FOCUS TRUST INC, 485APOS, 1997-06-16

FOCUS TRUST INC
485APOS, 1997-06-16

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<PAGE>

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FILE NO. 33-89090
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FILE NO. 811-8966
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FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]

PRE-EFFECTIVE AMENDMENT NO. ______ [ ]

POST EFFECTIVE AMENDMENT NO. 4 [X]
-------

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]

AMENDMENT NO 6 [X]
------

Focus Trust, Inc.
=================
(Exact name of Registrant as Specified in Charter)

P.O. Box 407
Wayne, PA 19087
- --------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code (610) 688-6558

Robert G. Hagstrom, Jr., CFA
Focus Capital Advisory, L.P.
Wayne, PA 19087
-------------------------------------
(Name and Address of Agent for Service)

COPIES TO:
Allan S. Mostoff, Esq. Joseph M. O'Donnell, Esq.
Dechert Price & Rhoads FPS Services, Inc.
1500 K Street, N.W. 3200 Horizon Drive
Washington, DC 20005-1208 King of Prussia,
Pennsylvania19406-0903

APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
IT IS PROPOSED THAT THIS FILING BECOME EFFECTIVE:

[X] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(1).

================================================================================
Registrant has previously registered an indefinite number of shares of its
securities under the Securities Act of 1933 pursuant to Rule 24f-2 of the
Investment Company Act of 1940, as amended. Registrant filed a Notice pursuant
to Rule 24f-2 for the fiscal year ended December 31, 1996 on February 27, 1997.

As filed with the U.S. Securities and Exchange Commission on June 16 , 1997
---------------
<PAGE>

FOCUS TRUST, INC.
Cross Reference Sheet Pursuant to Rule 481a

FORM N-1A ITEM CAPTION IN PROSPECTUS
---------------------
PART A INFORMATION REQUIRED IN A PROSPECTUS
- -------------------------------------------

1. Cover Page Cover Page

2. Synopsis *

3. Condensed Financial Information Financial Highlights

4. General Description of Investment Objective and Policies;
Registrant Risk Factors; Investment Practices

5. Management of the Fund Management of the Fund

5A. Management's Discussion of Included in Registrant's Annual
Fund Performance Report to Shareholder's

6. Capital Stock and Other General Information; Dividends and
Securities Taxes; Net Asset Value

7. Purchase of Securities Being How to Purchase Shares; Shareholder
Offered Services

8. Redemption or Repurchase How to Redeem Shares

9. Pending Legal Proceedings *

PART B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------

10. Cover Page Cover Page

11. Table of Contents Table of Contents

12. General Information and History Covered in Part A

13. Investment Objectives and Investment Policies; Investment
Policies Restrictions; Portfolio Transactions
and Brokerage

14. Management of Registrant Covered in Part A

15. Control Persons and Principal Shareholders
Holders of Securities

16. Investment Advisory and Other Investment Advisory and Other Services
Services

17. Brokerage Allocation Portfolio Transactions and Brokerage;

18. Capital Stock and Other Other Information
Securities
<PAGE>

PART B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION (CONTINUED)
- --------------------------------------------------------------------

19. Purchase, Redemption and Purchases; Redemptions
Pricing of Securities Being Offered

20. Tax Status Taxes

21. Underwriters Underwriter

22. Calculations of Performance Performance Information
Data

23. Financial Statements Financial Statements

PART C OTHER INFORMATION
- -------------------------

Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.

- ------------
* Item inapplicable at this time or answer negative.
<PAGE>

FOCUS TRUST, INC. PROSPECTUS
P.O. BOX 407 XXXX XX, 1997
WAYNE, PA 19087

FOCUS TRUST, INC.

Focus Trust (the "Fund") is a no-load, non-diversified open-end management
investment company, commonly known as a mutual fund. The Fund seeks to attain
maximum long-term capital appreciation with minimum risk to principal by
investing primarily in common stocks and securities convertible into or
exchangeable for common stocks. The selection of common stocks will be made
through an investment strategy referred to as "Focus Investing". See page XX.

The Fund is the initial series of shares of Focus Trust, Inc., a Maryland
corporation. Focus Capital Advisory, L.P. serves as the investment adviser to
the Fund and manages the investments of the Fund according to the investment
objectives stated in this Prospectus.

You can invest, reinvest or redeem your shares directly from the Fund at any
time without paying any sales charge. If you redeem your shares within two
years after purchase, however, your redemption will be subject to a 1.00%
redemption fee. The effect of this fee is that you redeem your shares at 99% of
their net asset value. This redemption fee is not a deferred sales load and the
proceeds of the adjustment will be retained by the Fund.

The initial minimum investment in the Fund is $1,000. Subsequent investments
will be accepted in amounts not less than $100.

This Prospectus provides the information which you require to make an informed
investment decision about the Fund. Read it carefully before you invest or send
money and retain it for future reference. A Statement of Additional Information,
dated xxxx xx, 1997, amended from time to time, provides further information
about this Fund and has also been filed with the U.S. Securities and Exchange
Commission. It is incorporated in its entirety into this Prospectus by reference
and is available without charge by calling (800) 665-2550 or by writing to the
Fund at the address noted above. The Statement of Additional Information,
material incorporated by reference into this Prospectus, and other information
regarding the Fund are maintained electronically with the U.S. Securities and
Exchange Commission at its Internet Web site (http: //www.sec.gov).

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>

TABLE OF CONTENTS

Page
----
Expense Summary................................................................
Financial Highlights...........................................................
Investment Objective and Policies..............................................
Investment Objective...........................................................
Theory of FocusInvesting.......................................................
Investment Policies............................................................
Investment Adviser-Shareholder Principles......................................
Risk Factors...................................................................
Investment Practices and Risks.................................................
Management of the Fund.........................................................
How to PurchaseShares..........................................................
How to Redeem Shares...........................................................
Shareholder Services...........................................................
Net Asset Value................................................................
Dividends and Taxes............................................................
Performance Information........................................................
General Information............................................................

UNDERWRITER: ADVISER:

FPS Broker Services, Inc. Focus Capital Advisory, L.P.
3200 Horizon Drive P.O. Box 407
King of Prussia, PA 19406-0903 Wayne, PA 19087
(800) 665-2550 (610) 688-6558

This Prospectus is not an offering of the securities herein described in any
jurisdiction or to any person to whom it is unlawful for the Fund to make
such an offer or solicitation. No sales representative, dealer, or
other person is authorized to give any information or make any
representation other than those contained in this Prospectus.
<PAGE>

EXPENSE SUMMARY

SHAREHOLDER TRANSACTION EXPENSES:

Maximum Sales Load Imposed on Purchases................... None
Maximum Sales Load Imposed on Reinvested Dividends........ None
Contingent Deferred Sales Charge.......................... None
Maximum Redemption Fee (as a percentage of amount
initially invested).............. 1.00%*

* The Fund charges a redemption fee of 1.00% on shares of the Fund that are
redeemed within two years of purchase. For more information, see "Redemption
Fee". If you want to redeem shares by wire transfer, the Fund's transfer
agent charges a fee (currently $9.00) for each wire redemption. Purchases and
redemptions may also be made through broker-dealers and others who may charge
a commission or other transaction fee for their services.

ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees after expense reimbursement*................. 0.00%
12b-1 Fees................................................... None
Other Expenses after expense reimbursement*.................. 2.00%
-----
Total Fund Operating Expenses after expense reimbursement*... 2.00%
=====

* Pursuant to the terms of the investment advisory agreement between the Adviser
and the Fund, the Adviser is entitled to receive a monthly fee at an annual
rate of 0.70% of the Fund's average daily net assets. The above table
reflects the Adviser's voluntary undertaking, effective September 1, 1995, to
waive its fees and reimburse expenses so that the Fund's total annual
operating expenses will not exceed 2.00%. Prior to September 1, 1995, the
Adviser had voluntarily agreed to limit total operating expenses to 1.75% of
total net assets. Had the Adviser not voluntarily agreed to this waiver, the
total fund operating expenses for the fiscal year ended December 31, 1996,
would have been 4.96%. Such fee reimbursement may be terminated at any time at
the discretion of the Adviser upon prior notice to shareholders.

EXAMPLE
The following example illustrates the expenses that you would pay on a
$1,000 investment assuming a 5% annual return, reinvestment of all
dividends and distributions and redemption at the end of each time period.

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------

$31 $63 $108 $233

The purpose of this table is to help you understand the various costs and
expenses that you, as a shareholder, will bear directly or indirectly in
connection with your investment in the Fund. The assumption in this example of
a 5% annual return is required by regulations of the U.S. Securities and
Exchange Commission applicable to all mutual funds.

THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RATES OF RETURN. THE ACTUAL EXPENSES AND RATE OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN.

-3-
<PAGE>

FINANCIAL HIGHLIGHTS

The following Financial Highlights for the period ended December 31, 1995 and
the fiscal year ended December 31, 1996, were audited by Coopers & Lybrand,
L.L.P., independent accountants, whose unqualified report thereon is
incorporated by reference into the Statement of Additional Information. The
Fund's Statement of Additional Information may be obtained without charge and is
incorporated by reference into the Prospectus.

The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.

Year Period
Ended Ended
12/31/96 12/31/95*
----------- -----------
<S> <C> <C>
Net Asset Value, Beginning of period....................... $ 11.17 $ 10.00
----------- -----------
Income from investment operations
Net investment income (loss).............................. (0.05) 0.06
Net realized and unrealized gain on investments........... 1.96 1.17
----------- -----------
Total from investment operations....................... 1.91 1.23
----------- -----------
Dividends to shareholders
Dividends from net investment income...................... 0.00 (0.06)
Dividends from net realized gains on investments.......... (0.07) 0.00
----------- -----------
Total from dividends to shareholders................... (0.07) (0.06)
----------- -----------
Net Asset Value, end of period............................. $ 13.01 $ 11.17
=========== ===========
Total Return............................................... 17.14% 12.29% /2/

Ratios/Supplemental Data
Net assets, end of period (in 000's)...................... $ 7,327 $ 5,061
Ratio of expenses to average net assets after
reimbursement of expenses by Advisor..................... 2.00% 1.92% /1/
Ratio of expenses to average net assets before
reimbursement of expenses by Advisor..................... 4.96% 7.89% /1/
Ratio of net investment income to average net assets
after reimbursement of expenses by Advisor............... (0.40%) 1.19% /1/
Ratio of net investment income to average net assets
before reimbursement of expenses by Advisor.............. (3.36%) (4.78%)/1/
Portfolio turnover........................................ 8.47% 0.00%
Average commission rate paid /3/.......................... $0.0979 N/A
</TABLE>
/1/ Annualized
/2/ Not Annualized
/3/ Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged. This disclosure is required by the U.S. Securities and
Exchange Commission beginning in 1996.

* The Fund commenced investment operations on April 17, 1995.

-4-
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Fund is considered a fundamental policy and,
therefore, may not be changed without a vote of the holders of the majority of
the voting securities of the Fund. Unless otherwise stated in this Prospectus,
the Fund's investment policies are not fundamental and may be changed without
shareholder approval. While an investment policy or restriction may be changed
by the Directors of the Fund without shareholder approval, the Fund intends to
notify shareholders before making any material change to an investment policy or
restriction. Additional investment policies and restrictions are described in
the Statement of Additional Information.

INVESTMENT OBJECTIVE

The Fund's investment objective is to seek maximum long-term capital
appreciation with minimum long-term risk to principal by investing primarily in
common stocks, preferred stocks and securities convertible into or exchangeable
for common stocks. Any income realized will be incidental to the Fund's
objective. The selection of common stocks will be made through an investment
strategy referred to as "focus investing", as described below. There can be no
assurance that the Fund's investment objective will be achieved.

THEORY OF FOCUS INVESTING

Focus Capital Advisory, L.P. (the "Adviser") identifies eligible portfolio
securities according to a methodology which it terms as "focus investing." Focus
investing, as explained by the Adviser, is an investment strategy whereby
companies (or businesses) are identified and selected as eligible for investment
by the examination of all fundamental quantitative and qualitative aspects of
the company, the company's management and financial position as compared to its
stock price. This is a bottom up, fundamental, method of analysis as opposed to
technical analysis. Technical analysis often depends on the identification of
market cycles and timing techniques.

If a particular stock is chosen for investment, focus investors then become
long-term owners of that business. Focus investing is based on the principle
that a shareholder's return from owning a stock is ultimately determined by the
fundamental economics of the underlying business. Of course, investment results
either can be enhanced or diminished by changes in valuation. The Adviser
theorizes that in shorter periods, changes in valuation tend to dominate
investment returns, but as the time horizon lengthens, the economic returns of
the business increasingly dominate the investment return.

A focus investor, according to the Adviser, should disregard short-term nuances
and instead focus on the long-term economic progress of the investment. The
economic progress of a business is determined by its earnings power. The return
on shareholder's capital is one measure that distinguishes the operating
earnings power of a business.

The Adviser believes that an outstanding business can be identified by focusing
on a company's economic competitive position, its financial strength, and the
capabilities of the company's management. There are certain business,
financial, and management tenets that encapsulate an outstanding business such
as those with favorable long-term prospects that are operated by honest and
competent people and importantly, are available at attractive prices. Focus
investors expend much energy determining the difference between a company's
intrinsic value and its current price in the marketplace.

The Adviser selects common stocks to be held by the Fund according to focus
investing. Such securities will be selected and held for the long-term in that
the Adviser is less concerned with short-term price fluctuations and instead
seeks to achieve minimal risk to principal together with long-term capital
appreciation. The Adviser ignores technical stock market studies and expends no
energy attempting to forecast the general direction of the stock market.

INVESTMENT POLICIES

The Adviser will seek capital appreciation primarily by purchasing common stocks
through "focus investing," as

-5-
<PAGE>

described above. The Adviser may also purchase preferred stocks and securities
convertible into common stocks, such as convertible bonds and debentures. The
securities in which the Fund invests generally will be listed on a national
stock exchange or traded on the over-the-counter market. However, the Fund may
invest up to 10% of its total assets in securities for which there is no ready
market, known as illiquid securities.

Security selection for the Fund is based on the Adviser's analysis of a
company's financial characteristics, economic competitive position and an
assessment of the quality and capability of the company's management. Companies
acceptable for investment by the Fund typically possess, in the opinion of the
Adviser, favorable long-term prospects, shareholder-oriented management, and
strong financial positions including high return on capital, healthy balance
sheets, predictability in the growth of earnings, and cash generating abilities
in excess of the company's operating needs. The Fund will only invest in those
companies which, in the Adviser's opinion, are undervalued at the time of
purchase. See "Theory of Focus Investing."

While it is the Fund's policy to remain substantially invested in common stock
or securities convertible into common stocks, it may invest in non-convertible
preferred stock and non-convertible debt securities. The Fund's investment in
debt securities will be made only in those considered to be investment grade.
Investment grade securities include those securities which are rated in one of
the four highest rating categories by a nationally recognized statistical rating
organization ("NRSRO") at the time of purchase, or, if unrated, are determined
to be of comparable quality by the Adviser. Securities rated in the fourth
highest category (e.g., BBB by Standard & Poor's Rating Group or Baa by Moody's
Investors Service, Inc.), although considered investment grade, may have
speculative characteristics and may be subject to greater fluctuations in value
than higher rated securities. In the event a security held by the Fund is
downgraded below investment grade, the Adviser shall promptly reassess the risks
involved and take such actions as it determines will be in the best interests of
the Fund and its shareholders.

