<PAGE>
TO OUR SHAREHOLDERS:
WELCOME TO LEGG MASON!
It is with great pleasure that I welcome you all to Legg Mason. We are indeed
very fortunate to be a member of this great company. You, our fellow
shareholders, apparently agree. Of the proxy solicitations received, 97% voted
to join Legg Mason's family of funds.
In my last letter to you, I indicated that although I was happy with our
investment performance, our growth in assets was troubling me. After three
years and only $10 million in assets it was clear we needed to seek a
partnership that would help us expand the shareholder base of Focus Trust. We
could not have picked a better team to play for.
Legg Mason, a publicly-traded company on the New York Stock Exchange, has 100
offices across the country and over 1,000 Financial Advisors whose clients may
now invest in our Fund. With $74.4 billion of assets under management, it is
clear Legg Mason has earned the right to be listed among the top money
management firms in the country.
Adding distribution was an important consideration in my decision to merge
with Legg Mason. But the principal reason for seeking this partnership was the
opportunity to join Legg Mason Fund Adviser, Inc.(LMFA), led by the
exceptionally talented portfolio manager Bill Miller. Many of you, I am sure,
are aware of Bill's talents. He has managed the Legg Mason Value Trust since
1990 and has outperformed the S&P 500 Index over the last seven consecutive
years. Bill is one of the brightest money managers working today and I am
fortunate that he has been my intellectual coach for the past 15 years. Those
who have read The Warren Buffett Way know, from the acknowledgement, the debt
that I owe to Bill in helping me to better understand Warren Buffett.
In addition to Bill, LMFA includes several other talented investment
professionals. Lisa Rapuano is our technology analyst and co-manages the Legg
Mason Special Investment Trust with Bill. Nancy Dennin, who outperformed
Bill's Value Trust in 1997, manages the Legg Mason Total Return Trust and
David Nelson, the former director of research at Legg Mason, manages the
American Leading Companies Trust. In addition, we have the analytical services
of Randy Befumo, Jay Leopold, and Chip Coleman. I am especially pleased that
Ericka Merluzzi, my research assistant for the past two years, has joined the
group and will continue to work with me on Focus Trust. On the individual
account side, Kyle Legg and Mary Chris Gay offer a high level of portfolio
management expertise.
PERFORMANCE ANALYSIS
Legg Mason Focus Trust's total return for the first quarter, second quarter,
and year to date are shown below with the total returns of the Fund's two
comparable benchmark indices: the Standard & Poor's 500 Index and Lipper
Analytical Services, Inc.'s ("Lipper") index of growth stock funds.
<TABLE>
<CAPTION>
LIPPER
GROWTH
FOCUS S&P 500 STOCK
1998 TRUST INDEX FUNDS
---- ----- ------- ------
<S> <C> <C> <C>
First Quarter........................................... 16.8% 13.8% 12.4%
Second Quarter.......................................... 5.2% 3.0% 2.9%
Year to Date............................................ 22.9% 16.8% 15.6%
</TABLE>
Legg Mason Focus Trust's average annual total returns for one, two and three
years are shown below as well as total return information for the same periods
for the S&P 500 Index and Lipper's index of growth stock funds.
-1-
<PAGE>
<TABLE>
<CAPTION>
LIPPER
GROWTH
FOCUS S&P 500 STOCK
JUNE 30, 1998 TRUST INDEX FUNDS
------------- ----- ------- ------
<S> <C> <C> <C>
One Year................................................ 39.9% 30.2% 28.3%
Two Year................................................ 32.0% 33.2% 26.9%
Three Year.............................................. 27.2% 30.2% 24.8%
</TABLE>
As you can see, Focus Trust's performance has improved measurably over the
last twelve months. The seeds that we planted years earlier are now bearing
fruit. We now have surpassed our competitors (other growth funds) and are
quickly closing in on the S&P 500. Considering our first year's
underperformance, attributed to above-average cash weightings in a fast rising
market, I am very pleased with our investment progress.
WILL FOCUS TRUST CHANGE?
Since our merger with Legg Mason, I have received many inquiries as to whether
this partnership will change our investment approach in Focus Trust. The
answer is no. We will continue to manage the assets of Focus Trust going
forward as we have since inception. Each stock that we purchase must fit the
investment tenets outlined in The Warren Buffett Way. This will not change.
