N-CSR/A
 
 
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 811-10377
PIMCO Municipal Income Fund
 
(Exact name of registrant as specified in charter)
     
1345 Avenue of the Americas, New York, NY   10105
 
(Address of principal executive offices)   (Zip code)
Lawrence G. Altadonna — 1345 Avenue of the Americas, New York, NY 10105
 
(Name and address of agent for service)
Registrant’s telephone number, including area code: 212-739-3371
Date of fiscal year end: April 30, 2009
Date of reporting period: April 30, 2009
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
 
 

 


 

Item 1.  Report to Shareholders
 
 
PIMCO Municipal Income Fund
PIMCO California Municipal Income Fund
PIMCO New York Municipal Income Fund
 
 
Annual Report
April 30, 2009
 
         
Contents    
 
Letter to Shareholders
    1  
Fund Insights/Performance & Statistics
    2-7  
Schedules of Investments
    8-24  
Statements of Assets and Liabilities
    26  
Statements of Operations
    27  
Statements of Changes in Net Assets
    28-29  
Notes to Financial Statements
    30-40  
Financial Highlights
    41-43  
Report of Independent Registered Public Accounting Firm     44  
Portfolio Manager Change/Changes to the Funds’ Investment Policies and Related Risks     45  
Tax Information/Annual Shareholder Meeting Results     46  
Privacy Policy/Proxy Voting Policies & Procedures     47  
Dividend Reinvestment Plan
    48  
Board of Trustees
    49-50  
Fund Officers
    51  
 


 

 
PIMCO Municipal Income Funds Letter to Shareholders
June 12, 2009
Dear Shareholder:
 
Please find enclosed the annual report for the PIMCO Municipal Income Fund, PIMCO California Municipal Income Fund and PIMCO New York Municipal Income Fund (the “Funds”) for the fiscal year ended April 30, 2009.
 
The U.S. bond market provided positive returns during the reporting period as economic growth slowed, inflationary pressures receded and liquidity infusions improved credit market conditions and bolstered investor sentiment. In this environment, municipal bonds generally showed marked improvement, however the Funds declined significantly during the fiscal year. The Barclays Capital Municipal Bond Index advanced 3.11% during the reporting period. Due to the tax-advantaged treatment of income from municipal bonds, which compared favorably on a taxable-equivalent basis to the 3.84% return for the broad market of bonds as represented by the Barclays Capital U.S. Aggregate Index.
 
The Federal Reserve (“the Fed”) and U.S. Treasury Department moved aggressively during the reporting period to stave off bank failures and to inject liquidity into the banking system. The Fed reduced the Federal Funds rate three times, lowering the benchmark rate on loans between member banks from 2.00% to a target of 0% to 0.25%. In addition, the Fed pursued a policy of quantitative easing, purchasing securities from banks in order to add to the supply of cash available for lending.
 
On April 6, 2009, the Funds announced a change increasing the amount of Residual Interest Municipal Bonds (“RIBs”) in which a Fund may invest to 15% from 10% of total assets. The change potentially allows the Funds to earn additional tax-free income. In addition, the use of RIBs, which results in a form of economic leverage, will allow the Funds to replace or increase leverage to some degree.
 
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 Web site, www.allianzinvestors.com/closedendfunds.
 
Together with Allianz Global Investors Fund Management LLC, the Funds’ investment manager, and Pacific Investment Management Company LLC (“PIMCO”), the Funds’ sub-adviser, we thank you for investing with us.
 
We remain dedicated to serving your investment needs.
 
Sincerely,
 
     
 
Hans W. Kertess   Brian S. Shlissel
Chairman   President & Chief Executive Officer
 
 
4.30.09   PIMCO Municipal Income Funds Annual Report 1


 

PIMCO Municipal Income Fund Fund Insights
April 30, 2009 (unaudited)
 
•  During the fiscal year ended April 30, 2009, PIMCO Municipal Income Fund (“Municipal Income”) declined 20.44% on net asset value (“NAV”) and 24.58% on market price, compared with declines of 9.02% and 9.85%, respectively, for the Lipper Analytical General Municipal Debt Funds (Leveraged) average.
 
•  High-quality municipal bond yields decreased across the yield curve during the reporting period with a more pronounced decline in the front end of the yield curve. The second half of 2008 experienced higher yields, but thus far in 2009 there has been a rebound across the yield curve.
 
•  Duration hedging strategies in longer-maturity swaps detracted from performance, as longer-maturity swap rates moved significantly lower during the reporting period. Most of the move came during the fourth quarter of 2008.
 
•  Municipal-to-Treasury yield ratios were volatile during the reporting period, crossing levels never before experienced. However, the yield ratios ended the reporting period at only a slight change from the beginning of 2009, with the 10-year ratio decreasing to 94% and the 30-year ratio increasing to 114%.
 
•  Tobacco securitization sector holdings detracted from performance, as the sector underperformed primarily during the fourth quarter of 2008, although the sector has rebounded since the beginning of 2009.
 
•  Municipal Income’s exposure to corporate-backed municipals detracted from performance, as this sector underperformed in line with the taxable corporate securities.
 
•  Pre-refunded bond exposure contributed positively to performance, as this sector benefited from investor risk aversion in light of the financial crisis.
 
•  Municipal Income’s exposure to zero-coupon municipals detracted from performance, as the sector underperformed with the Barclays Capital Zero Coupon Index declining 8.85% during the reporting period.
 
•  The municipal yield curve steepened significantly during the reporting period with investor demand more concentrated on shorter maturities. Although longer-maturity yields declined slightly, they declined less than the shorter maturities. The 15-, 20-, and 30-year maturity AAA General Obligation yields decreased 43, 18, and three basis points, respectively, while the two-year yield decreased 142 basis points. In this environment, the Municipal Income’s significant exposure to longer-maturity municipals detracted from performance, as this portion of the yield curve underperformed.
 
•  Compared to longer-maturity bonds in the taxable sectors, comparable-maturity municipal bonds underperformed primarily due to the treasury rally. The Barclays Capital Long Municipal Bond Index declining 3.95%, while the Barclays Capital Long Government/Credit and the Barclays Capital Long U.S. Treasury Indices declining 0.03% and an advancing of 9.30%, respectively.
 
•  Municipal bond issuance in 2008 was approximately 9.00% lower than 2007. Municipal bond issuance became more robust with a variety of issuers accessing the market which they had avoided at the end of 2008. Year-to-date issuance through April 30, 2009 was approximately 11% lower than the same period of prior year at $121.7 billion.
 
 
2 PIMCO Municipal Income Funds Annual Report   4.30.09


 

 
PIMCO Municipal Income Fund Performance & Statistics
April 30, 2009 (unaudited)
­ ­
 
                 
Total Return(1):   Market Price     NAV  
   
1 Year
    (24.58 )%     (20.44 )%
 
 
5 Year
    3.43 %     (0.87 )%
 
 
Commencement of Operations (6/29/01) to 4/30/09
    3.34 %     1.68 %
 
 
 

 
Market Price/NAV Performance:
Commencement of Operations (6/29/01) to 4/30/09
 

     
Market Price/NAV:
   
 
 
Market Price
  $11.40
 
 
NAV
  $9.38
 
 
Premium to NAV
  21.54%
 
 
Market Price Yield(2)
  8.55%
 
 
 
Moody’s Ratings
(as a % of total investments)
 


 
(1)  Past performance is no guarantee of future results. Total return is calculated by determining the percentage change in net asset value or market share price (as applicable) in the specified period. The calculation assumes that all income dividends and capital gain distributions have been reinvested. Total return does not reflect broker commissions or sales charges. Total return for a period of more than one year represents the average annual total return.
 
Performance at market price will differ from its results at NAV. Although market price returns typically reflect investment results over time, during shorter periods returns at market price can also be influenced by factors such as changing views about the Fund, market conditions, supply and demand for the Fund’s shares, or changes in Fund distributions.
 
An investment in the Fund involves risk, including the loss of principal. Total return, market price, market yield and net asset value will fluctuate with changes in market conditions. This data is provided for information only and is not intended for trading purposes. Closed-end funds, unlike open-end funds, are not continuously offered. There is a onetime public offering and once issued, shares of closed-end funds are sold in the open market through a stock exchange. Net asset value 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 share dividend (comprised from net investment income) payable to common shareholders by the market price per common share at April 30, 2009.
 
 
4.30.09   PIMCO Municipal Income Funds Annual Report 3


 

PIMCO California Municipal Income Fund Fund Insights
April 30, 2009 (unaudited)
 
•  For the fiscal year ended April 30, 2009, PIMCO California Municipal Income Fund (“California Municipal Income”) declined 15.49% on net asset value (“NAV”) and 16.72% on market price, compared with declines of 8.98% and 13.72%, respectively, for the Lipper Analytical California Municipal Debt Funds average.
 
•  High-quality municipal bond yields decreased across the yield curve during the reporting period with a more pronounced decline in the front end of the yield curve. The second half of 2008 experienced higher yields, but thus far in 2009 there has been a rebound across the yield curve.
 
•  Duration hedging strategies in longer-maturity swaps detracted from performance, as longer-maturity swap rates moved significantly lower during the reporting period. Most of the move came during the fourth quarter of 2008.
 
•  Municipal-to-Treasury yield ratios were volatile during the reporting period, crossing levels never before experienced. However, the yield ratios ended the reporting period at only a slight change from the beginning of 2009, with the 10-year ratio decreasing to 94% and the 30-year ratio increasing to 114%.
 
•  Tobacco securitization sector holdings detracted from performance, as this sector underperformed primarily during the fourth quarter of 2008, although the sector has rebounded since the beginning of 2009.
 
•  California Municipal Income’s exposure to corporate-backed municipals detracted from performance, as this sector underperformed in line with the taxable corporate securities.
 
•  Pre-refunded bond exposure contributed positively to California Municipal Income’s performance, as this sector benefited from investor risk aversion in light of the financial crisis.
 
•  California Municipal Income’s exposure to zero-coupon municipals detracted from performance, as the sector underperformed with the Barclays Capital Zero Coupon Index, declining 8.85% during the reporting period.
 
•  Municipal bonds within California underperformed the Barclays Capital Municipal Bond Index (“national index”) returning 1.40%, compared to 3.11% for the national index during the reporting period. Year-to-date through April 2009, California issued $24.76 billion, which was 5.00% higher than the same period in 2008.
 
•  Long California municipal bonds underperformed the Barclays Capital Long Municipal Bond Index, declining 6.13% compared to a decline of 3.95%, respectively. The California municipal yield curve also steepened with 30-year yields increased 60 basis points, while two-year yields decreased 57 basis points. California Municipal Income’s significant exposure to the longer maturities detracted from performance, as this portion of the yield curve underperformed.
 
 
4 PIMCO Municipal Income Funds Annual Report   4.30.09


 

PIMCO California Municipal Income Fund Performance & Statistics
April 30, 2009 (unaudited)
 
                 
Total Return(1):   Market Price     NAV  
   
1 Year
    (16.72 )%     (15.49 )%
 
 
5 Year
    5.09 %     1.32 %
 
 
Commencement of Operations (6/29/01) to 4/30/09
    3.89 %     2.78 %
 
 
 

 
Market Price/NAV Performance:
Commencement of Operations (6/29/01) to 4/30/09
 

     
Market Price/NAV:
   
 
 
Market Price
  $12.18
 
 
NAV
  $10.61
 
 
Premium to NAV
  14.80%
 
 
Market Price Yield(2)
  7.59%
 
 
 
Moody’s Ratings
(as a % of total investments)
 


 
(1)  Past performance is no guarantee of future results. Total return is calculated by determining the percentage change in net asset value or market share price (as applicable) in the specified period. The calculation assumes that all income dividends and capital gain distributions have been reinvested. Total return does not reflect broker commissions or sales charges. Total return for a period of more than one year represents the average annual total return.
 
Performance at market price will differ from its results at NAV. Although market price returns typically reflect investment results over time, during shorter periods returns at market price can also be influenced by factors such as changing views about the Fund, market conditions, supply and demand for the Fund’s shares, or changes in Fund distributions.
 
An investment in the Fund involves risk, including the loss of principal. Total return, market price, market yield and net asset value will fluctuate with changes in market conditions. This data is provided for information only and is not intended for trading purposes. Closed-end funds, unlike open-end funds, are not continuously offered. There is a onetime public offering and once issued, shares of closed-end funds are sold in the open market through a stock exchange. Net asset value 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 share dividend (comprised from net investment income) payable to common shareholders by the market price per common share at April 30, 2009.
 
 
4.30.09   PIMCO Municipal Income Funds Annual Report 5


 

PIMCO New York Municipal Income Fund Fund Insights
April 30, 2009 (unaudited)
 
•  For the fiscal year ended April 30, 2009, PIMCO New York Municipal Income Fund (“New York Municipal Income”) declined 22.66% on net asset value (“NAV”) and 18.80% on market price, compared with declines of 8.08% and 9.34%, respectively, for the Lipper Analytical New York Municipal Debt Funds average.
 
•  High-quality municipal bond yields decreased across the yield curve during the reporting period with a more pronounced decline in the front end of the yield curve. The second half of 2008 experienced higher yields, but thus far in 2009 there has been a rebound across the yield curve.
 
•  Duration hedging strategies in longer-maturity swaps detracted from performance, as longer-maturity swap rates moved significantly lower during the reporting period. Most of the move came during the fourth quarter of 2008.
 
•  Municipal-to-Treasury yield ratios were volatile during the reporting period, crossing levels never before experienced. However, the yield ratios ended the reporting period at only a slight change from the beginning of 2009, with the 10-year ratio decreasing to 94% and the 30-year ratio increasing to 114%.
 
•  Tobacco securitization sector holdings detracted from performance, as the sector underperformed primarily during the fourth quarter of 2008, although the sector has rebounded since the beginning of 2009.
 
•  New York Municipal Income’s exposure to corporate-backed municipals detracted from performance, as this sector underperformed in line with the taxable corporate securities.
 
•  Pre-refunded bond exposure contributed positively to New York Municipal Income’s performance, as this sector benefited from investor risk aversion in light of the financial crisis.
 
•  New York Municipal Income’s exposure to zero-coupon municipals detracted from performance, as this sector underperformed with the Barclays Capital Zero Coupon Index, declining 8.85% during the reporting period.
 
•  Municipal bonds within New York slightly outperformed the Barclays Capital Municipal Bond Index (“national index”) returning 3.34% compared to 3.11% for the national index during the reporting period. Year-to-date through April 2009, issuers in New York State issued $13.4 billion in bonds, which was roughly the same amount as the same period in 2008.
 
