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PROSPECTUS OCTOBER 1, 1996
THE DREYFUS THIRD CENTURY FUND, INC.
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THE DREYFUS THIRD CENTURY FUND, INC. (THE "FUND") -- CREATED TO MARK
THE ENTRY OF THE UNITED STATES INTO THE THIRD CENTURY OF ITS POLITICAL
EXISTENCE -- IS AN OPEN-END, DIVERSIFIED, MANAGEMENT INVESTMENT COMPANY,
KNOWN AS A MUTUAL FUND. THE FUND'S PRIMARY GOAL IS TO PROVIDE CAPITAL GROWTH.
CURRENT INCOME IS A SECONDARY GOAL.
THE FUND INVESTS PRINCIPALLY IN COMMON STOCKS, OR SECURITIES
CONVERTIBLE INTO COMMON STOCK, OF COMPANIES WHICH, IN THE OPINION OF THE
FUND'S MANAGEMENT, NOT ONLY MEET TRADITIONAL INVESTMENT STANDARDS, BUT ALSO
SHOW EVIDENCE THAT THEY CONDUCT THEIR BUSINESS IN A MANNER THAT CONTRIBUTES
TO THE ENHANCEMENT OF THE QUALITY OF LIFE IN AMERICA.
YOU CAN INVEST, REINVEST OR REDEEM SHARES AT ANY TIME WITHOUT CHARGE
OR PENALTY. YOU CAN PURCHASE OR REDEEM SHARES BY TELEPHONE USING DREYFUS TELET
RANSFER.
THE DREYFUS CORPORATION ("DREYFUS") SERVES AS THE FUND'S INVESTMENT
ADVISER. NCM CAPITAL MANAGEMENT GROUP, INC. ("NCM") SERVES AS THE FUND'S
SUB-INVESTMENT ADVISER AND PROVIDES DAY-TO-DAY MANAGEMENT OF THE FUND'S
PORTFOLIO.
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT
YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED OCTOBER 1, 1996, WHICH
MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF CERTAIN
AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST TO SOME
INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND
IS INCORPORATED HEREIN BY REFERENCE. THE SECURITIES AND EXCHANGE COMMISSION
MAINTAINS A WEB SITE (HTTP://WWW.SEC.GOV) THAT CONTAINS THE STATEMENT OF
ADDITIONAL INFORMATION, MATERIAL INCORPORATED BY REFERENCE, AND OTHER
INFORMATION REGARDING THE FUND. FOR A FREE COPY OF THE STATEMENT OF
ADDITIONAL INFORMATION, WRITE TO THE FUND AT 144 GLENN CURTISS BOULEVARD,
UNIONDALE, NEW YORK 11556-0144, OR CALL 1-800-645-6561. WHEN TELEPHONING, ASK
FOR OPERATOR 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. THE NET ASSET VALUE OF FUNDS OF THIS TYPE WILL FLUCTUATE FROM TIME TO
TIME.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <S> <C>
PAGE PAGE
ANNUAL FUND OPERATING EXPENSES ..... 3 SHAREHOLDER SERVICES................. 11
CONDENSED FINANCIAL INFORMATION..... 3 HOW TO REDEEM SHARES................. 14
DESCRIPTION OF THE FUND............. 4 SHAREHOLDER SERVICES PLAN............ 16
MANAGEMENT OF THE FUND.............. 7 DIVIDENDS, DISTRIBUTIONS AND TAXES .. 16
HOW TO BUY SHARES................... 9 PERFORMANCE INFORMATION.............. 18
GENERAL INFORMATION.................. 18
</TABLE>
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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[This Page Intentionally Left Blank]
Page 2
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
<S> <C>
Management Fees............................................................................. .75%
Other Expenses ............................................................................. .36%
Total Fund Operating Expenses............................................................... 1.11%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
You would pay the following expenses on
a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the
end of each time period: $11 $35 $61 $135
</TABLE>
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THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL
RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL
RETURN GREATER OR LESS THAN 5%.
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The purpose of the foregoing table is to assist you in understanding
the various costs and expenses borne by the Fund and therefore indirectly by
investors, the payment of which will reduce investors' annual return. The
foregoing table does not reflect any fee waivers or expense reimbursement
arrangements that may be in effect. See "Management of the Fund" and
"Shareholder Services Plan."
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by Ernst &
Young LLP, the Fund's independent auditors, whose report thereon appears in
the Statement of Additional Information. Further financial data and related
notes are included in the Statement of Additional Information, available upon
request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share
of Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each year indicated. This information
has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Year Ended May 31,
-----------------------------------------------------------------------------------------------
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning
of year $8.13 $7.73 $5.76 $6.33 $7.01 $7.79 $7.80 $8.48 $7.80 $7.45
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net.... .23 .19 .29 .21 .06 .05 .04 .05 .07 .03
Net realized and unrealized
gain (loss) on investments.... .64 (.53) .84 .84 1.07 .26 .74 (.08) .65 2.39
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .87 (.34) 1.13 1.05 1.13 .31 .78 (.03) .72 2.42
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net (.31) (.36) (.30) (.18) (.12) (.08) (.05) (.04) (.07) (.05)
Dividends from net realized
gain on investments......... (.96) (1.27) (.26) (.19) (.23) (.22) (.05) (.61) (1.00) (.57)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS...... (1.27) (1.63) (.56) (.37) (.35) (.30) (.10) (.65) (1.07) (.62)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year $7.73 $5.76 $6.33 $7.01 $7.79 $7.80 $8.48 $7.80 $7.45 $9.25
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN 14.53% (3.92%) 20.54% 17.26% 17.19% 3.92% 10.02% (.63%) 11.81% 33.63%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets .99% 1.02% 1.04% 1.05% 1.04% 1.08% 1.11% 1.17% 1.12% 1.11%
Ratio of net investment income
to average
net assets............... 2.95% 2.94% 4.71% 3.19% 1.10% .83% .48% .52% .93% .36%
Portfolio Turnover Rate.. 32.66% 36.76% 52.82% 162.82% 72.57% 47.92% 67.30% 71.70% 133.54% 92.08%
Net Assets, end of year
(000's Omitted) $169,944 $152,533 $168,579 $195,658 $266,126 $443,533 $526,335 $390,340 $368,833 $473,452
</TABLE>
Page 3
Further information about the Fund's performance is contained in the
Fund's annual report, which may be obtained without charge by writing to the
address or calling the number set forth on the cover page of this Prospectus.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVES -- The Fund's primary goal is to provide capital growth
through equity investment in 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
secondary to the primary goal. There can be no assurances that the Fund's
investment objectives will be achieved.
SPECIAL CONSIDERATIONS -- TYPES OF COMPANIES SOUGHT FOR INVESTMENT _ To
assess whether a company contributes to the enhancement of the quality of
life in America, the Fund considers a company's record in the areas of (1)
protection and improvement of the environment and the proper use of our
natural resources, (2) occupational health and safety, (3) consumer
protection and product safety, and (4) equal employment opportunity.
Consistent with its consumer protection screen, the Fund will not purchase
shares in a company which manufactures tobacco products. There are few
generally accepted measures of achievement in these areas. The development of
suitable measurement techniques, therefore, will be largely within the
discretion and judgment of the management of the Fund. Management does not
intend at present to evaluate in depth a company's activities not directly
connected with the conduct of its business (such as participation in
community improvement projects) or the secondary implications of corporate
activities (for example, in examining banks, the business activities of their
borrowers will not be evaluated).
The Fund's special considerations tend to limit the availability of
investment opportunities more than is customary with other investment
companies, including those managed by Dreyfus. Management believes, however,
that there are sufficient investment opportunities among companies which meet
the Fund's special considerations to permit full investment, if management
believes it desirable, in securities which meet the Fund's investment
objective of capital growth through equity investment.
The Fund's objectives and special considerations described above
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.
The Fund's Board of Directors may adopt additional criteria or
restrictions governing the Fund's investments if the Board of Directors
determines that the new criteria or restrictions are consistent with the
Fund's objective of investing in a socially responsible manner, but the Board
may not change the four existing special considerations described above
without shareholder approval.
THE INVESTMENT SELECTION PROCESS _ Potential investment portfolio selections
(based on traditional investment considerations, including an opinion of the
fundamental value of the security and other market factors) are designated to
the Dreyfus research staff. The staff begins a process of searching publicly
available information about the company to determine its record in the areas
of special concern to the Fund. Researchers use commercially available
computer data bases and reviews and evaluations published or made available
by "watchdog" groups whose interests focus on one or more of the special
areas, such as the environment, equal employment opportunity, product safety
or occupational safety and health, as applicable. Additional data may be
obtained, where practical, from local, state and federal agencies which
maintain surveillance in certain areas of interest to the Fund and which
provide this data to the public.
If the initial evaluation reveals no negative pattern in the areas of
special concern to the Fund, a company's securities are eligible for purchase.
The research staff supplements this initial screening by asking the company
to complete a questionnaire designed by the Fund to aid in the evaluation of
the
Page 4
company's conduct in the areas of special concern. The examination of a
company may also include personal interviews with company officials,
inspection of facilities and other techniques that may be applicable to
specific companies or industries.
If it is determined at any stage that purchase or retention of the
portfolio security is not consistent with the Fund's goal of investing in
companies whose conduct contributes to the enhancement of the quality of life
in America, the security will not be purchased or, if already purchased, will
be sold as expeditiously as possible, consistent with the best interests of
the Fund.
The Board will review new portfolio acquisitions in light of the
Fund's special concerns at their next regular meeting. While the Board of
Directors will disqualify a company evidencing a pattern of conduct that is
inconsistent with the Fund's special standards, the Board need not disqualify
a company on the basis of incidents that, in the Board's judgment, do not
reflect the company's policies and overall current level of performance in
the areas of special concern to the Fund. The performance of companies in the
areas of special concern are reviewed regularly to determine their continued
eligibility.
