LETTER TO SHAREHOLDERS
Dear Shareholder:
The Dreyfus Focus Funds completed their first fiscal year on October 31,
1994, a period of 10 months since inception of the Funds on December 29,
1993.
During most of this time period, the Federal Reserve Board was actively
raising interest rates, which depressed the bond market and stock prices. The
underlying U.S. economy continued to make gains. Industrial production, Gross
National Product, housing starts, automobile sales and many other indicators
advanced. Prices were subdued at both wholesale and retail levels, but fears
of potential inflation had some effect on the market and, of course, on
policies of the Federal Reserve.
It so happened that Dreyfus Focus Funds started operating in this market
environment. Our approach, however, emphasizes long-term results. We have
made industry sector and individual stock selections with a long-distance
horizon in view _ adjusting, of course, as short-term market fluctuations
required.
In the Small Company area, we like to measure ourselves against the
Russell 2000 Index of small companies, while in the Large Company sector we
use the Standard & Poor's 500 Composite Stock Price Index as the measuring
rod. Both of these indexes, as well as the relevant Wilshire indexes, are
given in the performance table at the end of this letter.
OUR GROWTH PHILOSOPHY
Two of the Fund's four portfolios are growth oriented. The Growth
portfolios seek to invest in companies with above - average earnings growth.
Such stocks, in our opinion, have attractive long-term growth prospects.
However, they are subject to greater volatility than the market as a whole.
While a number of large companies meet our criteria for stock selection,
many dynamic opportunities arise from the identification of future growth
companies at an earlier stage of their life cycle. We use both quantitative
analysis from our large data bank resources and qualitative analysis from a
seasoned group of industry analysts to seek to identify new, emerging
high-growth companies. Not only do we look for companies expected to generate
high rates of earnings growth, but they must possess, in our opinion, the
financial, managerial and technological skills necessary to become excellent
investment vehicles in most market environments. Given the current
low-inflation, cost-conscious environment, we also emphasize unit growth,
market niche, and nature of proprietary products, even if limited in number,
to find characteristics consistent with superior investments.
LARGE COMPANY GROWTH
Investments in U.S. common stocks made up nearly three fourths of this
portfolio, and foreign stocks about one fourth.
The Technology sector was the largest industry holding in the portfolio
as the fiscal year ended. This was more than double the weighting in the
Standard & Poor's 500 Composite Stock Price Index. Among the Technology
holdings that were helpful to the portfolio's overall performance were
Motorola, General Instruments, Microsoft, Hewlett Packard and COMPAQ
Computer.
The Health Care sector was also positive for the portfolio. This group
was weighted more heavily in the portfolio than in the S & P 500. Major
positions here included Abbott Laboratories, Genzyme, United Healthcare and
U.S. Healthcare. We also had holdings in Chiron and ALZA, which
underperformed the market.
Finance stocks constituted slightly more of the portfolio at year-end,
than in the S & P 500 Index. This group, however, was held back by mounting
interest rates and did not do as well as other sectors in the portfolio.
Other areas that contributed to positive performance included Consumer
Nondurables and Energy. The Telecommunications group continued to add to
performance in the second half of the year, as it had in the first half. Many
of these holdings are foreign communications companies in Brazil, Hong Kong,
Mexico, New Zealand, Spain, Sweden and the United Kingdom. We expect
continued growth in these markets.
The cash position of the Large Company Growth portfolio was greatly
reduced in the latter half of the fiscal period as we put
these funds to work in growth stocks. Cash holdings on October 31, 1994,
amounted to 2.5%.
SMALL COMPANY GROWTH
This portfolio had a harder time for the full fiscal year than did Large
Company Growth. The Small Company portfolio held proportionately more energy
stocks which, while netting a small unrealized gain, were not major
contributors to performance. In addition, when the year ended, Small Company
Growth was approximately 16% in cash.
Technology and Health Care stocks performed well for the smaller cap
portfolio as they did for Large Company Growth. Areas that had negative
effects on the Small Company Growth portfolio included Finance stocks,
Process Industries and Transportation.
It should also be borne in mind that small capitalization stocks, almost
by definition, are more volatile than large caps. They generally rise more in
bull markets than the large caps, but decline more in weak markets. That
phenomenon was at work in the Small Company portfolio, especially in the
early months of the fiscal year.
OUR VALUE PHILOSOPHY
The two Value portfolios invest primarily in companies selling at
discount valuations on a price/earnings or price/book basis. This approach
rests largely on research. The Small Company Value Portfolio is subject to
the same kind of volatility as described above in relation to Small Company
Growth stocks. Keeping that in mind, we search for companies earmarked by
such changes as restructurings, spin-outs, changes in management and
acquisitions. The focus continues to be on good value, good business fundament
als and positive business momentum.
LARGE COMPANY VALUE
Among Large Value Companies, the biggest single commitment at fiscal
year-end was to Finance companies, which were negatively affected by
constantly rising interest rates. The largest decline in the group was the
investment in Aetna Life & Casualty, which was affected by weather damage
claims. A number of banks we held reacted to the tightening of interest
rates. However, these holdings, which reflect undervaluation, benefited when
our stake in Continental Bank was absorbed by BankAmerica in a takeover
transaction.
Technology investments and Health Care, accounting for 5.1% and 4.7%
respectively of the portfolio, continued to do well.
Consumer Nondurables, featuring such investments as Philip Morris Cos.
and Archer-Daniels-Midland, also helped performance. This group constituted
7.8% of the portfolio, vs. a weighting of 11.7% in the S & P 500.
During the later months of the fiscal year, we added to the Retail
sector, bringing it to 15.4% of the holdings vs. 6.6% for the S & P 500. This
sector made a modest contribution to overall results.
In the Utilities group, the portfolio held primarily communications
companies. Several were under pricing pressures and were selling below cost
at the end of the fiscal year.
In the Energy sector, which amounts to 5.8% of the holdings (vs. 10.1%
weighting in the S & P 500), we divested many of the oil and gas companies,
both foreign and domestic, at a net profit. Some holdings in domestic
producers have been retained.
SMALL COMPANY VALUE
The smaller capitalization indexes reflected greater volatility in this
past year; 80% of NASDAQ securities are down over 20%, yet the Russell 2000
Index of small stocks for the last 12 months was down only 1.6%
(ex-dividends). While your Fund was down as well, we feel that the value
focus was paramount to capital preservation.
Because we focus on companies selling below their intrinsic value, we
find our holdings frequently subject to takeover bids. Fidelity New York
Federal Savings Bank, Western Co. of North America and NBB Bankcorp are among
the holdings that fell into this category.
With a value focus, we have historically underweighted our exposure to
Health Care and Technology. While this penalized us in
this past year, we have now raised our weightings in these sectors to 6% and
10.5%, respectively.
Consumer Services, the major component of U.S. Gross Domestic Product,
continues to be a large sector for the portfolio, with a weighting of 8.8%,
about double the weighting in the S & P 500. Stocks we held in this category
showed a modest gain for the year.
With concerns of rising interest rates, political tension in Washington,
and some signs of slowdown in the U.S. economy, we have sold a fair number of
cyclical holdings from the portfolio with a small overall gain for the group.
For example, the portfolio weightings for Consumer Nondurables, Process
Industries and Producer Manufacturing are all now below the S & P 500
weightings for those categories.
Sincerely,
(logo signature)
Ernest G. Wiggins
Portfolio Manager
November 16, 1994
New York, N.Y.
<TABLE>
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PERFORMANCE
Total return for the period ended October 31, 1994: (1)
Large Company Growth Portfolio 4.40%
Wilshire Large Company Growth Index (2) 4.20%
Large Company Value Portfolio 1.04%
Wilshire Large Company Value Index (2) (1.11%)
Small Company Growth Portfolio (1.84%)
Wilshire Small Company Growth Index (2) 2.35%
Small Company Value Portfolio (0.56%)
Wilshire Small Company Value Index (2) (1.79%)
Past performance is not predictive of future performance.
