OCTOBER 31, 2001
SEMI-ANNUAL REPORT
[NYSE LOGO] CLOSED-END NYSE-TRADED MUNICIPAL BOND FUNDS
PIMCO Municipal Income Fund (PMF)
PIMCO California Municipal Income Fund (PCQ)
PIMCO New York Municipal Income Fund (PNF)
PIMCO FUNDS
TABLE OF CONTENTS
President's Letter 3
Fund Summaries 4-9
Schedules of Investments 10-17
SCHEDULE OF
FUND FUND SUMMARY INVESTMENTS
PIMCO Municipal Income Fund 4 10
PIMCO California Municipal Income Fund 6 14
PIMCO New York Municipal Income Fund 8 16
Statements of Assets and Liabilities 18
Statements of Operations 19
Statements of Changes in Net Assets 20
Notes to Financial Statements 21-23
Financial Highlights 24
This report, including the financial information herein, is transmitted to the
shareholders of PIMCO Municipal Income Fund, PIMCO California Municipal Fund and
PIMCO New York Municipal Income Fund for their information. It is not a
prospectus, circular or representation intended for use in the purchase of
shares of any of the Funds or any securities mentioned in this report.
In accordance with Section 23(c) of the Investment Company Act of 1940, each
Fund hereby gives notice that it may from time to time repurchase its shares in
the open market at the option of the Board of Trustees and on such terms as the
Trustees shall determine.
[PICTURE]
Dear Shareholder:
PIMCO Funds is pleased to provide you with the initial semi-annual report for
PIMCO Municipal Income Fund, PIMCO California Municipal Income Fund and PIMCO
New York Municipal Income Fund (the "Municipal Income Funds"), for the period
June 29, 2001 (commencement of operations) through October 31, 2001.
I am pleased to report that each of the Municipal Income Funds has consistently
met its respective objectives since they were launched, delivering a steady
stream of current, tax-exempt income. In fact, at October 31, 2001, all three
Funds were yielding approximately 6%. Of course, the Funds' use of
leverage--which entails additional risks, including enhanced interest rate
risk--contributed to these strong results. Bear in mind that leverage can also
amplify negative performance during adverse market conditions.
We believe that the launch of the Municipal Income Funds came at an opportune
time in the municipal bond market. With interest rates currently near 40-year
lows, PIMCO believes that municipal securities offer some of the most attractive
tax-adjusted values in the fixed income marketplace today. In addition, because
each Fund focuses primarily on investment-grade quality municipal bonds, we
believe these Funds provide a prudent investment option for the long-term
taxable investor--especially when part of a well-diversified portfolio.
PIMCO Funds is committed to delivering the highest standard of service to
shareholders. For ongoing information about your investment, please contact your
financial advisor, or call our shareholder services area at 1-800-331-1710. You
can also access a wide range of information and resources through our Web
site--www.pimcofunds.com.
Thank you for the trust you have placed in PIMCO Funds. We look forward to
working with you and your financial advisor for many years to come.
Sincerely,
/s/ Stephen Treadway
Stephen Treadway
President
November 30, 2001
The opinions expressed in this letter are those of the author and no forecasts
can be guaranteed.
10.31.01 | PIMCO Municipal Income Funds Semi-Annual Report 3
A NYSE TRADED MUNICIPAL BOND FUND
PIMCO MUNICIPAL INCOME FUND
SYMBOL:
PMF
INVESTMENT OBJECTIVE:
PIMCO Municipal Income Fund seeks to provide income exempt from federal income
tax.
MAIN INVESTMENTS:
Municipal fixed-income
securities the interest from which is exempt from federal income taxes.
FUND INCEPTION DATE:
June 29, 2001
NET ASSETS:
$552.5 million (as of 10/31/01)
PORTFOLIO MANAGER:
Mark McCray
[PICTURE]
Mark McCray
Fund Manager
Mr. McCray is responsible for municipal bond portfolios at PIMCO. Previously
Co-Head of Municipal Bond Trading at Goldman Sachs & Co., he has over 10
years of investment experience.
"In the current market environment, municipal bonds continue to make sense for
investors given their attractive yields and strong credit profile."
The Lehman General Municipal Bond Index is an unmanaged index representative of
the tax-exempt bond market. The index is made up of all investment grade
municipal bonds issued after 12/31/90 having a remaining maturity of at least
one-year. It is not possible to invest directly in the index.
The opinions expressed above are those of the Fund's portfolio manager and are
current only through October 31, 2001. They should not be considered investment
advice. The portfolio manager's views are subject to change at any time based on
market and other conditions, and no forecasts are guaranteed.
PIMCO Municipal Income Fund began trading on the New York Stock Exchange on June
27, 2001 and calculated its first net asset value ("NAV") on June 29, 2001.
Since the Fund's inception through October 31, 2001, the Fund's common shares
provided a total return based on NAV of 5.25%, compared to 3.88% for the Lehman
General Municipal Bond Index over the same time period. (For share price
information, see opposite page.)
MILITARY UNCERTAINTY AND HISTORIC TREASURY ANNOUNCEMENT DRIVE BOND RETURNS.
The U.S. economy slowed significantly over the four months ended October 21,
2001 as corporate profits continued to deteriorate, capital investment dried up,
and unemployment surged. The attacks of September 11 magnified these trends, and
caused further risk aversion among investors. In addition, the economy faced
deeper economic uncertainty as military action began in Afghanistan, the U.S.
faced further security threats and the Treasury Department announced that it
would no longer issue 30-year debt. High quality fixed-income assets performed
well during the period, as investors sought safety amid the turmoil. However,
municipal bonds underperformed taxable debt during the period due to increased
investor preference for high quality, very liquid Treasury and agency
securities.
HIGH QUALITY BIAS AND DEFENSIVE FOCUS CONTRIBUTED TO PERFORMANCE.
The Fund's focus on high-quality municipal bonds enhanced returns as it enabled
it to withstand the financial shock that occurred in the wake of the September
11 attacks. The Fund's exposure to the healthcare industry was positive as those
bonds performed well due to their strong cash flow and defensive
characteristics. Extended duration also helped returns as municipal yields fell
across all maturities. The Fund's use of leverage through the issuance of
preferred shares increased portfolio yield--the municipal yield curve steepened
in response to the Fed's easing campaign. Transportation-related securities
negatively impacted performance, especially airport bonds, as revenues and
prospective debt servicing coverages were adversely affected by the attack. The
negative impact on the Fund was limited by holdings of insured issues and
minimal overall exposure.
SOME MORE PAIN AHEAD, BUT THEN A POSSIBLE RECOVERY.
After assessing the impact of the September 11 attacks, our secular outlook for
weaker global growth remains intact. In the short term, we expect that the U.S.
economy will initially experience further contraction, but then recover with the
benefit of fiscal and monetary stimulus. On the down side, heightened political
and economic uncertainty will reinforce trends already in existence prior to the
attacks. We believe that municipal bonds should continue to provide strong
relative values even under recessionary conditions as they offer high credit
quality and attractive tax-adjusted yields.
4 10.31.01 | PIMCO Municipal Income Funds Semi-Annual Report
PIMCO MUNICIPAL INCOME FUND PERFORMANCE & STATISTICS
All information as of October 31, 2001
CUMULATIVE TOTAL RETURN On Common Share Price On NAV
Since Commencement of Operations (6/29/01) (0.12)% 5.25%
CREDIT QUALITY (S&P Ratings)*
AAA 47%
-----------------------------------
AA 21%
-----------------------------------
A 22%
-----------------------------------
BBB 4%
-----------------------------------
BB 5%
-----------------------------------
BB 1%
-----------------------------------
Weighted Average Quality AA
PORTFOLIO STATISTICS*
Share Price $14.75
---------------------------------------------
Net Asset Value $14.85
---------------------------------------------
Market Yield(1) 6.26%
---------------------------------------------
Taxable Equivalent Yield(2) 10.28%
---------------------------------------------
(Federal Income Tax Rate)
Fund Net Assets (millions) $552.5
---------------------------------------------
Average Effective Maturity (years) 17.42
---------------------------------------------
Average Duration(3) 12.41
PORTFOLIO
COMPOSITION* (as a % of net assets)
Healthcare Revenue 27%
-------------------------------------------
Transportation Revenue 17%
-------------------------------------------
Local General Obligations 15%
-------------------------------------------
Other Revenue 8%
-------------------------------------------
State General Obligations 7%
TOP FIVE STATES
(as a % of total investments)
Illinois 15.6%
-------------------------------------------
Texas 15.2%
-------------------------------------------
Pennsylvania 8.5%
-------------------------------------------
Michigan 7.5%
-------------------------------------------
South Carolina 4.8%
COMMON SHARE PRICE PERFORMANCE
[LINE CHART]
2001 MONTHLY DIVIDENDS PER
COMMON SHARE
[BAR GRAPH]
Past performance is no guarantee of future results.
(1) Market yield is the annualized dividend yield on the market price for the
last day of the period.
(2) Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Fund on an after-tax basis. It is
calculated using the current market yield and a federal tax rate of 39.1%.
(3) Duration is a measure of a portfolio's NAV volatility in reaction to
interest rate movements.
* The Fund's portfolio is actively managed, and its current and future credit
quality breakdown, portfolio statistics and portfolio composition are
likely to vary from those listed above as of the date of this report.
INVESTMENT PROCESS
--------------------------------------------------------------------------------
The top-down investment process begins with our annual secular forum at which
PIMCO develops a 3-5 year outlook for the global economy and interest rates.
This helps set the basic portfolio parameters, including duration, yield-curve
positioning, sector weightings and credit quality. Our municipal bond team seeks
to add value in a number of ways. They believe that investments should be made
from the point of view of maximizing after-tax total return as opposed to simply
reaching for maximum yield. So the portfolio is scrutinized using a process that
models the potential changes in yield and price as the underlying variables of
the marketplace change. Yield-to-worst measures are carefully examined, as are
the impact of a shifting municipal yield curve and the influence of yield
volatility and credit shifts on the portfolio.
10.31.01 | PIMCO Municipal Income Funds Semi-Annual Report 5
A NYSE TRADED MUNICIPAL BOND FUND
PIMCO CALIFORNIA MUNICIPAL INCOME FUND
SYMBOL:
PCQ
INVESTMENT OBJECTIVE:
PIMCO California Municipal Income Fund seeks to provide current income exempt
from federal and California income tax.
MAIN INVESTMENTS:
Municipal fixed-income
securities the interest from which is exempt from federal and California income
taxes.
FUND INCEPTION DATE:
June 29, 2001
NET ASSETS:
$410.0 million (as of 10/31/01)
PORTFOLIO MANAGER:
Mark McCray
[PICTURE]
Mark McCray
Fund Manager
Mr. McCray is responsible for municipal bond portfolios at PIMCO. Previously
Co-Head of Municipal Bond Trading at Goldman Sachs & Co., he has over 10
years of investment experience.
