nvcsrs
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-10379
PIMCO California Municipal Income Fund
(Exact name of registrant as specified in charter)
     
1345 Avenue of the Americas, New York, NY   10105
 
(Address of principal executive offices)   (Zip code)
Lawrence G. Altadonna — 1345 Avenue of the Americas, New York, New York 10105
(Name and address of agent for service)
Registrant’s telephone number, including area code: 212-739-3371
Date of fiscal year end: April 30, 2010
Date of reporting period: October 31, 2009
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
 
 

 

 

ITEM 1.   REPORT TO SHAREHOLDERS
 
 
PIMCO Municipal Income Fund
PIMCO California Municipal Income Fund
PIMCO New York Municipal Income Fund
 
 
Semi-Annual Report
October 31, 2009
 
         
Contents    
 
    1  
    2-7  
    8-25  
    26  
    27  
    28-29  
Statements of Cash Flows
    30-31  
    32-39  
    40-42  
    43-45  
    45  
 

 

 
PIMCO Municipal Income Funds Letter to Shareholders
December 15, 2009
 
Dear Shareholder:
 
Please find enclosed, the semi-annual report for PIMCO Municipal Income Fund, PIMCO California Municipal Income Fund and PIMCO New York Municipal Income Fund (the “Funds”) for the fiscal six-month period ended October 31, 2009.
 
The U.S. bond market provided positive returns during the fiscal six-month period amid subdued inflationary pressures and adequate, government-supplied liquidity. In this environment, municipal bonds, as represented by the unmanaged Barclay’s Capital Municipal Bond Index, returned a tax-advantaged 4.99% return during the six-month reporting period. That compared favorably with the 5.61% taxable return for the broad market of bonds, represented by the unmanaged Barclay’s Capital U.S. Aggregate Index.
 
The Federal Reserve left the Federal Funds rate unchanged during the reporting period, holding the benchmark rate on loans between member banks to a target of 0% – 0.25%. In addition, the central bank continued to pursue a policy of quantitative easing, purchasing securities from banks in order to add to the supply of cash available for lending.
 
For specific information on the Funds and their performance, please review the following pages. If you have any questions regarding the information provided, we encourage you to contact your financial advisor or call the Funds’ shareholder servicing agent at (800) 254-5197. In addition, a wide range of information and resources are available on our Web site, www.allianzinvestors.com/closedendfunds.
 
Together with Allianz Global Investors Fund Management LLC, the Funds’ investment manager, and Pacific Investment Management Company LLC (“PIMCO”), the Funds’ sub-adviser, we thank you for investing with us.
 
We remain dedicated to serving your investment needs.
 
Sincerely,
 
     
 
Hans W. Kertess   Brian S. Shlissel
Chairman   President & Chief Executive Officer
 
 
10.31.09   PIMCO Municipal Income Funds Semi-Annual Report 1

 

PIMCO Municipal Income Fund Fund Insights
October 31, 2009 (unaudited)
 
•  For the fiscal six-month period ended October 31, 2009, PIMCO Municipal Income Fund returned 24.96% on net asset value (“NAV”) and 12.99% on market price, which compares to the returns of 14.96% and 16.27%, respectively, for the Lipper Analytical General Municipal Debt Funds (Leveraged) average.
 
•  Yields on longer-maturity high-quality municipal bonds moved lower, while yields on short and intermediate maturities moved higher during the six-month reporting period.
 
•  Municipal-to-U.S. Treasury yield ratios continued to trend lower as the market normalized during the reporting period. The 10-year ratio decreased to 89% and the 30-year ratio decreased to 100%, both were back to within historical average levels.
 
•  Exposure to the tobacco securitization sector contributed positively to performance as the sector posted strong positive returns due to investors’ increased appetite for riskier assets.
 
•  Exposure to corporate-backed municipal bonds contributed significantly to performance as the sector outperformed all other municipal bond sectors. Similar to the taxable corporate sector, this area of the municipal bond market continued to rebound and experience strong performance after struggling at the end of 2008.
 
•  A focus on revenue bonds contributed positively to performance as these bonds outperformed both pre-refunded and general obligation municipal bonds. Holdings in pre-refunded and general obligation municipal bonds detracted from returns as they underperformed due to investors moving further out on the risk spectrum in search of higher yields.
 
•  Exposure to longer-maturity zero coupon municipal bonds benefited performance as the longer durations outperformed and yields on longer maturities moved lower during the reporting period. The unmanaged Barclays Capital Zero Coupon Index advanced 10.25% during the six-month reporting period.
 
•  The municipal bond yield curve flattened during the reporting period as investors continued to move further out on the yield curve in search of higher yields. 15- and 20-year maturity AAA General Obligation yields decreased 27 and 44 basis points, respectively, while the 30-year AAA General Obligation yield decreased 35 basis points. Two-year AAA General Obligation yields decreased 23 basis points during the six-month reporting period. Significant exposure to longer-maturity municipal bonds benefited performance as this portion of the yield curve outperformed due to its longer duration.
 
•  Long-maturity municipal bonds slightly underperformed the broader long-maturity taxable market with the unmanaged Barclays Capital Long Municipal Bond Index returning 9.88% compared to the unmanaged Barclays Capital Long Government/Credit Index which advanced 11.88%. However, long-maturity municipal bonds significantly outperformed long-maturity U.S. Treasuries with the unmanaged Barclays Capital Long U.S. Treasury Index returning 0.92% during the six-months ended October 31, 2009.
 
•  Municipal bond issuance year-to-date in 2009 was approximately 3% lower than the comparable period in 2008, with a pickup in refundings, helping to increase issuance year-to-date. Municipal bond issuance was reduced by increased supply of taxable Build America Bonds, especially in the longer portion of the yield curve as issuers took advantage of the interest subsidy.
 
 
2 PIMCO Municipal Income Fund Semi-Annual Report   10.31.09

 

PIMCO Municipal Income Fund Performance & Statistics
October 31, 2009 (unaudited)
 
                 
Total Return(1):   Market Price     NAV  
   
Six Months
    12.99 %     24.96%  
 
 
1 Year
    15.83 %     24.02%  
 
 
5 Year
    3.85 %     2.60%  
 
 
Commencement of Operations (6/29/2001) to 10/31/09
    4.65 %     4.33%  
 
 
 

 
Market Price/NAV Performance:
Commencement of Operations (6/29/2001) to 10/31/09
 

     
Market Price/NAV:
   
 
 
Market Price
  $12.37
 
 
NAV
  $11.18
 
 
Premium to NAV
  10.64%
 
 
Market Price Yield (2)
  7.88%
 
 
 
Moody’s Ratings
(as a % of total investments)
 


 
(1)  Past performance is no guarantee of future results. Total return is calculated by determining the percentage change in net asset value (“NAV”) or market price (as applicable) in the specified period. The calculation assumes that all income dividends and capital gain distributions if any, have been reinvested. Total return does not reflect broker commissions or sales charges. Total return for a period of less than one year is not annualized. Total return for a period of more than one year represents the average annual total return.
 
Performance at market price will differ from its results at NAV. Although market price returns typically reflect investment results over time, during shorter periods returns at market price can also be influenced by factors such as changing views about the Fund, market conditions, supply and demand for the Fund’s shares, or changes in Fund dividends.
 
An investment in the Fund involves risk, including the loss of principal. Total return, market price, market yield and NAV will fluctuate with changes in market conditions. This data is provided for information only and is not intended for trading purposes. Closed-end funds, unlike open-end funds, are not continuously offered. There is a onetime public offering and once issued, shares of closed-end funds are sold in the open market through a stock exchange. NAV is equal to total assets less total liabilities divided by the number of shares outstanding. Holdings are subject to change daily.
 
(2)  Market Price Yield is determined by dividing the annualized current monthly per share dividend (comprised of net investment income) payable to shareholders by the market price per share at October 31, 2009.
 
 
10.31.09   PIMCO Municipal Income Fund Semi-Annual Report 3

 

PIMCO California Municipal Income Fund Fund Insights
October 31, 2009 (unaudited)
 
•  For the fiscal six-month period ended October 31, 2009, PIMCO California Municipal Income Fund returned 21.53% on net asset value (“NAV”) and 6.45% on market price, which compares to the returns of 12.45% and 15.80%, respectively, for the Lipper Analytical California Municipal Debt Funds average.
 
•  Yields on longer-maturity high-quality municipal bonds moved lower, while yields on short and intermediate maturities moved higher during the six-month reporting period.
 
•  Municipal-to-U.S. Treasury yield ratios continued to trend lower as the market normalized during the reporting period. The 10-year ratio decreased to 89% and the 30-year ratio decreased to 100%, both were back to within historical average levels.
 
•  Exposure to the tobacco securitization sector contributed positively to performance as the sector posted strong positive returns due to investors’ increased appetite for riskier assets.
 
•  Exposure to corporate-backed municipal bonds contributed significantly to performance as the sector outperformed all other municipal bond sectors. Similar to the taxable corporate sector, this area of the municipal bond market continued to rebound and experience strong performance after struggling at the end of 2008.
 
•  A focus on revenue bonds contributed positively to performance as these bonds outperformed both pre-refunded and general obligation municipal bonds. Holdings in pre-refunded and general obligation municipal bonds detracted from returns as they underperformed due to investors moving further out on the risk spectrum in search of higher yields.
 
•  Exposure to longer-maturity zero coupon municipal bonds benefited performance as the longer durations outperformed and yields on longer maturities moved lower during the reporting period. The unmanaged Barclays Capital Zero Coupon Index advanced 10.25% during the six-month reporting period.
 
•  Municipal bonds within California performed in-line with the unmanaged Barclays Capital Municipal Bond Index returning 5.00% compared to 4.99% for the national index during the six-month reporting period. California was able to balance its budget, which helped spur a rebound in performance during the latter part of the period. However, more recently the State of California issued a large amount of municipal bonds, which placed upward pressure on yields. Year-to-date through September of 2009, California issued $57.5 billion in municipal bonds, 14% higher than the comparable period in 2008.
 
•  Long-maturity California municipal bonds slightly underperformed the long-maturity unmanaged Barclays Capital Long Municipal Bond Index returning 9.46% compared to a rise of 9.88% for the long-maturity national index during the six-months ended October 31, 2009. The California municipal bond yield curve steepened during the reporting period with 30-year yields decreasing 6 basis points, while two-year yields decreased 24 basis points. Significant exposure to longer-maturity municipal bonds benefited performance as longer-duration municipal bonds outperformed as yields moved lower.
 
 
4 PIMCO California Municipal Income Fund Semi-Annual Report   10.31.09

 

PIMCO California Municipal Income Fund Performance & Statistics
October 31, 2009 (unaudited)
 
                 
Total Return(1):   Market Price     NAV  
   
Six Months
    6.45 %     21.53%  
 
 
1 Year
    21.08 %     23.43%  
 
 
5 Year
    4.40 %     4.10%  
 
 
Commencement of Operations (6/29/2001) to 10/31/09
    4.43 %     5.03%  
 
 
 

 
Market Price/NAV Performance:
Commencement of Operations (6/29/2001) to 10/31/09
 

     
Market Price/NAV:
   
 
 
Market Price
  $12.47
 
 
NAV
  $12.38
 
 
Premium to NAV
  0.73%
 
 
Market Price Yield (2)
  7.41%
 
 
 
Moody’s Ratings
(as a % of total investments)
 


 
(1)  Past performance is no guarantee of future results. Total return is calculated by determining the percentage change in net asset value (“NAV”) or market price (as applicable) in the specified period. The calculation assumes that all income dividends and capital gain distributions if any, have been reinvested. Total return does not reflect broker commissions or sales charges. Total return for a period of less than one year is not annualized. Total return for a period of more than one year represents the average annual total return.
 
Performance at market price will differ from its results at NAV. Although market price returns typically reflect investment results over time, during shorter periods returns at market price can also be influenced by factors such as changing views about the Fund, market conditions, supply and demand for the Fund’s shares, or changes in Fund dividends.
 
An investment in the Fund involves risk, including the loss of principal. Total return, market price, market yield and NAV will fluctuate with changes in market conditions. This data is provided for information only and is not intended for trading purposes. Closed-end funds, unlike open-end funds, are not continuously offered. There is a onetime public offering and once issued, shares of closed-end funds are sold in the open market through a stock exchange. NAV is equal to total assets less total liabilities divided by the number of shares outstanding. Holdings are subject to change daily.
 
(2)  Market Price Yield is determined by dividing the annualized current monthly per share dividend (comprised of net investment income) payable to shareholders by the market price per share at October 31, 2009.
 
 
10.31.09   PIMCO Municipal Income Fund Semi-Annual Report 5

 

PIMCO New York Municipal Income Fund Fund Insights
October 31, 2009 (unaudited)
 
•  For the fiscal six-month period ended October 31, 2009, PIMCO New York Municipal Income Fund returned 15.29% on net asset value (“NAV”) and 9.78% on market price, which compares to the returns of 11.69% and 13.59%, respectively, for the Lipper Analytical New York Municipal Debt Funds average.
 
•  Yields on longer-maturity high-quality municipal bonds moved lower, while yields on short and intermediate maturities moved higher during the six-month reporting period.
 
•  Municipal-to-U.S. Treasury yield ratios continued to trend lower as the market normalized during the reporting period. The 10-year ratio decreased to 89% and the 30-year ratio decreased to 100%, and both were back to within historical average levels.
 
•  Exposure to the tobacco securitization sector contributed positively to performance as the sector posted strong positive returns due to investors’ increased appetite for riskier assets.
 
•  Exposure to corporate-backed municipal bonds contributed significantly to performance as the sector outperformed all other municipal bond sectors. Similar to the taxable corporate sector, this area of the municipal bond market continued to rebound and experience strong performance after struggling at the end of 2008.
 
•  A focus on revenue bonds contributed positively to performance as these bonds outperformed both pre-refunded and general obligation municipal bonds. Holdings in pre-refunded and general obligation municipal bonds detracted from returns as they underperformed due to investors moving further out on the risk spectrum in search of higher yields.
 
•  Exposure to longer-maturity zero coupon municipal bonds benefited performance as the longer durations outperformed and yields on longer maturities moved lower during the reporting period. The unmanaged Barclays Capital Zero Coupon Index advanced 10.25% during the six-month reporting period.
 
•  Municipal bonds within New York marginally underperformed the unmanaged Barclays Capital Municipal Bond Index returning 4.79% compared to 4.99% for the national index during the six-month reporting period. Year-to-date through October of 2009, issuers in New York State raised $34.3 billion in bonds, 3% lower than the comparable period in 2008. New York ranks second in total municipal bond issuance.
 
•  Long-maturity New York municipal bonds slightly underperformed the unmanaged Barclays Capital Long Municipal Bond Index returning 8.45% compared to a rise of 9.88% for the long-maturity national index during the six-month reporting period. The New York municipal bond yield curve steepened marginally during the reporting period with 30-year yields decreasing 42 basis points and two-year yields decreased 62 basis points. Significant exposure to the longer portion of the municipal bond yield curve benefited performance as the longer-duration municipal bonds outperformed as yields moved lower.
 
 
6 PIMCO New York Municipal Income Fund Semi-Annual Report   10.31.09

 

PIMCO New York Municipal Income Fund Performance & Statistics
October 31, 2009 (unaudited)
 
                 
Total Return(1):   Market Price     NAV  
   
Six Months
    9.78 %     15.29%  
 
 
1 Year
    11.27 %     11.65%  
 
 
5 Year
    0.55 %     0.49%  
 
 
Commencement of Operations (6/29/2001) to 10/31/09
    2.01 %     2.28%  
 
 
 

 
Market Price/NAV Performance:
Commencement of Operations (6/29/2001) to 10/31/09
 

     
Market Price/NAV:
   
 
 
Market Price
  $10.50
 
 
NAV
  $10.23
 
 
Premium to NAV
  2.64%
 
 
Market Price Yield (2)
  6.51%
 
 
 
Moody’s Ratings
(as a % of total investments)
 


 
(1)  Past performance is no guarantee of future results. Total return is calculated by determining the percentage change in net asset value (“NAV”) or market price (as applicable) in the specified period. The calculation assumes that all income dividends and capital gain distributions if any, have been reinvested. Total return does not reflect broker commissions or sales charges. Total return for a period of less than one year is not annualized. Total return for a period of more than one year represents the average annual total return.
 
Performance at market price will differ from its results at NAV. Although market price returns typically reflect investment results over time, during shorter periods returns at market price can also be influenced by factors such as changing views about the Fund, market conditions, supply and demand for the Fund’s shares, or changes in Fund dividends.
 
An investment in the Fund involves risk, including the loss of principal. Total return, market price, market yield and NAV will fluctuate with changes in market conditions. This data is provided for information only and is not intended for trading purposes. Closed-end funds, unlike open-end funds, are not continuously offered. There is a onetime public offering and once issued, shares of closed-end funds are sold in the open market through a stock exchange. NAV is equal to total assets less total liabilities divided by the number of shares outstanding. Holdings are subject to change daily.
 
(2)  Market Price Yield is determined by dividing the annualized current monthly per share dividend (comprised of net investment income) payable to shareholders by the market price per share at October 31, 2009.
 