Standard & Poor's 500 Composite Stock Price Index 3.60% (3)
Dow Jones Industrial Average 6.52% (3)
Russell 2000 Index (0.35%)(3)
</TABLE>
(1) Total return figures for the Focus portfolios are from Inception
(December 29, 1993). For the various stock market indices, the total
return figures are from December 31, 1993. Total return represents the
change during the period in a hypothetical account with dividends
reinvested.
(2) SOURCE: WILSHIRE ASSOCIATES, INC. - Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Wilshire Large Company Growth Index, Small Company Growth Index, Large
Company Value Index and Small Company Value Index are unmanaged indices
derived from the largest 2,500 securities in the Wilshire 5000 Index. The
Large Company universe consists of the largest 750 companies in the
Wilshire 5000 and the Small Company universe consists of the remaining
securities in the top 2,500. The Value universe and Growth universe
consist of companies which embody the characteristics of each style
respectively.
(3) SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Reflects the reinvestment
of income dividends and, where applicable, capital gain distributions.
The Dow Jones Industrial Average, the Standard & Poor's 500 Composite
Stock Price Index and the Russell 2000 Index are widely accepted
unmanaged indexes of various aspects of stock market performance.
Performance
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN LARGE COMPANY GROWTH
PORTFOLIO
AND LARGE COMPANY VALUE PORTFOLIO OF DREYFUS FOCUS FUNDS
AND THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX *
<TABLE>
<CAPTION>
Exhibit A
* Source: Lipper Analytical Services, Inc.
Actual Aggregate Total Returns
From Inception (12/29/93)
to October 31, 1994
-------------------
<S> <C>
Large Company Growth Portfolio 4.40%
Large Company Value Portfolio 1.04%
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Large Company Growth
Portfolio and Large Company Value Portfolio of the Dreyfus Focus Funds on
12/29/93 (Inception Date of both Portfolios) to a $10,000 investment made in
the Standard & Poor's 500 Composite Stock Price Index on that date. For
comparative purposes, the value of the Index on 12/31/93 is used as the
beginning value on 12/29/93. All dividends and capital gain distributions are
reinvested.
The Fund's performance takes into account applicable fees and expenses. The
Standard & Poor's 500 Composite Stock Price Index is a widely accepted,
unmanaged index of overall stock market performance, which does not take into
account charges, fees and other expenses. Further information relating to
Fund performance, including expense reimbursements, if applicable, is
contained in the Condensed Financial Information section of the Prospectus
and elsewhere in this report.
Performance
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN SMALL COMPANY GROWTH
PORTFOLIO
AND THE SMALL COMPANY VALUE PORTFOLIO OF DREYFUS FOCUS FUNDS, INC.
AND THE RUSSELL 2000 INDEX
Exhibit B
* Source: Lipper Analytical Services, Inc.
Actual Aggregate Total Returns
From Inception (12/29/93)
to October 31, 1994
-------------------
Small Company Growth Portfolio (1.84%)
Small Company Value Portfolio (.56%)
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Small Company Growth
Portfolio and Small Company Value Portfolio of the Dreyfus Focus Funds on
12/29/93 (Inception Date of both Portfolios) to a $10,000 investment made in
the Russell 2000 Index on that date. For comparative purposes, the value of
the Index on 12/31/93 is used as the beginning value on 12/29/93. All
dividends and capital gain distributions are reinvested.
The Portfolio's performance takes into account all applicable fees and
expenses. The Russell 2000 Index is an unmanaged index and is composed of the
2,000 smallest companies in the Russell 3000 Index. The Russell 3000 Index is
composed of 3,000 of the largest U.S. companies by market capitalization. The
Index does not take into account charges, fees and other expenses. Further
information relating to Portfolio performance, including expense
reimbursements, if applicable, is contained in the Condensed Financial
Information section of the Prospectus and elsewhere in this report.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS FOCUS FUNDS, INC., Large Company Growth Portfolio
STATEMENT OF INVESTMENTS OCTOBER 31, 1994
COMMON STOCKS_97.0% SHARES VALUE
--------- ------------
<S> <C> <C>
CONSUMER NON-DURABLES_10.9%
Archer-Daniels-Midland............... 3,360 $ 96,180
Coca-Cola........................ 2,200 110,550
Colgate-Palmolive................ 1,000 61,000
General Mills.................... 1,000 56,000
Gillette......................... 1,000 74,375
International Flavors & Fragrances 1,200 52,650
Roche Holdings, A.D.R. .......... 1,900 84,194
Wrigley, (Wm.) Jr................ 900 40,612
---------
575,561
---------
CONSUMER SERVICES_4.5%
Bell Cablemedia, A.D.R. (a) 3,200 75,200
Comcast, Cl. A .................. 2,900 48,212
Comcast, Cl. A (Non-voting)...... 1,450 23,744
Grupo Televisa S.A. ............. 2,000 88,750
---------
235,906
---------
ENERGY_11.3%
Anadarko Petroleum................ 1,600 78,200
Ashland Oil...................... 1,500 58,313
Baker Hughes..................... 4,700 96,350
Louisiana Land & Exploration..... 1,900 86,212
Schlumberger..................... 2,700 158,625
Total, Cl. B, A.D.S. ............ 3,600 118,800
---------
596,500
---------
FINANCE_8.9%
American International Group......... 1,400 131,075
Federal National Mortgage Association.... 1,400 106,400
MGIC Investment.................. 3,100 97,263
Morgan (J.P.) & Co............... 1,300 80,437
Progressive Corp, Ohio........... 1,500 57,000
---------
472,175
---------
HEALTH CARE_10.7%
ALZA.............................. (a) 3,300 58,575
Abbott Laboratories.............. 3,000 93,000
Amgen............................. (a) 1,200 66,900
Chiron............................ (a) 1,000 67,375
Genentech......................... (a) 1,200 60,900
Genzyme........................... (a) 2,400 78,600
U.S. HealthCare.................. 1,350 63,788
United Healthcare................ 1,400 73,850
---------
562,988
---------
NON-ENERGY MINERALS_1.7%
Inco .............................. 3,000 90,375
---------
PRODUCER MAUFACTURING_4.2%
Deere & Co.......................... 1,200 86,100
General Electric................. 1,800 87,975
Trinity Industries............... 1,400 47,950
---------
222,025
---------
DREYFUS FOCUS FUNDS, INC., Large Company Growth Portfolio (continued)
STATEMENT OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
---------- -----------
RETAIL TRADE_1.3%
Albertson's......................... 2,200 $ 66,000
---------
TECHNOLOGY_19.9%
Apple Computer...................... 2,200 95,013
COMPAQ Computer................... (a) 2,400 96,300
Ericsson (LM) Telephone, Cl. B, A.D.R. 2,400 146,250
General Instrument................ (a) 4,800 160,800
Hewlett-Packard.................. 1,100 107,525
Microsoft........................ (a) 2,200 138,600
Motorola......................... 2,800 164,850
Scientific-Atlanta............... 3,600 77,850
Tandem Computers................. (a) 3,700 65,212
---------
1,052,400
---------
TRANSPORTATION_2.9%
AMR............................... (a) 1,400 77,175
Delta Air Lines.................. 1,500 78,188
---------
155,363
---------
UTILITIES_20.7%
Cable & Wireless, A.D.S. ......... 3,100 63,550
Hong Kong Telecom, A.D.R. ....... 4,200 89,250
LIN Broadcasting................. (a) 700 96,600
MCI Communications............... 6,200 142,600
MFS Communications................ (a) 2,000 74,000
NEXTEL Communications, Cl. A..... (a) 2,100 43,969
