PIMCO New York Municipal Income Fund
Table of Contents

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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 811-10381

PIMCO New York Municipal Income

Fund

(Exact name of registrant as specified in charter)

 

1633 Broadway, New York, New York   10019
(Address of principal executive offices)   (Zip code)

Lawrence G. Altadonna —1633 Broadway, New York, New York 10019

(Name and address of agent for service)

Registrant’s telephone number, including area code: 212-739-3371

Date of fiscal year end: April 30, 2012

Date of reporting period: October 31, 2011

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, 100 F Street, NE, Washington DC 20549-2001. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

 

 

 


Table of Contents

Item 1. REPORT TO SHAREHOLDERS

 

LOGO

 

Semi-Annual Report

 

October 31, 2011

 

 

 

PIMCO Municipal Income Fund

PIMCO California Municipal Income Fund

PIMCO New York Municipal Income Fund

 

LOGO


Table of Contents

Contents

 

Letter to Shareholders     2-3   
Fund Insights     4   
Performance & Statistics     5-7   
Schedules of Investments     8-23   
Statements of Assets and Liabilities     24   
Statements of Operations     25   
Statements of Changes in Net Assets     26-27   
Notes to Financial Statements     28-38   
Financial Highlights     39-41   
Portfolio Manager Change/Proxy Voting Policies & Procedures     42   
Matters Relating to the Trustees’ Consideration of the Investment Management & Portfolio Management Agreements     43-45   

 

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LOGO

Hans W. Kertess

Chairman

 

LOGO

Brian S. Shlissel

President & CEO

 

Dear Shareholder:

 

Municipal bonds posted solid returns during the six-month reporting period ended October 31, 2011. Low levels of new issuance together with concerns of higher taxes, helped to drive prices higher. Despite ongoing challenges for the U.S. economy, anxiety over municipal defaults eased.

 

Six-Month Period in Review

For the fiscal six-month period ended October 31, 2011:

 

 

PIMCO Municipal Income Fund increased 14.50% on net asset value (“NAV”) and 10.32% on market price.

 

 

PIMCO California Municipal Income Fund increased 14.11% on NAV and 10.68% on market price.

 

 

PIMCO New York Municipal Income Fund increased 9.73% on NAV and 10.04% on market price.

The U.S. economy gained strength during the reporting period. As it began, gross domestic product (“GDP”), the value of goods and services produced in the country, the broadest measure of economic activity and the principal indicator of economic performance, rose at an annual rate of 1.3%. GDP nearly doubled to an annual rate of 2.0% between July and September 2011.

 

During the period, Standard & Poor’s (“S&P”) downgraded the long-term credit rating of U.S. government debt from AAA to AA+. This move reflected S&P’s concern that Congress and the White House would not be able to solve the nation’s deepening fiscal problems. Other credit ratings agencies, however, maintained their top ratings for U.S. debt and the downgrade did not harm investor demand for U.S. Treasury securities. In fact, it had the opposite effect — investors reaffirmed the view that Treasuries were a relatively safe haven in times of uncertainty. Demand for government debt surged, with the yield on the benchmark 10-year Treasury bond dropping at one point to 1.72%, the lowest level in more than half-a-century. Municipal bond prices, which tend to closely track their Treasury brethren, rose accordingly. New issuance remained low throughout much of the reporting period, though it began to rise during the latter stages of the six-month period as suppliers moved to lock in low interest rates. In California, demand for new securities was strong, while a rally in higher-quality credits benefitted issuance in New York State.

 

2   PIMCO Municipal Income Funds Semi-Annual Report   10.31.11


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The Federal Reserve (“the Fed”) launched a third attempt to stimulate the economy. Its latest effort, “Operation Twist,” involves the selling of $400 billion of short-term Treasury securities in exchange for a similar amount of longer-term bonds. The Fed indicated this move is aimed at lowering longer-term bond yields while maintaining short-term rates at their current and historically low levels. This is regarded as an attempt to boost the ailing housing market by lowering mortgage rates, though such rates stand at the lowest levels in half-a-century. The Fed warned of “significant downside risks to the economic outlook, including strains in global financial markets.”

Outlook

The U.S. economy and the fiscal situation at the state and local level have strengthened of late, however, the overall picture remains daunting. The Center on Budget and Policy Priorities reports that collectively, states are grappling with $103 billion in red ink during the 2012 fiscal year. Separately, the National League of Cities reported that 57% of cities are facing greater financial

difficulties in 2011 than in 2010. These difficulties are compounded by uncertainty on taxes and budgets at the federal level, notably ongoing efforts by the so-called Congressional “super committee” to reduce the federal debt by $1.5 trillion.

 

For specific information on the Funds and their performance, please review the following pages. If you have any questions regarding the information provided, we encourage you to contact your financial advisor or call the Funds’ shareholder servicing agent at (800) 254-5197. In addition, a wide range of information and resources is available on our website, www.allianzinvestors.com/closedendfunds.

 

Together with Allianz Global Investors Fund Management LLC, the Funds’ investment manager, and Pacific Investment Management Company LLC (“PIMCO”), the Funds’ sub-adviser, we thank you for investing with us.

 

We remain dedicated to serving your investment needs.

 

Sincerely,

 

LOGO

Hans W. Kertess

Chairman

 

LOGO

Brian S. Shlissel

President & CEO

 

Receive this report electronically and eliminate paper mailings. To enroll, go to www.allianzinvestors.com/ edelivery.

 

10.31.11   PIMCO Municipal Income Funds Semi-Annual Report     3   


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PIMCO Municipal Income Funds Fund — Insights

October 31, 2011 (unaudited)

 

 

For the six-months ended October 31, 2011, PIMCO Municipal Income Fund returned 14.50% on net asset value (“NAV”) and 10.32% on market price.

 

For the six-months ended October 31, 2011, PIMCO California Municipal Income Fund returned 14.11% on net asset value (“NAV”) and 10.68% on market price.

 

For the six-months ended October 31, 2011, PIMCO New York Municipal Income Fund returned 9.73% on net asset value (“NAV”) and 10.04% on market price.

 

The municipal bond market produced strong results during the six-months ended October 31, 2011. The overall municipal market (as measured by the Barclays Capital Municipal Bond Index) posted a positive return during five of the six months of the reporting period. Factors supporting the market during the period included: generally robust investor demand as fear of mass defaults from earlier in the year were somewhat mitigated, as states observed improving revenue and actively addressed structural budgetary issues; a sharp decline in new issuance of municipal securities; sharply declining interest rates due to several flights to quality.

 

During the reporting period, Municipal Income and New York Municipal emphasized revenue bonds over general obligation bonds. This was beneficial for results as revenue bonds outperformed general obligation bonds. California Municipal in contrast, was aided by its positioning in California general obligation bonds, as these securities outperformed revenue bonds.

 

The Funds were rewarded for having exposure to tobacco bonds. This higher yielding sector outperformed the benchmark during the six months ended October 31, 2011.

 

Exposure to the health care was additive for the Funds’ performance as this sector outperformed the benchmarks during the reporting period. Municipal Income and New York Municipal benefited from exposure to the corporate-backed sector. California Municipal’s performance was enhanced by exposure to the education sector.

 

Shorter duration than that of their benchmarks detracted from performance, of each Fund, as municipal yields declined during the reporting period. A steepening yield curve bias also adversely effected results, as the municipal curve flattened during the six-month period.

 

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PIMCO Municipal Income Funds Performance & Statistics

October 31, 2011 (unaudited)

 

Municipal:

            
Total Return(1):   Market Price      NAV  

Six Month

    10.32%         14.50%   

1 Year

    3.76%         5.01%   

5 Year

    3.44%         3.48%   

10 Year

    6.58%         5.39%   

Commencement of Operations (6/29/01) to 10/31/11

    6.34%         5.72%   

 

Market Price/NAV Performance:

Commencement of Operations (6/29/01) to 10/31/11

 

LOGO

Market Price/NAV:        

Market Price

    $13.72   

NAV

    $11.76   

Premium to NAV

    16.67%   

Market Price Yield(2)

    7.11%   

 

Moody’s Rating

(as a % of total investments)

 

 

LOGO

 

 

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PIMCO Municipal Income Funds Performance & Statistics

October 31, 2011 (unaudited)

 

 

California:

            
Total Return(1):   Market Price      NAV  

Six Month

    10.68%         14.11%   

1 Year

    1.15%         0.30%   

5 Year

    1.84%         3.71%   

10 Year

    5.14%         5.29%   

Commencement of Operations (6/29/01) to 10/31/11

    5.31%         5.62%   

 

Market Price/NAV Performance:

Commencement of Operations (6/29/01) to 10/31/11

 

LOGO

Market Price/NAV:        

Market Price

    $12.78   

NAV

    $12.43   

Premium to NAV

    2.82%   

Market Price Yield(2)

    7.23%   

 

Moody’s Rating

(as a % of total investments)

 

 

LOGO

 

 

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PIMCO Municipal Income Funds Performance & Statistics

October 31, 2011 (unaudited)

 

New York:

            
Total Return(1):   Market Price      NAV  

Six Month

    10.04%         9.73%   

1 Year

    0.26%         1.67%   

5 Year

    1.91%         0.66%   

10 Year

    3.14%         3.29%   

Commencement of Operations (6/29/01) to 10/31/11

    2.94%         3.42%   

 

Market Price/NAV Performance:

Commencement of Operations (6/29/01) to 10/31/11

 

LOGO

Market Price/NAV:        

Market Price

    $10.53   

NAV

    $10.53   

Premium to NAV

    0.00%   

Market Price Yield(2)

    6.50%   

 

Moody’s Rating

(as a % of total investments)

 

 

LOGO

 

 

(1) Past performance is no guarantee of future results. Total return is calculated by determining the percentage change in NAV or market price (as applicable) in the specified period. The calculation assumes that all income dividends and capital gain distributions, if any, have been reinvested. Total return does not reflect broker commissions or sales charges in connection with the purchase or sale of Fund shares. Total investment return for a period of less than one year is not annualized. Total return for a period of more than one year represents the average annual total return.

Performance at market price will differ from results at NAV. Although market price returns typically reflect investment results over time, during shorter periods returns at market price can also be influenced by factors such as changing views about the Funds, market conditions, supply and demand for each Fund’s shares, or changes in the Funds’ dividends.

An investment in the Funds involves risk, including the loss of principal. Total return, market price, market price yield and NAV will fluctuate with changes in market conditions. This data is provided for information purposes only and is not intended for trading purposes. 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 traded in the open market through a stock exchange. NAV is equal to total assets attributable to common shareholders less total liabilities divided by the number of common shares outstanding. Holdings are subject to change daily.

(2) Market Price Yield is determined by dividing the annualized current monthly per common share dividend (comprised of net investment income) payable to common shareholders by the market price per common share at October 31, 2011.

 

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PIMCO Municipal Income Fund Schedule of Investments

October 31, 2011 (unaudited)

 

Principal
Amount
(000s)
                   Value  

 

MUNICIPAL BONDS & NOTES – 97.2%

   
    Alabama – 1.0%    
$ 2,500       

Birmingham-Baptist Medical Centers Special Care Facs. Financing Auth. Rev.,
Baptist Health Systems, Inc., 5.875%, 11/15/24, Ser. A

    $ 2,509,725   
   

Huntsville-Redstone Village Special Care Facs. Financing Auth. Rev., Redstone
Village Project,

   
  250       

5.50%, 1/1/28

      222,215   
  885       

5.50%, 1/1/43

      672,697   
  1,350       

Montgomery Medical Clinic Board Rev., Jackson Hospital & Clinic, 5.25%, 3/1/31

      1,267,245   
       

 

 

 
          4,671,882   
       

 

 

 
    Alaska – 1.2%    
  3,280       

Borough of Matanuska-Susitna Rev., Goose Creek Correctional Center, 6.00%, 9/1/32 (AGC)

      3,702,858   
  900       

Industrial Dev. & Export Auth. Rev., Boys & Girls Home, 6.00%, 12/1/36

      585,000   
  2,400       

Northern Tobacco Securitization Corp. Rev., 5.00%, 6/1/46, Ser. A

      1,508,448   
       

 

 

 
          5,796,306   
       

 

 

 
    Arizona – 5.0%    
  5,000       

Apache Cnty. Industrial Dev. Auth. Rev.,
Tucson Electric Power Co. Project, 5.875%, 3/1/33, Ser. B

      5,001,100   
   

Health Facs. Auth. Rev.,

   
  2,050       

Banner Health, 5.50%, 1/1/38, Ser. D

      2,126,711   
  2,750       

Beatitudes Campus Project, 5.20%, 10/1/37

      2,092,475   
  1,500       

Maricopa Cnty. Pollution Control Corp. Rev.,
Southern California Edison Co., 5.00%, 6/1/35, Ser. A

      1,573,515   
   

Pima Cnty. Industrial Dev. Auth. Rev., Tucson Electric Power Co., Ser. A,

   
  750       

5.25%, 10/1/40

      711,555   
  4,150       

6.375%, 9/1/29,

      4,213,536   
  5,000       

Salt River Project Agricultural Improvement & Power Dist. Rev., 5.00%, 1/1/39, Ser. A (i)

      5,282,900   
  4,200       

Salt Verde Financial Corp. Rev., 5.00%, 12/1/37

      3,808,392   
       

 

 

 
          24,810,184   
       

 

 

 
    Arkansas – 0.5%    
  8,500       

Dev. Finance Auth. Rev., Arkansas Cancer Research Center Project,
zero coupon, 7/1/36 (AMBAC)

      2,690,760   
       

 

 

 
    California – 14.7%    
   

Bay Area Toll Auth. Rev.,

   
  2,875       

5.00%, 10/1/34

      2,979,449   
  3,255       

San Francisco Bay Area, 5.00%, 10/1/42

      3,363,619   
  3,000       

Chula Vista Rev., San Diego Gas & Electric, 5.875%, 2/15/34, Ser. B

      3,298,620   
   

Golden State Tobacco Securitization Corp. Rev., Ser. A-1,

   
  6,000       

5.00%, 6/1/33

      4,244,460   
  1,500       

5.75%, 6/1/47

      1,086,555   

 

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PIMCO Municipal Income Fund Schedule of Investments

October 31, 2011 (unaudited) (continued)

 

Principal
Amount
(000s)
                   Value  
    California (continued)    
   

Health Facs. Financing Auth. Rev.,

   
$ 2,000       

Catholic Healthcare West, 6.00%, 7/1/39, Ser. A

    $ 2,131,080   
  1,500       

Sutter Health, 6.00%, 8/15/42, Ser. B

      1,634,370   
  5,300       

Los Angeles Community College Dist., GO, 5.00%, 8/1/32, Ser. A (FGIC-NPFGC)

      5,525,091   
  2,000       

Los Angeles Unified School Dist., GO, 5.00%, 7/1/30, Ser. E (AMBAC)

      2,070,140   
  4,175       

Montebello Unified School Dist., GO, 5.00%, 8/1/33 (AGM)

      4,346,718   
  2,000       

M-S-R Energy Auth. Rev., 6.125%, 11/1/29, Ser. C

      2,158,360   
  1,600       

Municipal Finance Auth. Rev., Azusa Pacific Univ. Project, 7.75%, 4/1/31, Ser. B

      1,716,896   
  5,000       

Orange Cnty. Airport Rev., 5.25%, 7/1/39, Ser. A

      5,230,550   
  500       

San Diego Cnty. Regional Airport Auth. Rev., 5.00%, 7/1/24, Ser. A

      539,310   
  1,600       

San Marcos Unified School Dist., GO, 5.00%, 8/1/38, Ser. A

      1,648,432   
   

State, GO,

   
  700       

5.00%, 11/1/32

      709,765   
  1,200       

5.00%, 6/1/37

      1,203,420   
  2,300       

5.125%, 8/1/36

      2,343,792   
  1,250       

5.25%, 3/1/38

      1,273,462   
  1,900       

5.25%, 11/1/40

      1,940,964   
  500       

5.50%, 3/1/40

      526,915   
  3,200       

6.00%, 4/1/38

      3,533,440   
   

Statewide Communities Dev. Auth. Rev.,

   
  750       

California Baptist Univ., 6.50%, 11/1/21

      810,667   
  845       

Catholic Healthcare West, 5.50%, 7/1/31, Ser. E

      860,126   
   

Methodist Hospital Project (FHA),

   
  2,600       

6.625%, 8/1/29

      3,095,690   
  9,500       

6.75%, 2/1/38

      10,964,425   
  1,500       

Torrance Rev., Memorial Medical Center, 5.00%, 9/1/40, Ser. A

      1,499,895   
  500       

Univ. of California Rev., 5.00%, 5/15/41, Ser. D (FGIC-NPFGC)

      511,135   
  2,000       

Whittier Union High School Dist., GO, zero coupon, 8/1/25

      880,380   
       

 

 

 
          72,127,726   
       

 

 

 
    Colorado – 1.2%    
  500       

Confluence Metropolitan Dist. Rev., 5.45%, 12/1/34

      375,090   
  450       

Denver Health & Hospital Auth. Rev., 5.625%, 12/1/40

      444,582   
  2,500       

Health Facs. Auth. Rev., 5.00%, 2/1/41, Ser. A (e)

      2,484,600   
  500       

Public Auth. for Colorado Energy Rev., 6.50%, 11/15/38

      546,740   
  400       

Regional Transportation Dist., CP, 5.375%, 6/1/31, Ser. A

      425,836   
  1,500       

Univ. of Colorado Rev., 5.375%, 6/1/38, Ser. A

      1,631,595   
       

 

 

 
          5,908,443   
       

 

 

 
    Connecticut – 1.0%    
  5,000       

State Health & Educational Fac. Auth. Rev.,
Hartford Healthcare, 5.00%, 7/1/41, Ser. A

      5,007,250   
       

 

 

 

 

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Table of Contents

PIMCO Municipal Income Fund Schedule of Investments

October 31, 2011 (unaudited) (continued)

 

