CROFT LEOMINSTER, INC.
INCOME FUND
SEMI-ANNUAL REPORT
OCTOBER 31, 1998
<PAGE>
December 17, 1998
Dear Shareholder,
From 1/1/98 to 11/30/98, your Croft-Leominster Income Fund has increased
4.2%*. The characteristics of the Income Fund are as follows**: weighted average
yield to maturity of 8.3%, average duration of 8.8 years and a weighted average
maturity of 18.9 years. The Income Fund is diversified among 72 bond issues and
20 different industries.
It has been an interesting year for the bond market. In the late Summer,
global anxieties led to serious concerns about the health of markets. Investors
became excessively risk-averse and fled markets for the safe haven of US
Treasuries. Treasury yields declined to historic lows. Corporate bond spreads
widened to beyond recessionary levels and banks tightened lending standards. The
Fed perceived a credit crunch was threatening the marketplace and proceeded to
cut interest rates by a total of 75 basis points.
Throughout these events, the Income Fund remained on course and emerged in
healthy shape. Due to our very limited international exposure (especially in
emerging markets), we stood by and watched as the global turmoil unfolded. In
addition, we had taken steps to improve the overall credit quality of the Income
Fund. Several bond issues that were called or disposed of were replaced with
higher quality companies.
Since inception of the Fund, we have accumulated a significant investment
in CBS and Westinghouse bonds. Our belief was that the transformation into a
media company would enable CBS (old Westinghouse) to generate large cash flows
and eventually achieve investment grade status. Our analysis proved correct, as
these bonds were recently upgraded to investment grade in early December by
Moody's.
Going forward, the current spreads of corporate bonds vs. Treasury Bonds
are very attractive. We believe the outlook for the corporate bond market is
promising.
Sincerely,
Kent G. Croft
* Past performance is not indicative of future performance. Investment
return and principal will fluctuate. An investor's shares, when redeemed,
may be worth more or less than the original value.
** Income Fund characteristics are as of 12/17/98.
-1-
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
SCHEDULE OF INVESTMENTS
October 31, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES MARKET VALUE
- ------ ------------
COMMON STOCKS -D 2.87%
BOND FUNDS -D 2.87%
<C> <S> <C>
6,200 Alliance World Dollar Govt. II ....................... $ 60,450
4,500 Salomon Brothers Worldwide Income Fund ............... 48,938
11,000 First Australia Prime Income Fund .................... 61,875
10,300 Templeton Emerging Markets Income Fund ............... 104,287
--------
TOTAL COMMON STOCKS (Cost $301,090).............................. 275,550
--------
PREFERRED STOCKS -D 1.79%
650 California Fed Bank, 10.625%, Pfd. B ................. 69,550
2,820 Conseco Financing Trust, 8.70%, 09/30/28.............. 69,971
1,300 MediaOne Finance Trust, 9.04%, 12/31/38............... 32,396
--------
TOTAL PREFERRED STOCKS-D (Cost $168,402)......................... 171,917
--------
PRINCIPAL VALUE
- ---------------
CORPORATE BONDS -D 92.26%
AUTOS & AUTOMOTIVE PRODUCTS -D 1.30%
$95,000 Ford Holdings Inc. Debentures, 9.30%, 03/01/30 ...... 124,627
--------
BUILDING MATERIALS & HOUSING -D 2.63%
50,000 Owens-Corning, Debentures, 7.50%, 08/01/18 .......... 46,841
200,000 Owens-Corning, Notes, 7.70%, 05/01/08 ............... 205,381
--------
252,222
--------
CABLE TV & CELLULAR TELEPHONE -D 6.83%
185,000 CF Cable TV Inc. Senior Secured Notes, 9.125%, 07/15/07 196,563
325,000 Tele-Communications Inc. Notes, 7.875%, 08/01/13 373,277
80,000 Tele-Communications Inc. Senior Debentures, 8.75%, 02/15/23 86,123
--------
655,963
--------
CAPITAL GOODS -D 1.00%
90,000 Caterpillar Inc. Sinking Fund Debentures, 9.75%, 06/01/19 95,951
--------
CHEMICALS -D 2.40%
105,000 ARCO Chemical Co. Debentures, 9.80%, 02/01/20........ 108,326
100,000 Dow Chemical Co. Debentures, 9.00%, 04/01/21......... 121,634
--------
229,960
--------
</TABLE>
THE ACCOMPANY NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-2-
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
SCHEDULE OF INVESTMENTS
October 31, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE MARKET VALUE
