<PAGE>
Dreyfus
Appreciation
Fund, Inc.
Semi-Annual
Report
June 30, 1997
<PAGE>
Dreyfus Appreciation Fund, Inc.
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Letter to Shareholders
Dear Shareholder:
<PAGE>
<TABLE>
<CAPTION>
Dreyfus Appreciation Fund, Inc.
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Statement of Investments June 30, 1997 (Unaudited)
Common Stocks-97.2% Shares Value
- ------------------------------------------------------------------------------ ----------- ---------------
<S> <C> <C> <C>
Apparel-3.7% Christian Dior........................... 140,000 $ 23,105,062
NIKE, Cl. B.............................. 475,000 27,728,125
Polo Ralph Lauren........................ 300,000 8,212,500
Warnaco Group, Cl. A..................... 130,000 4,143,750
---------------
63,189,437
---------------
Auto Related-3.9% Chrysler................................. 900,000 29,531,250
Ford Motor............................... 949,905 35,858,914
---------------
65,390,164
---------------
Banking-7.0% Chase Manhattan.......................... 425,000 41,251,563
Citicorp................................. 425,000 51,239,063
HSBC Holdings, A.D.R..................... 35,000 10,605,000
SunTrust Banks........................... 275,000 15,142,187
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118,237,813
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Basic Industries-3.3% Dow Chemical............................. 80,000 6,970,000
duPont (E.I.) de Nemours & Co............ 600,000 37,725,000
International Flavors & Fragrances....... 135,000 6,817,500
Rohm & Haas.............................. 50,000 4,503,125
---------------
56,015,625
---------------
Capital Goods-9.5% AlliedSignal............................. 270,000 22,680,000
Boeing................................... 400,900 21,272,756
Caterpillar.............................. 110,000 11,811,250
Emerson Electric......................... 250,000 13,765,625
General Electric......................... 800,000 52,300,000
Minnesota Mining & Manufacturing......... 250,000 25,500,000
Rockwell International................... 225,000 13,275,000
---------------
160,604,631
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Communication Services-2.9% BellSouth................................ 500,000 23,187,500
SBC Communications....................... 425,096 26,302,815
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49,490,315
---------------
Computers-2.9% Compaq Computer.......................(a) 225,000 22,331,250
Hewlett-Packard.......................... 475,000 26,600,000
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48,931,250
---------------
Electronics-4.0% Intel.................................... 475,000 67,360,937
---------------
Energy-9.1% British Petroleum, A.D.S................. 475,000 35,565,625
Chevron.................................. 400,000 29,575,000
Exxon.................................... 550,000 33,825,000
Mobil.................................... 375,000 26,203,125
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Dreyfus Appreciation Fund, Inc.
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Statement of Investments (continued) June 30, 1997 (Unaudited)
Common Stocks (continued) Shares Value
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<S> <C> <C> <C>
Energy (continued) Pennzoil................................. 10,000 $ 767,500
Royal Dutch Petroleum (New York Shares).. 500,000 27,187,500
---------------
153,123,750
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Finance-4.4% American General......................... 300,000 14,325,000
Associates First Capital, Cl. A.......... 325,000 18,037,500
Federal National Mortgage Association.... 700,000 30,537,500
Hertz, Cl. A............................. 325,000 11,700,000
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74,600,000
---------------
Food, Beverage & Tobacco-14.1% American Stores.......................... 80,000 3,950,000
Anheuser-Busch........................... 140,000 5,871,250
Coca-Cola................................ 1,000,000 67,500,000
Kellogg.................................. 130,000 11,131,250
Nestle, A.D.R............................ 350,000 23,034,375
PepsiCo.................................. 800,000 30,050,000
Philip Morris............................ 1,500,000 66,562,500
Unilever, N.V. (New York Shares)......... 25,000 5,450,000
Walgreen................................. 475,000 25,471,875
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239,021,250
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Health Care-17.0% Abbott Laboratories...................... 425,000 28,368,750
American Home Products................... 450,000 34,425,000
Amgen.................................... 120,000 6,975,000
Johnson & Johnson........................ 800,000 51,500,000
Merck & Co............................... 600,000 62,100,000
Pfizer................................... 600,000 71,700,000
Roche Holding, A.D.R..................... 325,000 29,412,500
Schering-Plough.......................... 56,000 2,681,000
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287,162,250
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Insurance-3.2% Berkshire Hathaway, Cl. A.............(a) 700 33,040,000
Marsh & McLennan......................... 300,000 21,412,500
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54,452,500
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Media/Entertainment-1.9% Disney (Walt)............................ 120,000 9,630,000
McDonald's............................... 450,000 21,740,625
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31,370,625
---------------
Personal Care-6.4% Lauder (Estee)........................... 250,000 12,562,500
Gillette................................. 450,000 42,637,500
Procter & Gamble......................... 375,000 52,968,750
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108,168,750
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Photography-1.1% Eastman Kodak............................ 250,000 19,187,500
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</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Dreyfus Appreciation Fund, Inc.
