SEMIANNUAL REPORT
March 31, 1998
FMI
Focus Fund
A NO-LOAD
MUTUAL FUND
FMI Focus Fund
MAY 13, 1998
THE VALUE OF A $10,000 INVESTMENT IN THE FMI FOCUS FUND FROM ITS INCEPTION
(12/16/96) TO 3/31/98 AS COMPARED TO THE STANDARD & POOR'S 500 AND THE RUSSELL
2000
FMI Focus Fund Standard & Poor's 500 Russell 2000
-------------- --------------------- ------------
12/16/96 $10,000 $10,000 $10,000
12/31/96 $10,250 $10,280 $10,350
3/31/97 $10,742 $10,547 $9,812
6/30/97 $12,719 $12,393 $11,401
9/30/97 $16,814 $13,335 $13,100
12/31/97 $17,402 $13,708 $12,668
3/31/98 $19,891 $15,627 $13,947
Results From Fund Inception (12/16/96) Through 3/31/98
Annualized
Total Return*<F1>
Through 3/31/98
Total Return*<F1> From Fund
Last 3 Months Inception 12/16/96
------------- ------------------
FMI Focus Fund 14.3% 70.5%
Standard &Poor's 500 14.0% 41.4%
Russell 2000 10.1% 29.5%
*<F1>Total return includes change in share prices and in each case includes
reinvestments of any dividends, interest and capital gain distributions.
Dear Fellow Shareholder:
The FMI Focus Fund is off to a good start in 1998. For the first quarter
ending March 31st, the Fund gained 14.3%, which compares favorably to the 10.1%
advance for the Russell 2000, 14.0% for the Standard & Poor's 500, and 12.1% for
the median capital appreciation fund, according to Lipper Analytical Services.
For the twelve months ending March 31st, the Fund increased in value by 85.1%,
ranking it first among 232 funds in the capital appreciation category!
For the quarter, we were pleased to have performed as well as we did given
that much of the "action" took place in the very large capitalization stocks and
the rapidly growing but richly valued sector of the market. Our area of focus,
smaller, reasonably valued companies, did not attract as much investor
attention, and as a group, lagged the market. So while the general market
indices exhibited robust performance, the strength was exaggerated by a few
exceptional sectors. As an example, the 23.24% gain posted by the NASDAQ 100
(100 largest NASDAQ companies) vastly out paced the 10.30% advance by the
Russell 2000 (smaller company index.)
To use a fishing metaphor, the fish were only nibbling in our smaller cap,
reasonably valued pond while they were practically jumping into the boat in the
larger cap and high P/E, rapidly growing ponds.
Fortunately, we know our pond well enough to still have found a few
productive areas and managed to beat many of the general averages, even if it
wasn't by as wide a margin as in some of the previous quarters. As we have
noted many times in the past, we are significant shareholders in the Fund, which
results in a sensible and disciplined approach. We are not about to jump into
another pond that we don't know well, just because the fishing is hot at the
moment. We feel very good about the prospects for the stocks in our portfolio
and have been around long enough to know that the action will cycle around our
pond again.
Continuing with the fishing metaphor, no "lunkers" were pulled in this
quarter, but we did enjoy a handful of "keepers", including insurance companies:
Amerin Corporation, Ambac Financial, and Delphi Financial; Texas banks Prime
Bancshares and Southwest Bancorporation; specialty chemical manufacturer
Minerals Technologies; and finally, General Cable and Superior Telecom, both
manufacturers of wire and cable. Superior Telecom is now the Fund's largest
position, at approximately 9% of assets as of mid-April, and is our featured
stock for this quarterly report. But before we review it, just a quick note on
how the portfolio is structured.
