DREYFUS MIDCAP VALUE FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
The following letter about Dreyfus Midcap Value Fund, a portfolio of the
Dreyfus Growth and Value Funds, Inc., is signed by Peter I. Higgins, its
portfolio manager.
Peter currently serves as the lead manager for our mid-cap product. He
has been with The Boston Company since 1988. Peter has over nine years of
investment experience. He started with The Boston Company as a research
analyst and before that held a similar post with Metropolitan Life Insurance
Company. A Chartered Financial Analyst, Peter holds a BS and BA from the
University of Pennsylvania and an MBA in Management from the Wharton School
of Business.
We welcome you as one of our investors with Peter Higgins working on your
behalf.
Sincerely,
[Stephen Canter signature logo]
Stephen Canter
Chief Investment Officer
The Dreyfus Corporation
DREYFUS MIDCAP VALUE FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to send you this first report to shareholders on the
operations of the Dreyfus Midcap Value Fund, a portfolio of the Dreyfus
Growth and Value Funds, Inc. This covers the semi-annual fiscal period from
inception of the Fund on September 29, 1995 through February 29, 1996.
In the approximately five months since the Fund began, it has provided a
total return of 14.11%.* This compares with a total return of 5.24% for the
Russell 2000 Index which is composed of small capitalization stocks, with
10.64% for the more broadly based Standard & Poor's 500 Composite Stock Price
Index, 15.67% for the blue chip Dow Jones Industrial Average and 9.57% for
the comprehensive Wilshire 5000 Index.** The above cited indices cover the
period September 30, 1995 through February 29, 1996.
ECONOMIC REVIEW
The U.S. economy grew slightly below its 2.5% trend rate in the last half
year, reflecting an improvement compared to the early months of 1995.
Inflation was well behaved, reducing expectations for price increases in the
months ahead. Corporate profits, strong in most of 1995, slowed towards
year-end. Near-trend growth and low inflation helped pull interest rates down
sharply by January. Although short-term interest rates are still low,
long-term rates have risen in recent weeks. When long-term rates rise above
short-term rates, the yield curve steepens, and this is generally positive
for sustained economic growth. Thus we believe that given current market
conditions, this business cycle, already five years old, may prove a long
one.
The picture, however, remained mixed as the growth in late 1995 was not
broad-based across all economic sectors. Faster growth was chiefly due to
strong exports, to a rally in the housing sector, to the service sector, and
to business spending on technology. By contrast, consumer spending in retail
stores was sluggish, leaving many stores with too much inventory, and a sharp
drop in truck sales slowed overall capital spending. These weak spots, in
turn, slowed manufacturing and imports, hurting foreign economies. In
addition, several events slowed the economy for a few months near year-end -
a strike at Boeing, the Federal Government shutdown, and January's
snowstorms. These are now past. Recent evidence shows that the excess
inventories have cleared and that retail spending is improving. Thus, a
somewhat broader-based profile now seems possible for economic growth in
coming months.
Low price inflation in the last six months has reduced market
expectations for inflation in future months. However, there is evidence of
pricing power in some sectors. Tight housing markets in some regions of the
country are boosting local housing prices; strong demand in the service
sector is prompting higher prices at hotels, cruise ships and airlines, and
crude oil prices are holding above year-ago levels. Moreover, recent data
show that a tightening labor market may finally be forcing increases in real
wages. Wages are emerging as a clear issue in this year's election, making
policy measures to repress rising wages unlikely.
Corporate profits fared well in the slow growth, low inflation
environment of 1995. Operating profits of S&P 500 companies rose an estimated
17% in the year, helped by a weaker dollar and more corporate restructuring.
However, they did slow somewhat in the fourth quarter, as rising wage costs
and foreign profit declines began to take their toll. Current market
expectations are that profits will grow only 4.3% in 1996. Key determinants
of 1996 profit growth will be how soon foreign economies start to pick up and
whether domestic companies will be able to pass higher wages into prices.
