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 811-21238
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PIMCO Corporate Opportunity Fund
(Exact name of registrant as specified in charter)
1345 Avenue of the Americas, New York, New York 10105
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(Address of principal executive offices) (Zip code)
Lawrence G. Altadonna - 1345 Avenue of the Americas, New York, New York 10105
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(Name and address of agent for service)
Registrant's telephone number, including area code: 212-739-3371
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Date of fiscal year end: November 30
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Date of reporting period: May 31
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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. Section 3507.
ITEM 1. REPORT TO SHAREHOLDERS
SEMI-ANNUAL REPORT
5.31.04
PIMCO CORPORATE OPPORTUNITY FUND
[PTY LISTED NYSE THE NEW YORK STOCK EXCHANGE LOGO]
CONTENTS
Letter to Shareholders 1
Performance Summary and Statistics 2
Schedule of Investments 3-9
Statement of Assets and Liabilities 10
Statement of Operations 11
Statement of Changes in Net Assets 12
Notes to Financial Statements 13-19
Financial Highlights 20
[PIMCO ADVISORS LOGO]
PIMCO CORPORATE OPPORTUNITY FUND LETTER TO SHAREHOLDERS
July 16, 2004
Dear Shareholder:
We are pleased to provide you with the semi-annual report of the PIMCO Corporate
Opportunity Fund (the "Fund") for the six months ended May 31, 2004.
Please refer to the following page for specific Fund information. If you have
any questions regarding the information provided, please contact your financial
advisor or call our shareholder services area at 1-800-331-1710. Please note
that a wide range of information and resources can be accessed through our Web
site, www.pimcoadvisors.com.
We at the Fund, together with PA Fund Management LLC (formerly, PIMCO Advisors
Fund Management LLC), the Fund's investment manager, and Pacific Investment
Management Company LLC, the Fund's sub-adviser, thank you for investing with us.
We remain dedicated to serving your investment needs.
Sincerely,
/s/ Stephen Treadway /s/ Brian S. Shlissel
Stephen Treadway Brian S. Shlissel
CHAIRMAN PRESIDENT, CHIEF EXECUTIVE OFFICER
PIMCO CORPORATE OPPORTUNITY FUND PERFORMANCE SUMMARY AND STATISTICS
May 31, 2004 (unaudited)
SYMBOL: PRIMARY INVESTMENTS: INCEPTION DATE:
PTY U.S. dollar-denominated corporate December 27, 2002
debt obligations of varying
OBJECTIVE: maturities and other corporate TOTAL NET ASSETS(1):
Seeks maximum total return income-producing securities. $1.599 billion
through a combination of current
income and capital appreciation. PORTFOLIO MANAGERS:
David Hinman
Mark Kiesel
TOTAL RETURN(2): MARKET PRICE NAV
Six months ended 5/31/04 0.77% 1.55%
1 year ended 5/31/04 7.65% 9.90%
Commencement of Operations (12/27/02) to 5/31/04 15.90% 21.41%
COMMON SHARE PRICE PERFORMANCE:
Commencement of Operations (12/27/02) to 5/31/04
AT NAV AT MARKET PRICE
12/27/2002 $ 14.33 $ 15.00
1/3/2003 $ 14.35 $ 15.04
1/10/2003 $ 14.70 $ 15.30
1/17/2003 $ 14.62 $ 15.34
1/24/2003 $ 14.59 $ 15.19
1/31/2003 $ 14.63 $ 15.29
2/7/2003 $ 14.63 $ 15.40
2/14/2003 $ 14.49 $ 15.62
2/21/2003 $ 14.51 $ 15.44
2/28/2003 $ 14.59 $ 15.44
3/7/2003 $ 14.78 $ 15.72
3/14/2003 $ 14.75 $ 15.61
3/21/2003 $ 14.64 $ 15.37
3/28/2003 $ 14.94 $ 15.49
4/4/2003 $ 15.26 $ 15.80
4/11/2003 $ 15.23 $ 15.56
4/18/2003 $ 15.56 $ 15.84
4/25/2003 $ 16.00 $ 15.84
5/2/2003 $ 16.47 $ 16.36
5/9/2003 $ 16.57 $ 16.50
5/16/2003 $ 16.50 $ 16.43
5/23/2003 $ 16.61 $ 16.50
5/30/2003 $ 16.59 $ 16.61
6/6/2003 $ 16.88 $ 16.86
6/13/2003 $ 17.06 $ 17.09
6/20/2003 $ 17.01 $ 16.82
6/27/2003 $ 16.85 $ 16.79
7/3/2003 $ 16.83 $ 17.02
7/11/2003 $ 16.78 $ 16.63
7/18/2003 $ 16.64 $ 16.30
7/25/2003 $ 16.50 $ 16.13
8/1/2003 $ 15.84 $ 15.38
8/8/2003 $ 15.91 $ 15.86
8/15/2003 $ 15.47 $ 15.45
8/22/2003 $ 15.94 $ 15.61
8/29/2003 $ 16.08 $ 15.79
9/5/2003 $ 16.33 $ 16.13
9/12/2003 $ 16.33 $ 16.32
9/19/2003 $ 16.60 $ 16.36
9/26/2003 $ 16.68 $ 16.29
10/3/2003 $ 16.68 $ 16.35
10/10/2003 $ 16.65 $ 16.18
10/17/2003 $ 16.77 $ 16.27
10/24/2003 $ 16.84 $ 16.35
10/31/2003 $ 16.86 $ 16.58
11/7/2003 $ 16.83 $ 16.64
11/14/2003 $ 17.06 $ 16.65
11/21/2003 $ 17.11 $ 16.62
11/28/2003 $ 17.08 $ 16.88
12/5/2003 $ 17.40 $ 16.99
12/12/2003 $ 17.31 $ 16.86
12/19/2003 $ 17.48 $ 17.29
12/26/2003 $ 17.19 $ 17.22
1/2/2004 $ 17.24 $ 17.17
1/9/2004 $ 17.71 $ 17.63
1/16/2004 $ 17.64 $ 17.55
1/23/2004 $ 17.68 $ 17.74
1/30/2004 $ 17.44 $ 16.88
2/6/2004 $ 17.32 $ 17.44
2/13/2004 $ 17.32 $ 17.23
2/20/2004 $ 17.27 $ 16.57
2/27/2004 $ 17.26 $ 16.80
3/5/2004 $ 17.43 $ 17.03
3/12/2004 $ 17.29 $ 16.99
3/19/2004 $ 17.23 $ 17.00
3/26/2004 $ 17.19 $ 17.02
4/2/2004 $ 17.11 $ 16.85
4/8/2004 $ 17.17 $ 16.70
4/16/2004 $ 16.87 $ 15.61
4/23/2004 $ 16.85 $ 15.85
4/30/2004 $ 16.70 $ 15.87
5/7/2004 $ 16.30 $ 15.29
5/14/2004 $ 15.92 $ 15.07
5/21/2004 $ 16.05 $ 15.33
5/28/2004 $ 16.20 $ 15.89
NET ASSET VALUE/MARKET PRICE:
Market Price $ 15.89
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Net Asset Value $ 16.20
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Discount to Net Asset Value 1.91%
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Market Price Yield(3) 10.38%
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(1) Inclusive of net assets attributable to Preferred Shares outstanding.