Principal
Amount
(000s)
                   Value  
    District of Columbia – 1.3%    
$ 2,500       

Dist. of Columbia Rev., Brookings Institution, 5.75%, 10/1/39

    $ 2,709,725   
  3,750       

Tobacco Settlement Financing Corp. Rev., 6.25%, 5/15/24

      3,756,862   
       

 

 

 
          6,466,587   
       

 

 

 
    Florida – 2.3%    
  850       

Beacon Lakes Community Dev. Dist., Special Assessment, 6.00%, 5/1/38, Ser. A

      764,133   
  4,000       

Broward Cnty. Water & Sewer Rev., 5.25%, 10/1/34, Ser. A (i)

      4,299,160   
  300       

Dev. Finance Corp. Rev., Renaissance Charter School, 6.50%, 6/15/21, Ser. A

      301,674   
  500       

Lee Cnty. Industrial Dev. Auth. Rev.,
Sara Lee Community Charter Foundation, 5.375%, 6/15/37, Ser. A

      395,380   
  1,250       

Miami-Dade Cnty. School Board, CP, 5.375%, 2/1/34, Ser. A (AGC)

      1,295,762   
  3,900       

State Board of Education, GO, 5.00%, 6/1/38, Ser. D (i)

      4,169,880   
       

 

 

 
          11,225,989   
       

 

 

 
    Georgia – 0.4%    
  2,300       

Medical Center Hospital Auth. Rev., Spring Harbor Green Island Project, 5.25%, 7/1/37

      1,865,024   
       

 

 

 
    Illinois – 3.4%    
  5,000       

Chicago, GO, 5.00%, 1/1/34, Ser. C (i)

      4,946,800   
  1,250       

Chicago Motor Fuel Tax Rev., 5.00%, 1/1/38, Ser. A (AGC)

      1,269,112   
   

Finance Auth. Rev.,

   
  1,000       

Memorial Health Systems, 5.50%, 4/1/39

      1,010,240   
  400       

OSF Healthcare System, 7.125%, 11/15/37, Ser. A

      445,900   
   

Univ. of Chicago,

   
  190       

5.25%, 7/1/41, Ser. 05-A

      191,524   
  5,000       

5.50%, 7/1/37, Ser. B (i)

      5,434,500   
  1,900       

Springfield Electric Rev., 5.00%, 3/1/36

      1,956,962   
  1,495       

Univ. of Illinois Rev., 5.25%, 4/1/32, Ser. B (FGIC-NPFGC)

      1,495,748   
       

 

 

 
          16,750,786   
       

 

 

 
    Indiana – 1.2%    
   

Finance Auth. Rev.,

   
  1,500       

Duke Energy Indiana, Inc., 6.00%, 8/1/39, Ser. B

      1,639,485   
  1,000       

U.S. Steel Corp., 6.00%, 12/1/26

      984,370   
  1,000       

Municipal Power Agcy. Rev., 6.00%, 1/1/39, Ser. B

      1,080,720   
  1,900       

Vigo Cnty. Hospital Auth. Rev., Union Hospital, Inc., 7.50%, 9/1/22

      2,218,402   
       

 

 

 
          5,922,977   
       

 

 

 
    Iowa – 1.6%    
   

Finance Auth. Rev.,

   
  4,890       

Deerfield Retirement Community, Inc., 5.50%, 11/15/37, Ser. A

      3,354,002   
   

Edgewater LLC Project,

   
  3,500       

6.75%, 11/15/37

      3,044,405   
  1,500       

6.75%, 11/15/42

      1,283,100   
       

 

 

 
          7,681,507   
       

 

 

 

 

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PIMCO Municipal Income Fund Schedule of Investments

October 31, 2011 (unaudited) (continued)

 

Principal
Amount
(000s)
                   Value  
    Kansas – 1.5%    
$ 1,000       

Dev. Finance Auth. Rev., Adventist Health, 5.75%, 11/15/38

    $ 1,081,370   
  1,000       

Lenexa City, Tax Allocation, Center East Project, 6.00%, 4/1/27

      709,670   
  650       

Manhattan Rev., Meadowlark Hills Retirement, 5.125%, 5/15/42, Ser. B

      528,333   
  5,000       

Wichita Hospital Rev., Facs. Improvements, 5.625%, 11/15/31, Ser. III

      5,059,150   
       

 

 

 
          7,378,523   
       

 

 

 
    Kentucky – 0.6%    
  635       

Dev. Finance Auth. Rev., St. Luke’s Hospital, 6.00%, 10/1/19, Ser. B

      637,483   
  1,000       

Economic Dev. Finance Auth. Rev.,
Owensboro Medical Healthcare Systems, 6.375%, 6/1/40, Ser. A

      1,045,240   
  1,000       

Ohio Cnty. Pollution Control Rev., Big Rivers Electric Corp., 6.00%, 7/15/31, Ser. A

      1,034,110   
       

 

 

 
          2,716,833   
       

 

 

 
    Louisiana – 6.5%    
   

Local Gov’t Environmental Facs. & Community Dev. Auth. Rev.,

   
  3,930       

Capital Projects & Equipment Acquisition, 6.55%, 9/1/25 (ACA)

      4,093,920   
  400       

Westlake Chemical Corp., 6.50%, 11/1/35, Ser. A-2

      417,700   
  750       

Woman’s Hospital Foundation, 5.875%, 10/1/40, Ser. A

      756,938   
  2,000       

Public Facs. Auth. Rev., Ochsner Clinic Foundation Project, 6.50%, 5/15/37

      2,134,560   
  24,395       

Tobacco Settlement Financing Corp. Rev., 5.875%, 5/15/39, Ser. 2001-B

      24,420,371   
       

 

 

 
          31,823,489   
       

 

 

 
    Maryland – 0.4%    
  1,500       

Economic Dev. Corp. Rev., 5.75%, 6/1/35, Ser. B

      1,498,005   
  650       

Health & Higher Educational Facs. Auth. Rev., Charlestown Community, 6.25%, 1/1/41

      675,649   
       

 

 

 
          2,173,654   
       

 

 

 
    Massachusetts – 0.5%    
  750       

Dev. Finance Agcy. Rev.,
Foxborough Regional Charter School, 7.00%, 7/1/42, Ser. A

      775,447   
   

Linden Ponds, Inc. Fac.,

   
  103       

zero coupon, 11/15/56, Ser. B

      1,027   
  21       

5.50%, 11/15/46, Ser. A-2

      13,519   
  388       

6.25%, 11/15/39, Ser. A-1

      291,203   
  1,500       

State College Building Auth. Rev., 5.50%, 5/1/39, Ser. A

      1,612,290   
       

 

 

 
          2,693,486   
       

 

 

 
    Michigan – 0.8%    
  1,000       

Detroit, GO, 5.375%, 4/1/17, Ser. A-1 (NPFGC)

      940,620   
  2,000       

Garden City Hospital Finance Auth. Rev., 5.00%, 8/15/38, Ser. A

      1,429,440   
  1,500       

Royal Oak Hospital Finance Auth. Rev., William Beaumont Hospital, 8.25%, 9/1/39

      1,773,195   
       

 

 

 
          4,143,255   
       

 

 

 
    Minnesota – 0.4%    
  95       

Agricultural & Economic Dev. Board Rev., Health Care Systems, 6.375%, 11/15/29, Ser. A

      95,094   
  100       

Duluth Housing & Redev. Auth. Rev., 5.875%, 11/1/40, Ser. A

      91,044   
  1,500       

St. Louis Park Rev., Nicollett Health Services, 5.75%, 7/1/39

      1,540,035   

 

10.31.11   PIMCO Municipal Income Funds Semi-Annual Report     11   


Table of Contents

PIMCO Municipal Income Fund Schedule of Investments

October 31, 2011 (unaudited) (continued)

 

Principal
Amount
(000s)
                   Value  
    Minnesota (continued)    
$ 500       

Washington Cnty. Housing & Redev. Auth. Rev.,
Birchwood & Woodbury Projects, 5.625%, 6/1/37, Ser. A

    $ 454,420   
       

 

 

 
          2,180,593   
       

 

 

 
    Missouri – 0.3%    
  1,000       

Joplin Industrial Dev. Auth. Rev., Christian Homes, Inc., 5.75%, 5/15/26, Ser. F

      949,020   
  500       

Lee’s Summit, Tax Allocation, Summit Fair Project, 5.625%, 10/1/23

      504,945   
       

 

 

 
          1,453,965   
       

 

 

 
    Nevada – 4.1%    
   

Clark Cnty., GO,

   
  5,000       

4.75%, 6/1/30 (AGM)

      5,067,550   
  5,230       

4.75%, 11/1/35 (FGIC-NPFGC) (i)

      5,244,644   
  9,755       

Washoe Cnty., Water & Sewer, GO, 5.00%, 1/1/35 (NPFGC)

      9,871,182   
       

 

 

 
          20,183,376   
       

 

 

 
    New Jersey – 6.5%    
  16,550       

Economic Dev. Auth., Special Assessment, Kapkowski Road Landfill Project, 5.75%, 4/1/31

      15,931,526   
  2,000       

Economic Dev. Auth. Rev., School Facs. Construction, 5.50%, 12/15/34, Ser. Z (AGC)

      2,136,860   
   

Health Care Facs. Financing Auth. Rev.,

   
  500       

AHS Hospital Corp., 6.00%, 7/1/37

      543,895   
  1,000       

Trinitas Hospital, 5.25%, 7/1/30, Ser. A

      924,840   
  2,000       

State Turnpike Auth. Rev., 5.25%, 1/1/40, Ser. E

      2,099,580   
   

Tobacco Settlement Financing Corp. Rev., Ser. 1-A,

   
  6,600       

4.75%, 6/1/34

      4,410,186   
  9,100       

5.00%, 6/1/41

      6,066,697   
       

 

 

 
          32,113,584   
       

 

 

 
    New Mexico – 1.5%    
  1,000       

Farmington Pollution Control Rev., 5.90%, 6/1/40, Ser. D

      974,360   
  6,400       

Hospital Equipment Loan Council Rev., Presbyterian Healthcare, 5.00%, 8/1/39

      6,548,032   
       

 

 

 
          7,522,392   
       

 

 

 
    New York – 7.0%    
  11,000       

Hudson Yards Infrastructure Corp. Rev., 5.25%, 2/15/47, Ser. A

      11,160,600   
   

Liberty Dev. Corp. Rev., Goldman Sachs Headquarters,

   
  7,500       

5.25%, 10/1/35

      7,654,050   
  3,000       

5.50%, 10/1/37

      3,058,290   
  4,200       

Nassau Cnty. Industrial Dev. Agcy. Rev., Amsterdam at Harborside, 6.70%, 1/1/43, Ser. A

      3,796,590   
  3,000       

New York City Municipal Water Finance Auth. Water & Sewer Rev.,
Second Generation Resolutions, 5.00%, 6/15/39, Ser. GG-1

      3,158,940   
  3,500       

State Dormitory Auth. Rev., The New School, 5.50%, 7/1/40

      3,712,450   
  1,625       

Westchester Cnty. Healthcare Corp. Rev., 5.875%, 11/1/25, Ser. A

      1,626,479   
       

 

 

 
          34,167,399   
       

 

 

 

 

12   PIMCO Municipal Income Funds Semi-Annual Report   10.31.11


Table of Contents

PIMCO Municipal Income Fund Schedule of Investments

October 31, 2011 (unaudited) (continued)

 

Principal
Amount
(000s)
                   Value  
    North Carolina – 0.4%    
$ 570       

Capital Facs. Finance Agcy. Rev., Duke Univ. Project, 5.125%, 10/1/41, Ser. A

    $ 570,844   
  1,500       

Medical Care Commission Rev., Village at Brookwood, 5.25%, 1/1/32

      1,193,895   
       

 

 

 
          1,764,739   
       

 

 

 
    Ohio – 2.0%    
  11,000       

Buckeye Tobacco Settlement Financing Auth. Rev., 5.875%, 6/1/47, Ser. A-2

      7,841,900   
   

Higher Educational Fac. Commission Rev.,

   
  250       

Ashland Univ. Project, 6.25%, 9/1/24

      255,240   
  500       

Univ. Hospital Health Systems, 6.75%, 1/15/39, Ser. 2009-A

      529,315   
  500       

Lorain Cnty. Port Auth. Rev., U.S. Steel Corp. Project, 6.75%, 12/1/40

      505,025   
  500       

Montgomery Cnty. Rev., Miami Valley Hospital, 6.25%, 11/15/39, Ser. A

      520,660   
       

 

 

 
          9,652,140   
       

 

 

 
    Oregon – 0.6%    
  2,000       

Oregon Health & Science Univ. Rev., 5.75%, 7/1/39, Ser. A

      2,169,800   
  600       

State Department of Administrative Services, CP, 5.25%, 5/1/39, Ser. A

      635,004   
       

 

 

 
          2,804,804   
       

 

 

 
    Pennsylvania – 4.9%    
  5,000       

Geisinger Auth. Rev., 5.25%, 6/1/39, Ser. A

      5,222,050   
  2,000       

Harrisburg Auth. Rev., Harrisburg Univ. of Science, 6.00%, 9/1/36, Ser. B

      1,807,000   
   

Higher Educational Facs. Auth. Rev.,

   
  500       

Edinboro Univ. Foundation, 6.00%, 7/1/43

      501,625   
  350       

Thomas Jefferson Univ., 5.00%, 3/1/40

      362,513   
   

Lancaster Cnty. Hospital Auth. Rev., Brethren Village Project, Ser. A,

   
  750       

6.25%, 7/1/26

      758,100   
  85       

6.375%, 7/1/30

      85,853   
  1,100       

Luzerne Cnty. Industrial Dev. Auth. Rev., Pennsylvania American Water Co., 5.50%, 12/1/39

      1,168,409   
  7,000       

Philadelphia, GO, 5.25%, 12/15/32, Ser. A (AGM)

      7,230,230   
  4,465       

Philadelphia Hospitals & Higher Education Facs. Auth. Rev.,
Temple Univ. Hospital, 6.625%, 11/15/23, Ser. A

      4,469,063   
  500       

Philadelphia Water Rev., 5.25%, 1/1/36, Ser. A

      518,990   
  2,000       

Turnpike Commission Rev., 5.125%, 12/1/40, Ser. D

      2,019,020   
       

 

 

 
          24,142,853   
       

 

 

 
    Puerto Rico – 0.6%    
  3,000       

Sales Tax Financing Corp. Rev., 5.375%, 8/1/38, Ser. C

      3,097,980   
       

 

 

 
    Rhode Island – 4.4%    
  23,800       

Tobacco Settlement Financing Corp. Rev., 6.25%, 6/1/42, Ser. A

      21,837,928   
       

 

 

 
    South Carolina – 1.7%    
   

Greenwood Cnty. Hospital Rev., Self Memorial Hospital,

   
  3,500       

5.50%, 10/1/21

      3,503,745   
  2,000       

5.50%, 10/1/26

      2,000,920   

 

10.31.11   PIMCO Municipal Income Funds Semi-Annual Report     13   


Table of Contents

PIMCO Municipal Income Fund Schedule of Investments

October 31, 2011 (unaudited) (continued)

 

Principal
Amount
(000s)
                   Value  
    South Carolina (continued)    
$ 450       

Jobs-Economic Dev. Auth. Rev., Lutheran Homes, 5.50%, 5/1/28

    $ 392,117   
  2,200       

State Ports Auth. Rev., 5.25%, 7/1/40

      2,321,990   
       

 

 

 
          8,218,772   
       

 

 

 
    Tennessee – 4.7%    
  940       

Memphis Health Educational & Housing Fac. Board Rev.,
Wesley Housing Corp. Project, 6.95%, 1/1/20 (a)(b)(f)(k)
(acquisition cost-$935,300; purchased 6/29/01)

      472,350   
  5,000       

Metropolitan Gov’t Nashville & Davidson Cnty. Health & Educational Facs. Board Rev., Vanderbilt Univ., 5.00%, 10/1/39, Ser. B (i)

      5,413,600   
   

Tennessee Energy Acquisition Corp. Rev.,

   
  370       

5.00%, 2/1/21, Ser. C

      364,328   
  5,000       

5.00%, 2/1/27, Ser. C

      4,818,750   
  6,460       

5.25%, 9/1/17, Ser. A

      6,672,082   
  600       

5.25%, 9/1/21, Ser. A

      600,408   
  5,000       

5.25%, 9/1/24, Ser. A

      4,958,200   
       

 

 

 
          23,299,718   
       

 

 

 
    Texas – 8.7%    
  1,200       

Dallas Rev., Dallas Civic Center, 5.25%, 8/15/38 (AGC)

      1,263,300   
   

North Harris Cnty. Regional Water Auth. Rev.,

   
  4,200       

5.25%, 12/15/33

      4,436,922   
  4,200       

5.50%, 12/15/38

      4,482,114   
   

North Texas Tollway Auth. Rev.,

   
  3,000       

5.25%, 1/1/44, Ser. C

      3,024,720   
  600       

5.50%, 9/1/41, Ser. A

      651,660   
  6,050       

5.625%, 1/1/33, Ser. A

      6,345,966   
  600       

5.75%, 1/1/33, Ser. F

      616,206   
  250       

San Juan Higher Education Finance Auth. Rev., 6.70%, 8/15/40, Ser. A

      258,168   
   

State Public Finance Auth. Rev., Charter School Finance Corp., Ser. A,

   
  400       

5.875%, 12/1/36

      387,992   
  2,000       

Cosmos Foundation, 5.375%, 2/15/37

      1,882,740   
  4,000       

Tarrant Cnty. Cultural Education Facs. Finance Corp. Rev.,
Baylor Health Care Systems Project, 6.25%, 11/15/29

      4,471,600   
   

Texas Municipal Gas Acquisition & Supply Corp. I Rev.,

   
  6,500       

5.25%, 12/15/23, Ser. A

      6,295,835   
  150       

5.25%, 12/15/25, Ser. A

      143,925   
  6,500       

6.25%, 12/15/26, Ser. D

      6,797,960   
  1,000       

Uptown Dev. Auth., Tax Allocation, Infrastructure Improvement Facs., 5.50%, 9/1/29