Interest rates fell substantially in 1995. Short-term market rates are
now below 5%, pulled down by the slow economy and three consecutive rate cuts
by the Federal Reserve Board. Long-term bond yields also fell considerably,
reaching a low of 5.96% by January. But long-term rates have moved upwards in
recent weeks for two key reasons. First, the economy has survived the several
obstacles discussed above. And second, hopes for an agreement to balance the
Federal budget are dampened, making this a contentious political issue to be
dealt with in the future.
We believe that the steeper yield curve now developing bodes well for
continued growth and a long economic cycle.
PORTFOLIO FOCUS
During 1995, the equity markets rose sharply, driven by exceptional gains
in corporate profitability and aided by an environment of falling interest
rates and low inflation. Large capitalization issues bettered their mid and
small cap peers. In part, this is attributable to large companies having
greater exposure to foreign income, which is beneficial in times of a
weakening dollar, as was the case for much of 1995. Furthermore, as the
economy slowed later in the year, investors continued to rotate into large
stocks, which tend to offer less earnings volatility.
For the year ahead, it is unlikely that recent market gains can be
duplicated due to a slowing of corporate profit growth. Yet, despite the high
absolute level of the markets, we continue to find what appear to be
excellent investment opportunities in the midcap area. As a result, we remain
almost fully invested in equities. Our style is very "bottom-up" oriented. We
focus on cheap stocks with solid fundamentals and short-term events that we
believe will propel the shares higher. With over 100 names held, the
portfolio is broadly diversified by economic sector and individual securities
which should help limit portfolio volatility.
Almost 20% of the portfolio is in Finance, in line with the midcap
universe. We have shifted the Finance holdings towards insurance, while
reducing our holdings of banks. Insurance is cheaper and in our view the
industry has better short-term trends. By contrast, after very strong
appreciation in 1995, most banks no longer appear cheap and there is evidence
of deteriorating asset quality. Among insurers, recent additions to the
portfolio include Prudential Reinsurance Holdings and Allmerica Financial,
which may experience dramatic earnings growth as they restructure their
operations over the next several years. We have also acquired Horace Mann
Educators, which has an outstanding track record.
Many Technology stocks do not meet our investment criteria as value
managers. As a result, we are underweight (versus the midcap universe) in the
sector. We have used the recent correction in the group, however, to buy high
quality companies that are oversold due to short-term product transitions.
One such holding is Silicon Graphics, a leader in visual processing computer
systems. We also hold Western Digital, a disk drive manufacturer, which
appears to be extremely cheap and to have a clean balance sheet.
In Basic Industries, we have a large position in fertilizer companies:
Arcadian, First Mississippi, Mississippi Chemical, and Sherritt. These
companies, in our opinion, are very cheap, and they may be big beneficiaries
of a surge in plantings due to high grain prices, record low grain stockpiles
and the potential reduction in Federal planting restrictions.
The Consumer Services sector includes a large position in supermarkets,
which we believe are also cheap, and may benefit from the recent rise in food
prices. Many supermarkets are also driving margin expansion through cost
cutting. Holdings include Kroger and Vons.
Energy Service firms are beneficiaries of the re-acceleration of capital
spending by the major oil companies. Drillers, in particular, have the
greatest leverage to this trend. Your Fund holds a sizable position in
Arethusa (Off Shore), among others, in order to seek to take advantage of
these favorable trends. And since the earnings of energy firms are less
susceptible to a downturn in the economy, they offer defensive
characteristics.
The Fund is overweighted in select Transportation names, particularly in
railroads where we hope dramatic corporate restructurings may benefit our
holdings. Canadian Pacific, whose diverse assets are worth considerably more
than their recent market value, is taking steps to unlock hidden value by
divesting non-core assets. And there is an arbitrage play in Southern Pacific
Rail, which is being acquired by Union Pacific.
The lower interest rate environment and improving fundamentals have led
to our investments in homebuilders Kaufman and Broad Home and Pulte. We
believe Kaufman and Broad is particularly cheap and are encouraged by the
recent upturn in California, its biggest market.
We are pleased that you are a shareholder in this Dreyfus Fund. You may
be sure that we will exert our best efforts on your behalf.