•  Long New York municipal bonds outperformed the Barclays Capital Long Municipal Bond Index with a decline of 2.62% compared to a decline of 3.95%, respectively. The New York yield curve also steepened during the reporting period with 30-year yields increased 19 basis points, while two-year yields decreased 82 basis points. New York Municipal Income held significant positions in the longer portions of the yield curve, which detracted from performance as this portion of the yield curve underperformed the shorter maturities
 
 
6 PIMCO Municipal Income Funds Annual Report   4.30.09


 

PIMCO New York Municipal Income Fund Performance & Statistics
April 30, 2009 (unaudited)
 
                 
Total Return(1):   Market Price     NAV  
   
1 Year
    (18.80 )%     (22.66 )%
 
 
5 Year
    1.13 %     (1.44 )%
 
 
Commencement of Operations (6/29/01) to 4/30/09
    0.93 %     0.58 %
 
 
 

 
Market Price/NAV Performance:
Commencement of Operations (6/29/01) to 4/30/09
 

     
Market Price/NAV:
   
 
 
Market Price
  $9.90
 
 
NAV
  $9.19
 
 
Premium to NAV
  7.73%
 
 
Market Price Yield(2)
  6.91%
 
 
 
Moody’s Ratings
(as a % of total investments)
 


 
(1)  Past performance is no guarantee of future results. Total return is calculated by determining the percentage change in net asset value or market share price (as applicable) in the specified period. The calculation assumes that all income dividends and capital gain distributions have been reinvested. Total return does not reflect broker commissions or sales charges. Total return for a period of more than one year represents the average annual total return.
 
Performance at market price will differ from its results at NAV. Although market price returns typically reflect investment results over time, during shorter periods returns at market price can also be influenced by factors such as changing views about the Fund, market conditions, supply and demand for the Fund’s shares, or changes in Fund distributions.
 
An investment in the Fund involves risk, including the loss of principal. Total return, market price, market yield and net asset value will fluctuate with changes in market conditions. This data is provided for information only and is not intended for trading purposes. Closed-end funds, unlike open-end funds, are not continuously offered. There is a onetime public offering and once issued, shares of closed-end funds are sold in the open market through a stock exchange. Net asset value 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 share dividend (comprised from net investment income) payable to common shareholders by the market price per common share at April 30, 2009.
 
 
4.30.09   PIMCO Municipal Income Funds Annual Report 7


 

PIMCO Municipal Income Fund  Schedule of Investments
April 30, 2009

 
                     
Principal
               
Amount
        Credit Rating
     
(000)         (Moody’s/S&P)*   Value  
   
MUNICIPAL BONDS & NOTES–91.6%
        Alabama–0.8%            
$ 2,500     Birmingham Baptist Medical Centers Special Care Facs. Financing
Auth. Rev., Baptist Health Systems Inc., 5.875%, 11/15/24, Ser. A
  Baa1/NR   $ 2,036,125  
        Huntsville-Redstone Village Special Care Facs. Financing Auth. Rev.,            
  250    
5.50%, 1/1/28
  NR/NR     171,732  
  885    
5.50%, 1/1/43
  NR/NR     545,001  
  1,350     Montgomery Medical Clinic Board Rev., Jackson Hospital & Clinic, 5.25%, 3/1/31   Baa2/BBB−     998,352  
                     
                  3,751,210  
                     
        Alaska–1.2%            
  3,280     Boro of Matanuska-Susitna Rev., Goose Creek Correctional Center, 6.00%, 9/1/32   Aa2/AAA     3,541,711  
  900    
Industrial Dev. & Export Auth. Boys & Girls Home Rev.,
6.00%, 12/1/36
  NR/NR     547,209  
  2,400     Northern Tobacco Securitization Corp. Rev., 5.00%, 6/1/46, Ser. A   Baa3/NR     1,251,384  
                     
                  5,340,304  
                     
        Arizona–4.0%            
  5,000     Apache Cnty. Industrial Dev. Auth. Pollution Control Rev., Tucson
Electric Power Co., Project, 5.875%, 3/1/33
  Baa3/BBB−     4,166,000  
        Health Facs. Auth. Rev.,            
  800       Banner Health, 5.50%, 1/1/38, Ser. D   NR/AA−     758,912  
  2,750       Beatitudes Campus Project, 5.20%, 10/1/37   NR/NR     1,512,307  
  4,150     Pima Cnty. Industrial Dev. Auth. Rev., Tucson Electric Power, 6.375%, 9/1/29, Ser. A   Baa3/BBB−     3,758,240  
  5,000     Salt River Project Agricultural Improvement & Power Dist. Rev., 5.00%, 1/1/39, Ser. A (k)   Aa1/AA     5,022,500  
  4,200     Salt Verde Financial Corp. Rev., 5.00%, 12/1/37   A3/A     2,862,972  
                     
                  18,080,931  
                     
        Arkansas–0.4%            
  8,500     Arkansas Dev. Finance Auth. Rev., zero coupon, 7/1/36 (AMBAC)   Aa3/NR     1,942,760  
                     
        California–5.8%            
  6,000    
Golden State Tobacco Securitization Corp. Rev.,
5.00%, 6/1/33, Ser. A-1
  Baa3/BBB     3,828,900  
  4,175     Montebello Unified School Dist., GO, 5.00%, 8/1/33 (FSA)   Aa3/AAA     4,065,949  
        State,            
  300    
5.00%, 6/1/37
  A2/A     273,477  
  4,200    
6.00%, 4/1/38
  A2/A     4,345,530  
  1,000     Statewide Communities Dev. Auth. Rev., Catholic Healthcare West, 5.50%, 7/1/31, Ser. E   A2/A     959,710  
 
 
8 PIMCO Municipal Income Funds Annual Report   4.30.09


 

 
PIMCO Municipal Income Fund Schedule of Investments
April 30, 2009 (continued)

 
                     
Principal
               
Amount
        Credit Rating
     
(000)         (Moody’s/S&P)*   Value  
   
        California (continued)            
        Methodist Hospital (FHA),            
$2,600    
6.625%, 8/1/29
  Aa2/AA   $2,769,780  
  9,500    
6.75%, 2/1/38
  Aa2/AA     10,045,490  
                     
                  26,288,836  
                     
        Colorado–1.7%            
  500     Confluence Metropolitan Dist. Rev., 5.45%, 12/1/34   NR/NR     299,085  
  4,940     Northwest Parkway Public Highway Auth. Rev., 7.125%, 6/15/41, Ser. D, (Pre-refunded @ $102, 6/15/11) (c)   NR/NR     5,337,917  
  500     Public Auth. for Colorado Energy Rev., 6.50%, 11/15/38   A2/A     409,725  
  1,500     Univ. of Colorado Rev., 5.375%, 6/1/38, Ser. A   Aa3/AA−     1,568,190  
                     
                  7,614,917  
                     
        Connecticut–0.2%            
  1,000     State Dev. Auth. Pollution Control Rev., 5.85%, 9/1/28   Baa1/BBB     988,500  
                     
        District of Columbia–1.4%            
  2,500     Dist. of Columbia Rev., Brookings Institution, 5.75%, 10/1/39   Aa3/A+     2,577,925  
  4,175     Tobacco Settlement Financing Corp. Rev., 6.25%, 5/15/24   Baa3/BBB     3,775,578  
                     
                  6,353,503  
                     
        Florida–4.1%            
  905    
Beacon Lakes Community Dev. Dist., Special Assessment, 6.00%, 5/1/38, Ser. A
  NR/NR     539,715  
  3,900     Board of Education, GO, 5.00%, 6/1/38, Ser. D (k)   Aa1/AAA     3,823,677  
  4,000     Broward Cnty. Rev., 5.25%, 10/1/34, Ser. A (k)   Aa3/AA     4,044,200  
  500     Lee Cnty. Industrial Dev. Auth. Rev., 5.375%, 6/15/37, Ser. A   NR/BB     283,580  
  3,000     Miami-Dade Cnty. Rev., 5.50%, 10/1/36, Ser. A (e)   A2/A−     2,888,970  
  1,250     Miami-Dade Cnty. School Board, CP, 5.375%, 2/1/34, Ser. A   Aa2/AAA     1,255,062  
  5,685     State Board of Governors Rev., Florida Univ., 6.50%, 7/1/33   Aa2/AA     6,099,436  
                     
                  18,934,640  
                     
        Georgia–0.3%            
  2,300     Medical Center Hospital Auth. Rev., Spring Harbor Green Island
Project, 5.25%, 7/1/37
  NR/NR     1,467,239  
                     
        Hawaii–1.5%            
  6,935     City & Cnty. of Honolulu Sewer Rev., 5.00%, 7/1/23 (FGIC) (NPFGC)   A1/AA−     6,982,505  
                     
        Illinois–6.8%            
        Chicago, GO,            
  5,000    
5.00%, 1/1/34, Ser. C (k)
  Aa3/AA−     4,895,600  
  2,935    
5.375%, 1/1/34, Ser. A (FGIC) (NPFGC)
  Aa3/AA−     2,938,992  
  10,115     Chicago Board of Education School Reform, GO,
zero coupon, 12/1/31, Ser. A (FGIC) (NPFGC)
  A1/AA     2,611,389  
 
 
4.30.09   PIMCO Municipal Income Funds Annual Report 9


 

 
PIMCO Municipal Income Fund Schedule of Investments
April 30, 2009 (continued)

 
                     
Principal
               
Amount
        Credit Rating
     
(000)         (Moody’s/S&P)*   Value  
   
        Illinois (continued)            
$190     Educational Facs. Auth. Rev., Univ. of Chicago, 5.25%, 7/1/41, Ser. A   Aa1/AA   $192,075  
        Finance Auth. Rev.,            
  400     OSF Healthcare Systems, 7.125%, 11/15/37, Ser. A   A2/A     404,696  
  10,000     Univ. of Chicago, 5.50%, 7/1/37, Ser. B (k)   Aa1/AA     10,452,700  
  5,345    
Regional Transportation Auth. Rev.,
5.50%, 6/1/23, Ser. B (FGIC) (NPFGC)
  Aa2/AA+     6,108,106  
  1,900     Springfield Power Rev., 5.00%, 3/1/36   Aa3/AA−     1,897,074  
  1,495     Univ. Rev., 5.25%, 4/1/32, Ser. B (FGIC) (NPFGC)   Aa3/AA−     1,506,766  
                     
                  31,007,398  
                     
        Indiana–0.2%            
  1,000     Municipal Power Agency Rev., 6.00%, 1/1/39, Ser. B   A1/A+     1,030,190  
                     
        Iowa–1.6%            
        Finance Auth. Rev.,            
  4,890     Deerfield Retirement Community, Inc., 5.50%, 11/15/37   NR/NR     2,729,891  
       
Edgewater LLC Project,
           
  3,500    
6.75%, 11/15/37
  NR/NR     2,504,250  
  1,500    
6.75%, 11/15/42
  NR/NR     1,056,285  
  2,000     Wedum Walnut Ridge LLC Project, 5.625%, 12/1/45, Ser. A   NR/NR     1,098,640  
                     
                  7,389,066  
                     
        Kansas–4.5%            
  1,000     Lenexa City Center East, Tax Allocation, 6.00%, 4/1/27   NR/NR     724,310  
  650    
Manhattan Rev., Meadowlark Hills Retirement,
5.125%, 5/15/42, Ser. B
  NR/NR     407,921  
        Wichita Hospital Rev.,            
  5,000    
5.625%, 11/15/31, Ser. III
  NR/A+     4,799,700  
  14,370    
6.25%, 11/15/24, Ser. XI
  NR/A+     14,570,605  
                     
                  20,502,536  
                     
        Kentucky–0.7%            
       
Economic Dev. Finance Auth. Hospital Facs. Rev., Baptist
Healthcare System, Ser. A,
           
  1,000    
5.375%, 8/15/24
  Aa3/NR     1,036,280  
  1,200    
5.625%, 8/15/27
  Aa3/NR     1,225,716  
  810     Economic Dev. Finance Auth. Rev., St. Luke’s Hospital, 6.00%, 10/1/19, Ser. B   A3/A     810,073  
                     
                  3,072,069  
                     
        Louisiana–5.0%            
  4,300     Local Gov’t Environmental Facs. & Community Dev. Auth. Rev., 6.55%, 9/1/25, (ACA)   NR/NR     3,530,386  
  27,895     Tobacco Settlement Financing Corp. Rev., 5.875%, 5/15/39, Ser. B   Baa3/BBB     19,429,146  
                     
                  22,959,532  
                     
                     
 
 
10 PIMCO Municipal Income Funds Annual Report   4.30.09


 

 
PIMCO Municipal Income Fund Schedule of Investments
April 30, 2009 (continued)

 
                     
Principal
               
Amount
        Credit Rating
     
(000)         (Moody’s/S&P)*   Value  
   
        Massachusetts–0.4%            
$550     Dev. Finance Agcy. Rev., Linden Ponds, Inc., 5.75%, 11/15/35, Ser. A   NR/NR   $316,107  
  1,500     State College Building Auth. Rev., 5.50%, 5/1/39, Ser. A   A1/A+     1,552,440  
                     
                  1,868,547  
                     
        Michigan–2.4%            
  1,000     Detroit, GO, 5.375%, 4/1/17, Ser. A-1 (NPFGC)   Baa1/AA−     869,560  
  4,550     Garden City Hospital Finance Auth. Rev., 5.00%, 8/15/38, Ser. A   NR/NR     2,604,011  
        Royal Oak Hospital Finance Auth. Rev., William Beaumont Hospital,            
  50    
5.25%, 11/15/35, Ser. M (NPFGC)
  A1/AA−     39,733  
  1,500    
8.25%, 9/1/39
  A1/A     1,663,770  
  4,000    
State Hospital Finance Auth. Rev., Detroit Medical Center,
6.25%, 8/15/13, Ser. A
  Ba3/BB−     3,817,920  
  2,000    
Strategic Fund Ltd. Obligation Rev., Detroit Edison Pollution
Control Co., 5.45%, 9/1/29
  A3/A−     1,978,040  
                     
                  10,973,034  
                     
        Minnesota–0.1%            
  95     Agricultural & Economic Dev. Board Rev., Health Care System, 6.375%, 11/15/29, Ser. A   A2/A     95,778  
  500    
Washington Cnty. Housing & Redev. Auth. Rev., Birchwood &
Woodbury Projects, 5.625%, 6/1/37, Ser. A
  NR/NR     339,420  
                     
                  435,198  
                     
        Missouri–0.2%            
  1,000    
Joplin Industrial Dev. Auth. Rev., Christian Homes, Inc.,
5.75%, 5/15/26, Ser. F
  NR/NR     703,390  
                     
        Nevada–3.7%            
  5,000     Clark Cnty., GO, 4.75%, 6/1/30 (FSA)   Aa1/AAA     4,489,750  
  12,185     Washoe Cnty., GO, 5.00%, 1/1/35 (NPFGC)   Aa2/AA     12,266,518  
                     
                  16,756,268  
                     
        New Hampshire–0.7%            
  3,000    
Business Finance Auth. Pollution Control Rev., Conn. Light & Power Co.,
5.85%, 12/1/22, Ser. A
  Baa1/BBB     3,051,120  
                     
        New Jersey–4.7%            
  16,550    
Economic Dev. Auth., Special Assessment, Kapkowski Road Landfill
Project, 5.75%, 4/1/31
  Baa3/NR     12,097,222  
  2,000     Economic Dev. Auth. Rev., 5.50%, 12/15/34, Ser. Z   Aa2/AAA     2,125,660  
  1,000    
Health Care Facs. Financing Auth. Rev., Trinitas Hospital,
5.25%, 7/1/30, Ser. A
  Baa3/BBB−     698,190  
  2,000     New Jersey State Turnpike Auth. Rev., 5.25%, 1/1/40, Ser. E   A3/A+     2,013,420  
  9,100     Tobacco Settlement Financing Corp. Rev., 5.00%, 6/1/41, Ser. 1A   Baa3/BBB     4,680,949  
                     
