<PAGE>
TO THE SHAREHOLDERS OF FOCUS TRUST, INC.:
Focus Trust's total return for the first quarter, second quarter and year to
date are shown below, along with the total returns of the Fund's two
comparable benchmark indices: the Standard & Poor's 500 Index and the Lipper
Growth Index.
<TABLE>
<CAPTION>
FOCUS S&P 500 LIPPER
TRUST INDEX GROWTH
----- ------- ------
<S> <C> <C> <C>
First Quarter......................................... 0.92% 2.60% 0.34%
Second Quarter........................................ 12.34% 16.91% 15.06%
Year-To-Date.......................................... 13.37% 19.49% 15.40%
</TABLE>
A breakdown of the share price performance of our individual holdings in the
first six months of 1997 is as follows:
<TABLE>
<CAPTION>
PERCENTAGE
COMPANY CHANGE
------- ----------
<S> <C>
Berkshire Hathaway, Inc..... 38.42%
Gannett Co.................. 31.89%
American Express Co......... 31.86%
Johnson & Johnson........... 29.40%
Federal Home Loan Mortgage.. 24.86%
Wm. Wrigley, Jr. Co......... 19.11%
Washington Post Co.......... 18.76%
The Walt Disney Co.......... 15.26%
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE
COMPANY CHANGE
------- ----------
<S> <C>
Lee Enterprises, Inc......... 13.44%
Hasbro, Inc.................. 9.47%
Brown-Forman Corp............ 6.69%
Harley-Davidson, Inc......... 1.99%
Gaylord Entertainment Co..... 0.82%
International Speedway Corp.. -6.17%
Sotheby's Holdings, Inc...... -9.40%
</TABLE>
I found this exercise to be very informative. Take a look at the top half of
the list and compare it to the bottom half. The big capitalization stocks,
large companies, had better price performance than smaller capitalization
stocks.
Now take the exercise one-step further and divide Focus Trust into two
portfolios, a big cap portfolio and a small-mid cap portfolio, then calculate
the performance of the two portfolios on a weighted basis.
<TABLE>
<CAPTION>
BIG "CAP" PORTFOLIO SMALL-MID "CAP" PORTFOLIO
------------------- -------------------------
<S> <C>
Berkshire Hathaway, Inc. Wm. Wrigley Jr., Co.
Gannett Co. Washington Post Co.
American Express Co. Lee Enterprises, Inc.
Johnson & Johnson Hasbro, Inc.
Federal Home Loan Mortgage Brown-Forman Corp.
The Walt Disney Co. Harley-Davidson, Inc.
Gaylord Entertainment Co.
International Speedway Corp.
Sotheby's Holdings, Inc.
</TABLE>
<TABLE>
<S> <C>
Six Month Investment Performance on a weighted basis:
Big Cap Portfolio................................................. 28.90%
Small-Mid Cap Portfolio........................................... 3.90%
</TABLE>
Quite clearly, our largest companies have had the best price performance over
the last six months while our smallest companies have dramatically lagged
behind the S&P 500 Index. This phenomena has been widespread and is
demonstrated in the broader indices. For example:
<TABLE>
<S> <C>
Six Month Investment Performance of various indices:
Standard & Poor's 500 Index....................................... 19.49%
Standard & Poor's 400 Mid Cap Index............................... 12.16%
Standard & Poor's 600 Small Cap Index............................. 11.05%
</TABLE>
-1-
<PAGE>
The share price of big capitalization stocks has risen faster than the share
price of smaller-mid capitalization stocks for almost two and a half years. In
last year's Annual Report we pointed out Focus Trust had half of its assets
invested in big cap stocks and half of its assets invested in smaller-mid cap
stocks. The same is true today. Hence our share price performance is still
skewed along these two lines.
But all this short-term price analysis makes us dizzy. It seems you can slice
and dice your performance in a number of ways to cast the best light, and it
is not unusual for money managers to resurrect an index that conveniently
makes themselves look good.