Telecom Corp New Zealand, A.D.S. 1,800 100,125
Telecomunicacoes Brasileiras S.A., A.D.R. 2,300 110,400
Telefonica de Espana, A.D.S. .... 2,000 81,000
Telefonos de Mexico, Cl. L, A.D.R. 1,500 82,687
Telephone & Data Systems......... 1,700 84,150
Vodafone Group, A.D.R. .......... 3,600 125,100
---------
1,093,431
---------
TOTAL COMMON STOCKS
(cost $4,853,687).............. $5,122,724
==========
PRINCIPAL
SHORT-TERM INVESTMENTS_.5% AMOUNT
----------
U.S. TREASURY BILL; 4.42%, 11/10/94
(cost $25,971)................. $ 26,000 $ 25,971
==========
TOTAL INVESTMENTS (cost $4,879,658)................... 97.5% $5,148,695
===== ===========
CASH AND RECEIVABLES (NET)............................ 2.5% $ 132,261
===== ===========
NET ASSETS............................................ 100.0% $5,280,956
===== ===========
NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS FOCUS FUNDS, INC., Large Company Value Portfolio
STATEMENT OF INVESTMENTS OCTOBER 31, 1994
COMMON STOCKS_95.6% SHARES VALUE
------ -------
<S> <C> <C>
CONSUMER DURABLES_5.0%
American Greetings, Cl. A ........ 800 $ 21,900
Black & Decker................... 500 12,563
Fleetwood Enterprises............ 200 4,600
Ford Motor....................... 4,000 118,000
Masco............................ 1,000 23,750
Volkswagen A.G., A.D.R........... 1,300 76,050
---------
256,863
---------
CONSUMER NON-DURABLE_-7.8%
American Brands.................. 800 27,800
Archer-Daniels-Midland........... 2,730 78,146
Dean Foods....................... 300 8,663
Heinz (H.J.)..................... 700 25,988
Liz Claiborne.................... 1,100 25,437
Pet ............................. 1,500 25,875
Philip Morris Cos................ 1,800 110,250
RJR Nabisco Holdings.............. (a) 6,500 44,687
Seagram.......................... 1,800 55,575
---------
402,421
---------
CONSUMER SERVICES_1.1%
King World Productions............ (a) 500 17,750
Knight-Ridder.................... 800 41,200
---------
58,950
---------
ENERGY_5.8%
Amerada Hess...................... 500 24,875
Exxon............................ 1,100 69,163
Horsham.......................... 2,200 34,100
MAPCO............................ 500 27,312
Mobil............................ 500 43,000
Royal Dutch Petroleum............ 500 58,250
Tosco............................ 1,300 41,275
---------
297,975
---------
FINANCE_22.5%
ACE.......................... 1,100 25,025
Aetna Life & Casualty............ 2,200 101,475
Ahmanson (H.F.) & Co. ........... 1,000 19,125
Allmerica Property & Casualty Cos 1,100 17,600
American Express................. 4,700 144,525
American International Group..... 600 56,175
BankAmerica...................... 1,518 66,033
Chase Manhattan.................. 1,900 68,400
Commerce Bancshares.............. 600 19,050
Crestar Financial................ 800 33,000
Federal National Mortgage Association 1,400 106,400
First Chicago.................... 1,600 78,400
First Tennessee National......... 600 28,200
Fleet Financial Group............ 1,800 61,650
Lincoln National................. 800 29,000
Merrill Lynch & Co............... 700 27,562
DREYFUS FOCUS FUNDS, INC., Large Company Value Portfolio (continued)
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
------- --------
FINANCE (CONTINUED)
Morgan (J.P.) & Co ............... 1,100 $ 68,063
Ryder System..................... 1,000 23,500
St. Paul Cos. ................... 1,000 43,625
Student Loan Marketing Association 1,800 57,825
SunAmerica....................... 800 31,100
Travelers........................ 1,700 59,075
---------
1,164,808
---------
HEALTH CARE_4.7%
Columbia/HCA Healthcare............. 40 1,665
FHP International................. (a) 700 20,300
Genetics Institute (Depository Shares)(a) 200 8,100
Healthtrust-The Hospital Company.. (a) 1,600 56,000
Johnson & Johnson................ 700 38,238
Lily (Eli) & Co.................. 700 43,400
Schering-Plough.................. 500 35,625
Warner-Lambert................... 500 38,125
---------
241,453
---------
NON-ENERGY MINERALS_1.2%
AK Steel Holding............... (a) 1,300 42,575
Bethlehem Steel................... (a) 1,200 22,800
---------
65,375
---------
PROCESS INDUSTRIES_5.4%
Bowater............. 900 24,300
Georgia-Pacific.................. 300 22,163
Grace (W.R.) & Co. .............. 1,600 63,400
IMC Global........................ (a) 1,100 46,750
International Paper.............. 300 22,350
James River...................... 1,200 27,450
Rayonier......................... 250 7,375
Sherwin-Williams................. 600 19,575
Stone Container................... (a) 1,000 16,750
Temple-Inland.................... 600 28,350
---------
278,463
---------
PRODUCER MANUFACTURING_12.8%
Canadian Pacific.......... 1,800 28,800
Champion International........... 1,400 51,800
Dial............................. 2,000 41,250
General Electric................. 1,300 63,537
Honeywell........................ 1,700 54,825
ITT....................... 800 70,600
Litton Industries................. (a) 700 25,725
Loews...................... 600 52,950
Louisiana Pacific................ 1,400 42,875
Philips Electronics, N.V. ....... 3,900 127,725
Varity............................ (a) 1,000 38,250
Xerox................................. 600 61,500
---------
659,837
---------
DREYFUS FOCUS FUNDS, INC., Large Company Value Portfolio (continued)
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
------- ---------
RETAIL TRADE_15.4%
American Stores................... 1,500 $ 40,688
Dayton Hudson.................... 400 31,000
Dillard Department Stores, Cl. A 2,600 68,900
Kroger............................ (a) 1,500 39,188
May Department Stores............ 1,900 71,487
Melville......................... 600 20,025
Mercantile Stores................ 700 31,850
Penney (J.C.).................... 1,500 75,937
Premark International............ 2,500 111,875
Rite Aid......................... 1,500 36,000
Sears, Roebuck & Co. ............ 2,400 118,800
Tandy............................ 2,400 106,200
United States Shoe............... 2,400 42,900
---------
794,850
---------
TECHNOLOGY_5.1%
Apple Computer............. 1,300 56,144
Martin Marietta.................. 1,700 77,988
Rockwell International........... 1,700 59,287
Sun Microsystems.................. (a) 1,400 45,850
Unicom........................... 1,200 25,950
---------
265,219
---------
TRANSPORTATION_2.8%
AMR............................ (a) 500 27,563
Conrail.......................... 1,100 59,812
Illinois Central, Ser. A......... 700 22,487
Southern Pacific Rail............. (a) 2,000 34,750
---------
144,612
---------
UTILITIES_6.0%
AT&T................... 1,000 55,000
CMS Energy....................... 2,400 55,200
Illinova......................... 2,500 49,375
MCI Communications............... 2,000 46,000
NYNEX............................ 700 27,475
Pinnacle West Capital............ 2,500 46,562
TransCanada Pipelines............ 2,500 32,500
---------
312,112
---------
TOTAL COMMON STOCKS
(cost $4,942,654).............. $4,942,938
==========
PRINCIPAL
SHORT-TERM INVESTMENTS_2.0% AMOUNT
-------
U.S. TREASURY BILLS; 4.40%, 11/10/94
(cost $100,889)................ $ 101,000 $ 100,889
==========
TOTAL INVESTMENTS (cost $5,043,543)........... 97.6% $5,043,827
===== ===========
CASH AND RECEIVABLES (NET).................... 2.4% $ 124,571
===== ===========
NET ASSETS................................... 100.0% $5,168,398
===== ===========
NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS FOCUS FUNDS, INC., Small Company Growth Portfolio
STATEMENT OF INVESTMENTS OCTOBER 31, 1994
COMMON STOCKS_83.7% SHARES VALUE
---------- ---------
<S> <C> <C>
CONSUMER DURABLES_3.8%
Avid Technology.................. (a) 2,800 $ 105,350
