-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TU2AlL9tv8HkMwwnf7uVXcQQkgLr4pkNk8riRam4YOrtMipJB2VuuRTphfHKOQ2k F4KJfcnwSotmVyu4MPRBEQ== 0000030167-99-000010.txt : 19990811 0000030167-99-000010.hdr.sgml : 19990811 ACCESSION NUMBER: 0000030167-99-000010 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990531 FILED AS OF DATE: 19990810 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DREYFUS THIRD CENTURY FUND INC CENTRAL INDEX KEY: 0000030167 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 132691318 STATE OF INCORPORATION: MD FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-02192 FILM NUMBER: 99681854 BUSINESS ADDRESS: STREET 1: 144 GLENN CURTISS BLVD CITY: UNIONDALE STATE: NY ZIP: 11556-0144 BUSINESS PHONE: 2129226792 MAIL ADDRESS: STREET 1: C/O DREYFUS CORP STREET 2: 200 PARK AVENUE, 8TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10166 N-30D 1 ANNUAL REPORT The Dreyfus Third Century Fund, Inc. ANNUAL REPORT May 31, 1999 The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Year 2000 Issues (Unaudited) The fund could be adversely affected if the computer systems used by The Dreyfus Corporation and the fund's other service providers do not properly process and calculate date-related information from and after January 1, 2000. The Dreyfus Corporation is working to avoid Year 2000-related problems in its systems and to obtain assurances from other service providers that they are taking similar steps. In addition, issuers of securities in which the fund invests may be adversely affected by Year 2000-related problems. This could have an impact on the value of the fund's investments and its share price. Contents THE FUND - ------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Fund Performance 7 Statement of Investments 10 Statement of Assets and Liabilities 11 Statement of Operations 12 Statement of Changes in Net Assets 13 Financial Highlights 14 Notes to Financial Statements 18 Report of Independent Auditors 19 Important Tax Information FOR MORE INFORMATION - -------------------------------------------------------- Back Cover The Dreyfus Third Century Fund, Inc. The Fund LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this annual report for The Dreyfus Third Century Fund, Inc. covering the 12-month period from June 1, 1998 through May 31, 1999. Inside, you'll find valuable information about how the fund was managed during the reporting period, including a discussion with the fund's portfolio managers, Paul A. Hilton and Maceo K. Sloan. Despite the sharp correction that occurred during the third quarter of 1998, the past year has generally been rewarding for equity investors. Strong economic growth, low inflation and high levels of consumer spending supported continued strength in the stocks of many large companies. As a result, several major market indices have set new records so far in 1999, including the Dow Jones Industrial Average's first-ever close above the 10,000 level. The broader S&P 500 Index and the technology-laden NASDAQ Index also recorded new highs. Yet, until near the end of the 12-month period, the stock market's advance remained relatively narrow, confined to a handful of highly valued growth and technology stocks. In April, however, some previously out-of-favor market sectors rallied strongly, including many value-oriented stocks, large-cap cyclical companies, and many small-cap and midcap stocks. We appreciate your confidence over the past year, and we look forward to your continued participation in The Dreyfus Third Century Fund, Inc. Sincerely, /s/ Stephen E. Canter Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation June 14, 1999 2 DISCUSSION OF FUND PERFORMANCE Paul A. Hilton and Maceo K. Sloan, Portfolio Managers How did The Dreyfus Third Century Fund, Inc. perform relative to its benchmark? For the 12-month period ended May 31, 1999, The Dreyfus Third Century Fund, Inc. produced a total return of 20.30%.1 The fund's benchmark, the Standard & Poor's 500 Composite Stock Price Index (S&P 500 Index), produced a total return of 21.03% and the Dow Jones Industrial Average produced a total return of 18.65% for the same period.2 We are pleased with the fund's competitive returns. By investing in approximately 55-70 large-cap growth names, the fund was able to produce returns similar to the benchmark's portfolio of 500 names. At the same time, the fund offers shareholders the opportunity to invest in companies that meet its social and environmental standards. What is the fund's investment approach? The fund focuses on