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Statement of Investments (continued) June 30, 1997 (Unaudited)
Common Stocks (continued) Shares Value
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<S> <C> <C> <C>
Publishing-.5% McGraw-Hill.............................. 110,000 $ 6,469,375
News Corp, A.D.R......................... 120,000 2,310,000
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8,779,375
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Retail-.7% May Department Stores.................... 50,000 2,362,500
Wal-Mart Stores.......................... 300,000 10,143,750
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12,506,250
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Transportation-1.6% Norfolk Southern......................... 275,000 27,706,250
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TOTAL COMMON STOCKS
(cost $1,163,013,085).................. $1,645,298,672
---------------
---------------
<CAPTION>
Preferred Stocks-.4%
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<S> <C> <C> <C>
Publishing; News Corp, A.D.R.
(cost $7,781,484)...................... 450,000 $ 7,031,250
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---------------
<CAPTION>
Principal
Short-Term Investments-3.3% Amount
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<S> <C> <C> <C>
U.S. Treasury Bill; 4.94%, 9/18/1997
(cost $56,648,426)..................... $57,269,000 $ 56,631,023
---------------
---------------
TOTAL INVESTMENTS (cost $1,227,442,995)...................................... 100.9% $1,708,960,945
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LIABILITIES, LESS CASH AND RECEIVABLES....................................... (0.9%) $ (15,372,340)
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NET ASSETS................................................................... 100.0% $1,693,588,605
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<FN>
Notes to Statement of Investments:
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(a) Non-income producing.
See notes to Financial Statements
</FN>
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Dreyfus Appreciation Fund, Inc.
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Statement of Assets and Liabilities June 30, 1997 (Unaudited)
Cost Value
--------------- ---------------
<S> <C> <C> <C>
ASSETS: Investments in securities-See Statement of Investments. $1,227,442,995 $1,708,960,945
Cash................................................... 2,744,348
Receivable for shares of Common Stock subscribed....... 5,805,902
Dividends and interest receivable...................... 2,150,051
Prepaid expenses....................................... 146,890
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1,719,808,136
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LIABILITIES: Due to The Dreyfus Corporation and affiliates.......... 511,481
Due to Fayez Sarofim & Co.............................. 353,965
Due to Distributor..................................... 200,253
Payable for investment securities purchased............ 24,148,437
Payable for shares of Common Stock redeemed............. 592,912
Accrued expenses....................................... 412,483
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26,219,531
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NET ASSETS ................................................................... $1,693,588,605
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----------------
REPRESENTED BY: Paid-in capital........................................ $1,202,872,054
Accumulated undistributed investment income-net........ 7,328,864
Accumulated net realized gain (loss) on investments.... 1,872,239
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions....... 481,515,448
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NET ASSETS ................................................................... $1,693,588,605
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----------------
SHARES OUTSTANDING
(100 million shares of $.01 par value Common Stock authorized)................. 54,977,588
NET ASSET VALUE, offering and redemption price per share....................... $30.81
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-------
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
<PAGE>
Dreyfus Appreciation Fund, Inc.
