CROFT LEOMINSTER
INCOME FUND
SEMI-ANNUAL REPORT
OCTOBER 31, 2000
<PAGE>
December 26, 2000
Dear Fellow Shareholders,
From January 1, 2000 to December 26, 2000, your Croft-Leominster Income
Fund increased 1.2*%. The Fund's current yield is approximately 7.9%.
US economic growth has recently begun to show signs of slowing, and
there are indications that the domestic unemployment rate will continue to trend
up. Because of this, the Federal Reserve Bank has suggested that an economic
slowdown, not inflation, is now the biggest risk to the US economy. Although the
economy is not on the brink of a recession, the Federal Reserve Bank will not
hesitate to cut interest rates to stimulate growth and investment, in an effort
to prolong the long economic expansion. It is possible that we will see at least
a full percentage point cut in interest rates, and we are confident that a
meaningful rally in the corporate bond market will result.
In the meantime, however, the environment remains a challenging one for
corporate bond investors. We have been decreasing our exposure to lower quality
bond issues. The effect of this is two-fold. If the economy does encounter a
meaningful slowdown, lower credit quality issuers bear the most risk. Also, as
the bond market rallies, quality companies will perform solidly. The current
spread between governments and quality corporate bonds is very wide by
historical terms and should narrow over the next year.
As of November 30, 2000, the Income Fund has the following
characteristics: weighted average yield to maturity of 9.0%, weighted average
duration of 8.5 years and weighted average maturity of 19.5 years. We continue
to manage credit risk by investing for strong diversification. We hold 63
corporate bond issues, which are spread among 18 industries.
Thank you for your investment in the Croft-Leominster Income Fund.
With kindest regards,
Sincerely,
Kent 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.
-1-
<PAGE>
<TABLE>
<CAPTION>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
SHARES MARKET VALUE
------ ------------
COMMON STOCKS - 2.94%
Closed-End Funds - 2.53%
<C> <S> <C>
6,200 Alliance World Dollar Govt. II ..................... $52,700
4,500 Salomon Brothers Worldwide Income Fund ............. 51,750
10,300 Templeton Emerging Markets Income Fund ............. 99,781
-------
204,231
-------
Utilities - 0.41%
1,400 Edison International ............................... 33,425
-------
TOTAL COMMON STOCKS (Cost $262,501) .............................. 237,656
-------
PREFERRED STOCKS - 1.25%
2,820 Conseco Financing Trust, 8.70%, 09/30/28 ........... 33,664
2,100 Foster Wheeler Trust, 9.00%, 01/15/29 .............. 37,144
1,400 Oxy Capital Trust, 8.16%, 01/20/39 ................. 30,625
-------
TOTAL PREFERRED STOCKS (Cost $158,000) ........................... 101,433
-------
Principal Value
---------------
CORPORATE BONDS - 87.31%
Cable TV & Cellular Telephone - 4.69%
$185,000 CF Cable TV Inc. Senior Secured Notes,
9.125%, 07/15/07 ........................ $198,559
100,000 Tele-Communications Inc. Notes, 7.875%, 08/01/13 ... 100,009
80,000 Tele-Communications Inc. Senior Debentures, 8.75%,
02/15/23 ................................ 80,973
-------
379,541
-------
Capital Goods - 0.89%
69,000 Caterpillar Inc. Sinking Fund Debentures,
9.75%, 06/01/19 ......................... 72,061
-------
Chemicals - 3.87%
35,000 ARCO Chemical Co. Debentures, 9.90%, 11/01/00 ...... 35,000
65,000 ARCO Chemical Co. Debentures, 10.25%, 11/01/10 ..... 66,774
105,000 ARCO Chemical Co. Debentures, 9.80%, 02/01/20 ...... 102,473
75,000 Agrium Inc Debentures (Yankee), 7.80%, 02/01/27 .... 61,902
60,000 Millennium Amer. Senior Unsecured Notes,
7.625%, 11/15/26 ........................ 46,716
-------
312,865
-------
The accompanying notes are an integral part of these financial statements.
