Dreyfus Appreciation Fund, Inc.
SEMIANNUAL REPORT June 30, 1999
(reg.tm)
<PAGE>
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
<PAGE>
Contents
THE FUND
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2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
10 Statement of Assets and Liabilities
11 Statement of Operations
12 Statement of Changes in Net Assets
13 Financial Highlights
14 Notes to Financial Statements
FOR MORE INFORMATION
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Back Cover
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Dreyfus Appreciation Fund, Inc.
The Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Appreciation Fund,
Inc. covering the six-month period from January 1, 1999 through June 30, 1999.
Inside you' ll find valuable information about how the fund was managed during
the reporting period, including a discussion with the fund's portfolio manager,
Fayez Sarofim, of Fayez Sarofim & Co., the fund's sub-investment adviser.
The past six months have been rewarding for most equity investors. Strong
economic growth, low inflation and high levels of consumer spending supported
continued strength in the stocks of many large companies. Several major market
indices set new records, including the Dow Jones Industrial Average's first-ever
close above the 10,000 level. The broader S&P 500 Index and the technology-laden
NASDAQ Index also recorded new highs.
Beginning in April, many previously out-of-favor market sectors rallied
strongly, including value-oriented stocks. At the same time, large-cap growth
stocks appear to have paused in their advance. This has helped narrow the
valuation gap that had developed over the past several years between the growth
and value sectors of the large-cap stock market.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Appreciation Fund, Inc.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 15, 1999
<PAGE>
DISCUSSION OF FUND PERFORMANCE
Fayez Sarofim, Portfolio Manager
Fayez Sarofim & Co., Sub-Investment Adviser
How did Dreyfus Appreciation Fund, Inc. perform relative to its benchmark?
The fund produced a total return of 6.88% over the six-month period ended June
30, 1999.(1) In comparison, the fund's benchmark, the Standard & Poor's 500
Composite Stock Price Index ("S&P 500") provided a 12.38% total return.(2)
Our relative underperformance over the six month period was the result of a
combination of factors. The technology sector, particularly the high-flying
internet stocks, performed very strongly during the period, and this is an area
in which we have chosen to de-emphasize, given that the constantly changing
nature of technology reduces our confidence in our ability to predict success
factors more than a year or two into the future. An additional contributor to
our underperformance was the substantial correction, after several years of good
performance, in the pharmaceutical sector, an area where we have committed over
one-sixth of the fund's capital. We believe that the long-term outlook for the
pharmaceutical industry remains attractive, and we intend to remain committed to
this sector.
What is the fund's investment approach?
We evaluate investment opportunities one company at a time in order to identify
large, established growth companies that we believe are well positioned to
weather difficult economic climates and thrive during favorable times. Such
companies typically are selected for their sustained patterns of profitability,
strong balance sheets, talented management teams, expanding global presence and
above-average growth potential.
We also maintain a "buy-and-hold" investment strategy, which is based on
remaining fully invested and on targeting long-term growth over a three to
five-year time frame, rather than going for short-term profits.
The Fund 3
<PAGE>
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
As a result, we tend to buy and sell relatively few stocks over the course of
the year. During the recent six-month period, the fund's portfolio turnover rate
was 3.51%.
Our investment strategy is also predicated on purchasing growth at a price we
consider to be justified by a company's fundamentals. For example, while the
fund was invested in several leading technology companies during the period,
such as Intel and Microsoft, we avoided most Internet companies because we
considered their prices to be higher than warranted by their financial strength
and growth rates.
What other factors influenced the fund's performance?
In addition to the remarkable rally of Internet-related stocks early in the
six-month period, the fund's performance was influenced by a change in market
leadership that took place in April. When investors began to recognize that
economic growth in the United States and overseas might be stronger than they
had anticipated, they became concerned about a possible resurgence of inflation.
In fact, reports of low levels of U.S. unemployment and rising global energy and
commodity prices further fueled inflation fears. As a result, interest rates
rose sharply.
When interest rates rise, growth companies become less attractive to investors.
That' s because higher interest rates have the potential to erode profits.
Accordingly, many investors began to sell their holdings of growth companies and
buy more attractively priced value-oriented companies. In addition, investors
turned their attention to companies whose earnings are sensitive to changes in
economic conditions, such as paper and chemical producers. Because our long-term
perspective favors companies with consistent and longstanding track records of
earnings growth, some of the companies in which we invested were hurt by the
market's recent preference for value stocks.
What is the fund's current strategy?
We continue to maintain the long-term investment strategy that produced the
fund's past success. Our company-by-company analyses led us to maintain the
fund's relatively high level of exposure to stocks in
4
<PAGE>
the financial services industry, and relatively low participation in cyclical
and technology stocks.
