LETTER TO SHAREHOLDERS
Dear Shareholder:
Although the Standard & Poor's 500 Composite Stock Price Index showed
little change at the close of 1994, this masked considerable correction among
many sectors and individual issues. Performance of fixed-income securities
was the weakest in over twenty years, and many emerging-market indices and
related mutual funds had negative returns. The total return of the Dreyfus
Appreciation Fund for the fiscal year ended December 31, 1994 was 3.62%,*
compared to 1.31% for the Standard & Poor's 500 Composite Stock Price
Index.** We are gratified to be able to report positive absolute and relative
performance results in an uncertain and difficult market environment.
FOCUS ON U.S. COMPANIES
Equity markets were undermined throughout 1994 by rising interest rates,
which made fixed-income investments appear increasingly attractive compared
to equity returns. We believe that uncertainty about the timing and extent of
future monetary tightening will continue to weigh on equity markets until it
is clear that growth is decelerating across the economy. Corporate profits
may weaken somewhat, but we expect stable earnings growth among the high
quality, globally prominent companies in the portfolio. Many of these
companies repurchased their own shares last year and in fact, repurchase
activity was at record levels. Given the ongoing cash flows from these stable
businesses, we expect repurchase activity to continue at high levels in 1995.
From a long-term investment perspective, we remain positive about markets.
Our economic outlook also supports our firm's strategy to focus on U.S.
domiciled companies - with global presence as leaders in production,
distribution and market share of branded proprietary products, technologies,
franchises and services. This approach has less inherent risk in our view
than investing directly in emerging markets where inflated capital flows in
either direction, and/or misguided policies can distort economic and market
fundamentals. The recent devaluation of the peso and sharp declines in the
Mexican and other Latin American markets appear to validate this stance.
HOW SECTORS PERFORMED
The Fund was fully invested during the year, with industry concentrations
in Consumer Non-Durables, Health Care and Technology. Shares of leading
pharmaceutical companies rebounded in 1994 as the regulatory threat of major
health care legislation dissipated. This sector had the second most positive
impact on the Fund's performance, led by shares of Merck & Co., Johnson &
Johnson, Pfizer and Amgen. Consumer Non-Durables, the third best-performing
sector in the Index, had the most positive impact on the Fund's results, with
particular strength in shares of Coca-Cola, Philip Morris Cos., PepsiCo,
Procter & Gamble and Gillette. Shares of technology-related companies
Motorola and General Electric also positively affected the Fund's
performance.
QUALITY HOLDINGS
Since the final quarter of 1993, as liquidity peaked, it became
increasingly clear that monetary policy would have to become more restrictive
to curtail the economy's growth. The economic climate throughout 1994 favored
many of the high quality holdings in the Fund's portfolio, particularly
holdings in Health Care and Consumer Non-Durables. Companies in these sectors
have benefitted from merger and buyout activity, as corporations strive to
better position themselves as more globally viable competitors. For example,
in the 12-month period covered by this report, price appreciation of Motorola
was 25.7%, of Gillette 25.6%, of Johnson & Johnson 22.0% and Coca-Cola 15.4%.
We will continue to emphasize quality in the Fund's portfolio as we strive to
help achieve your investment goals.
Sincerely,
(Fayez Sarofim Signature Logo)
Fayez Sarofim
Portfolio Manager
January 18, 1995
New York, N.Y.
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** 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.
DREYFUS APPRECIATION FUND, INC. DECEMBER 31, 1994
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS APPRECIATION
FUND, INC. AND THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX
(Exhibit A)
*Source: Lipper Analytical Services, Inc.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
ONE YEAR ENDED FIVE YEARS ENDED TEN YEARS ENDED FROM INCEPTION (1/18/84)
DECEMBER 31, 1994 DECEMBER 31, 1994 DECEMBER 31, 1994 TO DECEMBER 31, 1994
- ----------------- ----------------- ----------------- ------------------------
<S> <C> <C> <C>
3.62% 8.21% 13.61% 13.68%
</TABLE>
Past performance is not predictive of future performance. Share price and
investment return fluctuate and share price may be more or less than original
cost upon redemption.
