DREYFUS MIDCAP VALUE FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this semi-annual report for Dreyfus
MidCap Value Fund for the six months ended February 28, 1997. Over this
period, your Fund produced a total return of 25.94%,* which compares very
favorably with the total return of 15.06 % for the Russell MidCap Index,**
which serves as your Fund's benchmark, and with the total return of 22.52%
for the Standard & Poor's 500 Composite Stock Price Index over the same
period.***
ECONOMIC REVIEW
Economic evidence in early 1997 indicates that real GDP growth has not
slowed significantly. A key economic risk now developing lies in a further
increase of labor market tightness which could fuel faster wage inflation.
This is reigniting fears of higher future price inflation, even while current
prices are held low by the strong dollar. Market interest rates have recently
been led higher by rising expectations for a Federal Reserve tightening in
coming months, which could help temper demand and would support our view that
we are still in a long economic cycle.
During the reporting period, confidence soared in the household sector,
job insecurity was on the wane and real wages rose. Hence, consumer spending
growth appeared fairly solid in early 1997. Simultaneously, a rebound in
production of consumer goods was underway, both to meet the demand and to
replenish inventories left depleted at year-end. Elsewhere, capital goods
orders slowed since last fall, while export orders were also less strong in
early 1997, somewhat hurt by the higher dollar. However, a rise in demand for
consumer goods typically will attract imports, bolstering growth overseas;
better foreign economic growth may help offset the higher dollar to sustain
demand for U.S. exports.
Although wages have been on the rise since the fall of 1996, price
inflation continued to decelerate. Hence, real wages rose, rewarding
productivity in many instances. The risks for the future from wage hikes that
are driven by labor shortages are twofold: First, they may fuel overheating
in the economy, ultimately promoting price inflation; second, they may slow
profits for some companies. Profits are also vulnerable this year for
import-competing companies and at multinationals that have not hedged their
foreign currency exposure.
Market interest rates have shifted higher recently. As of this writing,
short-term rates are taking their cue from the Fed, expecting a tightening
within a few months. Long-term rates, still within the trading range
established over the last 12 months, have nevertheless trended higher.
Announcement of a balanced Federal budget agreement would represent a
positive development that could curtail the rise in bond yields.
The economy will shortly begin its seventh expansion year, a trend that
we believe could continue. A step by the Federal Reserve to tighten interest
rates could prolong this favorable business cycle.
MARKET OVERVIEW
The stock market activity encompassed by the six-month fiscal period
under review was remarkable, by any standard. The Dow Jones Industrials began
the period in early September in the 5700s, broke through 6000 by
mid-October, churned around a bit in December, then resumed a steady rise,
breaking the 7000-point barrier Valentine's week. But that was not the end of
the story. In February, Federal Reserve Chairman Alan Greenspan returned to a
theme he had initiated earlier - his worries about stock market excesses,
which could bring about a need for raising interest rates. By the end of
February, the market mood had changed. Investors were preoccupied with
Greenspan's warnings, even though the Fed Chairman explained that the ongoing
business expansion was moderate and did not appear to be inflationary.
Nonetheless, a sell-off occurred during the last week of February,
costing the DJIA 53.88 points for the week and sending the Standard & Poor's
500 down 10.95 points, the Nasdaq Composite 25.32 points and the Russell 2000
Index of small cap stocks 6.32 points. Even so, as February ended, the DJIA
still held a gain of 1,261.50 points for the preceding
six months, the S&P 500 was up by 138.83 and Nasdaq by 167.50. Small caps,
however, as measured by the Russell 2000, were showing an increase of only
66.41 points for the six-month period.
As these varying results indicate, the market has been a highly selective
one, closely attuned to such factors as interest rates and corporate profits.
In this climate, larger companies appeared to fare better than smaller ones,
and "value" stocks - sought after for their low price valuations - generally
stood up better than growth stocks.
Stock market sell-offs, when they occurred, were, however, gratifyingly
short-lived. It appeared that some fundamentals gave the market resilience.