You should be skeptical of any manager who starts to substitute indices. Or as
Warren Buffett says, be wary of the manager who first shoots an arrow and then
moves the bulls-eye.
The Securities and Exchange Commission requires a mutual fund to pick at least
one broad market index to compare itself against. We could have chosen the
Russell 1000, the Russell 2000, the Russell 3000, the Wilshire 5000 Index, or
the various S&P Indices. We choose the S&P 500 because it represents a basket
of top businesses in this country that produce a respectable level of
economics for its owners.
When we began to purchase shares of companies for Focus Trust it didn't matter
to me whether they were big cap stocks or small cap stocks. I was simply
looking for good performing economic companies, run by capable managers and
available at reasonable prices. If we did this correctly, we anticipate that,
over time, our Focus Trust share price would out perform the gain in the S&P
500 Index. It is a rather simple exercise.
You may be interested to know that International Speedway Corporation, our
second largest holding, just reported outstanding earnings. For the first six
months of 1997, International Speedway increased its revenue 26% while
earnings on a per share basis gained 24%. In the last twelve months, over
500,000 people have visited the new Daytona USA. All of our expectations of
International Speedway have been exceeded, yet the stock has declined 6% year-
to-date.
Why has a company that has generated superior economics declined in price? Our
only guess is more money is chasing big stocks while small companies are being
largely ignored. International Speedway is an $800 million capitalization
company but its economics are every bit as impressive as Gannett & Company, a
$15 billion company. So should I sell International Speedway and buy big
stocks that are on the move? No. We don't play these games. As long as
International Speedway continues to produce good earnings, the company's value
and hence its share price will eventually be recognized. We can afford to
wait.
We have discussed the advantages and disadvantages of a concentrated, low-
turnover investment approach with you before. The advantage of Focus investing
is the ability to compound money in an optimal manner. Specifically, by
reducing brokerage commissions and realized capital gains taxes, investors
stand a better chance, over time, of growing their capital base in an above-
average manner.
The disadvantage to Focus investing lies not in its long-term investment
strategy but in its short-term marketing strategy. Because many individuals
equate short-term performance with capability, a fund that under performs
indices over a short period of time is thought to have no long-term value. We,
of course, disagree.
Because the game of investing is one that is played out over decades not
quarters, it should be viewed as a long-term strategic plan and not as a
series of short-term conquests.
-2-
<PAGE>
There is a logical underpinning to Focus investing. A strong correlation,
demonstrated over time, does exist between a company's share price and its
economic value. As the time line is shortened, the correlation between price
and value is less visible. In other words, over short time spans, other
factors besides value affect share price.
The money management business exudes much energy trying to uncover what
variables affect short- term price even though there is plenty of strong
evidence of what affects share price long-term. So why do money managers
ignore long-term lessons in favor of short-term uncertainties? Because the
compensation system of rewarding short-term performance favors the conqueror.
It is not that we don't enjoy a good challenge. But buying and selling stocks
just to beat an index over the short-term is a shallow undertaking. After all,
the money invested in Focus Trust is money for savings, retirement, or a
child's education; at least it is for me and with that responsibility, I won't
play foolish games.
FOCUS CAPITAL ADVISORY, L.P.
As of June 27, 1997, Focus Capital Advisory, L.P. assumed responsibility for
the investment management of Focus Trust. Although we are a new company, the
portfolio management of Focus Trust has not changed.
Focus Capital Advisory is a limited partnership organized and devoted to the
management of Focus Trust. In addition, we can offer the Focus investment
approach to individuals, retirement plans, trusts, endowments, and
corporations on a separate account basis.
For further information, please feel free to call us at 1-610-688-6558 or
contact us through our web site: WWW.FOCUSTRUST.COM
The Focus Trust web site was developed to increase our communication effort
for shareholders as well as others who are interested in our mutual fund. The
Internet has become a valuable tool for small businesses and we intend to use
it to its maximum. Focustrust.com allows individuals access to daily updates
of the Fund's net asset value. You can also download account applications as
well as quarterly investment holdings and performance. We have also made
available past annual and semi-annual reports. There is also a guest book. So
the next time you are cruising the World Wide Web, stop by to see us and leave
a note.