      1,013,880   
  500       

Wise Cnty. Rev., Parker Cnty. Junior College Dist., 8.00%, 8/15/34

      526,225   
       

 

 

 
          42,599,213   
       

 

 

 

 

14   PIMCO Municipal Income Funds Semi-Annual Report   10.31.11


Table of Contents

PIMCO Municipal Income Fund Schedule of Investments

October 31, 2011 (unaudited) (continued)

 

Principal
Amount
(000s)
                   Value  
    U.S. Virgin Islands – 0.1%    
$ 500       

Virgin Islands Public Finance Auth. Rev., 5.00%, 10/1/39, Ser. A-1

    $ 463,175   
       

 

 

 
    Utah – 1.6%    
  7,000       

Salt Lake Cnty. Rev., IHC Health Services, 5.125%, 2/15/33 (AMBAC)

      7,892,640   
       

 

 

 
    Virginia – 0.6%    
  1,000       

Fairfax Cnty. Industrial Dev. Auth. Rev., Inova Health Systems, 5.50%, 5/15/35, Ser. A

      1,078,510   
  1,985       

Peninsula Town Center Community Dev. Auth. Rev., 6.45%, 9/1/37

      1,943,275   
       

 

 

 
          3,021,785   
       

 

 

 
    Washington – 1.2%    
   

Health Care Facs. Auth. Rev.,

   
  700       

Multicare Health Systems, 6.00%, 8/15/39, Ser. B (AGC)

      752,549   
  250       

Seattle Cancer Care Alliance, 7.375%, 3/1/38

      278,250   
  2,000       

Virginia Mason Medical Center, 6.125%, 8/15/37, Ser. A

      2,018,640   
   

State Housing Finance Commission Rev., Skyline at First Hill Project, Ser. A,

   
  275       

5.25%, 1/1/17

      238,972   
  3,600       

5.625%, 1/1/38

      2,431,800   
       

 

 

 
          5,720,211   
       

 

 

 
    West Virginia – 0.2%    
  1,000       

Hospital Finance Auth. Rev., Highland Hospital, 9.125%, 10/1/41

      1,054,720   
       

 

 

 
    Wisconsin – 0.6%    
  2,230       

Health & Educational Facs. Auth. Rev.,
Kenosha Hospital & Medical Center Project, 5.625%, 5/15/29

      2,230,290   
  500       

Prohealth Care, Inc., 6.625%, 2/15/39

      545,220   
       

 

 

 
          2,775,510   
       

 

 

 
   

Total Municipal Bonds & Notes (cost-$460,947,998)

      477,822,158   
       

 

 

 
       

 

VARIABLE RATE NOTES (a)(d)(g)(h) – 2.1%

  

    Texas – 0.4%    
  1,000       

JPMorgan Chase Putters/Drivers Trust, GO, 7.964%, 2/1/17, Ser. 3480

      1,180,210   
  600       

JPMorgan Chase Putters/Drivers Trust Rev., 8.484%, 10/1/31, Ser. 3227

      741,978   
       

 

 

 
          1,922,188   
       

 

 

 
    Washington – 1.7%    
  6,670       

JPMorgan Chase Putters/Drivers Trust, GO, 11.598%, 8/1/28, Ser. 3388

      8,445,421   
       

 

 

 
   

Total Variable Rate Notes (cost-$8,169,076)

      10,367,609   
       

 

 

 
       

 

SHORT-TERM INVESTMENTS – 0.7%

  

    U.S. Treasury Obligations (l) – 0.7%    
   

U.S. Treasury Bills,

   
  3,564       

0.003%-0.061%, 11/25/11-4/5/12 (cost-$3,563,746)

      3,563,746   
       

 

 

 
   

Total Investments (cost-$472,680,820) – 100.0%

    $ 491,753,513   
       

 

 

 

 

10.31.11   PIMCO Municipal Income Funds Semi-Annual Report     15   


Table of Contents

PIMCO California Municipal Income Fund Schedule of Investments

October 31, 2011 (unaudited)

 

Principal
Amount
(000s)
                   Value  

 

CALIFORNIA MUNICIPAL BONDS & NOTES – 93.3%

   
$ 10,000       

Bay Area Toll Auth. Rev., San Francisco Bay Area, 5.00%, 4/1/34, Ser. F-1

    $ 10,376,900   
  5,000       

Chula Vista Rev., San Diego Gas & Electric, 5.875%, 2/15/34, Ser. B

      5,497,700   
  650       

City & Cnty. of San Francisco, Capital Improvement Projects, CP, 5.25%, 4/1/31, Ser. A

      666,400   
  720       

City & Cnty. of San Francisco Redev. Agcy., Special Tax, 6.125%, 8/1/31, Ser. B

      719,863   
  350       

Contra Costa Cnty. Public Financing Auth., Tax Allocation, 5.85%, 8/1/33, Ser. A

      319,501   
  5,000       

Desert Community College Dist., GO, 5.00%, 8/1/37, Ser. C (AGM)

      5,117,350   
  310       

Dublin Unified School Dist., GO, zero coupon, 8/1/23, Ser. E

      167,899   
  6,300       

Eastern Municipal Water Dist., CP, 5.00%, 7/1/35, Ser. H

      6,479,172   
   

Educational Facs. Auth. Rev. (i),

   
  10,200       

Claremont McKenna College, 5.00%, 1/1/39

      10,641,864   
  10,000       

Univ. of Southern California, 5.00%, 10/1/39, Ser. A

      10,542,700   
  2,975       

El Dorado Irrigation Dist. & El Dorado Water Agcy., CP, 5.75%, 8/1/39, Ser. A (AGC)

      3,067,433   
   

El Monte, Department of Public Social Services Fac., CP (AMBAC),

   
  10,790       

4.75%, 6/1/30

      10,105,698   
  14,425       

Phase II, 5.25%, 1/1/34

      13,893,727   
  1,000       

Folsom Redev. Agcy., Tax Allocation, 5.50%, 8/1/36

      960,370   
   

Fremont Community Facs. Dist. No. 1, Special Tax,

   
  165       

6.00%, 9/1/18

      165,705   
  505       

6.00%, 9/1/19

      507,040   
  3,500       

6.30%, 9/1/31

      3,504,585   
   

Golden State Tobacco Securitization Corp. Rev.,

   
  12,000       

5.00%, 6/1/33, Ser. A-1

      8,488,920   
  3,000       

5.00%, 6/1/35, Ser. A (FGIC)

      2,914,920   
  6,000       

5.00%, 6/1/38, Ser. A (FGIC)

      5,720,040   
  1,600       

5.00%, 6/1/45 (AMBAC-TCRS)

      1,473,424   
  8,300       

5.125%, 6/1/47, Ser. A-1

      5,398,403   
  20,175       

5.75%, 6/1/47, Ser. A-1

      14,614,165   
  500       

Hartnell Community College Dist., GO, zero coupon, 8/1/34, Ser. 2002-D (j)

      280,700   
   

Health Facs. Financing Auth. Rev.,

   
   

Adventist Health System, Ser. A,

   
  4,630       

5.00%, 3/1/33

      4,563,976   
  2,000       

5.75%, 9/1/39

      2,081,580   
   

Catholic Healthcare West,

   
  70       

5.00%, 7/1/28, Ser. 2005-A

      70,236   
  2,000       

6.00%, 7/1/34, Ser. A

      2,044,600   
  4,000       

6.00%, 7/1/39, Ser. A

      4,262,160   
  750       

Children’s Hospital of Los Angeles, 5.25%, 7/1/38 (AGM)

      748,875   
  1,000       

Children’s Hospital of Orange Cnty., 6.50%, 11/1/38, Ser. A

      1,076,700   
  1,450       

Scripps Health, 5.00%, 11/15/36, Ser. A

      1,467,182   

 

16   PIMCO Municipal Income Funds Semi-Annual Report   10.31.11


Table of Contents

PIMCO California Municipal Income Fund Schedule of Investments

October 31, 2011 (unaudited) (continued)

 

Principal
Amount
(000s)
                   Value  
$ 3,400       

Stanford Hospital, 5.25%, 11/15/40, Ser. A-2

    $ 3,498,804   
   

Sutter Health,

   
  1,600       

5.00%, 11/15/42, Ser. A (IBC-NPFGC)

      1,575,168   
  2,800       

6.00%, 8/15/42, Ser. B

      3,050,824   
  10,590       

Kern Cnty., Capital Improvements Projects, CP, 5.75%, 8/1/35, Ser. A (AGC)

      11,139,092   
  7,000       

La Quinta Redev. Agcy., Tax Allocation, 5.10%, 9/1/31 (AMBAC)

      6,520,080   
  500       

Lancaster Redev. Agcy. Rev., Capital Improvements Projects, 5.90%, 12/1/35

      459,730   
  500       

Lancaster Redev. Agcy., Tax Allocation, 6.875%, 8/1/39

      506,655   
  1,495       

Lincoln Public Financing Auth. Rev., Twelve Bridges, 6.125%, 9/2/27

      1,501,160   
   

Long Beach Bond Finance Auth. Rev., Long Beach Natural Gas, Ser. A,

   
  1,000       

5.50%, 11/15/27

      977,090   
  3,900       

5.50%, 11/15/37

      3,608,397   
   

Los Angeles Department of Water & Power Rev. (i),

   
  5,000       

4.75%, 7/1/30, Ser. A-2 (AGM)

      5,105,800   
  3,000       

5.375%, 7/1/34, Ser. A

      3,254,490   
  7,000       

5.375%, 7/1/38, Ser. A

      7,553,140   
   

Los Angeles Unified School Dist., GO,

   
  10,000       

5.00%, 7/1/29, Ser. I (i)

      10,674,100   
  5,000       

5.00%, 1/1/34, Ser. I (i)

      5,219,450   
  3,500       

5.00%, 1/1/34, Ser. I

      3,653,615   
  250       

5.30%, 1/1/34, Ser. D

      266,828   
  700       

Malibu, City Hall Project, CP, 5.00%, 7/1/39, Ser. A

      723,345   
  200       

M-S-R Energy Auth. Rev., 6.50%, 11/1/39, Ser. B

      227,462   
   

Municipal Finance Auth. Rev.,

   
  1,200       

Azusa Pacific Univ. Project, 7.75%, 4/1/31, Ser. B

      1,287,672   
  2,900       

Biola Univ., 5.875%, 10/1/34

      2,997,440   
  2,145       

Patterson Public Financing Auth. Rev.,
Waste Water System Financing Project, 5.50%, 6/1/39 (AGC)

      2,251,864   
  1,250       

Peralta Community College Dist., GO, 5.00%, 8/1/39, Ser. C

      1,263,500   
   

Pollution Control Financing Auth. Rev.,

   
  1,250       

American Water Capital Corp. Project, 5.25%, 8/1/40 (a)(d)

      1,210,275   
  2,000       

San Jose Water Co. Projects, 5.10%, 6/1/40

      2,041,700   
  8,305       

Riverside Cnty., CP, 5.125%, 11/1/30 (NPFGC)

      8,358,899   
  545       

San Diego Cnty., CP, 5.25%, 10/1/28

      545,153   
   

San Diego Cnty. Water Auth., CP,

   
  350       

5.00%, 5/1/32, Ser. A (NPFGC)

      352,653   
  650       

5.00%, 5/1/32, Ser. A (NPFGC) (Pre-refunded @ $101, 5/1/12) (c)

      671,905   
  6,250       

5.00%, 5/1/38, Ser. 2008-A (AGM)

      6,424,312   
  3,285       

San Diego Regional Building Auth. Rev.,
Cnty. Operations Center & Annex, 5.375%, 2/1/36, Ser. A

      3,456,641   

 

10.31.11   PIMCO Municipal Income Funds Semi-Annual Report     17   


Table of Contents

PIMCO California Municipal Income Fund Schedule of Investments

October 31, 2011 (unaudited) (continued)

 

Principal
Amount
(000s)
                   Value  
   

San Joaquin Hills Transportation Corridor Agcy. Rev., Ser. A

   
$ 5,000       

5.50%, 1/15/28

    $ 4,038,450   
  5,000       

5.70%, 1/15/19

      4,687,650   
  230       

San Jose, Special Assessment, 5.60%, 9/2/17, Ser. 24-Q

      237,286   
  1,500       

San Jose Rev., Convention Center Expansion, 6.50%, 5/1/36

      1,590,435   
  1,200       

San Marcos Unified School Dist., GO, 5.00%, 8/1/38, Ser. A

      1,236,324   
  1,815       

Santa Clara, Central Park Library Project, CP, 5.00%, 2/1/32 (AMBAC)

      1,832,315   
  3,500       

Santa Clara Cnty. Financing Auth. Rev. (AMBAC), El Camino Hospital, 5.75%, 2/1/41, Ser. A

      3,597,720   
  1,300       

Santa Cruz Cnty. Redev. Agcy.,
Tax Allocation, Live Oak/Soquel Community, 7.00%, 9/1/36, Ser. A

      1,435,148   
   

State, GO,

   
  5,885       

5.00%, 9/1/35

      5,919,663   
  100       

5.00%, 6/1/37

      100,285   
  3,000       

5.00%, 12/1/37

      3,009,240   
  2,400       

5.25%, 11/1/40

      2,451,744   
  1,500       

5.50%, 3/1/40

      1,580,745   
  2,000       

6.00%, 4/1/38

      2,208,400   
  2,000       

6.00%, 11/1/39

      2,210,880   
   

State Public Works Board Rev.,

   
  2,000       

5.75%, 10/1/30, Ser. G-1

      2,100,920   
  2,000       

California State Univ., 6.00%, 11/1/34, Ser. J

      2,119,660   
  2,000       

Regents Univ., 5.00%, 4/1/34, Ser. E

      2,039,600   
   

Statewide Communities Dev. Auth. Rev.,

   
  1,000       

American Baptist Homes West, 6.25%, 10/1/39

      1,003,020   
  900       

California Baptist Univ., 5.50%, 11/1/38, Ser. A

      796,545   
  845       

Catholic Healthcare West, 5.50%, 7/1/31, Ser. D

      860,126   
  10,000       

Cottage Health, 5.00%, 11/1/40

      9,819,700   
  13,050       

Henry Mayo Newhall Memorial Hospital, 5.125%, 10/1/30, Ser. A (CA Mtg. Ins.)

      12,963,478   
  1,000       

Kaiser Permanente, 5.25%, 3/1/45, Ser. B

      996,800   
  1,000       

Lancer Student Housing Project, 7.50%, 6/1/42

      1,046,860   
  3,000       

Los Angeles Jewish Home, 5.50%, 11/15/33 (CA St. Mtg.)

      3,023,400   
   

Methodist Hospital Project (FHA),

   
  2,100       

6.625%, 8/1/29

      2,500,365   
  7,700       

6.75%, 2/1/38

      8,886,955   
   

St. Joseph Health System,

   
  100       

5.125%, 7/1/24 (NPFGC)

      105,439   
  3,200       

5.75%, 7/1/47, Ser. A (FGIC)

      3,305,024   
   

Sutter Health,

   
  4,000       

5.50%, 8/15/34, Ser. B

      4,016,360   
  2,000       

6.00%, 8/15/42, Ser. A

      2,179,160   
  8,000       

The Internext Group, CP, 5.375%, 4/1/30

      7,280,880   

 

18   PIMCO Municipal Income Funds Semi-Annual Report   10.31.11


Table of Contents

PIMCO California Municipal Income Fund Schedule of Investments

October 31, 2011 (unaudited) (continued)

 

Principal
Amount
(000s)
                   Value  
$ 910       

Windrush School, 5.50%, 7/1/37 (f)

    $ 627,845   
  6,300       

Torrance Rev., Memorial Medical Center, 5.00%, 9/1/40, Ser. A

      6,299,559   
  2,000       

Turlock, Emanuel Medical Center, CP, 5.50%, 10/15/37, Ser. B

      1,753,000   
   

Tustin Unified School Dist., Special Tax, Ser. B,

   
  2,345       

5.50%, 9/1/22

      2,359,774   
  2,520       

5.60%, 9/1/29

      2,491,801   
  2,000       

5.625%, 9/1/32

      1,946,040   
   

Univ. of California Rev.,

   
  8,000       

4.75%, 5/15/35, Ser. F (AGM) (i)

      8,079,680   
  2,000       

5.00%, 5/15/33, Ser. A (AMBAC)

      2,056,460   
  10,000       

5.00%, 5/15/36, Ser. A (AMBAC)

      10,262,600   
  1,000       

Westlake Village, CP, 5.00%, 6/1/39

      1,029,610   
       

 

 

 
   

Total California Municipal Bonds & Notes (cost-$359,648,942)

      376,403,978   
       

 

 

 
       

 

OTHER MUNICIPAL BONDS & NOTES – 2.2%

 
    Iowa – 1.7%    
  8,700       

Tobacco Settlement Auth. Rev., 5.60%, 6/1/34, Ser. B

      7,025,859   
       

 

 

 
    Louisiana – 0.1%    
  250       

Tobacco Settlement Financing Corp. Rev., 5.875%, 5/15/39, Ser. 2001-B

      250,260   
       

 

 

 
    Ohio – 0.4%    
  2,250       

Buckeye Tobacco Settlement Financing Auth. Rev., 5.875%, 6/1/47, Ser. A-2

      1,604,025   
       

 

 

 
   

Total Other Municipal Bonds & Notes (cost-$10,652,541)

      8,880,144   
       

 

 

 
       

 

CALIFORNIA VARIABLE RATE NOTES (a)(d)(g)(h) – 2.1%

 
   

Health Facs. Financing Auth. Rev.,

   
  1,000       

8.02%, 11/15/36, Ser. 3193

      1,025,410   
  6,000       

9.86%, 11/15/42, Ser. 3255

      5,742,540   
  1,670       

Sacramento Cnty. Sanitation Dists. Financing Auth. Rev.,
11.568%, 8/1/13, Ser. 1034 (NPFGC)

