CROFT
LEOMINSTER
INC.
VALUE FUND
ANNUAL REPORT
APRIL 30, 1999
<PAGE>
June 15, 1999
Dear Value Fund Shareholder,
From 01/01/99 to 06/10/99, the Value Fund's Performance is as follows*:
YTD PERFORMANCE
---------------
VALUE FUND + 15.4%
Standard and Poor's 500** + 6.6%
As the market continues to test new highs, we remain focused on our
value philosophy. We continue to search for those companies selling at discounts
to their intrinsic value. We examine future earnings, cash flows and hidden
assets. In addition, we look for companies that are out of favor with the
investment community as these neglected stocks often offer compelling reward vs.
risk potential. The current portfolio structure is as follows:
VALUE FUND S & P 500
---------- ---------
Estimated 2000 Price/Earnings Ratio 12.9x 25.6x
Estimated Growth Rate 10.9% 8.0%
Current Price/Book Value 2.8x 4.7x
The Fund's largest holding continues to be SPX Corp. Since our last
report dated October 31,1999, the stock has appreciated approximately 42.5%. SPX
Corp currently sells at 13.8X 2000 estimated earnings per share and should
increase earnings 14-16% annually for the next 3-4 years. According to
management, its merger with General Signal is progressing well. They have
accomplished over 70% of the targeted headcount reduction at the General Signal
Units. The merger should result in $209 million in cost saves over the next two
years. In addition, the Economic Value Added (EVA) culture is being adopted
throughout General Signal's work force. Employees' compensation is based on the
ability to create value by producing returns in excess of the cost of capital.
With its strong management team and its focus to increase returns to
shareholders, we believe SPX Corp. will continue to perform strongly in the
future.
In our last report, we highlighted the neglect of value stocks by
investors in the market. Recently, we have seen a renewed interest in these
stocks. A good example of this is the paper and forest products industry.
Investors have largely ignored this sector for the past several years as excess
capacity has pushed real product prices to historical lows. Early in 1999, we
began to see an improving pricing environment. Investors have recognized that
these companies are selling at compelling risk vs. reward levels. Two of the
fund's holdings, Smurfit-Stone Container (5.4%) and Boise Cascade Corp (3.3%)
have benefited.
Smurfit-Stone Container is the largest domestic producer of
containerboard. Management has focused on improving its business structure by
closing high cost mills and increasing operating efficiencies. In addition, they
-2-
<PAGE>
have been removing capacity to improve pricing. Smurfit Stone has been able to
increase containerboard prices by $50 per ton which should translate into
approximately $1 per share in post-tax earnings.
Boise Cascade Corp. is a distributor of office products and building
materials and also manufactures and distributes paper and wood products. Based
on our sum of the parts valuation of their equity investment in Boise Office
Products plus timberland properties plus other operations, we estimate Boise
Cascade is worth approximately $48 per share. Management has also been
successful in implementing price increases. The company is in the midst of
restructuring, cutting costs and refocusing its efforts on higher value added
products.
In the past couple of months, we have sold part of our position in
Qwest Communications International Inc (Qwest). On April 19, 1999 Bell South
agreed to acquire a 10% stake in Qwest for a split-adjusted price of $47.25.
This in our view placed a near-term upper limit on the stock. In addition, since
our initial investment two years ago, the stock had appreciated nicely, and the
portfolio's overall exposure to Qwest had increased as well. As the stock
approached Bell South's offer price, we decided to rebalance the portfolio by
taking some profits. We maintain a position in the company because we still like
the long-term outlook for Qwest within the broadband and telecommunications
sector. We have also maintained a position in MCI Worldcom, Inc., another major,
global communications company.
Going forward, we still believe that the largest-capitalization, growth
stocks as a whole are overvalued. They have had a nice run the past couple of
years, but investors are paying too much for future earnings growth. We will
maintain our value approach by investing in those companies that we believe
offer long-term appreciation and, at the same time, exhibit minimal downside
risk characteristics.
Thank you for investing with Croft-Leominster.
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.
** The Standard & Poor's 500 is an unmanaged index that is a widely recognized
indicator of general market performance. Figures are presented gross of
fees.
Information contained herein should not be considered a recommendation to
purchase or sell any security. There is no assurance as of the date of this
letter, that the Value Fund still holds any of these securities in its
portfolio.
