THE DREYFUS THIRD CENTURY FUND, INC.
(STATEMENT OF ADDITIONAL INFORMATION)
PART B
SEPTEMBER 15, 1995
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of The Dreyfus Third Century Fund, Inc. (the "Fund"), dated September 15,
1995, as it may be revised from time to time. To obtain a copy of the
Fund's Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York, 11556-0144 or call the following numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
Outside the U.S. and Canada -- Call 1-516-794-5452
The Dreyfus Corporation (the "Manager") serves as the Fund's
investment adviser.
NCM Capital Management Group, Inc. ("NCM") serves as the Fund's sub-
investment adviser. NCM provides day-to-day management of the Fund's
portfolio, subject to the supervision of the Manager.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objectives and Management Policies . . . . . . B-2
Management of the Fund. . . . . . . . . . . . . . . . . . B-6
Investment Advisory Agreements. . . . . . . . . . . . . . B-9
Purchase of Fund Shares . . . . . . . . . . . . . . . . . B-12
Redemption of Fund Shares . . . . . . . . . . . . . . . . B-13
Shareholder Services. . . . . . . . . . . . . . . . . . . B-14
Determination of Net Asset Value. . . . . . . . . . . . . B-18
Shareholder Services Plan . . . . . . . . . . . . . . . . B-18
Dividends, Distributions and Taxes. . . . . . . . . . . . B-19
Portfolio Transactions. . . . . . . . . . . . . . . . . . B-21
Performance Information . . . . . . . . . . . . . . . . . B-22
Information About the Fund. . . . . . . . . . . . . . . . B-22
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . . . B-23
Financial Statements. . . . . . . . . . . . . . . . . . . B-24
Report of Independent Auditors. . . . . . . . . . . . . . B-33
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Description
of the Fund."
Portfolio Securities. During a period when it becomes desirable to
move the Fund toward a defensive position because of adverse trends in the
financial markets or the economy, the Fund may invest in securities issued
or guaranteed by the U.S. Government or its agencies or instrumentalities.
These include a variety of U.S. Treasury securities, which differ in their
interest rates, maturities and times of issuance: Treasury Bills have
initial maturities of one year or less; Treasury Notes have initial
maturities of one to ten years; and Treasury Bonds generally have initial
maturities of greater then ten years. Some obligations issued or
guaranteed by U.S. Government agencies and instrumentalities, such as
Government National Mortgage Association pass-through certificates, are
supported by the full faith and credit of the U.S. Treasury; others, such
as those of the Federal Home Loan Banks, by the right of the issuer to
borrow from the U.S. Treasury; others, such as those issued by the Federal
National Mortgage Association, by discretionary authority of the U.S.
Government to purchase certain obligations of the agency or
instrumentality; and others, such as those issued by the Student Loan
Marketing Association, only by the credit of the instrumentality. These
securities bear fixed, floating or variable rates of interest. Principal
and interest may fluctuate based on generally recognized reference rates or
the relationship of rates. While the U.S. Government provides financial
support to such U.S. Government-
sponsored agencies or instrumentalities, no assurance can be given that it
will always do so since it is not so obligated by law. The Fund will
invest in such securities only when the Fund is satisfied that the credit
risk with respect to the issuer is minimal.
The Board of Directors of the Fund may, to a limited extent, authorize
the purchase of securities of foreign companies which have not been
declared eligible for investment ("ineligible securities") in order to
facilitate the purchase of securities of other foreign companies which are
contributing or will contribute to the enhancement of the quality of life
in America and which have been declared eligible for investment ("eligible
securities"). Certain countries have limited, either permanently or
temporarily, the ability of foreigners to purchase shares of their domestic
companies, shares which are already owned outside the country or shares
which may be obtained through the sale of shares of other companies located
in the same country which are owned outside that country. Accordingly, the
Fund may purchase ineligible securities so that these securities may be
sold or redeemed in the country of origin, and the proceeds thus received
used for the purchase of eligible securities.
Otherwise ineligible securities purchased for this limited purpose
would be held in the Fund's portfolio for a maximum of 60 days in order to
enable the Fund to have sufficient time to provide for the transportation
of the securities and their sale or redemption. Most transactions of this
type, however, are expected to be completed in a much shorter period.
Furthermore, such investments are limited, as a fundamental policy, in the
aggregate, to a maximum of 2% of the net assets of the Fund at the time of
investment. Engaging in these transactions will result in additional
expense to the Fund in the form of brokerage commissions incurred in the
purchase and sale of the ineligible security. Finally, the Board of
Directors would authorize investments in ineligible securities only for the
purpose of facilitating the purchase of securities of a specific eligible
company.
Writing and Purchasing Options. To earn additional income on its
portfolio, the Fund, to a limited extent, may write covered call options on
securities owned by the Fund ("covered options" or "options") and purchase
call options in order to close option transactions, as described below.
A call option gives the purchaser of the option the right to buy, and
obligates the writer to sell, the underlying security at the exercise price
at any time during the option period, regardless of the market price of the
security. The premium paid to the writer is the consideration for
undertaking the obligations under the option contract. When a covered
option is written by the Fund, the Fund will make arrangements with the
Fund's Custodian, to segregate the underlying securities until the option
either is exercised, expires or the Fund closes out the option as described
below. A covered option sold by the Fund exposes the Fund during the term
of the option to possible loss of opportunity to realize appreciation in
the market price of the underlying security or to possible continued
holding of a security which might otherwise have been sold to protect
against depreciation in the market price of the security. To limit this
exposure, the value of the portfolio securities underlying covered call
options written by the Fund will be limited to an amount not in excess of
20% of the value of the Fund's net assets at the time such options are
written.
The Fund will purchase call options only to close out open positions.
To close out a position, the Fund may make a "closing purchase
transaction," which involves purchasing a call option on the same security
with the same exercise price and expiration date as the option which it has
previously written on a particular security. The Fund will realize a
profit (or loss) from a closing purchase transaction if the amount paid to
purchase a call option is less (or more) than the amount received from the
sale thereof.
Illiquid Securities. The Fund may invest up to 15% of the value of
its net assets in securities which are illiquid securities. Illiquid
securities are securities which are not readily marketable, including those
with restrictions on resale. Rule 144A under the Securities Act of 1933,
as amended (the "Securities Act"), permits certain resales of restricted
securities to qualified institutional buyers without registration under the
Securities Act ("Rule 144A Securities"). Because it is not possible to
predict with assurance how the market for Rule 144A Securities will
develop, the Fund's Board has directed the Manager to monitor carefully the
Fund's investments in such securities with particular regard to trading
activity, availability of reliable price information and other relevant
information, and has approved procedures to determine whether a readily
available market exists. Rule 144A Securities for which there is a readily
available market are not illiquid.
When the Fund purchases securities that are illiquid due to the fact
that such securities have not been registered under the Securities Act, the
Fund will endeavor to obtain the right to registration at the expense of
the issuer. Generally, there will be a lapse of time between the Fund's
decision to sell any such securities and the registration of the securities
permitting sale. The valuation of illiquid securities will be monitored by
the Manager subject to the supervision of the Fund's Board.
Investment Restrictions. The Fund has adopted investment restrictions
numbered 1 through 16 as fundamental policies. These restrictions cannot
be changed without approval by the holders of a majority, as defined in the
Investment Company Act of 1940, as amended (the "Act"), of the Fund's
outstanding voting shares. Investment restrictions numbered 17 and 18 are
not fundamental policies and may be changed by vote of a majority of the
Fund's Directors at any time.
1. The Fund's special considerations described under "Special
Considerations" in the Fund's Prospectus will not be changed or
supplemented.
2. The Fund may not purchase the securities of any issuer if such
purchase would cause more than 5% of the value of its total assets to be
invested in securities of such issuer (except securities of the United
States Government or any instrumentality thereof).
3. The Fund may not purchase the securities of any issuer if such
purchase would cause the Fund to hold more than 10% of the outstanding
voting securities of such issuer.
4. The Fund may not purchase securities of any company having less
than three years' continuous operating history (including that of any
predecessors) if such purchase would cause the value of the Fund's
investments in all such securities to exceed 5% of the value of its net
assets. See also Investment Restriction No. 10.
5. The Fund may not purchase securities of closed-end investment
companies except in connection with a merger or consolidation of portfolio
companies. The Fund shall not purchase or retain securities issued by
open-end investment companies other than itself.
6. The Fund may not purchase or retain the securities of any issuer
if officers or directors of the Fund or of its investment adviser, who own
beneficially more than 1/2 of 1% of the securities of such issuer together
own beneficially more than 5% of the securities of such issuer.