The above graph compares a $10,000 investment made in Dreyfus Appreciation
Fund on 1/18/84 (Inception Date) 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 1/31/84 is used as the beginning value on
1/18/84. All dividends and capital gain distributions are reinvested.
The Fund's performance takes into account all 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.
DREYFUS APPRECIATION FUND, INC. DECEMBER 31, 1994
ASSET ALLOCATION
(Ehibit B)
FIVE LARGEST SECTORS
Food, Beverage & Tobacco........................................ 21.4%
Health Care & Related Products.................................. 15.2
Energy.......................................................... 8.9
Aerospace & Electronics......................................... 7.6
Personal Care................................................... 6.5
TEN LARGEST HOLDINGS
Coca-Cola....................................................... 6.6%
Philip Morris Cos............................................... 6.2
General Electric................................................ 4.4
Merck & Co...................................................... 3.1
Ford Motor Ser. A, Cum. Conv., $4.20............................ 3.0
Royal Dutch Petroleum (New York Shares)......................... 2.8
PepsiCo......................................................... 2.7
Johnson & Johnson............................................... 2.7
Procter & Gamble................................................ 2.7
Pfizer.......................................................... 2.6
All percentages shown above are based on Total Net Assets.
<TABLE>
<CAPTION>
DREYFUS APPRECIATION FUND, INC.
STATEMENT OF INVESTMENTS DECEMBER 31, 1994
COMMON STOCKS-93.4% SHARES VALUE
------------ ------------
<S> <C> <C>
AEROSPACE &
ELECTRONICS-7.6% Emerson Electric........................ 45,000 $ 2,812,500
General Electric........................ 200,000 10,200,000
Motorola................................ 80,000 4,630,000
------------
17,642,500
------------
APPAREL & TEXTILES-2.6% NIKE, Cl. B............................. 35,000 2,611,875
Stride Rite............................. 100,000 1,112,500
Warnaco Group, Cl. A......................(a) 130,000 2,242,500
------------
5,966,875
------------
AUTO RELATED-1.1% Chrysler................................ 55,000 2,695,000
------------
BANKING-3.0% Banc One................................ 30,000 761,250
Citicorp................................ 120,000 4,965,000
MBNA.................................... 30,000 701,250
PNC Bank................................ 30,000 633,750
------------
7,061,250
------------
BUSINESS SERVICES-.4% H&R Block............................... 25,000 928,125
------------
CHEMICALS-5.3% Dow Chemical............................ 55,000 3,698,750
Du Pont (E.I.) de Nemours............... 80,000 4,500,000
Rohm & Haas............................. 75,000 4,284,375
------------
12,483,125
------------
ENERGY-8.9% Chevron................................. 75,000 3,346,875
Exxon................................... 75,000 4,556,250
Mobil................................... 70,000 5,897,500
Pennzoil................................ 10,000 441,250
Royal Dutch Petroleum (New York Shares). 60,000 6,450,000
------------
20,691,875
------------
FINANCIAL-3.7% American General........................ 40,000 1,130,000
Federal National Mortgage Association... 50,000 3,643,750
HSBC Holdings, A.D.R.................... 35,000 3,797,500
------------
8,571,250
------------
FOOD, BEVERAGE &
TOBACCO-21.4%. Anheuser-Busch Cos...................... 70,000 3,561,250
Coca-Cola............................... 300,000 15,450,000
General Mills........................... 60,000 3,420,000
Nestle, A.D.R........................... 115,000 5,476,875
PepsiCo................................. 175,000 6,343,750
Philip Morris Cos....................... 250,000 14,375,000
Sara Lee................................ 50,000 1,262,500
------------
49,889,375
------------
DREYFUS APPRECIATION FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
-------------- ------------
HEALTH CARE &
RELATED PRODUCTS-15.2% Abbott Laboratories..................... 100,000 $ 3,262,500
American Home Products.................. 50,000 3,137,500
Amgen...................................(a) 60,000 3,540,000
Johnson & Johnson....................... 115,000 6,296,250
Merck & Co.............................. 190,000 7,243,750
Pfizer.................................. 80,000 6,180,000
Roche Holdings, A.D.R................... 100,000 4,793,750
Schering-Plough......................... 14,000 1,036,000
------------
35,489,750
------------
INDUSTRIAL SERVICES-.6% WMX Technologies........................ 55,000 1,443,750
------------