Sincerely,
[Peter I. Higgins signature logo]
Peter I. Higgins
Portfolio Manager
March 20, 1996
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. Unlike
the Fund, which can engage in different investment techniques, both the Dow
Jones Industrial Average and the Standard & Poor's 500 Composite Stock Price
Index are widely accepted unmanaged indexes of stock market performance. The
Russell 2000 Index is a widely accepted unmanaged index of small cap stock
performance and the Wilshire 5000 Index consists of both large and small
companies and is a widely accepted unmanaged index of overall stock market
performance.
<TABLE>
DREYFUS MIDCAP VALUE FUND
STATEMENT OF INVESTMENTS FEBRUARY 29, 1996 (UNAUDITED)
COMMON STOCKS-96.5% SHARES VALUE
______ ______
<S> <C> <C> <C>
BASIC INDUSTRIES-7.4% Arcadian............................. 1,400 $ 30,100
First Mississippi...................... 1,000 26,125
Mallinckrodt Group..................... 700 27,475
Manville............................. (a) 3,000 38,250
Mississippi Chemical................... 1,300 28,600
Reynolds Metals........................ 600 30,975
Sherritt............................... 1,800 24,280
_____
205,805
_____
CAPITAL GOODS-5.3% Belden............................. 800 23,600
Elsag Bailey Process Automation, N.V. (a) 1,200 25,800
Global Industrial Technologies....... (a) 600 14,025
ITT Industries......................... 900 23,625
TRW ................................... 400 34,650
UNR Industries......................... 3,000 25,500
_____
147,200
_____
CONSUMER DURABLES-6.4% Black & Decker........................ 700 23,625
Exide.................................. 1,000 30,500
Kaufman & Broad Home................... 2,500 38,437
Polaris Industries..................... 800 24,200
Pulte.................................. 800 23,900
Singer, N.V............................ 1,300 38,025
_____
178,687
_____
CONSUMER
NON-DURABLES-6.9% Alberto-Culver, Cl. A............... 1,200 39,300
Fruit of the Loom, Cl. A............. (a) 500 12,688
Hollinger International, Cl. A......... 3,000 31,500
Mossimo................................ 500 12,250
Revlon, Cl. A.......................... 2,000 55,250
U.S. Industries...................... (a) 1,500 29,062
Westpoint Stevens.................... (a) 600 11,700
_____
191,750
_____
CONSUMER SERVICES-23.2% ADVO................................... 3,000 65,625
Chancellor, Cl. A...................... 500 10,250
Claire's Stores........................ 2,250 35,438
Darden Restaurants..................... 1,600 19,600
Deluxe................................. 800 25,700
Eckerd............................... (a) 500 22,437
Hannaford Brothers..................... 800 22,000
Harcourt General....................... 900 39,038
Jostens................................ 1,500 34,125
Kroger............................... (a) 1,000 37,125
Melville............................... 1,300 41,437
Meyer (Fred)......................... (a) 1,000 24,125
DREYFUS MIDCAP VALUE FUND
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 29, 1996 (UNAUDITED)
COMMON STOCKS (CONTINUED) SHARES VALUE
______ ______
CONSUMER
SERVICES (CONTINUED) Pittston Brink's Group................. 1,200 $ 28,050
Quebecor Printing...................... 700 12,337
Red Lion Hotels...................... (a) 2,000 37,500
Rite Aid............................... 1,200 37,800
Safeway.............................. (a) 800 23,900
Tandy.................................. 500 21,875
True North Communications.............. 1,500 30,750
U.S. Satellite Broadcasting, Cl. A..... 500 16,250
Vons................................. (a) 800 23,000
Waban................................ (a) 1,700 38,250
_____
646,612
_____
ENERGY-5.9% Arethusa (Off-Shore)................... 1,500 48,375
Baker Hughes........................... 800 21,100
Coflexip, S.A., A.D.R.................. 800 14,100
Global Marine........................ (a) 3,000 26,625
McDermott (J. Ray), S.A................ 1,000 17,750
Noble Drilling....................... (a) 1,700 16,575
Petroleum Geo-Services, A.D.R........ (a) 1,000 21,750