      1,854,836   
       

 

 

 
   

Total California Variable Rate Notes (cost-$6,429,505)

      8,622,786   
       

 

 

 
       

 

SHORT-TERM INVESTMENTS – 2.4%

 
    U.S. Treasury Obligations (l) – 2.4%    
  9,491       

U.S. Treasury Bills,
0.003%-0.061%, 11/10/11-4/5/12 (cost-$9,490,355)

      9,490,355   
       

 

 

 
   

Total Investments (cost-$386,221,343) – 100.0%

    $ 403,397,263   
       

 

 

 

 

10.31.11   PIMCO Municipal Income Funds Semi-Annual Report     19   


Table of Contents

PIMCO New York Municipal Income Fund Schedule of Investments

October 31, 2011 (unaudited)

 

Principal
Amount
(000s)
                   Value  

 

NEW YORK MUNICIPAL BONDS & NOTES – 93.0%

   
$ 1,600       

Erie Cnty. Industrial Dev. Agcy. Rev., Orchard Park, Inc. Project, 6.00%, 11/15/36, Ser. A

    $ 1,295,488   
  4,000       

Hudson Yards Infrastructure Corp. Rev., 5.75%, 2/15/47, Ser. A

      4,235,520   
   

Liberty Dev. Corp. Rev.,

   
  1,500       

6.375%, 7/15/49

      1,555,485   
   

Goldman Sachs Headquarters,

   
  120       

5.25%, 10/1/35

      122,465   
  11,290       

5.25%, 10/1/35 (i)

      11,521,896   
  1,925       

5.50%, 10/1/37

      1,962,403   
   

Long Island Power Auth. Rev., Ser. A,

   
  750       

5.00%, 9/1/34 (AMBAC)

      765,795   
  4,500       

5.75%, 4/1/39

      4,931,100   
   

Metropolitan Transportation Auth. Rev.,

   
  6,650       

5.00%, 7/1/30, Ser. A (AMBAC)

      6,719,958   
  1,250       

5.00%, 11/15/32, Ser. B-2

      1,338,575   
  1,375       

5.125%, 1/1/29, Ser. A

      1,404,879   
  2,000       

5.25%, 11/15/31, Ser. E

      2,050,780   
  1,600       

Nassau Cnty. Industrial Dev. Agcy. Rev., Amsterdam at Harborside, 6.70%, 1/1/43, Ser. A

      1,446,320   
  3,500       

New York City Health & Hospital Corp. Rev., 5.00%, 2/15/30, Ser. A

      3,649,170   
   

New York City Industrial Dev. Agcy. Rev.,

   
  1,000       

Liberty Interactive Corp., 5.00%, 9/1/35

      883,560   
  900       

Queens Baseball Stadium, 6.50%, 1/1/46 (AGC)

      953,685   
  1,820       

Vaughn College Aeronautics, 5.25%, 12/1/36, Ser. B

      1,570,369   
  3,200       

Yankee Stadium, 7.00%, 3/1/49 (AGC)

      3,636,672   
  2,000       

New York City Municipal Water Finance Auth. Rev.,
Second Generation Resolutions, 5.00%, 6/15/32, Ser. HH

      2,156,620   
   

New York City Municipal Water Finance Auth. Water & Sewer Rev.,

   
  2,500       

5.00%, 6/15/40, Ser. FF-2

      2,622,450   
  5,000       

Second Generation Resolutions, 4.75%, 6/15/35, Ser. DD (i)

      5,153,750   
  5,000       

New York City Transitional Finance Auth. Rev., 5.25%, 1/15/39, Ser. S-3

      5,287,950   
  300       

New York City Trust for Cultural Res. Rev., Julliard School, 5.00%, 1/1/34, Ser. A

      317,547   
  1,000       

Niagara Falls Public Water Auth. Water & Sewer Rev., 5.00%, 7/15/34, Ser. A (NPFGC)

      1,003,640   
  600       

Onondaga Cnty. Rev., Syracuse Univ. Project, 5.00%, 12/1/36

      643,170   
   

Port Auth. of New York & New Jersey Rev.,

   
  2,000       

5.00%, 9/1/29, Ser. 132

      2,082,200   
  4,300       

5.00%, 9/1/38, Ser. 132

      4,430,204   
  1,000       

JFK International Air Terminal, 6.00%, 12/1/36

      1,052,820   
   

State Dormitory Auth. Rev.,

   
  500       

5.00%, 7/1/35, Ser. A

      525,795   
  1,000       

5.00%, 3/15/38, Ser. A

      1,055,380   
  1,000       

Fordham Univ., 5.50%, 7/1/36, Ser. A

      1,077,590   

 

20   PIMCO Municipal Income Funds Semi-Annual Report   10.31.11


Table of Contents

PIMCO New York Municipal Income Fund Schedule of Investments

October 31, 2011 (unaudited) (continued)

 

Principal
Amount
(000s)
                   Value  
$ 2,000       

Mount Sinai Hospital, 5.00%, 7/1/31, Ser. A

    $ 2,027,420   
  1,300       

Mount Sinai School of Medicine, 5.125%, 7/1/39

      1,324,232   
  4,500       

New York Univ., 5.00%, 7/1/38, Ser. C

      4,749,840   
  300       

North Shore-Long Island Jewish Health System, 5.50%, 5/1/37, Ser. A

      314,820   
  1,225       

NYU Hospitals Center, 6.00%, 7/1/40, Ser. A

      1,281,240   
  2,900       

Orange Regional Medical Center, 6.25%, 12/1/37

      2,874,045   
  1,000       

Pratt Institute, 5.125%, 7/1/39, Ser. C (AGC)

      1,046,000   
   

Sloan-Kettering Center Memorial,

   
  2,500       

4.50%, 7/1/35, Ser. A-1

      2,507,000   
  4,000       

5.00%, 7/1/34, Ser. 1

      4,045,480   
   

Teachers College,

   
  1,500       

5.00%, 7/1/32 (NPFGC)

      1,509,510   
  1,800       

5.50%, 3/1/39

      1,907,730   
  1,250       

The New School, 5.50%, 7/1/40

      1,325,875   
  1,275       

Winthrop Univ. Hospital Assoc., 5.25%, 7/1/31, Ser. A (AMBAC)

      1,280,330   
  2,000       

State Environmental Facs. Corp. Rev., New York City Municipal Water Project,
5.125%, 6/15/31, Ser. D

      2,030,880   
  1,800       

State Urban Dev. Corp. Rev., 5.00%, 3/15/36, Ser. B-1 (i)

      1,902,024   
  3,000       

Triborough Bridge & Tunnel Auth. Rev., 5.25%, 11/15/34, Ser. A-2 (i)

      3,218,370   
  5,860       

Troy Industrial Dev. Auth. Rev., Rensselaer Polytechnic Institute Project, 4.625%, 9/1/26

      5,875,705   
  800       

Troy Rev., Rensselaer Polytechnic Institute, 5.125%, 9/1/40, Ser. A

      798,144   
  1,455       

TSACS, Inc. Rev., 5.125%, 6/1/42, Ser. 1

      1,020,449   
  2,945       

Warren & Washington Cntys. Industrial Dev. Agcy. Rev.,
Glens Falls Hospital Project, 5.00%, 12/1/27, Ser. C (AGM)

      2,960,461   
  910       

Westchester Cnty. Healthcare Corp. Rev., 6.125%, 11/1/37, Ser. C-2

      954,535   
  200       

Yonkers Economic Dev. Corp. Rev., 6.00%, 10/15/30, Ser. A

      191,068   
  400       

Yonkers Industrial Dev. Agcy. Rev., Sarah Lawrence College Project, 6.00%, 6/1/41, Ser. A

      416,256   
       

 

 

 
   

Total New York Municipal Bonds & Notes (cost-$119,698,012)

      123,014,650   
       

 

 

 
       

 

OTHER MUNICIPAL BONDS & NOTES – 5.2%

   
    Louisiana – 0.6%    
  750       

Tobacco Settlement Financing Corp. Rev., 5.875%, 5/15/39, Ser. 2001-B

      750,780   
       

 

 

 
    New Jersey – 0.5%    
  1,000       

Tobacco Settlement Financing Corp. Rev., 4.75%, 6/1/34, Ser. 1-A

      668,210   
       

 

 

 
    Ohio – 1.1%    
  2,000       

Buckeye Tobacco Settlement Financing Auth. Rev., 5.875%, 6/1/47, Ser. A-2

      1,425,800   
       

 

 

 
    Puerto Rico – 2.7%    
  1,000       

Aqueduct & Sewer Auth. Rev., 6.00%, 7/1/44, Ser. A

      1,035,370   
  1,000       

Electric Power Auth. Rev., 5.25%, 7/1/40, Ser. XX

      1,008,930   
  1,500       

Sales Tax Financing Corp. Rev., 5.75%, 8/1/37, Ser. A

      1,581,225   
       

 

 

 
          3,625,525   
       

 

 

 

 

10.31.11   PIMCO Municipal Income Funds Semi-Annual Report     21   


Table of Contents

PIMCO New York Municipal Income Fund Schedule of Investments

October 31, 2011 (unaudited) (continued)

 

Principal
Amount
(000s)
                   Value  
    U.S. Virgin Islands – 0.3%    
$ 500       

Virgin Islands Public Finance Auth. Rev., 5.00%, 10/1/39, Ser. A-1

    $ 463,175   
       

 

 

 
   

Total Other Municipal Bonds & Notes (cost-$6,584,372)

      6,933,490   
       

 

 

 
       

 

SHORT-TERM INVESTMENTS – 1.8%

   
    U.S. Treasury Obligations (l) – 1.8%    
   

U.S. Treasury Bills,

   
  2,350       

0.01%-0.046%, 2/9/12-4/5/12 (cost-$2,349,776)

      2,349,777   
       

 

 

 
   

Total Investments (cost-$128,632,160) – 100.0%

    $ 132,297,917   
       

 

 

 

 

22   PIMCO Municipal Income Funds Semi-Annual Report   10.31.11


Table of Contents

PIMCO Municipal Income Funds Notes to Schedule of Investments

October 31, 2011 (unaudited) (continued)

 

(a)   Private Placement – Restricted as to resale and may not have a readily available market. Securities with an aggregate value of $10,839,959 and $9,833,061, representing 2.2% and 2.4% of total investments in Municipal and California Municipal, respectively.  
(b)   Illiquid.  
(c)   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 (payment date) and/or whose interest rates vary with changes in a designated base rate (such as the prime interest rate).  
(d)   144A – Exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, typically only to qualified institutional buyers. Unless otherwise indicated, these securities are not considered to be illiquid.  
(e)   When-issued. To be settled after October 31, 2011.  
(f)   In default.  
(g)   Inverse Floater – The interest rate shown bears an inverse relationship to the interest rate on another security or the value of an index. The interest rate disclosed reflects the rate in effect on October 31, 2011.  
(h)   Variable Rate Notes – Instruments whose interest rates change on specified date (such as a coupon date or interest payment date) and/or whose interest rates vary with changes in a designated base rate (such as the prime interest rate). The interest rate disclosed reflects the rate in effect on October 31, 2011.  
(i)   Residual Interest Bonds held in Trust – Securities represent underlying bonds transferred to a separate securitization trust established in a tender option bond transaction in which each Fund acquired the residual interest certificates. These securities serve as collateral in a financing transaction.  
(j)   Step Bond – Coupon is a fixed rate for an initial period then resets at a specific date and rate.  
(k)   Restricted. The aggregate acquisition cost of such securities is $935,300 in Municipal. The aggregate market value is $472,350, representing 0.1% of total investments in Municipal.  
(l)   Rates reflect the effective yields at purchase date.  

 

 

Glossary:

 

ACA     -      insured by American Capital Access Holding Ltd.
AGC     -      insured by Assured Guaranty Corp.
AGM     -      insured by Assured Guaranty Municipal Corp.
AMBAC     -      insured by American Municipal Bond Assurance Corp.
CA Mtg. Ins.     -      insured by California Mortgage Insurance
CA St. Mtg.     -      insured by California State Mortgage
CP     -      Certificates of Participation
FGIC     -      insured by Financial Guaranty Insurance Co.
FHA     -      insured by Federal Housing Administration
GO     -      General Obligation Bond
IBC     -      Insurance Bond Certificate
NPFGC     -      insured by National Public Finance Guarantee Corp.
TCRS     -      Temporary Custodian Receipts

 

See accompanying Notes to Financial Statements   10.31.11   PIMCO Municipal Income Funds Semi-Annual Report     23   


Table of Contents

PIMCO Municipal Income Funds Statements of Assets and Liabilities

October 31, 2011 (unaudited)

 

 
        Municipal         California
Municipal
        New York
Municipal
 
     
Assets:                  

Investments, at value (cost-$472,680,820, $386,221,343 and $128,632,160, respectively)

      $491,753,513          $403,397,263          $132,297,917   

Cash

      3,953,357          4,681,747          2,767,537   

Interest receivable

      8,469,400          7,600,828          2,412,447   

Receivable for investments sold

      2,057,904                   254,026   

Deposits with brokers

      33,000          718,000            

Prepaid expenses and other assets

      3,391,898          1,082,323          1,476,839   

Total Assets

      509,659,072          417,480,161          139,208,766   
     
Liabilities:                  

Payable for floating rate notes issued

      18,063,277          35,661,418          10,476,876   

Payable for investments purchased

      2,480,800                     

Dividends payable to common and preferred shareholders

      2,055,492          1,423,551          437,721   

Investment management fees payable

      246,223          191,623          64,581   

Interest payable

      62,955          717,683          616,143   

Accrued expenses and other liabilities

      143,465          276,328          69,893   

Total Liabilities

      23,052,212          38,270,603          11,665,214   

Preferred Shares ($25,000 liquidation preference per share applicable to an aggregate of 7,600, 6,000 and 1,880 shares issued and outstanding, respectively)

      190,000,000          150,000,000          47,000,000   
Net Assets Applicable to Common Shareholders       $296,606,860          $229,209,558          $80,543,552   
     
Composition of Net Assets Applicable to Common Shareholders:                  

Common Shares (no par value):

                 

Paid-in-capital

      $345,248,595          $254,060,570          $104,351,087   

Undistributed net investment income

      5,479,761          8,384,493          2,067,494   

Accumulated net realized loss

      (73,782,877)          (50,340,632)          (28,575,670)   

Net unrealized appreciation of investments

      19,661,381          17,105,127          2,700,641   
Net Assets Applicable to Common Shareholders       $296,606,860          $229,209,558          $80,543,552   

Common Shares Issued and Outstanding

      25,227,532          18,434,605          7,648,224   
Net Asset Value Per Common Share       $11.76          $12.43          $10.53   

 

24   PIMCO Municipal Income Funds Semi-Annual Report   10.31.11   See accompanying Notes to Financial Statements


Table of Contents

PIMCO Municipal Income Funds Statements of Operations

Six Months ended October 31, 2011 (unaudited)

 

 
        Municipal         California
Municipal
        New York
Municipal
 
     
Investment Income:                  

Interest

      $14,961,348          $11,603,706          $3,453,275   
     
Expenses:                  

Investment management fees

      1,562,652          1,216,501          412,183   

Interest expense

      298,631          133,256          27,180   

Auction agent fees and commissions

      159,007          122,893          39,083   

Custodian and accounting agent fees

      54,076          62,737          28,618   

Audit and tax services

      34,027          30,310          21,618   

Trustees’ fees and expenses

      21,380          18,428          6,298   

Shareholder communications

      21,160          17,009          8,794   

Transfer agent fees

      16,668          15,736          14,748   

New York Stock Exchange listing fees

      13,196          13,138          12,339   

Insurance expense

      6,964          4,629          1,783   

Legal fees

      5,125          4,100          3,075   

Miscellaneous

      6,574          6,626          5,800   

Total Expenses

      2,199,460          1,645,363          581,519   

Less: investment management fees waived

      (81,084)          (63,079)          (21,291)   

custody credits earned on cash balances

      (238)          (105)          (186)   

Net Expenses

      2,118,138          1,582,179          560,042   
     
Net Investment Income       12,843,210          10,021,527          2,893,233   
     
Realized and Change In Unrealized Gain (Loss):                  

Net realized gain (loss) on:

                 

Investments

      (1,110,946)          1,475,008          1,064,008   

Futures contracts

      267,808          207,688          71,051   

Swaps

      (4,431,799)          (11,472,396)          (2,372,276)   

Net change in unrealized appreciation/depreciation of:

                 

Investments

      29,975,128          26,629,737          5,294,659   

Swaps

      911,084          2,315,148          372,095   

Net realized and change in unrealized gain on investments, future contracts and swaps

      25,611,275          19,155,185          4,429,537   

Net Increase in Net Assets Resulting from Investment Operations

      38,454,485          29,176,712          7,322,770   

Dividends on Preferred Shares from Net investment income

      (230,933)          (183,306)          (56,808)   

Net Increase in Net Assets Applicable to Common Shareholders Resulting from Investment Operations

      $38,223,552          $28,993,406          $7,265,962   

 

See accompanying Notes to Financial Statements   10.31.11   PIMCO Municipal Income Funds Semi-Annual Report     25   


Table of Contents

PIMCO Municipal Income Funds Statements of Changes in Net Assets

Applicable to Common Shareholders

 

 
        Municipal  
        Six Months
ended
October 31, 2011
(unaudited)
        Year ended
April 30, 2011
 
Investment Operations:            

Net investment income

      $12,843,210          $26,927,704   

Net realized gain (loss) on investments, futures contracts and swaps

      (5,274,937)          (2,212,708)   

Net change in unrealized appreciation/depreciation of investments and swaps

      30,886,212          (25,572,174)   

Net increase (decrease) in net assets resulting from investment operations

      38,454,485          (857,178)   
Dividends on Preferred Shares from Net Investment Income       (230,933)          (805,715)   