MANAGEMENT POLICIES _ Depending on market conditions, the Fund attempts to be
fully invested in common stock, or securities convertible into common stock,
which meet both traditional investment standards and the Fund's investment
criteria described under "Types of Companies Sought for Investment."
As a fundamental policy, the Fund is permitted to borrow to the
extent permitted under the Act. However, the Fund currently intends to borrow
money only for temporary or emergency (not leveraging) purposes, in an amount
up to 15% of the value of the Fund's total assets (including the amount
borrowed) valued at the lesser of cost or market, less liabilities (not
including the amount borrowed) at the time the borrowing is made. While
borrowings exceed 5% of the Fund's total assets, the Fund will not make any
additional investments.
The Fund may invest up to 15% of the value of its net assets in
securities which are illiquid securities, provided such investments are
consistent with the Fund's investment objective. Illiquid securities are
securities which are not readily marketable, such as certain securities that
are subject to legal or contractual restrictions on resale, repurchase
agreements providing for settlement in more than seven days after notice, and
certain options traded in the over-the-counter market and securities used to
cover such options. Investment in illiquid securities subjects the Fund to
the risk that it will not be able to sell such securities when it may be
opportune to do so.
During periods in which management believes adverse trends are
occurring in the financial markets or the economy, the Fund may adopt a
temporary defensive posture to preserve shareholders' capital by investing in
U.S. Government securities, and also in corporate bonds, high grade
commercial paper, repurchase agreements, time deposits, bank certificates of
deposit, bankers' acceptances and other short-term bank obligations issued in
this country as well as those issued in dollar denominations by the foreign
branches of U.S. banks, and cash or cash equivalents, without limit as to
amount, as long as such investments are made in securities of eligible
companies and domestic banks. When the Fund has adopted a temporary defensive
posture, the entire portfolio can be so invested. During such periods, the
Fund may not achieve its investment objectives.
Repurchase agreements involve the acquisition by the Fund of an
underlying debt instrument subject to an obligation of the seller to
repurchase, and the Fund to resell, the instrument at a fixed price, usually
not more than one week after its purchase. The Fund's custodian will have
custody of, and will hold in a segregated account, securities acquired by the
Fund under a repurchase agreement. Repurchase agreements are considered by
the staff of the Securities and Exchange Commission to be loans by the Fund.
In an attempt to reduce the risk of incurring a loss on a repurchase
agreement, the Fund will enter into repurchase agreements only with domestic
banks with total assets in excess of one billion dollars or primary
government securities dealers reporting to the Federal Reserve Bank of New
Page 5
York with respect to securities of the type in which the Fund may invest, and
the Fund will require that additional securities be deposited with its
custodian if the value of the securities purchased should decrease below
resale price. Dreyfus will monitor on an ongoing basis the value of the
collateral to assure that it always equals or exceeds the repurchase price.
Certain costs may be incurred by the Fund in connection with the sale of the
securities if the seller does not repurchase them in accordance with the
repurchase agreement. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the securities, realization on the securities
by the Fund may be delayed or limited. The Fund will consider on an ongoing
basis the creditworthiness of the institutions with which it enters into
repurchase agreements.
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period
of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven
days) at a stated interest rate. Time deposits which may be held by the Fund
will not benefit from insurance from the Bank Insurance Fund or the Savings
Association Insurance Fund administered by the Federal Deposit Insurance
Corporation.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments reflect
the obligation both of the bank and of the drawer to pay the full amount of
the instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.
To earn additional income on its portfolio, the Fund may write and
sell covered call option contracts on securities it owns to the extent of 20%
of the value of its net assets at the time such option contracts are written.
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. A covered call option sold by the Fund,
which is a call option on a security owned 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.
A more detailed description of the securities in which the Fund may
invest can be found in the Statement of Additional Information.
The Fund may invest in companies with substantial overseas
activities, but, at present, management will not examine corporate activities
carried on outside the United States.
CERTAIN FUNDAMENTAL POLICIES -- The Fund may (i) borrow money to the extent
permitted under the Act, which currently limits borrowing to no more than 331/
3% of the value of the Fund's total assets; (ii) invest up to 5% of the value
of its total net assets in the securities of any one issuer (except
securities of the U.S. Government or any instrumentality thereof); (iii)
invest in companies having less than three years continuous operating history
(including that of predecessors) but only in an amount up to 5% of the value
of its net assets; and (iv) invest up to 25% of the value of its total assets
in any single industry. This paragraph describes fundamental policies of the
Fund which cannot be changed without approval by the holders of a majority
(as defined in the Act) of the Fund's outstanding voting shares. See
"Investment Objectives and Management Policies_Investment Restrictions" in
the Fund's Statement of Additional Information.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES -- The Fund may (i) pledge,
hypothecate, mortgage or otherwise encumber its assets, but only to secure
permitted borrowings; and (ii) invest up to 15% of the value of its net
assets in repurchase agreements providing for settlement in more than seven
days after notice and in other illiquid securities. See "Investment
Objectives and Management Policies _ Investment Restrictions" in the Fund's
Statement of Additional Information.
Page 6
INVESTMENT CONSIDERATIONS _ The Fund will not seek to realize profits by
anticipating short-term market movements. When market conditions permit, the
Fund generally intends to retain securities for at least the statutory
long-term capital gain period. The annual portfolio turnover rate indicates
the rate of change in the Fund's portfolio; for instance, a rate of 100%
would result if all the securities in the portfolio at the beginning of an
annual period had been replaced by the end of the period. While the rate of
portfolio turnover will not be a limiting factor when management deems
changes appropriate, it is anticipated that, in view of the Fund's investment
objectives, its annual portfolio turnover rate generally should not exceed
75%. When extraordinary market conditions prevail, a higher turnover rate and
increased brokerage expenses may be expected.
Investment decisions for the Fund are made independently from those
of other investment companies advised by Dreyfus. However, if such other
investment companies are prepared to invest in, or desire to dispose of,
securities of the type which the Fund invests in at the same time as the
Fund, available investments or opportunities for sales will be allocated
equitably to each investment company. In some cases, this procedure may
adversely affect the size of the position obtained for or disposed of by the
Fund or the price paid or received by the Fund.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER _ Dreyfus, located at 200 Park Avenue, New York, New York
10166, was formed in 1947 and serves as the Fund's investment adviser.
Dreyfus is a wholly-owned subsidiary of Mellon Bank, N.A., which is a
wholly-owned subsidiary of Mellon Bank Corporation ("Mellon"). As of August
30, 1996, Dreyfus managed or administered approximately $81 billion in assets
for more than 1.7 million investor accounts nationwide.
Dreyfus supervises and assists in the overall management of the
Fund's affairs under a Management Agreement with the Fund, subject to the
overall authority of the Fund's Board of Directors in accordance with
Maryland law.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international
markets. Mellon is among the twenty-five largest bank holding companies in
the United States based on total assets. Mellon's principal wholly-owned
subsidiaries are Mellon Bank, N.A., Mellon Bank (DE) National Association,
Mellon Bank (MD), The Boston Company, Inc., AFCO Credit Corporation and a
number of companies known as Mellon Financial Services Corporations. Through
its subsidiaries, Mellon managed approximately $220 billion in assets as of
June 30, 1996, including $83 billion in mutual fund assets. As of June 30,
1996, Mellon, through various subsidiaries, provided non-investment services,
such as custodial or administration services, for approximately $876 billion
in assets including approximately $57 billion in mutual fund assets.
Under the terms of the Management Agreement, the Fund has agreed to
pay Dreyfus a fee, payable monthly, at the annual rate of .75 of 1% of the
value of the Fund's average daily net assets. For the fiscal year ended May
31, 1996, the Fund paid Dreyfus a management fee at the annual rate of .75 of
1% of the value of the Fund's average daily net assets.
In allocating brokerage transactions for the Fund, Dreyfus seeks to
obtain the best execution of orders at the most favorable net price. Subject
to this determination, Dreyfus may consider, among other things, the receipt
of research services and/or the sale of shares of the Fund or other funds in
the Dreyfus Family of Funds as factors in the selection of broker-dealers to
execute portfolio transactions for the Fund. See "Portfolio Transactions" in
the Statement of Additional Information.
SUB-INVESTMENT ADVISER -- NCM, located at 103 West Main Street, Durham, North
Carolina 27705-3638, a registered investment adviser, serves as the Fund's
sub-investment adviser. NCM was
Page 7
incorporated in 1986 and is one of the nation's largest minority-owned
investment management firms. Prior to August 2, 1994, NCM had not advised a
registered investment company. As of June 30, 1996, NCM served as the
sub-investment adviser for one other registered investment company. As of
June 30, 1996, NCM managed or administered approximately $3.6 billion in
assets.
NCM, subject to the supervision and approval of Dreyfus, provides
investment advisory assistance and the day-to-day management of the Fund's
portfolio, as well as research and statistical information under an Amended
and Restated Sub-Investment Advisory Agreement with Dreyfus dated April 22,
1996, subject to the overall authority of the Fund's Board of Directors in
accordance with Maryland law. Prior to April 22, 1996, NCM provided such
services pursuant to a Sub-Investment Advisory Agreement with Dreyfus dated
August 2, 1994 (the "Prior Sub-Advisory Agreement"). The Amended and Restated
Sub-Investment Advisory Agreement provides for an increase in the fees
payable by Dreyfus to NCM and contains a restriction on NCM's ability to act
as the investment adviser or sub-investment adviser for other registered
funds with socially responsible investment policies without the consent of
Dreyfus or the Fund.