- 2 -
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
PRINCIPAL VALUE MARKET VALUE
--------------- ------------
Containers & Paper - 20.72%
$150,000 Abitibi-Consolidated, Debentures,
7.40%, 04/01/18 .................... $ 129,159
175,000 Champion International, Debentures,
7.625%, 09/01/23 ................... 155,951
46,000 Georgia Pacific Corp. Debentures,
9.875%, 11/01/21 ................... 47,120
380,000 Georgia Pacific Corp. Debentures,
9.625%, 03/15/22 ................... 379,278
700,000 Georgia Pacific Corp. Debentures,
9.125%, 07/01/22 ................... 694,324
50,000 Owens-Illinois Inc. Senior Unsecured
Debentures, 7.80%, 05/15/18 ........ 31,250
140,000 Stone Container Corp. Senior Subordinated
Debentures, 10.75%, 04/01/02 ....... 138,775
100,000 Stone Container Corp. Senior Subordinated
Units, 12.25%, 04/01/02 ............ 100,000
---------
1,675,857
---------
Electric & Gas Utilities - 3.46%
40,000 Houston Lighting & Power, 1st Mortgage,
8.75%, 03/01/22 ................... 40,776
70,000 Monongahela Power, 1st Mortgage,
8.625%, 11/01/21 .................. 72,913
115,000 Old Dominion Electric, 1st Mortgage,
8.76%, 12/01/22 ................... 118,335
50,000 Portland General Electric, 1st Mortgage,
7.75%, 04/15/23 ................... 48,129
---------
280,153
---------
Energy & Energy Services - 7.53%
65,000 Global Marine Inc., Notes,
7.00%, 06/01/28 .................... 57,447
50,000 Magnum Hunter Res, Debentures,
10.00%, 06/01/07 ................... 49,000
135,000 Mariner Energy Corp. Senior Subordinated
Notes, 10.50%, 08/01/06 ............ 129,600
100,000 Mobil Corp. Debentures,
8.00%, 08/12/32 .................... 104,927
240,000 Occidental Petroleum, Debentures,
7.20%, 04/01/28 .................... 218,958
50,000 YPF Sociedad Anonima, Notes,
8.00%, 02/15/04 .................... 49,140
---------
609,072
---------
Environmental Service/Pollution Control - 0.58%
50,000 Waste Management Inc. Debentures,
7.65%, 03/15/11 ................... 46,633
---------
Financial Services - 5.50%
100,000 Ace Capital Trust II, 9.70%, 04/01/30 ........... 105,181
123,000 Aetna Services Inc. Debentures, 8.00%, 01/15/17.. 120,390
95,000 Aetna Services Inc. Debentures, 7.25%, 08/15/23.. 88,724
105,000 Lincoln National Corp. Debentures,
9.125%, 10/01/24 .................. 112,654
20,000 Washington Mutual Cap Company Guarantee,
8.375%, 06/01/27 .................. 18,121
---------
445,070
---------
The accompanying notes are an integral part of these financial statements.
- 3 -
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
PRINCIPAL VALUE MARKET VALUE
--------------- ------------
Food & Drug Producers - 2.54%
$ 80,000 Borden Inc. Sinking Fund Debentures,
9.25%, 06/15/19 .................... $ 70,098
80,000 Dura Pharmaceuticals Convertible,
3.50%, 07/15/02 .................... 77,400
55,000 Rhone-Poulenc Rorer (Yankee) Debentures,
8.62%, 01/05/21 .................... 57,943
---------
205,441
---------
Gas & Gas Transmission - 1.61%
40,000 Bellwether Exploration Co. Senior
Subordinated, 10.875%, 04/01/07 .... 38,400
100,000 KN Energy Inc, Debentures,
7.25%, 03/01/28 .................... 91,911
---------
130,311
---------
Hotels & Motels - 0.88%
85,000 Starwood Hotel & Resorts Debentures,
7.75%, 11/15/25 ................... 71,543
---------
Industrial Goods - 11.87%
60,000 Crown Cork & Seal, Debentures,
8.00%, 04/15/23 .................. 31,773
75,000 Cummins Engine Company, Inc. Debentures (Puts),
6.75%, 02/15/27 .................. 69,518
85,000 National Equipment Services, Senior Subordinated
Notes, 10.00%, 11/30/04 .......... 51,425
50,000 Terex Corp. Company Guarantee, 8.875%, 04/01/08. 44,250
50,000 Tyco International Group SA Company Guarantee,
6.875%, 01/15/29 ................. 43,863
65,000 Westinghouse Electric Corp. Debentures,
8.625%, 08/01/12 ................. 68,449
670,000 Westinghouse Electric Corp. Debentures,
7.875%, 09/01/23 ................. 650,564
---------
959,842
---------
Media & Entertainment - 8.76%
200,000 CBS Inc. Senior Debentures, 8.875%, 06/01/22 .... 206,754
91,000 Granite Broadcasting, Senior Subordinated
Notes, 10.375%, 05/15/05 ................ 67,795
345,000 Time Warner Inc. Debentures, 9.15%, 02/01/23 .... 386,300
45,000 Time Warner Entertainment Senior Debentures,
8.375%, 03/15/23 ........................ 47,033
---------
707,882
---------
Metals & Mining - 6.02%
180,000 Alcan Aluminum Ltd. Debentures,
8.875%, 01/15/22 ........................ 190,491
285,000 USX Corp. Debentures, 8.50%, 03/01/23 ........... 296,801
---------
487,292
---------
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
PRINCIPAL VALUE MARKET VALUE
--------------- ------------
Miscellaneous Consumer Goods & Services - 0.94%
$ 10,000 Eastman Kodak Co. Notes, 9.375%, 03/15/03 ...... $ 10,448
75,000 Tenneco Packaging Debentures, 8.125%, 06/15/17.. 65,201
---------
75,649
---------
Retail Stores - 1.06%
115,000 Great Atlantic & Pacific Tea Co. Unsecured Notes,
7.75%, 04/15/07 ................... 78,678
30,000 Rite Aid Corp Notes, 7.125%, 01/15/07 .......... 7,350
---------
86,028
---------
Technology - 0.61%
50,000 Lockheed Martin Corp Company Guarantee,
7.65%, 05/01/16 ................... 49,426
---------
Telephones - 5.78%
50,000 BellSouth Telecommunications, Debentures,
7.875%, 08/01/32 .................. 48,119
125,000 GTE Corp. Debentures, 8.75%, 11/01/21 ........... 138,276
70,000 New York Telephone Co. Debentures,
9.375%, 07/15/31 .................. 74,065
17,096 Nynex Corp. Amortized Debentures,
9.55%, 05/01/10 ................... 18,259
135,000 U.S. West Communications, Debentures,
8.875%, 06/01/31 .................. 136,684
62,000 Williams Communication Group Senior Notes,
10.875%, 10/01/09 .................. 52,545
---------
467,948
---------
TOTAL CORPORATE BONDS (Cost $7,292,574) .................. 7,062,614
----------
SHORT TERM INVESTMENTS - 7.02%
Cash Equivalent - 4.55%
368,026 Firstar Treasury Fund (Cost $368,026) ........... 368,026
Commercial Paper - 2.47%
200,000 GE Capital Corp., 6.52%, 11/06/00
(Cost $200,000) ................................. 200,000
---------
The accompanying notes are an integral part of these financial statements.