Net increase (decrease) in net assets applicable to common shareholders resulting from investment operations

      38,223,552          (1,662,893)   

Dividends to Common Shareholders from Net Investment Income

      (12,286,680)          (24,482,358)   
   
Common Share Transactions:            

Reinvestment of dividends

      754,079          1,604,452   

Total increase (decrease) in net assets applicable to common shareholders

      26,690,951          (24,540,799)   
   
Net Assets Applicable to Common Shareholders:            

Beginning of period

      269,915,909          294,456,708   

End of period (including undistributed net investment income of $5,479,761 and $5,154,164; $8,384,493 and $7,054,241; $2,067,494 and $1,845,161; respectively)

      $296,606,860          $269,915,909   
   
Common Shares Issued in Reinvestment of Dividends       59,852          123,701   

 

26   PIMCO Municipal Income Funds Semi-Annual Report   10.31.11   See accompanying Notes to Financial Statements


Table of Contents

PIMCO Municipal Income Funds Statements of Changes in Net Assets

Applicable to Common Shareholders (continued)

 

 

     
California Municipal         New York Municipal  
Six Months
ended
October 31, 2011
(unaudited)
      Year ended
April 30, 2011
        Six Months
ended
October 31, 2011
(unaudited)
        Year ended
April 30, 2011
 
                   
$10,021,527       $20,708,483          $2,893,233          $6,116,196   
(9,789,700)       (2,535,504)          (1,237,217)          617,536   
28,944,885       (28,431,908)          5,666,754          (7,055,963)   
29,176,712       (10,258,929)          7,322,770          (322,231)   
(183,306)       (638,444)          (56,808)          (202,506)   
       
28,993,406       (10,897,373)          7,265,962          (524,737)   
(8,507,969)       (16,948,939)          (2,614,092)          (5,210,008)   
       
                   
576,830       1,201,620          163,760          388,870   
21,062,267       (26,644,692)          4,815,630          (5,345,875)   
       
                   
208,147,291       234,791,983          75,727,922          81,073,797   
       
$229,209,558       $208,147,291          $80,543,552          $75,727,922   
       
47,978       96,054          16,037          36,764   

 

See accompanying Notes to Financial Statements   10.31.11   PIMCO Municipal Income Funds Semi-Annual Report     27   


Table of Contents

PIMCO Municipal Income Funds Notes to Financial Statements

October 31, 2011 (unaudited)

 

1. Organization and Significant Accounting Policies

PIMCO Municipal Income Fund (“Municipal”), PIMCO California Municipal Income Fund (“California Municipal”) and PIMCO New York Municipal Income Fund (“New York Municipal”), each a “Fund” and collectively referred to as the “Funds” or “PIMCO Municipal Income Funds”, were organized as Massachusetts business trusts on May 10, 2001. Prior to commencing operations on June 29, 2001, the Funds had no operations other than matters relating to their organization and registration as non-diversified, closed-end management investment companies registered under the Investment Company Act of 1940 and the rules and regulations thereunder, as amended. Allianz Global Investors Fund Management LLC (the “Investment Manager”) serves as the Investment Manager and is an indirect, wholly-owned subsidiary of Allianz Global Investors of America L.P. (“Allianz Global”). Allianz Global is an indirect, wholly-owned subsidiary of Allianz SE, a publicly traded European insurance and financial services company. Each Fund has an unlimited amount of no par value per share of common shares authorized.

 

Under normal market conditions, Municipal invests substantially all of its assets in a portfolio of municipal bonds, the interest from which is exempt from federal income taxes. Under normal market conditions, California Municipal invests substantially all of its assets in municipal bonds which pay interest that is exempt from federal and California state income taxes. Under normal market conditions, New York Municipal invests substantially all of its assets in municipal bonds which pay interest that is exempt from federal, New York State and New York City income taxes. There is no guarantee that the Funds will meet their stated objectives. The Funds will generally seek to avoid investing in bonds generating interest income which could potentially subject individuals to alternative minimum tax. The issuers’ abilities to meet their obligations may be affected by economic 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 each Fund’s 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 that provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred.

 

In May 2011, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) to develop common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with Generally Accepted Accounting Principles (“GAAP”) and International Financial Reporting Standards (“IFRSs”). FASB concluded that the amendments in this ASU will improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with GAAP and IFRSs. The ASU is effective prospectively during interim or annual periods beginning on or after December 15, 2011. The Funds’ management is evaluating the implications of this change.

 

The following is a summary of significant accounting policies consistently followed by the Funds:

 

(a) Valuation of Investments

Portfolio securities and other financial instruments for which market quotations are readily available are stated at market value. Market value is generally determined on the basis of last reported sales prices, or if no sales are reported, on the basis of quotes obtained from a quotation reporting system, established market makers, or independent pricing services.

 

Portfolio securities and other financial instruments for which market quotations are not readily available, or for which a development/event occurs that may significantly impact the value of a security, are fair-valued, in good faith, pursuant to procedures established by the Board of Trustees, or persons acting at their discretion pursuant to procedures established by the Board of Trustees. The Funds’ investments are valued daily using prices supplied by an independent pricing service or dealer quotations, or by using the last sale price on the exchange that is the primary market for such securities, or the mean between the last quoted bid and ask price. Independent pricing services use information provided by market makers or estimates of market values obtained from yield data relating to investments or securities with similar characteristics. Securities purchased on a when-issued basis are marked to market daily until settlement at the forward settlement date. Short-term securities maturing in 60 days or less are valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.

 

28   PIMCO Municipal Income Funds Semi-Annual Report   10.31.11


Table of Contents

PIMCO Municipal Income Funds Notes to Financial Statements

October 31, 2011 (unaudited)

 

1. Organization and Significant Accounting Policies (continued)

 

 

The prices used by the Funds to value securities may differ from the value that would be realized if the securities were sold and these differences could be material to the Funds’ financial statements. Each Fund’s net asset value (“NAV”) is normally determined as of the close of regular trading (normally, 4:00 p.m. Eastern time) on the New York Stock Exchange (“NYSE”) on each day the NYSE is open for business.

 

(b) Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. the “exit price”) in an orderly transaction between market participants. The three levels of the fair value hierarchy are described below:

 

   

Level 1 — quoted prices in active markets for identical investments that the Funds have the ability to access

   

Level 2 — valuations based on other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) or quotes from inactive exchanges

   

Level 3 — valuations based on significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of investments)

 

An investment asset’s or liability’s level within the fair value hierarchy is based on the lowest level input, individually or in aggregate, that is significant to fair value measurement. The objective of fair value measurement remains the same even when there is a significant decrease in the volume and level of activity for an asset or liability and regardless of the valuation technique used.

 

The valuation techniques used by the Funds to measure fair value during the six months ended October 31, 2011 maximized the use of observable inputs and minimized the use of unobservable inputs.

 

The inputs or methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities. The following are certain inputs and techniques that the Funds generally use to evaluate how to classify each major category of assets and liabilities for Level 2 and Level 3, in accordance with GAAP.

 

Municipal Bonds & Notes and Variable Rate Notes — Municipal bonds and notes and variable rate notes are valued by independent pricing services based on pricing models that take into account, among other factors, information received from market makers and broker-dealers, current trades, bid-want lists, offerings, market movements, the callability of the bond, state of issuance, benchmark yield curves, and bond insurance. To the extent that these inputs are observable, the values of municipal bonds and notes and variable rate notes are categorized as Level 2. To the extent that these inputs are unobservable, the values are categorized as Level 3.

 

U.S. Treasury Obligations — U.S. Treasury obligations are valued by independent pricing services based on pricing models that evaluate the mean between the most recently quoted bid and ask price. The models also take into consideration data received from active market makers and broker-dealers, yield curves, and the spread over comparable U.S. Treasury issues. The spreads change daily in response to market conditions and are generally obtained from the new issue market and broker-dealer sources. To the extent that these inputs are observable, the values of U.S. Treasury obligations are categorized as Level 2. To the extent that these inputs are unobservable, the values are categorized as Level 3.

 

10.31.11   PIMCO Municipal Income Funds Semi-Annual Report     29   


Table of Contents

PIMCO Municipal Income Funds Notes to Financial Statements

October 31, 2011 (unaudited)

 

1. Organization and Significant Accounting Policies (continued)

 

 

The Funds’ policy is to recognize transfers between levels at the end of the reporting period.

 

A summary of the inputs used at October 31, 2011 in valuing each Fund’s assets and liabilities is listed below:

 

Municipal:        
     Level 1 –
Quoted Prices
    Level 2 –
Other Significant
Observable
Inputs
    Level 3 –
Significant
Unobservable
Inputs
    Value at
10/31/11
 
Investments in Securities – Assets        

Municipal Bonds & Notes:

       

Tennessee

        —      $ 22,827,368      $ 472,350      $ 23,299,718   

All Other

           454,522,440               454,522,440   

Variable Rate Notes

           10,367,609               10,367,609   

Short-Term Investments

           3,563,746               3,563,746   
   
Total Investments in Securities          $ 491,281,163      $ 472,350      $ 491,753,513   
   
California Municipal:        
     Level 1 –
Quoted Prices
    Level 2 –
Other Significant
Observable
Inputs
    Level 3 –
Significant
Unobservable
Inputs
    Value at
10/31/11
 
Investments in Securities – Assets        

California Municipal Bonds & Notes

         $ 376,403,978             $ 376,403,978   

Other Municipal Bonds & Notes

           8,880,144               8,880,144   

California Variable Rate Notes

           8,622,786               8,622,786   

Short-Term Investments

           9,490,355               9,490,355   
   
Total Investments in Securities – Assets          $ 403,397,263             $ 403,397,263   
   
New York Municipal:        
     Level 1 –
Quoted Prices
    Level 2 –
Other Significant
Observable
Inputs
    Level 3 –
Significant
Unobservable
Inputs
    Value at
10/31/11
 
Investments in Securities        

New York Municipal Bonds & Notes

         $ 123,014,650             $ 123,014,650   

Other Municipal Bonds & Notes

           6,933,490               6,933,490   

Short-Term Investments

           2,349,777               2,349,777   
   
Total Investments in Securities          $ 132,297,917             $ 132,297,917   
   

 

There were no significant transfers between Levels 1 and 2 during the six months ended October 31, 2011.

 

A roll forward of fair value measurements using significant unobservable inputs (Level 3) for the six months ended October 31, 2011, was as follows:

 

Municipal:                  
     Beginning
Balance
4/30/11
    Purchases     Sales     Accrued
Discounts
(Premiums)
    Net
Realized
Gain (Loss)
    Net Change
in Unrealized
Appreciation/
Depreciation
    Transfers
into
Level 3
    Transfers
out of
Level 3
    Ending
Balance
10/31/11
 
Investments in Securities – Assets               

Municipal Bonds & Notes:

                 

Tennessee

  $ 472,350                                                       $ 472,350   
   
Total Investments   $ 472,350                                                       $ 472,350   
   

 

30   PIMCO Municipal Income Funds Semi-Annual Report   10.31.11


Table of Contents

PIMCO Municipal Income Funds Notes to Financial Statements

October 31, 2011 (unaudited)

 

1. Organization and Significant Accounting Policies (continued)

 

 

There was no change in unrealized appreciation/depreciation of Level 3 investments which Municipal held at October 31, 2011. Net change in unrealized appreciation/depreciation is reflected on the Statements of Operations.

 

(c) Investment Transactions and Investment Income

Investment transactions are accounted for on the trade date. Securities purchased and sold on a when-issued basis may be settled a month or more after the trade date. Realized gains and losses on investments are determined on an identified cost basis. Interest income adjusted for the accretion of discounts and amortization of premiums is recorded on an accrual basis. Discounts or premiums on debt securities purchased are accreted or amortized, respectively, to interest income over the lives of the respective securities.

 

(d) Federal Income Taxes

The Funds intend to distribute all of their taxable income and to comply with the other requirements of Subchapter M of the U.S. Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Accordingly, no provision for U.S. federal income taxes is required.

 

Accounting for uncertainty in income taxes establishes for all entities, including pass-through entities such as the Funds, a minimum threshold for financial statement recognition of the benefit of positions taken in filing tax returns (including whether an entity is taxable in a particular jurisdiction), and requires certain expanded tax disclosures. The Funds’ management has determined that its evaluation has resulted in no material impact to the Funds’ financial statements at October 31, 2011. The Funds’ federal tax returns for the prior three years remain subject to examination by the Internal Revenue Service.

 

(e) Dividends and Distributions — Common Shares

The Funds declare dividends from net investment income monthly to common shareholders. Distributions of net realized capital gains, if any, are paid at least annually. The Funds record dividends and distributions to their respective 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 GAAP. These “book-tax” differences are considered either temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal income tax treatment. Temporary differences do not require reclassification. To the extent dividends and/or distributions exceed current and accumulated earnings and profits for federal income tax purposes, they are reported as dividends and/or distributions to shareholders from return of capital.

 

(f) Reverse Repurchase Agreements

In a reverse repurchase agreement, the Funds sell securities to a bank or broker-dealer and agree to repurchase the securities at a mutually agreed upon date and price. Generally, the effect of such a transaction is that the Funds can recover and reinvest all or most of the cash invested in portfolio securities involved during the term of the reverse repurchase agreement and still be entitled to the returns associated with those portfolio securities. Such transactions are advantageous if the interest cost to the Funds of the reverse repurchase transaction is less than the returns they obtain on investments purchased with the cash. To the extent the Funds do not cover their positions in reverse repurchase agreements (by segregating liquid assets at least equal in amount to the forward purchase commitment), the Funds’ uncovered obligations under the agreements will be subject to the Funds’ limitations on borrowings. Reverse repurchase agreements involve leverage risk and also the risk that the market value of the securities that the Funds are obligated to repurchase under the agreements may decline below the repurchase price. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, the Funds’ use of the proceeds of the agreement may be restricted pending determination by the other party, or their trustee or receiver, whether to enforce the Funds’ obligation to repurchase the securities. There were no reverse repurchase agreements open at October 31, 2011.

 

10.31.11   PIMCO Municipal Income Funds Semi-Annual Report     31   


Table of Contents

PIMCO Municipal Income Funds Notes to Financial Statements

October 31, 2011 (unaudited)

 

1. Organization and Significant Accounting Policies (continued)

 

 

(g) Inverse Floating Rate Transactions — Residual Interest Municipal Bonds (“RIBs”) / Residual Interest Tax Exempt Bonds (“RITEs”)

The Funds invest in RIBs and RITEs (“Inverse Floaters”), whose interest rates bear an inverse relationship to the interest rate on another security or the value of an index. In inverse floating rate transactions, the Funds sell a fixed rate municipal bond (“Fixed Rate Bond”) to a broker who places the Fixed Rate Bond in a special purpose trust (“Trust”) from which floating rate bonds (“Floating Rate Notes”) and Inverse Floaters are issued. The Funds simultaneously or within a short period of time, purchase the Inverse Floaters from the broker. The Inverse Floaters held by the Funds provide the Funds with the right to: (1) cause the holders of the Floating Rate Notes to tender their notes at par, and (2) cause the broker to transfer the Fixed-Rate Bond held by the Trust to the Funds, thereby collapsing the Trust. The Funds account for the transaction described above as a secured borrowing by including the Fixed Rate Bond in their Schedules of Investments, and account for the Floating Rate Notes as a liability under the caption “Payable for floating rate notes issued” in the Funds’ Statements of Assets and Liabilities. The Floating Rate Notes have interest rates that generally reset weekly and their holders have the option to tender their notes to the broker for redemption at par at each reset date.

 

The Funds may also invest in Inverse Floaters without transferring a fixed rate municipal bond into a special purpose trust, which are not accounted for as secured borrowings. The Funds may also invest in Inverse Floaters for the purpose of increasing leverage.

 

The Inverse Floaters are created by dividing the income stream provided by the underlying bonds to create two securities, one short-term and one long-term. The interest rate on the short-term component is reset by an index or auction process typically every 7 to 35 days. After income is paid on the short-term securities at current rates, the residual income from the underlying bond(s) goes to the long-term securities. Therefore, rising short-term rates result in lower income for the long-term component and vice versa. The longer-term bonds may be more volatile and less liquid than other municipal bonds of comparable maturity. Investments in Inverse Floaters typically will involve greater risk than in an investment in Fixed Rate Bonds.

 

The Funds’ restrictions on borrowings do not apply to the secured borrowings deemed to have occurred for accounting purposes. Inverse Floaters held by the Funds are exempt from registration under Rule 144A of the Securities Act of 1933.

 

In addition to general market risks, the Funds’ investments in Inverse Floaters may involve greater risk and volatility than an investment in a fixed rate bond, and the value of Inverse Floaters may decrease significantly when market interest rates increase. Inverse Floaters have varying degrees of liquidity, and the market for these securities may be volatile. These securities tend to underperform the market for fixed rate bonds in a rising interest rate environment, but tend to outperform the market for fixed rate bonds when interest rates decline or remain relatively stable. Although volatile, Inverse Floaters typically offer the potential for yields exceeding the yields available on fixed rate bonds with comparable credit quality, coupon, call provisions and maturity. Trusts in which Inverse Floaters may be held could be terminated due to market, credit or other events beyond the Funds’ control, which could require the Funds to reduce leverage and dispose of portfolio investments at inopportune times and prices.

 

(h) When-Issued/Delayed-Delivery Transactions

When-issued or delayed-delivery transactions involve a commitment to purchase or sell securities for a predetermined price or yield, with payment and delivery taking place beyond the customary settlement period. When delayed-delivery purchases are outstanding, the Funds will set aside and maintain until the settlement date in a designated account, liquid assets in an amount sufficient to meet the purchase price. When purchasing a security on a delayed-delivery basis, the Funds assume the rights and risks of ownership of the security, including the risk of price and yield fluctuations; consequently, such fluctuations are taken into account when determining the net asset value. The Funds may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell when-issued securities before they are delivered, which may result in a realized gain or loss. When a security is sold on a delayed-delivery basis, the Funds do not participate in future gains and losses with respect to the security.