I have often talked about raising the "economic bar" at Focus Trust which, as
you know, is the process of adding economically superior companies to our base
portfolio. If we are successful, the share price of Focus Trust should
continue to march ahead at an above-average rate. The opportunity to work with
Bill, Lisa, Nancy, David, Randy, Jay, Chip, Ericka, Kyle and Mary Chris gives
us a greater list of companies to choose from, with the satisfaction that the
research coverage of each of these companies is complete. In short, by joining
Legg Mason, we have raised our "intellectual bar". This new partnership, I am
confident, should provide stronger returns for our shareholders.
As always, we appreciate your support and confidence. If you have any
questions about Focus Trust or your account statement, please do not hesitate
to contact us. Our new 800 number at Legg Mason is (800) 822-5544. Also, if
you know investors who think similarly to us, send them our way. We want to
grow Focus Trust, but only with a core group of individuals who appreciate the
investment approach. If you need a quick reminder, read our Investment
Adviser-Shareholder Principles on the following page.
Sincerely,
LOGO
/s/ Robert G. Hagstrom
Robert G. Hagstrom, Jr., CFA
Portfolio Manager
-2-
<PAGE>
INVESTMENT ADVISER--SHAREHOLDER PRINCIPLES
You should read carefully the following Investment Adviser--Shareholder
Principles before making an investment in the Fund.
. Legg Mason Fund Adviser, Inc., (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. 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.
-3-
<PAGE>
LEGG MASON FOCUS TRUST, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
COMMON STOCKS (93.45%)
<TABLE>
<CAPTION>
VALUE
SHARES COST (NOTE 1)
------ --------- -----------
<C> <S> <C> <C>
ADVERTISING (5.43%)
9,000 WPP Group PLC ................................ $ 394,900 $ 605,250
--------- -----------
AMUSEMENT/RECREATION (16.34%)
5,800 America Online, Inc.* ........................ 527,955 614,800
42,400 International Speedway Corp., Class A ........ 734,976 1,205,750
--------- -----------
1,262,931 1,820,550
--------- -----------
BANKING SERVICES (4.72%)
37,700 Lloyds TSB Group PLC ......................... 624,859 526,494
--------- -----------
BUSINESS SERVICES (4.53%)
22,550 Sotheby's Holdings Inc., Class A ............. 343,746 504,556
--------- -----------
COLLECTIBLES (5.70%)
19,750 Action Performance Companies, Inc. *.......... 553,005 635,703
--------- -----------
GAMES/TOYS (5.17%)
14,650 Hasbro, Inc. ................................. 348,103 575,928
--------- -----------
INSURANCE (15.09%)
15 Berkshire Hathaway, Inc., Class A *........... 415,055 1,174,575
2,000 General RE Corp. ............................. 517,700 507,000
--------- -----------
932,755 1,681,575
--------- -----------
MOTORCYCLES/BICYCLES (5.63%)
16,200 Harley-Davidson, Inc. ........................ 316,448 627,750
--------- -----------
PHARMACEUTICALS (4.24%)
6,400 Johnson & Johnson ............................ 232,327 472,000
--------- -----------
RESTAURANTS/LODGING (5.45%)
8,800 McDonald's Corp. ............................. 414,555 607,200
--------- -----------
SECURITY BROKER (15.41%)
10,350 American Express Company...................... 390,811 1,179,900
20,500 United Asset Management Corp. ................ 539,368 536,844
--------- -----------
930,179 1,716,744
--------- -----------
SERVICES (5.74%)
13,600 Freddie Mac................................... 261,368 640,050
--------- -----------
TOTAL COMMON STOCKS........................... 6,615,176 10,413,800
--------- -----------
SHORT-TERM INVESTMENTS (6.47%)
720,675 Bank of New York Cash Reserve................. 720,675 720,675
--------- -----------
TOTAL INVESTMENTS (99.92%).................... 7,335,851# 11,134,475
========= -----------
OTHER ASSETS IN EXCESS OF LIABILITIES (0.08%) 9,255
-----------
NET ASSETS (100.00%).......................... $11,143,730
===========
</TABLE>
# Also represents cost for Federal income tax purposes
* Non-income producing security
See Notes to Financial Statements.