"California municipal bonds are an attractive alternative given the current
volatility affecting the financial markets."
Mark McCray
The Lehman Insured California Municipal Debt Index is an unmanaged index
comprised of insured California Municipal Bond Issues. It is not possible to
invest directly in the index.
The opinions expressed above are those of the Fund's portfolio manager and are
current only through October 31, 2001. They should not be considered investment
advice. The portfolio manager's views are subject to change at any time based on
market and other conditions, and no forecasts are guaranteed.
PIMCO California Municipal Income Fund began trading on the New York Stock
Exchange on June 27, 2001 and calculated its first net asset value ("NAV") on
June 29, 2001. Since the Fund's inception through October 31, 2001, the Fund's
common shares provided a total return based on NAV of 5.17%, compared to 5.09%
for the Lehman Insured California Municipal Debt Index over the same time
period. (For share price information, see opposite page.)
POLITICAL AND ECONOMIC UNCERTAINTY DRAG DOWN THE ECONOMY.
The U.S economy slowed significantly over the four months ended October 31,
2001, despite a supportive Federal Reserve, which lowered short-term rates by
four percentage points since the beginning of the 2001 calendar year. Eroding
profits, mounting layoffs and lower consumer confidence all contributed to the
weakening of the economy and were exacerbated by the terrorist attacks of
September 11. In addition, the economy faced deeper economic uncertainty as
military action began in Afghanistan, the U.S. faced further security threats
and the Treasury Department announced that it would no longer issue 30-year
debt. High quality assets outperformed as investors sought safety amid the
turmoil. While municipal debt underperformed taxable debt, the California
municipal market outperformed the national municipal market amid modest new
issuance and stabilized energy costs.
REVENUE BONDS PROVIDE ANCHOR AMID VOLATILITY
The Fund's exposure to revenue bonds enhanced returns as the Fund benefited from
the strong cash flow generated by these issues. Extended duration was also
positive for returns as California municipal yields fell across all maturities.
Due to its high quality focus, the Fund was also well positioned to withstand
the effects of September 11 on the financial markets. While transportation
holdings, especially airport bonds, were negative for performance, the Fund
benefited from limited exposure to these issues. The Fund's use of leverage
through the issuance of preferred shares increased portfolio yield--the
California municipal yield curve steepened in response to the Fed's easing
campaign.
ECONOMY LIKELY TO WEAKEN IN THE SHORT TERM, BUT IS POISED FOR A REBOUND.
While our secular outlook for weaker global growth remains intact, we do
anticipate that sometime in 2002 economic growth could rebound sharply due to
the convergence of aggressive monetary easing and increased fiscal stimulus. In
the near term, however, the risks remain weighted towards continued economic
weakness. As a result, we intend to maintain our focus on high-quality issues.
We believe that long-term California municipal bonds offer attractive
tax-adjusted yields relative to Treasury and agency issues, despite the higher
probability of a state recession after the September 11 attacks.
6 10.31.01 | PIMCO Municipal Income Funds Semi-Annual Report
PIMCO CALIFORNIA MUNICIPAL INCOME FUND PERFORMANCE & STATISTICS
All information as of October 31, 2001
CUMULATIVE TOTAL RETURN On Common Share Price On NAV
Since Commencement of Operations (6/29/01) 3.46% 5.17%
CREDIT QUALITY (S&P Ratings)*
AAA 47%
-----------------------------------
AA 14%
-----------------------------------
A 9%
-----------------------------------
BBB 13%
-----------------------------------
BB 17%
-----------------------------------
Weighted Average Quality AA-
PORTFOLIO STATISTICS*
Share Price $15.28
-------------------------------------------------
Net Asset Value $14.84
-------------------------------------------------
Market Yield(1) 5.89%
-------------------------------------------------
Taxable Equivalent Yield(2) 10.66%
-------------------------------------------------
(Combined Federal & State Income Tax Rate)
Net Assets (millions) $410.0
-------------------------------------------------
Average Effective Maturity (years) 19.34
-------------------------------------------------
Average Duration(3) 13.06
PORTFOLIO
COMPOSITION* (as a % of net assets)
Other Revenue 22%
-------------------------------------------
Healthcare Revenue 21%
-------------------------------------------
Local General Obligations 16%
-------------------------------------------
Water & Sewer Revenue 14%
-------------------------------------------
State General Obligations 11%
COMMON SHARE PRICE PERFORMANCE
[LINE CHART]
2001 MONTHLY DIVIDENDS PER
COMMON SHARE
[BAR GRAPH]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
(1) Market yield is the annualized dividend yield on the market price for the
last day of the period.
(2) Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Fund on an after-tax basis. It is
calculated using the current market yield and a combined federal and state
tax rate of 44.76%.
(3) Duration is a measure of a portfolio's NAV volatility in reaction to
interest rate movements.
* The Fund's portfolio is actively managed, and its current and future credit
quality breakdown, portfolio statistics and portfolio composition are
likely to vary from those listed above as of the date of this report.
INVESTMENT PROCESS
--------------------------------------------------------------------------------
The top-down investment process begins with our annual secular forum at which
PIMCO develops a 3-5 year outlook for the global economy and interest rates.
This helps set the basic portfolio parameters, including duration, yield-curve
positioning, sector weightings and credit quality. Our municipal bond team seeks
to add value in a number of ways. They believe that investments should be made
from the point of view of maximizing after-tax total return as opposed to simply
reaching for maximum yield. So the portfolio is scrutinized using a process that
models the potential changes in yield and price as the underlying variables of
the marketplace change. Yield-to-worst measures are carefully examined, as are
the impact of a shifting municipal yield curve and the influence of yield
volatility and credit shifts on the portfolio.
10.31.01 | PIMCO Municipal Income Funds Semi-Annual Report 7
A NYSE TRADED MUNICIPAL BOND FUND
PIMCO NEW YORK MUNICIPAL INCOME FUND
SYMBOL:
PNF
OBJECTIVE:
PIMCO New York Municipal Income Fund seeks to provide current income exempt from
federal, New York and New York City income tax.
MAIN INVESTMENT:
Municipal fixed-income securities the interest from which is exempt from
federal, New York State and New York City taxes.
FUND INCEPTION DATE:
June 29, 2001
NET ASSETS:
$166.5 million (as of 10/31/01)
PORTFOLIO MANAGER:
Mark McCray
[PICTURE]
Mark McCray
Fund Manager
Mr. McCray is responsible for municipal bond portfolios at PIMCO. Previously
Co-Head of Municipal Bond Trading at Goldman Sachs & Co., he has over 10
years of investment experience.
"While the outlook for New York remains uncertain, municipal bonds offer refuge
amid the turbulence."
Mark McCray
The Lehman Insured NY Municipal Debt Index is an unmanaged index comprised of
insured New York Municipal Bond issues. It is not possible to invest directly in
the index.
The opinions expressed above are those of the Fund's portfolio manager and are
current only through October 31, 2001. They should not be considered investment
advice. The portfolio manager's views are subject to change at any time based on
market and other conditions, and no forecasts are guaranteed.
PIMCO New York Municipal Income Fund began trading on the New York Stock
Exchange on June 27, 2001 and calculated its first net asset value ("NAV") on
June 29, 2001. Since the Fund's inception through October 31, 2001, the Fund's
common shares provided a total return based on NAV of 2.58%, compared to 3.69%
for the Lehman Insured New York Municipal Debt Index over the same time period.
(For share price information, see opposite page.)
CORPORATE SLOWDOWN AND ATTACKS CONTRIBUTE TO AILING ECONOMY.
The U.S economy continued to slow drastically over the four months ended October
31, 2001 as corporate profits deteriorated, layoffs mounted and consumer
confidence weakened. The September 11 attacks amplified these trends and caused
further risk aversion among investors. In addition, the economy faced deeper
economic uncertainty as military action began in Afghanistan, the U.S. faced
further security threats and the Treasury Department announced that it would no
longer issue 30-year debt. High quality assets outperformed as investors sought
safety amid the turmoil. Municipal debt underperformed taxable debt, and the New
York municipal market underperformed the national municipal market due to weaker
financial conditions in the state.
HIGH QUALITY FOCUS AND REVENUE BONDS BOLSTER PORTFOLIO.
The Fund's revenue bond holdings were positive for performance as these bonds
generated strong cash flow in an uncertain environment. The Fund's extended
duration also contributed to returns as New York municipal yields fell across
all maturities. The Fund was also well positioned to withstand the effects of
the September 11 attacks on the financial markets due to its high quality focus.
The Fund's use of leverage through the issuance of preferred shares increased
portfolio yield--the New York municipal yield curve steepened in response to the
Fed's easing campaign. Transportation issues, especially airport bonds,
experienced negative price returns amid fears that revenues and debt servicing
would be impacted by the attacks, but their impact on the Fund was lessened due
to limited exposure.
FURTHER SLOWING AHEAD, BUT HELP IS ON THE WAY.
While our secular outlook for weaker global growth remains intact, we do
anticipate that sometime in 2002 economic growth could rebound sharply due to
the convergence of aggressive monetary easing and increased fiscal stimulus. In
the near term, however, the risks remain weighted towards continued economic
weakness. As a result, we intend to maintain our focus on high-quality issues.
We believe that long-term New York municipal bonds offer attractive tax-adjusted
yields relative to Treasuries and agency issues, despite the higher probability
of a state recession after the attacks.
8 10.31.01 | PIMCO Municipal Income Funds Semi-Annual Report
PIMCO NEW YORK MUNICIPAL INCOME FUND PERFORMANCE & STATISTICS
All information as of October 31, 2001
CUMULATIVE TOTAL RETURN On Common Share Price On NAV
Since Commencement of Operations (6/29/01) (0.91)% 2.58%
CREDIT QUALITY (S&P Ratings)*
AAA 48%
-----------------------------------
AA 19%
-----------------------------------
A 25%
-----------------------------------
BBB 7%
-----------------------------------
BB 1%
-----------------------------------
Weighted Average Quality AA
PORTFOLIO STATISTICS*
Share Price $14.63
------------------------------------------------
Net Asset Value $14.47
------------------------------------------------
Market Yield(1) 6.15%
------------------------------------------------
Taxable Equivalent Yield(2) 10.84%
------------------------------------------------
(Combined Federal & State Income Tax Rate)
Net Assets (millions) $166.5
------------------------------------------------
Average Effective Maturity (years) 21.47
------------------------------------------------
Average Duration(3) 12.58
PORTFOLIO
COMPOSITION* (as a % of net assets)
Higher Education Revenue 43%
-----------------------------------
Water & Sewer Revenue 15%
-----------------------------------
Other Revenue 11%
-----------------------------------
Transportation Revenue 9%
-----------------------------------
State General Obligations 8%
COMMON SHARE PRICE PERFORMANCE
[LINE CHART]
2001 MONTHLY DIVIDENDS PER
COMMON SHARE
[BAR GRAPH]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
(1) Market yield is the annualized dividend yield on the market price for the
last day of the period.