As always, we appreciate your support and confidence. If you have any
questions about Focus Trust or your account statement, please don't hesitate
to call 1-800-665-2550.
Also, if you know investors who think similarly to us, send them our way. We
are interested in growing Focus Trust, but only with a core of individuals who
appreciate the investment approach. If you need a quick reminder, read our
Investment Adviser-Shareholder Principles on the following page.
Sincerely,
/s/ Robert G. Hagstrom
Robert G. Hagstrom, Jr., CFA
Portfolio Manager
-3-
<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 holder 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
partner, 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.
-4-
<PAGE>
FOCUS TRUST, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 1997 (UNAUDITED)
COMMON STOCKS (98.84%)
<TABLE>
<CAPTION>
VALUE
SHARES COST (NOTE 1)
------ ---------- ----------
<C> <S> <C> <C>
AMUSEMENT & RECREATION (20.56%)
42,800 International Speedway Corp., Class B......... $ 743,671 $ 813,200
9,500 The Walt Disney Company....................... 564,068 762,375
---------- ----------
1,307,739 1,575,575
---------- ----------
BEVERAGES (5.29%)
8,300 Brown-Forman Corp., Class B .................. 327,019 405,144
---------- ----------
BUSINESS SERVICES (4.45%)
20,200 Sotheby's Holdings Inc., Class A ............. 296,495 340,875
---------- ----------
ENTERTAINMENT (3.02%)
10,032 Gaylord Entertainment Company, Class A........ 232,493 231,363
---------- ----------
GAMES/TOYS (4.45%)
12,000 Hasbro, Inc. ................................. 251,338 340,500
---------- ----------
INSURANCE (10.47%)
17 Berkshire Hathaway, Inc., Class A*............ 479,130 802,400
---------- ----------
MOTORCYCLES, BICYCLES (5.94%)
9,500 Harley-Davidson, Inc. ........................ 375,056 455,406
---------- ----------
NEWSPAPER (14.10%)
4,250 Gannett Company............................... 228,753 419,688
14,500 Lee Enterprises, Inc. ........................ 310,325 382,437
700 Washington Post Company, Class B.............. 186,560 278,600
---------- ----------
725,638 1,080,725
---------- ----------
PHARMACEUTICALS (5.38%)
6,400 Johnson & Johnson............................. 232,327 412,000
---------- ----------
RESTAURANTS (2.52%)
4,000 McDonald's Corp. ............................. 179,900 193,250
---------- ----------
SECURITY BROKER (13.95%)
14,350 American Express Company...................... 594,836 1,069,075
---------- ----------
SERVICES (5.65%)
12,600 Federal Home Loan Mortgage Corp. ............. 216,330 433,125
---------- ----------
SUGAR PRODUCTS (3.06%)
3,500 Wrigley (WM) Jr. Company...................... 155,567 234,500
---------- ----------
TOTAL COMMON STOCKS........................... 5,373,868# 7,573,938
---------- ----------
OTHER ASSETS IN EXCESS OF LIABILITIES (1.16%). 88,795
----------
NET ASSETS (100.00%).......................... $7,662,733
==========
</TABLE>
# Also represents cost for Federal income tax purposes
* Non-income producing security
See Notes to Financial Statements.