high-quality growth-oriented companies that exhibit three characteristics: improving profitability measurements; a pattern of consistent earnings; and reasonable prices. While the majority of our holdings are large-cap stocks, the fund also has the ability to purchase mid- and small-cap stocks. Once candidates meet rigorous financial standards, they must also show evidence that they conduct their business in a manner that contributes to the enhancement of the quality of life in America. What other factors influenced the fund's performance? The portfolio's strongest gains during the period came from its technology, telecommunications and health care investments. Within the technology sector, the fund enjoyed solid returns from the same companies that continued to drive the performance of the S&P 500 Index, includ- The Fund 3 DISCUSSION OF FUND PERFORMANCE (continued) ing Microsoft, Intel, International Business Machines, Cisco Systems, Lucent Technologies and Sun Microsystems. In addition, telecommunications names such as MCI WorldCom, AirTouch Communications, AT&T and Ameritech provided strong returns by expanding their businesses to provide customers with data as well as voice services. Health care has long been one of the fund's largest investment themes. Demand for medical services and products by the aging baby boomers continues to increase. In addition, recent technological advances have resulted in more timely FDA approvals and delivery of pharmaceutical products to the marketplace. Finally, new television and radio advertising has been able to raise consumer brand awareness, thereby driving revenues of many names in the portfolio, most notably Johnson & Johnson, Guidant, Schering-Plough and Amgen. On the other hand, financial stocks hindered performance as many of these companies have not yet recovered fully from the global credit and currency crisis that took place last fall. However, we viewed this as an excellent opportunity to acquire fundamentally sound, attractively priced names for the portfolio, and to add to existing high-quality names. What is the fund's current strategy? Over the past several months, we've begun to add more cyclical names -- companies whose earnings are sensitive to changes in economic conditions -- to the portfolio because these companies tend to perform best in an improving economy. Most recently, when the stock market began to shift its emphasis away from growth companies to more reasonably priced value names, we followed suit. In doing so, we believe we have been able to align the portfolio more closely with prevailing market conditions. Can you give us an update on the fund's social investment program? This has been a very busy proxy season for social shareholder resolutions, not just for companies held in this fund, but for a wide array of 4 companies in general. In fact, so far in 1999, shareholders have filed approximately 220 resolutions concerning social and environmental policies with over 150 major U.S. companies. The most popular resolutions were those concerning the environment, equal employment opportunity, global corporate accountability, international health and tobacco, and executive compensation. While we carefully examine each resolution on a case-by-case basis, in most cases, we vote the fund's shares in support of social shareholder resolutions if we believe they support the fund's areas of social concern. At all times, we strive to maintain open communications with the companies' managements so that we can encourage improvement in socially responsible areas. For example, this past year Home Depot faced two resolutions: to release diversity data on its employment practices and to stop the sale of products made from old-growth wood. We voted in favor of both of these resolutions and are currently engaged in an ongoing dialogue with Home Depot's management team regarding these issues. In response to the resolutions, Home Depot recently released equal employment opportunity data in its publicly available social responsibility report. While the company had already banned the sale of old-growth redwood prior to the resolution, it continues to work together with the Forest Stewardship Council to identify suitable old-growth alternatives. We are pleased with Home Depot's responses to these resolutions, however, we believe the company can still do more. Our view is that Home Depot is a leader in its industry and we will continue to work with the company to encourage further improvements. June 14, 1999 1 Total return includes reinvestment