(2) PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Total return is
determined by subtracting the initial investment from the value at the end of
the period and dividing the remainder by the initial investment and expressing
the result as a percentage. The calculation assumes that all of the Fund's
income dividends and capital gain distributions have been reinvested at prices
obtained under the dividend reinvestment plan. Total return does not reflect
broker commissions or sales charges. Total return for a period of less than one
year is not annualized. Total return for a period more than one year represents
the average annual return.
An investment in the Fund involves risk, including the loss of principal. Total
return, price, yield and net asset value will fluctuate with changes in market
conditions. This data is provided for information only and is not intended for
trading purposes. Closed-end funds, unlike open-end funds, are not continuously
offered. There is a one-time public offering and once issued, shares of
closed-end funds are sold in the open market through a stock exchange. Net asset
value is total assets applicable to common shareholders less total liabilities
divided by the number of common shares outstanding. Holdings are subject to
change daily.
(3) Market Price Yield is determined by dividing the annualized current per
share dividend to common shareholders by the market price per common share at
May 31, 2004.
2
PIMCO CORPORATE OPPORTUNITY FUND SCHEDULE OF INVESTMENTS
May 31, 2004 (unaudited)
PRINCIPAL
AMOUNT CREDIT RATING
(000) (MOODY'S/S&P) VALUE
----------------------------------------------------------------------------------------------------------------
CORPORATE BONDS & NOTES--79.9%
AIRLINES - 4.5%
Continental Airlines, Inc., pass thru certificates,
$ 4,354 6.703%, 6/15/21, Ser. 01-1 Baa3/A- $ 4,126,652
3,374 7.373%, 12/15/15, Ser. 01-1 Ba1/BBB 2,849,889
2,000 7.487%, 10/2/10, Ser. 00-2 Baa3/A 1,975,667
10,310 7.707%, 4/2/21, Ser. 00-2 Baa3/A- 10,123,647
Delta Airlines, Inc., pass thru certificates,
5,000 7.57%, 11/18/10, Ser. 00-1 Baa3/BBB- 4,711,095
8,000 7.92%, 11/18/10, Ser. 00-1 Ba3/B+ 5,240,304
Northwest Airlines Corp., pass thru certificates,
1,637 6.81%, 2/1/20, Ser. 991A Baa3/BBB- 1,447,238
12,500 6.841%, 4/1/11, Ser. 01-1 Baa3/A 11,919,058
5,629 7.575%, 3/1/19, Ser. 992A Baa2/A+ 5,614,903
2,579 7.67%, 7/2/16, Ser. A Ba2/B+ 2,155,560
United Airlines, Inc., pass thru certificates,
15,411 7.186%, 4/1/11, Ser. 00-2 Wr/BBB- 13,536,884
10,000 7.73%, 7/1/10, Ser. 00-1 Wr/BBB- 8,809,695
--------------
72,510,592
==============
AUTOMOTIVE - 3.3%
4,000 Auburn Hills Trust, 12.375%, 5/1/20 A3/BBB 5,786,828
8,000 DaimlerChrysler Holdings Co., 1.91%, 9/26/05 (a) A3/BBB 8,050,624
21,000 Ford Motor Co., 7.45%-9.98%, 7/16/31-2/15/47 Baa1/BBB- 21,321,339
15,000 General Motors Corp., 8.375%-9.40%, 7/15/21-7/5/33 Baa1/BBB 17,781,945
--------------
52,940,736
==============
BANKING - 2.0%
1,000 HSBC Capital Funding LP, 4.61%, 12/13/49
(acquired 6/24/03; cost-$1,000,000) (b) (c) A2/A- 906,989
9,706 Riggs Capital Trust II, 8.875%, 3/15/27, Ser. C Ba2/CCC+ 9,706,000
3,500 Royal Bank of Canada, 1.68%, 11/8/11 (a) Aa3/A+ 3,523,069
8,740 Sovereign Bancorp, Inc., 10.50%, 11/15/06 Baa3/BBB- 10,076,180
8,000 Sumitomo Mitsui Banking Corp., 8.15%, 8/1/08 Baa1/NR 8,193,392
--------------
32,405,630
==============
CHEMICALS - 0.6%
8,445 Equistar Chemical L.P., 10.125%, 9/1/08 B2/B+ 9,226,162
--------------
DIVERSIFIED MANUFACTURING - 5.1%
10,000 General Electric Co., 1.22%, 10/24/05 (a) Aaa/AAA 10,013,100
5,000 Hutchison Whampoa Int'l Ltd., 7.45%, 11/24/33 (b) (c)
(acquired 11/19/03; cost-$4,988,702) A3/A- 4,691,195
55,285 Tyco International Group SA, 5.50%-7.00%, 11/19/08-6/15/28 Ba2/BBB- 65,672,505
--------------
80,376,800
==============
ELECTRONICS - 2.2%
2,000 CMS Energy Corp., 8.90%, 7/15/08 B3/B+ 2,105,000
29,630 Ipalco Enterprises, Inc., 7.375%-7.625%, 11/14/08-11/14/11 Ba1/BB- 32,444,850
--------------
34,549,850
==============
3
PRINCIPAL
AMOUNT CREDIT RATING
(000) (MOODY'S/S&P) VALUE
----------------------------------------------------------------------------------------------------------------