INSURANCE COMPANIES-.1% Wellpoint Health Networks, Cl. A........(a) 10,000 291,250
------------
LEISURE TIME-2.4% Disney (Walt)........................... 65,000 2,998,125
Eastman Kodak........................... 55,000 2,626,250
------------
5,624,375
------------
MEDIA-2.3% News Corp, A.D.R........................ 120,000 1,875,000
Reader's Digest Association,
Cl. A (non-voting).................. 70,000 3,438,750
------------
5,313,750
------------
MULTI-INDUSTRY-2.6% Corning................................. 40,000 1,195,000
Minnesota Mining & Manufacturing........ 90,000 4,803,750
------------
5,998,750
------------
OFFICE & BUSINESS
EQUIPMENT-2.1% AT&T.................................... 100,000 5,025,000
------------
PAPER & FOREST
PRODUCTS-1.1% Kimberly-Clark.......................... 50,000 2,525,000
------------
PERSONAL CARE-6.5% Gillette................................ 80,000 5,980,000
Procter & Gamble........................ 100,000 6,200,000
Unilever, N.V. (New York Shares)........ 25,000 2,912,500
------------
15,092,500
------------
RETAIL-5.1% American Stores......................... 80,000 2,150,000
May Department Stores................... 50,000 1,687,500
Toys R Us...............................(a) 70,000 2,135,000
Wal-Mart Stores......................... 140,000 2,975,000
Walgreen................................ 70,000 3,062,500
------------
12,010,000
------------
TRANSPORTATION-1.4% Norfolk Southern........................ 55,000 3,334,375
------------
TOTAL COMMON STOCKS
(cost $192,386,121).................. $218,077,875
============
DREYFUS APPRECIATION FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
PREFERRED STOCKS-4.0% SHARES VALUE
-------------- ------------
AUTO RELATED-2.9% Ford Motor Ser. A, Cum. Conv., $4.20.... 75,000 $ 6,900,000
------------
CAPITAL GOODS-.7% Cooper Industries, Cum. Conv., $1.60.... 80,000 1,640,000
------------
MEDIA-.4% News Corp, A.D.R........................ 60,000 832,500
------------
TOTAL PREFERRED STOCKS
(cost $8,226,497)................... $ 9,372,500
============
PRINCIPAL
SHORT-TERM INVESTMENTS-2.6% AMOUNT VALUE
-------------- ------------
U.S. TREASURY BILLS: 5.12%, 1/19/95..........................$ 38,000 $ 37,903
5.15%, 2/2/95........................... 44,000 43,798
5.18%, 3/2/95........................... 904,000 896,195
5.33%, 3/9/95........................... 5,221,000 5,169,209
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $6,147,105)................... $ 6,147,105
------------
TOTAL INVESTMENTS (cost $206,759,723).......................................... 100.0% $233,597,480
====== ============
LIABILITIES, LESS CASH AND RECEIVABLES......................................... (.0%) $ (138,739)
====== ============
NET ASSETS..................................................................... 100.0% $233,458,741
====== ============
NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS APPRECIATION FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1994
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $206,759,723)-see statement..................................... $233,597,480
Cash.................................................................... 312,896
Dividends and interest receivable....................................... 613,561
Receivable for subscriptions to Common Stock............................ 13,441
Prepaid expenses........................................................ 22,114
--------------
234,559,492
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 38,252
Due to Fayez Sarofim & Co............................................... 69,182
Due to Distributor...................................................... 39,067
Payable for Common Stock redeemed....................................... 769,842
Accrued expenses........................................................ 184,408 1,100,751
---------- --------------
NET ASSETS ................................................................ $233,458,741
==============
REPRESENTED BY:
Paid-in capital......................................................... $206,188,901
Accumulated undistriduted investment income-net......................... 48,800
Accumulated undistributed net realized gain on investments.............. 383,283
Accumulated net unrealized appreciation on investments-Note 3........... 26,837,757
--------------
NET ASSETS at value applicable to 15,390,369 shares outstanding
(100 million shares of $.01 par value Common Stock authorized).......... $233,458,741
==============
NET ASSET VALUE, offering and redemption price per share
($233,458,741 / 15,390,369 shares)...................................... $15.17
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS APPRECIATION FUND, INC.
