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
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PIMCO California Municipal Income Fund
--------------------------------------
(Exact name of registrant as specified in charter)
1345 Avenue of the Americas, New York, New York 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
--------
Date of reporting period: April 30
--------
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. ss. 3507.
ITEM 1. Report to Shareholder
ANNUAL REPORT
4.30.04
PIMCO MUNICIPAL INCOME FUND
PIMCO CALIFORNIA MUNICIPAL INCOME FUND
PIMCO NEW YORK MUNICIPAL INCOME FUND
--------------------------------------------------------------------------------
CONTENTS
[PMF
LISTED Letter to Shareholders........................... 1
NYSE LOGO
OMITTED] Performance and Statistics....................... 2-4
Schedules of Investments......................... 5-19
Statements of Assets and Liabilities............. 20
[PCQ
LISTED Statements of Operations......................... 21
NYSE LOGO
OMITTED] Statements of Changes in Net Assets.............. 22-23
Notes to Financial Statements.................... 24-30
Financial Highlights............................. 31-33
[PNF
LISTED Report of Independent Registered
NYSE LOGO Public Accounting Firm........................... 34
OMITTED]
Privacy Policy, Proxy Voting Policies and
Procedures, other information.................... 35
Tax Information.................................. 36
Dividend of Reinvestment Plan.................... 37
Board of Trustees................................ 38
P I M C O
---------
ADVISORS
PIMCO MUNICIPAL INCOME FUNDS LETTER TO SHAREHOLDERS
June 10, 2004
Dear Shareholder:
We are pleased to provide you with the annual report of PIMCO Municipal Income
Fund, PIMCO California Municipal Income Fund, and PIMCO New York Municipal
Income Fund ("PIMCO Municipal Income Funds" or the "Funds") for the fiscal year
ended April 30, 2004.
Please refer to the following pages for specific information for each of the
PIMCO Municipal Income Funds. If you have any questions regarding the
information provided, please contact your financial advisor or call our
shareholder services area at 1-800-331-1710. Please note that a wide range of
information and resources can be accessed through our Web site,
www.pimcoadvisors.com.
We at the Funds, together with PA Fund Management LLC (formerly, PIMCO Advisors
Fund Management LLC) the Funds' investment manager and Pacific Investment
Management Co. LLC, the Funds' sub-adviser, thank you for investing with us. We
remain dedicated to serving your investment needs.
Sincerely,
/s/ Stephen Treadway /s/ Brian S. Shlissel
-------------------- ----------------------------------
Stephen Treadway Brian S. Shlissel
Chairman President, Chief Executive Officer
10.31.03 | PIMCO Municipal Income Funds Annual Report 1
PIMCO MUNICIPAL INCOME FUND PERFORMANCE SUMMARY AND STATISTICS
April 30, 2004 (unaudited)
--------------------------------------------------------------------------------
SYMBOL: PRIMARY INVESTMENTS: INCEPTION DATE:
PMF Municipal fixed-income June 29, 2001
securities, the interest from
OBJECTIVE: which is exempt from federal TOTAL NET ASSETS(1):
To provide income exempt income tax. $541.8 million
from federal income tax.
PORTFOLIO MANAGER:
Mark McCray
--------------------------------------------------------------------------------
TOTAL RETURN(2): MARKET PRICE NAV
--------------------------------------------------------------------------------
1 Year 2.15% 7.75%
Commencement of Operations (6/29/01) to 4/30/04 3.17% 6.34%
COMMON SHARE PRICE PERFORMANCE: MARKET PRICE/NET ASSET VALUE:
Commencement of Operations (6/29/01) ---------------------------------------
to 4/30/04 Market Price $13.55
[ ] Market Price ---------------------------------------
[ ] NAV Net Asset Value $14.11
---------------------------------------
6/29/2001 15 14.31 Discount to Net Asset Value 3.97%
15 14.32 ---------------------------------------
15.04 14.42 Market Price Yield(3) 7.20%
15.01 14.57 ---------------------------------------
15.05 14.62
15.15 14.69
15.16 14.82
15.58 14.97
15.34 14.84
15.08 14.99
15.05 14.95
14.4 14.48
14.98 14.57
15.05 14.87
14.96 14.65
14.88 14.69
14.84 14.64
14.75 14.85
15.01 15.09
14.93 14.54
14.9 14.37
15 14.45
14.75 13.98
14.99 13.92
14.2 13.96
13.87 13.97
14.6 14.05
14.48 14.38
14.72 14.44
14.67 14.23
14.86 14.32
14.95 14.41
14.96 14.35
14.83 14.53
14.92 14.48
14.7 14.09
14.76 13.97
14.44 13.89
14.3 13.91
14.47 14.1
14.45 14.2
14.28 14.06
14.6 14.22
14.7 14.22
14.6 14.29
14.13 14.63
14.64 13.97
14.65 14.17
14.79 14.29
14.88 14.36
14.85 14.44
14.8 14.45
14.75 14.42
14.95 14.49
14.98 14.48
15.1 14.57
14.94 14.66
14.54 15.02
15.06 14.54
15.05 14.5
14.92 14.43
14.96 14.51
15.04 14.74
15 14.68
15 14.83
15.11 14.83
15.11 14.91
14.99 14.75
14.69 14.18
14.14 14.1
14.79 14.25
14.72 14.45
14.5 14.29
14.22 14.16
14.18 14.13
14.21 14.29
14.25 14.27
14.28 14.35
14.23 14.35
14.45 14.38
14.28 14.29
14.4 14.18
14.22 14.26
14.25 14.24
14.49 14.25
14.25 14.29
14.35 14.33
14.3 14.35
14.48 14.45
14.56 14.42
14.13 14.17
14.45 14.22
14.33 13.77
14.18 13.76
14.2 13.99
14.21 14.02
14.28 14.08
14.42 14.22
14.57 14.26
14.73 14.46
14.75 14.43
14.81 14.46
14.9 14.53
14.74 14.31
14.89 14.25
14.98 14.23
14.8 14.11
14.32 13.9
14.06 13.74
13.79 13.29
13.93 13.47
13.63 13.17
13.74 13.19
13.7 13.23
13.9 13.32
13.84 13.35
13.78 13.68
13.77 13.76
13.86 13.73
13.64 13.62
13.65 13.58
13.63 13.79
13.73 13.85
13.83 13.9
13.84 14.07
13.88 14.24
13.85 14.28
14.08 14.21
14.05 14.25
13.98 14.38
13.92 14.4
13.95 14.45
14.38 14.66
14.65 14.62
14.66 14.64
14.54 14.52
14.74 14.64
14.79 14.68
14.49 14.71
14.43 14.67
14.71 14.81
14.62 14.79
14.72 14.75
14.87 14.6
14.68 14.4
14.09 14.46
13.96 14.31
13.72 14.24
4/30/2004 13.55 14.11
(1) Inclusive of net assets attributable to Preferred Shares outstanding.
(2) PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Total return is
determined by subtracting the initial investment from the value at the end of
the period and dividing the remainder by the initial investment and expressing
the result as a percentage. The calculation assumes that all income dividends
and capital gain distributions have been reinvested at prices obtained under the
Fund's dividend reinvestment plan. Total return does not reflect broker
commissions or sales charges. Total return for a period greater than one year
represents the average annual total return. Total return for a period of less
than one year is not annualized.
An investment in the Fund involves risk, including the loss of principal. Total
return, price, yield and net asset value will fluctuate with changes in market
conditions. This data is provided for information only and is not intended for
trading purposes. A portion of the income generated by the Fund may be subject
to federal, state and local taxes, and may at times be subject to the
alternative minimum tax. Closed-end funds, unlike open-end funds, are not
continuously offered. There is a one-time public offering and once issued,
shares of closed-end funds are sold in the open market through a stock exchange.
Net asset value is total assets applicable to common shareholders less total
liabilities divided by the number of common shares outstanding. Holdings are
subject to change daily.
(3) Market Price Yield is determined by dividing the annualized current monthly
per share dividend to common shareholders by the market price per common share
at April 30, 2004.
2 PIMCO Municipal Income Funds Annual Report | 4.30.04
PIMCO CALIFORNIA MUNICIPAL INCOME FUND PERFORMANCE SUMMARY AND STATISTICS
April 30, 2004 (unaudited)
--------------------------------------------------------------------------------
SYMBOL: PRIMARY INVESTMENTS: INCEPTION DATE:
PCQ Municipal fixed-income June 29, 2001
securities, the interest
OBJECTIVE: from which is exempt from TOTAL NET ASSETS(1):
To provide current income federal and California $397.9 million
exempt from federal and State income tax.
California State income tax. PORTFOLIO MANAGER:
Mark McCray
--------------------------------------------------------------------------------
TOTAL RETURN(2): MARKET PRICE NAV
--------------------------------------------------------------------------------
1 Year (0.28)% 4.95%
Commencement of Operations (6/29/01) to 4/30/04 1.81% 5.40%
COMMON SHARE PRICE PERFORMANCE: MARKET PRICE/NET ASSET VALUE:
Commencement of Operations (6/29/01) --------------------------------------
to 4/30/04 Market Price $13.19
[ ] Market Price --------------------------------------
[ ] NAV Net Asset Value $13.92
--------------------------------------
6/29/2001 15 14.3 Discount to Net Asset Value 5.24%
15.03 14.29 --------------------------------------
15.01 14.36 Market Price Yield(3) 7.01%
15.03 14.46 --------------------------------------
15.09 14.49
15.34 14.51
15.25 14.65
15.88 14.84
15.5 14.78
15.33 14.9
15.31 14.93
14.95 14.52
15 14.67
15.11 14.9
15.1 14.76
15.31 14.77
15.23 14.76
15.28 14.84
15.35 14.92
15.09 14.7
15 14.53
15.39 14.49
15.1 14.07
15.09 13.99
14.6 13.96
14.7 14.01
14.86 14.06
15.02 14.35
15.06 14.36
15.05 14.22
15.02 14.28
15.18 14.35
15.28 14.31
15.06 14.4
15.2 14.36
15.2 14
14.9 13.83
14.7 13.65
14.5 13.63
14.44 13.85
14.36 13.98
14.68 13.86
14.95 14.03
14.9 14.09
14.97 13.96
14.7 13.81
14.57 13.96
14.9 14.07
14.76 14.15
14.75 14.2
14.82 14.21
14.85 14.24
14.96 14.34
14.85 14.38
14.78 14.41
14.89 14.49
15 14.32
15.02 14.32
15.13 14.28
15.05 14.23
15.2 14.34
15.14 14.57
15.35 14.64
15.1 14.78
15.05 14.84
15.06 14.83
14.95 14.64
14.84 13.97
14.7 13.9
14.75 14.14
15.01 14.3
14.8 14.14
14.8 14.01
14.79 14
14.46 14.16
14.28 14.14
14.09 14.15
14.05 14.18
14.5 14.18
14.2 14.07
14.13 13.97
14.11 13.99
14.14 13.96
14.11 13.99
14.02 14.01
14 14.07
14.03 14.18
14.06 14.29
13.94 14.25
13.74 13.95
13.98 14.13
13.96 14.03
14.11 13.97
14.14 14.11
14.1 14.14
14.08 14.23
14.14 14.29
14.21 14.37
14.8 14.51
14.86 14.5
14.94 14.55
14.92 14.6
14.5 14.36
14.65 14.27
14.55 14.25
14.19 14.14
13.58 13.92
13.17 13.6
13.08 13.13
13.41 13.31
13.39 13
13.37 13.06
13.45 13.11
13.47 13.24
13.56 13.3
13.5 13.5
13.4 13.56
13.67 13.5
13.67 13.38
13.35 13.4
13.43 13.61
13.37 13.67
13.45 13.71
13.45 13.87
13.29 14.03
13.39 14.09
13.37 14.02
13.29 14.04
13.29 14.13
13.32 14.15
13.36 14.21
13.54 14.4
13.77 14.35
13.79 14.34
13.78 14.24
13.9 14.35
13.88 14.39
13.88 14.47
13.99 14.43
14.1 14.48
14.1 14.43
14.07 14.39
14.11 14.24
13.96 14.16
13.35 14.23
13.33 14.09
13.13 14.06
4/30/2004 13.19 13.92
(1) Inclusive of net assets attributable to Preferred Shares outstanding.
(2) PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Total return is
determined by subtracting the initial investment from the value at the end of
the period and dividing the remainder by the initial investment and expressing
the result as a percentage. The calculation assumes that all income dividends
have been reinvested at prices obtained under the Fund's dividend reinvestment
plan. Total return does not reflect broker commissions or sales charges. Total
return for a period greater than one year represents the average annual total
return. Total return for a period of less than one year is not annualized.
An investment in the Fund involves risk, including the loss of principal. Total
return, price, yield and net asset value will fluctuate with changes in market
conditions. This data is provided for information only and is not intended for
trading purposes. A portion of the income generated by the Fund may be subject
to federal, state and local taxes, and may at times be subject to the
alternative minimum tax. Closed-end funds, unlike open-end funds, are not
continuously offered. There is a one-time public offering and once issued,
shares of closed-end funds are sold in the open market through a stock exchange.
Net asset value is total assets applicable to common shareholders less total
liabilities divided by the number of common shares outstanding. Holdings are
subject to change daily.
(3) Market Price Yield is determined by dividing the annualized current monthly
per share dividend to common shareholders by the market price per common share
at April 30, 2004.
4.30.04 | PIMCO Municipal Income Funds Annual Report 3
PIMCO NEW YORK MUNICIPAL INCOME FUND PERFORMANCE SUMMARY AND STATISTICS
April 30, 2004 (unaudited)
--------------------------------------------------------------------------------
SYMBOL: PRIMARY INVESTMENTS: INCEPTION DATE:
PNF Municipal fixed-income June 29, 2001
securities, the interest
OBJECTIVE: from which is exempt from TOTAL NET ASSETS(1):
To provide current income federal, New York State $161.9 million
exempt from federal, and New York City income
New York State and New York tax. PORTFOLIO MANAGER:
City income tax. Mark McCray
--------------------------------------------------------------------------------
TOTAL RETURN(2): MARKET PRICE NAV
--------------------------------------------------------------------------------
1 Year 0.21% 6.45%
Commencement of Operations (6/29/01) to 4/30/04 0.59% 4.24%
COMMON SHARE PRICE PERFORMANCE: MARKET PRICE/NET ASSET VALUE:
Commencement of Operations (6/29/01) --------------------------------------
to 4/30/04 Market Price $12.70
[ ] Market Price --------------------------------------
[ ] NAV Net Asset Value $13.44
--------------------------------------
6/29/2001 15 14.3 Discount to Net Asset Value 5.51%
15.09 14.33 --------------------------------------
15.1 14.38 Market Yield Price(3) 7.09%
15.07 14.46 --------------------------------------
15.01 14.58
15.06 14.59
15.2 14.67
15.4 14.81
15.4 14.73
15.18 14.79
15.33 14.73
14.25 14.27
14.89 14.31
14.9 14.57
14.81 14.39
14.7 14.36
14.75 14.25
14.63 14.47
14.83 14.56
14.96 14.19
14.88 13.97
14.7 14.11
14.62 13.58
14.6 13.54
13.7 13.53
13.7 13.51
13.95 13.61
14.44 14.02
14.76 14.13
14.8 13.89
14.73 13.98
14.73 14.14
14.8 14.1
14.7 14.33
14.77 14.28
14.55 13.87
14.5 13.64
13.93 13.58
14.17 13.6
14.18 13.81
14.25 13.92
14.31 13.78
14.27 13.94
14.37 13.96
14.34 13.78
14 13.55
13.96 13.71
14.1 13.85
14.33 13.9
14.31 13.99
14.32 13.98
14.27 13.93
14.44 14.02
14.9 14.02
14.7 14.11
14.58 14.17
15 14.06
14.8 14.05
14.75 14.03
14.67 13.97
14.56 14.05
14.7 14.28
14.63 14.24
14.55 14.39
14.66 14.46
14.75 14.5
14.6 14.33
14.18 13.73
14.12 13.67
14.37 13.86
14.34 14.05
13.93 13.9
14.18 13.75
14.05 13.72
13.89 13.94
13.69 13.96
13.63 14.03
13.5 14.12
13.95 14.15
13.8 13.92
13.8 13.86
13.42 13.85
13.5 13.86
13.51 13.88
13.48 13.92
13.51 13.94
13.5 13.97
13.68 14.04
13.46 14.07
13.23 13.75
13.48 13.89
13.5 13.31
13.42 13.22
13.38 13.46
13.6 13.53
13.77 13.64
14.08 13.63
14.28 13.82
14.31 13.83
14.37 13.86
14.48 13.91
14.36 13.71
14.49 13.72
14.4 13.69
14.4 13.58
14 13.36
13.77 13.2
13.37 12.54
13.45 12.96
13.1 12.63
13.25 12.68
13.35 12.75
13.39 12.86
13.51 12.91
13.47 13.22
13.42 13.35
13.52 13.26
13.36 13.13
13.38 13.08
13.5 13.43
13.5 13.45
13.5 13.48
13.23 13.65
13.19 13.82
13.31 13.86
13.35 13.79
13.3 13.8
13.42 13.85
13.34 13.86
13.36 13.91
13.6 14.1
13.91 14.06
13.97 14.05
13.83 13.92
14.05 14.05
14.03 14.09
14.14 14.13
14.17 14.07
14.04 14.15
14.19 14.15
14.23 14.13
14.16 14
14.06 13.8
13.56 13.87
13.07 13.67
12.78 13.55
4/30/2004 12.7 13.44
(1) Inclusive of net assets attributable to Preferred Shares outstanding.