Under the Amended and Restated Sub-Investment Advisory Agreement,
Dreyfus has agreed to pay NCM an annual fee, payable monthly, as set forth
below:
<TABLE>
<CAPTION>
<S> <C>
ANNUAL FEE AS A PERCENTAGE OF
TOTAL ASSETS AVERAGE DAILY NET ASSETS
0 to $400 million............................ .10 of 1%
In excess of $400 million
. to $500 million............................ .15 of 1%
In excess of $500 million
to $750 million............................ .20 of 1%
In excess of $750 million..................... .25 of 1%
</TABLE>
For the fiscal year ended May 31, 1996, Dreyfus paid NCM pursuant to
the Amended and Restated Sub-Investment Advisory Agreement and Prior
Sub-Advisory Agreement a monthly fee at the effective aggregate annual rate
of .10 of 1% of the value of the Fund's average daily net assets.
The Fund's portfolio managers primarily responsible for management of
the Fund's portfolio are Eric W. Steedman, with respect to the Fund's areas
of special concern, and Maceo K. Sloan, with respect to selection of
portfolio securities. Mr. Steedman has held that position since May 1, 1996
and has been employed by Dreyfus since January 1995. From June 1994 to
December 1994, he was employed by the Council on Economic Priorities. Mr.
Sloan has held his position with the Fund since August 1994 and has been
employed by NCM since 1986. The Fund's other portfolio managers are
identified under"Management of the Fund" in the Fund's Statement of
Additional Information. Dreyfus also provides research services for the Fund
as well as for other funds advised by Dreyfus through a professional staff of
portfolio managers and security analysts.
EXPENSES -- From time to time, Dreyfus may waive receipt of its fees and/or
voluntarily assume certain expenses of the Fund, which would have the effect
of lowering the overall expense ratio of the Fund and increasing yield to
investors at the time such amounts are waived or assumed, as the case may be.
The Fund will not pay Dreyfus at a later time for any amounts it may waive,
nor will the Fund reimburse Dreyfus for any amounts it may assume.
Dreyfus may pay the Fund's distributor for shareholder services from
Dreyfus' own assets, including past profits but not including the management
fee paid by the Fund. The Fund's distributor may use part or all of such
payments to pay securities dealers or others in respect of these services.
DISTRIBUTOR -- The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at 60 State Street, Boston, Massachusetts 02109.
The Distributor is a wholly-owned sub-
Page 8
sidiary 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.
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT _ Mellon Bank, N.A., One
Mellon Bank Center, Pittsburgh, P.A. 15258, is the Custodian of the Fund's
investments. Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus,
P.O. Box 9671, Providence, Rhode Island 02940-9671, is the Fund's Transfer
and Dividend Disbursing Agent (the "Transfer Agent").
HOW TO BUY SHARES
Fund shares are sold without a sales charge if you purchase them
directly from the Distributor; you may be charged a nominal fee if you effect
transactions in shares of the Fund through a securities dealer, bank or other
financial institution. Stock certificates are issued only upon your written
request. No certificates are issued for fractional shares. The Fund reserves
the right to reject any purchase order.
The minimum initial investment is $2,500, or $1,000 if you are a
client of a securities dealer, investment adviser or bank which has made an
aggregate minimum initial purchase for its customers of $2,500, or $750 if
the investment is for Dreyfus sponsored Keogh Plans, IRAs, SEP-IRAs and
403(b)(7) Plans with only one participant. Subsequent investments normally
must be at least $100, although there is no minimum for retirement plans. The
initial investment must be accompanied by the Fund's Account Application. The
Fund reserves the right to offer Fund shares without regard to minimum
purchase requirements to employees participating in certain qualified or
non-qualified employee benefit plans or other programs where contributions or
account information can be transmitted in a manner and in a form acceptable
to the Fund. For full-time or part-time employees of Dreyfus or any of its
affiliates or subsidiaries, directors of Dreyfus, Board members of a fund
advised by Dreyfus, including members of the Fund's Board, or the spouse or
minor child of any of the foregoing, the minimum initial investment is
$1,000. For full-time or part-time employees of Dreyfus or any of its
affiliates or subsidiaries who elect to have a portion of their pay directly
deposited into their Fund account, the minimum initial investment is $50.
Fund shares also are offered without regard to the minimum initial investment
requirements through Dreyfus-AUTOMATIC Asset BuilderRegistration Mark,
Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan
pursuant to the Dreyfus Step Program described under "Shareholder Services."
These services enable you to make regularly scheduled investments and may
provide you with a convenient way to invest for long-term financial goals.
You should be aware, however, that periodic investment plans do not guarantee
a profit and will not protect an investor against loss in a declining market.
The Fund reserves the right to vary further the initial and subsequent
investment minimum requirement at any time.
You may purchase Fund shares by check or wire, or through the Dreyfus
TELETRANSFER Privilege described below. Checks should be made payable to "The
Dreyfus Family of Funds," or, if for Dreyfus retirement plan accounts, to
"The Dreyfus Trust Company, Custodian." Payments to open new accounts which
are mailed should be sent to The Dreyfus Family of Funds, P.O. Box 9387,
Providence, Rhode Island 02940-9387, together with your Account Application.
For subsequent investments, your Fund account number should appear on the
check and an investment slip should be enclosed and sent to The Dreyfus
Family of Funds, P.O. Box 105, Newark, New Jersey 07101-0105. For Dreyfus
retirement plan accounts, both initial and subsequent investments should be
sent to The Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence,
Rhode Island 02940-6427. Neither initial nor subsequent investments should be
made by third party check. Purchase orders may be delivered in person only to
a Dreyfus Financial Center. THESE ORDERS WILL BE FORWARDED TO THE FUND AND
WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For the location of the nearest
Dreyfus Financial Center, please call one of the telephone numbers listed
under "General Information."
Page 9
Wire payments may be made if your bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank having
a correspondent bank in New York City. Immediately available funds may be
transmitted by wire to The Bank of New York, DDA #8900051787/The Dreyfus Third
Century Fund, Inc. for purchase of Fund shares in your name. The wire must
include your Fund account number (for new accounts, your Taxpayer
Identification Number ("TIN") should be included instead), account
registration and dealer number, if applicable. If your initial purchase of
Fund shares is by wire, please call 1-800-645-6561 after completing your wire
payment to obtain your Fund account number. Please include your Fund account
number on the Fund's Account Application and promptly mail the Account
Application to the Fund, as no redemptions will be permitted until the Account
Application is received. You may obtain further information about remitting
funds in this manner from your bank. All payments should be in U.S. dollars
and, to avoid fees and delays, should be drawn only on U.S. banks. A charge
will be imposed if any check used for investment in your account does not
clear. The Fund makes available to certain large institutions the ability to
issue purchase instructions through compatible computer facilities.
Subsequent investments may also be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House member. You must direct the
institution to transmit immediately available funds through the Automated
Clearing House to The Bank of New York with instructions to credit your Fund
account. The instructions must specify your Fund account registration, and
your Fund account number PRECEDED BY THE DIGITS "1111."
If an order is received in proper form by the Transfer Agent by the
close of trading on the floor of the New York Stock Exchange (currently 4:00
p.m., New York time) on a business day, Fund shares will be purchased at the
net asset value determined as of the close of trading on that day. Otherwise,
Fund shares will be purchased at the next determined net asset value.
The Distributor may pay dealers a fee of up to .5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified or non-qualified employee benefit plans or other programs where (i)
the employers or affiliated employers maintaining such plans or programs have
a minimum of 250 U.S.-based employees eligible for participation in such
plans or programs, or (ii) such plan's or program's aggregate investment in
the Dreyfus Family of Funds or certain other products made available by the
Distributor to such plans or programs exceeds one million dollars. All
present holdings of shares of funds in the Dreyfus Family of Funds by such
employee benefit plans or programs will be aggregated to determine the fee
payable with respect to each such purchase of Fund shares. The Distributor
reserves the right to cease paying these fees at any time. The Distributor
will pay such fees from its own funds, other than amounts received from the
Fund, including past profits or any other source available to it.
Fund shares are sold on a continuous basis. Net asset value per share
is determined as of the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m., New York time), on each day that the New York
Stock Exchange is open for business. For purposes of determining net asset
value per share, options will be valued 15 minutes after the close of trading
on the floor of the New York Stock Exchange. Net asset value per share is
computed by dividing the Fund's net assets (i.e., the value of its assets
less liabilities) by the total number of shares outstanding.
The Fund's investments are valued based on market value or, where
market quotations are not readily available, based on fair value as
determined in good faith by the Board of Directors. For further information
regarding the method employed in valuing Fund investments, see "Determination
of Net Asset Value" in the Fund's Statement of Additional Information.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes" and
the Fund's Account Application for further
Page 10
information concerning this requirement. Failure to furnish a certified TIN
to the Fund could subject you to a $50 penalty imposed by the Internal
Revenue Service (the "IRS").
DREYFUS TELETRANSFER PRIVILEGE _ You may purchase Fund shares (minimum of
$500, maximum of $150,000 per day) by telephone if you have checked the
appropriate box and supplied the necessary information on the Fund's Account
Application or have filed a Shareholder Services Form with the Transfer
Agent. The proceeds will be transferred between the bank account designated
in one of these documents and your Fund account. Only a bank account
maintained in a domestic financial institution which is an Automated Clearing
House member may be so designated. The Fund may modify or terminate this
Privilege at any time or charge a service fee upon notice to shareholders. No
such fee currently is contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase by telephoning 1-800-645-6561 or, if
you are calling from overseas, call 516-794-5452.
SHAREHOLDER SERVICES
FUND EXCHANGES -- You may purchase, in exchange for shares of the Fund,
shares of certain other funds managed or administered by Dreyfus, to the
extent such shares are offered for sale in your state of residence. These
funds have different investment objectives which may be of interest to you.
If you desire to use this service, please call 1-800-645-6561 to determine if
it is available and whether any conditions are imposed on its use.