 
10.31.09   PIMCO California Municipal Income Fund Semi-Annual Report 7

 

PIMCO Municipal Income Fund Schedule of Investments
October 31, 2009 (unaudited)
 
                     
Principal
                
Amount
         Credit Rating
      
(000)         (Moody’s/S&P)   Value  
   
 
MUNICIPAL BONDS & NOTES–94.3%
        Alabama–0.9%            
$ 2,500     Birmingham Baptist Medical Centers Special Care Facs. Financing,            
       
Auth. Rev. Baptist Health Systems, Inc., 5.875%, 11/15/24, Ser. A
  Baa2/NR   $ 2,529,950  
        Huntsville-Redstone Village Special Care Facs. Financing Auth. Rev.,            
       
Redstone Village Project,
           
  250    
5.50%, 1/1/28
  NR/NR     199,555  
  885    
5.50%, 1/1/43
  NR/NR     645,377  
  1,350     Montgomery Medical Clinic Board Rev., Jackson Hospital & Clinic,            
       
5.25%, 3/1/31
  Baa2/BBB−     1,230,471  
                     
                  4,605,353  
                     
        Alaska–1.2%            
  3,280     Borough of Matanuska-Susitna Rev., Goose Creek Correctional Center, 6.00%, 9/1/32   Aa2/AAA     3,739,725  
  900     Industrial Dev. & Export Auth. Rev., Boys & Girls Home,            
       
6.00%, 12/1/36
  NR/NR     628,272  
  2,400     Northern Tobacco Securitization Corp. Rev., 5.00%, 6/1/46, Ser. A   Baa3/NR     1,550,928  
                     
                  5,918,925  
                     
        Arizona–5.2%            
  5,000     Apache Cnty. Industrial Dev. Auth. Rev., Tucson Electric Power Co. Project, 5.875%, 3/1/33, Ser. B   Baa3/BBB−     4,921,550  
        Health Facs. Auth. Rev.,            
  2,050    
Banner Health, 5.50%, 1/1/38, Ser. D
  NR/A+     2,087,576  
  2,750    
Beatitudes Campus Project, 5.20%, 10/1/37
  NR/NR     1,989,680  
       
Pima Cnty. Industrial Dev. Auth. Rev., Tucson Electric Power Co., Ser. A,
           
  4,000    
4.95%, 10/1/20
  Baa3/BBB−     4,009,840  
  4,150    
6.375%, 9/1/29
  Baa3/BBB−     4,225,945  
  5,000     Salt River Project Agricultural Improvement & Power Dist. Rev.,            
       
5.00%, 1/1/39, Ser. A (j)
  Aa1/AA     5,212,350  
  4,200     Salt Verde Financial Corp. Rev., 5.00%, 12/1/37   A3/A     3,596,922  
                     
                  26,043,863  
                     
        Arkansas–0.4%            
  8,500     Dev. Finance Auth. Rev., Arkansas Cancer Research Center Project,            
       
zero coupon, 7/1/36 (AMBAC)
  Aa3/NR     2,207,365  
                     
        California–8.1%            
  3,000     Chula Vista Rev., San Diego Gas & Electric, 5.875%, 2/15/34, Ser. B   Aa3/A+     3,271,590  
  6,000    
Golden State Tobacco Securitization Corp. Rev., 5.00%, 6/1/33, Ser. A-1
  Baa3/BBB     4,623,960  
  2,000     Health Facs. Financing Auth. Rev., Catholic Healthcare West,            
       
6.00%, 7/1/39, Ser. A
  A2/A     2,104,600  
  4,175     Montebello Unified School Dist., GO, 5.00%, 8/1/33 (FSA)   Aa3/AAA     4,201,136  
  5,000     Orange Cnty. Airport Rev., 5.25%, 7/1/39, Ser. A   Aa3/AA−     5,160,250  
 
 
8 PIMCO Municipal Income Fund Semi-Annual Report   10.31.09

 

 
PIMCO Municipal Income Fund Schedule of Investments
October 31, 2009 (unaudited)
 
                     
Principal
                
Amount
         Credit Rating
      
(000)         (Moody’s/S&P)   Value  
   
        California (continued)            
        State, GO,            
$ 300    
5.00%, 6/1/37
  Baa1/A   $ 275,736  
  4,200    
6.00%, 4/1/38
  Baa1/A     4,466,574  
        Statewide Communities Dev. Auth. Rev.,            
  1,000    
Catholic Healthcare West, 5.50%, 7/1/31, Ser. E
  A2/A     1,013,010  
       
Methodist Hospital Project (FHA),
           
  2,600    
6.625%, 8/1/29
  Aa2/AA     2,924,558  
  9,500    
6.75%, 2/1/38
  Aa2/AA     10,628,790  
  4,000     Whittier Union High School Dist., GO, zero coupon, 8/1/25   NR/AA−     1,577,240  
                     
                  40,247,444  
                     
        Colorado–0.5%            
  500     Confluence Metropolitan Dist. Rev., 5.45%, 12/1/34   NR/NR     355,040  
  500     Public Auth. for Colorado Energy Rev., 6.50%, 11/15/38   A2/A     531,300  
  1,500     Univ. of Colorado Rev., 5.375%, 6/1/38, Ser. A   Aa3/AA−     1,613,220  
                     
                  2,499,560  
                     
        Connecticut–0.2%            
  1,000     State Dev. Auth. Rev., Connecticut Light & Power Co., 5.85%, 9/1/28   Baa1/BBB     1,018,360  
                     
        District of Columbia–1.4%            
  2,500     Dist. of Columbia Rev., Brookings Institution, 5.75%, 10/1/39   Aa3/A+     2,731,425  
  4,175     Tobacco Settlement Financing Corp. Rev., 6.25%, 5/15/24   Baa3/BBB     4,123,982  
                     
                  6,855,407  
                     
        Florida–4.0%            
  905     Beacon Lakes Community Dev. Dist., Special Assessment,            
       
6.00%, 5/1/38, Ser. A
  NR/NR     668,931  
  4,000     Broward Cnty. Water & Sewer Rev., 5.25%, 10/1/34, Ser. A (j)   Aa3/AA     4,167,320  
  500     Lee Cnty. Industrial Dev. Auth. Rev., Sara Lee Charter Foundation,            
       
5.375%, 6/15/37, Ser. A
  NR/BB     363,295  
  3,000     Miami-Dade Cnty. Airport Rev., 5.50%, 10/1/36, Ser. A   A2/A−     3,034,110  
  1,250     Miami-Dade Cnty. School Board, CP, 5.375%, 2/1/34, Ser. A   Aa2/AAA     1,286,112  
  3,900     State Board of Education, GO, 5.00%, 6/1/38, Ser. D (j)   Aa1/AAA     4,025,697  
  5,685     State Board of Governors Rev., Florida Univ., 6.50%, 7/1/33   Aa2/AA     6,517,909  
                     
                  20,063,374  
                     
        Georgia–0.4%            
  2,300    
Medical Center Hospital Auth. Rev., Spring Harbor Green Island Project, 5.25%, 7/1/37
  NR/NR     1,782,937  
                     
        Illinois–5.5%            
        Chicago, GO,            
  5,000    
5.00%, 1/1/34, Ser. C (j)
  Aa3/AA−     5,073,100  
  2,935    
5.375%, 1/1/34, Ser. A (FGIC-NPFGC)
  Aa3/AA−     2,940,019  
 
 
10.31.09   PIMCO Municipal Income Fund Semi-Annual Report 9

 

 
PIMCO Municipal Income Fund Schedule of Investments
October 31, 2009 (unaudited)
 
                     
Principal
                
Amount
         Credit Rating
      
(000)         (Moody’s/S&P)   Value  
   
        Illinois (continued)            
$ 10,115    
Chicago Board of Education School Reform, GO, zero coupon, 12/1/31, Ser. A (FGIC-NPFGC)
  A1/AA−   $ 2,784,356  
  1,250     Chicago Motor Fuel Tax Rev., 5.00%, 1/1/38, Ser. A   Aa2/AAA     1,275,937  
  190     Educational Facs. Auth. Rev., Univ. of Chicago, 5.25%, 7/1/41, Ser. A   Aa1/AA     193,236  
        Finance Auth. Rev.,            
  400    
OSF Healthcare System, 7.125%, 11/15/37, Ser. A
  A2/A     442,080  
  10,000    
Univ. of Chicago, 5.50%, 7/1/37, Ser. B (j)
  Aa1/AA     11,003,500  
  1,900     Springfield Electric Rev., 5.00%, 3/1/36   Aa3/AA−     1,903,724  
  1,495     Univ. of Illinois Rev., 5.25%, 4/1/32, Ser. B (FGIC-NPFGC)   Aa3/AA−     1,505,405  
                     
                  27,121,357  
                     
        Indiana–0.5%            
  1,500     Finance Auth. Rev., Duke Energy Indiana, Inc., 6.00%, 8/1/39, Ser. B   NR/A     1,602,495  
  1,000     Municipal Power Agcy. Rev., 6.00%, 1/1/39, Ser. B   A1/A+     1,059,870  
                     
                  2,662,365  
                     
        Iowa–1.7%            
        Finance Auth. Rev.,            
  4,890    
Deerfield Retirement Community, Inc., 5.50%, 11/15/37, Ser. A
  NR/NR     3,274,931  
       
Edgewater LLC Project,
           
  3,500    
6.75%, 11/15/37
  NR/NR     3,194,310  
  1,500    
6.75%, 11/15/42
  NR/NR     1,354,755  
  1,600    
Wedum Walnut Ridge LLC Project, 5.625%, 12/1/45, Ser. A (b)
  NR/NR     908,448  
                     
                  8,732,444  
                     
        Kansas–4.5%            
  1,000     Dev. Finance Auth. Rev., Adventist Health, 5.75%, 11/15/38   A1/A+     1,033,070  
  1,000     Lenexa City, Tax Allocation, Center East Project, 6.00%, 4/1/27   NR/NR     840,080  
  650    
Manhattan Rev., Meadowlark Hills Retirement, 5.125%, 5/15/42, Ser. B
  NR/NR     489,164  
        Wichita Hospital Rev., Facs. Improvements,            
  5,000    
5.625%, 11/15/31, Ser. III
  NR/A+     5,076,950  
  14,370    
6.25%, 11/15/24, Ser. XI
  NR/A+     14,636,707  
                     
                  22,075,971  
                     
        Kentucky–0.6%            
        Economic Dev. Finance Auth. Rev.,            
       
Baptist Healthcare Systems, Ser. A,
           
  1,000    
5.375%, 8/15/24
  Aa3/NR     1,097,590  
  1,200    
5.625%, 8/15/27
  Aa3/NR     1,296,900  
  760    
St. Luke’s Hospital, 6.00%, 10/1/19, Ser. B
  A3/A     760,046  
                     
                  3,154,536  
                     
 
 
10 PIMCO Municipal Income Fund Semi-Annual Report   10.31.09

 

 
PIMCO Municipal Income Fund Schedule of Investments
October 31, 2009 (unaudited)
 
                     
Principal
                
Amount
         Credit Rating
      
(000)         (Moody’s/S&P)   Value  
   
        Louisiana–5.8%            
$ 3,930     Local Gov’t Environmental Facs. & Community Dev. Auth. Rev.,            
       
Capital Projects & Equipment Acquisition, 6.55%, 9/1/25 (ACA)
  NR/NR   $ 3,510,158  
  27,895    
Tobacco Settlement Financing Corp. Rev., 5.875%, 5/15/39, Ser. 2001B
  Baa3/BBB     25,448,051  
                     
                  28,958,209  
                     
        Massachusetts–0.4%            
  550     Dev. Finance Agcy. Rev., Linden Ponds, Inc. Fac.,            
       
5.75%, 11/15/35, Ser. A
  NR/NR     403,634  
  1,500     State College Building Auth. Rev., 5.50%, 5/1/39, Ser. A   A1/A+     1,565,340  
                     
                  1,968,974  
                     
        Michigan–2.3%            
  1,000     Detroit, GO, 5.375%, 4/1/17, Ser. A-1 (NPFGC)   Baa1/A     909,920  
  4,550     Garden City Hospital Finance Auth. Rev., 5.00%, 8/15/38, Ser. A   NR/NR     2,645,825  
        Royal Oak Hospital Finance Auth. Rev., William Beaumont Hospital,            
  50    
5.25%, 11/15/35, Ser. M (NPFGC)
  A1/A     43,205  
  1,500    
8.25%, 9/1/39
  A1/A     1,764,480  
  4,000     State Hospital Finance Auth. Rev., Detroit Medical Center,            
       
6.25%, 8/15/13, Ser. A
  Ba3/BB-     4,004,640  
  2,000     Strategic Fund Rev., Detroit Edison Co. Pollution Control,            
       
5.45%, 9/1/29, Ser. C
  A2/A−     2,023,700  
                     
                  11,391,770  
                     
        Minnesota–0.1%            
  95     Agricultural & Economic Dev. Board Rev., Health Care Systems,            
       
6.375%, 11/15/29, Ser. A
  A2/A     96,867  
  500    
Washington Cnty. Housing & Redev. Auth. Rev., Birchwood & Woodbury Projects, 5.625%, 6/1/37, Ser. A
  NR/NR     393,780  
                     
                  490,647  
                     
        Missouri–0.2%            
  1,000     Joplin Industrial Dev. Auth. Rev., Christian Homes, Inc.,            
       
5.75%, 5/15/26, Ser. F
  NR/NR     807,370  
                     
        Nevada–3.5%            
  5,000     Clark Cnty., GO, 4.75%, 6/1/30 (FSA)   Aa1/AAA     4,928,800  
  12,185     Washoe Cnty., Water & Sewer, GO, 5.00%, 1/1/35 (NPFGC)   Aa2/AA     12,325,737  
                     
                  17,254,537  
                     
        New Hampshire–0.6%            
  3,000    
Business Finance Auth. Pollution Control Rev., Connecticut Light & Power Co., 5.85%, 12/1/22, Ser. A
  Baa1/BBB     3,063,720  
                     
        New Jersey–4.9%            
  16,550    
Economic Dev. Auth., Special Assessment, Kapkowski Road Landfill Project, 5.75%, 4/1/31
  Baa3/NR     13,380,509  
 
 
10.31.09   PIMCO Municipal Income Fund Semi-Annual Report 11

 

 
PIMCO Municipal Income Fund Schedule of Investments
October 31, 2009 (unaudited)
 
                     
Principal
                
Amount
         Credit Rating
      
(000)         (Moody’s/S&P)   Value  
   
        New Jersey (continued)            
$ 2,000     Economic Dev. Auth. Rev., School Facs. Construction,            
       
5.50%, 12/15/34, Ser. Z
  Aa2/AAA   $ 2,199,880  
  1,000     Health Care Facs. Financing Auth. Rev., Trinitas Hospital,            
       
5.25%, 7/1/30, Ser. A
  Baa3/BBB−     838,950  
  2,000     State Turnpike Auth. Rev., 5.25%, 1/1/40, Ser. E   A3/A+     2,049,540  
  9,100     Tobacco Settlement Financing Corp. Rev., 5.00%, 6/1/41, Ser. 1A   Baa3/BBB     6,124,391  
                     
                  24,593,270  
                     
        New Mexico–0.5%            
  2,500     Farmington Pollution Control Rev., 5.80%, 4/1/22, Ser. A   Baa3/BB+     2,503,400  
                     
        New York–6.3%            
        Liberty Dev. Corp. Rev., Goldman Sachs Headquarters,            
  5,000    
5.25%, 10/1/35
  A1/A     4,882,150  
  3,000    
5.50%, 10/1/37
  A1/A     3,021,210  
  4,200     Nassau Cnty. Industrial Dev. Agcy. Rev., Amsterdam at Harborside,            
       
6.70%, 1/1/43, Ser. A
  NR/NR     3,588,816  
       
New York City Municipal Water Finance Auth. Water
& Sewer Rev. (j),
           
  13,000    
5.00%, 6/15/26, Ser. E
  Aa2/AAA     13,280,280  
  670    
5.00%, 6/15/37, Ser. D
  Aa2/AAA     685,088  
  3,000     New York City Municipal Water Finance Auth. Water & Sewer Rev.,            
       
Second Generation Resolutions, 5.00%, 6/15/39, Ser. GG-1
  Aa3/AA+     3,066,480  
  1,000     State Dormitory Auth. Rev., 5.00%, 3/15/38, Ser. A   NR/AAA     1,028,570  
  1,625     Westchester Cnty. Healthcare Corp. Rev., 5.875%, 11/1/25, Ser. A   Baa3/BBB−     1,605,939  
                     
                  31,158,533  
                     
        North Carolina–0.3%            
  570     Capital Facs. Finance Agcy. Rev., Duke Univ. Project,            
       
5.125%, 10/1/41, Ser. A
  Aa1/AA+     578,607  
  1,500     Medical Care Commission Rev., Village at Brookwood, 5.25%, 1/1/32   NR/NR     1,051,125  
                     
                  1,629,732  
                     
        Ohio–2.9%            
  11,000     Buckeye Tobacco Settlement Financing Auth. Rev.,            
       
5.875%, 6/1/47, Ser. A-2
  Baa3/BBB     8,130,540  
        Lorain Cnty. Hospital Rev., Catholic Healthcare, Ser. A,            
  2,500    
5.625%, 10/1/17
  A1/AA−     2,585,325  
  2,565    
5.75%, 10/1/18
  A1/AA−     2,648,824  
  500    
Montgomery Cnty. Rev., Miami Valley Hospital, 6.25%, 11/15/39, Ser. A
  Aa3/NR     520,055  
  500     State Higher Educational Fac. Commission Rev.,            
       
Univ. Hospital Health Systems, 6.75%, 1/15/39, Ser. A
  A2/A     530,185  
                     
                  14,414,929  
                     
 
 
12 PIMCO Municipal Income Fund Semi-Annual Report   10.31.09

 

 
PIMCO Municipal Income Fund Schedule of Investments
October 31, 2009 (unaudited)
 
                     
Principal
                
Amount
         Credit Rating
      
(000)         (Moody’s/S&P)   Value  
   
        Oregon–0.6%            
$ 2,000     Oregon Health & Science Univ. Rev., 5.75%, 7/1/39, Ser. A   A2/BBB+   $ 2,154,960  
  600     State Department of Administrative Services, CP,            
       