(2) PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Total return is
determined by subtracting the initial investment from the value at the end of
the period and dividing the remainder by the initial investment and expressing
the result as a percentage. The calculation assumes that all income dividends
have been reinvested at prices obtained under the Fund's dividend reinvestment
plan. Total return does not reflect broker commissions or sales charges. Total
return for a period greater than one year represents the average annual total
return. Total return for a period of less than one year is not annualized.
An investment in the Fund involves risk, including the loss of principal. Total
return, price, yield and net asset value will fluctuate with changes in market
conditions. This data is provided for information only and is not intended for
trading purposes. A portion of the income generated by the Fund may be subject
to federal, state and local taxes, and may at times be subject to the
alternative minimum tax. Closed-end funds, unlike open-end funds, are not
continuously offered. There is a one-time public offering and once issued,
shares of closed-end funds are sold in the open market through a stock exchange.
Net asset value is total assets applicable to common shareholders less total
liabilities divided by the number of common shares outstanding. Holdings are
subject to change daily.
(3) Market Price Yield is determined by dividing the annualized current monthly
per share dividend to common shareholders by the market price per common share
at April 30, 2004.
4 PIMCO Municipal Income Funds Annual Report | 4.30.04
PIMCO MUNICIPAL INCOME FUND SCHEDULE OF INVESTMENTS
April 30, 2004
-------------------------------------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) (Moody's/S&P)* Value
-------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS & NOTES--87.3%
ALABAMA--2.0%
$ 2,500 Birmingham Baptist Med. Ctr., Baptist Health Syst.,
5.875%, 11/15/24, Ser. A A3/NR $ 2,566,500
8,000 Huntsville Health Care Auth., 5.75%, 6/1/31, Ser. A A2/NR 8,186,160
------------
10,752,660
------------
ALASKA--0.9%
6,000 Northern Tobacco Securitization Corp., 5.50%, 6/1/29 Baa3/BBB 4,955,220
------------
ARIZONA--0.4%
2,000 Apache Cnty. Pollution Control Rev., Tucson Elec. Power Co.,
5.875%, 3/1/33 Ba3/B+ 1,897,600
------------
CALIFORNIA--1.8%
10,000 Tobacco Securization Agcy. Rev., 6.75%, 6/1/39 Baa3/BBB 9,414,500
------------
COLORADO--2.3%
3,000 Denver Health & Hosp. Auth. Healthcare Rev.,
5.375%-6.00%, 12/1/23-12/1/28, Ser. A Baa3/BBB 2,830,470
12,400 Liberty Heights Health Auth. Retirement Facs. Rev.,
zero coupon, 7/15/24 NR/AAA 4,056,784
4,965 Northwest Pkwy. Pub. Hwy. Auth., 7.125%, 6/15/41, Ser. D Ba1/BB+ 5,147,762
------------
12,035,016
------------
CONNECTICUT--0.2%
1,000 State Dev. Auth. Pollution Control Rev., Conn. Light & Power,
5.85%, 9/1/28 A3/BBB 1,043,210
------------
DISTRICT OF COLUMBIA--1.0%
5,855 Tobacco Settlement Fin. Corp., 6.25%, 5/15/24 Baa3/BBB 5,475,069
------------
FLORIDA--1.8%
9,000 Highlands Cnty. Health Fac. Auth. Rev., Adventist Health Syst.,
6.00%, 11/15/31, Ser. A A3/A 9,470,340
------------
GEORGIA--2.1%
10,000 Muni Elec. Auth. Power Rev., 5.50%, 1/1/20, Ser. Z (MBIA) Aaa/AAA 11,066,800
------------
ILLINOIS--12.1%
10,115 Chicago Education Board GO, zero coupon, 12/1/31, Ser. A (FGIC) Aaa/AAA 2,176,647
9,080 Chicago, GO, 5.375%, 1/1/34, Ser. A (FGIC) Aaa/AAA 9,285,662
2,000 Chicago Water Rev., 5.25%, 11/1/27 (FGIC) Aaa/AAA 2,034,280
6,260 Dev. Fin. Auth. Hosp. Rev., Adventist Health Syst., 5.50%-5.65%,
11/15/24-11/15/29 A3/A 6,226,322
5,000 Educational Fac. Auth. Rev., Chicago Univ., 5.25%, 7/1/41, Ser. A Aa1/AA 5,059,150
1,115 Educational Fac. Auth. Rev., Midwestern Univ.,
5.50%, 5/15/18, Ser. B NR/BBB+ 1,150,401
3,000 Health Fac. Auth. Rev., Decatur Memorial Hosp., 5.75%, 10/1/24 A2/A 3,043,110
5,425 Health Fac. Auth. Rev., Silver Cross Hosp., 5.50%, 8/15/25 NR/A- 5,337,657
15,690 Lake Cnty. High School Dist., GO, zero coupon, 2/1/19-2/1/22,
Ser. B (FGIC) Aaa/AAA 6,844,965
4.30.04 PIMCO Municipal Income Funds Annual Report 5
PIMCO MUNICIPAL INCOME FUND SCHEDULE OF INVESTMENTS
April 30, 2004
------------------------------------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) (Moody's/S&P)* Value
------------------------------------------------------------------------------------------------------------
ILLINOIS--(CONCLUDED)
$ 7,345 Regional Transportation Auth., 5.50%, 6/1/23, Ser. B (FGIC) Aaa/AAA $ 7,934,436
2,500 State, GO, 5.375%, 8/1/14 (MBIA) Aaa/AAA 2,718,950
3,000 State Sales Tax Rev., 5.125%, 6/15/20 Aa3/AAA 3,112,890
5,000 Univ. Rev., Auxiliary Fac. Syst., 5.25%, 4/1/32, Ser. B (FGIC) Aaa/AAA 5,074,900
4,000 Winnebago Boone ETC Cntys., Rock Valley Community College,
5.30%, 10/1/18 (FGIC) Aaa/NR 4,196,600
------------
64,195,970
------------
INDIANA--1.8%
6,500 Carmel School Bldg. Corp., 5.00%, 7/15/22 (MBIA) NR/AAA 6,608,810
2,725 Richland Beanblossom School Bldg. Corp., 5.00%, 1/15/22 (FGIC) Aaa/AAA 2,765,929
------------
9,374,739
------------
KANSAS--3.8%
Wichita Hosp. Rev.,
5,000 5.625%, 11/15/31, Ser. III NR/A+ 5,120,550
14,370 6.25%, 11/15/24, Ser XI NR/A+ 15,294,422
------------
20,414,972
------------
KENTUCKY--0.8%
4,000 Kentucky Development Fin. Auth. Hospital Rev.,
6.00%, 10/1/1 A3/A 4,376,440
------------
LOUISIANA--6.4%
10,000 Local Gov't Environmental Fac., Community Dev. Auth. Rev.,
6.55%, 9/1/25 NR/A 10,858,400
27,890 Tobacco Settlement Fin. Corp. Rev., 5.875%, 5/15/39 Baa3/BBB 23,248,546
------------
34,106,946
------------
MARYLAND--0.4%
2,000 Baltimore Water Proj. Rev., 5.125%, 7/1/42, Ser. A (FGIC) Aaa/AAA 2,021,780
------------
MICHIGAN--4.9%
2,000 Detroit, GO, 5.375%, 4/1/15-4/1/17, Ser. A-1 (MBIA) Aaa/AAA 2,164,080
5,650 Forest Hills Pub. School, GO, 5.25%, 5/1/18 Aa2/NR 6,022,787
3,000 Mount Clemens Community School Dist., 5.00%, 5/1/31 Aa1/AAA 3,018,600
50 Royal Oak Hosp. Fin. Auth., William Beaumont Hosp.,
5.25%, 11/15/35, Ser. M (MBIA) Aaa/AAA 50,744
4,000 State Hosp. Fac. Auth. Rev., Detroit Med. Ctr., 6.25%, 8/15/13 Ba3/B 3,441,160
2,500 State Strategic Oblig. Rev., Detroit Edison Co., 5.45%, 9/1/29 A3/A- 2,538,975
3,000 Taylor Tax lncrement Fin. Auth., 5.375%, 5/1/17 (FSA) Aaa/AAA 3,215,310
6,255 Wayne Charter Cnty. Airport Fac. Rev., Northwest Airlines, Inc.,
6.75%, 12/1/15 NR/NR 5,728,704
------------
26,180,360
------------
MINNESOTA--0.6%
3,000 Agricultural & Econ. Dev. Board Rev., Health Care Syst.,
6.375%, 11/15/29, Ser. A A2/A 3,205,830
------------
6 PIMCO Municipal Income Funds Annual Report 4.30.04
PIMCO MUNICIPAL INCOME FUND SCHEDULE OF INVESTMENTS
April 30, 2004
-------------------------------------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) (Moody's/S&P)* Value
-------------------------------------------------------------------------------------------------------------
MISSOURI--0.5%
$ 2,500 Interstate 470 & 350 Trans. Dev., Motranson Rev., 6.35%, 5/1/22 NR/NR $ 2,535,025
------------
NEVADA--3.6%
3,000 Clark Cnty. Airport Rev., 5.25%, 7/1/34, Ser. B (FGIC) Aaa/AAA 3,042,630
12,000 Clark Cnty. Passenger Fac. Rev., 4.75%, 7/1/22 (MBIA) Aaa/AAA 11,869,800
4,250 Truckee Meadows Water Auth. Rev., 5.25%, 7/1/34, Ser. A (FSA) Aaa/AAA 4,361,817
------------
19,274,247
------------
NEW HAMPSHIRE--0.6%
3,000 State Bus. Fin. Auth. Pollution Control Rev., Conn. Light & Power
Co., 5.85%, 12/1/22 A3/BBB 3,149,040
------------
NEW JERSEY--4.0%
1,860 Camden Cnty. Improvement Auth. Rev., Cooper Health Syst.,
5.60%-6.00%, 2/15/07-2/15/27 Ba2/NR 1,510,003
3,000 Economic Dev. Auth. Rev., Arbor Glen, 5.875%, 5/15/16, Ser. A NR/NR 2,739,900
16,550 Economic Dev. Auth. Rev., Kapkowski Landfill Proj., 5.75%, 4/1/31 Baa3/NR 17,032,101
------------
21,282,004
------------
NEW MEXICO--0.5%
2,500 Farmington Pollution Control Rev., Public Service Co.,
5.80%, 4/1/22 Baa2/BBB 2,585,725
------------
NEW YORK--0.5%
2,875 Westchester Cnty. Health Care Corp. Rev., 5.875%, 11/1/25,
Ser. A Ba1/BB 2,646,667
------------
NORTH CAROLINA--0.6%
3,000 State Fin. Agy. Rev., Duke Univ. Proj., 5.125%, 10/1/41, Ser. A Aa1/AA+ 3,011,760
------------
OHIO--1.3%
5,065 Lorain Cnty. Hosp. Rev., Catholic Healthcare Partners,
5.625%-5.75%, 10/1/17-10/1/18 A1/AA- 5,394,115
1,235 State Turnpike Rev., 5.50%, 2/15/15 Aa3/AA 1,346,249
------------
6,740,364
------------
PENNSYLVANIA--4.4%
5,780 Allegheny Cnty. Hosp. Dev. Auth. Rev., 9.25%, 11/15/30, Ser. B B2/B 6,454,815
1,000 Allegheny Cnty. Indl. Dev. Auth. Rev., USX Corp., 5.60%, 9/1/30 Baa1/BBB+ 995,820
1,095 Allegheny Cnty. Port Auth. Rev., 5.25%, 3/1/20 (FGIC) Aaa/AAA 1,147,100
2,575 Delaware Cnty. Auth. College Rev., Neumann College,
5.80%, 10/1/17 NR/BBB- 2,610,381
1,000 Philadelphia Auth. Indl. Rev., Franklin Institute, 5.20%, 6/15/26 Baa2/NR 917,050
4,610 Philadelphia Hosp. & Higher Education Fac. Hosp. Rev., Temple
Univ. Hosp.,
6.625%, 11/15/23, Ser. A Baa2/BBB 4,691,920
6,200 State Higher Educational Fac. Auth. Rev., UPMC Health Syst.,
6.00%, 1/15/31, Ser. A NR/A 6,494,686
------------
23,311,772
------------
4.30.04 PIMCO Municipal Income Funds Annual Report 7
PIMCO MUNICIPAL INCOME FUND SCHEDULE OF INVESTMENTS
April 30, 2004
-------------------------------------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) (Moody's/S&P)* Value
-------------------------------------------------------------------------------------------------------------
PUERTO RICO--0.3%
$ 1,600 Elec. Power Auth. Rev., 5.125%, 7/1/29, Ser. NN A3/A- $ 1,601,632
------------
RHODE ISLAND--3.0%
18,000 Tobacco Settlement Fin. Corp. Rev., 6.25%, 6/1/42, Ser. A Baa3/BBB 15,784,560
------------
SOUTH CAROLINA--4.3%
5,500 Greenwood Cnty. Hosp. Rev., Self Memorial Hosp.,
5.50%, 10/1/21-10/1/26 A2/A 5,591,465
3,000 Jobs Economic Dev. Auth. Hosp. Facs. Rev., Georgetown
Memorial Hosp.,
5.375%, 2/1/30 (Radian) NR/AA 3,041,910
15,600 Tobacco Settlement Rev., 6.375%, 5/15/30, Ser. B Baa3/BBB 14,061,996
------------
22,695,371
------------
TENNESSEE--2.5%
4,000 Knox Health Educational & Housing Fac. Rev., Baptist Health
Syst., 6.375%, 4/15/22 Baa2/NR 4,063,760
9,320 Memphis Health Educational & Housing Fac., Wesley Housing
Corp., 6.95%, 1/1/20 (a)(b) (acquired 6/29/01; cost-$9,277,291) NR/NR 9,319,814
------------
13,383,574
------------
TEXAS--9.4%
1,750 Austin Convention Enterprises Inc., 5.75%, 1/1/32, Ser. B A3/BBB- 1,765,243
4,000 Austin Water & Wastewater Syst. Rev., 5.25%, 5/15/31, Ser. A &
B (FSA) Aaa/AAA 4,070,440
2,935 Bell Cnty. Health Fac. Dev. Corp., Buckner Retirement Fac.,
5.25%, 11/15/19 NR/A- 2,910,346
2,865 Corpus Christi Refin. & Improvement, GO, 5.375%, 3/1/18 (FSA) Aaa/AAA 3,094,458
3,680 Duncanville Indpt. School Dist., 5.25%, 2/15/32, Ser. B Aaa/AAA 3,745,504
5,000 Harris Cnty. Health Fac. Dev. Corp., Christus Health, 5.375%,
7/1/29, Ser. A (MBIA) Aaa/AAA 5,090,000
7,000 Harris Cnty. Health Fac. Dev. Corp., Memorial Hermann
Healthcare, 6.375%, 6/1/29 A2/A 7,806,820
1,840 Houston Water Conveyance Syst., CP., 6.25%, 12/15/12, Ser. J
(AMBAC) Aaa/AAA 2,152,138
2,000 Mansfield Indpt. School Dist., GO, 5.25%, 2/15/23 Aaa/AAA 2,068,940
4,380 Southlake Parks Dev. Corp., Sales Tax Rev., 5.60%, 8/15/31
(AMBAC). Aaa/AAA 4,580,341
4,530 State Water Financial Assistance, 5.30%, 8/1/18, Ser. A Aa1/AA 4,808,369
7,450 Water Dev. Board Rev., 5.125%, 7/15/18 Aaa/AAA 7,723,341
------------
49,815,940
------------
UTAH--1.3%
7,000 Salt Lake Cnty. Hosp. Rev., IHC Health Services Inc., 5.125%,
2/15/33 (AMBAC) Aaa/AAA 7,023,940
------------
WASHINGTON--3.5%
3,120 Cowlitz Cnty. School Dist., GO, 5.625%, 12/1/14-12/1/16 (FSA) Aaa/NR 3,424,154
5,000 Kent, GO, 5.375%, 12/1/20 (MBIA) Aaa/AAA 5,271,400
8 PIMCO Municipal Income Funds Annual Report 4.30.04
