<PAGE>
Dreyfus
Third Century
Fund, Inc.
Annual Report
May 31, 1997
<PAGE>
The Dreyfus Third Century Fund, Inc.
- --------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to provide you with this annual report for The Dreyfus Third
Century Fund, Inc. for the fiscal reporting period ended May 31, 1997. Over this
12-month period, your Fund produced a total return of 25.70%,* which compares
with a total return of 29.42% for the Standard & Poor's 500 Composite Stock
Price Index (S&P 500).**
Economic Review
Will they or won't they? This year's cliffhanger each time the Federal
Reserve Board (the Fed) Open Market Committee meets reflects a splintering of
views on the need for monetary tightening between (1) those who point to a
fundamentally strong economy operating with little slack, and (2) those who
point to the absence of rising inflation. At issue is the business cycle, now in
its seventh year of expansion, which may be vulnerable to renewed inflation. The
alternative theory is that the business and inflation cycles have been
eliminated by global capacity and the technology era. The benign economic
environment has kept market interest rates within their range of the past 18
months, swaying with the fluctuations of short-term economic evidence.
When the Fed tightened the Federal Funds rate 25 basis points in March, it
was primarily because real Gross Domestic Product (GDP) in the first calendar
quarter of 1997 was growing at a 5.8% annualized pace on the heels of 3.8%
growth in the fourth quarter of 1996. However, by the Fed's May meeting,
economic evidence indicated a slowing economy in March and April, allowing the
Fed to stand pat. Could this be the long awaited slowdown? Evidence for the
second quarter continues to portray a slower economy, although the pace of
manufacturing activity seems to be quickening again.
Faster economic growth since last fall has been accompanied by slower price
inflation. Domestically, a stronger dollar this year is keeping down prices of
many import-competing products. Additionally though, rising hourly wages are not
translating into much wage inflation. Rather, they are frequently ascribed to
well-earned productivity rewards, while employee benefit costs continue to be
contained.
The risk for corporate profits is probably more clear cut. The combination
of weak pricing power and a tightening labor market would likely hurt profits in
a sustained economic slowdown. Through the first quarter, however, profits
continued to surprise on the upside, and we currently expect overall profits to
post modest gains in 1997.
Market Overview
Over the past 12 months the market has changed personalities several times
as investors have been keeping one eye on the economy and the Fed, and the other
on valuation and earnings of stocks. While pundits were alleging that the market
had crossed over the irrational level with the valuation of large cap stocks,
economists were slugging it out over "slow to moderate growth" versus
"re-acceleration" of economic growth. Confusion resulted, and that combined with
fears of a vigilant Fed along with the aforementioned factors, led to a sharp
correction last July, when the various averages plunged anywhere from 6% on the
S&P 500 to 10% on the NASDAQ. Since then the market has been on a sometimes
turbulent but persistent uptrend, with a narrow group of big cap stocks leading
the way. Alan Greenspan's implied threat of raising rates to counter what he
calls "irrational exuberance" has not deterred the strong engine of money flow
that continues to fuel the market. With economic growth healthy but moderate,
inflation all but absent from the economy, and earnings growth weighing in at
respectable levels for this time in the cycle, most naysayers are capitulating
and trying to look back in history to figure out when the market has been so
strong for so long.
Nineteen ninety-seven got off to a good start as the market was fueled by
typical annual asset allocation shifts by investors, payment of 1996 bonuses,
and the trend of households continuing to invest for the future. Portfolio
managers
<PAGE>
looked to 1996 laggards, and stocks with cheap relative valuations which were
primarily in the cyclical area. Coming into 1997 the economy was beginning to
show prospective signs of strength. This resulted in the market focusing on
economically sensitive stocks, realizing that perhaps the profit picture for
these companies had been declared dead too soon. Consumer growth companies also
continued their reign as the market decided that large, liquid, stable, growing
companies were still the best hedge against an uncertain economy. But what
really influenced the market in the face of Mr. Greenspan's "irrational
exuberance" comment was the fact that the economy (along with the financial
markets) was showing some unnerving signs of strength. Housing data, labor
market tightening, stronger than expected business spending, retail sales, and
increasing consumer confidence levels due to low unemployment and strong
financial market performance all led to the Fed increasing interest rates in
March as a precautionary measure. This brought about a market setback in late
March and early April which proved short-lived.
However, since then the market slowly came to realize that the corporate
profit picture, albeit in a slower growth mode, is still intact. And the
economy, at least for now, does not appear to be in any imminent danger of
inflation. May marked the fifth straight month of wholesale price index (PPI)
decreases and the third straight month of declining retail sales.