- --------------- ------------
<C> <S> <C>
CONTAINERS & PAPER -D 18.56%
$150,000 Abiti dated, Debentures, 7.40%, 04/01/18 $ 139,254
165,000 Champion International, Debentures, 7.625%, 09/01/23 165,479
46,000 Georgia Pacific Corp. Debentures, 9.875%, 11/01/21 51,448
380,000 Georgia Pacific Corp. Debentures, 9.625%, 03/15/22 433,377
635,000 Georgia Pacific Corp. Debentures, 9.125%, 07/01/22 698,150
65,000 Stone Container Corp. Senior Notes, 9.875%, 02/01/01 65,000
140,000 Stone Container Corp. Senior Subordinated
Debentures, 10.75%, 04/01/02 137,900
100,000 Stone Container Corp. Senior Subordinated Units,
12.25%, 04/01/02 91,000
----------
1,781,608
----------
ELECTRIC & GAS UTILITIES -D 4.01%
70,000 Monongahela Power, 1st Mortgage, 8.625%, 11/01/21 73,903
115,000 Old Dominion Electric, 1st Mortgage, 8.76%, 12/01/22 143,690
105,000 Penn Power & Light, 1st Mortgage, 9.25%, 10/01/19 113,301
50,000 Portland General Electric, 1st Mortgage, 7.75%,
04/15/23 54,258
----------
385,152
----------
ENERGY & ENERGY SERVICES -D 8.23%
60,000 Costilla Energy Inc. Senior Notes, 10.25%, 10/01/06 50,100
65,000 Global Marine Inc, Notes, 7.00%, 06/01/28 57,822
55,000 Kelley Oil & Gas, Senior Subordinated Notes, 10.375%,
10/15/06 41,800
50,000 Magnum Hunter Res, Debentures, 10.00%, 06/01/07 40,500
135,000 Mariner Energy Corp. Senior Subordinated Notes, 10.50%,
08/01/06 116,437
100,000 Mobil Corp. Debentures, 8.00%, 08/12/32 111,737
200,000 Occidental Petroleum, Debentures, 7.20%, 04/01/28 185,218
125,000 Panaco Inc. Notes, 10.625%, 10/01/04 99,375
50,000 Wiser Oil, Debentures, 9.50%, 05/15/07 40,000
50,000 YPF Sociedad Anonima, Notes, 8.00%, 02/15/04 46,500
----------
789,489
----------
FINANCIAL SERVICES -D 7.24%
105,000 APP International Finance, Global Bond, 11.75%, 10/01/05 75,075
157,000 Aetna Services Inc. Debentures, 8.00%, 01/15/17 163,119
55,000 Aetna Services Inc. Debentures, 7.25%, 08/15/23 53,364
100,000 Chase Manhattan Corp New, Subordinated Notes, 7.875%,
08/01/04 100,711
15,000 ITT Corp. Senior Subordinated Debentures, 8.75%, 03/01/06 14,505
105,000 Lincoln National Corp. Debentures, 9.125%, 10/01/24 122,480
160,000 Reliance Group Holdings, Senior Subordinated Debentures,
9.75%, 11/15/03 165,200
----------
694,454
----------
</TABLE>
THE ACCOMPANY NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-3-
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
SCHEDULE OF INVESTMENTS
October 31, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE MARKET VALUE
- --------------- ------------
<C> <S> <C>
FOOD & DRUG PRODUCERS -D 1.79%
$ 80,000 Borden Inc. Sinking Fund Debentures, 9.25%, 06/15/19 $ 83,750
85,000 RJR Nabisco Inc. Notes, 8.625%, 12/01/02 88,102
------------
171,852
------------
GAS & GAS TRANSMISSION -D 5.12%
350,000 Bellwether Exploration Co. Senior Subordinated,
10.875%, 04/01/07 332,500
165,000 KN Energy Inc, Debentures, 7.25%, 03/01/28 158,769
------------
491,269
------------
INDUSTRIAL GOODS -D 8.32%
50,000 Crown Cork & Seal, Debentures, 8.00%, 04/15/23 45,621
65,000 Westinghouse Electric Corp. Debentures, 8.625%,
08/01/12 68,849
670,000 Westinghouse Electric Corp. Debentures, 7.875%,
09/01/23 684,401
------------
798,871
------------
MEDIA & ENTERTAINMENT -D 8.21%
200,000 CBS Inc. Senior Debentures, 8.875%, 06/01/22 204,757
100,000 Granite Broadcasting, Senior Subordinated Notes,
10.375%, 05/15/05 95,500
345,000 Time Warner Inc. Debentures, 9.15%, 02/01/23 435,003
45,000 Time Warner Inc. Senior Debentures, 8.375%, 03/15/23 52,428
------------
787,688
------------
METALS & MINING -D 5.30%
180,000 Alcan Aluminum Ltd. Debentures, 8.875%, 01/15/22 202,739
285,000 USX Corp. Debentures, 8.50%, 03/01/23 305,786
------------
508,525
------------
MISC. CONSUMER GOODS & SERVICES -D 0.25%
10,000 Eastman Kodak Co. Notes, 9.375%, 03/15/03 11,599
10,000 Proctor & Gamble Co. Senior Notes, 8.50%, 08/10/09 12,326
------------
23,925
------------
RETAIL STORES -D 2.81%
30,000 Dayton Hudson Co. Debentures, 8.60%, 01/15/12 36,453
105,000 Sears Roebuck & Co. Notes, 9.375%, 11/01/11 134,302
100,000 Woolworth Corp. Debentures, 8.50%, 01/15/22 99,229
------------
269,984
------------
TECHNOLOGY -D 1.86%
125,000 Plantronics Inc. Senior Notes, 10.00%, 01/15/01 125,312
50,000 Tektronix Inc. Senior Notes, 7.625%, 08/15/02 53,457
------------
178,769
------------