                  21,615,441  
                     
                     
 
 
4.30.09   PIMCO Municipal Income Funds Annual Report 11


 

 
PIMCO Municipal Income Fund Schedule of Investments
April 30, 2009 (continued)

 
                     
Principal
               
Amount
        Credit Rating
     
(000)         (Moody’s/S&P)*   Value  
   
        New Mexico–0.5%            
$2,500     Farmington Pollution Control Rev., 5.80%, 4/1/22, Ser. A   Baa3/BB+   $2,249,550  
                     
        New York–5.8%            
        Liberty Dev. Corp. Rev., Goldman Sachs Headquarters,            
  5,000    
5.25%, 10/1/35
  A1/A     4,346,500  
  3,000    
5.50%, 10/1/37
  A1/A     2,698,620  
  4,200     Nassau Cnty. Industrial Dev. Agcy. Rev., Amsterdam at Harborside, 6.70%, 1/1/43, Ser. A   NR/NR     3,130,092  
        New York City Municipal Water Finance Auth. Rev., (k),            
  13,000    
5.00%, 6/15/26, Ser. E
  Aa2/AAA     13,152,360  
  670    
5.00%, 6/15/37, Ser. D
  Aa2/AAA     673,116  
  1,000     State Dormitory Auth. Rev., 5.00%, 3/15/38, Ser. A   NR/AAA     1,002,250  
  1,625     Westchester Cnty. Healthcare Corp. Rev., 5.875%, 11/1/25, Ser. A   Baa3/BBB−     1,403,626  
                     
                  26,406,564  
                     
        North Carolina–0.3%            
  570    
Capital Facs. Finance Agcy. Rev., Duke Univ. Project,
5.125%, 10/1/41, Ser. A
  Aa1/AA+     576,202  
  1,500    
Medical Care Commission Rev., Village at Brookwood,
5.25%, 1/1/32
  NR/NR     898,560  
                     
                  1,474,762  
                     
        Ohio–2.7%            
  11,000    
Buckeye Tobacco Settlement Financing Auth. Rev.,
5.875%, 6/1/47, Ser. A-2
  Baa3/BBB     6,160,770  
  500    
Cnty. of Montgomery Rev., Miami Valley Hospital,
6.25%, 11/15/39, Ser. A
  Aa3/NR     507,295  
        Lorain Cnty. Hospital Rev., Catholic Healthcare,            
  2,500    
5.625%, 10/1/17, Ser. A
  A1/AA−     2,595,650  
  2,565    
5.75%, 10/1/18, Ser. A
  A1/AA−     2,674,577  
  500     State Higher Educational Fac. Commission Rev., Univ. Hospital
Health Systems, 6.75%, 1/15/39, Ser. A
  A2/A     502,420  
                     
                  12,440,712  
                     
        Oregon–0.1%            
  600    
State Department of Administrative Services, CP,
5.25%, 5/1/39, Ser. A
  Aa3/AA−     613,098  
                     
        Pennsylvania–4.5%            
  1,000    
Allegheny Cnty. Industrial Dev. Auth. Rev., USX Corp.,
5.60%, 9/1/30
  Baa1/BBB+     840,190  
  2,000     Harrisburg Auth. Rev., 6.00%, 9/1/36   NR/NR     1,560,180  
  6,200    
Higher Educational Facs. Auth. Rev., UPMC Health System,
6.00%, 1/15/31, Ser. A
  Aa3/AA−     6,310,174  
        Lancaster Cnty. Hospital Auth. Rev., Brethren Village, Ser. A,            
  750    
6.25%, 7/1/26
  NR/NR     615,878  
  85    
6.375%, 7/1/30
  NR/NR     68,020  
 
 
12 PIMCO Municipal Income Funds Annual Report   4.30.09


 

 
PIMCO Municipal Income Fund Schedule of Investments
April 30, 2009 (continued)

 
                     
Principal
               
Amount
        Credit Rating
     
(000)         (Moody’s/S&P)*   Value  
   
        Pennsylvania (continued)            
$4,700     Philadelphia Hospitals & Higher Education Facs. Auth. Rev., Temple
Univ. Hospital, 6.625%, 11/15/23, Ser. A
  Baa3/BBB   $4,293,215  
  7,000     Philadelphia, GO, 5.25%, 12/15/32, Ser. A (FSA)   Aa3/AAA     7,004,830  
                     
                  20,692,487  
                     
        Puerto Rico–0.5%            
  135     Commonwealth of Puerto Rico, GO, 5.00%, 7/1/35, Ser. B   Baa3/BBB−     110,263  
        Sales Tax Financing Corp. Rev.,            
  32,550    
zero coupon, 8/1/54, Ser. A (AMBAC)
  A1/A+     1,226,484  
  29,200    
zero coupon, 8/1/56, Ser. A
  A1/A+     951,920  
                     
                  2,288,667  
                     
        Rhode Island–3.8%            
  23,800     Tobacco Settlement Financing Corp. Rev., 6.25%, 6/1/42, Ser. A   Baa3/BBB     17,589,390  
                     
        South Carolina–1.3%            
        Greenwood Cnty. Hospital Rev., Self Memorial Hospital,            
  3,500    
5.50%, 10/1/21
  A2/A     3,509,170  
  2,000    
5.50%, 10/1/26
  A2/A     1,907,300  
  450     Jobs Economic Dev. Auth. Rev., Lutheran Homes, 5.50%, 5/1/28   NR/NR     307,575  
                     
                  5,724,045  
                     
        Tennessee–3.6%            
  940     Memphis Health Educational & Housing Fac. Rev., Wesley Housing
Corp. Project, 6.95%, 1/1/20 (a)(b)(f)
  NR/NR     470,000  
  5,000     Metropolitan Gov’t Nashville & Davidson Cnty. Health &
Educational Facs. Rev., Vanderbilt Univ., 5.00%, 10/1/39, Ser. B (k)
  Aa2/AA     5,072,749  
        State Energy Acquisition Corp. Rev.,            
  370    
5.00%, 2/1/21, Ser. C
  Baa1/A     312,772  
  6,460    
5.25%, 9/1/17, Ser. A
  Ba1/BBB+     5,823,367  
  600    
5.25%, 9/1/21, Ser. A
  Ba1/BBB+     516,546  
  300    
5.25%, 9/1/22, Ser. A
  Ba1/BBB+     255,567  
  5,000    
5.25%, 9/1/24, Ser. A
  Ba1/BBB+     4,196,750  
                     
                  16,647,751  
                     
        Texas–7.7%            
  10,000    
Coppell Independent School Dist., GO,
zero coupon 8/15/29, (PSF-GTD)
  Aaa/AAA     3,666,300  
  1,200     Dallas Water Rev., 5.25%, 8/15/38   Aa2/AAA     1,207,476  
  20    
Duncanville Independent School Dist., GO,
5.25%, 2/15/32, Ser. B (PSF-GTD)
  Aaa/AAA     20,370  
  285     Mansfield Independent School Dist., GO, 5.25%, 2/15/23 (PSF-GTD)   Aaa/AAA     293,063  
 
 
4.30.09   PIMCO Municipal Income Funds Annual Report 13


 

 
PIMCO Municipal Income Fund Schedule of Investments
April 30, 2009 (continued)

 
                     
Principal
               
Amount
        Credit Rating
     
(000)         (Moody’s/S&P)*   Value  
   
        Texas (continued)            
        Municipal Gas Acquisition & Supply Corp. I Rev.,            
$150    
5.25%, 12/15/25, Ser. A
  A2/A   $112,329  
  6,500    
6.25%, 12/15/26, Ser. D
  A2/A     5,534,295  
        North Harris Cnty. Regional Water Auth. Rev.,            
  4,200    
5.25%, 12/15/33
  A3/A+     4,053,588  
  4,200    
5.50%, 12/15/38
  A3/A+     4,157,328  
        North Texas Tollway Auth. Rev.,            
  6,050    
5.625%, 1/1/33, Ser. A
  A2/A−     5,983,208  
  600    
5.75%, 1/1/33, Ser. F
  A3/BBB+     565,962  
  6,500    
State Municipal Gas Acquisition & Supply Corp. I Rev.,
5.25%, 12/15/23, Ser. A
  A2/A     4,966,520  
  400     State Public Finance Auth. Rev., 5.875%, 12/1/36, Ser. A   Baa3/BBB−     277,244  
  4,000     Tarrant Cnty. Cultural Education Facs. Finance Corp. Rev., Baylor
Health Care Systems Project, 6.25%, 11/15/29
  Aa2/AA−     4,223,120  
                     
                  35,060,803  
                     
        Utah–1.6%            
  7,000    
Salt Lake Cnty. Hospital Rev., IHC Health Services,
5.125%, 2/15/33 (AMBAC)
  Baa1/AA+     7,188,930  
                     
        Virginia–0.5%            
  1,000     Fairfax Cnty. Industrial Dev. Auth. Rev., Inova Health System, 5.50%, 5/15/35, Ser. A   Aa2/AA+     1,013,830  
  2,000     Peninsula Town Center Community Dev. Auth. Rev., 6.45%, 9/1/37   NR/NR     1,337,080  
                     
                  2,350,910  
                     
        Washington–1.1%            
        Health Care Facs. Auth. Rev.,            
  700    
6.00%, 8/15/39, Ser. B
  Aa2/AAA     711,193  
  250     Seattle Cancer Care Alliance, 7.375%, 3/1/38   A3/NR     262,518  
  2,000     Virginia Mason Medical Center, 6.125%, 8/15/37, Ser. A   Baa2/BBB     1,583,800  
        State Housing Finance Commission Rev., Skyline at First Hill, Ser. A,            
  275    
5.25%, 1/1/17
  NR/NR     217,745  
  3,600    
5.625%, 1/1/38
  NR/NR     2,087,100  
                     
                  4,862,356  
                     
        Wisconsin–5.2%            
  9,785    
Badger Tobacco Asset Securitization Corp. Rev.,
6.00%, 6/1/17, (Pre-refunded @ $100, 6/1/12) (c)
  Aaa/AAA     10,883,562  
 
 
14 PIMCO Municipal Income Funds Annual Report   4.30.09


 

 
PIMCO Municipal Income Fund Schedule of Investments
April 30, 2009 (continued)

 
                     
Principal
               
Amount
        Credit Rating
     
(000)         (Moody’s/S&P)*   Value  
   
        Wisconsin (continued)            
        Health & Educational Facs. Auth. Rev.,            
$2,230     Kenosha Hospital & Medical Center Project, 5.625%, 5/15/29   NR/A   $2,062,393  
  500     Prohealth Care, Inc., 6.625%, 2/15/39   A1/A+     499,050  
  10,000     State Rev., 6.00%, 5/1/36, Ser. A   A1/AA−     10,529,500  
                     
                  23,974,505  
                     
        Total Municipal Bonds & Notes (cost–$453,733,713)         418,673,664  
                     
VARIABLE RATE NOTES (a)(d)(g)(h)–3.2%
        Illinois–1.6%            
  7,252     Cook Cnty., GO, 8.77%, 11/15/28, Ser. 458 (FGIC)   Aa2/NR     7,223,272  
                     
        Texas–0.0%            
  200    
JPMorgan Chase Putters/Drivers Trust Rev.,
9.593%, 2/1/27, Ser. 3224
  Aa1/NR     223,266  
                     
        Washington–1.6%            
  6,670    
JPMorgan Chase Putters/Drivers Trust, GO,
13.045%, 8/1/28, Ser. 3388
  NR/AA+     7,110,554  
                     
        Total Variable Rate Notes (cost–$13,621,426)         14,557,092  
                     
CORPORATE BONDS & NOTES (j)–2.1%
  10,000     American General Finance Corp., 4.625%, 9/1/10   Baa2/BB+     5,985,360  
  4,500     CIT Group, Inc., 5.80%, 7/28/11   Ba2/BBB−     2,993,629  
  600     International Lease Finance Corp., 1.469%, 5/24/10, FRN   Baa2/BBB+     524,614  
                     
        Total Corporate Bonds & Notes (cost–$10,592,897)         9,503,603  
                     
SHORT-TERM INVESTMENTS–3.1%
Variable Rate Demand Notes (h)(i)–1.3%
           
        California–0.6%            
  3,000    
Los Angeles Cnty. Metropolitan Transportation Auth. Rev.,
0.20%, 6/1/09, Ser. A2
  NR/AA+     3,000,000  
                     
        Colorado–0.1%            
  500     Denver City & Cnty., CP, 0.20%, 6/1/09, Ser. A2   VMIG1/NR     500,000  
                     
        New York–0.6%            
  800    
New York City Municipal Water Finance Auth. Rev.,
0.14%, 5/15/09, Ser. BB-5
  VMIG1/AA+     800,000  
  2,000     State Dormitory Auth. Rev., Cornell Univ., 0.20%, 6/1/09, Ser. B   VMIG1/A-1+     2,000,000  
                     
                  2,800,000  
                     
        Total Variable Rate Demand Notes (cost–$6,300,000)         6,300,000  
                     
                     
 
 
4.30.09   PIMCO Municipal Income Funds Annual Report 15


 

 
PIMCO Municipal Income Fund Schedule of Investments
April 30, 2009 (continued)

 
                     
Principal
               
Amount
        Credit Rating
     
(000)         (Moody’s/S&P)*   Value  
   
Corporate Bonds & Notes–1.8%
           
        American General Finance Corp.,            
$1,600    
1.542%, 10/2/09, FRN (j)
  Baa2/BB+   $1,211,541  
  1,100    
4.625%, 5/15/09
  Baa2/BB+     1,082,325  
  4,400     CIT Group, Inc., 4.125%, 11/3/09 (j)   Ba2/BBB−     3,929,121  
        International Lease Finance Corp., (j),            
  500    
1.531%, 1/15/10, FRN
  Baa2/BBB+     453,294  
  1,500    
4.75%, 7/1/09
  Baa2/BBB+     1,466,174  
                     
        Total Corporate Bonds & Notes (cost–$8,508,685)         8,142,455  
                     
        Total Short-term Investments (cost–$14,808,685)         14,442,455  
                     
        Total Investments (cost–$492,756,721)–100.0%       $ 457,176,814  
                     
 
 
16 PIMCO Municipal Income Funds Annual Report   4.30.09


 

PIMCO California Municipal Income Fund Schedule of Investments
April 30, 2009

 
                     
Principal
               
Amount
        Credit Rating
     
(000)         (Moody’s/S&P)*   Value  
   
CALIFORNIA MUNICIPAL BONDS & NOTES–91.2%
$ 1,385     Alvord Unified School Dist., GO, 5.375%, 8/1/29, Ser. C (FSA)   Aa3/NR   $ 1,406,135  
        Assoc. of Bay Area Gov’t Finance Auth. Rev.,            
  1,000     Channing House, Rev., CP, 5.375%, 2/15/19   NR/BBB−     868,890  
  1,000    
Poway Housing, Inc. Project,
5.375%, 11/15/25, Ser. A (CA Mtg. Ins.)
  NR/A     989,730  
  10,000     Bay Area Toll Auth. Rev., 5.00%, 4/1/34, Ser. F1   Aa3/AA     9,929,100  
        Contra Costa Cnty. Public Financing Auth., Tax Allocation,            
  2,150    
5.125%, 8/1/19
  NR/BBB     1,884,346  
  350    
5.85%, 8/1/33, Ser. A
  NR/NR     290,602  
  4,650    
5.85%, 8/1/33, Ser. A, (Pre-refunded @ $100, 8/1/13) (c)
  NR/BBB     5,431,712  
  3,635    
Cucamonga Cnty. Water Dist. Rev., CP,
5.125%, 9/1/35 (FGIC-NPFGC)
  NR/AA−     3,393,709  
  5,000     Desert Community College Dist., GO, 5.00%, 8/1/37, Ser. C (FSA)   Aa3/AAA     4,781,200  
  6,300     Eastern Municipal Water Dist., CP, 5.00%, 7/1/35, Ser. H   Aa3/AA     6,025,131  
        Educational Facs. Auth. Rev.,            
  10,200     Claremont McKenna College, 5.00%, 1/1/39 (k)   Aa2/NR     9,907,566  
       