-3-
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE ANNUAL PERFORMANCE
SINCE INCEPTION
ONE YEAR 5/10/95
-------- -------
VALUE FUND (0.63%) 19.07%
CUMULATIVE PERFORMANCE COMPARISON
$10,000 INVESTMENT SINCE INCEPTION*
PERIOD S&P 500 PERIOD
MMYY VALUE FUND RETURN* RETURN
- ---- ----------- ------- ------- ------
<S> <C> <C> <C> <C>
May-95 $10,000.00 $10,000.00
Jul-95 $10,300.00 3.00% $10,782.00 7.82%
Oct-95 $10,489.52 1.84% $11,224.06 4.10%
Jan-96 $11.513.30 9.76% $12,347.59 10.01%
Apr-96 $11,856.39 2.98% $12,764.94 3.38%
Jul-96 $11,563.54 -2.47% $12,561.98 -1.59%
Oct-96 $12,848.25 11.11% $13,926.21 10.86%
Jan-97 $14,208.88 10.59% $15,600.14 12.02%
Apr-97 $14,071.05 -0.97% $ 15,970 2.37%
Jul-97 $17,145.58 21.85% $19,096.76 19.58%
Oct-97 $17,958.28 4.74% $18,394.00 -3.68%
Jan-98 $17,478.79 -2.67% $19,795.62 7.62%
Apr-98 $ 20,139 15.22% $ 22,521 13.77%
Jul-98 $ 17,845 -11.39% $ 22,789 1.19%
Oct-98 $ 16,000 -10.34% $ 22,434 -1.56%
Jan-99 $ 17,320 8.25% $ 26,219 16.87%
Apr-99 $ 20,024 15.61% $ 27,432 4.63%
<FN>
* 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.
</FN>
</TABLE>
-4-
<PAGE>
CROFT FUNDS CORPORATIONS
CROFT-LEOMINSTER VALUE FUND
SCHEDULE OF INVESTMENTS
April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES MARKET VALUE
- ------ ------------
COMMON STOCKS - 100.17%
AEROSPACE/DEFENSE- 0.69%
<C> <S> <C>
2,500+ Fairchild Corp.................................... $ 33,594
--------
APPAREL MANUFACTURERS - 0.30%
1,400+ Fruit of the Loom, Inc. .......................... 14,875
--------
AUTO & AUTOMOTIVE PRODUCTS - 13.85%
6,050 Federal-Mogul Corp. .............................. 265,444
6,326+ SPX Corp. ........................................ 413,167
--------
678,611
--------
BANKS, S&L'S AND BROKERS - 9.36%
500 Astoria Financial Corp. .......................... 25,062
2,100 BankAtlantic Bancorp, Inc. ....................... 15,619
1,500 BankUnited Cl A .................................. 60,563
1,900 Dime Bancorp Inc. Cl B ........................... 43,819
1,100 Mellon Bank Corp. ................................ 81,744
2,100 Summit Bancorp ................................... 88,988
3,476 Washington Mutual Inc. ........................... 142,951
--------
458,746
--------
BASIC MATERIALS - 0.80%
4,200 National Steel Corp. Cl B ........................ 39,375
--------
BUILDING & CONSTRUCTION - 3.81%
2,800 Foster Wheeler Corp. ............................. 37,800
3,050 Owens Corning .................................... 108,656
1,300 Texas Industries, Inc. ........................... 40,137
--------
186,583
--------
CAPITAL EQUIPMENT - 4.00%
2,200 Kennametal Inc. .................................. 58,438
2,300+ Terex Corp........................................ 72,738
1,100 Xerox Corp. ...................................... 64,625
--------
195,801
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-5-
<PAGE>
CROFT FUNDS CORPORATIONS
CROFT-LEOMINSTER VALUE FUND
SCHEDULE OF INVESTMENTS
April 30, 1999
- --------------------------------------------------------------------------------
SHARES MARKET VALUE
- ------ ------------
CHEMICALS - 4.73%
2,000 Crompton & Knowles Corp. ......................... $ 40,500
1,500 Hanna M.A. Co. ................................... 24,281
700+ International Specialty Products Inc. ............ 5,775
4,600 Lyondell Chemical Co. ............................ 9,700
1,200 Millennium Chemicals Inc. ........................ 32,400
3,300 NL Industries, Inc. .............................. 38,981
--------
231,637
--------
CLOSED END FUNDS - BRAZIL - 0.21%
18,000 Brazilian Investment Trust PLC ................... 10,260
--------
CLOSED END FUNDS - INDIA - 0.68%
534+ India Growth Fund Inc. ........................... 5,073
2,800+ Jardine Fleming India Fund ....................... 17,500
600+ Morgan Stanley India Invt. Fund................... 4,912
700+ The India Fund Inc................................ 5,862
--------
33,347
--------
CONSUMER CYCLICALS - 2.54%
900 Koninklijke Royal Philips Electronics N.V......... 76,838
1,000 Newell Rubbermaid Inc. ........................... 47,437
--------
124,275
--------
CONSUMER SERVICES - 1.66%
2,458 Viad Corp. ....................................... 81,268
--------
FINANCIAL SERVICES - 9.13%
1,600 Capital One Financial Corp. ...................... 277,900
2,250 Citigroup Inc. ................................... 169,313
--------
447,213
--------
HEALTHCARE - 0.35%
1,000 Varian Medical Systems, Inc. ..................... 17,187
--------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-6-
<PAGE>
CROFT FUNDS CORPORATIONS
CROFT-LEOMINSTER VALUE FUND
SCHEDULE OF INVESTMENTS
April 30, 1999
- --------------------------------------------------------------------------------
SHARES MARKET VALUE
- ------ ------------
INSURANCE - 4.54%
1,300 Ace Ltd. ......................................... $ 39,325
1,200 Allmerica Financial Corp. ........................ 68,775
800 Allstate Corp. ................................... 29,100
800 Hartford Financial Services Group Inc. ........... 47,150
1,400+ Highlands Insurance Group Inc. ................... 15,400