of dividends and any capital gains paid. Past performance is no guarantee of future results. Share price and investment return fluctuate such that upon redemption fund shares may be worth more or less than their original cost. 2 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 and The Dow Jones Industrial Average are widely accepted unmanaged indices of U.S. stock market performance. The Fund 5 $331,939 Standard & Poor's 500 Composite Stock Price Index* $316,522 The Dreyfus Third Century Fund, Inc. Comparison of change in value of $10,000 investment in the fund and the Standard & Poor's 500 Composite Stock Price Index - -------------------------------------------------------------------------------- Average Annual Total Returns as of 5/31/99 Inception 1 Year 5 Years 10 Years (3/29/72) - -------------------------------------------------------------------------------- Fund 20.30% 23.62% 16.25% 13.56% * Source: Lipper Analytical Services, Inc. Past performance is not predictive of future performance. The above graph compares a $10,000 investment made in The Dreyfus Third Century Fund, Inc. on 3/29/72 (Inception Date) to a $10,000 investment made in the Standard & Poor's 500 Composite Stock Price Index on that date. For comparative purposes, the value of the Index on 3/31/72 is used as the beginning value on 3/29/72. All dividends and capital gain distributions are reinvested. The Dreyfus Third Century Fund primarily seeks capital growth through investment in common stocks of companies that, in the opinion of the fund's management, not only meet traditional investment standards, but which also show evidence that they conduct their business in a manner that contributes to the enhancement of the quality of life in America. Current income is a secondary goal. The fund's performance shown in the line graph takes into account all applicable fees and expenses. The Standard & Poor's 500 Composite Stock Price Index is a widely accepted, unmanaged index of overall stock market performance which does not take into account charges, fees and other expenses and is not subject to the same socially responsible investment criteria as The Dreyfus Third Century Fund. Further information relating to fund performance, including expense reimbursements, if applicable, is contained in the Financial Highlights section of the Prospectus and elsewhere in this report. 6 STATEMENT OF INVESTMENTS May 31, 1999 - -------------------------------------------------------------------------------- Common Stocks--95.1% Shares Value ($) - -------------------------------------------------------------------------------- Commercial Services--.9% At Home, Cl. A 40,200 a 5,095,350 Interpublic Group Cos. 73,800 5,590,350 10,685,700 Consumer Durables--.6% Newell Rubbermaid 170,200 6,893,100 Consumer Non-Durables--8.6% Clorox 216,100 21,812,594 Kimberly-Clark 562,000 32,982,375 PepsiCo 555,800 19,904,588 Procter & Gamble 244,900 22,867,538 97,567,095 Consumer Services--.7% Infinity Broadcasting, Cl. A 299,000 a 7,643,188 Electronic Technology--19.6% Cisco Systems 308,550 a 33,593,381 EMC 131,000 a 13,050,875 Global Telesystems Group 87,800 a 6,672,800 Intel 287,000 15,515,938 International Business Machines 351,800 40,918,733 Linear Technology 222,400 11,787,200 Lucent Technologies 426,000 24,228,750 Nokia, A.D.S. 149,400 10,607,400 Solectron 210,000 a 11,497,500 Sun Microsystems 497,600 a 29,731,600 Tellabs 401,800 a 23,505,300 221,109,477 Finance--13.8% American Express 155,900 18,893,131 American International Group 206,450 23,599,816 BankAmerica 202,217 13,080,912 Citigroup 224,700 14,886,375 Federal National Mortgage Association 533,700 36,291,600 Fifth Third Bancorp 128,700 8,775,731 Marsh & McLennan Cos. 176,600 12,847,650 Merrill Lynch 170,000 14,280,000 State Street 172,100 13,122,625 155,777,840 The Fund 7 STATEMENT OF INVESTMENTS (continued) May 31, 1999 - -------------------------------------------------------------------------------- Common Stocks (continued) Shares Value ($) - -------------------------------------------------------------------------------- Health Services--2.1% Cardinal Health 258,450 15,603,919 United Healthcare 150,300 8,754,975 24,358,894 Health Technology--10.2% Amgen 207,200 a 13,105,400 Guidant 332,000 16,600,000 Johnson & Johnson 192,000 17,784,000 Lilly (Eli) 221,700 15,837,694 Merck & Co. 454,000 30,645,000 Schering-Plough 250,800 11,301,675 Watson Pharmaceuticals 270,000 a 10,344,375 115,618,144 Non-Energy Minerals--1.1% Alcoa 220,000 12,100,000 Process Industries--1.4% Avery Dennison 