PIMCO MUNICIPAL INCOME FUND SCHEDULE OF INVESTMENTS
April 30, 2004
----------------------------------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) (Moody's/S&P)* Value
----------------------------------------------------------------------------------------------------------
WASHINGTON--(CONCLUDED)
$ 5,420 King Cnty. School Dist., GO, 5.25%, 12/1/21, Ser. A (MBIA) Aaa/AAA $ 5,646,448
4,000 Northwest Energy Elec. Rev., 5.50%, 7/1/13-7/1/15, Ser. A Aa1/AA- 4,402,400
------------
18,744,402
------------
WISCONSIN--3.7%
14,785 Badger Tobacco Asset Corp., 5.75%-6.00%, 6/1/12-6/1/17 Baa3/BBB 14,011,574
3,515 State, GO, 5.00%, 5/1/22, Ser. A (FGIC) Aaa/AAA 3,589,237
2,230 State Health & Educational Fac. Auth. Rev., Kenosha Hosp. &
Med. Ctr., 5.625%, 5/15/29 NR/A 2,237,292
------------
19,838,103
------------
Total Municipal Bonds & Notes (cost-$462,308,260) 463,411,578
------------
VARIABLE RATE NOTES (b)(c)(d)(e)--10.1%
HAWAII--0.7%
3,468 Honolulu City & Cnty. Wastewater Syst. Rev., 8.62%, 7/1/23,
Ser. 400 (FGIC) (acquired 7/3/01; cost--$3,134,043) Aaa/NR 3,536,573
------------
ILLINOIS--2.6%
7,253 Cook Cnty., GO, 8.63%, 11/15/28, Ser. 458 (FGIC) (acquired
7/3/01; cost--$6,327,551) Aaa/NR 7,150,965
6,900 Educational Fac. Auth. Rev., 8.91%, 7/1/26 (acquired 8/23/01;
cost--$6,610,300) NR/AA 6,902,622
------------
14,053,587
------------
MASSACHUSETTS--1.0%
5,000 State Health & Educational Fac. Auth. Rev., 10.18%, 1/1/10
(acquired 8/10/01; cost--$5,126,861) NR/NR 5,435,300
------------
NEW YORK--1.2%
6,500 City Muni. Water Auth. Rev., 8.65%, 6/15/05 (acquired 8/24/01,
cost--$6,395,360) NR/AA 6,634,290
------------
TENNESSEE--1.1%
5,000 Memphis Electricity System Rev., 8.63%, 12/1/11 (acquired
11/26/03; cost--$6,182,516) Aaa/NR 5,899,700
------------
TEXAS--2.6%
4,250 Harris Cnty. Health Fac. Dev. Corp., 9.41%, 2/15/21 (acquired
8/10/01; cost--$4,152,443) NR/AA 4,318,000
8,988 Harris Cnty. Health Fac. Dev. Corp., 9.38%, 7/1/29,
Ser. 357 (MBIA) (acquired 6/29/01; cost--$8,442,719) Aaa/NR 9,311,050
------------
13,629,050
------------
WASHINGTON--0.9%
4,500 Seattle, GO, 8.87%, 12/15/28, Ser. 348 (acquired 7/3/01;
cost--$4,103,012) Aa1/NR 4,589,550
------------
Total Variable Rate Notes (cost-$50,474,805) 53,778,050
------------
4.30.04 PIMCO Municipal Income Funds Annual Report 9
PIMCO MUNICIPAL INCOME FUND SCHEDULE OF INVESTMENTS
April 30, 2004
-----------------------------------------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) (Moody's/S&P)* Value
-----------------------------------------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (c)(f)--1.8%
CONNECTICUT--0.1%
$ 800 State Health & Education Facility Auth., Rev., Yale University,
1.05%, 5/3/04 Aaa/AAA $ 800,000
------------
FLORIDA--0.2%
1,160 Orange Cnty. School Board CP., 1.11%, 5/3/04, Ser. B (MBIA) Aaa/AAA 1,160,000
------------
MICHIGAN--0.0%
10 Holt Public Schools, GO, 1.08%, 5/6/04 NR/AA+ 10,000
------------
NEVADA--0.3%
1,400 Clark Cnty. School Dist., GO, 1.07%, 5/3/04 Ser. A Aaa/AAA 1,400,000
------------
NEW JERSEY--0.4%
1,900 New Jersey Educational Facility Auth., Rev., Princeton University,
1.05%, 5/3/04 Aaa/AAA 1,900,000
------------
PENNSYLVANIA--0.3%
1,800 Philadelphia Hospital & Higher Education Facility Auth. Rev.,
1.10%, 5/3/04 Aaa/AAA 1,800,000
------------
VIRGINIA--0.5%
2,700 Loudoun Cnty. Indl. Dev. Auth. Rev., Howard Hughes Med. Ctr.,
1.08%, 5/3/04, Ser. C Aaa/AAA 2,700,000
------------
Total Variable Rate Demand Notes (cost-$9,770,000) 9,770,000
------------
U.S. TREASURY BILLS (g)--0.8%
4,275 0.885%-0.9425%, 6/3/04-6/17/04 (cost-$4,270,389) Aaa/AAA 4,270,949
------------
TOTAL INVESTMENTS BEFORE CALL OPTIONS WRITTEN (cost-$526,823,454+)--100.0% 531,230,577
------------
CALL OPTIONS WRITTEN (h)--(0.0)%
Contracts
---------
U.S. Treasury Bond Futures, Chicago Board of Trade:
(230) Strike price $112, expires 8/27/04 (158,125)
(230) Strike price $113, expires 8/27/04 (118,594)
------------
Total call options written (premiums received-$303,744) (276,719)
------------
PUT OPTIONS WRITTEN (h)--0.0%
U.S. Treasury Bond Futures, Chicago Board of Trade:
(73) Strike price $106, expires 5/21/04 (premium received-$33,420) (59,312)
------------
Total Options Written (premiums received-$337,164) (336,031)
------------
TOTAL INVESTMENTS, NET OF OPTIONS WRITTEN (cost-$526,486,290)--100.0% $530,894,546
------------
10 PIMCO Municipal Income Funds Annual Report 4.30.04
PIMCO MUNICIPAL INCOME FUND SCHEDULE OF INVESTMENTS
April 30, 2004
--------------------------------------------------------------------------------
+ The cost basis of portfolio securities for federal income tax purposes is
$526,823,454. Aggregate gross unrealized appreciation for securities in
which there is an excess of value over tax cost is $16,239,567; aggregate
gross unrealized depreciation for securities in which there is an excess
of tax cost over value is $11,832,444; net unrealized appreciation for
federal income tax purposes is $4,407,123.
--------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
4.30.04 PIMCO Municipal Income Funds Annual Report 11
PIMCO CALIFORNIA MUNICIPAL INCOME FUND SCHEDULE OF INVESTMENTS
April 30, 2004
-------------------------------------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) (Moody's/S&P)* Value
-------------------------------------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS & NOTES--87.4%
$ 1,000 ABAG Fin. Auth. for Nonprofit Corps., CP, 5.375%, 2/15/19 NR/BBB+ $ 1,003,010
1,000 ABAG Fin. Auth. for Nonprofit Corps., Rev., 5.375%, 11/15/25 NR/BBB 998,080
1,385 Alvord Unified School Dist., GO, 5.375%, 8/1/29, Ser. C (FSA) Aaa/NR 1,461,743
1,650 Apple Valley, CP, 5.375%, 6/1/21 NR/BBB 1,638,103
2,000 Baldwin Park Monrovia School Facs., Grant Financing Auth.,
5.00%, 10/1/36 (AMBAC) Aaa/AAA 1,974,600
6,405 Campbell Union High School Dist., GO, 5.50%, 8/1/30 (FSA) Aaa/NR 6,755,994
2,250 Capistrano Unified School Dist., Community Fac. Dist., Special
Tax, 5.75%, 9/1/29 NR/NR 2,257,515
8,250 Carson Improvement Board Act 1915, Special Assessment,
6.35%-6.375%, 9/2/23-9/2/31 NR/NR 8,528,123
5,250 Central JT Powers Health Fin. Auth., CP, 5.75%, 2/1/31 Baa2/BBB 5,158,020
4,140 Charter Oak Unified School Dist., GO, 5.00%, 7/1/28, Ser. B
(FSA) Aaa/AAA 4,145,755
7,750 Contra Costa Cnty. Public Fin. Auth., Tax Allocation Rev.,
5.125%-5.85%, 8/1/19-8/1/33 NR/BBB 7,865,011
2,750 CSUCI Fin. Auth. Rev., 5.00%, 9/1/31, Ser. A, (MBIA) Aaa/AAA 2,776,675
3,635 Cucamonga Cnty. Water Dist., CP, 5.125%, 9/1/35 (FGIC) Aaa/AAA 3,657,973
1,775 Educational Fac. Auth. Rev., zero coupon, 9/1/10 (AMBAC) Aaa/AAA 1,399,943
25,215 El Monte, CP, 4.75%-5.25%, 6/1/30-1/1/34 (AMBAC) Aaa/AAA 25,036,644
10,000 Foothill Eastern Corridor Agcy., Toll Road Rev.,
zero coupon, 1/15/33-1/15/34 Baa3/NR 1,721,450
4,170 Fremont Community Fac. Dist., Special Tax.,
6.00%-6.30%, 9/1/18-9/1/31 NR/NR 4,224,902
Golden State Tobacco Securization Corp., Tobacco Settlement Rev.,
27,655 6.25%-6.75%, 6/1/33-6/1/39, Ser. 2003-A-1, Baa2/BBB 25,909,100
540 7.875%, 6/1/42, Ser. A-1 Baa2/BBB 573,156
Health Fac. Fin. Auth. Rev.,
500 5.00%, 3/1/33 NR/A 476,510
4,000 5.00%, 7/1/18-7/1/28, Ser. A Baa1/BBB+ 3,883,130
5,315 5.125%, 7/1/18 NR/A- 5,335,356
3,000 5.25%, 10/1/14, Ser. B A3/A 3,295,020
6,250 Infrastructure & Economic Dev. Bank Rev., 5.00%, 7/1/36
(AMBAC) Aaa/AAA 6,219,875
14,000 La Quinta Redev. Agcy., Tax Allocation,
5.00%-5.125%, 9/1/21-9/2/32 (AMBAC) Aaa/AAA 14,035,610
1,560 Lincoln Public Fin. Auth. Rev., 6.125%, 9/2/27 NR/NR 1,581,403
845 Los Angeles Community Redev. Agcy., Tax Allocation,
5.875%-6.00%, 9/1/26-9/1/31, Ser. B, NR/NR 807,966
6,250 Los Angeles Cnty. Metropolitan Transportation Auth. Rev., Sales
Tax Rev., 4.75%, 7/1/28, Ser. B, Aaa/AAA 6,023,438
3,250 Los Angeles Unified School Dist., GO, 5.125%, 7/1/21, Ser. E
(MBIA) Aaa/AAA 3,366,968
12 PIMCO Municipal Income Funds Annual Report 4.30.04
PIMCO CALIFORNIA MUNICIPAL INCOME FUND SCHEDULE OF INVESTMENTS
April 30, 2004
------------------------------------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) (Moody's/S&P)* Value
------------------------------------------------------------------------------------------------------------
Los Angeles Water & Power Rev., Ser. A-A-1,
$ 3,000 5.00%, 7/1/11 (MBIA) Aaa/AAA $ 3,282,540
13,000 5.25%, 7/1/21 (FSA) Aaa/AAA 13,598,130
1,000 Menifee Union School Dist., Special Tax, 6.40%, 9/1/31 NR/NR 1,017,280
2,665 Merced Irrigation Dist. Elec. Syst. Rev., 6.50%, 9/1/22 Baa3/NR 2,752,758
3,500 Metropolitan Water Dist., Waterworks Rev., 5.00%, 7/1/26,
Ser. A (Pre-refunded @ 101, 1/1/08) (i) Aa2/AA 3,770,257
5,820 Montclair Redev. Agcy., Tax Allocation, 5.30%, 10/1/30 (MBIA) Aaa/AAA 5,998,732
3,730 Murrieta Valley Yuma Unified School Dist., Special Tax,
6.30%-6.50%, 9/1/18-9/1/31 NR/NR 3,818,535
6,255 Orange Cnty. Sanitation Dist., CP, 5.25%, 2/1/30 (FGIC) Aaa/AAA 6,392,297
1,080 Palm Springs Community Redev. Agcy., Tax Allocation,
5.50%, 8/1/21 NR/A- 1,107,940
1,010 Pomona Unified School Dist., GO, 6.10%, 2/1/19, Ser. A (MBIA) Aaa/AAA 1,191,063
1,690 Rancho Etiwanda Public Fac., Special Tax, 6.375%, 9/1/24 NR/NR 1,728,921
2,770 Rancho Mirage Redev. Agcy., Tax Allocation,
5.50%-5.625%, 4/1/24-4/1/33 Baa1/BBB+ 2,797,583
8,305 Riverside Cnty., CP, 5.125%, 11/1/30 (MBIA) Aaa/AAA 8,382,652
1,000 Riverside Cnty. Pub. Financing., Tax Allocation,
5.625%, 10/1/33, Ser. A Baa2/BBB- 1,002,840
1,850 Riverside Improvement Board Act 1915, Special Assessment,
6.15%-6.375%, 9/2/19-9/2/26 NR/NR 1,878,196
575 Roseville Woodcreek Community Fac. Dist., Special Tax,
6.375%, 9/1/27 NR/NR 596,333
2,000 Sacramento Health Fac. Rev., 5.30%, 1/1/24, Ser. A NR/A+ 1,992,600
6,855 Sacramento Special Tax, 5.70%-6.15%, 9/1/21-9/1/26 NR/NR 6,862,810
545 San Diego Cnty., CP, 5.25%, 10/1/28 A2/NR 548,292
1,000 San Diego Cnty., Water Auth. Rev., CP, 4.75%-5.00%,
5/1/28-5/1/32, Ser. A Aaa/AAA 989,590
3,330 San Francisco Bay Area Rapid Transit Dist. Rev., 5.125%,
7/1/36 (AMBAC) Aaa/AAA 3,342,621
720 San Francisco City & Cnty. Redev. Agcy. Rev., Special Tax,
6.125%, 8/1/31, Ser. B NR/NR 734,450
5,065 San Joaquin Cnty., CP, 5.00%, 9/1/20 (MBIA) Aaa/AAA 5,202,110
San Joaquin Hills Transportation Corridor Agcy., Toll Road Rev.,
Ser. A,
5,000 zero coupon, 1/15/19 Baa3/BBB- 4,127,700
5,000 5.50%, 1/15/28 Baa3/BBB- 4,679,550
230 San Jose Improvement Board Act 1915, Special Assessment,
5.60%, 9/2/17, Ser. 24Q NR/NR 233,002
5,000 San Jose Unified School Dist., Santa Clara Cnty.,
GO, 5.125%, 8/1/25, Ser. D (FSA) Aaa/NR 5,101,050
26,450 San Juan Unified School Dist., GO,
zero coupon, 8/1/22-8/1/26 (FSA) Aaa/AAA 8,713,164
600 Santa Ana Financing. Auth., Rev., 5.60% 9/1/19, Ser. C NR/BBB 614,040
1,815 Santa Clara CP, 5.00%, 2/1/32 (AMBAC) Aaa/AAA 1,796,051
4.30.04 PIMCO Municipal Income Funds Annual Report 13
PIMCO CALIFORNIA MUNICIPAL INCOME FUND SCHEDULE OF INVESTMENTS
April 30, 2004
----------------------------------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) (Moody's/S&P)* Value
----------------------------------------------------------------------------------------------------------
$ 1,435 Santa Maria JT Union High School Dist., GO,
5.25%, 8/1/25, Ser. A (FSA) Aaa/AAA $ 1,477,734
Statewide Community Dev. Auth., CP,
8,000 5.375%, 4/1/30 NR/BBB 7,455,520
8,000 6.50%, 7/1/20 Baa2/BBB 8,898,480
Statewide Community Dev. Auth., Rev.,
15,250 5.125%, 10/1/30, Ser. A, NR/A+ 14,256,462
4,000 5.50%, 8/15/34, Ser. B A2/A+ 4,063,400
9,900 6.625%, 10/1/31-11/1/31 NR/NR 9,820,600
2,550 6.75%, 6/1/28 (a) (b) (acquired 7/3/01; cost-$2,550,000) NR/NR 2,563,974
10,800 Tobacco Securitization Auth. Rev., Ser. A,
5.25%-5.375%, 6/1/31-6/1/41 A1/A 8,488,350
6,865 Tustin Unified School Dist., Special Tax,
5.50%-5.625%, 9/1/22-9/1/32 NR/NR 6,713,694
University Rev.