To request an exchange, you must give exchange instructions to the
Transfer Agent in writing or by telephone. Before any exchange, you must
obtain and should review a copy of the current prospectus of the fund into
which the exchange is being made. Prospectuses may be obtained by calling
1-800-645-6561. Except in the case of Personal Retirement Plans, the shares
being exchanged must have a current value of at least $500; furthermore, when
establishing a new account by exchange, the shares being exchanged must have
a current value of at least the minimum initial investment required for the
fund into which the exchange is being made. The ability to issue exchange
instructions by telephone is given to all Fund shareholders automatically,
unless you check the applicable "No" box on the Account Application,
indicating that you specifically refuse this Privilege. The Telephone
Exchange Privilege may be established for an existing account by written
request, signed by all shareholders on the account, by a separate signed
Shareholder Services Form, available by calling 1-800-645-6561 or, by oral
request from any of the authorized signatories on the account, also by
calling 1-800-645-6561. If you have established the Telephone Exchange
Privilege, you may telephone exchange instructions (including over The
Dreyfus TouchRegistration Mark automated telephone system) by calling
1-800-645-6561. If you are calling from overseas, call 516-794-5452. See "How
to Redeem Fund Shares_Procedures." Upon an exchange into a new account, the
following shareholder services and privileges, as applicable and where
available, will be automatically carried over to the fund into which the
exchange is made: Telephone Exchange Privilege, Wire Redemption Privilege,
Telephone Redemption Privilege, TELETRANSFER Privilege, and the
dividend/capital gain distribution option (except for Dividend Sweep)
selected by the investor.
Shares will be exchanged at the next determined net asset value;
however, a sales load may be charged with respect to exchanges into funds
sold with a sales load. If you are exchanging into a fund that charges a
sales load, you may qualify for share prices which do not include the sales
load or which reflect a reduced sales load, if the shares from which you are
exchanging or transferring were: (a) purchased with a sales load, (b)
acquired by a previous exchange or transfer from shares purchased with a
sales load, or (c) acquired through reinvestment of dividends or
distributions paid with respect to the foregoing categories of shares. To
qualify, at the time of your exchange or transfer you must notify the
Transfer Agent. Any such qualification is subject to confirmation of your
holdings through a check of appropriate records. See "Shareholder Services"
in the Statement of Additional Information. No fees currently are charged
shareholders directly in connection with exchanges, although the Fund reserves
the right, upon not less than 60
Page 11
days' notice, to charge shareholders a nominal fee in accordance with rules
promulgated by the Securities and Exchange Commission. The Fund reserves the
right to reject any exchange request in whole or in part. The availability of
Fund Exchanges may be modified or terminated upon notice to shareholders.
The exchange of shares of one fund for shares of another is treated
for Federal income tax purposes as a sale of the shares given in exchange by
the shareholder, and an exchanging shareholder, therefore, may realize a
taxable gain or loss.
DREYFUS AUTO-EXCHANGE PRIVILEGE -- Dreyfus Auto-Exchange Privilege enables
you to invest regularly (on a semi-monthly, monthly, quarterly or annual
basis), in exchange for shares of the Fund, in shares of other funds in The
Dreyfus Family of Funds of which you are currently an investor. The amount
you designate, which can be expressed either in terms of a specific dollar or
share amount ($100 minimum), will be exchanged automatically on the first
and/or fifteenth day of the month according to the schedule you have
selected. Shares will be exchanged at the then-current net asset value;
however, a sales load may be charged with respect to exchanges into funds
sold with a sales load. See "Shareholder Services" in the Statement of
Additional Information. The right to exercise this Privilege may be modified
or cancelled by the Fund or the Transfer Agent. You may modify or cancel your
exercise of this Privilege at any time by writing to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. The Fund may
charge a service fee for the use of this Privilege. No such fee currently is
contemplated. The exchange of shares of one fund for shares of another is
treated for Federal income tax purposes as a sale of the shares given in
exchange by the shareholder and, therefore, an exchanging shareholder may
realize a taxable gain or loss. For more information concerning this
Privilege and the funds in the Dreyfus Family of Funds eligible to
participate in this Privilege, or to obtain a Dreyfus Auto-Exchange
Authorization Form, please call toll free 1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark -- Dreyfus-AUTOMATIC Asset
Builder permits you to purchase Fund shares (minimum of $100 and maximum of
$150,000 per transaction) at regular intervals selected by you. Fund shares
are purchased by transferring funds from the bank account designated by you.
At your option, the bank account designated by you will be debited in the
specified amount, and Fund shares will be purchased, once a month, on either
the first or fifteenth day, or twice a month, on both days. Only an account
maintained at a domestic financial institution which is an Automated Clearing
House member may be so designated. To establish a Dreyfus-AUTOMATIC Asset
Builder account, you must file an authorization form with the Transfer Agent.
You may obtain the necessary authorization form by calling 1-800-645-6561.
You may cancel this Privilege or change the amount of purchase at any time by
mailing written notification to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671, or, if for Dreyfus retirement plan
accounts, to The Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence,
Rhode Island 02940-6427, and the notification will be effective three
business days following receipt. The Fund may modify or terminate this
Privilege at any time or charge a service fee. No such fee currently is
contemplated.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE -- Dreyfus Government Direct
Deposit Privilege enables you to purchase Fund shares (minimum of $100 and
maximum of $50,000 per transaction) by having Federal salary, Social
Security, or certain veterans', military or other payments from the Federal
government automatically deposited into your Fund account. You may deposit as
much of such payments as you elect. To enroll in Dreyfus Government Direct
Deposit, you must file with the Transfer Agent a completed Direct Deposit
Sign-Up Form for each type of payment that you desire to include in this
Privilege. The appropriate form may be obtained by calling 1-800-645-6561.
Death or legal incapacity will terminate your participation in this
Privilege. You may elect at any time to terminate your participation by
notifying in writing the appropriate Federal agency. Further, the Fund may
terminate your participation upon 30 days' notice to you.
Page 12
DREYFUS DIVIDEND OPTIONS -- Dreyfus Dividend Sweep enables you to invest
automatically dividends or dividends and capital gain distributions, if any,
paid by the Fund in shares of another fund in the Dreyfus Family of Funds of
which you are a shareholder. Shares of the other fund will be purchased at
the then-current net asset value; however, a sales load may be charged with
respect to investments in shares of a fund sold with a sales load. If you are
investing in a fund that charges a sales load, you may qualify for share price
s which do not include the sales load or which reflect a reduced sales load.
If you are investing in a fund that charges a contingent deferred sales
charge, the shares purchased will be subject upon redemption to the
contingent deferred sales charge, if any, applicable to the purchased shares.
See "Shareholder Services" in the Statement of Additional Information.
Dreyfus Dividend ACH permits you to transfer electronically your dividends or
dividends and capital gain distributions, if any, from the Fund to a
designated bank account. Only an account maintained at a domestic financial
institution which is an Automated Clearing House member may be so designated.
Banks may charge a fee for this service.
For more information concerning these privileges, or to request a
Dividend Options Form, please call toll free 1-800-645-6561. You may cancel
these privileges by mailing written notification to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. Enrollment in or
cancellation of these privileges is effective three business days following
receipt. These privileges are available only for existing accounts and may
not be used to open new accounts. Minimum subsequent investments do not apply
for Dreyfus Dividend Sweep. The Fund may modify or terminate these privileges
at any time or charge a service fee. No such fee currently is contemplated.
Shares held under Keogh Plans, IRAs or other retirement plans are not
eligible for Dreyfus Dividend Sweep.
DREYFUS PAYROLL SAVINGS PLAN _ Dreyfus Payroll Savings Plan permits you to
purchase Fund shares (minimum of $100 per transaction) automatically on a
regular basis. Depending upon your employer's direct deposit program, you may
have part or all of your paycheck transferred to your existing Dreyfus
account electronically through the Automated Clearing House at each pay
period. To establish a Dreyfus Payroll Savings Plan account, you must file an
authorization form with your employer's payroll department. Your employer
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 by calling 1-800-645-6561. You may
change the amount of purchase or cancel the authorization only by written
notification to your employer. It is the sole responsibility of your
employer, not the Distributor, Dreyfus, the Fund, the Transfer Agent or any
other person, to arrange for transactions under the Dreyfus Payroll Savings
Plan. The Fund may modify or terminate this Privilege at any time or charge a
service fee. No such fee currently is contemplated.
DREYFUS STEP PROGRAM _ The Dreyfus Step Program enables you to purchase Fund
shares without regard to the Fund's minimum initial investment requirements
through Dreyfus-Automatic Asset Builder, Dreyfus Government Direct Deposit
Privilege or Dreyfus Payroll Savings Plan. To establish a Dreyfus Step
Program account, you must supply the necessary information on the Fund's
Account Application and file the required authorization form(s) with the
Transfer Agent. For more information concerning this Program, or to request
the necessary authorization form(s), please call toll free 1-800-782-6620.
You may terminate your participation in this Program at any time by
discontinuing your participation in Dreyfus-Automatic Asset Builder, Dreyfus
Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan, as the
case may be, as provided under the terms of such Privilege(s). The Fund
reserves the right to redeem your account if you have terminated your
participation in the Program and your account's net asset value is $500 or
less. See "How to Redeem Fund Shares." The Fund may modify or terminate this
Program at any time. Investors who wish to purchase Fund shares through the
Dreyfus Step Program in conjunction with a Dreyfus-sponsored retirement plan
may do so only for IRAs,
Page 13
SEP-IRAs and IRA "Rollover Accounts." You should
consider your financial condition and the possibility of having to redeem
your Fund shares in times of rising prices or declining Fund share prices.