Under normal circumstances, the Adviser expects to make concentrated investments
in a limited number of companies. When purchasing portfolio securities for the
Fund, the Adviser's philosophy is a buy and hold strategy versus buying for
short-term trading. Accordingly, the portfolio turnover rate is not expected to
exceed 25%. See "Portfolio Turnover Rate" under "Investment Practices and
Risks."

While the Fund has no present intention to invest in foreign securities, the
Fund may invest up to 15% of its total assets in foreign securities, either
directly or indirectly through the purchase of American Depository Receipts
("ADRs") or European Depository Receipts ("EDRs"). See "Risk Factors" and
"Investment Practices and Risks".

When, in the opinion of the Adviser, a temporary defensive position is
warranted, the Fund is permitted to temporarily invest up to 100% of its assets
in short-term U.S. Government securities, bank certificates of deposit, prime
commercial paper and other high-quality short-term fixed income securities and
repurchase agreements with respect to the foregoing securities. High quality
securities are securities that have received a rating from at least one NRSRO in
one of the two highest rating categories or, if not rated by any NRSRO, such as
U.S. Government securities, have been determined by the Adviser to be of
comparable quality. In addition, the Fund may hold cash reserves, when
necessary, for anticipated securities purchases and redemptions or temporarily
during periods when prevailing market conditions call for a defensive posture.
The Fund's investment objective may not be achieved at such times when a
temporary defensive position is taken.

The Fund is a non-diversified investment company and is able to invest more than
5% of its total assets at the time of purchase in the securities of a single
issuer. See "Risk Factors".

The Fund may not use any of the following forms of derivatives or hedging
instruments such as options, futures contracts, puts, calls or options on
futures contracts, and therefore will not be subject to the risks inherent in
these types of investments. The Fund may, however, invest in forward
commitments, when-issued securities and delayed delivery transactions which are
considered derivative securities.

THE ADVISER DOES NOT INTEND TO PARTICIPATE IN SOFT DOLLAR ARRANGEMENTS.

-6-
<PAGE>

INVESTMENT ADVISER - SHAREHOLDER PRINCIPLES

You should read carefully the following Investment Adviser - Shareholder
Principles before making an investment in the Fund.

. Although the Fund is organized as a mutual fund, the partners of Focus Capital
Advisory, L.P. (the "Adviser") take the view that it is a managing partner
with you, the shareholders of this Fund. This commitment is reinforced by
having the partners of the Adviser also invest a portion of their assets in
the Fund and thus become co-owners of the Fund.

. As managing partners, the Adviser will attempt to locate and invest in a few
outstanding businesses which it believes possess favorable long-term prospects
with superb underlying economics run by trustworthy and able management and
finally, are available at sensible prices.

. Once invested in a particular security, the Adviser looks forward to becoming
a long-term holders of these outstanding businesses. The Adviser is not, nor
will it ever be, interested in constantly buying and selling mediocre
businesses where economic gain depends more on profiting from short-term price
changes rather than the economic gain afforded by companies that are able to
grow their long-term intrinsic value.

. Because long-term maximum growth of intrinsic value, not profits from short-
term price changes, is the Adviser's prime objective, the Adviser expects that
the Fund may, from time to time, underperform various stock market indices.
This fact does not cause the Adviser any alarm. However, the Adviser would be
disappointed if the gain in the intrinsic value of the companies selected for
investment by the Fund, and hence the long-term rise in their respective stock
prices, did not advance at a rate greater than the average large American
company.

. It would be unfair to ask you, the shareholder, to ignore short-term price
movements as a way to measure investment results unless the Adviser offers an
alternative means by which to judge the Fund's progress. As a managing
partners, the Adviser is continually focused on, and will communicate to you,
the economic progress of the companies selected for investment by the Fund.
The Adviser believes that if a company is advancing economically at a
satisfactory rate, over time, the price of the company will correlate to this
change in value.

. The Adviser promises to be honest and forthcoming with you, the Fund's
shareholders. The Adviser promises to check periodic successes with an equally
hard look at any investment failures. The Adviser believes that this public
self-examination will be a benefit to shareholders and to the Adviser over the
long term. The Adviser's goal in reporting is to be as forthright with you as
it would like if the roles were reversed.

. STOP!!! If, after reading these principles, you have any reservation about
investing in the Fund, please don't. We would much prefer that you not invest
with us if the slightest short-term disruption in the markets or individual
stock prices will cause you to sell your shares. The Adviser believes that
long-term investment results should approximate the value of the underlying
businesses and not be affected by the excessive trading of any of the Fund's
shareholders.

-7-
<PAGE>

RISK FACTORS

You should understand that all investments involve risk and there can be no
guarantee against loss resulting from an investment in the Fund, nor can there
be any assurance that the Fund's investment objective will be attained. The
risks inherent in investing in the Fund are those risks which are common to any
mutual fund investment. These include the risks that the net asset value will
fluctuate in response to changes in economic conditions, interest rates and the
market's perception of the underlying portfolio securities of the Fund.

The Fund is designed for long-term investors who are willing to accept the risks
entailed in seeking long-term growth of capital through investment primarily in
common stocks. The Fund is not meant to provide a vehicle for playing short-
term swings in the stock market nor is it intended to be a complete investment
program. The value of the Fund's portfolio securities will fluctuate based on
market and other conditions. Consistent with a long-term investment approach,
investors in the Fund should be prepared and able to maintain or add to their
investment during periods of adverse market conditions and should not rely on an
investment in the Fund for their short-term financial needs.

The Fund is classified as a "non-diversified" investment company within the
meaning of the Investment Company Act of 1940, as amended, (the "1940 Act")
which means that the Fund may invest a larger portion of its assets in the
securities of a single issuer than a diversified fund. An investment in the
Fund therefore will entail greater price risk than an investment in a
diversified investment company because a higher percentage of investments among
fewer issuers may result in greater fluctuation in the total market value of the
Fund's portfolio, and economic, political or regulatory developments may have a
greater impact on the value of the Fund's portfolio than would be the case if
the portfolio were diversified among more issuers. However, the Fund intends to
comply with the diversification and other requirements applicable to regulated
investment companies under the Internal Revenue Code of 1986, as amended. See
"Dividends and Taxes."

The Fund may invest directly in the securities of foreign issuers. There are
certain risks and costs involved in investing in securities of companies and
governments of foreign nations, which are in addition to the usual risks
inherent in U.S. investments. Investments in foreign securities involve higher
costs than investments in U.S. securities, including higher transaction costs as
well as the imposition of additional taxes by foreign governments. In addition,
foreign investments may include additional risks associated with the level of
currency exchange rates, less complete financial information about the issuers,
less market liquidity, more market volatility and political instability. Future
political and economic developments, the possible imposition of withholding
taxes on dividend income, the possible seizure or nationalization of foreign
holdings, the possible establishment of exchange controls, or the adoption of
other governmental restrictions might adversely affect an investment in foreign
securities. Additionally, foreign banks and foreign branches of domestic banks
may be subject to less stringent reserve requirements, and to different
accounting, auditing and recordkeeping requirements.

INVESTMENT PRACTICES AND RISKS

In attempting to achieve its investment objective, the Fund may, in addition to
the investment policies stated above, engage in the following practices:

ADR's and EDR's: For many foreign securities, there are U.S. dollar denominated
American Depository Receipts ("ADR's"), which are bought and sold in the United
States and are issued by domestic banks. ADR's represent the right to receive
securities of foreign issuers deposited in the domestic bank or a correspondent
bank. ADR's do not eliminate all the risk inherent in investing in the
securities of foreign issuers. By investing in ADR's rather than directly in
foreign issuer's stock, the Fund may avoid currency risks during the settlement
period for either purchases or sales. In general, there is a large, liquid
market in the United States for most ADR's. The Fund may also invest in
European Depository

-8-
<PAGE>

Receipts ("EDR's") which are receipts evidencing an arrangement with a European
bank similar to that for ADR's and are designed for use in the European
securities markets. EDR's are not necessarily denominated in the currency of the
underlying security. The Fund has no current intention to invest in unsponsored
ADR's and EDR's.

Borrowing: The Fund has a fundamental policy that it may not borrow money,
except (1) from banks for temporary or emergency purposes and not for
leveraging or investment and (2) to enter into reverse repurchase agreements
for any purpose, so long as the aggregate amount of borrowings and reverse
repurchase agreements does not exceed one-third of the Fund's total assets less
liabilities (other than borrowings). In the event that such asset coverage
shall at any time fall below 300%, the Fund shall, within three business days
thereafter or such longer period as the U.S. Securities and Exchange Commission
(the "SEC") may prescribe by rules and regulations, reduce the amount of its
borrowings to such an extent that the asset coverage of such borrowings shall be
at least 300%. Investment securities will not be purchased while the Fund has
an outstanding borrowing that exceeds 5% of the Fund's net assets.

Forward Commitments, When-Issued Securities and Delayed Delivery Transactions:
The Fund may purchase securities on a "when-issued" basis and may purchase or
sell securities on a "forward commitment" and "delayed delivery" basis. These
transactions involve a commitment by the Fund to purchase or sell particular
securities with payment and delivery taking place at a future date. They
involve the risk that the price or yield available in the market may be less
favorable than the price or yield available when the delivery takes place. The
Fund's when-issued purchases, forward commitments and delayed delivery
transactions in total will not exceed 5% of the value of the Fund's net assets.
This 5% limitation reflects the value of the underlying obligation together with
its initial payment.

Illiquid Securities: The Fund may invest up to 10% of its net assets in
securities that are illiquid. Illiquid securities are assets which may not be
sold or disposed of in the ordinary course of business within seven days at
approximately the price at which they are valued by the Fund. Due to the
absence of an active trading market, the Fund may experience difficulty in
valuing or disposing of illiquid securities. Repurchase agreements with deemed
maturities in excess of seven days and certain securities that are not
registered under the Securities Act of 1933 but that may be purchased by
institutional buyers under SEC Rule 144A (known as "restricted securities") are
subject to this 10% limit. The Adviser determines the liquidity of the Fund's
securities, under supervision of the Board of Directors.

Portfolio Turnover Rate: Generally, the Fund will purchase portfolio securities
for capital appreciation and not for short-term trading profits. Due to the
nature of "focus investing", however, the Adviser anticipates that the
portfolio turnover levels will be held at low levels. This is consistent with
the Fund's buy and hold strategy. The rate of portfolio turnover will not be a
limiting factor in making portfolio decisions. A high rate of portfolio
turnover may result in the realization of substantial capital gains and involves
correspondingly greater transaction costs. It is currently estimated that under
normal market conditions the annual portfolio turnover rate for the Fund will
not exceed 25%. Portfolio turnover rates may vary from year to year as well as
within a particular year.

Repurchase Agreements: The Fund may enter into repurchase agreements. The Fund
may only enter into repurchase agreements with financial institutions that are
deemed to be creditworthy by the Adviser, pursuant to guidelines established by
the Fund's Board of Directors. During the term of any repurchase agreement, the
Adviser will continue to monitor the creditworthiness of the seller. Repurchase
agreements are considered under the 1940 Act to be collateralized loans by the
Fund to the seller secured by the securities transferred to the Fund.
Repurchase agreements under the 1940 Act will be fully collateralized by
securities in which the Fund may invest directly. Such collateral will be
marked-to-market daily. If the seller of the underlying security under the
repurchase agreement should default on its obligation to repurchase the
underlying security, the Fund may experience delay or difficulty in exercising
its right to realize upon the security and, in addition, may incur a loss if the
value of the security should decline, as well as disposition costs in
liquidating the security. The Fund will not invest more than 10% of its net
assets in repurchase agreements maturing in more than seven days.

Restricted Securities and Rule 144A Securities: Restricted securities cannot be
sold to the public without registration under the Securities Act of 1933 (the
"1933 Act"). Unless registered for sale, these securities can only be sold in
privately negotiated transactions or pursuant to an exemption from registration.
Rule 144A securities may be resold

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<PAGE>

only to qualified institutional buyers in accordance with Rule 144A under the
1933 Act. Some restricted securities may be illiquid securities.

Securities Lending: The Fund may lend its portfolio securities on a short-term
basis to banks, broker/dealers and other institutional investors pursuant to
agreements requiring that the loans be continuously secured by collateral equal
at all times in value to at least the market value of the securities loaned.
The Fund will not lend portfolio securities in excess of 33% of the value of its
total assets. There may be risks of delay in receiving additional collateral or
in recovering the securities loaned or even a loss of rights in the collateral
should the borrower of the securities fail financially. However, loans are made
only to borrowers deemed by the Adviser to be of good standing and when, in its
judgment, the income to be earned from the loan justifies the attendant risks.

Securities of Other Investment Companies: The Fund may invest in securities
issued by other investment companies within the limits prescribed by the 1940
Act. The Fund may invest up to 10% of its assets in shares of investment
companies and up to 5% of its assets in any one investment company so long as
the investment does not represent more than 3% of the voting stock of the
acquired investment company. Investments in other investment companies will
cause the Fund (and, indirectly the Fund's shareholders) to bear proportionately
the costs incurred in connection with the investment companies' operations.

MANAGEMENT OF THE FUND

THE BOARD OF DIRECTORS AND OFFICERS

The Fund has a Board of Directors that establishes the Fund's policies and
supervises and reviews the management of the Fund. The day-to-day operations of
the Fund are administered by the officers of the Fund and by the Adviser
pursuant to the terms of an investment advisory agreement with the Fund. The
Fund's Directors review the various services provided by the Adviser to ensure
that the Fund's general investment policies and programs are being properly
carried out and that administrative services are being provided to the Fund in a
satisfactory manner. Information pertaining to the Directors and executive
officers of the Fund is set forth below.

ROBERT G. HAGSTROM, JR., CFA*, President and Director; General Partner of Focus
Capital Advisory, L.P., P.O. Box 407, Wayne, Pennsylvania, 19087 since 1997;
prior thereto Principal with Lloyd, Leith & Sawin from 1992 through 1997, and
Vice President from 1991 to 1992; prior thereto portfolio manager with First
Fidelity Bank, Philadelphia, PA from 1989 through 1991; prior thereto,
investment broker for Legg Mason Wood Walker from 1984 through 1989. Mr.
Hagstrom received his B.A. and M.A. from Villanova University. He is a member of
the Association of Investment Management and Research and the Financial Analysts
of Philadelphia. Mr. Hagstrom is a Chartered Financial Analyst and the author of
the book titled The Warren Buffett Way: Investment Strategies of the
-----------------------------------------------------
World's Greatest Investor (John Wiley & Sons, November, 1994).
- -------------------------

ALLAN S. MOSTOFF, ESQ.*, Director; Partner from 1976 and Chairman of the
Government Practice Department of the law firm of Dechert Price & Rhoads, 1500 K
Street, N.W., Washington, DC 20005; prior thereto, Director of the SEC's,
Division of Investment Management Regulation from 1972 until 1976; Mr. Mostoff
received his B.S. from Cornell University, his M.B.A. from New York University
and his L.L.B. from New York University Law School.

ROBERT J. COLEMAN, JR., Director; Principal of Combined Capital Management, 614
East High Street, Charlottesville, Virginia 22902 since 1993; prior thereto,
institutional sales and research for the "Value Group" at Dominick & Dominick,
New York, New York from 1991 through 1993, and the "Value Group" at Laidlaw
Adam's and Peck (formerly, W.R. Lazard Laidlaw) from 1987 to 1991. Mr. Coleman
attended Lake Forest College.