The fund's investments in financial services stocks performed particularly well
as investors became more comfortable that the worst-case scenarios were unlikely
to materialize for banks, brokerage firms and insurance companies doing business
in Asian and Latin American emerging markets. Financial giant Citigroup provided
particularly attractive returns in the wake of the apparently successful merger
of Citicorp and Travelers Group. Companies such as BankAmerica, Merrill Lynch
and Marsh & McLennan also provided attractive returns.
The fund also benefited from good performance from individual companies in a
variety of sectors. Automobile manufacturer Ford Motor has reported record sales
in a favorable economic environment. More important, we believe that Ford Motor
is well positioned to establish itself as a leading competitor in the global
automobile market. In our opinion, technology company Cisco Systems, a dominant
supplier of Internet infrastructure, is another example of a company with a
history of earnings growth that is likely to continue.
Our investment strategy can be summarized as follows: we believe that, over the
long term, superior companies produce superior returns. We intend to maintain
that strategy regardless of short-term market influences.
July 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- REFLECTS THE REINVESTMENT OF
INCOME DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE STANDARD
& POOR'S 500 COMPOSITE STOCK INDEX IS A WIDELY ACCEPTED UNMANAGED INDEX OF U.S.
STOCK MARKET PERFORMANCE.
The Fund 5
<PAGE>
STATEMENT OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS--98.4% Shares Value ($)
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<S> <C> <C>
APPAREL--.8%
Christian Dior 150,000 24,517,650
Polo Ralph Lauren 650,000 (a) 12,350,000
Warnaco Group, Cl. A 180,000 4,815,000
41,682,650
AUTOMOTIVE--4.0%
Dailmer-Chrysler 808,200 71,828,775
Delphi Automotive Systems 349,465 6,486,944
Ford Motor 2,124,905 119,924,326
198,240,045
BANKING--6.1%
BankAmerica 1,251,466 91,748,101
Chase Manhattan 1,425,000 123,440,625
SunTrust Banks 1,350,000 93,740,625
308,929,351
BASIC MATERIALS--.3%
Dow Chemical 50,000 6,343,750
Rohm & Haas 150,000 6,431,250
12,775,000
CAPITAL GOODS--8.9%
AlliedSignal 1,525,000 96,075,000
Boeing 553,900 24,475,457
Emerson Electric 1,000,000 62,875,000
General Electric 1,525,000 172,325,000
Rockwell International 1,500,000 91,125,000
446,875,457
COMMUNICATIONS SERVICE & MANUFACTURING--6.3%
Bell Atlantic 1,025,000 67,009,375
BellSouth 2,375,000 111,328,125
SBC Communications 2,375,192 137,761,136
316,098,636
COMPUTERS--8.8%
Cisco Systems 2,051,500 (a) 132,321,750
Compaq Computer 1,250,000 29,609,375
Hewlett-Packard 1,000,000 100,500,000
Microsoft 2,000,000 (a) 180,375,000
442,806,125
6
<PAGE>
COMMON STOCKS (CONTINUED) Shares Value ($)
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ELECTRONICS--5.2%
Conexant Systems 475,000 (a) 27,579,687
Intel 3,950,000 235,025,000
262,604,687
ENERGY--6.0%
BP Amoco, A.D.S. 820,000 88,970,000
Chevron 450,000 42,834,375
Exxon 950,000 73,268,750
Mobil 660,000 65,340,000
Royal Dutch Petroleum, A.D.R. 540,000 32,535,000
302,948,125
FINANCE-MISC.--8.9%
American Express 300,000 39,037,500
Associates First Capital, Cl. A 1,901,788 84,272,981
Citigroup 2,666,250 126,646,875
Federal National Mortgage Association 1,925,000 131,621,875
Hertz, Cl. A 350,000 21,700,000
Merrill Lynch 575,000 45,964,062
449,243,293
FOOD & DRUGS--1.9%
Walgreen 3,300,000 96,937,500
FOOD, BEVERAGE & TOBACCO--7.9%
Anheuser-Busch 140,000 9,931,250
Coca-Cola 2,400,000 150,000,000
Kellogg 125,000 4,125,000
Nestle, A.D.R. 350,000 31,850,000
PepsiCo 2,050,000 79,309,375
Philip Morris Cos. 3,000,000 120,562,500
395,778,125
HEALTH CARE--17.5%
Abbott Laboratories 1,750,000 79,625,000
American Home Products 1,800,000 103,500,000
Bristol-Myers Squibb 1,600,000 112,700,000
Johnson & Johnson 1,600,000 156,800,000
Merck & Co. 2,100,000 155,400,000
Pfizer 2,100,000 230,475,000
The Fund 7
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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HEALTH CARE (CONTINUED)
Roche Holdings, A.D.R. 325,000 33,434,375
Schering-Plough 160,000 8,480,000
880,414,375
HOUSEHOLD PRODUCTS-MISC.--5.2%
Colgate-Palmolive 675,000 66,656,250
Estee Lauder Cos. 520,000 26,065,000
Gillette 1,900,000 77,900,000
Procter & Gamble 1,000,000 89,250,000
259,871,250
INSURANCE--4.3%
American General 316,000 23,818,500
Berkshire Hathaway, Cl. A 1,507 (a) 103,832,300
Berkshire Hathaway, Cl. B 15 (a) 33,600
Marsh & McLennan 1,175,000 88,712,500
216,396,900
MEDIA/ENTERTAINMENT--2.6%
Disney (Walt) 450,000 13,865,625
Fox Entertainment Group, Cl. A 1,457,700 (a) 39,266,794
McDonald's 1,550,000 64,034,375
Tricon Global Restaurants 250,000 (a) 13,531,250
130,698,044
PUBLISHING--1.2%
McGraw-Hill 1,075,000 57,982,813
News Corp, A.D.R. 120,000 4,237,500
62,220,313
RETAIL--1.4%
Wal-Mart Stores 1,450,000 69,962,500
TRANSPORTATION--1.1%
Norfolk Southern 1,900,000 57,237,500
TOTAL COMMON STOCKS
(cost $3,345,037,186) 4,951,719,876
8
<PAGE>