ENERGY - 4.1%
$ 7,000 Noram Energy Resources, 6.50%, 2/1/08 Ba1/BBB $ 7,405,454
2,916 Salton Sea Funding Inc., 8.30%, 5/30/11, Ser. E Ba1/BB+ 3,108,683
14,000 Sithe Independence Funding Corp., 9.00%, 12/30/13, Ser. A Ba1/BBB- 15,470,000
10,000 Southern Natural Gas Co., 8.875%, 3/15/10 B1/B- 10,900,000
4,000 TXU Corp., 2.46%, 7/1/28 (a) Ba1/BB+ 3,733,916
Williams Cos., Inc.,
10,000 7.375%, 11/15/16 (acquired 2/11/04; cost-$10,764,797) (b) (c) Ba1/BBB- 10,812,500
15,000 7.875%, 9/1/21 B3/B+ 14,137,500
--------------
65,568,053
==============
FINANCIAL SERVICES - 6.2%
4,000 Beaver Valley Funding Corp., 8.625%, 6/1/07 Baa3/BB+ 4,229,608
2,500 CIT Group, Inc., 1.60%, 7/29/05 (a) A2/A 2,510,863
2,750 Fiat Finance Lux. Ltd., 3.25%, 1/9/07
(acquired 7/24/03; cost-$2,644,063) (b) (c) Ba3/NR 2,756,875
38,171 Finova Group, Inc., 7.50%, 11/15/09 NR/NR 21,375,662
11,000 Ford Motor Credit Co.,
6.50%-7.60%, 8/1/05-8/25/07 A3/BBB- 11,581,697
General Motors Acceptance Corp.,
14,500 2.135%-2.40%, 10/20/05-5/18/06 (a) A3/BBB 14,587,995
15,000 8.00%-8.875%, 6/1/10-11/1/31 A3/BBB 15,817,050
9,200 Mizuho JGB Investment, 9.87%, 12/30/49
(acquired 1/14/03; cost- $8,960,621) (b) (c) Baa3/B+ 10,449,976
8,300 Mizuho Preferred Capital, 8.79%, 12/29/49
(acquired 1/10/03; cost- $7,413,694) (b) (c) Baa3/B+ 9,128,323
6,500 Trac-X North America, 7.375%, 3/25/09
(acquired 12/3/03, cost-$6,500,000) (b) (c) (g) B3/NR 6,264,375
--------------
98,702,424
==============
FINANCING - 0.5%
7,500 Pemex Project Master Trust, 8.625%, 2/1/22 Baa1/BBB- 7,912,500
--------------
HEALTHCARE & HOSPITALS - 2.4%
19,000 Healthsouth Corp., 7.625%, 6/1/12 WR/NR 18,525,000
23,000 Tenet Healthcare Corp., 6.375%-7.375%,
12/1/11-11/15/31 B3/B- 18,860,000
--------------
37,385,000
==============
HOTELS/GAMING - 3.1%
13,500 Hilton Hotels Corp., 7.625%, 12/1/12 Ba1/BBB- 14,445,000
1,200 Mandalay Resort Group, 9.375%, 2/15/10 Ba3/BB- 1,350,000
4,875 Park Place Entertainment, 9.375%, 2/15/07 Ba2/BB- 5,313,750
24,150 Starwood Hotels & Resorts, 7.375%-7.875%,
5/1/12-11/15/25 Ba1/BB+ 24,539,250
4,333 Times Square Hotels Trust, 8.528%, 8/1/26
(acquired 11/18/03; cost-$4,784,201) (b) (c) (f) Baa3/BB+ 4,452,033
--------------
50,100,033
==============
MISCELLANEOUS - 3.4%
5,000 AES Red Oak LLC., 9.20%, 11/30/29, Ser. B. B2/B+ 5,275,000
8,625 Cedar Brakes II LLC., 9.875%, 9/1/13 Caa1/CCC+ 8,495,674
26,100 Morgan Stanley TRACERS, 5.878%, 3/1/07
(acquired 3/27/03-7/28/03; cost-$27,598,635) (b) (c) (f) (g) A3/NR 27,456,313
4
PRINCIPAL
AMOUNT CREDIT RATING
(000) (MOODY'S/S&P) VALUE
----------------------------------------------------------------------------------------------------------------
MISCELLANEOUS (CONCLUDED)
Small Business Administration
$ 2,564 6.03%, 2/1/12 NA/NA $ 2,667,305
1,738 6.44%, 6/1/21, Ser. 20-F NA/NR 1,853,143
8,600 Tokai PFD Capital Co., LLC., 9.98%, 12/29/49
(acquired 1/9/03-4/25/03; cost-$7,940,267) (b) (c) Baa3/B+ 9,778,983
--------------
55,526,418
==============
MULTI-MEDIA - 7.7%
17,250 AOL Time Warner Inc., 6.875%-7.70%, 5/1/12-5/1/32 Baa1/BBB+ 18,830,573
7,500 Comcast Cable Communications, 6.75%, 1/30/11 Baa3/BBB 8,107,125
11,000 Comcast Cable Holdings, 8.375%, 3/15/13 Baa3/BBB 12,934,702
CSC Holdings Inc.,
30,690 7.25%-7.875%, 2/15/18-7/15/18 B1/BB- 29,678,650
4,500 8.125%, 8/5/09, Ser. B B1/BB- 4,747,500
16,050 News America Holdings, Inc., 7.43%, 10/1/26 Baa3/BBB- 17,721,607
15,000 Rogers Cable Inc., 8.75%, 5/1/32 Ba2/BBB- 16,343,265
13,000 Shaw Communications Inc., 7.20%-8.25%,
4/11/10-12/15/11 Ba2/BB+ 14,026,296
--------------
122,389,718
==============
OIL & GAS - 4.9%
Centerpoint Energy Resources,
28,000 7.75%-7.875% 2/15/11-4/1/13 Ba1/BBB 31,091,780
21,500 8.125%, 7/15/05, Ser. B. Ba1/BBB 22,668,568
28,200 Coastal Corp., 7.42%-7.625%, 9/1/08-2/15/37 Caa1/CCC+ 21,771,500
2,500 XTO Energy Inc., 6.25%, 4/15/13 Baa3/BBB- 2,598,865
--------------
78,130,713
==============
PAPER - 3.8%
33,500 Abitibi-Consolidated Inc., 7.50%-8.50%, 4/1/28-8/1/29 Ba2/BB 29,899,346
Georgia-Pacific Corp.,
18,725 7.75%-8.25% 3/1/23-11/15/29 Ba3/BB+ 18,567,250
9,750 8.875%, 2/1/10 Ba2/BB+ 10,895,625
