<letter>
THE DARUMA FUNDS, INC.
60 East 42nd Street
Suite 1112
New York, NY 10165
tele: 212-687-1473
fax: 212-687-1544
February 26, 1998
VIA EDGAR TRANSMISSION
Brian McNeill
Examiner
U.S. Securities and Exchange Commission
450 Fifth Street, NW
Washington DC 20549
Re: Daruma Mid-Cap Value Fund
a series of The Daruma Funds, Inc.
Registration No. 333-0379
ICA No. 811-07621
Dear Mr. McNeill:
Transmitted herewith for filing is the Daruma
Mid-Cap Value Fund's Semi-Annual Report to
Shareholders dated December 31, 1997.
If you have any questions, please call me at
212-687-1473.
Very truly yours,
/s/
Mary B. O'Byrne
Secretary
cc: Thomas Westle, Battle Fowler LLP
<PAGE>
PORTFOLIO SUMMARY
(Unaudited)
Portfolio Composition Value % of Net Assets
Common Stocks "$1,730,357" 92.7%
Cash & Other Net Assets "136,327" 7.3%
Total Net Assets "$1,866,684" 100.0%
Portfolio Characteristics
Average Market Capitalization $1.7 billion
Median Market Capitalization $1.5 billion
Average P/E Ratio 17.4 x
Average Portfolio Yield 1.4 %
Common Stock Sectors % of Net Assets
Consumer Durable 22.9%
Consumer Non-Durable 22.8
Business Services 13.4
Technology 10.7
Transportation 6.7
Basic Industries 5.7
Financial Services 4.3
Utilities 2.2
Energy 2.0
Media 2.0
Top Ten Positions Value % of Net Assets
1.OEA Inc. "$83,919" 4.5 %
2."Unisource Worldwide, Inc." "83,220" 4.5
3."Dime Bancorp, Inc." "80,162" 4.3
4.International Multifoods Corporation"70,781" 3.8
5.Storage Technology Corporation "68,131" 3.6
6.ANTEC Corporation "61,875" 3.3
7.Raychem Corp. "60,288" 3.2
8."A. Schulman, Inc." "59,044" 3.2
9.Pittsson Burlington Group "58,537" 3.1
10."Arrow International, Inc." "56,240" 3.0
</PAGE>
<PAGE>
DARUMA MID-CAP VALUE FUND
"Schedule of Investments at December 31, 1997 (unaudited)"
Common Stocks - 92.7%
Shares Value
BASIC INDUSTRIES - 5.7%
"1,055" Minerals Technologies Inc. "$47,940"
"2,350" "A. Schulman, Inc." "59,044"
"106,984"
BUSINESS SERVICES - 17.7%
"2,715" *"ADVO, Inc." "52,942"
"3,690" *ANTEC Corporation "61,875"
"1,300" *Cincinnati Bell Inc. "40,300"
"1,300" *"Interim Services, Inc." "33,637"
700 *Lincare Holdings Inc. "39,900"
"1,310" Pittston Brinks Group "52,727"
"2,190" *"Wang Laboratores, Inc." "48,454"
"329,835"
CONSUMER DURABLE - 23.3%
900 "Echlin, Inc." "32,569"
"1,300" Federal-Mogul Corporation "52,650"
"2,500" International Multifoods
Corporation "70,781"
880 *MacFrugal's Bargains Close
-Outs Inc. "36,190"
"1,210" Newell Co. "51,425"
"2,900" OEA Inc. "83,919"
"1,400" Raychem Corp. "60,288"
"1,700" Tupperware Corporation "47,387"
"435,209"
CONSUMER NON-DURABLE - 18.1%
"1,520" "Arrow International, Inc." "56,240"
"1,800" *Boise Cascade Office
Products Corporation "26,887"
"1,430" Hormel Foods Corporation "46,832"
"1,570" "IBP, Inc," "32,872"
"3,360" "Owens & Minor, Inc." "48,720"
700 *R.P. Scherer Corporation "42,700"
"5,840" "Unisource Worldwide, Inc." "83,220"
"337,471"
ENERGY - 2.0%
"3,400" *Santa Fe Resources Inc. "38,250"
The accompanying notes are an integral part
of the financial statements.
</page>
<PAGE>
Schedule of Investments (continued)
FINANCIAL SERVICES - 4.3%
"2,650" "Dime Bancorp, Inc." "80,162"
MEDIA - 4.9%
960 A.H. Belo Corporation "53,880"
"2,000" Reynolds & Reynolds
Company Cl. A "36,875"
"90,755"
RETAIL - 3.8
"1,200" "Casey's General Stores,
Inc," "30,450"
600 *"Payless Shoesource,
Inc." "40,275"
"70,725"
TECHNOLOGY - 6.2%
"1,700" *NCR Corporation "47,281"
"1,100" *Storage Technology
Corporation "68,131"
"115,412"
TRANSPORTATION - 6.7%
680 Airborne Freight
Corporation "42,245"
"1,080" "Circle International,
Inc." "24,772"
"2,230" Pittston Burlington Group"58,537"
"125,554"
Total Common Stocks
" (Cost $1,459,933)" "1,730,357"
TOTAL INVESTMENTS - 92.7%
" (Cost $1,459,933)" "1,730,357"
CASH AND OTHER ASSETS LESS
LIABILITIES - 7.3% "136,327"
NET ASSETS - 100.0% "$1,866,684"
*Non-income producing.
