DREYFUS APPRECIATION FUND, INC.
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this annual report on the Dreyfus
Appreciation Fund, Inc. for the 12-month period ended December 31, 1995.
During that period, the Fund's shares provided a total return of 37.89%.*
During the same period, the Standard & Poor's 500 Composite Stock Price Index
provided a total return of 37.53%.**
PORTFOLIO COMPOSITION
At the close of the period, the Fund had 6.7% of its net assets in
short-term Treasuries and the balance in equities. In the equity portion of
the Fund, industry concentrations were in nondurable consumer products and
health care. As market conditions permit, we will reduce the position in
Treasuries and commit these assets to what we believe are high quality
equities.
ECONOMIC OUTLOOK
In our view, 1995 will prove to have been a bridge to a path of moderate
growth, which should extend the economic cycle in an environment of low
inflation and declining interest rates. We presently expect that average
annual Gross Domestic Product growth will weaken to a range of 1.5% - 2.0% in
1996, with inflation near 2.5%, or very likely lower. Long-term interest
rates should decline to 5.5% or below in an environment of fiscal restraint
and little pricing flexibility. If our outlook is incorrect, it is possible
that growth and inflation will fall below our expectations - particularly in
the first half of 1996, although we do not expect a recession to develop. In
our view, consumer demand will remain weak until late in the year, with any
pickup in spending continuing to be affected by price sensitivity. The
economy's growth should be supported by a moderate increase in capital
spending and by growth in U.S. exports, which continues to increase as a
percentage of Gross Domestic Product, although from a low base. In spite of
weakness among its principal trading partners, the U.S. continues to gain
market share in developing markets, particularly in the Pacific Rim and the
Far East. The above factors, along with cautious but more accommodative moneta
ry policy, should provide enough liquidity to prevent a contraction in
economic growth.
INVESTMENT OUTLOOK AND STRATEGY
In a slowing economy, with the prospect of falling corporate profits and
earnings disappointments, we do not expect total return on equities to
approximate that of 1995. However, we continue to believe that equities will
outperform fixed income securities and cash equivalents. We believe our
strategy focusing on large capitalization, multinational industry leaders
generally may provide the most upside potential with less exposure to risk.
These types of companies should continue to have excess cash available to
repurchase shares near the record levels reached in 1995, in spite of weak
economies among the Group of 7 leading industrial nations. We also believe
industry consolidations and merger and acquisition activity will be robust,
and only marginally lower than the record set in 1995. If the best of
possible developments takes place on the political front, investors could be
surprised that equity markets will do better than consensus expectations.
INVESTMENT HIGHLIGHTS
Rising bond prices, low inflation and the prospect of an extended period
of moderate economic growth provided a constructive backdrop for equity
markets in 1995. Optimism about the goal of achieving meaningful deficit
reduction, and a cyclical trend of fiscal accountability and restraint, also
supported equity prices. The rise in the S&P 500 Stock Index was led by
health care issues, as had been the case in 1994. The Fund's 15.8% weighting
in this sector had the most positive impact on performance, relative to the
Index. Strong performance in shares of Merck & Co., Pfizer, Johnson & Johnson
and Roche Holdings A.D.R. led this group. The strategy of concentrating the
Fund's assets in shares of the highest quality global companies in nondurable
consumer products also benefited performance. Shares of Philip Morris,
Coca-Cola, PepsiCo, Procter & Gamble, Gillette and NIKE led this group.
Performance in the financial services and energy sectors was also quite
positive. The Fund's underweighting in the retail sector relative to the S&P
500 Stock Index was a positive factor, since this was the weakest group in the
Index in 1995.
We appreciate your investment in the Dreyfus Appreciation Fund, Inc. and
we will continue to seek rewarding returns on your behalf.
Sincerely,
[Fayez Sarofim signature logo]
Fayez Sarofim
Portfolio Manager
January 24, 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. The
Standard & Poor's 500 Composite Stock Price Index is a widely accepted
unmanaged index of stock market performance.
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<CAPTION>
DREYFUS APPRECIATION FUND, INC. DECEMBER 31, 1995
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:
$56,247
Standard & Poor's 500
Composite Stock
Price Index*
Dollars
$56,186
Dreyfus
Appreciation Fund
*Source: Lipper Analytical Services, Inc.]