Univ. of Southern California, Ser. A,
           
  5,000    
5.00%, 10/1/38
  Aa1/AA+     5,097,500  
  10,000    
5.00%, 10/1/39 (k)
  Aa1/AA+     10,081,700  
  2,975    
El Dorado Irrigation Dist. & El Dorado Water Agcy., CP,
5.75%, 8/1/39, Ser. A
  Aa2/AAA     3,002,786  
        El Monte, CP (AMBAC),            
  10,790    
4.75%, 6/1/30
  A3/A+     9,409,959  
  14,425    
5.25%, 1/1/34
  A3/A     13,434,724  
        Fremont Community Dist., Special Tax,            
  165    
6.00%, 9/1/18
  NR/NR     144,986  
  505    
6.00%, 9/1/19
  NR/NR     429,624  
  3,500    
6.30%, 9/1/31
  NR/NR     2,760,415  
        Golden State Tobacco Securitization Corp. Rev.,            
  9,000    
5.00%, 6/1/33, Ser. A-1
  Baa3/BBB     5,743,350  
  3,000    
5.00%, 6/1/35, Ser. A (FGIC)
  A3/A−     2,477,100  
  6,000    
5.00%, 6/1/38, Ser. A (FGIC)
  A3/A−     4,902,300  
  1,600    
5.00%, 6/1/45 (AMBAC-TCRS)
  A2/A     1,257,296  
  3,655    
6.25%, 6/1/33, Ser. A-1
  Aaa/AAA     4,029,345  
  540    
7.875%, 6/1/42, Ser. A-3, (Pre-refunded @ $100, 6/1/13) (c)
  Aaa/AAA     656,143  
        Health Facs. Finance Auth. Rev.,            
  4,630     Adventist Health System, 5.00%, 3/1/33, Ser. A   NR/A     3,849,336  
       
Catholic Healthcare West, Ser. A,
           
  1,980    
5.00%, 7/1/18
  A2/A     1,981,406  
  875    
5.00%, 7/1/28
  A2/A     772,835  
  5,315     Northern California Presbyterian, 5.125%, 7/1/18   NR/BBB+     4,476,612  
 
 
4.30.09   PIMCO Municipal Income Funds Annual Report 17


 

 
PIMCO California Municipal Income Fund Schedule of Investments
April 30, 2009 (continued)

 
                     
Principal
               
Amount
        Credit Rating
     
(000)         (Moody’s/S&P)*   Value  
   
$ 6,250     Infrastructure & Economic Dev. Bank Rev., Bay Area Toll Bridges, 5.00%, 7/1/36, Ser. A, (Pre-refunded @ $100, 1/1/28) (AMBAC) (c)   Aaa/AAA   $ 7,101,312  
  10,590     Kern Cnty., CP, 5.75%, 8/1/35, Ser. A   Aa2/AAA     10,659,576  
        La Quinta Redev. Agcy., Tax Allocation (AMBAC),            
  3,000    
5.00%, 9/1/21
  Baa1/A+     2,776,530  
  10,000    
5.10%, 9/1/31
  Baa1/A+     8,179,100  
  1,000    
5.125%, 9/1/32
  Baa1/A+     812,110  
  1,495    
Lincoln Public Financing Auth. Rev., Twelve Bridges Ltd.,
6.125%, 9/2/27
  NR/NR     1,233,853  
        Long Beach Bond Finance Auth. Rev., Ser. A,            
  3,900    
5.50%, 11/15/37
  A2/A     2,909,283  
  1,000     Long Beach Natural Gas, 5.50%, 11/15/27   A2/A     794,650  
        Los Angeles Department of Water & Power Rev.,            
  5,000    
4.75%, 7/1/30, Ser. A-2 (FSA) (k)
  Aaa/AAA     4,914,550  
  3,930    
5.125%, 7/1/41, Ser. A
  Aa3/AA     3,812,296  
  3,000    
5.375%, 7/1/34, Ser. A (k)
  Aa3/AA     3,085,110  
  7,000    
5.375%, 7/1/38, Ser. A (k)
  Aa3/AA     7,150,220  
        Los Angeles Unified School Dist., GO,            
  13,000    
5.00%, 1/1/29, Ser. I
  Aa3/AA−     12,465,830  
  5,000    
5.00%, 1/1/34, Ser. I (k)
  Aa3/AA−     4,794,550  
  10,000    
5.00%, 7/1/29, Ser. I (k)
  Aa3/AA−     9,874,300  
  250    
5.30%, 1/1/34, Ser. D
  Aa3/AA−     249,982  
  2,900     Municipal Finance Auth. Rev., Biola Univ., 5.875%, 10/1/34   Baa1/NR     2,393,631  
  5,000     Orange Cnty. Sanitation Dist., CP, 5.00%, 2/1/39, Ser. A (e)   NR/AAA     4,893,500  
  1,080    
Palm Springs Community Redev. Agcy., Tax Allocation,
5.50%, 8/1/21
  NR/A     1,114,560  
        Riverside, Improvement Board Act 1915, Special Assessment,            
  500    
6.15%, 9/2/19
  NR/NR     462,490  
  1,350    
6.375%, 9/2/26
  NR/NR     1,231,862  
  8,305     Riverside Cnty., CP, 5.125%, 11/1/30 (NPFGC)   A2/AA−     8,088,655  
  545     San Diego Cnty., CP, 5.25%, 10/1/28   A2/NR     530,743  
        San Diego Cnty. Water Auth., CP, Ser. A,            
  1,000    
5.00%, 5/1/32 (NPFGC)
  Aa3/AA+     1,002,860  
  6,250    
5.00%, 5/1/38 (FSA)
  Aa3/AAA     5,982,750  
  3,285    
San Diego Regional Building Auth. Rev., Cnty. Operations Center &
Annex, 5.375%, 2/1/36, Ser. A
  A1/AA+     3,285,953  
  5,000     San Diego Unified School Dist., GO, 4.75%, 7/1/27, Ser. D-2 (FSA)   Aa2/AAA     5,003,050  
  880     San Francisco Bay Area Transit Financing Auth. Rev. (AMBAC), 5.125%, 7/1/36   Aa3/AA+     889,865  
  720    
San Francisco City & Cnty. Redev. Agcy. Rev., Special Tax,
6.125%, 8/1/31, Ser. B
  NR/NR     572,566  
  5,065    
San Joaquin Cnty., General Hospital Project, CP,
5.00%, 9/1/20 (NPFGC)
  A2/AA−     4,902,971  
 
 
18 PIMCO Municipal Income Funds Annual Report   4.30.09


 

 
PIMCO California Municipal Income Fund Schedule of Investments
April 30, 2009 (continued)

 
                     
Principal
               
Amount
        Credit Rating
     
(000)         (Moody’s/S&P)*   Value  
   
        San Joaquin Hills Transportation Corridor Agcy. Toll Road Rev., Ser. A,            
$ 5,000    
5.50%, 1/15/28
  Ba2/BB−   $ 3,563,200  
  5,000    
5.70%, 1/15/19
  Ba2/BB−     4,285,150  
  230     San Jose, Improvement Board Act 1915, Special Assessment, 5.60%, 9/2/17, Ser. Q   NR/NR     206,982  
  600     Santa Ana Financing Auth. Rev., 5.60%, 9/1/19, Ser. C   NR/BBB     605,802  
  1,815     Santa Clara, CP, 5.00%, 2/1/32 (AMBAC)   Aa3/AA     1,824,692  
  1,300    
Santa Cruz Cnty. Redev. Agcy., Tax Allocation,
7.00%, 9/1/36, Ser. A
  A2/A     1,386,437  
        State, GO,            
  5,885    
5.00%, 9/1/35
  A2/A     5,382,715  
  3,300    
5.00%, 12/1/37
  A2/A     3,006,729  
  8,000    
6.00%, 4/1/38
  A2/A     8,277,200  
  2,000    
State Public Works Board Rev., Regents Univ.,
5.00%, 4/1/34, Ser. E
  Aa2/AA−     1,928,180  
        Statewide Communities Dev. Auth. Rev.,            
  900     Baptist Univ., 5.50%, 11/1/38, Ser. A   NR/NR     545,580  
  1,000     Catholic Healthcare West, 5.50%, 7/1/31, Ser. D   A2/A     959,710  
  5,320     Gross-Gillispie School, 6.625%, 10/1/31   NR/NR     4,110,817  
  15,250    
Henry Mayo Newhall Memorial Hospital,
5.125%, 10/1/30 (CA Mtg. Ins.)
  NR/A     13,803,842  
  8,000     Internext Group, CP, 5.375%, 4/1/30   NR/BBB     5,503,600  
  3,000     Jewish Home, 5.50%, 11/15/33 (CA St. Mtg.)   NR/A     2,803,800  
  1,000     Kaiser Permanente, 5.25%, 3/1/45, Ser. B   NR/A+     858,310  
       
Methodist Hospital Project (FHA),
           
  2,100    
6.625%, 8/1/29
  Aa2/AA     2,237,130  
  7,700    
6.75%, 2/1/38
  Aa2/AA     8,142,134  
       
St. Joseph,
           
  100    
5.125%, 7/1/24 (NPFGC)
  Aa3/AA     97,561  
  3,200    
5.75%, 7/1/47, Ser. A (FGIC)
  Aa3/AA−     2,993,312  
  2,380     St. Marks School, 6.75%, 6/1/28 (a)(b)   NR/NR     2,259,191  
  4,000     Sutter Health, 5.50%, 8/15/34, Ser. B   Aa3/AA−     3,935,240  
  910     Windrush School, 5.50%, 7/1/37   NR/NR     606,288  
  2,000     Turlock, Emanuel Medical Center, CP, 5.50%, 10/15/37, Ser. B   NR/BBB     1,435,180  
        Tustin Unified School Dist., Special Tax, Ser. B,            
  2,345    
5.50%, 9/1/22
  NR/NR     1,861,461  
  2,520    
5.60%, 9/1/29
  NR/NR     1,868,756  
  2,000    
5.625%, 9/1/32
  NR/NR     1,461,580  
        Univ. Rev.,            
  8,000    
4.75%, 5/15/35, Ser. F (FSA) (k)
  NR/AAA     7,587,840  
  10,000    
5.00%, 5/15/36, Ser. A (AMBAC)
  Aa1/AA     9,825,200  
                     
        Total California Municipal Bonds & Notes (cost–$356,897,061)         343,947,865  
                     
 
 
4.30.09   PIMCO Municipal Income Funds Annual Report 19


 

 
PIMCO California Municipal Income Fund Schedule of Investments
April 30, 2009 (continued)

 
                     
Principal
               
Amount
        Credit Rating
     
(000)         (Moody’s/S&P)*   Value  
   
OTHER MUNICIPAL BONDS & NOTES–3.3%
        Illinois–1.4%            
$ 5,260    
Educational Facs. Auth. Rev., Univ. of Chicago,
5.00%, 7/1/33, Ser. A
  Aa1/AA   $ 5,302,816  
                     
        Iowa–1.4%            
  8,700     Tobacco Settlement Auth. Rev., 5.60%, 6/1/34, Ser. B   Baa3/BBB     5,306,478  
                     
        Louisiana–0.3%            
  1,750    
Tobacco Settlement Financing Corp. Rev.,
5.875%, 5/15/39, Ser.2001- B
  Baa3/BBB     1,218,892  
                     
        New York–0.1%            
  450    
New York City Municipal Water Finance Auth. Rev.,
5.00%, 6/15/37, Ser. D (k)
  Aa2/AAA     452,092  
                     
        South Carolina–0.1%            
  340    
Tobacco Settlement Rev. Management Auth. Rev.,
6.375%, 5/15/30, Ser. B
  Baa3/BBB     402,509  
                     
        Total Other Municipal Bonds & Notes (cost–$16,244,306)         12,682,787  
                     
CORPORATE BONDS & NOTES (j)–2.0%
  7,800     American General Finance Corp., 4.625%, 9/1/10   Baa2/BB+     4,668,581  
  3,500     CIT Group, Inc., 5.80%, 7/28/11   Ba2/BBB−     2,328,378  
  500     International Lease Finance Corp., 1.469%, 5/24/10, FRN   Baa2/BBB+     437,178  
                     
        Total Corporate Bonds & Notes (cost–$8,281,361)         7,434,137  
                     
OTHER VARIABLE RATE NOTES (a)(d)(h)–1.7%
        Illinois–1.7%            
  6,670     Chicago Water Supply System Rev.,   NR/AA-        
       
12.431%, 5/1/14, Ser. 1419 (AMBAC) (cost–$6,976,631)
        6,173,819  
                     
CALIFORNIA VARIABLE RATE NOTES (a)(h)–0.4%
  1,670     Sacramento Cnty. Sanitation Dist. Rev.,   NR/AA        
       
12.359%, 8/1/13, Ser. 1034 (NPFGC) (cost–$1,863,651)
        1,650,144  
                     
SHORT-TERM INVESTMENTS–1.4%
Corporate Bonds & Notes (j)–1.4%
           
        American General Finance Corp.,            
  1,200    
1.542%, 10/2/09, FRN
  Baa2/BB+     908,655  
  900    
4.625%, 5/15/09
  Baa2/BB+     885,539  
  3,400     CIT Group, Inc., 4.125%, 11/3/09   Ba2/BBB−     3,036,139  
  400     International Lease Finance Corp., 1.531%, 1/15/10, FRN   Baa2/BBB+     362,636  
                     
        Total Corporate Bonds & Notes (cost–$5,478,357)         5,192,969  
California Variable Rate Demand Notes (h)(i)–0.0%
           
  100     Irvine, Special Assessment, 0.40%, 6/1/09 (cost–$100,000)   NR/A-1+     100,000  
                     
        Total Short-Term Investments (cost–$5,578,357)         5,292,969  
                     
        Total Investments (cost–$395,841,367)–100.0%       $ 377,181,721  
                     
 
 
20 PIMCO Municipal Income Funds Annual Report   4.30.09


 

PIMCO New York Municipal Income Fund  Schedule of Investments
April 30, 2009

 
                     