12,000 5.00%, 5/15/11-5/15/36, Ser. A (AMBAC) Aaa/AAA 12,137,760
7,000 5.125%, 9/1/31, Ser. O (FGIC) Aaa/AAA 7,077,490
3,750 West Kern Cnty. Water Dist., CP, 5.625%, 6/1/31 Baa2/NR 3,753,075
------------
Total California Municipal Bonds & Notes (cost-$339,117,524) 343,070,699
------------
OTHER MUNICIPAL BONDS & NOTES--5.7%
ILLINOIS-1.4%
5,500 Educational Facs. Auth Rev.s, 5.00% 7/1/33, Ser. A Aa1/AA 5,441,315
LOUISIANA-0.4%
1,750 Tobacco Settlement Finance Corp., 5.875%, 5/15/39 Ser. 2001-B A1/A 1,458,765
NEW JERSEY-1.3%
6,210 Tobacco Settlement Finance Corp., 6.00%-6.125%,
6/1/37-6/1/42 Baa2/BBB 5,321,613
PUERTO RICO-2.5%
3,050 Commonwealth, GO, 5.50%, 7/1/12 NR/AAA 3,437,868
Electric Power Auth. Power Rev.,
1,250 5.125%, 7/1/29, Ser. NN A3/A- 1,251,275
5,000 5.25%, 7/1/29, Ser. HH (FSA) Aaa/AAA 5,165,150
SOUTH CAROLINA-0.1%
340 Tobacco Settlement Rev. Management Auth., 6.375%, 5/15/30 Baa2/BBB 306,479
------------
Total Other Municipal Bonds & Notes (cost-$21,899,833) 22,382,465
------------
CALIFORNIA VARIABLE RATE NOTES (b)(c)(d)(e)-2.6%
10,003 Los Angeles Wastewater Syst. Rev., RITES,
8.72%, 6/1/28, Ser. 318 (FGIC) (acquired 7/3/01
cost-$9,049,503) NR/NR 10,022,505
------------
CALIFORNIA SHORT-TERM VARIABLE RATE DEMAND NOTES (c)(f)-3.3%
1,600 Health Facs. Financing Auth. Rev.,
1.15%, 5/3/04, Ser. B, (AMBAC) VMIG1/A1+ 1,600,000
1,000 Irvine Ranch Water Dist., GO,
1.09%, 5/3/04 VMIG1/AAA 1,000,000
14 PIMCO Municipal Income Funds Annual Report 4.30.04
PIMCO CALIFORNIA MUNICIPAL INCOME FUND SCHEDULE OF INVESTMENTS
April 30, 2004
-----------------------------------------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) (Moody's/S&P)* Value
-----------------------------------------------------------------------------------------------------------------
$ 800 Irvine Unified School Dist., Special Tax,
1.09%, 5/3/04 VMIG1/NR $ 800,000
Metropolitan Water Dist., Southern CA. Waterworks Rev.,
4,100 1.02%, 5/3/04 Ser. C-2 VMIG1/A-1+ 4,100,000
2,500 1.05%, 5/3/04 Ser. C-2 VMIG1/A-1+ 2,500,000
1,300 1.09%, 5/3/04 Ser. B-1 VMIG1/A-1+ 1,300,000
1,500 Pollution Control Financing Auth., 0.97%, 5/3/04 VMIG1/AAA 1,500,000
------------
Total California Short-Term Variable Rate Notes
(cost-$12,800,000) 12,800,000
------------
U.S. TREASURY BILLS (g)-1.1%
4,470 0.86%-0.96%, 6/3/04-6/17/04 (cost-$4,465,209) Aaa/AAA 4,465,793
------------
TOTAL INVESTMENTS BEFORE OPTIONS WRITTEN
(cost-$387,332,069+)-100.1% 392,741,462
------------
CALL OPTIONS WRITTEN (h)-(0.1)%
Contracts
-----------
U.S. Treasury Bond Futures, Chicago Board of Trade:
(170) Strike price $112, expires 8/27/04 (116,875)
(170) Strike price $113, expires 8/27/04 (87,656)
------------
Total call options written (premiums received-$224,506) (204,531)
------------
PUT OPTIONS WRITTEN (h)-0.0%
U.S. Treasury Bond Futures, Chicago Board of Trade:
(290) Strike price $106, expires 5/21/04 (premium received-$132,766) (235,625)
------------
Total Options Written (premiums received-357,272) (440,156)
------------
TOTAL INVESTMENTS, NET OF OPTIONS WRITTEN (cost-$386,974,797)-100.0% $392,301,306
------------
--------------------------------------------------------------------------------
+ The cost basis of portfolio securities for federal income tax purposes is
$387,332,069. Aggregate gross unrealized appreciation for securities in
which there is an excess of value over tax cost is $9,783,605; aggregate
gross unrealized depreciation for securities in which there is an excess of
tax cost over value is $4,374,212; net unrealized appreciation for federal
income tax purposes is $5,409,393.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
4.30.04 PIMCO Municipal Income Funds Annual Report 15
PIMCO NEW YORK MUNICIPAL INCOME FUND SCHEDULE OF INVESTMENTS
April 30, 2004
------------------------------------------------------------------------------------------------------------
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., 5.30%, 4/1/29, Ser. A Baa2/NR $ 3,251,418
1,000 Long Island Power Auth. Elec. Syst. Rev., 5.375%,
5/1/33 Ser. L (acquired 6/29/03; cost-$999,184) (b) Baa1/A- 1,011,890
Metropolitan Transportation Auth., NY Service Contract, Ser. A,
6,040 5.00%, 7/1/25 (FGIC) Aaa/AAA 6,071,771
8,150 5.00%, 7/1/30 (AMBAC) Aaa/AAA 8,160,269
1,375 5.125%, 1/1/29 A3/AA- 1,368,235
1,500 Monroe Tobacco Asset Securitization Corp. Rev., 6.375%, 6/1/35 Baa1/BBB 1,451,730
New York City, GO, Ser. J,
5,000 5.125%, 5/15/29 (MBIA) Aaa/AAA 5,042,450
300 5.25%, 6/1/28 A2/A 304,749
2,000 New York City Indl. Dev. Agcy. Rev., 6.00%, 11/1/28 NR/NR 1,440,000
New York City Muni. Water Fin. Auth., Water & Sewer
Syst., Rev.,
7,605 4.75%, 6/15/31, Ser. A (FGIC) Aaa/AAA 7,334,946
7,000 5.125%, 6/15/21, Ser. A (AMBAC) Aaa/AAA 7,215,180
5,000 5.125%, 6/15/33, Ser. C Aa2/AA 5,034,350
5,000 5.25%, 6/15/25, Ser. D Aa2/AA 5,122,450
2,750 New York City Transitional Fin. Auth., Rev., 4.75%, 11/15/23
Ser. B Aa2/AA+ 2,715,488
1,000 Niagara Falls Public Water Auth., Water & Sewer Syst. Rev.,
5.00%, 7/1/34, Ser. A (MBIA) Aaa/AAA 999,930
Port Auth. of New York & New Jersey Rev.,
8,000 5.00%, 7/15/28-9/1/38 A1/AA- 7,890,080
4,515 Sachem Central School District of Holbrook, GO., 5.00%,
10/15/30, Ser. B (MBIA) Aaa/AAA 4,535,137
6,550 State Dormitory Auth. Lease Rev., 4.75%, 1/15/29 Ser. 1 (FSA) Aaa/AAA 6,345,836
1,435 State Dormitory Auth. Rev., Augustana Lutheran Home for the
Aged Inc., 5.50%, 2/1/41 (MBIA) Aaa/AAA 1,481,077
8,000 State Dormitory Auth. Rev., Lenox Hill Hosp. Oblig. Group,
5.50%, 7/1/30 A3/NR 8,205,360
4,000 State Dormitory Auth. Rev., Memorial Sloan-Kettering Center,
5.00%, 7/1/34, Ser. 1 Aa2/AA 4,014,320
8,000 State Dormitory Auth. Rev., Mental Health Services Fac.
Improvement, Ser. D (MBIA)
4.75%, 2/15/25 (Pre-refunded @ 100, 8/15/08) (i) Aaa/AAA 7,774,849
100 State Dormitory Auth. Rev., Mortgage Nursing Home Rev.,
5.40%-5.50%, 2/1/31-2/1/41 (MBIA) Aaa/AAA 102,511
1,825 State Dormitory Auth. Rev., Mount Sinai Health,
6.50%-6.625%, 7/1/18-7/1/25, Ser. A Ba1/BB 1,833,067
7,000 State Dormitory Auth. Rev., New York & Presbyterian Hosp.,
4.75%, 8/1/27 (AMBAC) Aaa/AAA 6,760,600
16 PIMCO Municipal Income Funds Annual Report 4.30.04
PIMCO NEW YORK MUNICIPAL INCOME FUND SCHEDULE OF INVESTMENTS
April 30, 2004
--------------------------------------------------------------------------------------------------------------
Principal
Amount Credit Ratings
(000) (Moody's/S&P)* Value
--------------------------------------------------------------------------------------------------------------
$ 845 State Dormitory Auth. Rev., New York Univ.,
5.50%, 7/1/20-7/1/21, Ser. 2 (AMBAC) Aaa/AAA $ 911,015
2,250 State Dormitory Auth. Rev., New York Univ.,
5.00%, 7/1/11, Ser. B (MBIA) Aaa/NR 2,455,943
State Dormitory Auth. Rev., State Univ., Ser B. (FSA)
1,045 4.75%, 5/15/28 Aaa/AAA 1,014,371
1,270 4.75%, 5/15/28 (Pre-refunded @ 101, 5/15/08) (i) Aaa/AAA 1,387,767
1,275 State Dormitory Auth. Rev., Winthrop Univ. Hosp. Assoc.,
5.25%, 7/1/31, Ser. A (AMBAC) Aaa/AAA 1,301,189
5,000 State Thruway Auth. General Rev., 4.75%, 1/1/19, Ser. E Aa3/AA- 5,066,500
3,975 State Urban Dev. Corp. Rev., 4.75%, 1/1/28, Ser. B (AMBAC) Aaa/AAA 4,331,359
130 Tobacco Trust II Rev., 5.625%-5.75%, 6/1/35-6/1/43 Baa1/BBB 116,225
7,000 Triborough Bridge & Tunnel Auth. Rev.,
5.00%, 1/1/27-1/1/32, Ser. A Aa3/AA- 6,952,430
2,945 Warren & Washington Cntys, Industrial Development Agency,
Glens Falls Hospital Project, 5.00%, 12/1/27, Ser C (FSA) Aaa/AAA 2,956,014
------------
Total New York Municipal Bonds & Notes (cost-$129,306,237) 131,960,506
------------
OTHER MUNICIPAL BONDS & NOTES--5.2%
ILLINOIS--2.5%
4,000 Illinois Educational Facilities Auth Rev., 5.00%, 7/1/33, Ser. A Aa1/AA 3,957,320
------------
LOUISIANA--0.4%
750 Tobacco Settlement Finance Corp., 5.875%, 5/15/39, Ser. 2001-B Baa3/BBB 625,185
------------
PUERTO RICO--2.3%
1,500 Commonwealth Hwy. & Transportation Auth. Rev., 5.25%, 7/1/38,
Ser. D Baa1/A 1,520,745
1,500 Commonwealth Public Improvement 5.00%, 7/1/11, Ser A Baa1/A- 1,617,630
500 Electric Power Authority Power Rev., 5.125%, 7/1/29, Ser NN A3/A- 500,510
------------
3,638,885
------------
Total Other Municipal Bonds & Notes (cost-$8,231,796) 8,221,390
------------
NEW YORK VARIABLE RATE NOTES (b)(c)(d)--8.8%
5,173 New York City Transitional Fin. Auth. Rev.,
8.12%, 11/1/23, Ser. 362 (acquired 8/9/01; cost-$4,649,623) Aa2/NR 5,042,981
Tobacco Trust II Rev.,
4,240 9.374%, 12/1/09, 886-A (acquired 8/2/01; cost-$4,321,763) A1/A 3,457,126
6,780 9.612%, 12/1/09, 886-B 9 (acquired 8/2/01; cost-$7,022,487) A1/A 5,402,507
------------
Total New York Variable Rate Notes (cost-$15,993,676) 13,902,614
------------
4.30.04 PIMCO Municipal Income Funds Annual Report 17
PIMCO NEW YORK MUNICIPAL INCOME FUND SCHEDULE OF INVESTMENTS
April 30, 2004
--------------------------------------------------------------------------------------------------------------
Principal
Amount Credit Ratings
(000) (Moody's/S&P)* Value
--------------------------------------------------------------------------------------------------------------
NEW YORK SHORT-TERM VARIABLE RATE DEMAND NOTES (C)(F)--2.1%
$ 2,000 New York Local Government Assistance Corp., 1.03%, 5/5/04,
Ser. A Aaa/AAA $ 2,000,000
1,400 State Dormitory Auth. Rev., Cornell Univ., 1.08%, 5/3/04, Ser. B VMIG1/A-1+ 1,400,000
------------
Total New York Short-Term Variable Rate Demand Notes
(cost-$3,400,000) 3,400,000
------------
U.S. TREASURY BILLS (g)--0.9%
1,490 0.885%-0.943%, 6/3/04-6/17/04, (cost-$1,488,394) Aaa/AAA 1,488,582
------------
TOTAL INVESTMENTS BEFORE OPTIONS WRITTEN
(cost-$158,420,103+)--100.1% 158,973,092
------------
CALL OPTIONS WRITTEN (h)--(0.1)%
Contracts U.S. Treasury Bond Futures, Chicago Board of Trade:
(70) Strike price $112, expires 8/27/04 (48,125)
(70) Strike price $113, expires 8/27/04 (36,094)
------------
Total call options written (premiums received-$92,444) (84,219)
------------
PUT OPTIONS WRITTEN (h)--(0.0)%
U.S. Treasury Bond Futures, Chicago Board of Trade:
(9) Strike price $106, expires 5/21/04 (premium received-$4,120) (7,312)
------------
Total options written (premiums received-$96,564) (91,531)
------------
TOTAL INVESTMENTS, NET OF OPTIONS WRITTEN
(cost-$158,323,539+)--100.0% $158,881,561
------------
--------------------------------------------------------------------------------
+ The cost basis of portfolio securities for federal income tax purposes is
$158,420,122. Aggregate gross unrealized appreciation for securities in
which there is an excess of value over tax cost is $3,933,440; aggregate
gross unrealized depreciation for securities in which there is an excess of
tax cost over value is $3,380,470; net unrealized appreciation for federal
income tax purposes is $552,970.
18 PIMCO Municipal Income Funds Annual Report 4.30.04
PIMCO NEW YORK MUNICIPAL INCOME FUND SCHEDULE OF INVESTMENTS
April 30, 2004
--------------------------------------------------------------------------------
NOTES TO SCHEDULE OF INVESTMENTS:
* Unaudited
(a) Illiquid Security.
(b) Private Placement. Restricted as to resale and may not have a readily
available market; the aggregate cost and value of such securites is
$63,097,864 or 11.9% of investments, $12,586,479 or 3.2% of investments and
$14,914,504 or 9.4% of investments, respectively, for Municipal, California
Municipal and New York Municipal.
(c) 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).
(d) 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. These
securities amounted to $53,778,050 or 10.1% of investments, $10,022,505 or
2.6% of investments and $13,902,614 or 8.8% of investments, respectively,
for Municipal, California Municipal and New York Municipal.
(e) Residual Interest/Tax Exempt Municipal Bonds. The interest rate shown bears
an inverse relationship to the interest rate on another security or the
value of an index.
(f) Maturity date shown is date of next call.
(g) All or partial principal amount segregated as initial margin on futures
contracts.
(h) Non-income producing securities.
(i) Pre-refunded bonds are collateralized by U.S. Government or other eligible
securities which are held in escrow and used to pay principal and interest
and retire the bonds at the earliest refunding date.