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1994
INVESTMENT INCOME:
INCOME:
<S> <C> <C>
Cash dividends (net of $118,696 foreign taxes withheld at source)..... $6,219,355
Interest.............................................................. 109,164
------------
TOTAL INCOME...................................................... $6,328,519
EXPENSES:
Investment advisory fee-Note 2(a)..................................... 779,597
Sub-investment advisory fee-Note 2(a)................................. 457,139
Shareholder servicing costs-Note 2(b)................................. 705,389
Prospectus and shareholders' reports.................................. 77,042
Professional fees..................................................... 48,949
Registration fees..................................................... 29,491
Custodian fees........................................................ 26,267
Directors' fees and expenses-Note 2(c)................................ 25,209
Miscellaneous......................................................... 7,222
------------
TOTAL EXPENSES.................................................... 2,156,305
-----------
INVESTMENT INCOME-NET............................................. 4,172,214
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $1,003,334
Net unrealized appreciation on investments.............................. 2,231,801
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 3,235,135
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $7,407,349
===========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS APPRECIATION FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
--------------------------------
1993 1994
-------------- --------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 3,871,354 $ 4,172,214
Net realized gain on investments........................................ 464,765 1,003,334
Net unrealized appreciation (depreciation) on investments for the year.. (1,533,728) 2,231,801
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 2,802,391 7,407,349
-------------- --------------
DIVIDENDS TO SHAREHOLDERS:
From investment income-net.............................................. (4,132,287) (4,152,619)
In excess of investment income-net...................................... (88,267) --
From net realized gain on investments................................... (631,165) (141,615)
In excess of net realized gain on investments........................... (360,964) --
-------------- --------------
TOTAL DIVIDENDS....................................................... (5,212,683) (4,294,234)
-------------- --------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 147,154,427 94,909,133
Dividends reinvested.................................................... 4,837,140 3,933,592
Cost of shares redeemed................................................. (120,189,603) (105,515,580)
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS..... 31,801,964 (6,672,855)
-------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... 29,391,672 (3,559,740)
NET ASSETS:
Beginning of year....................................................... 207,626,809 237,018,481
-------------- --------------
End of year [including distributions in excess of investment income-net;
($88,267) in 1993 and undistributed investment income-net;
$48,800 in 1994]...................................................... $ 237,018,481 $ 233,458,741
============== ==============
SHARES SHARES
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 10,126,669 6,370,453
Shares issued for dividends reinvested.................................. 330,438 263,004
Shares redeemed......................................................... (8,276,374) (7,125,102)
-------------- --------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING......................... 2,180,733 (491,645)
============== ==============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS APPRECIATION FUND, 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 year indicated. This information
has been derived from the Fund's financial statements.