2,000 Smurfit Capital Funding plc, 7.50%, 11/20/25 B1/BB- 1,845,000
--------------
61,207,221
==============
RETAIL - 0.9%
13,000 JC Penny Co., Inc., 8.125%, 4/1/27 Ba3/BB+ 13,780,000
--------------
TELECOMMUNICATIONS - 15.1%
35,000 AT&T Corp., 8.00%, 11/15/31 Baa2/BBB 36,915,550
10,000 AT&T Wireless Svcs. Inc., 8.125%, 5/1/12 Baa2/BBB 11,574,510
1,541 Calpoint Receivables Structured Trust, 7.44%, 12/10/06
(acquired 10/14/03; cost-$1,521,702) (b) (c) Caa1/NR 1,540,686
6,000 Cincinnati Bell Inc., 6.33%, 12/30/05 Ba2/NR 5,910,000
18,301 MCI Inc., 5.908%-7.735%, 5/1/07-5/1/14 NR/NR 17,198,026
5
PRINCIPAL
AMOUNT CREDIT RATING
(000) (MOODY'S/S&P) VALUE
----------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS (CONCLUDED)
Panamsat Corp.,
$ 21,650 6.875%, 1/15/28 Ba2/BB $ 18,510,750
20,000 8.50%, 2/1/12 Ba3/B+ 22,500,000
23,670 Qwest Capital Funding, 7.00%-7.90%, 8/3/09-8/15/10 Caa2/CCC+ 20,393,850
Qwest Corp.,
3,000 7.25%, 9/15/25 Ba3/B- 2,550,000
6,150 8.875%, 3/15/12 (acquired 1/22/03; cost-$6,363,295) (b) (c) Ba3/B- 6,549,750
7,950 13.00%, 12/15/07 (acquired 5/14/03-5/15/03;
cost-$8,619,318) (b) (c) Caa1/CCC+ 9,082,875
12,340 Rogers Cantel Inc., 9.75%, 6/1/16 Ba3/BB+ 14,252,700
66,600 Sprint Capital Corp., (FON Group), 6.375%-8.75%
5/1/09-3/15/32 Baa3/BBB- 72,886,654
--------------
239,865,351
==============
UTILITIES - 10.1%
4,735 AES Corp., 10.00%, 7/15/05
(acquired 4/3/03; cost-$7,949,318) (b) (c) B2/BB 4,853,464
13,679 East Coast Power LLC.,
6.737%-7.066%, 3/31/08-3/31/12, Ser. B Baa3/BBB- 13,629,251
7,000 FirstEnergy Corp., 7.375%, 11/15/31, Ser. C Baa3/BB+ 7,324,030
2,950 Indianapolis Power & Light Co., 7.375%, 8/1/07 Baa2/BB+ 3,217,875
Midwest Generation LLC., pass thru certificates,
28,380 8.30%, 7/2/09 Ser. A B2/B 28,521,900
13,070 8.56%, 1/2/16 Ser. B B2/B 13,135,350
5,000 8.75%, 5/1/34 (acquired 4/15/04; cost-$5,000,000) (b) (c) B1/B- 4,950,000
44,500 PSEG Energy Holdings LLC., 8.50%-10.00%, 10/1/09-6/15/11 Ba3/BB- 47,421,250
12,796 South Point Energy Center LLC, 8.40% 5/30/12
(acquired 12/30/02-3/17/03; cost-$9,270,783) (b) (c) B2/B 10,565,057
25,500 Western Energy Inc. 7.875%-8.50%, 5/1/07-7/1/22 Ba1/BBB- 27,256,544
--------------
160,874,721
==============
Total Corporate Bonds & Notes (cost-$1,180,243,133) 1,273,451,922
==============
MORTGAGE-RELATED SECURITIES--0.7%
ASSET-BACKED SECURITIES - 0.1%
1,380 Nextcard Credit Card Trust, 1.90%, 12/15/06-4/16/07
(acquired 1/27/04; cost-$1,331,480) (a) (b) (c) B3/B- 1,345,450
--------------
COLLATERALIZED BOND OBLIGATIONS - 0.6%
2,698 PPM America High Yield CBO Ltd., 2.07%, 6/1/11 (a) NR/NR 2,205,036
6,887 Small Business Administration, 5.24%, 8/1/23 NR/NR 6,902,129
--------------
9,107,165
==============
Total Mortgage-Related Securites (cost-$10,499,286) 10,452,615
==============
SOVEREIGN DEBT OBLIGATIONS--6.6%
BRAZIL - 2.5%
Federal Republic of Brazil,
13,120 2.00%, 4/15/06, Ser. EI-L (a) B2/B+ 12,815,170
29,524 11.00%-11.50%, 3/12/08-1/11/12 B2/B+ 27,505,699
--------------
40,320,869
==============
6
PRINCIPAL
AMOUNT CREDIT RATING
(000) (MOODY'S/S&P) VALUE
----------------------------------------------------------------------------------------------------------------
COLOMBIA - 0.1%
$ 1,000 Republic of Colombia, 10.00%, 1/23/12 Ba2/BB $ 1,017,500
--------------
MEXICO - 1.2%
16,000 United Mexican States, 6.375%-11.375%, 1/14/11-9/15/16 Baa2/BBB- 19,076,000
--------------
PANAMA - 0.9%
13,000 Republic of Panama, 9.375%-10.75%, 7/23/12-5/15/20 Ba1/BB 14,480,000
--------------
PERU - 0.9%
15,000 Republic of Peru, 9.125%, 2/21/12 Ba3/BB- 15,075,000
--------------
RUSSIA - 0.9%
15,000 Russian Federation, 5.00%, 3/1/30, Ser. REGS Baa3/BB 13,706,250
--------------
UKRAINE - 0.1%
1,560 Ukraine Government, 7.65%-11.00%, 3/15/07-6/11/13 B1/B 1,556,353
--------------
Total Sovereign Debt Obligations (cost-$99,304,313) 105,231,972
==============
LOAN PARTICIPATIONS (c)(e)(f)--3.4%
FINANCE - 0.8%
11,970 Nextel Finance Co., 4.75%, 6/30/08, Term B (Credit Suisse
First Boston) (acquired 12/5/03; cost-$11,955,983) NR/NR 12,072,595
--------------
MULTI-MEDIA - 0.6%
10,000 Charter Communications Holdings, LLC, 4.58%,
3/18/08, Term B (Morgan Stanley Senior Funding, Inc.)