JOAN LAMM-TENNANT, Ph.D., Director; Professor of Finance at Villanova
University, Villanova, Pennsylvania since 1988; Dr. Lamm-Tennant is the author
of the book titled Mutual Funds: Analysis, Allocation and Performance Evaluation
-------------------------------------------------------------
and co-editor of a book titled Financial Management of Life Insurance Companies.
------------------------------------------------
Dr. Lamm-Tennant has

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<PAGE>

published and lectured extensively on investment policies and practices of the
insurance industry. Her publications include articles in journals such as the
Journal of Business, Journal of Risk and Insurance, Review of Research in
Banking and Finance, and Journal of Insurance Regulation. Dr. Lamm-Tennant
serves on the Board of Directors for Selective Insurance Group, Inc. and the
Financial Analysts of Philadelphia. She received a B.B.A. degree in Accounting
and a M.B.A. degree in finance from St. Mary's University, Texas, and a Ph.D. in
finance, investments and insurance from the University of Texas at Austin.

ERICKA M. MERLUZZI, Vice President and Treasurer; Research Associate with Focus
Capital Advisory, L.P., P.O. Box 407, Wayne, Pennsylvania, 19087 since 1997;
prior thereto research assistant with Lloyd, Leith & Sawin from 1996 to 1997;
prior thereto operations manager of the Chemical Engineering Department at
Tulane University. Ms. Merluzzi received her B.A. from Franklin & Marshall
College. She is a member of the Association for Investment Management and
Research and the Financial Analysts of Philadelphia. Ms Merluzzi is a candidate
in the Chartered Financial Analyst program.

GRETCHEN B. ZEPERNICK, Vice President and Secretary; Corporate Compliance
Administrator of FPS Services, Inc., 3200 Horizon Drive, King of Prussia,
Pennsylvania, 19406-0903 since 1994; prior thereto Corporate Assistant of
University Management and Commonwealth Realty from 1991 to 1993. Ms. Zepernick
received her B.B.A. from James Madison University.

*These Directors are considered "interested persons" of the Fund as defined
under the 1940 Act.

The Directors of the Fund receive fees and expenses for each meeting of the
Board of Directors they attend. However, no officer or employee of the Adviser
receives any compensation from the Fund for acting as a Director of the Fund.
The officers of the Fund receive no compensation directly from the Fund for
performing the duties of their offices.

THE INVESTMENT ADVISER

Focus Capital Advisory, L.P. (the "Adviser") which has its offices at P.O. Box
407, Wayne, Pennsylvania, 19087, serves as the Fund's investment adviser and
manager and is a registered investment adviser under the Investment Advisers Act
of 1940, as amended. The Adviser is a limited partnership that was formed on
March 17, 1997 and provides investment counsel to individuals, trust accounts,
individual retirement accounts, and pension and profit sharing plans. As of June
30, 1997, the Adviser had approximately $xx million of assets under management.

Subject to the overall authority of the Fund's Board of Directors, the Adviser
supervises the management of the Fund. These management responsibilities
include, among other things, reporting to the Directors regarding economic and
statistical information as requested by the Directors and Officers. The Adviser
invests the Fund's assets, manages the

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<PAGE>

Fund's business affairs and supervises the Fund's overall day-to-day operations.
Pursuant to an investment advisory agreement with the Fund, the Adviser provides
the Fund with advice on buying and selling securities in accordance with the
Fund's investment policies, limitations and restrictions. The Adviser also
furnishes office space and certain administrative and clerical services, and
employs the personnel needed with respect to the Adviser's responsibilities
under the investment advisory agreement.

For providing investment advisory services, the Fund pays the Adviser a monthly
fee calculated daily by applying an annual rate of 0.70% to the Fund's assets.
From time to time, the Adviser may voluntarily waive all or a portion of its
management fee and/or absorb certain expenses of the Fund without further
notification of the commencement or termination of any such waiver or
absorption. Any such waiver or absorption will have the effect of lowering the
overall expense ratio of the Fund and increasing the Fund's overall return to
investors at the time any such amounts are waived and/or absorbed. The Adviser
has agreed to waive that portion of its advisory fee equal to the total expenses
of the Fund for any fiscal year which exceeds the permissible limits applicable
to a Fund in any state in which its shares are then qualified for sale. Any
reductions made by the Adviser in its fees are subject to reimbursement by the
Fund within the following three years provided the Fund is able to effect such
reimbursement and remain in compliance with applicable expense limitations.

The terms of the Fund's investment advisory agreement permit the Adviser, at its
own expense, to obtain statistical and other factual information and advice as
it deems necessary or desirable to fulfill its investment responsibilities under
the contract.

PORTFOLIO MANAGEMENT

Robert G. Hagstrom, Jr., CFA, General Partner of the Adviser, is responsible for
overseeing all investments made by the Fund. See "The Board of Directors and
Officers" for biographical information.

BROKERAGE TRANSACTIONS

In determining the brokers through whom, and commission rates and other
transaction costs at which securities transactions for the Fund are to be
executed, the Adviser seeks to obtain the best available price, investment
services and execution. The Adviser does not have an agreement or commitment to
place orders with any particular broker-dealer, and it is expected that a number
of broker-dealers will be used in various transactions. The Adviser does not
intend to participate in soft dollar arrangements.

THE UNDERWRITER

FPS Broker Services, Inc. ("FPSB"), 3200 Horizon Drive, King of Prussia, PA
19406-0903, was engaged pursuant to an underwriting agreement for the limited
purpose of acting as underwriter to facilitate the registration of shares of the
Fund under state securities laws and to assist in the sale of shares.

THE ADMINISTRATOR

FPS Services, Inc. ("FPS"), 3200 Horizon Drive, King of Prussia, PA 19406-0903,
serves as administrator pursuant to an administrative services agreement. The
services FPS provides to the Fund include: the coordination and monitoring of
any third parties furnishing services to the Fund; providing the necessary
office space, equipment and personnel to perform administrative and clerical
functions for the Fund; preparing, filing and distributing proxy materials and
periodic reports to shareholders, registration statements and other documents;
and responding to shareholder inquiries. Pursuant to this agreement, FPS
receives a fee at the annual rate of 0.15% on the first $50 million of total
average net assets, 0.10% on the next $50 million of total average net assets
and 0.05% on total net assets in excess of $100 million. The minimum
administrative services fee is $65,000 per year for the Fund.

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<PAGE>

THE CUSTODIAN, TRANSFER AGENT AND FUND ACCOUNTING/PRICING AGENT

The Bank of New York, 48 Wall Street, New York, New York 10286 is the custodian
for the cash and securities of the Fund. FPS serves as the Fund's transfer agent
and as such it maintains the records of each shareholder's account, answers
shareholder inquiries concerning accounts, processes purchases and redemptions
of the Fund's shares, acts as dividend and distribution disbursing agent and
performs other shareholder service functions. As fund accounting agent, FPS
performs certain accounting and pricing services for the Fund, including the
daily calculation of the Fund's net asset value.

FUND EXPENSES

The Fund is responsible for all of its own operating expenses. Such expenses may
include, but are not limited to: management fees; expenses for printing and
distribution costs of prospectuses and reports to existing shareholders;
brokerage fees and commissions; fees for the registration or qualification of
Fund shares under federal or state securities laws; expenses of the organization
of the Fund; transfer agent, custodian, administrator, legal and auditing fees;
the expenses of obtaining quotations of portfolio securities and of pricing the
Fund's shares; trade association dues; all costs associated with shareholder
meetings and the preparation and dissemination of proxy materials; and other
expenses relating to the Fund's operations; costs of liability insurance and
fidelity bonds; fees for Directors who are not officers, directors or employees
of the Adviser; and any extraordinary and nonrecurring expenses which are not
expressly assumed by the Adviser.

HOW TO PURCHASE SHARES

You can purchase shares of the Fund directly from the Fund at the net asset
value next determined after receipt of the order in proper form by the transfer
agent. There is no sales load or charge in connection with the purchase of
shares. The Fund's shares are also offered for sale through FPS Broker
Services, Inc. ("FPSB"), the Fund's underwriter.

The minimum initial investment is $1,000 for all accounts, including investments
for individual investors, IRAs, 403(b)(7) plans and other retirement plans. The
Fund will not accept a check endorsed over by a third-party. Subsequent
investments for the Fund will be accepted in minimum amounts of $100.

The Fund reserves the right to reject any purchase order and to suspend the
offering of shares of the Fund. The Fund reserves the right to waive the initial
and subsequent investment minimums at any time. In addition, FPSB may waive the
minimum initial investment requirement for any investor.

Purchase orders for shares of the Fund which are received by FPS in proper form,
including money orders, checks or bank drafts, by the close of regular trading
on the NYSE (currently 4:00 p.m. Eastern time), on any day that the New York
Stock Exchange is open for regular trading, will be purchased at the Fund's net
asset value determined that day. Orders for Fund shares received after 4:00 p.m.
Eastern time will be purchased at the net asset value determined on the business
day following receipt of the order.

You may purchase shares of the Fund in one of the following ways:

BY MAIL

Send your completed and signed application and check or money order, payable to
"Focus Trust, Inc.," to FPS Services, Inc., 3200 Horizon Drive, King of Prussia,
PA 19406-0903. If this is your first purchase, please send a minimum of $1,000.
Subsequent investments must be a minimum of $100.

-13-
<PAGE>

BY WIRE

Call (800) 665-2550 for instructions on how to wire money to purchase shares.
Your wire goes to United Missouri Bank and must include your name and your
account number. You must also furnish the Fund with your social security number
or other tax identification number. Following notification to the transfer
agent, federal funds and registration instructions should be wired through the
Federal Reserve System to:

UNITED MISSOURI BANK KC NA
ABA # 10-10-00695
FOR: FPS SERVICES, INC.
A/C 98-7037-071-9
FBO "Focus Trust, Inc."
"SHAREHOLDER NAME AND ACCOUNT NUMBER"

For initial wire purchases, complete, sign and mail your application to the
transfer agent subsequent to the initial wire. Be aware that some banks may
impose a wire service fee. The Fund will not be responsible for the consequence
of delays, including delays in the banking or Federal Reserve wire systems.

THROUGH BROKER-DEALERS

You may purchase and redeem your shares through broker-dealers, financial
institutions or service organizations which have been previously approved by the
Fund. It is the responsibility of such brokers, financial institutions or
service organizations to promptly forward purchase orders and payments for the
same to the Fund. Shares of the Fund purchased through brokers, financial
institutions, service organizations, banks, and bank trust departments, may
charge you a transaction fee or other fee for its services at the time of
purchase. Such fees would not otherwise be charged if you purchased your shares
directly from the Fund.

SUBSEQUENT INVESTMENTS

Once your account has been opened, you may make subsequent purchases by mail,
bank wire or by telephone. The minimum for subsequent investments is $100 for
all accounts. Orders to purchase shares are effective on the day FPS receives
your check or money order.

When you are making subsequent investments by mail, return the remittance
portion of a previous confirmation with your investment in the envelope
provided. Your check should be made payable to "Focus Trust, Inc." and mailed to
Focus Trust, Inc. c/o FPS Services, Inc., P.O. Box 412797, Kansas City, MO
64141-2797.

All investments must be made in U.S. dollars, and, to avoid fees and delays,
checks must be drawn only on banks located in the United States. A charge ($20
minimum) will be imposed if any check used for the purchase of shares is
returned. The Fund and FPS each reserve the right to reject any purchase order
in whole or in part.

HOW TO REDEEM SHARES

You may request redemption of your shares at any time in one of the ways
outlined below. Such redemption proceeds may be reduced by the amount of any
applicable redemption fee. See "Redemption Fee".

BY MAIL

You may redeem your shares by submitting a written request for redemption to FPS
Services, Inc., 3200 Horizon Drive, King of Prussia, PA 19406-0903.

A written request must be in good order which means that it must: (i) identify
the shareholder's account name and

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<PAGE>

account number; (ii) state the number of shares or dollar amount to be redeemed;
and (iii) be signed by each registered owner exactly as the shares are
registered. To prevent fraudulent redemptions, a signature guarantee for the
signature of each person in whose name the account is registered is required on
all written redemptions requests over $10,000 and redemption requests for which
proceeds are to be mailed somewhere other than the address of record. A
guarantee may be obtained from any commercial bank, credit union, a member firm
of a national securities exchange, registered securities associations, clearing
agencies and savings and loan associations. Credit unions must be authorized to
issue signature guarantees; notary public endorsement will not be accepted.
Signature guarantees will be accepted from any eligible guarantor institution
which participates in a signature guarantee program. The transfer agent may
require additional supporting documents for redemptions made by corporations,
executors, administrators, trustees or guardians and retirement plans.

BY TELEPHONE

If you have so indicated on the application, or have subsequently arranged in
writing to do so, you may redeem your shares by calling the transfer agent at
(800) 665-2550 during normal business hours. In order to arrange for redemption
by wire or telephone after an account has been opened, or to change the bank or
account designated to receive redemption proceeds, you must send a written
request to the transfer agent with a signature guarantee at the address listed
under "Redemption by Mail.".

The Fund reserves the right to refuse a wire or telephone redemption if it is
believed advisable to do so. Procedures for redeeming Fund shares by wire or
telephone may be modified or terminated at any time.

During periods of unusual economic or market changes, telephone redemptions may
be difficult to implement. In such event, you should follow procedures under
redemption by mail.

GENERAL REDEMPTION INFORMATION

A redemption request will not be deemed to be properly received until the
transfer agent receives all required documents in proper form. If you have any
questions with respect to the proper form for redemption requests you should
contact the transfer agent at (800) 665-2550.

Redemptions will be processed only on a business day that the New York Stock
Exchange ("NYSE") is open for business. Redemptions will be effective at the
net asset value per share next determined after the receipt by the transfer
agent of a redemption request meeting the requirements described above. The
Fund normally sends redemption proceeds on the next business day, but in any
event redemption proceeds are sent within seven calendar days of receipt of a
redemption request in proper form. Payment may also be made by wire directly to
any bank previously designated by you on a new account application. There is a
$9.00 charge for redemptions made by wire. Please note that your bank may also
impose a fee for wire service. There also may be fees for redemptions made
through brokers, financial institutions and service organizations.

Except as noted below, redemption requests received in proper form by the
transfer agent prior to the close of regular trading hours on the NYSE on any
business day that the Fund calculates its net asset value are effective that
day. Redemption requests received after the close of the NYSE will be effected
at the net asset value per share determined on the next business day following
receipt. No redemption will be processed until the transfer agent has received
a completed application with respect to the account.

The Fund will satisfy redemption requests in cash to the fullest extent
feasible, so long as such payments would not, in the opinion of the Board of
Directors, result in the necessity of the Fund to sell assets under
disadvantageous conditions or to the detriment of the remaining shareholders of
the Fund.

Pursuant to the Fund's Articles of Incorporation, however, payment for shares
redeemed may also be made in kind, or partly in cash and partly in-kind. The
Fund has elected, pursuant to Rule 18f-1 under the 1940 Act to redeem its shares

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<PAGE>

solely in cash up to the lesser of $250,000 or 1% of the net asset value of the
Fund, during any 90 day period for any one shareholder. Any portfolio
securities paid or distributed in-kind would be in readily marketable securities
and valued as described under "Net Asset Value." In the event that an in-kind
distribution is made, you may incur additional expenses, such as the payment of
brokerage commissions, on the sale or other disposition of the securities
received from the Fund. In-kind payments need not constitute a cross-section of
the Fund's portfolio.