--------------------------------------------------------------------------------
GLOSSARY:
AMBAC -- insured by American Municipal Bond Assurance Corp.
CP -- Certificates of Participation
FGIC -- insured by Financial Guaranty Insurance Co.
FSA -- insured by Financial Security Assurance, Inc.
GO -- General Obligation Bonds
MBIA -- insured by Municipal Bond Investors Assurance
NR -- not rated
Radian - insured by Radian Guaranty Inc.
RITES -- Residual Interest Tax Exempt Securities
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
4.30.04 PIMCO Municipal Income Funds Annual Report 19
PIMCO MUNICIPAL INCOME FUNDS STATEMENTS OF ASSETS AND LIABILITIES
April 30, 2004
--------------------------------------------------------------------------------
California New York
Municipal Municipal Municipal
--------------- --------------- --------------
ASSETS:
Investments, at value (cost-$526,823,454, $387,332,069
and $158,420,103, respectively) $531,230,577 $392,741,462 $158,973,092
-------------------------------------------------------- ------------- ------------- ------------
Cash 1,330,895 1,098,529 715,594
-------------------------------------------------------- ------------- ------------- ------------
Interest receivable 10,757,103 6,052,913 3,049,233
-------------------------------------------------------- ------------- ------------- ------------
Receivable for investments called 1,220,000 -- --
-------------------------------------------------------- ------------- ------------- ------------
Receivable for variation margin on futures contracts 459,934 421,125 124,740
-------------------------------------------------------- ------------- ------------- ------------
Prepaid expenses 11,745 7,760 3,018
-------------------------------------------------------- ------------- ------------- ------------
Total Assets 545,010,254 400,321,789 162,865,677
-------------------------------------------------------- ------------- ------------- ------------
LIABILITIES:
Dividends payable to common and preferred shareholders 1,985,607 1,385,478 557,230
-------------------------------------------------------- ------------- ------------- ------------
Payable for variation margin on futures contracts 585,500 392,000 175,750
-------------------------------------------------------- ------------- ------------- ------------
Options written, at value (premiums received--$337,164,
$357,272, and $96,564, respectively) 336,031 440,156 91,531
-------------------------------------------------------- ------------- ------------- ------------
Investment management fees payable 201,961 148,124 60,452
-------------------------------------------------------- ------------- ------------- ------------
Accrued expenses 117,283 98,678 58,907
-------------------------------------------------------- ------------- ------------- ------------
Total Liabilities 3,226,382 2,464,436 943,870
-------------------------------------------------------- ------------- ------------- ------------
PREFERRED SHARES ($25,000 NET ASSET AND LIQUIDATION
VALUE PER SHARE APPLICABLE TO AN AGGREGATE OF
8,000, 6,000 AND 2,520, SHARES ISSUED AND
OUTSTANDING, RESPECTIVELY) 200,000,000 150,000,000 63,000,000
-------------------------------------------------------- ------------- ------------- ------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS $341,783,872 $247,857,353 $98,921,807
-------------------------------------------------------- ------------- ------------- ------------
COMPOSITION OF NET ASSETS APPLICABLE TO
COMMON SHAREHOLDERS:
Common stock (no par value):
Paid-in capital $343,902,892 $252,748,809 $104,267,867
-------------------------------------------------------- ------------- ------------- ------------
Undistributed net investment income 8,001,325 3,965,290 994,944
-------------------------------------------------------- ------------- ------------- ------------
Accumulated net realized loss on investments (18,537,663) (17,169,911) (8,083,541)
-------------------------------------------------------- ------------- ------------- ------------
Net unrealized appreciation of investments, futures
contracts and options written 8,417,318 8,313,165 1,742,537
-------------------------------------------------------- ------------- ------------- ------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS $341,783,872 $247,857,353 $98,921,807
-------------------------------------------------------- ------------- ------------- ------------
Common Shares Outstanding 24,226,494 17,811,229 7,359,308
-------------------------------------------------------- ------------- ------------- ------------
NET ASSET VALUE PER COMMON SHARE $14.11 $13.92 $13.44
-------------------------------------------------------- ------------- ------------- ------------
20 PIMCO Municipal Income Funds Annual Report 4.30.04
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
PIMCO MUNICIPAL INCOME FUNDS STATEMENTS OF OPERATIONS
For the year ended April 30, 2004
--------------------------------------------------------------------------------
California New York
Municipal Municipal Municipal
-------------- --------------- ---------------
INTEREST INCOME:
Interest $31,477,392 $21,271,945 $8,485,146
--------------------------------------------------------- ------------ ------------ ------------
EXPENSES:
Investment management fees 3,522,016 2,593,575 1,057,662
--------------------------------------------------------- ------------ ------------ ------------
Auction agent fees and commissions 527,767 392,464 163,954
--------------------------------------------------------- ------------ ------------ ------------
Custodian and accounting agent fees 114,102 103,339 67,363
--------------------------------------------------------- ------------ ------------ ------------
Reports to shareholders 83,838 47,439 20,419
--------------------------------------------------------- ------------ ------------ ------------
Audit and tax services 64,497 59,482 40,967
--------------------------------------------------------- ------------ ------------ ------------
Transfer agent fees 34,970 34,132 32,966
--------------------------------------------------------- ------------ ------------ ------------
Trustees' fees and expenses 27,235 22,568 11,132
--------------------------------------------------------- ------------ ------------ ------------
Investor relations 24,927 18,087 7,693
--------------------------------------------------------- ------------ ------------ ------------
New York Stock Exchange listing fees 23,954 23,792 1,557
--------------------------------------------------------- ------------ ------------ ------------
Insurance expense 13,046 10,147 5,545
--------------------------------------------------------- ------------ ------------ ------------
Miscellaneous 14,038 13,248 11,803
--------------------------------------------------------- ------------ ------------ ------------
Total expenses 4,450,390 3,318,273 1,421,061
--------------------------------------------------------- ------------ ------------ ------------
Less: investment management fees waived (1,083,697) (798,023) (325,434)
--------------------------------------------------------- ------------ ------------ ------------
custody credits earned on cash balances (1,392) (1,769) (1,557)
--------------------------------------------------------- ------------ ------------ ------------
Net expenses 3,365,301 2,518,481 1,094,070
--------------------------------------------------------- ------------ ------------ ------------
NET INVESTMENT INCOME $28,112,091 $18,753,464 $7,391,076
--------------------------------------------------------- ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
---------------------------------------------------------
Investments 1,492,298 (1,563,611) (616,273)
--------------------------------------------------------- ------------ ------------ ------------
Futures contracts (5,118,827) (2,616,216) (2,446,659)
--------------------------------------------------------- ------------ ------------ ------------
Options written 2,205,620 1,015,173 898,603
--------------------------------------------------------- ------------ ------------ ------------
Net change in unrealized appreciation/depreciation on:
---------------------------------------------------------
Investments (2,821,695) (4,934,804) 523,550
--------------------------------------------------------- ------------ ------------ ------------
Futures contracts 3,310,180 2,476,562 980,929
--------------------------------------------------------- ------------ ------------ ------------
Options written 105,881 (14,209) 34,302
--------------------------------------------------------- ------------ ------------ ------------
Net realized and unrealized loss on investments, futures
contracts and options written (826,543) (5,637,105) (625,548)
--------------------------------------------------------- ------------ ------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM INVESTMENT
OPERATIONS $27,285,548 $13,116,359 $6,765,528
--------------------------------------------------------- ------------ ------------ ------------
DIVIDENDS ON PREFERRED SHARES FROM NET
INVESTMENT INCOME (1,799,570) (1,198,190) (515,620)
--------------------------------------------------------- ------------ ------------ ------------
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON
SHAREHOLDERS RESULTING FROM INVESTMENT OPERATIONS $25,485,978 $11,918,169 $6,249,908
--------------------------------------------------------- ------------ ------------ ------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
4.30.04 PIMCO Municipal Income Funds Annual Report 21
PIMCO MUNICIPAL INCOME FUNDS STATEMENTS OF CHANGES IN NET ASSETS
APPLICABLE TO COMMON SHAREHOLDERS
--------------------------------------------------------------------------------
Municipal
----------------------------------
Year ended Year ended
April 30, 2004 April 30, 2003
---------------- ---------------
INVESTMENT OPERATIONS:
Net investment income $ 28,112,091 $ 28,236,360
---------------------------------------------------------------------- ------------- -------------
Net realized loss on investments, futures contracts and options
written (1,420,909) (17,116,754)
---------------------------------------------------------------------- ------------- -------------
Net change in unrealized appreciation/depreciation of investments,
futures contracts and options written 594,366 11,056,671
---------------------------------------------------------------------- ------------- -------------
Net increase in net assets resulting from investment operations 27,285,548 22,176,277
---------------------------------------------------------------------- ------------- -------------
DIVIDENDS AND DISTRIBUTIONS ON PREFERRED SHARES FROM:
Net investment income (1,799,570) (2,299,781)
---------------------------------------------------------------------- ------------- -------------
Net realized gains -- (114,138)
---------------------------------------------------------------------- ------------- -------------
Total dividends and distributions on preferred shares (1,799,570) (2,413,919)
---------------------------------------------------------------------- ------------- -------------
Net increase in net assets applicable to common shareholders
resulting from investment operations 25,485,978 19,762,358
---------------------------------------------------------------------- ------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS FROM:
Net investment income (23,568,259) (23,364,852)
---------------------------------------------------------------------- ------------- -------------
Net realized gains -- (907,918)
---------------------------------------------------------------------- ------------- -------------
Total dividends and distributions to common shareholders (23,568,259) (24,272,770)
---------------------------------------------------------------------- ------------- -------------
CAPITAL SHARE TRANSACTIONS:
----------------------------------------------------------------------
Reinvestment of dividends and distributions 2,178,230 3,495,385
---------------------------------------------------------------------- ------------- -------------
Total increase (decrease) in net assets applicable to common
shareholders 4,095,949 (1,015,027)
---------------------------------------------------------------------- ------------- -------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS:
Beginning of year 337,687,923 338,702,950
---------------------------------------------------------------------- ------------- -------------
End of year (including undistributed net investment of $8,001,325 and
$5,257,063, $3,965,290 and $2,860,275, and $994,944 and
$718,920, respectively) $341,783,872 $337,687,923
---------------------------------------------------------------------- ------------- -------------
COMMON SHARES ISSUED IN REINVESTMENT OF DIVIDENDS
AND DISTRIBUTIONS: 155,843 243,737
---------------------------------------------------------------------- ------------- -------------
22 PIMCO Municipal Income Funds Annual Report 4.30.04
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
California New York
Municipal Municipal
----------------------------------- ----------------------------------
Year ended Year ended Year ended Year ended
April 30, 2004 April 30, 2003 April 30, 2004 April 30, 2003
---------------- ---------------- ---------------- ---------------
$ 18,753,464 $ 19,843,263 $ 7,391,076 $ 7,544,964
------------- ------------- ------------ ------------
(3,164,654) (13,895,334) (2,164,329) (5,953,984)
------------- ------------- ------------ ------------
(2,472,451) 15,066,673 1,538,781 2,557,403
------------- ------------- ------------ ------------
13,116,359 21,014,602 6,765,528 4,148,383
------------- ------------- ------------ ------------
(1,198,190) (1,716,314) (515,620) (718,510)
------------- ------------- ------------ ------------
-- -- -- --
------------- ------------- ------------ ------------
(1,198,190) (1,716,314) (515,620) (718,510)
------------- ------------- ------------ ------------
11,918,169 19,298,288 6,249,908 3,429,873
------------- ------------- ------------ ------------
(16,450,259) (16,367,945) (6,599,432) (6,536,786)
------------- ------------- ------------ ------------
-- -- -- --
------------- ------------- ------------ ------------
(16,450,259) (16,367,945) (6,599,432) (6,536,786)
------------- ------------- ------------ ------------
558,093 2,219,123 948,252 1,017,328
------------- ------------- ------------ ------------
(3,973,997) 5,149,466 598,728 (2,089,585)
------------- ------------- ------------ ------------
251,831,350 246,681,884 98,323,079 100,412,664
------------- ------------- ------------ ------------
$247,857,353 $251,831,350 $98,921,807 $98,323,079
------------- ------------- ------------ ------------
40,062 155,749 70,499 72,990
------------- ------------- ------------ ------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
4.30.04 PIMCO Municipal Income Funds Annual Report 23
PIMCO MUNICIPAL INCOME FUNDS NOTES TO FINANCIAL STATEMENTS
April 30, 2004
--------------------------------------------------------------------------------
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", 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. PA Fund Management LLC (the
"Investment Manager," formerly known as PIMCO Advisors Fund Management LLC),
serves as the Funds' Investment Manager and is an indirect, wholly-owned
subsidiary of Allianz Dresdner Asset Management of America L.P., ("ADAM"). ADAM
is an indirect majority-owned subsidiary of Allianz AG. The Funds have an
unlimited amount of no par value common stock authorized.
Municipal 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 state 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 income
which could potentially subject 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.
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 financial statements. Actual results could differ from
those estimates.
In the normal course of business the Funds enter into contracts that contain a
variety of representations which 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 based upon events 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 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. The Fund's
Investments are valued daily by an independent pricing service approved by the
Board of Trustees. Prices obtained from an independent pricing service use
information provided by market makers or estimates of market values obtained
from yield data relating to investments or securities with similar
characteristics. Short-term investments maturing in sixty days or less are
valued at amortized cost, if their original 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. Securities for which market quotations are not
readily available or if a development/event occurs that may significantly
impact the value of the security may be fair valued, pursuant to guidelines
established by the Board of Trustees. The prices used by the Funds to value
securities may differ from the value that would be realized if the securities
were sold. The Fund's net asset value is determined daily at the close of
regular trading (normally 4:00 p.m. Eastern time) on the New York Stock
Exchange.
(b) 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 discount, if any, is accreted daily to taxable income.
(c) 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 taxable 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.
(d) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
financial instrument at a set price on a future date. Upon entering into such a
contract, the Funds are required to pledge to the broker an amount of cash
24 PIMCO Municipal Income Funds Annual Report 4.30.04
PIMCO MUNICIPAL INCOME FUNDS NOTES TO FINANCIAL STATEMENTS
April 30, 2004
--------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONCLUDED)
or securities equal to the minimum "initial margin" requirements of the
exchange. Pursuant to the contracts, the Funds agree to receive from or pay to
the broker an amount of cash equal to the daily fluctuation in the value of the
contracts. Such receipts or payments are known as "variation margin" and are
recorded by the Funds as unrealized appreciation or depreciation. When the
contracts are closed, the Funds record a realized gain or loss equal to the
difference between the value of the contracts at the time they were opened and
the value at the time they were closed. Any unrealized appreciation or
depreciation recorded is simultaneously reversed. The use of futures
transactions involve the risk of an imperfect correlation in the movements in
the price of futures contracts, interest rates and the underlying hedged
assets, and the possible inability of counterparties to meet the terms of their
contracts.
(e) OPTION TRANSACTIONS
For hedging purposes, the Funds may purchase and write (sell) put and call
options on municipal bonds, U.S. government securities, swap agreements,
indexes or futures contracts which are standardized and traded on a U.S. or
other exchange, boards of trade, or similar entity, or quoted on an automated
quotation system. The risk associated with purchasing an option is that the
Funds pay a premium whether or not the option is exercised. Additionally, the
Funds bear the risk of loss of premium and change in market value should the
counterparty not perform under the contract. Put and call options purchased are
accounted for in the same manner as portfolio securities.
The cost of securities acquired through the exercise of call options is
increased by the premiums paid. The proceeds from the securities sold through
the exercise of put options is decreased by the premiums paid.
When an option is written, the premium received is recorded as an asset with an
equal liability which is subsequently adjusted to the current market value of
the option written. Premiums received from writing options which expire
unexercised are recorded on the expiration date as a realized gain. The
difference between the premium received and the amount paid on effecting a
closing purchase transaction, including brokerage commissions, is also treated
as a realized gain, or if the premium is less than the amount paid for the
closing purchase transactions, as a realized loss. If a call option is
exercised, the premium is added to the proceeds from the sale of the underlying
security in determining whether there has been a realized gain or loss. If a
put option is exercised, the premium reduces the cost basis of the security. In
writing an option, the Funds bear the market risk of an unfavorable change in
the price of the security underlying the written option. Exercise of an option
written could result in the Funds purchasing a security at a price different
from the current market price.
