In early 2004, two purported class and derivative actions were filed against
Mellon Financial Corporation, Mellon Bank, N.A., Dreyfus, Founders Asset
Management LLC, and certain directors of the Dreyfus Funds and the Dreyfus
Founders Funds (together, the Funds) in the United States District Court for the
Western District of Pennsylvania. In September 2004, plaintiffs served a
Consolidated Amended Complaint (the Amended Complaint) on behalf of a purported
class of all persons who acquired interests in any of the Funds between January
30, 1999 and November 17, 2003, and derivatively on behalf of the Funds. The
Amended Complaint in the newly styled In re Dreyfus Mutual Funds Fee Litigation
also named Dreyfus Service Corporation, Premier Mutual Fund Services, Inc. and
two additional Fund directors as defendants and alleges violations of the
Investment Company Act of 1940, the Investment Advisers Act of 1940, the
Pennsylvania Unfair Trade Practices and Consumer Protection Law and common-law
claims. Plaintiffs seek to recover allegedly improper and excessive Rule 12b-1
and advisory fees allegedly charged to the Funds for marketing and distribution
services. More specifically, plaintiffs claim, among other things, that 12b-1
fees and directed brokerage were improperly used to pay brokers to recommend the
Funds over other funds, and that such payments were not disclosed to investors.
In addition, plaintiffs assert that economies of scale and soft-dollar benefits
were not passed on to the Funds. Plaintiffs further allege that 12b-1 fees were
improperly charged to certain of the Funds that were closed to new investors.
The Amended Complaint seeks compensatory and punitive damages, rescission of the
advisory contracts, and an accounting and restitution of any unlawful fees, as
well as an award of attorneys fees and litigation expenses. As noted, some of
the claims in this litigation are asserted derivatively on behalf of the Funds
that have been named as nominal defendants. With respect to such derivative
claims, no relief is sought against the Funds. Dreyfus believes the allegations
to be totally without merit and intends to defend the action vigorously. In
November 2004, all named defendants moved to dismiss the Amended Complaint in
whole or substantial part. Briefing was completed in May 2005.

Additional lawsuits arising out of these circumstances and presenting similar
allegations and requests for relief may be filed against the defendants in the
future. Neither Dreyfus nor the Funds believe that any of the pending actions
will have a material adverse effect on the Funds or Dreyfus ability to perform
its contract with the Funds.