The Fund may suspend the right of redemption or postpone the date of payment for
more than seven days during any period when (1) trading on the NYSE is
restricted or the NYSE is closed, other than customary weekend and holiday
closings; (2) the SEC has by order permitted such suspension; (3) an emergency,
as defined by rules of the SEC, exists making disposal of portfolio investments
or determination of the value of the net assets of the Fund not reasonably
practicable.

Shares of the Fund may be redeemed through certain brokers, financial
institutions or service organizations, banks and bank trust departments who may
charge the investor a transaction or other fee for their services at the time of
redemption. Such additional transaction fees would not otherwise be charged if
the shares were redeemed directly from the Fund.

REDEMPTION FEE

With certain exceptions, shares of the Fund that are redeemed within the first
two years of purchase are subject to a redemption fee pursuant to which shares
that are redeemed within two years after purchase are redeemable at 99% of their
net asset value. This redemption fee is not a deferred sales load. The
reductions from net asset value for shareholders redeeming during the first two
years after purchase are retained by the Fund for the benefit of all
shareholders to help offset the additional transactional costs of short-term
investments in the Fund.

The redemption fee will be waived under the following circumstances: 1) total
or partial redemptions made following the death or disability of a shareholder;
2) minimum required distribution made in connection with an IRA, retirement plan
or custodial account under Section 403(b) or other retirement plan following
attainment of age 70 1/2; 3) total or partial redemption resulting from a
distribution following retirement in the case of a tax-qualified employer-
sponsored retirement plan; 4) when a redemption results from a tax-free return
of an excess contribution or from the death or disability of the employer; or 5)
redemptions pursuant to the Fund's right to liquidate a shareholder's account
involuntarily.

TELEPHONE TRANSACTIONS

If you wish to initiate redemption transactions by telephone, you must first
elect the option, as described above. The Fund and its transfer agent may
request personal identification information before accepting a telephone
redemption. To the extent that the Fund or its transfer agent fail to use
reasonable procedures to verify the genuineness of telephone instructions, the
Fund may be liable for losses due to fraudulent or unauthorized instructions.
The Fund reserves the right to refuse a telephone redemption if it is believed
advisable to do so. Procedures for redeeming Fund shares by telephone may be
modified or terminated at any time by the Fund. Written confirmation will be
provided for all redemption transactions initiated by telephone.

MINIMUM BALANCES

Due to the relatively high cost of maintaining smaller accounts, the Fund
reserves the right to involuntary redeem shares in any account at its then
current net asset value (which will be promptly paid to the shareholder) if at
any time the total investment does not have a value of at least $500 due to
redemptions but not market fluctuations. You will be notified that the value of
your account is less than the required minimum and you will be allowed at least
60 days to bring the value of your account up to the minimum before the
redemption is processed.

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<PAGE>

SHAREHOLDER SERVICES

The following special services are available to you as a shareholder of the
Fund. There are no charges for the programs noted below and you may change or
stop these plans at any time by written notice to the Fund.

AUTOMATIC INVESTMENT PLAN: Once an account has been opened, you can make
additional monthly purchases of shares of the Fund through an automatic
investment plan. You may authorize the automatic withdrawal of funds from your
bank account by first opening your account with a minimum $1,000 purchase and
completing the appropriate section on the new account application enclosed with
this Prospectus. Subsequent monthly investments are subject to a minimum amount
of $50.

RETIREMENT PLANS: The Fund is available for investment by pension and profit
sharing plans including Individual Retirement Accounts, 401(k) plans, and
403(b)(7) Retirement Plans through which you may purchase Fund shares. For
details concerning any of the retirement plans, please call the Fund at (800)
665-2550.

NET ASSET VALUE

The net asset value per share of the Fund is computed once daily as of the close
of regular trading on the NYSE, currently 4:00 p.m. Eastern time. Currently,
the NYSE observes the following holidays: New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas.

The net asset value per share is computed by adding the value of all securities
and other assets in the portfolio, deducting any liabilities (expenses and fees
are accrued daily), and dividing that remainder by the total number of
outstanding shares. The Fund's securities are valued based on market quotations
or, when no market quotations are available, at fair value as determined in good
faith by or under direction of the Board of Directors. Securities listed on any
national securities exchange are valued at their last sale price on the exchange
where the securities are principally traded or, if there has been no sale on
that date, at the mean between the last reported bid and asked prices.
Securities traded over-the-counter are priced at the mean of the last bid and
asked prices.

Securities which are valued through valuations obtained from a commercial
pricing service or at the most recent mean of the bid and asked prices provided
by investment dealers are done so in accordance with procedures established by
the Board of Directors.

Short-term investments having a maturity of 60 days or less are valued at
amortized cost, which the Board of Directors believes represents fair value.
When a security is valued at amortized cost, it is valued at its cost when
purchased, and thereafter by assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument.

All other securities and other assets are valued at their fair value as
determined in good faith under procedures established by and under the
supervision of the Board of Directors.

DIVIDENDS AND TAXES

DIVIDENDS

The Fund intends to distribute its net investment income annually in December.
Any net realized gain from the sale of portfolio securities are distributed at
least once each year unless they are used to offset losses carried forward from
prior years, in which case no such gain will be distributed. Such income
dividends and capital gain distributions are reinvested automatically in
additional shares at net asset value, unless a shareholder elects to receive
them in cash. Distribution options may be changed at any time by requesting it
in writing.

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<PAGE>

Any check in payment of dividends or other distributions which cannot be
delivered by the Post Office or which remains uncashed for a period of more than
one year may be reinvested in the shareholder's account at the then current net
asset value and the dividend option may be changed from cash to reinvest.
Dividends are reinvested on the ex-dividend date (the "ex-date") at the net
asset value determined at the close of business on that date. Dividends and
distributions are treated the same for tax purposes whether received in cash or
reinvested in additional shares. PLEASE NOTE THAT SHARES PURCHASED SHORTLY
BEFORE THE RECORD DATE FOR A DIVIDEND OR DISTRIBUTION MAY HAVE THE EFFECT OF
RETURNING CAPITAL ALTHOUGH SUCH DIVIDENDS AND DISTRIBUTIONS ARE SUBJECT TO
TAXES.

TAXES

The Fund intends to conduct its operations so as to qualify as a "regulated
investment company" for purposes of the Internal Revenue Code of 1986, as
amended (the "Code"), which generally will relieve the Fund of any liability for
federal income tax to the extent its earnings and net realized capital gains are
distributed to shareholders. To qualify as a regulated investment company, the
Fund generally must, among other things, diversify its investments so that, at
the close of each quarter of its taxable year, (1) not more than 25% of the
market value of the Fund's total assets will be invested in the securities of a
single issuer, and (2) at least 50% of the market value of its total assets is
represented by cash, U.S. Government securities, the securities of other
regulated investment companies and other securities, with such other securities
limited, in respect of any one issuer, to an amount not greater than 5% of the
market value of the Fund's total assets and 10% of the outstanding voting
securities of such issuer.

Because the Fund intends to distribute substantially all of its net investment
income and capital gains to shareholders and otherwise qualify as a regulated
investment company under Subchapter M of the Code, it is generally not expected
that the Fund will be required to pay federal income taxes.

An investment in the Fund has certain tax consequences, depending on the type of
account. Distributions are subject to federal income tax and may also be
subject to state and local income and other taxes. Distributions are generally
taxable when they are paid, whether in cash or by reinvestment in additional
shares, except that certain distributions declared in October, November or
December and paid during the following January are taxable as if they were paid
on December 31. If shares of the Fund are owned by a qualified retirement
account, taxes on income and gains earned by the retirement account are
generally deferred until distributions are made from the retirement account.

For federal income tax purposes, income dividends and short-term capital gain
distributions are taxed as ordinary income. Distributions of net capital gains
(the excess of net long-term capital gain over net short-term capital loss
designated by the Fund as capital gain dividends) are taxed as long-term capital
gains, regardless of how long a shareholder has held the Fund's shares. The tax
treatment of distributions of ordinary income or capital gains will be the same
whether the shareholder reinvests the distributions or elects to receive them in
cash.

Shareholders may be subject to a 31% backup withholding tax on reportable
dividend and redemption payments ("backup withholding") if, among other things,
a certified taxpayer identification number is not on file with the Fund, or if
to the Fund's knowledge, an incorrect number has been furnished. An
individual's taxpayer identification number is his/her social security number
which must be included with the account application.

Shareholders will be advised annually of the source and tax status of all
distributions for federal income tax purposes. Information accompanying a
shareholder's statement will show the portion of those distributions that are
not taxable in certain states. Further information regarding the tax
consequences of investing in the Fund is included in the Statement of Additional
Information.

The foregoing summary of certain federal income tax consequences is included
herein for general informational purposes only. Consult your own tax adviser
for more specific information regarding the tax consequences you may be subject
to if you make an investment in the Fund.

-18-
<PAGE>

PERFORMANCE INFORMATION

The investment philosophy of the Fund is to make concentrated investments in a
limited number of companies whose long term economic progress, relative to the
acquisition price of their stocks, are deemed to be attractive. As a result of
this portfolio concentration, the performance of the Fund over time should
correlate more closely with the specific financial performance of its limited
number of portfolio companies than with price movements in the stock market in
general.

Performance information such as total return for the Fund may be quoted in
advertisements or in communications to shareholders. Such performance
information may be useful in reviewing the performance of the Fund and for
providing a basis for comparison with other investment alternatives. However,
since net investment return of the Fund changes in response to fluctuations in
market conditions, interest rates and Fund expenses, any given performance
quotation should not be considered representative of the Fund's performance for
any future period. The value of an investment in the Fund will fluctuate and an
investor's shares, when redeemed, may be worth more or less than their original
cost.

The Fund's total return is the change in value of an investment in the Fund over
a particular period, assuming that all distributions have been reinvested.
Thus, total return reflects not only income earned, but also variations in share
prices at the beginning and end of the period. Average annual return reflects
the average percentage change per year in the value of an investment in the
Fund. Aggregate total return reflects the total percentage change over the
stated period. Please refer to the Statement of Additional Information for more
information on performance.

You may obtain current performance information about the Fund by calling the
Fund at (800) 665-2550.

GENERAL INFORMATION

ORGANIZATION: Focus Trust, Inc. was incorporated under the laws of Maryland on
January 27, 1995 as an open-end, non-diversified, management investment company.
The Fund's Articles of Incorporation permit the Directors to issue one hundred
million shares of common stock, with a $0.001 par value. The Board of Directors
has the power to designate one or more classes of shares of common stock and to
classify or reclassify any unissued shares with respect to such class.
Currently the Fund is offering one class of shares.

DESCRIPTION OF SHARES: Shares of the Fund represent equal proportionate
interests in the assets of the Fund and have identical voting, dividend,
redemption, liquidation, and other rights. All shares issued, in the opinion of
Dechert Price & Rhoads, are legally issued, fully paid and nonassessable, and
shareholders have no preemptive or other right to subscribe to any additional
shares. All accounts will be maintained in book-entry form, no share
certificate will be issued.

VOTING RIGHTS: A shareholder is entitled to one vote for each full share held
(and a fractional vote for each fractional share held). All shares of the Fund
participate equally in regard to dividends, distributions, and liquidations with
respect to the Fund. Shareholders do not have preemptive, conversion or
cumulative voting rights which means that the holders of more than 50% of the
shares voting for the election of directors can elect 100% of the directors if
they choose to do so and, in such event, the holders of the remaining shares
will not be able to elect any person to the Board of Directors.

SHAREHOLDER MEETINGS: The Directors of the Fund are not required and do not
intend to hold annual meetings of shareholders. The Fund has undertaken to the
SEC, however, that it will promptly call a meeting for the purpose of voting
upon the question of the removal of any Director when requested to do so by
holders of not less than 10% of the outstanding shares of the Fund. In
addition, subject to certain conditions, shareholders of the Fund may apply to
the Fund to communicate with other shareholders to request a shareholders'
meeting to vote upon the removal of a Director or Directors.

SHAREHOLDER REPORTS AND INQUIRIES: Shareholders will receive semiannual reports
showing portfolio investments and other information as of June 30, and annual
reports audited by independent accountants as of December 31. Shareholder
inquiries should be addressed to the Fund c/o Focus Capital Advisory, L.P., P.O.
Box 407, Wayne, PA 19087, (800) 665-2550.

-19-
<PAGE>

INVESTMENT ADVISER

Focus Capital Advisory, L.P.
P.O. Box 407
Wayne, PA 19087

UNDERWRITER

FPS Broker Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406-0903
(800) 665-2550

SHAREHOLDER SERVICES

FPS Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406-0903
(800) 665-2550

CUSTODIAN

The Bank of New York
48 Wall Street
New York, NY 10286

LEGAL COUNSEL

Dechert Price & Rhoads
1500 K Street, N.W.
Washington, DC 20005

ACCOUNTANTS

Coopers & Lybrand, L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103

For Additional Information about Focus Trust, Inc. call:
(800) 665-2550

Visit the Focus Trust, Inc. web site on the Internet at
www.focustrust.com.

<PAGE>

This is your

INVESTMENT APPLICATION

Detach and Mail to:

FPS Services, Inc.
P.O. Box 61503
King of Prussia, PA 19406-0903
<PAGE>

FOCUS TRUST, INC.

1. INITIAL INVESTED ($1,000 MINIMUM)
- --------------------------------------------------------------------------------
FORM OF PAYMENT- INITIAL INVESTMENT

[ ] CHECK FOR $_______ ENCLOSED - PAYABLE TO FOCUS TRUST, INC.

[ ] Proceeds from another mutual fund in the amount of $______

[ ] By Wire - Funds were wired on __________ in the amount of $______
- --------------------------------------------------------------------------------

2. REGISTRATION (Please Print).
- --------------------------------------------------------------------------------
INDIVIDUAL* (Joint ownership with rights of survivorship unless otherwise noted)

[_][_][_][_][_][_][_][_][_][_] [_][_][_][_][_][_] [_][_][_]-[_][_]-[_][_][_][_]
First name Middle Initial Last Name Social Security #

[_][_][_][_][_][_][_][_][_][_] [_][_][_][_][_][_] [_][_][_]-[_][_]-[_][_][_][_]
Jt. Owner Middle Initial Last Name Social Security #
First name*
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
GIFT TO MINORS

[_][_][_][_][_][_][_][_][_][_][_][_] Under the ________________ UGMA/UTMA
Name of Custodian (name one only) State

[_][_][_][_][_][_][_][_][_][_][_][_] [_][_][_]-[_][_]-[_][_][_][_]
As Custodian For (name one only) Minor's Social Security #
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
CORPORATIONS, PARTNERSHIPS, TRUSTS AND OTHERS
(COMPLETE CORPORATE RESOLUTION)

[_][_]-[_][_][_][_][_][_][_] [_][_][_][_][_][_][_][_][_] [_][_][_][_][_][_]
Tax I.D. # Name of Trustee(s) Date of Trust

[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Name of Corporation, Partnership, Trust or Other

Citizen of: [ ] United States [ ] Other (Please indicate)____________________
- -------------------------------------------------------------------------------

3. MAILING ADDRESS OF RECORD AND TELEPHONE NUMBER(S)
- --------------------------------------------------------------------------------

[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_] [_][_] [_][_][_][_][_][_][_]
Street Address and Apt. No. City State Zip Code

Daytime Evening
Phone Number ( )___________________ Phone Number ( )______________________
- --------------------------------------------------------------------------------

4. DISTRIBUTION OPTIONS (Please indicate one - Distributions will be
reinvested if no option is checked.)
- --------------------------------------------------------------------------------
[ ] Automatic Compounding (dividends & capital gains in additional shares)

[ ] Cash Dividends (dividends in cash, capital gains in additional shares)

[ ] All Cash (dividends & capital gains in cash)
- -----------------------------------------------------------------------------
<PAGE>

5. TELEPHONE OPTIONS
- --------------------------------------------------------------------------------
[ ] TELEPHONE REDEMPTION

I (we) authorize FPS Services, Inc. to honor telephone instructions for
my(our) account. Neither the Fund nor FPS Services, Inc. will be liable for
properly acting upon telephone instructions believed to be genuine. Please
attach a voided check on the Transfer account or complete below.