Oakwood Homes.................... 3,600 85,500
---------
190,850
---------
CONSUMER SERVICES_1.0%
People's Choice TV............ (a) 2,700 52,650
---------
ENERGY_18.6%
Global Marine............... (a) 32,300 153,425
Helmerich & Payne................ 2,800 87,500
Hornbeck Offshore Services........ (a) 4,900 73,500
Noble Drilling.................... (a) 8,500 62,688
Parker Drilling................... (a) 15,100 92,488
Rowan............................. (a) 15,900 121,237
Sonat Offshore Drilling.......... 5,000 99,375
Unit.............................. (a) 12,200 44,225
Varco International.............. .(a) 11,900 83,300
Weatherford International......... (a) 10,500 119,437
---------
937,175
---------
FINANCE_3.8%
Ethical Holdings, A.D.R. ...... (a) 7,500 53,437
PXRE............................. 3,000 73,875
United Companies Financial....... 2,000 66,500
---------
193,812
---------
HEALTH CARE_9.4%
COR Therapeutics............. (a) 6,500 84,500
Centocor.......................... (a) 5,500 97,281
GMIS.............................. (a) 4,400 82,500
Immune Response................... (a) 8,000 65,000
Mariner Health Group.............. (a) 3,500 79,188
Noven Pharmaceuticals............. (a) 4,300 65,575
---------
474,044
---------
INDUSTRIAL SERVICES_1.5%
Catalina Marketing............... (a) 1,500 76,312
---------
MISCELLANEOUS_1.7%
Brown (Tom).................... (a) 6,700 85,844
---------
NON-ENERGY MINERALS_1.5%
Cleveland-Cliffs............ 2,000 76,250
---------
PROCESS INDUSTRIES_2.5%
Albany International, Cl. A ............. 3,700 73,075
Seda Speciality Packaging......... (a) 4,000 52,000
---------
125,075
---------
PRODUCER MANUFACTURING_1.8%
Lam Research........... (a) 2,000 90,000
---------
TECHNOLOGY_24.9%
ANTEC...................... (a) 3,100 88,350
Altera........................... (a) 2,400 94,650
Andrew........................... (a) 2,400 124,200
Aspen Technology................. (a) 4,500 76,500
Auspex Systems.................... (a) 8,600 63,425
Chipcom........................... (a) 2,600 156,650
DREYFUS FOCUS FUNDS, INC., Small Company Growth Portfolio (continued)
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
-------- -------------
TECHNOLOGY (CONTINUED)
FORE Systems ................... (a) 2,000 $ 99,500
Keane............................. (a) 3,300 67,650
Novellus Systems................. .(a) 1,800 98,100
Tellabs........................... (a) 5,400 263,250
Zilog............................. (a) 4,200 120,750
---------
1,253,025
---------
TRANSPORTATION_4.0%
Comair Holdings........... 3,200 69,600
SkyWest.......................... 3,000 61,500
Werner Enterprises............... 2,700 68,850
---------
199,950
---------
UTILITIES_9.2%
Associated Communications, Cl. B (a) 3,200 82,400
C-TEC, Cl. B...................... (a) 2,400 67,200
Cellular Communications, Cl. A ... (a) 2,800 149,100
Rogers Cantel Mobile Communications, Cl. B (a) 2,800 85,575
United International Holdings, Cl. A (a) 5,200 81,900
---------
466,175
---------
TOTAL COMMON STOCKS
(cost $3,954,924).............. $4,221,162
==========
PRINCIPAL
SHORT-TERM INVESTMENTS_13.5% AMOUNT
-----------
U.S. TREASURY BILLS: 4.42%, 11/10/94 $ 307,000 $ 306,661
4.61%, 11/17/94.................. 235,000 234,518
4.73%, 12/22/94.................. 139,000 138,069
==========
TOTAL SHORT-TERM INVESTMENTS
(cost $679,248)................ $ 679,248
==========
TOTAL INVESTMENTS (cost $4,634,172).......... 97.2% $4,900,410
===== ===========
CASH AND RECEIVABLES (NET)................... 2.8% $ 138,955
===== ===========
NET ASSETS................................... 100.0% $5,039,365
===== ===========
NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS FOCUS FUNDS, INC., Small Company Value Portfolio
STATEMENT OF INVESTMENTS OCTOBER 31, 1994
COMMON STOCKS_86.1% SHARES VALUE
-------- -----------
<S> <C> <C>
CONSUMER DURABLES_5.6%
Coachmen Industries .............. 3,000 $ 38,250
Continental Homes Holding........ 2,300 31,913
Fedders........................... (a) 3,900 23,400
Fedders, Cl. A (non-voting)...... 1,950 8,775
Johnson Worldwide Associates, Cl. A (a) 1,500 33,938
LADD Furniture................... 2,600 16,250
NVR............................... (a) 1,700 9,775
Pentech International............. (a) 4,000 20,250
Scotts, Cl. A..................... (a) 1,500 23,250
U.S. Home......................... (a) 2,000 31,750
Vista Resources................... (a) 2,300 49,737
---------
287,288
---------
CONSUMER NON-DURABLE_5.4%
Alberto Culver, Cl. A............. 3,500 82,688
Block Drug, Cl. A (non-voting)... 500 17,812
DeSoto............................ (a) 3,600 18,000
Duplex Products................... (a) 1,000 9,500
Ennis Business Forms............. 2,600 35,100
Gibson (C.R.).................... 2,200 17,187
GoodMark Foods................... 4,200 67,725
Graphic Industries............... 3,100 30,225
---------
278,237
---------
CONSUMER SERVICES_8.8%
Broadcasting Partners, Cl. A ..... (a) 1,800 28,575
Chris-Craft Industries........... (a) 1,339 50,547
Daka International................ (a) 5,400 82,350
Kinder-Care Learning Centers...... (a) 2,800 37,100
Longhorn Steaks................... (a) 4,300 35,475
Luby's Cafeterias................ 1,900 43,938
MDC, Cl. A........................ (a) 18,500 36,918
Plenum Publishing................ 700 17,850
Pulitzer Publishing.............. 1,000 35,750
Ryan's Family Steak House........ (a) 3,000 18,750
SFX Broadcasting, Cl. A........... (a) 3,900 66,300
---------
453,553
---------
ENERGY_8.4%
DI Industries................... (a) 12,000 12,000
Grad & Walker Energy.............. (a) 2,600 22,700
Offshore Pipelines................ (a) 4,000 81,500
Plains Petroleum................. 2,500 67,500
Santa Fe Energy Resources........ (a) 6,000 54,750
Total Petroleum, N.A............. 4,800 69,000
Trident NGL Holdings............. 4,500 47,812
Western Co. of North America...... (a) 4,600 81,650
---------
436,912
---------
FINANCE_14.3%
Acceptance Insurance Cos. (Warrants) (a) 10,000 53,750
Advantage Bancorp................ (a) 700 20,038
DREYFUS FOCUS FUNDS, INC., Small Company Value Portfolio (continued)
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
------- ----------
FINANCE (CONTINUED)
Albank Financial.................. 2,000 $ 44,750
Allmerica Property & Casualty Cos. 1,800 28,800
AmeriFed Financial............... 500 22,000
Anchor Bancorp................... (a) 2,000 29,625
Argonaut Group................... 1,100 31,075
Astoria Financial................ 900 25,875
Capital Guaranty................. 800 12,100
Citizens......................... 1,000 16,375
City National..................... (a) 3,800 41,800
Downey Savings & Loan Association. 2,300 43,412
Fidelity New York Federal Savings Bank (a) 2,300 64,544
First Palm Beach Bancorp.......... (a) 1,300 22,100
Fleet Financial Group............ 548 18,769
MMI Cos.......................... 3,000 43,125
Merchants Group.................. 1,300 19,175
Meridian Insurance Group......... 3,600 37,800
NBB Bancorp...................... 800 38,200
National Mercantile Bancorp...... (a) 2,700 12,319
Primark........................... (a) 1,000 13,000
Roosevelt Financial Group........ 2,211 33,441
Standard Federal Bank............ 2,000 53,000
Sterling Financial................ (a) 1,430 16,087
---------
741,160
---------
HEALTH CARE_6.0%
Advanced Technology Laboratories.......... (a) 1,300 20,800
Datascope......................... (a) 1,500 26,250
Living Centers of America........ (a) 2,800 84,350
Nellcor.......................... (a) 1,500 46,500
OrNda Healthcorp.................. (a) 1,294 20,542
PSICOR............................ (a) 1,300 12,188