-4-
<PAGE>
LEGG MASON FOCUS TRUST, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (cost $7,335,851) (Note 1).. $11,134,475
Foreign currency, at value (cost $338).......................... 340
Cash............................................................ 11,357
Dividends and interest receivable............................... 17,718
Receivable for fund shares sold................................. 23,800
Deferred organization costs (Note 1)............................ 23,325
Other assets.................................................... 11,669
-----------
Total assets.................................................. 11,222,684
-----------
LIABILITIES:
Fund shares redeemed............................................ 39,213
Accrued expenses................................................ 19,149
Payable to Adviser.............................................. 20,592
-----------
Total liabilities............................................. 78,954
-----------
NET ASSETS:
Applicable to 555,815 shares of capital stock outstanding (Note
1)............................................................. $11,143,730
===========
NET ASSETS CONSIST OF:
Paid-in capital................................................. $ 6,141,319
Undistributed net investment loss............................... (42,320)
Accumulated net realized gain on investments and foreign
currency....................................................... 1,246,105
Net unrealized appreciation of investments and foreign
currency....................................................... 3,798,626
-----------
Net assets.................................................... $11,143,730
===========
NET ASSET VALUE AND OFFERING PRICE PER SHARE:
($11,143,730/555,815 shares).................................... $ 20.05
===========
</TABLE>
See Notes to Financial Statements.
-5-
<PAGE>
LEGG MASON FOCUS TRUST, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends........................................................ $ 38,537
Interest......................................................... 15,416
----------
Total income................................................... 53,953
----------
EXPENSES:
Investment advisory fees (Note 2)................................ 33,681
Administration fees.............................................. 32,233
Registration fees................................................ 10,413
Transfer agent fees.............................................. 19,141
Accounting fees.................................................. 11,901
Legal fees....................................................... 6,943
Custody fees..................................................... 2,767
Insurance........................................................ 8,724
Amortization of organization costs (Note 1)...................... 6,447
Audit fees....................................................... 8,857
Directors fees................................................... 7,140
Printing fees.................................................... 5,951
Other expenses................................................... 348
----------
Total expenses................................................. 154,546
Less expenses waived and reimbursed by Adviser (Note 2).......... (58,273)
----------
Net expenses................................................... 96,273
----------
NET INVESTMENT LOSS................................................ (42,320)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from security transactions and foreign
currency........................................................ 1,023,102
Net change in unrealized appreciation on investments and foreign
currency........................................................ 909,350
----------
Net realized and unrealized gain on investments.................. 1,932,452
----------
NET INCREASE IN NET ASSETS FROM OPERATIONS......................... $1,890,132
==========
</TABLE>
See Notes to Financial Statements.
-6-
<PAGE>
LEGG MASON FOCUS TRUST, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
06/30/98 ENDED
(UNAUDITED) 12/31/97
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment loss................................. $ (42,320) $ (56,184)
Net realized gain on investments and foreign
currency........................................... 1,023,102 503,863
Net change in unrealized appreciation on investments
and foreign currency............................... 909,350 1,547,574
----------- -----------
Net increase in net assets from operations........ 1,890,132 1,995,253
----------- -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Net realized gains on investments................... 0 (224,676)
----------- -----------
CAPITAL STOCK TRANSACTIONS (NET)--NOTE 1.............. 1,160,373 (1,004,784)
----------- -----------
Total increase in net assets........................ 3,050,505 765,793
----------- -----------
NET ASSETS:
Beginning of period................................. 8,093,225 7,327,432
----------- -----------
End of period....................................... $11,143,730 $ 8,093,225
=========== ===========
</TABLE>
See Notes to Financial Statements.