_____
166,275
_____
FINANCIAL SERVICES-12.8%. Allmerica Financial 1,500 40,500
BayBanks............................... 500 52,250
Berkley (W.R.)......................... 600 27,150
Boston Bancorp......................... 800 34,800
Citizens............................... 1,100 21,588
First Colony........................... 1,000 24,750
Glendale Federal Bank................. (a) 1,400 21,875
Horace Mann Educators.................. 800 26,300
Old Republic International............. 600 20,550
Prudential Reinsurance Holdings........ 1,400 34,300
Republic New York...................... 400 23,950
SAFECO................................. 800 29,000
_____
357,013
_____
HEALTH CARE-4.9% Allergan.............................. 400 14,900
ESC Medical Systems.................... 500 16,500
FHP International.................... (a) 500 16,375
Horizon/CMS Healthcare............... (a) 1,000 23,750
NCS HealthCare, Cl. A.................. 500 12,625
Renal Care Group....................... 500 13,750
Tenet Healthcare..................... (a) 1,800 40,275
_____
138,175
_____
MISCELLANEOUS-3.6% Avalon Properties.................... 500 11,187
Bay Apartment Communities.............. 700 16,450
DREYFUS MIDCAP VALUE FUND
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 29, 1996 (UNAUDITED)
COMMON STOCKS (CONTINUED) SHARES VALUE
______ ______
MISCELLANEOUS (CONTINUED)Equity Residential Properties Trust 400 $ 12,700
Highwoods Properties................... 700 21,000
Liberty Property Trust................. 600 13,125
Patriot American Hospitality........... 500 14,188
Storage USA............................ 400 12,700
_____
101,350
_____
TECHNOLOGY-12.5% CKS Group............................. 300 9,975
Cylink................................. 300 7,050
Digital Equipment.................... (a) 600 43,200
Documentum............................. 300 11,625
Dynatech............................. (a) 1,500 37,500
Harris................................. 300 19,950
Indus Group............................ 500 11,000
National Semiconductor............... (a) 700 10,937
Objective Systems Integrators.......... 300 12,300
Omnipoint.............................. 500 13,500
Raptor Systems......................... 500 15,875
Read-Rite............................ (a) 900 16,875
Silicon Graphics..................... (a) 1,300 32,500
Symantec............................. (a) 4,000 51,000
Teradyne............................. (a) 1,500 30,563
Western Digital...................... (a) 1,200 25,050
_____
348,900
_____
TRANSPORTATION-4.4% Canadian Pacific.......................... 2,300 45,425
Southern Pacific Rail................. (a) 900 21,375
Stolt-Nielsen, S.A..................... 1,500 26,438
Stolt-Nielsen, S.A., A.D.R............. 500 9,000
TNT Freightways........................ 1,000 20,750
_____
122,988
_____
UTILITIES-3.2% CMS Energy............................ 600 18,225
Comsat................................. 1,200 27,750
Illinova............................... 800 22,800
Pinnacle West Capital.................. 700 19,863
_____
88,638
_____
TOTAL COMMON STOCKS
(cost $2,521,915).................... $2,693,393
=====
DREYFUS MIDCAP VALUE FUND
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 29, 1996 (UNAUDITED)
PRINCIPAL
SHORT-TERM INVESTMENTS-5.0% AMOUNT VALUE
______ ______
U.S. TREASURY BILLS:..5.00%, 3/7/96 (b) $ 40,000 $ 39,967
4.95%, 4/4/96........................ (b) 31,000 30,856
4.77%, 5/2/96.......................... 13,000 12,889
4.77%, 5/9/96........................ (b) 55,000 54,484
_____
TOTAL SHORT-TERM INVESTMENTS
(cost $138,212)...................... $ 138,196
=====
TOTAL INVESTMENTS (cost $2,660,127)........................ 101.5% $2,831,589
===== =====
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (1.5%) $ (40,572)
===== =====
NET ASSETS.................................................................. 100.0% $2,791,017
===== =====
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Non-income producing.
(b) Partially held by brokers as collateral for open short positions.