120,300 7,202,963 Ecolab 198,000 8,415,000 15,617,963 Producer Manufacturing--9.3% Emerson Electric 237,000 15,138,375 Illinois Tool Works 278,100 21,344,175 Minnesota Mining & Manufacturing 252,600 21,660,450 Pitney Bowes 207,400 13,221,750 Tyco International 207,000 18,086,625 Xerox 275,800 15,496,513 104,947,888 Retail Trade--9.5% CVS 324,000 14,904,000 Home Depot 307,500 17,489,063 Kroger 173,500 a 10,160,594 Safeway 510,600 a 23,742,900 Sears, Roebuck & Co. 306,400 14,649,750 TJX Cos. 360,000 10,800,000 Wal-Mart Stores 353,600 15,072,200 106,818,507 8 - -------------------------------------------------------------------------------- Common Stocks (continued) Shares Value ($) - -------------------------------------------------------------------------------- Technology Services--8.1% America Online 71,200 a 8,499,500 BMC Software 406,800 a 20,111,175 Microsoft 464,600 a 37,487,413 Oracle 1,011,600 a 25,100,325 91,198,413 Utilities--9.2% AES 320,100 a 15,924,975 AT&T 330,750 18,356,625 AT&T - Liberty Media Group, Cl.A 195,000 a 12,955,313 AirTouch Communications 203,100 a 20,411,550 Ameritech 191,900 12,629,419 MCI WorldCom 275,897 a 23,830,603 104,108,485 Total Common Stocks (cost $776,036,430) 1,074,444,694 - -------------------------------------------------------------------------------- Principal Short-Term Investments--3.8% Amount ($) Value ($) - -------------------------------------------------------------------------------- Certificates of Deposit--.0% Self Help Credit Union, 4.66%, 6/21/1999 100,000 100,000 U.S. Treasury Bills--3.8% 4.38%, 7/22/1999 428,000 425,161 4.47%, 8/5/1999 4,751,000 4,713,040 4.44%, 8/12/1999 525,000 520,122 4.48%, 8/19/1999 36,222,000 35,849,058 4.48%, 8/26/1999 1,545,000 1,527,735 43,035,116 Total Short-Term Investments (cost $43,152,772) 43,135,116 - -------------------------------------------------------------------------------- Total Investments (cost $819,189,202) 98.9% 1,117,579,810 Cash and Receivables (Net) 1.1% 12,610,143 Net Assets 100.0% 1,130,189,953 a Non-income producing. See notes to financial statements. The Fund 9 STATEMENT OF ASSETS AND LIABILITIES May 31, 1999 - -------------------------------------------------------------------------------- Cost Value - -------------------------------------------------------------------------------- Assets ($): Investments in securities--See Statement of Investments 819,189,202 1,117,579,810 Cash 12,957,434 Dividends and interest receivable 544,432 Receivable for shares of Common Stock subscribed 198,140 Prepaid expenses 52,350 1,131,332,166 - -------------------------------------------------------------------------------- Liabilities ($): Due to The Dreyfus Corporation and affiliates 889,498 Payable for shares of Common Stock redeemed 37,759 Accrued expenses 214,956 1,142,213 - -------------------------------------------------------------------------------- Net Assets ($) 1,130,189,953 - -------------------------------------------------------------------------------- Composition of Net Assets ($): Paid-in capital 729,791,296 Accumulated undistributed investment income--net 85,006 Accumulated net realized gain (loss) on investments 101,923,043 Accumulated net unrealized appreciation (depreciation) on investments--Note 4 298,390,608 - -------------------------------------------------------------------------------- Net Assets ($) 1,130,189,953 - -------------------------------------------------------------------------------- Shares Outstanding (150 million shares of $.331/3 par value Common Stock authorized) 88,854,980 Net Asset Value, offering and redemption price per share ($) 12.72 See notes to financial statements. 10 STATEMENT OF OPERATIONS Year Ended May 31, 1999 - -------------------------------------------------------------------------------- Investment Income ($) Investment Income ($): - -------------------------------------------------------------------------------- Income: Cash dividends (net of $24,186 foreign taxes withheld at source) 7,226,016 Interest 1,321,401 Total Income 8,547,417 Expenses: Investment advisory fee--Note 3(a) 7,521,525 Shareholder servicing costs--Note 3(b) 1,671,176 Professional fees 107,832 Registration fees 80,664 Custodian fees--Note 3(b) 79,856 Prospectus and shareholders' reports 56,988 Directors' fees and expenses--Note 3(c) 33,381 Interest expense--Note 2 23,221 Loan commitment fees--Note 2 4,338 Miscellaneous 36,377 Total Expenses 9,615,358 Investment (Loss) (1,067,941) - -------------------------------------------------------------------------------- Realized