- -----------------------------------
S E M I - A N N U A L R E P O R T
- -----------------------------------
[PHOTO APPEARS HERE]
Smith Barney
Appreciation
Fund Inc.
- -----------------------------------
June 30, 1995
[LOGO OF SMITH BARNEY MUTUAL FUNDS APPEARS HERE]
- ----------------------
Appreciation Fund Inc.
- ----------------------
DEAR SHAREHOLDER:
In our annual report to shareholders, we suggested that 1995 would be a much
better year for the stock market than 1994. We said that the stage was set for
upside surprises, because the best investment environment is one where
skepticism is rampant, and Federal Reserve monetary policy is loosening. The
first six months of 1995 benefitted from both of these factors. The stock market
staged a magnificent rally as interest rates fell sharply, and investors began
to shed the pessimism that had driven prices down for most of 1994. For the six
months ended June 30, 1995, the Smith Barney Appreciation Fund had a total
return of 17.24% for Class A shares compared with a return of 20.19% for the
unmanaged Standard & Poor's 500 Stock Index, a common benchmark for U.S. stock
market performance.
Our investment philosophy has always been to own a core of great growth
companies such as Procter & Gamble, Johnson & Johnson, Minnesota Mining &
Manufacturing, International Flavors & Fragrances, Gillette, and more recently,
Microsoft. This type of consumer-oriented company will account for a meaningful
amount of the portfolio's performance. As long as they do not seem too
expensive, we will tend to hold a large weighting in various growth-stock
positions and let the proven managements of these companies do the work for us
as shareholders.
Around this core of growth stocks, we try to identify timely themes. For
example, in the past few years, we have liked the "information highway" theme
and have invested in several telecommunications-related stocks including AT&T,
one of the Fund's largest holdings, to participate in that theme. We have also
believed in the enhanced profitability of industrial America, and in a departure
from our traditional growth style of investing of the 1980's, we own positions
in such cyclical companies as Ingersoll Rand, Union Pacific, Mead Corp.,
Hercules, DuPont, and Caterpillar. DuPont also fits into our most successful
theme of the past couple of years -- the restructuring of formerly great
companies that had fallen on harder times. Companies such as DuPont, Eastman
Kodak, Xerox, United Technologies, IBM, Allied Signal, and American Home
Products have all experienced significant catalysts for change, either in new
management, cost-cutting, or mergers. In each case, the stocks have begun to
reflect a better outlook.
Although the Fund has modest positions in Microsoft and Intel, and a more
substantial position in AMP, it has always been our policy not to "bet the
ranch" on any one industry, in this case, technology. Because technology was the
best-performing sector in the past three months, the Fund's second quarter was
not quite as exciting as the first. In the first quarter, our core multi-
national growth stocks turned in an outstanding performance.
1
There were few major sales in the Fund in the first half of the year. KeyCorp, a
regional bank stock, was eliminated, as was Southern Pacific Rail, because we
believe both have a less promising earnings outlook. We sold our holdings in
Aetna, one of our restructuring candidates, and realized a profit on that stock.
But for the most part, our sales consisted of an occasional trimming of a
position when a stock seemed to be getting richly valued, or when it adequately
reflected current or potential good news. Purchases included Mead Corp., a group
of paging stocks, a few bank stocks, and some small positions in younger growth
companies, such as ACX Technologies and Scotts Co. We are also continuing our
recent policy of increasing the percentage of the portfolio represented by its
top-20 holdings so that these stocks will have a greater impact on the Fund's
performance.
We believe that the stock market reacts to three factors: earnings, interest
rates, and psychology. As we had anticipated, due to corporate cost-cutting,
first-quarter earnings were better than had generally been expected. Estimates
have been raised, and while earnings should remain fairly good, even with the
slowdown in the economy, they are not likely to generate any fireworks. We
believe interest rates will be stable from this point on with short-term rates
possibly declining a bit further. That leaves psychology. It is our belief that
markets do better "climbing a wall of worry," such as we saw in the first
several months of the year. Skepticism has given way to complacency, which may
lead to euphoria. We are monitoring the psychological side of the market for
such signs, but of course, there are no formulas for it; nor are there any rules
about how long this cycle can last.
In summary, conditions remain generally friendly to financial assets, and we
believe our consistent approach is a good way to participate.
We thank you for your investment in the Fund and your continued confidence in
our investment management.