- 5 -
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
PRINCIPAL VALUE MARKET VALUE
--------------- ------------
TOTAL SHORT TERM INVESTMENTS (Cost $568,026) ..................... $ 568,026
TOTAL INVESTMENTS (Cost $8,281,101) .. 98.52% 7,969,729
----- ---------
Other assets less liabilities ........ 1.48% 119,776
----- -------
TOTAL NET ASSETS .....................100.00% $ 8,089,505
======= ===========
<FN>
(1) Federal Tax Information: At October 31, 2000 the net unrealized appreciation
based on cost for Federal Income tax purposes of $8,343,558 was as follows:
Aggregate gross unrealized appreciation for all investments for
which there was an excess of value over cost ..... $ 215,845
Aggregate gross unrealized depreciation for all investments for
which there was an excess of cost over value ..... (589,674)
-----------
Net unrealized depreciation .............................. $ (373,829)
</FN>
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 6 -
<PAGE>
<TABLE>
<CAPTION>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
(Unaudited)
--------------------------------------------------------------------------------
Assets:
<S> <C>
Investments in securities, at value (cost $8,343,558) (Note 2) .. $ 7,969,729
Dividends and interest receivables .............................. 169,521
Fund shares sold ................................................ 1,805
Due from investment advisor ..................................... 1,776
Prepaid expenses ................................................ 7,576
-----------
Total Assets ............................................ 8,150,407
-----------
Liabilities:
Dividends payable .......................... 37,853
Accrued directors fees ..................... 744
Other accrued expenses ..................... 22,305
-----------
Total Liabilities ....................................... 60,902
-----------
Net Assets .............................................. $ 8,089,505
===========
Net Assets Consist of:
Additional paid in capital .............................. 9,125,110
Undistributed net investment loss ....................... (5,453)
Accumulated net realized loss from
investment transactions (Note 6) ................ (656,323)
Net unrealized depreciation on investments .............. (373,829)
-----------
Net Assets .............................................. $ 8,089,505
===========
Net asset value, redemption and offering price per share
($8,089,505/884,490 shares
of capital stock outstanding) (Note 4) $ 9.15
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 7 -
<PAGE>
<TABLE>
<CAPTION>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
STATEMENT OF OPERATIONS
For the six months ended October 31, 2000
(Unaudited)
--------------------------------------------------------------------------------
<S> <C>
Investment Income:
Interest ......................................................... $ 348,967
Dividends ........................................................ 20,721
---------
Total income ............................................. 369,688
Expenses:
Investment advisory fees (Note 3) ................................ 32,405
Administration fees (Note 4) ..................................... 13,121
Transfer agent fees .............................................. 5,991
Audit fees ....................................................... 5,880
Legal fees ....................................................... 4,333
Registration fees ................................................ 3,435
Insurance ........................................................ 3,007
Custody fees ..................................................... 1,960
Printing and postage expense ..................................... 857
Directors' fees .................................................. 245
Other expenses ................................................... 4,004
---------
Total expenses ........................................... 75,240
Less: Expense reimbursement (Note 3) ..................... (30,119)
---------
Net expenses ............................................. 45,121
---------
Net investment income .................................... 324,567
---------
Net Realized and Unrealized Gain
(Loss) on Investments (Note 2)
Net realized loss from investment transactions ................... (468,016)
Net change in unrealized depreciation on investments ............. 229,297
---------
Net realized and unrealized loss on investments .......... (238,719)
---------
Net increase in net assets resulting from operations ..... $ 85,848
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 8 -
<PAGE>
<TABLE>
<CAPTION>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
For the six
months ended For the year
October 31, 2000 ended
(Unaudited) April 30, 2000
----------- --------------
<S> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income ............................... $ 324,567 $ 689,042
Net realized loss from investment transactions ...... (468,016) (107,608)
Net change in unrealized appreciation
(depreciation) on investments ............... 229,297 (814,802)
----------- ------------
Net increase (decrease) in net assets resulting
from operations ............................. 85,848 (233,368)
Dividends and Distributions to Shareholders
Dividend from net investment income
($0.39 and 0.79 per share, respectively) .... (337,296) (701,930)
Capital Share Transactions
Net capital share transactions (Note 4) ............. 183,979 (1,028,911)
----------- ------------
Net decrease in net assets .......................... (67,469) (1,964,209)
Net Assets:
Beginning of Period ................................. 8,156,974 10,121,183
----------- ------------
End of Period (including undistributed net investment
loss of $5,453, and net investment income
of $7,276, respectively) .................... $ 8,089,505 $ 8,156,974
=========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 9 -
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
(Unaudited)
--------------------------------------------------------------------------------
NOTE 1. ORGANIZATION
The Croft-Leominster Income Fund (the "Fund"), a managed portfolio of the
Croft Funds Corporation, is a diversified open-end management investment company
registered under the Investment Company Act of 1940. The Fund is one of a series
of Funds of the Croft Funds Corporation, which also includes the
Croft-Leominster Value Fund. It was organized in 1994 to succeed to the business
of Croft-Leominster Inc.'s Leominster Income Limited Partnership, an investment
company organized as a limited partnership, which commenced operations January
1, 1992, for the purpose of investing the partners' capital in securities under
professional investment management. This succession occurred on May 4, 1995 when
the partnership's net assets aggregating $3,175,041 were transferred to the
Croft-Leominster Income Fund in exchange for 317,504 shares of the Fund's
capital stock. As a result of transferring such assets at their market value,
the change in unrealized appreciation of investments for the period, as shown in
the Statement of Operations will not equal the current unrealized appreciation
at April 30, 2000 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 that 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.