Income Tax Information:
The cost of total investments for federal income tax
purposes was"$1,459,933. At December 31, 1997, net
unrealized appreciation""on investments was $270,424,
consisting of aggregate gross " "unrealized appreciation
of $328,309 and aggregate gross ""depreciation of $57,885."
The accompanying notes are an integral part of
the financial statements.
</PAGE>
<PAGE>
DARUMA MID-CAP VALUE FUND
"Statement of Assets and Liabilities at December 31,
1997 (unaudited)"
ASSETS:
"Investments at value
(identified cost $1,459,933) (Note 1)""$1,730,357"
Cash "115,397"
Receivable for securities sold "45,302"
Deferred organization costs "8,774"
Receivable for dividends and interest "1,093"
Prepaid expenses and other assets "20,274"
TOTAL ASSETS "1,921,197"
LIABILITIES:
Payable for securities purchased "22,498"
Investment advisory fee payable (Note 2)"16,634"
Accrued expenses "15,381"
TOTAL LIABILITIES "54,513"
NET ASSETS "$1,866,684"
ANALYSIS OF NET ASSETS:
Accumulated net realized gain on investments"$13,579"
Net unrealized appreciation on investments "270,424"
Paid-in capital "1,582,681"
NET ASSETS "$1,866,684"
PRICING OF SHARES
"($1,866,684 / 143,354 shares outstanding)"$13.02
Statement of Changes in Net Assets
For the period
Six Months Ended 8/16/1996 through
"December 31, 1997" "June 30, 1997"
( Note 1) (Note 1)
From Investment Operations:
Net investment loss "($4,627)" "($5,673)"
Net realized gain on investments"103,343" "57,855"
Net unrealized appreciation on
investments "270,424" "223,365"
Net increase in net assets
resulting from operations "369,140" "275,547"
Dividends to Shareholders:
Distributions paid from net
realized gains "(194,028)" "-1,146"
From Capital Share Transactions:
Net increase in net assets from
capital share transactions (Note 3)"232,411" "1,184,760"
Increase in net assets "407,523" "1,459,161"
Net Assets:
Beginning of period "1,459,161" ---
End of period "$1,866,684" "$1,459,161"
The accompaning notes are an integral part
of the financial statements.
</PAGE>
DARUMA MID-CAP VALUE FUND
"Statement of Operations for the six
months ended December 31, 1997 (unaudited)"
INVESTMENT INCOME
Income:
Dividends "$8,073"
Total Income "8,073"
Expenses:
Investment advisory fee (Note 2) "8,544"
custodian and transfer agent fees "7,260"
Fund accounting fee "5,445"
Auditing and legal fees "4,410"
Federal and state registration fees "1,814"
Other expenses "1,285"
Amoritaztion of deferred organization costs 984
"29,742"
Less:
Fee waived and expenses reimbursed
by Advisor (Note 2) "17,042"
Net Expenses "12,700"
Net Investment Loss "(4,627)"
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS (Note 1)
Net realized gain on investments"103,343"
Net unrealized appreciation on investments"270,424"
Net realized and unrealized gains
on investments "373,767"
Net Increase in Net Assets
Resulting from Operations "$369,140"
The accompaning notes are an integral part
of the financial statements.
</PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS
This table is presented to show selected data
for a share outstanding throughout the period
and to assist shareholders in evaluating the
Fund's performance.
For the period
For the six months "August 16, 1996"
ended through
"December 31, 1997""June 30, 1997"
(Note 1) (unaudited) (Note 1)
"Net Asset Value, Beginning of period" $12.90 $10.00
Income from Investment Operations:
Net investment loss (0.02) (0.07)
Net realized and unrealized
gains on investments 1.69 2.98
Total from Investment Operations 14.57 12.91
Less Distributions:
Distributions from net realized
gains (1.55) (0.01)
Total Distributions (1.55) (0.01)
"Net Asset Value, End of Period"$13.02 $12.90
Total Investment Return 13% 29%
Ratios/Supplemental Data:
"Net Assets, End of Period""$1,866,684" "$1,459,161"
Ratio of Expenses to
Average Net Assets (a) 1.5%* 1.5%
Ratio of Net Investment
Loss to Average Net Assets (b)-0.6%* -0.6%
Portfolio Turnover Rate 35% 46%
Average Commission Rate
Paid (c) $0.05 $0.04
*Annualized
(a)The ratio of expenses to average net assets
before waiver of fee and reimbursement of
expenses by"the investment adviser would have
been 3.5% for the period ended December 31,
1997 and""5.10% for the period ended June 30,
1997."
(b)The ratio of net investment loss to average
net assets before the waiver of fees and
reimbursement of expenses by the investment
adviser would have been (2.6%) for the period
ended"December 31, 1997 and (4.21%) for the
period ended June 30, 1997."
(c) The Fund is required
to disclose its average commission rate
paid per share for purchasesand sales of
investment securities.
The accompaning notes are an integral part of
the financial statements.
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