<TABLE>
STATEMENT OF SECURITIES SOLD SHORT FEBRUARY 29, 1996 (UNAUDITED)
COMMON STOCKS SHARES VALUE
____ ____
<S> <C> <C>
Arch Communications Group................................................... 400 $10,375
CompUSA ................................................................. 500 20,000
Micron Technology........................................................... 500 16,000
MobileMedia................................................................. 600 15,000
Paging Network.............................................................. 700 18,550
Quanex...................................................................... 700 13,913
TOTAL SECURITIES SOLD SHORT -------
(proceeds $86,878)...................................................... $93,838
=====
</TABLE>
See notes to financial statements.
<TABLE>
DREYFUS MIDCAP VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 29, 1996 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $2,660,127)-see statement....................................... $2,831,589
Receivable for investment securities sold............................... 89,036
Receivable from brokers for proceeds on securities sold short........... 86,878
Dividends and interest receivable....................................... 2,817
Prepaid expenses........................................................ 546
Due from The Dreyfus Corporation........................................ 2,866
_____
3,013,732
LIABILITIES:
Due to Distributor...................................................... $ 529
Due to Custodian........................................................ 40,086
Securities sold short, at value
(proceeds $86,878)-see statement...................................... 93,838
Payable for investment securities purchased............................. 73,633
Accrued expenses........................................................ 14,629 222,715
___ _____
NET ASSETS.................................................................. $2,791,017
=====
REPRESENTED BY:
Paid-in capital......................................................... $2,490,385
Accumulated undistributed investment income-net......................... 7,461
Accumulated undistributed net realized gain on investments
and securities sold short............................................. 128,669
Accumulated net unrealized appreciation on investments and
securities sold short-Note 3(b)....................................... 164,502
_____
NET ASSETS at value applicable to 196,440 outstanding shares of
Common Stock, equivalent to $14.21 per share (100 million shares
of $.001 par value authorized).......................................... $2,791,017
=====
</TABLE>
See notes to financial statements.
<TABLE>
DREYFUS MIDCAP VALUE FUND
STATEMENT OF OPERATIONS
FROM SEPTEMBER 29, 1995 (COMMENCEMENT OF OPERATIONS) TO FEBRUARY 29, 1996 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
INCOME:
Cash dividends (net of $172 foreign taxes withheld at source)......... $ 21,553
Interest.............................................................. 4,914
____
TOTAL INCOME.................................................... $ 26,467
EXPENSES:
Management fee-Note 2(a).............................................. 7,214
Legal fees............................................................ 12,135
Custodian fees........................................................ 6,085
Shareholder servicing costs-Note 2(b)................................. 3,924
Auditing fees......................................................... 1,953
Prospectus and shareholders' reports.................................. 1,840
Registration fees..................................................... 1,221
Directors' fees and expenses-Note 2(c)................................ 902
Miscellaneous......................................................... 717
____
TOTAL EXPENSES.................................................. 35,991
Less-expense reimbursement from Manager
due to undertaking-Note 2(a)...................................... 23,255
____
NET EXPENSES.................................................... 12,736
____
INVESTMENT INCOME-NET........................................... 13,731
____
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3(a):
Long transactions..................................................... $129,965
Short sale transactions............................................... 1,391
____
NET REALIZED GAIN..................................................... 131,356
Net unrealized appreciation on investments and
securities sold short................................................. 164,502
____
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 295,858
____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $309,589
====
</TABLE>
See notes to financial statements.
<TABLE>
DREYFUS MIDCAP VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
FROM SEPTEMBER 29, 1995 (COMMENCEMENT OF OPERATIONS) TO FEBRUARY 29, 1996 (UNAUDITED)
<S> <C> <C>
OPERATIONS:
Investment income-net....................................................................... $ 13,731
Net realized gain on investments............................................................ 131,356
Net unrealized appreciation on investments for the period................................... 164,502
_____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................................... 309,589
_____
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net....................................................................... (6,270)
Net realized gain on investments............................................................ (2,687)
_____
TOTAL DIVIDENDS........................................................................... (8,957)
_____
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold............................................................... 2,724,918
Dividends reinvested........................................................................ 8,938
Cost of shares redeemed..................................................................... (243,471)
_____
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS.................................... 2,490,385
_____
TOTAL INCREASE IN NET ASSETS.......................................................... 2,791,017
NET ASSETS: _
Beginning of period......................................................................... ____
End of period (including undistributed investment income-net;
$7,461 on February 29, 1996).............................................................. $2,791,017
=====
SHARES
_____
CAPITAL SHARE TRANSACTIONS:
Shares sold................................................................................. 214,435
Shares issued for dividends reinvested...................................................... 681
Shares redeemed............................................................................. (18,676)
_____
NET INCREASE IN SHARES OUTSTANDING........................................................ 196,440
=====
</TABLE>
See notes to financial statements.