There were forty-five companies in the Fund as of the end of the quarter,
clearly a greater number than in the recent quarters, and on the surface, more
diversified than one might anticipate with a so-called Focused Fund. However,
certain concentrations are still quite prevalent. Financial Services, for
example, still comprise about a third of the portfolio, a "big bet", but down
from as high as 50% of the portfolio in previous quarters. In part, this is due
to the substantial appreciation the group has enjoyed. We have culled some of
the fully valued positions and begun to replace them with more attractive
opportunities. This has meant trading down in market cap to smaller companies
where we still find bargains. But this requires some patience as the smaller
stocks are often illiquid and take time to accumulate. Hence, we have taken a
"package approach" in this area. Inherently, this means more individual company
investments. With the "package approach" we tend to look at the collection as
one position. Except for the occasional buyout, these stocks tend to move
together.
We would also point out that the top 15 positions account for about fifty-
five percent of the portfolio. Again, much more concentrated than the average
fund, but less concentrated than we have been in the past. The principal reason
for this, in addition to the above discussion on financials, is that
opportunities like Bucyrus International or Commence Clearing House, big winners
for us in the past, simply don't come around that often. The circumstances
leading us to make a 15% to 20% "bet" tend to be extraordinary. The risk reward
characteristics must be outstanding. We really don't expect this type of
situation to occur more than a couple of times every several years. But the
beauty of our non-diversified charter is that when they do, we really "load up".
We are on the hunt for the next "big one", which again, explains why we are
less concentrated than we would ideally like to be. One to keep an eye on,
though, is our old friend Raychem, featured in the last shareholder's report.
The company possesses a terrific portfolio of businesses, effective and
shareholder oriented management and is very cheap at 14 times free cash flow
(even after capital spending requirements). The company also continues to buy
back significant amounts of it's own stock. However, the progress the company
has made in recent years is being obscured by currency translations due to the
strength of the U.S. dollar and higher reported tax rate. Note though, that
cash taxes are still quite low. Concerns about Asian exposure, which represents
about 20% of the company's revenue, are also weighing on the share price. If
the selling pressure continues yet the fundamentals stay largely intact, we will
likely add to the position. If Wall Street gives up on the stock and creates a
selling panic, in the meantime we will be waiting with our bucket. Stay tuned!
Now, on to Superior Telecom.
Superior Telecom Inc., is the leading domestic manufacturer of copper
telecommunications wire and cable products for the local loop segment of the
telecommunications network. The company holds about a 40% market share of the
copper phone lines that run between the local, central switching office and the
telephone or the computer in your home or office.
Copper wire is enjoying a renaissance. Strong demand is being driven by
record telephone access line growth as consumers are installing additional lines
for internet access, dedicated fax and computer lines, especially for home
offices, and second phone lines for children.
As well, advanced digital technologies, such as xDSL, have expanded the
bandwidth capacity of the existing copper cable infrastructure and has given the
RBOC's, or Regional Bell Operating Companies renewed optimism with respect to
the competitiveness of copper vis-a-vis Fiber and CATX Coaxial Cable. The
Regional Bell Operating Companies have responded by spending more money on
maintenance, repair, and upgrades which can account for as much as 50% total
copper wire demand (new access lines accounting for the other 50%). We believe
the company can grow earnings 15% to 20% annually over the next few years. The
company is well managed, generates tremendous free cash flow, and is reasonably
valued at seventeen times our 1998 earnings estimate.
In closing, we want to thank Dave Campbell of Keefe, Bruyette and Woods, Inc.
for bringing the Texas banks to our attention. They have been terrific winners
for us. And Glen Primack of Cleary Gull, Reiland and McDevitt for the Superior
Telecom idea. As always thanks to the FMI Focus Fund shareholders for your
continuing support.
Sincerely,
/s/ Ted D. Kellner /s/ Richard E. Lane
Ted D. Kellner, C.F.A. Richard E. Lane, C.F.A.