(acquired 1/3/03-1/21/03; cost-$8,893,705) NR/NR 9,894,370
--------------
OIL & GAS - 0.5%
8,190 Aquila, Inc., 8.75%, 4/15/06, Term 2 (Morgan Stanley Senior
Funding, Inc.) (acquired 4/1/03-4/14/03; cost-$8,163,740) NR/NR 8,528,333
--------------
TELECOMMUNICATIONS - 0.2%
2,970 Crown Castle International Corp., 4.15%, 3/15/08, Term B
(Goldman Sachs Credit Partners) (acquired 2/2/04;
cost-$2,881,291) NR/NR 3,024,650
--------------
UTILITIES - 1.3%
1,429 AES Corp., 5.13%-5.32% 7/29/08 Term B (Bank of America)
(acquired 12/10/03; cost-$1,422,526) NR/NR 1,447,099
20,000 Reliant Resources Inc., 5.35%, 3/15/07 (JP Morgan Chase)
(acquired 5/13/04-5/27/04; cost-$19,675,000) NR/NR 19,777,080
--------------
21,224,179
==============
Total Loan Participations (cost-$52,992,245) 54,744,127
==============
COMMON STOCK--0.1%
SHARES
------
TELECOMMUNICATIONS - 0.1%
90,825 MCI Inc. (cost-$1,913,353) 1,348,751
--------------
7
PRINCIPAL
AMOUNT CREDIT RATING
(000) (MOODY'S/S&P) VALUE
----------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--9.3%
COMMERCIAL PAPER - 6.1%
BANKING - 0.2%
$ 3,100 European Investment Bank, 1.015%, 6/15/04 P-1/A-1+ $ 3,098,776
--------------
FINANCE - 5.7%
44,300 HBOS Treasury Services plc, 1.03%-1.095%, 6/24/04-8/6/04 P-1/A-1+ 44,269,567
46,000 UBS Finance LLC, 1.245%-1.03%, 6/7/04-9/20/04 P-1/A-1+ 45,845,158
--------------
90,114,725
==============
TOBACCO - 0.2%
3,900 Altria Group Inc., 1.80%, 10/29/04 P-3/A-2 3,900,000
--------------
Total Commercial Paper (cost-$97,113,501) 97,113,501
==============
CORPORATE NOTES - 1.5%
FINANCE - 0.4%
5,000 Bombardier Capital Inc., 7.50%, 8/15/04
(acquired 3/28/03-4/23/03; cost-$4,949,581) (b) (c) Baa3/BBB- 5,054,885
1,000 Household Finance Corp., 8.00%, 5/9/05 A1/A 1,053,543
--------------
6,108,428
==============
METALS/MINING - 0.1%
1,650 Alcan Inc., 1.37%, 12/8/04
(acquired 12/3/03; cost-$1,650,000) (a) (b) (c) Baa1/A- 1,650,582
--------------
MISCELLANEOUS - 1.0%
7,000 Danske Corp., 1.025%, 6/22/04, Ser. A. NR/NR 6,995,815
10,000 Gemstone Investors Ltd., 7.71%, 10/31/04
(acquired 12/30/02; cost-$9,414,834) (b) (c) Caa1/CCC+ 10,175,000
--------------
17,170,815
==============
Total Corporate Notes (cost-$24,069,583) 24,929,825
==============
U.S. GOVERNMENT AGENCY DISCOUNT NOTES - 1.1%
FANNIE MAE - 1.0%
16,400 1.01%-1.055%, 6/23/04-7/28/04 AAA/Aaa 16,384,866
--------------
FEDERAL HOME LOAN MORTGAGE - 0.1%
900 1.01%, 6/15/04-7/15/04 AAA/Aaa 899,227
--------------
Total U.S. Government Agency Discount Notes (cost-$17,284,093) 17,284,093
==============
U.S. TREASURY BILLS (h) - 0.1%
1,045 1.01%, 6/3/04-6/17/04 (cost-$1,044,839) AAA/Aaa 1,044,839
--------------
REPURCHASE AGREEMENT - 0.5%
8,023 State Street Bank & Trust Co.,
dated 5/28/04, 0.80%, due 6/1/04,
proceeds $8,023,713: collateralized by Fannie Mae,
1/15/06, valued at $8,185,897 (cost-$8,023,000) 8,023,000
--------------
Total Short-Term Investments (cost-$147,535,016) 148,395,258
==============
8
VALUE
----------------------------------------------------------------------------------------------------------------
PUT OPTIONS PURCHASED (d)--0.0%
Contracts
$ 100,000 Swap Options, iBoxx High Volatility
Strike rate 1.25%, expires 6/21/04 $ 97,350
100,000 Swap Options, iBoxx High Volatility
Strike rate 1.75%, expires 6/21/04 93,230
---------------
Total Put Options Purchased (premiums paid-$836,000) 190,580
===============
TOTAL INVESTMENTS, BEFORE CALL OPTIONS WRITTEN (cost-$1,493,323,346+) - 100.0% $ 1,593,815,225
===============
CALL OPTIONS WRITTEN (d)--(0.0)%
(16,050) News America Holdings, strike price $100, expires 10/1/06 (676,010)
(250,000) Swap Options, iBoxx High Volatility
Strike rate 0.90%, expires 6/21/04 (3,675)
(100,000) Swap Options, iBoxx High Volatility
Strike rate 0.90%, expires 6/21/04 (1,470)
(150,000) Swap Options, iBoxx High Volatility
Strike rate 1.25%, expires 6/21/04 (2,280)
---------------
Total Call Options Written (premiums received-$895,000) (683,435)
===============
TOTAL INVESTMENTS, NET OF CALL OPTIONS WRITTEN (cost-$1,492,428,346) - 100.0% $ 1,593,131,790
===============
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Floating Rate Security. Interest rate shown is the rate in effect at May
31, 2004.
(b) Security exempt from registration, under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, typically to qualified institutional investors. These
securities amounted to $142,465,311 or 8.9% of investments.
