<DOCUMENT>
<TYPE>EX-99.77E LEGAL
<SEQUENCE>4
<FILENAME>r77e.txt
<DESCRIPTION>REGULATORY AND LITIGATION MATTERS
<TEXT>
REGULATORY AND LITIGATION MATTERS

Since February 2004, PIMCO, Allianz Global Investors of America L.P.
(PIMCO's parent company), and certain of their affiliates, including the
PIMCO Funds (a series of funds managed by PIMCO), the Allianz Funds (formerly
known as PIMCO Funds: Multi-Manager Series(another series of funds managed by
affiliates of PIMCO)), certain Directors of the Fund (in their capacity as
Trustees of the PIMCO Funds or the Allianz 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 Court for 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 the 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 PIMCO Funds and the Allianz Funds and this alleged activity was not
disclosed. Pursuant to tolling agreements entered into with the derivative
and class action plaintiffs, PIMCO, certain Directors of the Fund (in their
capacity as Trustees of PIMCO Funds or the Allianz Funds), 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 PIMCO Funds and the Allianz 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, the Fund and certain other funds managed by PIMCO were served
in an adversary proceeding brought by the Official Committee of Asbestos
Claimants of G-I Holdings, Inc. in G-I Holdings, Inc.'s 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 the Fund and certain other funds managed by PIMCO are alleged to be
holders. The complaint alleges that in 2000, more than two hundred noteholders-
including the Fund and certain other funds managed by PIMCO-were granted a
second priority lien on the assets of the subsidiary in exchange for their
onsent 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 Court's 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 Committee's claims, including 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. It is possible that
these matters and/or other developments resulting from 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 PIMCO's ability to
perform its investment advisory services relating to the Fund.
</TEXT>
</DOCUMENT>