One such factor was the continued high demand for stocks, particularly from
those putting money away for retirement. The Investment Company Institute,
the trade association of the mutual fund industry, reported that in January,
1997, mutual funds took in $29.39 billion in new money from investors. This
smashed all previous records.
Another supportive factor has been corporate profits. The Wall Street
Journal calculated that, among the stocks in the Dow Jones Industry Groups,
profits in the fourth quarter of 1996 were above security analysts' average
estimates for 56% of the companies, below estimates for 27% and matched the
estimates for 17% of companies analyzed.
To judge by the market's performance, however, investors can quickly
ignore the market's fundamental strengths, particularly when scared by a hint
of higher interest rates, or by specific cases of disappointing profits. This
latter factor has affected such market keystones as AT&T, but also shows up
in recent valuations of some technology stocks, particularly the smaller
capitalized ones.
Thus, as the fiscal half-year ended, the mood of investors appeared to be
hopeful, but very wary.
PORTFOLIO FOCUS
Our investment philosophy focuses on identifying inexpensive stocks with
positive short-term business trends and solid long-term fundamental. We
examine many measures to identify these stocks. Price-to-earnings,
price-to-book, and price-to-sales ratios, enterprise value/EBITDA (Earnings
Before Interest, Taxes and Depreciation Allowance) and breakup value are the
most prevalent. We also pay close attention to normalized values for cyclical
industries. Our focus is on stocks that, identified by the measures just
mentioned, are cheap compared to their peers, to their own historical
valuation ranges and to the market as a whole. But we do not just invest in
cheap stocks, since some stocks deserve to be cheap. Instead, we try to
identify positive catalysts that can drive stocks higher. These can come in
the form of rising earnings estimates, improving income statements and
balance sheets, and management action to unlock hidden values. We look for
strong long-term fundamentals, namely, high return on assets and return on
equity, free cash flow, dependable business franchises and quality of
management.
ENERGY
Our holdings of energy services firms, particularly drillers, contributed
substantially to investment results over the past half year. Following a lull
of many years, business for drillers picked up markedly starting about two
years ago as a result of technological advances that made finding oil and gas
more economical and due to rising capital expenditures from major exploration
and production companies. Drilling rig utilization rates and day rates
surged, leading to dramatic profit growth. Earnings estimates for most
industry participants have increased substantially. Despite the fact that
business momentum remains very strong for the drillers, we have materially
reduced our holdings in the sector because the companies no longer meet our
strict valuation criteria.
TRANSPORTATION
Recently, we made a meaningful commitment to the less-than-truckload
(LTL) trucking sector. The trucking industry has had several years of
disappointing performance. As a result, the valuations on these stocks became
very depressed. The
catalyst that caused us to invest in the sector was a much healthier business
outlook. Pricing flexibility, which had been nonexistent for the past two
years, is running ahead by as much as 5%. Additionally, capacity utilization
is improving as increasing demand is beginning to match the substantial
capacity additions of a few years ago. Given the large operating leverage of
the sector, we believe these factors could combine to create positive earning
surprises in 1997. As of the end of the reporting period, our largest LTL
trucking position is Yellow, which we initially purchased as it came under
intense selling pressure upon being dropped from the S&P 500 index.
TECHNOLOGY
Technology stocks added substantially to overall portfolio performance
over the past six months. We opportunistically took advantage of major
declines in many technology companies in the third quarter of 1996 to boost
our holdings to a material overweight compared to the Russell Midcap Index.
We were of the opinion that valuations had become very compelling.
Furthermore, we believed that the worst news in terms of earnings
disappointments was behind many industry participants. We found the best mix
of attractive valuation and favorable momentum in the personal computer (PC)
component suppliers and the semi-conductor equipment stocks. In the case of
PC component suppliers, inventories were very low for many end-users and the
demand outlook was healthy. Our best performing holding in this segment was
Quantum Corporation, which tripled in price from our initial purchase in the
third quarter of 1996. In the case of semi-conductor equipment companies, we
believed that the book-to-bill ratios, which had come under significant
pressure throughout 1996, bottomed in the third quarter and were poised to
improve sequentially. Investments in this sector, including KLA Instruments,
performed very well subsequent to purchase. In the first quarter of 1997 we
lowered our technology weighting to a below-market weighting because
valuations were less compelling after substantial gains and there were signs
of a slowdown in business conditions.