- -------------------------------------------------------------------------------
Name of Bank City State

- -------------------------------------------------------------------------------
Bank Routing Number (nine digits) Account Number [ ] Checking [ ] Savings

[ ] TELEPHONE PURCHASES
- --------------------------------------------------------------------------------

6. SIGNATURE AND CERTIFICATION
- --------------------------------------------------------------------------------
REQUIRED BY FEDERAL TAX LAW TO AVOID 31% BACKUP WITHHOLDING; "BY SIGNING, I
CERTIFY UNDER PENALTIES OF PERJURY THAT THE SOCIAL SECURITY OR TAXPAYER
IDENTIFICATION NUMBER ENTERED ABOVE IS CORRECT AND THAT I HAVE NOT BEEN
NOTIFIED BY THE IRS THAT I AM SUBJECT TO BACKUP WITHHOLDING UNLESS I HAVE
CHECKED THE BOX TO THE RIGHT." [ ] I AM SUBJECT TO BACKUP WITHHOLDING.
RECEIPT OF CURRENT PROSPECTUS IS HEREBY ACKNOWLEDGED.

THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION
OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.

- --------------------------------------------------------------------------------
Signature [ ] Owner [ ] Custodian [ ] Trustee Date

- --------------------------------------------------------------------------------
Signature of Joint Owner (if applicable) Date
- --------------------------------------------------------------------------------

7. FOR INVESTMENT DEALER INFORMATION ONLY
- --------------------------------------------------------------------------------

- --------------------------------------------- -------------------------
Firm Name Branch/Branch #

- --------------------------------------------------------------------------------
Branch Address

- --------------------------------------------------------------------------------
City State Zip Code

- --------------------------------------------------------------------------------
Rep # Rep's Last Name
<PAGE>

================================================================================
RESOLUTIONS

(This Section to be Completed by Corporations, Trusts, and Other Organizations).

RESOLVED: That this corporation or organization become a shareholder of Focus
Trust, Inc. (the "Fund") and that:

- --------------------------------------------------------------------------------

is (are) hereby authorized to complete and execute the Application on behalf of
the corporation or organization and take any action for it as may be necessary
or appropriate with respect to its shareholders account(s) with the Fund, and it
is

FURTHER RESOLVED: That any one of the above noted officers is authorized to sign
any documents necessary or appropriate to appoint FPS Services, Inc. as
redemption agent of the corporation or organization for shares of the Fund, to
establish or acknowledge terms and conditions governing the redemption of said
shares or to otherwise implement the privileges elected on the application.
================================================================================

CERTIFICATE

I hereby certify that the foregoing resolutions are in conformity with the
Charter and By-Laws or other empowering documents of the:

- --------------------------------------------------------------------------------
(Name of Corporation)

incorporated or formed under the laws of ______________________________________
(State)

and were adopted at a meeting of the Board of Directors or Trustees of the
organization or corporation duly called and held on _____________________ at
which a quorum was present and acting throughout, and that the same are now in
full force and effect.

I further certify that the following is (are) the duly elected officer(s) of the
corporation or organization, authorized to act in accordance with the foregoing
resolutions.

Title Name

- ---------------------------------------- -------------------------------------

Witness my hand and the seal of the corporation or organization
this__________day of________________________, 19_____.

- ---------------------------------------- -------------------------------------
Other Authorized Officer (if required) *Secretary-Clerk

* If the Secretary or other recording officer is authorized to act by the above
resolutions, this certificate must also be signed by another officer.
<PAGE>

PART B

FOCUS TRUST, INC.
-----------------

STATEMENT OF ADDITIONAL INFORMATION

xxxx xx, 1997

================================================================================

This Statement of Additional Information dated xxxx xx, 1997, is not a
prospectus but should be read in conjunction with the Prospectus for the Focus
Trust, Inc. (the "Fund") dated xxxx xx, 1997, as amended or supplemented from
time to time. No investment in shares should be made without first reading the
Prospectus. This Statement of Additional Information is intended to provide
additional information regarding the activities and operations of the Fund, and
should be read in conjunction with the Prospectus. A copy of the Prospectus may
be obtained without charge from the Fund at the addresses and telephone numbers
below.

UNDERWRITER: ADVISER:

FPS Broker Services, Inc. Focus Capital Advisory, L.P.
3200 Horizon Drive P.O. Box 407
King of Prussia, PA 19406-0903 Wayne, PA 19087
(800) 665-2550 (610) 688-6558

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS STATEMENT OF ADDITIONAL INFORMATION OR IN
THE PROSPECTUS IN CONNECTION WITH THE OFFERING MADE BY THE PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE FUND OR ITS DISTRIBUTOR. THE PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING BY THE FUND OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN
WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
<PAGE>

TABLE OF CONTENTS
================================================================================

PAGE

Investment Policies and Techniques.................................

Convertible Securities...........................................
Forward Commitments, When-Issued Securities and Delayed
Delivery Transactions..........................................
Loans of Portfolio Securities....................................
Repurchase Agreements............................................
Reverse Repurchase Agreements....................................
Rule 144A Securities.............................................
Other Investments................................................

Investment Restrictions............................................

Management of the Fund.............................................

Principal Shareholders.............................................

Investment Advisory and Other Services
Investment Advisory Agreement....................................
Expenses of the Fund.............................................
Administrator....................................................
Underwriter......................................................

Portfolio Transactions and Brokerage...............................

Portfolio Turnover.................................................

Determination of Net Asset Value...................................

Taxes..............................................................

Performance Information
General.........................................................
Total Return Calculation........................................
Performance and Advertisements..................................

Other Information..................................................

Financial Statements...............................................

Page 2
<PAGE>

INVESTMENT POLICIES AND TECHNIQUES

The following supplements the information contained in the Prospectus concerning
a description of securities and investment practices of the Fund.

The investment practices described below, except for the discussion of portfolio
loan transactions, are not fundamental and may be changed by the Board of
Directors without the approval of the shareholders of the Fund. Shareholders
will, however, be notified within thirty (30) days of any changes in the
investment policies.

CONVERTIBLE SECURITIES
- ----------------------

The Fund may invest in convertible securities. Common stock occupies the most
junior position in a company's capital structure. Convertible securities
entitle the holder to exchange the securities for a specified number of shares
of common stock, usually of the same company, at specified prices within a
certain period of time and to receive interest or dividends until the holder
elects to convert. The provisions of any convertible security determine its
ranking in a company's capital structure. In the case of subordinated
convertible debentures, the holder's claims on assets and earnings are
subordinated to the claims of other creditors, and are senior to the claims of
preferred and common shareholders. In the case of preferred stock and
convertible preferred stock, the holder's claims on assets and earnings are
subordinated to the claims of all creditors but are senior to the claims of
common shareholders.

To the extent that a convertible security's investment value is greater than its
conversion value, its price will be primarily a reflection of such investment
value and its price will be likely to increase when interest rates fall and
decrease when interest rates rise, as with a fixed-income security. If the
conversion value exceeds the investment value, the price of the convertible
security will rise above its investment value and, in addition, may sell at some
premium over its conversion value. At such times the price of the convertible
security will tend to fluctuate directly with the price of the underlying equity
security.

FORWARD COMMITMENTS, WHEN-ISSUED SECURITIES AND DELAYED DELIVERY TRANSACTIONS
- -----------------------------------------------------------------------------

Although the Fund may purchase securities on a when-issued basis, or purchase or
sell securities on a forward commitment basis or purchase securities on a
delayed delivery basis, the Fund does not have the current intention of doing so
in the foreseeable future. The Fund will normally realize a capital gain or
loss in connection with these transactions.

When the Fund purchases securities on a when-issued, delayed delivery or forward
commitment basis, the Fund's custodian will maintain in a segregated account:
cash, U.S. Government securities or other high grade liquid debt obligations
having a value (determined daily) at least equal to the amount of the Fund's
purchase commitments. In the case of a forward commitment to sell portfolio
securities, the custodian will hold the portfolio securities themselves in a
segregated account while the commitment is outstanding. These procedures are
designed to ensure that the Fund will maintain sufficient assets at all times to
cover its obligations under when-issued purchases, forward commitments and
delayed delivery transactions.

LOANS OF PORTFOLIO SECURITIES
- -----------------------------

The Fund may lend portfolio securities to broker-dealers and financial
institutions, although at the present time it has no intention of lending
portfolio securities in the foreseeable future. The Fund may lend portfolio
securities provided: (1) the loan is secured continuously by collateral marked-
to-market daily and maintained in an amount at least equal to the current market
value of the securities loaned; (2) the Fund may call the loan at any time and
receive the securities loaned; (3) the Fund will receive any interest or
dividends paid on the loaned securities; and (4) the aggregate market value of
securities loaned will not at any time exceed 33% of the total assets of the
Fund.

Collateral will consist of U.S. Government securities, cash equivalents or
irrevocable letters of credit. Loans of securities involve a risk that the
borrower may fail to return the securities or may fail to maintain the proper
amount of collateral. Therefore, the Fund will only enter into portfolio loans
after a review of all pertinent facts by the Adviser, under the supervision of
the Board of Directors, including the creditworthiness of the borrower. Such
reviews will be monitored on an ongoing basis.

Page 3
<PAGE>

REPURCHASE AGREEMENTS
- ---------------------

The repurchase price under the repurchase agreements described in the
Prospectuses generally equals the price paid by the Fund plus interest
negotiated on the basis of current short-term rates (which may be more or less
than the rate on the securities underlying the repurchase agreement).
Repurchase agreements are considered loans by the Fund under the Investment
Company Act of 1940, as amended (the "1940 Act").

The financial institutions with which the Fund may enter into repurchase
agreements are banks and non-bank dealers of U.S. Government securities that are
listed on the Federal Reserve Bank of New York's list of reporting dealers and
banks, if such banks and non-bank dealers are deemed creditworthy by the
Adviser. The Adviser will continue to monitor the creditworthiness of the
seller under a repurchase agreement, and will require the seller to maintain
during the term of the agreement the value of the securities subject to the
agreement at not less than the repurchase price. The Fund will only enter into
a repurchase agreement where the market value of the underlying security,
including interest accrued, will be at all times equal to or exceed the value of
the repurchase agreement.

REVERSE REPURCHASE AGREEMENTS
- -----------------------------

The Fund may enter into reverse repurchase agreements but it does not currently
have the intention of doing so in the foreseeable future. Reverse repurchase
agreements involve the sale of securities held by the Fund pursuant to the
Fund's agreement to repurchase the securities at an agreed upon price, date and
rate of interest. Such agreements are considered to be borrowings under the
1940 Act, and may be entered into only for temporary or emergency purposes.
While reverse repurchase transactions are outstanding, the Fund will maintain in
a segregated account cash, U.S. Government securities or other liquid, high
grade debt securities in an amount at least equal to the market value of the
securities, plus accrued interest, subject to the agreement. Reverse repurchase
agreements involve the risk that the market value of the securities sold by the
Fund may decline below the price of the securities the Fund is obligated to
repurchase.

RULE 144A SECURITIES
- --------------------

The Fund may invest in securities that are exempt under SEC Rule 144A from the
registration requirements of the Securities Act of 1933. Those securities,
purchased under Rule 144A, are traded among qualified institutional investors
and are subject to the Fund's limitation on illiquid investment.

Investing in securities under Rule 144A could have the effect of increasing the
levels of the Fund's illiquidity to the extent that qualified institutional
buyers become, for a time, uninterested in purchasing these securities. The
Fund will limit its investment in securities of issuers which the Fund is
restricted from selling to the public without registration under the Securities
Act of 1933 to no more than 10% of the Fund's total assets, excluding restricted
securities eligible for resale pursuant to Rule 144A that have been determined
to be liquid by the Fund's Board of Directors.

OTHER INVESTMENTS
- -----------------

Subject to prior disclosure to shareholders, the Board of Directors may, in the
future, authorize the Fund to invest in securities other than those listed here
and in the prospectus, provided that such investment would be consistent with
the Fund's investment objective and that it would not violate any fundamental
investment policies or restrictions applicable to the Fund.

INVESTMENT RESTRICTIONS

The investment restrictions set forth below are fundamental policies and may not
be changed without the approval of a majority of the outstanding voting shares
(as defined in the 1940 Act) of the Fund. Unless otherwise indicated, all
percentage limitations listed below apply to the Fund only at the time of the
transaction. Accordingly, if a percentage restriction is adhered to at the time
of investment, a later increase or decrease in the percentage which results from
a relative change in values or from a change in the Fund's total assets will not
be considered a violation.

Except as set forth under "Investment Objective and Policies" and "Investment
Practices" in the Prospectus, the Fund may not:

(1) Act as an underwriter of securities, except that, in connection with
the disposition of a security, the Fund may be deemed to be an
"underwriter" as that term is defined in the Securities Act of 1933;

Page 4
<PAGE>

(2) Purchase or sell real estate (but this restriction shall not prevent
the Fund from investing directly or indirectly in portfolio instruments
secured by real estate or interests therein or acquiring securities of
real estate investment trusts or other issuers that deal in real
estate), interests in oil, gas and/or mineral exploration or
development programs or leases. However, in order to comply with the
"blue sky" restrictions of certain states, the Fund will limit its
purchases of readily marketable real estate investment trusts to 10% of
its total assets, and the Fund will not invest in real estate limited
partnerships;

(3) Purchase or sell commodities or commodity contracts;

(4) Make loans, except that this restriction shall not prohibit (a) the
purchase and holding of debt instruments in accordance with the Fund's
investment objectives and policies, (b) the lending of portfolio
securities, or (c) entry into repurchase agreements with banks or
broker-dealers;

(5) Borrow money or issue senior securities, except that the Fund may
borrow from banks and enter into reverse repurchase agreements for
temporary purposes in amounts up to one-third of the value of its total
assets at the time of such borrowing; or mortgage, pledge, or
hypothecate any assets, except in connection with any such borrowing
and in amounts not in excess of the lesser of the dollar amounts
borrowed or 5% of the value of the total assets of the Fund at the time
of its borrowing. All borrowings will be done from a bank and asset
coverage of at least 300% is required;

(6) Sell securities short or purchase securities on margin, except for such
short-term credits as are necessary for the clearance of transactions;

(7) Invest in puts, calls, straddles or combinations thereof;

(8) Participate on a joint or joint and several basis in any securities
trading account;

(9) Make investments in securities for the purpose of exercising control;

(10) Purchase the securities of any one issuer if, immediately after such
purchase, the Fund would own more than 25% of the outstanding voting
securities of such issuer;

(11) Invest more than 25% of the value of its total assets (taken at market
value at the time of each investment) in securities of issuers whose
principal business activities are in the same industry. For this
purpose, "industry" does not include the U.S. Government, its agencies
and instrumentalities; or

(12) Purchase securities of issuers having less than three years' continuous
operation, if such purchase would cause the value of the Fund's
investments in all such issuers to exceed 5% of the value of its total
assets. Such three year periods shall include the operation of any
predecessor company or companies.