Sincerely,
/s/ Heath B. McLendon /s/ Harry D. Cohen
Heath B. McLendon Harry D. Cohen
Chairman and Vice President and
Chief Executive Officer Investment Officer
July 17, 1995
2
Smith Barney Appreciation Fund Inc.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Historical Performance -- Class A Shares
- --------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns/(1)/
================================================================================
<S> <C> <C> <C> <C> <C>
6/30/95 $10.15 $11.90 $0.00 $0.00 17.24%
- --------------------------------------------------------------------------------
12/31/94 11.01 10.15 0.18 0.60 (0.77)
- --------------------------------------------------------------------------------
12/31/93 10.66 11.01 0.16 0.36 8.13
- --------------------------------------------------------------------------------
12/31/92 10.26 10.66 0.15 0.09 6.29
- --------------------------------------------------------------------------------
12/31/91 8.30 10.26 0.20 0.07 26.94
- --------------------------------------------------------------------------------
12/31/90 8.66 8.30 0.25 0.08 (0.27)
- --------------------------------------------------------------------------------
12/31/89 7.04 8.66 0.24 0.22 29.55
- --------------------------------------------------------------------------------
12/31/88 6.49 7.04 0.19 0.13 13.45
- --------------------------------------------------------------------------------
12/31/87 6.54 6.49 0.26 0.25 6.95
- --------------------------------------------------------------------------------
12/31/86 5.82 6.54 0.00 0.41 19.93
- --------------------------------------------------------------------------------
12/31/85 4.45 5.82 0.04 0.09 34.38
- --------------------------------------------------------------------------------
12/31/84 4.52 4.45 0.06 0.09 1.78
================================================================================
Total $1.73 $2.39
================================================================================
<CAPTION>
- --------------------------------------------------------------------------------
Historical Performance -- Class B Shares
- --------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns/(1)/
================================================================================
<S> <C> <C> <C> <C> <C>
6/30/95 $10.14 $11.83 $0.00 $0.00 16.67%
- --------------------------------------------------------------------------------
12/31/94 11.00 10.14 0.10 0.60 (1.53)
- --------------------------------------------------------------------------------
12/31/93 10.65 11.00 0.08 0.36 7.38
- --------------------------------------------------------------------------------
Inception*-12/31/92 10.55 10.65 0.16 0.09 3.28
================================================================================
Total $0.34 $1.05
================================================================================
<CAPTION>
- --------------------------------------------------------------------------------
Historical Performance -- Class C Shares
- --------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns/(1)/
================================================================================
<S> <C> <C> <C> <C> <C>
6/30/95 $10.14 $11.84 $0.00 $0.00 16.77%
- --------------------------------------------------------------------------------
12/31/94 11.00 10.14 0.11 0.60 (1.41)
- --------------------------------------------------------------------------------
Inception*-12/31/93 10.99 11.00 0.08 0.36 4.09
================================================================================
Total $0.19 $0.96
================================================================================
</TABLE>
3
Smith Barney Appreciation Fund Inc.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Historical Performance -- Class Z Shares
- --------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns/(1)/
================================================================================
<S> <C> <C> <C> <C> <C>
6/30/95 $10.16 $11.92 $0.00 $0.00 17.32%
- --------------------------------------------------------------------------------
12/31/94 11.02 10.16 0.22 0.60 (0.36)
- --------------------------------------------------------------------------------
12/31/93 10.66 11.02 0.18 0.36 8.47
- --------------------------------------------------------------------------------
Inception*-12/31/92 10.55 10.66 0.16 0.09 3.38
================================================================================
Total $0.56 $1.05
================================================================================
</TABLE>
IT IS THE FUND'S POLICY TO DISTRIBUTE DIVIDENDS AND CAPITAL GAINS, IF ANY,
ANNUALLY.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Return
- --------------------------------------------------------------------------------
Without Sales Charge/(1)/
-------------------------------------------
Class A Class B Class C Class Z
================================================================================
<S> <C> <C> <C> <C>
Six Months Ended 6/30/95+ 17.24% 16.67% 16.77% 17.32%
- --------------------------------------------------------------------------------
Year Ended 6/30/95 18.71 17.66 17.90 19.11
- --------------------------------------------------------------------------------
Five Years Ended 6/30/95 10.13 N/A N/A N/A
- --------------------------------------------------------------------------------
Ten Years Ended 6/30/95 13.70 N/A N/A N/A
- --------------------------------------------------------------------------------
Inception* through 6/30/95 N/A 9.58 7.83 10.75
- --------------------------------------------------------------------------------
<CAPTION>
With Sales Charge/(2)/
-------------------------------------------
Class A Class B Class C Class Z
================================================================================
<S> <C> <C> <C> <C>
Six Months Ended 6/30/95+ 11.42% 11.66% 15.77% N/A
- --------------------------------------------------------------------------------
Year Ended 6/30/95 12.75 12.66 16.90 N/A
- --------------------------------------------------------------------------------
Five Years Ended 6/30/95 8.99 N/A N/A N/A
- --------------------------------------------------------------------------------
Ten Years Ended 6/30/95 13.12 N/A N/A N/A
- --------------------------------------------------------------------------------
Inception* through 6/30/95 N/A 8.60 7.83 N/A
- --------------------------------------------------------------------------------
</TABLE>
4
Smith Barney Appreciation Fund Inc.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Cumulative Total Return
- --------------------------------------------------------------------------------
Without Sales Charge/(1)/
-------------------------
<S> <C>
Class A (6/30/85 through 6/30/95) 261.05%
- --------------------------------------------------------------------------------
Class B (Inception* through 6/30/95) 27.41
- --------------------------------------------------------------------------------
Class C (Inception* through 6/30/95) 19.82
- --------------------------------------------------------------------------------
Class Z (Inception* through 6/30/95) 31.02
- --------------------------------------------------------------------------------
</TABLE>
(1) Assumes reinvestment of all dividends and capital gain distributions at net
asset value and does not reflect deduction of the applicable sales charge
with respect to Class A shares or the applicable contingent deferred sales
charges ("CDSC") with respect to Class B and Class C shares.
(2) Assumes reinvestment of all dividends and capital gain distributions at net
asset value. In addition, Class A shares reflect the deduction of the
maximum initial sales charge of 5.00%; Class B shares reflect the deduction
of a 5.00% CDSC, which applies if shares are redeemed less than one year
from initial purchase and declines by 1.00% per year until no CDSC is
incurred. Class C shares reflect the deduction of a 1.00% CDSC which
applies if shares are redeemed within the first year of purchase.
* The inception dates for Class B, C and Z shares are November 6, 1992,
February 4, 1993 and November 6, 1992, respectively.
+ Represents total return for the period from January 1, 1995 through
June 30, 1995, not annualized.
5
Smith Barney Appreciation Fund Inc.