AUTOMATIC WITHDRAWAL PLAN _ The Automatic Withdrawal Plan permits you to
request withdrawal of a specified dollar amount (minimum of $50) on either a
monthly or quarterly basis if you have a $5,000 minimum account. An
application for the Automatic Withdrawal Plan can be obtained by calling
1-800-645-6561. The Automatic Withdrawal Plan may be ended at any time by
you, the Fund or the Transfer Agent. Shares for which stock certificates have
been issued may not be redeemed through this Plan.
You may make additional investments in Fund shares while an Automatic
Withdrawal Plan is in effect.
RETIREMENT PLANS _ The Fund offers a variety of pension and profit-sharing
plans, including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts,"
401(k) Salary Reduction Plans and 403(b)(7) Plans. Plan support services are
also available. You 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.
HOW TO REDEEM SHARES
GENERAL -- You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When
a request is received in proper form, the Fund will redeem the shares at the
next determined net asset value.
The Fund imposes no charges when shares are redeemed directly through
the Distributor. Securities dealers, banks and other financial institutions
may charge a nominal fee for effecting redemptions of Fund shares. Any stock
certificates representing Fund shares being redeemed must be submitted with
the redemption request. The value of the shares redeemed may be more or less
than their original cost, depending upon the Fund's then-current net asset
value.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY CHECK, BY DREYFUS
TELETRANSFER PRIVILEGE OR THROUGH DREYFUS-AUTOMATIC ASSET BUILDER AND
SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION REQUEST TO THE TRANSFER AGENT, THE
REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE
OF YOUR PURCHASE CHECK, DREYFUS TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC
ASSET BUILDER ORDER, WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN
ADDITION, THE FUND WILL REJECT REQUESTS TO REDEEM SHARES BY WIRE OR TELEPHONE
OR PURSUANT TO THE DREYFUS TELETRANSFER PRIVILEGE, FOR A PERIOD OF EIGHT
BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK, THE
DREYFUS TELETRANSFER PURCHASE OR THE DREYFUS-AUTOMATIC ASSET BUILDER ORDER
AGAINST WHICH SUCH REDEMPTION IS REQUESTED. THESE PROCEDURES WILL NOT APPLY
IF YOUR SHARES WERE PURCHASED BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A
SUFFICIENT COLLECTED BALANCE IN YOUR ACCOUNT TO COVER THE REDEMPTION REQUEST.
PRIOR TO THE TIME ANY REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL
ACCRUE AND BE PAYABLE, AND YOU WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS
OF BENEFICIAL OWNERSHIP. Fund shares will not be redeemed until the Transfer
Agent has received your Account Application.
Ordinarily, the Fund will initiate payment for all shares redeemed
pursuant to the regular redemption procedure, the Wire Redemption Privilege,
the Telephone Redemption Privilege or the Dreyfus TELETRANSFER Privilege on
the next business day after receipt by the Transfer Agent of a redemption
request in proper form.
The Fund reserves the right to redeem your account at its option upon
not less than 30 days' written notice if your account's net asset value has
been reduced to $500 or less and remains so during the notice period.
Page 14
PROCEDURES _ You may redeem shares by using the regular redemption procedure
through the Transfer Agent, the Wire Redemption Privilege, the Telephone
Redemption Privilege, or the Dreyfus TELETRANSFER Privilege. The Fund makes
available to certain large institutions the ability to issue redemption
instructions through compatible computer facilities.
You may redeem Fund shares by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone redemption
privilege or telephone exchange privilege (which is granted automatically
unless you refuse it), you authorize the Transfer Agent to act on telephone
instructions (including over The Dreyfus TouchRegistration Mark automated
telephone system) from any person representing himself or herself to be you
and reasonably believed by the Transfer Agent to be genuine. The Fund will
require the Transfer Agent to employ reasonable procedures, such as requiring
a form of personal identification, to confirm that instructions are genuine
and, if it does not follow such procedures, the Fund or the Transfer Agent
may be liable for any losses due to unauthorized or fraudulent instructions.
Neither the Fund nor the Transfer Agent will be liable for following
telephone instructions reasonably believed to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or exchange of Fund shares. In such cases, investors
should consider using the other redemption procedures described herein. Use
of these other redemption procedures may result in your redemption request
being processed at a later time than it would have been if telephone
redemption had been used. During the delay, the Fund's net asset value may
fluctuate.
REGULAR REDEMPTION -- Under the regular redemption procedure, you may redeem
your shares by written request mailed to The Dreyfus Family of Funds, P.O.
Box 9671, Providence, Rhode Island 02940-9671, or if for Dreyfus retirement
plan accounts, to The Dreyfus Trust Company, Custodian, P.O. Box 6427,
Providence, Rhode Island 02940-6427. Redemption requests may be delivered in
person only to a Dreyfus Financial Center. THESE REQUESTS WILL BE FORWARDED
TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREOF. For the location
of the nearest Dreyfus Financial Center, please call one of the telephone
numbers listed under "General Information."
Redemption requests must be signed by each shareholder, including
each owner of a joint account and each signature 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, as well as from participants in the New York Stock Exchange
Medallion Signature Program, the Securities Transfer Agents Medallion Program
("STAMP") and the Stock Exchanges Medallion Program. If you have any
questions, please call one of the telephone numbers listed under "General
Information."
Redemption proceeds of at least $1,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
WIRE REDEMPTION PRIVILEGE -- You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank which
is a member of the Federal Reserve System, or a correspondent bank if your
bank is not a member. To establish the Wire Redemption Privilege, you must
check the appropriate box and supply the necessary information on the Fund's
Account Application or file a Shareholder Services Form with the Transfer
Agent. You may direct that redemption proceeds be paid by check (maximum
$150,000 per day) made out to the owners of record and mailed to your
address. Redemption proceeds of less than $1,000 will be paid automatically
by check. Holders of jointly registered Fund or bank accounts may have
redemption proceeds of only up to $250,000 wired within
Page 15
any 30-day period. You may telephone redemption requests by calling
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452. The
Fund reserves the right to refuse any redemption request, including requests
made shortly after a change of address, and may limit the amount involved or
the number of such requests. This Privilege may be modified or terminated at
any time by the Transfer Agent or the Fund. The Fund's Statement of
Additional Information sets forth instructions for transmitting redemption
requests by wire. Shares held under Keogh Plans, IRAs or other retirement
plans, and shares for which certificates have been issued, are not eligible
for this Privilege.
TELEPHONE REDEMPTION PRIVILEGE -- You may redeem Fund shares (maximum
$150,000 per day) by telephone if you have checked the appropriate box on the
Fund's Account Application or have filed a Shareholder Services Form with the
Transfer Agent. The redemption proceeds will be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452. The
Fund reserves the right to refuse any request made by telephone, including
requests made shortly after a change of address, and may limit the amount
involved or the number of telephone redemption requests. This Privilege may
be modified or terminated at any time by the Transfer Agent or the Fund.
Shares held under Keogh Plans, IRAs or other retirement plans, and shares for
which certificates have been issued, are not eligible for this Privilege.
DREYFUS TELETRANSFER PRIVILEGE -- You may redeem Fund shares (minimum $500
per day) by telephone if you have checked the appropriate box and supplied
the necessary information on the Fund's Account Application or have filed a
Shareholder Services Form with the Transfer Agent. The proceeds will be
transferred between your Fund account and the bank account designated in one
of these documents. Only such an account maintained in a domestic financial
institution which is an Automated Clearing House member may be so designated.
Redemption proceeds will be on deposit in your account at an Automated
Clearing House member bank ordinarily two days after receipt of the
redemption request or, at your request, paid by check (maximum $150,000 per
day) and mailed to your address. Holders of jointly registered Fund or bank
accounts may redeem through the Dreyfus TELETRANSFER Privilege for transfer
to their bank account only up to $250,000 within any 30-day period. The Fund
reserves the right to refuse any request made by telephone, including
requests made shortly after a change of address, and may limit the amount
involved or the number of such requests. The Fund may modify or terminate
this Privilege at any time or charge a service fee upon notice to
shareholders. No such fee currently is contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER redemption of Fund shares by telephoning
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452.
Shares held under Keogh, IRAs or other retirement plans, and shares issued in
certificate form, are not eligible for this Privilege.
SHAREHOLDER SERVICES PLAN
The Fund has adopted a Shareholder Services Plan pursuant to which
the Fund reimburses Dreyfus Service Corporation, a subsidiary of Dreyfus, an
amount not to exceed an annual rate of .25 of 1% of the value of the average
daily net assets of the Fund's shares 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.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily pays dividends from net investment income and
makes distributions from net realized securities gains, if any, once a year,
but it may make distributions on a more frequent basis to comply with the
distribution requirements of the Internal Revenue Code of 1986, as amended
(the
Page 16
"Code"), in all events in a manner consistent with the provisions of the
Act. The Fund will not make distributions from net realized securities gains
unless capital loss carryovers, if any, have been utilized or have expired.
You may choose whether to receive dividends and distributions in cash or to
reinvest in additional Fund shares at net asset value. All expenses are
accrued daily and deducted before the declaration of dividends to investors.
Dividends paid by the Fund derived from net investment income,
together with distributions from net realized short-term securities gains and
all or a portion of gains realized from the sale or other disposition of
certain market discount bonds, will be taxable to U.S. shareholders as
ordinary income whether or not reinvested. Distributions from net realized
long-term securities gains of the Fund will be taxable to U.S. shareholders
as long-term capital gains, regardless of how long shareholders have held
their Fund shares and whether such distributions are received in cash or
reinvested in Fund shares. The Code currently provides that the net capital
gain of an individual generally will not be subject to Federal income tax at
a rate in excess of 28%. Dividends and distributions may be subject to state
and local taxes.
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of gains realized from the sale or other disposition of certain
market discount bonds, paid by the Fund to a foreign investor generally are
subject to U.S. nonresident withholding taxes of 30%, unless the foreign
investor claims the benefit of a lower rate specified in a tax treaty.
