UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811- 1940

Legg Mason Partners Appreciation Fund, Inc.

(Exact name of registrant as specified in charter)

125 Broad Street, New York, NY 10004

(Address of principal executive offices) (Zip code)

Robert I. Frenkel, Esq.

Legg Mason & Co., LLC

300 First Stamford Place

Stamford, CT 06902

(Name and address of agent for service)

Registrant’s telephone number, including area code: 1-800-451-2010

Date of fiscal year end: December 31

Date of reporting period: September 30, 2006

ITEM 1. SCHEDULE OF INVESTMENTS

LEGG MASON PARTNERS APPRECIATION FUND, INC.

FORM N-Q

SEPTEMBER 30, 2006

LEGG MASON PARTNERS APPRECIATION FUND, INC.

Schedule of Investments (unaudited) September 30, 2006

SHARES	SECURITY		VALUE
COMMON STOCKS - 96.5%
CONSUMER DISCRETIONARY - 6.7%
Hotels, Restaurants & Leisure - 0.8%
700,000	Marcus Corp.	$	16,079,000
800,000	McDonald’s Corp.		31,296,000
	Total Hotels, Restaurants & Leisure		47,375,000
Media - 5.5%
500,000	EchoStar Communications Corp., Class A Shares*		16,370,000
350,000	Gannett Co. Inc.		19,890,500
300,000	Meredith Corp.		14,799,000
7,000,000	Time Warner Inc.		127,610,000
650,500	Viacom Inc., Class B Shares*		24,185,590
3,500,000	Walt Disney Co.		108,185,000
516,625	Warner Music Group Corp.		13,406,419
	Total Media		324,446,509
Specialty Retail - 0.4%
600,000	Home Depot Inc.		21,762,000
	TOTAL CONSUMER DISCRETIONARY		393,583,509
CONSUMER STAPLES - 11.8%
Beverages - 1.7%
1,550,000	PepsiCo Inc.		101,153,000
Food & Staples Retailing - 3.9%
800,000	Costco Wholesale Corp.		39,744,000
2,500,000	Wal-Mart Stores Inc.		123,300,000
1,400,000	Walgreen Co.		62,146,000
	Total Food & Staples Retailing		225,190,000
Food Products - 3.3%
1,126,210	Cadbury Schweppes PLC, ADR		48,168,002
600,000	Dean Foods Co.*		25,212,000
1,000,000	General Mills Inc.		56,600,000
400,000	H.J. Heinz Co.		16,772,000
200,000	Hershey Co.		10,690,000
800,000	Wm. Wrigley Jr. Co.		36,848,000
	Total Food Products		194,290,002
Household Products - 2.9%
900,000	Kimberly-Clark Corp.		58,824,000
1,789,121	Procter & Gamble Co.		110,889,719
	Total Household Products		169,713,719
	TOTAL CONSUMER STAPLES		690,346,721
ENERGY - 8.4%
Energy Equipment & Services - 0.9%
310,500	National-Oilwell Varco Inc.*		18,179,775
600,000	Schlumberger Ltd.		37,218,000
	Total Energy Equipment & Services		55,397,775
Oil, Gas & Consumable Fuels - 7.5%
400,000	BP PLC, ADR		26,232,000
1,400,000	Canadian Natural Resources Ltd.		63,812,000
700,000	Cimarex Energy Co.		24,633,000
500,000	Devon Energy Corp.		31,575,000
1,500,000	EnCana Corp.		70,035,000
2,700,000	Exxon Mobil Corp.		181,170,000
200,000	Suncor Energy Inc.		14,410,000
500,000	Valero Energy Corp.		25,735,000
	Total Oil, Gas & Consumable Fuels		437,602,000
	TOTAL ENERGY		492,999,775

See Notes to Schedule of Investments.

1

LEGG MASON PARTNERS APPRECIATION FUND, INC.