- --------------------------------------------------------------------------------
Historical Performance
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of
the Smith Barney Appreciation Fund Inc.
vs. The Standard & Poor's 500 Index +
(unaudited)
- --------------------------------------------------------------------------------
June 1985 - June 1995
[GRAPHS APPEARS HERE]
<TABLE>
<CAPTION>
SMITH BARNEY
APPRECIATION
FUND INC. S&P 500
<S> <C> <C>
6/85 $9,500.90 $10,000.00
6/86 $13,299.50 $12,533.23
6/87 $15,977.50 $14,421.30
6/88 $15,163.70 $13,428.58
6/89 $18,002.20 $16,183.91
6/90 $21,176.50 $18,853.98
6/91 $22,571.50 $20,245.14
6/92 $25,128.80 $22,964.26
6/93 $27,958.10 $26,098.87
6/94 $28,896.00 $26,463.97
6/95 $34,302.60 $33,359.13
</TABLE>
+ Hypothetical Illustration of $10,000 invested in Class A shares on June 30,
1985, assuming deduction of the maximum 5.00% sales charge at the time of
investment and reinvestment of dividends and capital gains, if any, at net
asset value through June 30, 1995. The Standard & Poor's 500 Stock Index
("S&P 500") is an index composed of widely held common stocks listed on the
New York Stock Exchange, American Stock Exchange and over-the-counter
market. Figures for the S&P 500 Index include reinvestment of dividends. The
index is unmanaged and it is not subject to the same management and trading
expenses as a mutual fund. The performance of the Fund's other classes may
be greater or less than the Class A shares' performance indicated on this
chart, depending on whether greater or lesser sales charges and fees were
incurred by shareholders investing in other classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption value may be more or less than the original cost. No adjustment
has been made for shareholder tax liability on dividends or capital gains.
6
Smith Barney Appreciation Fund Inc.
- --------------------------------------------------------------------------------
Portfolio Highlights (unaudited) June 30, 1995
- --------------------------------------------------------------------------------
Industry Breakdown
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
Percentage of
Industry Breakdown Breakdown
- --------------------------------------------------------------------------------
<S> <C>
Other Common Stocks 16.6%
Repurchase Agreements 11.6%
Oil - International & Domestic 9.4%
Healthcare/Drugs/Hospital 8.3%
Diversified Conglomerate 7.9%
Telephone Communication 5.2%
Chemical 5.0%
Financial Services 4.3%
Consumer Products 4.1%
Publishing 4.0%
Banking 4.0%
Retail 3.9%
Electrical Equipment 3.6%
Office Equipment & Supplies 3.4%
Entertainment & Leisure 3.3%
Technology 2.8%
Insurance 2.6%
</TABLE>
Top Ten Holdings
<TABLE>
<CAPTION>
Percentage of
Company Total Investments
- --------------------------------------------------------------------------------
<S> <C>
Eastman Kodak Company 4.2%
Minnesota Mining and Manufacturing Company 3.5
American Telephone & Telegraph Company 3.2
Xerox Corporation 2.7
American Home Products Corporation 2.3
Mobil Corporation 2.2
E.I. du Pont de Nemours & Company 2.1
R.R. Donnelley & Sons Company 1.9
Amoco Corporation 1.9
Amp Incorporated 1.8
</TABLE>
7
Smith Barney Appreciation Fund Inc.
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) June 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
================================================================================
<C> <S> <C>
COMMON STOCKS -- 88.4%
Aerospace -- 2.1%
400,000 Allied Signal Incorporated $ 20,025,000
225,000 Boeing Company 14,090,625
100,000 Lockheed Martin Corporation 6,312,500
239,800 United Technologies Corporation 18,734,375
- --------------------------------------------------------------------------------
59,162,500
- --------------------------------------------------------------------------------
Appliances -- 0.3%
150,000 Whirlpool Corporation 8,250,000
- --------------------------------------------------------------------------------
Auto-Parts & Accessories -- 0.9%
600,000 Goodyear Tire & Rubber Company 24,750,000
- --------------------------------------------------------------------------------
Automobile -- 2.4%
250,000 Chrysler Corporation 11,968,750
1,100,000 Ford Motor Company 32,725,000
500,000 General Motors Corporation 23,437,500
- --------------------------------------------------------------------------------
68,131,250
- --------------------------------------------------------------------------------
Banking -- 4.0%
475,000 Bank of New York Incorporated 19,178,125
100,000 Barnett Banks Incorporated 5,125,000
300,000 Chase Manhattan Bank 14,100,000
400,000 Chemical Banking Corporation 18,900,000
350,000 First Virginia Banks Incorporated 13,125,000
350,000 Republic New York Corporation 19,600,000
140,000 Wells Fargo & Company 25,235,000
- --------------------------------------------------------------------------------
115,263,125
- --------------------------------------------------------------------------------
Beverage, Food and Tobacco -- 2.4%
250,000 Coca-Cola Company 15,937,500
400,000 CPC International 24,700,000
725,000 McDonalds Corporation 28,365,625
- --------------------------------------------------------------------------------
69,003,125
- --------------------------------------------------------------------------------
Broadcasting -- 2.1%
180,000 Capital Cities / ABC Incorporated 19,440,000
450,000 CBS Incorporated 30,150,000
336,500 Scandinavian Broadcasting 6,814,125
125,000 Turner Broadcasting System Incorporated 2,500,000
- --------------------------------------------------------------------------------
58,904,125
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
8
Smith Barney Appreciation Fund Inc.