UTILITIES
Late in the fourth quarter of 1996, we initiated positions in several
electric utilities. Concerns about the effect of pending competition caused
the electric utility sector to rank among the worst performing sectors in the
market last year. The stocks were very cheap on valuation and offered
attractive yields. Recent legislative trends at the state level indicate that
the transition to open competition should be fairly smooth for most
utilities, with reasonable recoveries of "stranded assets" allowed. Thus,
"high cost" utilities have the means of recouping excess expenditures on
generating assets. Furthermore, the trend towards consolidation could allow
for cost-savings synergies. The recent rise in interest rates has caused
these latest investments to underperform. Yet, we remain comfortable with our
holdings due to their defensive characteristics and very favorable
valuations.
HEALTHCARE
We raised our holdings in healthcare to an overweight position starting
about six months ago. In particular, we established positions in several HMOs
where valuations became very compelling following sharp sell-offs due to
earnings disappointments early in the year. But, we were comforted by the
improved pricing environment for the industry and the trend towards
consolidation. The sector was also expected to maintain strong volume growth
due to taking share from traditional/indemnity programs. Among our most
favorable investments in this area was Healthsource, which was acquired at a
significant premium by Cigna in the first quarter of 1997.
FINANCE
We continue to have a large finance weighting. More recently, we have
shifted our holdings towards thrifts, particularly in California, and away
from banks. This benefited us with the merger activity surrounding Great
Western Financial (GWF), one of our largest holdings. We believe that
consolidation among California thrifts is inevitable and, subsequent to the
GWF news, we have increased our holdings of other thrifts in California.
Recently the environment for equities has become more challenging.
Nonetheless, we hope that our rigorous selection disciplines will be
advantageous for the Fund.
Sincerely,
[Peter I. Higgins signature logo]
Peter I. Higgins
Portfolio Manager
March 24, 1997
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC. - The Russell Midcap Index
consists of the bottom 800 securities in the Russell 1000 Index as ranked by
total market capitalization and is a widely accepted measure of medium-cap
stock market performance.
*** SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Reflects the reinvestment
of income dividends and, where applicable, capital gain distributions. The
Standard & Poor's 500 Composite Stock Price Index is a widely accepted
unmanaged index of U.S. stock market performance.
<TABLE>
DREYFUS MIDCAP VALUE FUND
STATEMENT OF INVESTMENTS FEBRUARY 28, 1997 (UNAUDITED)
Common Stocks-97.0% Shares Value
------- ------
<S> <C> <C> <C>
Basic Industries- 7.6% Geon.................. 7,500 $ 161,250
Georgia Gulf........................... 3,600 97,200
IMC Global............................. 5,000 174,375
James River............................ 12,000 393,000
Mississippi Chemical................... 5,600 137,200
Safety-Kleen........................... 13,500 243,000
Schulman (A.).......................... 11,000 213,125
Silgan Holdings........................ 3,200 81,600
Stone Container........................ 10,000 130,000
Wausau Paper Mills..................... 3,400 67,575
-------
1,698,325
-------
Capital Goods-2.9% Hanson, A.D.R............. 1,625 36,156
Jacobs Engineering Group............. (a) 12,500 321,875
Newport News Shipbuilding.............. 13,000 201,500
Smith (A.O.)........................... 3,000 100,875
-------
660,406
-------
Consumer Durables-4.4% American Standard..... (a) 3,500 157,500
Black & Decker......................... 4,400 139,150
Cooper Tire and Rubber................. 10,000 198,750
Dal-Tile International................. 8,000 142,000
Kaufman & Broad Home................... 24,900 351,713
-------
989,113
-------
Consumer Non-Durables-14.1% Dole Food........ 7,000 267,750
General Cigar Holdings................. 5,800 133,400
Harcourt General....................... 4,000 188,500
Harland (John H.)...................... 14,000 423,500
Hasbro................................. 7,000 299,250
Hudson Foods, Cl. A.................... 8,000 140,000
McGraw-Hill Cos........................ 1,800 93,375
Perrigo.............................. (a) 33,000 400,125
Phillips-Van Heusen.................... 15,000 191,250
Polaroid............................... 10,000 422,500
Rubbermaid............................. 5,300 126,538
Russell................................ 4,000 150,500
Whitman................................ 7,000 164,500