AVERAGE ANNUAL TOTAL RETURNS
ONE YEAR ENDED FIVE YEARS ENDED TEN YEARS ENDED FROM INCEPTION (1/18/84)
DECEMBER 31, 1995 DECEMBER 31, 1995 DECEMBER 31, 1995 TO DECEMBER 31, 1995
_________________ _________________ _________________ _____________
<S> <C> <C>
37.89% 15.79% 13.81% 15.53%
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Dreyfus Appreciation
Fund, Inc. 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 shown in the line graph takes into account all
applicable fees and expenses. The Standard and 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 Financial Highlights
section of the Prospectus and elsewhere in this report.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS APPRECIATION FUND, INC.
STATEMENT OF INVESTMENTS DECEMBER 31, 1995
COMMON STOCKS-94.0% SHARES VALUE
_______ _______
<S> <C> <C> <C>
AEROSPACE &
ELECTRONICS-8.5% Emerson Electric....................... 55,000 $ 4,496,250
General Electric....................... 250,000 18,000,000
Intel.................................. 115,000 6,526,250
Motorola............................... 80,000 4,560,000
Rockwell International................. 100,000 5,287,500
__________
38,870,000
__________
APPAREL & TEXTILES-1.6% NIKE, Cl. B............................ 60,000 4,177,500
Warnaco Group, Cl. A................... 130,000 3,250,000
__________
7,427,500
__________
AUTO RELATED-2.4% Chrysler............................... 70,000 3,876,250
Ford Motor............................. 244,905 7,102,245
__________
10,978,495
__________
BANKING-6.5% Banc One............................... 30,000 1,132,500
Chemical Banking....................... 150,000 8,812,500
Citicorp............................... 200,000 13,450,000
HSBC Holdings, A.D.R................... 35,000 5,285,000
PNC Bank............................... 30,000 967,500
__________
29,647,500
__________
CAPITAL GOODS-1.1% Allied Signal......................... 110,000 5,225,000
__________
CHEMICALS-4.5% Dow Chemical........................... 100,000 7,037,500
duPont (E.I.) de Nemours............... 125,000 8,734,375
Rohm & Haas............................ 75,000 4,828,125
__________
20,600,000
_________
ENERGY-8.0% Chevron................................ 120,000 6,300,000
Exxon.................................. 110,000 8,813,750
Mobil.................................. 75,000 8,400,000
Pennzoil............................... 10,000 422,500
Royal Dutch Petroleum (New York Shares) 90,000 12,701,250
__________
36,637,500
__________
FINANCIAL-3.4% American General....................... 200,000 6,975,000
Federal National Mortgage Association.. 60,000 7,447,500
MBNA................................... 30,000 1,106,250
__________
15,528,750
FOOD, BEVERAGE & __________
TOBACCO-17.7% Anheuser-Busch.......................... 70,000 4,681,250
Coca-Cola.............................. 300,000 22,275,000
General Mills.......................... 60,000 3,465,000
Kellogg................................ 100,000 7,725,000
Nestle, A.D.R.......................... 125,000 7,015,625
DREYFUS APPRECIATION FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1995
COMMON STOCKS (CONTINUED) SHARES VALUE
_______ _______
FOOD, BEVERAGE &
TOBACCO (CONTINUED) PepsiCo.................................... 220,000 $ 12,292,500
Philip Morris.......................... 240,000 21,720,000
Sara Lee............................... 50,000 1,593,750
__________
80,768,125
___________
HEALTH CARE &
RELATED PRODUCTS-15.8% Abbott Laboratories.................... 175,000 7,306,250
American Home Products................. 90,000 8,730,000
Amgen................................(a) 120,000 7,125,000
Johnson & Johnson...................... 145,000 12,415,625
Merck & Co............................. 250,000 16,437,500
Pfizer................................. 170,000 10,710,000
Roche Holdings, A.D.R.................. 100,000 7,925,000
Schering-Plough........................ 28,000 1,533,000
__________
72,182,375
_______
INDUSTRIAL SERVICES-.4% WMX Technologies....................... 55,000 1,643,125
__________
LEISURE TIME-4.2% Disney (Walt).......................... 95,000 5,605,000
Eastman Kodak.......................... 90,000 6,030,000
McDonald's............................. 172,000 7,761,500
__________
19,396,500
___________
MEDIA-2.3% McGraw-Hill............................ 50,000 4,356,250