-5-
<PAGE>
FOCUS TRUST, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (cost $5,373,868) (Note 1)... $7,573,938
Cash............................................................. 58,755
Dividends and interest receivable................................ 11,691
Receivable for capital stock sold................................ 5,100
Deferred organization costs (Note 1)............................. 36,326
Other assets..................................................... 14,588
----------
Total assets................................................... 7,700,398
----------
LIABILITIES:
Accrued expenses................................................. 1,339
Payable to Adviser............................................... 36,326
----------
Total liabilities.............................................. 37,665
----------
NET ASSETS:
Applicable to 519,538 shares of capital stock outstanding (Note
1).............................................................. $7,662,733
==========
NET ASSETS CONSIST OF:
Paid-in capital.................................................. $5,316,181
Undistributed net investment loss................................ (21,731)
Accumulated net realized gain on investments..................... 168,213
Net unrealized appreciation of investments....................... 2,200,070
----------
Net assets..................................................... $7,662,733
==========
NET ASSET VALUE AND OFFERING PRICE PER SHARE:
($7,662,733/519,538 shares)...................................... $ 14.75
==========
</TABLE>
See Notes to Financial Statements.
-6-
<PAGE>
FOCUS TRUST, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends......................................................... $ 42,328
Interest.......................................................... 13,006
----------
Total income.................................................... 55,334
----------
EXPENSES:
Investment advisory fees (Note 2)................................. 26,973
Administration fees............................................... 27,219
Registration fees................................................. 19,954
Transfer agent fees............................................... 19,191
Accounting fees................................................... 10,000
Amortization of organization costs (Note 1)....................... 6,447
Audit fees........................................................ 9,300
Directors fees.................................................... 8,200
Other expenses.................................................... 8,234
----------
Total expenses.................................................. 135,518
Less expenses waived and reimbursed by Adviser (Note 2)........... (58,453)
----------
Net expenses.................................................... 77,065
----------
NET INVESTMENT LOSS................................................. (21,731)
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from security transactions...................... 168,213
Net change in unrealized appreciation on investments.............. 858,368
----------
Net realized and unrealized gain on investments................... 1,026,581
----------
NET INCREASE IN NET ASSETS FROM OPERATIONS.......................... $1,004,850
==========
</TABLE>
See Notes to Financial Statements.
-7-
<PAGE>
FOCUS TRUST, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
06/30/97 ENDED
(UNAUDITED) 12/31/96
----------- ----------
<S> <C> <C>
OPERATIONS:
Net investment loss.................................. $ (21,731) $ (24,610)
Net realized gain on investments..................... 168,213 44,537
Net change in unrealized appreciation on investments. 858,368 952,975
---------- ----------
Net increase in net assets from operations......... 1,004,850 972,902
---------- ----------
DIVIDENDS TO SHAREHOLDERS FROM:
Net realized gains on investments.................... -- (40,853)
---------- ----------
CAPITAL STOCK TRANSACTIONS (NET)--NOTE 1............... (669,549) 1,334,394
---------- ----------
Total increase in net assets......................... 335,301 2,266,443
---------- ----------
NET ASSETS:
Beginning of period.................................. 7,327,432 5,060,989
---------- ----------
End of period........................................ $7,662,733 $7,327,432
========== ==========
</TABLE>
See Notes to Financial Statements.
-8-
<PAGE>
FOCUS TRUST, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES:
Focus Trust, Inc. (the "Fund") is a no-load, non-diversified, open-end
management investment company registered under the Investment Company Act of
1940, as amended. The Fund was incorporated under the laws of Maryland on
January 27, 1995 and commenced operations on April 17, 1995. The following is
a summary of significant accounting policies consistently followed by the Fund
in the preparation of its financial statements. The preparation of financial
statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the period could differ
from these estimates.
A. SECURITY VALUATION: The Fund calculates the net asset value and
completes orders to purchase, exchange or repurchase Fund shares on each
business day as of 4:00 p.m. Eastern time, with the exception of those days
on which the New York Stock Exchange is closed.
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 price. 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.
B. FEDERAL INCOME TAXES: It is the policy of the Fund to comply with all
requirements of the Internal Revenue Code (the "Code") applicable to
regulated investment companies and to distribute substantially all of its
taxable income to its shareholders. The Fund has met the requirements of
the Code applicable to regulated investment companies for the six months
ended June 30, 1997. Therefore, no Federal income or excise tax provision
is required.