7. The Fund may not purchase, hold or deal in commodities or
commodity contracts, in oil, gas, or other mineral exploration or
development programs, or in real estate but this shall not prohibit the
Fund from investing, consistent with Item 18 below, in securities of
companies engaged in oil, gas or mineral investments or activities. This
limitation shall not prevent the Fund from investing in securities issued
by a real estate investment trust, provided that such trust is not
permitted to invest in real estate or in interests other than mortgages or
other security interests.
8. The Fund may not borrow money, except to the extent permitted
under the Act (which currently limits borrowing to no more than 33 1/3% of the
value of the Fund's total assets).
9. The Fund may not make loans other than by the purchase,
consistent with Item 18 below, of bonds, debentures or other debt
securities of the types commonly offered privately and purchased by
financial institutions. The purchase of a portion of an issue of publicly
distributed debt obligations shall not constitute the making of loans.
10. The Fund may not act as an underwriter of securities of other
issuers.
11. The Fund may not purchase from or sell to any of its officers or
directors, or firms of which any of them are members, any securities (other
than capital stock of the Fund), but such persons or firms may act as
brokers for the Fund for customary commissions.
12. The Fund may not invest in the securities of a company for the
purpose of exercising management or control, but the Fund will vote the
securities it owns in its portfolio as a shareholder in accordance with its
views.
13. The Fund may not purchase securities on margin, but the Fund may
obtain such short-term credit as may be necessary for the clearance of
purchases and sales of securities.
14. The Fund may not sell any security short or engage in the
purchase and sale of put, call, straddle, or spread options or combinations
thereof, or in writing such options, except that the Fund may write and
sell covered call option contracts on securities owned by the Fund up to,
but not in excess of, 20% of the market value of its net assets at the time
such option contracts are written. The Fund may also purchase call options
for the purpose of terminating its outstanding obligations with respect to
securities upon which covered call option contracts have been written. In
connection with the writing of covered call options, the Fund may pledge
assets to an extent not greater than 20% of the market value of its total
net assets at the time such options are written.
15. The Fund may not concentrate its investments in any particular
industry or industries, except that the Fund may invest up to 25% of the
value of its total assets in a single industry.
16. The Fund may not purchase warrants in excess of 2% of the value
of its net assets. Such warrants shall be valued at the lower of cost or
market, except that warrants acquired by the Fund in units or attached to
securities shall be deemed to be without value, for purposes of this
restriction only.
17. The Fund may not pledge, mortgage, hypothecate or otherwise
encumber its assets, except to the extent necessary to secure permitted
borrowings.
18. The Fund may not enter into repurchase agreements providing for
settlement in more than seven days after notice or purchase securities
which are illiquid if, in the aggregate, more than 15% of the value of the
Fund's net assets would be so invested.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage resulting from a change in values
or assets will not constitute a violation of that restriction.
The Fund may make commitments more restrictive than the restrictions
noted above so as to permit the sale of Fund shares in certain states.
Should the Fund determine that a commitment is no longer in the best
interests of the Fund and its shareholders, the Fund reserves the right to
revoke the commitment by terminating the sale of Fund shares in the state
involved.
MANAGEMENT OF THE FUND
Directors and officers of the Fund are shown below, together with
information as to their principal business occupation during at least the
last five years. Each Director who is deemed an "interested person" of the
Fund as defined in the Act, is indicated by an asterisk.
Directors of the Fund
CLIFFORD L. ALEXANDER, JR., Director. President of Alexander & Associates,
Inc., a management consulting firm. From 1977 to 1981, Mr. Alexander
served as Secretary of the Army and Chairman of the Board of the
Panama Canal Company and from 1975 to 1977 he was a member of the
Washington, D.C. law firm of Verner, Liipfert, Bernhard, McPherson and
Alexander. He is a director of American Home Products Corporation,
The Dun & Bradstreet Corporation, Equitable Resources, Inc., a
producer and distributor of natural gas and crude petroleum, MCI
Communications Corporation and Mutual of America Life Insurance
Company. He is 61 years old and his address is 400 C Street N.E.,
Washington, D.C. 20002.
LUCY WILSON BENSON, Director. President of Benson and Associates,
consultants to business and government. Mrs. Benson is a Director of
COMSAT Corporation, General Re Corporation and Logistics Management
Institute. She is also a Trustee of the Alfred P. Sloan Foundation,
Vice Chairman of the Board of Trustees of Lafayette College, Vice
Chairman of the Citizens Network for Foreign Affairs and a member of
the Council on Foreign Relations. Mrs. Benson served as a consultant
to the U.S. Department of State and to SRI International from 1980 to
1981. From 1977 to 1980, she was Under Secretary of State for
Security Assistance, Science and Technology. She is 68 years old and
her address is 46 Sunset Avenue, Amherst, Massachusetts 01002.
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Mr.
DiMartino has served as Chairman of the Board for various funds in the
Dreyfus Family of Funds. For more than five years prior thereto, he
was President, a director and, until August 1994, Chief Operating
Officer of the Manager and Executive Vice President and a director of
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager
and until August 1994, the Fund's distributor. From August 1994 to
December 31, 1994, he was a director of Mellon Bank Corporation. Mr.
DiMartino is a director and former Treasurer of Muscular Dystrophy
Association; a trustee of Bucknell University; Chairman of the Board
of Directors of Noel Group, Inc.; a director of HealthPlan Services
Corporation, Belding Heminway Company, Inc., a manufacturer and
marketer of industrial threads, specialty yarns, home furnishings and
fabrics, Curtis Industries, Inc., a national distributor of security
products, chemicals, automotive and other hardware, Simmons Outdoor
Corporation, and Staffing Resources, Inc. He is 51 years old and his
address is 200 Park Avenue, New York, New York 10166.
PETER C. GOLDMARK, JR., Director. Since July 1988, President of The
Rockefeller Foundation, an organization which promotes research and
educational activities. He is also a trustee of The Rockefeller
Foundation and a director of Knight-Ridder, Inc. From 1985 to 1988,
Mr. Goldmark was Senior Vice President of Times Mirror Company and
from 1977 to 1985 he was Executive Director of The Port Authority of
New York and New Jersey. He is 54 years old and his address is 420
Fifth Avenue, New York, New York 10018.
JOSIE CRUZ NATORI, Director. Since 1977, President of The Natori Company,
a fashion design company. She sits on the Board of Trustees of
Manhattanville College, the Board of Directors of the Educational
Foundation of Fashion Industries and on the Boards of The Philippine
American Foundation, Calyx & Corolla and Junior Achievement, Inc.
Additionally, she is an active member of the Young Presidents
Organization, the Committee of 200 and the Fashion Group
International. She is 48 years old and her office address is 40 East
34th Street, New York, New York 10016.
For so long as the Fund's plan described in the section captioned
"Shareholder Services Plan" remains in effect, the Directors of the Fund
who are not "interested persons" of the Fund, as defined in the Act, will
be selected and nominated by the Directors who are not "interested persons"
of the Fund.
The Fund typically pays its Directors an annual retainer fee and
reimburses them for their Board Meeting expenses. The Chairman of the
Board receives an additional 25% of such compensation. For the fiscal year
ended May 31, 1995, the aggregate amount of compensation paid to each
Director by the Fund and by all other funds in the Dreyfus Family of funds
for which such person is a Board member were as follows (the number of
which is set forth in parenthesis next to each Board member's total
compensation):
<TABLE>
<CAPTION>
(5)
(3) Total
(2) Pension or Compensation
Aggregate Retirement (4) From Fund and
(1) Compensation Benefits Accrued Estimated Annual From Fund Complex
Name of Board From as Part of Benefits Upon Paid to Board
Member Fund* Fund's Expenses Retirement Member
------------ --------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Clifford L. Alexander $10,000 none none $ 73,210 (17)
Lucy Wilson Benson $10,000 none none $ 64,459 (13)
Joseph S. DiMartino $12,5002 none none $445,0003 (93)
Peter C. Goldmark $10,000 none none $ 12,459 (1)
Josie Cruz Natori $10,000 none none $ 12,459 (1)
_________________________
1 Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $1,478 for all Directors a group.