Portfolio Focus
The Fund's strongest return contributions came from the financial services,
consumer staples and technology sectors. We continue to favor these areas on the
secular themes of savings and investment, globalization and productivity. The
Fund's performance during the period benefited from its holdings in Allstate,
Aflac, Sunamerica, Colgate Palmolive, Gillette, Coca- Cola, Microsoft, BMC
Software, and US Robotics. Each of these companies not only outperformed the
market, but also outperformed their corresponding sectors. Each of these
companies delivered robust earnings gains during the past 12 months and
convinced Wall Street that the future was indeed bright for these companies.
After a dismal performance in the first quarter of 1997, technology regained
investors' attention to perform well during the second quarter of 1997. We
currently intend to take profits in this area on strength but will remain
slightly overweighted, as we continue to like the long-term picture for
technology. Consumer staple stocks continue to attract interest because of the
stability of their earnings, although many, we believe, are reaching full
valuation. The financial stocks benefited from a rebound in the bond market as
investors concluded that the Fed will leave rates unchanged for the near term as
inflation is not prevalent in this economy. We currently remain overweighted in
this group as we believe that company-specific fundamentals remain intact along
with our belief that the long-term direction of interest rates is lower.
The transportation and industrial sectors performed well during the period.
However, our underweighting in these two sectors hurt performance. The portfolio
was also hurt by the poor performance of stocks in the consumer cyclical sector,
including Officemax Inc. and Viking Office Products.
Social Goals
Social screening is part of the Fund's fundamental investment objective, and
Fund management is continually involved in ensuring that portfolio holdings
exhibit evidence that they conduct their business in a manner that contributes
to the enhancement of the quality of life in America based on the Fund's social
criteria.. The Fund's strong performance relative to its Lipper peer group
reveals, in the opinion of Fund management, that solid social screening and
attractive financial returns are not incompatible. For example, we believe that
companies with solid environmental
<PAGE>
policies and practices can exhibit more stable returns over the long run as
they benefit from increased efficiencies and avoid potential costly liability
settlements. In addition, companies that take their environmental
responsibilities seriously realize that by reducing in-house waste and
packaging costs, minimizing toxic releases, and increasing the use of
recycling, they can generate substantial cost savings, and are able to foster
better relations not only with the communities they operate in but with the
public at large.
We have positive news to report on a number of the Fund's core holdings.
Sun Microsystems recently received the EPA's "Energy Star Office Equipment
Partner of the Year Award" for promoting the importance of energy conservation
throughout the company. Bank of America, one of the Fund's largest holdings for
some time, has signed the Coalition for Environmentally Responsible Economies
(CERES) principles. On the diversity front, two of the companies currently held
in the Fund's portfolio, Avon and Allstate, won 1997 Catalyst Awards for
initiatives that underscore their commitment to the promotion and advancement
of women.
Outlook
Currently, the outlook for the stock market appears to be positive. Lower
interest rates, modest economic growth, no evident threat of inflation, and
continued money flows into equity mutual funds bode well for the market.
However, somewhat pricey valuations, whispers of potential re-accelerating
economic growth and scattered earnings pre-announcements temper our enthusiasm
in the short term. However, the overall fundamentals appear to be strong.
Sincerely,
Maceo K. Sloan Eric Steedman
Portfolio Manager Portfolio Manager
NCM Capital Management The Dreyfus Corporation
Group, Inc.
June 20, 1997
New York, N.Y.
*Total return includes reinvestment of dividends and any capital gains paid.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- Reflects the reinvestment
of income dividends and, where applicable, capital gain distributions. The
Standard & Poor's 500 Composite Stock Price Index is a widely accepted
unmanaged index of U.S. stock market performance.
<PAGE>
The Dreyfus Third Century Fund, Inc.