 

32   PIMCO Municipal Income Funds Semi-Annual Report   10.31.11


Table of Contents

PIMCO Municipal Income Funds Notes to Financial Statements

October 31, 2011 (unaudited)

 

1. Organization and Significant Accounting Policies (continued)

 

 

(i) Restricted Securities

The Funds are permitted to invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expenses, and prompt sale at an acceptable price may be difficult.

 

(j) Custody Credits on Cash Balances

The Funds benefit from an expense offset arrangement with their custodian bank, whereby uninvested cash balances earn credits that 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. Cash overdraft charges, if any, are included in custodian and accounting agent fees.

 

(k) Interest Expense

Interest expense primarily relates to the Funds’ participation in floating rate notes held by third parties in conjunction with Inverse Floater transactions.

 

2. Principal Risks

In the normal course of business, the Funds trade financial instruments and enter into financial transactions where risk of potential loss exists due to, among other things, changes in the market (market risk) or failure of the other party to a transaction to perform (counterparty risk). The Funds are also exposed to other risks such as, but not limited to, interest rate and credit risks.

 

Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the value of certain fixed income securities held by the Funds are likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is used primarily as a measure of the sensitivity of a fixed income security’s market price to interest rate (i.e. yield) movements.

 

Variable and floating rate securities generally are less sensitive to interest rate changes but may decline in value if their interest rates do not rise as much, or as quickly, as interest rates in general. Conversely, floating rate securities will not generally increase in value if interest rates decline. Inverse floating rate securities may decrease in value if interest rates increase. Inverse floating rate securities may also exhibit greater price volatility than a fixed rate obligation with similar credit quality. When the Funds hold variable or floating rate securities, a decrease (or, in the case of inverse floating rate securities, an increase) in market interest rates will adversely affect the income received from such securities and the NAV of the Funds’ shares.

 

The Funds are exposed to credit risk, which is the risk of losing money if the issuer or guarantor of a fixed income security is unable or unwilling, or is perceived (whether by market participants, rating agencies, pricing services or otherwise) as unable or unwilling, to make timely principal and/or interest payments, or to otherwise honor its obligations. Securities are subject to varying degrees of credit risk, which are often reflected in credit ratings.

 

The Funds are exposed to counterparty risk, or the risk that an institution or other entity with which the Funds have unsettled or open transactions will default. The potential loss to the Funds could exceed the value of the financial assets recorded in the Funds’ financial statements. Financial assets, which potentially expose the Funds to counterparty risk, consist principally of cash due from counterparties and investments. The Funds’ Sub-Adviser, Pacific Investment Management Company LLC (the “Sub-Adviser”), an affiliate of the Investment Manager, seeks to minimize the Funds’ counterparty risk by performing reviews of each counterparty and by minimizing concentration of counterparty risk by undertaking transactions with multiple customers and counterparties on recognized and reputable exchanges. Delivery of securities sold is only made once the Funds have received payment. Payment is made on a purchase once the securities have been delivered by the counterparty. The trade will fail if either party fails to meet its obligation.

 

10.31.11   PIMCO Municipal Income Funds Semi-Annual Report     33   


Table of Contents

PIMCO Municipal Income Funds Notes to Financial Statements

October 31, 2011 (unaudited)

 

2. Principal Risks (continued)

 

 

Leverage will cause the value of the Funds’ shares to be more volatile than if the Funds did not use leverage. This is because leverage tends to exaggerate the effect of any increase or decrease in the value of the Funds’ portfolio securities. The Funds may engage in transactions or purchase instruments that give rise to forms of leverage. In addition, to the extent the Funds employ leverage, interest costs may not be recovered by any appreciation of the securities purchased with the leverage proceeds and could exceed the Funds’ investment returns, resulting in greater losses.

 

The Funds are party to International Swaps and Derivatives Association, Inc. Master Agreements (“ISDA Master Agreements”) with select counterparties that govern transactions, over-the-counter derivatives and foreign exchange contracts entered into by the Funds and those counterparties. The ISDA Master Agreements contain provisions for general obligations, representations, agreements, collateral and events of default or termination. Events of termination include conditions that may entitle counterparties to elect to terminate early and cause settlement of all outstanding transactions under the applicable ISDA Master Agreement. Any election to terminate early could be material to the financial statements of the Funds.

 

3. Financial Derivative Instruments

Disclosure about derivatives and hedging activities requires qualitative disclosure regarding objectives and strategies for using derivatives, quantitative disclosure about fair value amounts of gains and losses on derivatives, and disclosure about credit-risk-related contingent features in derivative agreements. The disclosure requirements distinguish between derivatives, which are accounted for as “hedges”, and those that do not qualify for such accounting. Although the Funds sometimes use derivatives for hedging purposes, the Funds reflect derivatives at fair value and recognize changes in fair value through the Funds’ Statements of Operations, and such derivatives do not qualify for hedge accounting treatment.

 

(a) Futures Contracts

The Funds use futures contracts to manage their exposure to the securities markets or the movements in interest rates and currency values. 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 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 or securities 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 involves various risks, including the risk of an imperfect correlation in the movements in the price of futures contracts, interest rates and underlying hedging assets, and possible inability or unwillingness of counterparties to meet the terms of their contracts.

 

(b) Swap Agreements

Swap agreements are bilaterally negotiated agreements between the Funds and a counterparty to exchange or swap investment cash flows, assets, foreign currencies or market-linked returns at specified, future intervals. Swap agreements are privately negotiated in the over-the-counter market (“OTC swaps”) and may be executed in a multilateral or other trade facility platform, such as a registered commodities exchange (“centrally cleared swaps”). The Funds enter into credit default, cross-currency, interest rate, total return, variance and other forms of swap agreements in order to manage their exposure to credit, currency and interest rate risk. In connection with these agreements, securities or cash may be identified as collateral or margin in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default or bankruptcy/insolvency.

 

OTC swap payments received or made at the beginning of the measurement period, if any, are reflected as such on the Funds’ Statements of Assets and Liabilities and represent payments made or received upon entering into the swap agreement to compensate for differences between the stated terms of the swap agreement and prevailing market conditions (credit spreads, currency exchange rates, interest rates, and other relevant factors). These upfront payments, if any, are recorded as realized gains or losses on the Funds’ Statements of Operations upon termination or maturity of the

 

34   PIMCO Municipal Income Funds Semi-Annual Report   10.31.11


Table of Contents

PIMCO Municipal Income Funds Notes to Financial Statements

October 31, 2011 (unaudited)

 

3. Financial Derivative Instruments (continued)

 

swap. A liquidation payment received or made at the termination of the swap, if any, is recorded as realized gain or loss on the Funds’ Statements of Operations. Net periodic payments received or paid by the Funds, if any, are included as part of realized gains or losses on the Funds’ Statements of Operations. Changes in market value, if any, are reflected as a component of net changes in unrealized appreciation/depreciation on the Funds’ Statements of Operations. Daily changes in valuation of centrally cleared swaps, if any, are recorded as a receivable or payable for variation margin on centrally cleared swaps on the Funds’ Statements of Assets and Liabilities.

 

Entering into these agreements involves, to varying degrees, elements of credit, legal, market and documentation risk in excess of the amounts recognized on the Funds’ Statements of Assets and Liabilities. Such risks include the possibility that there will be no liquid market for these agreements, that the counterparties to the agreements may default on their obligation to perform or disagree as to the meaning of contractual terms in the agreements and that there may be unfavorable changes in interest rates.

 

Interest Rate Swap Agreements — Interest rate swap agreements involve the exchange by the Funds with a counterparty of their respective commitments to pay or receive interest, e.g., an exchange of floating rate payments for fixed rate payments, with respect to the notional amount of principal. Certain forms of interest rate swap agreements may include: (i) interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or “cap”, (ii) interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified rate, or “floor”, (iii) interest rate collars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels, (iv) callable interest rate swaps, under which the counterparty may terminate the swap transaction in whole at zero cost by a predetermined date and time prior to the maturity date, (v) spreadlocks, which allow the interest rate swap users to lock in the forward differential (or spread) between the interest rate swap rate and a specified benchmark, or (vi) basis swaps, under which two parties can exchange variable interest rates based on different money markets.

 

The following is a summary of the fair valuation of the Funds’ derivatives categorized by risk exposure.

 

The effect of derivatives on the Statements of Operations for the six months ended October 31, 2011:

 

Municipal:  
Location   Interest Rate
Contracts
 
Net realized gain (loss) on:  

Futures contracts

  $ 267,808   

Swaps

    (4,431,799
 

 

 

 
Total net realized gain (loss)   $ (4,163,991
 

 

 

 
Net change in unrealized appreciation/depreciation of:  

Swaps

  $ 911,084   
 

 

 

 
California Municipal:  
Location   Interest Rate
Contracts
 
Net realized gain (loss) on:  

Futures contracts

  $ 207,688   

Swaps

    (11,472,396
 

 

 

 
Total net realized gain (loss)   $ (11,264,708
 

 

 

 
Net change in unrealized appreciation/depreciation of:  

Swaps

  $ 2,315,148   
 

 

 

 

 

10.31.11   PIMCO Municipal Income Funds Semi-Annual Report     35   


Table of Contents

PIMCO Municipal Income Funds Notes to Financial Statements

October 31, 2011 (unaudited)

 

3. Financial Derivative Instruments (continued)

 

New York Municipal:  
Location   Interest
Rate
Contracts
 
Net realized gain (loss) on:  

Futures contracts

  $ 71,051   

Swaps

    (2,372,276
 

 

 

 
Total net realized gain (loss)   $ (2,301,225
 

 

 

 
Net change in unrealized appreciation/depreciation of:  

Swaps

  $ 372,095   
 

 

 

 

 

The average volume (measured at each fiscal quarter end) of derivative activity during the six months ended October 31, 2011:

 

     Interest Rate
Swap
Agreements(1)
 

Municipal

  $ 10,267   

California Municipal

    25,200   

New York Municipal

    5,200   

 

(1)   

Notional amount (in thousands)

 

 

4. Investment Manager/Sub-Adviser

Each Fund has an Investment Management Agreement (each an “Agreement”) with the Investment Manager. Subject to the supervision of the Funds’ Board of Trustees, the Investment Manager is responsible for managing, either directly or through others selected by it, the Funds’ investment activities, business affairs and administrative matters. Pursuant to each Agreement, the Investment Manager receives an annual fee, payable monthly, at an annual rate of 0.65% of each Fund’s average daily net assets, inclusive of daily net assets attributable to any Preferred Shares outstanding. The Investment Manager has voluntarily agreed to waive a portion of its fee for each Fund at the annual rate of 0.05% of each Fund’s average daily net assets, inclusive of net assets attributable to any Preferred Shares that may be outstanding, for the period from July 1, 2011 through June 30, 2012. For the six months ended October 31, 2011, each Fund paid investment management fees at an effective rate of 0.62% of each Fund’s average daily net assets, inclusive of net assets attributable to any Preferred Shares that were outstanding.

 

The Investment Manager has retained the Sub-Adviser to manage the Funds’ investments. Subject to the supervision of the Investment Manager, the Sub-Adviser is responsible for making all of the Funds’ investment decisions. The Investment Manager, and not the Funds, pays a portion of the fees it receives as Investment Manager to the Sub-Adviser in return for its services.

 

5. Investments in Securities

Purchases and sales of investments, other than short-term securities and U.S. government obligations, for the six months ended October 31, 2011:

 

     Municipal     California
Municipal
    New York
Municipal
 

Purchases

  $ 44,124,777      $ 4,542,086      $ 16,045,260   

Sales

    43,034,825        26,304,380        23,795,349   

 

(a) Floating rate notes:

 

The weighted average daily balance of floating rate notes outstanding during the six months ended October 31, 2011 for Municipal, California Municipal and New York Municipal was $18,063,277, $35,661,418 and $10,476,876 at a weighted average interest rate, including fees, of 1.65%, 0.37% and 0.26%, respectively.

 

36   PIMCO Municipal Income Funds Semi-Annual Report   10.31.11


Table of Contents

PIMCO Municipal Income Funds Notes to Financial Statements

October 31, 2011 (unaudited)

 

 

6. Income Tax Information

Under the recently enacted Regulated Investment Company Modernization Act of 2010, the Funds will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010, for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years. As a result of this, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term capital losses.

 

The cost basis of investments for federal income tax purposes and gross unrealized appreciation and gross unrealized depreciation of investments at October 31, 2011 were:

 

     Cost of
Investments
    Gross
Unrealized
Appreciation
    Gross
Unrealized
Depreciation
    Net
Unrealized
Appreciation
 

Municipal

  $ 456,842,487      $ 32,963,902      $ 12,818,612      $ 20,145,290   

California Municipal

    352,324,126        24,438,351        8,181,205        16,257,146   

New York Municipal

    119,831,660        5,449,271        2,074,047        3,425,224   

 

The difference between book and tax cost and appreciation/depreciation were attributable to inverse floater transactions.

 

7. Auction-Rate Preferred Shares

Municipal has 1,520 shares of Preferred Shares Series A, 1,520 shares of Preferred Shares Series B, 1,520 shares of Preferred Shares Series C, 1,520 shares of Preferred Shares Series D and 1,520 shares of Preferred Shares Series E outstanding, each with a liquidation preference value of $25,000 per share plus any accumulated, unpaid dividends.

 

California Municipal has 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 outstanding, each with a liquidation preference value of $25,000 per share plus any accumulated, unpaid dividends.

 

New York Municipal has 1,880 shares of Preferred Shares Series A outstanding, with a liquidation preference value of $25,000 per share plus any accumulated, unpaid dividends.

 

Dividends are accumulated daily at an annual rate (typically re-set every seven days) through auction procedures (or through default provisions in the event of failed auctions). Distributions of net realized capital gains, if any, are paid annually.

 

For the six months ended October 31, 2011, the annualized dividend rates for each Fund ranged from:

 

     High     Low     At
October 31, 2011
 

Municipal:

     

Series A

    0.396     0.107     0.229

Series B

    0.411     0.107     0.229

Series C

    0.411     0.110     0.229

Series D

    0.411     0.107     0.229

Series E

    0.411     0.107     0.229

California Municipal:

     

Series A

    0.396     0.107     0.229

Series B

    0.411     0.110     0.229

Series C

    0.411     0.107     0.229

New York Municipal:

     

Series A

    0.411     0.107     0.229

 

10.31.11   PIMCO Municipal Income Funds Semi-Annual Report     37   


Table of Contents

PIMCO Municipal Income Funds Notes to Financial Statements

October 31, 2011 (unaudited)

 

7. Auction-Rate Preferred Shares (continued)

 

 

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 or paying any dividends or distributions to

common shareholders or repurchasing common shares and/or could trigger the mandatory redemption of Preferred

Shares at their liquidation preference value plus any accumulated, unpaid dividends.

 

Preferred shareholders, who are entitled to one vote per share, generally vote together with the common shareholders but vote separately as a class to elect two Trustees and on any matters affecting the rights of the Preferred Shares.

 

Since mid-February 2008, holders of auction-rate preferred shares (“ARPS”) issued by the Funds have been directly impacted by an unprecedented lack of liquidity, which has similarly affected ARPS holders in many of the nation’s closed-end funds. Since then, regularly scheduled auctions for ARPS issued by the Funds have consistently “failed” because of insufficient demand (bids to buy shares) to meet the supply (shares offered for sale) at each auction. In a failed auction, ARPS holders cannot sell all, and may not be able to sell any, of their shares tendered for sale. While repeated auction failures have affected the liquidity for ARPS, they do not constitute a default or automatically alter the credit quality of the ARPS, and the ARPS holders have continued to receive dividends at the defined “maximum rate” equal to the higher of the 30-day “AA” Composite Commercial Paper Rate multiplied by 110% or the Taxable Equivalent of the Short-Term Municipal Obligations Rate-defined as 90% of the quotient of (A) the per annum rate expressed on an interest equivalent basis equal to the Kenny S&P 30-day High Grade Index divided by (B) 1.00 minus the Marginal Tax Rate (expressed as a decimal) multiplied by 110% (which is a function of short-term interest rates and typically higher than the rate that would have otherwise been set through a successful auction). If the Funds’ ARPS auctions continue to fail and the “maximum rate” payable on the ARPS rises as a result of changes in short-term interest rates, returns for the Funds’ common shareholders could be adversely affected.

 

8. Subsequent Events

On November 1, 2011, the following dividends were declared to common shareholders payable December 1, 2011 to shareholders of record on November 14, 2011:

 

Municipal      $0.08125 per common share
California Municipal      $0.077 per common share
New York Municipal      $0.057 per common share

 

On December 1, 2011, the following dividends were declared to common shareholders payable January 3, 2012 to shareholders of record on December 12, 2011:

 

Municipal      $0.08125 per common share
California Municipal      $0.077 per common share
New York Municipal      $0.057 per common share

 

The Funds’ amended Dividend Reinvestment Plan became effective on November 15, 2011, for distributions paid after December 15, 2011.

 

It is anticipated that Paul Belica will retire from the Trust’s Board as a Trustee on December 31, 2011.