News, A.D.R. .......................... 120,000 2,565,000
Readers Digest Association, Cl. A
(non-voting)......................... 70,000 3,587,500
__________
10,508,750
__________
MULTI-INDUSTRY-1.8% Minnesota Mining & Manufacturing...... 125,000 8,281,250
___________
OFFICE &
BUSINESS EQUIPMENT-2.0% AT&T................................... 80,000 5,180,000
General Motors, Cl. E.................. 75,000 3,900,000
__________
9,080,000
___________
PAPER &
FOREST PRODUCTS-.9% International Paper..................... 110,000 4,166,250
_______
PERSONAL CARE-8.5% Estee Lauder, Cl. A..................... 97,000 3,382,875
Gillette............................... 240,000 12,510,000
International Flavors & Fragrances..... 125,000 6,000,000
Procter & Gamble....................... 160,000 13,280,000
Unilever, N.V. (New York Shares)....... 25,000 3,518,750
___________
38,691,625
___________
DREYFUS APPRECIATION FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1995
COMMON STOCKS (CONTINUED) SHARES VALUE
_______ _______
RETAIL-3.1% American Stores........................ 80,000 $ 2,140,000
May Department Stores.................. 50,000 2,112,500
Wal-Mart Stores........................ 190,000 4,251,250
Walgreen............................... 190,000 5,676,250
__________
14,180,000
__________
TRANSPORTATION-1.3% Norfolk Southern....................... 75,000 5,953,125
__________
TOTAL COMMON STOCKS
(cost $307,152,995).................. $429,765,870
============
PREFERRED STOCKS-.5%
MEDIA; News, A.D.R. ..........................
(cost $1,916,832).................... 125,000 $ 2,406,250
============
PRINCIPAL
SHORT-TERM INVESTMENTS-6.7% AMOUNT
_______
U.S. TREASURY BILLS: 5.32%, 1/11/96......................... $ 1,564,000 $ 1,561,545
5.33%, 1/25/96......................... 4,791,000 4,775,573
5.25%, 2/29/96......................... 1,440,000 1,428,566
5.07%, 3/7/96.......................... 22,272,000 22,067,098
4.80%, 3/14/96......................... 928,000 918,488
___________
TOTAL SHORT-TERM INVESTMENTS
(cost $30,747,197)................... $ 30,751,270
============
TOTAL INVESTMENTS (cost $339,817,024) ................................ 101.2% $462,923,390
===== ============
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (1.2%) $(5,656,322)
===== ============
NET ASSETS.................................................................. 100.0% $457,267,068
===== ============
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, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $339,817,024)-see statement..................................... $462,923,390
Cash.................................................................... 1,308,143
Dividends and interest receivable....................................... 774,505
Receivable for subscriptions to Common Stock............................ 136,271
Prepaid expenses........................................................ 17,583
_______
465,159,892
LIABILITIES:
Due to The Dreyfus Corporation and subsidiaries......................... $ 157,404
Due to Fayez Sarofim & Co............................................... 90,315
Due to Distributor...................................................... 38,550
Payable for Common Stock redeemed....................................... 5,343,067
Payable for investment securities purchased............................. 2,029,050
Accrued expenses........................................................ 234,438 7,892,824
_________ ___________
NET ASSETS ................................................................ $457,267,068
===========
REPRESENTED BY:
Paid-in capital......................................................... $337,562,876
Accumulated undistriduted investment income-net......................... 71
Accumulated net realized (loss) on investments.......................... (3,402,245)
Accumulated net unrealized appreciation on investments-Note 3........... 123,106,366
_____
- -NET ASSETS at value applicable to 22,256,561 shares outstanding
(100 million shares of $.01 par value Common Stock authorized).......... $457,267,068
============
NET ASSET VALUE, offering and redemption price per share
($457,267,068 / 22,256,561 shares)...................................... $20.55
============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS APPRECIATION FUND, INC.