</TABLE>
THE ACCOMPANY NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-4-
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
SCHEDULE OF INVESTMENTS
October 31, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE MARKET VALUE
- --------------- ------------
<C> <S> <C>
TELEPHONES -D 4.91%
$ 50,000 BellSouth Telecommunications, Debentures, 7.875%,
08/01/32 $ 54,649
125,000 GTE Corp. Debentures, 8.75%, 11/01/21 159,824
70,000 New York Telephone Co. Debentures, 9.375%, 07/15/31 79,943
20,324 Nynex Corp. Amortized Debentures, 9.55%, 05/01/10 23,761
135,000 U.S. West Communications, Debentures, 8.875%, 06/01/31 152,989
------------
471,166
------------
TEXTILES & APPAREL MANUFACTURING -D 0.67%
70,000 Fruit of the Loom Inc. Senior Notes, 7.375%, 11/15/23 63,993
------------
TRANSPORTATION -D 0.82%
75,000 Union Pacific Corp. Sinking Fund Debentures, 8.50%,
01/15/17 78,668
------------
TOTAL CORPORATE BONDS-D (Cost $8,547,638) 8,854,136
------------
SHORT TERM INVESTMENTS -D 2.25%
216,199 Star Treasury Fund,
TOTAL SHORT TERM INVESTMENTS-(Cost $216,199) 216,199
------------
TOTAL INVESTMENTS (Cost $9,233,329) 99.17% 9,517,802
Other assets in excess of liabilities 0.83% 79,227
------- ------------
TOTAL NET ASSETS 100.00% $9,597,029
======= ============
<FN>
(1 Federal Tax Information: At October 31, 1998 the net unrealized
appreciation based on cost for Federal Income tax purposes of $9,233,329
was as follows:
Aggregate gross unrealized appreciation for all investments for
which there was an excess of value over cost $ 581,255
Aggregate gross unrealized depreciation for all investments for which
there was an excess of cost over value (296,782)
---------
Net unrealized appreciation $ 284,473
=========
+ Non-income producing security
</FN>
</TABLE>
THE ACCOMPANY NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-5-
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
ASSETS:
<S> <C>
Investments in securities, at value
(cost $9,293,082) (Note 2) .............................. $ 9,517,802
Dividends and interest receivable ............................... 189,162
Prepaid expenses and other ...................................... 14,784
-----------
Total Assets ............................................ 9,721,748
-----------
LIABILITIES:
Payables:
For advisory fees (Note 3) ...................$ 908
For securities purchased ..................... 81,296
Dividends declared ........................... 40,889
Other expenses ............................... 1,626
-----------
Total Liabilities ....................................... 124,719
-----------
Net Assets .............................................. $ 9,597,029
===========
NET ASSETS CONSIST OF:
Additional paid in capital .............................. $ 9,402,274
Accumulated net investment loss ......................... (7,604)
Accumulated net realized loss from
investment transactions (Note 6 ) ............... (22,360)
Net unrealized appreciation on investments .............. 224,719
-----------
Net Assets .............................................. $ 9,597,029
===========
Net asset value and redemption and offering price per share
($9,597,029/912,072 shares of capital stock outstanding)
(Note 6 ) ............................................... $ 10.52
===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-6-
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
STATEMENT OF OPERATIONS
For the six months ended October 31, 1998
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
INVESTMENT INCOME :
<S> <C>
Interest ......................................................... $ 383,337
Dividends ........................................................ 4,116
---------
Total income ............................................. 387,453
EXPENSES:
Investment advisory fees (Note 3) ................................ 39,328
Administration fees .............................................. 11,282
Legal fees ....................................................... 7,804
Transfer agent fees .............................................. 5,891
Audit fees ....................................................... 3,327
Insurance ........................................................ 3,150
Custody fees ..................................................... 3,138
Printing ......................................................... 1,915