Safeguard Health Enterprises...... (a) 2,900 27,912
SpaceLabs Medical................ (a) 2,400 50,400
Wellpoint Health Networks, Cl. A (a) 700 19,250
---------
308,192
---------
INDUSTRIAL SERVICES_3.0%
Appliance Recycling Centers of America (a) 2,000 14,000
CHC Helicopter, Cl. B............ 5,700 24,751
Groundwater Technology........... (a) 1,300 16,575
International Recovery........... 5,300 82,150
UTILX............................. (a) 5,000 19,375
---------
156,851
---------
NON-ENERGY MINERALS_2.5%
Chaparral Steel................... 3,400 27,200
Kentucky Electric Steel........... (a) 2,400 24,600
Miramar Mining................... (a) 4,000 17,369
Schnitzer Steel Industries, Cl. A 2,600 59,150
---------
128,319
---------
DREYFUS FOCUS FUNDS, INC., Small Company Value Portfolio (continued)
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
---------- ----------
PROCESS INDUSTRIES_3.2%
CalMat.................... 3,500 $ 72,625
Lone Star Industries............. (a) 324 6,278
NCH.............................. 500 33,312
Paragon Trade Brands............. (a) 1,100 26,400
Slocan Forest Products........... 2,800 27,938
---------
166,553
---------
PRODUCER MANUFACTURING_5.5%
Borg-Warner Automotive......... 1,500 33,750
Cherry, Cl. A ................... 800 12,600
Cherry, Cl. B .................... (a) 800 13,600
Defiance.......................... (a) 3,400 24,650
Harnischfeger Industries......... 2,000 50,000
Nashua........................... 1,200 27,300
PAR Technology................... (a) 6,600 49,500
RB&W............................. (a) 4,700 36,425
Thomas Industries................ 2,400 35,400
---------
283,225
---------
RETAIL TRADE_9.6%Allou Health & Beauty, Cl. A (a) 1,500 12,563
Blair............................ 600 25,200
Bon-Ton Stores................... (a) 6,800 85,000
Designs.......................... (a) 3,300 24,338
Dress Barn........................ (a) 3,700 36,537
Lechters.......................... (a) 3,500 62,125
Lillian Vernon................... 2,600 43,875
Little Switzerland................ (a) 1,800 9,675
Morgan Products................... (a) 3,200 16,000
Pier 1 Imports................... 6,500 50,375
Shopko Stores.................... 1,700 16,787
Uni-Marts........................ 10,000 56,250
Venture Stores................... 300 4,650
Waban............................. (a) 3,000 53,250
---------
496,625
---------
TECHNOLOGY_10.5%
Beamscope Canada.................. 7,000 67,258
Code Alarm........................ (a) 5,800 63,800
Conner Peripherals................ (a) 4,000 46,000
Core Industries.................. 2,400 21,600
Cray Research..................... (a) 1,400 26,775
Evans & Sutherland Computer...... (a) 1,000 11,750
Micrografx........................ (a) 4,700 29,375
Printronix........................ (a) 2,000 42,000
QMS............................... (a) 10,500 105,000
Quantum.......................... (a) 1,500 23,062
Read-Rite......................... (a) 3,000 52,125
Rexon............................. (a) 10,000 52,500
Tripos........................... 333 1,582
---------
542,827
---------
DREYFUS FOCUS FUNDS, INC., Small Company Value Portfolio (continued)
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
------- ----------
TRANSPORTATION_3.2%
Alexander & Baldwin................ 1,100 $ 25,575
Arkansas Best.................... 4,500 58,219
Builders Transport................ (a) 3,500 39,375
Cannon Express, Cl. B............. (a) 2,100 25,200
Matlack Systems................... (a) 1,500 14,812
---------
163,181
---------
UTILITIES_.1%
Associated Communication, Cl. A .. (a) 300 7,762
---------
TOTAL COMMON STOCKS
(cost $4,824,118).............. $4,450,685
==========
PRINCIPAL
SHORT-TERM INVESTMENTS_12.5% AMOUNT
------------
U.S. TREASURY BILLS: 4.50%, 12/1/94..... (b) $ 292,000 $ 290,905
4.71%, 12/22/94.... 355,000 352,630
---------
TOTAL SHORT-TERM INVESTMENTS
(cost $643,535)................ $ 643,535
===========
TOTAL INVESTMENTS (cost $5,467,653).......... 98.6% $5,094,220
===== ===========
CASH AND RECEIVABLES (NET)................ 1.4% $ 71,571
===== ===========
NET ASSETS................................. 100.0% $5,165,791
===== ===========
NOTES TO STATEMENT OF INVESTMENTS:
(a) Non-income producing.
(b) Partially held by broker as collateral for open short positions
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Dreyfus Focus Funds, Inc., Small Company Value Portfolio
Statement of Securities Sold Short
October 31, 1994
Common Stocks_1.6% Shares Value
------ --------
<S> <C> <C>
Appliance Recycling Centers of America...................................... 4,000 $ 28,000
Lone Star Industries........................................................ 324 6,278
Lone Star Industries (Warrants)............................................. 1,654 13,232
Presstek.................................................................... 1,000 34,000
--------
TOTAL SECURITIES SOLD SHORT
(proceeds $99,299)...................................................... $ 81,510
========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Dreyfus Focus Funds, Inc.
Statement of Assets and Liabilities
October 31, 1994
Large Large Small Small
Company Company Company Company
Growth Value Growth Value
Portfolio Portfolio Portfolio Portfolio
---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at value
[cost_Note 4(b)]_see statement....... $5,148,695 $5,043,827 $4,900,410 $5,094,220
Cash................................... 76,556 52,091 98,631 --
Receivable for investment securities sold 42,562 174,100 167,359 239,851
Dividends and interest receivable...... 4,112 10,367 -- 11,123
Receivable from brokers for proceeds on
securities sold short................ -- -- -- 99,299
Prepaid expenses_Note 2(g)............. 25,091 26,133 26,201 25,764
Due from The Dreyfus Corporation....... 6,180 7,032 6,048 8,316
---------- --------- --------- ---------
5,303,196 5,313,550 5,198,649 5,478,573
---------- --------- --------- ---------
LIABILITIES:
Due to the Distributor................. $ 3,276 $ 3,263 $ 3,137 $ 3,286
Due to Custodian....................... -- -- -- 205,310
Payable for investment securities purchased -- 120,885 138,500 --
Securities sold short, at value (proceeds $99,299) -- -- -- 81,510
Accrued expenses and other liabilities. 18,964 21,004 17,647 22,676
---------- --------- --------- ---------
22,240 145,152 159,284 312,782
---------- --------- --------- ---------
NET ASSETS ...................... $5,280,956 $5,168,398 $5,039,365 $5,165,791
=========== ========== ========== ==========
REPRESENTED BY:
Paid-in capital........................ $5,060,887 $5,116,478 $5,131,448 $5,197,419
Accumulated undistributed investment
income_net.......................... 68,916 106,661 38,622 123,146
Accumulated undistributed net realized gain
(loss) on investments, securities sold short
and foreign currency transactions.... (117,884) (55,025) (396,943) 200,873
Accumulated net unrealized appreciation
(depreciation) on investments, securities
sold short and foreign currency
transactions_Note 4(b)............... 269,037 284 266,238 (355,647)
---------- --------- --------- ---------
NET ASSETS at value........................ $5,280,956 $5,168,398 $5,039,365 $5,165,791
=========== ========== ========== ==========
Shares Outstanding
[400 million shares (with 100 million allocated
to each series) of $.001 par value Common Stock
authorized]............................ 404,823 409,217 410,862 415,510
=========== ========== ========== ==========
NET ASSET VALUE per share
(Net Assets / Shares Outstanding)...... $13.05 $12.63 $12.27 $12.43
=========== ========== ========== ==========
See notes to financial statements.