(f) RESIDUAL INTEREST MUNICIPAL BONDS
The Funds invest in Residual Interest Tax Exempt Bonds ("RITES") whose interest
rates bear an inverse relationship to the interest rate on another security or
the value of an index, RITES 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 normally every seven 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 interest
rates result in lower income for the longer-term portion, and vice versa. The
longer-term bonds may be more volatile and less liquid than other Municipal
Bonds of comparable maturity. An investment in RITES typically will involve
greater risk than an investment in a fixed rate bond.
(g) 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.
(h) 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.
4.30.04 PIMCO Municipal Income Funds Annual Report 25
PIMCO MUNICIPAL INCOME FUNDS NOTES TO FINANCIAL STATEMENTS
April 30, 2004
--------------------------------------------------------------------------------
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 each Fund's Board of Trustees, the
Investment Manager is responsible for managing, either directly or through
others selected by it, the investment activities of each Fund and the Fund's
business affairs and other administrative matters. Pursuant to the Agreements,
the Investment Manager receives 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
investment decisions with respect to 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 will receive an increasing amount (not to exceed 0.37% of
each Fund's average daily net assets, including net assets attributable to any
preferred shares that may be outstanding) thereafter through June 30, 2009. The
Investment Manager informed the Funds that it paid the Sub-Adviser $1,354,622,
$997,529 and $406,793 in connection with sub-advisory services for Municipal,
California Municipal and New York Municipal, respectively, for the year ended
April 30, 2004.
3. INVESTMENTS IN SECURITIES
(a) For the year ended April 30, 2004, purchases and sales of investments,
other than short-term securities, were:
California New York
Municipal Municipal Municipal
--------------------------------------------------------------------------------
Purchases $81,992,614 $ 94,204,355 $66,921,669
Sales $83,234,398 $138,690,455 $60,302,013
(b) Futures contracts outstanding at April 30, 2004:
# of Expiration Unrealized
Fund Type Contracts Date Appreciation
-----------------------------------------------------------------------------------------------------------
Municipal Short: U.S. Treasury 30 Year Bond 1,264 6/21/04 $4,009,062
==========
California Municipal Short: U.S. Treasury 30 Year Bond 844 6/21/04 $2,986,656
==========
New York Municipal Short: U.S. Treasury 30 Year Bond 377 6/21/04 $1,184,515
==========
26 PIMCO Municipal Income Funds Annual Report 4.30.04
PIMCO MUNICIPAL INCOME FUNDS NOTES TO FINANCIAL STATEMENTS
April 30, 2004
--------------------------------------------------------------------------------
3. INVESTMENTS IN SECURITIES (CONCLUDED)
(c) Transactions in options written for the year ended April 30, 2004 were:
Contracts Premiums
-----------------------------------------------------------------------------------
Municipal:
----------
Options outstanding, April 30, 2003 667 $ 521,190
Options written 6,151 5,068,823
Options expired (1,534) (993,934)
Option terminated in closing purchase transactions (2,749) (2,210,820)
Options exercised (2,002) (2,048,095)
-------- ------------
Options outstanding, April 30, 2004 533 $ 337,164
======== ============
California Municipal:
---------------------
Options outstanding, April 30, 2003 350 $ 267,012
Options written 4,550 3,945,748
Option expired (402) (326,762)
Options terminated in closing purchase transactions (1,999) (1,515,647)
Options exercised (1,869) (2,013,079)
-------- ------------
Options outstanding, April 30, 2004 630 $ 357,272
======== ============
New York Municipal:
-------------------
Options outstanding, April 30, 2003 169 $ 130,794
Options written 2,213 1,612,465
Options expired (828) (437,408)
Options terminated in closing purchase transactions (778) (658,208)
Options exercised (627) (551,079)
-------- ------------
Options outstanding, April 30, 2004 149 $ 96,564
======== ============
4. INCOME TAX INFORMATION
Municipal:
----------
The tax character of dividends and distributions paid were:
Year Ended Year Ended
April 30, 2004 April 30, 2003
-------------- --------------
Ordinary Income $506,889 $1,424,818
Tax Exempt Income $24,860,940 $25,261,871
At April 30, 2004, the tax character of distributable earnings of $8,001,325
was comprised entirely of tax exempt income.
At April 30, 2004, Municipal had a capital loss carryforward of $14,527,467,
($12,636,579 of which expires in 2011 and $1,890,888 of which expires in 2012)
available as a reduction to the extent provided in the regulations, of any
future net realized gains. To the extent that these losses are used to offset
future realized capital gains, such gains will not be distributed.
California Municipal:
---------------------
The tax character of dividends paid were:
Year Ended Year Ended
April 30, 2004 April 30, 2003
-------------- --------------
Ordinary Income $362,889 $392,046
Tax Exempt Income $17,285,560 $17,692,213
4.30.04 PIMCO Municipal Income Funds Annual Report 27
PIMCO MUNICIPAL INCOME FUNDS NOTES TO FINANCIAL STATEMENTS
April 30, 2004
--------------------------------------------------------------------------------
4. INCOME TAX INFORMATION (CONCLUDED)
At April 30, 2004, the tax basis of distributable earnings of $3,965,290 was
comprised entirely of tax exempt income.
At April 30, 2004, California Municipal had a capital loss carryforward of
$14,266,137, ($2,250 of which will expire in 2010, $9,872,564 of which will
expire in 2011 and $4,391,323 of which will expire in 2012), available as a
reduction, to the extent provided in the regulations, of any future net
realized capital gains. To the extent that these losses are used to offset
future realized capital gains, such gains will not be distributed.
New York Municipal:
-------------------
The tax character of dividends paid were:
July 1, 2002
Year Ended through
April 30, 2004 April 30, 2003
-------------- --------------
Ordinary Income $48,250 $22,716
Tax Exempt Income $7,066,802 $5,997,367
During the year ended April 30, 2003, New York Municipal changed its tax fiscal
year end from June 30 to April 30.
At April 30, 2004, the tax basis of distributable earnings of $994,944 was
comprised entirely of tax exempt income.
At April 30, 2004, New York Municipal had a capital loss carryforward of
$6,893,974 ($4,214,928 of which will expire in 2011 and $2,679,046 of which
will expire in 2012), available as a reduction, to the extent provided in the
regulations, of any future net realized capital gains. To the extent that these
losses are used to offset future realized capital gains, such gains will not be
distributed.
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.
28 PIMCO Municipal Income Funds Annual Report 4.30.04
PIMCO MUNICIPAL INCOME FUNDS NOTES TO FINANCIAL STATEMENTS
April 30, 2004
--------------------------------------------------------------------------------
5. AUCTION PREFERRED SHARES (CONCLUDED)
For the year ended April 30, 2004, the annualized dividend rates ranged from:
High Low At April 30, 2004
--------------------------------------------------------------------------------
Municipal:
----------
Series A 1.75% 0.40% 1.02%
Series B 1.75% 0.40% 1.02%
Series C 1.30% 0.70% 1.02%
Series D 1.75% 0.40% 1.02%
Series E 1.75% 0.49% 1.10%
California Municipal:
---------------------
Series A 1.70% 0.40% 1.02%
Series B 1.25% 0.40% 0.45%
Series C 1.75% 0.40% 1.05%
New York Municipal:
-------------------
Series A 1.75% 0.40% 1.02%
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.
6. SUBSEQUENT COMMON DIVIDEND DECLARATIONS
On May 3, 2004, the following dividends were declared to common shareholders
payable June 1, 2004 to shareholders of record on May 14, 2004:
Municipal $0.08125 per common share
California Municipal $0.077 per common share
New York Municipal $0.075 per common share
On June 1, 2004, the following dividends were declared to common shareholders
payable July 1, 2004 to shareholders of record on June 11, 2004:
Municipal $0.08125 per common share
California Municipal $0.077 per common share
New York Municipal $0.075 per common share
7. LEGAL PROCEEDINGS
On May 6, 2004, the Securities and Exchange Commission (the "Commission") filed
a complaint in the U.S. District Court in the Southern District of New York
alleging that the Investment Manager, certain of its affiliates and Stephen J.
Treadway (the chief executive officer of the Investment Manager as well as the
chairman and a trustee of the Funds) had, among other things, violated and/or
aided and abetted violations of various antifraud provisions of the federal
securities laws in connection with alleged "market timing" arrangements in
certain open-end investment companies advised by the Investment Manager. The
complaint seeks injunctive relief, disgorgement plus pre-judgment interest,
monetary penalties, and an order permanently enjoining the defendants from
serving as investment advisers, principal underwriters, officers, directors, or
members of any advisory boards to any registered investment companies.
The above complaint does not allege that any inappropriate activity took place
in the Funds and the Funds are not named in the complaint.
4.30.04 PIMCO Municipal Income Funds Annual Report 29
PIMCO MUNICIPAL INCOME FUNDS NOTES TO FINANCIAL STATEMENTS
April 30, 2004
--------------------------------------------------------------------------------
7. LEGAL PROCEEDINGS (CONCLUDED)
In addition, on June 1, 2004, ADAM and certain other affiliates of the
Investment Manager entered into a consent order and final judgment with the
Attorney General of the State of New Jersey (the "NJAG") in settlement of a
lawsuit filed by the NJAG on February 17, 2004 in connection with alleged
"market timing" arrangements. Under the terms of the settlement, ADAM and
certain of its affiliates agreed to pay the State of New Jersey a civil
monetary penalty of $15 million and $3 million for investigative costs. In
addition, ADAM and certain of its affiliates agreed to make several corporate
governance changes. Also on June 1, 2004, the NJAG dismissed its claims against
the Sub-Adviser, which had been filed as part of the same lawsuit.
If the Commission (or other regulator) were to obtain a court injunction
against the Investment Manager, its affiliates or Mr. Treadway, they and their
affiliates (including the Sub-Adviser) would, in the absence of exemptive
relief granted by the Commission, be barred from serving as an investment
adviser/sub-adviser or principal underwriter for any registered investment
company, including the Funds. In such a case, the Investment Manager and the
Sub-Adviser would in turn seek exemptive relief from the Commission, as
contemplated by the Investment Company Act, although there is no assurance that
such exemptive relief would be granted. The Commission also has the power by
order to prohibit the Investment Manager, the Sub-Adviser and their affiliates
from serving as investment advisers and underwriters, although to date it has
not exercised such powers with respect to market timing arrangements involving
other mutual fund complexes.
Since February, 2004, the Investment Manager, the Sub-Adviser and certain of
their affiliates, various investment companies advised by the Investment
Manager and the Sub-Adviser and their trustees (including Mr. Treadway) have
been named as defendants in multiple lawsuits filed in U.S. District Court in
the Southern District of New York, the Central District of California and the
Districts of New Jersey and Connecticut. The lawsuits have been commenced as
putative class actions on behalf of investors who purchased, held or redeemed
shares of the specified funds during specific periods or as derivative actions
on behalf of the specified funds. The lawsuits generally relate to the same
facts that are the subject of the regulatory proceedings discussed above. The
lawsuits seek, among other things, unspecified compensatory damages plus
interest and, in some cases, punitive damages, the rescission of investment
advisory contracts, and/or the return of fees paid under those contracts and
restitution. The Funds have been named in several class action lawsuits. The
Investment Manager and the Sub-Adviser believe that other similar lawsuits may
be filed in U.S. federal or state courts naming ADAM, the Investment Manager,
the Sub-Adviser, various investment companies they advise (which may include
the Funds), their boards of trustees and/or their affiliates.
In November 2003, the Commission settled an enforcement action against an
unaffiliated broker-dealer relating to the undisclosed receipt of fees from
certain mutual fund companies in return for preferred marketing of their funds
and announced that it would be investigating mutual funds and their
distributors generally with respect to compensation arrangements relating to
the sale of mutual fund shares. In that connection, the Investment Manager, the
Sub-Adviser and certain of their affiliates are under investigation by the
Commission relating to revenue-sharing arrangements and the use of brokerage
commissions to recognize brokers effecting sales of open-end investment
companies advised by the Investment Manager, the Sub-Adviser and their
affiliates. In addition, the Attorney General of the State of California has
publicly announced an investigation into the brokerage recognition and
revenue-sharing arrangements of these open-end investment companies.
It is possible that these matters and/or other developments from these matters
could lead to a decrease in the market price of the Funds' shares or other
adverse consequences to the Funds and their shareholders. However, 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 the Investment
Manager's or the Sub-Adviser's ability to perform its respective investment
advisory services related to the Funds.
30 PIMCO Municipal Income Funds Annual Report 4.30.04
PIMCO MUNICIPAL INCOME FUNDS FINANCIAL HIGHLIGHTS
For a share of common stock outstanding throughout each period:
--------------------------------------------------------------------------------
Municipal
-------------------------------------------------------
For the period
June 29, 2001*
Year ended Year ended through
April 30, 2004 April 30, 2003 April 30, 2002
---------------- ---------------- -------------------
Net asset value, beginning of period $14.03 $14.22 $14.33**
--------------------------------------------------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 1.16 1.19 0.91
--------------------------------------------------- -------- -------- --------
Net realized and unrealized loss on investments,
futures contracts and options written (0.03) (0.26) (0.07)
--------------------------------------------------- -------- -------- --------
Total from investment operations 1.13 0.93 0.84
--------------------------------------------------- -------- -------- --------
DIVIDENDS AND DISTRIBUTIONS ON PREFERRED
SHARES FROM:
Net investment income (0.07) (0.10) (0.09)
--------------------------------------------------- -------- -------- --------
Net realized gains -- (0.00)+ (0.00)+
--------------------------------------------------- -------- -------- --------
Total dividends and distributions on preferred
shares (0.07) (0.10) (0.09)
--------------------------------------------------- -------- -------- --------
Net increase in net assets applicable to common
shares resulting from investment operations 1.06 0.83 0.75
--------------------------------------------------- -------- -------- --------
DIVIDENDS AND DISTRIBUTIONS TO COMMON
SHAREHOLDERS FROM:
Net investment income (0.98) (0.98) (0.71)
--------------------------------------------------- -------- -------- --------
Net realized gains -- (0.04) (0.02)
--------------------------------------------------- -------- -------- --------
Total dividends and distributions to common
shareholders (0.98) (1.02) (0.73)
--------------------------------------------------- -------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Common stock offering costs charged to paid-in
capital -- -- (0.03)
--------------------------------------------------- -------- -------- --------
Preferred shares offering costs/underwriting
discounts charged to paid-in capital -- -- (0.10)
--------------------------------------------------- -------- -------- --------
Total capital share transactions -- -- (0.13)
--------------------------------------------------- -------- -------- --------
Net asset value, end of period $14.11 $14.03 $14.22
--------------------------------------------------- -------- -------- --------
Market price, end of period $13.55 $14.22 $14.70
--------------------------------------------------- -------- -------- --------
TOTAL INVESTMENT RETURN (1) 2.15% 3.79% 3.10%
--------------------------------------------------- -------- -------- --------
RATIOS/SUPPLEMENTAL DATA:
Net assets applicable to common shareholders,
end of period (000) $341,784 $337,688 $338,703
--------------------------------------------------- -------- -------- --------
Ratio of expenses to average net assets (2)(3)(5) 0.98% 1.00% 0.91%(4)
--------------------------------------------------- -------- -------- --------
Ratio of net investment income to average net
assets (2)(5) 8.22% 8.21% 7.64%(4)
--------------------------------------------------- -------- -------- --------
Preferred shares asset coverage per share $67,719 $67,206 $67,332
--------------------------------------------------- -------- -------- --------
Portfolio turnover 16% 27% 39%
--------------------------------------------------- -------- -------- --------
* Commencement of operations.
** Initial public offering price of $15.00 per share less underwriting
discount of $0.675 per share.
+ Less than $0.005 per share.
(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 each period reported. Dividends and
distributions 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 custody credits earned on cash balances
at custodian bank. (See note 1(h) in Notes to Financial Statements).
(4) Annualized.
