Croft-Leominster
Value Fund
SEMI-ANNUAL REPORT
October 31, 1996
(Unaudited)
<PAGE>
Dear fellow shareholder:
During the twelve months period ending December 31, 1996, the Croft-Leominster
Value Fund gained 19.9% on a total return basis. Since its inception date of May
10, 1995 through December 31, 1996, the Value Fund has gained 34.1% on a total
return basis.* There has not been much change in the structure of the portfolio
over the last six months because of the comfort level we have with the
fundamentals of the companies and the longer term nature of our investment
philosophy. Our cash level is slightly higher (8.4%) and is earmarked for
purchases. In hindsight, we were probably too early in booking some gains in the
banking sector, though we still have a very meaningful exposure (9.0%).
Through our research we have not had an easy time uncovering compelling value
ideas given the current investment climate. As shown in the following chart we
continue to adhere to our discipline of owning companies that are selling more
cheaply than the overall market.
<TABLE>
<S> <C> <C>
Value Fund S&P 500
---------- -------
1997E Price/Earnings 13.3x 16.4x
Estimated Growth Rate 10.6% 8.0%
Price/Book Value 2.0x 3.0x
</TABLE>
The most significant portfolio shift has been to increase our weighting in oil
(13%) and natural gas (12%) exploration and production. In these two areas we
have been able to find some smaller companies that are trading at significant
discounts to their net asset values and at low cash flow multiples.
We diligently continue our pursuit of value while keeping a sharp eye on reduced
downside risk in all of the companies we purchase.
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,
/s/ Gordon Crofit
Gordon Croft
Vice President
* 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 October 31, 1996. 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
October 31, 1996
(Unaudited)
<C> <S> <C> <C>
Shares Market Value
- ------ ------------
COMMON STOCKS 92.02%
BANKS, S & L'S, AND BROKERS 8.97%
100 Chase Manhattan Bank .................. $ 8,575
2,500 Great Western Financial................ 70,000
900 Greenpoint Financial Corp.............. 41,850
300 H.F. Ahmanson & Co..................... 9,413
420 Provident Bankshares Corp.............. 15,120
-------
144,958
-------
BUILDING & CONSTRUCTION 6.64%
2,050 Owens Corning.......................... 79,431
2,900 Schuller Corporation................... 27,913
-------
107,344
-------
BUSINESS SERVICES AND TRANSPORTATION 5.18%
100 AMR Corp.*............................. 8,400
700 Kansas City Southern Industries........ 32,900
757 Union Pacific Corp..................... 42,487
-------
83,787
-------
CAPITAL EQUIPMENT 4.34%
4,100 Westinghouse Electric.................. 70,213
-------
CHEMICALS 3.47%
2,185 Millenium Chemicals Inc................ 44,246
400 Rhone-Poulenc ADR...................... 11,900
-------
56,146
-------
The accompanying notes are an integral part of these financial statements.
<PAGE>
CROFT-FUNDS CORPORATION
SCHEDULE OF INVESTMENTS
CROFT-LEOMINSTER VALUE FUND
October 31, 1996
(Unaudited)
Shares Market Value
- ------ ------------
CLOSED END FUNDS- ASIA 1.76%
2,500 Asia Tigers Fund Inc................... $ 25,938
200 Schroder Asian Growth Fund............. 2,400
-------
28,338
-------
CLOSED END FUNDS- GERMANY 1.58%
700 Central European Equity Fund Inc....... 13,738
1,500 Emerging Germany Fund Inc.*............ 11,813
-------
25,551
-------
CLOSED END FUNDS- GLOBAL 0.67%
100 GT Global Developing Markets Fund...... 1,100
700 GT Global Eastern Europe Fund.......... 9,625
-------
10,725
-------
CLOSED END FUNDS-LATIN AMERICA 0.50%
700 Argentina Fund Inc..................... 8,050
-------
CONSUMER CYCLICALS 3.46%
600 Philips Electronics N.V................ 21,150
2,900 Stant Corp............................. 34,800
-------
55,950
-------
CONSUMER NON-DURABLES 3.43%
200 Colgate Palmolive Co................... 18,400
4,000 Hanson PLC ADR......................... 25,500
1,000 Imperial Tobacco Group PLC ADR......... 11,500
-------
55,400
-------
FERTILIZERS 2.54%
450 Agrium, Inc. (CANADA).................. 6,023
300 IMC Global Inc......................... 11,250
335 Potash Corp. Of Saskatchewan........... 23,743
-------
41,016
-------
The accompanying notes are an integral part of these financial statements.