-7-
<PAGE>
LEGG MASON FOCUS TRUST, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES:
Legg Mason Focus Trust, Inc. (the "Fund") is a 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. RISKS ASSOCIATED WITH FOREIGN SECURITIES: Investments by the Fund in the
securities of foreign issuers may involve investment risks different from
those of U.S. issuers including possible political or economic instability
of the country of the issuer, the difficulty of predicting international
trade patterns, the possibility of currency exchange controls, the possible
imposition of foreign withholding tax on the interest income payable on
such instruments, the possible establishment of foreign controls, the
possible seizure or nationalization of foreign deposits or assets, or the
adoption of other foreign government restrictions that might adversely
affect the foreign securities held by the Fund. Foreign securities may also
be subject to greater fluctuations in price than securities of domestic
corporations or the U.S. Government.
C. 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, 1998. Therefore, no Federal income or excise tax provision
is required.
D. DETERMINATION OF GAINS OR LOSSES ON SALES OF SECURITIES: Gains or losses
on the sale of securities are determined on the identified cost basis.
E. 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. Legg Mason Fund Adviser, Inc. (the "Adviser"), has
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.
F. 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.
-8-
<PAGE>
G. 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.
H. 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, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
------- ---------- -------- -----------
<S> <C> <C> <C> <C>
Shares sold.................... 97,476 $1,853,960 96,836 $ 1,421,730
Shares issued through
reinvestment of dividends...... 0 0 13,635 218,033
Shares redeemed *.............. (37,501) (693,587) (177,687) (2,644,547)
------- ---------- -------- -----------
Net Increase (Decrease)........ 59,975 $1,160,373 (67,216) ($1,004,784)
======= ========== ======== ===========
</TABLE>
* Prior to June 30, 1998, redemptions were subject to a 1.00% fee if redeemed
within two years of purchase. Thus, the redemption price may have differed
from the net asset value per share. Effective June 30, 1998, the Fund no
longer imposes a redemption fee.
NOTE 2 -- INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
Effective June 30, 1998, Legg Mason Fund Adviser, Inc. (the "Adviser") serves
as the investment adviser to the Fund. The Adviser provides the Fund with
investment advice, administrative services and facilities. As compensation for
these services, the Fund pays the Adviser a monthly fee based on the Fund's
average daily net assets. Focus Capital Advisory, L.P. had voluntarily agreed
to reduce its fees and reimburse the Fund to the extent total annualized
expenses exceed 2.00%. Effective June 30, 1998, the Adviser has voluntarily
agreed to reduce its fees and reimburse the Fund to the extent total
annualized expenses exceed 1.90% until at least June 30, 2000. Investment
advisory fees for the six-month period ended June 30, 1998 were as follows:
<TABLE>
<CAPTION>
EXPENSES WAIVED
ADVISORY ADVISORY AND REIMBURSED
FEE (%) FEE ($) BY ADVISER
-------- -------- ---------------
<S> <C> <C> <C>
Legg Mason Fund Adviser, Inc............. 0.70% $33,681 $58,273
</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 month period ended June 30,
1998, excluding temporary short-term investments, are as follows:
<TABLE>
<CAPTION>
PROCEEDS
PURCHASES FROM SALES
---------- ----------
<S> <C>
$3,224,079 $2,138,018
</TABLE>
NOTE 4 -- UNREALIZED APPRECIATION AND DEPRECIATION:
At June 30, 1998, the net unrealized appreciation of securities for Federal
income tax purposes consisted of:
<TABLE>
<CAPTION>
AMOUNT
----------
<S> <C>
Gross unrealized appreciation.................................. $3,910,216
Gross unrealized depreciation.................................. (111,590)
----------
Net unrealized appreciation.................................... $3,798,626
==========
</TABLE>
-9-
<PAGE>
NOTE 5 -- SPECIAL MEETING OF SHAREHOLDERS (UNAUDITED):
A special meeting of shareholders was held on June 24, 1998 to vote on matters
in connection with the proposed acquisition of Focus Capital Advisory, L.P. by