(c) Private Placement. Restricted as to resale and does not have a readily
available market; the aggregate cost and value of such securities is
$197,209,438 or 12.4% of investments.
(d) Non-income producing security.
(e) Participation interests were acquired through the financial institution
indicated parenthetically.
(f) Illiquid security.
(g) Credit-linked trust certificate.
(h) All or partial principal amount segregated as initial margin on futures
contracts.
+ The cost basis of portfolio securities for federal income tax purposes is
$1,493,323,346. Aggregate gross unrealized appreciation for securities in
which there is an excess of value over tax cost is $114,950,283; aggregate
gross unrealized depreciation for securites in which there is an excess of
tax cost over value is $14,458,404; net unrealized appreciation for federal
income tax purposes is $100,491,879
GLOSSARY:
CBO - Collateralized Bond Obligation
NR - Not Rated
TRACERS - Traded Custody Receipts
WR - Withdrawn Rating
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
9
PIMCO CORPORATE OPPORTUNITY FUND STATEMENT OF ASSETS AND LIABILITIES
May 31, 2004 (unaudited)
ASSETS:
Investments, at value (cost-$1,493,323,346) $ 1,593,815,225
------------------------------------------------------------------------------------------ ---------------
Cash (including foreign currency with a cost and value of $32) 130,676
------------------------------------------------------------------------------------------ ---------------
Interest receivable 28,165,914
------------------------------------------------------------------------------------------ ---------------
Periodic payments receivable on swaps 8,126,003
------------------------------------------------------------------------------------------ ---------------
Unrealized appreciation on swaps 611,169
------------------------------------------------------------------------------------------ ---------------
Prepaid expenses 36,555
------------------------------------------------------------------------------------------ ---------------
Total Assets 1,630,885,542
========================================================================================== ===============
LIABILITIES:
Payable for investments purchased 19,675,000
------------------------------------------------------------------------------------------ ---------------
Dividends payable to common and preferred shareholders 8,900,439
------------------------------------------------------------------------------------------ ---------------
Unrealized depreciation on swaps 1,291,184
------------------------------------------------------------------------------------------ ---------------
Investment management fee payable 812,798
------------------------------------------------------------------------------------------ ---------------
Call options written, at value (premium received $895,000) 683,435
------------------------------------------------------------------------------------------ ---------------
Periodic payments payable on swaps 433,038
------------------------------------------------------------------------------------------ ---------------
Unrealized depreciation on forward foreign currency contracts 223,379
------------------------------------------------------------------------------------------ ---------------
Payable for variation margin on futures contracts 100,000
------------------------------------------------------------------------------------------ ---------------
Accrued expenses 172,241
------------------------------------------------------------------------------------------ ---------------
Total Liabilities 32,291,514
------------------------------------------------------------------------------------------ ---------------
PREFERRED SHARES ($0.00001 PAR VALUE AND $25,000 NET ASSET AND LIQUIDATION VALUE PER
SHARE APPLICABLE TO AN AGGREGATE OF 22,600 SHARES ISSUED AND OUTSTANDING) 565,000,000
------------------------------------------------------------------------------------------ ---------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS $ 1,033,594,028
========================================================================================== ===============
COMPOSITION OF NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS:
Common stock:
Par value ($0.00001 per share, applicable to 63,796,079 shares issued and outstanding) $ 638
------------------------------------------------------------------------------------------ ---------------
Paid-in-capital in excess of par 906,936,875
------------------------------------------------------------------------------------------ ---------------
Undistributed net investment income 5,121,354
------------------------------------------------------------------------------------------ ---------------
Accumulated net realized gain 21,839,257
------------------------------------------------------------------------------------------ ---------------
Net unrealized appreciation of investments, futures contracts, options written, swaps
and foreign currency transactions 99,695,904
------------------------------------------------------------------------------------------ ---------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS $ 1,033,594,028
------------------------------------------------------------------------------------------ ---------------
NET ASSET VALUE PER COMMON SHARE $ 16.20
========================================================================================== ===============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
10
PIMCO CORPORATE OPPORTUNITY FUND STATEMENT OF OPERATIONS
Six months ended May 31, 2004 (unaudited)
INTEREST INCOME:
Interest $ 64,116,193
------------------------------------------------------------------------------------------ ---------------
EXPENSES:
Investment management fees 4,965,630
------------------------------------------------------------------------------------------ ---------------
Auction agent fees and commissions 720,999
------------------------------------------------------------------------------------------ ---------------
Custodian and accounting agent fees 178,198
------------------------------------------------------------------------------------------ ---------------
Reports to shareholders 87,459
------------------------------------------------------------------------------------------ ---------------
Audit and tax services 40,623
------------------------------------------------------------------------------------------ ---------------
Trustees' fees and expenses 27,510
------------------------------------------------------------------------------------------ ---------------
Transfer agent fees 19,539
------------------------------------------------------------------------------------------ ---------------
Legal fees 15,568
------------------------------------------------------------------------------------------ ---------------
Insurance expense 14,958
------------------------------------------------------------------------------------------ ---------------
Investor relations 5,042
------------------------------------------------------------------------------------------ ---------------
Miscellaneous 8,026
------------------------------------------------------------------------------------------ ---------------
Total expenses 6,083,552
------------------------------------------------------------------------------------------ ---------------
Less: custody credits earned on cash balances (1,493)
------------------------------------------------------------------------------------------ ---------------
Net expenses 6,082,059
------------------------------------------------------------------------------------------ ---------------
NET INVESTMENT INCOME $ 58,034,134
========================================================================================== ===============
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments 23,470,330
------------------------------------------------------------------------------------------ ---------------
Options written (844,000)
------------------------------------------------------------------------------------------ ---------------
Swaps 9,344
------------------------------------------------------------------------------------------ ---------------
Foreign currency transactions (1,113,789)
------------------------------------------------------------------------------------------ ---------------
Net change in unrealized appreciation/depreciation of:
Investments (61,437,331)