3,000 Reliance Group Holdings, Inc. .................... 22,500
----------
222,250
----------
MEDIA & ENTERTAINMENT - 6.96%
3,500+ Big City Radio Inc. .............................. 14,656
6,300 CBS Inc. ......................................... 287,044
1,200 News Corporation Ltd. ADR ........................ 39,150
----------
340,850
----------
NATURAL GAS - 8.99%
600 Anadarko Petroleum Corp. ......................... 22,762
12,200+ Bellwether Exploration Co. ....................... 48,800
500 Burlington Resources Inc. ........................ 23,031
16,200+ Comstock Resources Inc. .......................... 75,938
34,500+ Gothic Energy Corp. .............................. 23,718
1,300+ Mallon Resources Corp. ........................... 11,212
29,708+ Meridian Resources Corp. ......................... 172,678
24,200+ Panaco Inc. ...................................... 21,175
1,600+ Titan Exploration Inc. ........................... 9,000
2,300 Union Pacific Resources Group ................... 32,200
----------
440,514
----------
OIL - 1.50%
800 Apache Corp. ..................................... 24,550
39,300+ Equity Oil Co. ................................... 49,125
----------
73,675
----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-7-
<PAGE>
CROFT FUNDS CORPORATIONS
CROFT-LEOMINSTER VALUE FUND
SCHEDULE OF INVESTMENTS
April 30, 1999
- --------------------------------------------------------------------------------
SHARES MARKET VALUE
- ------ ------------
PAPER & FOREST PRODUCTS - 8.66%
4,000 Boise Cascade Corp. .............................. $ 161,000
11,261+ Smurfit-Stone Container Corp. .................... 263,226
----------
424,226
----------
PHARMACEUTICALS - 1.76%
600 American Home Products Corp. ..................... 36,600
300+ Elan Corp. ADR ................................... 15,450
500 Warner Lambert Co. ............................... 33,969
----------
86,019
----------
REAL ESTATE INVESTMENT TRUSTS - 1.09%
1,459 Starwood Hotels & Resorts Trust .................. 53,527
----------
TECHNOLOGY - 2.33%
900+ DII Group Inc. ................................... 27,900
1,100+ Oak Industries Inc. .............................. 45,925
3,000+ Varian Inc. ...................................... 27,187
1,000+ Varian Semiconductor Equipment Associates, Inc. .. 13,000
----------
114,012
----------
TELEPHONE & CELLULAR - 6.52%
3,200+ Alpine Group Inc. ................................ 44,400
2,000+ MCI Worldcom Inc. ................................ 164,375
1,065+ Qwest Communications International Inc. .......... 90,991
2,000+ STAR Telecommunications, Inc. .................... 19,375
----------
319,141
----------
TRANSPORTATION - 5.71%
4700 Kansas City Southern Industries Inc. ............. 279,944
----------
TOTAL COMMON STOCK (Cost $3,930,527) ....................... 4,906,940
MUTUAL FUNDS - 0.03%
147+ Schroder All Asia (Cost $1,629) .................. 1,354
----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-8-
<PAGE>
CROFT FUNDS CORPORATIONS
CROFT-LEOMINSTER VALUE FUND
SCHEDULE OF INVESTMENTS
April 30, 1999
- --------------------------------------------------------------------------------
SHARES MARKET VALUE
- ------ ------------
SHORT TERM INVESTMENTS - 0.42%
20,440 Star Treasury Fund (Cost $20,440) ................ $ 20,440
TOTAL INVESTMENTS
(Cost $3,952,596) ......................100.62% 4,928,734
Liabilities in excess of other assets ..(0.62%) (30,219)
------- ---------
TOTAL NET ASSETS .......................100.00% $ 4,898,515
======= ===========
<FN>
(1) Federal Tax Information: At April 30, 1999 the net
unrealized appreciation based on cost for Federal
Income tax purposes of $3,952,596 was as follows:
Aggregate gross unrealized appreciation for all
investments for which there was an excess of
value over cost $1,376,778
Aggregate gross unrealized depreciation for all
investments for which there was an excess of cost over value (400,640)
----------
Net unrealized appreciation $ 976,138
==========
+ Non-income producing security
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</FN>
</TABLE>
-9-
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in securities, at value (cost $3,952,596) (Note 2) .. $ 4,928,734
Receivable for securities sold .................................. 95,123
Dividends and interest receivable ............................... 1,998
Due from advisor (Note 3) ....................................... 3,465
-----------
Total assets ............................................ 5,029,320
-----------
LIABILITIES
Payables:
For redemptions .............................$ 108,761
Accrued expenses ............................ 22,044
-----------
Total liabilities .................................... 130,805
-----------
Net Assets .............................................. $ 4,898,515
===========
NET ASSETS CONSIST OF:
Additional paid in capital .............................. 4,078,622
Accumulated net realized loss from
investment transactions .............................. (156,245)
Net unrealized appreciation on investments .............. 976,138
-----------