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) June 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
================================================================================
<C> <S> <C>
Chemicals -- 5.0%
850,000 E.I. du Pont de Nemours & Company $ 58,437,500
350,000 Hercules Incorporated 17,062,500
500,000 Mead Corporation 29,687,500
300,000 Monsanto Company 27,037,500
300,000 Scherwin-Williams Company 10,687,500
- --------------------------------------------------------------------------------
142,912,500
- --------------------------------------------------------------------------------
Computer Software & Services -- 0.7%
230,000 Microsoft Corporation 20,786,250
- --------------------------------------------------------------------------------
Consumer Products -- 4.1%
500,000 Gillette Company 22,312,500
580,000 International Flavors & Fragrances Incorporated 28,855,000
800,000 Newell Company 19,600,000
550,000 Procter & Gamble Company 39,531,250
260,000 Scotts Company Class A Shares* 5,687,500
- --------------------------------------------------------------------------------
115,986,250
- --------------------------------------------------------------------------------
Containers/Packaging/Glass -- 1.1%
650,000 Crown Cork & Seal Incorporated* 32,581,250
- --------------------------------------------------------------------------------
Diversified/Conglomerate -- 7.9%
1,950,000 Eastman Kodak Company 118,218,750
200,000 Honeywell Incorporated 8,625,000
1,725,000 Minnesota Mining & Manufacturing Company 98,756,250
- --------------------------------------------------------------------------------
225,600,000
- --------------------------------------------------------------------------------
Electrical Equipment -- 3.6%
1,225,000 Amp Incorporated 51,756,250
300,000 Emerson Electric Company 21,450,000
500,000 General Electric Company 28,187,500
- --------------------------------------------------------------------------------
101,393,750
- --------------------------------------------------------------------------------
Entertainment & Leisure -- 3.3%
100,000 Dick Clark Productions Incorporated* 875,000
500,000 Walt Disney Company 27,812,500
78,750 Gaylord Entertainment Corporation Class A Shares* 1,988,438
200,000 GC Companies Incorporated* 6,550,000
700,000 Savoy Pictures Entertainment Incorporated* 6,387,500
1,200,000 Time-Warner Incorporated 49,350,000
- --------------------------------------------------------------------------------
92,963,438
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
9
Smith Barney Appreciation Fund Inc.
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) June 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
================================================================================
<C> <S> <C>
Financial Services -- 4.3%
800,000 American Express Company $ 28,100,000
200,000 H & R Block Incorporated 8,225,000
400,000 Federal National Mortgage Association 37,750,000
500,000 Fiserv Incorporated* 14,062,500
50,000 Fund American Enterprises Holdings* 3,568,750
550,000 Household International 27,225,000
200,000 Mercury Finance Company 3,850,000
- --------------------------------------------------------------------------------
122,781,250
- --------------------------------------------------------------------------------
Healthcare/Drugs/Hospital Supplies -- 8.3%
350,000 Abbott Laboratories 14,175,000
850,000 American Home Products Corporation 65,768,750
600,000 Bristol-Myers-Squibb Company 40,875,000
300,000 Forest Laboratories Incorporated Class A Shares* 13,312,500
100,000 Hospitality Franchise Systems Inc.* 3,462,500
600,000 Johnson & Johnson 40,575,000
600,000 Merck and Company Incorporated 29,400,000
325,000 Warner Lambert Company 28,071,875
- --------------------------------------------------------------------------------
235,640,625
- --------------------------------------------------------------------------------
Insurance -- 2.6%
400,000 American International Group Incorporated 45,600,000
100,000 CNA Financial Corporation* 8,637,500
251,000 Leucadia National Corporation 12,675,500
250,000 Provident Life and Accident Company of America 5,812,500
- --------------------------------------------------------------------------------
72,725,500
- --------------------------------------------------------------------------------
Machinery -- 1.0%
150,000 Caterpillar Incorporated 9,637,500
475,000 Ingersoll-Rand Company 18,168,750
- --------------------------------------------------------------------------------
27,806,250
- --------------------------------------------------------------------------------
Metals -- 0.8%
100,000 Aluminum Company of America 5,012,500
450,000 Cyprus Amax Minerals Company 12,825,000
300,000 Santa Fe Pacific Gold Corporation 3,637,500
- --------------------------------------------------------------------------------
21,475,000
- --------------------------------------------------------------------------------
Miscellaneous -- 0.1%
100,000 Service Corporation 3,162,500
- --------------------------------------------------------------------------------
Office Equipment & Supplies -- 3.4%
175,000 Alco Standard Corporation 13,978,125
</TABLE>
See Notes to Financial Statements.
10
Smith Barney Appreciation Fund Inc.
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) June 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
================================================================================
<C> <S> <C>
Office Equipment & Supplies -- 3.4% (continued)
250,000 ECI Telecommunications Limited $ 3,421,875
25,000 Global Direct Mail* 493,750
660,000 Xerox Corporation 77,385,000
- --------------------------------------------------------------------------------
95,278,750
- --------------------------------------------------------------------------------
Oil-Domestic & Crude -- 3.3%
400,000 Amerada Hess Corporation 19,550,000
225,000 Atlantic Richfield Company 24,693,750
300,000 Baker Hughes Incorporated 6,150,000
400,000 Burlington Resources Incorporated 14,750,000
500,000 Enron Corporation 17,562,500
200,000 Global Marine Incorporated* 1,150,000
300,000 Questar Corporation 8,625,000
100,000 Rowan Companies Incorporated* 812,500
- --------------------------------------------------------------------------------
93,293,750
- --------------------------------------------------------------------------------
Oil International -- 6.1%
800,000 Amoco Corporation 53,300,000
100,000 British Petroleum PLC ADR 8,562,500
300,000 Chevron Corporation 13,987,500
100,000 Ensco International Incorporated* 1,587,500
650,000 Mobil Corporation 62,400,000
275,000 Royal Dutch Petroleum Company ADR 33,515,625
- --------------------------------------------------------------------------------
173,353,125
- --------------------------------------------------------------------------------
Paper and Paper Products -- 1.0%
200,000 Bowater Incorporated 8,975,000
47,600 Riverwood International Corporation 1,106,700
290,000 St. Joe Paper Company 18,415,000
- --------------------------------------------------------------------------------
28,496,700
- --------------------------------------------------------------------------------
Publishing -- 4.0%
325,000 Gannett Company 17,631,250
250,000 Harcourt General Incorporated 10,625,000
1,500,000 R.R. Donnelley & Sons Company 54,000,000
500,000 Tribune Company 30,687,500
- --------------------------------------------------------------------------------
112,943,750
- --------------------------------------------------------------------------------
Railroads -- 1.5%
150,000 Burlington Northern Incorporated 9,506,250
625,000 Union Pacific Corporation 34,609,375
- --------------------------------------------------------------------------------
44,115,625
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
11
Smith Barney Appreciation Fund Inc.