<PAGE>
CROFT-FUNDS CORPORATION
SCHEDULE OF INVESTMENTS
CROFT-LEOMINSTER VALUE FUND
October 31, 1996
(Unaudited)
Shares Market Value
- ------ ------------
FINANCIAL SERVICES 1.09%
250 Franklin Resources Inc................. $ 17,625
-------
GAS AND GAS TRANSMISSION 0.97%
500 British Gas PLC ADR.................... 15,625
-------
INSURANCE 8.50%
1,100 Everest Reinsurance Holdings Inc....... 28,050
700 GCR Holdings Ltd....................... 16,275
2,200 Highlands Insurance Group*............. 43,450
400 ITT Hartford Group, Inc................ 25,200
450 Travelers Group, Inc................... 24,413
-------
137,388
-------
INTERNATIONAL OIL AND GAS 0.28%
200 YPF SA (ADR)........................... 4,550
-------
NATURAL GAS 12.73%
2,400 Bellwether Exploration*................ 16,200
2,600 Comstock Resources Inc.*............... 33,475
12,200 Frontier Natural Gas Corp.*............ 29,738
6,600 Gothic Energy Corp.*................... 15,675
14,510 National Energy Group Inc.*............ 61,668
8,500 Panaco Inc.*........................... 48,875
.10 Union Pacific Resources Group.......... 4
-------
205,635
-------
OIL 13.32%
600 Benton Oil & Gas Co.*................. 14,700
7,300 Equity Oil Co*........................ 23,269
6,000 Magnum Petroleum Inc.*................ 29,250
1,300 Mallon Resources Corp.*............... 10,400
3,100 McFarland Energy Inc.*................ 35,650
1,500 Oryx Energy Co. *..................... 28,875
4,500 Santa Fe Energy Resources*............ 64,125
200 Triton Energy Ltd.*................... 8,925
-------
215,194
-------
The accompanying notes are an integral part of these financial statements.
<PAGE>
CROFT-FUNDS CORPORATION
SCHEDULE OF INVESTMENTS
CROFT-LEOMINSTER VALUE FUND
October 31, 1996
(Unaudited)
Shares Market Value
- ------ ------------
PAPER & FOREST PRODUCTS 8.20%
1,300 Boise Cascade Corp...................... $ 40,300
1,700 Scott Paper Ltd......................... 34,223
3,800 Stone Container Corp.................... 57,950
--------
132,473
--------
PHARMACEUTICALS 3.54%
900 Warner Lambert Co....................... 57,263
--------
RETAIL 0.29%
2,000 Barry's Jewelers Inc.*.................. 4,750
--------
TELEPHONE & CELLULAR 0.56%
5,000 SA Telecommunications Inc.*............. 9,063
--------
TOTAL COMMON STOCKS (Cost $1,330,712)....................... 1,487,044
---------
SHORT TERM INVESTMENTS 8.86%
143,109 Star Treasury Fund (Cost $143,109)....... 143,109
--------
TOTAL INVESTMENTS (Cost $1,473,821).............. 100.88% $ 1,630,153
Other assets less liabilities.................... (0.88%) (14,182)
------ -----------
TOTAL NET ASSETS ................................ 100.00% $ 1,615,971
======= ===========
<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
October 31, 1996
(Unaudited)
<S> <C>
ASSETS
Investments at value (cost $1,473,821)....................... $1,630,153
Dividends and interest receivable............................ 1,742
Due from Investment Adviser (Note 3)......................... 2,247
Other Assets ................................................ 3,100
---------
Total assets ......................................... 1,637,242
---------
LIABILITIES
Payable for securities purchased ............................ 6,500
Payable for fund shares redeemed ............................ 330
Other expenses .............................................. 14,441
--------
Total liabilities .................................... 21,271
========
NET ASSETS
Net assets, equivalent to $12.60 per share,
on 128,289 shares outstanding (Note 4).................... $1,615,971
=========
Computation of net asset value per share and
public offering price ....................................... $ 12.60
=========
Net Assets consist of:
Paid in capital ............................................. 1,394,479
Undistributed net investment income.......................... 3,965
Accumulated undistributed net realized
gains (losses) from security transactions................ 61,195
Net unrealized appreciation (depreciation)
of investments .......................................... 156,332
---------
Net Assets October 31, 1996 ..................................... $1,615,971
=========
</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 six months ended October 31, 1996
(Unaudited)
<S> <C>
Investment Income:
Dividends .................................................. $ 9,248
Interest ................................................... 5,262
-------
Total income ........................................ 14,510
-------
Expenses:
Investment advisory fee (Note 3)............................ 6,615
Distribution fee (Note 3) .................................. 1,352
Administration Fee ......................................... 8,554
Legal Fee .................................................. 7,259
Transfer Agent Fee ......................................... 5,892
Audit Fee .................................................. 3,308
Insurance .................................................. 3,150
Custody Fee................................................. 2,944
Printing ................................................... 1,915
Registration ............................................... 1,261
Other ...................................................... 857