Young Broadcasting, Cl. A............ (a) 5,800 168,925
-------
3,170,113
-------
Consumer Services-19.7% ACNielsen............ 21,000 309,750
American Radio Systems, Cl. A........ (a) 4,000 134,000
Apple South............................ 11,000 148,500
Block (H & R).......................... 6,400 188,000
DREYFUS MIDCAP VALUE FUND
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
Common Stocks (continued) Shares Value
------- ------
Consumer Services (continued) Brinker International (a) 8,000 $ 95,000
Browning-Ferris Industries............. 6,000 188,250
Chancellor Broadcasting, Cl. A....... (a) 8,000 218,000
Claire's Stores........................ 16,000 226,000
Deluxe...................................... 10,000 316,250
Food Lion, Cl. A....................... 15,000 119,063
Footstar............................... 13,030 329,007
Golf Trust of America.................. 3,333 80,825
Great Atlantic & Pacific Tea........... 10,800 321,300
Knight-Ridder.......................... 5,000 198,750
Pittston Brinks Group.................. 9,000 231,750
SFX Broadcasting, Cl. A.............. (a) 6,200 206,150
True North Communications.............. 5,000 100,000
Waban................................ (a) 3,800 108,775
Woolworth............................ (a) 29,000 605,375
World Color Press.................... (a) 14,000 295,750
-------
4,420,495
-------
Energy-5.3% Houston Exploration.............. 14,000 196,000
Marine Drilling...................... (a) 9,000 136,125
McDermott International................ 15,500 344,875
McDermott (J. Ray)................... (a) 15,000 345,000
Oryx Energy.......................... (a) 8,000 160,000
-------
1,182,000
-------
Finance-13.9% Ahmanson (H.F.) & Co........... 4,000 164,500
Allmerica Financial.................... 11,000 411,125
AmSouth Bancorp........................ 3,000 153,750
Astoria Financial...................... 3,600 154,800
Bancorp Hawaii......................... 5,000 220,000
Citizens............................... 2,400 59,700
City National.......................... 9,000 218,250
Equitable.............................. 7,000 219,625
Everest Reinsurance Holdings........... 15,400 485,100
Glendale Federal Bank................ (a) 4,000 106,500
Great Western Financial................ 11,000 482,625
Provident Cos.......................... 3,000 163,500
Washington Mutual...................... 5,200 274,950
-------
3,114,425
-------
Health Care-7.9% Beckman Instruments......... 5,000 207,500
Foundation Health.................... (a) 4,100 154,775
Healthsource......................... (a) 12,000 250,500
Health Systems International, Cl. A.. (a) 8,000 235,000
Living Centers of America............ (a) 4,300 137,062
DREYFUS MIDCAP VALUE FUND
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
Common Stocks (Continued) Shares Value
---------- -----
Health Care (continued) Mid Atlantic Medical Services (a) 10,000 $ 147,500
Nellcor Puritan Bennett.............. (a) 3,000 52,125
Physician Corp. of America........... (a) 8,000 35,000
Quest Diagnostics...................... 21,000 354,375
Trigon Healthcare...................... 10,000 178,750
Watson Pharmaceutical................ (a) 200 8,725
-------
1,761,312
-------
Technology-12.7% Allen Group................. (a) 11,000 229,625
Applied Magnetics.................... (a) 3,000 116,625
Ciena.................................. 3,300 129,525
General Instrument................... (a) 17,000 403,750
Imation................................ 7,800 207,675
Novell............................... (a) 19,000 192,375
Read-Rite............................ (a) 12,300 377,456
Scientific-Atlanta..................... 7,000 117,250
Silicon Graphics..................... (a) 8,000 193,000
Silicon Valley Group................. (a) 3,300 70,538
Symantec............................. (a) 33,000 515,625
Tencor Instruments................... (a) 4,000 160,250
VLSI Technology...................... (a) 7,000 130,812
-------
2,844,506
-------
Transportation-6.2% American Freightways..... (a) 6,500 78,000
Caliber System......................... 7,000 159,250
Knightsbridge Tankers.................. 5,581 123,480
Landstar Systems..................... (a) 5,000 111,875
USFreightsways......................... 15,000 361,875
Werner Enterprises..................... 5,000 87,500
Yellow...................................... (a) 30,000 468,750
-------
1,390,730
-------
Utilities-2.3% Boston Edison........................... 1,600 42,800
CMS Energy............................. 1,500 49,125
Energy Group, A.D.R.................... 1,625 55,250
Illinova............................... 3,100 77,500
New England Electric System............ 1,700 59,287
Pinnacle West Capital.................. 2,600 81,250