Distributions from net realized long-term securities gains paid by the Fund
to a foreign investor as well as the proceeds of any redemptions from a
foreign investor's account, regardless of the extent to which gain or loss
may be realized, generally will not be subject to any U.S. nonresident
withholding tax. However, such distributions and redemption proceeds may be
subject to backup withholding, as described below, unless the foreign
investor certifies his non-U.S. residency status.
Notice as to the tax status of your dividends and distributions will
be mailed to you annually. You also will receive periodic summaries of your
account which will include information as to dividends and distributions from
securities gains, if any, paid during the year.
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of dividends, distributions
from net realized securities gains and the proceeds of any redemption,
regardless of the extent to which gain or loss may be realized, paid to a
shareholder of the Fund if such shareholder fails to certify either that the
TIN furnished in connection with opening an account is correct, or that such
shareholder has not received notice from the IRS of being subject to backup
withholding as a result of a failure to properly report taxable dividend or
interest income on a Federal income tax return. Furthermore, the IRS may
notify the Fund to institute backup withholding if the IRS determines a
shareholder's TIN is incorrect or if a shareholder has failed to properly
report taxable dividend and interest income on a Federal income tax return.
A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the
record owner of the account, and may be claimed as a credit on the record
owner's Federal income tax return.
Management of the Fund believes that the Fund has qualified for the
fiscal year ended May 31, 1996 as a "regulated investment company" under the
Code. The Fund intends to continue to so qualify so long as such
qualification is in the best interests of its shareholders. Such
qualification relieves the Fund of any liability for Federal income taxes to
the extent its net investment income and realized capital gains are
distributed in accordance with the applicable provisions of the Code. The
Fund is subject to a non-deductible 4% excise tax, measured with respect to
certain undistributed amounts of taxable investment income and capital gains.
You should consult your tax adviser regarding specific questions as
to Federal, state and local taxes.
Page 17
PERFORMANCE INFORMATION
For purposes of advertising, performance will be calculated on the
basis of average annual total return. Advertisements may also include
performance calculated on the basis of total return.
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment in the Fund was purchased with an
initial payment of $1,000 and that the investment was redeemed at the end of
a stated period of time, after giving effect to the reinvestment of dividends
and distributions during the period. The return is expressed as a percentage
rate which, if applied on a compounded annual basis, would result in the
redeemable value of the investment at the end of the period. Advertisements
of the Fund's performance will include the Fund's average annual total return
for one, five and ten year periods.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the income
and principal changes for a specified period and dividing by the net asset
value per share at the beginning of the period. Advertisements may include
the percentage rate of total return or may include the value of a
hypothetical investment at the end of the period which assumes the
application of the percentage rate of total return.
Performance will vary from time to time and past results are not
necessarily representative of future results. You should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a
basis for comparison with other investments or other investment companies
using a different method of calculating performance.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from Lipper
Analytical Services, Inc., Dow Jones Industrial Average, Standard & Poor's
500 Composite Stock Price Index, Morningstar, Inc. or other industry
publications
GENERAL INFORMATION
The Fund was incorporated under Delaware law on May 6, 1971 and began
operations on March 29, 1972. On July 30, 1982, the Fund changed its state of
incorporation to Maryland. In April 1996, at a meeting of shareholders of the
Fund, shareholders approved changes in the Fund's fundamental policies and
investment restrictions and an Amended and Restated Sub-Investment Advisory
Agreement between Dreyfus and NCM.
The Fund is authorized to issue 150 million shares of Common Stock,
par value $.331/3 per share. Each share has one vote, has equal voting,
redemption, dividend and liquidation rights, and, when issued in accordance
with the terms of this offering, is fully-paid and non-assessable. Shares are
freely transferable and are redeemable at net asset value, at the option of
the shareholder.
Unless otherwise required by the Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a result,
Fund shareholders may not consider each year the election of Directors or the
appointment of auditors. However, pursuant to the Fund's By-Laws, the holders
of at least 10% of the shares outstanding and entitled to vote may require
the Fund to hold a special meeting of shareholders for the purpose of
removing a Director from office and the holders of at least 25% of such
shares may require the Fund to hold a special meeting of shareholders for any
other purpose. Fund shareholders may remove a Director by the affirmative
vote of a majority of the Fund's outstanding voting shares. In addition, the
Board of Directors will call a meeting of shareholders for the purpose of
electing Directors if, at any time, less than a majority of the Directors
holding office at the time were elected by shareholders.
Page 18
The Transfer Agent maintains a record of each shareholder's ownership
and will send confirmations and statements of account to each shareholder.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling toll free
1-800-645-6561. In New York City, call
718-895-1206; outside the U.S. and Canada, call 516-794-5452.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 19
The Dreyfus
Third Century
Fund, Inc.
Prospectus
Registration Mark
Copy Rights 1996 Dreyfus Service Corporation
035p100196
This Prospectus is Printed on Recycled Paper.
Page 20
__________________________________________________________________________
THE DREYFUS THIRD CENTURY FUND, INC.
(STATEMENT OF ADDITIONAL INFORMATION)
PART B
OCTOBER 1, 1996
__________________________________________________________________________
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 October 1,
1996, 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 718-895-1206
Outside the U.S. and Canada -- Call 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 Shares . . . . . . . . . . . . . . . . . . . . B-13
Redemption of Shares . . . . . . . . . . . . . . . . . . . B-14
Shareholder Services . . . . . . . . . . . . . . . . . . . B-15
Determination of Net Asset Value . . . . . . . . . . . . . B-19
Shareholder Services Plan. . . . . . . . . . . . . . . . . B-19
Dividends, Distributions and Taxes . . . . . . . . . . . . B-20
Portfolio Transactions . . . . . . . . . . . . . . . . . . B-22
Performance Information. . . . . . . . . . . . . . . . . . B-23
Information About the Fund . . . . . . . . . . . . . . . . B-23
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors . . . . . . . . . . . . B-23
Financial Statements . . . . . . . . . . . . . . . . . . . B-25
Report of Independent Auditors . . . . . . . . . . . . . . B-34
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-Types of Companies Sought for Investment" in the Fund's
Prospectus will not be changed without stockholder approval. The Board of
Directors may from time to time without stockholder approval adopt
additional criteria or restrictions governing the Fund's investments if
the Board of Directors determines that the new criteria or restrictions
are consistent with the Fund's objective of investing in a socially
responsible manner. Any such new criteria or restrictions would not be
fundamental policies of the Fund and could be subsequently terminated or
changed by the Board of Directors at any time without stockholder
approval.
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 62 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 69 years old and
her address is 46 Sunset Avenue, Amherst, Massachusetts 01002.
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, 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 24, 1994, the Fund's distributor. From August 1994 to
December 31, 1994, he was a director of Mellon Bank Corporation. He
is Chairman of the Board of Directors of Noel Group, Inc.; a trustee
of Bucknell University; a director of The Muscular Dystrophy
Association, HealthPlan Services Corporation, Belding Heminway
Company, Inc., Curtis Industries, Inc., Simmons Outdoor Corporation,
and Staffing Resources, Inc. He is 52 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 55 years old and his address is 420
Fifth Avenue, New York, New York 10018.
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. Any Director who
becomes an Emeritus Director shall be entitled to receive an annual
retainer fee of one-half the amount paid to Directors. The aggregate
amount of compensation paid to each Director by the Fund (for the fiscal
year ended May 31, 1996) and by all other funds in the Dreyfus Family of
Funds for which such person is a Board member (the number of which is set
forth in parenthesis next to each Director's total compensation) for the
year ended December 31, 1995, were as follows:
<TABLE>
<CAPTION>
(5)
(3) Total
(2) Pension or Compensation
Aggregate Retirement (4) From Fund and
(1) Compensation Benefits Accrued Estimated Annual Fund Complex
Name of Board From as Part of Benefits Upon Paid to Board
Member Fund(1) Fund's Expenses Retirement Member
- -------------- ------------- --------------- ----------------- --------------
<S> <C> <C> <C> <C>
Clifford L. Alexander $10,000 none none $ 94,386 (17)
Lucy Wilson Benson $10,000 none none $ 72,003 (13)
Joseph S. DiMartino $12,500(2) none none $448,6182 (93)
Peter C. Goldmark $10,000 none none $ 12,500 (1)
Josie Cruz Natori(3) $10,000 none none $ 12,500 (1)
</TABLE>
_________________________
1 Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $2,101 for all Directors a group.
2 Estimated amount for the current year ending December 31, 1996.
3 Josie Cruz Natori resigned as a Director of the Fund effective as of
June 28, 1996.
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 38 years old.
JOHN E. PELLETIER, Vice President and 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 32 years old.
JOSEPH S. TOWER, Vice President and 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 34 years old.
ELIZABETH BACHMAN, Vice President and Assistant Secretary. Assistant Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. She is 26 years
old.
RICHARD W. INGRAM, Vice President and Assistant Secretary. Senior Vice
President and Director of Client Services and Treasury Operations of
the Distributor and an officer of other investment companies advised
or administered by the Manager. From March 1994 to November 1995, he
was Vice President and Division Manager for First Data Investor
Services Group. From 1989 to 1994, Mr. Ingram was Vice President,
Assistant Treasurer and Tax Director - Mutual Funds of The Boston
Company. He is 40 years old.
MARY A. NELSON, Vice President and Assistant Treasurer. Vice President
and Manager of Treasury Services and Administration of the
Distributor, and an officer of other investment companies advised or
administered by the Manager. From September 1989 to July 1994, she
was an Assistant Vice President and Client Manager for The Boston
Company. She is 32 years old.