C. DETERMINATION OF GAINS OR LOSSES ON SALES OF SECURITIES: Gains or losses
on the sale of securities are determined on the identified cost basis.
D. ORGANIZATION COSTS: Costs incurred by the Fund in connection with their
organization and initial registration and public offering of shares have
been deferred by the Fund. Organization costs are being amortized on a
straight-line basis for a five-year period beginning at the commencement of
operations of the Fund. The partners of Focus Capital Advisory, L.P. (the
"Adviser"), have agreed that in the event it redeems any of its shares
during such period, it will reimburse the Fund for any unamortized
organization costs in the same proportion as the number of shares to be
redeemed bears to the number of shares that were initially purchased by the
Adviser and remain outstanding at the time of redemption.
E. DISTRIBUTIONS TO SHAREHOLDERS: It is the policy of the Fund to
distribute net investment income in December and capital gains, if any,
annually. Distributions to shareholders are recorded on the ex-dividend
date. Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles.
F. OTHER: Securities transactions are accounted for on the trade date.
Interest income is recorded on the accrual basis and dividend income on the
ex-dividend date.
G. CAPITAL SHARE TRANSACTIONS: The Fund is authorized to issue one hundred
million shares of capital stock with a par value of $0.001 per share.
Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1997 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1996
-------------------- -------------------
SHARES AMOUNT SHARES AMOUNT
------- ----------- ------- ----------
<S> <C> <C> <C> <C>
Shares sold.................... 41,477 $ 570,501 181,792 $2,164,827
Shares issued through
reinvestment of dividends..... -- -- 3,120 39,553
Shares redeemed*............... (84,995) (1,240,050) (75,076) (869,986)
======= =========== ======= ==========
Net Increase (Decrease)........ (43,518) $ (669,549) 109,836 $1,334,394
======= =========== ======= ==========
</TABLE>
* Redemptions are subject to a 1.00% fee if redeemed within two years of
purchase. Thus, the redemption price may differ from the net asset value per
share.
-9-
<PAGE>
NOTE 2 -- INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
Prior to June 28, 1997, Lloyd, Leith & Sawin, Inc. ("LLS") served as the
Fund's investment adviser. Effective June 28, 1997, Focus Capital Advisory,
L.P. (the "Adviser") serves as the investment adviser to the Fund. The Adviser
provides the Fund with investment advice, administrative services and
facilities. As compensation for these services, the Fund pays the Adviser a
monthly fee based on the Fund's average daily net assets. From January 1, 1997
to June 27, 1997, LLS voluntarily agreed to reduce its fees and reimburse the
Fund to the extent total annualized expenses exceeded 2.00% of the Fund's
average daily net assets. The Adviser has voluntarily agreed to continue to
reduce its fees and reimburse the Fund to the extent total annualized expenses
exceed 2.00%. Investment advisory fees for the six-month period ended June 30,
1997 were as follows:
<TABLE>
<CAPTION>
EXPENSES WAIVED
ADVISORY ADVISORY AND REIMBURSED
FEE FEE BY ADVISER
-------- -------- ---------------
<S> <C> <C> <C>
LLS...................................... 0.70% $26,527 $58,453
Focus Capital Advisory, L.P.............. 0.70% $ 446 --
</TABLE>
Certain officers of the Fund are also officers and directors of the Adviser.
All officers serve without direct compensation from the Fund during the
period. There were no directors' fees paid to affiliated directors of the
Fund. Robert G. Hagstrom, Jr., Chairman, is considered an affiliated director
of the Fund, but receives no compensation.