-------
Total expenses....................................... 43,107
Less: Expense Reimbursement.......................... (32,552)
-------
Net Expenses......................................... 10,555
-------
Net investment income (loss)......................... 3,955
------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) on investments .................... 62,031
Unrealized appreciation (depreciation) of investments
for the period ........................................ 50,570
-------
Net gain (loss) on investments ...................... 112,601
-------
Net increase (decrease) in net assets from
operations........................................ $116,556
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Croft Funds Corporation
STATEMENT OF CHANGES IN NET ASSETS
CROFT-LEOMINSTER VALUE FUND
<TABLE>
<S> <C> <C>
For the six months May 4, 1995*
ended October 31, 1996 through
(Unaudited) April 30, 1996
Increase (Decrease) in Net Assets from Operations:
Net investment income ....................................... $ 3,955 $ 6,168
Net realized gain (loss) on investments...................... 62,031 15,698
Unrealized appreciation (depreciation) for the period........ 50,570 105,762
------- -------
Net increase (decrease) in net assets
from operations ........................................ 116,556 127,628
------- -------
Dividends paid to shareholders:
Net investment income ($.0 and .07 per share, respectively).. 0 (6,158)
Capital gains ($.11 and .04 per share, respectively) (12,746) (3,788)
Capital share transactions (Note 4).......................... 256,732 1,137,747
------- ---------
Total increase ......................................... 360,542 1,255,429
------- ---------
Net Assets:
Beginning of period ......................................... 1,255,429 0
End of period (including undistributed
net investment income of $3,965 and $10, respectively).. $1,615,971 $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
October 31, 1996
(Unaudited)
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 STATEMENT
October 31, 1996
(Unaudited)
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 excludes ordinary brokerage commissions incurred
in the purchase or sale of portfolio securities, will not exceed 1.50%. As a
result, for the six months ended October 31, 1996, the Adviser accrued
reimbursements to the Fund of $32,552.
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 six months ended October 31, 1996 the Fund
accrued distribution fees of $1,352.
Note 4. Capital Stock.
At October 31, 1996, there were 30,000,000 shares of capital stock ($.001 par
value) authorized for the Croft Funds Corporation, and capital paid-in amounted
to $1,394,479 for the Value Fund. Transactions in capital stock were as follows:
<TABLE>
For the six
months ended
October 31, 1996
------------------
<S> <C> <C>
Shares Amount
------ ------
Sold ....................................... 20,378 $245,862
Issued on reinvestment
of dividends ............................... 992 11,200
Redemptions ................................ (27) (330)
------ -------
Net increase................................... 21,343 $256,732
====== ========
</TABLE>
<PAGE>
CROFT FUNDS CORPORATION
NOTES TO FINANCIAL STATEMENT
October 31, 1996
(Unaudited)
Note 5. Investment Transactions.
During the period ended October 31, 1996, purchases and sales of investment
securities, excluding short-term obligations were as follows:
Cost of purchases $733,750
Proceeds of sales 558,297
At October 31, 1996 the net unrealized appreciation based on cost for Federal
income tax purposes of $1,476,757 for the Value Fund was as follows:
Unrealized appreciation $ 201,476
Unrealized depreciation (48,079)
--------
$ 153,397
========
Note 6. Financial Instrument Disclosure
There are no reportable financial instruments that have any off balance sheet
risk as of October 31, 1996.
<PAGE>
<TABLE>
<CAPTION>
CROFT-FUNDS CORPORATION
CROFT-LEOMINSTER VALUE FUND
Financial Highlights for a share outstanding
throughout the period
<S> <C> <C>
For the six months May 4, 1995*
ended October 31, 1996 through
(Unaudited) April 30, 1996
----------- --------------
Net asset value, beginning of period........ $ 11.74 $ 10.00
Income from investment operations:
Net investment income.................... .03 .10
Net realized and unrealized gain (loss)
on investments .......................... .94 1.75
------ ------
Total from investment operations .97 1.85
------ ------
Less distributions:
Dividends from net investment income... - (.07)
Dividends from net realized gains...... (.11) (.04)
------ ------
Total distributions................... (.11) (.11)
------ ------
Net asset value, end of period.............. $ 12.60 $ 11.74
======= =======
Ratios/Supplemental Data:
Net assets, end of period (000's)...... 1,616 1,255
Ratios to average net assets:
Expenses............................... 1.50%** 1.50%**
Net investment income.................. 0.56%** 0.89%**
Portfolio turnover rate ............... 46.00% 65.38%
Average Commission Rate Paid .......... .1051 -
Total Return................................ 17.29%** 18.57%
<FN>
** Commencement of operations
** Annualized
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