DOUGLAS C. CONROY, Vice President and Assistant Secretary. Supervisor of
Treasury Services and Administration of the Distributor and an
officer of other investment companies advised or administered by the
Manager. From April 1993 to January 1995, he was a Senior Fund
Accountant for Investors Bank and Trust Company. From December 1991
to March 1993, he was employed as a Fund Accountant at The Boston
Company. He is 27 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 July 15, 1996.
The following person is known by the Fund to own of record 5% or more
of the Fund's voting securities outstanding on July 15, 1996: Nationwide
Life Insurance Company, C/O IPO Co 53, P.O. Box 182029 Columbus, OH 43218-
- -5.22%.
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, 1996. 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 an investment advisory fee for the fiscal year ended
May 31, 1994 of $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. For the fiscal year ended May 31, 1996, the Fund paid the
Manager pursuant to the Agreement a fee of $3,154,864.
The following persons are officers and/or directors of the Manager:
W. Keith Smith, Chairman of the Board; Christopher M. Condron, President,
Chief Executive Officer; 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 and a director; William T. Sandalls, Jr., Senior Vice
President and Chief Financial Officer; Elie M. Genadry, Vice President-
Institutional Sales; William F. Glavin, Jr., Vice President-Corporate
Development; Mark N. Jacobs, Vice President, General Counsel and
Secretary; Patrice M. Kozlowski, Vice President-Corporate Communications;
Mary Beth Leibig, Vice President-Human Resources; Jeffrey N. Nachman, Vice
President-Mutual Fund Accounting; Andrew S. Wasser, Vice President-
Information Systems; Elvira Oslapas, Assistant Secretary; and Mandell L.
Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene and Julian
M. Smerling, directors.
Amended and Restated Sub-Investment Advisory Agreement. NCM provides
sub-investment advisory services pursuant to an Amended and Restated
Sub-Investment Advisory Agreement dated April 22, 1996 between the Manager
and NCM. The Amended and Restated 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 Amended and Restated 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 Amended and Restated Sub-Investment Advisory Agreement
at a meeting held on July 18, 1996. Shareholders approved the Amended and
Restated Sub-Investment Advisory Agreement on April 18, 1996. The Amended
and Restated Sub-Investment Agreement contains a restriction on NCM's
ability to act as the investment adviser or sub-investment adviser for
other registered funds with socially responsible investment policies
without the consent of the Fund or the Manager. The Amended and Restated
Sub-Investment Advisory Agreement is terminable without penalty, on 60
days' notice, by the Manager, 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 Amended and Restated 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 Amended and Restated Sub-
Investment Advisory Agreement will terminate effective upon the date the
Management Agreement terminates.
As compensation for NCM's services under the Amended and Restated
Sub-Investment Advisory Agreement, the Manager has agreed to pay NCM a
fee, payable monthly, at an annual rate as set forth in the Fund's
Prospectus.
For the period August 2, 1994 through April 21, 1996, NCM served as
the Fund's sub-investment adviser pursuant to a sub-investment advisory
agreement (the "Former NCM Agreement") dated August 2, 1994 between NCM
and Dreyfus. Pursuant to the Former NCM Agreement, Dreyfus agreed to pay
NCM a sub-investment advisory fee at the annual rate of .10 of 1% of the
Fund's average daily net assets up to $500 million; and .20 of 1% of the
Fund's average daily net assets in excess of $500 million. 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 year
ended May 31, 1994 and for the period from June 1, 1994 to August 1, 1994
were $1,224,676 and $141,170, respectively. For the period from August 2,
1994 to May 31, 1995, Dreyfus paid NCM a sub-advisory fee of $297,131
pursuant to the Former NCM Agreement. For the period from June 1, 1995 to
April 21, 1996, Dreyfus paid NCM a sub-advisory fee of $382,143 pursuant
to the Former NCM Agreement and for the period from April 22, 1996 to May
31, 1996, Dreyfus paid NCM a sub-advisory fee of $42,614 pursuant to the
Amended and Restated Sub-Investment Advisory Agreement.
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, Paul L. VanKempen, 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 Eric Steedman, Maceo K.
Sloan and Stephon Jackson. 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 Amended and Restated
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 SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
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. Dreyfus Transfer, Inc., 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 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 SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem 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 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 (which may include non-marketable
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 Redemptions. 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 (including
over The Dreyfus Touch(R) automated telephone system) 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 "Fund
Exchanges." 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 Exchange
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. 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 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 Fund's Board
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 Fund's Board 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, 1996, $655,193 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, 1996 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, 1994, 1995 and 1996, the Fund paid total brokerage commissions of
$983,514, $1,445,266 and $777,679, 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 $662,268, $0 and $0 in fiscal years 1994,
1995 and 1996, 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,
1995 and 1996 were 133.54% and 92.08%, 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, 1996 was 33.63%, 11.16% and 11.96%, 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, 1996
was 1,538.41%. 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 include
biographical information relating to its portfolio managers and may refer
to, or include commentary by the portfolio manager relating to investment
strategy, asset growth, current or past business, political, economic, or
financial conditions and other matters of general interest to investors.
It may also 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
Mellon Bank, N.A. (the "Custodian"), Dreyfus' parent and a subsidiary
of Mellon Bank Corporation, is located at One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258, and serves as the custodian of the Fund.
Under its Custody Agreement with the Fund, the Custodian holds the Fund's
portfolio securities and keeps all necessary accounts and records.
Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, P.O.
Box 9671, Providence, Rhode Island 02940-9671, is the Fund's transfer and
dividend disbursing agent. Under a transfer agency agreement with the
Fund, the Transfer Agent arranges for the maintenance of shareholder
account records for the Fund, the handling of certain communications
between shareholders and the Fund and the payment of dividends and
distributions payable by the Fund. For these services, the Transfer Agent
receives a monthly fee computed on the basis of the number of shareholder
accounts it maintains for the Fund during the month, and is reimbursed for
certain out-of-pocket expenses. For the period December 1, 1995
(effective date of Transfer Agency Agreement) through May 31, 1996, the
Fund paid the Transfer Agent $128.102.
Neither the Transfer Agent nor the Custodian 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>
THE DREYFUS THIRD CENTURY FUND, INC.
STATEMENT OF INVESTMENTS MAY 31, 1996
COMMON STOCKS-98.3% SHARES VALUE
_______ _______
<S> <C> <C>
COMMERCIAL SERVICES-2.3%..... Grainger (W.W.) 55,700 $ 3,724,938
...................................Sysco 212,000 7,234,500
_______
10,959,438
_______
CONSUMER DURABLES-1.9%..... Briggs & Stratton 104,500 4,493,500
Oakwood Homes.......................... 95,000 4,607,500
_______
9,101,000
_______
CONSUMER
NON-DURABLES-14.1%......... CPC International 80,000 5,530,000
Campbell Soup.......................... 142,500 9,191,250
Coca-Cola.............................. 229,800 10,570,800
Gillette............................... 141,600 8,372,100
Jones Apparel Group.................. (a) 130,000 6,630,000
NIKE, Cl. B............................ 80,800 8,110,300
PepsiCo................................ 297,000 9,875,250
Tambrands.............................. 180,000 8,302,500
_______
66,582,200
_______
CONSUMER SERVICES-6.3%... BET Holdings, Cl. A (a) 73,900 1,967,588
CUC International.................... (a) 225,700 8,350,900
Disney (Walt).......................... 133,600 8,116,200
Regal Cinemas........................ (a) 60,000 2,782,500
Service Corp. International............ 150,000 8,381,250
_______
29,598,438
_______
ELECTRONIC TECHNOLOGY-13.0% Applied Materials (a) 207,000 7,710,750
Atmel............................ (a) 60,000 2,130,000
Coherent............................. (a) 58,400 2,854,300
....EMC (a) 514,100 11,374,463
Hewlett-Packard........................ 95,200 10,162,600
Linear Technology...................... 194,400 6,706,800
Sun Microsystems..................... (a) 168,600 10,558,575
....3COM (a) 206,300 10,160,275
_______
61,657,763
_______
FINANCE-15.2%..................... AFLAC 171,150 5,155,894
Allstate............................... 163,070 6,889,707
American International Group........... 74,700 7,040,475
BankAmerica............................ 175,000 13,168,750
Citicorp............................... 99,200 8,332,800
Federal National Mortgage Association.. 310,600 9,589,775
Green Tree Financial................... 266,800 8,737,700
MGIC Investment........................ 75,000 4,406,250
SunAmerica............................. 150,000 8,400,000
_______
71,721,351
_______
THE DREYFUS THIRD CENTURY FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1996
COMMON STOCKS (CONTINUED) SHARES VALUE
_______ _______
HEALTH SERVICES-1.1%...... HealthCare COMPARE (a) 105,000 $ 5,079,375
_______
HEALTH TECHNOLOGY-14.3%............Amgen (a) 135,600 8,068,200
Becton, Dickinson & Co. ............... 85,400 7,259,000
Bristol-Myers Squibb................... 103,500 8,836,313
Chiron............................... (a) 50,000 5,250,000
Guidant................................ 100,000 5,800,000
Johnson & Johnson...................... 99,540 9,692,707
Medtronic.............................. 169,600 9,540,000
Merck & Co. ........................... 146,762 9,484,494
Neopath.............................. (a) 97,700 2,515,775
Neurogen............................. (a) 40,000 1,170,000
_______
67,616,489
_______
INDUSTRIAL SERVICES-.7%......... Schlumberger 42,210 3,519,259
_______
PROCESS INDUSTRIES-5.3%....... Avery Dennison 100,000 5,700,000
....Bemis 300,600 9,957,375
Sigma-Aldrich.......................... 170,900 9,570,400
_______
25,227,775
_______
PRODUCER
MANUFACTURING-3.6%...............Dover 125,800 5,975,500
Harnischfeger Industries............... 160,000 5,600,000
Philips Electronics, N.V. ............. 158,500 5,567,313
_______
17,142,813
_______
RETAIL TRADE-2.6%........ Consolidated Stores (a) 113,000 4,279,875
Sears, Roebuck & Co. .................. 158,700 8,073,862
_______
12,353,737