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Statement of Operations Six Months Ended June 30, 1997 (Unaudited)
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME: Cash dividends (net of $293,707 foreign taxes
withheld at source)................................. $ 11,512,397
Interest............................................... 1,112,950
---------------
Total Income..................................... $ 12,625,347
EXPENSES: Investment advisory fee-Note 3(a)...................... 1,778,481
Sub-investment advisory fee-Note 3(a).................. 1,607,399
Shareholder servicing costs-Note 3(b).................. 1,645,815
Registration fees...................................... 234,885
Custodian fees-Note 3(b)............................... 48,098
Prospectus and shareholders' reports................... 36,405
Professional fees...................................... 20,274
Directors' fees and expenses-Note 3(c)................. 18,355
Interest expense-Note 2................................ 8,112
Loan commitment fees-Note 2............................ 6,726
Miscellaneous.......................................... 6,159
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Total Expenses................................... 5,410,709
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INVESTMENT INCOME-NET.......................................................... 7,214,638
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments................ $ 2,146,234
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions................... 221,650,269
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NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS......................... 223,796,503
---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................... $231,011,141
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</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
<PAGE>
Dreyfus Appreciation Fund, Inc.
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Statement of Changes in Net Assets
Six Months Ended
June 30, 1997 Year Ended
(Unaudited) December 31, 1996
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................ $ 7,214,638 $ 8,578,200
Net realized gain (loss) on investments.............................. 2,146,234 3,060,053
Net unrealized appreciation (depreciation) on investments............ 221,650,269 136,758,813
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Net Increase (Decrease) in Net Assets Resulting from Operations.. 231,011,141 148,397,066
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DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................ -- (8,454,676)
---------------- ----------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................ 1,750,589,044 955,936,798
Dividends reinvested................................................. -- 7,839,218
Cost of shares redeemed.............................................. (1,133,508,202) (715,488,852)
---------------- ----------------
Increase (Decrease) in Net Assets from Capital Stock Transactions 617,080,842 248,287,164
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Total Increase (Decrease) in Net Assets........................ 848,091,983 388,229,554
NET ASSETS:
Beginning of Period.................................................. 845,496,622 457,267,068
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End of Period........................................................ $1,693,588,605 $ 845,496,622
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---------------- ----------------
Undistributed investment income-net.................................... $ 7,328,864 $ 123,595
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CAPITAL SHARE TRANSACTIONS: Shares Shares
---------------- ----------------
Shares sold.......................................................... 62,408,239 40,260,066
Shares issued for dividends reinvested............................... -- 301,519
Shares redeemed...................................................... (40,480,935) (29,767,862)
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Net Increase (Decrease) in Shares Outstanding.................... 21,927,304 10,793,723
---------------- ----------------
---------------- ----------------
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
<PAGE>
Dreyfus Appreciation Fund, Inc.
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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.