2 Estimated amount for the fiscal year ended May 31, 1995.
3 Estimated amount for the current fiscal year ended December 31, 1995.
</TABLE>
Officers of the Fund
Marie E. Connolly, President and Treasurer. President and Chief Operating
Officer and a Director of the Distributor and an officer of other
investment companies advised or administered by the Manager. From
December 1991 to July 1994, she was President and Chief Compliance
Officer of Funds Distributor, Inc., the ultimate parent company of
which is Boston Institutional Group, Inc.. Prior to December 1991,
she served as Vice President and Controller, and later as Senior Vice
President, of The Boston Company Advisors, Inc. She is 37 years old.
John E. Pelletier, Secretary. Senior Vice President - General Counsel of
the Distributor and an officer of other investment companies advised
or administered by the Manager. From February 1992 to July 1994, he
served as Counsel for The Boston Company Advisors, Inc. Prior thereto,
he was employed as an Associate at Ropes & Gray, and prior to August
1990, he was employed as an Associate at Sidley & Austin. He is 31
years old.
Joseph F. Tower, III, Assistant Treasurer. Senior Vice President,
Treasurer and Chief Financial Officer of the Distributor and an
officer of other investment companies advised or administered by the
Manager. From July 1988 to August 1994, he was employed by The Boston
Company, Inc. where he held various management positions in the
Corporate Finance and Treasury areas. He is 33 years old.
Frederick C. Dey, Assistant Treasurer. Senior Vice President of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From 1988 to August 1994, he was manager
of the High Performance Fabric Division of Springs Industries Inc. He
is 33 years old.
Eric B. Fischman, Assistant Secretary. Associate General Counsel of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From September 1992 to August 1994, he
was an attorney with the Board of Governors of the Federal Reserve
System. Prior to September 1992, he attended the Boston University
School of Law. He is 30 years old.
Ruth D. Leibert, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From March 1992 to July 1994, she was a
Compliance Officer for The Managers Funds, registered investment
companies. From March 1990 until September 1991, she was Development
Director of The Rockland Center for the Arts and, prior thereto, was
employed as a Research Assistant for the Bureau of National Affairs.
She is 50 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
Directors and officers of the Fund, as a group, owned less than 1% of
the outstanding common stock of the Fund on August 30, 1995.
No person owned of record or beneficially 5% or more of the Fund's
outstanding shares of common stock as of August 30, 1995.
INVESTMENT ADVISORY AGREEMENTS
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."
Management Agreement. The Manager provides investment advisory
services pursuant to the Management Agreement (the "Agreement") dated
August 2, 1994, between the Manager and the Fund which is subject to annual
approval by (i) the Board of Directors of the Fund or (ii) vote of a
majority (as defined in the Act) of the outstanding voting securities of
the Fund, provided that in either event the continuance also is approved by
a majority of the Board of Directors who are not "interested persons" (as
defined in the Act) of any party to the Agreement, by vote cast in person
at a meeting called for the purpose of voting on such approval. The Board
of Directors, including a majority of the Directors who are not "interested
persons," last approved the Agreement at a meeting held on July 18, 1995.
Shareholders approved the Agreement on August 2, 1994. The Agreement is
terminable without penalty, on 60 days' notice, by the Board of Directors
of the Fund or by vote of the holders of a majority of the Fund's shares,
or, upon not less than 90 days' notice, by the Manager. The Agreement will
terminate automatically in the event of its assignment (as defined in the
Act).
As compensation for the Manager's services to the Fund, under the
Agreement the Fund has agreed to pay the Manager a fee payable monthly at
an annual rate of .75 of 1% of the Fund's average daily net assets. Prior
to August 2, 1994, the Manager provided investment advisory services to the
Fund pursuant to an Investment Advisory Agreement with the Fund (the "Prior
Advisory Agreement") dated August 27, 1990. Pursuant to the Prior Advisory
Agreement, the Fund agreed to pay the Manager an advisory fee at the annual
rate of .65 of 1% of the Fund's average daily net assets up to $200
million; .40 of 1% of the Fund's average daily net assets for the next $100
million; and .375 of 1% of the Fund's average daily net assets in excess of
$300 million. Pursuant to the Prior Advisory Agreement, the Fund paid the
Manager investment advisory fees for the fiscal years ended May 31, 1993
and 1994 of $2,421,102 and $2,374,676. For the period from June 1, 1994
through August 1, 1994, the Fund paid the Manager pursuant to the prior
Advisory Agreement a fee of $332,837. For the period from August 2, 1994
through May 31, 1995 the Fund paid the Manager pursuant to the Agreement a
fee of $2,229,348.
The following persons are officers and/or directors of the Manager:
Howard Stein, Chairman of the Board and Chief Executive Officer; W. Keith
Smith, Vice Chairman of the Board; Robert E. Riley, President, Chief
Operating Officer and a director; Stephen E. Canter, Vice Chairman, Chief
Investment Officer and a director; Lawrence S. Kash, Vice Chairman-
Distribution and a director; Philip L. Toia, Vice Chairman-Operations and
Administration; Barbara E. Casey, Vice President--Dreyfus Retirement
Services; Diane M. Coffey, Vice President-Corporate Communications; Elie M.
Genadry, Vice President-Institutional Sales; William F. Glavin, Jr., Vice
President-Corporate Development; Henry D. Gottman, Vice President-Retail
Sales and Service; Mark N. Jacobs, Vice President-Legal and Secretary;
Daniel C. Maclean, Vice President and General Counsel; Jeffrey N. Nachman,
Vice President-Mutual Fund Accounting; Andrew S. Wasser, Vice President-
Information Services; Katherine C. Wickham, Vice President-Human Resources;
Murice Bendrihem, Controller; Elvira Oslapas, Assistant Secretary; and
Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene,
Julian M. Smerling and David B. Truman, directors.
Sub-Investment Advisory Agreement. NCM provides sub-investment
advisory services pursuant to a Sub-Investment Advisory Agreement dated
August 2, 1994 between the Manager and NCM. The Sub-Investment Advisory
Agreement is subject to annual approval by (i) the Board of Directors of
the Fund or (ii) vote of a majority (as defined in the Act) of the Fund's
outstanding voting securities, provided that in either event the
continuance also is approved by a majority of the Directors who are not
"interested persons" (as defined in the Act) of any party to the Sub-
Investment Advisory Agreement, by vote cast in person at a meeting called
for the purpose of voting on such approval. The Board of Directors,
including a majority of the Directors who are not "interested persons",
last approved the Sub-Investment Advisory Agreement at a meeting held on
July 18, 1995. Shareholders approved the Sub-Investment Advisory Agreement
on August 2, 1994. The Sub-Investment Advisory Agreement is terminable
without penalty, on 60 days' notice, by the Board of Directors of the Fund
or by vote of the holders of a majority of the Fund's shares, or, upon not
less than 90 days' notice, by NCM. The Sub-Investment Advisory Agreement
will terminate automatically in the event of its assignment (as defined in
the Act). In addition, if the Management Agreement terminates for any
reason, the Sub-Investment Advisory Agreement will terminate effective upon
the date the Management Agreement terminates.
Under the Sub-Investment Advisory Agreement, Dreyfus has agreed to pay
NCM a monthly fee at the annual rate set forth in the Fund's Prospectus.
For the period from August 2, 1994 through May 31, 1995, Dreyfus paid
$297,131 to NCM under the Sub-Investment Advisory Agreement.
Prior to August 2, 1994, Tiffany Capital Advisors, Inc. ("Tiffany")
served as the Fund's sub-investment adviser pursuant to a sub-investment
advisory agreement (the "Prior Sub-Advisory Agreement") dated August 27,
1990 between Tiffany and the Fund. Pursuant to the Prior Sub-Advisory
Agreement, the Fund agreed to pay Tiffany a sub-investment advisory fee at
the annual rate of .10 of 1% of the Fund's average daily net assets up to
$200 million; .35 of 1% of the Fund's average daily net assets for the next
$100 million; and .375 of 1% of the Fund's average daily net assets in
excess of $300 million. The sub-investment advisory fees paid by the Fund
pursuant to the Prior Sub-Advisory Agreement for the fiscal years ended May
31, 1993 and 1994 and for the period from June 1, 1994 to August 1, 1994
were $1,271,102, $1,224,676, and $141,170, respectively.
The following persons are officers and/or directors of NCM: Maceo K.
Sloan, Chairman, President and Chief Executive Officer; Justin F. Beckett,
Executive Vice President and Director; Peter J. Anderson, Director; Morris
Goodwin, Jr., Director; Edith H. Noel, Senior Vice President, Corporate
Secretary and Treasurer; Clifford D. Mpare, Jr., Senior Vice President -
Investments; Brenda Walker, Senior Vice President - Director Marketing and
Client Services; Dennis M. McCaskill, Jr., Mary M. Ford, Stanley G.