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) June 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
================================================================================
<C> <S> <C>
Real Estate -- 0.2%
100,000 General Growth Properties $ 2,037,500
150,000 Spieker Properties Incorporated 3,356,250
- --------------------------------------------------------------------------------
5,393,750
- --------------------------------------------------------------------------------
Retail -- 3.9%
500,000 American Stores Company 14,062,500
525,000 Home Depot Incorporated 21,328,125
150,000 Limited Incorporated 3,300,000
450,000 J.C. Penney Incorporated 21,600,000
350,000 Rite Aid Corporation 8,968,750
1,500,000 Wal-Mart Stores Incorporated 40,125,000
- --------------------------------------------------------------------------------
109,384,375
- --------------------------------------------------------------------------------
Technology -- 2.8%
150,000 ACX Technologies* 6,262,500
360,000 Intel Corporation 22,792,500
275,000 International Business Machines Corporation 26,400,000
300,000 Motorola Incorporated 20,137,500
134,400 Reynolds & Reynolds Company Class A Shares 3,964,800
- --------------------------------------------------------------------------------
79,557,300
- --------------------------------------------------------------------------------
Telephone/Communications -- 5.2%
1,700,000 American Telephone & Telegraph Company 90,312,500
47,500 A Plus Communications Incorporated* 629,375
100,000 Arch Communications Group Incorporated* 2,225,000
800,000 Comcast Corporation Class A Shares 14,850,000
100,000 General Instrument Corporation* 3,837,500
100,000 Mobil Telecommunications 2,737,500
60,000 Mobilemedia Corporation* 1,230,000
100,000 Paging Network Incorporated* 3,425,000
60,000 Pronet Incorporated* 1,230,000
1,200,000 Tele-Communications Incorporated Class A Shares* 28,125,000
- --------------------------------------------------------------------------------
148,601,875
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost -- $1,838,663,372) 2,509,697,688
================================================================================
</TABLE>
See Notes to Financial Statements.
12
Smith Barney Appreciation Fund Inc.
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) June 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNTS SECURITY VALUE
================================================================================
<C> <S> <C>
REPURCHASE AGREEMENTS -- 11.6%
$200,000,000 Fuji Securities, Inc., 6.00% due 7/03/95;
Proceeds at maturity -- $200,099,951; (Fully
collateralized by U.S. Treasury Notes, 6.50% due
9/30/96; Market value -- $204,119,370) $ 200,000,000
100,000,000 Morgan Stanley, Inc., 6.00% due 7/03/95;
Proceeds at maturity -- $100,049,976; (Fully
collateralized by U.S. Treasury Notes, 7.50% due
1/31/97; Market value -- $102,008,855) 100,000,000
30,067,000 Chemical Securities Inc., 5.98% due 7/03/95;
Proceeds at maturity -- $30,081,975; (Fully
collateralized by U.S. Treasury Notes, 6.125% due
5/15/98; Market value -- $30,670,980) 30,067,000
- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost -- $330,067,000) 330,067,000
================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $2,168,730,372++) $2,839,764,688
================================================================================
</TABLE>
* Non-income producing security.
++ Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
13
Smith Barney Appreciation Fund Inc.
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) June 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost -- $2,168,730,372) $2,839,764,688
Cash 260
Receivable for securities sold 5,008,048
Receivable for Fund shares sold 1,475,680
Dividends and interest receivable 4,233,517
- --------------------------------------------------------------------------------
Total Assets 2,850,482,193
- --------------------------------------------------------------------------------
LIABILITIES:
Management fees payable 1,576,350
Distribution costs payable 1,100,610
Payable for securities purchased 14,372,613
Accrued expenses and other liabilities 241,229
- --------------------------------------------------------------------------------
Total Liabilities 17,290,802
- --------------------------------------------------------------------------------
Total Net Assets $2,833,191,391
================================================================================
NET ASSETS:
Par value of capital shares $ 238,548
Capital paid in excess of par value 1,990,914,013
Undistributed net investment income 21,995,605
Accumulated net realized gain on security transactions 149,008,909
Net unrealized appreciation of investment 671,034,316
- --------------------------------------------------------------------------------
Total Net Assets $2,833,191,391
================================================================================
Shares Outstanding:
Class A 153,228,790
------------------------------------------------------------------------------
Class B 74,194,153
------------------------------------------------------------------------------
Class C 684,378
------------------------------------------------------------------------------
Class Z 10,440,246
------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $11.90
------------------------------------------------------------------------------
Class B* $11.83
------------------------------------------------------------------------------
Class C** $11.84
------------------------------------------------------------------------------
Class Z (and redemption price) $11.92
------------------------------------------------------------------------------
Class A Maximum Public Offering Price Per Share
(net asset value plus 5.26% of net asset value per share) $12.53
================================================================================
</TABLE>
* Redemption price is NAV of Class B shares reduced by a 5.00% CDSC if shares
are redeemed less than one year from initial purchase, and declines by 1.00%
per year until no CDSC is incurred.
** Redemption price is NAV of Class C shares reduced by a 1.00% CDSC if shares
are redeemed within the first year of purchase.
See Notes to Financial Statements.
14
Smith Barney Appreciation Fund Inc.