(2) Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Fund on an after-tax basis. It is
calculated using the current market yield and a combined federal and state
tax rate of 43.27%.
(3) Duration is a measure of a portfolio's NAV volatility in reaction to
interest rate movements.
* The Fund's portfolio is actively managed, and its current and future credit
quality breakdown, portfolio statistics and portfolio composition are
likely to vary from those listed above as of the date of this report.
INVESTMENT PROCESS
--------------------------------------------------------------------------------
The top-down investment process begins with our annual secular forum at which
PIMCO develops a 3-5 year outlook for the global economy and interest rates.
This helps set the basic portfolio parameters, including duration, yield-curve
positioning, sector weightings and credit quality. Our municipal bond team seeks
to add value in a number of ways. They believe that investments should be made
from the point of view of maximizing after-tax total return as opposed to simply
reaching for maximum yield. So the portfolio is scrutinized using a process that
models the potential changes in yield and price as the underlying variables of
the marketplace change. Yield-to-worst measures are carefully examined, as are
the impact of a shifting municipal yield curve and the influence of yield
volatility and credit shifts on the portfolio.
10.31.01 | PIMCO Municipal Income Funds Semi-Annual Report 9
SCHEDULE OF INVESTMENTS
PIMCO MUNICIPAL INCOME FUND
October 31, 2001 (unaudited)
Principal
Amount Credit Rating
(000) (Moody's/S&P) Value*
------------------------------------------------------------------------------------------
MUNICIPAL BONDS & NOTES -- 92.5%
ALABAMA -- 2.9%
$ 2,500 Birmingham Baptist Med. Ctr.,
Baptist Health Syst., Ser. A,
5.875%, 11/15/24 A3/NR $ 2,542,575
8,000 Huntsville Health Care Auth.,
Ser. A, 5.75%, 6/1/31 A2/NR 8,228,240
5,000 Jefferson Cnty. Sewer Rev.,
Ser. A, 5.375%, 2/1/36 (FGIC) Aaa/AAA 5,130,750
------------
15,901,565
============
ALASKA -- 1.1%
6,000 Northern Tobacco Securitization
Corp., 5.50%, 6/1/29 Aa3/A+ 6,012,960
============
ARIZONA -- 0.3%
2,000 Apache Cnty. Pollution Control
Rev., Tucson Elec. Power Co.,
5.875%, 3/1/33 Ba3/B+ 1,878,500
============
COLORADO -- 2.4%
3,000 Denver Health & Hosp. Auth.
Healthcare Rev., Ser. A,
5.375%-6.00%,
12/1/23-12/1/28 Baa2/BBB+ 2,879,690
Northwest Pkwy. Pub. Hwy. Auth.,
5,000 5.25%, 6/15/41, Ser. A (FSA) Aaa/AAA 5,056,100
4,965 7.125%, 6/15/41, Ser. D Ba1/BB+ 5,096,672
------------
13,032,462
============
CONNECTICUT -- 0.2%
1,000 State Dev. Auth. Pollution Control
Rev., Conn. Light & Power,
5.85%, 9/1/28 Baa2/BBB 1,020,980
============
DISTRICT OF COLUMBIA -- 1.4%
6,970 Tobacco Settlement Fin. Corp.,
6.25%, 5/15/24 A1/A 7,470,167
============
FLORIDA -- 1.7%
9,000 Highlands Cnty. Health Fac. Auth.
Rev., Adventist Health Syst.,
Ser. A, 6.00%, 11/15/31 Baa1/A- 9,253,170
============
GEORGIA -- 2.0%
10,000 Muni. Elec. Auth. Power Rev.,
Ser. Z, 5.50%, 1/1/20 (MBIA) Aaa/AAA 11,003,900
============
ILLINOIS -- 14.1%
Chicago GO, Ser. A,
5,645 5.00%, 1/1/41 (MBIA) Aaa/AAA 5,530,576
9,080 5.375%, 1/1/34 (FGIC) Aaa/AAA 9,311,449
12,565 Chicago Midway Airport Rev.,
Ser. B, 5.00%, 1/1/35 (MBIA) Aaa/AAA 12,279,523
2,000 Chicago Water Rev., 5.25%,
11/1/27 (FGIC) Aaa/AAA 2,022,920
6,260 Dev. Fin. Auth. Hosp. Rev.,
Adventist Health Syst.,
5.50%-5.65%,
11/15/24-11/15/29 Baa1/A- 6,025,898
Principal
Amount Credit Rating
(000) (Moody's/S&P) Value*
------------------------------------------------------------------------------------------
$ 1,115 Educational Fac. Auth. Rev.,
Midwestern Univ., Ser. B,
5.50%, 5/15/18 NR/BBB+ $ 1,095,967
6,900 Educational Fac. Auth. Rev.,
7.85%, 7/1/38++ NR/AA 6,732,468
5,425 Health Fac. Auth. Rev., Silver
Cross Hosp., 5.50%, 8/15/25 NR/A- 5,229,429
3,000 Health Fac. Auth. Rev.,
Decatur Memorial Hosp.,
5.75%, 10/1/24 A2/A 3,047,400
1,215 Northern Univ. Rev., Auxilary Fac.
Syst., 5.00%, 4/1/16 (FGIC) Aaa/NR 1,242,434
7,345 Regional Transportation Auth.,
Ser. B, 5.50%, 6/1/23 (FGIC) Aaa/AAA 8,031,023
State GO,
2,400 5.125%, 5/1/19 (FSA) Aaa/AAA 2,438,976
2,500 5.375%, 8/1/14 (MBIA) Aaa/AAA 2,697,550
3,000 State Sales Tax Rev.,
5.125%, 6/15/20 Aa2/AAA 3,037,800
5,000 Univ. Rev., Auxiliary Fac. Syst.,
Ser. B, 5.25%, 4/1/32 (FGIC) Aaa/AAA 5,060,150
4,000 Winnebago Boone ETC Cntys.,
Rock Valley Community College,
5.30%, 10/1/18 (FGIC) Aaa/NR 4,128,280
------------
77,911,843
============
INDIANA -- 1.9%
8,125 Indianapolis Gas Util. Rev.,
Distribution Syst., Ser. A,
5.00%, 8/15/24 (AMBAC) Aaa/AAA 8,004,831
2,725 Richland Beanblossom School
Bldg. Corp., 5.00%, 1/15/22
(FGIC) Aaa/AAA 2,700,857
------------
10,705,688
============
KANSAS -- 3.7%
Wichita Hosp. Rev.,
5,000 5.625%, 11/15/31, Ser. III NR/A+ 5,086,700
14,370 6.25%, 11/15/24, Ser. XI NR/A+ 15,367,709
------------
20,454,409
============
LOUISIANA -- 2.0%
10,000 Local Gov't Environmental Fac.,
Community Dev. Auth. Rev.,
6.55%, 9/1/25 NR/A 11,186,700
============
MASSACHUSETTS -- 4.7%
15,240 Massachusetts Bay Trans. Auth.,
Ser. A, 4.50%, 3/1/26 (MBIA) Aaa/AAA 13,952,677
5,000 State Health & Educational Fac.
Auth. Rev., 7.46%, 7/1/32 NR/NR 5,278,500
7,000 State Turnpike Auth., Met. Hwy.
Syst. Rev., Ser. A, 4.75%,
1/1/34 (AMBAC) Aaa/AAA 6,551,370
------------
25,782,547
============
10 PIMCO Municipal Income Funds Semi-Annual Report 10.31.2001
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
SCHEDULE OF INVESTMENTS (CONT.)
PIMCO MUNICIPAL INCOME FUND
October 31, 2001 (unaudited)
Principal
Amount Credit Rating
(000) (Moody's/S&P) Value*
----------------------------------------------------------------------------------------
MICHIGAN -- 7.4%
$ 2,000 Detroit GO, Ser. A-1, 5.375%,
4/1/15-4/1/17 (MBIA) Aaa/AAA $ 2,117,430
5,650 Forest Hills Pub. School GO,
5.25%, 5/1/18 Aa2/NR 5,845,660
2,000 Muni. Board Auth. Rev.,
Clean Water Revolving Fund,
5.25%, 10/1/19 Aaa/AAA 2,060,720
14,300 Royal Oak Hosp. Fin. Auth.,
William Beaumont Hosp.,
Ser. M, 5.25%,
11/15/31-11/15/35 (MBIA) Aaa/AAA 14,401,205
5,000 State Health Fac. Auth. Rev.,
Detroit Med. Ctr.,
6.25%, 8/15/13 Baa3/BBB- 5,041,250
3,000 State Strategic Oblig. Rev.,
Detroit Edison Co.,
5.45%, 9/1/29 A3/A- 3,033,900
3,000 Taylor Tax lncrement Fin. Auth.,
5.375%, 5/1/17 (FSA) Aaa/AAA 3,139,680
6,270 Wayne Charter Cnty. Airport Fac.
Rev., Northwest Airlines, Inc.,
6.75%, 12/1/15 NR/NR 5,065,846
------------
40,705,691
============
MINNESOTA -- 1.2%
3,395 Anoka-Hennepin Indpt., School
Dist. No. 11, GO, 5.00%,
2/1/17 Aa1/AA+ 3,467,891
3,000 Agricultural & Econ. Dev. Board
Rev., Health Care Syst., Ser. A,
6.375%, 11/15/29 A2/A 3,200,340
------------
6,668,231
============
MISSOURI -- 1.8%
2,500 Interstate 470 & 350 Trans. Dev.,
Motranson Rev., 6.35%, 5/1/22 NR/NR 2,524,075
7,410 State Health & Educational Fac.
Rev., Washington Univ., Ser. A,
5.125%, 6/15/41 Aa1/AA+ 7,363,465
------------
9,887,540
============
NEVADA -- 1.8%
3,000 Clark Cnty. Airport Rev., Ser. B,
5.25%, 7/1/34 (FGIC) Aaa/AAA 3,028,770
6,250 Truckee Meadows Water Auth. Rev.,
Ser. A, 5.25%, 7/1/34 (FSA) Aaa/AAA 6,348,062
845 Washoe Cnty. Improvement Dist.
No. 23, 6.50%, 11/1/17 NR/NR 866,404
------------
10,243,236
============
NEW HAMPSHIRE -- 0.5%
3,000 State Bus. Fin. Auth. Pollution
Control Rev., Conn. Light &
Power Co., 5.85%, 12/1/22 Baa3/BBB 3,028,740
============
Principal
Amount Credit Rating
(000) (Moody's/S&P) Value*
----------------------------------------------------------------------------------------
NEW JERSEY -- 0.8%
$ 2,105 Camden Cnty. Improvement Auth.