Laborde, and Paul L. VanKampen, Senior Vice Presidents; Stephon Jackson,
Senior Vice President, Director of Research; Linda Jordan, Victor Ross,
Regional Vice Presidents; David Carter, Wendell Mackey, Lorenzo Newsome and
Lawrence Verny, Vice Presidents; Deborah C. Bronson, Vice President -
Director of Operations; Marc Reid, Assistant Vice President - Manager of
Marketing and Client Services.
NCM provides day-to-day management of the Fund's portfolio of
investments in accordance with the stated policies of the Fund, subject to
the supervision of the Manager and the approval of the Fund's Board of
Directors. The Manager and NCM provide the Fund with Portfolio Managers
who are authorized by the Directors to execute purchases and sales of
securities. The Fund's Portfolio Managers are Diane M. Coffey, Thomas A.
Frank, James P. Ruskin, Maceo K. Sloan, James Stanley, and Howard Stein.
The Manager also maintains a research department with a professional staff
of portfolio managers and securities analysts who provide research services
for the Fund as well as for other funds advised by the Manager. All
purchases and sales are reported for the Directors' review at the meeting
subsequent to such transactions.
Expenses. All expenses incurred in the operation of the Fund are
borne by the Fund, except to the extent specifically assumed by the Manager
or NCM. The expenses borne by the Fund include: organizational costs,
taxes, interest, loan commitment fees, interest and distributions on
securities sold short, brokerage fees and commissions, if any, fees of
Directors who are not officers, directors, employees or holders of 5% or
more of the outstanding voting securities of the Manager or NCM, or any
affiliate of the Manager or NCM, Securities and Exchange Commission fees,
state Blue Sky qualification fees, advisory fees, charges of custodians,
transfer and dividend disbursing agents' fees, certain insurance premiums,
industry association fees, outside auditing and legal expenses, costs of
maintaining the Fund's existence, costs of independent pricing services,
costs attributable to investor services (including, without limitation,
telephone and personnel expenses), cost of shareholders' reports and
meetings, costs of preparing, printing and distributing certain
prospectuses and statements of additional information, and any
extraordinary expenses.
The Manager and NCM have agreed that if, in any fiscal year, the
aggregate expenses of the Fund, exclusive of taxes, brokerage, interest and
(with the prior written consent of the necessary state securities
commissions) extraordinary expenses, but including the management and
sub-advisory fees, exceed 1 1/2% of the average value of the Fund's net assets
for the fiscal year, the Fund may deduct from the fees to be paid to the
Manager and NCM, or each will bear, the excess expense. For each fiscal
year of the Fund, the Manager and NCM will pay or bear such excess on a pro
rata basis in proportion to the relative fees otherwise payable to each
pursuant to the Management Agreement and the Sub-Investment Advisory
Agreement, respectively. Such deduction or payment, if any, will be
estimated, reconciled and effected or paid, as the case may be, on a
monthly basis and will be limited to the amount of fees otherwise payable
to the Manager and NCM under each respective agreement.
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
The Distributor. The Distributor serves as the Fund's distributor
pursuant to an agreement which is renewable annually. The Distributor also
acts as distributor for the
other funds in the Dreyfus Family of Funds and for certain other investment
companies.
Using Federal Funds. The Shareholder Services Group, Inc., a
subsidiary of First Data Corporation, the Fund's transfer and dividend
disbursing agent (the "Transfer Agent") or the Fund may attempt to notify
the investor upon receipt of checks drawn on banks that are not members of
the Federal Reserve System as to the possible delay in conversion into
Federal Funds and may attempt to arrange for a better means of transmitting
the money. If the investor is a customer of a securities dealer, bank or
other financial institution and his order to purchase Fund shares is paid
for other than in Federal Funds, the securities dealer, bank or other
financial institution, acting on behalf of its customer, will complete the
conversion into, or itself advance, Federal Funds generally on the business
day following receipt of the customer order. The order is effective only
when so converted and received by the Transfer Agent. An order for the
purchase of Fund shares placed by an investor with sufficient Federal Funds
or cash balance in his brokerage account with a securities dealer, bank or
other financial institution will become effective on the day that the
order, including Federal Funds, is received by the Transfer Agent. In some
states, banks or other financial institutions effecting transactions in
Fund shares may be required to register as a dealer pursuant to state law.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made between the hours of 8:00 A.M. and 4:00 P.M., New York time, on
any business day that the Transfer Agent and the New York Stock Exchange
are open. Such purchases will be credited to the shareholder's Fund
account on the next bank business day. To qualify to use Dreyfus
TeleTransfer Privilege, the initial payment for purchase of Fund shares
must be drawn on, and redemption proceeds paid to, the same bank and
account as are designated on the Account Application or Shareholder
Services Form on file. If the proceeds of a particular redemption are to
be wired to an account at any other bank, the request must be in writing
and signature-guaranteed. See also "Redemption of Fund Shares - Dreyfus
TeleTransfer Privilege."
Reopening an Account. An investor may reopen an account with a
minimum investment of $100 without filing a new Account Application during
the calendar year the account is closed or during the following calendar
year, provided that the information on the old Account Application is still
applicable.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem Fund Shares."
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire or telephone redemption
instructions from any person representing himself or herself to be the
investor, and reasonably believed by the Transfer Agent to be genuine.
Ordinarily, the Fund will initiate payment for shares redeemed pursuant to
this Privilege on the next business day after receipt if the Transfer Agent
receives the redemption request in proper form. Redemption proceeds will
be transferred by Federal Reserve wire only to the commercial bank account
specified by the investor on the Account Application or Shareholder
Services Form. Redemption proceeds, if wired, must be in the amount of
$1,000 or more and will be wired to the investor's account at the bank of
record designated in the investor's file at the Transfer Agent, if the
investor's bank is a member of the Federal Reserve System, or to a
correspondent bank if the investor's bank is not a member. Fees ordinarily
are imposed by such bank and usually are borne by the investor. Immediate
notification by the correspondent bank to the investor's bank is necessary
to avoid a delay in crediting the funds to the investor's bank account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at
1-800-654-7171 toll free. Investors should advise the operator that the
above transmittal code must be used and should inform the operator of the
Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive wire
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Stock Certificates; Signatures."
Dreyfus TeleTransfer Privilege. Investors should be aware that if
they have selected the Dreyfus TeleTransfer Privilege, requests for
redemption, including wire redemption will be effected as a Dreyfus
TeleTransfer transaction, not a Wire Redemption transaction, through the
Automated Clearing House ("ACH") system unless more prompt transmittal
specifically is requested. Redemption proceeds will be on deposit in the
investor's account at an ACH member bank ordinarily two business days after
receipt of the redemption request. See "Purchase of Fund Shares - Dreyfus
TeleTransfer Privilege."
Stock Certificates; Signatures. Any stock certificates representing
Fund shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each owner of a joint account and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations. Guarantees must be signed by an authorized
signatory of the guarantor and "Signature-Guaranteed" should appear with
the signature. The Transfer Agent may request additional documentation
from corporations, executors, administrators, trustees or guardians and may
accept other suitable verification arrangements from foreign investors such
as consular verification. For more information with respect to signature-
guarantees, please call one of the numbers listed on the cover.
Redemption Commitment. The Fund has committed itself to pay in cash
for all redemption requests by any shareholder of record, limited in amount
during any 90-day period to the lesser of $250,000 or 1% of the value of
the Fund's net assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the Securities and Exchange
Commission. In the case of requests for redemption in excess of such
amount, the Board of Directors reserves the right to make payments in whole
or in part in securities or other assets of the Fund in case of an
emergency or any time a cash distribution would impair the liquidity of the
Fund to the detriment of the existing shareholders. In this event, the
securities would be valued in the same manner as the portfolio of the Fund.
If the recipient sold such securities, brokerage charges would be incurred.
There is no charge for redemption. Should such a charge be
established, shareholders will be given written notice and a reasonable
period within which to redeem shares without charge.
Suspension of Redemption. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (b)
when trading in the markets the Fund normally utilizes is restricted, or
when an emergency exists as determined by the Securities and Exchange
Commission so that disposal of the Fund's investments or determination of
its net asset value is not reasonably practicable, or (c) for such other
periods as the Securities and Exchange Commission by order may permit to
protect the Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Shareholder
Services."