Principal
               
Amount
        Credit Rating
     
(000)         (Moody’s/S&P)*   Value  
   
NEW YORK MUNICIPAL BONDS & NOTES–91.2%
$ 1,600     Erie Cnty. Industrial Dev. Agcy., Orchard Park Rev., 6.00%, 11/15/36, Ser. A   NR/NR   $ 1,003,552  
        Liberty Dev. Corp. Rev., Goldman Sachs Headquarters,            
  11,410    
5.25%, 10/1/35, Ser. 1251(k)
  A1/A     9,918,713  
  1,925    
5.50%, 10/1/37
  A1/A     1,731,614  
  2,300     Long Island Power Auth. Rev., 5.75%, 4/1/39, Ser. A   A3/A−     2,357,454  
        Metropolitan Transportation Auth. Rev.,            
  8,150    
5.00%, 7/1/30, Ser. A (AMBAC)
  A1/AA−     8,107,375  
  1,375    
5.125%, 1/1/29, Ser. A
  A1/AA−     1,349,026  
  2,000    
5.25%, 11/15/31, Ser. E
  A2/A     1,979,120  
  1,600    
Nassau Cnty. Industrial Dev. Agcy. Rev., Amsterdam at Harborside,
6.70%, 1/1/43, Ser. A
  NR/NR     1,192,416  
        New York City, GO, Ser. J,            
  2,595    
5.125%, 5/15/29 (NPFGC)
  Aa3/AA     2,595,701  
  5    
5.25%, 6/1/28
  Aa3/AA     5,042  
        New York City Industrial Dev. Agcy. Rev.,            
  1,000     Liberty Interactive Corp., 5.00%, 9/1/35   Ba2/BB+     677,300  
  900     Queens Baseball Stadium, 6.50%, 1/1/46   Aa2/AAA     977,886  
  1,820     Vaughn College Aeronautics, 5.25%, 12/1/36, Ser. B   NR/BB+     1,137,300  
  3,200     Yankee Stadium, 7.00%, 3/1/49   Aa2/AAA     3,504,192  
        New York City Municipal Water Finance Auth., Water & Sewer System Rev.,            
  5,105    
4.75%, 6/15/31, Ser. A (FGIC-NPFGC)
  Aa2/AAA     4,928,520  
  3,000    
5.00%, 6/15/32, Ser. A
  Aa2/AAA     3,009,960  
  5,000    
5.125%, 6/15/33, Ser. C
  Aa2/AAA     5,037,550  
  5,000    
5.25%, 6/15/25, Ser. D
  Aa2/AAA     5,161,850  
        New York City Municipal Water Finance Auth. Rev.,            
  5,000    
4.75%, 6/15/35, Ser. DD (k)
  Aa3/AA+     4,818,600  
  2,500    
5.00%, 6/15/40, Ser. FF-2
  Aa3/AA+     2,468,750  
        New York City Transitional Finance Auth. Rev.,            
  7,345    
4.75%, 11/1/23, Ser. B
  Aa1/AAA     7,439,457  
  5,000    
5.25%, 1/15/39, Ser. S-3
  A1/AA−     4,911,000  
  300    
New York City Trust for Cultural Res. Rev., Julliard School,
5.00%, 1/1/34, Ser. A
  Aa2/AA     303,648  
  1,000     Niagara Falls Public Water Auth. Water & Sewer System Rev., 5.00%, 7/15/34, Ser. A (NPFGC)   Baa1/AA−     1,000,300  
        Port Auth. of New York & New Jersey Rev., Ser. 132,            
  3,000    
5.00%, 9/1/29
  Aa3/AA−     3,061,680  
  4,300    
5.00%, 9/1/38
  Aa3/AA−     4,318,189  
        State Dormitory Auth. Rev.,            
  3,850     Lenox Hill Hospital, 5.50%, 7/1/30   Ba1/NR     2,801,260  
  1,825     Mount Sinai Health, 6.50%, 7/1/25, Ser. A   A3/NR     1,844,473  
  7,000     NY & Presbyterian Hospital, 4.75%, 8/1/27 (AMBAC-FHA)   Baa1/A     6,670,860  
 
 
4.30.09   PIMCO Municipal Income Funds Annual Report 21


 

 
PIMCO New York Municipal Income Fund Schedule of Investments
April 30, 2009 (continued)

 
                     
Principal
               
Amount
        Credit Rating
     
(000)         (Moody’s/S&P)*   Value  
   
$ 1,500     NYU Hospital Center, 5.00%, 7/1/26, Ser. A   Ba2/BB+   $ 1,162,935  
  2,900     Orange Regional Medical Center, 6.25%, 12/1/37   Ba1/NR     2,171,520  
  4,000     Sloan-Kettering Center Memorial, 5.00%, 7/1/34, Ser. 1   Aa2/AA     3,904,640  
       
Teachers College,
           
  1,500    
5.00%, 7/1/32 (NPFGC)
  A1/NR     1,519,545  
  1,800    
5.50%, 3/1/39
  A1/NR     1,817,532  
  1,275     Winthrop Univ. Hospital Assoc., 5.25%, 7/1/31, Ser. A (AMBAC)   Baa1/A     1,248,748  
  2,000     State Environmental Facs. Corp., State Clean Water & Drinking Rev., 5.125%, 6/15/31   Aaa/AAA     2,032,920  
  1,800     State Urban Dev. Corp. Rev., 5.00%, 3/15/36, Ser. B-1 (k)   NR/AAA     1,799,892  
        Triborough Bridge & Tunnel Auth. Rev.,            
  755    
5.00%, 1/1/32, Ser. A
  Aa2/AA−     756,253  
  3,000    
5.25%, 11/15/34, Ser. A-2 (k)
  Aa2/AA−     3,072,240  
  2,945     Warren & Washington Cntys. Industrial Dev. Agcy. Rev., Glens Falls Hospital, 5.00%, 12/1/27, Ser. C (FSA)   Aa3/AAA     3,032,113  
                     
        Total New York Municipal Bonds & Notes (cost–$120,163,603)         116,831,126  
                     
OTHER MUNICIPAL BONDS & NOTES–3.4%
        Louisiana–0.4%            
  750    
Tobacco Settlement Financing Corp. Rev.,
5.875%, 5/15/39, Ser.2001- B
  Baa3/BBB     522,383  
                     
        Puerto Rico–3.0%            
        Aqueduct & Sewer Auth. Rev., Ser. A,            
  3,100    
6.00%, 7/1/38
  Baa3/BBB−     2,925,129  
  1,000    
6.00%, 7/1/44
  Baa3/BBB−     940,250  
                     
                  3,865,379  
                     
        Total Other Municipal Bonds & Notes (cost–$4,596,287)         4,387,762  
                     
CORPORATE BONDS & NOTES (j)–1.5%
  2,900     American General Finance Corp., 4.625%, 9/1/10   Baa2/BB+     1,735,755  
  200     International Lease Finance Corp., 1.469%, 5/24/10, FRN   Baa2/BBB+     174,871  
                     
        Total Corporate Bonds & Notes (cost–$2,108,100)         1,910,626  
                     
OTHER VARIABLE RATE NOTES (h)–1.4%
        Puerto Rico–1.4%            
  2,500    
Commonwealth of Puerto Rico, GO,
4.655%, 7/1/19, Ser. A (cost–$2,116,974)
  Aa2/AAA     1,771,300  
                     
SHORT-TERM INVESTMENTS–2.5%
Corporate Bonds & Notes (j)–2.4%
           
  300     American General Finance Corp., 4.625%, 5/15/09   Baa2/BB+     295,179  
        CIT Group, Inc.,            
  300    
1.358%, 8/17/09
  Ba2/BBB−     273,197  
  800    
4.125%, 11/3/09
  Ba2/BBB−     714,386  
  1,700     Goldman Sachs Group, Inc., 1.318%, 11/16/09, FRN   A1/A     1,677,431  
 
 
22 PIMCO Municipal Income Funds Annual Report   4.30.09


 

 
PIMCO New York Municipal Income Fund Schedule of Investments
April 30, 2009 (continued)

 
                     
Principal
               
Amount
        Credit Rating
     
(000)         (Moody’s/S&P)*   Value  
   
Corporate Bonds & Notes (continued)
           
$ 100     International Lease Finance Corp., 1.531%, 1/15/10, FRN   Baa2/BBB+   $ 90,659  
                     
        Total Corporate Bonds & Notes (cost–$3,099,724)         3,050,852  
                     
New York Variable Rate Demand Notes (h)(i)–0.1%
           
  100     New York City, GO, 0.43%, 6/1/09, Ser. L-6 (cost–$100,000)   NR/A-1+     100,000  
                     
        Total Short-Term Investments (cost–$3,199,724)         3,150,852  
                     
        Total Investments (cost–$132,184,688)–100.0%       $ 128,051,666  
                     
 
 
4.30.09   PIMCO Municipal Income Funds Annual Report 23


 

 
 
PIMCO Municipal Income Funds Notes to Schedules of Investments
April 30, 2009

 
 
Unaudited
(a) Private Placement – Restricted as to resale and may not have a readily available market. Securities with an aggregate value of $15,027,092, representing 3.29% of total investments in Municipal Income. Securities with an aggregate value of $10,083,154, representing 2.67% of total investments in California Municipal Income.
(b) Illiquid security.
(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 Security – 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 security. To be settled after April 30, 2009.
(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 April 30, 2009.
(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 April 30, 2009.
(i) Maturity date shown is date of next put.
(j) All or partial amount segregated as collateral for reverse repurchase agreements.
(k) Residual Interest Bonds held in Trust – Securities represent underlying bonds transferred to a separate securitization trust established in a tender option bond transaction in which the Fund acquired the residual interest certificates. These securities serve as collateral in a financing transaction.
 
Glossary:
ACA – insured by American Capital Access Holding Ltd.
AMBAC – insured by American Municipal Bond Assurance Corp.
CA Mtg. Ins. – insured by California Mortgage Insurance
CA St. Mtg. – insured by California State Mortgage
CP – Certificates of Participation
FGIC – insured by Financial Guaranty Insurance Co.
FHA – insured by Federal Housing Administration
FRN – Floating Rate Note. The interest rate disclosed reflects the rate in effect on April 30, 2009.
FSA – insured by Financial Security Assurance, Inc.
GO – General Obligation Bond
GTD – Guaranteed
NPFGC – insured by National Public Finance Guarantee Corporation
NR – Not Rated
PSF – Public School Fund
TCRS – Temporary Custodian Receipts
 
 
 
 
24 PIMCO Municipal Income Funds Annual Report   4.30.09   See accompanying Notes to Financial Statements


 

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PIMCO Municipal Income Funds Statements of Assets and Liabilities
April 30, 2009

 
                             
        California 
    New York 
        Municipal        Municipal          Municipal 
Assets:
                           
Investments, at value (cost–$492,756,721, $395,841,367
and $132,184,688, respectively)
    $457,176,814         $377,181,721         $128,051,666  
                             
Cash
    587,566         65,876         236,799  
                             
Interest receivable
    8,657,366         5,853,486         2,142,548  
                             
Receivable for investments sold
    430,000         10,812,564          
                             
Prepaid expenses and other assets
    3,091,299         968,255         1,089,036  
                             
Total Assets
    469,943,045         394,881,902         131,520,049  
                             
                             
Liabilities:
                           
Payable for floating rate notes
    27,711,643         35,078,085         10,476,876  
                             
Payable for reverse repurchase agreements
    13,240,000         10,028,000         3,952,000  
                             
Payable for investments purchased
    2,929,290         4,953,700          
                             
Dividends payable to common and preferred shareholders
    2,037,119         1,407,956         432,811  
                             
Investment management fees payable
    203,061         166,470         56,605  
                             
Interest payable
    162,381         152,481         48,287  
                             
Interest payable for reverse repurchase agreements
    6,076         4,882         1,624  
                             
Accrued expenses and other liabilities
    146,332         241,230         69,432  
                             
Total Liabilities
    46,435,902         52,032,804         15,037,635  
                             
Preferred shares ($25,000 net asset and liquidation value per share applicable to an aggregate of 7,600, 6,000 and 1,880 shares issued and outstanding, respectively)
    190,000,000         150,000,000         47,000,000  
                             
Net Assets Applicable to Common Shareholders
    $233,507,143         $192,849,098         $69,482,414  
                             
                             
Composition of Net Assets Applicable to Common Shareholders:
                           
Common Stock (no par value):
                           
Paid-in-capital
    $353,763,344         $258,129,392         $106,448,814  
                             
Dividends in excess of net investment income
    (2,037,119 )       (1,192,408 )       (432,809 )
                             
Accumulated net realized loss
    (82,852,502 )       (45,248,493 )       (31,051,110 )
                             
Net unrealized depreciation of investments
    (35,366,580 )       (18,839,393 )       (5,482,481 )
                             
Net Assets Applicable to Common Shareholders
    $233,507,143         $192,849,098         $69,482,414  
                             
Common Shares Outstanding
    24,897,488         18,172,949         7,557,384  
                             
Net Asset Value Per Common Share
    $9.38         $10.61         $9.19  
                             
 
 
26 PIMCO Municipal Income Funds Annual Report   4.30.09   See accompanying Notes to Financial Statements


 

PIMCO Municipal Income Funds Statements of Operations
Year ended April 30, 2009

 
                           
        California 
    New York 
        Municipal        Municipal          Municipal 
Investment Income:
                         
Interest
    $32,177,324       $23,135,430         $8,040,788  
                           
                           
                           
Expenses:
                         
Investment management fees
    2,987,058       2,331,903         882,746  
                           
Interest expense
    581,515       567,431         181,954  
                           
Auction agent fees and commissions
    523,565       397,351         156,717  
                           
Custodian and accounting agent fees
    173,832       126,509         101,141  
                           
Legal fees
    85,750       66,685         33,792  
                           
Audit and tax services
    58,949       53,685         57,175  
                           
Trustees’ fees and expenses
    53,754       43,797         23,194  
                           
Transfer agent fees
    38,090       35,875         37,060  
                           
Shareholder communications
    35,840       28,993         16,304  
                           
New York Stock Exchange listing fees
    21,841       21,652         21,503  
                           
Insurance expense
    10,585       8,247         3,612  
                           
Miscellaneous
    5,797       5,926         11,827  
                           
Total expenses
    4,576,576       3,688,054         1,527,025  
                           
Less: investment management fees waived
    (273,313     (212,483       (81,171
                           
   custody credits earned on cash balances
    (31,553     (8,558       (9,340
                           
Net expenses
    4,271,710       3,467,013         1,436,514  
                           
                           
Net Investment Income
    27,905,614       19,668,417         6,604,274  
                           
                           
Realized and Change In Unrealized Gain (Loss)
                         
Net realized gain (loss) on:
                         
Investments
    (21,707,854 )     (9,875,052 )       (7,255,362 )
                           
Futures contracts
    (909,673 )     (309,819 )       (383,176 )
                           
Options written
    225,464       169,915         66,986  
                           
Swaps
    (24,481,849 )     (11,790,267 )       (10,425,135
                           
Net change in unrealized appreciation/depreciation of:
                         
Investments
    (40,550,391 )     (31,697,650 )       (8,179,983 )
                           
Futures contracts
    (309,320 )     (277,937 )       (158,766 )
                           
Options written
    (152,152 )     (114,665 )       (45,205 )
                           
Net realized and change in unrealized loss on investments, futures contracts, options written and swaps
    (87,885,775 )     (53,895,475 )       (26,380,641 )
                           
Net Decrease in Net Assets Resulting from
Investment Operations
    (59,980,161 )     (34,227,058 )       (19,776,367 )
                           