Rev., Cooper, Health Syst.,
5.60%-6.00% 2/15/07-2/15/27 B1/NR $ 1,744,117
3,000 Economic Dev. Auth. Rev., Arbor
Glen, Ser. A, 5.875%, 5/15/16 NR/NR 2,650,140
------------
4,394,257
============
NEW MEXICO -- 0.5%
2,500 Farmington Pollution Control Rev.,
Public Service Co.,
5.80%, 4/1/22 Baa3/NR 2,467,500
250 State Hosp. Equip., Presbyterian
Healthcare, Ser. A,
5.50%, 8/1/30 A1/A 252,810
------------
2,720,310
============
NEW YORK -- 1.7%
6,500 City Muni. Water Auth. Rev.,
8.08%, 6/15/26++ NR/AA 6,336,070
2,875 Westchester Cnty. Health Care
Corp. Rev., Ser. A,
5.875%, 11/1/25 A3/A 3,004,663
------------
9,340,733
============
OHIO -- 3.6%
5,065 Lorain Cnty. Hosp. Rev.,
Catholic Healthcare Partners,
5.625%-5.75%, 10/1/17-10/1/18 A1/AA- 5,284,155
12,515 State School Facs., GO, Ser. B,
5.25%, 9/15/17 Aa1/AA+ 13,133,742
1,235 State Turnpike Rev.,
5.50%, 2/15/15 Aa3/AA 1,337,579
------------
19,755,476
============
OKLAHOMA -- 0.6%
3,250 Oklahoma City Airport Trust,
Ser. A, 5.00%, 7/1/18 (FSA) Aaa/AAA 3,252,048
============
PENNSYLVANIA -- 8.4%
3,240 Allegheny Cnty. Hosp. Dev. Auth.
Rev., Ser. B, 9.25%, 11/15/30 B1/B+ 3,413,988
1,000 Allegheny Cnty. Indl. Dev. Auth.
Rev., USX Corp., 5.60%, 9/1/30 Baa1/BBB+ 947,980
1,095 Allegheny Cnty. Port Auth. Rev.,
5.25%, 3/1/20 (FGIC) Aaa/AAA 1,125,704
2,575 Delaware Cnty. Auth. College
Rev., Neumann College,
5.80%, 10/1/17 NR/BBB- 2,611,694
1,000 Philadelphia Auth. Indl. Rev.,
Franklin Institute,
5.20%, 6/15/26 Baa2/NR 892,990
4,610 Philadelphia Hosp. & Higher
Education Fac. Hosp. Rev.,
Temple Univ. Hosp., Ser. A,
6.625%, 11/15/23 Baa2/BBB 4,618,713
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
10.31.2001 PIMCO Municipal Income Funds Semi-Annual Report 11
SCHEDULE OF INVESTMENTS (CONT.)
PIMCO MUNICIPAL INCOME FUND
October 31, 2001 (unaudited)
Principal
Amount Credit Rating
(000) (Moody's/S&P) Value*
-------------------------------------------------------------------------------------------
$ 6,905 Ridley School Dist.,
5.00%, 11/15/29 (FGIC) Aaa/AAA $ 6,863,639
6,200 State Higher Educational Fac.
Auth. Rev., UPMC Health Syst.,
Ser. A, 6.00%, 1/15/31 NR/A+ 6,513,162
8,225 State Turnpike, Oil Franchise
Tax Rev., Ser. A, 4.75%,
12/1/27 (AMBAC) Aaa/AAA 7,840,481
11,600 State Turnpike, 5.00%, 7/15/41
(AMBAC) Aaa/AAA 11,439,456
------------
46,267,807
============
SOUTH CAROLINA -- 4.7%
5,500 Greenwood Cnty. Hosp. Rev.,
Self Memorial Hosp., 5.50%,
10/1/21-10/1/26 A2/A+ 5,510,270
3,000 Jobs Economic Dev. Auth., Hosp.
Facs. Rev., Georgetown
Memorial Hosp.,
5.375%, 2/1/30 NR/AA 3,021,240
15,600 Tobacco Settlement Rev., Ser. B,
6.375%, 5/15/30 A1/A 17,408,196
------------
25,939,706
============
TENNESSEE -- 3.5%
10,000 Memphis GO, 5.25%, 4/1/19 Aa2/AA 10,266,400
9,320 Memphis Health Educational &
Housing Fac., Wesley Housing
Corp., 6.95%, 1/1/20++ NR/NR 9,340,597
------------
19,606,997
============
TEXAS -- 13.1%
5,000 Austin Convention Enterprises
Inc., Ser. B, 5.75%, 1/1/32 Aa3/AA 5,119,350
4,000 Austin Water & Wastewater
Syst. Rev., Ser. A & B,
5.25%, 5/15/31 (FSA) Aaa/AAA 4,053,840
2,935 Bell Cnty. Health Fac. Dev. Corp.,
Buckner Retirement Fac.,
5.25%, 11/15/19 NR/A- 2,825,671
5,000 Carrollton Fmrs. Indpt. School
Dist. GO, 4.625%, 2/15/19 Aaa/AAA 4,737,200
2,865 Corpus Christi Refin. &
Improvement, GO, 5.375%,
3/1/18 (FSA) Aaa/AAA 2,978,826
7,000 Harris Cnty. Health Fac. Dev.
Corp., Memorial Hermann
Healthcare, 6.375%, 6/1/29 A3/A- 7,445,620
4,250 Harris Cnty. Health Fac. Dev.
Corp., 5.375%, 2/15/26++ NR/AA 4,209,285
4,000 Mansfield Indpt. School Dist. GO,
5.25%, 2/15/23 Aaa/AAA 4,049,520
3,150 San Antonio Elec. & Gas,
Ser. A, 5.25%, 2/1/16 Aa1/AA 3,260,565
Principal
Amount Credit Rating
(000) (Moody's/S&P) Value*
-------------------------------------------------------------------------------------------
$ 4,380 Southlake Parks Dev. Corp., Sales
Tax Rev., 5.60%, 8/15/31
(AMBAC) Aaa/AAA $ 4,557,828
21,330 State Water Financial Assistance,
Ser. A, 5.25%-5.30%,
8/1/18-8/1/23 Aa1/AA 21,786,090
7,450 Water Dev. Board Rev.,
5.125%, 7/15/18 Aaa/AAA 7,532,770
------------
72,556,565
============
UTAH -- 1.2%
7,000 Salt Lake Cnty. Hosp. Rev., IHC
Health Services Inc.,
5.125%, 2/15/33 (AMBAC) Aaa/AAA 6,929,440
============
WASHINGTON -- 2.7%
3,120 Cowlitz Cnty. School Dist. GO,
5.625%, 12/1/14-12/1/16 (FSA) Aaa/NR 3,430,144
5,000 Kent GO, 5.375%, 12/1/20 (MBIA) Aaa/AAA 5,182,950
6,420 King Cnty. School Dist. GO,
Ser. A, 5.25%, 12/1/21 (MBIA) Aaa/AAA 6,560,919
------------
15,174,013
============
WISCONSIN -- 0.6%
1,070 Hortonville School Dist. Tax Rev.
Anticipation Notes,
2.36%, 11/1/02 NR/NR 1,091,539
2,230 State Health & Educational Fac.
Auth. Rev., Kenosha Hosp. &
Med. Ctr., 5.625%, 5/15/29 NR/A 2,219,118
------------
3,310,657
============
Total Municipal Bonds & Notes
(cost - $500,323,385) 511,396,338
============
12 PIMCO Municipal Income Funds Semi-Annual Report 10.31.2001
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
SCHEDULE OF INVESTMENTS (CONT.)
PIMCO MUNICIPAL INCOME FUND
October 31, 2001 (unaudited)
Principal
Amount Credit Rating
(000) (Moody's/S&P) Value*
--------------------------------------------------------------------------------
SHORT-TERM VARIABLE RATE DEMAND NOTES** -- 5.8%
GEORGIA -- 0.1%
$ 200 Muni. Elec. Auth. Power Rev.,
Ser. C, 1.85%, 11/7/01 (MBIA) Aaa/AAA $ 200,000
============
HAWAII -- 0.6%
3,468 Honolulu City & Cnty.
Wastewater Syst. Rev., Ser. 400,
7.49%, 11/1/01 (FGIC)++ Aaa/NR 3,430,675
============
ILLINOIS -- 1.3%
7,253 Cook Cnty. GO, Ser. 458,
7.61%, 11/1/01 (FGIC)++ Aaa/NR 7,063,645
============
NEVADA -- 1.2%
7,500 Clark Cnty. Passenger Fac.
Change Rev., Ser. 343,
6.99%, 11/1/01 (MBIA)++ Aaa/NR 6,777,900
============
TEXAS -- 1.8%
8,988 Harris Cnty. Health Fac. Dev.
Corp., Ser. 357,
8.34%, 11/1/01 (MBIA)++ Aaa/NR 8,870,842
1,000 Houston Water & Sewer Syst.
Rev., Ser. 495,
8.11%, 11/1/01 (FGIC)++ NR/AAA 1,025,860
------------
9,896,702
============
WASHINGTON -- 0.8%
4,500 Seattle GO, Ser. 348,
7.74%, 11/1/01++ VMIGI/NR 4,534,650
============
Total Short-Term Variable Rate Demand Notes
(cost - $29,130,411) 31,903,572
============
TOTAL INVESTMENTS -- 98.3%
(cost - $529,453,796+) $543,299,910
OTHER ASSETS LESS LIABILITIES -- 1.7% 9,165,726
------------
NET ASSETS -- 100.0% $552,465,636
============
-----------
+ Aggregate gross unrealized appreciation for securities in which there is
an excess of value over tax cost is $15,186,089, aggregate gross
unrealized depreciation for securities in which there is an excess of tax
cost over value is $1,339,975 and net unrealized appreciation for federal
income tax purposes is $13,846,114. The cost basis of portfolio
securities for federal income tax purposes is $529,453,796.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
10.31.2001 PIMCO Municipal Income Funds Semi-Annual Report 13
SCHEDULE OF INVESTMENTS
PIMCO CALIFORNIA MUNICIPAL INCOME FUND
October 31, 2001 (unaudited)
Principal
Amount Credit Rating
(000) (Moody's/S&P) Value*
------------------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS & NOTES -- 93.3%
$ 1,000 ABAG Fin. Auth. for Nonprofit
Corps., CP, 5.375%, 2/15/19 NR/BBB+ $ 999,350
1,000 ABAG Fin. Auth. for Nonprofit
Corps., Ser. A, Rev.,
5.375%, 11/15/25 NR/A+ 1,029,180
2,745 ABC Univ. School Dist., GO,
Zero coupon, 8/1/26-8/1/27
(FGIC) Aaa/AAA 731,625
4,475 Alameda Corridor Transportation
Auth. Rev., Ser. A,
4.75%, 10/1/25 (MBIA) Aaa/AAA 4,424,388
1,385 Alvord Univ. School Dist., GO,
Ser. C, 5.375%, 8/1/29 (FSA) Aaa/NR 1,447,283
1,650 Apple Valley, CP, 5.375%, 6/1/21 NR/A+ 1,723,755
400 Beverly Hills Public Fin. Auth.
Lease, Rev., 5.508%, 6/1/15
(MBIA) Aaa/AAA 421,736
6,405 Campbell Union High School
Dist., GO, 5.50%, 8/1/30 (FSA) Aaa/NR 6,817,098
2,250 Capistrano Univ. School Dist.,
Community Fac. Dist., Special
Tax, 5.75%, 9/1/29 NR/NR 2,249,797
8,250 Carson Improvement Board Act
1915, Special Assessment,
6.35%-6.375%, 9/2/23-9/2/31 NR/NR 8,331,055
5,250 Central JT Powers Health Fin.