Fund Exchanges. Shares of other funds purchased by exchange will be
purchased on the basis of relative net asset value per share as follows:
A. Exchanges for shares of funds that are offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a
sales load, and additional shares acquired through reinvestment
of dividends or distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales load applicable
to the Offered Shares exceeds the maximum sales load that could
have been imposed in connection with the Purchased Shares (at the
time the Purchased Shares were acquired), without giving effect
to any reduced loads, the difference will be deducted.
To accomplish an exchange under Item D above, shareholders must notify
the Transfer Agent of their prior ownership of fund shares and their
account number.
To request an exchange, an investor must give exchange instructions to
the Transfer Agent in writing or by telephone. The ability to issue
exchange instructions by telephone is given to all Fund shareholders
automatically, unless the investor checks the applicable "No" box on the
Account Application, indicating that the investor specifically refuses this
privilege. By using the Telephone Exchange Privilege, the investor
authorizes the Transfer Agent to act on telephonic instructions from any
person representing himself or herself to be the investor, and believed by
the Transfer Agent to be genuine. The Transfer Agent's records of such
instructions are binding. Telephone exchanges may be subject to
limitations as to amount involved or the number of telephone exchanges
permitted. Shares issued in certificate form are not eligible for
telephone exchanges.
To establish a Personal Retirement Plan by exchange, shares of the
fund being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made.
For Dreyfus-sponsored Keogh Plans and IRAs, including IRAs set up under a
Simplified Employee Pension Plan ("SEP-IRAs"), with only one participant,
the minimum initial investment is $750. To exchange shares held in
Corporate Plans, 403(b)(7) Plans and SEP-IRAs with more than one
participant, the minimum initial investment is $100 if the plan has at
least $2,500 invested among the funds in the Dreyfus Family of Funds. To
exchange shares held in Personal Retirement Plans, the shares exchanged
must have a current value of at least $100.
Dreyfus Auto-Exchange Privilege. The Dreyfus Auto-Exchange Privilege
permits an investor to purchase, in exchange for shares of the Fund, shares
of another fund in the Dreyfus Family of Funds. This Privilege is
available only for existing accounts. Shares will be exchanged on the
basis of relative net asset value as described above under "Exchange
Privilege." Enrollment in or modification or cancellation of this
Privilege is effective three business days following notification by the
investor. Investors will be notified if their accounts fall below the
amount designated to be exchanged under this Privilege. In this case, an
investor's account will fall to zero unless additional investments are made
in excess of the designated amount prior to the next Auto-Exchange
transaction. Shares held under IRA and other retirement plans are eligible
for this Privilege. Exchanges of IRA shares may be made between IRA
accounts and from regular accounts to IRA accounts, but not from IRA
accounts to regular accounts. With respect to all other retirement
accounts, exchanges may be made only among those accounts.
Fund Exchanges and Dreyfus Auto-Exchange Privilege are available to
shareholders resident in any state in which the fund being acquired may
legally be sold. Shares may be exchanged only between fund accounts having
identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds in the
Dreyfus Family of Funds may be obtained by calling 1-800-645-6561. The
Fund reserves the right to reject any exchange request. The Fund Exchanges
services or Dreyfus Auto-Exchange Privilege may be modified or terminated
at any time upon notice to shareholders.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the
yield on the shares. If withdrawal payments exceed reinvested dividends
and distributions, the investor's shares will be reduced and eventually may
be depleted. There is a service charge of $.50 for each withdrawal check.
The Automatic Withdrawal Plan may be terminated at any time by the
investor, the Fund or the Transfer Agent. Shares for which certificates
have been issued may not be redeemed through the Automatic Withdrawal Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest on payment date their dividends and any capital gains distributions
from the Fund in shares of another fund in the Dreyfus Family of Funds of
which the investor is a shareholder. Shares of other funds purchased
pursuant to Dreyfus Dividend Sweep will be purchased on the basis of
relative net asset value per share as follows:
A. Dividends and distributions paid by a fund may be invested
without imposition of the sales load in shares of other funds
that are offered without a sales load.
B. Dividends and distributions paid by a fund which does not charge
a sales load may be invested in shares of other funds sold with a
sales load, and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which charges a sales
load may be invested in shares of other funds sold with a sales
load (referred to herein as "Offered Shares"), provided that, if
the sales load applicable to the Offered Shares exceeds the
maximum sales load charged by the fund from which dividends or
distributions are being swept, without giving effect to any
reduced loads, the difference will be deducted.
D. Dividends and distributions paid by a fund may be invested in
shares of other funds that impose a contingent deferred sales
charge ("CDSC") and the applicable CDSC, if any, will be imposed
upon redemption of such shares.
Dreyfus Payroll Savings Plan. The Dreyfus Payroll Savings Plan allows
investors to purchase Fund shares (minimum of $100 per transaction)
automatically on a regular basis. A Dreyfus Payroll Savings Plan account
can only be established by filing an authorization form with your
employer's payroll department, which must complete the reverse side of the
form and return it to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. You may obtain the necessary
authorization form from the Distributor.
Corporate Pension/Profit-Sharing and Personal Retirement Plans. The
Fund makes available to corporations a variety of prototype pension and
profit-sharing plans, including a 401(k) Salary Reduction Plan. In
addition, the Fund makes available Keogh Plans, IRAs, including SEP-IRAs
and IRA "Rollover Accounts," and 403(b)(7) Plans. Plan support services
also are available. Investors can obtain details on the various plans by
calling the following numbers toll free: for Keogh Plans, please call 1-
800-358-5566; for IRAs and IRA "Rollover Accounts," please call 1-800-645-
6561; for SEP-IRAs, 401(k) Salary Reduction Plans and 403(b)(7) Plans,
please call 1-800-322-7880.
Investors who wish to purchase Fund shares in conjunction with a Keogh
Plan, a 403(b)(7) Plan or an IRA, including a SEP-IRA, may request from the
Distributor forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or
IRAs may charge a fee, payment of which could require the liquidation of
shares. All fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity acting as custodian. Purchases for these plans may
not be made in advance of receipt of funds.
The minimum initial investment for corporate plans, Salary Reduction
Plans, 403(b)(7) Plans, and SEP-IRAs with more than one participant, is
$2,500 with no minimum on subsequent purchases. The minimum initial
investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and 403(b)(7)
Plans with only one participant, is normally $750, with no minimum on
subsequent purchases. Individuals who open an IRA also may open a
non-working spousal IRA with a minimum investment of $250.
The investor should read the Prototype Retirement Plan and the Bank
Custodial Agreement for further details on eligibility, service fees and
tax implications, and should consult a tax adviser.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
Valuation of Portfolio Securities. Portfolio securities, including
warrants and covered call options written, are valued at the last sales
price on the securities exchange on which the securities primarily are
traded or at the last sales price on the national securities market.
Securities not listed on an exchange or national securities market, or
securities in which there were no transactions, are valued at the average
of the most recently reported bid and asked prices. Market quotations of
foreign securities in foreign currencies are translated into U.S. dollars
at the prevailing rates of exchange. Any securities or other assets for
which market quotations are not readily available are valued at fair value
as determined in good faith by the Board of Directors. The Board of
Directors will review the method of valuation on a regular basis. In
making their good faith valuation, the Board will generally take the
following into consideration: restricted securities which are, or are
convertible into, securities of the same class of securities for which a
public market exists usually will be valued at market value less the same
percentage discount at which purchased. This discount will be revised
periodically by the Board of Directors if they believe that it no longer
reflects the value of the restricted securities. Restricted securities not
of the same class as securities for which a public market exists will
usually be valued initially at cost. Any subsequent adjustments from cost
will be based upon considerations deemed relevant by the Board of
Directors. Expenses and fees, including the advisory fees, are accrued
daily and taken into account for the purpose of determining the net asset
value of Fund shares.
New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Shareholder
Services Plan."
The Fund has adopted a Shareholder Services Plan (the "Plan") pursuant
to which the Fund reimburses Dreyfus Service Corporation, a wholly-owned
subsidiary of the Manager, for certain allocated expenses of providing
personal services and/or maintaining shareholder accounts. 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.
A quarterly report of the amounts expended under the Plan, and the
purposes for which such expenditures were incurred, must be made to the
Directors for their review. In addition, the Plan provides that material
amendments of the Plan must be approved by the Board of Directors, and by
the Directors who are not "interested persons" (as defined in the Act) of
the Fund and have no direct or indirect financial interest in the operation
of the Plan by vote cast in person at a meeting called for the purpose of
considering such amendments. The Plan is subject to annual approval by
such vote of the Directors cast in person at a meeting called for the
purpose of voting on the Plan. The Plan is terminable at any time by vote
of a majority of the Directors who are not "interested persons" and have no
direct or indirect financial interest in the operation of the Plan.