NOTE 3 -- INVESTMENT TRANSACTIONS:
Investment transactions for the Fund for the six months ended June 30, 1997,
excluding temporary short-term investments, are as follows:
<TABLE>
<CAPTION>
PROCEEDS FROM
PURCHASES SALES
--------- -------------
<S> <C>
$539,703 $937,366
</TABLE>
NOTE 4 -- UNREALIZED APPRECIATION AND DEPRECIATION:
At June 30, 1997, the net unrealized appreciation of securities for Federal
income tax purposes consisted of:
<TABLE>
<CAPTION>
AMOUNT
----------
<S> <C>
Gross unrealized appreciation............................ $2,201,200
Gross unrealized depreciation............................ (1,130)
----------
Net unrealized appreciation.............................. $2,200,070
==========
</TABLE>
NOTE 5 -- SPECIAL MEETING OF SHAREHOLDERS:
A special meeting of shareholders was held on June 27, 1997 to vote on a
proposed new investment advisory agreement between Focus Capital Advisory,
L.P. and the Fund. The results were as follows:
<TABLE>
<CAPTION>
SHARES SHARES SHARES
FOR AGAINST ABSTAINED
------ ------- ---------
<S> <C> <C>
366,882 6,332 54,763
</TABLE>
-10-
<PAGE>
FOCUS TRUST, INC.
FINANCIAL HIGHLIGHTS
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR PERIOD
06/30/97 ENDED ENDED
(UNAUDITED) 12/31/96 12/31/95**
----------- -------- ----------
<S> <C> <C> <C>
Net Asset Value, beginning of period.... $ 13.01 $ 11.17 $10.00
------- ------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)........ (0.04) (0.05) 0.06
Net realized and unrealized gain on
investments........................ 1.78 1.96 1.17
------- ------- ------
Total from investment operations.. 1.74 1.91 1.23
------- ------- ------
DIVIDENDS TO SHAREHOLDERS
Dividends from net investment
income............................. -- -- (0.06)
Dividends from net realized gains on
investments........................ -- (0.07) --
------- ------- ------
Total from dividends to sharehold-
ers.............................. -- (0.07) (0.06)
------- ------- ------
Net Asset Value, end of period.......... $ 14.75 $ 13.01 $11.17
======= ======= ======
TOTAL RETURN............................ 13.37% (2) 17.14% 12.29% (2)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's).. $ 7,663 $ 7,327 $5,061
Ratio of expenses to average net
assets after reimbursement of
expenses by Adviser.................. 2.00% (1) 2.00% 1.92% (1)(3)
Ratio of expenses to average net
assets before reimbursement of
expenses by Adviser.................. 3.52% (1) 4.96% 7.89% (1)
Ratio of net investment income to
average net assets after
reimbursement of expenses by Adviser. (0.56%)(1) (0.40%) 1.19% (1)
Ratio of net investment income to
average net assets before
reimbursement of expenses by Adviser. (2.08%)(1) (3.36%) (4.78%)(1)
Portfolio turnover.................... 7.62% (2) 8.47% 0.00%
Average commission rate paid*......... $0.1014 $0.0979 N/A
</TABLE>
(1) Annualized
(2) Not Annualized
(3) Prior to September 1, 1995, the annualized expenses were capped at 1.75%.
* 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 1996.
** The Fund commenced investment operations on April 17, 1995.
See Notes to Financial Statements.
-11-
<PAGE>
- --------------------------------------------------------------------------------
FOCUS TRUST, INC.
(800) 665-2550
DIRECTORS
Robert J. Coleman, Jr. Robert G. Hagstrom, Jr.
Joan Lamm-Tennant Allan S. Mostoff
OFFICERS
Robert G. Hagstrom, Jr, President
Ericka M. Merluzzi, Vice President & Treasurer
Gretchen B. Zepernick, Vice President & Secretary
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
SHAREHOLDER SERVICES
FPS Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406
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
AUDITORS
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103
This report is submitted for general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective Prospectus which includes
details regarding the Fund's objectives, policies, expenses and other
information.
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FOCUS TRUST, INC. /SM/
SEMI-ANNUAL
REPORT
JUNE 30, 1997
Visit the Focus Trust, Inc. web site on the Internet at
WWW.FOCUSTRUST.COM