Net Assets .............................................. $ 4,898,515
===========
Net asset value and redemption price per share
($4,898,515/294,147 shares
of capital stock outstanding) (Note 4) .................... $ 16.65
===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>
-10-
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER VALUE FUND
STATEMENT OF OPERATIONS
For the year ended April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Investment Income:
<S> <C>
Dividends ........................................................ $ 56,745
Interest ......................................................... 13,633
---------
Total income ............................................. 70,378
Expenses:
Investment advisory fee (Note 3) ................................. 54,584
Administration fee ............................................... 20,079
Legal Fees ....................................................... 25,904
Transfer agent fee ............................................... 9,594
Audit fee ........................................................ 8,474
Insurance ........................................................ 6,249
Custody fee ...................................................... 7,040
Distribution fee (Note 3) ........................................ 5,807
Printing ......................................................... 3,074
Registration Fees ................................................ 6,095
Trustee fee ...................................................... 408
Other ............................................................ 2,885
---------
Total expenses ........................................... 150,193
Less: Expense reimbursement .............................. (63,091)
---------
Net expenses ............................................. 87,102
---------
Net investment income (loss) ............................. (16,724)
---------
Net Realized and Unrealized Gains
(Losses) on Investments (Note 2)
Net realized loss from investment transactions ................... (156,944)
Net change in unrealized appreciation of investments ............. 7,115
---------
Net realized and unrealized loss on investments .......... (149,829)
---------
Net decrease in net assets resulting from operations ..... $(166,553)
=========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>
-11-
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the year For the year
ended ended
April 30, 1999 April 30, 1998
-----------------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
<S> <C> <C>
Net investment income (loss) ................................. $ (16,724) $ 175
Net realized gain (loss) from investment transactions ........ (156,944) 393,287
Net change in unrealized appreciation of investments ......... 7,115 773,296
----------- -----------
Net increase (decrease) in net assets resulting from
operations (166,553) 1,166,758
Distributions from net investment income ..................... 0 0
Distributions from net gain on investments ................... (105,002) (414,496)
----------- -----------
Net capital share transactions (Note 4) ...................... (93,167) 2,446,934
Net increase (decrease) in net assets ........................ (364,722) 3,199,196
NET ASSETS:
Beginning of year ............................................ 5,263,237 2,064,041
----------- -----------
End of year .................................................. $ 4,898,515 $ 5,263,237
=========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>
-12-
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER VALUE FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 1999
- --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION
The Croft-Leominster Value Fund (the "Fund"), is a managed portfolio of
the Croft Funds Corporation, is registered under the Investment Company Act of
1940, as amended, as a diversified, open-end management company. 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 invest 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.
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 the last bid price.
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 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.
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 and interest income is
recorded on an accrual basis. Discounts and premiums on securities purchased are
amortized over the life of the respective securities.
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 FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund retains Croft-Leominster Inc. (the "Adviser") as its
investment adviser. Under the terms of the management agreement, the Adviser
receives a fee, computed daily and payable monthly at the annual rate of .94% of
the Fund's average daily net asset value. Until December 31, 2001, the Adviser
guarantees that the overall expense ratio for the Fund, which exclude ordinary
brokerage commission incurred in the purchase or sale of portfolio securities,
will not exceed 1.50%. As a result, for the year ended April 30, 1999, the
Adviser accrued reimbursements to the Fund of $63,091.