Dividends on Preferred Shares from Net Investment Income
    (4,964,321 )     (3,740,623 )       (1,545,412 )
                           
Net Decrease in Net Assets Applicable to Common
Shareholders Resulting from Investment
Operations
    $(64,944,482 )     $(37,967,681 )       $(21,321,779 )
                           
 
 
See accompanying Notes to Financial Statements   4.30.09   PIMCO Municipal Income Funds Annual Report 27


 

PIMCO Municipal Income Funds Statements of Changes in Net Assets
Applicable to Common Shareholders

 
                 
    Municipal
    Year Ended 
  Year Ended 
        April 30, 2009        April 30, 2008 
Investment Operations:
               
Net investment income
    $27,905,614       $27,581,652  
                 
Net realized gain (loss) on investments, futures contracts, options written and swaps
    (46,873,912 )     (5,514,686 )
                 
Net change in unrealized appreciation/depreciation of investments, futures contracts, options written and swaps
    (41,011,863     (37,830,459
                 
Net decrease in net assets resulting from investment operations
    (59,980,161 )     (15,763,493 )
                 
                 
Dividends on Preferred Shares from Net Investment Income
    (4,964,321 )     (7,111,992 )
                 
Net decrease in net assets applicable to common shareholders
resulting from investment operations
    (64,944,482 )     (22,875,485 )
                 
                 
Dividends to Common Shareholders from Net Investment Income
    (24,225,508 )     (24,103,636 )
                 
Capital Share Transactions:
               
Reinvestment of dividends
    1,409,202       2,263,389  
                 
Total decrease in net assets applicable to common shareholders
    (87,760,788 )     (44,715,732 )
                 
                 
Net Assets Applicable to Common Shareholders:
               
Beginning of year
    321,267,931       365,983,663  
                 
End of year (including dividends in excess of net investment income of $(2,037,119) and $(890,326); $(1,192,408) and $(390,187); $(432,809) and $(436,049); respectively)
    $233,507,143       $321,267,931  
                 
                 
Common Shares Issued in Reinvestment of Dividends
    110,169       148,191  
                 
 
 
28 PIMCO Municipal Income Funds Annual Report   4.30.09   See accompanying Notes to Financial Statements


 

PIMCO Municipal Income Funds Statements of Changes in Net Assets
Applicable to Common Shareholders 
(continued)

 
                             
California Municipal   New York Municipal
Year Ended 
  Year Ended 
  Year Ended 
  Year Ended 
April 30, 2009    April 30, 2008    April 30, 2009    April 30, 2008 
                             
  $19,668,417       $19,381,280       $6,604,274       $7,275,242  
                             
                             
  (21,805,223 )     221,523       (17,996,687 )     24,717  
                             
                             
  (32,090,252     (19,890,355     (8,383,954     (7,691,572
                             
  (34,227,058 )     (287,552 )     (19,776,367 )     (391,613 )
                             
                             
  (3,740,623 )     (5,026,208 )     (1,545,412 )     (2,245,279 )
                             
                             
  (37,967,681 )     (5,313,760 )     (21,321,779 )     (2,636,892 )
                             
                             
  (16,768,120 )     (16,681,528 )     (5,165,556 )     (5,143,675 )
                             
                             
  971,936       1,547,398       278,849       436,455  
                             
  (53,763,865 )     (20,447,890 )     (26,208,486 )     (7,344,112 )
                             
                             
                             
  246,612,963       267,060,853       95,690,900       103,035,012  
                             
                             
                             
  $192,849,098       $246,612,963       $69,482,414       $95,690,900  
                             
                             
  72,038       102,530       23,211       33,359  
                             
 
 
See accompanying Notes to Financial Statements   4.30.09   PIMCO Municipal Income Funds Annual Report 29


 

PIMCO Municipal Income Funds Notes to Financial Statements
April 30, 2009

 
1. Organization and Significant Accounting Policies
PIMCO Municipal Income Fund (“Municipal”), PIMCO California Municipal Income Fund (“California Municipal”) and PIMCO New York Municipal Income Fund (“New York Municipal”), collectively referred to as the “Funds” or “PIMCO Municipal Income Funds”, were organized as Massachusetts business trusts on May 10, 2001. Prior to commencing operations on June 29, 2001, the Funds had no operations other than matters relating to their organization and registration as non-diversified, closed-end management investment companies registered under the Investment Company Act of 1940 and the rules and regulations thereunder, as amended. Allianz Global Investors Fund Management LLC (the “Investment Manager”) serves as the investment manager and is an indirect, wholly-owned subsidiary of Allianz Global Investors of America L.P. (“Allianz Global”). Allianz Global is an indirect, wholly-owned subsidiary of Allianz SE, a publicly traded European insurance and financial services company. Each Fund has an unlimited amount of no par value per share of common stock authorized.
 
Under normal market conditions, Municipal invests substantially all of its assets in a portfolio of municipal bonds, the interest from which is exempt from federal income taxes. Under normal market conditions, California Municipal invests substantially all of its assets in municipal bonds which pay interest that is exempt from federal and California state income taxes. Under normal market conditions, New York Municipal invests substantially all of its assets in municipal bonds which pay interest that is exempt from federal, New York State and New York City income taxes. The Funds will generally seek to avoid investing in bonds generating interest income which could potentially subject individuals to alternative minimum tax. The issuers’ abilities to meet their obligations may be affected by economic, political and other developments in a specific state or region.
 
The preparation of the financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimated.
 
In the normal course of business, the Funds enter into contracts that contain a variety of representations which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds expect the risk of any loss to be remote.
 
The following is a summary of significant accounting policies consistently followed by the Funds:
 
(a) Valuation of Investments
Portfolio securities and other financial instruments for which market quotations are readily available are stated at market value. Market value is generally determined on the basis of last reported sales prices, or if no sales are reported, on the basis of quotes obtained from a quotation reporting system, established market makers, or independent pricing services.
 
Portfolio securities and other financial instruments for which market quotations are not readily available or for which a development/event occurs that may significantly impact the value of a security, are fair-valued, in good faith, pursuant to procedures established by the Board of Trustees, or persons acting at their discretion pursuant to procedures established by the Board of Trustees. The Funds’ investments are valued daily using prices supplied by an independent pricing service or dealer quotations, or by using the last sale price on the exchange that is the primary market for such securities, or the last quoted mean price for those securities for which the over-the-counter market is the primary market or for listed securities in which there were no sales. Independent pricing services use information provided by market makers or estimates of market values obtained from yield data relating to investments or securities with similar characteristics. Exchange-traded options, futures and options on futures are valued at the settlement price determined by the relevant exchange. Securities purchased on a when-issued or delayed-delivery basis are marked to market daily until settlement at the forward settlement value. Short-term securities maturing in 60 days or less are valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.
 
The prices used by the Funds to value securities may differ from the value that would be realized if the securities were sold and these differences could be material to the financial statements. Each Fund’s net asset value is normally determined as of the close of regular trading (normally, 4:00 p.m. Eastern time) on the New York Stock Exchange (“NYSE”) on each day the NYSE is open for business.
 
(b) Fair Value Measurement
The Funds have adopted FASB Statement of Financial Accounting Standards No. 157, “Fair Value Measurements,” (“SFAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of the fair value measurements. Under this
 
 
30 PIMCO Municipal Income Funds Annual Report   4.30.09


 

 
PIMCO Municipal Income Funds Notes to Financial Statements
April 30, 2009

 
1. Organization and Significant Accounting Policies (continued)
 
standard, 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 under SFAS 157 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 or liability’s level within the fair value hierarchy is based on the lowest level input, individually or in the aggregate, that is significant to fair value measurement.
 
The valuation techniques used by the Funds to measure fair value during the year ended April 30, 2009 maximized the use of observable inputs and minimized the use of unobservable inputs.
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
 
The following is a summary of the inputs used as of April 30, 2009 in valuing each Fund’s investments carried at value:
 
                         
    Municipal Income     California Municipal     New York Municipal  
    Investments in
    Investments
    Investments
 
Valuation Inputs   Securities     in Securities     in Securities  
   
 
Level 1 – Quoted Prices
    $—       $—       $—  
Level 2 – Other Significant Observable Inputs
    457,176,814       377,181,721       128,051,666  
Level 3 – Significant Unobservable Inputs
                 
                         
Total
    $457,176,814       $377,181,721       $128,051,666  
                         
 
In April 2009, the FASB issued FASB Staff Position No. 157-4. “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP 157-4”). FSP 157-4 provides additional guidance for estimating fair value in accordance with SFAS 157, when the volume and level of activity for the asset or liability have significantly decreased as well as guidance on identifying circumstances that indicate a transaction is not orderly. FSP 157-4 is effective for fiscal years and interim periods ending after June 15, 2009. The Funds’ Management is currently evaluating the impact the adoption of FSP 157-4 will have on the Funds’ financial statement disclosures.
 
(c) Disclosures about Credit Derivatives
The Funds have adopted FASB Staff Positions No. 133-1 and FIN 45-4 “Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FAS Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161” (“FSP”), which required enhanced transparency of the effect of credit derivatives and guarantees on an issuer’s financial position, financial performance and cash flows. FSP is effective for reporting periods after November 15, 2008. FSP applies to certain credit derivatives, hybrid instruments that have embedded credit derivatives (for example, credit-linked notes), and certain guarantees and it requires additional disclosures regarding credit derivatives with sold protection. The Funds’ management has determined that FSP has no material impact on the Funds’ financial statements.
 
In March 2008, FASB issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS 161”), which is effective for fiscal years and interim periods beginning after November 15, 2008. SFAS 161 requires enhanced disclosures about a fund’s derivative and hedging activities. The Funds’ management is currently evaluating the impact the adoption of SFAS 161 will have on the Funds’ financial statement disclosures.
 
 
4.30.09   PIMCO Municipal Income Funds Annual Report 31


 

 
PIMCO Municipal Income Funds Notes to Financial Statements
April 30, 2009

 
1. Organization and Significant Accounting Policies (continued)
 
(d) Investment Transactions and Investment Income
Investment transactions are accounted for on the trade date. Securities purchased and sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses on investments are determined on an identified cost basis. Interest income adjusted for the accretion of discounts and amortization of premiums is recorded on an accrual basis. Discounts or premiums on debt securities purchased are accreted or amortized, respectively, to interest income over the lives of the respective securities using the effective interest method.
 
(e) Federal Income Taxes
The Funds intend to distribute all of their taxable income and to comply with the other requirements of the U.S. Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Accordingly, no provision for U.S. federal income taxes is required.
 
The Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109” (the “Interpretation”). The Interpretation 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 of the Interpretation has resulted in no material impact to the Funds’ financial statements at April 30, 2009. The Funds’ federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service.
 
(f) Dividends and Distributions – Common Stock
The Funds declare dividends from net investment income monthly to common shareholders. Distributions of net realized capital gains, if any, are paid at least annually. The Funds record dividends and distributions to their shareholders on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from generally accepted accounting principles. These “book-tax” differences are considered either temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal income tax treatment; temporary differences do not require reclassification. To the extent dividends and/or distributions exceed current and accumulated earnings and profits for federal income tax purposes; they are reported as dividends and/or distributions of paid-in-capital in excess of par.
 
(g) Futures Contracts
The Funds may enter into futures contracts. A futures contract is an agreement between two parties to buy and sell a financial instrument at a set price on a future date. Upon entering into such a contract, the Funds are required to pledge to the broker an amount of cash or securities equal to the minimum “initial margin” requirements of the relevant 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 the risk of an imperfect correlation in the movements in the price of futures contracts, interest rates and the underlying hedged assets, and the possible inability or unwillingness of counterparties to meet the terms of their contracts.
 
(h) Option Transactions
The Funds may purchase and write (sell) put and call options on securities for hedging purposes, risk management purposes or as part of their investment strategies. The risk associated with purchasing an option is that the Funds pay a premium whether or not the option is exercised. Additionally, the Funds bear the risk of loss of premium and change in market value should the counterparty not perform under the contract. Put and call options purchased are accounted for in the same manner as portfolio securities. The cost of securities acquired through the exercise of call options is increased by the premiums paid. The proceeds from securities sold through the exercise of put options is decreased by the premiums paid.
 
When an option is written, the premium received is recorded as an asset with an equal liability which is subsequently marked to market to reflect the current market value of the option written. These liabilities are reflected as options written in the Statements of Assets and Liabilities. Premiums received from writing options which expire unexercised are recorded on the expiration date as a realized gain. The difference between the premium received and the amount paid on
 
 
32 PIMCO Municipal Income Funds Annual Report   4.30.09


 

 
PIMCO Municipal Income Funds Notes to Financial Statements
April 30, 2009

 
1. Organization and Significant Accounting Policies (continued)
 
effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchased transactions, as a realized loss. If a call option written by the Funds is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether there has been a realized gain or loss. If a put option written by the Funds is exercised, the premium reduces the cost basis of the security. In writing an option, the Funds bear the market risk of an unfavorable change in the price of the security underlying the written option. Exercise of a written option could result in the Funds purchasing a security at a price different from its current market value.
 
(i) Swap Agreements
The Funds may enter into swap agreements. Swap agreements are privately 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. The Funds may 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 may be identified as collateral 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.
 
Payments received or made at the beginning of the measurement period are reflected as such on the 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 are recorded as realized gains or losses on the Statements of Operations upon termination or maturity of the swap. A liquidation payment received or made at the termination of the swap is recorded as realized gain or loss on the Statements of Operations. Net periodic payments received or paid by the Funds are included as part of realized gains or losses on the Statements of Operations.
 
Entering into these agreements involves, to varying degrees, elements of credit, legal, market and documentation risk in excess of the amounts recognized on the 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 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 swap, under which two parties can exchange variable interest rates based on different money markets.
 
(j) Reverse Repurchase Agreements
The Funds may enter into reverse repurchase agreements. In a reverse repurchase agreement, the Funds sell securities to a bank or broker-dealer and agree to repurchase the securities at a mutually agreed date and price. Generally, the effect of such a transaction is that the Funds can recover and reinvest all or most of the cash invested in the portfolio securities involved during the term of the reverse repurchase agreement and still be entitled to the returns associated with those portfolio securities. Such transactions are advantageous if the interest cost to the Funds of the reverse repurchase transaction is less than the returns it obtains on investments purchased with the cash. Unless the Funds cover their positions in reverse repurchase agreements (by segregating liquid assets at least equal in amount to the forward purchase commitment), their obligations under the agreements will be subject to the Funds’ limitations on borrowings. Reverse repurchase agreements involve leverage risk and also the risk that the market value of the securities that the Funds are obligated to repurchase under the agreement may decline below the repurchase price. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, the Funds’ use of the
 
 
4.30.09   PIMCO Municipal Income Funds Annual Report 33


 

 
PIMCO Municipal Income Funds Notes to Financial Statements
April 30, 2009

 
1. Organization and Significant Accounting Policies (continued)
 
proceeds of the agreement may be restricted pending determination by the other party, or its trustee or receiver, whether to enforce the Funds’ obligation to repurchase the securities.
 