Securities for which market quotations are not readily available are valued at
fair value as determined in good faith by and under the direction 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 obligations having remaining
maturities of 60 days or less, are valued at amortized cost.
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. Federal income tax loss carryforwards generated in
prior years will be used to offset a portion of current year's net realized
gains.
- 10 -
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
(Unaudited)
--------------------------------------------------------------------------------
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 the 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 AGREEMENT 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 provides
portfolio management and makes day-to-day investment decisions for the Fund. For
its services as Adviser, the Fund pays 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 (excluding interest, taxes, brokerage commission and extraordinary
expenses) will not an annual rate of exceed 1.10%. As a result, for the six
months ended October 31, 2000, the Adviser accrued reimbursements to the Fund of
$30,119.
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.
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.
- 11 -
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
(Unaudited)
--------------------------------------------------------------------------------
Note 4. CAPITAL SHARE TRANSACTIONS
As of October 31, 2000, there were 30,000,000, $0.001 par value shares of
capital stock authorized for the Croft Funds Corporation, and capital paid-in
amounted to $9,125,110 for the Fund.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
October 31, 2000 April 30, 2000
(Unaudited)
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares sold .................... 11,574 $ 109,778 33,076 $ 330,901
Shares issued in reinvestment of
dividends ............... 28,084 259,232 70,385 697,538
Shares redeemed ................ (19,715) (185,524) (205,246) (2,057,350)
------- -------- -------- ----------
Net increase (decrease) ........ 19,943 $ 183,486 (101,785) $(1,028,911)
====== ========= ======== ===========
</TABLE>
NOTE 5. INVESTMENT TRANSACTIONS
During the six months ended October 31, 2000, the cost of purchases and the
proceeds of sales, excluding short-term securities, aggregated $1,436,593 and
$1,228,139, respectively.
NOTE 6. DISTRIBUTIONS TO SHAREHOLDERS
The Fund makes dividend distributions quarterly. During the six months ended
October 31, 2000, distributions of $0.39 aggregating $337,296 were declared from
net investment income.
NOTE 7. CARRYOVERS
At April 30, 2000, the Fund had unused capital loss carryforwards of
$141,295 available to offset future gains, if any, for Federal income tax
purposes. The capital loss carryforward expires in 2008.
- 12 -
<PAGE>
<TABLE>
<CAPTION>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
FINANCIAL HIGHLIGHTS
(For a fund share outstanding throughout each period)
Six Months
Ended
October 31, For the Fiscal Years Ended April 30,
2000 (a) 2000 1999 1998 1997 1996 (b)
-------- ---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .......... $ 9.43 $ 10.47 $ 10.95 $ 10.40 $ 10.25 $ 10.00
------------ ------------ ---------- --------- ------- ------------
Income (loss) from investment operations:
Net investment income (loss) .......... (0.01) 0.76 0.77 0.81 0.79 0.73
Net realized and unrealized gain
(loss) on investments ......... 0.12 (1.02) (0.46) 0.65 0.26 0.28
------------ ------------ ---------- --------- ------- ------------
Total from investment operations ...... 0.11 (0.26) 0.31 1.46 1.05 1.01
------------ ------------ ---------- --------- ------- ------------
Less distributions:
Dividends from net investment income .. (0.39) (0.78) (0.76) (0.78) (0.84) (0.73)
Distributions from net realized
capital gains from
security transactions ......... 0.00 0.00 (0.03) (0.13) (0.06) (0.03)
------------ ------------ ---------- --------- ------- ------------
Total distributions ................... (0.39) (0.78) (0.79) (0.91) (0.90) (0.76)
------------ ------------ ---------- --------- ------- ------------
Net asset value, end of period ................ $ 9.15 $ 9.43 $ 10.47 $ 10.95 $ 10.40 $ 10.25
============ ============ ========== ========= ========== ============
Total return (b) .............................. 1.17% (2.40%) 2.91% 14.36% 10.56% 10.17%
Ratios/Supplemental data
Net assets end of period (in 000Os) ... $ 8,090 $ 8,157 $ 10,121 $ 9,890 $ 7,419 $ 6,450
Ratio of expenses to average
net assets before reimbursement 1.83%(c) 1.79% 1.78% 1.59% 1.90% 1.10%(c)
Ratio of expenses to average
net assets after reimbursement 1.10%(c) 1.10% 1.10% 1.10% 1.10% 1.10%(c)
Ratio of net investment income
(loss) to average net assets
before reimbursement .......... 7.18%(c) 6.97% 6.47% 6.90% 6.76% 7.35%(c)
Ratio of net investment income
(loss) to average net assets,
after reimbursement ........... 7.91%(c) 7.66% 7.15% 7.38% 7.57% 7.35%(c)
Portfolio turnover rate ............... 16.08% 5.87% 13.45% 15.62% 13.73% 13.76%
<FN>
----------
(a) Unaudited.