President Portfolio Manager
225 E. Mason St. o Milwaukee, WI 53202 o 414-226-4555
FMI Focus Fund
STATEMENT OF NET ASSETS
March 31, 1998 (Unaudited)
SHARES OR QUOTED
PRINCIPAL MARKET
AMOUNT COST VALUE
------ ------ ------
COMMON STOCKS -- 101.4% (A)<F3>
BANKS & FINANCIAL SERVICES -- 15.3%
5,000 Amcore Financial Inc. $ 121,675 $ 135,000
4,000 Associated Banc-Corp. 167,165 215,752
8,300 Bay Bancshares, Inc. 134,675 182,600
19,200 Blackhawk Bancorp, Inc. 255,375 288,000
10,000 Local Financial*<F2>(b)<F4> 100,000 115,000
14,000 Midwest Banc Holdings, Inc. 210,000 248,500
8,000 National City Bancorporation*<F2> 242,000 271,000
18,000 Prime Bancshares, Inc. 332,500 461,250
6,000 Southwest Bancorporation
of Texas, Inc.*<F2> 157,500 237,750
4,000 Union Bankshares Ltd.* <F2> 102,500 115,000
8,100 Willis Lease Finance Corp.*<F2> 121,500 181,237
---------- ----------
1,944,890 2,451,089
CABLE TELEVISION -- 3.4%
30,000 Jones Intercable Inc. Cl A*<F2> 466,120 547,500
CHEMICAL/SPECIALTY MATERIALS -- 4.3%
3,000 H.B. Fuller Co. 171,180 179,625
10,000 Minerals Technologies Inc. 422,192 503,750
---------- ----------
593,372 683,375
COMPUTERS & ELECTRONICS -- 14.3%
20,000 Berg Electronics Corp.*<F2> 449,340 513,760
10,000 Icon CMT Corp.*<F2> 162,060 155,000
22,000 MicroTouch Systems, Inc.*<F2> 360,944 423,500
10,000 Molex Inc. Class A 265,100 268,130
4,000 Sanmina Corp.*<F2> 280,519 279,752
5,000 Thomas & Betts Corporation 239,112 320,000
14,000 Tollgrade CommunicationsInc.*<F2> 302,250 322,000
---------- ----------
2,059,325 2,282,142
CONSUMER PRODUCTS/RETAILING -- 8.7%
20,000 International Game Technology 521,512 500,000
19,000 Jostens, Inc. 425,546 456,000
10,000 Ross Stores, Inc. 417,798 441,250
---------- ----------
1,364,856 1,397,250
HEALTH INDUSTRIES -- 5.3%
26,875 Covance Inc.*<F2> 477,039 660,131
15,000 Diagnostic Health
Services, Inc.*<F2> 210,000 191,250
---------- ----------
687,039 851,381
INDUSTRIAL PRODUCTS -- 14.8%
12,000 Bandag, Inc. Class A 570,720 639,756
5,000 Essex International, Inc.*<F2> 200,825 197,500
10,000 FARO Technologies, Inc.*<F2> 117,500 120,000
8,900 General Cable Corp. 277,503 403,838
24,000 Raychem Corp. 923,440 997,512
---------- ----------
2,089,988 2,358,606
INSURANCE -- 16.7%
7,000 American Safety
Insurance Group, Ltd.*<F2> 82,625 94,500
6,000 Ambac Financial Group, Inc. 279,798 350,628
35,000 Amerin Corporation*<F2> 971,988 1,054,375
10,000 Delphi Financial Group, Inc.*<F2> 406,075 532,500
6,000 Financial Industries Corp.*<F2> 114,750 123,750
13,000 Motor Club of America*<F2> 186,250 222,625
11,000 Stirling Cooke Brown Holdings 278,058 291,500
---------- ----------
2,319,544 2,669,878
MEDIA/COMMUNICATION -- 16.8%
10,000 ADC Telecommunications, Inc.*<F2> 198,437 275,630
23,300 Anixter International Inc.*<F2> 385,048 429,605
19,000 Imax Corporation*<F2> 423,914 539,125
25,000 Paging Network, Inc.*<F2> 277,925 384,375
10,000 PairGain Technologies, Inc.*<F2> 211,819 240,000
19,500 Superior TeleCom Inc. 598,098 814,125
---------- ----------
2,095,241 2,682,860
PRINTING/PUBLISHING/FORMS -- 1.8%
20,000 PRIMEDIA Inc.*<F2> 276,681 293,760
---------- ----------
Total common stocks 13,897,056 16,217,841
---------- ----------
SHORT-TERM INVESTMENTS -- 0.0% (A)<F3>
VARIABLE RATE DEMAND NOTES
$2,798 General Mills, Inc. 2,798 2,798
---------- ----------
Total investments $13,899,854 16,220,639
----------
----------
Liabilities, less cash and
receivables (1.4%)(A)<F3> (226,891)
----------
Net Assets $15,993,748
----------
----------
Net Asset Value Per Share
($0.01 par value 500,000,000
shares authorized), offering
and redemption price
($15,993,748 / 947,654
shares outstanding) $16.88
----------
----------
*<F2>Non-income producing security.