 

38   PIMCO Municipal Income Funds Semi-Annual Report   10.31.11


Table of Contents

PIMCO Municipal Income Fund Financial Highlights

For a common share outstanding throughout each period:

 

          Six Months
ended
October 31, 2011
(unaudited)
         Year ended April 30,  
              2011         2010         2009         2008         2007  

Net asset value, beginning of period

      $10.72          $11.76          $9.38          $12.96          $14.85          $14.54   
           

Investment Operations:

                                   

Net investment income

      0.51          1.07          1.18          1.13          1.12          1.07   

Net realized and change in unrealized gain (loss) on investments, futures contracts, options written and swaps

      1.03          (1.10       2.22          (3.53       (1.74       0.50   

Total from investment operations

      1.54          (0.03       3.40          (2.40       (0.62       1.57   
           

Dividends on Preferred Shares from Net Investment Income

      (0.01       (0.03       (0.04       (0.20       (0.29       (0.28

Net increase (decrease) in net assets applicable to common shareholders resulting from investment operations

      1.53          (0.06       3.36          (2.60       (0.91       1.29   
           

Dividends to Common Shareholders from Investment Income

      (0.49       (0.98       (0.98       (0.98       (0.98       (0.98

Net asset value, end of period

      $11.76          $10.72          $11.76          $9.38          $12.96          $14.85   

Market price, end of period

      $13.72          $12.92          $13.72          $11.40          $16.46          $18.00   

Total Investment Return (1)

      10.32       1.54       30.34       (24.58 )%        (2.47 )%        17.77
           

RATIOS/SUPPLEMENTAL DATA:

                                   

Net assets applicable to common shareholders, end of period (000s)

      $296,607          $269,916          $294,457          $233,507          $321,268          $365,984   

Ratio of expenses to average net assets, including interest expense (2)(3)(4)

      1.45 %*(5)        1.44       1.46 %(5)        1.64 %(5)        1.51 %(5)        1.32 %(5) 

Ratio of expenses to average net assets, excluding interest expense (2)(3)

      1.24 %*(5)        1.34       1.34 %(5)        1.42 %(5)        1.20 %(5)        1.00 %(5) 

Ratio of net investment income to average net assets (2)

      8.88 %*(5)        9.43       10.77 %(5)        10.65 %(5)        8.07 %(5)        7.23 %(5) 

Preferred shares asset coverage per share

      $64,026          $60,514          $63,743          $55,722          $65,143          $70,727   

Portfolio turnover rate

      9       15       11       60       32       6

 

*   Annualized  
(1)   Total investment return is calculated assuming a purchase of a common share at the market price on the first day and a sale of a common share at the market price on the last day of each period reported. Dividends and distributions, if any, are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total investment return does not reflect brokerage commissions or sales charges in connection with the purchase or sale of Fund shares. Total investment return for a period of less than one year is not annualized.  
(2)   Calculated on the basis of income and expenses applicable to both common and preferred shares relative to the average net assets of common shareholders.  
(3)   Inclusive of expenses offset by custody credits earned on cash balances at the custodian bank (See Note 1(j) in Notes to Financial Statements).  
(4)   Interest expense primarily relates to the liability for floating rate notes issued in connection with Inverse Floater transactions and/or participation in reverse repurchase agreement transactions.  
(5)   During the periods indicated above, the Investment Manager/Sub-Adviser waived a portion of their fees. The effect of such waivers relative to the average net assets of common shareholders was 0.07% (annualized), 0.01%, 0.10%, 0.17% and 0.24% for the six months ended October 31, 2011 and the years ended April 30, 2010, April 30, 2009, April 30, 2008, and April 30, 2007, respectively.  

 

See accompanying Notes to Financial Statements   10.31.11   PIMCO Municipal Income Funds Semi-Annual Report     39   


Table of Contents

PIMCO California Municipal Income Fund Financial Highlights

For a common share outstanding throughout each period:

 

          Six Months
ended
October 31, 2011
(unaudited)
         Year ended April 30,  
              2011         2010         2009         2008         2007  

Net asset value, beginning of period

      $11.32          $12.84          $10.61          $13.62          $14.84          $14.48   
           

Investment Operations:

                                   

Net investment income

      0.54          1.12          1.21          1.08          1.07          1.10   

Net realized and change in unrealized gain (loss) on investments, futures contracts, options written and swaps

      1.04          (1.69       1.98          (2.96       (1.09       0.44   

Total from investment operations

      1.58          (0.57       3.19          (1.88       (0.02       1.54   
           

Dividends on Preferred Shares from Net Investment Income

      (0.01       (0.03       (0.04       (0.21       (0.28       (0.26

Net increase (decrease) in net assets applicable to common shareholders resulting from investment operations

      1.57          (0.60       3.15          (2.09       (0.30       1.28   
           

Dividends to Common Shareholders from Investment Income

      (0.46       (0.92       (0.92       (0.92       (0.92       (0.92

Net asset value, end of period

      $12.43          $11.32          $12.84          $10.61          $13.62          $14.84   

Market price, end of period

      $12.78          $11.99          $13.29          $12.18          $15.83          $17.70   

Total Investment Return (1)

      10.68       (2.79 )%        17.72       (16.72 )%        (4.88 )%        18.20
           

RATIOS/SUPPLEMENTAL DATA:

                                   

Net assets applicable to common shareholders, end of period (000s)

      $229,210          $208,147          $234,792          $192,849          $246,613          $267,061   

Ratio of expenses to average net assets, including interest expense (2)(3)(4)

      1.40 %*(5)        1.48       1.49 %(5)        1.66 %(5)        1.41 %(5)        1.26 %(5) 

Ratio of expenses to average net assets, excluding interest expense (2)(3)

      1.28 %*(5)        1.34       1.34 %(5)        1.39 %(5)        1.15 %(5)        1.05 %(5) 

Ratio of net investment income to average net assets (2)

      8.98 %*(5)        9.21       10.15 %(5)        9.42 %(5)        7.57 %(5)        7.48 %(5) 

Preferred shares asset coverage per share

      $63,201          $59,689          $64,130          $57,140          $66,086          $69,491   

Portfolio turnover rate

      1       19       8       42       14       4

 

*   Annualized  
(1)   Total investment return is calculated assuming a purchase of a common share at the market price on the first day and a sale of a common share at the market price on the last day of each period reported. Dividends and distributions, if any, are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total investment return does not reflect brokerage commissions or sales charges in connection with the purchase or sale of Fund shares. Total investment return for a period of less than one year is not annualized.  
(2)   Calculated on the basis of income and expenses applicable to both common and preferred shares relative to the average net assets of common shareholders.  
(3)   Inclusive of expenses offset by custody credits earned on cash balances at the custodian bank (See Note 1(j) in Notes to Financial Statements).  
(4)   Interest expense primarily relates to the liability for floating rate notes issued in connection with Inverse Floater transactions and/or participation in reverse repurchase agreement transactions.  
(5)   During the periods indicated above, the Investment Manager/Sub-Adviser waived a portion of their fees. The effect of such waivers relative to the average net assets of common shareholders was 0.07% (annualized), 0.01%, 0.10%, 0.17% and 0.25% for the six months ended October 31, 2011 and the years ended April 30, 2010, April 30, 2009, April 30, 2008, and April 30, 2007, respectively.  

 

40   PIMCO Municipal Income Funds Semi-Annual Report   10.31.11   See accompanying Notes to Financial Statements


Table of Contents

PIMCO New York Municipal Income Fund Financial Highlights

For a common share outstanding throughout each period:

 

          Six Months
ended
October 31,  2011
(unaudited)
         Year ended April 30,  
              2011         2010         2009         2008         2007  

Net asset value, beginning of period

      $9.92          $10.67          $9.19          $12.70          $13.74          $13.47   
           

Investment Operations:

                                   

Net investment income

      0.38          0.80          0.88          0.87          0.97          0.97   

Net realized and change in unrealized gain (loss) on investments, futures contracts, options written and swaps

      0.58          (0.84       1.31          (3.50       (1.03       0.37   

Total from investment operations

      0.96          (0.04       2.19          (2.63       (0.06       1.34   
           

Dividends on Preferred Shares from Net Investment Income

      (0.01       (0.03       (0.03       (0.20       (0.30       (0.28

Net increase (decrease) in net assets applicable to common shareholders resulting from investment operations

      0.95          (0.07       2.16          (2.83       (0.36       1.06   
           

Dividends to Common Shareholders from Investment Income

      (0.34       (0.68       (0.68       (0.68       (0.68       (0.79

Net asset value, end of period

      $10.53          $9.92          $10.67          $9.19          $12.70          $13.74   

Market price, end of period

      $10.53          $9.89          $11.18          $9.90          $13.06          $15.02   

Total Investment Return (1)

      10.04       (5.57 )%        20.76       (18.80 )%        (8.31 )%        8.89
           

RATIOS/SUPPLEMENTAL DATA:

                                   

Net assets applicable to common shareholders, end of period (000s)

      $80,544          $75,728          $81,074          $69,482          $95,691          $103,035   

Ratio of expenses to average net assets, including interest expense (2)(3)(4)

      1.39 %*(5)        1.51       1.52 %(5)        1.86 %(5)        2.00 %(5)        1.94 %(5) 

Ratio of expenses to average net assets, excluding interest expense (2)(3)

      1.32 %*(5)        1.42       1.41 %(5)        1.62 %(5)        1.32 %(5)        1.23 %(5) 

Ratio of net investment income to average net assets (2)

      7.29 %*(5)        7.70       8.71 %(5)        8.49 %(5)        7.41 %(5)        7.06 %(5) 

Preferred shares asset coverage per share

      $67,841          $65,279          $68,123          $61,957          $62,969          $65,863   

Portfolio turnover rate

      12       29       11       37       14       2

 

*   Annualized  
(1)   Total investment return is calculated assuming a purchase of a common share at the market price on the first day and a sale of a common share at the market price on the last day of each period reported. Dividends and distributions, if any, are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total investment return does not reflect brokerage commissions or sales charges in connection with the purchase or sale of Fund shares. Total investment return for a period of less than one year is not annualized.  
(2)   Calculated on the basis of income and expenses applicable to both common and preferred shares relative to the average net assets of common shareholders.  
(3)   Inclusive of expenses offset by custody credits earned on cash balances at the custodian bank (See Note 1(j) in Notes to Financial Statements).  
(4)   Interest expense primarily relates to the liability for floating rate notes issued in connection with Inverse Floater transactions and/or participation in reverse repurchase agreement transactions.  
(5)   During the periods indicated above, the Investment Manager/Sub-Adviser waived a portion of their fees. The effect of such waivers relative to the average net assets of common shareholders was 0.07% (annualized), 0.01%, 0.10%, 0.18% and 0.26% for the six months ended October 31, 2011 and the years ended April 30, 2010, April 30, 2009, April 30, 2008, and April 30, 2007, respectively.  

 

See accompanying Notes to Financial Statements   10.31.11   PIMCO Municipal Income Funds Semi-Annual Report     41   


Table of Contents

PIMCO Municipal Income Funds

Portfolio Manager Change/Proxy Voting Policies & Procedures (unaudited)

 

Portfolio Manager Change:

 

On July 26, 2011, Joe Deane assumed primary responsibility for the day-to-day portfolio management of each of the Funds. Mr. Deane, an Executive Vice President at Pacific Investment Management Company LLC (“PIMCO”), joined PIMCO in 2011 and is the head of the municipal bond portfolio management team. Prior to joining PIMCO, he served as Managing Director, Co-Head of the Tax-Exempt Department for Western Asset Management Company. Previously he was Managing Director, Head of Tax-Exempt Investments for Smith Barney/Citigroup Asset Management from 1993 to 2005.

 

 

Proxy Voting Policies & Procedures:

 

A description of the policies and procedures that the Funds have adopted to determine how to vote proxies relating to portfolio securities and information about how the Funds voted proxies relating to portfolio securities held during the most recent twelve month period ended June 30 is available (i) without charge, upon request, by calling the Funds’ shareholder servicing agent at (800) 254-5197; (ii) on the Funds’ website at www.allianzinvestors.com/closedendfunds; and (iii) on the Securities and Exchange Commission website at www.sec.gov

 

42   PIMCO Municipal Income Funds Semi-Annual Report   10.31.11


Table of Contents

PIMCO Municipal Income Funds

Matters Relating to the Trustees’ Consideration of the Investment Management & Portfolio Management Agreements (unaudited)

 

The Investment Company Act of 1940, as amended, requires that both the full Board of Trustees (the “Trustees”) and a majority of the non-interested Trustees (the “Independent Trustees”), voting separately, approve each Fund’s Management Agreement with the Investment Manager (the “Advisory Agreement”) and Portfolio Management Agreement between the Investment Manager and the Sub-Adviser (the “Sub-Advisory Agreement”, and together with the Advisory Agreement, the “Agreements”). The Trustees met in person on June 14-15, 2011 (the “contract review meeting”) for the specific purpose of considering whether to approve the continuation of the Agreements. The Independent Trustees were assisted in their evaluation of the Agreements by independent legal counsel, from whom they received separate legal advice and with whom they met separately from Fund management during the contract review meeting.

 

Based on their evaluation of factors that they deemed to be material, including those factors described below, the Trustees, including a majority of the Independent Trustees, concluded that the continuation of the Agreements should be approved for a one-year period commencing July 1, 2011.

 

In connection with their deliberations regarding the continuation of the Agreements, the Trustees, including the Independent Trustees, considered such information and factors as they believed, in light of the legal advice furnished to them and their own business judgment, to be relevant. As described below, the Trustees considered the nature, quality, and extent of the various investment management, administrative and other services performed by the Investment Manager or the Sub-Adviser under the applicable Agreement.

 

In connection with their contract review meetings, the Trustees received and relied upon materials provided by the Investment Manager which included, among other items: (i) information provided by Morningstar Associates LLC (“Morningstar”) on the net return investment performance (based on net assets) of the Funds for various time periods, the investment performance of a group of funds with substantially similar investment classifications/objectives as the Funds identified by Morningstar and the performance of an applicable benchmark index, (ii) information provided by Morningstar on the Funds’ management fees and other expenses and the management fees and other expenses of comparable funds identified by Morningstar, (iii) information regarding the investment performance and management fees of any comparable portfolios of other clients of the Sub-Adviser, (iv) the estimated profitability to the Investment Manager and the Sub-Adviser from their relationship with the Funds for the one year period ended March 31, 2011, (v) descriptions of various functions performed by the Investment Manager and the Sub-Adviser for the Funds, such as portfolio management, compliance monitoring and portfolio trading practices, and (vi) information regarding the overall organization of the Investment Manager and the Sub-Adviser, including information regarding senior management, portfolio managers and other personnel providing investment management, administrative and other services to the Funds.

 

The Trustees’ conclusions as to the continuation of the Agreements were based on a comprehensive consideration of all information provided to the Trustees and were not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations are described below, although individual Trustees may have evaluated the information presented differently from one another, attributing different weights to various factors.

 

As part of their review, the Trustees examined the Investment Manager’s and the Sub-Adviser’s abilities to provide high quality investment management and other services to the Funds. The Trustees considered the investment philosophy and research and decision-making processes of the Sub-Adviser; the experience of key advisory personnel of the Sub-Adviser responsible for portfolio management of the Funds; the ability of the Investment Manager and the Sub-Adviser to attract and retain capable personnel; the capability and integrity of the senior management and staff of the Investment Manager and the Sub-Adviser; and the level of skill required to manage the Funds. In addition, the Trustees reviewed the quality of the Investment Manager’s and the Sub-Adviser’s services with respect to regulatory compliance and compliance with the investment policies of the Funds; the nature and quality of certain administrative services the Investment Manager is responsible for providing to the Funds; and conditions that might affect the Investment Manager’s or the Sub-Adviser’s ability to provide high quality services to the Funds in the future under the Agreements, including each organization’s respective business reputation, financial condition and operational stability. Based on the foregoing, the Trustees concluded that the Sub-Adviser’s investment process, research capabilities and philosophy were well suited to each of

 

10.31.11   PIMCO Municipal Income Funds Semi-Annual Report     43   


Table of Contents

PIMCO Municipal Income Funds

Matters Relating to the Trustees’ Consideration of the Investment Management & Portfolio Management Agreements (unaudited) (continued)

 

the Funds given their respective investment objectives and policies, and that the Investment Manager and the Sub-Adviser would be able to continue to meet any reasonably foreseeable obligations under the Agreements.

 

Based on information provided by Morningstar, the Trustees also reviewed each Fund’s net return investment performance as well as the performance of comparable funds identified by Morningstar. In the course of their deliberations, the Trustees took into account information provided by the Investment Manager in connection with the contract review meeting, as well as during investment review meetings conducted with portfolio management personnel during the course of the year regarding each Fund’s performance.

 

In assessing the reasonableness of each Fund’s fees under the Agreements, the Trustees considered, among other information, each Fund’s management fee and the total net expense ratio as a percentage of average net assets attributable to common shares and preferred shares and the management fee and total net expense ratios of comparable funds identified by Morningstar.

 

The Trustees specifically took note of how each Fund compared to its Morningstar peers as to performance and management fee and total net expenses. The Trustees noted that while the Funds are not charged a separate administration fee, it was not clear whether the peer funds in the Morningstar categories were separately charged such a fee by their investment managers, so that the total net expense ratio (rather than any individual expense component) represented the most relevant comparison. It was noted that the total net expense ratio reflects the effect of expense waivers/reimbursements and does not reflect interest expense.

 

Municipal:

The Trustees noted that the expense group for the Fund provided by Morningstar consisted of a total of thirteen closed-end funds, including the Fund but not including the peer funds managed by the Investment Manager. The Trustees also noted that average net assets of the common shares of the funds in the peer group ranged from $84.95 million to $492.33 million, and that five of the funds are larger in asset size than the Fund. The Trustees also noted that the Fund was ranked eleventh out of thirteen funds in the expense peer group for total net expense ratio based on common share assets, tenth out of thirteen funds in the expense peer group for the total net expense ratio based on common share and leveraged assets combined and eleventh out of thirteen funds in actual management fees (with funds ranked first having the lowest fees/expenses and ranked thirteenth having the highest fees/expenses in the peer group). Finally, the Trustees considered the Investment Manager’s voluntary waiver of 0.05% of the Fund’s management fee payable.

 

With respect to Fund performance (based on net asset value), the Trustees also noted that the Fund outperformed its benchmark and was ranked tenth out of twelve funds for the one-year period ended February 28, 2011. The Trustees noted that the Fund underperformed its benchmark and was ranked eighth and ninth out of twelve funds for the three-year and five-year periods ended February 28, 2011, respectively.