PREFERRED STOCKS--.5% Shares Value ($)
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PUBLISHING;
News Corp., A.D.R.
(cost $15,964,941) 800,000 25,250,000
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Principal
SHORT-TERM INVESTMENTS--.9% Amount ($) Value ($)
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U.S. TREASURY BILLS:
4.45%, 9/23/1999 45,356,000 44,874,455
4.65%, 9/30/1999 1,872,000 1,849,985
TOTAL SHORT-TERM INVESTMENTS
(cost $46,735,050) 46,724,440
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TOTAL INVESTMENTS (cost $3,407,737,177) 99.8% 5,023,694,316
CASH AND RECEIVABLES (NET) .2% 11,534,452
NET ASSETS 100.0% 5,035,228,768
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund 9
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STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
Cost Value
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ASSETS ($):
Investments in securities--See Statement of
Investments 3,407,737,177 5,023,694,31
Cash 18,473,809
Receivable for investment securities sold 46,640,272
Receivable for shares of Common Stock subscribed 4,443,387
Dividends receivable 3,617,964
Prepaid expenses 259,752
5,097,129,500
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LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 1,374,071
Due to Fayez Sarofim & Co. 1,088,498
Due to Distributor 995,906
Payable for shares of Common Stock redeemed 57,895,539
Interest payable--Note 2 21,653
Accrued expenses 525,065
61,900,732
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NET ASSETS ($) 5,035,228,768
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 3,369,365,873
Accumulated undistributed investment income--net 13,946,852
Accumulated net realized gain (loss) on investments 35,972,249
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 1,615,943,794
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NET ASSETS ($) 5,035,228,768
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SHARES OUTSTANDING
(300 million shares of $.01 par value Common Stock authorized) 111,999,162
NET ASSET VALUE, offering and redemption price per share ($) 44.96
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999 (Unaudited)
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INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $859,100 foreign taxes withheld at source) 33,452,680
Interest 1,087,390
TOTAL INCOME 34,540,070
EXPENSES:
Investment advisory fee--Note 3(a) 6,536,239
Sub-investment advisory fee--Note 3(a) 6,365,157
Shareholder servicing costs--Note 3(b) 6,977,511
Registration fees 252,810
Prospectus and shareholders' reports 246,643
Custodian fees--Note 3(b) 104,060
Professional fees 23,454
Interest expense--Note 2 21,653
Directors' fees and expenses--Note 3(c) 17,928
Loan commitment fees--Note 2 9,040
Miscellaneous 38,723
TOTAL EXPENSES 20,593,218
INVESTMENT INCOME--NET 13,946,852
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments 36,034,898
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions 258,417,606
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 294,452,504
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 308,399,356
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund 11
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1999 Year Ended
(Unaudited) December 31, 1998
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OPERATIONS ($):
Investment income--net 13,946,852 22,086,845
Net realized gain (loss) on investments 36,034,898 6,832,495
Net unrealized appreciation (depreciation)
on investments 258,417,606 779,726,182
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 308,399,356 808,645,522
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DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net -- (22,227,913)
Net realized gain on investments (332,038) (6,915,626)
TOTAL DIVIDENDS (332,038) (29,143,539)
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CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold 1,886,074,198 3,227,561,253
Dividends reinvested 251,019 23,885,824
Cost of shares redeemed (1,321,179,656) (1,846,571,204)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS 565,145,561 1,404,875,873
TOTAL INCREASE (DECREASE) IN NET ASSETS 873,212,879 2,184,377,856
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NET ASSETS ($):
Beginning of Period 4,162,015,889 1,977,638,033
END OF PERIOD 5,035,228,768 4,162,015,889
Undistributed investment income--net 13,946,852 --
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CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 43,470,026 86,769,924
Shares issued for dividends reinvested 5,769 569,180
Shares redeemed (30,400,760) (49,485,662)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 13,075,035 37,853,442
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1999 Year Ended December 31,
----------------------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
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<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value,
beginning of period 42.07 32.38 25.58 20.55 15.17 14.92