Although not considered fundamental, the Fund will not invest: (1) more than 5%
of its net assets in warrants, including within that amount no more than 2% in
warrants which are not listed on the New York or American Stock Exchanges,
except warrants acquired as a result of its holdings of common stocks; and (2)
purchase or retain the securities of any issuer if, to the knowledge of the
Fund, any officer or director of the Fund or of its investment manager owns
beneficially more than 1/2 of 1% of the outstanding securities of such issuer,
and such officers and directors of the Fund or of its investment manager who own
more than 1/2 of 1%, own in the aggregate, more than 5% of the outstanding
securities of such issuer.

Page 5
<PAGE>

MANAGEMENT OF THE FUND

For the fiscal year ended December 31, 1996, the directors received the
following compensation:

COMPENSATION TABLE

NAME OF DIRECTOR AGGREGATE COMPENSATION TOTAL COMPENSATION FROM
FROM REGISTRANT REGISTRANT AND FUND COMPLEX

Robert G. Hagstrom, Jr.* $ 0.00 $ 0.00
Allan S. Mostoff, Esq.* $4,800 $4,800
Robert J. Coleman, Jr. $5,000 $5,000
Joan Lamm-Tennant $5,000 $5,000

* This Director is considered an "Interested Person" of the Fund as defined
under the 1940 Act.

Directors who are not officers, directors or employees of the Adviser are
entitled to receive an annual retainer of $4,000 per annum and $200 per Board
meeting and committee meeting attended, as well as reimbursement for all out-of-
pocket expenses relating to attendence at such meetings.

PRINCIPAL SHAREHOLDERS

As of May 22, 1997, the officers and Directors of the Fund, together as a group,
owned beneficially 13,295 shares (2.32%) of the Fund. As of May 22, 1997, the
following persons owned of record or beneficially more than 5% of the
outstanding voting shares of the Fund:

NAME & ADDRESS PERCENTAGE
-------------- ----------

George H. Nofer 8.79%
Philadelphia, PA

Charles Schwab & Co., Inc. 8.48%
San Francisco, CA

INVESTMENT ADVISORY AND OTHER SERVICES

INVESTMENT ADVISORY AGREEMENT
- -----------------------------

The advisory services provided by Focus Capital Advisory, L.P. (the "Adviser"),
and the fees received by it for such services, are described in the Prospectus.
As stated in the Prospectus, the Adviser may from time to time voluntarily waive
its advisory fees with respect to the Fund. In addition, if the total expenses
borne by the Fund in any fiscal year exceed the expense limitations imposed by
applicable state securities regulations, the Adviser will bear the amount of
such excess to the extent required by such regulations.

The Adviser has agreed to waive its advisory fee in an amount equal to the total
expenses of the Fund for any fiscal year which exceeds the permissible limits
applicable to the Fund in any state in which its shares are then qualified for
sale.

Page 6
<PAGE>

Under its investment advisory agreement (the "Investment Advisory Agreement"),
the Adviser is not liable for any error of judgment or mistake of law or for any
loss suffered by the Fund in connection with the performance of the Investment
Advisory Agreement, except a loss resulting from willful misfeasance, bad faith
or gross negligence on its part in the performance of its duties or from
reckless disregard of its duties and obligations thereunder.

Under its terms, the Investment Advisory Agreement will continue from year to
year thereafter, provided its continuance is approved at least annually by the
vote of the holders of at least a majority of the outstanding shares of the
Fund, or by the Directors of the Fund. The Investment Advisory Agreement is
terminable with respect to the Fund by vote of the Board of Directors or by the
holders of a majority of the outstanding voting securities of the Fund, at any
time without penalty, on 60 days' written notice to the Adviser. The Adviser
may also terminate its advisory relationship with respect to the Fund on 60
days' written notice to the Fund. The Investment Advisory Agreement terminates
automatically in the event of its assignment.

Prior to June 27, 1997, Lloyd, Leith & Sawin, Inc. served as investment adviser
to the Fund. For the period April 17, 1995 (commencement of operations) through
December 31, 1995 and the fiscal year ended December 31, 1996, Lloyd, Leith &
Sawin, Inc. was entitled to receive advisory fees of $15,371 and $43,364,
respectively. However, Lloyd, Leith & Sawin , Inc. waived its fees to reimburse
the Fund for expenses so that the Fund's expenses would not exceed 2.00%.

EXPENSES OF THE FUND
- --------------------

Under the Investment Advisory Agreement, the Fund pays the following expenses:
(1) the fees and expenses of the Fund's disinterested directors; (2) the
salaries and expenses of the Fund's officers or employees who are not affiliated
with the Adviser; (3) interest expenses; (4) taxes and governmental fees; (5)
brokerage commissions and other expenses incurred in acquiring or disposing of
portfolio securities; (6) the expenses of registering and qualifying shares for
sale with the SEC and with various state securities commissions; (7) accounting
and legal costs; (8) insurance premiums; (9) fees and expenses of the Fund's
custodian, administrator and transfer agent and any related services; (10)
expenses of obtaining quotations of the Fund's portfolio securities and of
pricing the Fund's shares; (11) expenses of maintaining the Fund's legal
existence and of shareholders' meetings; (12) expenses of preparation and
distribution to existing shareholders of reports, proxies and prospectuses; and
(13) fees and expenses of membership in industry organizations.

Prior to July 27, 1997 Lloyd, Leith & Sawin, Inc. served as investment adviser
to the Fund. For the period April 17, 1995 (commencement of operations) through
December 31, 1995, and the fiscal year ended December 31, 1996 Lloyd, Leith &
Sawin, Inc. reimbursed the Fund $128,696 and $173,23, respectively, so that the
Fund's expenses would not exceed 2.00%.

ADMINISTRATOR
- -------------

FPS Services, Inc., 3200 Horizon Drive King of Prussia, PA 19406-0903 (the
"Administrator"), provides certain administrative services to the Fund pursuant
to an administrative services agreement (the "Administrative Services
Agreement").

Under the Administrative Services Agreement, the Administrator (1) coordinates
with the Custodian and Transfer Agent and monitors the services they provide to
the Fund; (2) coordinates with and monitors any other third parties furnishing
services to the Fund; (3) provides the Fund with necessary office space,
telephones and other communications facilities and personnel competent to
perform administrative and clerical functions; (4) supervises the maintenance by
third parties of such books and records of the Fund as may be required by
applicable federal or state law; (5) prepares and, after approval by the Fund,
files and arranges for the distribution of proxy materials and periodic reports
to shareholders of the Fund as required by applicable law; (6) prepares and,
after approval by the Fund, arranges for the filing of such registration
statements and other documents with the SEC and other federal and state
regulatory authorities as may be required by applicable law; (7) reviews and
submits to the officers of the Fund for their approval invoices or other
requests for payment of the Fund's expenses and instructs the Custodian to issue
checks in payment thereof; and (8) takes such other action with respect to the
Fund as may be necessary in the opinion of the Administrator to perform its
duties under the agreement.

Page 7
<PAGE>

As compensation for services performed under the Administrative Services
Agreement, the Administrator receives a fee payable monthly at an annual rate
(as described in the Prospectus) multiplied by the average daily net assets of
the Fund. For the period April 17, 1995 (commencement of operations) through
December 31, 1995, the Administrator was entitled to receive administrative fees
of $48,482 of which it retained $46,982 and waived $1,500 of such fees. For the
fiscal year ended December 31, 1996, the Administrator was entitled to receive
administrative fees of $71,515 of which it retained $65,515 and waived $6,000 of
such fees.

UNDERWRITER
- -----------

FPS Broker Services, Inc., 3200 Horizon Drive, King of Prussia, PA 19406-0903,
acts as an underwriter of the Fund's shares for the purpose of facilitating the
registration of shares of the Fund under state securities laws and to assist in
sales of shares pursuant to an underwriting agreement (the "Underwriting
Agreement") approved by the Fund's Directors.

In this regard, FPSB has agreed at its own expense to qualify as a broker-dealer
under all applicable federal or state laws in those states which the Fund shall
from time to time identify to FPSB as states in which it wishes to offer its
shares for sale, in order that state registrations may be maintained for the
Fund.

FPSB is a broker-dealer registered with the U.S. Securities and Exchange
Commission and a member in good standing of the National Association of
Securities Dealers, Inc. FPSB charges no fee for serving as the Fund's
underwriter.

The Fund does not impose any sales loads nor does it bear any fees pursuant to a
Rule 12b-1 Plan. The Fund shall continue to bear the expenses of all filing or
registration fees incurred in connection with the registration of shares under
state securities laws.

The Underwriting Agreement may be terminated by either party upon 60 days' prior
written notice to the other party, and if so terminated, the prorata portion of
the unearned fee will be returned to the Adviser.

PORTFOLIO TRANSACTIONS AND BROKERAGE

The Adviser is responsible for decisions to buy and sell securities for the Fund
and for effecting portfolio transactions and the negotiation of commissions, if
any, paid on such transactions. Fixed-income securities and many equity
securities in which the Fund invests are traded in over-the-counter markets.
These securities are generally traded on a net basis with dealers acting as
principal for their own accounts without a stated commission. In over-the-
counter transactions, orders are placed directly with a principal market-maker
unless a better price and execution can be obtained by using a broker.
Brokerage commissions are paid on transactions in listed securities, futures
contracts and options thereon. The Adviser is responsible for effecting
portfolio transactions and will do so in a manner deemed fair and reasonable to
the Fund. The Fund does not participate in soft dollar arrangements. For the
period April 17, 1995 (commencement of operations) through December 31, 1995 and
the fiscal year ended December 31, 1996, the Fund incurred aggregate brokerage
commissions of $6,042 and $8,781, respectively.

PORTFOLIO TURNOVER

The portfolio turnover rate for the Fund is calculated by dividing the lesser of
purchases or sales of portfolio investments for the reporting period by the
monthly average value of the portfolio investments owned during the reporting
period. The calculation excludes all securities whose maturities or expiration
dates at the time of acquisition are one year or less. Portfolio turnover may
vary greatly from year to year as well as within a particular year, and may be
affected by cash requirements for redemption of shares and by requirements which
enable the Fund to receive favorable tax treatment. In any event, the annual
portfolio turnover for the Fund is not expected to exceed 25%. This relatively
low portfolio turnover rate reflects the Adviser's buy and hold strategy for the
portfolio securities held by the Fund.

Page 8
<PAGE>

DETERMINATION OF NET ASSET VALUE

A more complete discussion of the Fund's determination of net asset value is
contained in the Prospectus. Generally, the net asset value of the Fund will be
determined as of the close of trading on each day the New York Stock Exchange is
open for trading. The Fund does not determine net asset value on days that the
New York Stock Exchange is closed and at other times described in the
Prospectus. The New York Stock Exchange is closed on New Year's Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day. Additionally, if any of the aforementioned holidays falls on
a Saturday, the New York Stock Exchange will not be open for trading on the
preceding Friday and when such holiday falls on a Sunday, the New York Stock
Exchange will not be open for trading on the succeeding Monday, unless unusual
business conditions exist, such as the ending of a monthly or the yearly
accounting period.

TAXES

The Fund intends to qualify each year as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). In
order to so qualify for any taxable year, the Fund must, among other things, (i)
derive at least 90% of its gross income from dividends, interest, payments with
respect to certain securities loans and gains from the sale or other disposition
of stock, securities of foreign currencies, or other income (including but not
limited to gains from options, futures or forward contracts) derived with
respect to its business of investing in such stock, securities or currencies;
(ii) derive less than 30% of its gross income from gains from the sale or other
disposition of securities or certain futures, options or forward contracts
thereon held for less than three months; (iii) distribute at least 90% of its
dividend, interest and certain other taxable income each year; and (iv) at the
end of each fiscal quarter maintain at least 50% of the value of its total
assets in cash, U.S. Government securities, securities of other regulated
investment companies, and other securities, with such other securities limited,
in respect of any one to each issuer, to not more than 5% of the value of the
Fund's total assets and 10% of the outstanding voting securities of such issuer,
and have no more than 25% of its assets invested in the securities (other than
those of the U.S. Government or other regulated investment companies) of any one
issuer or of two or more issuers which the Fund controls and which are engaged
in the same, similar or related trades or businesses.

To the extent the Fund qualifies for treatment as a regulated investment
company, it generally will not be subject to federal income tax on income paid
to shareholders in the form of dividends or capital gains distributions.

An excise tax at the rate of 4% will be imposed on the excess, if any, of the
Fund's "required distributions" over actual distributions in any calendar year.
Generally, the "required distribution" is 98% of the Fund's ordinary income for
the calendar year plus 98% of its capital gain net income recognized during the
one-year period ending on October 31 plus undistributed amounts from prior
years. The Fund intends to make distributions sufficient to avoid imposition of
the excise tax. A distribution will be treated as paid on December 31 of the
current calendar year if it is declared by the Fund during October, November or
December to shareholders of record during such month and paid during January of
the following year. Such distributions will be taxable in the year they are
declared, rather than the year in which they are received.

Shareholders generally will be subject to federal income taxes on distributions
made by the Fund whether received in cash or additional shares of the Fund.
Distributions of net investment income and net short-term capital gains, if any,
will be taxable to shareholders as ordinary income. Distributions of net
investment income may be eligible for the corporate dividends-received
deduction to the extend attributable to the Fund's qualifying dividend income.
However, the alternative minimum tax applicable to corporations may reduce the
benefit of the dividends-received deduction. Distributions of net capital gains,
if any, designated by the Fund as capital gain dividends, will be taxable to
shareholders as long-term capital gains, without regard to how long a
shareholder has held shares of the Fund, and are not eligible for the dividends
received deduction. A loss on the sale of shares held for six months or less
will be treated as a long-term capital loss to the extent of any capital gain
dividend paid to the shareholder with respect to such shares.

Certain of the debt securities acquired by the Fund may be treated as debt
securities that were originally issued at a discount. Original issue discount
can generally be defined as the difference between the price at which a security
was issued and its stated redemption price at maturity. Generally, the amount
of the original issue discount is treated as

Page 9
<PAGE>

interest income and is included in income over the term of the debt security,
even though payment of the amount is not received until a later time, usually
when the debt security matures.

Some debt securities may be purchased by the Fund at a discount which exceeds
the original issue discount on such debt securities, if any. This additional
discount represents market discount for federal income tax purposes. The gain
realized on the disposition of any debt security having market discount will be
treated as ordinary income to the extent it does not exceed the accrued market
discount on such debt security. Generally, market discount accrues on a daily
basis for each day the debt security is held by the Fund at a constant rate over
the time remaining to the debt security's maturity. In the case of certain
short-term debt securities with market discount, the amount of the market
discount is included in income over the remaining term of the debt security,
even though payment of the amount is not received until a later time, usually
when the debt security matures.

The Fund may invest in stocks of foreign companies that are classified under the
Code as passive foreign investment companies ("PFICs"). In general, a foreign
company is classified as a PFIC if at least one-half of its assets constitute
investment-type assets or 75% or more of its gross income is investment-type
income. Under the PFIC rules, an "excess distribution" received with respect to
PFIC stock is treated as having been realized ratably over the period during
which the Fund held the PFIC stock. The Fund itself will be subject to tax on
the portion, if any, of the excess distribution that is allocated to the Fund's
holding period in prior taxable years (and an interest factor will be added to
the tax as if the tax had actually been payable in such prior taxable years)
even though the Fund distributed the corresponding income to shareholders.
Excess distributions include any gain from the sale of PFIC stock as well as
certain distributions from a PFIC. All excess distributions are taxable as
ordinary income.