(a)<F3> Percentages for the various classifications relate to net assets.
(b)<F4> As of March 31, 1998, the security was illiquid and unregistered and
was valued at fair value as discussed in footnote (1)(a). However, effective
April 22, 1998, the security has been registered.
The accompanying notes to financial statements are an integral part of this
statement.
FMI Focus Fund
STATEMENT OF OPERATIONS
For the Period Ending March 31, 1998 (Unaudited)
INCOME:
Dividends $ 29,373
Interest 3,009
-----------
Total income 32,382
-----------
EXPENSES:
Management fees 55,024
Professional fees 31,542
Registration fees 17,739
Administrative services 9,552
Printing and postage expenses 7,137
Custodian fees 6,559
Transfer agent fees 5,604
Amortization of organizational expenses 2,977
Other expenses 3,545
-----------
Total operating expenses before interest
expense, dividends on short positions
and reimbursement 139,679
Interest expense $ 23,788
Dividends on short positions -0-
-----------
Total interest expense and
dividends on short positions 23,788
-----------
Total expenses before reimbursement 163,467
Less expenses assumed by adviser (8,422)
-----------
Net expenses 155,045
NET INVESTMENT LOSS (122,663)
-----------
Net realized gain on investments 215,413
Net realized loss on short positions (74,248)
-----------
NET REALIZED GAIN ON INVESTMENTS AND
SHORT POSITIONS 141,165
NET INCREASE IN UNREALIZED
APPRECIATION ON INVESTMENTS 1,914,986
-----------
NET GAIN ON INVESTMENTS AND SHORT POSITIONS 2,056,151
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,933,488
-----------
-----------
The accompanying notes to financial statements are an integral part of this
statement.
FMI Focus Fund
STATEMENTS OF CHANGES IN NET ASSETS For the Period Ending March 31, 1998
(Unaudited) and For the Period from December 16, 1996 (commencement of
operations) to September 30, 1997
1998 1997
---------- ----------
OPERATIONS:
Net investment loss $(122,663) $ (20,220)
Net realized gain on investments
and short positions 141,165 524,136
Net increase in unrealized
appreciation on investments 1,914,986 405,799
---------- ----------
Net increase in net assets
resulting from operations 1,933,488 909,715
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Distribution from net investment
income ($0.015 per share) -- (818)
Distributions from net realized
gains ($0.4782 and $1.8971
per share, respectively) (278,771) (355,365)
---------- ----------
Total distributions (278,771) (356,183)*<F5>
---------- ----------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (597,159 and
316,306 shares, respectively) 9,180,899 4,178,695
Net asset value of shares
issued in distributions (15,049 and
24,644 shares, respectively) 215,951 339,335
Cost of shares redeemed (14,453 and
1,071 shares, respectively) (214,113) (15,268)
---------- ----------
Net increase in net assets derived
from Fund share activities 9,182,737 4,502,762
---------- ----------
TOTAL INCREASE 10,837,454 5,056,294
NET ASSETS AT THE BEGINNING OF THE PERIOD 5,156,294 100,000
---------- ----------
NET ASSETS AT THE END OF THE PERIOD $15,993,748 $ 5,156,294
---------- ----------
---------- ----------
*<F5>Total distributions consists entirely of ordinary income, of which 2% is
eligible for the corporate dividends received deduction.