Investment Operations:
Investment income--net .13(a) .23 .25 .25 .33 .28
Net realized and unrealized
gain (loss) on investments 2.76 9.76 6.87 5.03 5.42 .26
Total from Investment Operations 2.89 9.99 7.12 5.28 5.75 .54
Distributions:
Dividends from investment
income--net -- (.23) (.26) (.25) (.34) (.28)
Dividends in excess of
investment income--net -- -- (.00)(b) -- -- --
Dividends from net realized gain
on investments (.00)(b) (.07) (.06) -- (.03) (.01)
Total Distributions -- (.30) (.32) (.25) (.37) (.29)
Net asset value, end of period 44.96 42.07 32.38 25.58 20.55 15.17
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TOTAL RETURN (%) 6.88(c) 30.85 27.85 25.68 37.89 3.62
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average
net assets .44(c) .89 .87 .91 .92 .96
Ratio of net investment income
to average net assets .29(c) .75 .99 1.34 2.28 1.86
Portfolio Turnover Rate 3.51(c) 1.40 1.23 4.84 4.51 6.58
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Net Assets, end of period
($ x 1,000) 5,035,229 4,162,016 1,977,638 845,497 457,267 233,459
(A) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(B) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
(C) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund 13
<PAGE>
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, as amended (the "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 charge.
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. Securities for
which there are no such valuations are valued at fair value as determined in
good faith under the direction of the Board of Directors. 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.
14
<PAGE>
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 and 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. Under the terms of the custody agreement, the fund receives net
earnings credits based on available cash balances left on deposit.
(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 of 1986, as amended (the "Code"). To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the fund not to distribute such gain.
(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 Code,
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes.
The Fund 15
<PAGE>
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 (the "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.
The average daily amount of borrowings outstanding during the period ended June
30, 1999 was approximately $826,500, with a related weighted average annualized
interest rate of 5.21%.
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:
<TABLE>
<CAPTION>
Average Net Assets Dreyfus Sarofim
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
0 up to $25 million . . . . . . . . . . . . . . . . . . . . . . . . . .44 of 1% .11 of 1%
$25 million up to $75 million . . . . . . . . . . . . . . . . . . . . .37 of 1% .18 of 1%
$75 million up to $200 million . . . . . . . . . . . . . . . . . . . . .33 of 1% .22 of 1%
$200 million up to $300 million . . . . . . . . . . . . . . . . . . . .29 of 1% .26 of 1%
In excess of $300 million . . . . . . . . . . . . . . . . . . . . . . .275 of 1% .275 of 1%
</TABLE>
(b) Under the Shareholder Services Plan, the fund pays the Distributor for the
provision of certain services at the annual rate of .25 of 1% of the value of
the fund's average daily net assets. The services provided may include personal
services relating to shareholder accounts, such as answering shareholder
inquiries regarding the fund and providing reports and other information, and
services related to the maintenance of shareholder accounts. The Distributor may
make payments to Service Agents (a securities dealer, financial institution or
other industry professional) in respect of these services. The
16
<PAGE>
Distributor determines the amounts to be paid to Service Agents. During the
period ended June 30, 1999, the fund was charged $5,864,271 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. During the period
ended June 30, 1999, the fund was charged $615,084 pursuant to the transfer
agency agreement.
The fund compensates Mellon under a custody agreement for providing custodial
services for the fund. During the period ended June 30, 1999, the fund was
charged $104,060 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.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended June 30, 1999, amounted to
$721,778,757 and $163,336,386, respectively.
At June 30, 1999, accumulated net unrealized appreciation on investments was
$1,615,957,139, consisting of $1,625,415,477 gross unrealized appreciation and
$9,458,338 gross unrealized depreciation.
At June 30, 1999, 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).
The Fund 17
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For More Information
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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE
Call 1-800-645-6561
BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 1999 Dreyfus Service Corporation 141SA996
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