Auth., CP, 5.75%, 2/1/31 Baa1/BBB+ 5,351,272
2,750 Contra Costa Cnty., Public Fin.
Auth., Tax Allocation Rev.,
5.125%, 8/1/19 NR/BBB 2,674,815
2,750 CSUCI Fin. Auth. Rev., Ser. A,
5.00%, 9/1/31 (MBIA) Aaa/AAA 2,773,210
3,635 Cucamonga Cnty. Water Dist., CP,
5.125%, 9/1/35 (FGIC) Aaa/AAA 3,710,826
10,940 East Bay Muni. Util. Dist.
Water Syst. Rev.,
4.75%, 6/1/28 (MBIA) Aaa/AAA 10,777,103
1,000 Educational Fac. Auth. Rev.,
5.75%, 12/1/30 Baa3/NR 1,037,900
26,215 El Monte, CP, 4.75%-5.25%,
6/1/30-1/1/34 (AMBAC) Aaa/AAA 26,478,675
10,000 Foothill Eastern Corridor Agcy.,
Special Tax, Toll Road Rev.,
Zero coupon, 1/15/33-1/15/34 Baa3/BBB- 1,518,850
9,170 Fremont Community Fac. Dist.,
Special Tax., 6.00%-6.30%,
9/1/18-9/1/31 NR/NR 9,328,914
Health Fac. Fin. Auth. Rev.,
4,000 5.00%, 7/1/18-7/1/28 Ser. A Baa2/BBB 3,645,150
6,315 5.125%, 7/1/18 NR/A- 6,344,617
3,000 5.25%, 10/1/14 Ser. B A3/A 3,136,200
Principal
Amount Credit Rating
(000) (Moody's/S&P) Value*
------------------------------------------------------------------------------------------
$ 9,025 Irvine Improvement Board Act
1915, Special Assessment,
5.80%-5.90%, 9/2/18-9/2/23 NR/NR $9,116,749
13,000 LA Quinta Redev. Agcy.,
Tax Allocation, 5.00%-5.10%,
9/1/21-9/2/31 (AMBAC) Aaa/AAA 13,275,110
1,620 Lincoln Public Fin. Auth., Rev.,
6.125%, 9/2/27 NR/NR 1,630,530
7,250 Los Angeles Cnty. Metropolitan
Transportation Auth. Rev., Sales
Tax Rev., Ser. B, 4.75%, 7/1/28 Aaa/AAA 7,141,685
845 Los Angeles Community Redev.
Agcy., Ser. B, Tax Allocation,
5.875%-6.00%, 9/1/26-9/1/31 NR/NR 859,269
13,000 Los Angeles Water & Power Rev.,
Ser. A-A-1, 5.25%, 7/1/21 (FSA) Aaa/AAA 13,549,510
10,000 Los Angeles Dept. of Water &
Power Waterworks Rev.,
5.125%, 7/1/41 (FGIC) NR/AAA 10,170,100
1,000 Menifee Univ. School Dist.,
Special Tax, 6.40%, 9/1/31 NR/NR 1,020,460
2,665 Merced Irrigation Dist. Elec. Syst.
Rev., 6.50%, 9/1/22 NR/NR 2,677,499
2,395 Metropolitan Water Dist., GO,
Ser. H, 4.75%, 3/1/37 Aaa/AAA 2,339,508
3,500 Metropolitan Water Dist.,
Waterworks Rev.,
5.00%, 7/1/26 Ser. A Aa2/AA 3,527,790
5,820 Montclair Redev. Agcy., Tax
Allocation, 5.30%, 10/1/30
(MBIA) Aaa/AAA 5,951,008
5,910 Murrieta Valley Yuma Univ.
School Dist., Special Tax,
6.30%-6.50%, 9/1/18-9/1/31 NR/NR 6,042,665
1,080 Palm Springs Community Redev.
Agcy., Tax Allocation,
5.50%, 8/1/21 NR/A- 1,120,748
1,010 Pomona Univ. School Dist., GO,
Ser. A, 6.10%, 2/1/19 (MBIA) Aaa/AAA 1,191,628
1,690 Rancho Etiwanda Public Fac.,
Special Tax, 6.375%, 9/1/24 NR/NR 1,736,796
2,770 Rancho Mirage Redev. Agcy.,
Tax Allocation,
5.50%-5.625%, 4/1/24-4/1/33 Baa1/BBB+ 2,846,019
8,305 Riverside Cnty., CP,
5.125%, 11/1/30 (MBIA) Aaa/AAA 8,503,323
1,000 Riverside Cnty. Pub Financing.,
Tax Allocation, Ser. A,
5.625%, 10/1/33 Baa2/BBB- 1,008,370
1,850 Riverside Improvement Board Act
1915, Special Assessment,
6.15%-6.375%, 9/2/19-9/2/26 NR/NR 1,881,872
14 PIMCO Municipal Income Funds Semi-Annual Report 10.31.2001
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
SCHEDULE OF INVESTMENTS (CONT.)
PIMCO CALIFORNIA MUNICIPAL INCOME FUND
October 31, 2001 (unaudited)
Principal
Amount Credit Rating
(000) (Moody's/S&P) Value*
------------------------------------------------------------------------------------------------
$ 575 Roseville, Woodcreek Community
Fac. Dist., Spec. Tax,
6.375%, 9/1/27 NR/NR $ 597,046
2,000 Sacramento Health Fac. Rev.,
Ser. A, 5.30%, 1/1/24 NR/A+ 2,038,960
6,910 Sacramento, Special Tax,
5.70%-6.15%, 9/1/21-9/1/26 NR/NR 6,952,361
545 San Diego Cnty., CP,
5.25%, 10/1/28 A3/NR 555,529
6,500 San Diego Cnty. Water Auth.
Rev., CP, Ser. A, 4.75%, 5/1/28 Aaa/AAA 6,403,605
3,330 San Francisco Bay Area Rapid
Transit Dist. Rev., 5.125%,
7/1/36 (AMBAC) Aaa/AAA 3,393,070
4,500 San Francisco City & Cnty.
Airport., Community Int'l Airport
Rev., 4.50%, 5/1/26 (MBIA) Aaa/AAA 4,226,535
San Francisco City & Cnty. Redev.
Agcy. Rev., Special Tax,
1,500 6.125%, 8/1/31, Ser. A NR/NR 1,522,920
3,500 6.125%, 8/1/31, Ser. B NR/NR 3,553,480
5,065 San Joaquin Cnty., CP,
5.00%, 9/1/20 (MBIA) Aaa/AAA 5,159,260
San Joaquin Hills Transportation
Corridor Agcy. Toll Road, Rev.,
Ser. A,
5,000 Zero coupon, 1/15/19, Baa3/BBB- 3,635,600
5,000 5.50%, 1/15/28, Baa3/BBB- 5,002,500
240 San Jose Improvement Board Act
1915, Special Assessment,
Ser. 24Q, 5.60%, 9/2/17 NR/NR 244,637
5,000 San Jose Redev. Agcy., Tax
Allocation, 5.25%, 8/1/29 A2/A 5,087,300
5,000 San Jose Univ. School Dist.,
Santa Clara Cnty., GO, Ser. D,
5.125%, 8/1/25 (FSA) Aaa/NR 5,121,050
26,450 San Juan Univ. School Dist., GO,
Zero coupon, 8/1/22-8/1/26 (FSA) Aaa/AAA 8,020,124
600 Santa Ana Fin. Auth., Ser. C,
Rev., 5.60% 9/1/19 NR/BBB 608,040
State, GO,
7,000 4.50%, 12/1/21 (FGIC) Aaa/AAA 6,704,880
11,000 4.75%-5.375%, 12/1/28-10/1/25 Aa3/A+ 11,237,280
22,500 State, GO, RITES-PA 898 R,
8.42%, 6/1/27++ NR/NR 22,650,300
State, Public Works Board Lease Rev.,
6,385 5.00%, 10/1/19 Ser. A (MBIA) A1/A 6,398,408
5,000 5.00%, 9/1/21 Ser. B Aaa/AAA 5,067,400
Statewide Community Dev. Auth., CP,
15,000 5.375%, 4/1/30 NR/BBB 14,491,050
8,000 6.50%, 7/1/20 Baa2/BBB 8,482,000
Principal
Amount Credit Rating
(000) (Moody's/S&P) Value*
------------------------------------------------------------------------------------------------
Statewide Community Dev. Auth., Rev.,
$ 15,250 5.125%, 10/1/30, Ser. A NR/A+ $ 15,265,555
12,450 6.625%-6.75%, 10/1/31-6/1/28 NR/NR 12,608,769
2,000 Tamalpais Union High School
Dist., GO, 5.00% 8/1/26 (MBIA) Aaa/AAA 2,023,080
10,800 Tobacco Securitization Auth.,
Rev., Ser. A
5.25%-5.375%, 6/1/31-6/1/41 A1/A 10,917,465
3,750 West Kern Cnty. Water Dist., CP,
5.625%, 6/1/31 Baa2/NR 3,863,213
------------
Total California Municipal Bonds & Notes
(cost - $372,489,560) 382,374,855
============
PUERTO RICO MUNICIPAL BONDS & NOTES -- 2.1%
3,050 Commonwealth, GO,
5.50%, 7/1/12 (FSA) Aaa/AAA 3,475,201
5,010 Public Fin. Corp. Rev. Ser. A,
5.00%, 8/1/29 (MBIA) Aaa/AAA 5,040,361
------------
Total Puerto Rico Municipal Bonds & Notes
(cost - $8,496,029) 8,515,562
============
CALIFORNIA SHORT-TERM VARIABLE RATE DEMAND NOTES** -- 3.3%
900 Health Fac. Fin. Auth. Rev.,
Ser. A, 1.65%, 11/1/01 (MBIA) VMIG1/A1+ 900,000
1,400 Housing Fin. Agcy. Rev.,
(Landesbank Hessen),
1.75%, 11/1/01 VMIG1/A1+ 1,400,000
663 Irvine Improvement Board Act
1915, Special Assessment,
(KBC Bank, NV),
1.65%, 11/1/01 VMIG1/A1 663,000
10,003 Los Angeles Wastewater Syst.