and Unrealized Gain (Loss) on Investments--Note 4 ($): Net realized gain (loss) on investments 114,693,454 Net unrealized appreciation (depreciation) on investments 66,921,091 Net Realized and Unrealized Gain (Loss) on Investments 181,614,545 Net Increase in Net Assets Resulting From Operations 180,546,604 See notes to financial statements. The Fund 11 STATEMENT OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- Year Ended May 31, ----------------------------- 1999 1998 - -------------------------------------------------------------------------------- Operations ($): Investment income (loss)--net (1,067,941) 527,450 Net realized gain (loss) on investments 114,693,454 127,135,626 Net unrealized appreciation (depreciation) on investments 66,921,091 61,034,848 Net Increase (Decrease) in Net Assets Resulting from Operations 180,546,604 188,697,924 - -------------------------------------------------------------------------------- Dividends to Shareholders from ($): Investment income--net -- (1,359,845) Net realized gain on investments (105,500,411) (61,193,006) Total Dividends (105,500,411) (62,552,851) - -------------------------------------------------------------------------------- Capital Stock Transactions ($): Net proceeds from shares sold 731,491,242 1,080,725,202 Dividends reinvested 100,555,806 60,535,061 Cost of shares redeemed (688,590,998) (1,032,801,808) Increase (Decrease) in Net Assets from Capital Stock Transactions 143,456,050 108,458,455 Total Increase (Decrease) in Net Assets 218,502,243 234,603,528 - -------------------------------------------------------------------------------- Net Assets ($): Beginning of Period 911,687,710 677,084,182 End of Period 1,130,189,953 911,687,710 Undistributed investment income--net 85,006 85,006 - -------------------------------------------------------------------------------- Capital Share Transactions (Shares): Shares sold 59,336,041 97,261,223 Shares issued for dividends reinvested 8,565,231 5,636,412 Shares redeemed (56,431,517) (93,123,816) Net Increase (Decrease) in Shares Outstanding 11,469,755 9,773,819 See notes to financial statements. 12 FINANCIAL HIGHLIGHTS The following table describes the performance for the fiscal periods indicated. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements.
- ------------------------------------------------------------------------------------- Year Ended May 31, ------------------------------------------------------- 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------- Per Share Data ($): Net asset value, beginning of period 11.78 10.01 9.25 7.45 7.80 Investment Operations: Investment income (loss)--net (.01) .01 .02 .03 .07 Net realized and unrealized gain (loss) on investments 2.29 2.68 2.16 2.39 .65 Total from Investment Operations 2.28 2.69 2.18 2.42 .72 Distributions: Dividends from investment income--net -- (.02) (.02) (.05) (.07) Dividends from net realized gain on investments (1.34) (.90) (1.40) (.57) (1.00) Total Distributions (1.34) (.92) (1.42) (.62) (1.07) Net asset value, end of period 12.72 11.78 10.01 9.25 7.45 - ---------------------------------------------------------------------------------- Total Investment Return (%) 20.30 27.76 25.70 33.63 11.81 - ---------------------------------------------------------------------------------- Ratios/Supplemental Data (%): Ratio of expenses to average net assets .96 .97 1.03 1.11 1.12 Ratio of net investment income (loss) to average net assets (.11) .07 .22 .36 .93 Portfolio Turnover Rate 75.88 70.41 66.52 92.08 133.54 - ---------------------------------------------------------------------------------- Net Assets, end of period ($ x 1,000) 1,130,190 911,688 677,084 473,452 368,833
See notes to financial statements. The Fund 13 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, as amended (the "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. Under the terms of the custody agreement, the fund received net earnings credits of $5,977 during the period ended May 31, 1999 based on available cash bal- 14 ances left on deposit. Income earned under this arrangement is included in interest income. (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 of 1986, as amended (the "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 Code, and to make distributions of taxable income sufficient to relieve it from substantially all Federal income and excise taxes. During the period ended May 31, 1999, the fund reclassed $1,067,941 to accumulated undistributed net investment income from accumulated net realized gain on