------------------------------------------------------------------------------------------ ---------------
Futures contacts 205,000
------------------------------------------------------------------------------------------ ---------------
Options written 1,210,918
------------------------------------------------------------------------------------------ ---------------
Foreign curency transactions 1,903,890
------------------------------------------------------------------------------------------ ---------------
Swaps 678,739
------------------------------------------------------------------------------------------ ---------------
Net realized and unrealized loss on investments, futures contracts, options written, swaps
and foreign currency transactions (35,916,899)
------------------------------------------------------------------------------------------ ---------------
NET INCREASE IN NET ASSETS RESULTING FROM INVESTMENT OPERATIONS 22,117,235
========================================================================================== ===============
DIVIDENDS ON PREFERRED SHARES FROM NET INVESTMENT INCOME (3,375,946)
------------------------------------------------------------------------------------------ ---------------
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS
RESULTING FROM INVESTMENT OPERATIONS $ 18,741,289
========================================================================================== ===============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
11
PIMCO CORPORATE OPPORTUNITY FUND STATEMENT OF CHANGES IN NET ASSETS
APPLICABLE TO COMMON SHAREHOLDERS
SIX MONTHS FOR THE PERIOD
ENDED DECEMBER 27, 2002*
MAY 31, 2004 THROUGH
(UNAUDITED) NOVEMBER 30, 2003
--------------- ------------------
INVESTMENT OPERATIONS:
Net investment income $ 58,034,134 $ 103,443,018
--------------------------------------------------------------------------- --------------- ------------------
Net realized gain on investments, futures contracts, options written,
swaps and foreign currency transactions 21,521,885 14,768,810
--------------------------------------------------------------------------- --------------- ------------------
Net change in unrealized appreciation/depreciation of investments, futures
contracts, options written, swaps and foreign currency transactions (57,438,784) 157,134,688
--------------------------------------------------------------------------- --------------- ------------------
Net increase in net assets resulting from investment operations 22,117,235 275,346,516
=========================================================================== =============== ==================
DIVIDENDS ON PREFERRED SHARES FROM NET INVESTMENT INCOME (3,375,946) (5,272,280)
--------------------------------------------------------------------------- --------------- ------------------
Net increase in net assets applicable to common shareholders
resulting from investment operations 18,741,289 270,074,236
--------------------------------------------------------------------------- --------------- ------------------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS FROM:
Net investment income (57,693,953) (87,470,321)
--------------------------------------------------------------------------- --------------- ------------------
Net realized gains (17,015,966) --
--------------------------------------------------------------------------- --------------- ------------------
Total dividends and distributions to common shareholders (74,709,919) (87,470,321)
=========================================================================== =============== ==================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from the sale of common stock -- 905,769,750
--------------------------------------------------------------------------- --------------- ------------------
Preferred shares underwriting discount charged to paid-in capital
in excess of par -- (5,650,000)
--------------------------------------------------------------------------- --------------- ------------------
Common stock and preferred shares offering costs charged to
paid-in capital in excess of par -- (2,096,436)
--------------------------------------------------------------------------- --------------- ------------------
Reinvestment of dividends and distributions 1,134,943 7,700,483
--------------------------------------------------------------------------- --------------- ------------------
Net increase in capital share transactions 1,134,943 905,723,797
--------------------------------------------------------------------------- --------------- ------------------
Total increase (decrease) in net assets applicable to common
shareholders (54,833,687) 1,088,327,712
=========================================================================== =============== ==================
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS:
Beginning of period 1,088,427,715 100,003
--------------------------------------------------------------------------- --------------- ------------------
End of period (including undistributed net investment income
$5,121,354 and $8,157,119, respectively) $ 1,033,594,028 $ 1,088,427,715
--------------------------------------------------------------------------- --------------- ------------------
COMMON SHARES ISSUED AND REINVESTED:
Issued -- 63,230,000
--------------------------------------------------------------------------- --------------- ------------------
Issued in reinvestment of dividends and distributions 65,870 493,228
--------------------------------------------------------------------------- --------------- ------------------
Net Increase 65,870 63,723,228
=========================================================================== =============== ==================
* Commencement of operations
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
12
PIMCO CORPORATE OPPORTUNITY FUND NOTES TO FINANCIAL STATEMENTS
May 31, 2004 (unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PIMCO Corporate Opportunity Fund (the "Fund"), was organized as a Massachusetts
business trust on September 13, 2002. Prior to commencing operations on December
27, 2002, the Fund had no operations other than matters relating to its
organization and registration as a diversified, closed-end management investment
company registered under the Investment Company Act of 1940 and the rules and
regulations thereunder, as amended, and the sale and issuance of 6,981 shares of
beneficial interest at an aggregate purchase price of $100,003 to Allianz
Dresdner Asset Management of America L.P. ("ADAM"). PA Fund Management LLC (the
"Investment Manager"), formerly PIMCO Advisors Fund Management LLC, serves as
the Fund's Investment Manager and is an indirect wholly-owned subsidiary of
ADAM. ADAM is an indirect, majority-owned subsidiary of Allianz AG. The Fund has
an unlimited amount of $0.00001 par value common stock authorized.
The Fund seeks to maximize total return through a combination of current income
and capital appreciation in a diversified portfolio of U.S. dollar denominated
corporate debt obligations of varying maturities and other income producing
securities.
The Fund issued 55,500,000 shares of common stock, in its initial public
offering. An additional 7,730,000 shares were issued in connection with the
exercise of the underwriters' over-allotment option. These shares were all
issued at $15.00 per share before an underwriting discount of $0.675 per share.
Common offering costs of $1,541,506 (representing $0.024 per share) were offset
against the proceeds of the offering and charged to paid-in capital in excess of
par. The Investment Manager agreed to pay all offering costs (other than the
sales load) and organizational expenses exceeding $0.03 per share. Because
aggregate offering costs and organizational expenses were less than $0.03 per
common share, organizational expenses of $15,000 were expensed in the prior
period. In addition, the underwriters' commission and offering costs associated
with the issuance of Preferred Shares in the amounts of $5,650,000 and $554,930,
respectively, were charged to paid-in capital in excess of par.
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
these estimates.
In the normal course of business the Fund enters into contracts that contain a
variety of representations which provide general indemnifications. The Fund's
maximum exposure under these arrangements is unknown as this would involve
claims that may be made against the Fund based upon events that have not yet
been asserted. However, the Fund expects the risk of any loss to be remote.