Rev., Ser. 318, 7.82%, 11/1/01
(FGIC) ++ NR/NR 10,182,345
400 Turlock Irrigation Dist., CP,
(Societe Generale),
1.65%, 11/1/01 NR/A1+ 400,000
------------
Total Short-Term Variable Rate Demand Notes
(cost - $12,382,913) 13,545,345
============
TOTAL INVESTMENTS -- 98.7%
(cost - $393,368,502+) $404,435,762
OTHER ASSETS LESS LIABILITIES -- 1.3% 5,538,568
------------
NET ASSETS -- 100.0% $409,974,330
============
-----------
+ Aggregate gross unrealized appreciation for securities in which there is
an excess of value over tax cost is $11,311,459, aggregate gross
unrealized depreciation for securities in which there is an excess of tax
cost over value is $244,199, and net unrealized appreciation for federal
income tax purposes is $11,067,260. The cost basis of portfolio
securities for federal income tax purposes is $393,368,502.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
10.31.2001 PIMCO Municipal Income Funds Semi-Annual Report 15
SCHEDULE OF INVESTMENTS
PIMCO NEW YORK MUNICIPAL INCOME FUND
October 31, 2001 (unaudited)
Principal
Amount Credit Ratings
(000) (Moody's/S&P) Value*
--------------------------------------------------------------------------------------
NEW YORK MUNICIPAL BONDS & NOTES -- 83.1%
$ 3,265 Albany Indl. Dev. Agcy. Civic Fac.
Rev., Ser. A, 5.30%, 4/1/29 Baa1/NR $ 3,266,273
Long Island Power Auth. Elec.
Syst. Rev.,
1,000 5.375%, 5/1/33, Ser. L Baa1/A- 1,013,510
6,300 5.50%, 12/1/29, Ser. A Baa1/A- 6,392,862
2,500 Monroe Tobacco Asset
Securitization Corp. Rev.,
6.375%, 6/1/35 A1/A 2,682,300
5,000 New York City, GO,
Ser. J, 5.125%, 5/15/29 (MBIA) Aaa/AAA 5,005,500
2,000 New York City Indl. Dev. Agcy. Rev.,
6.00%, 11/1/28 NR/NR 1,780,920
New York City Muni. Water Fin.
Auth., Water & Sewer Syst., Rev.,
7,605 4.75%, 6/15/31, Ser. A, (FGIC) Aaa/AAA 7,189,006
7,000 5.125%, 6/15/21, Ser. A (AMBAC) Aaa/AAA 7,068,040
5,000 5.125%, 6/15/33, Ser. C Aa2/AA 5,001,750
5,000 5.25%, 6/15/25, Ser. D Aa2/AA 5,093,500
3,250 New York City Transitional Fin.
Auth. Rev., Ser. B,
4.75%, 11/15/23 Aa2/AA+ 3,107,877
2,000 Port Auth. of New York & New
Jersey Rev., 5.00%, 7/15/28 A1/AA- 1,934,600
6,550 State Dormitory Auth. Lease Rev.,
Ser. 1, 4.75%, 1/15/29 (FSA) Aaa/AAA 6,122,940
1,535 State Dormitory Auth. Rev.,
FHA-Mortgage Nursing Home Rev.,
5.40%-5.50%, 2/1/31-2/1/41
(MBIA) Aaa/AAA 1,570,775
8,000 State Dormitory Auth. Rev.,
FHA-NY & Presbyterian Hosp.,
4.75%, 8/1/27 (AMBAC) Aaa/AAA 7,471,280
11,800 State Dormitory Auth. Rev.,
Lenox Hill Hosp. Oblig. Group,
5.50%, 7/1/30 A3/NR 11,989,508
13,000 State Dormitory Auth. Rev.,
Mental Health Services Fac.
Improvement, Ser. D, 4.75%,
2/15/25 (MBIA) Aaa/AAA 12,298,260
8,325 State Dormitory Auth. Rev.,
Mount Sinai Health, Ser. A,
6.50%-6.625%, 7/1/18-7/1/25 Baa2/BBB 9,145,668
845 State Dormitory Auth. Rev., New
York Univ., Ser. B,
5.50%, 7/1/20-7/1/21 (AMBAC) Aaa/AAA 890,543
State Dormitory Auth. Rev., State
Univ. Educational Fac., Ser. B,
3,315 4.75%, 5/15/28 (FSA) Aaa/AAA 3,151,372
6,000 4.75%, 5/15/28 (MBIA) Aaa/AAA 5,703,840
6,000 5.25%, 5/15/19 A3/AA- 6,346,860
Principal
Amount Credit Ratings
(000) (Moody's/S&P) Value*
--------------------------------------------------------------------------------------
$ 1,275 State Dormitory Auth. Rev.,
Winthrop Univ. Hosp. Assoc.,
Ser. A, 5.25%, 7/1/31 (AMBAC) Aaa/AAA $ 1,289,446
5,000 State Thruway Auth. General
Rev., Ser. E , 4.75%, 1/1/19 Aa3/AA- 4,879,250
3,975 State Urban Dev. Corp. Rev.,
Ser. B, 4.75%, 1/1/28 (AMBAC) Aaa/AAA 3,766,750
Tobacco Trust II Rev.,
3,125 5.625%-5.75%, 6/1/35-6/1/43 A1/A 3,189,619
Tobacco Trust II Rev., RITES-PA
4,000 8.08%, 6/1/35, 886-A ++ A1/A 4,162,640
6,500 8.08%, 6/1/43, 886-B ++ A1/A 6,873,100
------------
Total New York Municipal Bonds & Notes
(cost - $136,884,535) 138,387,989
============
PUERTO RICO MUNICIPAL BONDS & NOTES -- 12.0%
3,480 Commonwealth, GO,
5.00%, 7/1/27 (AMBAC) Aaa/AAA 3,502,864
5,000 Commonwealth, GO,
5.125%, 7/1/30 (FSA) Aaa/AAA 5,090,100
5,000 Commonwealth Hwy. &
Transportation Auth. Rev.,
Ser. A, 4.75%, 7/1/38 Baa1/A 4,790,550
1,610 Elec. Power Auth. Rev., Ser DD,
5.00%, 7/1/28 (FSA) Aaa/AAA 1,619,451
5,000 Public Fin. Corp. Rev., Ser. A,
5%, 8/1/31 (MBIA) Aaa/AAA 5,030,300
------------
Total Puerto Rico Municipal Bonds & Notes
(cost - $20,033,026) 20,033,265
============
16 PIMCO Municipal Income Funds Semi-Annual Report 10.31.01
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
SCHEDULE OF INVESTMENTS (CONT.)
PIMCO NEW YORK MUNICIPAL INCOME FUND
October 31, 2001 (unaudited)
Principal
Amount Credit Ratings
(000) (Moody's/S&P) Value*
--------------------------------------------------------------------------------
NEW YORK SHORT-TERM VARIABLE RATE DEMAND NOTES** - 3.0%
$ 200 New York City, GO, Ser. A7, 2.00%,
11/1/01 VMIG1/A1+ $ 200,000
5,173 New York City Transitional Fin. Auth.,
Rev., Ser. 362,
7.06%, 11/1/01++ Aa2/NR 4,723,320
------------
Total Short-Term Variable Rate Demand Notes
(cost - $4,823,476) 4,923,320
============
TOTAL INVESTMENTS -- 98.1%
(cost - $161,741,037+) $163,344,574
OTHER ASSETS LESS LIABILITIES -- 1.9% 3,115,190
------------
NET ASSETS -- 100.0% $166,459,764
============
----------------------
+ Aggregate gross unrealized appreciation for securities in which there is
an excess of value over tax cost is $2,308,178, aggregate gross
unrealized depreciation for securities in which there is an excess of tax
cost over value is $704,641, and net unrealized appreciation for federal
income tax purposes is $1,603,537. The cost basis of portfolio securities
for federal income tax purposes is $161,741,037.
----------------------
* Long-term debt securities are valued by an independent price service
authorized by the Board of Trustees.
** Variable Rate Demand Notes are 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). Maturity date shown is date of next rate
change.
++ Security exempt from registration under Rule 144a of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, typically to qualified institutional investors. At October
31, 2001, these securities amounted to $58,321,992 or 10.6% of net
assets, $32,832,645 or 8.0% of net assets and $15,759,060 or 9.5% of net
assets, respectively, for Municipal, California Municipal and New York
Municipal.
Glossary:
---------
AMBAC -- insured by American Municipal Bond Assurance Corp.
CP -- Certificates of Participation
FGIC -- insured by insured Financial Guaranty Insurance Co.
FHA -- insured by Federal Housing Administration
FSA -- insured by Financial Security Assurance, Inc.