Schedule of Investments (unaudited) (continued) September 30, 2006

SHARES	SECURITY		VALUE
EXCHANGE TRADED FUNDS - 1.4%
3,200,000	iShares MSCI Japan Index Fund	$	43,328,000
600,000	streetTRACKS Gold Trust*		35,682,000
	TOTAL EXCHANGE TRADED FUNDS		79,010,000
FINANCIALS - 20.4%
Capital Markets - 2.2%
1,200,000	Bank of New York Co. Inc.		42,312,000
125,000	Goldman Sachs Group Inc.		21,146,250
800,000	Merrill Lynch & Co. Inc.		62,576,000
	Total Capital Markets		126,034,250
Commercial Banks - 2.0%
3,200,000	Wells Fargo & Co.		115,776,000
Consumer Finance - 1.9%
2,000,000	American Express Co.		112,160,000
Diversified Financial Services - 2.4%
1,700,000	Bank of America Corp.		91,069,000
1,000,000	JPMorgan Chase & Co.		46,960,000
	Total Diversified Financial Services		138,029,000
Insurance - 9.4%
4,000	Berkshire Hathaway Inc., Class A Shares*		383,200,000
2,000,000	Marsh & McLennan Cos. Inc.		56,300,000
2,300,000	St. Paul Travelers Cos. Inc.		107,847,000
	Total Insurance		547,347,000
Real Estate Management & Development - 2.0%
2,200,000	Forest City Enterprises Inc., Class A Shares		119,460,000
Thrifts & Mortgage Finance - 0.5%
700,000	Brookline Bancorp Inc.		9,625,000
1,500,000	Hudson City Bancorp Inc.		19,875,000
	Total Thrifts & Mortgage Finance		29,500,000
	TOTAL FINANCIALS		1,188,306,250
HEALTH CARE - 6.3%
Biotechnology - 1.5%
900,000	Amgen Inc.*		64,377,000
300,000	Genentech Inc.*		24,810,000
	Total Biotechnology		89,187,000
Health Care Providers & Services - 0.7%
800,000	UnitedHealth Group Inc.		39,360,000
Pharmaceuticals - 4.1%
1,850,000	Johnson & Johnson		120,139,000
3,000,000	Pfizer Inc.		85,080,000
700,000	Wyeth		35,588,000
	Total Pharmaceuticals		240,807,000
	TOTAL HEALTH CARE		369,354,000
INDUSTRIALS - 20.4%
Aerospace & Defense - 4.0%
1,000,000	Honeywell International Inc.		40,900,000
1,600,000	Raytheon Co.		76,816,000
1,800,000	United Technologies Corp.		114,030,000
	Total Aerospace & Defense		231,746,000
Air Freight & Logistics - 1.6%
1,300,000	United Parcel Service Inc., Class B Shares		93,522,000

See Notes to Schedule of Investments.

2

LEGG MASON PARTNERS APPRECIATION FUND, INC.

Schedule of Investments (unaudited) (continued) September 30, 2006

SHARES	SECURITY		VALUE
Airlines - 0.7%
2,500,000	Southwest Airlines Co.	$	41,650,000
Building Products - 0.4%
801,000	Masco Corp.		21,963,420
Commercial Services & Supplies - 2.7%
1,100,000	Covanta Holding Corp.*		23,683,000
1,200,000	Pitney Bowes Inc.		53,244,000
2,200,000	Waste Management Inc.		80,696,000
	Total Commercial Services & Supplies		157,623,000
Electrical Equipment - 0.5%
1,176,850	American Power Conversion Corp.		25,843,626
Industrial Conglomerates - 9.0%
2,000,000	3M Co.		148,840,000
8,500,000	General Electric Co.		300,050,000
2,800,000	Tyco International Ltd.		78,372,000
	Total Industrial Conglomerates		527,262,000
Machinery - 0.3%
1,000,000	Tata Motors Ltd., ADR		18,580,000
Road & Rail - 1.2%
1,231,033	Florida East Coast Industries Inc.		70,267,363
	TOTAL INDUSTRIALS		1,188,457,409
INFORMATION TECHNOLOGY - 14.3%
Communications Equipment - 3.4%
7,000,000	3Com Corp.*		30,870,000
5,500,000	Cisco Systems Inc.*		126,500,000
1,000,000	Motorola Inc.		25,000,000
500,000	QUALCOMM Inc.		18,175,000
	Total Communications Equipment		200,545,000
Computers & Peripherals - 2.5%
5,500,000	EMC Corp.*		65,890,000
1,000,000	International Business Machines Corp.		81,940,000
	Total Computers & Peripherals		147,830,000
Internet Software & Services - 2.7%
900,000	eBay Inc.*		25,524,000
90,000	Google Inc., Class A Shares*		36,171,000
2,200,000	VeriSign Inc.*		44,440,000
2,000,000	Yahoo! Inc.*		50,560,000
	Total Internet Software & Services		156,695,000
IT Services - 1.6%
800,000	Accenture Ltd., Class A Shares		25,368,000
1,425,000	Automatic Data Processing Inc.		67,459,500
	Total IT Services		92,827,500
Semiconductors & Semiconductor Equipment - 0.8%
1,000,000	Freescale Semiconductor Inc., Class B Shares*		38,010,000
500,000	Intel Corp.		10,285,000
	Total Semiconductors & Semiconductor Equipment		48,295,000
Software - 3.3%
7,000,000	Microsoft Corp.		191,310,000
	TOTAL INFORMATION TECHNOLOGY		837,502,500
MATERIALS - 4.1%
Chemicals - 4.1%
1,000,000	Cytec Industries Inc.		55,590,000

See Notes to Schedule of Investments.