(b) Based on net asset value per share and not annualized for any period less than 1 year.
(c) Annualized.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
-13-
<PAGE>
CROFT
LEOMINSTER
1-800-746-3322
<PAGE>
December 26, 2000
Dear Fellow Shareholders:
From January 1, 2000 to December 26, 2000, your Croft-Leominster Value
Fund has increased 12.9%. Over the same period, the S&P 500 Index has declined
(9.5%) and the Lipper Multi-Cap Value Index has returned 7.3%. The Lipper
Multi-Cap Value Index is how we are measured versus funds with the same
investment style. *
In our past letters to you, we highlighted our belief that many investors
were ignoring fundamentals and were placing bets on companies with extremely
high valuations. This has occurred several times in the past. Each of these
periods of investor speculation eventually ends and the over-valued companies
correct.
The NASDAQ Index, which contains a number of these companies, has declined
(38.7%) year to date. An even more speculative index, the Bloomberg US Internet
Index has declined (65.3%) year to date.
Our Value philosophy and patience have continued to be rewarded throughout
this market volatility. Our approach attempts to find those companies that are
selling at a discount to their intrinsic value based on future earnings, cash
flows and/or hidden assets. Many times these companies are out of favor with the
general investment community and offer compelling rewards vs. risks. This can
help to preserve investor principle when a correction occurs. The Value Fund has
the following characteristics:
Value Fund S&P 500 Index
---------- -------------
Estimated 2001 Price/Earnings 12.6 X 20.9 X
Estimated Growth Rate 11.2% 10.0 %
Yield 1.9% 1.2%
We have added several quality names to the portfolio since our last
letter. One of our larger purchases was Honeywell International Incorporated.
Honeywell's pending merger with General Electric, which is expected to close by
the second quarter of next year, is a great fit. The combination will add a
company that is well positioned to advantage from several macroeconomic trends,
such as strong markets for performance chemicals and robust demand for aerospace
products (Honeywell), with one long considered to be among the best-managed
companies in the world, if not the best overall. Eliminating one concern, GE CEO
Jack Welch has announced his successor, Jeffrey Immelt, a well-respected company
insider who should be able to continue to deliver results.
A second purchase was Chase Manhattan Corp. Chase, through its merger with
J.P. Morgan, will become the next global financial services powerhouse. By the
end of next year, we expect major cost saving synergies to materialize, as well
as major revenue growth resulting from cross selling of the two firms' financial
services. Chase is reporting stable credit quality, which puts the company ahead
of its peers. In addition, if the Federal Reserve begins to ease interest rates,
as is widely expected, not only will market sensitive revenues such as trading
commissions increase, but overall credit quality should improve, and earnings
estimates should prove conservative.
- 1 -
<PAGE>
We have also begun to sell some securities as they become fully valued, in
our opinion. An example is Meridian Resource Corp. Rallying commodity markets
and an improved earnings and cash flow picture has driven this small exploration
and production company's stock up about 200% in the last year. We felt, however,
that a price of $34 for a barrel of oil was unsustainable over the long term.
With oil prices most likely stabilizing at a lower level, large additional
upside is doubtful. For this reason, we have reduced our oil and gas company
holdings across the board.
We still believe that there is a place for technology and communication
companies in your fund, but recent months have seen us cut exposure to these two
areas, thus cutting your fund's volatility. We continue to seek exposure in
these areas with companies that are industry leaders, have quality earnings, are
reasonably valued within their sectors, and have good growth rates. We will
invest only in those companies that we feel will be in existence several years
from now.
We thank you for your investment in the Croft-Leominster Value Fund.
Sincerely,
Kent 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 and Poor's 500 (S&P 500) is an unmanaged index that is
widely recognized as an indicator of the overall market. The Lipper Multi-Cap
Value Index is comprised of stock funds investing in companies of various size,
normally those that are considered undervalued relative to major stock indexes
based on price-to-current-earnings and price-to-book ratios.
Comments about the Value Fund Portfolio and the S&P 500 are as of 12/26/00.
- 2 -
<PAGE>
<TABLE>
<CAPTION>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER VALUE FUND
SCHEDULE OF INVESTMENTS
October 31, 2000
(Unaudited)
--------------------------------------------------------------------------------
SHARES MARKET VALUE
------ ------------
COMMON STOCKS - 83.13%
Banks, S&L's and Brokers - 8.58%
<C> <S> <C>
500 Astoria Financial Corp. ............................ $18,750
1,100 Bank United Corp. .................................. 62,356
900 First Union Corp. .................................. 27,280
2,100 FleetBoston Financial Corp. ........................ 79,800
1,600 Mellon Financial Corp. ............................. 77,200
4,376 Washington Mutual Inc. ............................. 192,544
----------
457,930
----------
Basic Materials - 1.48%
9,000+ Bethlehem Steel Corp. .............................. 25,875
3,328 USX-U.S. Steel Group ............................... 53,040
----------
78,915
----------
Brazil - 0.19%
18,000+ Brazilian Investment Trust PLC ..................... 10,260
Capital Equipment - 6.69%
1,400 Eaton Corp. ........................................ 95,287
2,598 Honeywell International Inc. ....................... 139,805
1,300 Ingersoll-Rand Co. ................................. 49,075
700 Kennametal Inc. .................................... 20,562
1,239 PACCAR Inc. ........................................ 52,115
----------
356,844
----------
Chemicals - 3.87%
575 E.I. DuPont de Nemours & Co. ....................... 26,091
4,400 Lyondell Chemical Co. .............................. 63,250
578 Minnesota Mining & Manufacturing Co. ............... 55,849
3,400 PolyOne Corporation ................................ 26,775
800 Union Carbide Corp. ................................ 34,400
----------
206,365
-----------
Consumer Cyclicals - 2.57%
1,100 Ford Motor Company ................................. 28,738
2,716 Koninklijke Philips Electronics NV ................. 108,470
-----------
137,208
-----------
The accompanying notes are an integral part of these financial statements.