5.25%, 5/1/39, Ser. A
  Aa3/AA−     624,102  
                     
                  2,779,062  
                     
        Pennsylvania–5.9%            
  1,000    
Allegheny Cnty. Industrial Dev. Auth. Rev., Environmental Improvements, USX Corp., 5.60%, 9/1/30
  Baa1/BBB+     1,000,150  
  5,000     Geisinger Auth. Rev., 5.25%, 6/1/39, Ser. A   Aa2/AA     4,992,300  
  2,000     Harrisburg Auth. Rev., Harrisburg Univ. of Science,            
       
6.00%, 9/1/36, Ser. B
  NR/NR     1,767,920  
  6,200     Higher Educational Facs. Auth. Rev., UPMC Health System,            
       
6.00%, 1/15/31, Ser. A
  Aa3/A+     6,354,566  
        Lancaster Cnty. Hospital Auth. Rev., Brethren Village Project, Ser. A,            
  750    
6.25%, 7/1/26
  NR/NR     711,308  
  85    
6.375%, 7/1/30
  NR/NR     78,970  
  7,000     Philadelphia, GO, 5.25%, 12/15/32, Ser. A (FSA)   Aa3/AAA     7,224,700  
  4,700     Philadelphia Hospitals & Higher Education Facs. Auth. Rev.,            
       
Temple Univ. Hospital, 6.625%, 11/15/23, Ser. A
  Baa3/BBB     4,715,980  
  500     Philadelphia Water Rev., 5.25%, 1/1/36, Ser. A   A3/A     507,590  
  2,000     Turnpike Commission Rev., 5.125%, 12/1/40, Ser. D   A2/A−     1,952,820  
                     
                  29,306,304  
                     
        Puerto Rico–0.7%            
  135     Commonwealth of Puerto Rico, Public Improvements, GO,            
       
5.00%, 7/1/35, Ser. B
  Baa3/BBB−     121,326  
        Sales Tax Financing Corp. Rev., Ser. A,            
  32,550    
zero coupon, 8/1/54 (AMBAC)
  Aa3/AA−     1,934,446  
  29,200    
zero coupon, 8/1/56
  Aa3/AA−     1,509,056  
                     
                  3,564,828  
                     
        Rhode Island–4.4%            
  23,800     Tobacco Settlement Financing Corp. Rev., 6.25%, 6/1/42, Ser. A   Baa3/BBB     21,660,142  
                     
        South Carolina–1.4%            
        Greenwood Cnty. Hospital Rev., Self Memorial Hospital,            
  3,500    
5.50%, 10/1/21
  A2/A     3,551,030  
  2,000    
5.50%, 10/1/26
  A2/A     2,012,820  
  450     Jobs-Economic Dev. Auth. Rev., Lutheran Homes, 5.50%, 5/1/28   NR/NR     355,828  
  1,000     State Public Service Auth. Rev., 5.25%, 1/1/39, Ser. B   Aa2/AA−     1,054,190  
                     
                  6,973,868  
                     
        Tennessee–3.7%            
  940     Memphis Health Educational & Housing Fac. Board Rev.,            
       
Wesley Housing Corp. Project, 6.95%, 1/1/20 (a)(b)(e)
  NR/NR     470,000  
 
 
10.31.09   PIMCO Municipal Income Fund Semi-Annual Report 13

 

 
PIMCO Municipal Income Fund Schedule of Investments
October 31, 2009 (unaudited)
 
                     
Principal
                
Amount
         Credit Rating
      
(000)         (Moody’s/S&P)   Value  
   
        Tennessee (continued)            
$ 5,000    
Metropolitan Gov’t Nashville & Davidson Cnty. Health & Educational Vanderbilt Univ., 5.00%, 10/1/39, Ser. B (j)
  Aa2/AA   $ 5,210,050  
        Tennessee Energy Acquisition Corp. Rev.,            
  370    
5.00%, 2/1/21, Ser. C
  Baa1/A     360,658  
  6,460    
5.25%, 9/1/17, Ser. A
  Ba3/BB+     6,484,160  
  600    
5.25%, 9/1/21, Ser. A
  Ba3/BB+     587,034  
  300    
5.25%, 9/1/22, Ser. A
  Ba3/BB+     291,795  
  5,000    
5.25%, 9/1/24, Ser. A
  Ba3/BB+     4,770,150  
                     
                  18,173,847  
                     
        Texas–8.5%            
  10,000    
Coppell Independent School Dist., GO, zero coupon, 8/15/29
(PSF-GTD)
  Aaa/AAA     3,853,100  
  1,200     Dallas Civic Center Rev., 5.25%, 8/15/38   Aa2/AAA     1,227,552  
  20     Duncanville Independent School Dist., GO,            
       
5.25%, 2/15/32, Ser. B (PSF-GTD)
  Aaa/AAA     20,477  
  285     Mansfield Independent School Dist., GO, 5.25%, 2/15/23 (PSF-GTD)   Aaa/AAA     291,863  
        Municipal Gas Acquisition & Supply Corp. I Rev.,            
  150    
5.25%, 12/15/25, Ser. A
  A2/A     139,698  
  6,500    
6.25%, 12/15/26, Ser. D
  A2/A     6,728,280  
        North Harris Cnty. Regional Water Auth. Rev.,            
  4,200    
5.25%, 12/15/33
  A3/A+     4,245,234  
  4,200    
5.50%, 12/15/38
  A3/A+     4,287,234  
        North Texas Tollway Auth. Rev.,            
  3,000    
5.25%, 1/1/44, Ser. C (d)
  A2/A−     2,832,000  
  6,050    
5.625%, 1/1/33, Ser. A
  A2/A−     6,158,355  
  600    
5.75%, 1/1/33, Ser. F
  A3/BBB+     609,702  
  400     State Public Finance Auth. Rev., 5.875%, 12/1/36, Ser. A   Baa3/BBB−     380,512  
  4,000     Tarrant Cnty. Cultural Education Facs. Finance Corp. Rev.,            
       
Baylor Health Care Systems Project, 6.25%, 11/15/29
  Aa2/AA−     4,266,880  
  6,500     Texas Municipal Gas Acquisition & Supply Corp. Rev.,            
       
5.25%, 12/15/23, Ser. A
  A2/A     6,151,340  
  1,000    
Uptown Development Auth., Tax Allocation, Infrastructure Improvement Facs., 5.50%, 9/1/29
  NR/BBB+     985,560  
                     
                  42,177,787  
                     
        U.S. Virgin Islands–0.1%            
  500     Virgin Islands Public Finance Auth. Rev., 5.00%, 10/1/39, Ser. A-1   Baa2/BBB     487,105  
                     
        Utah–1.5%            
  7,000     Salt Lake Cnty. Rev., IHC Health Services, 5.125%, 2/15/33 (AMBAC)   NR/AA+     7,238,210  
                     
 
 
14 PIMCO Municipal Income Fund Semi-Annual Report   10.31.09

 

 
PIMCO Municipal Income Fund Schedule of Investments
October 31, 2009 (unaudited)
 
                     
Principal
                
Amount
         Credit Rating
      
(000)         (Moody’s/S&P)   Value  
   
        Virginia–0.6%            
$ 1,000     Fairfax Cnty. Industrial Dev. Auth. Rev.,            
       
Inova Health Systems, 5.50%, 5/15/35, Ser. A
  Aa2/AA+   $ 1,076,790  
  2,000     Peninsula Town Center Community Dev. Auth. Rev., 6.45%, 9/1/37   NR/NR     1,735,080  
                     
                  2,811,870  
                     
        Washington–1.2%            
        Health Care Facs. Auth. Rev.,            
  700    
Multicare Health Systems, 6.00%, 8/15/39, Ser. B
  Aa2/AAA     738,598  
  250    
Seattle Cancer Care Alliance, 7.375%, 3/1/38
  A3/NR     274,998  
  2,000    
Virginia Mason Medical Center, 6.125%, 8/15/37, Ser. A
  Baa2/BBB     2,042,540  
       
State Housing Finance Commission Rev., Skyline at First Hill Project, Ser. A,
           
  275    
5.25%, 1/1/17
  NR/NR     247,519  
  3,600    
5.625%, 1/1/38
  NR/NR     2,614,068  
                     
                  5,917,723  
                     
        Wisconsin–2.8%            
  2,230     Health & Educational Facs. Auth. Rev.,            
       
Kenosha Hospital & Medical Center Project, 5.625%, 5/15/29
  NR/A     2,230,111  
  500    
Prohealth Care, Inc., 6.625%, 2/15/39
  A1/A+     533,290  
  10,000     State Rev., 6.00%, 5/1/36, Ser. A   A1/AA−     11,075,000  
                     
                  13,838,401  
                     
        Total Municipal Bonds & Notes (cost–$464,560,145)         468,153,499  
                     
 
VARIABLE RATE NOTES (a)(c)(g)–3.4%
        Illinois–1.5%            
  7,253     Cook Cnty., GO, 7.68%, 11/15/28, Ser. 458 (FGIC) (f)   Aa3/NR     7,392,473  
                     
        Texas–0.4%            
  1,000     JPMorgan Chase Putters/Drivers Trust, GO,            
       
7.901%, 2/1/17, Ser. 3480
  NR/AA+     1,091,510  
        JPMorgan Chase Putters/Drivers Trust Rev.,            
  200    
8.34%, 2/1/27, Ser. 3224
  Aa1/NR     234,992  
  600    
8.424%, 10/1/31, Ser. 3227
  NR/AAA     709,488  
                     
                  2,035,990  
                     
        Washington–1.5%            
  6,670     JPMorgan Chase Putters/Drivers Trust, GO,            
       
11.478%, 8/1/28, Ser. 3388
  NR/AA+     7,301,983  
                     
        Total Variable Rate Notes (cost–$15,301,251)         16,730,446  
                     
 
SHORT-TERM INVESTMENTS–2.3%
Corporate Notes–2.1%
           
        Financial Services–2.1%            
  10,000     American General Finance Corp., 4.625%, 9/1/10 (i)   Baa3/BB+     9,309,760  
 
 
10.31.09   PIMCO Municipal Income Fund Semi-Annual Report 15

 

 
PIMCO Municipal Income Fund Schedule of Investments
October 31, 2009 (unaudited)
 
                     
Principal
                
Amount
         Credit Rating
      
(000)         (Moody’s/S&P)   Value  
   
        Financial Services (continued)            
        International Lease Finance Corp., FRN,            
$ 600    
0.627%, 5/24/10
  Baa3/BBB+   $ 570,032  
  500    
0.684%, 1/15/10
  Baa3/BBB+     491,275  
                     
        Total Corporate Notes (cost–$8,797,788)         10,371,067  
                     
 
Variable Rate Demand Notes (g)(h)–0.2%
        Colorado–0.0%            
  285     City & Cnty. of Denver, CP, 0.18%, 11/2/09, Ser. A1   VMIG1/NR     285,000  
                     
        Massachusetts–0.2%            
  1,000     Health & Educational Facs. Auth. Rev., 0.20%, 11/4/09, Ser. A2   VMIG1/A-1+     1,000,000  
                     
        Total Variable Rate Demand Notes (cost–$1,285,000)         1,285,000  
                     
        Total Short-Term Investments (cost–$10,082,788)         11,656,067  
                     
        Total Investments (cost–$489,944,184)–100.0%       $ 496,540,012  
                     
 
 
16 PIMCO Municipal Income Fund Semi-Annual Report   10.31.09

 

PIMCO California Municipal Income Fund Schedule of Investments
October 31, 2009 (unaudited)
 
                     
 Principal
                
Amount
         Credit Rating
      
(000)         (Moody’s/S&P)   Value  
   
CALIFORNIA MUNICIPAL BONDS & NOTES–92.2%
$ 1,000     Assoc. of Bay Area Gov’t Finance Auth. for Nonprofit Corps. Rev.,            
       
Poway Housing, Inc. Project, 5.375%, 11/15/25, Ser. A
(CA Mtg. Ins.)
  NR/A   $ 1,000,130  
  1,000     Channing House, CP, 5.375%, 11/15/34   NR/BBB−     962,100  
  10,000     Bay Area Toll Auth. Rev., San Francisco Bay Area,            
       
5.00%, 4/1/34, Ser. F1
  Aa3/AA     10,240,900  
  5,000     Chula Vista Rev., San Diego Gas & Electric, 5.875%, 2/15/34, Ser. B   Aa3/A+     5,452,650  
  720     City & Cnty. of San Francisco Redev. Agcy. Rev.,            
       
Special Tax, 6.125%, 8/1/31, Ser. B
  NR/NR     637,653  
  650     City & Cnty. of San Francisco,            
       
Capital Improvement Projects, CP, 5.25%, 4/1/31, Ser. A
  A1/AA−     659,607  
        Contra Costa Cnty. Public Financing Auth., Tax Allocation,            
  350    
5.85%, 8/1/33, Ser. A
  NR/NR     349,517  
  2,150    
Pleasant Hill 5.125%, 8/1/19
  NR/BBB     2,105,473  
  3,635     Cucamonga Cnty. Water Dist., CP, 5.125%, 9/1/35 (FGIC-NPFGC)   A2/AA−     3,632,165  
  5,000     Desert Community College Dist., GO, 5.00%, 8/1/37, Ser. C (FSA)   Aa3/AAA     5,076,600  
  310     Dublin Unified School Dist., GO, zero coupon, 8/1/23, Ser. E   A1/AA−     146,494  
  6,300     Eastern Municipal Water Dist., CP, 5.00%, 7/1/35, Ser. H   Aa3/AA     6,419,322  
       
Educational Facs. Auth. Rev.,
Claremont McKenna College,
           
  1,400    
5.00%, 1/1/39
  Aa2/NR     1,432,970  
  10,200    
5.00%, 1/1/39 (j)
  Aa2/NR     10,440,210  
       
Univ. of Southern California, Ser. A,
           
  5,000    
5.00%, 10/1/38
  Aa1/AA+     5,174,200  
  10,000    
5.00%, 10/1/39 (j)
  Aa1/AA+     10,340,999  
  2,975     El Dorado Irrigation Dist. & El Dorado Water Agcy., CP,            
       
5.75%, 8/1/39, Ser. A
  Aa2/AAA     3,102,300  
        El Monte, Department of Public Social Services Fac., CP (AMBAC),            
  10,790    
4.75%, 6/1/30
  A3/A+     10,364,982  
  14,425    
Phase II, 5.25%, 1/1/34
  A3/NR     14,472,170  
  1,000     Folsom Redev. Agcy., Tax Allocation, 5.50%, 8/1/36   NR/A     965,970  
        Fremont Community Dist. No. 1, Special Tax,            
  165    
6.00%, 9/1/18
  NR/NR     156,722  
  505    
6.00%, 9/1/19
  NR/NR     473,296  
  3,500    
6.30%, 9/1/31
  NR/NR     3,232,845  
        Golden State Tobacco Securitization Corp. Rev.,            
  9,000    
5.00%, 6/1/33, Ser. A-1
  Baa3/BBB     6,935,940  
  3,000    
5.00%, 6/1/35, Ser. A (FGIC)
  Baa2/A−     2,665,650  
  6,000    
5.00%, 6/1/38, Ser. A (FGIC)
  Baa2/A−     5,268,780  
  1,600    
5.00%, 6/1/45 (AMBAC-TCRS)
  Baa2/A−     1,376,816  
  500     Hartnell Community College Dist., GO, zero coupon, 8/1/34, Ser. D   A1/AA−     240,625  
       
Health Facs. Financing Auth. Rev.,
Adventist Health System, Ser. A,
           
  4,630    
5.00%,3/1/33
  NR/A     4,231,959  
  2,000    
5.75%,9/1/39
  NR/A     2,020,740  
 
 
10.31.09   PIMCO California Municipal Income Fund Semi-Annual Report 17

 

 
PIMCO California Municipal Income Fund Schedule of Investments
October 31, 2009 (unaudited)
 
                     
 Principal
                
Amount
         Credit Rating
      
(000)         (Moody’s/S&P)   Value  
   
       
Catholic Healthcare West, Ser. A,
           
$ 1,875    
5.00%,7/1/18
  A2/A   $ 1,879,219  
  875    
5.00%, 7/1/28
  A2/A     853,466  
  2,000    
6.00%, 7/1/34
  A2/A     2,102,380  
  4,000    
6.00%, 7/1/39
  A2/A     4,209,200  
       