Dreyfus Focus Funds, Inc.
Statement of Operations
from December 29, 1993 (commencement of operations) to October 31, 1994
Large Large Small Small
Company Company Company Company
Growth Value Growth Value
Portfolio Portfolio Portfolio Portfolio
---------- --------- --------- ---------
INVESTMENT INCOME:
Income:
Cash dividends (net of $2,225, $1,328 and $333
foreign taxes withheld at source for the Large
Company Growth, Large Company Value and
Small Company Value Portfolios, respectively) $ 54,058 $ 98,206 $ 8,750 $ 100,925
Interest.................................. 14,858 8,455 29,872 22,605
---------- --------- --------- ---------
Total Income........................ 68,916 106,661 38,622 123,530
---------- --------- --------- ---------
Expenses_Note 2(d):
Management fee_Note 3(a).................. $ 31,700 $ 32,302 $ 30,774 $ 32,544
Shareholder servicing costs_Note 3(b,c)... 35,544 36,046 33,266 36,393
Auditing fees............................. 10,013 10,012 9,613 10,413
Legal fees................................ 6,899 7,071 6,724 7,122
Organization expenses_Note 2(g)........... 5,303 5,447 5,411 5,485
Shareholders' reports..................... 3,174 3,182 3,143 3,250
Registration fees......................... 2,246 2,535 2,558 2,536
Directors' fees and expenses_Note 3(d).... 2,013 2,111 1,951 2,300
Custodian fees............................ 1,206 3,328 1,335 5,761
Dividends on securities sold short........ -- -- -- 384
Miscellaneous............................. 1,046 959 956 962
---------- --------- --------- ---------
99,144 102,993 95,731 107,150
Less_expense reimbursement from Manager
due to undertaking_Note 3(a).......... 99,144 102,993 95,731 106,766
---------- --------- --------- ---------
Total Expenses...................... -- -- -- 384
---------- --------- --------- ---------
INVESTMENT INCOME_NET............... 68,916 106,661 38,622 123,146
---------- --------- --------- ---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on investments_Note 4(a):
Long transactions (including foreign currency
transactions)....................... $(117,884) $ (55,025) $(396,943) $ 182,814
Short sale transactions............... -- -- -- 18,059
---------- --------- --------- ---------
Net Realized Gain (Loss).............. (117,884) (55,025) (396,943) 200,873
Net unrealized appreciation (depreciation) on
investments, securities sold short and foreign
currency transactions................. 269,037 284 266,238 (355,647)
---------- --------- --------- ---------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS...... 151,153 (54,741) (130,705) (154,774)
---------- --------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................... $ 220,069 $ 51,920 $ (92,083) $ (31,628)
========== ========= =========== ===========
See notes to financial statements.
Dreyfus Focus Funds, Inc.
Statement of Changes in Net Assets
from December 29, 1993 (commencement of operations) to October 31, 1994
Large Large Small Small
Company Company Company Company
Growth Value Growth Value
Portfolio Portfolio Portfolio Portfolio
---------- --------- --------- ---------
OPERATIONS:
Investment income_net................. $ 68,916 $ 106,661 $ 38,622 $ 123,146
Net realized gain (loss) on investments (117,884) (55,025) (396,943) 200,873
Net unrealized appreciation (depreciation) on
investments for the period........... 269,037 284 266,238 (355,647)
---------- --------- --------- ---------
Net Increase (Decrease) In Net Assets
Resulting From Operations...... 220,069 51,920 (92,083) (31,628)
---------- --------- --------- ---------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold.......... 5,053,200 5,101,555 5,286,073 5,174,759
Cost of shares redeemed................ (17,313) (10,077) (179,625) (2,340)
---------- --------- --------- ---------
Increase In Net Assets From Capital
Stock Transactions............. 5,035,887 5,091,478 5,106,448 5,172,419
---------- --------- --------- ---------
Total Increase In Net Assets 5,255,956 5,143,398 5,014,365 5,140,791
NET ASSETS:
Beginning of period_Note 1............ 25,000 25,000 25,000 25,000
---------- --------- --------- ---------
End of period (including undistributed
investment income_net_see Statement of
Assets and Liabilities).............. $5,280,956 $5,168,398 $5,039,365 $5,165,791
---------- --------- --------- ---------
---------- --------- --------- ---------
Shares Shares Shares Shares
---------- --------- --------- ---------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................ 404,190 407,991 424,287 413,701
Shares redeemed........................ (1,367) (774) (15,425) (191)
---------- --------- --------- ---------
Net Increase In Shares Outstanding 402,823 407,217 408,862 413,510
========= ========== ======= ==========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Dreyfus Focus Funds, Inc.
Financial Highlights
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each series for the period December
29, 1993 (commencement of operations) to October 31, 1994. This information
has been derived from the Fund's financial statements.
Large Large Small Small
Company Company Company Company
Growth Value Growth Value
PER SHARE DATA: Portfolio Portfolio Portfolio Portfolio
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period... $12.50 $12.50 $12.50 $12.50
---------- --------- --------- ---------
Investment Operations:
Investment income_net................. .17 .26 .09 .30
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions......................... .38 (.13) (.32) (.37)
---------- --------- --------- ---------
Total from Investment Operations. .55 .13 (.23) (.07)
---------- --------- --------- ---------
Net asset value, end of period......... $13.05 $12.63 $12.27 $12.43
======= ====== ======= =======
TOTAL INVESTMENT RETURN*................... 4.40% 1.04% (1.84%) (.56%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average net assets* -- -- -- --
Ratio of dividends on securities sold short to
average net assets*.................. -- -- -- .01%
Ratio of net investment income to average
net assets*.......................... 1.37% 2.08% .79% 2.39%
Decrease reflected in above expense ratios due
to undertaking by the Manager*....... 1.97% 2.01% 1.96% 2.07%
Portfolio Turnover Rate*............... 12.08% 48.35% 25.95% 219.63%
Net Assets, end of period (000's Omitted) $5,281 $5,168 $5,039 $5,166
* Not annualized.
See notes to financial statements.
</TABLE>
Dreyfus Focus Funds, Inc.
NOTES TO FINANCIAL STATEMENTS
NOTE 1_General:
Dreyfus Focus Funds, Inc. (the "Fund") was incorporated on November 16,
1993 and operates as a series company currently offering four classes of
shares of Common Stock: the Large Company Growth Portfolio, the Large Company
Value Portfolio, the Small Company Growth Portfolio and the Small Company
Value Portfolio. The Fund accounts separately for the assets, liabilities and
operations of each series. The Fund had no operations until December 29, 1993
(when operations commenced for all series) other than matters relating to its
organization and registration as a diversified open-end management investment
company under the Investment Company Act of 1940 ("Act") and the Securities
Act of 1933 and the sale and issuance of 2,000 shares of Common Stock ("Initia
l Shares") of each series to The Dreyfus Corporation ("Manager"). Dreyfus
Service Corporation, a wholly-owned subsidiary of the Manager, until August
24, 1994, acted as the distributor of the Fund's shares. Effective August 24,
1994, the Manager became a direct subsidiary of Mellon Bank, N.A.