- 3 -
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER VALUE FUND
SCHEDULE OF INVESTMENTS
October 31, 2000
(Unaudited)
--------------------------------------------------------------------------------
SHARES MARKET VALUE
------ ------------
Consumer Nondurables - 0.54%
400 Procter & Gamble Co. ............................... $28,575
-----------
Consumer Services - 0.98%
2,458 Viad Corp. ......................................... 52,540
-----------
Containers & Paper- 0.35%
1,800+ Pactiv Corporation ................................. 18,900
-----------
Financial Services - 9.14%
1,400 Capital One Financial Corp. ........................ 88,375
4,100 Citigroup Inc. ..................................... 215,762
4,100 Stillwell Financial Inc. ........................... 183,731
-----------
487,868
-----------
Health Care - 1.29%
800 Becton, Dickinson and Co. .......................... 26,800
1,500 McKesson HBOC Inc. ................................. 42,094
-----------
68,894
-----------
Hotels and Motels - 1.44%
2,600 Starwood Hotels & Resorts Worldwide Inc. ........... 77,025
-----------
India - 0.56%
534+ India Growth Fund Inc. ............................. 5,440
700+ The India Fund Inc. ................................ 7,481
1,186+ Jardine Fleming India Fund ......................... 10,748
600+ Morgan Stanley India Investment Fund ............... 6,338
-----------
30,007
-----------
Insurance - 7.12%
4,500 ACE Ltd. ........................................... 176,625
1,500 Hartford Financial Services Group Inc. ............. 111,656
1,043 Lincoln National Corp. ............................. 50,455
2,100 Trenwick Group Ltd. ................................ 41,213
-----------
379,949
-----------
The accompanying notes are an integral part of these financial statements.
- 4 -
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER VALUE FUND
SCHEDULE OF INVESTMENTS
October 31, 2000
(Unaudited)
--------------------------------------------------------------------------------
SHARES MARKET VALUE
------ ------------
Media & Entertainment - 6.57%
1,700+ Big City Radio Inc. ................................ $ 5,525
300+ Cablevision Systems Cl A ........................... 22,350
282+ Clear Channel Communications Inc. .................. 16,938
800+ Fox Entertainment Group Inc. ....................... 17,200
500 News Corporation Ltd. ADR .......................... 21,500
4,699+ Viacom Inc. Cl-B ................................... 267,256
-----------
350,769
-----------
Multi-Industry - 10.39%
2,692+ SPX Corp. .......................................... 332,799
2,600 TRW Inc. ........................................... 109,200
2,000 Tyco International Ltd. ............................ 113,375
-----------
555,374
-----------
Natural Gas - 3.15%
500 Anadarko Petroleum Corp. ........................... 32,025
2,100 Burlington Resources Inc. .......................... 75,600
2,000+ Comstock Resources Inc. ............................ 20,750
2,398+ Pure Resources Inc. ................................ 39,567
-----------
167,942
-----------
Oil - 1.12%
400 Apache Corp. ....................................... 22,125
744 Devon Energy Corp. ................................. 37,498
-----------
59,623
-----------
Paper & Forest Products - 4.46%
3,000 Boise Cascade Corp. ................................ 86,063
11,261+ Smurfit-Stone Container Corp. ...................... 152,024
-----------
238,087
-----------
Pharmaceuticals - 3.65%
1,700 American Home Products Corp. ....................... 107,950
680+ Amgen Inc. ......................................... 39,397
1,100 Pfizer Inc. ........................................ 47,506
-----------
194,853
-----------
Retail - 1.63%
1,900 Lowe's Companies Inc. .............................. 86,806
-----------
The accompanying notes are an integral part of these financial statements.
- 5 -
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER VALUE FUND
SCHEDULE OF INVESTMENTS
October 31, 2000
(Unaudited)
--------------------------------------------------------------------------------
SHARES MARKET VALUE
------ ------------
Technology - 3.28%
300+ America Online Inc. ................................ $15,129
632 Computer Associates International Inc. ............. 20,145
698+ Flextronics International Ltd. ..................... 26,524
594 Corning Inc. ....................................... 45,441
450+ General Motors Corp.-Class H ....................... 14,580
200 International Business Machines Corp. .............. 19,700
600+ Oracle Corp. ....................................... 19,800
600+ Varian Semiconductor Equipment Associates Inc. ..... 13,800
-----------
175,119
-----------
Telephone & Cellular - 2.22%
1,230+ Qwest Communications International Inc. ............ 59,809
1,400 Williams Companies Inc. ............................ 58,538
-----------
118,347
-----------
Transportation - 0.17%
1,025+ Kansas City Southern Industries Inc. ............... 8,905
-----------
Utilities - 1.69%
1,300 Edison International ............................... 31,037
3,700+ Niagara Mohawk Holdings Inc. ....................... 59,200
-----------
90,237
-----------
TOTAL COMMON STOCK (Cost $3,025,476) ............................. 4,437,342
-----------
CONVERTIBLE PREFERRED STOCKS - 0.69%
700 Seagram Co. Ltd. "Aces"(Cost $29,046) .............. 36,750
-----------
MUTUAL FUNDS - 0.03%
147+ Schroder All Asia Fund Cl A (Cost $1,629) .......... 1,442
-----------
The accompanying notes are an integral part of these financial statements.