- --------------------------------------------------------------------------------
Statement of Operations (unaudited)
- --------------------------------------------------------------------------------
For the Six Months Ended June 30, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 9,748,133
Dividends 27,866,234
- --------------------------------------------------------------------------------
Total Investment Income 37,614,367
- --------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 2) 6,382,987
Distribution fees (Note 2) 6,326,448
Administration 2,337,304
Shareholder and system servicing fees 1,810,000
Custodian 100,000
Shareholder communications 100,000
Registration fees 45,000
Audit and legal 30,000
Directors' fees 12,500
Other 104,283
- --------------------------------------------------------------------------------
Total Expenses 17,248,522
- --------------------------------------------------------------------------------
Net Investment Income 20,365,845
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (Note 3):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from sales 635,524,839
Cost of securities sold 539,605,976
- --------------------------------------------------------------------------------
Net Realized Gain 95,918,863
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of period 365,357,847
End of period 671,034,316
- --------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 305,676,469
- --------------------------------------------------------------------------------
Net Gain on Investments 401,595,332
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations $421,961,177
================================================================================
</TABLE>
See Notes to Financial Statements.
15
Smith Barney Appreciation Fund Inc.
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Six Months Ended June 30, 1995 (unaudited)
and the Year Ended December 31, 1994
<TABLE>
<CAPTION>
1995 1994
========================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 20,365,845 $ 36,423,127
Net realized gain from security transactions 95,918,863 173,322,683
Increase (decrease) in net unrealized
appreciation of investments 305,676,469 (239,245,191)
- ----------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
From Operations 421,961,177 (29,499,381)
- ----------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (11,153) (36,643,881)
Net realized gain from security transactions -- (140,417,671)
- ----------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (11,153) (177,061,552)
- ----------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (Note 5):
Net proceeds from sale of shares 126,634,991 669,137,931
Net asset value of shares issued
for reinvestment of dividends -- 171,376,919
Cost of shares reacquired (272,233,431) (1,102,418,686)
- ----------------------------------------------------------------------------------------
Decrease in Net Assets From
Fund Share Transactions (145,598,440) (261,903,836)
- ----------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets 276,351,584 (468,464,769)
NET ASSETS:
Beginning of period 2,556,839,807 3,025,304,576
- ----------------------------------------------------------------------------------------
End of period * $2,833,191,391 $2,556,839,807
========================================================================================
* Includes undistributed net investment income of: $21,995,605 $1,640,913
========================================================================================
</TABLE>
See Notes to Financial Statements.
16
Smith Barney Appreciation Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Smith Barney Appreciation Fund Inc. ("Fund"), a Maryland Corporation,
is registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company.
The significant accounting policies consistently followed by the Fund are:
(a) securities transactions are accounted for on trade date; (b) securities
traded on national securities markets are valued at the closing prices on such
markets; securities traded in the over-the-counter market and listed securities
for which no sales price was reported and U.S. Government and Government Agency
obligations are valued at bid price, or in the absence of a recent bid price, at
the bid equivalent obtained from one or more of the major market makers in the
securities; (c) short-term investments that have a maturity of 60 days or less
are valued at cost plus accreted discount, or minus amortized premium, as
applicable; (d) dividend income is recorded on the ex-dividend date and interest
income is recorded on the accrual basis; (e) gains or losses on the sale of
securities are calculated by using the specific identification method; (f)
direct expenses are charged to each class; management fees and general fund
expenses are allocated on the basis of relative net assets; (g) dividends and
distributions to shareholders are recorded on the ex-dividend date; (h) the
accounting records are maintained in U.S. dollars. All assets and liabilities
denominated in foreign currencies are translated into U.S. dollars based on the
rate of exchange of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities, and income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian bank
and (i) the Fund intends to comply with the requirements of the Internal Revenue
Code pertaining to regulated investment companies and to make the required
distributions to shareholders; therefore, no provision for Federal income taxes
has been made.
17
Smith Barney Appreciation Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
2. Management Agreement and Transactions with Affiliated Persons
Smith Barney Mutual Funds Management Inc. ("SBMFM"), a subsidiary of Smith
Barney Holdings Inc. ("SBH"), acts as investment advisor of the Fund. The Fund
pays SBMFM an investment advisory fee calculated at the annual rate of 0.55% on
the Fund's average daily net assets up to $250 million; 0.513% on the next $250
million; 0.476% on the next $500 million; 0.439% on the next $1 billion; 0.402%
on the next $1 billion; and 0.365% on average daily net assets in excess of $3
billion. All fees are calculated daily and paid monthly.
SBMFM also serves as administrator to the Fund. As compensation for such
services, SBMFM receives a fee computed daily and paid monthly at the following
annual rates: 0.20% on the Fund's average daily net assets up to $250 million;
0.187% on the next $250 million; 0.174% on the next $500 million; 0.161% on the
next $1 billion; 0.148% on the next $1 billion and 0.135% on the average daily
net assets in excess of $3 billion.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts as distributor of
Fund shares and primary broker for its portfolio agency transactions. For the
six months ended June 30, 1995, SB received brokerage commissions of $205,800
and was paid sales charges on Class A share purchases of approximately $753,000.
A contingent deferred sales charge ("CDSC") is imposed on Class B shares
which begins at 5.00% if redemption occurs less than one year from initial
purchase and declines by 1.00% per year until no CDSC is incurred. A CDSC of
1.00% is imposed on Class C shares if redemption occurs within the first year
from the date such investment was made. Any CDSC imposed on redemptions is paid
to SB. For the six months ended June 30, 1995, there were approximately $1.1
million in such charges.
Pursuant to a Distribution Plan the Fund pays a service fee with respect to
its Class A, B and C shares calculated at the annual rate of 0.25% of the
average daily net assets of each respective class.