The accompanying notes to financial statements are an integral part of these
statements.
FMI Focus Fund
FINANCIAL HIGHLIGHTS
(Selected Data for each share of the Fund outstanding throughout each period)
(UNAUDITED)
FOR THE PERIOD FOR THE PERIOD FROM
ENDING DECEMBER 16, 1996+<F6> TO
MARCH 31, 1998 SEPTEMBER 30, 1997
-------------- ---------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 14.74 $ 10.00
Income from investment operations:
Net investment loss (a)<F9> (0.09) (0.04)
Net realized and unrealized gains
on investments
and short positions 2.71 6.69
--------- --------
Total from investment operations 2.62 6.65
Less distributions:
Dividend from net investment income -- (0.01)
Distributions from net realized gains (0.48) (1.90)
---------- --------
Total from distributions (0.48) (1.91)
---------- --------
Net asset value, end of period $ 16.88 $ 14.74
--------- --------
--------- --------
TOTAL INVESTMENT RETURN 18.3%*<F7> 68.0%*<F7>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's $) 15,995 5,156
Ratio of operating expenses
(after reimbursement) to average
net assets (b)<F10> 2.74%**<F8> 2.75%**<F8>
Ratio of interest expense and
dividends on short positions
to average net assets 0.50%**<F8> 0.17%**<F8>
Ratio of net investment loss to
average net assets (c)<F11> (2.07%)**<F8> (1.85%)**<F8>
Portfolio turnover rate 186.8% 298.2%
Average commission rate paid $0.0599 $0.0758
+<F6>Commencement of operations.
*<F7>Not annualized.
**<F8>Annualized.
(a)<F9>Net investment loss before interest expense and dividends on short
positions for the period ended March 31, 1998 and
September 30, 1997 was ($0.07) and ($0.04), respectively.
(b)<F10>Computed after giving effect to adviser's expense limitation
undertaking. If the Fund had paid all of its expenses for the period ended
March 31, 1998 and September 30, 1997, the ratio would have been 2.92%**<F8> and
6.38%**<F8>, respectively.
(c)<F11>Computed after giving effect to adviser's expense limitation
undertaking. If the Fund had paid all of its expenses for the period ended
March 31, 1998 and September 30, 1997, the ratio would have been (2.24%)**<F8>
and (5.48%)**<F8>, respectively.
The accompanying notes to financial statements are an integral part of this
statement.
FMI Focus Fund
NOTES TO FINANCIAL STATEMENTS
March 31, 1998 (Unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES --
The following is a summary of significant accounting policies of the FMI
Focus Fund (the "Fund"), a portfolio of FMI Funds, Inc. (the "Company") which
is registered under the Investment Company Act of 1940. The Company was
incorporated under the laws of Maryland on September 5, 1996 and the Fund
commenced operations on December 16, 1996. The investment objective of the
Fund is to seek capital appreciation principally through investing in common
stocks and warrants, engaging in short sales, investing in foreign securities
and effecting transactions in stock index contracts, options and stock index
futures contracts, and options on securities and stock indexes.