GO -- General Obligation Bonds
MBIA -- insured by Municipal Bond Investors Assurance
NR -- not rated
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
10.31.01 PIMCO Municipal Income Funds Semi-Annual Report 17
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 2001 (unaudited)
CALIFORNIA NEW YORK
MUNICIPAL MUNICIPAL MUNICIPAL
----------------- -------------- ----------------
ASSETS:
Investments, at value (cost -- $529,453,796, $393,368,502 and
$161,741,037, respectively) $543,299,910 $404,435,762 $163,344,574
-------------------------------------------------------------------- ------------ ------------ ------------
Cash 1,194,950 1,881,746 917,747
-------------------------------------------------------------------- ------------ ------------ ------------
Interest receivable 10,371,669 5,335,945 2,963,896
-------------------------------------------------------------------- ------------ ------------ ------------
Receivable for investments called 15,300 -- --
-------------------------------------------------------------------- ------------ ------------ ------------
Prepaid expenses 31,976 21,865 9,990
-------------------------------------------------------------------- ------------ ------------ ------------
Total Assets 554,913,805 411,675,318 167,236,207
==================================================================== ============ ============ ============
LIABILITIES:
Dividends payable to common and preferred shareholders 1,859,343 1,340,951 539,013
-------------------------------------------------------------------- ------------ ------------ ------------
Investment management fees payable 209,778 156,305 63,384
-------------------------------------------------------------------- ------------ ------------ ------------
Preferred shares offering expenses payable 208,606 144,374 137,268
-------------------------------------------------------------------- ------------ ------------ ------------
Common stock offering expenses payable 101,446 -- --
-------------------------------------------------------------------- ------------ ------------ ------------
Accrued expenses 68,996 59,358 36,778
-------------------------------------------------------------------- ------------ ------------ ------------
Total Liabilities 2,448,169 1,700,988 776,443
-------------------------------------------------------------------- ------------ ------------ ------------
Net Assets $552,465,636 $409,974,330 $166,459,764
==================================================================== ============ ============ ============
COMPOSITION OF NET ASSETS:
Preferred shares ($25,000 net asset and liquidation value
per share applicable to 8,000, 6,000 and
2,520, shares issued and outstanding, respectively) $200,000,000 $150,000,000 $ 63,000,000
-------------------------------------------------------------------- ------------ ------------ ------------
Common stock (no par value):
Paid-in capital in excess of par 336,963,150 248,596,012 101,419,414
-------------------------------------------------------------------- ------------ ------------ ------------
Undistributed net investment income 1,154,305 313,308 25,823
-------------------------------------------------------------------- ------------ ------------ ------------
Net realized gain (loss) on investments 502,067 (2,250) 410,990
-------------------------------------------------------------------- ------------ ------------ ------------
Net unrealized appreciation of investments 13,846,114 11,067,260 1,603,537
-------------------------------------------------------------------- ------------ ------------ ------------
Net assets applicable to common shareholders 352,465,636 259,974,330 103,459,764
-------------------------------------------------------------------- ------------ ------------ ------------
Net Assets $552,465,636 $409,974,330 $166,459,764
-------------------------------------------------------------------- ------------ ------------ ------------
Common shares outstanding 23,733,289 17,513,142 7,151,169
-------------------------------------------------------------------- ------------ ------------ ------------
NET ASSET VALUE PER COMMON SHARE $14.85 $14.84 $14.47
==================================================================== ============ ============ ============
18 PIMCO Municipal Income Funds Semi-Annual Report 10.31.01
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS
For the period June 29, 2001* through October 31, 2001 (unaudited)
CALIFORNIA NEW YORK
MUNICIPAL MUNICIPAL MUNICIPAL
--------------- --------------- --------------
INTEREST INCOME:
Interest $ 8,303,233 $ 5,474,758 $2,168,990
================================================================= =========== =========== ==========
EXPENSES:
Investment management fees 995,672 736,704 298,152
----------------------------------------------------------------- ----------- ----------- ----------
Auction agent fees and commissions 94,146 69,736 28,923
----------------------------------------------------------------- ----------- ----------- ----------
Trustees' fees 24,455 20,812 14,237
----------------------------------------------------------------- ----------- ----------- ----------
Custodian fees 20,057 24,936 14,855
----------------------------------------------------------------- ----------- ----------- ----------
Reports to shareholders 16,375 14,250 8,125
----------------------------------------------------------------- ----------- ----------- ----------
Audit and tax service fees 14,250 12,250 10,250
----------------------------------------------------------------- ----------- ----------- ----------
Transfer agent fees 13,875 12,500 11,500
----------------------------------------------------------------- ----------- ----------- ----------
Legal fees 13,125 11,000 4,375
----------------------------------------------------------------- ----------- ----------- ----------
Miscellaneous 16,824 15,628 10,567
----------------------------------------------------------------- ----------- ----------- ----------
Total expenses 1,208,779 917,816 400,984
----------------------------------------------------------------- ----------- ----------- ----------
Less: investment management fee waiver (306,361) (226,678) (91,739)
----------------------------------------------------------------- ----------- ----------- ----------
expense offset (20,057) (24,936) (14,855)
----------------------------------------------------------------- ----------- ----------- ----------
Net expenses 882,361 666,202 294,390
----------------------------------------------------------------- ----------- ----------- ----------
NET INVESTMENT INCOME 7,420,872 4,808,556 1,874,600
================================================================= =========== =========== ==========
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments $ 502,067 $ (2,250) $ 410,990
----------------------------------------------------------------- ----------- ----------- ----------
Net unrealized appreciation of investments 13,846,114 11,067,260 1,603,537
----------------------------------------------------------------- ----------- ----------- ----------
Net realized and unrealized gain on investments 14,348,181 11,065,010 2,014,527
----------------------------------------------------------------- ----------- ----------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM INVESTMENT OPERATIONS $21,769,053 $15,873,566 $3,889,127
================================================================= =========== =========== ==========
* Commencement of operations.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
10.31.01 PIMCO Municipal Income Funds Semi-Annual Report 19
STATEMENTS OF CHANGES IN NET ASSETS
For the period June 29, 2001* through October 31, 2001 (unaudited)
CALIFORNIA NEW YORK
MUNICIPAL MUNICIPAL MUNICIPAL
--------------- -------------- -------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
--------------------------------------------------------------------------
Net investment income $ 7,420,872 $ 4,808,556 $ 1,874,600
-------------------------------------------------------------------------- ------------ ------------ ------------
Net realized gain (loss) on investments 502,067 (2,250) 410,990
-------------------------------------------------------------------------- ------------ ------------ ------------
Net unrealized appreciation of investments 13,846,114 11,067,260 1,603,537
-------------------------------------------------------------------------- ------------ ------------ ------------
Net increase in net assets resulting from investment operations 21,769,053 15,873,566 3,889,127
========================================================================== ============ ============ ============
CAPITAL SHARE TRANSACTIONS:
Net proceeds from the sale of common stock 339,359,250 250,401,000 102,137,250
-------------------------------------------------------------------------- ------------ ------------ ------------
Reinvestment of dividends 539,595 390,407 210,059
-------------------------------------------------------------------------- ------------ ------------ ------------
Proceeds from the sale of preferred shares 200,000,000 150,000,000 63,000,000
-------------------------------------------------------------------------- ------------ ------------ ------------
Preferred shares underwriting discount charged to paid-in capital
in excess of par (2,000,000) (1,500,000) (630,000)
-------------------------------------------------------------------------- ------------ ------------ ------------
Common stock and preferred shares offering costs charged to
paid-in capital in excess of par (1,035,700) (795,400) (397,900)
-------------------------------------------------------------------------- ------------ ------------ ------------
Net increase in capital share transactions 536,863,145 398,496,007 164,319,409
========================================================================== ============ ============ ============
DIVIDENDS TO SHAREHOLDERS:
To preferred shareholders from net investment income (795,485) (557,746) (241,395)
-------------------------------------------------------------------------- ------------ ------------ ------------
To common shareholders from net investment income (5,471,082) (3,937,502) (1,607,382)
-------------------------------------------------------------------------- ------------ ------------ ------------
Total dividends to shareholders (6,266,567) (4,495,248) (1,848,777)
-------------------------------------------------------------------------- ------------ ------------ ------------
Total increase in net assets 552,365,631 409,874,325 166,359,759
========================================================================== ============ ============ ============
NET ASSETS:
Beginning of period 100,005 100,005 100,005
-------------------------------------------------------------------------- ------------ ------------ ------------
End of period (including undistributed net investment income of
$1,154,305, $313,308 and $25,823, respectively) $552,465,636 $409,974,330 $166,459,764
-------------------------------------------------------------------------- ------------ ------------ ------------
SHARES ISSUED AND REINVESTED:
Issued 23,690,000 17,480,000 7,130,000
-------------------------------------------------------------------------- ------------ ------------ ------------
Issued in reinvestment of dividends 36,622 26,475 14,502
-------------------------------------------------------------------------- ------------ ------------ ------------
NET INCREASE 23,726,622 17,506,475 7,144,502
========================================================================== ============ ============ ============
* Commencement of operations.
20 PIMCO Municipal Income Funds Semi-Annual Report 10.31.01
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
October 31, 2001 (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 known as the "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; and the sale and issuance to
PIMCO Advisors L.P. (the "Investment Manager"), an indirect, majority-owned
subsidiary of Allianz AG, of 6,667 shares of beneficial interest of each fund
at an aggregate purchase price of $100,005 per fund.
Municipal, California Municipal and New York Municipal issued 20,600,000,
15,200,000 and 6,200,000 shares of common stock, respectively, in their initial
public offerings. An additional 3,090,000, 2,280,000 and 930,000 shares of
Municipal, California Municipal and New York Municipal, respectively, were
issued in connection with the exercise of the underwriters over-allotment
option. Offering costs of $710,700, $524,400 and $213,900 (representing $0.03
per share for each fund), for Municipal, California Municipal and New York
Municipal, respectively, were offset against the proceeds of the offerings and
have been charged to paid-in capital in excess of par. The Investment Manager
has agreed to pay all offering costs (other than the sales load) and
organizational expenses exceeding $0.03 per share for each fund.
In addition, the underwriters discount and offering costs associated with the
Funds issuance of Preferred Shares in the amounts of $2,000,000 and $325,000,
$1,500,000 and $246,000 and $630,000 and $184,000, for Municipal, California
Municipal and New York Municipal, respectively, have been charged to paid-in
capital in excess of par.
The preparation of the financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates. The following is
a summary of significant accounting policies consistently followed by the
Funds:
(a) VALUATION OF INVESTMENTS
Debt securities are valued daily by an independent pricing service approved by
the Boards of Trustees. Any security or other asset for which market quotations
are not readily available is valued at fair value as determined in good faith
under procedures established by the Boards of Trustees. Municipal Income
invests substantially all of its assets in a portfolio of municipal bonds, the
interest from which is exempt from federal income taxes. California Municipal
invests substantially all of its assets in municipal bonds which pay interest
that is exempt from federal and California income taxes. 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 seek to avoid bonds generating interest potentially subjecting
individuals to alternative minimum tax. The issuers' abilities to meet their
obligations may be affected by economic and political developments in a
specific state or region.
(b) 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. In addition, by distributing
substantially all of their ordinary income and long-term capital gains, if any,
during each calendar year, the Funds intend not to be subject to U.S. federal
excise tax.
(c) INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on the trade date. Realized gains and
losses on investments are determined on the identified cost basis. Interest
income is recorded on an accrual basis. Original issue discounts or premiums on
debt securities purchased are accreted or amortized daily to non-taxable
interest income. Market discounts, if any, are accreted daily to taxable
income.
(d) 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. Each Fund records dividends and distributions to its
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 either
considered 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.
(e) EXPENSE OFFSET
The Funds benefit from an expense offset arrangement with their custodian bank
whereby uninvested cash balances earn credits which reduce monthly custodian
expenses. Had these cash balances been invested in income producing securities,
they would have generated income for the Funds.