360 Communications................... (a) 7,000 151,375
-------
516,587
-------
TOTAL COMMON STOCKS
(cost $20,893,462)................... $21,748,012
=======
DREYFUS MIDCAP VALUE FUND
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
Principal
Short-Term Investments - 4.4% Amount Value
------- ------
U.S. Treasury Bills: 4.85%, 3/6/97........... $ 100,000 $ 99,929
4.98%, 5/8/97.......................... 110,000 108,953
4.98%, 5/15/97......................... 191,000 188,987
4.94%, 5/22/97....................... (b) 140,000 138,387
5.05%, 5/29/97......................... 455,000 449,276
-------
TOTAL SHORT-TERM INVESTMENTS
(cost $985,658)...................... $ 985,532
=======
TOTAL INVESTMENTS (cost $21,879,120)........................................ 101.4% $22,733,544
==== =======
LIABILITES, LESS CASH AND RECEIVABLES....................................... (1.4%) $ (306,550)
==== =======
NET ASSETS.................................................................. 100.0% $22,426,994
==== =======
</TABLE>
Notes to Statement of Investments:
(a) Non-income producing.
(b) Partially held by broker as collateral for open short positions.
<TABLE>
STATEMENT OF SECURITIES SOLD SHORT FEBRUARY 28, 1997 (UNAUDITED)
Common Stocks Shares Value
------- ------
<S> <C> <C>
OEA......................................................................... 800 $ 37,100
Quanex...................................................................... 500 13,375
-------
TOTAL SECURITES SOLD SHORT
(proceeds $40,785)...................................................... $ 50,475
=======
</TABLE>
See notes to financial statements.
<TABLE>
DREYFUS MIDCAP VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1997 (UNAUDITED)
Cost Value
------- ------
<S> <C> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $21,879,120 $22,733,544
Cash....................................... 278,223
Receivable for shares of Common Stock subscribed 70,800
Receivable from brokers for proceeds on
securities sold short...................... 40,785
Dividends and interest receivable.......... 13,342
Prepaid expenses........................... 23,058
-------
23,159,752
-------
LIABILITIES: Due to The Dreyfus Corporation and affiliates 11,913
Due to Distributor......................... 3,640
Payable for investment securities purchased 636,250
Securities sold short, at value
(proceeds $40,785)-see statement........... 50,475
Payable for shares of Common Stock redeemed 10,600
Interest payable........................... 841
Accrued expenses........................... 19,039
-------
732,758
-------
NET ASSETS.................................................................. $22,426,994
=======
REPRESENTED BY: Paid-in capital............................ $20,818,068
Accumulated undistributed investment income-net 405
Accumulated net realized gain (loss) on investments and
securities sold short...................... 763,787
Accumulated net unrealized appreciation (depreciation) on
investments and securities sold short-Note 4 (b) 844,734
-------
NET ASSETS.................................................................. $22,426,994
=======
SHARES OUTSTANDING
(100 MILLION SHARES OF $.001 PAR VALUE COMMON STOCK AUTHORIZED)............. 1,245,069
NET ASSET VALUE, offering and redemption price per share.................... $18.01
=======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
DREYFUS MIDCAP VALUE FUND
STATEMENT OF OPERATIONS SIX MONTHS ENDED FEBRUARY 28, 1997 (UNAUDITED)
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME: Cash dividends (net of $123 foreign taxes
withheld at source).................... $ 43,437
Interest................................... 16,380
------
Total Income......................... $ 59,817
EXPENSES: Management fee-Note 3(a)................... 31,506
Shareholder servicing costs-Note 3(b)...... 14,975
Registration fees.......................... 14,650
Custodian fees-Note 3(b)................... 8,904
Auditing fees.............................. 6,411
Prospectus and shareholders' reports....... 3,494
Legal fees................................. 1,316
Directors' fees and expenses-Note 3(c)..... 955
Interest-Note 2............................ 841
Dividends on securities sold short......... 470
Loan commitment fees-Note 2................ 89
Miscellaneous.............................. 932
------
Total Expenses....................... 84,543
Less-reduction in management fee due to
undertaking-Note 3(a).................. (30,089)
------
Net Expenses......................... 54,454
------
INVESTMENT INCOME-NET....................................................... 5,363
------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 4:
Net realized gain (loss) on investments:
Long transactions...................... $ 891,867
Short sale transactions................ (30,958)