As of October 31, 1994 Major Trading Corporation, a subsidiary of Mellon
Bank Investments Corporation, the parent company of which is Mellon Bank,
held the following shares:
<TABLE>
<CAPTION>
<S> <C> <S> <C>
Large Company Growth Portfolio 402,000 Small Company Growth Portfolio 402,000
Large Company Value Portfolio 402,000 Small Company Value Portfolio 407,816
</TABLE>
On August 24, 1994, Premier Mutual Fund Services, Inc, (the "Distributor")
was engaged as the Fund's distributor. The Distributor, located at One Exchange
Place, Boston, Massachusetts 02109, is a wholly-owned subsidiary of
Institutional Administration Services, Inc., a provider of mutual fund
administration services, the parent company of which is Boston Institutional
Group, Inc.
NOTE 2_Significant Accounting Policies:
(a) Portfolio valuation: Each series' investments in securities are
valued at the last sales price on the securities exchange on which such
securities are primarily traded or at the last sales price on the national
securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices, except for
open short positions, where the asked price is used for valuation purposes.
Bid price is used when no asked price is available. Short-term investments
are carried at amortized cost, which approximates value. Investments
denominated in foreign currencies are translated to U.S. dollars at the
prevailing rates of exchange.
(b) Foreign currency transactions: The Fund does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates
on investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales
and maturities of short-term securities, sales of foreign currencies,
currency gains or losses realized on securities transactions, the difference
between the amounts of dividends, interest, and foreign withholding taxes
recorded on the Fund's books, and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains and losses
arise from changes in the value of assets and liabilities other than
investments in securities at fiscal year end, resulting from changes in
exchange rate.
Dreyfus Focus Funds, Inc.
NOTES TO FINANCIAL STATEMENTS (continued)
(c) Securities transactions and investment income: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
(d) Expenses: Expenses directly attributable to each series are charged
to that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
(e) Dividends to shareholders: Dividends payable to shareholders are
recorded by each series on the ex-dividend date. Dividends from investment
income-net and dividends from net realized capital gain, with respect to each
series, are normally declared and paid annually, but each series may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. To the extent that a net realized
capital gain of a series can be offset by a capital loss carryover of that
series, such gain will not be distributed.
(f) Federal income taxes: It is the policy of the Fund to qualify as a
regulated investment company, if such qualification is in the best interests
of its shareholders, by complying with the applicaple provisions of the
Internal Revenue Code, and to make distributions of taxable income sufficient
to relieve it from substantially all Federal income and excise taxes. For
Federal income tax purposes, each series is treated as a single entity for
the purpose of determining such qualification.
The Large Company Growth Portfolio has an unused capital loss carryover
of approximately $118,000 available for Federal income tax purposes to be
applied against future net securities profits, if any, realized subsequent to
October 31, 1994. If not applied, the carryover expires in fiscal 2002.
The Large Company Value Portfolio has an unused capital loss carryover of
approximately $55,000 available for Federal income tax purposes to be applied
against future net securities profits, if any, realized subsequent to October
31, 1994. If not applied, the carryover expires in fiscal 2002.
The Small Company Growth Portfolio has an unused capital loss carryover
of approximately $397,000 available for Federal income tax purposes to be
applied against future net securities profits, if any, realized subsequent to
October 31, 1994. If not applied, the carryover expires in fiscal 2002.
(g) Other: Organization expenses paid by the Fund are included in prepaid
expenses and are being amortized to operations from the date operations
commenced over the period during which it is expected that a benefit will be
realized, not to exceed five years. At October 31, 1994, the unamortized
balance of such expenses for each of the respective series amounted to the
following:
<TABLE>
<CAPTION>
<S> <C> <S> <C>
Large Company Growth Portfolio $23,629 Small Company Growth Portfolio $24,133
Large Company Value Portfolio 24,235 Small Company Value Portfolio 23,947
</TABLE>
In the event that any of the Initial Shares, with respect to all series,
are redeemed during the amortization period, the redemption proceeds will be
reduced by any unamortized organization expenses for that series in the same
proportion as the number of such shares being redeemed bears to the number of
such shares outstanding of that series at the time of such redemption.
NOTE 3_Management Fee and Other Transactions With Affiliates:
(a) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .75 of 1% of the average
daily value of each series' net assets and is payable monthly. The Agreement
provides that if in any full fiscal year the aggregate expenses of any
series, exclusive of taxes, brokerage, interest on borrowings (which, in the
view of Stroock & Stroock &
Dreyfus Focus Funds, Inc.
NOTES TO FINANCIAL STATEMENTS (continued)
Lavan, counsel to the Fund, also contemplates dividends accrued on securities
sold short) and extraordinary expenses, exceed the expense limitation of any
state having jurisdiction over the Series, that series may deduct from
payments to be made to the Manager, or the Manager will bear the amount of
such excess to the extent required by state law. The most stringent state
expense limitation applicable to each Series presently requires reimbursement
of expenses in any full fiscal year that such expenses (exclusive of
distribution expenses and certain expenses as described above) exceed 2 1/2%
of the first $30 million, 2% of the next $70 million and 1 1/2% of the excess
over $100 million of the average value of that series' net assets in
accordance with California "blue sky" regulations. However, the Manager has
undertaken from December 29, 1993 through December 31, 1994, or until such
time as the net assets of a series exceed $25 million, regardless of whether
they remain at that level, to assume all expenses of each Series (excluding
certain expenses as described above).
The expense reimbursements, pursuant to the undertaking amounted to the
following for the period ended October 31, 1994:
<TABLE>
<CAPTION>
<S> <C> <S> <C>
Large Company Growth Portfolio $ 99,144 Small Company Growth Portfolio $ 95,731
Large Company Value Portfolio 102,993 Small Company Value Portfolio 106,766
</TABLE>
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the agreement.
(b) On August 5, 1994, the shareholders approved a revised Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the Plan,
effective August 24, 1994, the Fund (a) reimburses the Distributor for
payments to certain Service Agents for distributing each Series' shares and
(b) pays the Manager, Dreyfus Service Corporation and any affiliate of either
of them for advertising and marketing relating to each Series, at an
aggregate annual rate of .50 of 1% of the value of each Series' average daily
net assets. The Distributor may pay one or more Service Agents in respect of
distribution services. The Distributor determines the amounts, if any, to be
paid to Service Agents under the Plan and the basis on which such payments
are made. The fees payable under the Plan are payable without regard to
actual expenses incurred. The Plan also separately provides for the Fund to
bear the costs of preparing, printing and distributing certain of the Fund's
prospectuses and statements of additional information and costs associated
with implementing and operating the Plan, not to exceed the greater of
$100,000 or .005 of 1% of each Series' average daily net assets for any full
fiscal year.
Prior to August 24, 1994, the Fund's Distribution Plan ("prior
Distribution Plan") provided that each Series pay Dreyfus Service Corporation
at an annual rate of .50 of 1% of the value of each Series' average daily net
assets, for costs and expenses in connection with advertising, marketing and
distributing the Series' shares and for servicing shareholder accounts.
Dreyfus Service Corporation made payments to one or more Service Agents based
on the value of the Series' shares owned by clients of the Service Agents.
The prior Distribution Plan also separately provided for the Fund to bear the
costs of preparing, printing and distributing certain of the Fund's
prospectuses and statements of additional information and costs associated
with implementing and operating the prior Distibution Plan, not to exceed the
greater of $100,000 or .005 of 1% of each Series' average daily net assets
for any full fiscal year.
Dreyfus Focus Funds, Inc.