The Fund also pays a distribution fee with respect to Class B and C shares
calculated at the annual rate of 0.75% of the average daily net assets for each
class. All officers and one director of the Fund are employees of SB.
18
Smith Barney Appreciation Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
3. Investments
During the six months ended June 30, 1995, the aggregate cost of purchases
and proceeds from sales of investments (including maturities, but excluding
short-term securities) was $475,867,225 and $635,524,839, respectively.
At June 30, 1995, the net unrealized appreciation of investments for
Federal income tax purposes consisted of the following:
<TABLE>
<S> <C>
===============================================================================
Gross unrealized appreciation $680,805,019
Gross unrealized depreciation (9,770,703)
- -------------------------------------------------------------------------------
Net unrealized appreciation $671,034,316
===============================================================================
</TABLE>
4. Repurchase Agreements
The Fund purchases (and its custodian takes possession of) U.S. Government
securities from banks and securities dealers subject to agreements to resell the
securities to the sellers at a future date (generally, the next business day) at
an agreed-upon higher repurchase price. The Fund requires continual maintenance
of the market value of the collateral in amounts at least equal to the
repurchase price.
5. Capital Shares
At June 30, 1995, the Fund had two billion shares of $0.001 par value
capital stock authorized. The Fund has the ability to issue multiple classes of
shares. Each share of a class represents an identical interest and has the same
rights, except that each class bears certain expenses, including those
specifically related to the distribution of its shares. Effective November 7,
1994, the Fund adopted a new class structure, renaming the existing Class C and
D shares as Class Z and C shares, respectively. At June 30, 1995, total paid-in
capital amounted to the following for each class:
<TABLE>
<CAPTION>
Class A Class B Class C Class Z
================================================================================
<S> <C> <C> <C> <C>
Total Paid-in Capital $1,194,010,648 $679,769,539 $7,500,047 $109,872,327
================================================================================
</TABLE>
19
Smith Barney Appreciation Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1995 December 31, 1994
---------------------- -----------------------
Shares Amount Shares Amount
======================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 3,347,886 $ 37,107,093 44,084,284 $ 488,137,245
Shares issued on
reinvestment -- -- 11,449,490 116,212,319
Shares redeemed (16,487,707) (180,643,732) (32,594,240) (358,392,877)
- --------------------------------------------------------------------------------------
Net Increase (Decrease) (13,139,821) $(143,536,639) 22,939,534 $ 245,956,687
======================================================================================
Class B
Shares sold 6,687,927 $ 74,169,998 13,930,876 $ 152,849,192
Shares issued on
reinvestment -- -- 4,660,147 47,253,894
Shares redeemed (7,545,883) (82,928,349) (60,436,380) (664,262,057)
- --------------------------------------------------------------------------------------
Net Decrease (857,956) $ (8,758,351) (41,845,357) $(464,158,971)
======================================================================================
Class C
Shares sold 496,682 $ 5,474,718 327,092 $ 3,573,460
Shares issued on
reinvestment -- -- 32,039 324,876
Shares redeemed (309,227) (3,402,390) (63,463) (694,090)
- --------------------------------------------------------------------------------------
Net Increase 187,455 $ 2,072,328 295,668 $ 3,204,246
======================================================================================
Class Z
Shares sold 912,721 $ 9,883,182 2,221,990 $ 24,578,034
Shares issued on
reinvestment -- -- 746,636 7,585,830
Shares redeemed (470,612) (5,258,960) (7,290,364) (79,069,662)
- --------------------------------------------------------------------------------------
Net Increase (Decrease) 442,109 $ 4,624,222 (4,321,738) $ (46,905,798)
======================================================================================
</TABLE>
20
Smith Barney Appreciation Fund Inc.
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Class A Shares (1) 1995(2) 1994 1993(3) 1992 1991
===================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.15 $11.01 $10.66 $10.26 $8.30
- -------------------------------------------------------------------------------------------------------------------
Income (Loss) from Operations:
Net investment income 0.10 0.16 0.15 0.18 0.18
Net realized and unrealized gain (loss)
on investments 1.65 (0.24) 0.72 0.46 2.05
- -------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 1.75 (0.08) 0.87 0.64 2.23
- -------------------------------------------------------------------------------------------------------------------
Less Distributions:
Distributions from net investment income -- (0.18) (0.16) (0.15) (0.20)
Distributions from capital gains -- (0.60) (0.36) (0.09) (0.07)
- -------------------------------------------------------------------------------------------------------------------
Total Distributions -- (0.78) (0.52) (0.24) (0.27)
- -------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.90 $10.15 $11.01 $10.66 $10.26
- -------------------------------------------------------------------------------------------------------------------
Total Return 17.24%++ (0.77)% 8.13% 6.29% 26.94%
- -------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $1,822,681 $1,689,268 $1,579,248 $1,712,411 $1,752,884
- -------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.08%+ 1.02% 1.03% 0.88% 0.80%
Net investment income 1.78+ 1.61 1.35 1.58 2.20
- -------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 20% 52% 52% 21% 19%
===================================================================================================================
</TABLE>
(1) All shares in existence prior to November 6, 1992 were designated as
Class A shares.
(2) For the six months ended June 30, 1995 (unaudited).
(3) Per share amounts have been calculated using the monthly average shares
method, which more appropriately presents per share data for this year
since the use of the undistributed income method did not accord with
results of operations.
++ Not annualized as it may not be representative of the total return for the
year.
+ Annualized.
21
Smith Barney Appreciation Fund Inc.