-13-
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER VALUE FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 1999
- --------------------------------------------------------------------------------
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 April 30, 1999 the Fund accrued
distribution fees of $5,807.
Certain Directors and officers of the Corporation are interested
persons (as defined in the Investment Company Act of 1940) of the Corporation.
Each non-interested Director is entitled to receive an annual fee of $500 plus
expenses for services relating to the Corporation.
NOTE 4. CAPITAL SHARE TRANSACTIONS
At April 30, 1999 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 $4,097,768 for the Fund. Transactions in capital stock were as
follows:
<TABLE>
<CAPTION>
For the year For the year
ended ended
April 30, 1999 April 30, 1998
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares sold ............. 146,546 $ 2,269,700 131,285 $ 2,117,741
Shares issued in
reinvestment of dividends 7,044 103,048 26,843 399,689
Shares redeemed ......... (168,416) (2,465,915) (4,150) (70,496)
Net increase (decrease) . (14,826) $ (93,167) 153,978 $ 2,446,934
</TABLE>
NOTE 5. INVESTMENT TRANSACTIONS
Purchases and sales, excluding short term securities, for the year
ended April 30, 1999 aggregated $4,497,161, and $4,707,248, respectively, for
the Fund.
NOTE 6. DISTRIBUTIONS TO SHAREHOLDERS
During the year ended April 30, 1999, distributions of $0.24
aggregating $105,002 were declared from net realized gains.
-14-
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER VALUE FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 1999
- --------------------------------------------------------------------------------
NOTE 7. RECLASSIFICATIONS
In accordance with accounting pronouncements, the Fund has recorded a
reclassification in its capital accounts. As of April 30, 1999 the Fund recorded
permanent book/tax differences of ($16,549) from undistributed net investment
income to paid in capital. This reclassification has no impact on the net asset
value of the Fund and is designed generally to present undistributed income on a
tax basis which is considered to be more informative to shareholders.
-15-
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER VALUE FUND
FINANCIAL HIGHLIGHTS
(for a fund share outstanding throughout the period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the For the May 4, 1995*
year ended year ended year ended through
April 30, April 30, April 30, April 30,
1999 1998 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net asset value, beginning of period .......... $ 17.03 $ 13.32 $ 11.74 $ 10.00
------------ ------------ ------------ ------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income ................. (0.04) 0.00 0.04 0.10
Net realized and unrealized gain
on investments ................ (0.10) 5.49 2.11 1.75)
------------ ------------ ------------ ------------
Total from investment operations ...... (0.14) 5.49 2.15 1.85)
------------ ------------ ------------ ------------
LESS DISTRIBUTIONS:
Dividends from net investment income .. 0.00 0.00 (0.05) (0.07)
Distribution from realized gains
from security transactions .... (0.24) (1.78) (0.52) (0.04)
------------ ------------ ------------ ------------
Total distributions ................... (0.24) (1.78) (0.57) (0.11)
------------ ------------ ------------ ------------
Net asset value, end of period ................ $ 16.65 $ 17.03 $ 13.32 $ 11.74
============ ============ ============ ============
Total return** ................................ (0.63%) 43.14% 18.71% 18.57%
RATIOS/SUPPLEMENTAL DATA:
Net assets end of period (in 000's) ... 4,899 5,263 2,064 1,255
Ratio of expenses to average net assets
before reimbursement .......... 2.59% 2.75% 5.40% 1.50%^
Ratio of expenses to average net assets
after reimbursement ........... 1.50% 1.50% 1.50% 1.50 ^
Ratio of net investment income (loss)
to average net assets, ........ (0.29)% 0.00% 0.34% 0.89%^
Portfolio turnover rate ............... 89.33% 80.98% 105.72% 65.38%
<FN>
- ------------------
* Commencement of operations
** Based on net asset value per share
^ Annualized
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</FN>
</TABLE>
-16-
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and
Board of Directors
Croft-Leominster Value Fund:
We have audited the accompanying statement of assets and liabilities, including
the schedule of portfolio investments, of the Croft-Leominster Value Fund (one
of a series constituting the Croft Funds Corporation) as of April 30, 1999, and
the related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended, and
financial highlights for each of the three years 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 Fund's 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, 1999, 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 the
Croft-Leominster Value Fund of the Croft Funds Corporation as of April 30, 1999,
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the three years in the period 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
May 13, 1999
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<PAGE>
CROFT
LEOMINSTER
INC.
1-800-746-3322