(a) Each security, including securities sold short, but excluding short-term
investments, is valued at the last sale price reported by the principal
security exchange on which the issue is traded. Common stocks which are
listed on a national securities exchange or the Nasdaq Stock Market but
which were not traded on the valuation date are valued at the most recent
bid price. Securities sold short which are listed on a national securities
exchange or the Nasdaq Stock Market but which were not traded on the
valuation date are valued at the most recent ask price. Unlisted equity
securities for which market quotations are readily available are valued at
the most recent bid price. Options purchased or written by the Fund are
valued at the average of the most recent bid and ask prices. Securities for
which quotations are not readily available are valued at fair value as
determined by the investment adviser under the supervision of the Board of
Directors. Short-term investments are valued at amortized cost which
approximates quoted market value. Investment transactions are recorded no
later than the first business day after the trade date.
(b) Net realized gains and losses on common stock are computed on the basis of
the cost of specific certificates.
(c) Provision has not been made for Federal income taxes since the Fund has
elected to be taxed as a "regulated investment company" and intends to
distribute substantially all net investment company taxable income and net
capital gains to its shareholders and otherwise comply with the provisions
of the Internal Revenue Code applicable to regulated investment companies.
(d) Dividend income is recorded on the ex-dividend date. Interest income is
recorded on the accrual basis.
(e) The Fund has investments in short-term variable rate demand notes, which
are unsecured instruments. The Fund may be susceptible to credit risk with
respect to these notes to the extent the issuer defaults on its payment
obligation. The Fund's policy is to monitor the creditworthiness of the
issuer and does not anticipate nonperformance by these counterparties.
(f) Generally accepted accounting principles require that permanent financial
reporting and tax differences be reclassified to capital stock.
(g) 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 these estimates.
(h) The Fund may sell securities short. For financial statement purposes, an
amount equal to the settlement amount would be included in the Statement of
Assets and Liabilities as a liability. The amount of the liability is
subsequently marked-to-market to reflect the current value of the short
position. Subsequent fluctuations in the market prices of securities sold,
but not yet purchased, may require purchasing the securities at prices which
may differ from the market value reflected on the Statement of Assets and
Liabilities. The Fund is liable for any dividends payable on securities
while those securities are in a short position. As collateral for its short
positions, the Fund is required under the 1940 Act to maintain segregated
assets consisting of liquid securities. These segregated assets are required
to be adjusted daily to reflect changes in the value of the securities sold
short. As of March 31, 1998 there were no short positions in the Fund.
(2) INVESTMENT ADVISER AND MANAGEMENT AGREEMENT AND TRANSACTIONS WITH RELATED
PARTIES --
The Fund has a management agreement with Fiduciary Management, Inc. ("FMI"),
with whom certain officers and directors of the Fund are affiliated, to serve
as investment adviser and manager. Under the terms of the agreement, the Fund
paid FMI, for the period from October 1, 1997 through December 31, 1997, a
monthly management fee at the annual rate of 1% of the daily net assets.
Effective January 1, 1998 the Fund will pay monthly management fee of 1.25% of
the daily net assets. The Fund has an administrative agreement with FMI to
supervise all aspects of the Fund's operations except those performed by FMI
pursuant to the management agreement. Under the terms of the agreement, the
Fund will pay FMI a monthly administrative fee at the annual rate of 0.2% of
the daily net assets up to and including $30,000,000, 0.1% on the next
$70,000,000 and 0.05% of the daily net assets of the Fund in excess of
$100,000,000.
As required under the management agreement, FMI has reimbursed the Fund for
expenses over 2.75% of the daily net assets of the Fund. These reimbursements
amounted to $8,422 for the period ended March 31, 1998.
(3) CREDIT FACILITY --
Firstar Bank Milwaukee, NA has made available to the Fund a $1,000,000 credit
facility pursuant to a Credit Agreement ("Agreement") dated August 21, 1997
(subsequently amended) for the purpose of purchasing portfolio securities.
The Agreement is renewed annually each August. Principal and interest of each
loan under the Agreement are due not more than 90 days after the date of the
loan. Amounts under the credit facility bear interest at a rate per annum
equal to the prime rate (8.50% on March 31, 1998) on the amount borrowed.