3

LEGG MASON PARTNERS APPRECIATION FUND, INC.

Schedule of Investments (unaudited) (continued) September 30, 2006

	SHARES	SECURITY		VALUE
	Chemicals - 4.1% (continued)
	500,000	Dow Chemical Co.	$	19,490,000
	1,500,000	E.I. du Pont de Nemours & Co.		64,260,000
	800,000	Ecolab Inc.		34,256,000
	950,000	PPG Industries Inc.		63,726,000
		TOTAL MATERIALS		237,322,000
	TELECOMMUNICATION SERVICES - 2.0%
	Diversified Telecommunication Services - 0.9%
	1,000,000	Verizon Communications Inc.		37,130,000
	1,033,926	Windstream Corp.		13,637,484
		Total Diversified Telecommunication Services		50,767,484
	Wireless Telecommunication Services - 1.1%
	900,000	ALLTEL Corp.		49,950,000
	1,000,000	Sprint Nextel Corp.		17,150,000
		Total Wireless Telecommunication Services		67,100,000
		TOTAL TELECOMMUNICATION SERVICES		117,867,484
	UTILITIES - 0.7%
	Electric Utilities - 0.7%
	1,410,874	Duke Energy Corp.		42,608,395
		TOTAL INVESTMENTS BEFORE SHORT-TERM INVESTMENT (Cost - $4,036,382,001)		5,637,358,043
	FACE AMOUNT
	SHORT-TERM INVESTMENT - 4.2%
	Repurchase Agreement - 4.2%
$	244,687,000	Interest in $414,241,000 joint tri-party repurchase agreement dated 9/29/06 with Banc of America Securities LLC, 5.300% due 10/2/06; Proceeds at maturity- $244,795,070; (Fully collateralized by various U.S. Government Agency Obligations, 0.000% to 5.600% due 2/28/07 to 9/26/13; Market value- $249,580,980) (Cost - $244,687,000)		244,687,000
		TOTAL INVESTMENTS - 100.7% (Cost - $4,281,069,001#)		5,882,045,043
		Liabilities in Excess of Other Assets - (0.7)%		(41,061,093	)
		TOTAL NET ASSETS - 100.0%	$	5,840,983,950

* Non-income producing security.

# Aggregate cost for federal income tax purposes is substantially the same.

Abbreviation used in this schedule:

ADR  — American Depositary Receipt

See Notes to Schedule of Investments.

4

Notes to Schedule of Investments (unaudited)

1. Organization and Significant Accounting Policies

Legg Mason Partners Appreciation Fund, Inc. (formerly known as Smith Barney Appreciation Fund Inc) (the “Fund”), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a diversified, open-end management investment company.

The following are significant accounting policies consistently followed by the Fund and are in conformity with U.S. generally accepted accounting principles (“GAAP”).

(a) Investment Valuation. Equity securities for which market quotations are available are valued at the last sale price or official closing price on the primary market or exchange on which they trade. Debt securities are valued at the mean between the bid and asked prices provided by an independent pricing service that are based on transactions in debt obligations, quotations from bond dealers, market transactions in comparable securities and various other relationships between securities. When prices are not readily available, or are determined not to reflect fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded, but before the Fund calculates its net asset value, the Fund may value these investments at fair value as determined in accordance with the procedures approved by the Fund’s Board of Directors. Short-term obligations with maturities of 60 days or less are valued at amortized cost, which approximates market value.

(b) Repurchase Agreements. When entering into repurchase agreements, it is the Fund’s policy that its custodian or a third party custodian take possession of the underlying collateral securities, the market value of which at least equals the principal amount of the repurchase transaction, including accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market to ensure the adequacy of the collateral. If the seller defaults, and the market value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited.

(c) Security Transactions. Security transactions are accounted for on a trade date basis.

2. Investments

At September 30, 2006, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:

Gross unrealized appreciation	$	1,635,158,124
Gross unrealized depreciation		(34,182,082	)
Net unrealized appreciation	$	1,600,976,042

ITEM 2. CONTROLS AND PROCEDURES.

(a) The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a- 3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934.

(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant’s last fiscal quarter that have materially affected, or are likely to materially affect the registrant’s internal control over financial reporting.

ITEM 3. EXHIBITS.

Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are attached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Legg Mason Partners Appreciation Fund, Inc.
By	/S/    R. JAY GERKEN
	R. Jay Gerken
	Chief Executive Officer

Date  November 28, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:	/S/    R. JAY GERKEN
	R. Jay Gerken
	Chief Executive Officer
Date:	November 28, 2006

By:	/S/    KAPREL OZSOLAK
	Kaprel Ozsolak
	Chief Financial Officer
Date:	November 28, 2006