Registration fees ................................................ 1,676
DirectorsO fees and expenses ..................................... 252
Distribution fee (Note 3) ........................................ 0
Other ............................................................ 960
---------
TOTAL EXPENSES ........................................... 78,723
Less: Expense reimbursement (Note 3) .................... (23,963)
---------
Net expenses ............................................. 54,760
---------
NET INVESTMENT INCOME .................................... 332,693
---------
NET REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS (Note 2)
Net realized gain from investment transactions ................... 2,020
Distributions of realized gains by other investment companies .... 15,732
Net change in unrealized appreciation of investments ............. (360,599)
---------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS .......... (342,847)
---------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ..... $ (10,154)
=========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-7-
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the six months For the year
ended ended
October 31, 1998 April 30, 1998
---------------- --------------
(Unaudited)
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
<S> <C> <C>
Net investment income .............................. $ 332,693 $ 679,426
Net realized gain from investment transactions ..... 2,020 88,800
Distributions of realized gains by other
investment companies ............................... 15,732 19,524
Net change in unrealized appreciation of investments (360,599) 389,694
----------- -----------
Net increase in net assets resulting from operations (10,154) 1,177,444
DIVIDENDS PAID TO SHAREHOLDERS:
Net investment income ($.41 and .78 per share,
respectively) ...................................... (368,519) (673,010)
Capital gains ($0 and .13 per share, respectively) . 0 (111,925)
Net capital share transactions (Note 4) ............ 85,647 2,079,013
----------- -----------
Net increase (decrease) in net assets .............. (293,026) 2,471,522
NET ASSETS:
Beginning of period ................................ 9,890,055 7,418,533
----------- -----------
End of period ...................................... $ 9,597,029 $ 9,890,055
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-8-
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1998
(UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION
The Croft-Leominster Income 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 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 October 31, 1998 as shown in the Statement of Assets and Liabilities and the
Schedule of Investments. The Croft-Leominster Income Fund seeks a high level of
current income with moderate risk of principal by investing primarily in a
diversified portfolio of investment grade fixed-income securities.
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.
SECURITY VALUATION - Securities which are traded on any exchange or on the
NASDAQ over-the-counter market are valued at the last quoted sale price.
Investments, for which no sale is reported, are valued at their last bid price.
When market quotations are not readily available, when it is determined that the
last bid price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith under procedures established by and under the general supervision of the
Fund's Board of Directors.
Fixed income securities generally are valued by using market quotations,
but may be valued on the basis of prices furnished by a pricing service when the
Adviser believes such prices accurately reflect the fair market value of such
securities. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional-size trading units of debt securities
without regard to sale or bid prices. Short term investments in fixed income
securities with maturities of less than 60 days when acquired, or which
subsequently are within 60 days of maturity, are valued by using the amortized
cost method of valuation, unless the Board of Directors determine that the
amortized cost does not reflect the securities' fair value, in which case these
securities will be valued at their fair value as determined by the Board of
Directors.