- 6 -
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER VALUE FUND
SCHEDULE OF INVESTMENTS
October 31, 2000
(Unaudited)
--------------------------------------------------------------------------------
SHARES MARKET VALUE
------ ------------
SHORT TERM INVESTMENTS - 16.28%
Cash Equivalent - 6.92%
369,216 Firstar Treasury Fund (Cost $369,216) .............. $369,216
Commercial Paper - 9.36%
500,000 GE Capital Corp., 6.52%, 11/06/00
(Cost $500,000) ................. 500,000
-----------
TOTAL SHORT TERM INVESTMENTS
(Cost $869,216) 869,216
TOTAL INVESTMENTS
(Cost $3,923,738) ............................ 100.13% 5,344,750
Cash and other assets less liabilities ....... (0.13)% (7,008)
------ -----------
TOTAL NET ASSETS ............................. 100.00% $ 5,337,742
====== ===========
<FN>
(1) Federal Tax Information: At October 31, 2000 the net unrealized
appreciation based on cost for Federal Income tax purposes of
$3,923,738 was as follows:
Aggregate gross unrealized appreciation for all investments for
which there was an excess of value over cost ................. $ 1,524,553
Aggregate gross unrealized depreciation for all investments for
which there was an excess of cost over value ................. (103,541)
-----------
Net unrealized appreciation ....................................... $ 1,421,012
===========
+ Non-income producing security.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 7 -
<PAGE>
<TABLE>
<CAPTION>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
(Unaudited)
--------------------------------------------------------------------------------
Assets:
Investments in securities, at value
<S> <C>
(cost $3,923,738) (Note 2) ...................................... $ 5,344,750
Dividends and interest receivables .............................. 6,890
Prepaid expenses ................................................ 9,732
Due from investment advisor ..................................... 3,506
-----------
Total Assets ............................................ 5,364,878
-----------
Liabilities:
Payable:
Securities purchased .......................... 12,050
Fund shares repurchased ....................... 962
Accrued directors fees ........................ 510
Accrued expenses and other liabilities ........ 13,614
--------
Total Liabilities ............................... 27,136
--------
Net Assets .............................................. $ 5,337,742
===========
Net Assets Consist of:
Additional paid in capital .............................. 4,074,184
Undistributed net investment loss ....................... (21,266)
Accumulated net realized loss from
investment transactions (Note 6) ................ (136,188)
Net unrealized appreciation on investments .............. 1,421,012
-----------
Net Assets .............................................. $ 5,337,742
===========
Net asset value, redemption and offering price per share
($5,337,742/294,325 shares
of capital stock outstanding) (Note 4) .................. $ 18.14
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 8 -
<PAGE>
<TABLE>
<CAPTION>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER VALUE FUND
STATEMENT OF OPERATIONS
For the six months ended October 31, 2000
(Unaudited)
--------------------------------------------------------------------------------
<S> <C>
Investment Income:
Dividends ....................................................... $ 29,443
Interest ........................................................ 11,474
-----------
Total income ............................................ 40,917
-----------
Expenses:
Investment advisory fees (Note 3) ............................... 24,305
Administration fees (Note 4) .................................... 10,395
Transfer agent fees ............................................. 5,692
Legal fees ...................................................... 4,811
Registration fees ............................................... 3,620
Custody fees .................................................... 3,387
Audit fees ...................................................... 3,366
Insurance ....................................................... 2,993
Printing and postage expenses ................................... 1,131
Other expenses .................................................. 2,673
-----------
Total expenses .......................................... 62,373
Less: Expense reimbursement (Note 3) ................... (23,589)
-----------
Net expenses ............................................ 38,784
-----------
Net investment income .................................. 2,133
-----------
Net Realized and Unrelaized Gains
(Losses) on Investments (Note 2)
Net realized loss from investment transactions .................. (119,552)
Net change in unrealized appreciation on investments ............ 444,874
-----------
Net realized and unrealized gain on investments ......... 325,322
-----------
Net increase in net assets resulting from operations .... $ 327,455
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 9 -
<PAGE>
<TABLE>
<CAPTION>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
For the six
months ended For the year
October 31, 2000 ended
(Unaudited) April 30, 2000
----------- --------------
Increase (Decrease) in Net Assets from Operations
<S> <C> <C>
Net investment income (loss) ........................ $ 2,133 $ (23,398)
Net realized gain (loss) from investment transactions (119,552) 144,911
Net change in unrealized appreciation
(depreciation) on investments ............... 444,874 (136,637)
----------- ------------
Net increase (decrease) in net assets resulting
from operations ............................. 327,455 (15,124)
Dividends and Distributions to Shareholders
Distributions from net gain on investments .......... 0 0
Capital Share Transactions
Net capital share transactions (Note 4) ............. 9,453 (19,194)
----------- ------------
Net increase (decrease) in net assets ............... 336,908 (34,318)
Net Assets:
Beginning of Period ................................. 4,864,197 4,898,515
----------- ------------
End of Period (including undistributed net investment
loss of $21,266, and $0, respectively) ...... $ 5,201,105 $ 4,864,197
=========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 10 -
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER VALUE FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
NOTE 1. ORGANIZATION
The Croft-Leominster Value Fund (the "Fund"), 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 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.