DREYFUS MIDCAP VALUE FUND
FINANCIAL HIGHLIGHTS (UNAUDITED)
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 the period September 29, 1995
(commencement of operations) to February 29, 1996. This information has been
derived from the Fund's financial statements.
<TABLE>
<S>
PER SHARE DATA: <C> <C>
Net asset value, beginning of period..................................................... $12.50
___
INVESTMENT OPERATIONS:
Investment income-net.................................................................... .07
Net realized and unrealized gain on investments.......................................... 1.70
___
TOTAL FROM INVESTMENT OPERATIONS....................................................... 1.77
___
DISTRIBUTIONS:
Dividends from investment income-net..................................................... (.04)
Dividends from net realized gain on investments.......................................... (.02)
___
TOTAL DISTRIBUTIONS.................................................................... (.06)
___
Net asset value, end of period........................................................... $14.21
===
TOTAL INVESTMENT RETURN...................................................................... 14.11%*
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.................................................. .56%*
Ratio of net investment income to average net assets..................................... .60%*
Decrease reflected in above expense ratio due to
undertaking by the Manager (limited to the expense
limitation provision of the management agreement)...................................... .49%*
Portfolio Turnover Rate.................................................................. 136.71%*
Average commission rate paid............................................................. $.0460
Net Assets, end of period (000's omitted)................................................ $2,791
* Not annualized.
</TABLE>
See notes to financial statements.
DREYFUS MIDCAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Growth and Value Funds, Inc. (the "Company") is registered under
the Investment Company Act of 1940 ("Act") as a diversified open-end
management investment company and operates as a series company currently
offering eight series, including the Dreyfus Midcap Value Fund (the "Fund")
which commenced operations on September 29, 1995. The Fund's investment
objective is to provide investment results that exceed the total return
performance of publicly traded common stocks in the aggregate, as represented
by a recognized index of mid cap stocks. The Dreyfus Corporation ("Dreyfus")
serves as the Fund's investment adviser. Dreyfus is a direct subsidiary of
Mellon Bank, N.A. On September 29, 1995, the Fund's shareholders approved a
sub-investment advisory agreement between Dreyfus and The Boston Company
Asset Management, Inc. ("TBC Asset Management"), an affiliate of Dreyfus.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares, which are sold to the public without a
sales charge.
The Company accounts separately for the assets, liabilities and
operations of each fund. Expenses directly attributable to each fund are
charged to that funds' operations; expenses which are applicable to all
series are allocated among them on a pro rata basis.
As of February 29, 1996, Allomon Corporation, a subsidiary of Mellon Bank
Investments Corporation, the parent company of which is Mellon Bank, held
160,610 shares of the Fund.
(A) PORTFOLIO VALUATION: The Fund's investments in securities (including
options and financial futures) 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.
Investments denominated in foreign currencies are translated to U.S. dollars
at the prevailing rates of exchange.
(B) 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.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain are normally declared and paid annually, but the Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. To the extent that net realized
capital gain can be offset by capital loss carryovers, if any, it is the
policy of the Fund not to distribute such gain.
(D) 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 applicable 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.