YEAR ENDED DECEMBER 31,
----------------------------------------------
PER SHARE DATA: 1990 1991 1992 1993 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year........................ $12.20 $10.95 $14.67 $15.15 $14.92
------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net *................................... .23 .21 .17 .24 .28
Net realized and unrealized gain (loss) on investments * (.46) 3.96 .52 (.14) .26
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS........................ (.23) 4.17 .69 .10 .54
------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment income-net *.................... (.24) (.20) (.13) (.24) (.28)
Dividends in excess of investment income-net. - - - (.03) -
Dividends from net realized gain on investments *......... (.78) (.25) (.08) (.03) (.01)
Dividends in excess of net realized gain on investments... - - - (.03) -
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS..................................... (1.02) (.45) (.21) (.33) (.29)
------ ------ ------ ------ ------
Net asset value, end of year.............................. $10.95 $14.67 $15.15 $14.92 $15.17
====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN (1.83%) 38.43% 4.62% .71% 3.62%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................... 1.24% 1.30% 1.14% 1.07% .96%
Ratio of net investment income to average net assets...... 2.21% 1.69% 1.46% 1.66% 1.86%
Portfolio Turnover Rate................................... 179.03% 12.89% 2.84% 9.65% 6.58%
Net Assets, end of year (000's Omitted)...................$40,398 $80,947 $207,627 $237,018 $233,459
- -----------------------------------
* Per share data for 1990 and 1991 has been restated to reflect a 100% stock
dividend at the close of business on March 9, 1992.
See notes to financial statements.
</TABLE>
DREYFUS APPRECIATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a diversified open-end management investment company. The Dreyfus
Corporation ("Dreyfus") serves as the Fund's investment adviser. Fayez
Sarofim & Co. ("Sarofim") serves as the Fund's sub-investment adviser. Prior
to August 24, 1994, Dreyfus Service Corporation, a wholly-owned subsidiary of
Dreyfus, acted as the distributor of the Fund's shares, which are sold to the
public without a sales load. Effective August 24, 1994, Dreyfus became a
direct subsidiary of Mellon Bank, N.A.
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.
(A) PORTFOLIO VALUATION: 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. 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) 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 discounts 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. This may result in distributions
that are in excess of investment income-net and net realized gain on a fiscal
year basis. 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.
During the year ended December 31, 1994, the Fund reclassified $117,472
charged from net realized gain on investments in prior years to investment
income-net.
(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 APPRECIATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2-INVESTMENT ADVISORY FEE, SUB-INVESTMENT ADVISORY FEE AND OTHER TRANSACT
IONS WITH AFFILIATES:
(A) Fees payable by the Fund pursuant to the provisions of an Investment
Advisory Agreement with Dreyfus and a Sub-Investment
Advisory Agreement with Sarofim (together "Agreements") are payable monthly,
computed on the average daily value of the Fund's net assets at the following
annual rates:
TOTAL NET ASSETS DREYFUS SAROFIM
------------------- ------------- -------------
0 to $25 million...................... .44 of 1% .11 of 1%
$25 up to $75 million................. .37 of 1% .18 of 1%
$75 up to $200 million................ .33 of 1% .22 of 1%
$200 up to $300 million............... .29 of 1% .26 of 1%
In excess of $300 million............. .275 of 1% .275 of 1%
The Investment Advisory Agreement further provides that if in any full
year the aggregate expenses of the Fund excluding
taxes, interest, brokerage commissions and extraordinary expenses, exceed the
expense limitation of any state having jurisdiction over the Fund, the Fund
may deduct from the fee to be paid to Dreyfus, or Dreyfus will bear, such
excess expense 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 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 the Fund's net assets in accordance with
California "blue sky" regulations. There was no expense reimbursement for the
year ended December 31, 1994.
(B) On August 3, 1994, Fund shareholders approved the adoption of a new
Service 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 third parties for distributing the Fund's shares and
servicing shareholder accounts and (b) pays Dreyfus, Dreyfus Service
Corporation or any affiliate for advertising and marketing relating to the
Fund and servicing shareholders accounts, at an annual rate of .20 of 1% of
the value of the Fund's average daily net assets. Each of the Distributor and
Dreyfus may pay Service Agents (a securities dealer, financial institution or
other industry professional) a fee in respect of the Fund's shares owned by
shareholders with whom the Service Agent has a servicing relationship or for
whom the Service Agent is the dealer or holder of record. Each of the
Distributor and Dreyfus determine the amounts to be paid to Service Agents to
which it will make payments and the basis on which such payments are made.