SECURITY VALUATION - Securities that are traded on any exchange or on the
NASDAQ over-the-counter market are valued at the last quoted sales price.
Investments for which no sale is reported are valued at the last bid price.
Short-term obligations having remaining maturities of 60 days or less, are
valued at amortized cost. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith by and under the
direction of Fund's 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 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, 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.
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 provides
portfolio management and makes day-to-day investment decisions for the Fund. For
its services as Adviser, the Fund pays a fee, computed daily and payable monthly
at the annual rate of 0.94% of the Fund's average daily net asset value. Until
December 31, 2001, the Adviser guarantees that the overall expenses of the Fund
(excluding interest, taxes, brokerage commissions and extraordinary expenses)
-11-
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER VALUE FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
will not exceed an annual rate of 1.50%. As a result, for the six months ended
October 31, 2000, the Adviser accrued reimbursements to the Fund of $23,589.
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 Corporation elected to waive the 12b-1 fee for the
fund on May 1, 1999. The 12b-1 fee will be waived into the foreseeable future;
however, the Corporation reserves the right to terminate the waiver and
reinstate the 12b-1 fee at any time in its sole discretion.
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 October 31, 2000, there were 30,000,000, $0.001 par value shares of
capital stock authorized for the Croft Funds Corporation, and capital paid-in
amounted to $4,074,184 for the Fund.
Transactions in capital stock were as follows:
Six Months Ended Year Ended
October 31, 2000 April 30, 2000
Shares Amount Shares Amount
------ ------ ------ ------
Shares sold ................. 15,709 $ 268,320 36,366 $ 568,874
Shares issued in reinvestment
of dividends 0 0 0 0
Shares redeemed ............. (15,006) (261,867) (36,891) (588,068)
------- --------- ------- ---------
Net increase (decrease) ..... 702 $ 9,453 (525) $ (19,194)
======= ========= ======= =========
NOTE 5. INVESTMENT TRANSACTIONS
During the six months ended October 31, 2000, the cost of purchases and
the proceeds from sales, other than short-term securities, aggregated 1,117,523
and $1,764,587, respectively.
NOTE 6. DISTRIBUTION TO SHAREHOLDERS
During the six months ended October 31, 2000, the Fund did not declare any
dividends.
- 12 -
<PAGE>
<TABLE>
<CAPTION>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER VALUE FUND
FINANCIAL HIGHLIGHTS
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
--------------------------------------------------------------------------------
Six Months
Ended
October 31, For the Fiscal Years Ended April 30,
2000 (a) 2000 1999 1998 1997 1996 (b)
-------- ---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.57 $16.65 $17.03 $13.32 $11.74 $10.00
------- ------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income (loss) $ 0.09 (0.08) (0.04) 0.00 0.04 0.10
Net realized and unrealized gain
(loss) on investments 1.48 0.00 (0.10) 5.49 2.11 1.75
------- ------ ------ ------ ------ ------
Total from investment operations 1.57 (0.08) (0.14) 5.49 2.15 1.85
------- ------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income 0.00 0.00 0.00 0.00 (0.05) (0.07)
Distributions from net realized capital
gains from security transactions 0.00 0.00 (0.24) (1.78) (0.52) (0.04)
------- ----- ------ ------ ------ ------
Total distributions 0.00 0.00 (0.24) (1.78) (0.57) (0.11)
------- ------ ------ ------ ------ ------
Net asset value, end of period $ 18.14 $16.57 $16.65 $17.03 $13.32 $11.74
======= ====== ====== ====== ====== ======
Total return (c) 9.47% (0.48%) (0.63%) 43.14% 18.71% 18.57%
Ratios/Supplemental data
Net assets end of period (in 000's) $5,338 $4,864 $4,899 $5,263 $2,064 $1,255
Ratio of expenses to average net
assets before reimbursement 2.41%(d) 2.47% 2.59% 2.75% 5.40% 1.50%(d)
Ratio of expenses to average net
assets after reimbursement 1.50%(d) 1.50% 1.50% 1.50% 1.50% 1.50%(d)
Ratio of net investment income
(loss) to average net assets
before reimbursement (0.83%)(d) (1.01%) (1.37%) (1.25%) (3.56%) 0.89%(d)
Ratio of net investment income
(loss) to average net assets,
after reimbursement 0.08%(d) (0.49%) (0.29%) 0.00% 0.34% 0.89%(d)
Portfolio turnover rate 23.71% 55.66% 89.33% 80.98% 105.72% 65.38%
<FN>
----------
(a) Unaudited.
(b) For the period May 4, 1995 (commencement of operations) to April 30, 1996.
(c) Based on net asset value per share.
(d) Not annualized.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 13 -
<PAGE>
CROFT LEOMINSTER
VALUE FUND
1-800-746-3322
