<DOCUMENT>
<TYPE>EX-99.77E LEGAL
<SEQUENCE>3
<FILENAME>r77e2.txt
<DESCRIPTION>REGULATORY AND LITIGATION MATTERS
<TEXT>
REGULATORY AND LITIGATION MATTERS

Since February 2004, PIMCO, Allianz Global Investors of America L.P. (PIMCOs
parent company) and certain of their affiliates, including the PIMCO Funds,
(a series of funds managed by PIMCO), the Allianz Funds, (a series of funds
managed by affiliates of PIMCO), certain Trustees of the PIMCO Funds and
certain employees of PIMCO, have been named as defendants in fifteen lawsuits
filed in various jurisdictions. Eleven of those lawsuits concern market
timing, and they have been transferred to and consolidated for pre-trial
proceedings in a multi-district litigation proceeding in the U.S. District
Courtfor the District of Maryland; the other four lawsuits concern revenue
sharing and have been consolidated into a single action in the U.S. District
Court for the District of Connecticut. The lawsuits have been commenced as
putative class actions on behalf of investors who purchased, held or redeemed
shares of the various series of the PIMCO Funds and the Allianz Funds during
specified periods, or as derivative actions on behalf of the PIMCO Funds and
Allianz Funds.

The market timing actions in the District of Maryland generally allege that
certain hedge funds were allowed to engage in market timing in certain of
the Allianz Funds and the PIMCO Funds and this alleged activity was not
disclosed.  Pursuant to tolling agreements entered into with the derivative
and class action plaintiffs, PIMCO, certain PIMCO Funds Trustees, and certain
employees of PIMCO who were previously named as defendants have all been
dropped as defendants in the market timing actions; the plaintiffs continue
to assert claims on behalf of the shareholders of the PIMCO Funds or on behalf
of the PIMCO Funds themselves against other defendants. By order dated
November 3, 2005, the U.S. District Court for the District of Maryland granted
the PIMCO Funds motion to dismiss claims asserted against it in a
consolidated amended complaint where the PIMCO Funds were named, in the
complaint, as a nominal defendant. The revenue sharing action in the District
of Connecticut generally alleges that fund assets were inappropriately used to
pay brokers to promote the Allianz Funds and PIMCO Funds, including directing
fund brokerage transactions to such brokers, and that such alleged arrangements
were not fully disclosed to shareholders. On August 11, 2005 the U.S. District
Court for the District of Connecticut conducted a hearing on defendants motion
to dismiss the consolidated amended complaint in the revenue sharing action but
has not yet ruled on the motion to dismiss. The market timing and revenue
sharing lawsuits seek, among other things,unspecified compensatory damages plus
interest and, in some cases, punitive damages, the rescission of investment
advisory contracts, the return of fees paid under those contracts and
restitution.

Two nearly identical class action civil complaints have been filed in August
2005, in the Northern District of Illinois Eastern Division, alleging that the
plaintiffs each purchased and sold a 10 year Treasury note futures contract and
suffered damages from an alleged shortage when PIMCO held both physical and
futures positions in 10 year Treasury notes for its client accounts. The two
actions have been consolidated into one action, and the two separate complaints
have been replaced by a consolidated complaint. PIMCO is a named defendant, and
the PIMCO Funds have been added as a defendant, to the consolidated action.
PIMCO strongly believes the complaint is without merit and intends to
vigorously defend itself.

In April 2006, certain funds managed by PIMCO were served in an adversary
proceeding brought by the Official Committee of Asbestos Claimants of G-I
Holdings, Inc. in GI Holdings, Inc. bankruptcy in the District of New Jersey.
In July 2004, PIMCO was named in this lawsuit and remains a defendant. The
plaintiff seeks to recover for the bankruptcy estate assets that were
transferred by the predecessor entity of G-I Holdings, Inc. to a wholly-owned
subsidiary in 1994. The subsidiary has since issued notes, of which certain
funds managed by PIMCO are alleged to be holders. The complaint alleges that in
2000, more than two hundred noteholders - including certain funds managed by
PIMCO were granted a second priority lien on the assets of the subsidiary in
exchange for their consent to a refinancing transaction and the granting of a
first priority lien to the lending banks. The plaintiff is seeking invalidation
of the lien in favor of the noteholders and/or the value of the lien. On June
21, 2006, the District of New Jersey overturned the Bankruptcy Courts decision
granting permission to file the adversary proceeding and remanded the matter to
the Bankruptcy Court for further proceedings. Following a motion to reconsider,
the District Court upheld its remand on August 7, 2006, and instructed the
Bankruptcy Court to conduct a cost benefit analysis of the Committees claims,
including the claims against the noteholders. The Bankruptcy Court held a
status conference on October 25, 2006 and set a briefing schedule relating to
this cost-benefit analysis.

The foregoing speaks only as of the date of this report. None of the
aforementioned complaints alleges that any improper activity took place in the
Fund. It is possible that these matters could lead to a decrease in the market
value of the Funds shares or other adverse consequences to the Fund.  However,
PIMCO believes that these matters are not likely to have a material adverse
effect on the Fund or on PIMCOs ability to perform its investment advisory
services relating to the Fund.
</TEXT>
</DOCUMENT>