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.
Prior to August 24, 1994, the Fund's Service Plan ("prior Service Plan")
provided that the Fund pay Dreyfus or Dreyfus Service Corporation for
payments made to Service Agents, at an annual rate of .20 of 1% of the
average daily net asset value of Fund shares owned by the clients of the
Service Agent.
DREYFUS APPRECIATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
During the year ended December 31, 1994, $173,820 was charged to the Fund
pursuant to the Plan and $326,550 was charged pursuant to the prior Service
Plan.
(C) Prior to August 24, 1994, certain officers and directors of the Fund
were "affiliated persons," as defined in the Act, of Dreyfus and/or Dreyfus
Service Corporation. Each director who is not an "affiliated person" receives
an annual fee of $2,500 and an attendance fee of $500 per meeting.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
other than short-term securities, during the year ended December 31, 1994,
amounted to $14,669,777 and $24,150,005, respectively.
At December 31, 1994, accumulated net unrealized appreciation on
investments was $26,837,757, consisting of $37,861,696 gross unrealized
appreciation and $11,023,939 gross unrealized depreciation.
At December 31, 1994, 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 APPRECIATION FUND, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS APPRECIATION FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus Appreciation Fund, Inc., including the statement of investments, as
of December 31, 1994, and the related statement of operations for the year
then ended, the statement of changes in net assets for each of the two years
in the period then ended, and financial highlights for each of the years
indicated therein. 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 audits.
We conducted our audits 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 December 31, 1994 by correspondence with the custodian.
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 audits provide 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 Dreyfus Appreciation Fund, Inc. at December 31, 1994, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights
for each of the indicated years, in conformity with generally accepted
accounting principles.
(Ernst & Young Signature Logo)
New York, New York
January 31, 1995
DREYFUS APPRECIATION FUND, INC.
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal tax purposes the Fund hereby designates $.0075 per share as a
long-term capital gain distribution of the $.2825 per share paid on December
14, 1994.
(Dreyfus Lion "D" Logo)
DREYFUS APPRECIATION FUND, INC.
200 Park Avenue
New York, NY 10166
INVESTMENT ADVISER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
SUB-INVESTMENT ADVISER
Fayez Sarofim & Co.
Two Houston Center,
Suite 2907
Houston, TX 77010
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. 141AR9412
(Dreyfus Logo)
Appreciation
Fund, Inc.
Annual Report
December 31, 1994
*n*
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS APPRECIATION FUND, INC.
AND THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE
INDEX
EXHIBIT A:
______________________________________________________
| | STANDARD | |
| | & POOR'S 500 | DREYFUS |
| PERIOD | COMPOSITE STOCK | APPRECIATION |
| | PRICE INDEX * | FUND |
|-----------------|-----------------|------------------|
| 1/18/84 | 10,000 | 10,000 |
| 12/31/84 | 10,687 | 11,374 |
| 12/31/85 | 14,078 | 15,389 |
| 12/31/86 | 16,705 | 17,702 |
| 12/31/87 | 17,582 | 18,514 |
| 12/31/88 | 20,494 | 21,590 |
| 12/31/89 | 26,976 | 27,463 |
| 12/31/90 | 26,137 | 26,960 |
| 12/31/91 | 34,082 | 37,321 |
| 12/31/92 | 36,676 | 39,048 |
| 12/31/93 | 40,365 | 39,324 |
| 12/31/94 | 40,897 | 40,749 |
|------------------------------------------------------|
*Source: Lipper Analytical Services, Inc.
Dreyfus Appreciation Fund, Inc.
Asset Allocation
| -----------------------------------------|
| Common Stocks 93.4 %|
| Preferred Stocks 4.0 %|
| Cash Equivalents 2.6 %|
| -----------------------------------------|