_______
TECHNOLOGY SERVICES-10.3%.. Arrow Electronics (a) 191,500 9,431,375
BMC Software......................... (a) 148,560 9,359,280
Computer Associates International.............. 128,950 9,381,113
Ericsson (LM) Telephone, Cl. B, A.D.R......... 195,000 4,497,187
Microsoft............................ (a) 48,000 5,700,000
....Oracle (a) 310,500 10,285,312
_______
48,654,267
_______
TRANSPORTATION-3.0%.......... Comair Holdings 127,500 3,346,875
Delta Air Lines........................ 56,000 4,641,000
Federal Express...................... (a) 82,820 6,346,082
_______
14,333,957
_______
UTILITIES-4.6%.................... CMS Energy 75,000 2,156,250
Century Telephone Enterprises.................. 261,900 8,511,750
....GTE 153,430 6,559,132
THE DREYFUS THIRD CENTURY FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1996
COMMON STOCKS (CONTINUED) SHARES VALUE
_______ _______
UTILITIES (CONTINUED)..... 360 Communications 200,000 $ 4,625,000
_______
21,852,132
_______
TOTAL COMMON STOCKS
(cost $361,774,796).................. $465,399,994
=======
PRINCIPAL
SHORT-TERM INVESTMENT-.1% AMOUNT
_______
U.S. TREASURY BILL;.......... 4.98%, 8/8/1996
(cost $340,764)...................... $.......344,000 $ 340,743
=======
TOTAL INVESTMENTS (cost $362,115,560)....................................... 98.4% $465,740,737
==== =======
CASH AND RECEIVABLES (NET).................................................. 1.6% $ 7,711,406
==== =======
NET ASSETS.................................................................. 100.0% $473,452,143
==== =======
NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
THE DREYFUS THIRD CENTURY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1996
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $362,115,560)-see statement..................................... $465,740,737
Cash.................................................................... 903,182
Receivable for investment securities sold............................... 7,195,281
Dividends receivable.................................................... 489,962
Receivable for subscriptions to Common Stock............................ 62,778
Prepaid expenses........................................................ 62,720
_______
474,454,660
LIABILITIES:
Due to The Dreyfus Corporation and subsidiaries......................... $329,540
Payable for investment securities purchased............................. 324,482
Payable for Common Stock redeemed....................................... 32,718
Accrued expenses........................................................ 315,777 1,002,517
____ _______
NET ASSETS.................................................................. $473,452,143
=======
REPRESENTED BY:
Paid-in capital......................................................... $329,978,345
Accumulated undistributed investment income-net......................... 773,541
Accumulated undistributed net realized gain on investments.............. 39,075,080
Accumulated net unrealized appreciation on investments-Note 4........... 103,625,177
_______
NET ASSETS at value applicable to 51,201,638 shares outstanding
(150 million shares of $.331/3 par value Common Stock authorized)....... $473,452,143
=======
NET ASSET VALUE, offering and redemption price per share
($473,452,143 / 51,201,638 shares)...................................... $9.25
=======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
THE DREYFUS THIRD CENTURY FUND, INC.
STATEMENT OF OPERATIONS YEAR ENDED MAY 31, 1996
INVESTMENT INCOME:
<S> <C> <C>
INCOME:
Cash dividends (net of $78,787 foreign taxes withheld at source)...... $ 5,248,818
Interest.............................................................. 904,332
______
TOTAL INCOME.................................................... $ 6,153,150
EXPENSES:
Investment advisory fee-Note 3(a)..................................... 3,154,864
Shareholder servicing costs-Note 3(b)................................. 1,192,986
Professional fees..................................................... 89,450
Directors' fees and expenses-Note 3(c)................................ 54,327
Prospectus and shareholders' reports.................................. 51,648
Custodian fees-Note 3(b).............................................. 50,005
Registration fees..................................................... 31,646
Miscellaneous......................................................... 21,062
______
TOTAL EXPENSES.................................................. 4,645,988
_______
INVESTMENT INCOME-NET........................................... 1,507,162
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 4................................. $62,835,662
Net unrealized appreciation on investments.............................. 54,728,281
______
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 117,563,943
_______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $119,071,105
=======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
THE DREYFUS THIRD CENTURY FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED MAY 31,
__________________________________
1995 1996
_______ ______
<S> <C>
OPERATIONS: <C>
Investment income-net................................................... $ 3,346,699 $ 1,507,162
Net realized gain on investments........................................ 12,839,259 62,835,662
Net unrealized appreciation on investments for the year................. 22,739,756 54,728,281
_______ ______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 38,925,714 119,071,105
_______ ______
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................... (2,986,999) (2,113,842)
Net realized gain on investments........................................ (46,183,615) (27,118,179)
_______ ______
TOTAL DIVIDENDS....................................................... (49,170,614) (29,232,021)
_______ ______
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 68,296,100 347,500,025
Dividends reinvested.................................................... 47,326,617 27,798,267
Cost of shares redeemed................................................. (126,884,560) (360,518,670)
_______ ______
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS..... (11,261,843) 14,779,622
_______ ______
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... (21,506,743) 104,618,706
NET ASSETS:
Beginning of year....................................................... 390,340,180 368,833,437
_______ ______
End of year (including undistributed investment income-net:
$1,380,221 in 1995 and $773,541 in 1996).............................. $ 368,833,437 $ 473,452,143
======= ======
SHARES SHARES
_______ ______
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 9,474,361 40,415,926
Shares issued for dividends reinvested.................................. 7,548,119 3,419,227
Shares redeemed......................................................... (17,546,982) (42,120,754)
_______ ______
NET INCREASE (DECREASE) IN SHARES OUTSTANDING......................... (524,502) 1,714,399
======= ======
See notes to financial statements.
</TABLE>
THE DREYFUS THIRD CENTURY FUND, INC.
FINANCIAL HIGHLIGHTS
Reference is made to page 3 of the Fund's Prospectus dated October 1, 1996.
See notes to financial statements.
THE DREYFUS THIRD CENTURY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Dreyfus Third Century Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a diversified open-end management
investment company. The Fund's investment objective is to provide capital
growth. The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
adviser. Dreyfus is a direct subsidiary of Mellon Bank, N.A. ("Mellon"). NCM
Capital Management Group, Inc. ("NCM") serves as the Fund's sub-investment
adviser. Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares which are sold to the public without a sales
charge.
(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-BANK LINE OF CREDIT:
The Fund participates in a $100 million unsecured line of credit provided
by The Bank of New York, primarily for temporary or emergency purposes,
including the meeting of redemption requests that otherwise might require the
untimely disposition of securities. Interest is payable at the Federal Funds
rate plus .50% on an annualized basis. During the year ended May 31, 1996,
the amounts borrowed from this line of credit were immaterial.
NOTE 3-INVESTMENT ADVISORY FEE, SUB-INVESTMENT ADVISORY FEE AND OTHER TRANSACT
IONS WITH AFFILIATES:
(A) Pursuant to the management agreement ("Agreement") with Dreyfus, the
management fee is computed at an annual rate of .75 of 1% of the value of the
Fund's average daily net assets and is payable monthly. The agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary
THE DREYFUS THIRD CENTURY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
expenses, exceed 11\2% of the value of the Fund's average daily net assets
for any full fiscal year. There was no expense reimbursement for the year
ended May 31, 1996.
Pursuant to a Sub-Investment Advisory Agreement with NCM, the
sub-investment advisory fees are payable monthly by Dreyfus, and are based
upon the value of the Fund's average daily net assets, computed at the
following rates:
<TABLE>
<CAPTION>
AVERAGE NET ASSETS
____________
<S> <C>
0 to $400 million..................................................................... .10 of 1%
$400 to $500 million.................................................................. .15 of 1%
$500 to $750 million.................................................................. .20 of 1%
In excess of $750 million............................................................. .25 of 1%
</TABLE>
Prior to April 18, 1996, the sub-investment advisory fee was computed at
an annual rate of .10 of 1% on the first $500
million and .20 of 1% on the excess over $500 million of the value of the
Fund's average daily net assets and was payable monthly by Dreyfus.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund reimburses
Dreyfus Service Corporation, a wholly-owned subsidiary of Dreyfus, an amount
not to exceed an annual rate of .25 of 1% of the value of the Fund's average
daily net assets 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.
During the year ended May 31, 1996, the Fund was charged an aggregate of
$655,193 pursuant to the Shareholder Services Plan.
Effective December 1, 1995, the Fund compensates Dreyfus Transfer, Inc.,
a wholly-owned subsidiary of Dreyfus, under a transfer agency agreement for
providing personnel and facilities to perform transfer agency services for
the Fund. Such compensation amounted to $128,102 for the period from December
1, 1995 through May 31, 1996.
Effective May 10, 1996, the Fund entered into a Custody Agreement with
Mellon to provide custodial services for the Fund. For the period from May
10, 1996 through May 31, 1996, $4,606 was paid to Mellon pursuant to the
Custody Agreement.
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $10,000. The Chairman of the Board
receives an additional 25% of such compensation.
NOTE 4-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the year ended May 31, 1996 amounted
to $378,938,523 and $369,914,313, respectively.
At May 31, 1996, accumulated net unrealized appreciation on investments
was $103,625,177, consisting of $107,429,785 gross unrealized appreciation
and $3,804,608 gross unrealized depreciation.
At May 31, 1996, 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, 1996, 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 verification by
examination of securities held by the custodian as of May 31, 1996 and confirm
ation of securities not held by the custodian by correspondence with others.
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, 1996, 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 and Young LLP signature logo]
New York, New York
July 9, 1996