 

California Municipal:

The Trustees noted that the expense group for the Fund provided by Morningstar consisted of a total of twelve closed-end funds, including the Fund but not including the peer Funds managed by the Investment Manager. The Trustees also noted that average net assets of the common shares of the funds in the peer group ranged from $30.63 million to $329.31 million, and that five of the funds are larger in asset size than the Fund. The Trustees also noted that the Fund was ranked ninth out of twelve funds in the expense peer group for total net expense ratio based on common share assets, ninth out of twelve funds in the expense peer group for the total net expense ratio based on common share and leveraged assets combined and sixth out of twelve funds in actual management fees (with funds ranked first having the lowest fees/expenses and ranked twelfth having the highest fees/expenses in the peer group). Finally, the Trustees considered the Investment Manager’s voluntary waiver of 0.05% of the Fund’s management fee payable.

 

With respect to Fund performance (based on net asset value), the Trustees also noted that the Fund underperformed its benchmark and was ranked eleventh out of twelve funds for the one-year period ended February 28, 2011. The Trustees noted that the Fund underperformed its benchmark and was ranked seventh and fifth out of twelve funds for the three-year and five-year periods ended February 28, 2011, respectively.

 

44   PIMCO Municipal Income Funds Semi-Annual Report   10.31.11


Table of Contents

PIMCO Municipal Income Funds

Matters Relating to the Trustees’ Consideration of the Investment Management & Portfolio Management Agreements (unaudited) (continued)

 

 

New York Municipal:

The Trustees noted that the expense group for the Fund provided by Morningstar consisted of a total of eleven closed-end funds, including the Fund but not including the peer funds managed by the Investment Manager. The Trustees also noted that average net assets of the common shares of the funds in the peer group ranged from $41.72 million to $262.56 million, and that eight of the funds are larger in asset size than the Fund. The Trustees also noted that the Fund was ranked eighth out of eleven funds in the expense peer group for total net expense ratio based on common share assets, sixth out of eleven funds in the expense peer group for the total net expense ratio based on common share and leveraged assets combined and fifth out of eleven funds in actual management fees (with funds ranked first having the lowest fees/expenses and ranked eleventh having the highest fees/expenses in the peer group). Finally, the Trustees considered the Investment Manager’s voluntary waiver of 0.05% of the Fund’s management fee payable.

 

With respect to Fund performance (based on net asset value), the Trustees also noted that the Fund underperformed its benchmark and was ranked eighth out of eleven funds for the one-year period ended February 28, 2011. The Trustees noted that the Fund underperformed its benchmark and was ranked ninth and eighth out of eleven funds for the three-year and five-year periods ended February 28, 2011, respectively.

 

The Trustees also considered the management fees charged by Sub-Adviser to other clients, including accounts with investment strategies similar to those of the Funds. The Trustees noted that the management fees paid by the Funds are generally higher than the fees paid by the open-end funds offered for comparison but were advised that there are additional portfolio management challenges in managing the Funds, such as the use of leverage and meeting a regular dividend.

 

The Trustees also took into account that the Funds have preferred shares outstanding, which increases the amount of fees received by the Investment Manager and the Sub-Adviser under the Agreements (because the fees are calculated based on the Funds’ net assets, including assets attributable to preferred shares). In this regard, the Trustees took into account that the Investment Manager and the Sub-Adviser have a financial incentive for the Funds to continue to have preferred shares outstanding, which may create a conflict of interest between the Investment Manager and the Sub-Adviser, on one hand, and the Funds’ common shareholders, on the other. In this regard, the Trustees considered information provided by the Investment Manager and the Sub-Adviser and determined that each Funds’ use of leverage through preferred shares continues to be appropriate and in the best interests of the Funds’ common shareholders.

 

Based on a profitability analysis provided by the Investment Manager, the Trustees also considered the estimated profitability of the Investment Manager and the Sub-Adviser from their relationship with each Fund and determined that such profitability did not appear to be excessive.

 

The Trustees also took into account that, as closed-end investment companies, the Funds do not currently intend to raise additional assets, so the assets of the Funds will grow (if at all) only through the investment performance of each Fund. Therefore, the Trustees did not consider potential economies of scale as a principal factor in assessing the fee rates payable under the Agreements.

 

Additionally, the Trustees considered so-called “fall-out benefits” to the Investment Manager and the Sub-Adviser, such as reputational value derived from serving as Investment Manager and Sub-Adviser to the Funds.

 

After reviewing these and other factors described herein, the Trustees concluded with respect to each Fund, within the context of their overall conclusions regarding the Agreements and based on the information provided and related representations made by management, that the fees payable under the Agreements represent reasonable compensation in light of the nature and quality of the services being provided by the Investment Manager and Sub-Adviser to the Funds.

 

10.31.11   PIMCO Municipal Income Funds Semi-Annual Report     45   


Table of Contents
Trustees   Fund Officers

Hans W. Kertess
Chairman of the Board of Trustees

Paul Belica

Bradford K. Gallagher

James A. Jacobson

John C. Maney

William B. Ogden, IV

Alan Rappaport

Deborah A. Zoullas

 

Brian S. Shlissel
President & Chief Executive Officer

Lawrence G. Altadonna
Treasurer, Principal Financial & Accounting Officer

Thomas J. Fuccillo
Vice President, Secretary & Chief Legal Officer

Scott Whisten
Assistant Treasurer

Richard J. Cochran
Assistant Treasurer

Orhan Dzemaili
Assistant Treasurer

Youse E. Guia
Chief Compliance Officer

Lagan Srivastava
Assistant Secretary

 

Investment Manager

Allianz Global Investors Fund Management LLC

1633 Broadway

New York, NY 10019

 

Sub-Adviser

Pacific Investment Management Company LLC

840 Newport Center Drive

Newport Beach, CA 92660

 

Custodian & Accounting Agent

State Street Bank & Trust Co.

Lafayette Corporate Center, 5th Floor

2 Avenue De Lafayette

Boston, MA 02111

 

Transfer Agent, Dividend Paying Agent and Registrar

BNY Mellon

P.O. Box 43027

Providence, RI 02940-3027

 

Independent Registered Public Accounting Firm

PricewaterhouseCoopers LLP

300 Madison Avenue

New York, NY 10017

 

Legal Counsel

Ropes & Gray LLP

Prudential Tower

800 Boylston Street

Boston, MA 02199

 

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.

 

The financial information included herein is taken from the records of the Funds without examination by an independent registered public accounting firm, who did not express an opinion herein.

 

Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940, as amended, that from time to time the Funds may purchase their common shares in the open market.

 

The Funds file their complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of their fiscal year on Form N-Q. The Funds’ Form N-Q are available on the SEC’s website at www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. The information on
Form N-Q is also available on the Funds’ website at www.allianzinvestors.com/closedendfunds.

Information on the Funds is available at www.allianzinvestors.com/closedendfunds or by calling the Funds’ shareholder servicing agent at (800) 254-5197.


Table of Contents

LOGO

 

 

Receive this report electronically and eliminate paper mailings.

To enroll, go to www.allianzinvestors.com/edelivery.

 

AZ609SA_103111

 

AGI-2011-10-28-2064


Table of Contents
ITEM 2. CODE OF ETHICS

Not required in this filing.

 

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT

Not required in this filing.

 

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Not required in this filing.

 

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANT

Not required in this filing.

 

ITEM 6. SCHEDULE OF INVESTMENTS

(a) The registrant’s Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this form.

(b) Not applicable.

 

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES

Not required in this filing.

 

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES

(a)(1)

As of January 5, 2012, the following individual has primary responsibility for the day-to-day implementation of the PIMCO Municipal Income Fund (PMF), PIMCO California Municipal Income Fund (PCQ) and PIMCO New York Municipal Income Fund (PNF) (each a “Fund” and collectively, the “Funds”):

Joe Deane

Mr. Deane has been the portfolio manager for the Funds since July 2011. Mr. Deane, an Executive Vice President at Pacific Investment Management Company LLC (“PIMCO”), joined PIMCO in 2011 and is the head of the municipal bond portfolio management team. Prior to joining PIMCO, he served as Managing Director, Co-Head of the Tax-Exempt Department for Western Asset Management Company. Previously he was Managing Director, Head of Tax-Exempt Investments for Smith Barney/Citigroup Asset Management from 1993 to 2005. He has 41 years of investment experience and holds a bachelor’s degree from Iona College.

(a)(2)

The following summarizes information regarding each of the accounts, excluding the respective Fund managed by the Portfolio Manager as of October 31, 2011, including accounts managed by a team, committee, or other group that includes the Portfolio Manager. Unless mentioned otherwise, the advisory fee charged for managing each of the accounts listed below is not based on performance.

 

         

Registered Investment

Companies

  

Other Pooled Investment

Vehicles

  

Other Accounts

PM

  

Fund

  

#

  

AUM($million)

  

#

  

AUM($million)

  

#

  

AUM($million)

Joe Deane

   PMF    19    5,378.10    0    0    4    365.82
   PCQ    19    5,485.59    0    0    4    365.82
   PNF    19    5,737.46    0    0    4    365.82

From time to time, potential and actual conflicts of interest may arise between a portfolio manager’s management of the investments of a Fund, on the one hand, and the management of other accounts, on the other. Potential and actual conflicts of interest may also arise as a result of PIMCO’s other business activities and PIMCO’s possession of material non-public information about an issuer. Other accounts managed by a portfolio manager might have similar investment objectives or strategies as the Funds, track the same index a Fund tracks or otherwise hold, purchase, or sell securities that are eligible to be held, purchased or sold by the Funds. The other accounts might also have different investment objectives or strategies than the Funds.

 


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Knowledge and Timing of Fund Trades. A potential conflict of interest may arise as a result of the portfolio manager’s day-to-day management of a Fund. Because of their positions with the Funds, the portfolio managers know the size, timing and possible market impact of a Fund’s trades. It is theoretically possible that the portfolio managers could use this information to the advantage of other accounts they manage and to the possible detriment of a Fund.

Investment Opportunities. A potential conflict of interest may arise as a result of the portfolio manager’s management of a number of accounts with varying investment guidelines. Often, an investment opportunity may be suitable for both a Fund and other accounts managed by the portfolio manager, but may not be available in sufficient quantities for both the Fund and the other accounts to participate fully. Similarly, there may be limited opportunity to sell an investment held by a Fund and another account. PIMCO has adopted policies and procedures reasonably designed to allocate investment opportunities on a fair and equitable basis over time.

Under PIMCO’s allocation procedures, investment opportunities are allocated among various investment strategies based on individual account investment guidelines and PIMCO’s investment outlook. PIMCO has also adopted additional procedures to complement the general trade allocation policy that are designed to address potential conflicts of interest due to the side-by-side management of the Funds and certain pooled investment vehicles, including investment opportunity allocation issues.

Conflicts potentially limiting a Fund’s investment opportunities may also arise when the Fund and other PIMCO clients invest in different parts of an issuer’s capital structure, such as when the Fund owns senior debt obligations of an issuer and other clients own junior tranches of the same issuer. In such circumstances, decisions over whether to trigger an event of default, over the terms of any workout, or how to exit an investment may result in conflicts of interest. In order to minimize such conflicts, a portfolio manager may avoid certain investment opportunities that would potentially give rise to conflicts with other PIMCO clients or PIMCO may enact internal procedures designed to minimize such conflicts, which could have the effect of limiting a Fund’s investment opportunities.

Additionally, if PIMCO acquires material non-public confidential information in connection with its business activities for other clients, a portfolio manager may be restricted from purchasing securities or selling securities for a Fund. When making investment decisions where a conflict of interest may arise, PIMCO will endeavor to act in a fair and equitable manner as between a Fund and other clients; however, in certain instances the resolution of the conflict may result in PIMCO acting on behalf of another client in a manner that may not be in the best interest, or may be opposed to the best interest, of a Fund.

Performance Fees. A portfolio manager may advise certain accounts with respect to which the advisory fee is based entirely or partially on performance. Performance fee arrangements may create a conflict of interest for the portfolio manager in that the portfolio manager may have an incentive to allocate the investment opportunities that he or she believes might be the most profitable to such other accounts instead of allocating them to a Fund. PIMCO has adopted policies and procedures reasonably designed to allocate investment opportunities between the Funds and such other accounts on a fair and equitable basis over time.

(a) (3)

As of October 31, 2011, the following explains the compensation structure of the individual that shares primary responsibility for day-to-day portfolio management of the Fund:

PIMCO has adopted a Total Compensation Plan for its professional level employees, including its portfolio managers, that is designed to pay competitive compensation and reward performance, integrity and teamwork consistent with the firm’s mission statement. The Total Compensation Plan includes an incentive component that rewards high performance standards, work ethic and consistent individual and team contributions to the firm. The compensation of portfolio managers consists of a base salary, discretionary performance bonus, and may include an equity or long term incentive component.

Certain employees of PIMCO, including portfolio managers, may elect to defer compensation through PIMCO’s deferred compensation plan. PIMCO also offers its employees a non-contributory defined contribution plan through which PIMCO makes a contribution based on the employee’s compensation. PIMCO’s contribution rate increases at a specified compensation level, which is a level that would include portfolio managers.

The Total Compensation Plan consists of three components:

 

   

Base Salary – Base salary is determined based on core job responsibilities, market factors and internal equity. Base salary levels are reviewed annually, when there is a significant change in job responsibilities or a significant change in the market. Base salary is paid in regular installments throughout the year and payment dates are in line with local practice.

 


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Performance Bonus – Performance bonuses are designed to reward individual performance. Each professional and his or her supervisor will agree upon performance objectives to serve as a basis for performance evaluation during the year. The objectives will outline individual goals according to pre-established measures of the group or department success. Achievement against these goals as measured by the employee and supervisor will be an important, but not exclusive, element of the Compensation Committee’s bonus decision process. Final award amounts are determined at the discretion of the Compensation Committee and will also consider firm performance.

 

   

Equity or Long Term Incentive Compensation – Equity allows key professionals to participate in the long-term growth of the firm. This program provides mid to senior level employees with the potential to acquire an equity stake in PIMCO over their careers and to better align employee incentives with the firm’s long-term results. These options vest over a number of years and may convert into PIMCO equity which shares in the profit distributions of the firm. M Units are non-voting common equity of PIMCO and provide a mechanism for individuals to build a significant equity stake in PIMCO over time. Employees who reach a total compensation threshold are delivered their annual compensation in a mix of cash and option awards. PIMCO incorporates a progressive allocation of option awards as a percentage of total compensation which is in line with market practices.

In certain countries with significant tax implications for employees to participate in the M Unit Option Plan, PIMCO continues to use the Long Term Incentive Plan (“LTIP”) in place of the M Unit Option Plan. The LTIP provides cash awards that appreciate or depreciate based upon the performance of PIMCO’s parent company, Allianz Global Investors, and PIMCO over a three-year period. The aggregate amount available for distribution to participants is based upon Allianz Global Investors’ profit growth and PIMCO’s profit growth.

Participation in the M Unit Option Plan and LTIP is contingent upon continued employment at PIMCO.

In addition, the following non-exclusive list of qualitative criteria may be considered when specifically determining the total compensation for portfolio managers:

 

   

3-year, 2-year and 1-year dollar-weighted and account-weighted, pre-tax investment performance as judged against the applicable benchmarks for each account managed by a portfolio manager (including the Funds) and relative to applicable industry peer groups;

 

   

Appropriate risk positioning that is consistent with PIMCO’s investment philosophy and the Investment Committee/CIO approach to the generation of alpha;

 

   

Amount and nature of assets managed by the portfolio manager;

 

   

Consistency of investment performance across portfolios of similar mandate and guidelines (reward low dispersion);

 

   

Generation and contribution of investment ideas in the context of PIMCO’s secular and cyclical forums, portfolio strategy meetings, Investment Committee meetings, and on a day-to-day basis;

 

   

Absence of defaults and price defaults for issues in the portfolios managed by the portfolio manager;

 

   

Contributions to asset retention, gathering and client satisfaction;

 

   

Contributions to mentoring, coaching and/or supervising; and

 

   

Personal growth and skills added.

A portfolio manager’s compensation is not based directly on the performance of any Fund or any other account managed by that portfolio manager.

Profit Sharing Plan. Instead of a bonus, portfolio managers who are Managing Directors of PIMCO receive compensation from a non-qualified profit sharing plan consisting of a portion of PIMCO’s net profits. Portfolio managers who are Managing Directors receive an amount determined by the Partner Compensation Committee, based upon an individual’s overall contribution to the firm.


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(a)(4)

The following summarizes the dollar range of securities the portfolio manager for the Fund beneficially owned of the Fund that he managed as of October 31, 2011.

 

PIMCO Municipal Income Fund

PIMCO California Municipal Income Fund

PIMCO New York Municipal Income Fund

  

Portfolio Manager

   Dollar Range of Equity Securities in each Fund   

Joe Deane

   None   

 

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED COMPANIES

None.

 

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There have been no material changes to the procedures by which shareholders may recommend nominees to the Fund’s Board of Trustees since the Fund last provided disclosure in response to this item.

 

ITEM 11. CONTROLS AND PROCEDURES

(a) The registrant’s President and Chief Executive Officer and Treasurer, Principal Financial & Accounting Officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Act (17 CFR 270.30a-3(c)), as amended) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.

(b) There were no significant changes in internal control over financial reporting as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d))) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting.

 

ITEM 12. EXHIBITS

(a) (1) Not required in this filing.

(a) (2) Exhibit 99.302 Cert. — Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

(a) (3) Not applicable.

(b) Exhibit 99.906 Cert. — Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 


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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

(Registrant) PIMCO New York Municipal Income Fund
By:   /s/    Brian S. Shlissel        
President and Chief Executive Officer
Date:   January 5, 2012
By:   /s/    Lawrence G. Altadonna         
Treasurer, Principal Financial & Accounting Officer
Date:   January 5, 2012

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        
President and Chief Executive Officer
Date:   January 5, 2012
By:   /s/    Lawrence G. Altadonna         
Treasurer, Principal Financial & Accounting Officer        
Date:   January 5, 2012