Additionally, the Fund pays a commitment fee of 0.25% of the commitment and an
unused line fee of 0.25% of the unused amount of the facility. Advances are
collateralized by securities owned by the Fund. During the period September
30, 1997 through March 31, 1998, the Fund had an outstanding average daily
balance of $476,511 under the Agreement. The maximum amount outstanding
during that period was $1,950,000. Interest expense amounted to $23,788 for
the period ended March 31, 1998. At March 31, 1998, the Fund had a loan
payable balance of $375,000, and the securities collateralizing the Agreement
amounted to $7,853,832.
Pursuant to the 1940 Act, the Fund is required to satisfy asset coverage
requirements on its outstanding borrowings. At March 31, 1998, the Fund
satisfied all asset coverage requirements of the 1940 Act.
(4) DISTRIBUTION TO SHAREHOLDERS --
Net investment income and net realized gains are distributed to shareholders.
On December 29, 1997, the Fund distributed $278,771 from net short-term
realized gains ($0.4782 per share). The distribution was paid on December 30,
1997, to shareholders of record on December 26, 1997.
(5) DEFERRED EXPENSES --
Organizational expenses were deferred and are being amortized on a straight-
line basis over a period of five years beginning with the date of sales of
shares to the public. These expenses were advanced by the Adviser who will be
reimbursed by the Fund over a period of five years. The proceeds of any
redemption of the initial shares by the original shareholder will be reduced
by a pro-rata portion of any then unamortized deferred expenses in the same
proportion as the number of initial shares being redeemed bears to the number
of initial shares outstanding at the time of such redemption. The unamortized
organizational expenses at March 31, 1998 were $22,326.
(6) INVESTMENT TRANSACTIONS --
For the period ending March 31, 1998, purchases and proceeds of sales of
investment securities (excluding short-term investments) were $27,798,959 and
$19,103,582, respectively.
(7) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES --
As of March 31, 1998, liabilities of the Fund included the following:
Loan payable $ 375,000
Payable to brokers for securities purchased 159,426
Payable to FMI for management, administrative
fees and deferred expenses 40,480
Interest payable on loan payable 3,732
Other liabilities 6,101
(8)SOURCES OF NET ASSETS --
As of March 31, 1998, the sources of net assets were as follows:
Fund shares issued and outstanding $13,659,487
Net unrealized appreciation on investments 2,320,785
Accumulated net realized gains on investments 13,476
----------
$15,993,748
----------
----------
Aggregate net unrealized appreciation as of March 31, 1998, consisted of the
following:
Aggregate gross unrealized appreciation $2,383,570
Aggregate gross unrealized depreciation (62,785)
----------
Net unrealized appreciation $2,320,785
----------
----------
FMI FOCUS FUND
225 East Mason Street
Milwaukee, Wisconsin 53202
414-226-4555
BOARD OF DIRECTORS
BARRY K. ALLEN
GEORGE D. DALTON
PATRICK J. ENGLISH
TED D. KELLNER
THOMAS W. MOUNT
DONALD S. WILSON
INVESTMENT ADVISER
AND ADMINISTRATOR
FIDUCIARY MANAGEMENT, INC.
225 East Mason Street
Milwaukee, Wisconsin 53202
CUSTODIAN, TRANSFER AGENT
AND DIVIDEND DISBURSING AGENT
FIRSTAR TRUST COMPANY
615 East Michigan Street
Milwaukee, Wisconsin 53202
800-811-5311 or 414-765-4124
INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
100 East Wisconsin Avenue
Suite 1500
Milwaukee, Wisconsin 53202
LEGAL COUNSEL
FOLEY & LARDNER
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of FMI Focus Fund unless accompanied or preceded by the
Fund's current prospectus. Past performance is not indicative of future
performance. Investment return and principal value of an investment may
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