The Fund may be able to elect alternative tax treatment with respect to PFIC
stock. Under an election that currently may be available, the Fund generally
would be required to include in its gross income its share of the earnings of a
PFIC on a current basis, regardless of whether any distributions are received
from the PFIC. If this election is made, the special rules, discussed above,
relating to the taxation of excess distributions, would not apply.
Alternatively, the Fund may be able to elect to mark to market its PFIC stock,
resulting in the stock being treated as sold at fair market value on the last
business day of each taxable year. Any resulting gain would be reported as
ordinary income, and any resulting loss would not be recognized. If this
election were made, the special rules described above with respect to excess
distributions would still apply. The Fund's intention to qualify annually as
regulated investment company may limit its elections with respect to PFIC stock.

Because the application of the PFIC rules may affect, among other things, the
character of gains, the amount of gain or loss and the timing of the recognition
of income with respect to PFIC stock, as well as subject the Fund itself to tax
on certain income from PFIC stock, the amount that must be distributed to
shareholders, and which will be taxed to shareholders as ordinary income or
long-term capital gain, may be increased or decreased substantially as compared
to a Fund that did not invest in PFIC stock.

Under the Code, gains or losses attributable to fluctuations in foreign currency
exchange rates which occur between the time the Fund accrues income or other
receivables or accrues expenses or other liabilities denominated in foreign
currency and the time the Fund actually collects such receivables or pays such
liabilities generally are treated as ordinary income or ordinary loss.
Similarly, on disposition of debt securities denominated in a foreign currency,
gains or losses attributable to fluctuations in the value of foreign currency
between the date of acquisition of the security and the date of disposition also
are treated as ordinary gain or loss. These gains and losses, referred to under
the Code as "Section 988" gains and losses, may increase or decrease the amount
of the Fund's net investment income to be distributed to its shareholders as
ordinary income. For example, fluctuations in exchange rates may increase the
amount of income that the Fund must distribute in order to qualify for treatment
as a regulated investment company and to prevent application of an excise tax on
undistributed income. Alternatively, fluctuations in exchange rates may
decrease or eliminate income available for distribution. If Section 988 losses
exceed other net investment income during a taxable year, the Fund would not be
able to make ordinary dividend distributions, or distributions made before the
losses were realized would be recharacterized as return of capital to
shareholders for federal income tax purposes, rather than as an ordinary
dividend, reducing each shareholder's basis in his Fund shares.

Upon the sale or exchange of shares in the Fund, a shareholder will realize a
taxable gain or loss depending upon his basis in the shares. Such gain or loss
will be treated as capital gain or loss if the shares are capital assets in the

Page 10
<PAGE>

shareholder's hands, and generally will be long-term if the shareholder's
holding period for the shares is more than one year and generally otherwise will
be short-term. Any loss realized on a sale or exchange will be disallowed to
the extent that the shares disposed of are replaced (including replacement
through the reinvesting of dividends and capital gain distributions in the Fund)
within a period of 61 days beginning 30 days before and ending 30 days after the
disposition of the shares. In such a case, the basis of the shares acquired
will be adjusted to reflect the disallowed loss.

The Fund will notify shareholders each year of the amount of dividends and
distributions, including the amount of any distribution of capital gain
dividends, and the portion of its dividends which may be eligible for the 70%
dividend-received deduction.

The above discussion and the related tax discussion in the Prospectus are
general in nature and are not intended to be complete discussions of all
applicable federal tax consequences relating to an investment in the Fund. The
law firm of Dechert Price & Rhoads has expressed no opinion in respect thereof.
Dividends and distributions also may be subject to state and local taxes.
Shareholders are urged to consult their tax advisors regarding specific
questions as to federal, state and local taxes.

The foregoing discussion relates solely to U.S. federal income tax law. Non-
U.S. investors should consult their tax advisors concerning the tax consequences
of ownership of shares of the Fund, including the possibility that distributions
may be subject to a 30% U.S. withholding tax (or a reduced rate of withholding
provided by treaty).

PERFORMANCE INFORMATION
GENERAL
- -------

From time to time, the Fund may include general comparative information, such as
statistical data regarding inflation, securities indices or the features or
performance of alternative investments, in advertisements, sales literature and
reports to shareholders. The Fund may also include calculations, such as
hypothetical compounding examples or tax-free compounding examples, which
describe hypothetical investment results in such communications. Such
performance examples will be based on an express set of assumptions and are not
indicative of the performance of the Fund.

From time to time, the total return of the Fund may be quoted in advertisements,
shareholder reports or other communications to shareholders.

TOTAL RETURN CALCULATION
- ------------------------

Current yield and total return quotations used by the Fund are based on
standardized methods of computing performance mandated by SEC Rules. As the
following formula indicates, the average annual total return is determined by
multiplying a hypothetical initial purchase order of $1,000 by the average
compound rate of return (including capital appreciation/depreciation and
dividends and distributions paid and reinvested) for the stated period less any
fees charged to all shareholder accounts and annualizing the result. The
calculation assumes that all dividends and distributions are reinvested at the
net asset value on the reinvestment dates during the period. The quotation
assumes the account was completely redeemed at the end of each period and
deduction of applicable charges and fees. This calculation can be expressed as
follows:

Average Annual Total Return = P(1+T)/n/ = ERV

Where: ERV = ending redeemable value at the end of the period
covered by the computation of a hypothetical $1,000
payment made at the beginning of the period.
P = hypothetical initial payment of $1,000.
n = period covered by the computation, expressed in
terms of years.

The Fund computes its aggregate total return by determining the aggregate
compounded rate of return during specified period that likewise equate the
initial amount invested to the ending redeemable value of such investment. The
formula for calculating aggregate total return is as follows:

Page 11
<PAGE>

Aggregate Total Return = [ (ERV) - 1 ]
---
P
Where: ERV = ending redeemable value at the end of the period
covered by the computation of a hypothetical $1,000
payment made at the beginning of the period.
P = hypothetical initial payment of $1,000.

The calculations of average annual total return and aggregate total return
assume the reinvestment of all dividends and capital gain distributions on the
reinvestment dates during the period. The ending redeemable value (variable
"ERV" in each formula) is determined by assuming complete redemption of the
hypothetical investment and the deduction of all nonrecurring charges at the end
of the period covered by the computations. Based upon the foregoing
calculations, the average annual total return for the Fund for the period April
17, 1995 (commencement of operations) through December 31, 1996 was 17.41%. For
the fiscal year ended December 31, 1996, the annual total return for the Fund
was 17.14%.

Since performance will fluctuate, performance data for the Fund should not be
used to compare an investment in the Fund's shares with bank deposits, savings
accounts and similar investment alternatives which often provide an agreed-upon
or guaranteed fixed yield for a stated period of time. Shareholders should
remember that performance is generally a function of the kind and quality of the
instruments held in a portfolio, portfolio maturity, operating expenses and
market conditions.

PERFORMANCE AND ADVERTISEMENTS
- ------------------------------

From time to time, in marketing and other fund literature, the Fund's
performance may be compared to the performance of other mutual funds in general
or to the performance of particular types of mutual funds with similar
investment goals, as tracked by independent organizations. Among these
organizations, Lipper Analytical Services, Inc. ("Lipper"), a widely used
independent research firm which ranks mutual funds by overall performance,
investment objectives, and assets, may be cited. Lipper performance figures are
based on changes in net asset value, with all income and capital gains dividends
reinvested. Such calculations do not include the effect of any sales charges
imposed by other funds. The Fund will be compared to Lipper's appropriate fund
category, that is, by fund objective and portfolio holdings. The Fund's
performance may also be compared to the average performance of its Lipper
category.

The Fund's performance may also be compared to the performance of other mutual
funds by Morningstar, Inc. which ranks funds on the basis of historical risk and
total return. Morningstar's rankings range from five stars (highest) to one
star (lowest) and represent Morningstar's assessment of the historical risk
level and total return of a fund as a weighted average for three, five and ten
year periods. Ranks are not absolute or necessarily predictive of future
performance.

In assessing such comparisons of total return, or volatility, an investor should
keep in mind that the composition of the investments in the reported indices and
averages is not identical to those of the Fund, that the averages are generally
unmanaged, and that the items included in the calculations of such averages may
not be identical to the formula used by the Fund to calculate its figures.

OTHER INFORMATION

The Prospectus and this Statement of Additional Information do not contain all
the information included in the Registration Statement filed with the SEC under
the Securities Act of 1933 with respect to the securities offered by the
Prospectus. Certain portions of the Registration Statement have been omitted
from the Prospectus and this Statement of Additional Information pursuant to the
rules and regulations of the SEC. The Registration Statement including the
exhibits filed therewith may be examined at the office of the SEC in Washington,
D.C.

Statements contained in the Prospectus or in this Statement of Additional
Information as to the contents of any contract or other document referred to are
not necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement of which the Prospectus and this Statement of Additional Information
forms a part. Each such statement is qualified in all respects by such
reference.

Page 12
<PAGE>

CUSTODIAN. The Bank of New York, 48 Wall Street, New York, NY 10286 is custodian
of the Fund's assets pursuant to a custodian agreement. Under the custodian
agreement, The Bank of New York (i) maintains a separate account or accounts in
the name of the Fund, (ii) holds and transfers portfolio securities on account
of the Fund, (iii) accepts receipts and makes disbursements of money on behalf
of the Fund, (iv) collects and receives all income and other payments and
distributions on account of the Fund's securities and (v) makes periodic reports
to the Board of Directors concerning the Fund's operations.

INDEPENDENT ACCOUNTANTS. Coopers & Lybrand L.L.P., 2400 Eleven Penn Center,
Philadelphia, PA 19103 have been selected as the independent accountants for
the Fund. Coopers & Lybrand L.L.P. provide audit and tax services. The books
of the Fund will be audited at least once each year by Coopers & Lybrand L.L.P.

REPORTS TO SHAREHOLDERS. Shareholders will receive unaudited semi-annual
reports describing the Fund's investment operations and annual financial
statements audited by independent certified public accountants. Inquiries
regarding the Fund may be directed to the Adviser at (610) 688-6558.

FINANCIAL STATEMENTS

The Fund's Financial Statements, including the notes thereto, dated as of
December 31, 1996, which have been audited by Coopers & Lybrand L.L.P., are
incorporated by reference from the Fund's 1996 Annual Report to shareholders.

Page 13
<PAGE>

FOCUS TRUST, INC.
Form N-1A
Part C Other Information
PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits.
- -------------------------------------------------
(a) Financial Statements:
Included in Part A:
(1) The Financial Highlights for the period from April 17, 1995
(commencement of operations) through December 31, 1995 and the fiscal year
ended December 31, 1996 (audited).

Incorporated by reference in Part B.

(1) Schedule of Investments at December 31, 1996 (audited).
(2) Statement of Assets and Liabilities at December 31, 1996 (audited).
(3) Statement of Operations for the period ended December 31, 1996
(audited).
(4) Statement of Changes in Net Assets for the period of April 17, 1995
(commencement of operations) to December 31, 1995 and the fiscal year
ended December 31, 1996 (audited).
(5) Notes to Financial Statements.
(6) Financial Highlights (audited).
(7) Report of Independent Accountants

(b) Exhibits filed pursuant to Form N-1A:
(1) Copies of Charter -- Articles of Incorporation are incorporated herein
by reference to Post-Effective Amendment No. 2 as Exhibit No. 99(1) to
Item 24 as electronically filed on April 29, 1996.

(2) Copies of existing By-Laws -- By-Laws are incorporated herein by
reference to Post-Effective Amendment No. 2 as Exhibit No. 99(2) to
Item 24 as electronically filed on April 29, 1996.

(3) Copies of any voting trust agreement -- Not Applicable.

(4) Copies of all instruments defining the rights of holders of the
securities -- Not Applicable - Registrant proposes to maintain
investments as non-certificated book entry shares.

(5) Copies of all investment advisory contracts

Investment Advisory Agreement dated June 30, 1997 between Registrant
and Focus Capital Advisory, L.P. is filed herewith.

(6) Copies of each underwriting or distribution contract -- Underwriting
Agreement dated April 4, 1995 between Registrant and FPS Broker
Services, Inc. is incorporated herein by reference to Post-Effective
Amendment No. 2 as Exhibit No. 99(6) to Item 24 as electronically filed
on April 29, 1996.

(7) Copies of all bonus, profit sharing, pension or other similar contracts
-- Not Applicable.

(8) Copies of all custodian agreements

(a) Custody Administration and Agency Agreement dated April 22, 1996
between Registrant and FPS Services, Inc. is incorporated herein by
reference to Post-Effective Amendment No. 2 as Exhibit No. 99(8)(a) to
Item 24 as electronically filed on April 29, 1996.

(b) Custody Agreement dated April 22, 1996 between the Registrant and
The Bank of New York is incorporated herein by reference to Post-
Effective Amendment No. 2 as Exhibit No. 99(8)(b) to
<PAGE>
Item 24 as electronically filed on April 29, 1996.

(9) Copies of all other material contracts not made in the ordinary course
of business which are to be performed.
(a) Shareholder Services Agreement between the Registrant and FPS
Services, Inc. dated April 4, 1995 is incorporated herein by
reference to Post-Effective Amendment No. 2 as Exhibit No. 99(9)(a)
to Item 24 as electronically filed on April 29, 1996.

(b) Administrative Services Agreement between the Registrant and FPS
Services, Inc. dated April 4, 1995 is incorporated herein by
reference to Post-Effective Amendment No. 2 as Exhibit No. 99(9)(b)
to Item 24 as electronically filed on April 29, 1996.

(c) Accounting Services Agreement between the Registrant and FPS
Services, Inc. dated April 4, 1995 is incorporated herein by
reference to Post-Effective Amendment No. 2 as Exhibit No. 99(9)(c)
to Item 24 as electronically filed on April 29, 1996.

(10) Opinion and Consent of Counsel as to the legality of the securities to
be issued -- Opinion and Consent of Counsel is incorporated by reference
to Registrant's Rule 24f-2 Notice filed electronically on February 27,
1997.

(11) Copies of any other opinions, appraisals or rulings -- Consent of
Independent Auditors - is filed herewith.

(12) All financial statements omitted from Item 23. -- Not Applicable.

(13) Copies of any agreements or understandings made in consideration for
providing the initial capital between or among the Registrant is
incorporated herein by reference to Post-Effective Amendment No. 2 as
Exhibit No. 99(13) to Item 24 as electronically filed on April 29, 1996.

(14) Copies of the model plan -- Form of Individual Retirement Account
(I.R.A.) is incorporated herein by reference to Post-Effective Amendment
No. 2 as Exhibit No. 99(14) to Item 24 as electronically filed on April
29, 1996.

(15) Copies of any plan entered into by Registrant pursuant to Rule 12b-1 --
Not Applicable.

(16) Schedule for Computation of Performance Quotations --incorporated herein
by reference to Post-Effective Amendment No. 2 as Exhibit No. 99(16) to
Item 24 as electronically filed on April 29, 1996.

(18) Directors' and Officers Powers of Attorney: (a) Robert G. Hagstrom,
Jr.; (b) Allan S. Mostoff, Esq.; (c) Joan Lamm-Tennant; and (d) Robert
J. Coleman, Jr.; and (e) John S. Lloyd --incorporated herein by
reference to Post-Effective Amendment No. 2 as Exhibit No. 99(18) to
Item 24 as electronically filed on April 29, 1996.