(k) Inverse Floating Rate Transactions – Residual Interest Municipal Bonds (“RIBs”) / Residual Interest Tax Exempt Bonds (“RITEs”)
The Funds may invest in RIBs and RITEs, (“Inverse Floaters”) whose interest rates bear an inverse relationship to the interest rate on another security or the value of an index. In inverse floating rate transactions, the Funds sell a fixed rate municipal bond (“Fixed Rate Bond”) to a broker who places the Fixed Rate Bond in a special purpose trust (“Trust”) from which floating rate bonds (“Floating Rate Notes”) and Inverse Floaters are issued. The Funds simultaneously or within a short period of time purchase the Inverse Floaters from the broker. The Inverse Floaters held by the Funds provide the Funds with the right to: (1) cause the holders of the Floating Rate Notes to tender their notes at par, and (2) cause the broker to transfer the Fixed-Rate Bond held by the Trust to the Funds, thereby collapsing the Trust. Pursuant to Statement of Financial Accounting Standards No. 140 (“FASB Statement No. 140”), the Funds account for the transaction described above as a secured borrowing by including the Fixed Rate Bond in their Schedules of Investments, and account for the Floating Rate Notes as a liability under the caption “Payable for floating rate notes” in the Funds’ Statements of Assets and Liabilities. The Floating Rate Notes have interest rates that generally reset weekly and their holders have the option to tender their notes to the broker for redemption at par at each reset date.
 
The Funds may also invest in Inverse Floaters without transferring a fixed rate municipal bond into a special purpose trust, which are not accounted for as secured borrowings.
 
The Inverse Floaters are created by dividing the income stream provided by the underlying bonds to create two securities, one short-term and one long-term. The interest rate on the short-term component is reset by an index or auction process typically every 7 to 35 days. After income is paid on the short-term securities at current rates, the residual income from the underlying bond(s) goes to the long-term securities. Therefore, rising short-term rates result in lower income for the long-term component and vice versa. The longer-term bonds may be more volatile and less liquid than other municipal bonds of comparable maturity. Investments in Inverse Floaters typically will involve greater risk than in an investment in Fixed Rate Bonds. The Funds may also invest in Inverse Floaters for the purpose of increasing leverage.
 
The Funds’ restrictions on borrowings do not apply to the secured borrowings deemed to have occurred for accounting purposes pursuant to FASB Statement No. 140. Inverse Floaters held by the Funds are exempt from registration under Rule 144A of the Securities Act of 1933.
 
Effective April 6, 2009, each Fund’s investment policy was revised to increase the amount of Residual Interest Municipal Bonds (“RIBs”) in which each Fund may invest from 10% to 15% of their respective total assets. The Board of Trustees approved the changes based on a recommendation from the Investment Manager and the Funds’ Sub-Adviser that this limit increase in RIBs would be in the best interest of the Funds and the Funds’ shareholders. In addition, this change potentially allows the Funds to earn additional tax-free income. In addition, the use of RIBs, which results in a form of economic leverage, will allow the Funds, including those that redeemed a portion of their auction rate preferred shares, to replace or increase leverage to some degree.
 
In addition to general market risks, the Funds’ investments in RIBs may involve greater risk and volatility than an investment in a fixed rate bond, and the value of RIBs may decrease significantly when market interest rates increase. RIBs 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, RIBs 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 RIBS 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.
 
(l) When-Issued/Delayed-Delivery Transactions
The Funds may purchase or sell securities on a when-issued or delayed-delivery basis. The transactions involve a commitment to purchase or sell securities for a predetermined price or yield, with payment and delivery taking place beyond the customary settlement period. When 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
 
 
34 PIMCO Municipal Income Funds Annual Report   4.30.09


 

 
PIMCO Municipal Income Funds Notes to Financial Statements
April 30, 2009

 
1. Organization and Significant Accounting Policies (continued)
 
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.
 
(m) Custody Credits on Cash Balances
The Funds benefit from an expense offset arrangement with their custodian bank, whereby uninvested cash balances earn credits which reduce monthly custodian and accounting agent expenses. Had these cash balances been invested in income-producing securities, they would have generated income for the Funds.
 
(n) Interest Expense
Interest expense relates to the Funds’ liability in connection with floating rate notes held by third parties in conjunction with Inverse Floater transactions and Reverse Repurchase Agreements. Interest expense is recorded as it is incurred.
 
2. Investment Manager/Sub-Adviser
The Funds have Investment Management Agreements (collectively the “Agreements”) with the Investment Manager. Subject to the supervision of each Fund’s Board of Trustees, the Investment Manager is responsible for managing, either directly or through others selected by it, the Funds’ investment activities, business affairs and administrative matters. Pursuant to the Agreements, the Investment Manager receives an annual fee, payable on a monthly basis, at an annual rate of 0.65% of each Fund’s average daily net assets, inclusive of net assets attributable to any preferred shares that may be outstanding. In order to reduce each Fund’s expenses, the Investment Manager has contractually agreed to waive a portion of its investment management fees for each Fund at the annual rate of 0.10% of each Fund’s average daily net assets, inclusive of net assets attributable to any preferred shares that may be outstanding through June 30, 2008. On July 1, 2008, the contractual fee waiver was reduced to 0.05% of each Funds’ average daily net assets, including net assets attributable to any preferred shares that may be outstanding through June 30, 2009. For the fiscal year ended April 30, 2009, each Fund paid investment management fees at an annualized effective rate of 0.59%.
 
The Investment Manager has retained its affiliate, Pacific Investment Management Company LLC (the “Sub-Adviser”), to manage each Fund’s investments. Subject to the supervision of the Investment Manager, the Sub-Adviser is responsible for making all of the Fund’s investment decisions. The Investment Manager, not the Funds, pays a portion of the fees it receives to the Sub-Adviser in return for its services.
 
3. Investments in Securities
For the year ended April 30, 2009, purchases and sales of investments, other than short-term securities and U.S. government obligations were:
 
             
        California
  New York
    Municipal   Municipal   Municipal
 
 
Purchases
  $281,235,626   $164,552,594   $49,858,336
Sales
  289,038,773   157,203,537   64,462,690
 
 
4.30.09   PIMCO Municipal Income Funds Annual Report 35


 

 
PIMCO Municipal Income Funds Notes to Financial Statements
April 30, 2009

 
3. Investments in Securities (continued)
 
(a) Transactions in options written for the year ended April 30, 2009:
 
             
    Contracts     Premiums
 
 
Municipal Income:
           
Options outstanding, April 30, 2008
    276     $225,464
Options expired
    (276 )   (225,464)
             
Options outstanding, April 30, 2009
        $—
             
             
California Municipal:
           
Options outstanding, April 30, 2008
    208     $169,915
Options expired
    (208 )   (169,915)
             
Options outstanding, April 30, 2009
        $—
             
New York Municipal:
           
Options outstanding, April 30, 2008
    82     $66,986
Options expired
    (82 )   (66,986)
             
Options outstanding, April 30, 2009
        $—
             
 
(b) The weighted average daily balance of reverse repurchase agreements outstanding during the year ended April 30, 2009 for Municipal, California Municipal and New York Municipal was $13,361,238, $10,012,341 and $3,805,627 at a weighted average interest rate of 1.11%, 1.10% and 1.10%, respectively. The total market value of underlying collateral (refer to the Schedule of Investments for positions segregated as collateral for reverse repurchase agreements) for open reverse repurchase agreements at April 30, 2009 was $16,563,733, $12,627,106 and $4,961,478, respectively.
 
Open reverse repurchase agreements at April 30, 2009 were:
 
                         
                Principal &
   
Counterparty   Rate   Trade Date   Maturity Date   Interest   Principal
 
 
Municipal Income:
                       
Barclays Bank
  0.80%   4/16/09   5/18/09   $4,308,436     $4,307,000  
    0.85%   4/9/09   5/8/09   8,937,640     8,933,000  
                         
                      $13,240,000  
                         
California Municipal:
                       
Barclays Bank
  0.80%   4/16/09   5/18/09   $1,759,586     $1,759,000  
    0.85%   4/9/09   5/8/09   8,273,296     8,269,000  
                         
                      $10,028,000  
                         
New York Municipal:
                       
Barclays Bank
  0.80%   4/16/09   5/18/09   $2,302,767     $2,302,000  
    0.85%   4/9/09   5/8/09   1,650,857     1,650,000  
                         
                      $3,952,000  
                         
 
Municipal, California Municipal and New York Municipal received $1,150,000, $1,800,000 and $350,000, respectively, in U.S. government agency securities as collateral for open reverse repurchase agreements. Collateral received as securities cannot be pledged.
 
 
36 PIMCO Municipal Income Funds Annual Report   4.30.09


 

 
PIMCO Municipal Income Funds Notes to Financial Statements
April 30, 2009

 
4. Income Tax Information
 
Municipal:
 
The tax character of dividends paid were:
 
                 
    Year ended
  Year ended
    April 30, 2009   April 30, 2008
 
Ordinary Income
    $2,587,230       $868,183  
Tax Exempt Income
    $26,602,599       $30,347,445  
 
At April 30, 2009, there were no distributable earnings.
 
At April 30, 2009, Municipal had a capital loss carryforward of $32,717,436 ($12,636,580 of which will expire in 2011, $1,890,888 of which will expire in 2012, $12,156,912 of which will expire in 2013, $1,105,730 of which will expire in 2014, $459,581 of which will expire in 2015, $3,577,024 of which will expire in 2016 and $890,721 of which will expire in 2017) available as a reduction, to the extent provided in the regulations, of any future net realized capital gains. To the extent that these losses are used to offset future realized capital gains, such gains will not be distributed.
 
In accordance with U.S. Treasury regulations, the fund elected to defer realized capital losses of $49,835,639 arising after October 31, 2008. Such losses are treated as arising on May 1, 2009.
 
For the year ended April 30, 2009, permanent “book-tax” differences were primarily attributable to the differing treatment of inverse floater transactions, taxable overdistributions and swap payments. These adjustments were to decrease dividends in excess of net investment income by 137,422, decrease paid-in capital by $177,210 and decrease accumulated net realized loss by $39,788.
 
California Municipal:
 
The tax character of dividends paid were:
 
                 
    Year ended
  Year ended
    April 30, 2009   April 30, 2008
 
Ordinary Income
    $1,840,392       $882,491  
Tax Exempt Income
    $18,668,351       $20,825,245  
 
At April 30, 2009, there were no distributable earnings.
 
At April 30, 2009, California Municipal had a capital loss carryforward of $20,127,806 ($7,233,060 of which will expire in 2011, $4,391,323 of which will expire in 2012, $6,552,094 of which will expire in 2013, and $1,951,329 of which will expire in 2014), available as a reduction, to the extent provided in the regulations, of any future net realized capital gains. To the extent that these losses are used to offset future realized capital gains, such gains will not be distributed. During the year ended April 30, 2009, California Municipal utilized $874,690 of capital loss carry forwards.
 
In accordance with U.S. Treasury regulations, the fund elected to defer realized capital losses of $25,162,785 arising after October 31, 2008. Such losses are treated as arising on May 1, 2009.
 
For the year ended April 30, 2009, permanent “book-tax” differences were primarily attributable to the differing treatment of inverse floater transactions. These adjustments were to decrease dividends in excess of net investment income and increase accumulated net realized loss by $38,105.
 
New York Municipal:
 
The tax character of dividends paid were:
 
                 
    Year ended
  Year ended
    April 30, 2009   April 30, 2008
 
Ordinary Income
    $521,345       $253,271  
Tax Exempt Income
    $6,189,623       $7,135,683  
 
At April 30, 2009, there were no distributable earnings.
 
 
4.30.09   PIMCO Municipal Income Funds Annual Report 37


 

 
PIMCO Municipal Income Funds Notes to Financial Statements
April 30, 2009

 
4. Income Tax Information (continued)
 
At April 30, 2009, New York Municipal had a capital loss carryforward of $14,655,117 ($4,010,420 of which will expire in 2011, $2,679,047 of which will expire in 2012, $4,622,781 of which will expire in 2013, $243,785 of which will expire in 2014 and $3,099,084 of which will expire in 2017), available as a reduction, to the extent provided in the regulations, of any future net realized capital gains. To the extent that these losses are used to offset future realized capital gains, such gains will not be distributed.
 
In accordance with U.S. Treasury regulations, the fund elected to defer realized capital losses of $17,125,856 arising after October 31, 2008. Such losses are treated as arising on May 1, 2009.
 
For the year ended April 30, 2009, permanent “book-tax” differences were primarily attributable to the differing treatment of inverse floater transactions, taxable overdistributions and swap payments. These adjustments were to decrease dividends in excess of net investment income by $109,934, decrease paid-in capital by $68,551 and increase accumulated net realized loss by $41,383.
 
The cost of investments for federal income tax purposes and gross unrealized appreciation and gross unrealized depreciation of investments at April 30, 2009 were:
 
                 
        Gross
  Gross
  Net
    Cost of
  Unrealized
  Unrealized
  Unrealized
    Investments   Appreciation   Depreciation   Depreciation
 
 
Municipal
  $468,162,504   $16,040,878   $(51,706,883)   $(35,666,005)
California Municipal
  361,692,387   8,802,329   (27,599,621)   (18,797,292)
New York Municipal
  123,384,188   3,881,476   (8,634,095)   (4,752,619)
 
The difference between book and tax depreciation is attributable to inverse floater transactions.
 
5. Auction-Rate Preferred Shares
Municipal has outstanding 1,520 shares of Preferred Shares Series A, 1,520 shares of Preferred Shares Series B, 1,520 shares of Preferred Shares Series C, 1,520 shares of Preferred Shares Series D and 1,520 shares of Preferred Shares Series E, each with a net asset and liquidation value of $25,000 per share plus, any accumulated, unpaid dividends.
 
California Municipal has issued 2,000 shares of Preferred Shares Series A, 2,000 shares of Preferred Shares Series B and 2,000 shares of Preferred Shares Series C, each with a net asset and liquidation value of $25,000 per share plus any accumulated, unpaid dividends.
 
New York Municipal has issued 1,880 shares of Preferred Shares Series A with a net asset and liquidation value of $25,000 per share plus any accumulated, unpaid dividends.
 
Dividends are accumulated daily at an annual rate (typically re-set every seven days) through auction procedures. Distributions of net realized capital gains, if any, are paid annually.
 
 
38 PIMCO Municipal Income Funds Annual Report   4.30.09


 

 
PIMCO Municipal Income Funds Notes to Financial Statements
April 30, 2009

 
5. Auction-Rate Preferred Shares (continued)
 
For the year ended April 30, 2009, the annualized dividend rates for each Fund ranged from:
 
             
    High   Low   At April 30, 2009
 
 
Municipal:
           
Series A
  11.347%   0.640%   0.792%
Series B
  12.565%   0.640%   0.792%
Series C
  12.261%   0.594%   0.761%
Series D
  11.728%   0.594%   0.792%
Series E
  10.205%   0.594%   0.792%
California Municipal:
           
Series A
  11.347%   0.640%   0.792%
Series B
  12.261%   0.625%   0.761%
Series C
  10.205%   0.625%   0.792%
New York Municipal:
           
Series A
  12.565%   0.685%   0.792%
 
The Funds are subject to certain limitations and restrictions while Preferred Shares are outstanding. Failure to comply with these limitations and restrictions could preclude the Funds from declaring any dividends or distributions to common shareholders or repurchasing common shares and/or could trigger the mandatory redemption of Preferred Shares at their liquidation value.
 
Preferred shareholders, who are entitled to one vote per share, generally vote with the common shareholders but vote separately as a class to elect two Trustees and on any matters affecting the rights of the Preferred Shareholders.
 