Children’s Hospital of Orange Cnty., Ser. A,
           
  1,000    
6.50%, 11/1/38
  NR/A     1,053,290  
       
Northern California Presbyterian,
           
  5,315    
5.125%, 7/1/18
  NR/BBB+     5,214,600  
  10,590     Kern Cnty., Capital Improvements Projects, CP, 5.75%, 8/1/35, Ser. A   Aa2/AAA     10,988,502  
        La Quinta Redev. Agcy., Tax Allocation (AMBAC),            
  3,000    
5.00%, 9/1/21
  NR/A+     3,003,930  
  10,000    
5.10%, 9/1/31
  NR/A+     9,506,700  
  1,000    
5.125%, 9/1/32
  NR/A+     935,130  
  500     Lancaster Redev. Agcy., Tax Allocation, 6.875%, 8/1/39   NR/A     526,955  
  1,495     Lincoln Public Financing Auth. Rev., Twelve Bridges, 6.125%, 9/2/27   NR/NR     1,357,116  
        Long Beach Bond Finance Auth. Rev., Long Beach Natural Gas, Ser. A,            
  1,000    
5.50%, 11/15/27
  A2/A     969,960  
  3,900    
5.50%, 11/15/37
  A2/A     3,607,500  
        Los Angeles Department of Water & Power Rev.,            
  5,000    
4.75%, 7/1/30, Ser. A-2 (FSA) (j)
  Aa3/AAA     5,046,600  
  3,930    
5.125%, 7/1/41, Ser. A
  Aa3/AA     3,955,466  
  10,000    
5.375%, 7/1/34, Ser. A (j)
  Aa3/AA     10,577,940  
        Los Angeles Unified School Dist., GO,            
  10,000    
5.00%, 7/1/29, Ser. I (j)
  Aa3/AA−     10,332,100  
  13,000    
5.00%, 1/1/34, Ser. I
  Aa3/AA−     13,098,280  
  5,000    
5.00%, 1/1/34, Ser. I (j)
  Aa3/AA−     5,037,800  
  250    
5.30%, 1/1/34, Ser. D
  Aa3/AA−     257,605  
  700     Malibu, City Hall Project, CP, 5.00%, 7/1/39, Ser. A   NR/AA+     703,682  
  200     M-S-R Energy Auth. Rev., 6.50%, 11/1/39, Ser. B   NR/A     213,834  
  2,900     Municipal Finance Auth. Rev., Biola Univ., 5.875%, 10/1/34   Baa1/NR     2,943,790  
  5,000     Orange Cnty. Sanitation Dist., CP, 5.00%, 2/1/39, Ser. A   NR/AAA     5,099,750  
  1,080    
Palm Springs Community Redev. Agcy., Tax Allocation,
5.50%, 8/1/21
  NR/A     1,101,622  
  2,145    
Patterson Public Financing Auth. Rev., Waste Water Systems Project, 5.50%, 6/1/39
  NR/AAA     2,178,398  
  1,250     Peralta Community College Dist., GO, 5.00%, 8/1/39   NR/AA−     1,271,125  
  8,305     Riverside Cnty., CP, 5.125%, 11/1/30 (NPFGC)   A2/AA−     8,163,483  
        Riverside, Special Assessment, Riverwalk Assessment Dist.,            
  500    
6.15%, 9/2/19
  NR/NR     494,515  
  1,350    
6.375%, 9/2/26
  NR/NR     1,350,716  
        San Diego Cnty. Water Auth., CP, Ser. A,            
  1,000    
5.00%, 5/1/32 (NPFGC)
  Aa3/AA+     1,012,440  
  6,250    
5.00%, 5/1/38 (FSA)
  Aa3/AAA     6,284,312  
  545     San Diego Cnty., CP, 5.25%, 10/1/28   A2/NR     552,270  
 
 
18 PIMCO California Municipal Income Fund Semi-Annual Report   10.31.09

 

 
PIMCO California Municipal Income Fund Schedule of Investments
October 31, 2009 (unaudited)
 
                     
 Principal
                
Amount
         Credit Rating
      
(000)         (Moody’s/S&P)   Value  
   
$ 2,000     San Diego Public Facs. Financing Auth. Rev., 5.25%, 5/15/39, Ser. A   A2/A+   $ 2,040,540  
  3,285     San Diego Regional Building Auth. Rev.,            
       
Cnty. Operations Center & Annex, 5.375%, 2/1/36, Ser. A
  A1/AA+     3,375,009  
  5,000     San Diego Unified School Dist., GO, 4.75%, 7/1/27, Ser. D-2 (FSA)   Aa2/AAA     5,083,200  
  880     San Francisco Bay Area Transit Financing Auth. Rev.,            
       
5.125%, 7/1/36 (AMBAC)
  Aa3/AA+     885,843  
  5,065     San Joaquin Cnty., General Hospital Project, CP,            
       
5.00%, 9/1/20 (NPFGC)
  A2/A     5,107,698  
        San Joaquin Hills Transportation Corridor Agcy. Rev., Ser. A,            
  5,000    
5.50%, 1/15/28
  Ba2/BB-     4,450,900  
  5,000    
5.70%, 1/15/19
  Ba2/BB-     4,929,300  
  230     San Jose, Special Assessment, 5.60%, 9/2/17, Ser. Q   NR/NR     222,891  
  600     Santa Ana Financing Auth. Rev., 5.60%, 9/1/19, Ser. C   NR/BBB     607,188  
  3,500     Santa Clara Cnty. Financing Auth. Rev.,            
       
5.75%, 2/1/41, Ser. A (AMBAC)
  A1/A+     3,623,340  
  1,815    
Santa Clara, Central Park Library Project, CP, 5.00%, 2/1/32 (AMBAC)
  Aa3/AA     1,860,684  
  1,300     Santa Cruz Cnty. Redev. Agcy., Tax Allocation,            
       
Live Oak/Soquel Community, 7.00%, 9/1/36, Ser. A
  A2/A     1,427,712  
        State Public Works Board Rev.,            
  2,000    
5.75%, 10/1/30, Ser. G-1
  Baa2/A−     1,964,100  
  2,000    
Regents Univ., 5.00%, 4/1/34, Ser. E
  Aa2/AA−     1,977,660  
        State, GO,            
  5,885    
5.00%, 9/1/35
  Baa1/A     5,443,213  
  3,300    
5.00%, 12/1/37
  Baa1/A     3,031,644  
  8,000    
6.00%, 4/1/38
  Baa1/A     8,507,760  
        Statewide Communities Dev. Auth. Rev.,            
  900    
Baptist Univ., 5.50%, 11/1/38, Ser. A
  NR/NR     690,093  
  1,000    
Catholic Healthcare West, 5.50%, 7/1/31, Ser. D
  A2/A     1,013,010  
  5,215    
Gross-Gillispie School, 6.625%, 10/1/31
  NR/NR     4,502,840  
  15,250    
Henry Mayo Newhall Memorial Hospital, 5.125%, 10/1/30
(CA Mtg. Ins.)
  NR/A     14,616,972  
  8,000    
The Internext Group, CP, 5.375%, 4/1/30
  NR/BBB     7,258,320  
  1,000    
Kaiser Permanente, 5.25%, 3/1/45, Ser. B
  NR/A+     953,680  
  3,000    
Los Angeles Jewish Home, 5.50%, 11/15/33 (CA St. Mtg.)
  NR/A     3,024,690  
       
Methodist Hospital Project (FHA),
           
  2,100    
6.625%, 8/1/29
  Aa2/AA     2,362,143  
  7,700    
6.75%, 2/1/38
  Aa2/AA     8,614,914  
       
St. Joseph,
           
  100    
5.125%, 7/1/24 (NPFGC)
  A1/AA−     101,495  
  3,200    
5.75%, 7/1/47, Ser. A (FGIC)
  A1/AA−     3,265,312  
  2,325    
St. Marks School, 6.75%, 6/1/28 (a)(b)
  NR/NR     2,343,344  
  4,000    
Sutter Health, 5.50%, 8/15/34, Ser. B
  Aa3/A+     4,005,760  
  910    
Windrush School, 5.50%, 7/1/37
  NR/NR     687,050  
  2,000     Turlock, Emanuel Medical Center, CP, 5.50%, 10/15/37, Ser. B   NR/BBB     1,734,520  
 
 
10.31.09   PIMCO California Municipal Income Fund Semi-Annual Report 19

 

 
PIMCO California Municipal Income Fund Schedule of Investments
October 31, 2009 (unaudited)
 
                     
 Principal
                
Amount
         Credit Rating
      
(000)         (Moody’s/S&P)   Value  
   
        Tustin Unified School Dist., Special Tax, Ser. B,            
$ 2,345    
5.50%, 9/1/22
  NR/NR   $ 2,327,788  
  2,520    
5.60%, 9/1/29
  NR/NR     2,381,501  
  2,000    
5.625%, 9/1/32
  NR/NR     1,835,280  
        Univ. of California Rev.,            
  8,000    
4.75%, 5/15/35, Ser. F (FSA) (j)
  Aa1/AAA     8,022,480  
  10,000    
5.00%, 5/15/36, Ser. A (AMBAC)
  Aa1/AA     10,161,400  
  1,000     Western Municipal Water Dist. Facs. Auth. Rev.,            
       
5.00%, 10/1/39, Ser. B
  NR/AA+     1,013,220  
  1,000     Westlake Village, CP, 5.00%, 6/1/39   NR/AA+     1,012,250  
  1,000     Whittier Union High School Dist., GO, zero coupon, 8/1/25   NR/AA−     394,310  
                     
        Total California Municipal Bonds & Notes (cost–$371,689,881)         382,324,515  
                     
OTHER MUNICIPAL BONDS & NOTES–3.7%
        Illinois–1.3%            
  5,260     Educational Facs. Auth. Rev., Univ. of Chicago, 5.00%, 7/1/33,
  Ser. A 		  Aa1/AA     5,336,848  
                     
        Iowa–1.8%            
  8,700     Tobacco Settlement Auth. Rev., 5.60%, 6/1/34, Ser. B   Baa3/BBB     7,525,848  
                     
        Louisiana–0.4%            
  1,750     Tobacco Settlement Financing Corp. Rev.,            
       
5.875%, 5/15/39, Ser. 2001B
  Baa3/BBB     1,596,490  
                     
        New York–0.1%            
  450     New York City Municipal Water Finance Auth. Water & Sewer Rev.,            
       
5.00%, 6/15/37, Ser. D (j)
  Aa2/AAA     460,134  
                     
        South Carolina–0.1%            
  340     Tobacco Settlement Rev. Management Auth. Rev.,            
       
6.375%, 5/15/30, Ser. B
  Baa3/BBB     423,960  
                     
        Total Other Municipal Bonds & Notes (cost–$16,254,813)         15,343,280  
                     
OTHER VARIABLE RATE NOTES (a)(c)(g)–1.7%
        Illinois–1.7%            
  6,670     Chicago Water Rev.,            
       
11.388%, 5/1/14, Ser. 1419 (AMBAC) (cost–$6,950,816)
  NR/AA−     6,846,021  
                     
CALIFORNIA VARIABLE RATE NOTES (a)(g)–0.4%
  1,670     Sacramento Regional Cnty. Sanitation Dist. Rev.,            
       
11.329%, 8/1/13, Ser. 1034 (NPFGC) (cost–$1,843,995)
  NR/AA     1,817,845  
                     
SHORT-TERM INVESTMENTS–2.0%
Corporate Notes (i)–2.0%
           
        Financial Services–2.0%            
  7,800     American General Finance Corp., 4.625%, 9/1/10   Baa3/BB+     7,261,613  
        International Lease Finance Corp., FRN,            
  500    
0.627%, 5/24/10
  Baa3/BBB+     475,027  
  400    
0.684%, 1/15/10
  Baa3/BBB+     393,019  
                     
        Total Corporate Notes (cost–$6,900,823)         8,129,659  
                     
 
 
20 PIMCO California Municipal Income Fund Semi-Annual Report   10.31.09

 

 
PIMCO California Municipal Income Fund Schedule of Investments
October 31, 2009 (unaudited)
 
                     
 Principal
                
Amount
         Credit Rating
      
(000)         (Moody’s/S&P)   Value  
   
California Variable Rate Demand Notes (g)(h)–0.0%
$ 300     Pollution Control Financing Auth. Rev., 0.15%, 11/2/09, Ser. E
  (cost–$300,000) 		  NR/A-1+   $ 300,000  
                     
        Total Short-Term Investments (cost–$7,200,823)         8,429,659  
                     
        Total Investments (cost–$403,940,328)–100.0%       $ 414,761,320  
                     
 
 
10.31.09   PIMCO California Municipal Income Fund Semi-Annual Report 21

 

PIMCO New York Municipal Income Fund Schedule of Investments
October 31, 2009 (unaudited)
 
                     
Principal
                
Amount
         Credit Rating
      
(000)         (Moody’s/S&P)   Value  
   
NEW YORK MUNICIPAL BONDS & NOTES–89.0%
$ 1,600     Erie Cnty. Industrial Dev. Agcy. Rev.,            
       
Orchard Park, Inc. Project, 6.00%, 11/15/36, Ser. A
  NR/NR   $ 1,300,208  
        Liberty Dev. Corp. Rev., Goldman Sachs Headquarters,            
  120    
5.25%, 10/1/35
  A1/A     117,172  
  11,290    
5.25%, 10/1/35 (j)
  A1/A     11,023,894  
  1,925    
5.50%,10/1/37
  A1/A     1,938,610  
        Long Island Power Auth. Rev., Ser. A,            
  750    
5.00%, 9/1/34 (AMBAC)
  A3/A−     757,305  
  2,300    
5.75%, 4/1/39
  A3/A−     2,485,449  
        Metropolitan Transportation Auth. Rev.,            
  8,150    
5.00%, 7/1/30, Ser. A (AMBAC)
  A1/AA−     8,248,534  
  1,375    
5.125%, 1/1/29, Ser. A
  A1/AA−     1,407,299  
  2,000    
5.25%, 11/15/31, Ser. E
  A2/A     2,030,700  
  1,600     Nassau Cnty. Industrial Dev. Agcy. Rev.,            
       
Amsterdam at Harborside, 6.70%, 1/1/43, Ser. A
  NR/NR     1,367,168  
        New York City, GO, Ser. J,            
  1,505    
5.125%, 5/15/29 (NPFGC)
  Aa3/AA     1,520,682  
  5    
5.25%, 6/1/28
  Aa3/AA     5,184  
  1,000     New York City Industrial Dev. Agcy. Rev.,            
       
Liberty Interactive Corp., 5.00%, 9/1/35
  Ba2/BB+     758,660  
  900    
Queens Baseball Stadium, 6.50%, 1/1/46
  Aa2/AAA     1,007,991  
  1,820    
Vaughn College Aeronautics, 5.25%, 12/1/36, Ser. B
  NR/BB+     1,410,227  
  3,200    
Yankee Stadium, 7.00%, 3/1/49
  Aa2/AAA     3,716,128  
        New York City Municipal Water Finance Auth. Water & Sewer Rev.,            
  5,105    
4.75%, 6/15/31, Ser. A (FGIC-NPFGC)
  Aa2/AAA     5,106,072  
  3,000    
5.00%, 6/15/32, Ser. A
  Aa2/AAA     3,037,410  
  2,500    
5.00%, 6/15/40, Ser. FF-2
  Aa3/AA+     2,555,400  
  5,000    
5.125%, 6/15/33, Ser. C
  Aa2/AAA     5,108,150  
  5,000    
5.25%, 6/15/25, Ser. D
  Aa2/AAA     5,180,000  
  5,000    
Second Generation Resolutions, 4.75%, 6/15/35, Ser. DD (j)
  Aa3/AA+     5,012,450  
        New York City Transitional Finance Auth. Rev.,            
  4,055    
4.75%, 11/1/23, Ser. B
  Aa1/AAA     4,098,186  
  5,000    
5.25%, 1/15/39, Ser. S-3
  A1/AA−     5,191,750  
  300     New York City Trust for Cultural Res. Rev.,            
       
Julliard School, 5.00%, 1/1/34, Ser. A
  Aa2/AA     313,662  
  1,000     Niagara Falls Public Water Auth. Water & Sewer Rev.,            
       
5.00%, 7/15/34, Ser. A (NPFGC)
  Baa1/A     1,012,710  
        Port Auth. of New York & New Jersey Rev., Ser. 132,            
  2,000    
5.00%, 9/1/29
  Aa3/AA−     2,081,580  
  4,300    
5.00%, 9/1/38
  Aa3/AA−     4,393,353  
  3,850     State Dormitory Auth. Rev.,   Ba1/NR     3,407,366  
       
Lenox Hill Hospital, 5.50%, 7/1/30
           
  1,825    
Mount Sinai Health, 6.50%, 7/1/25, Ser. A
  A2/NR     1,870,917  
  1,300    
Mount Sinai Scholl of Medicine, 5.125%, 7/1/39 (d)
  A3/A−     1,232,634  
 
 
22 PIMCO New York Municipal Income Fund Semi-Annual Report   10.31.09

 

 
PIMCO New York Municipal Income Fund Schedule of Investments
October 31, 2009 (unaudited)
 
                     
Principal
                
Amount
         Credit Rating
      
(000)         (Moody’s/S&P)   Value  
   
$ 1,500    
New York Univ. Hospital Center, 5.00%, 7/1/26, Ser. A
  Baa2/BB+   $ 1,431,345  
  300    
North Shore-Long Island Jewish Health System, 5.50%, 5/1/37,
  Ser. A
  Baa1/A−     300,657  
  5,245    
NY & Presbyterian Hospital, 4.75%, 8/1/27 (AMBAC-FHA)
  NR/NR     5,182,689  
  2,900    
Orange Regional Medical Center, 6.25%, 12/1/37
  Ba1/NR     2,608,028  
  1,000    
Pratt Institute, 5.125%, 7/1/39, Ser. C
  Aa2/NR     1,037,350  
       
Sloan-Kettering Center Memorial,
           
  2,500    
4.50%, 7/1/35, Ser. A1
  Aa2/AA     2,320,250  
  4,000    
5.00%, 7/1/34, Ser. 1
  Aa2/AA     4,001,040  
       
Teachers College,
           
  1,500    
5.00%, 7/1/32 (NPFGC)
  A1/NR     1,516,635  
  1,800    
5.50%, 3/1/39
  A1/NR     1,875,834  
  1,275    
Winthrop Univ. Hospital Assoc., 5.25%, 7/1/31, Ser. A (AMBAC)
  NR/NR     1,282,752  
  2,000     State Environmental Facs. Corp. Rev., 5.125%, 6/15/31, Ser. D   Aaa/AAA     2,065,760  
  1,800     State Urban Dev. Corp. Rev., 5.00%, 3/15/36, Ser. B-1 (j)   NR/AAA     1,854,180  
        Triborough Bridge & Tunnel Auth. Rev.,            
  755    
5.00%, 1/1/32, Ser. A
  Aa2/AA−     764,807  
  3,000    
5.25%, 11/15/34, Ser. A-2 (j)
  Aa2/AA−     3,188,310  
  2,945     Warren & Washington Cntys. Industrial Dev. Agcy. Rev.,            
       