NOTES TO FINANCIAL STATEMENTS (continued)
During the period ended October 31, 1994, the following was charged to
each series pursuant to the Plan:
<TABLE>
<CAPTION>
<S> <C> <S> <C>
Large Company Growth Portfolio $4,819 Small Company Growth Portfolio $4,582
Large Company Value Portfolio 4,914 Small Company Value Portfolio 4,878
</TABLE>
and the following was charged to each series pursuant to the prior
Distribution Plan:
<TABLE>
<CAPTION>
<S> <C> <S> <C>
Large Company Growth Portfolio $16,314 Small Company Growth Portfolio $15,934
Large Company Value Portfolio 16,620 Small Company Value Portfolio 16,818
</TABLE>
(c) Under the Shareholder Services Plan, each series pays the Distributor
at an annual rate of .25 of 1% of the value of a series' average daily net
assets for servicing shareholder accounts. The services provided may include
personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Series and providing reports and other
information, and services related to the maintenance of shareholder accounts.
The Distributor may make payments to Service Agents in respect of these
services. The Distributor determines the amount to be paid to Service Agents.
The following summarizes the aggregate amount charged by Dreyfus Service
Corporation, pursuant to the Shareholder Services Plan from December 29, 1994
through August 23, 1994:
<TABLE>
<CAPTION>
<S> <C> <S> <C>
Large Company Growth Portfolio $8,157 Small Company Growth Portfolio $7,967
Large Company Value Portfolio 8,310 Small Company Value Portfolio 8,409
</TABLE>
and the following summarizes the aggregate amount charged by the Distributor,
pursuant to the Shareholder Services Plan from August 24, 1994 through
October 31, 1994:
<TABLE>
<CAPTION>
<S> <C> <S> <C>
Large Company Growth Portfolio $2,410 Small Company Growth Portfolio $2,291
Large Company Value Portfolio 2,457 Small Company Value Portfolio 2,439
</TABLE>
(d) Prior to August 24, 1994 certain officers and directors of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each director who is not an "affiliated person"
receives from the Fund an annual fee of $3,000 and an attendance fee of $250
per meeting.
NOTE 4_Securities Transactions:
(a) The following summarizes the aggregate amount of purchases and sales
of investment securities and securities sold short, excluding short-term
securities, for the period ended October 31, 1994:
Long Transactions:
<TABLE>
<CAPTION>
Purchases Sales
------------ ------------
<S> <C> <C>
Large Company Growth Portfolio................................... $ 5,538,049 $ 566,037
Large Company Value Portfolio.................................... 7,397,149 2,399,042
Small Company Growth Portfolio................................... 5,410,726 1,058,375
Small Company Value Portfolio.................................... 14,802,118 10,160,353
Short Sale Transactions;
Purchases Sales
------------- -------------
Small Company Value Portfolio.................................... $ 315,298 $ 432,656
</TABLE>
Dreyfus Focus Funds, Inc.
NOTES TO FINANCIAL STATEMENTS (continued)
The Small Company Value Portfolio is engaged in short-selling which
obligates the Series to replace the security borrowed by purchasing the
security at current market value. The Series would incur a loss if the price
of the security increases between the date of the short sale and the date on
which the Series replaces the borrowed security. The Series would realize a
gain if the price of the security declines between those dates. Until the
Series replaces the borrowed security, the Series will maintain daily, a
segregated account with a broker and custodian, of cash and/or U.S.
Government securities sufficient to cover its short position. Securities sold
short at October 31, 1994 and their related market values and proceeds are
set forth in the Statement of Securities Sold Short.
(b) The following summarizes the accumulated net unrealized appreciation
(depreciation) on investments, excluding foreign currency transactions, for
each series at October 31, 1994:
<TABLE>
<CAPTION>
Gross Gross
Appreciation (Depreciation) Net
--------- ---------- ---------
<S> <C> <C> <C>
Large Company Growth Portfolio.......................... $525,342 $(256,305) $ 269,037
Large Company Value Portfolio........................... 241,180 (240,896) 284
Small Company Growth Portfolio.......................... 532,190 (265,952) 266,238
Small Company Value Portfolio........................... 179,642 (535,286) (355,644)
</TABLE>
At October 31, 1994, the cost of investments of each series for Federal
income tax purposes was substantially the same as the
cost for financial reporting purposes. The cost of investments for each
series for financial reporting purposes as of October 31, 1994 was as
follows:
<TABLE>
<CAPTION>
<S> <C> <S> <C>
Large Company Growth Portfolio $4,879,658 Small Company Growth Portfolio $4,634,172
Large Company Value Portfolio 5,043,543 Small Company Value Portfolio 5,467,653
</TABLE>
Dreyfus Focus Funds, Inc.
Report of Ernst & Young LLP, Independent Auditors
Shareholders and Board of Directors
Dreyfus Focus Funds, Inc.
We have audited the accompanying statement of assets and liabilities,
including the statements of investments and securities sold short, of Dreyfus
Focus Funds, Inc. (comprising, respectively, the Large Company Growth
Portfolio, the Large Company Value Portfolio, the Small Company Growth
Portfolio and the Small Company Value Portfolio), as of October 31, 1994, and
the related statements of operations and changes in net assets and financial
highlights for the period from December 29, 1993 (commencement of operations)
to October 31, 1994. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1994 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of each of the respective portfolios constituting the Dreyfus Focus
Funds, Inc. at October 31, 1994, and the results of their operations, the
changes in their net assets and the financial highlights for the period from
December 29, 1993 to October 31, 1994, in conformity with generally accepted
accounting principles.
New York, New York
December 5, 1994
DREYFUS FOCUS FUNDS, INC.
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained
in the Prospectus, which must
precede or accompany this report.
Printed in U.S.A. FFIAR9410
Focus Funds, Inc.
Annual Report
October 31, 1994
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN LARGE
COMPANY GROWTH PORTFOLIO AND LARGE COMPANY VALUE PORTFOLIO OF
DREYFUS FOCUS FUNDS, INC. AND THE STANDARD & POOR'S 500 COMPOSITE
STOCK PRICE INDEX
EXHIBIT A:
________________________________________________________________________
| | LARGE | LARGE | |
| | COMPANY | COMPANY | STANDARD & POOR'S |
| PERIOD | GROWTH | VALUE | 500 COMPOSITE |
| | PORTFOLIO | PORTFOLIO | STOCK PRICE INDEX* |
|-------- | ----------- | ----------- | ------------------ |
|12/29/93 | 10,000 | 10,000 | 10,000 |
|1/31/94 | 10,360 | 10,440 | 10,340 |
|4/30/94 | 9,608 | 9,968 | 9,745 |
|7/31/94 | 9,848 | 10,040 | 9,979 |
|10/31/94 | 10,440 | 10,104 | 10,360 |
|-----------------------------------------------------------------------
*Source: Lipper Analytical Services, Inc.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN SMALL
COMPANY GROWTH PORTFOLIO AND SMALL COMPANY VALUE PORTFOLIO OF
DREYFUS FOCUS FUNDS, INC. AND THE RUSSELL 2000 INDEX
EXHIBIT B:
________________________________________________________________________
| | SMALL | SMALL | |
| | COMPANY | COMPANY | |
| PERIOD | GROWTH | VALUE | RUSSELL 2000 |
| | PORTFOLIO | PORTFOLIO | INDEX* |
|-------- | ----------- | ----------- | ------------------ |
|12/29/93 | 10,000 | 10,000 | 10,000 |
|1/31/94 | 10,120 | 10,528 | 10,313 |
|4/30/94 | 9,480 | 9,976 | 9,792 |
|7/31/94 | 9,200 | 9,736 | 9,509 |
|10/31/94 | 9,816 | 9,944 | 9,965 |
|-----------------------------------------------------------------------
*Source: Lipper Analytical Services, Inc.