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1995
INVESTMENT INCOME:
<S> <C> <C>
INCOME:
Cash dividends (net of $124,178 foreign taxes withheld at source)..... $ 9,508,460
Interest.............................................................. 612,231
________
TOTAL INCOME...................................................... $ 10,120,691
EXPENSES:
Investment advisory fee-Note 2(a)..................................... 1,039,869
Sub-investment advisory fee-Note 2(a)................................. 700,539
Shareholder servicing costs-Note 2(b)................................. 906,232
Registration fees..................................................... 71,019
Professional fees..................................................... 64,830
Prospectus and shareholders' reports-Note 2(b)........................ 51,651
Custodian fees........................................................ 39,023
Directors' fees and expenses-Note 2(c)................................ 35,995
Miscellaneous......................................................... 6,131
______
TOTAL EXPENSES.................................................... 2,915,289
_________
INVESTMENT INCOME-NET............................................. 7,205,402
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $ (3,334,873)
Net unrealized appreciation on investments.............................. 96,268,609
______
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 92,933,736
__________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $100,139,138
============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS APPRECIATION FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
_________________________________
1994 1995
---- -----
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 4,172,214 $ 7,205,402
Net realized gain (loss) on investments................................. 1,003,334 (3,334,873)
Net unrealized appreciation on investments for the year................. 2,231,801 96,268,609
_________ ___________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 7,407,349 100,139,138
__________ ___________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................... (4,152,619) (7,254,131)
Net realized gain on investments........................................ (141,615) (450,655)
__________ ____________
TOTAL DIVIDENDS....................................................... (4,294,234) (7,704,786)
___________ ____________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 94,909,133 316,317,434
Dividends reinvested.................................................... 3,933,592 7,319,942
Cost of shares redeemed................................................. (105,515,580) (192,263,401)
_____________ _____________
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS..... (6,672,855) 131,373,975
______________ ____________
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... (3,559,740) 223,808,327
NET ASSETS:
Beginning of year....................................................... 237,018,481 233,458,741
___________ ____________
End of year (including undistributed investment income-net:
$48,800 in 1994 and $71 in 1995)...................................... $233,458,741 $457,267,068
============ ============
SHARES SHARES
_______ ______
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 6,370,453 17,110,923
Shares issued for dividends reinvested.................................. 263,004 362,104
Shares redeemed......................................................... (7,125,102) (10,606,835)
__________ ___________
NET INCREASE (DECREASE) IN SHARES OUTSTANDING......................... (491,645) 6,866,192
============ ===========
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: 1991 1992 1993 1994 1995
___ ___ ___ ___ ___
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year........... $10.95 $14.67 $15.15 $14.92 $15.17
___ ___ ___ ___ ___
INVESTMENT OPERATIONS:
Investment income-net (1).................... .21 .17 .24 .28 .33
Net realized and unrealized gain (loss)
on investments (1)......................... 3.96 .52 (.14) .26 5.42
___ ___ ___ ___ ___
TOTAL FROM INVESTMENT OPERATIONS........... 4.17 .69 .10 .54 5.75
___ ___ ___ ___ ___
DISTRIBUTIONS:
Dividends from investment income-net (1)..... (.20) (.13) (.24) (.28) (.34)
Dividends in excess of investment income-net. -- -- (.03) -- --
Dividends from net realized gain on investments (1) (.25) (.08) (.03) (.01) (.03 )
Dividends in excess of net realized gain
on investments............................. -- -- (.03) -- --
___ ___ ___ ___ ___
TOTAL DISTRIBUTIONS........................ (.45) (.21) (.33) (.29) (.37)
___ ___ ___ ___ ___
Net asset value, end of year................. $14.67 $15.15 $14.92 $15.17 $20.55
=== === === === ===
TOTAL INVESTMENT RETURN.......................... 38.43% 4.62% .71% 3.62% 37.89%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... 1.30% 1.14% 1.07% .96% .92%
Ratio of net investment income to average net assets 1.69% 1.46% 1.66% 1.86% 2.28%
Portfolio Turnover Rate...................... 12.89% 2.84% 9.65% 6.58% 4.51%
Net Assets, end of year (000's Omitted)...... $80,947 $207,627 $237,018 $233,459 $457,267
______________________
(1) Per share data for 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. 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 load. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of FDI Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a wholly-owned subsidiary of FDI
Holdings, Inc., the parent company of which is Boston Institutional Group,
Inc. The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
adviser. Dreyfus is a direct subsidiary of Mellon Bank, N.A. Fayez Sarofim &
Co. ("Sarofim") serves as the Fund's sub-investment adviser.