Legg Mason Fund Adviser, Inc. The proposals submitted for shareholder approval
and the results for each proposal were as follows:
A. PROPOSALS
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
------- ------- -------
<S> <C> <C> <C>
1. Approval of New Investment Advisory And
Management Agreement with Legg Mason Fund
Adviser, Inc. ................................. 284,629 15,358 4,492
2. Approval of New Distribution Plan.............. 272,604 28,063 3,812
</TABLE>
<TABLE>
<CAPTION>
FOR WITHHOLD AUTHORITY
------- ------------------
<S> <C> <C>
3. Election of Directors
John F. Curley, Jr............................ 288,831 15,648
Richard G. Gilmore............................ 288,831 15,648
Arnold L. Lehman.............................. 288,831 15,648
Jill E. McGovern.............................. 288,831 15,648
T. A. Rodgers................................. 288,831 15,648
</TABLE>
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
------- ------- -------
<S> <C> <C> <C>
4. Ratification of selection of
PricewaterhouseCoopers LLP as independent
public accountants for the fiscal year
ending December 31, 1998.................... 294,008 4,998 5,473
</TABLE>
-10-
<PAGE>
LEGG MASON 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 YEAR PERIOD
06/30/98 ENDED ENDED ENDED
(UNAUDITED) 12/31/97 12/31/96 12/31/95**
----------- -------- -------- ----------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of
period...................... $ 16.32 $ 13.01 $ 11.17 $10.00
------- ------- ------- ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income
(loss).................. (0.08) (0.11) (0.05) 0.06
Net realized and
unrealized gain on
investments............. 3.81 3.89 1.96 1.17
------- ------- ------- ------
Total from investment
operations............ 3.73 3.78 1.91 1.23
------- ------- ------- ------
DIVIDENDS TO SHAREHOLDERS
Dividends from net
investment income....... -- -- -- (0.06)
Dividends from net
realized gains on
investments............. -- (0.47) (0.07) --
------- ------- ------- ------
Total from dividends to
shareholders.......... 0.00 (0.47) (0.07) (0.06)
------- ------- ------- ------
Net Asset Value, end of
period...................... $ 20.05 $ 16.32 $ 13.01 $11.17
======= ======= ======= ======
TOTAL RETURN................. 22.86% (2) 29.10% 17.14% 12.29% (2)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's)................ $11,144 $ 8,093 $ 7,327 $5,061
Ratio of expenses to
average net assets after
reimbursement of expenses
by Adviser................ 2.00% (1) 2.00% 2.00% 1.92% (1)(3)
Ratio of expenses to
average net assets before
reimbursement of expenses
by Adviser................ 3.21% (1) 4.04% 4.96% 7.89% (1)
Ratio of net investment
income to average net
assets after reimbursement
of expenses by Adviser.... (0.89%)(1) (0.74%) (0.40%) 1.19% (1)
Ratio of net investment
income to average net
assets before
reimbursement of expenses
by Adviser................ (2.10%)(1) (2.78%) (3.36%) (4.78%) (1)
Portfolio turnover......... 23.61% (2) 14.47% (4) 8.47% 0.00%
Average commission rate
paid *.................... N/R $0.1006 $0.0979 N/R
</TABLE>
(1) Annualized
(2) Not Annualized
(3) Prior to September 1, 1995, the annualized expenses were capped at 1.75%.
(4) Portfolio turnover was higher than anticipated due to fund share
redemptions.
* 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 was initially required by the U.S.
Securities and Exchange Commission beginning 1996 but has since been
revoked.
N/R Not required
** The Fund commenced investment operations on April 17, 1995.
See Notes to Financial Statements.
-11-
<PAGE>
LEGG MASON FOCUS TRUST, INC. (800) 665-2550
BOARD OF DIRECTORS
John F. Curley, Jr., Chairman
Richard G. Gilmore
Arnold L. Lehman
Dr. Jill E. McGovern
T. A. Rodgers
INVESTMENT ADVISER
Legg Mason Fund Adviser, Inc.
100 Light Street
Baltimore, MD 21202
UNDERWRITER
FPS Broker Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406
SHAREHOLDER SERVICES
First Data Investor Services Group Inc.
3200 Horizon Drive
King of Prussia, PA 19406
CUSTODIAN
The Bank of New York
48 Wall Street
New York, NY 10286
LEGAL COUNSEL
Kirkpatrick & Lockhart, LLP
1800 Massachusetts Ave., N.W.
Washington, DC 20036
AUDITORS
PricewaterhouseCoopers LLP
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.
LEGG MASON
FOCUS TRUST, INC. /SM/
SEMI-ANNUAL
REPORT
JUNE 30, 1998