------
Net Realized Gain (Loss)............. 860,909
Net unrealized appreciation (depreciation) on investments
and securities sold short.............. 796,092
------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 1,657,001
------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $1,662,364
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
DREYFUS MIDCAP VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
February 28, 1997 Year Ended
(Unaudited) August 31, 1996*
---------- ---------
<S> <C> <C>
OPERATIONS:
Investment income-net.................................................. $ 5,363 $ 15,778
Net realized gain (loss) on investments................................ 860,909 538,463
Net unrealized appreciation (depreciation) on investments.............. 796,092 48,642
------- -------
Net Increase (Decrease) in Net Assets Resulting from Operations...... 1,662,364 602,883
------- -------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net.................................................. (14,466) (6,270)
Net realized gain on investments....................................... (632,898) (2,687)
------- -------
Total Dividends...................................................... (647,364) (8,957)
------- -------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold.......................................... 28,274,057 4,374,036
Dividends reinvested................................................... 641,084 8,938
Cost of shares redeemed................................................ (11,094,535) (1,385,512)
------- -------
Increase (Decrease) in Net Assets from Capital Stock Transactions.... 17,820,606 2,997,462
------- -------
Total Increase (Decrease) in Net Assets.......................... 18,835,606 3,591,388
NET ASSETS:
Beginning of Period.................................................... 3,591,388 ----
------- -------
End of Period.......................................................... $ 22,426,994 $ 3,591,388
======= =======
UNDISTRIBUTED INVESTMENT INCOME-NET........................................ $ 405 $ 9,508
------- -------
Shares Shares
------- -------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................ 1,612,207 319,436
Shares issued for dividends reinvested................................. 37,556 682
Shares redeemed........................................................ (631,981) (92,831)
------- -------
Net Increase (Decrease) in Shares Outstanding........................ 1,017,782 227,287
======= =======
____________________________
*From September 29, 1995 (commencement of operations) to August 31, 1996.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS MIDCAP VALUE FUND
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 period indicated. This
information has been derived from the Fund's financial statements.
<TABLE>
Six Months Ended
February 28, 1997 Year Ended
PER SHARE DATA: (Unaudited) August 31, 1996(1)
---------- ---------
<S> <C> <C>
Net asset value, beginning of period.................................. $15.80 $12.50
---- ----
Investment Operations:
Investment income-net................................................. - .08
Net realized and unrealized gain (loss)
on investments...................................................... 4.00 3.28
---- ----
Total from Investment Operations...................................... 4.00 3.36
---- ----
Distributions:
Dividends from investment income-net.................................. (.04) (.04)
Dividends from net realized gain on investments....................... (1.75) (.02)
---- ----
Total Distributions................................................... (1.79) (.06)
---- ----
Net asset value, end of period........................................ $18.01 $15.80
==== ====
TOTAL INVESTMENT RETURN(2)................................................ 25.94% 26.88%
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average net assets(2).................. .62% 1.18%
Ratio of interest expense and dividends on securities sold short
to average net assets(2)............................................ .02% .01%
Ratio of net investment income
to average net assets(2)............................................ .06% .56%
Decrease reflected in above expense ratios
due to undertaking by the Manager
(limited to the expense limitation provision
of the management agreement)(2)........................................... .36% 1.13%
Portfolio Turnover Rate(2)............................................ 86.14% 266.80%
Average commission rate paid(3)....................................... $.0500 $.0478
Net Assets, end of period (000's Omitted)............................. $22,427 $3,591
____________________________
(1) From September 29, 1995 (commencement of operations) to August 31, 1996.