For the year ended May 31, 1995, $474,919 was charged to the Fund
under the Plan.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Dividends,
Distributions and Taxes."
Management believes that the Fund qualified for the fiscal year ended
May 31, 1995 as a "regulated investment company" under the Internal Revenue
Code of 1986, as amended (the "Code"). The Fund intends to continue to so
qualify if such qualification is in the best interests of its shareholders.
Qualification as a "regulated investment company" relieves the Fund of any
liability for Federal income taxes to the extent its net investment income
and net realized capital gains are distributed in accordance with
applicable provisions of the Code. Among the requirements for such
qualification is that less than 30% of the Fund's income be derived from
gains from the sale or other disposition of securities held for less than
three months, the Fund must distribute at least 90% of its net income
(consisting of net investment income and net short-term capital gain) to
its shareholders, and the Fund must meet certain asset diversification and
other requirements. Accordingly, the Fund may be restricted in the selling
of securities held for less than three months, and in the utilization of
certain of the investment techniques described in the Prospectus. The
Code's rules regarding the determination of the holding period of property
comprising a straddle, however, should make it easier for the Fund to
satisfy the 30% test. The term "regulated investment company" does not
imply the supervision of management or investment practices or policies by
any government agency.
Any dividend or distribution paid shortly after an investor's purchase
may have the effect of reducing the net asset value of the shares below the
original cost of his investment. Such dividend or distribution would be a
return on investment in an economic sense although taxable as stated above.
In addition, the Code provides that if a shareholder holds shares of the
Fund for six months (or such shorter period as the Internal Revenue Service
may prescribe by regulations) and has received a capital gain dividend with
respect to such shares, any loss incurred on the sale of such shares will
be treated as long-term capital loss to the extent of the capital gain
dividend received.
Depending upon the composition of the Fund's income, the entire amount
or a portion of the dividends from net investment income may qualify for
the dividends received deduction allowable to qualifying U.S. corporate
shareholders ("dividends received deduction"). In general, dividend income
of the Fund distributed to its qualifying corporate shareholders will be
eligible for the dividends received deduction only to the extent that (i)
the Fund's income consists of dividends paid by U.S. corporations and (ii)
the Fund would have been entitled to the dividends received deduction with
respect to such dividend income if the Fund were not a regulated investment
company. However, Section 246(c) of the Code provides that if a qualifying
corporate shareholder has disposed of Fund shares not held for more than 45
days and has received a dividend from net investment income with respect to
such shares, the portion designated by the Fund as qualifying for the
dividends received deduction will not be eligible for such shareholder's
dividends received deduction. In addition, the Code provides other
limitations with respect to the ability of a qualifying corporate
shareholder to claim the dividends received deduction in connection with
holding Fund shares.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gain or loss. However, all or a portion of the gain
or loss from the disposition of non-U.S. dollar denominated securities
(including debt instruments, certain financial forward, futures and option
contracts, and certain preferred stock) may be treated as ordinary income
or loss under Section 988 of the Code. In addition, all or a portion of
the gain realized from the disposition of certain market discount bonds
will be treated as ordinary income under Section 1276. Finally, all or a
portion of the gain realized from engaging in "conversion transactions" may
be treated as ordinary income under Section 1258. "Conversion
transactions" are defined to include certain forward, futures, option and
straddle transactions, transactions marketed or sold to produce capital
gains, or transactions described in Treasury regulations to be issued in
the future.
Under Section 1256 of the Code, any gain or loss realized by the Fund
from certain options transactions will be treated as 60% long-term capital
gain or loss and 40% short-term capital gain or loss. Gain or loss will
arise upon the exercise or lapse of such options as well as from closing
transactions. In addition, any such options remaining unexercised at the
end of the Fund's taxable year will be treated as sold for their then fair
market value, resulting in additional gain or loss to the Fund
characterized in the manner described above.
Offsetting positions held by the Fund involving certain financial
forward, futures or options contracts may be considered, for tax purposes,
to constitute "straddles." "Straddles" are defined to include "offsetting
positions" in personal property. The tax treatment of "straddles" is
governed by Sections 1092 and 1258 of the Code, which, in certain
circumstances, override or modify the provisions of Sections 988 and 1256.
As such, all or a portion of any short or long-term capital gains from
certain "straddle" transactions may be recharacterized as ordinary income.
If the Fund were treated as entering into "straddles" by reason of its
engaging in certain financial forward, futures or options contracts, such
"straddles" could be characterized as "mixed straddles" if at least one
(but not all) of the positions comprising such straddles are "Section 1256
contracts." A "Section 1256 contract" is defined to include any regulated
futures contract, foreign currency contract, non-equity option, and dealer
equity option. Section 1256(d) of the Code permits the Fund to elect not
to have Section 1256 apply with respect to "mixed straddles." If no such
election is made, to the extent the "straddle" rules apply to positions
established by the Fund, losses realized by the Fund will be deferred to
the extent of unrealized gain in any offsetting positions. Moreover, as a
result of the "straddle" and the conversion transaction rules, short-term
capital loss on "straddle" positions may be recharacterized as long-term
capital loss, and long-term capital gain may be recharacterized as
short-term capital gain or ordinary income.
PORTFOLIO TRANSACTIONS
The Manager assumes general supervision over placing orders on behalf
of the Fund for the purchase or sale of portfolio securities. Allocation
of brokerage transactions, including their frequency, is made in the best
judgment of the Manager and in a manner deemed fair and reasonable to
shareholders, rather than by any formula. The primary consideration in all
portfolio securities transactions is prompt execution of orders at the most
favorable net price. When this primary consideration is met to the
satisfaction of the Manager, brokers may also be selected because of their
ability to handle special executions such as are involved in large block
trades or broad distributions. Large block trades may, in certain cases,
result from two or more funds advised or administered by the Manager being
engaged simultaneously in the purchase or sale of the same security.
Subject to the primary consideration, particular brokers selected may also
include those who supplement the Manager's and NCM's research facilities
with statistical data, investment information, economic facts and opinions;
sales of Fund shares by a broker may be taken into consideration.
Information so received is in addition to and not in lieu of services
required to be performed by the Manager and NCM and their fees are not
reduced as a consequence of the receipt of such supplemental information.
Such information may be useful to the Manager in serving both the Fund and
other funds which it advises and to NCM in serving both the Fund and the
other accounts it manages, and, conversely, supplemental information
obtained by the placement of business of other clients may be useful to the
Manager and NCM in carrying out their obligations to the Fund. The overall
reasonableness of brokerage commissions paid is evaluated by the Manager
based upon its knowledge of available information as to the general level
of commissions paid by other institutional investors for comparable
services. When transactions are executed in the over-the-counter market,
the Fund will deal with the primary market makers unless a more favorable
price or execution is otherwise obtainable. Although it is not possible to
place a dollar value on the research services received from brokers who
effect transactions in portfolio securities, it is the opinion of the
Manager that these services should not reduce the overall expenses of its
research department.
For its portfolio securities transactions for the fiscal years ended
May 31, 1993, 1994 and 1995, the Fund paid total brokerage commissions of
$813,956, $983,514 and $1,445,266, respectively, none of which was paid to
the Distributor. The above figures for brokerage commissions paid do not
include gross spreads and concessions on principal transactions which,
where determinable, amounted to $1,184,974, $662,268 and $0 in fiscal years
1993, 1994 and 1995, respectively, none of which was paid to the
Distributor.
The Fund's portfolio turnover rates (exclusive of U.S. Government
securities and short-term investments) for the fiscal years ended May 31,
1994 and 1995 were 71.70% and 133.54%, respectively.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Performance
Information."
The Fund's average annual total return for the one, five and ten year
periods ended May 31, 1995 was 11.81%, 8.29% and 10.86%, respectively.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000
payment made at the beginning of the period (assuming the reinvestment of
dividends and distributions), dividing by the amount of the initial
investment, taking the "n"th root of the quotient (where "n" is the number
of years in the period) and subtracting 1 from the result.
The Fund's total return for the period March 29, 1972 to May 31, 1995
was 1,126.08%. Total return is calculated by subtracting the amount of the
Fund's net asset value per share at the beginning of a stated period from
the net asset value per share at the end of the period (after giving effect
to the reinvestment of dividends and distributions during the period), and
dividing the result by the net asset value per share at the beginning of
the period.