10.31.01 | PIMCO Municipal Income Funds Semi-Annual Report 21
2. INVESTMENT MANAGER AND SUB-ADVISER
Each Fund has entered into an Investment Management Agreement (the
"Agreements") with the Investment Manager to serve as Investment Manager to
each Fund. Subject to the supervision of the Fund's Board of Trustees, the
Investment Manager is responsible for managing, either directly or through
others selected by it, the investment activities of the Fund and the Fund's
business affairs and other administrative matters. Pursuant to the Agreements,
the Investment Manager will receive an annual fee, payable monthly, at the
annual rate of 0.65% of each Fund's average daily net assets (including net
assets attributable to any preferred shares that may be outstanding). In order
to reduce Fund expenses, the Investment Manager has contractually agreed to
reimburse each Fund for fees and expenses at the annual rate of 0.20% of the
Fund's average daily net assets (including net assets attributable to any
preferred shares that may be outstanding) from the commencement of operations
through June 30, 2006, and for a declining amount thereafter through June 30,
2009.
The Investment Manager has retained its affiliate, Pacific Investment
Management Company LLC (the "Sub-Adviser") to manage each Fund's investments.
Subject to the supervision of the Investment Manager, the Sub-Adviser makes all
determinations with respect to the investment of each Fund's assets. The
Investment Manager (not the Funds) pays a portion of the fees it receives to
the Sub-Adviser in return for its services, at the maximum annual rate of 0.37%
of each Fund's average daily net assets (including net assets attributable to
any preferred shares that may be outstanding). The Sub-Adviser has
contractually agreed to waive a portion of the fees it is entitled to receive
from the Investment Manager, such that the Sub-Adviser will receive 0.25% of
each Fund's average daily net assets (including net assets attributable to any
preferred shares that may be outstanding) from the commencement of the Funds
operations through June 30, 2006, and an increasing amount thereafter through
June 30, 2009. The Investment Manager informed the Funds that it paid the
Sub-Adviser $382,951, $283,348 and $114,674 in connection with sub-advisory
services for Municipal, California Municipal and New York Municipal,
respectively, for the period ended October 31, 2001.
3. INVESTMENTS IN SECURITIES
For the period ended October 31, 2001, purchases and sales of investments,
other than short-term securities, were as follows:
California New York
Municipal Municipal Municipal
--------- --------- ---------
Purchases $626,224,922 $524,820,981 $225,067,092
Sales 97,271,483 131,621,400 63,731,290
4. CAPITAL
The Funds have an unlimited amount of no par value common stock authorized.
5. AUCTION PREFERRED SHARES
Municipal has issued 1,600 shares of Preferred Shares Series A, 1,600 shares of
Preferred Shares Series B, 1,600 shares of Preferred Shares Series C, 1,600
shares of Preferred Shares Series D and 1,600 shares of Preferred Shares Series
E each with a net asset and liquidation value of $25,000 per share plus accrued
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
accrued dividends.
New York Municipal has issued 2,520 shares of Preferred Shares Series A with a
net asset and liquidation value of $25,000 per share plus accrued dividends.
Dividends are accumulated daily at an annual rate set through auction
procedures. Distributions of net realized capital gains, if any, are paid
annually.
For the period ended October 31, 2001, the annualized dividend rate ranged
from:
At
High Low 10/31/01
---- --- --------
Municipal:
----------
Series A 2.30% 1.65% 1.65%
Series B 2.40% 1.073% 1.625%
Series C 2.30% 1.50% 1.50%
Series D 2.25% 1.55% 1.65%
Series E 2.20% 1.625% 1.625%
California Municipal:
---------------------
Series A 2.02% 1.80% 1.70%
Series B 2.125% 1.04% 1.70%
Series C 2.05% 1.70% 1.70%
New York Municipal:
-------------------
Series A 2.20% 1.55% 1.55%
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.
Preferred Shares, which are entitled to one vote per share, generally vote with
the common stock but vote separately as a class to elect two Trustees and on
any matters affecting the rights of the Preferred Shares.
22 PIMCO Municipal Income Funds Semi-Annual Report | 10.31.01
6. SUBSEQUENT DIVIDEND DECLARATIONS
On November 1, 2001, the following dividends were declared to common
shareholders payable December 3, 2001 to shareholders of record on November 16,
2001:
Municipal $0.0769 per common share
California Municipal $0.0750 per common share
New York Municipal $0.0750 per common share
On December 3, 2001, the following dividends were declared to common
shareholders payable December 31, 2001 to shareholders of record on December 14,
2001:
Municipal $0.0769 per common share
California Municipal $0.0750 per common share
New York Municipal $0.0750 per common share
On December 10, 2001, the Boards of Trustees of Municipal and California
Municipal announced their intention to increase the monthly per share common
dividends. Municipal's dividend will increase from $0.0769 per common share to
$0.08125 per common share and California Municipal's dividend will increase
from $0.075 per common share to $0.077 per common share.
7. SUBSEQUENT CAPITAL GAIN DECLARATIONS
On December 17, 2001, the Boards of Trustees of Municipal and New York
Municipal declared short-term capital gain distributions of $0.01846 per common
share and $0.05027 per common share, respectively. The distributions are
payable January 4, 2002 to shareholders of record on December 28, 2001.
10.31.01 | PIMCO Municipal Income Funds Semi-Annual Report 23
FINANCIAL HIGHLIGHTS
For a share of common stock outstanding for the period June 29, 2001* through
October 31, 2001 (unaudited):
CALIFORNIA NEW YORK
MUNICIPAL MUNICIPAL MUNICIPAL
--------- --------- ---------
Net Asset Value, Beginning of Period** $14.33 $14.33 $14.33
------------------------------------------------------------------------ -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
------------------------------------------------------------------------ -------- -------- --------
Net Investment Income 0.31 0.27 0.26
------------------------------------------------------------------------ -------- -------- --------
Net Realized and Unrealized Gain on Investments 0.60 0.63 0.28
------------------------------------------------------------------------ -------- -------- --------
Total from Investment Operations 0.91 0.90 0.54
======================================================================== -------- -------- --------
DIVIDENDS TO SHAREHOLDERS:
------------------------------------------------------------------------ -------- -------- --------
To Preferred Shareholders from Net Investment Income (0.03) (0.03) (0.03)
------------------------------------------------------------------------ -------- -------- --------
To Common Shareholders from Net Investment Income (0.23) (0.23) (0.23)
------------------------------------------------------------------------ -------- -------- --------
Total Dividends to Shareholders (0.26) (0.26) (0.26)
======================================================================== -------- -------- --------
CAPITAL SHARE TRANSACTIONS:
------------------------------------------------------------------------ -------- -------- --------
Common Stock Offering Costs Charged to Paid-in Capital in Excess of Par (0.03) (0.03) (0.03)
------------------------------------------------------------------------ -------- -------- --------
Preferred Shares Offering Costs/Underwriting Discount Charged to
Paid-in Capital in Excess of Par (0.10) (0.10) (0.11)
------------------------------------------------------------------------ -------- -------- --------
Total Capital Share Transactions (0.13) (0.13) (0.14)
======================================================================== ======== -------- ========
Net Asset Value, End of Period $14.85 $14.84 $14.47
------------------------------------------------------------------------ -------- -------- --------
Marked Price, End of Period $14.75 $15.28 $14.63
======================================================================== ======== -------- ========
TOTAL INVESTMENT RETURN (1) (0.1)% 3.5% (0.9)%
------------------------------------------------------------------------ -------- -------- --------
RATIOS/SUPPLEMENTAL DATA:
------------------------------------------------------------------------ -------- -------- --------
Net Assets Applicable to Common Shareholders, End of Period (000) $352,466 $259,974 $103,460
------------------------------------------------------------------------ -------- -------- --------
Ratio of Expenses to Average Net Assets (2)(3)+ 0.59%(4) 0.61%(5) 0.67%(6)
------------------------------------------------------------------------ -------- -------- --------
Ratio of Net Investment Income to Average Net Assets (2)+ 4.84%(4) 4.24%(5) 4.09%(6)
------------------------------------------------------------------------ -------- -------- --------
Asset Coverage Per Share of Preferred Stock $69,051 $68,321 $66,054
------------------------------------------------------------------------ -------- -------- --------
Portfolio Turnover 23% 57% 69%
======================================================================== ======== ======== ========
* Commencement of operations.
** Initial public offering price of $15.00 per share less underwriting
discount of $0.67 per share.
+ Annualized.
(1) Total investment return is calculated assuming a purchase of common stock
at the current market price on the first day and a sale at the current
market price on the last day of the period reported. Dividends are
assumed, for purposes of this calculation, to be reinvested at prices
obtained under the Funds' 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 earning credits from custodian bank. (See
note 1e in Notes to Financial Statements).
(4) During the period indicated above the Investment Manager waived a portion
of its investment management fee. If such waiver had not been in effect,
the ratio of expenses to average net assets and the ratio of net
investment income to average net assets would have been 0.79%
(annualized) and 4.64% (annualized), respectively.
(5) During the period indicated above the Investment Manager waived a portion
of its investment management fee. If such waiver had not been in effect,
the ratio of expenses to average net assets and the ratio of net
investment income to average net assets would have been 0.81%
(annualized) and 4.04% (annualized), respectively.
(6) During the period indicated above the Investment Manager waived a portion
of its investment management fee. If such waiver had not been in effect,
the ratio of expenses to average net assets and the ratio of net
investment income to average net assets would have been 0.87%
(annualized) and 3.89% (annualized), respectively.
24 PIMCO Municipal Income Funds Semi-Annual Report 10.31.01
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
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TRUSTEES AND PRINCIPAL OFFICERS
Stephen J. Treadway
Chairman, President,
Principal Executive Officer & Trustee
Paul Belica
Trustee
Robert E. Connor
Trustee
Jack Dalessandro
Trustee
Hans Kertess
Trustee
Mark V. McCray
Vice President
Newton B. Schott, Jr.
Vice President & Secretary
Brian S. Shlissel
Treasurer, Principal Financial & Accounting Officer
Michael B. Zuckerman
Assistant Secretary
INVESTMENT MANAGER
PIMCO Advisors L.P.
888 San Clemente Drive
Suite 100
Newport Beach, CA 92660
SUB-ADVISER
Pacific Investment Management Company LLC
840 Newport Center Drive
Newport Beach, CA 92660
TRANSFER AGENT, DIVIDEND PAYING
AGENT AND REGISTRAR
PFPC Inc.
P.O. Box 43027
Providence, RI 02940-3027
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Quarterly information on the Funds is now available on the PIMCO Funds website
(www.pimcofunds.com). Information provided includes portfolio analysis,
performance, yield data, and portfolio manager commentary.
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