- --------------------------------------------------------------------------------
Statement of Investments May 31, 1997
<TABLE>
<CAPTION>
Common Stocks--88.9% Shares Value
- ---------------------------------------------------------------------------- -------- --------------
<S> <C> <C> <C>
Consumer Non-Durables--14.0% Avon Products............................ 150,000 $ 9,562,500
CPC International........................ 110,000 9,460,000
Clorox................................... 110,000 13,887,500
Coca-Cola................................ 194,800 13,295,100
Colgate-Palmolive........................ 280,000 17,360,000
Gillette................................. 176,600 15,695,325
Interstate Bakeries...................... 90,000 4,837,500
Jones Apparel Group...................(a) 130,000 6,093,750
NIKE, Cl. B.............................. 81,600 4,651,200
--------------
94,842,875
--------------
Consumer Services--6.3% BET Holdings, Cl. A...................(a) 85,000 2,730,625
CUC International.....................(a) 418,550 9,626,650
Disney (Walt)............................ 198,600 16,260,375
Service Corp. International.............. 400,000 14,100,000
--------------
42,717,650
--------------
Electronic Technology--10.7% Cisco Systems.........................(a) 235,000 15,921,250
EMC...................................(a) 214,100 8,537,237
Intel.................................... 75,000 11,362,500
Linear Technology.....................(a) 170,000 8,521,250
Seagate Technology....................(a) 150,000 6,093,750
Sun Microsystems......................(a) 247,200 7,972,200
3COM..................................(a) 86,300 4,185,550
U.S. Robotics.........................(a) 120,000 10,080,000
--------------
72,673,737
--------------
Finance--20.1% AFLAC.................................... 171,150 8,728,650
Allstate................................. 213,070 15,687,278
American International Group............. 74,700 10,112,512
BANKBOSTON............................... 170,000 12,410,000
BankAmerica.............................. 115,000 13,440,625
Chase Manhattan.......................... 50,000 4,725,000
Citicorp................................. 99,200 11,346,000
Fannie Mae............................... 410,600 17,912,425
Green Tree Financial..................... 366,800 12,838,000
PNC Bank................................. 225,000 9,421,875
Summit Bancorp........................... 133,000 6,566,875
SunAmerica............................... 270,000 12,757,500
--------------
135,946,740
--------------
</TABLE>
<PAGE>
The Dreyfus Third Century Fund, Inc.
- --------------------------------------------------------------------------------
Statement of Investments (continued) May 31, 1997
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ----------------------------------------------------------------------------- -------- -------------
<S> <C> <C> <C>
Health Technology--14.2% Amgen.................................(a) 200,600 $ 13,415,125
Boston Scientific.....................(a) 100,000 5,337,500
Bristol-Myers Squibb..................... 207,000 15,188,625
Guidant.................................. 150,000 11,643,750
Johnson & Johnson........................ 299,080 17,907,415
Medtronic................................ 219,600 16,250,400
Merck & Co............................... 184,762 16,605,484
------------
96,348,299
------------
Industrial Services--3.6% Global Marine.........................(a) 200,000 4,500,000
Schlumberger............................. 122,210 14,558,266
Seitel................................(a) 150,000 5,568,750
------------
24,627,016
------------
Process Industries--3.6% Avery Dennison........................... 200,000 7,525,000
Bemis.................................... 300,600 12,024,000
Fort Howard...........................(a) 102,600 4,713,187
------------
24,262,187
------------
Producer Manufacturing--2.0% Dover.................................... 235,800 13,499,550
------------
Retail Trade--4.0% Consolidated Stores...................(a) 141,250 5,402,812
OfficeMax.............................(a) 400,000 5,550,000
Sears, Roebuck & Co...................... 238,700 11,726,137
Viking Office Products................(a) 250,000 4,718,750
------------
27,397,699
------------
Technology Services--7.6% BMC Software..........................(a) 327,120 17,705,375
Computer Associates International........ 188,425 10,316,269
Microsoft.............................(a) 90,000 11,160,000
Oracle................................(a) 260,500 12,145,812
------------
51,327,456
------------
Transportation--1.0% Federal Express.......................(a) 125,640 6,580,395
------------
Utilities--1.8% WorldCom..............................(a) 400,000 11,850,000
------------
TOTAL COMMON STOCKS
(cost $431,659,916).................... $602,073,604
------------
------------
</TABLE>
<PAGE>
The Dreyfus Third Century Fund, Inc.
- --------------------------------------------------------------------------------
Statement of Investments (continued) May 31, 1997
<TABLE>
<CAPTION>
Principal
Short-Term Investments--6.9% Amount Value
- ----------------------------------------------------------------------------- ------------- ---------------
<S> <C> <C> <C>
U.S. Treasury Bills: 5.13%, 7/24/1997......................... $ 1,261,000 $ 1,252,097
5.06%, 8/7/1997.......................... 2,121,000 2,102,462
4.98%, 8/21/1997......................... 43,537,000 43,068,107
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $46,401,685)..................... $ 46,422,666
============
TOTAL INVESTMENTS (cost $478,061,601)........................................ 95.8% $648,496,270
====== ============
CASH AND RECEIVABLES (NET)................................................... 4.2% $ 28,587,912
====== ============
NET ASSETS................................................................... 100.0% $677,084,182
====== ============
</TABLE>
Notes to Statement of Investments:
- --------------------------------------------------------------------------------
(a) Non-income producing.
See notes to financial statements.