Glens Falls Hospital Project, 5.00%, 12/1/27, Ser. C (FSA)
  Aa3/AAA     3,020,097  
                     
        Total New York Municipal Bonds & Notes (cost–$119,083,449)         121,146,585  
                     
OTHER MUNICIPAL BONDS & NOTES–6.2%
        California–1.1%            
  1,500     Los Angeles Department of Water & Power Rev.,            
       
5.00%, 7/1/39, Ser. A-1 (AMBAC)
  Aa3/AA−     1,516,065  
                     
        Louisiana–0.5%            
  750     Tobacco Settlement Financing Corp. Rev.,            
       
5.875%, 5/15/39, Ser. 2001B
  Baa3/BBB     684,210  
                     
        Puerto Rico–4.2%            
        Aqueduct & Sewer Auth. Rev., Ser. A,            
  3,100    
6.00%, 7/1/38
  Baa3/BBB−     3,203,199  
  1,000    
6.00%, 7/1/44
  Baa3/BBB−     1,029,130  
  1,500     Sales Tax Financing Corp. Rev., 5.75%, 8/1/37, Ser. A   A2/A+     1,558,815  
                     
                  5,791,144  
                     
        U.S. Virgin Islands–0.4%            
  500     Virgin Islands Public Finance Auth. Rev., 5.00%, 10/1/39, Ser. A-1   Baa2/BBB     487,105  
                     
        Total Other Municipal Bonds & Notes (cost–$7,943,249)         8,478,524  
                     
OTHER VARIABLE RATE NOTES (g)–1.3%
        Puerto Rico–1.3%            
  2,500     Commonwealth of Puerto Rico, Public Improvements, GO,            
       
0.263%, 7/1/19, Ser. A (cost–$2,130,233)
  Aa2/AAA     1,815,775  
                     
 
 
10.31.09   PIMCO New York Municipal Income Fund Semi-Annual Report 23

 

 
PIMCO New York Municipal Income Fund Schedule of Investments
October 31, 2009 (unaudited)
 
                     
Principal
                
Amount
         Credit Rating
      
(000)         (Moody’s/S&P)   Value  
   
SHORT-TERM INVESTMENTS–3.5%
Corporate Notes (i)–3.5%
           
$ 2,900     American General Finance Corp., 4.625%, 9/1/10   Baa3/BB+   $ 2,699,830  
  1,700     Goldman Sachs Group, Inc., 0.52%, 11/16/09, FRN   A1/A     1,700,090  
        International Lease Finance Corp., FRN,            
  200    
0.627%, 5/24/10
  Baa3/BBB+     190,011  
  100    
0.684%, 1/15/10
  Baa3/BBB+     98,255  
                     
        Total Corporate Notes (cost–$4,227,589)         4,688,186  
                     
        Total Investments (cost–$133,384,520)–100.0%       $ 136,129,070  
                     
 
 
24 PIMCO New York Municipal Income Fund Semi-Annual Report   10.31.09

 

PIMCO Municipal Income Funds Notes to Schedules of Investments
October 31, 2009 (unaudited)
 
(a) Private Placement – Restricted as to resale and may not have a readily available market. Securities with an aggregate value of $17,200,446, representing 3.5% of total investments in Municipal Income; securities with an aggregate value of $11,007,210, representing 2.7% of total investments in California Municipal Income.
(b) Illiquid.
(c) 144A – Exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, typically only to qualified institutional buyers. Unless otherwise indicated, these securities are not considered to be illiquid.
(d) When-issued or delayed-delivery. To be settled/delivered after October 31, 2009.
(e) In default.
(f) Inverse Floater – The interest rate shown bears an inverse relationship to the interest rate on another security or the value of an index. The interest rate disclosed reflects the rate in effect on October 31, 2009.
(g) Variable Rate Notes – Instruments whose interest rates change on specified date (such as a coupon date or interest payment date) and/or whose interest rates vary with changes in a designated base rate (such as the prime interest rate). The interest rate disclosed reflects the rate in effect on October 31, 2009.
(h) Maturity date shown is date of next put.
(i) All or partial amount segregated as collateral for reverse repurchase agreements.
(j) Residual Interest Bonds held in Trust – Securities represent underlying bonds transferred to a separate securitization trust established in a tender option bond transaction in which the Fund acquired the residual interest certificates. These securities serve as collateral in a financing transaction.
 
Glossary:
ACA – insured by American Capital Access Holding Ltd.
AMBAC – insured by American Municipal Bond Assurance Corp.
CA Mtg. Ins. – insured by California Mortgage Insurance
CA St. Mtg. – insured by California State Mortgage
CP – Certificates of Participation
FGIC – insured by Financial Guaranty Insurance Co.
FHA – insured by Federal Housing Administration
FRN – Floating Rate Note. The interest rate disclosed reflects the rate in effect on October 31, 2009.
FSA – insured by Financial Security Assurance, Inc.
GO – General Obligation Bond
GTD – Guaranteed
NPFGC – insured by National Public Finance Guarantee Corporation
NR – Not Rated
PSF – Public School Fund
TCRS – Temporary Custodian Receipts
 
 
See accompanying Notes to Financial Statements   10.31.09   PIMCO Municipal Income Funds Semi-Annual Report 25

 

PIMCO Municipal Income Funds Statements of Assets and Liabilities
October 31, 2009 (unaudited)
 
                             
        California 
     New York 
        Municipal        Municipal          Municipal 
Assets:
                           
Investments, at value (cost–$489,944,184, $403,940,328 and $133,384,520, respectively)
    $496,540,012         $414,761,320         $136,129,070  
                             
Cash
    —         —         184,618  
                             
Interest receivable
    9,197,384         6,474,362         2,106,318  
                             
Receivable for investments sold
    2,128,059         —         1,100,900  
                             
Prepaid expenses and other assets
    3,240,252         1,071,797         1,371,552  
                             
Total Assets
    511,105,707         422,307,479         140,892,458  
                             
                             
Liabilities:
                           
Payable for floating rate notes issued
    27,659,903         35,911,418         10,476,876  
                             
Payable for reverse repurchase agreements
    7,799,000         6,820,000         4,037,000  
                             
Payable for investments purchased
    2,884,770         —         1,252,914  
                             
Dividends payable to common and preferred shareholders
    2,037,906         1,412,048         434,204  
                             
Payable to custodian for cash overdraft
    1,000,070         1,918,589         —  
                             
Investment management fees payable
    263,625         211,493         69,653  
                             
Interest payable
    96,396         110,230         23,206  
                             
Interest payable for reverse repurchase agreements
    3,802         3,325         1,968  
                             
Accrued expenses and other liabilities
    157,160         214,270         68,574  
                             
Total Liabilities
    41,902,632         46,601,373         16,364,395  
                             
Preferred shares ($25,000 net asset and liquidation value per share applicable to an aggregate of 7,600, 6,000 and 1,880 shares issued and outstanding, respectively)
    190,000,000         150,000,000         47,000,000  
                             
Net Assets Applicable to Common Shareholders
    $279,203,075         $225,706,106         $77,528,063  
                             
                             
Composition of Net Assets Applicable to Common Shareholders:
                           
Common Stock (no par value):
                           
Paid-in-capital
    $354,668,599         $258,828,581         $106,660,205  
                             
Undistributed net investment income
    203,887         1,196,190         200,932  
                             
Accumulated net realized loss on investments
    (82,638,566 )        (45,059,323 )        (31,000,497 ) 
                             
Net unrealized appreciation of investments
    6,969,155         10,740,658         1,667,423  
                             
Net Assets Applicable to Common Shareholders
    $279,203,075         $225,706,106         $77,528,063  
                             
Common Shares Outstanding
    24,973,007         18,232,716         7,578,946  
                             
Net Asset Value Per Common Share
    $11.18         $12.38         $10.23  
                             
 
 
26 PIMCO Municipal Income Funds Semi-Annual Report   10.31.09   See accompanying Notes to Financial Statements

 

PIMCO Municipal Income Funds Statements of Operations
Six Months ended October 31, 2009 (unaudited)
 
                             
        California 
     New York 
        Municipal        Municipal          Municipal 
Investment Income:
                           
Interest
    $16,845,446         $12,776,661         $3,927,007  
                             
                             
Expenses:
                           
Investment management fees
    1,471,840         1,174,641         396,841  
                             
Interest expense
    179,495         184,387         48,385  
                             
Auction agent fees and commissions
    140,828         109,306         38,226  
                             
Custodian and accounting agent fees
    60,883         42,670         33,518  
                             
Legal fees
    29,700         9,520         8,100  
                             
Audit and tax services
    28,676         24,976         20,516  
                             
Trustees’ fees and expenses
    26,312         22,632         11,436  
                             
Shareholder communications
    18,632         16,844         3,048  
                             
Transfer agent fees
    17,584         15,556         15,456  
                             
New York Stock Exchange listing fees
    13,108         13,064         12,933  
                             
Insurance expense
    7,580         6,025         2,354  
                             
Miscellaneous
    3,760         3,576         3,208  
                             
Total expenses
    1,998,398         1,623,197         594,021  
                             
Less: investment management fees waived
    (36,451 )        (29,122 )        (9,889 ) 
                             
   custody credits earned on cash balances
    (23 )       (22 )       (14 )
                             
Net expenses
    1,961,924         1,594,053         584,118  
                             
                             
Net Investment Income
    14,883,522         11,182,608         3,342,889  
                             
                             
Realized and Change in Unrealized Gain (Loss)
                           
Net realized gain (loss) on investments
    78,239         (963,865 )       13,275  
                             
Net change in unrealized appreciation/depreciation of investments
    42,471,432         30,733,086         7,187,242  
                             
Net realized and change in unrealized gain on investments
    42,549,671         29,769,221         7,200,517  
                             
Net Increase in Net Assets Resulting from Investment Operations
    57,433,193         40,951,829         10,543,406  
                             
Dividends on Preferred Shares from Net Investment Income
    (483,548 )       (382,086 )       (120,348 )
                             
Net Increase in Net Assets Applicable to Common Shareholders Resulting from Investment Operations
    $56,949,645         $40,569,743         $10,423,058  
                             
 
 
See accompanying Notes to Financial Statements   10.31.09   PIMCO Municipal Income Funds Semi-Annual Report 27

 

PIMCO Municipal Income Funds Statements of Changes in Net Assets
                             Applicable to Common Shareholders
 
                 
    Municipal
    Six Months 
    
    ended 
    
               October 31, 2009 
   Year ended 
    (unaudited)    April 30, 2009 
Investment Operations:
               
Net investment income
    $14,883,522            $27,905,614  
                 
Net realized gain (loss) on investments, futures contracts, options written and swaps
    78,239       (46,873,912 ) 
                 
Net change in unrealized appreciation/depreciation of investments, futures contracts, options written and swaps
    42,471,432       (41,011,863 )
                 
Net increase (decrease) in net assets resulting from investment operations
    57,433,193       (59,980,161 )
                 
                 
Dividends on Preferred Shares from Net Investment Income
    (483,548 )      (4,964,321 )
                 
Net increase (decrease) in net assets applicable to common shareholders resulting from investment operations
    56,949,645       (64,944,482 )
                 
                 
Dividends to Common Shareholders from Net Investment Income
    (12,158,968 )     (24,225,508 )
                 
Capital Share Transactions:
               
Reinvestment of dividends
    905,255       1,409,202  
                 
Total increase (decrease) in net assets applicable to common shareholders
    45,695,932       (87,760,788 )
                 
                 
Net Assets Applicable to Common Shareholders:
               
Beginning of period
    233,507,143       321,267,931  
                 
End of period (including undistributed (dividends in excess of) net investment income of $203,887 and $(2,037,119); $1,196,190 and $(1,192,408); $200,932 and $(432,809); respectively)
    $279,203,075       $233,507,143  
                 
                 
Common Shares Issued in Reinvestment of Dividends
    75,519       110,169  
                 
 
 
28 PIMCO Municipal Income Funds Semi-Annual Report   10.31.09   See accompanying Notes to Financial Statements

 

PIMCO Municipal Income Funds Statements of Changes in Net Assets
                             Applicable to Common Shareholders (continued)
 
                             
California Municipal   New York Municipal
Six Months 
       Six Months 
    
ended 
       ended 
    
October 31, 2009 
   Year ended 
   October 31, 2009 
   Year ended 
(unaudited)    April 30, 2009    (unaudited)    April 30, 2009 
  $11,182,608       $19,668,417       $3,342,889       $6,604,274  
                             
                             
  (963,865 )      (21,805,223 )      13,275        (17,996,687 ) 
                             
 
30,733,086 		      (32,090,252 )     7,187,242       (8,383,954 )
                             
                             
  40,951,829       (34,227,058 )     10,543,406       (19,776,367 )
                             
                             
                             
  (382,086 )     (3,740,623 )     (120,348 )     (1,545,412 )
                             
 
40,569,743 		      (37,967,681 )     10,423,058       (21,321,779 )
                             
                             
                             
  (8,411,924 )     (16,768,120 )     (2,588,800 )      (5,165,556 )
                             
                             
  699,189       971,936       211,391       278,849  
                             
                             
  32,857,008       (53,763,865 )     8,045,649       (26,208,486 )
                             
                             
                             
  192,849,098       246,612,963       69,482,414       95,690,900  
                             
                             
  $225,706,106       $192,849,098       $77,528,063       $69,482,414  
                             
                             
  59,767       72,038       21,562       23,211  
                             
 
 
See accompanying Notes to Financial Statements   10.31.09   PIMCO Municipal Income Funds Semi-Annual Report 29

 

PIMCO California Municipal Income Fund Statement of Cash Flows
Six Months ended October 31, 2009 (unaudited)
 
         
                      
Decrease in Cash from:
       
Cash Flows provided by Operating Activities:
       
Net increase in net assets resulting investment from operations
    $40,951,829  
         
Adjustments to Reconcile Net Increase in Net Assets Resulting from Investment Operations to Net Cash Provided by Operating Activities:
       
Purchases of long-term investments
    (31,628,749 ) 
         
Proceeds from sales of long-term investments
    28,359,881  
         
Sales of short-term portfolio investments, net
    3,456,250  
         
Net change in unrealized appreciation of investments
    (28,728,227 )
         
Net realized loss on investments
    (1,014,991 )
         
Net amortization on investments
    (1,403,704 )
         
Decrease in receivable for investments sold
    10,812,564  
         
Increase in interest receivable
    (666,092 )
         
Decrease in prepaid expenses and other assets
    8,488  
         
Decrease in payable for investments purchased
    (4,953,700 )
         
Increase in investment management fees payable
    45,023  
         
Decrease in interest payable for reverse repurchase agreements
    (1,557 )
         
Decrease in accrued expenses and other liabilities
    (63,147 )
         
Net cash provided by operating activities
    15,173,868  
         
         
Cash Flows used for Financing Activities:
       
Decrease in payable for reverse repurchase agreements
    (3,208,000 )
         
Cash dividends paid (excluding reinvestment of dividends of $699,189)
    (8,090,729 )
         
Payments to retire floating rate notes issued
    (6,689,604 )
         
Cash receipts on issuance of floating rate notes
    830,000  
         
Increase in payable to custodian
    1,918,589  
         
Net cash used for financing activities
    (15,239,744 )
         
         
Net decrease in cash
    (65,876 )
         
Cash at beginning of period
    65,876  
         
Cash at end of period
    $—  
         
 
The Fund paid $39,664 cash for interest on reverse repurchase agreements.
 
 
30 PIMCO Municipal Income Funds Semi-Annual Report   10.31.09   See accompanying Notes to Financial Statements

 

PIMCO New York Municipal Income Fund Statement of Cash Flows
Six Months ended October 31, 2009 (unaudited)
 
         
                      
Decrease in Cash from:
       
Cash Flows provided by Operating Activities:
       
Net increase in net assets resulting from investment operations
    $10,543,406  
         
Adjustments to Reconcile Net Increase in Net Assets Resulting from Investment Operations to Net Cash Provided by Operating Activities:
       
Purchases of long-term investments
    (9,099,993 ) 
         
Proceeds from sales of long-term investments
    7,132,720  
         
Sales of short-term portfolio investments, net
    1,222,750  
         
Net change in unrealized appreciation of investments
    (7,146,323 )
         
Net realized gain on investments
    (13,275 )
         
Net amortization on investments
    (442,034 )
         
Increase in receivable for investments sold
    (1,100,900 )
         
Decrease in interest receivable
    10,792  
         
Increase in prepaid expenses and other assets
    (9,800 )
         
Increase in payable for investments purchased
    1,252,914  
         
Increase in investment management fees payable
    13,048  
         
Increase in interest payable for reverse repurchase agreements
    344  
         
Decrease in accrued expenses and other liabilities
    (4,466 )
         
Net cash provided by operating activities
    2,359,183  
         
         
Cash Flows used for Financing Activities:
       
Increase in payable for reverse repurchase agreements
    85,000  
         
Cash dividends paid (excluding reinvestment of dividends of $211,391)
    (2,496,364 )
         
Net cash used for financing activities
    (2,411,364 )
         
         
Net decrease in cash
    (52,181 )
         
Cash at beginning of period
    236,799  
         
Cash at end of period
    $184,618  
         
 
The Fund paid $15,703 in cash for interest on reverse repurchase agreements.
 