FEDERAL INCOME TAXES - The Fund intends to comply with requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its net
-9-
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
investment income as dividends to its shareholders. The Fund intends to
distribute its net long-term capital gains and its net short-term capital gains
at least once a year. Therefore no provision for income taxes is required.
Federal income tax loss carryforwards generated in prior years will be used to
offset a portion of current year's net realized gains.
OTHER - The Fund follows industry practice and records security
transactions on the trade date. The specific identification method is used for
determining gains or losses for financial statement and income tax purposes.
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. Interest income is recorded on an accrual basis.
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.
NOTE 3. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES.
The Fund retains Croft-Leominster Inc. (the "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, 2001, the Adviser 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 1.10%. As a result, for the six months ended October 31, 1998, the
Adviser accrued reimbursements to the Fund of $23,963.
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 Fund on
August 23, 1995. 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.
-10-
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
NOTE 4. CAPITAL SHARE TRANSACTIONS
As of October 31, 1998 there was 30,000,000, $0.001 par value shares of
capital stock authorized for the Croft Funds Corporation, and capital paid-in
amounted to $9,402,274 for the Fund.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1998 APRIL 30, 1998
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares sold .................... 44,785 $ 489,612 339,981 $ 3,714,031
Shares issued in reinvestment of
dividends .............. 26,114 280,943 57,575 629,138
Shares redeemed ................ (62,143) (684,908) (207,625) (2,264,156)
-------- ----------- -------- -----------
Net increase ................... 8,756 $ 85,647 189,931 $ 2,079,013
======== =========== ======== ===========
</TABLE>
NOTE 5. INVESTMENT TRANSACTIONS
Purchases and sales, excluding short-term securities, for the six months
ended October 31, 1998 aggregated $517,736 and $607,861, respectively, for the
Fund.
NOTE 6. DISTRIBUTIONS TO SHAREHOLDERS
The Fund makes dividend distributions quarterly. During the six months
ended October 31, 1998, distributions of $0.41 aggregating $368,519 were
declared from net investment income with $40,889 remaining payable to
shareholders at October 31, 1998. For the same time period, no distributions
were declared from net realized gains.
NOTE 7. FINANCIAL INSTRUMENT DISCLOSURE
There are no reportable financial instruments that have any off balance
sheet risk as of October 31, 1998.
-11-
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
FINANCIAL HIGHLIGHTS
(For a fund share outstanding throughout each period)
<TABLE>
<CAPTION>
For the six
months ended For the For the May 4, 1995*
October 31, 1 year ended year ended through
(Unaudited) April 30, 1998 April 30,1997 April 30, 1996
----------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ................... $ 10.95 $ 10.40 $ 10.25 $ 10.00
Income (loss) from investment operations:
Net investment income .......................... 0.03 0.81 0.79 0.73
Net realized and unrealized gain(loss) on
investments ............................ (0.05) 0.65 0.26 0.28
Total from investment operations ............... (0.02) 1.46 1.05 1.01
Less distributions
Dividends from net investment income ........... (0.41) (0.78) (0.84) (0.73)
Distribution from realized gains from security
transactions ........................... 0.00 (0.13) (0.06) (0.03)
Total distributions ............................ (0.41) (0.91) (0.90) (0.76)
Net asset value, end of period ......................... $ 10.52 $ 10.95 $ 10.40 $ 10.25
Total return** ......................................... (0.23%) 14.36% 10.56% 10.17%
Ratios/Supplemental data
Net assets end of period (in 000's) ............ 9,597 9,890 7,419 6,450
Ratio of expenses to average net assets,
before reimburse ....................... 1.58%^ 1.59% 1.90% 1.10%^
Ratio of expenses to average net assets,
after reimbursement .................... 1.10%^ 1.10% 1.10% 1.10%^
Ratio of net investment income (loss) to average
net assets, before reimbursement ....... 6.27%^ 6.90% 6.76% 7.35%^
Ratio of net investment income (loss) to average
net assets, after reimbursement ........ 6.75%^ 7.38% 7.57% 7.35%^
Portfolio turnover rate ........................ 5.42% 15.62% 13.73% 13.76%^
<FN>
- ---------------
* Commencement of operations
** Based on net asset value per share.
^ Annualized
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-12-
<PAGE>