<PAGE>
The Dreyfus Third Century Fund, Inc.
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities May 31, 1997
<TABLE>
<CAPTION>
Cost Value
------------- -------------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments.... $478,061,601 $648,496,270
Cash....................................................... 27,678,441
Receivable for shares of Common Stock subscribed........... 1,018,871
Dividends receivable...................................... 499,236
Prepaid expenses........................................... 64,834
------------
677,757,652
------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.............. 437,618
Payable for shares of Common Stock redeemed................ 27,625
Accrued expenses........................................... 208,227
------------
673,470
------------
NET ASSETS..................................................................... $677,084,182
============
REPRESENTED BY: Paid-in capital............................................ $477,876,791
Accumulated undistributed investment income--net.......... 917,401
Accumulated net realized gain (loss) on investments........ 27,855,321
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4............................... 170,434,669
------------
NET ASSETS..................................................................... $677,084,182
============
SHARES OUTSTANDING
(150 million shares of $.33 1/3 par value Common Stock authorized)............. 67,611,406
NET ASSET VALUE, offering and redemption price per share....................... $10.01
======
</TABLE>
See notes to financial statements.
<PAGE>
The Dreyfus Third Century Fund, Inc.
- --------------------------------------------------------------------------------
Statement of Operations Year Ended May 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME: Cash dividends................................... $ 5,201,271
Interest ........................................ 1,534,525
------------
Total Income................................ $ 6,735,796
EXPENSES: Management fee--Note 3(a)........................ 4,045,691
Shareholder servicing costs--Note 3(b)........... 1,133,683
Professional fees................................ 97,242
Registration fees................................ 73,435
Prospectus and shareholders' reports............. 67,592
Directors' fees and expenses--Note 3(c).......... 42,827
Custodian fees--Note 3(b)........................ 42,287
Interest--Note 2................................. 7,510
Loan commitment fees--Note 2..................... 3,856
Miscellaneous.................................... 18,348
------------
Total Expenses.............................. 5,532,471
------------
INVESTMENT INCOME--NET......................................................... 1,203,325
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments ......... $ 62,677,975
Net unrealized appreciation (depreciation) on
investments.................................... 66,809,492
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS......................... 129,487,467
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................... $130,690,792
============
</TABLE>
See notes to financial statements.
<PAGE>
The Dreyfus Third Century Fund, Inc.
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets Year Ended May 31, 1997
<TABLE>
<CAPTION>
Year Ended Year Ended
May 31, 1997 May 31, 1996
---------------- --------------
<S> <C> <C>
OPERATIONS:
Investment income--net.................................................. $ 1,203,325 $ 1,507,162
Net realized gain (loss) on investments................................. 62,677,975 62,835,662
Net unrealized appreciation (depreciation) on investments............... 66,809,492 54,728,281
-------------- -------------
Net Increase (Decrease) in Net Assets Resulting from Operations..... 130,690,792 119,071,105
-------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net.................................................. (1,059,465) (2,113,842)
Net realized gain on investments........................................ (73,897,734) (27,118,179)
-------------- -------------
Total Dividends..................................................... (74,957,199) (29,232,021)
-------------- -------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 1,044,680,240 347,500,025
Dividends reinvested.................................................... 72,507,283 27,798,267
Cost of shares redeemed................................................. (969,289,077) (360,518,670)
-------------- -------------
Increase (Decrease) in Net Assets from Capital Stock Transactions... 147,898,446 14,779,622
-------------- -------------
Total Increase (Decrease) in Net Assets........................... 203,632,039 104,618,706
NET ASSETS:
Beginning of Period..................................................... 473,452,143 368,833,437
-------------- -------------
End of Period........................................................... $ 677,084,182 $473,452,143
-------------- -------------
-------------- -------------
Undistributed investment income--net...................................... $ 917,401 $ 773,541
-------------- -------------
<CAPTION>
Shares Shares
-------------- -------------
<S> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 109,951,947 40,415,926
Shares issued for dividends reinvested.................................. 8,277,087 3,419,227
Shares redeemed......................................................... (101,819,266) (42,120,754)
-------------- -------------
Net Increase (Decrease) in Shares Outstanding....................... 16,409,768 1,714,399
-------------- -------------
-------------- -------------
</TABLE>
See notes to financial statements.
<PAGE>
The Dreyfus Third Century Fund, Inc.