 
See accompanying Notes to Financial Statements   10.31.09   PIMCO Municipal Income Funds Semi-Annual Report 31

 

PIMCO Municipal Income Funds Notes to Financial Statements
October 31, 2009 (unaudited)
 
1.  Organization and Significant Accounting Policies
PIMCO Municipal Income Fund (“Municipal”), PIMCO California Municipal Income Fund (“California Municipal”) and PIMCO New York Municipal Income Fund (“New York Municipal”), collectively referred to as the “Funds” or “PIMCO Municipal Income Funds”, were organized as Massachusetts business trusts on May 10, 2001. Prior to commencing operations on June 29, 2001, the Funds had no operations other than matters relating to their organization and registration as non-diversified, closed-end management investment companies registered under the Investment Company Act of 1940 and the rules and regulations thereunder, as amended. Allianz Global Investors Fund Management LLC (the “Investment Manager”) serves as the Investment Manager and is an indirect, wholly-owned subsidiary of Allianz Global Investors of America L.P. (“Allianz Global”). Allianz Global is an indirect, wholly-owned subsidiary of Allianz SE, a publicly traded European insurance and financial services company. Each Fund has an unlimited amount of no par value per share of common stock authorized.
 
Under normal market conditions, Municipal invests substantially all of its assets in a portfolio of municipal bonds, the interest from which is exempt from federal income taxes. Under normal market conditions, California Municipal invests substantially all of its assets in municipal bonds which pay interest that is exempt from federal and California state income taxes. Under normal market conditions, New York Municipal invests substantially all of its assets in municipal bonds which pay interest that is exempt from federal, New York State and New York City income taxes. The Funds will generally seek to avoid investing in bonds generating interest income which could potentially subject individuals to alternative minimum tax. The issuers’ abilities to meet their obligations may be affected by economic, political and other developments in a specific state or region. There is no guarantee that the Funds will meet their stated objectives.
 
The preparation of the financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the Funds’ financial statements. Actual results could differ from those estimated.
 
In the normal course of business, the Funds enter into contracts that contain a variety of representations that provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds expect the risk of any loss to be remote.
 
The following is a summary of significant accounting policies consistently followed by the Funds:
 
(a) Valuation of Investments
Portfolio securities and other financial instruments for which market quotations are readily available are stated at market value. Market value is generally determined on the basis of last reported sales prices, or if no sales are reported, on the basis of quotes obtained from a quotation reporting system, established market makers, or independent pricing services.
 
Portfolio securities and other financial instruments for which market quotations are not readily available or for which a development/event occurs that may significantly impact the value of a security, are fair-valued, in good faith, pursuant to procedures established by the Board of Trustees, or persons acting at their discretion pursuant to procedures established by the Board of Trustees. The Funds’ investments are valued daily using prices supplied by an independent pricing service or dealer quotations, or by using the last sale price on the exchange that is the primary market for such securities, or the mean between the last quoted bid and ask price for those securities for which the over-the-counter market is the primary market or for listed securities in which there were no sales. Independent pricing services use information provided by market makers or estimates of market values obtained from yield data relating to investments or securities with similar characteristics. Securities purchased on a when-issued or delayed-delivery basis are marked to market daily until settlement at the forward settlement value. Short-term securities maturing in 60 days or less are valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.
 
The prices used by the Funds to value securities may differ from the value that would be realized if the securities were sold and these differences could be material to the Funds’ financial statements. Each Fund’s net asset value is normally determined as of the close of regular trading (normally, 4:00 p.m. Eastern time) on the New York Stock Exchange (“NYSE”) on each day the NYSE is open for business.
 
 
32 PIMCO Municipal Income Funds Semi-Annual Report   10.31.09

 

 
PIMCO Municipal Income Funds Notes to Financial Statements
October 31, 2009 (unaudited)
 
1.  Organization and Significant Accounting Policies (continued)
 
(b) Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. the “exit price”) in an orderly transaction between market participants. The three levels of the fair value hierarchy are described below:
 
•  Level 1 – quoted prices in active markets for identical investments that the Funds have the ability to access
 
•  Level 2 – valuations based on other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) or quotes from inactive exchanges
 
•  Level 3 – valuations based on significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of investments)
 
An investment asset’s or liability’s level within the fair value hierarchy is based on the lowest level input, individually or in aggregate, that is significant to fair value measurement. The objective of fair value measurement remains the same even when there is a significant decrease in the volume and level of activity for an asset or liability and regardless of the valuation technique used.
 
The valuation techniques used by the Funds to measure fair value during the six months ended October 31, 2009 maximized the use of observable inputs and minimized the use of unobservable inputs.
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
 
A summary of the inputs used at October 31, 2009 in valuing each Fund’s assets and liabilities is listed below:
 
Municipal:
 
                 
        Level 2 -
   Level 3 -
    
        Other Significant
   Significant
    
    Level 1 -
   Observable
   Unobservable
   Value at
    Quoted Prices   Inputs   Inputs   10/31/09
 
 
Investments in Securities – Assets
               
Municipal Bonds & Notes
  —   $468,153,499   —   $468,153,499
Variable Rate Notes
  —   16,730,446   —   16,730,446
Short-Term Investments
  —   11,656,067   —   11,656,067
 
 
Total Investments in Securities
  —   $496,540,012   —   $496,540,012
 
 
 
California Municipal:
 
                 
        Level 2 -
   Level 3 -
    
        Other Significant
   Significant
    
    Level 1 -
   Observable
   Unobservable
   Value at
    Quoted Prices   Inputs   Inputs   10/31/09
 
 
Investments in Securities – Assets
               
California Municipal Bonds & Notes
  —   $382,324,515   —   $382,324,515
Other Municipal Bonds & Notes
  —   15,343,280   —   15,343,280
Other Variable Rate Notes
  —   6,846,021   —   6,846,021
California Variable Rate Notes
  —   1,817,845   —   1,817,845
Short-Term Investments
  —   8,429,659   —   8,429,659
 
 
Total Investments in Securities
  —   $414,761,320   —   $414,761,320
 
 
 
 
10.31.09   PIMCO Municipal Income Funds Semi-Annual Report 33

 

 
PIMCO Municipal Income Funds Notes to Financial Statements
October 31, 2009 (unaudited)
 
1.  Organization and Significant Accounting Policies (continued)
 
New York Municipal:
 
                 
        Level 2 -
   Level 3 -
    
        Other Significant
   Significant
    
    Level 1 -
   Observable
   Unobservable
   Value at
    Quoted Prices   Inputs   Inputs   10/31/09
 
 
Investments in Securities – Assets
               
New York Municipal Bonds & Notes
  —   $121,146,585   —   $121,146,585
Other Municipal Bonds & Notes
  —   8,478,524   —   8,478,524
Other Variable Rate Notes
  —   1,815,775   —   1,815,775
Short-Term Investments
  —   4,688,186   —   4,688,186
 
 
Total Investments in Securities
  —   $136,129,070   —   $136,129,070
 
 
 
(c) Investment Transactions and Investment Income
Investment transactions are accounted for on the trade date. Securities purchased and sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses on investments are determined on an identified cost basis. Interest income adjusted for the accretion of discounts and amortization of premiums is recorded on an accrual basis. Discounts or premiums on debt securities purchased are accreted or amortized, respectively, to interest income over the lives of the respective securities.
 
(d) Federal Income Taxes
The Funds intend to distribute all of their taxable income and to comply with the other requirements of the U.S. Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Accordingly, no provision for U.S. federal income taxes is required.
 
Accounting for uncertainty in income taxes establishes for all entities, including pass-through entities such as the Funds, a minimum threshold for financial statement recognition of the benefit of positions taken in filing tax returns (including whether an entity is taxable in a particular jurisdiction), and requires certain expanded tax disclosures. The Funds’ management has determined that its evaluation has resulted in no material impact to the Funds’ financial statements at October 31, 2009. The Funds’ federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service.
 
(e) Dividends and Distributions — Common Stock
The Funds declare dividends from net investment income monthly to common shareholders. Distributions of net realized capital gains, if any, are paid at least annually. The Funds record dividends and distributions to their shareholders on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from generally accepted accounting principles. These “book-tax” differences are considered either temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal income tax treatment. Temporary differences do not require reclassification. To the extent dividends and/or distributions exceed current and accumulated earnings and profits for federal income tax purposes; they are reported as dividends and/or distributions of paid-in-capital in excess of par.
 
(f) Reverse Repurchase Agreements
In a reverse repurchase agreement, the Funds sell securities to a bank or broker-dealer and agree to repurchase the securities at a mutually agreed date and price. Generally, the effect of such a transaction is that the Funds can recover and reinvest all or most of the cash invested in portfolio securities involved during the term of the reverse repurchase agreement and still be entitled to the returns associated with those portfolio securities. Such transactions are advantageous if the interest cost to the Funds of the reverse repurchase transaction is less than the returns it obtains on investments purchased with the cash. Unless the Funds cover their positions in reverse repurchase agreements (by segregating liquid assets at least equal in amount to the forward purchase commitment), their obligations under the agreements will be subject to the Funds’ limitations on borrowings. Reverse repurchase agreements involve leverage risk
 
 
34 PIMCO Municipal Income Funds Semi-Annual Report   10.31.09

 

 
PIMCO Municipal Income Funds Notes to Financial Statements
October 31, 2009 (unaudited)
 
1.  Organization and Significant Accounting Policies (continued)
 
and also the risk that the market value of the securities that the Funds are obligated to repurchase under the agreement may decline below the repurchase price. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, the Funds’ use of the proceeds of the agreement may be restricted pending determination by the other party, or its trustee or receiver, whether to enforce the Funds’ obligation to repurchase the securities.
 
(g) Inverse Floating Rate Transactions — Residual Interest Municipal Bonds (“RIBs”) / Residual Interest Tax Exempt Bonds (“RITEs”)
The Funds may invest in RIBs and RITEs, (“Inverse Floaters”) whose interest rates bear an inverse relationship to the interest rate on another security or the value of an index. In inverse floating rate transactions, the Funds sell a fixed rate municipal bond (“Fixed Rate Bond”) to a broker who places the Fixed Rate Bond in a special purpose trust (“Trust”) from which floating rate bonds (“Floating Rate Notes”) and Inverse Floaters are issued. The Funds simultaneously or within a short period of time, purchase the Inverse Floaters from the broker. The Inverse Floaters held by the Funds provide the Funds with the right to: (1) cause the holders of the Floating Rate Notes to tender their notes at par, and (2) cause the broker to transfer the Fixed-Rate Bond held by the Trust to the Funds, thereby collapsing the Trust. The Funds account for the transaction described above as a secured borrowing by including the Fixed Rate Bond in their Schedules of Investments, and account for the Floating Rate Notes as a liability under the caption “Payable for floating rate notes” in the Funds’ Statements of Assets and Liabilities. The Floating Rate Notes have interest rates that generally reset weekly and their holders have the option to tender their notes to the broker for redemption at par at each reset date.
 
The Funds may also invest in Inverse Floaters without transferring a fixed rate municipal bond into a special purpose trust, which are not accounted for as secured borrowings.
 
The Inverse Floaters are created by dividing the income stream provided by the underlying bonds to create two securities, one short-term and one long-term. The interest rate on the short-term component is reset by an index or auction process typically every 7 to 35 days. After income is paid on the short-term securities at current rates, the residual income from the underlying bond(s) goes to the long-term securities. Therefore, rising short-term rates result in lower income for the long-term component and vice versa. The longer-term bonds may be more volatile and less liquid than other municipal bonds of comparable maturity. Investments in Inverse Floaters typically will involve greater risk than in an investment in Fixed Rate Bonds. The Funds may also invest in Inverse Floaters for the purpose of increasing leverage.
 
The Funds’ restrictions on borrowings do not apply to the secured borrowings deemed to have occurred for accounting purposes. Inverse Floaters held by the Funds are exempt from registration under Rule 144A of the Securities Act of 1933.
 
In addition to general market risks, the Funds’ investments in Inverse Floaters may involve greater risk and volatility than an investment in a fixed rate bond, and the value of Inverse Floaters may decrease significantly when market interest rates increase. Inverse Floaters have varying degrees of liquidity, and the market for these securities may be volatile. These securities tend to underperform the market for fixed rate bonds in a rising interest rate environment, but tend to outperform the marked for fixed rate bonds when interest rates decline or remain relatively stable. Although volatile, Inverse Floaters typically offer the potential for yields exceeding the yields available on fixed rate bonds with comparable credit quality, coupon, call provisions and maturity. Trusts in which Inverse Floaters may be held could be terminated due to market, credit or other events beyond the Funds’ control, which could require the Funds to reduce leverage and dispose of portfolio investments at inopportune times and prices.
 
(h) When-Issued/Delayed-Delivery Transactions
The Funds may purchase or sell securities on a when-issued or delayed-delivery basis. The transactions involve a commitment to purchase or sell securities for a predetermined price or yield, with payment and delivery taking place beyond the customary settlement period. When-issued or delayed-delivery transactions involve a commitment to purchase or sell securities for a predetermined price or yield, with payment and delivery taking place beyond the customary settlement period. When delayed-delivery purchases are outstanding, the Funds will set aside and maintain until the settlement date in a designated account, liquid assets in an amount sufficient to meet the purchase price. When purchasing a security on a delayed-delivery basis, the Funds assume the rights and risks of ownership of the security, including the risk of price and yield fluctuations; consequently, such fluctuations are taken into account when determining the net asset value. The Funds may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and
 
 
10.31.09   PIMCO Municipal Income Funds Semi-Annual Report 35

 

 
PIMCO Municipal Income Funds Notes to Financial Statements
October 31, 2009 (unaudited)
 
1.  Organization and Significant Accounting Policies (continued)
 
may sell when-issued securities before they are delivered, which may result in a realized gain or loss. When a security is sold on a delayed-delivery basis, the Funds do not participate in future gains and losses with respect to the security.
 
(i) Custody Credits on Cash Balances
The Funds benefit from an expense offset arrangement with their custodian bank, whereby uninvested cash balances earn credits which reduce monthly custodian and accounting agent expenses. Had these cash balances been invested in income-producing securities, they would have generated income for the Funds.
 
(j) Interest Expense
Interest expense relates to the Funds’ liability in connection with Floating Rate Notes held by third parties in conjunction with Inverse Floaters and reverse repurchase agreements. Interest expense on reverse repurchase agreements is recorded as it is incurred.
 
2.  Principal Risk
In the normal course of business, the Funds trade financial instruments and enter into financial transactions where risk of potential loss exists due to, among other things, changes in the market (market risk) or failure of the other party to a transaction to perform (credit/counterparty risk). The main risks from derivative instruments are interest rate, market price and credit/counterparty risks.
 
Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the value of certain fixed income securities held by the Funds is likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is used primarily as a measure of the sensitivity of a fixed income security’s market price to interest rate (i.e. yield) movements.
 
The Funds will be exposed to credit risk on parties with whom it trades and will also bear the risk of settlement default. The Funds minimize concentrations of credit risk by undertaking transactions with a large number of customers and counterparties on recognized and reputable exchanges. The Funds could lose money if the issuer or guarantor of a fixed income security, or the counterparty to a derivatives contract, repurchase agreement or a loan of portfolio securities, is unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. Securities are subject to varying degrees of credit risk, which are often reflected in credit ratings.
 
Similar to credit risk, the Funds may be exposed to counterparty risk, or the risk that an institution or other entity with which the Funds have unsettled or open transactions will default. The potential loss could exceed the value of the financial assets recorded in the Funds’ financial statements. Financial assets, which potentially expose the Funds to counterparty risk, consist principally of cash due from counterparties and investments.
 
The Funds’ sub-adviser, Pacific Investment Management Company LLC (the “Sub-Adviser”), an affiliate of the Investment Manager, seeks to minimize the Funds’ credit risks by performing reviews of each counterparty. Generally, all transactions in listed securities are settled/paid for upon delivery. Delivery of securities sold is only made once the Funds have received payment. Payment is made on a purchase once the securities have been delivered by the counterparty. The trade will fail if either party fails to meet its obligation.
 
3.  Investment Manager/Sub-Adviser
Each Fund has an Investment Management Agreement (each an “Agreement”) with the Investment Manager. Subject to the supervision of each Funds’ Board of Trustees, the Investment Manager is responsible for managing, either directly or through others selected by it, each Funds’ investment activities, business affairs and administrative matters. Pursuant to the each Agreement, the Investment Manager receives an annual fee, payable on a monthly basis, at an annual rate of 0.65% of each Fund’s average daily net assets, inclusive of net assets attributable to any Preferred Shares that may be outstanding. In order to reduce each Fund’s expenses, the Investment Manager has contractually agreed to waive a portion of its investment management fees for each Fund at the annual rate of 0.05% of each Fund’s average daily net assets, inclusive of net assets attributable to any Preferred Shares that may be outstanding, through June 30, 2009. For the six months ended October 31, 2009, each Fund paid investment management fees at an annualized effective rate of 0.63% of each Fund’s average daily net assets, inclusive of net assets attributable to any Preferred Shares that may be outstanding.
 
 
36 PIMCO Municipal Income Funds Semi-Annual Report   10.31.09

 

 
PIMCO Municipal Income Funds Notes to Financial Statements
October 31, 2009 (unaudited)
 
3.  Investment Manager/Sub-Adviser (continued)
 
The Investment Manager has retained the Sub-Adviser to manage each Fund’s investments. Subject to the supervision of the Investment Manager, the Sub-Adviser is responsible for making all of the Funds’ investment decisions. The Investment Manager, not the Funds, pays a portion of the fees it receives to the Sub-Adviser in return for its services.
 
4. Investments in Securities
For the six months ended October 31, 2009, purchases and sales of investments, other than short-term securities and U.S. government obligations were:.
             