(2) Not annualized.
(3) The Fund is required to disclose its average commission rate paid per share for purchases and sales of investment
securities.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS MIDCAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Midcap Value Fund (the "Fund") is a series of Dreyfus Growth and
Value Funds, Inc. (the "Company") which 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 Fund. 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 ("Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A. ("Mellon"),
which is a wholly-owned subsidiary of Mellon Bank Corporation. Premier Mutual
Fund Services, Inc. (the "Distributor") is 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 funds
are allocated among them on a pro rata basis.
As of February 28, 1997, APT Holdings Corporation, an indirect subsidiary
of Mellon Bank Corporation, held 177,452 shares of the Fund.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(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 continue 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-BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. At February 28, 1997, there
were no outstanding borrowings under the Facility.
The average daily amount of borrowings outstanding under a previous line
of credit during the period ended February 28, 1997 was approximately
$29,000, with a related weighted average annualized interest rate of 5.76%.
The maximum amount borrowed under this line of credit at any time during the
period ended February 28, 1997 was $1.0 million.
NOTE 3-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(a) Pursuant to a management agreement with the Manager, 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 Manager has undertaken
from September 1, 1996 through August 31, 1997 to reduce the management fee
paid by the Fund, to the extent that the Fund's aggregate expenses, exclusive
of taxes, brokerage, interest on borrowings (which in the view of Stroock &
Stroock & Lavan, counsel to the Fund, also contemplates loan commitment fees
and dividends accrued on securities sold short) and extraordinary expenses,
exceed an annual rate of 1.25% of the value of the Fund's average daily net
assets. The reduction in management fee, pursuant to the undertaking,
amounted to $30,089 during the period ended February 28, 1997.
(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 (a securities dealer,
financial institution or other industry professional) in respect of these
services. The Distributor determines the amounts to be paid to Service
Agents. During the period ended February 28, 1997, the Fund was charged an
aggregate of $10,502 pursuant to the Shareholder Services Plan.
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 $2,435 during the period ended February 28, 1997.
The Fund compensates Mellon under a custody agreement to provide
custodial services for the Fund. During the period ended February 28, 1997,
$8,904 was charged by Mellon pursuant to the custody agreement.
(c) Each director who is not an "affiliated person" as defined in the Act
receives from the Company 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)
(d) Effective March 1, 1997, a 1% redemption fee is charged on certain
redemptions of Fund shares (including redemptions
through use of the Fund Exchanges service) where the shares being redeemed
were issued subsequent to a specified effective date and the redemption or
exchange occurs less than fifteen days following the date of issuance.
NOTE 4-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 28, 1997 is summarized as follows:
<TABLE>
Purchases Sales
---------------- ---------------
<S> <C> <C>
Long transactions.................................................... $24,480,264 $7,777,429
Short sale transactions.............................................. 254,446 127,047
------- -------
Total............................................................ $24,734,710 $7,904,476
======= =======
</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 the custodian, of
cash and/or U.S. Government securities sufficient to cover its short position.
Securities sold short at February 28, 1997 and their related market values and
proceeds are set forth in the Statement of Securities Sold Short.
(b) At February 28, 1997, accumulated net unrealized appreciation on
investments and securities sold short was $844,734, consisting of $1,362,192
gross unrealized appreciation and $517,458 gross unrealized depreciation.
At February 28, 1997, 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]
Registration Mark
DREYFUS MIDCAP VALUE FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 258SA972
Registration Mark
[Dreyfus logo]
Midcap Value Fund
Semi-Annual
Report
February 28, 1997