Since mid-February 2008, holders of auction-rate preferred shares (“ARPS”) issued by the Funds have been directly impacted by an unprecedented lack of liquidity, which has similarly affected ARPS holders in many of the nation’s closed-end funds. Since then, regularly scheduled auctions for ARPS issued by the Funds have consistently “failed” because of insufficient demand (bids to buy shares) to meet the supply (shares offered for sale) at each auction. In a failed auction, ARPS holders cannot sell all, and may not be able to sell any, of their shares tendered for sale. While repeated auction failures have affected the liquidity for ARPS, they do not constitute a default or automatically alter the credit quality of the ARPS, and ARPS holders have continued to receive dividends at the defined “maximum rate” the higher of the 30-day “AA” Composite Commercial Paper Rate multiplied by 110% or the Taxable Equivalent of the Short-Term Municipal Obligations Rate-defined as 90% of the quotient of (A) the per annum rate expressed on an interest equivalent basis equal to the Kenny S&P 30-day High Grade Index divided by (B) 1.00 minus the Marginal Tax Rate (expressed as a decimal) multiplied by 110% (which is a function of short-term interest rates and typically higher than the rate that would have otherwise been set through a successful auction).
 
The Funds’ outstanding common shares continue to trade on the NYSE without any change. 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.
 
During the year ended April 30, 2009, Municipal and New York Municipal redeemed, at their liquidation preference, a portion of their ARPS. The redemptions were intended to increase asset coverage of each of these Fund’s ARPS above the 200% Level (subject to future market conditions), permitting these Funds to pay previously declared common share dividends and to declare and pay future common share dividends. Municipal and California Municipal redeemed their
 
 
4.30.09   PIMCO Municipal Income Funds Annual Report 39


 

 
PIMCO Municipal Income Funds Notes to Financial Statements
April 30, 2009

 
5. Auction-Rate Preferred Shares (continued)
 
ARPs, at the full liquidation preference of $25,000 per share plus an amount equal to accumulated but unpaid dividends, across each Fund’s series of ARPS on their respective dates of redemption.
 
             
        New York
    Municipal (a)   Municipal (b)
 
 
Beginning balance, April 30, 2008
    $200,000,000     $63,000,000
Redemptions
    (10,000,000)     (16,000,000)
         
Ending balance, April 30, 2009
    $190,000,000     $47,000,000
         
 
 
(a) Redeemed January 26, 2009 – January 30, 2009
 
(b) Redeemed January 7, 2009
 
6. Subsequent Common Dividend Declarations
On May 1, 2009, the following dividends were declared to common shareholders payable June 1, 2009 to shareholders of record on May 11, 2009:
 
     
Municipal
  $0.08125 per common share
California Municipal
  $0.077 per common share
New York Municipal
  $0.057 per common share
 
On June 1, 2009, the following dividends were declared to common shareholders payable July 1, 2009 to shareholders of record on June 11, 2009:
 
     
Municipal
  $0.08125 per common share
California Municipal
  $0.077 per common share
New York Municipal
  $0.057 per common share
 
7. Legal Proceedings
In June and September 2004, the Investment Manager and certain of its affiliates (including PEA Capital LLC (“PEA”), Allianz Global Investors Distributors LLC and Allianz Global Investors of America L.P.), agreed to settle, without admitting or denying the allegations, claims brought by the Securities and Exchange Commission and the New Jersey Attorney General alleging violations of federal and state securities laws with respect to certain open-end funds for which the Investment Manager serves as investment adviser. The settlements related to an alleged “market timing” arrangement in certain open-end funds formerly sub-advised by PEA. The Investment Manager and its affiliates agreed to pay a total of $68 million to settle the claims. In addition to monetary payments, the settling parties agreed to undertake certain corporate governance, compliance and disclosure reforms related to market timing, and consented to cease and desist orders and censures. Subsequent to these events, PEA deregistered as an investment adviser and dissolved. None of the settlements alleged that any inappropriate activity took place with respect to the Funds.
 
Since February 2004, the Investment Manager, the Sub-Adviser, and certain of their affiliates and their employees have been named as defendants in a number of pending lawsuits concerning “market timing”, which allege the same or similar conduct underlying the regulatory settlements discussed above. The market timing lawsuits have been consolidated in a multi-district litigation proceeding in the U.S. District Court for the District of Maryland. Any potential resolution of these matters may include, but not be limited to, judgments or settlements for damages against the Investment Manager, the Sub-Adviser, or their affiliates or related injunctions.
 
The Investment Manager and the Sub-Adviser believe that these matters are not likely to have a material adverse effect on the Funds or on their ability to perform their respective investment advisory activities relating to the Funds.
 
The foregoing speaks only as of the date hereof.
 
 
40 PIMCO Municipal Income Funds Annual Report   4.30.09


 

PIMCO Municipal Income Fund Financial Highlights
For a share of common stock outstanding throughout each year:

 
                                                 
    Year ended April 30
    2009     2008     2007     2006     2005 
Net asset value, beginning of year
    $12.96         $14.85         $14.54         $14.84         $14.11  
                                                 
Investment Operations:
                                               
Net investment income
    1.13         1.12         1.07         1.10         1.15  
                                                 
Net realized and change in unrealized gain
(loss) on investments, futures contracts,
options written and swaps
    (3.53 )       (1.74 )       0.50         (0.21 )       0.68  
                                                 
Total from investment operations
    (2.40 )       (0.62 )       1.57         0.89         1.83  
                                                 
Dividends on Preferred Shares
from Net Investment Income
    (0.20 )       (0.29 )       (0.28 )       (0.21 )       (0.12 )
                                                 
Net increase (decrease) in net assets
applicable to common shareholders
resulting from investment operations
    (2.60 )       (0.91 )       1.29         0.68         1.71  
                                                 
Dividends to Common Shareholders
from Net Investment Income
    (0.98 )       (0.98 )       (0.98 )       (0.98 )       (0.98 )
                                                 
Net asset value, end of year
    $9.38         $12.96         $14.85         $14.54         $14.84  
                                                 
Market price, end of year
    $11.40         $16.46         $18.00         $16.22         $14.64  
                                                 
Total Investment Return (1)
    (24.58 )%       (2.47 )%       17.77 %       18.13 %       15.68 %
                                                 
RATIOS/SUPPLEMENTAL DATA:
                                               
Net assets applicable to common
shareholders, end of year (000)
    $233,507         $321,268         $365,984         $355,877         $360,699  
                                                 
Ratio of expenses to average net assets,
including interest expense (2)(3)(4)(5)
    1.64 %       1.51 %       1.32 %       1.18 %       1.06 %
                                                 
Ratio of expenses to average net assets,
excluding interest expense (2)(3)(5)
    1.42 %       1.20 %       1.00 %       0.98 %       0.97 %
                                                 
Ratio of net investment income to average
net assets (2)(5)
    10.65 %       8.07 %       7.23 %       7.41 %       7.97 %
                                                 
Preferred shares asset coverage per share
    $55,722         $65,143         $70,727         $69,462         $70,077  
                                                 
Portfolio turnover
    60 %       32 %       6 %       13 %       11 %
                                                 
(1) Total investment return is calculated assuming a purchase of a share of common stock at the current market price on the first day of each period and a sale of a share of common stock at the current market price on the last day of each period reported. Dividends and distributions are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total investment return does not reflect brokerage commissions or sales charges.
 
(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(n) in Notes to Financial Statements).
 
(4) Interest expense relates to the liability for floating rate notes issued in connection with inverse floater transactions.
 
(5) During the fiscal periods indicated above, the Investment Manager waived a portion of its investment management fee. The effect of such waiver relative to the average net assets of common shareholders was 0.10%, 0.17%, 0.24%, 0.32% and 0.31% for the years ended April 30, 2009, April 30, 2008, April 30, 2007, April 30, 2006 and April 30, 2005, respectively.
 
 
See accompanying Notes to Financial Statements   4.30.09   PIMCO Municipal Income Funds Annual Report 41


 

PIMCO California Municipal Income Fund Financial Highlights
For a share of common stock outstanding throughout each year:

 
                                                 
    Year ended April 30
    2009     2008     2007     2006     2005 
Net asset value, beginning of year
    $13.62         $14.84         $14.48         $14.60         $13.92  
                                                 
Investment Operations:
                                               
Net investment income
    1.08         1.07         1.10         1.05         1.07  
                                                 
Net realized and change in unrealized gain
(loss) on investments, futures contracts,
options written and swaps
    (2.96 )       (1.09 )       0.44         (0.05 )       0.64  
                                                 
Total from investment operations
    (1.88 )       (0.02 )       1.54         1.00         1.71  
                                                 
Dividends on Preferred Shares
from Net Investment Income
    (0.21 )       (0.28 )       (0.26 )       (0.20 )       (0.11 )
                                                 
Net increase (decrease) in net assets
applicable to common shareholders
resulting from investment operations
    (2.09 )       (0.30 )       1.28         0.80         1.60  
                                                 
Dividends to Common Shareholders
from Net Investment Income
    (0.92 )       (0.92 )       (0.92 )       (0.92 )       (0.92 )
                                                 
Net asset value, end of year
    $10.61         $13.62         $14.84         $14.48         $14.60  
                                                 
Market price, end of year
    $12.18         $15.83         $17.70         $15.87         $14.20  
                                                 
Total Investment Return (1)
    (16.72 )%       (4.88 )%       18.20 %       18.93 %       15.05 %
                                                 
RATIOS/SUPPLEMENTAL DATA:
                                               
Net assets applicable to common
shareholders, end of year (000)
    $192,849         $246,613         $267,061         $259,127         $259,978  
                                                 
Ratio of expenses to average net assets,
including interest expense (2)(3)(4)(5)
    1.66 %       1.41 %       1.26 %       1.08 %       1.00 %
                                                 
Ratio of expenses to average net assets,
excluding interest expense (2)(3)(5)
    1.39 %       1.15 %       1.05 %       0.99 %       1.00 %
                                                 
Ratio of net investment income to average
net assets (2)(5)
    9.42 %       7.57 %       7.48 %       7.19 %       7.56 %
                                                 
Preferred shares asset coverage per share
    $57,140         $66,086         $69,491         $68,164         $68,319  
                                                 
Portfolio turnover
    42 %       14 %       4 %       8 %       5 %
                                                 
(1) Total investment return is calculated assuming a purchase of a share of common stock at the current market price on the first day of each period and a sale of a share of common stock at the current market price on the last day of each period reported. Dividends and distributions are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total investment return does not reflect brokerage commissions or sales charges.
 
(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(n) in Notes to Financial Statements).
 
(4) Interest expense relates to the liability for floating rate notes issued in connection with inverse floater transactions.
 
(5) During the fiscal periods indicated above, the Investment Manager waived a portion of its investment management fee. The effect of such waiver relative to the average net assets of common shareholders was 0.10%, 0.17%, 0.25%, 0.32% and 0.31% for the years ended April 30, 2009, April 30, 2008, April 30, 2007, April 30, 2006 and April 30, 2005, respectively.
 
 
42 PIMCO Municipal Income Funds Annual Report   4.30.09   See accompanying Notes to Financial Statements


 

PIMCO New York Municipal Income Fund Financial Highlights
For a share of common stock outstanding throughout each year:

 
                                                 
    Year ended April 30
    2009     2008     2007     2006     2005 
Net asset value, beginning of year
    $12.70         $13.74         $13.47         $13.83         $13.44  
                                                 
Investment Operations:
                                               
Net investment income
    0.87         0.97         0.97         0.98         1.01  
                                                 
Net realized and change in unrealized gain
(loss) on investments, futures contracts,
options written and swaps
    (3.50 )       (1.03 )       0.37         (0.23 )       0.40  
                                                 
Total from investment operations
    (2.63 )       (0.06 )       1.34         0.75         1.41  
                                                 
Dividends on Preferred Shares
from Net Investment Income
    (0.20 )       (0.30 )       (0.28 )       (0.22 )       (0.12 )
                                                 
Net increase (decrease) in net assets
applicable to common shareholders
resulting from investment operations
    (2.83 )       (0.36 )       1.06         0.53         1.29  
                                                 
Dividends to Common Shareholders
from Net Investment Income
    (0.68 )       (0.68 )       (0.79 )       (0.89 )       (0.90 )
                                                 
Net asset value, end of year
    $9.19         $12.70         $13.74         $13.47         $13.83  
                                                 
Market price, end of year
    $9.90         $13.06         $15.02         $14.56         $13.90  
                                                 
Total Investment Return (1)
    (18.80 )%       (8.31 )%       8.89 %       11.45 %       17.04 %
                                                 
RATIOS/SUPPLEMENTAL DATA:
                                               
Net assets applicable to common
shareholders, end of year (000)
    $69,482         $95,691         $103,035         $100,367         $102,112  
                                                 
Ratio of expenses to average net assets,
including interest expense (2)(3)(4)(5)
    1.86 %       2.00 %       1.94 %       1.57 %       1.44 %
                                                 
Ratio of expenses to average net assets,
excluding interest expense (2)(3)(5)
    1.62 %       1.32 %       1.23 %       1.09 %       1.12 %
                                                 
Ratio of net investment income to average
net assets (2)(5)
    8.49 %       7.41 %       7.06 %       7.04 %       7.48 %
                                                 
Preferred shares asset coverage per share
    $61,957         $62,969         $65,863         $64,809         $65,509  
                                                 
Portfolio turnover
    37 %       14 %       2 %       15 %       6 %
                                                 
(1) Total investment return is calculated assuming a purchase of a share of common stock at the current market price on the first day of each period and a sale of a share of common stock at the current market price on the last day of each period reported. Dividends and distributions are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total investment return does not reflect brokerage commissions or sales charges.
 
(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(n) in Notes to Financial Statements).
 
(4) Interest expense relates to the liability for floating rate notes issued in connection with inverse floater transactions.
 
(5) During the fiscal periods indicated above, the Investment Manager waived a portion of its investment management fee. The effect of such waiver relative to the average net assets of common shareholders was 0.10%, 0.18%, 0.26%, 0.33% and 0.33% for the years ended April 30, 2009, April 30, 2008, April 30, 2007, April 30, 2006 and April 30, 2005, respectively.
 
 
See accompanying Notes to Financial Statements   4.30.09   PIMCO Municipal Income Funds Annual Report 43


 

PIMCO Municipal Income Funds Report of Independent Registered Public Accounting Firm

 
To the Shareholders and Board of Trustees of:
PIMCO Municipal Income Fund,
PIMCO California Municipal Income Fund and
PIMCO New York Municipal Income Fund
 
 
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets applicable to common shareholders and the financial highlights present fairly, in all material respects, the financial position of PIMCO Municipal Income Fund, PIMCO California Municipal Income Fund and PIMCO New York Municipal Income Fund (collectively hereafter referred to as the “Funds”) at April 30, 2009, the results of each of their operations for the year then ended, changes in each of their net assets applicable to common shareholders for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at April 30, 2009 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
 
PricewaterhouseCoopers LLP
New York, New York
June 19, 2009
 
 
44 PIMCO Municipal Income Funds Annual Report   4.30.09


 

PIMCO Municipal Income Funds Portfolio Manager Change/Changes to the Fund’s Investment Policies and Related Risks