From time to time, advertising material for the Fund may discuss or
portray the principles of dollar-cost-averaging and may refer to
Morningstar or Value Line ratings and related analyses supporting the
ratings.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "General
Information."
Each share has one vote and, when issued and paid for in accordance
with the terms of the offering, is fully paid and non-assessable. Shares
of stock are of one class and have equal rights as to voting, redemption,
dividends, and in liquidation. Shares have no preemptive, subscription or
conversion rights and are freely transferable.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT,
COUNSEL AND INDEPENDENT AUDITORS
The Bank of New York, 90 Washington Street, New York, New York 10286,
is the Fund's custodian. The Shareholder Services Group, Inc., a
subsidiary of First Data Corporation, P.O. Box 9671, Providence, Rhode
Island 02940-9671 is the Fund's transfer and dividend disbursing agent.
Neither The Bank of New York nor The Shareholder Services Group, Inc. has
any part in determining the investment policies of the Fund or which
securities are to be purchased or sold by the Fund.
Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, New York
10103, as counsel for the Fund, has rendered its opinion as to certain
legal matters in connection with the shares of Capital Stock being sold
pursuant to the Fund's Prospectus to which this Statement of Additional
Information relates.
Ernst & Young LLP, independent auditors, 787 Seventh Avenue, New York,
New York 10019, have been selected as auditors of the Fund.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
ONE YEAR ENDED FIVE YEARS ENDED TEN YEARS ENDED FROM INCEPTION (3/29/72)
MAY 31, 1995 MAY 31, 1995 MAY 31, 1995 TO MAY 31, 1995
----------------- ------------------ ------------------ ---------------------------
<S> <C> <C> <C>
11.81% 8.29% 10.86% 11.42%
</TABLE>
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in The Dreyfus Third
Century Fund on 3/29/72 (Inception Date) to a $10,000 investment made in the
Standard & Poor's 500 Composite Stock Price Index on that date. For
comparative purposes, the value of the Index on 3/31/72 is used as the
beginning value on 3/29/72. All dividends and capital gain distributions are
reinvested.
The Dreyfus Third Century Fund primarily seeks capital growth through
investment in common stocks of companies that, in the opinion of the Fund's
management, not only meet traditional investment standards, but which also
show evidence that they conduct their business in a manner that contributes
to the enhancement of the quality of life in America. Current income is a
secondary goal. The Fund's performance shown in the line graph takes into
account all applicable fees and expenses. The Standard & Poor's 500 Composite
Stock Price Index is a widely accepted, unmanaged index of overall stock
market performance which does not take into account charges, fees and other
expenses and is not subject to the same socially responsible investment
criteria as The Dreyfus Third Century Fund. Further information relating to
Fund performance is contained in the Condensed Financial Information section
of the Prospectus and elsewhere in this report.
<TABLE>
<CAPTION>
THE DREYFUS THIRD CENTURY FUND, INC.
STATEMENT OF INVESTMENTS MAY 31, 1995
COMMON STOCKS-91.8% SHARES VALUE
-------------- -------------
<S> <C> <C> <C>
CONSUMER DURABLES- 2.9% American Greetings, Cl. A................. 236,100 $ 6,669,825
Sunbeam................................... 231,400 4,194,125
--------------
10,863,950
--------------
CONSUMER
NON-DURABLES-12.0% Campbell Soup............................. 142,500 7,000,312
Coca-Cola................................. 155,400 9,615,375
Colgate-Palmolive......................... 105,800 8,146,600
Gillette.................................. 85,800 7,239,375
IBP....................................... 119,500 4,481,250
NIKE, Cl. B............................... 55,800 4,401,225
PepsiCo................................... 71,300 3,493,700
--------------
44,377,837
--------------
CONSUMER SERVICES-3.6% Capital Cities/ABC........................ 63,700 6,147,050
Disney (Walt)............................. 131,400 7,309,125
--------------
13,456,175
--------------
ENERGY-5.0% Imperial Oil.............................. 243,900 9,481,613
Schlumberger.............................. 137,100 8,911,500
--------------
18,393,113
--------------
FINANCE-10.7% ADVANTA, Cl. A............................ 109,800 4,282,200
AFLAC..................................... 99,100 4,162,200
American International Group.............. 33,900 3,856,125
Bank of New York.......................... 111,000 4,523,250
Citicorp.................................. 98,900 5,291,150
Federal National Mortgage Association..... 64,400 5,989,200
Green Tree Financial...................... 176,400 7,695,450
Midlantic................................. 100,700 3,814,012
--------------
39,613,587
--------------
HEALTH CARE-14.2 Amgen..................................(a) 74,300 5,386,750
Becton, Dickinson......................... 133,800 7,693,500
Bristol-Myers Squibb...................... 139,000 9,226,125
Cordis.................................(a) 100,100 6,906,900
Forest Laboratories....................(a) 67,500 2,978,438
HealthCare COMPARE.....................(a) 95,000 2,968,750
Johnson & Johnson......................... 58,800 3,895,500
Medtronic................................. 49,800 3,747,450
Merck & Co................................ 204,002 9,613,594
--------------
52,417,007
--------------
THE DREYFUS THIRD CENTURY FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1995
COMMON STOCKS (CONTINUED) SHARES VALUE
-------------- --------------
INDUSTRIAL SERVICES-.9% Empresas ICA Sociedad, A.D.S.............. 467,300 $ 3,271,100
--------------
NON-ENERGY MINERALS-4.2% British Steel, A.D.S...................... 134,200 3,774,375
Phelps Dodge.............................. 75,300 4,150,913
Santa Fe Pacific Gold..................... 208,461 2,605,762
Terra Industries.......................... 476,300 4,763,000
--------------
15,294,050
--------------
PROCESS INDUSTRIES-.9% Scott Paper............................... 76,200 3,305,175
--------------
PRODUCER
MANUFACTURING-10.1% AGCO...................................... 119,200 4,514,700
Briggs & Stratton......................... 194,500 6,904,750
Dover..................................... 62,900 4,127,813
Eaton..................................... 120,600 7,371,675
Parker-Hannifin........................... 114,100 6,517,962
Philips Electronics, N.V. ................ 193,600 7,768,200
--------------
37,205,100
--------------
RETAIL TRADE-1.5% Consolidated Stores....................(a) 296,800 5,565,000
--------------
TECHNOLOGY-19.0% Apple Computer 88,000 3,657,500
Applied Materials......................(a) 64,200 4,943,400
Computer Associates International......... 111,300 7,290,150
EMC....................................(a) 513,300 11,805,900
Hewlett-Packard........................... 117,600 7,776,300
Linear Technology......................... 121,600 7,448,000
Oracle Systems.........................(a) 329,900 11,464,025
Sun Microsystems.......................(a) 171,700 7,726,500
3Com...................................(a) 124,100 7,942,400
--------------
70,054,175
--------------
TRANSPORTATION-.9% Federal Express........................(a) 52,700 3,155,413
--------------
UTILITIES-5.9%. Century Telephone Enterprises............. 123,300 3,621,938
Duke Power................................ 140,800 5,878,400
GTE....................................... 197,100 6,578,212
Public Service Enterprise Group........... 193,600 5,759,600
--------------
21,838,150
--------------
TOTAL COMMON STOCKS
(cost $289,913,158)....................... $338,809,832
==============
THE DREYFUS THIRD CENTURY FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1995
PRINCIPAL
SHORT-TERM INVESTMENTS-4.7% AMOUNT VALUE
-------------- --------------
U.S. TREASURY BILLS: 5.72%, 6/22/95............................ $ 293,000 $ 292,048
5.54%, 7/6/95............................. 4,392,000 4,368,151
5.57%, 7/20/95............................ 1,851,000 1,836,988
5.58%, 7/27/95............................ 894,000 886,240
5.59%, 8/3/95............................. 9,962,000 9,864,970
--------------
TOTAL SHORT-TERM INVESTMENTS
(cost $17,248,175)...................... $ 17,248,397
==============
TOTAL INVESTMENTS (cost $307,161,333).................................. 96.5% $356,058,229
======== ==============
CASH AND RECEIVABLES (NET)............................................. 3.5% $ 12,775,208
======== ==============
NET ASSETS..................................................................... 100.0% $368,833,437
======== ==============
</TABLE>
NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.
See notes to financial statements.