Six Months Ended Year Ended December 31,
June 30, 1997 -----------------------------------------------------
PER SHARE DATA: (Unaudited) 1996 1995 1994 1993 1992
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $25.58 $20.55 $15.17 $14.92 $15.15 $14.67
------- ------- ------- ------- ------- -------
Investment Operations:
Investment income-net....................... .13 .25 .33 .28 .24 .17
Net realized and unrealized gain (loss)
on investments............................ 5.10 5.03 5.42 .26 (.14) .52
------- ------- ------- ------- ------- -------
Total from Investment Operations............ 5.23 5.28 5.75 .54 .10 .69
------- ------- ------- ------- ------- -------
Distributions:
Dividends from investment income-net........ -- (.25) (.34) (.28) (.24) (.13)
Dividends in excess of investment income-net -- -- -- (.03) -- --
Dividends from net realized gain
on investments............................ -- -- (.03) (.01) (.03) (.08)
Dividends in excess of net realized gain
on investments............................ -- -- -- -- (.03) --
------- ------- ------- ------- ------- -------
Total Distributions......................... -- (.25) (.37) (.29) (.33) (.21)
------- ------- ------- ------- ------- -------
Net asset value, end of period.............. $30.81 $25.58 $20.55 $15.17 $14.92 $15.15
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
TOTAL INVESTMENT RETURN........................ 20.45%(1) 25.68% 37.89% 3.62% .71% 4.62%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets..... .44%(1) .91% .92% .96% 1.07% 1.14%
Ratio of net investment income
to average net assets..................... .58%(1) 1.34% 2.28% 1.86% 1.66% 1.46%
Portfolio Turnover Rate..................... .38%(1) 4.84% 4.51% 6.58% 9.65% 2.84%
Average commission rate paid(2)............. $.0637 $.0633 -- -- -- --
Net Assets, end of period (000's Omitted)... $1,693,589 $845,497 $457,267 $233,459 $237,018 $207,627
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<FN>
(1) Not annualized.
(2) For fiscal years beginning January 1, 1996, the Fund is required to
disclose its average commission rate paid per share for purchases and sales of
investment securities.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Appreciation Fund, Inc.
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NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Appreciation Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a diversified open-end management
investment company. The Fund's investment objective is to provide investors with
long-term capital growth consistent with the preservation of capital. The
Dreyfus Corporation ("Dreyfus") serves as the Fund's investment adviser. Dreyfus
is a direct subsidiary of Mellon Bank, N.A. ("Mellon"). Fayez Sarofim & Co.
("Sarofim") serves as the Fund's sub-investment adviser. Premier Mutual Fund
Services, Inc. (the "Distributor") is the distributor of the Fund's shares,
which are sold to the public without a sales load.
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: 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) Foreign currency transactions: The Fund does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency gains
or losses realized on securities transactions, the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books, and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities, resulting
from changes in exchange rates. Such gains and losses are included with net
realized and unrealized gain or loss on investments.
(c) 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.
(d) 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, it is the policy of the
Fund not to distribute such gain.
(e) 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 $275,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1996. If not
applied, the carryover expires in fiscal 2003.
<PAGE>
Dreyfus Appreciation Fund, Inc.
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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 June 30, 1997, there were
no outstanding borrowings under the Facility.
The average daily amount of borrowings outstanding during the period ended
June 30, 1997 was approximately $278,000, with related weighted average
annualized interest rate of 5.89%. The maximum amount borrowed at any time
during the period ended June 30, 1997 was $14.1 million.
NOTE 3--Investment Advisory Fee, Sub-Investment Advisory Fee and Other
Transactions 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 are payable monthly, computed on the average daily value of the Fund's
net assets at the following annual rates:
Average Net Assets Dreyfus Sarofim
--------------- --------- ---------
0 up 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%
(b) Under the Shareholder Services Plan, the Fund 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. Both the Distributor and Dreyfus or its affiliates may pay one
or more 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. During the period
ended June 30, 1997, the Fund was charged $1,231,229 pursuant to the Shareholder
Services Plan.
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 $235,173 during the period ended June 30, 1997.
The Fund compensates Mellon under a custody agreement to provide custodial
services for the Fund. During the period ended June 30, 1997, $48,098 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 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.
<PAGE>
Dreyfus Appreciation Fund, Inc.
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NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended June 30, 1997, amounted
to $553,773,136 and $4,586,551, respectively.
At June 30, 1997, accumulated net unrealized appreciation on investments
was $481,517,950, consisting of $483,102,555 gross unrealized appreciation and
$1,584,605 gross unrealized depreciation.
At June 30, 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).
<PAGE>
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
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. 141SA976