        California
   New York
    Municipal   Municipal   Municipal
 
 
Purchases
  $39,688,474   $31,628,749   $9,099,993
Sales
  32,648,519   28,359,881   7,132,720
 
 
(a) Open reverse repurchase agreements at October 31, 2009 were:
 
Municipal:
 
                         
            Maturity
   Principal &
    
Counterparty   Rate   Trade Date   Date   Interest   Principal
 
 
                         
Barclays Bank
  0.65%   10/5/09   11/9/09   $7,802,802     $7,799,000  
                         
 
California Municipal:
 
                         
            Maturity
   Principal &
    
Counterparty   Rate   Trade Date   Date   Interest   Principal
 
 
                         
Barclays Bank
  0.65%   10/5/09   11/9/09   $6,823,325     $6,820,000  
                         
 
New York Municipal:
 
                         
            Maturity
   Principal &
    
Counterparty   Rate   Trade Date   Date   Interest   Principal
 
 
                         
Barclays Bank
  0.65%   10/5/09   11/5/09   $4,038,968     $4,037,000  
                         
 
The weighted average daily balance of reverse repurchase agreements outstanding during the six months ended October 31, 2009 for Municipal, California Municipal and New York Municipal was $12,340,451, $9,456,500 and $4,150,245 at a weighted average interest rate of 0.79%, 0.79% and 0.76%, respectively. The total market value of underlying collateral (refer to the Schedules of Investments for positions segregated as collateral for reverse repurchase agreements) for open reverse repurchase agreements at October 31, 2009 was $9,309,760, $8,129,659 and $4,688,186 for Municipal, California Municipal and New York Municipal, respectively.
 
5.  Income Tax Information
The cost of investments for federal income tax purposes and gross unrealized appreciation and gross unrealized depreciation of investments at October 31, 2009 were:
 
                 
        Gross
   Gross
   Net
    Cost of
   Unrealized
   Unrealized
   Unrealized
    Investments   Appreciation   Depreciation   Appreciation
 
 
Municipal
  $465,337,994   $29,738,830   $23,074,289   $6,664,541
California Municipal
  369,783,306   17,357,335   7,426,400   9,930,935
New York Municipal
  124,584,020   6,617,116   4,223,413   2,393,703
 
 
10.31.09   PIMCO Municipal Income Funds Semi-Annual Report 37

 

 
PIMCO Municipal Income Funds Notes to Financial Statements
October 31, 2009 (unaudited)
 
6.  Auction-Rate Preferred Shares
Municipal has outstanding 1,520 shares of Preferred Shares Series A, 1,520 shares of Preferred Shares Series B, 1,520 shares of Preferred Shares Series C, 1,520 shares of Preferred Shares Series D and 1,520 shares of Preferred Shares Series E, each with a net asset and liquidation value of $25,000 per share plus any accumulated, unpaid dividends.
 
California Municipal has issued 2,000 shares of Preferred Shares Series A, 2,000 shares of Preferred Shares Series B and 2,000 shares of Preferred Shares Series C, each with a net asset and liquidation value of $25,000 per share plus any accumulated, unpaid dividends.
 
New York Municipal has issued 1,880 shares of Preferred Shares Series A with a net asset and liquidation value of $25,000 per share plus any accumulated, unpaid dividends.
 
Dividends are accumulated daily at an annual rate (typically re-set every seven days) through auction procedures. Distributions of net realized capital gains, if any, are paid annually.
 
For the six months ended October 31, 2009, the annualized dividend rates for each Fund ranged from:
 
             
    High   Low   At October 31, 2009
 
 
Municipal:
           
Series A
  0.79%   0.40%   0.43%
Series B
  0.79%   0.38%   0.43%
Series C
  0.76%   0.35%   0.41%
Series D
  0.76%   0.35%   0.41%
Series E
  0.79%   0.40%   0.43%
California Municipal:
           
Series A
  0.79%   0.40%   0.43%
Series B
  0.76%   0.35%   0.41%
Series C
  0.79%   0.40%   0.43%
New York Municipal:
           
Series A
  0.79%   0.38%   0.43%
 
The Funds are subject to certain limitations and restrictions while Preferred Shares are outstanding. Failure to comply with these limitations and restrictions could preclude the Funds from declaring any dividends or distributions to common shareholders or repurchasing common shares and/or could trigger the mandatory redemption of Preferred Shares at their liquidation value plus any accumulated, unpaid dividends.
 
Preferred shareholders, who are entitled to one vote per share, generally vote with the common shareholders but vote separately as a class to elect two Trustees and on any matters affecting the rights of the preferred shareholders.
 
Since mid-February 2008, holders of auction-rate preferred shares (“ARPS”) issued by the Funds have been directly impacted by an unprecedented lack of liquidity, which has similarly affected ARPS holders in many of the nation’s closed-end funds. Since then, regularly scheduled auctions for ARPS issued by the Funds have consistently “failed” because of insufficient demand (bids to buy shares) to meet the supply (shares offered for sale) at each auction. In a failed auction, ARPS holders cannot sell all, and may not be able to sell any, of their shares tendered for sale. While repeated auction failures have affected the liquidity for ARPS, they do not constitute a default or automatically alter the credit quality of the ARPS, and ARPS holders have continued to receive dividends at the defined “maximum rate” the higher of the 30-day “AA” Composite Commercial Paper Rate multiplied by 110% or the Taxable Equivalent of the Short-Term Municipal Obligations Rate-defined as 90% of the quotient of (A) the per annum rate expressed on an interest equivalent basis equal to the Kenny S&P 30-day High Grade Index divided by (B) 1.00 minus the Marginal Tax Rate (expressed as a decimal) multiplied by 110% (which is a function of short-term interest rates and typically higher than the rate that would have otherwise been set through a successful auction). If the Funds’ ARPS auctions continue to fail and the “maximum rate” payable on the ARPS rises as a result of changes in short-term interest rates, returns for the Funds’ common shareholders could be adversely affected.
 
 
38 PIMCO Municipal Income Funds Semi-Annual Report   10.31.09

 

 
PIMCO Municipal Income Funds Notes to Financial Statements
October 31, 2009 (unaudited)
 
6.  Auction-Rate Preferred Shares (continued)
 
7.  Legal Proceedings
In June and September 2004, the Investment Manager and certain of its affiliates (including PEA Capital LLC (“PEA”), Allianz Global Investors Distributors LLC and Allianz Global Investors of America, L.P.), agreed to settle, without admitting or denying the allegations, claims brought by the Securities and Exchange Commission (“SEC”) and the New Jersey Attorney General alleging violations of federal and state securities laws with respect to certain open-end funds for which the Investment Manager serves as investment adviser. The settlements related to an alleged “market timing” arrangement in certain open-end funds formerly sub-advised by PEA. The Investment Manager and its affiliates agreed to pay a total of $68 million to settle the claims. In addition to monetary payments, the settling parties agreed to undertake certain corporate governance, compliance and disclosure reforms related to market timing, and consented to cease and desist orders and censures. Subsequent to these events, PEA deregistered as an investment adviser and dissolved. None of the settlements alleged that any inappropriate activity took place with respect to the Funds.
 
Since February 2004, the Investment Manager and certain of its affiliates and their employees have been named as defendants in a number of pending lawsuits concerning “market timing,” which allege the same or similar conduct underlying the regulatory settlements discussed above. The market timing lawsuits have been consolidated in a multi-district litigation proceeding in the U.S. District Court for the District of Maryland. Any potential resolution of these matters may include, but not be limited to, judgments or settlements for damages against the Investment Manager, or its affiliates or related injunctions.
 
In addition, the Sub-Adviser is the subject of a lawsuit in the Northern District of Illinois Eastern Division in which the complaint alleges that plaintiffs each purchased and sold a 10-year Treasury note futures contract and suffered damages from an alleged shortage when the Sub-Adviser held both physical and futures positions in 10-year Treasury notes for its client accounts. In July 2007, the court granted class certification of a class consisting of those persons who purchased futures contracts to offset short positions between May 9, 2005 and June 30, 2005. The Sub-Adviser currently believes that the complaint is without merit and the Sub-Adviser intends to vigorously defend against this action.
 
The Investment Manager and the Sub-Adviser believe that these matters are not likely to have a material adverse effect on the Funds or on their ability to perform their respective investment advisory activities relating to the Funds.
 
8.  Resignation of Trustee
Diana L. Taylor resigned as Trustee of the Funds on September 10, 2009.
 
9. Subsequent Events
Fund management has evaluated subsequent events following the six months ended October 31, 2009 through December 23, 2009, which is the date the financial statements were issued. The subsequent events were as follows:
 
On November 2, 2009, the following dividends were declared to common shareholders payable December 1, 2009 to shareholders of record on November 12, 2009:
 
     
Municipal
  $0.08125 per common share
California Municipal
  $0.077 per common share
New York Municipal
  $0.057 per common share
 
On December 1, 2009, the following dividends were declared to common shareholders payable December 30, 2009 to shareholders of record on December 11, 2009:
 
     
Municipal
  $0.08125 per common share
California Municipal
  $0.077 per common share
New York Municipal
  $0.057 per common share
 
On December 14, 2009, James Jacobson joined the Board of Trustees.
 
 
10.31.09   PIMCO Municipal Income Funds Semi-Annual Report 39

 

PIMCO Municipal Income Fund Financial Highlights
For a share of common stock outstanding throughout each period
 
                                                           
    Six Months
                              
    ended
                              
    October 31,
                              
    2009
     Year ended April 30,
    (unaudited)     2009     2008     2007     2006     2005 
Net asset value, beginning of period
    $9.38         $12.96         $14.85         $14.54         $14.84         $14.11  
                                                           
Investment Operations:
                                                         
Net investment income
    0.60         1.13         1.12         1.07         1.10         1.15  
                                                           
Net realized and change in unrealized gain (loss) on investments, futures contracts, options written and swaps
    1.71         (3.53 )       (1.74 )       0.50         (0.21 )       0.68  
                                                           
Total from investment operations
    2.31         (2.40 )       (0.62 )       1.57         0.89         1.83  
                                                           
Dividends on Preferred Shares from Net Investment Income
    (0.02 )       (0.20 )       (0.29 )       (0.28 )       (0.21 )       (0.12 )
                                                           
Net increase (decrease) in net assets applicable to common shareholders resulting from investment operations
    2.29         (2.60 )       (0.91 )       1.29         0.68         1.71  
                                                           
Dividends to Common Shareholders from Net Investment Income
    (0.49 )       (0.98 )       (0.98 )       (0.98 )       (0.98 )       (0.98 )
                                                           
Net asset value, end of period
    $11.18         $9.38         $12.96         $14.85         $14.54         $14.84  
                                                           
Market price, end of period
    $12.37         $11.40         $16.46         $18.00         $16.22         $14.64  
                                                           
Total Investment Return (1)
    12.99 %       (24.58 )%       (2.47 )%       17.77 %       18.13 %       15.68 %
                                                           
RATIOS/SUPPLEMENTAL DATA:
                                                         
Net assets applicable to common shareholders, end of period (000)
    $279,203         $233,507         $321,268         $365,984         $355,877         $360,699  
                                                           
Ratio of expenses to average net assets, including interest expense (2)(3)(4)(5)
    1.52 %*       1.64 %       1.51 %       1.32 %       1.18 %       1.06 %
                                                           
Ratio of expenses to average net assets, excluding interest expense (2)(3)(5)
    1.38 %*       1.42 %       1.20 %       1.00 %       0.98 %       0.97 %
                                                           
Ratio of net investment income to average net assets (2)(5)
    11.54 %*       10.65 %       8.07 %       7.23 %       7.41 %       7.97 %
                                                           
Preferred shares asset coverage per share
    $61,347         $55,722         $65,143         $70,727         $69,462         $70,077  
                                                           
Portfolio turnover
    7 %       60 %       32 %       6 %       13 %       11 %
                                                           
* Annualized
 
(1) Total investment return is calculated assuming a purchase of a share of common stock at the current market price on the first day of each period and a sale of a share of common stock at the current market price on the last day of each period reported. Dividends and distributions are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total investment return does not reflect brokerage commissions or sales charges. Total investment return for a period of less than one year is not annualized.
 
(2) Calculated on the basis of income and expenses applicable to both common and preferred shares relative to the average net assets of common shareholders.
 
(3) Inclusive of expenses offset by custody credits earned on cash balances at the custodian bank. (See Note 1(i) in Notes to Financial Statements).
 
(4) Interest expense relates to the liability for floating rate notes issued in connection with inverse floater transactions and reverse repurchase agreement transactions.
 
(5) During the fiscal periods indicated above, the Investment Manager waived a portion of its investment management fee. The effect of such waiver relative to the average net assets of common shareholders was 0.03%, 0.10%, 0.17%, 0.24%, 0.32% and 0.31% for the six months ended October 31, 2009 and the years ended April 30, 2009, April 30, 2008, April 30, 2007, April 30, 2006 and April 30, 2005, respectively.
 
 
40 PIMCO Municipal Income Funds Semi-Annual Report   10.31.09

 

PIMCO California Municipal Income Fund Financial Highlights
For a share of common stock outstanding throughout each period
 
                                                           
    Six Months
                              
    ended
                              
    October 31,
                              
    2009
     Year ended April 30,
    (unaudited)     2009     2008     2007     2006     2005 
Net asset value, beginning of period
    $10.61         $13.62         $14.84         $14.48         $14.60         $13.92  
                                                           
Investment Operations:
                                                         
Net investment income
    0.61         1.08         1.07         1.10         1.05         1.07  
                                                           
Net realized and change in unrealized gain (loss) on investments, futures contracts, options written and swaps
    1.64         (2.96 )       (1.09 )       0.44         (0.05 )       0.64  
                                                           
Total from investment operations
    2.25         (1.88 )       (0.02 )       1.54         1.00         1.71  
                                                           
Dividends on Preferred Shares from Net Investment Income
    (0.02 )       (0.21 )       (0.28 )       (0.26 )       (0.20 )       (0.11 )
                                                           
Net increase (decrease) in net assets applicable to common shareholders resulting from investment operations
    2.23         (2.09 )       (0.30 )       1.28         0.80         1.60  
                                                           
Dividends to Common Shareholders from Net Investment Income
    (0.46 )       (0.92 )       (0.92 )       (0.92 )       (0.92 )       (0.92 )
                                                           
Net asset value, end of period
    $12.38         $10.61         $13.62         $14.84         $14.48         $14.60  
                                                           
Market price, end of period
    $12.47         $12.18         $15.83         $17.70         $15.87         $14.20  
                                                           
Total Investment Return (1)
    6.45 %       (16.72 )%       (4.88 )%       18.20 %       18.93 %       15.05 %
                                                           
RATIOS/SUPPLEMENTAL DATA:
                                                         
Net assets applicable to common shareholders, end of period (000)
    $225,706         $192,849         $246,613         $267,061         $259,127         $259,978  
                                                           
Ratio of expenses to average net assets, including interest expense (2)(3)(4)(5)
    1.52 %*       1.66 %       1.41 %       1.26 %       1.08 %       1.00 %
                                                           
Ratio of expenses to average net assets, excluding interest expense (2)(3)(5)
    1.34 %*       1.39 %       1.15 %       1.05 %       0.99 %       1.00 %
                                                           
Ratio of net investment income to average net assets (2)(5)
    10.64 %*       9.42 %       7.57 %       7.48 %       7.19 %       7.56 %
                                                           
Preferred shares asset coverage per share
    $62,267         $57,140         $66,086         $69,491         $68,164         $68,319  
                                                           
Portfolio turnover
    8 %       42 %       14 %       4 %       8 %       5 %
                                                           
* Annualized
 
(1) Total investment return is calculated assuming a purchase of a share of common stock at the current market price on the first day of each period and a sale of a share of common stock at the current market price on the last day of each period reported. Dividends and distributions are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total investment return does not reflect brokerage commissions or sales charges. Total investment return for a period of less than one year is not annualized.
 
(2) Calculated on the basis of income and expenses applicable to both common and preferred shares relative to the average net assets of common shareholders.
 
(3) Inclusive of expenses offset by custody credits earned on cash balances at the custodian bank. (See Note 1(i) in Notes to Financial Statements).
 
(4) Interest expense relates to the liability for floating rate notes issued in connection with inverse floater transactions.
 
(5) During the fiscal periods indicated above, the Investment Manager waived a portion of its investment management fee. The effect of such waiver relative to the average net assets of common shareholders was 0.03%, 0.10%, 0.17%, 0.25%, 0.32% and 0.31% for the six months ended October 31, 2009 and the years ended April 30, 2009, April 30, 2008, April 30, 2007, April 30, 2006 and April 30, 2005, respectively.
 