(5) During the periods 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 1.30% and 7.91%,
respectively, for the year ended April 30, 2004, 1.32% and 7.89%,
respectively for the year ended April 30, 2003 and 1.21% (annualized) and
7.34% (annualized), respectively, for the period June 29, 2001
(commencement of operations) through April 30, 2002.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
4.30.04 PIMCO Municipal Income Funds Annual Report 31
PIMCO MUNICIPAL INCOME FUNDS FINANCIAL HIGHLIGHTS
For a share of common stock outstanding throughout each period:
--------------------------------------------------------------------------------
California
Municipal
-------------------------------------------------------
For the period
June 29, 2001*
Year ended Year ended through
April 30, 2004 April 30, 2003 April 30, 2002
---------------- ---------------- -------------------
Net asset value, beginning of period $14.17 $14.00 $14.33**
--------------------------------------------------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 1.05 1.12 0.83
--------------------------------------------------- -------- -------- --------
Net realized and unrealized gain (loss) on
investments, futures contracts and options
written (0.31) 0.07 (0.25)
--------------------------------------------------- -------- -------- --------
Total from investment operations 0.74 1.19 0.58
--------------------------------------------------- -------- -------- --------
DIVIDENDS ON PREFERRED SHARES FROM NET
INVESTMENT INCOME (0.07) (0.10) (0.09)
--------------------------------------------------- -------- -------- --------
Net increase in net assets applicable to common
shares resulting from investment operations 0.67 1.09 0.49
--------------------------------------------------- -------- -------- --------
DIVIDENDS TO COMMON SHAREHOLDERS FROM
NET INVESTMENT INCOME (0.92) (0.92) (0.68)
--------------------------------------------------- -------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Common stock offering costs charged to paid-in
capital -- -- (0.03)
--------------------------------------------------- -------- -------- --------
Preferred shares offering costs/underwriting
discounts charges to paid-in capital -- -- (0.11)
--------------------------------------------------- -------- -------- --------
Total capital share transactions -- -- (0.14)
--------------------------------------------------- -------- -------- --------
Net asset value, end of period $13.92 $14.17 $14.00
--------------------------------------------------- -------- -------- --------
Market price, end of period $13.19 $14.15 $14.71
--------------------------------------------------- -------- -------- --------
TOTAL INVESTMENT RETURN (1) (0.28)% 2.64% 2.82%
--------------------------------------------------- -------- -------- --------
RATIOS/SUPPLEMENTAL DATA:
---------------------------------------------------
Net assets applicable to common shareholders,
end of period (000) $247,857 $251,831 $246,682
--------------------------------------------------- -------- -------- --------
Ratio of expenses to average net assets (2)(3)(5) 1.01% 1.03% 0.94%(4)
--------------------------------------------------- -------- -------- ---------
Ratio of net investment income to average net
assets (2)(5) 7.53% 7.89% 7.03%(4)
--------------------------------------------------- -------- -------- ---------
Preferred share asset coverage per share $66,306 $66,967 $66,109
--------------------------------------------------- -------- -------- ---------
Portfolio turnover 25% 15% 45%
--------------------------------------------------- -------- -------- ---------
* Commencement of operations.
** Initial public offering price of $15.00 per share less underwriting
discount of $0.675 per share.
(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 each 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 custody credits earned on cash balances at
custodian bank. (See note 1(h) in Notes to Financial Statements).
(4) Annualized.
(5) During the periods 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 1.33% and 7.21%, respectively
for the year ended April 30, 2004, 1.34% and 7.58%, respectively for the
year ended April 30, 2003 and 1.24% (annualized) and 6.73% (annualized),
respectively, for the period June 29, 2001 (commencement of operations)
through April 30, 2002.
32 PIMCO Municipal Income Funds Annual Report 4.30.04
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
PIMCO MUNICIPAL INCOME FUNDS FINANCIAL HIGHLIGHTS
For a share of common stock outstanding throughout each period:
--------------------------------------------------------------------------------
New York
Municipal
--------------------------------------------------------
For the period
June 29, 2001*
Year ended Year ended through
April 30, 2004 April 30, 2003 April 30, 2002
---------------- ---------------- --------------------
Net asset value, beginning of period $13.49 $13.92 $14.33**
------------------------------------------------------- ------- ------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 1.00 1.04 0.82
------------------------------------------------------- ------- ------- --------
Net realized and unrealized loss on
investments, futures contracts and options
written (0.08) (0.47) (0.26)
------------------------------------------------------- ------- ------- --------
Total from investment operations 0.92 0.57 0.56
------------------------------------------------------- ------- ------- --------
DIVIDENDS AND DISTRIBUTIONS ON PREFERRED
SHARES FROM:
Net investment income (0.07) (0.10) (0.09)
------------------------------------------------------- ------- ------- --------
Net realized gains -- (0.01)
------------------------------------------------------- ------- ------- --------
Total dividends and distributions on preferred
shares (0.07) (0.10) (0.10)
------------------------------------------------------- ------- ------- --------
Net increase in net assets applicable to
common shares resulting from investment
operations 0.85 0.47 0.46
------------------------------------------------------- ------- ------- --------
DIVIDENDS AND DISTRIBUTIONS TO COMMON
SHAREHOLDERS FROM:
Net investment income (0.90) (0.90) (0.67)
------------------------------------------------------- ------- ------- --------
Net realized gains -- -- (0.05)
------------------------------------------------------- ------- ------- --------
Total dividends and distributions to common
shareholders (0.90) (0.90) (0.72)
------------------------------------------------------- ------- ------- --------
CAPITAL SHARE TRANSACTIONS:
Common stock offering costs charged to
paid-in capital -- -- (0.03)
------------------------------------------------------- ------- ------- --------
Preferred shares offering costs/underwriting
discounts charged to paid-in-capital -- -- (0.12)
------------------------------------------------------- ------- ------- --------
Total capital share transactions -- -- (0.15)
------------------------------------------------------- ------- ------- --------
Net asset value, end of period $13.44 $13.49 $13.92
------------------------------------------------------- ------- ------- --------
Market price, end of period $12.70 $13.55 $14.20
------------------------------------------------------- ------- ------- --------
TOTAL INVESTMENT RETURN (1) 0.21% 1.82% (0.34)%
------------------------------------------------------- ------- ------- --------
RATIOS/SUPPLEMENTAL DATA:
Net assets applicable to common
shareholders, end of period (000) $98,922 $98,323 $100,413
------------------------------------------------------- ------- ------- --------
Ratio of expenses to average net asset
(2)(3)(5) 1.10% 1.13% 1.04%(4)
------------------------------------------------------- ------- ------- --------
Ratio of net investment income to average net
assets (2)(5) 7.41% 7.46% 7.07%(4)
------------------------------------------------------- ------- ------- --------
Preferred shares asset coverage per share $64,251 $64,016 $64,834
------------------------------------------------------- ------- ------- --------
Portfolio turnover 39% 23% 51%
------------------------------------------------------- ------- ------- --------
* Commencement of operations.
** Initial public offering price of $15.00 per share less underwriting
discount of $0.675 per share.
(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 each period reported. Dividends and
distributions 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 custody credits earned on cash balances
at custodian bank. (See note 1(h) in Notes to Financial Statements).
(4) Annualized.
(5) During the periods 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 1.43% and 7.08%,
respectively for the year ended April 30, 2004, 1.45% and 7.14%,
respectively for the year ended April 30, 2003 and 1.34% (annualized) and
6.77% (annualized), respectively for the period June 29, 2001
(commencement of operations) through April 30, 2002.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
4.30.04 PIMCO Municipal Income Funds Annual Report 33
PIMCO MUNICIPAL INCOME FUNDS REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
--------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
PIMCO Municipal Income Fund, PIMCO California Municipal Income Fund and
PIMCO New York Municipal Income Fund
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets applicable to common shareholders and
the financial highlights present fairly, in all material respects, the
financial position of PIMCO Municipal Income Fund, PIMCO California Municipal
Income Fund and PIMCO New York Municipal Income Fund (collectively hereafter
referred to as the "Funds") at April 30, 2004, the results of each of their
operations for the year then ended, and the changes in each of their net assets
applicable to common shareholders for each of the two years in the period then
ended and the financial highlights for each of the two years in the period then
ended and for the period June 29, 2001 (commencement of operations) through
April 30, 2002, in conformity with accounting principles generally accepted in
the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States), which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at April 30, 2004 by correspondence with the custodian and
brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
June 25, 2004
34 PIMCO Municipal Income Funds Annual Report 4.30.03
PIMCO MUNICIPAL INCOME FUNDS PRIVACY POLICY, PROXY VOTING POLICIES AND
PROCEDURES, OTHER INFORMATION (unaudited)
--------------------------------------------------------------------------------
PRIVACY POLICY:
OUR COMMITMENT TO YOU
We consider customer privacy to be a fundamental aspect of our relationship
with clients. We are committed to maintaining the confidentiality, integrity,
and security of our current, prospective and former clients' personal
information. We have developed policies designed to protect this
confidentiality, while allowing client needs to be served.
OBTAINING PERSONAL INFORMATION
In the course of providing you with products and services, we may obtain
non-public personal information about you. This information may come from
sources such as account applications and other forms, from other written,
electronic or verbal correspondence, from your transactions, from your
brokerage or financial advisory firm, financial adviser or consultant, and/or
from information captured on our internet web sites.
RESPECTING YOUR PRIVACY
We do not disclose any personal or account information provided by you or
gathered by us to non-affiliated third parties, except as required or permitted
by law. As is common in the industry, non-affiliated companies may from time to
time be used to provide certain services, such as preparing and mailing
prospectuses, reports, account statements and other information, conducting
research on client satisfaction, and gathering shareholder proxies. We may also
retain non-affiliated companies to market our products and enter in joint
marketing agreements with other companies. These companies may have access to
your personal and account information, but are permitted to use the information
solely to provide the specific service or as otherwise permitted by law. We may
also provide your personal and account information to your brokerage or
financial advisory firm and/or to your financial adviser or consultant.
SHARING INFORMATION WITH THIRD PARTIES
We do reserve the right to disclose or report personal information to
non-affiliated third parties in limited circumstances where we believe in good
faith that disclosure is required under law, to cooperate with regulators or
law enforcement authorities, to protect our rights or property, or upon
reasonable request by any mutual fund in which you have chosen to invest. In
addition, we may disclose information about you or your accounts to a
non-affiliated third party at your request or if you consent in writing to the
disclosure.
SHARING INFORMATION WITH AFFILIATES
We may share client information with our affiliates in connection with
servicing your account or to provide you with information about products and
services that we believe may be of interest to you. The information we share
may include, for example, your participation in our mutual funds or other
investment programs, your ownership of certain types of accounts (such as
IRAs), or other data about your accounts. Our affiliates, in turn, are not
permitted to share your information with non-affiliated entities, except as
required or permitted by law.
IMPLEMENTATION OF PROCEDURES
We take seriously the obligation to safeguard your non-public personal
information. We have implemented procedures designed to restrict access to your
non-public personal information to our personnel who need to know that
information to provide products or services to you. To guard your non-public
personal information, physical, electronic, and procedural safeguards are in
place.
--------------------------------------------------------------------------------
PROXY VOTING POLICIES AND PROCEDURES:
A description of the policies and procedures that the Funds have adopted to
determine how to vote proxies relating to portfolio securities is available (i)
without charge, upon request, by calling the Funds at (800) 331-1710 (ii) on
the Funds' website at www.pimcoadvisors.com, and (iii) on the Securities and
Exchange Commission's website at www.sec.gov.
--------------------------------------------------------------------------------
OTHER INFORMATION:
Since April 30, 2003, there have been no: (i) material changes in the Funds'
investment objectives or policies; (ii) changes to the Funds' charter or
by-laws; (iii) material changes in the principal risk factors associated with
investment in the Funds: or (iv) change in the persons primarily responsible
for the day-to-day management of the Funds' portfolio.
4.30.04 PIMCO Municipal Income Funds Annual Report 35
PIMCO MUNICIPAL INCOME FUNDS TAX INFORMATION (unaudited)
--------------------------------------------------------------------------------
Subchapter M of the Internal Revenue Code of 1986, as amended, requires the
Funds to advise shareholders within 60 days of the Funds' tax year end (April
30, 2004) as to the federal tax status of dividends and distributions received
by shareholders during such tax period. Accordingly, please note that
substantially all dividends paid from net investment income from the Funds
during the tax period ended April 30, 2004 were federally exempt interest
dividends. Although these Funds invested in municipal bonds containing market
discount, whose accretion is taxable. Accordingly, the percentage of dividends
paid from net investment income during the tax period which are taxable were:
Municipal 2.00%
California Municipal 2.06%
New York Municipal 0.68%
Since the Funds' fiscal year is not the calendar year, another notification
will be sent with respect to calendar year 2004. In January 2005, you will be
advised on IRS Form 1099 DIV as to the federal tax status of the dividends and
distributions received during calendar year 2003. The amount that will be
reported, will be the amount to use on your 2004 federal income tax return and
may differ from the amount which must be reported in connection with each
Fund's tax year ended April 30, 2004. Shareholders are advised to consult with
their tax advisers as to the federal, state and local tax status of the income
received from the Funds. In January 2005, an allocation of interest by state
will be provided which may be of value in reducing a shareholder's state or
local tax liability, if any.
36 PIMCO Municipal Income Funds Annual Report 4.30.04
PIMCO MUNICIPAL INCOME FUNDS DIVIDEND REINVESTMENT PLAN (unaudited)
--------------------------------------------------------------------------------
Pursuant to the Funds' Dividend Reinvestment Plan (the "Plan"), all Common
Shareholders whose shares are registered in their own names will have all
dividends, including any capital gain dividends, reinvested automatically in
additional Common Shares by PFPC Inc., as agent for the Common Shareholders
(the "Plan Agent"), unless the shareholder elects to receive cash. An election
to receive cash may be revoked or reinstated at the option of the shareholder.
In the case of record shareholders such as banks, brokers or other nominees
that hold Common Shares for others who are the beneficial owners, the Plan
Agent will administer the Plan on the basis of the number of Common Shares
certified from time to time by the record shareholder as representing the total
amount registered in such shareholder's name and held for the account of
beneficial owners who are to participate in the Plan. Shareholders whose shares
are held in the name of a bank, broker or nominee should contact the bank,
whose broker or nominee elects not to participate on the investor's behalf),
will be paid in cash by check mailed, in the case of direct shareholder, to the
record holder by PFPC Inc., as the Fund's dividend disbursement agent.
Unless you (or your broker or nominee) elects not to participate in the Plan,
the number of Common Shares you will receive will be determined as follows:
(1) If Common Shares are trading at or above net asset value on the payment
date, the Fund will issue new shares at the greater of (i) the net asset
value per Common Share on the payment date or (ii) 95% of the market
price per Common Share on the payment date; or
(2) If Common Shares are trading below net asset value (minus estimated
brokerage commissions that would be incurred upon the purchase of Common
Shares on the open market) on the payment date, the Plan Agent will
receive the dividend or distribution in cash and will purchase Common
Shares in the open market, on the New York Stock Exchange or elsewhere,
for the participants' accounts. It is possible that the market price for
the Common Shares may increase before the Plan Agent has completed its
purchases. Therefore, the average purchase price per share paid by the
Plan Agent may exceed the market price on the payment date, resulting in
the purchase of fewer shares than if the dividend or distribution had
been paid in Common Shares issued by the Fund. The Plan Agent will use
all dividends and distributions received in cash to purchase Common
Shares in the open market on or shortly after the payment date, but in no
event later than the ex-dividend date for the next distribution. Interest
will not be paid on any uninvested cash payments.
You may withdraw from the Plan at any time by giving notice to the Plan Agent.
If you withdraw or the Plan is terminated, you will receive a certificate for
each whole share in your account under the Plan and you will receive a cash
payment for any fraction of a share in your account. If you wish, the Plan
Agent will sell your shares and send you the proceeds, minus brokerage
commissions.
The Plan Agent maintains all shareholders' accounts in the Plan and gives
written confirmation of all transactions in the accounts, including information
you may need for tax records. The Plan Agent will also furnish each person who
buys Common Shares with written instructions detailing the procedures for
electing not to participate in the Plan and to instead receive distributions in
cash. Common Shares in your account will be held by the Plan Agent in
non-certificated form. Any proxy you receive will include all Common Shares you
have received under the Plan.
There is no brokerage charge for reinvestment of your dividends or
distributions in Common Shares. However, all participants will pay a pro rata
share of brokerage commissions incurred by the Plan Agent when it makes open
market purchases.
Automatically reinvested dividends and distributions are taxed in the same
manner as cash dividends and distributions.
The Funds and the Plan Agent reserve the right to amend or terminate the Plan.
There is no direct service charge to participants in the Plan; however, the
Funds reserve the right to amend the Plan to include a service charge payable
by the participants. Additional information about the Plan may be obtained from
the Funds' transfer agent, PFPC Inc., P.O. Box 43027, Providence, RI
02940-3027, telephone number 1-800-331-1710.