investments as a result of permanent book to tax differences. The results of operations and net assets were not affected by this reclassification. NOTE 2--Bank Line of Credit: The fund participates with other Dreyfus-managed funds in a $600 million redemption credit facility (the "Facility") primarily 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. The average daily amount of borrowings outstanding during the period ended May 31, 1999, was approximately $430,800 with a related weighted average annualized interest rate of 5.39%. The Fund 15 NOTES TO FINANCIAL STATEMENTS (continued) NOTE 3--Investment Advisory Fee, Sub-Investment Advisory Fee and Other Transactions With Affiliates: (a) Pursuant to the investment advisory ("Agreement") with Dreyfus, the investment advisory 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 daily net assets, the fund may deduct from the fees paid to Dreyfus, or Dreyfus will bear such excess expense. There was no expense reimbursement pursuant to the agrement during the period ended May 31, 1999. 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 annual rates: Average Net Assets ------------------ 0 to $400 million................. .10 of 1% $400 million to $500 million...... .15 of 1% $500 million 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, 1999, the fund was charged $1,084,748 pursuant to the Shareholder Services Plan. 16 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. During the period ended May 31, 1999, the fund was charged $300,526 pursuant to the transfer agency agreement. The fund compensates Mellon under a custody agreement for providing custodial services for the fund. During the period ended May 31, 1999, the fund was charged $79,856 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, 1999, amounted to $742,587,945 and $739,731,715, respectively. At May 31, 1999, accumulated net unrealized appreciation on investments was $298,390,608, consisting of $311,970,444 gross unrealized appreciation and $13,579,836 gross unrealized depreciation. At May 31, 1999, 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 Fund 17 REPORT OF 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, 1999, 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, 1999 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, 1999, 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. /s/ Ernst & Young LLP New York, New York July 2, 1999 18 IMPORTANT TAX INFORMATION (Unaudited) For Federal tax purposes the fund hereby designates $1.124 per share as a long-term capital gain distribution of the $1.339 per share paid on December 7, 1998. The fund also designates 25.191% of the ordinary dividends paid during the fiscal year ended May 31, 1999 as qualifying for the corporate dividends received deduction. Shareholders will receive notification in January 2000 of the percentage applicable to the preparation of their 1999 income tax returns. The Fund 19 NOTES For More Information 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 Distributor Premier Mutual Fund Services, Inc. 60 State Street Boston, MA 02109 To obtain information: By telephone Call 1-800-645-6561 By mail Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard Uniondale, NY 11556-0144 By E-mail Send your request to info@dreyfus.com On the Internet Information can be viewed online or downloaded from: http://www.dreyfus.com Printed on recycled paper. 50% post-consumer. Process chlorine free. Vegetable-based ink. (c) 1999, Dreyfus Service Corporation 035AR995 EX-99 2 GRAPH IN THE PRESIDENT'S LETTER OF ANNUAL REPORT COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE DREYFUS THIRD CENTURY FUND, INC. AND THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX EXHIBIT A: STANDARD & POOR'S 500 THE DREYFUS PERIOD COMPOSITE STOCK THIRD CENTURY PRICE INDEX * FUND, INC. 3/29/72 10,000 10,000 5/31/72 10,266 10,061 5/31/73 10,124 8,177 5/31/74 8,721 7,551 5/31/75 9,556 9,193 5/31/76 10,928 10,781 5/31/77 10,937 12,082 5/31/78 11,656 14,870 5/31/79 12,522 17,335 5/31/80 14,858 24,830 5/31/81 18,603 33,866 5/31/82 16,607 26,088 5/31/83 25,378 37,009 5/31/84 24,604 33,576 5/31/85 32,415 43,715 5/31/86 43,971 52,949 5/31/87 53,275 60,640 5/31/88 49,807 58,265 5/31/89 63,136 70,235 5/31/90 73,604 82,355 5/31/91 82,259 96,514 5/31/92 90,345 100,299 5/31/93 100,816 110,350 5/31/94 105,101 109,657 5/31/95 126,288 122,610 5/31/96 162,168 163,843 5/31/97 209,909 205,945 5/31/98 274,257 263,121 5/31/99 331,939 316,522 * Source: Lipper Analytical Services, Inc. -----END PRIVACY-ENHANCED MESSAGE-----