(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. 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, 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.
The fund has an unused capital loss carryover of approximately $3,314,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1995. The
carryover does not include net realized securities losses from November 1,
1995 through December 31, 1995 which are treated, for Federal income tax
purposes, as arising in fiscal 1996. If not applied, the carryover expires in
fiscal 2003.
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:
<TABLE>
<CAPTION>
DREYFUS APPRECIATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AVERAGE NET ASSETS DREYFUS SAROFIM
____________ _______ ______
<S> <C> <C>
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%
</TABLE>
The Investment Advisory Agreement further provides that if in any full year
the aggregate expenses of the Fund exclusive of 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 21/2% of the first $30 million, 2% of the next $70
million and 11/2% 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, 1995.
Effective December 1, 1995, the Fund compensates Dreyfus Transfer, Inc.,
a wholly-owned subsidiary of Dreyfus, under a transfer agency agreement for
providing personnel and facilities to perform transfer agency services for
the Fund. Such compensation amounted to $17,130 for the period from December
1, 1995 through December 31, 1995.
(B) Effective August 1, 1995, the Fund adopted a Shareholder Services
Plan, pursuant to which it reimburses (a) the Distributor for payments made
for servicing shareholder accounts ("Servicing") and (b) Dreyfus, Dreyfus
Service Corporation, a wholly-owned subsidiary of Dreyfus, and any affiliate
of either of them for payments made for Servicing, at an aggregate annual
rate of up to .20 of 1% of the value of the Fund's average daily net assets.
Each of the Distributor and Dreyfus or its affiliates may pay one or more
Service Agents 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. During the period August 1,
1995 through December 31, 1995, the Fund was charged $319,704 pursuant to the
Shareholder Services Plan.
Prior to August 1, 1995, the Service Plan (the "Plan") pursuant to Rule
12b-1 under the Act, provided for the Fund to (a) reimburse the Distributor
for payments to third parties for distributing the Fund's shares and
servicing shareholder accounts ("Servicing") and (b) pay Dreyfus, Dreyfus
Service Corporation, or any affiliate for Servicing, 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 have paid 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 had a
Servicing relationship or for whom the Service Agent was the dealer or holder
of record. Each of the Distributor and Dreyfus determined the amounts to be
paid to Service Agents to which it made payments and the basis on which such
payments were made. The Plan also separately provided for the Fund to bear
the costs of preparing, printing and distributing certain of the Fund's
prospectuses and statements of additional information and costs associated
with implementing and
DREYFUS APPRECIATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
operating the Plan. During the period January 1, 1995 through July 31, 1995,
the Fund was charged $338,750 pursuant to the Plan. Effective August 1, 1995
the Plan was terminated.
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $2,500 and an attendance fee of $500
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the year ended December 31, 1995,
amounted to $125,680,703 and $13,877,981, respectively.
At December 31, 1995, accumulated net unrealized appreciation on
investments was $123,106,366, consisting of $125,810,620 gross unrealized
appreciation and $2,704,254 gross unrealized depreciation.
At December 31, 1995, 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, 1995, 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, 1995 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our 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, 1995, 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 and Young LLP signature logo]
New York, New York
February 6, 1996
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal tax purposes the Fund hereby designates $.025 per share as a
long-term capital gain distribution of the $.030 per share paid on August 30,
1995.
[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
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. 141AR9512
[Dreyfus logo]
Appreciation
Fund, Inc.
Annual Report
December 31, 1995
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 |
| 12/31/95 | 56,247 | 56,186 |
|------------------------------------------------|
*Source: Lipper Analytical Services, Inc.