 
10.31.09   PIMCO Municipal Income Funds Semi-Annual Report 41

 

PIMCO New York Municipal Income Fund Financial Highlights
For a share of common stock outstanding throughout each period
 
                                                           
    Six Months
                              
    ended
                              
    October 31,
                              
    2009
     Year ended April 30,
    (unaudited)     2009     2008     2007     2006     2005 
Net asset value, beginning of period
    $9.19         $12.70         $13.74         $13.47         $13.83         $13.44  
                                                           
Investment Operations:
                                                         
Net investment income
    0.44         0.87         0.97         0.97         0.98         1.01  
                                                           
Net realized and change in unrealized gain (loss) on investments, futures contracts, options written and swaps
    0.96         (3.50 )       (1.03 )       0.37         (0.23 )       0.40  
                                                           
Total from investment operations
    1.40         (2.63 )       (0.06 )       1.34         0.75         1.41  
                                                           
Dividends on Preferred Shares from Net Investment Income
    (0.02 )       (0.20 )       (0.30 )       (0.28 )       (0.22 )       (0.12 )
                                                           
Net increase (decrease) in net assets applicable to common shareholders resulting from investment operations
    1.38         (2.83 )       (0.36 )       1.06         0.53         1.29  
                                                           
Dividends to Common Shareholders from Net Investment Income
    (0.34 )       (0.68 )       (0.68 )       (0.79 )       (0.89 )       (0.90 )
                                                           
Net asset value, end of period
    $10.23         $9.19         $12.70         $13.74         $13.47         $13.83  
                                                           
Market price, end of period
    $10.50         $9.90         $13.06         $15.02         $14.56         $13.90  
                                                           
Total Investment Return (1)
    9.78 %       (18.80 )%       (8.31 )%       8.89 %       11.45 %       17.04 %
                                                           
RATIOS/SUPPLEMENTAL DATA:
                                                         
Net assets applicable to common shareholders, end of period (000)
    $77,528         $69,482         $95,691         $103,035         $100,367         $102,112  
                                                           
Ratio of expenses to average net assets, including interest expense (2)(3)(4)(5)
    1.99 %*       1.86 %       2.00 %       1.94 %       1.57 %       1.44 %
                                                           
Ratio of expenses to average net assets, excluding interest expense (2)(3)(5)
    1.83 %*       1.62 %       1.32 %       1.23 %       1.09 %       1.12 %
                                                           
Ratio of net investment income to average net assets (2)(5)
    11.41 %*       8.49 %       7.41 %       7.06 %       7.04 %       7.48 %
                                                           
Preferred shares asset coverage per share
    $65,861         $61,957         $62,969         $65,863         $64,809         $65,509  
                                                           
Portfolio turnover
    6 %       37 %       14 %       2 %       15 %       6 %
                                                           
* Annualized
 
(1) Total investment return is calculated assuming a purchase of a share of common stock at the current market price on the first day of each period and a sale of a share of common stock at the current market price on the last day of each period reported. Dividends and distributions are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total investment return does not reflect brokerage commissions or sales charges. Total investment return for a period of less than one year is not annualized.
 
(2) Calculated on the basis of income and expenses applicable to both common and preferred shares relative to the average net assets of common shareholders.
 
(3) Inclusive of expenses offset by custody credits earned on cash balances at the custodian bank. (See Note 1(i) in Notes to Financial Statements).
 
(4) Interest expense relates to the liability for floating rate notes issued in connection with inverse floater transactions.
 
(5) During the fiscal periods indicated above, the Investment Manager waived a portion of its investment management fee. The effect of such waiver relative to the average net assets of common shareholders was 0.03%, 0.10%, 0.18%, 0.26%, 0.33% and 0.33% for the six months ended October 31, 2009 and the years ended April 30, 2009, April 30, 2008, April 30, 2007, April 30, 2006 and April 30, 2005, respectively.
 
 
42 PIMCO Municipal Income Funds Semi-Annual Report   10.31.09

 

PIMCO Municipal Income Funds
Matters Relating to the Trustees’ Consideration of the Investment Management &
Portfolio Management Agreements  (unaudited)
 
The Investment Company Act of 1940, as amended, requires that both the full Board of Trustees (the “Trustees”) and a majority of the non-interested Trustees (the “Independent Trustees”), voting separately, approve the Funds’ Management Agreements (the “Advisory Agreements”) with the Investment Manager and Portfolio Management Agreements (the “Sub-Advisory Agreements”, and together with the Advisory Agreements, the “Agreements”) between the Investment Manager and the Sub-Adviser. The Trustees met in person on June 16-17, 2009 (the “contract review meeting”) for the specific purpose of considering whether to approve the continuation of the Advisory Agreements and the Sub-Advisory Agreements. The Independent Trustees were assisted in their evaluation of the Agreements by independent legal counsel, from whom they received separate legal advice and with whom they met separately from Fund management during the contract review meeting.
 
Based on their evaluation of factors that they deemed to be material, including those factors described below, the Board of Trustees, including a majority of the Independent Trustees, concluded that the continuation of the Funds’ Advisory Agreements and the Sub-Advisory Agreements, as amended, should be approved for a one-year period commencing July 1, 2009.
 
In connection with their deliberations regarding the continuation of the Agreements, the Trustees, including the Independent Trustees, considered such information and factors as they believed, in light of the legal advice furnished to them and their own business judgment, to be relevant. As described below, the Trustees considered the nature, quality, and extent of the various investment management, administrative and other services performed by the Investment Manager or the Sub-Adviser under the applicable Agreements.
 
In connection with their contract review meeting, the Trustees received and relied upon materials provided by the Investment Manager which included, among other items: (i) information provided by Lipper Inc. (“Lipper”) on the total return investment performance (based on net assets) of the Funds for various time periods and the investment performance of a group of funds with substantially similar investment classifications/objectives as the Funds identified by Lipper and the performance of applicable benchmark indices, (ii) information provided by Lipper on the Funds’ management fees and other expenses and the management fees and other expenses of comparable funds identified by Lipper, (iii) information regarding the investment performance and management fees of comparable portfolios of other clients of the Sub-Adviser, including institutional separate accounts and other clients, (iv) the profitability to the Investment Manager and the Sub-Adviser from their relationship with the Funds for the one year period ended March 31, 2009, (v) descriptions of various functions performed by the Investment Manager and the Sub-Adviser for the Funds, such as portfolio management, compliance monitoring and portfolio trading practices, and (vi) information regarding the overall organization of the Investment Manager and the Sub-Adviser, including information regarding senior management, portfolio managers and other personnel providing investment management, administrative and other services to the Funds.
 
The Trustees’ conclusions as to the continuation of the Agreements were based on a comprehensive consideration of all information provided to the Trustees and were not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations are described below, although individual Trustees may have evaluated the information presented differently from one another, attributing different weights to various factors.
 
As part of their review, the Trustees examined the Investment Manager’s and the Sub-Adviser’s abilities to provide high quality investment management and other services to the Funds. The Trustees considered the investment philosophy and research and decision-making processes of the Sub-Adviser; the experience of key advisory personnel of the Sub-Adviser responsible for portfolio management of the Funds; the ability of the Investment Manager and the Sub-Adviser to attract and retain capable personnel; the capability and integrity of the senior management and staff of the Investment Manager and the Sub-Adviser; and the level of skill required to manage the Funds. In addition, the Trustees reviewed the quality of the Investment Manager’s and the Sub-Adviser’s services with respect to regulatory compliance and compliance with the investment policies of the Funds; the nature and quality of certain administrative services the Investment Manager is responsible for providing to the Funds; and conditions that might affect the Investment Manager’s or the Sub-Adviser’s ability to provide high quality services to the Funds in the future under the Agreements, including each organization’s respective business reputation, financial condition and operational stability. Based on the foregoing, the Trustees concluded that the Sub-Adviser’s investment process, research capabilities and philosophy were well suited to each of the Funds given their respective investment objectives and policies, and that the Investment Manager and the Sub-Adviser would be able to continue to meet any reasonably foreseeable obligations under the Agreements.
 
Based on information provided by Lipper, the Trustees also reviewed each Fund’s total return investment performance as well as the performance of comparable funds identified by Lipper. In the course of their deliberations, the Trustees took
 
 
10.31.09   PIMCO Municipal Income Funds Semi-Annual Report 43

 

PIMCO Municipal Income Funds
Matters Relating to the Trustees’ Consideration of the Investment Management &
Portfolio Management Agreements   (unaudited) (continued)
into account information provided by the Investment Manager in connection with the contract review meeting, as well as during investment review meetings conducted with portfolio management personnel during the course of the year regarding each Fund’s performance.
 
In assessing the reasonableness of each Fund’s fees under the Agreements, the Trustees considered, among other information, each Fund’s management fee and the total expense ratio as a percentage of average net assets attributable to common and preferred shares and the management fee and total expense ratios of comparable funds identified by Lipper.
 
For each of the Funds, the Trustees specifically took note of how each Fund compared to its Lipper peers as to performance, management fee expenses and total expenses. The Trustees noted that the Investment Manager had provided a memorandum containing comparative information on the performance and expenses information of the Funds compared to their Lipper peer categories. The Trustees noted that while the Funds are not charged a separate administration fee, it was not clear whether the peer funds in the Lipper categories were charged such a fee by their investment managers.
 
Municipal Income
 
The Trustees noted that the expense group for Municipal Income consists of 12 funds. The Trustees also noted that the actual management fees were better than the median and the total actual expenses were worse than the median. The Trustees discussed that Municipal Income had bottom quintile performance for the one-, three- and five-year periods ended March 31, 2009, with over 50 funds in the peer group. The Trustees noted that for the three-month and year-to-date ended May 31, 2009, it was noted Municipal Income had top quintile performance.
 
California Municipal Income
 
The Trustees noted that the expense group for California Municipal Income consists of 14 funds. The Trustees also noted that the actual management fees and the total actual expenses were worse than the median. The Trustees discussed that California Municipal Income had bottom quintile performance for the one-, three- and five-year periods ended March 31, 2009, with over 20 funds in the peer group. The Trustees noted that for the three-month and year-to-date ended May 31, 2009, it was noted California Municipal Income had top quintile performance.
 
New York Municipal Income
 
The Trustees noted that the expense group for New York Municipal Income consists of 13 funds. The Trustees also noted that the actual management fees and the total actual expenses were worse than the median. The Trustees discussed that New York Municipal Income had bottom quintile performance for the one-, three- and five-year periods ended March 31, 2009, with 15 funds in the peer group. The Trustees noted that for the three-month and year-to-date ended May 31, 2009, it was noted New York Municipal Income had top quintile performance.
 
At the request of the Trustees, the Investment Manager and Sub-Adviser agreed to provide performance information related to the Funds on a monthly basis.
 
After reviewing these and related factors, the Trustees concluded, within the context of their overall conclusions regarding the Agreements, that they were satisfied with the Investment Manager’s and the Sub-Adviser’s responses and efforts to continue to improve the Funds’ investment performance. The Trustees agreed to reassess the services provided by the Investment Manager and Sub-Adviser under the Agreements in light of the Funds’ ongoing performance at each quarterly Board meeting.
 
The Trustees also considered the management fees charged by Sub-Adviser to other clients, including institutional separate accounts with investment strategies similar to those of the Funds. Regarding the institutional separate accounts, they noted that the management fees paid by the Funds are generally higher than the fees paid by these clients of the Sub-Adviser, but the Trustees were advised by the Sub-Adviser that the administrative burden for the Investment Manager and the Sub-Adviser with respect to the Funds are also relatively higher, due in part to the more extensive regulatory regime to which the Funds are subject in comparison to institutional separate accounts. The Trustees noted that the management fees paid by the Funds are generally higher than the fees paid by the open-end funds offered for comparison but were advised that there are additional portfolio management challenges in managing the Funds, such as the use of leverage and meeting a regular dividend.
 
 
44 PIMCO Municipal Income Funds Semi-Annual Report   10.31.09

 

PIMCO Municipal Income Funds
Matters Relating to the Trustees’ Consideration of the Investment Management &
Portfolio Management Agreements/Proxy Voting Policies & Procedures
 (unaudited) (continued)
 
The Trustees also took into account that the Funds have preferred shares outstanding, which increases the amount of fees received by the Investment Manager and the Sub-Adviser under the Agreements (because the fees are calculated based on either a Fund’s net assets or total managed assets, including assets attributable to preferred shares and other forms of leverage outstanding but not deducting any liabilities connected to the leverage). The Trustees took into account that the Investment Manager and the Sub-Adviser have a financial incentive for the Funds to continue to have preferred shares outstanding, which may create a conflict of interest between the Investment Manager and the Sub-Adviser, on the one hand, and a Fund’s common shareholders, on the other. In this regard, the Trustees considered information provided by the Investment Manager and the Sub-Adviser indicating that each Fund’s use of leverage through preferred shares continues to be appropriate and in the best interests of the respective Fund’s common shareholders.
 
Based on a profitability analysis provided by the Investment Manager, the Trustees also considered the profitability of the Investment Manager and the Sub-Adviser from their relationship with each Fund and determined that such profitability was drawn from last year and was not excessive.
 
The Trustees also took into account that, as closed-end investment companies, the Funds do not currently intend to raise additional assets, so the assets of the Funds will grow (if at all) only through the investment performance of each Fund. Therefore, the Trustees did not consider potential economies of scale as a principal factor in assessing the fee rates payable under the Agreements.
 
Additionally, the Trustees considered so-called “fall-out benefits” to the Investment Manager and the Sub-Adviser, such as reputational value derived from serving as Investment Manager and Sub-Adviser to the Funds.
 
After reviewing these and other factors described herein, the Trustees concluded with respect to each Fund, within the context of their overall conclusions regarding the Agreements and based on the information provided and related representations made by management, that the fees payable under the Agreements represent reasonable compensation in light of the nature and quality of the services being provided by the Investment Manager and Sub-Adviser to the Funds.
 
 
Proxy Voting Policies & Procedures:
 
A description of the policies and procedures that the Funds have adopted to determine how to vote proxies relating to portfolio securities and information about how the Funds voted proxies relating to portfolio securities held during the most recent twelve month period ended June 30 is available (i) without charge, upon request, by calling the Funds’ shareholder servicing agent at (800) 254-5197; (ii) on the Funds’ website at www.allianzinvestors.com/closedendfunds; and (iii) on the Securities and Exchange Commission’s website at www.sec.gov.
 
 
10.31.09   PIMCO Municipal Income Funds Semi-Annual Report 45

 

Board of Trustees                         Fund Officers
 
     
Hans W. Kertess
  Chairman of the Board of Trustees
Paul Belica
Robert E. Connor
James A. Jacobson
John C. Maney
William B. Ogden, IV
R. Peter Sullivan III 		  Brian S. Shlissel
  President & Chief Executive Officer
Lawrence G. Altadonna
  Treasurer, Principal Financial & Accounting Officer
Thomas J. Fuccillo
  Vice President, Secretary & Chief Legal Officer
Scott Whisten
  Assistant Treasurer
Richard J. Cochran
  Assistant Treasurer
Youse E. Guia
  Chief Compliance Officer
Kathleen A. Chapman
  Assistant Secretary
Lagan Srivastava
  Assistant Secretary
 
Investment Manager
 
Allianz Global Investors Fund Management LLC
1345 Avenue of the Americas
New York, NY 10105
 
Sub-Adviser
 
Pacific Investment Management Company LLC
840 Newport Center Drive
Newport Beach, CA 92660
 
Custodian & Accounting Agent
 
State Street Bank & Trust Co.
225 Franklin Street
Boston, MA 02110
 
Transfer Agent, Dividend Paying Agent and Registrar
 
PNC Global Investment Servicing
P.O. Box 43027
Providence, RI 02940-3027
 
Independent Registered Public Accounting Firm
 
PricewaterhouseCoopers LLP
300 Madison Avenue
New York, NY 10017
 
Legal Counsel
 
Ropes & Gray LLP
One International Place
Boston, MA 02110-2624
 
This report, including the financial information herein, is transmitted to the shareholders of PIMCO Municipal Income Fund, PIMCO California Municipal Income Fund and PIMCO New York Income Fund for their information. It is not a prospectus, circular or representation intended for use in the purchase of shares of the Funds or any securities mentioned in this report.
 
The financial information included herein is taken from the records of the Funds without examination by an independent registered public accounting firm, who did not express an opinion herein.
 
Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940, as amended, that from time to time the Funds may purchase shares of their common stock in the open market.
 
The Funds file their complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of their fiscal year on Form N-Q. The Funds’ Form N-Q’s are available on the SEC’s website at www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. The information on Form N-Q is also available on the Funds’ website at www.allianzinvestors.com/closedendfunds.
 
On January 9, 2009, the Funds submitted CEO annual certifications to the New York Stock Exchange (“NYSE”) on which the Funds’ principal executive officer certified that he was not aware, as of the date, of any violation by the Funds of the NYSE’s Corporate Governance listing standards. In addition, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and related SEC rules, the Funds’ principal executive and principal financial officer made quarterly certifications, included in filings with the SEC on Forms N-CSR and N-Q relating to, among other things, the Funds’ disclosure controls and procedures and internal control over financial reporting, as applicable.
 
Information on the Funds is available at www.allianzinvestors.com/closedendfunds or by calling the Funds’ shareholder servicing agent at (800) 254-5197.

 

(ALLIANG LOGO)

 

ITEM 2. CODE OF ETHICS
Not required in this filing.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
Not required in this filing.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not required in this filing.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANT
Not required in this filing.
ITEM 6. SCHEDULE OF INVESTMENTS
Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not required in this filing.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not required in this filing.
ITEM 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Companies
None
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There have been no material changes to the procedures by which shareholders may recommend nominees to the Fund’s Board of Trustees since the Fund last provided disclosure in response to this item.
ITEM 11. CONTROLS AND PROCEDURES
(a) The registrant’s President & Chief Executive Officer and Treasurer, Principal Financial & Accounting Officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR 270.30a-3(c))), as amended are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.
(b) There were no significant changes over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d))) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants control over financial reporting.
ITEM 12. EXHIBITS
(a) Exhibit 99.302 Cert. — Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(b) Exhibit 99.906 Cert. — Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

Signature
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) PIMCO California Municipal Income Fund
     
By:
  /s/ Brian S. Shlissel
 
   
 
  Brian S. Shlissel
 
  President & Chief Executive Officer
Date: January 6, 2010
     
By:
  /s/ Lawrence G. Altadonna
 
   
 
  Lawrence G. Altadonna
 
  Treasurer, Principal Financial & Accounting Officer
Date: January 6, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
     
By:
  /s/ Brian S. Shlissel
 
   
 
  Brian S. Shlissel
 
  President & Chief Executive Officer
Date: January 6, 2010
     
By:
  /s/ Lawrence G. Altadonna
 
   
 
  Lawrence G. Altadonna
 
  Treasurer, Principal Financial & Accounting Officer
Date: January 6, 2010