- --------------------------------------------------------------------------------
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 period indicated. This information has
been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Year Ended May 31,
-------------------------------------------------------
PER SHARE DATA: 1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 9.25 $ 7.45 $ 7.80 $ 8.48 $ 7.80
------ ------ ------ ------ ------
Investment Operations:
Investment income--net............................ .02 .03 .07 .05 .04
Net realized and unrealized gain (loss)
on investments.................................. 2.16 2.39 .65 (.08) .74
------ ------ ------ ------ ------
Total from Investment Operations.................. 2.18 2.42 .72 (.03) .78
------ ------ ------ ------ ------
Distributions:
Dividends from investment income--net.............. (.02) (.05) (.07) (.04) (.05)
Dividends from net realized gain on investments...... (1.40) (.57) (1.00) (.61) (.05)
------ ------ ------ ------ ------
Total Distributions............................... (1.42) (.62) (1.07) (.65) (.10)
------ ------ ------ ------ ------
Net asset value, end of period.................... $10.01 $ 9.25 $ 7.45 $ 7.80 $ 8.48
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN.............................. 25.70% 33.63% 11.81% (.63%) 10.02%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.......... 1.03% 1.11% 1.12% 1.17% 1.11%
Ratio of net investment income
to average net assets........................... .22% .36% .93% .52% .48%
Portfolio Turnover Rate.............................. 66.52% 92.08% 133.54% 71.70% 67.30%
Average commission rate paid*..................... $.0616 -- -- -- --
Net Assets, end of period (000's Omitted)......... $677,084 $473,452 $368,833 $390,340 $526,335
<FN>
- --------------------------
* For fiscal years beginning June 1, 1996, the Fund is required to disclose its
average commission rate paid per share for purchases and sales of investment
securities.
</TABLE>
See notes to financial statements.
<PAGE>
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. is the distributor
of the Fund's shares which are sold to the public without a sales charge.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities are valued at the last
sales price on the securities exchange on which such securities are primarily
traded or at the last sales price on the national securities market. Securities
not listed on an exchange or the national securities market, or securities for
which there were no transactions, are valued at the average of the most recent
bid and asked prices. Bid price is used when no asked price is available.
Securities for which there are no such valuations are valued at fair value as
determined in good faith under the direction of the Board of Directors.
(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 with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion of
the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. At May 31, 1997, there were no
outstanding borrowings under the Facility.
The average daily amount of borrowings outstanding under a previous line of
credit during the period ended May 31, 1997, was approximately $118,000, with a
related weighted average annualized interest rate of 5.83%. The maximum amount
borrowed at any time during the period ended May 31, 1997 was $15 million.
<PAGE>
The Dreyfus Third Century Fund, Inc.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 3--Investment Advisory Fee, Sub-Investment Advisory Fee and Other
Transactions 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
that if in any full fiscal year the aggregate expenses of the Fund, exclusive of
taxes, brokerage, interest on borrowings, commitment fees and extraordinary
expenses, exceed 11/2% of the value of the Fund's average net assets, the Fund
may deduct from the fees paid to Dreyfus, or Dreyfus will bear such excess
expense. There was no expense reimbursement for the period ended May 31, 1997.
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:
Average Net Assets
------------------
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%
(b) Under the 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 period
ended May 31, 1997, the Fund was charged an aggregate of $780,224 pursuant to
the Shareholder Services Plan.
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such compensation
amounted to $265,039 during the period ended May 31, 1997.
The Fund compensates Mellon under a custody agreement to provide custodial
services for the Fund. During the period ended May 31, 1997, $42,287 was charged
by 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 period ended May 31, 1997 amounted
to $346,080,414 and $338,005,328, respectively.
At May 31, 1997, accumulated net unrealized appreciation on investments was
$170,434,669, consisting of $172,683,615 gross unrealized appreciation and
$2,248,946 gross unrealized depreciation.
At May 31, 1997, 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).
<PAGE>
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, 1997, 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 and financial highlights. Our procedures included verification by
examination of securities held as of May 31, 1997 and confirmation 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, 1997, and 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.
New York, New York
July 7, 1997
<PAGE>
The Dreyfus Third Century Fund, Inc.
- --------------------------------------------------------------------------------
Important Tax Information (Unaudited)
For Federal tax purposes the Fund hereby designates $.8800 per share as
a long-term capital gain distribution of the $1.4150 per share paid on December
12, 1996.
The Fund also designates 15.37% of the ordinary dividends paid during the
fiscal year ended May 31, 1997 as qualifying for the corporate dividends
received deduction. Shareholders will receive notification in January 1998 of
the percentage applicable to the preparation of their 1997 income tax return.
<PAGE>
The Dreyfus
Third Century Fund, Inc.
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Sub-Investment Adviser
NCM Capital Management Group, Inc.
103 West Main Street
Durham, North Carolina 27705
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 035AR975