DREYFUS MIDCAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 2-MANAGEMENT FEE, SUB-INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH
AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with Dreyfus, the
management fee is computed at the annual rate of .75 of 1% of the value of
the Fund's average daily net assets and is payable monthly. The Agreement
provides that if in any full fiscal year the aggregate expenses of the Fund,
exclusive of taxes, brokerage, interest on borrowings (which, in the view of
Stroock & Stroock & Lavan, counsel to the Fund, also contemplates dividends
and interest accrued on securities sold short) and extraordinary expenses,
exceed the expense limitation of any state having jurisdiction over the Fund,
the Fund may deduct from payments to be made to Dreyfus, or Dreyfus will bear
the amount of such excess to the extent required by state law. The most
stringent state expense limitation applicable to the Fund presently requires
reimbursement of expenses in any full fiscal year that such expenses
(exclusive of 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 the Fund's net assets in accordance with
California "blue sky" regulations. Dreyfus has currently undertaken from
September 29, 1995 through August 31, 1996 to reduce the management fee paid
by or reimburse such excess expenses of the Fund, to the extent that the
Fund's aggregate annual expenses (exclusive of certain expenses as described
above) exceed an annual rate of 1.25 of 1% of the value of the Fund's average
daily net assets. The expense reimbursement, pursuant to the undertaking,
amounted to $23,255 for the period ended February 29, 1996.
The undertaking may be modified by Dreyfus from time to time, provided
that the resulting expense reimbursement would not be less than the amount
required pursuant to the agreement.
Pursuant to a Sub-Investment Advisory Agreement between Dreyfus and TBC
Asset Management, the sub-investment advisory fee is computed at the annual
rate of .25 of 1% of the first $100 million of the Fund's average daily net
assets, .20 of 1% of the next $900 million of such assets, .15 of 1% of the
next $500 million of such assets and .10 of 1% of such assets over $1.5
billion, and is payable monthly by Dreyfus.
Effective December 1, 1995, the Fund compensates Dreyfus Transfer, Inc.,
a wholly-owned subsidiary of the Manager, under a transfer agency agreement
for providing personnel and facilities to perform transfer agency services
for the Fund. Such compensation amounted to $32 for the period from December
1, 1995 through February 29, 1996.
(B) Under the Shareholder Services Plan, the Fund pays the Distributor at
an annual rate of .25 of 1% of the value of the Fund's average daily net
assets for the provision of certain services. The services provided may
include personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Fund 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 amounts to be paid to Service
Agents. During the period ended February 29, 1996, the Fund was charged an
aggregate of $2,405 pursuant to the Shareholder Services Plan.
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $5,000 and an attendance fee of $500
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
DREYFUS MIDCAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 3-SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities
and securities sold short, excluding short-term securities, during the period
ended February 29, 1996 is summarized as follows:
<TABLE>
PURCHASES SALES
_______ _______
<S> <C> <C>
Long transactions................................................ $4,969,964 $2,578,039
Short sale transactions.......................................... 51,472 139,741
_______ _______
TOTAL.......................................................... $5,021,436 $2,717,780
======= =======
</TABLE>
The Fund is engaged in short-selling which obligates the Fund to replace
the security borrowed by purchasing the security at
current market value. The Fund would incur a loss if the price of the
security increases between the date of the short sale and the date on which
the Fund replaces the borrowed security. The Fund would realize a gain if the
price of the security declines between those dates. Until the Fund replaces
the borrowed security, the Fund will maintain daily, a segregated account
with a broker and/or custodian, of cash and/or U.S. Government securities
sufficient to cover its short position. Securities sold short at February 29,
1996 and their related market values and proceeds are set forth in the
Statement of Securities Sold Short.
(B) At February 29, 1996, accumulated net unrealized appreciation on
investments was $164,502, consisting of $224,864 gross unrealized
appreciation and $60,362 gross unrealized depreciation.
At February 29, 1996, the cost of investments for federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
[Dreyfus lion "d" logo]
DREYFUS MIDCAP VALUE FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
SUB-INVESTMENT ADVISER
The Boston Company
Asset Management, Inc.
One Boston Place
Boston, MA 02108
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, RI 02903
Further information is contained
in the Prospectus, which must
precede or accompany this report.
Printed in U.S.A. 258SA962
[Dreyfus logo]
Midcap Value Fund
Semi-Annual
Report
February 29, 1996