- -------------------------------------------------------------------------------
Financial Highlights (continued)
- -------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Class B Shares 1995(1) 1994 1993(2) 1992(2)(3)
============================================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.14 $11.00 $10.65 $10.55
- ------------------------------------------------------------------------------------------------------------
Income (Loss) from Operations:
Net investment income 0.05 0.13 0.06 0.01
Net realized and unrealized gain (loss)
on investments 1.64 (0.29) 0.73 0.34
- ------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 1.69 (0.16) 0.79 0.35
- ------------------------------------------------------------------------------------------------------------
Less Distributions:
Distributions from net investment income -- (0.10) (0.08) (0.16)
Distributions from capital gains -- (0.60) (0.36) (0.09)
- ------------------------------------------------------------------------------------------------------------
Total Distributions -- (0.70) (0.44) (0.25)
- ------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.83 $10.14 $11.00 $10.65
- ------------------------------------------------------------------------------------------------------------
Total Return 16.67%++ (1.53)% 7.38% 3.28%++
- ------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $878,014 $761,000 $1,285,966 $1,122,249
- ------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.85%+ 1.80% 1.83% 1.82%+
Net investment income 1.01+ 0.83 0.56 0.64+
- ------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 20% 52% 52% 21%
============================================================================================================
</TABLE>
(1) For the six months ended June 30, 1995 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, which more appropriately presents per share data for this year
since the use of the undistributed income method did not accord with
results of operations.
(3) For the period from November 6, 1992 (inception date) to December 31,
1992.
++ Not annualized as it may not be representative of the total return for
the year.
+ Annualized.
22
Smith Barney Appreciation Fund Inc.
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Class C Shares 1995(1) 1994 1993(2)(3)
=====================================================================================
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $10.14 $11.00 $10.99
- -------------------------------------------------------------------------------------
Income (Loss) from Operations:
Net investment income 0.06 0.10 0.07
Net realized and unrealized gain (loss)
on investments 1.64 (0.25) 0.38
- -------------------------------------------------------------------------------------
Total Income (Loss) From Operations 1.70 (0.15) 0.45
- -------------------------------------------------------------------------------------
Less Distributions:
Distributions from net investment income -- (0.11) (0.08)
Distributions from capital gains -- (0.60) (0.36)
- -------------------------------------------------------------------------------------
Total Distributions -- (0.71) (0.44)
- -------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.84 $10.14 $11.00
- -------------------------------------------------------------------------------------
Total Return 16.77%++ (1.41)% 4.09%++
- -------------------------------------------------------------------------------------
Net Asset, End of Period (000s) $8,099 $5,040 $2,214
- -------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.86%+ 1.66% 1.68%+
Net investment income 0.97+ 0.98 0.71+
- -------------------------------------------------------------------------------------
Portfolio Turnover Rate 20% 52% 52%
=====================================================================================
</TABLE>
(1) For the six months ended June 30, 1995 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, which more appropriately presents per share data for this year since
the use of the undistributed income method did not accord with results of
operations.
(3) For the period from February 4, 1993 (inception date) to December 31, 1993.
++ Not annualized as it may not be representative of the total return for the
year.
+ Annualized.
23
Smith Barney Appreciation Fund Inc.
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Class Z Shares 1995(1) 1994 1993(2) 1992(3)
===========================================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.16 $11.02 $10.66 $10.55
- -----------------------------------------------------------------------------------------------------------
Income (Loss) from Operations:
Net investment income 0.12 0.20 0.19 0.03
Net realized and unrealized gain (loss)
on investments 1.64 (0.24) 0.71 0.33
- -----------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 1.76 (0.04) 0.90 0.36
- -----------------------------------------------------------------------------------------------------------
Less Distributions:
Distributions from net investment income -- (0.22) (0.18) (0.16)
Distributions from capital gains -- (0.60) (0.36) (0.09)
- -----------------------------------------------------------------------------------------------------------
Total Distributions -- (0.82) (0.54) (0.25)
- -----------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.92 $10.16 $11.02 $10.66
- -----------------------------------------------------------------------------------------------------------
Total Return 17.32%++ (0.41)% 8.47% 3.38%++
- -----------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $124,397 $101,532 $157,876 $151,427
- -----------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.82%+ 0.64% 0.66% 0.80%+
Net investment income 2.04+ 1.99 1.73 1.66+
- -----------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 20% 52% 52% 21%
===========================================================================================================
</TABLE>
(1) For the six months ended June 30, 1995 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, which more appropriately presents per share data for this year since
the use of the undistributed income method did not accord with results of
operations.
(3) For the period from November 6, 1992 (inception date) to December 31, 1992.
++ Not annualized as it may not be representative of the total return for the
year.
+ Annualized.
24
Smith Barney
Appreciation
Fund Inc.
Directors
Herbert Barg
Alfred Banchetti
Martin Brody
Dwight Crane
Burt N. Dorsett
Elliot S. Jaffe
Stephen kaufman
Joseph McCann
Heath B. Mclendon, Chairman
Cornelius C. Rose, Jr.
Officers
Heath B. McLendon
Chief Executive Officer
Jessica M. Bibliowicz
President
Lewis E. Daidone
Senior Vice President
and Treasurer
Harry D. Cohen
Vice President and
Investment Officer
Christina T. Sydor
Secretary
[LOGO OF SMITH BARNEY TRAVELERS GROUP APPEARS HERE]
Investment Manager
Smith Barney Mutual Funds
Management Inc.
Distributor
Smith Barney Inc.
Custodian
PNC Bank
Shareholder
Servicing Agent
The Shareholder Services Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of the shareholders of
Smith Barney Appreciation Fund Inc. It is not authorized for distribution to
prospective investors unless accompanied or preceded by an effective Prospectus
for the Fund, which contains information concerning the Fund's investment
policies and expenses as well as other pertinent information.
Smith Barney
Appreciation Fund Inc.
388 Greenwich Street
New York, New York 10013
FD 0404 8/95