4.30.04 PIMCO Municipal Income Funds Annual Report 37
PIMCO MUNICIPAL INCOME FUNDS BOARD OF TRUSTEES (UNAUDITED)
--------------------------------------------------------------------------------
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS:
---------------------------------------- -------------------------------------------------------------------------
STEPHEN TREADWAY Managing Director, Allianz Dresdner Asset Management of America L.P.;
1345 Avenue of the Americas Managing Director and Chief Executive Officer, PA Fund Management
New York, NY 10105 LLC; Managing Director and Chief Executive Officer, PA Distributors LLC;
Age: 56 Member of the Board of Management of Allianz Dresdner Asset
Trustee since: 2001 Management GmbH. Mr. Treadway serves as a director/trustee and
Term of office: Expected to stand for holds various executive officer positions in connection with Allianz
re-election at 2005 annual meeting of Dresdner Asset Management of America L.P.'s affiliated open and
shareholders. closed-end mutual funds.
Trustee/Director of 61 funds in Fund
Complex
Trustee/Director of no funds outside of
Fund Complex
PAUL BELICA Director, Student Loan Finance Corp., Education Loans, Inc., Goal
1345 Avenue of the Americas Funding I, Inc., Goal Funding II, Inc. and Surety Loan Funding, Inc.;
New York, NY 10105 Formerly, senior executive and member of the Board of Smith Barney,
Age: 82 Harris Upham & Co.; and the CEO of five State of New York agencies.
Trustee since: 2001
Term of office: Expected to stand for
re-election at 2004 annual meeting of
shareholders.
Trustee/Director of 20 funds in Fund
Complex
Trustee of 10 funds outside of Fund
Complex
ROBERT E. CONNOR Corporate Affairs Consultant; Formerly, Senior Vice President, Corporate
1345 Avenue of the Americas Office, Smith Barney, Inc.
New York, NY 10105
Age: 69
Trustee since: 2001
Term of office: Expected to stand for
re-election at 2006 annual meeting of
shareholders.
Trustee/Director of 20 funds in Fund
Complex
Trustee of no funds outside of
Fund Complex
JOHN J. DALESSANDRO II Formerly, President and Director, J.J. Dalessandro II Ltd. registered
1345 Avenue of the Americas broker-dealer and member of the New York Stock Exchange.
New York, NY 10105
Age: 66
Trustee since: 2001
Term of office: Expected to stand for
re-election at 2004 annual meeting of
shareholders.
Trustee of 15 funds in Fund Complex
Trustee of no funds outside of Fund
Complex
HANS W. KERTESS President, H Kertess & Co.; Formerly, Managing Director, Royal Bank of
1345 Avenue of the Americas Canada Capital Markets.
New York, NY 10105
Age: 64
Trustee since: 2001
Term of office: Expected to stand for
re-election at 2006 annual meeting of
shareholders.
Trustee of 15 funds in Fund Complex
Trustee of no funds outside of Fund
Complex
R. PETER SULLIVAN III Formerly, Managing Partner, Bear Wagner Specialists LLC (formerly,
1345 Avenue of the Americas Wagner Stott Mercator LLC), specialist firm on the New York Stock
New York, NY 10105 Exchange.
Age: 62
Trustee since: 2002
Term of office: Expected to stand for
re-election at 2005 annual meeting of
shareholders.
Trustee of 10 funds in Fund Complex
Trustee of no funds outside of Fund
Complex
38 PIMCO Municipal Income Funds Annual Report 4.30.04
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4.30.04 PIMCO Municipal Income Funds Annual Report 39
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40 PIMCO Municipal Income Funds Annual Report 4.30.04
TRUSTEES AND PRINCIPAL OFFICERS
Stephen Treadway
Trustee, Chairman, Chairman of the Board
Paul Belica
Trustee
Robert E. Connor
Trustee
John J. Dalessandro II
Trustee
Hans W. Kertess
Trustee
R. Peter Sullivan III
Trustee
Brian S. Shlissel
President & Chief Executive Officer
Newton B. Schott, Jr.
Vice President & Secretary
Mark V. McCray
Vice President
Lawrence G. Altadonna
Treasurer, Principal Financial & Accounting Officer
Jennifer A. Patula
Assistant Secretary
INVESTMENT MANAGER
PA 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
TRANSFER AGENT, DIVIDEND PAYING AGENT AND REGISTRAR
PFPC Inc.
P.O. Box 43027
Providence, RI 02940-3027
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL
Ropes & Gray LLP
One International Place
Boston, MA 02210-2624
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 Municipal 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.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that from time to time each Fund may purchase
shares of its common stock in the open market.
Information on the Funds is available at www.pimcoadvisors.com or by calling
1-800-331-1710
ITEM 2. CODE OF ETHICS
(a) As of the end of the period covered by this report, the registrant
has adopted a code of ethics (the "Section 406 Standards for
Investment Companies -- Ethical Standards for Principal Executive
and Financial Officers") that applies to the registrant's Principal
Executive Officer and Principal Financial Officer; the registrant's
Principal Financial Officer also serves as the Principal Accounting
Officer. The registrant undertakes to provide a copy of such code
of ethics to any person upon request, without charge, by calling
1-800-331-1710.
(b) During the period covered by this report, there were not any
amendments to a provision of the code of ethics adopted in 2(a)
above.
(c) During the period covered by this report, there were not any
waivers or implicit waivers to a provision of the code of ethics
adopted in 2(a) above.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT The registrant's Board has determined
that Mr. Paul Belica, a member of the Board's Audit Oversight Committee is an
"audit committee financial expert," and that he is "independent," for purposes
of this Item.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
a) Audit fees. The aggregate fees billed for each of the last two
fiscal years (the "Reporting Periods") for professional services
rendered by the Registrant's principal accountant (the
"Auditor")for the audit of the Registrant's annual financial
statements, or services that are normally provided by the Auditor
in connection with the statutory and regulatory filings or
engagements for the Reporting Periods, were $36,200 in 2003 and
$41,667 in 2004.
b) Audit-Related Fees. The aggregate fees billed in the Reporting
Periods for assurance and related services by the principal
accountant that are reasonably related to the performance of the
audit registrant's financial statements and are not reported under
paragraph (e) of this Item were $6,713 in 2003 and $7,262 in 2004.
These services consist of accounting consultations, agreed upon
procedure reports (inclusive of annual review of basic maintenance
testing associated with the Preferred Shares), attestation reports
and comfort letters.
c) Tax Fees. The aggregate fees billed in the Reporting Periods for
professional services rendered by the Auditor for tax compliance,
tax service and tax planning ("Tax Services") were $7,200 in 2003
and $7,200 in 2004. These services consisted of review or
preparation of U.S. federal, state, local and excise tax returns.
d) All Other Fees. There were no other fees billed in the Reporting
Periods for products and services provided by the Auditor to the
Registrant.
e) 1. Audit Committee Pre-Approval Policies and Procedures. The
Registrant's Audit Committee has established policies and
procedures for pre-approval of all audit and permissible non-
-10-
audit services by the Auditor for the Registrant, as well as the
Auditor's engagements for non-audit services to the when the
engagement relates directly to the operations and financial
reporting of the Registrant. The Registrant's policy is stated
below.
PIMCO Municipal Income Funds (THE "FUNDS")
AUDIT OVERSIGHT COMMITTEE POLICY FOR PRE-APPROVAL OF SERVICES PROVIDED BY THE
INDEPENDENT ACCOUNTANTS
The Funds' Audit Oversight Committee ("Committee") is charged with the oversight
of the Funds' financial reporting policies and practices and their internal
controls. As part of this responsibility, the Committee must pre-approve any
independent accounting firm's engagement to render audit and/or permissible
non-audit services, as required by law. In evaluating a proposed engagement by
the independent accountants, the Committee will assess the effect that the
engagement might reasonably be expected to have on the accountant's
independence. The Committee's evaluation will be based on:
a review of the nature of the professional services expected to provided,
the fees to be charged in connection with the services expected to be
provided,
a review of the safeguards put into place by the accounting firm to safeguard
independence, and
periodic meetings with the accounting firm.
POLICY FOR AUDIT AND NON-AUDIT SERVICES TO BE PROVIDED TO THE FUNDS
On an annual basis, the Funds' Committee will review and pre-approve the scope
of the audits of the Funds and proposed audit fees and permitted non-audit
(including audit-related) services that may be performed by the Funds'
independent accountants. At least annually, the Committee will receive a report
of all audit and non-audit services that were rendered in the previous calendar
year pursuant to this Policy. In addition to the Committee's pre-approval of
services pursuant to this Policy, the engagement of the independent accounting
firm for any permitted non-audit service provided to the Funds will also require
the separate written pre-approval of the President of the Funds, who will
confirm, independently, that the accounting firms's engagement will not
adversely affect the firm's independence. All non-audit services performed by
the independent accounting firm will be disclosed, as required, in filings with
the Securities and Exchange Commission.
AUDIT SERVICES
The categories of audit services and related fees to be reviewed and
pre-approved annually by the Committee are:
Annual Fund financial statement audits
Seed audits (related to new product filings, as required)
SEC and regulatory filings and consents
Semiannual financial statement reviews
AUDIT-RELATED SERVICES
The following categories of audit-related services are considered to be
consistent with the role of the Fund's independent accountants and services
falling under one of these categories will be pre-approved by the Committee on
an annual basis if the Committee deems those services to be consistent with the
accounting firm's independence:
Accounting consultations
Fund merger support services
Agreed upon procedure reports (inclusive of quarterly review of Basic
Maintenance testing associated with issuance of Preferred Shares and
semiannual report review)
Other attestation reports
Comfort letters
Other internal control reports
Individual audit-related services that fall within one of these categories and
are not presented to the Committee as part of the annual pre-approval process
described above, may be pre-approved, if deemed consistent with the accounting
firm's independence, by the Committee Chair (or any other Committee member who
is a disinterested trustee under the Investment Company Act to whom this
responsibility has been delegated) so long as the estimated fee for those
services does not exceed $75,000. Any such pre-approval shall be reported to the
full Committee at its next regularly scheduled meeting.
TAX SERVICES
The following categories of tax services are considered to be consistent with
the role of the Funds' independent accountants and services falling under one of
these categories will be pre-approved by the Committee on an annual basis if the
Committee deems those services to be consistent with the accounting firm's
independence:
Tax compliance services related to the filing or amendment of the following:
Federal, state and local income tax compliance; and, sales and use tax
compliance
Timely RIC qualification reviews
Tax distribution analysis and planning
Tax authority examination services
Tax appeals support services
Accounting methods studies
Fund merger support service
Other tax consulting services and related projects
Individual tax services that fall within one of these categories and are not
presented to the Committee as part of the annual pre-approval process described
above, may be pre-approved, if deemed consistent with the accounting firm's
independence, by the Committee Chairman (or any other Committee member who is a
disinterested trustee under the Investment Company Act to whom this
responsibility has been delegated) so long as the estimated fee for those
services does not exceed $75,000. Any such pre-approval shall be reported to the
full Committee at its next regularly scheduled meeting.
PROSCRIBED SERVICES
The Funds' independent accountants will not render services in the following
categories of non-audit services:
Bookkeeping or other services related to the accounting records or
financial statements of the Funds
Financial information systems design and implementation
Appraisal or valuation services, fairness opinions, or
contribution-in-kind reports
Actuarial services
Internal audit outsourcing services
Management functions or human resources
Broker or dealer, investment adviser or investment banking services
Legal services and expert services unrelated to the audit
Any other service that the Public Company Accounting Oversight Board
determines, by regulation, is impermissible
PRE-APPROVAL OF NON-AUDIT SERVICES PROVIDED TO OTHER ENTITIES WITHIN THE FUND
COMPLEX
The Committee will pre-approve annually any permitted non-audit services to be
provided to PA Fund Management LLC (Formerly, PIMCO Advisors Fund Management
LLC) or any other investment manager to the Funds (but not including any
sub-adviser whose role is primarily portfolio management and is sub-contracted
by the investment manager) (the "Investment Manager") and any entity
controlling, controlled by, or under common control with the Investment Manager
that provides ongoing services to the Funds (including affiliated sub-advisers
to the Funds), provided, in each case, that the engagement relates directly to
the operations and financial reporting of the Funds (such entities, including
the Investment Manager, shall be referred to herein as the "Accounting
Affiliates"). Individual projects that are not presented to the Committee as
part of the annual pre-approval process, may be pre-approved, if deemed
consistent with the accounting firm's independence, by the Committee Chairman
(or any other Committee member who is a disinterested trustee under the
Investment Company Act to whom this responsibility has been delegated) so long
as the estimated fee for those services does not exceed $100,000. Any such
pre-approval shall be reported to the full Committee at its next regularly
scheduled meeting.
Although the Committee will not pre-approve all services provided to the
Investment Manager and its affiliates, the Committee will receive an annual
report from the Funds' independent accounting firm showing the aggregate fees
for all services provided to the Investment Manager and its affiliates.
DE MINIMUS EXCEPTION TO REQUIREMENT OF PRE-APPROVAL OF NON-AUDIT SERVICES
With respect to the provision of permitted non-audit services to a Fund or
Accounting Affiliates, the pre-approval requirement is waived if:
(1) The aggregate amount of all such permitted non-audit services provided
constitutes no more than (i) with respect to such services provided to
the Fund, five percent (5%) of the total amount of revenues paid by
the Fund to its independent accountant during the fiscal year in which
the services are provided, and(ii) with respect to such services
provided to Accounting Affiliates, five percent (5%)of the total
amount of revenues paid to the Fund's independent accountant by the
Fund and the Accounting Affiliates during the fiscal year in which the
services are provided;
(2) Such services were not recognized by the Fund at the time of the
engagement for such services to be non-audit services; and
(3) Such services are promptly brought to the attention of the Committee
and approved prior to the completion of the audit by the Committee or
by the Committee Chairman (or any other Committee member who is a
disinterested trustee under the Investment Company Act to whom this
Committee Chairman or other delegate shall be reported to the full
Committee at its next regularly scheduled meeting.
e) 2. No services were approved pursuant to the procedures contained in
paragraph (C) (7) (i) (C) of Rule 2-01 of Registration S-X.
f) Not applicable
g) Non-audit fees. The aggregate non-audit fees billed by the Auditor for
services rendered to the Registrant, and rendered to the Adviser, for
the 2003 Reporting Period was $3,223,981 and the 2004 Reporting Period
was $4,298,980.
h) Auditor Independence. The Registrant's Audit Oversight Committee has
considered whether the provision of non-audit services that were
rendered to the Adviser which were not pre-approved is compatible with
maintaining the Auditor's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANT Not applicable
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 The registrant has delegated the voting of
proxies relating to its voting securities to its sub-adviser, Pacific Investment
Management Co. (the "Sub-Adviser"). The Proxy Voting Policies and Procedures of
the Sub-Adviser are included as an Exhibit 99.PROXYPOL hereto.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED COMPANIES. Disclosure requirement not currently effective
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS In January 2004, the
Registrant's Board of Trustees adopted a Nominating Committee Charter governing
the affairs of the Nominating Committee of the Board, which is posted on the
PIMCO Advisors website at www.pimcoadvisors.com. Appendix B to the Nominating
Committee Charter includes "Procedures for Shareholders to Submit Nominee
Candidates," which sets forth the procedures by which shareholders may recommend
nominees to the Registrant's Board of Trustees. Among other requirements, the
procedures provide that the recommending shareholder must submit any
recommendation in writing to the Registrant to the attention of the Registrant's
Secretary, at the address of the principal executive offices of the Registrant
and that such submission must be received at such offices not less than 45 days
nor more than 75 days prior to the date of the Board or shareholder meeting at
which the nominee would be elected. Any recommendation must include certain
biographical and other information regarding the candidate and the recommending
shareholder, and must include a written and signed consent of the candidate to
be named as a nominee and to serve as a Trustee if elected. The foregoing
description of the requirements is only a summary and is qualified in its
entirety by reference to Appendix B of the Nominating Committee Charter.
ITEM 10. CONTROLS AND PROCEDURES
(a) The registrant's President and Chief Executive Officer and Principal
Financial Officer have concluded that the registrant's disclosure controls and
procedures (as defined in Rule 30a-2(c) under the Investment Company Act of
1940, 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 in the registrant's internal controls or
in factors that could affect these controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
ITEM 11. 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
(c) Exhibit 99.PROXYPOL - Proxy Voting Policies and Procedures
(d) Exhibit 99.Code Eth - Code of Ethics
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.
PIMCO California Municipal Income Fund
By /s/ Brian S. Shlissel
------------------------
Brian S. Shlissel, President & Chief Executive Officer
Date: July 9, 2004
By /s/ Lawrence G. Altadonna
----------------------------
Lawrence G. Altadonna, Treasurer, Principal Financial & Accounting Officer
Date: July 9, 2004
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: July 9, 2004
By /s/ Lawrence G. Altadonna
----------------------------
Lawrence G. Altadonna, Treasurer, Principal Financial & Accounting Officer
Date: July 9, 2004