<TABLE>
<CAPTION>
THE DREYFUS THIRD CENTURY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1995
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $307,161,333)-see statement..................................... $356,058,229
Cash.................................................................... 10,083,216
Receivable for investment securities sold............................... 3,982,625
Dividends receivable.................................................... 559,479
Receivable for subscriptions to Common Stock............................ 780
Prepaid expenses........................................................ 44,895
-------------
370,729,224
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 226,101
Payable for investment securities purchased............................. 1,386,563
Payable for Common Stock redeemed....................................... 29,028
Accrued expenses........................................................ 254,095 1,895,787
------------- -------------
NET ASSETS ................................................................ $368,833,437
=============
REPRESENTED BY:
Paid-in capital......................................................... $315,198,723
Accumulated undistributed investment income-net......................... 1,380,221
Accumulated undistributed net realized gain on investments.............. 3,357,597
Accumulated net unrealized appreciation on investments-Note 3........... 48,896,896
-------------
NET ASSETS at value applicable to 49,487,239 shares outstanding
(150 million shares of $.33 1/3 par value Common Stock authorized)...... $368,833,437
=============
NET ASSET VALUE, offering and redemption price per share
($368,833,437 / 49,487,239 shares)...................................... $7.45
=======
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
THE DREYFUS THIRD CENTURY FUND, INC.
STATEMENT OF OPERATIONS YEAR ENDED MAY 31, 1995
INVESTMENT INCOME:
<S> <C> <C>
INCOME:
Cash dividends (net of $66,257 foreign taxes withheld at source)...... $ 5,255,911
Interest.............................................................. 2,132,773
-------------
TOTAL INCOME...................................................... $ 7,388,684
EXPENSES:
Investment advisory fee-Note 2(a)..................................... 2,562,185
Sub-investment advisory fee-Note 2(a)................................. 141,170
Shareholder servicing costs-Note 2(b)................................. 993,582
Professional fees..................................................... 111,780
Custodian fees........................................................ 61,582
Directors' fees and expenses-Note 2(c)................................ 45,689
Registration fees..................................................... 35,521
Prospectus and shareholders' reports.................................. 29,276
Miscellaneous......................................................... 61,200
-------------
TOTAL EXPENSES.................................................... 4,041,985
-----------
INVESTMENT INCOME-NET............................................. 3,346,699
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $12,839,259
Net unrealized appreciation on investments.............................. 22,739,756
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 35,579,015
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $38,925,714
============
</TABLE>
See notes to financial statements.
THE DREYFUS THIRD CENTURY FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
---------------------------------
1994 1995
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 2,524,629 $ 3,346,699
Net realized gain on investments........................................ 43,262,547 12,839,259
Net unrealized appreciation (depreciation) on investments for the year.. (42,310,849) 22,739,756
--------------- ---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 3,476,327 38,925,714
--------------- ---------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................... (2,357,310) (2,986,999)
Net realized gain on investments........................................ (35,948,936) (46,183,615)
--------------- ----------------
TOTAL DIVIDENDS....................................................... (38,306,246) (49,170,614)
--------------- ----------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 133,886,002 68,296,100
Dividends reinvested.................................................... 36,994,901 47,326,617
Cost of shares redeemed................................................. (272,045,796) (126,884,560)
--------------- ----------------
(DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS.............. (101,164,893) (11,261,843)
--------------- ----------------
TOTAL (DECREASE) IN NET ASSETS.................................... (135,994,812) (21,506,743)
NET ASSETS:
Beginning of year....................................................... 526,334,992 390,340,180
--------------- ----------------
End of year (including undistributed investment income-net:
$1,020,521 in 1994 and $1,380,221 in 1995)............................ $ 390,340,180 $ 368,833,437
=============== ===============
SHARES SHARES
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 15,961,262 9,474,361
Shares issued for dividends reinvested.................................. 4,572,917 7,548,119
Shares redeemed......................................................... (32,586,800) (17,546,982)
--------------- ----------------
NET (DECREASE) IN SHARES OUTSTANDING.................................. (12,052,621) (524,502)
=============== ===============
</TABLE>
See notes to financial statements.
THE DREYFUS THIRD CENTURY FUND, INC.
FINANCIAL HIGHLIGHTS
Reference is made to page __ of the Fund's Prospectus dated September 15,
1995.
See notes to financial statements.
THE DREYFUS THIRD CENTURY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a diversified open-end management investment company. The Dreyfus
Corporation ("Dreyfus") serves as the Fund's investment adviser. Tiffany
Capital Advisors, Inc. ("Tiffany") served as the Fund's sub-investment
adviser until August 1, 1994. On August 2, 1994, the Fund's shareholders
approved a new sub-investment advisory agreement between Dreyfus and NCM
Capital Management Group, Inc. to replace the existing sub-investment advisory
agreement between the Fund and Tiffany. Prior to August 24, 1994, the
Dreyfus Service Corporation, a wholly-owned subsidiary of Dreyfus, acted as
the exclusive distributor of the Fund's shares, which are sold to the public
without a sales charge. Effective August 24, 1994, Dreyfus became a direct
subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of FDI Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a wholly-owned subsidiary of FDI
Holdings, Inc., the parent company of which is Boston Institutional Group,
Inc.
(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.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain are normally declared and paid annually, but the Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. 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.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 2-INVESTMENT ADVISORY FEE, SUB-INVESTMENT ADVISORY FEE AND OTHER TRANSACT
IONS WITH AFFILIATES:
THE DREYFUS THIRD CENTURY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(A) Pursuant to the management agreement (new "Agreement") with the
Manager, the management fee is computed at an annual rate of .75 of 1% of the
average daily value of the Fund's net assets and is payable monthly. Prior to
August 2, 1994, fees payable by the Fund pursuant to the provisions of an
Investment Advisory Agreement with Dreyfus and Sub-Investment Advisory
Agreement with Tiffany (prior "Agreements") were payable monthly and computed
on the average daily value of the Fund's net assets at the following annual
rates:
<TABLE>
<CAPTION>
TOTAL NET ASSETS DREYFUS TIFFANY
------------------- ------------- -------------
<S> <C> <C>
The first $200 million............................................ .65 of 1% .10 of 1%
$200 up to $300 million........................................... .40 of 1% .35 of 1%
In excess of $300 million......................................... .375 of 1% .375 of 1%
</TABLE>
Pursuant to a new Sub-Investment Advisory Agreement with NCM Capital
Management Group, Inc., the sub-investment advisory fee is computed at an
annual rate of .10 of 1% on the first $500 million and .20 of 1% on the excess
of the average daily value of the Fund's net assets and is payable monthly by
Dreyfus.
The Agreements further provided that if in any full fiscal year the
aggregate expenses of the Fund, excluding taxes, interest on borrowings,
brokerage and extraordinary expenses, exceed 11\2% of the average value of
the Fund's net assets, the Fund may deduct from the fees to be paid to
Dreyfus and Tiffany, or Dreyfus and Tiffany will bear, such excess, up to the
amount of their respective fees, on a pro rata basis in proportion to the
relative fees otherwise payable to each pursuant to the Agreements. There was
no expense reimbursement for the year ended May 31, 1995.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund reimburses
Dreyfus Service Corporation an amount not to exceed an annual rate of .25 of
1% of the value of the Fund's average daily net assets for servicing
shareholder accounts. 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. During the year ended May
31, 1995, the Fund was charged an aggregate of $474,919 pursuant to the
Shareholder Services Plan.
(C) Prior to August 24, 1994, certain officers and directors of the Fund
were "affiliated persons," as defined in the Act, of the Investment Adviser
and/or Dreyfus Service Corporation. Each director who is not an "affiliated
person" receives an annual fee of $10,000. The Chairman of the Board receives
an additional 25% of such compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
other than short-term securities, for the year ended May 31, 1995 amounted to
$456,267,016 and $418,266,478, respectively.
At May 31, 1995, accumulated net unrealized appreciation on investments
was $48,896,896, consisting of $54,399,198 gross unrealized appreciation and
$5,502,302 gross unrealized depreciation.
At May 31, 1995, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see
the Statement of Investments).
THE DREYFUS THIRD CENTURY FUND, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
THE DREYFUS THIRD CENTURY FUND, INC.
We have audited the accompanying statement of assets and liabilities of
The Dreyfus Third Century Fund, Inc., including the statement of investments,
as of May 31, 1995, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in
the period then ended, and financial highlights for each of the years
indicated therein. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of May 31, 1995 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of The Dreyfus Third Century Fund, Inc. at May 31, 1995, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights
for each of the indicated years, in conformity with generally accepted
accounting principles.
(Ernst & Young LLP Signature Logo)
New York, New York
July 3, 1995