(27) Financial Data Schedule is filed herewith.

Item 25. Persons Controlled by or under Common Control with Registrant.
- ------------------------------------------------------------------------
None.
-----

Item 26. Number of Holders of Securities as of May 22, 1997.
- -------------------------------------------------------------
696
---

Item 27. Indemnification.
- --------------------------
<PAGE>

Reference is made to Article VII of the Registrant's Articles of
Incorporation and Article VI of the Registrant's By-Laws which are filed as
exhibits 1 and 2 respectively, and are incorporated by reference herein.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Registrant by the Registrant pursuant to the Fund's Articles of
Incorporation, its By-Laws or otherwise, the Registrant is aware that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act and, therefore, is
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by directors, officers or controlling persons of the Registrant in
connection with the successful defense of any act, suit or proceeding) is
asserted by such directors, officers or controlling persons in connection
with shares being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act and will be governed
by the final adjudication of such issues.

Item 28. Business and Other Connections of Adviser.
- ----------------------------------------------------

Focus Capital Advisory, L.P., P.O., Box 407, Wayne, PA 19087, provides
investment counsel to individuals, trust accounts, individual retirement
accounts, and pension and profit sharing plans, and as of June 30, 1997
had approximately $xx million in assets under management.

For information as to any other business, vocation or employment of a
substantial nature in which each Director or officer of the Registrant's
investment adviser has been engaged for his own account or in the capacity of
Director, officer, employee, partner or trustee, reference is made to the
Form ADV (File # 801-54031) filed by it under the Investment Advisers Act
of 1940, as amended.

Item 29. Principal Underwriter.
- --------------------------------
(a) FPS Broker Services, Inc. ("FPSB"), the principal underwriter for the
Registrant's securities, currently acts as principal underwriter for the
following entities:

Bjurman Funds
CT&T Funds
Farrell Alpha Strategies
Focus Trust, Inc.
The Homestate PA Growth Fund
IAA Trust Mutual Funds
Matthews International Funds
McM Funds
Polynous Trust
Sage\Tso Trust
Smith Breeden Series Fund
Smith Breeden Short Duration U.S. Government Fund
Smith Breeden Trust
The Stratton Funds, Inc.
Stratton Growth Fund, Inc.
Stratton Monthly Dividend Shares, Inc.
The Timothy Plan
Trainer, Wortham First Mutual Funds

(b) The table below sets forth certain information as to the Underwriter's
Directors, Officers and Control Persons:
<PAGE>

POSITION POSITION AND
NAME AND PRINCIPAL AND OFFICES OFFICES WITH
BUSINESS ADDRESS WITH UNDERWRITER REGISTRANT
- -------------------------------------- ------------------------ ------------
<S> <C> <C>
Kenneth J. Kempf Director and None
3200 Horizon Drive President
King of Prussia, PA 19406-0903

Lynne M. Cannon Senior Vice President None
3200 Horizon Drive Director and Principal
King of Prussia, PA 19406-0903

Rocco C. Cavalieri Director and None
3200 Horizon Drive Vice President
King of Prussia, PA 19406-0903

Gerald J. Holland Director and None
3200 Horizon Drive Senior Vice President
King of Prussia, PA 19406-0903

Joseph M. O'Donnell, Esq. Director and None
3200 Horizon Drive Vice President
King of Prussia, PA 19406-0903

Sandra L. Adams Assistant Vice President None
3200 Horizon Drive and Principal
King of Prussia, PA 19406-0903

Mary P. Efstration Secretary None
3200 Horizon Drive
King of Prussia, PA 19406-0903

John H. Leven Treasurer None
3200 Horizon Drive
King of Prussia, PA 19406-0903

Bruno DiStefano Principal None
3200 Horizon Drive
King of Prussia, PA 19406-0903
</TABLE>

James W. Stratton may be considered a control person of the Underwriter due to
his direct or indirect ownership of FPS Services, Inc., the parent of the
Underwriter.

Item 30. Location of Accounts and Records.
- -------------------------------------------

All records described in Section 31(a) of the 1940 Act and the Rules 17 CFR
270.31a-1 to 31a-31 promulgated thereunder, are maintained by the Fund's
Investment Adviser, Focus Capital Advisory, L.P., P.O. Box 407, Wayne,
PA 19087, except for those maintained by the Fund's Custodian, The Bank of
New York and the Fund's Administrator, Transfer Agent and Fund Account
Services Agent, FPS Services, Inc. 3200 Horizon Drive, King of Prussia, PA
19406-0903.

<PAGE>

Item 31. Management Services.
- ------------------------------
There are no management-related service contracts not discussed in Part A or
Part B.

Item 32. Undertakings.
- -----------------------
(a) Registrant hereby undertakes to promptly call a meeting of shareholders
for the purpose of voting upon the question of removal of any director or
directors when requested in writing to do so by the record holders of not
less than 10 percent of the Registrant's outstanding shares and to assist
its shareholders in accordance with the requirements of Section 16(c) of
the Investment Company Act of 1940 relating to shareholder
communications.

(b) Registrant hereby undertakes to furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual report for the
fiscal year ended December 31, 1996 upon request and without charge.
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485 (a) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Town of Wayne, and Commonwealth of Pennsylvania on
the 16th day of June 1997.

FOCUS TRUST, INC.
-----------------------------------------------
Name of Registrant

By: /s/ Robert G. Hagstrom, Jr., CFA
-----------------------------------------------
Robert G. Hagstrom, Jr., CFA
President

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement of Focus Trust, Inc. has been signed below by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>

Signature Capacity Date
- ---------------------------------- --------------------------------- --------------
<S> <C> <C>

/s/ Robert G. Hagstrom, Jr., CFA Director, President and Principal 6/13/97
- --------------------------------
Robert G. Hagstrom, Jr., CFA Executive Officer

/s/ Allan S. Mostoff, Esq. Director 6/13/97
- --------------------------------
Allan S. Mostoff, Esq.

/s/ Robert J. Coleman, Jr. Director 6/13/97
- --------------------------------
Robert J. Coleman, Jr.

/s/ Joan Lamm-Tennant Director 6/13/97
- --------------------------------
Joan Lamm-Tennant

/s/ John S. Lloyd Vice President, Secretary, 6/13/97
- --------------------------------
John S. Lloyd Principal Accounting
and Financial Officer

</TABLE>
<PAGE>

FOCUS TRUST, INC.

INDEX TO EXHIBITS TO FORM N-1A

Exhibit
Number

5 Investment Advisory Agreement
11 Consent of Independent Accountants
27 Financial Data Schedule

<PAGE>

Exhibit 99.b.5
INVESTMENT ADVISORY AGREEMENT
-----------------------------

AGREEMENT made this 3rd day of June, 1997 by and between FOCUS TRUST, INC.
(the "Corporation"), a Maryland corporation and FOCUS CAPITAL ADVISORY, L.P.
(the "Adviser"), a Pennsylvania limited partnership.

1. DUTIES OF ADVISER. The Corporation hereby appoints the Adviser to act
-----------------
as investment adviser to FOCUS TRUST, INC. for the period and on such terms set
-----------------
forth in this Agreement. The Corporation employs the Adviser to manage the
investment and reinvestment of the assets of the Corporation, to determine in it
discretion the assets to be held uninvested, to provide the Corporation with
records concerning the Adviser's activities which the Corporation is required to
maintain, and to render regular reports to the Corporation's officers and Board
of Directors concerning the Adviser's discharge of the foregoing
responsibilities. The Adviser shall discharge the foregoing responsibilities
subject to the control of the officers and the Board of Directors of the
Corporation, and in compliance with the objectives, policies and limitations set
forth in the Corporation's Prospectus and Statement of Additional Information
then in effect. The Adviser accepts such employment and agrees to render the
services and to provide, at its own expense, the office space, furnishings,
equipment and the personnel required by it to perform the services on the terms
and for the compensation provided herein.

2. PORTFOLIO TRANSACTIONS. The Adviser shall provide the Corporation
----------------------
with a trading department. The Adviser shall select the brokers or dealers that
will execute the purchases and sales of securities for the Corporation and is
directed to use its best efforts to ensure that the best available price and
most favorable execution of securities transactions for the Corporation are
obtained. The Corporation will bear all expenses associated with its investment
activities, including, without limitation, brokerage commissions and custody
expenses. Subject to policies established by the Board of Directors of the
Corporation and communicated to the Adviser, it is understood that the Adviser
will not be deemed to have acted unlawfully, or to have breached a fiduciary
duty to the Corporation or in respect of the Corporation, or be in breach of any
obligation owing to the Corporation or in respect of the Corporation under this
Agreement, or otherwise, solely by reason of its having caused the

1
<PAGE>

Corporation to pay a member of a securities exchange, a broker or a dealer a
commission for effecting a securities transaction for the Corporation in excess
of the amount of commission another member of an exchange, broker or dealer
would have charged if the Adviser determines in good faith that the commission
paid was reasonable in relation to the brokerage or research services provided
by such member, broker or dealer, viewed in terms of that particular transaction
or the Adviser's overall responsibilities with respect to the accounts,
including the Corporation, as to which it exercises investment discretion. The
Adviser will communicate on a quarterly to the officers and directors of the
Corporation such information relating to Corporation transactions as they may
reasonably request.

3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
---------------------------
Adviser as provided in Section 1 and 2 of this Agreement, the Corporation shall
pay to the Adviser within five business days after the end of each calendar
month, a monthly fee of one twelfth of 0.70% of the Corporation's average daily
net assets for the month. The net asset value shall be calculated in the manner
as provided in the Corporation's Prospectus and Statement of Additional
Information then in effect.

In the event of termination of this Agreement, the fee provided in this
Section 3 shall be paid on a pro rate basis, based on the number of days when
this Agreement was in effect.

4. REPORTS. The Corporation and the Adviser agree to furnish to each
-------
other such information regarding their operations with regard to their affairs
as each may reasonably request.

5. STATUS OF ADVISER. The services of the Adviser to the Corporation are
-----------------
not to be deemed exclusive, and the Adviser shall be free to render similar
services to others so long as its services to the Corporation are not impaired
thereby.

6. LIABILITY OF ADVISER. In the absence of willful misfeasance, bad
--------------------
faith, gross negligence or reckless disregard by the Adviser of its obligations
and duties hereunder, the Adviser shall not be subject to any liability
whatsoever to the Corporation, or to any shareholder of the Corporation, for any
error of judgment, mistake of law or any other act or omission in the course of,
or connected with, rendering services hereunder including, without limitation,
for any losses that may be sustained in connection with the purchase, holding,
redemption or sale of any security on behalf of the Corporation.

7. DURATION AND TERMINATION. This Agreement shall become effective on
------------------------
the

2
<PAGE>

date which the U.S. Securities and Exchange Commission declares effective,
the Corporation's registration statement provided that first it is approved by
the Board of Directors of the Corporation, including a majority of those
directors who are not parties to this Agreement or interested persons of any
party hereto, in the manner provided in section 15(c) of the Investment Company
Act of 1940, and by the holders of a majority of the outstanding voting
securities of the Corporation; and shall continue in effect for two years.
Thereafter, this Agreement may continue in effect only if such continuance is
approved at least annually by: (i) the Corporation's Board of Directors or, (ii)
by the vote of a majority of the outstanding voting securities of the
Corporation; and in either event by a vote of a majority of those directors of
the Corporation who are not parties to this Agreement or interested persons of
any such party in the manner provided in section 15(c) of the Investment Company
Act of 1940. This Agreement may be terminated by the Corporation at any time,
without the payment of any penalty, by the Board of Directors of the Corporation
or by vote of the holders of a majority of the outstanding voting securities of
the Corporation on 60 days' written notice to the Adviser. This Agreement may
be terminated by the Adviser at any time, without the payment of any penalty,
upon 60 days' written notice to the Corporation. This Agreement will
automatically terminate in the event of its assignment. Any notice under this
Agreement shall be given in writing, addressed and delivered or mailed postpaid,
to the other party at the principal office of such party.

As used in this Section 8, the terms "assignment" "interested person", and
"a vote of a majority of the outstanding voting securities" shall have the
respective meanings set forth in Section 2(a)(4), Section 2(a)(19) and Section
2(a)(42) of the 1940 Act and Rule 18f-2 thereunder.

8. NAME OF ADVISER. The parties agree that the Adviser has a proprietary
---------------
interest in the name "Focus Trust, Inc." and the Corporation agrees to promptly
take such action as may be necessary to delete from its corporate name and/or
the name of the Corporation any reference to the name of the Adviser on the name
"Focus Trust, Inc." promptly after receipt from the Adviser of a written request
therefore.

9. SEVERABILITY. If any provisions of this Agreement shall be held or
------------
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.

3
<PAGE>

10. GOVERNING LAW. This agreement shall be governed by and construed and
-------------
interpreted in accordance with the laws of the Commonwealth of Pennsylvania.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the date hereinabove set forth.

ATTEST: FOCUS TRUST, INC.

________________________________ __________________________________
, Secretary Robert G. Hagstrom, Jr., President

ATTEST: FOCUS CAPITAL ADVISORY, L.P.

________________________________ _________________________________________
, Secretary Robert G. Hagstrom, Jr., General Partner

<PAGE>

Exhibit 99(11)

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in this Post-Effective Amendment
No. 4 to the Registration Statement under the Securities Act of 1933 on Form N1-
A (File No. 33-89090) of our report dated January 20, 1997 accompanying the
financial statements and financial highlights of Focus Trust, Inc. in the
Statement of Additional Information. We also consent to the reference to our
Firm under the headings "Financial Highlights" in the Prospectus and under the
headings "Other Information-Independent Accountants" and "Financial Statements"
in the Statement of Additional Information.

Coopers & Lybrand L.L.P.

2400 Eleven Penn Center
Philadelphia, Pennsylvania
June 16, 1997

<PAGE>
<ARTICLE> 6
<CIK> 0000936886
<NAME> FOCUS TRUST, INC.
<SERIES>
<NUMBER> 1
<NAME> FOCUS TRUST, INC.
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 5,603,318
<INVESTMENTS-AT-VALUE> 6,945,020
<RECEIVABLES> 62,538
<ASSETS-OTHER> 47,436
<OTHER-ITEMS-ASSETS> 361,831
<TOTAL-ASSETS> 7,416,825
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 89,393
<TOTAL-LIABILITIES> 89,393
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,982,046
<SHARES-COMMON-STOCK> 563,056
<SHARES-COMMON-PRIOR> 453,220
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,684
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,341,702
<NET-ASSETS> 7,327,432
<DIVIDEND-INCOME> 77,106
<INTEREST-INCOME> 22,180
<OTHER-INCOME> 0
<EXPENSES-NET> 123,896
<NET-INVESTMENT-INCOME> (24,610)
<REALIZED-GAINS-CURRENT> 44,537
<APPREC-INCREASE-CURRENT> 952,975
<NET-CHANGE-FROM-OPS> 972,902
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 40,853
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 181,792
<NUMBER-OF-SHARES-REDEEMED> 75,076
<SHARES-REINVESTED> 3,120
<NET-CHANGE-IN-ASSETS> 2,266,443
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 43,364
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 307,134
<AVERAGE-NET-ASSETS> 6,219,353
<PER-SHARE-NAV-BEGIN> 11.17
<PER-SHARE-NII> (0.05)
<PER-SHARE-GAIN-APPREC> 1.96
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.07
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.01
<EXPENSE-RATIO> 2.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>