The following is a summary of significant accounting policies followed by the
Fund:
(a) VALUATION OF INVESTMENTS
Portfolio securities and other financial instruments for which market quotations
are readily available are stated at market value. The Fund's investments are
valued daily by an independent pricing service approved by the Board of
Trustees, dealer quotations, or are valued at the last sale price on the
exchange that is the primary market for such securities, or the last quoted bid
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. The independent
pricing service uses information provided by market makers or estimates of
market value obtained from yield data relating to investments or securities with
similar characteristics. Short-term investments maturing in 60 days or less are
valued at amortized cost, if their original maturity was 60 days or less, or by
amortizing their value on the 61st day prior to maturity, if the original term
to maturity exceeded 60 days. Securities for which market quotations are not
readily available or if a development/event occurs that may significantly impact
the value of the security, may be fair valued pursuant to guidelines established
by the Board of Trustees. The prices used by the Fund to value securities may
differ from the value that would be realized if the securities were sold. The
Fund's net asset value is determined daily at the close of regular trading
(normally, 4:00 p.m. Eastern time) on the New York Stock Exchange.
(b) INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on the trade date. Realized gains and
losses on investments are determined on the identified cost basis. Interest
income is recorded on an accrual basis. Discounts or premiums on debt securities
purchased are accreted or amortized to interest income over the lives of the
respective securities using the effective interest method.
(c) FEDERAL INCOME TAXES
The Fund intends to distribute all of its taxable income and to comply with the
other requirements of the U.S. Internal Revenue Code of 1986, as amended,
applicable to regulated investment companies. Accordingly, no provision for U.S.
federal income taxes is required. In addition, by distributing substantially all
of its ordinary income and long-term capital gains, if any, during each calendar
year the Fund intends not to be subject to U.S. federal excise tax.
13
(d) DIVIDENDS AND DISTRIBUTIONS -- COMMON STOCK
The Fund declares dividends from net investment income monthly to common
shareholders. Distributions of net realized capital gains, if any, are paid at
least annually. The Fund records dividends and distributions to its shareholders
on the ex-dividend date. The amount of dividends and distributions from net
investment income and net realized capital gains are determined in accordance
with federal income tax regulations, which may differ from generally accepted
accounting principles. These "book-tax" differences are either considered
temporary or permanent in nature. To the extent these differences are permanent
in nature, such amounts are reclassified within the capital accounts based on
their income tax treatment; temporary differences do not require
reclassification. To the extent dividends and/or distributions exceed current
and accumulated earnings and profits for federal income tax purposes, they are
reported as dividends and/or distributions of paid-in capital in excess of par.
(e) INTEREST RATE/CREDIT DEFAULT SWAPS
The Fund enters into interest rate and credit default swap contracts ("swaps")
for investment purposes, to manage its interest rate and credit risk or to add
leverage.
As a seller in the credit default swap contract, the Fund would be required to
pay the par or other agreed-upon value of a referenced debt obligation to the
counterparty in the event of a default by a third party, such as a U.S. or
foreign corporate issuer, on the referenced debt obligation. In return, the Fund
would receive from the counterparty a periodic stream of payments over the term
of the contract provided that no event of default has occurred. If no default
occurs, the Fund would keep the stream of payments and would have no payment
obligations.
The Fund may also purchase credit default swap contracts in order to hedge
against the risk of default of debt securities held, in which case the Fund
would function as the counterparty referenced in the preceding paragraph. As a
purchaser of a credit default swap contract, the Fund would receive the par or
other agreed upon value of a referenced debt obligation from the counterparty in
the event of default by a third party, such as a U.S. or foreign corporate
issuer on the referenced debt obligation. In return, the Fund would make
periodic payments to the counterparty over the term of the contract provided no
event of default has occurred. Such periodic payments are accrued daily and
charged to realized gains and losses.
Interest rate swap agreements involve the exchange by the Fund 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 a
notional amount of principal. Net periodic payments received by the Fund are
included as part of realized gains/losses and or unrealized
appreciation/depreciation on the Statement of Operations.
Swaps are marked to market daily by the Fund's Investment Manager based upon
quotations from market makers and the change in value, if any, is recorded as
unrealized appreciation or depreciation in the Fund's Statement of Operations.
For a credit default swap sold by the Fund, payment of the agreed upon amount
made by the Fund in the event of default of the referenced debt obligation is
recorded as the cost of the referenced debt obligation purchased/received. For a
credit default swap purchased by the Fund, the agreed upon amount received by
the Fund in the event of default of the referenced debt obligation is recorded
as proceeds from sale/delivery of the referenced debt obligation and the
resulting gain or loss realized on the referenced debt obligation is recorded as
such by the Fund.
Entering into swaps involves, to varying degrees, elements of credit, market and
documentation risk in excess of the amounts recognized on the Statement of
Assets and Liabilities. Such risks involve the possibility that there will be no
liquid market for these agreements, that the counterparty to the agreements may
default on its obligation to perform or disagree as to the meaning of the
contractual terms in the agreements, and that there may be unfavorable changes
in net interest rates.
Periodic payments made or accrued under interest rate swap agreements were
previously included within interest income but, as a result of a recent FASB
Emerging Issues Task Force consensus and subsequent related SEC staff guidance,
are now shown as a component of either realized gain (loss) or change in
unrealized appreciation/ depreciation in the Statement of Operations. This
change does not affect the calculation of Net Asset Value per share. The impact
of this change on prior years' net investment income and realized and unrealized
gain (loss) in the Statement of Changes in Net Assets applicable to common
shareholders and net investment income and realized gain (loss) per share
amounts in the Financial Highlights was less than $0.01 per share.
(f) REPURCHASE AGREEMENTS
The Fund may enter into transactions with its custodian bank or securities
brokerage firms approved by the Board of Trustees whereby it purchases
securities under agreements to resell at an agreed upon price and date
("repurchase agreements"). Such agreements are carried at the contract amount in
the financial statements. Collateral pledged (the
14
securities received), which consists primarily of U.S. government obligations
and asset-backed securities, are held by the custodian bank until maturity of
the repurchase agreement. Provisions of the repurchase agreements and the
procedures adopted by the Fund require that the market value of the collateral,
including accrued interest thereon, is sufficient in the event of default by the
counterparty. If the counterparty defaults and the value of the collateral
declines or if the counterparty enters an insolvency proceeding, realization of
the collateral by the Fund may be delayed or limited.
(g) FORWARD FOREIGN CURRENCY CONTRACTS
The Fund may enter into forward foreign currency contracts for the purpose of
hedging against foreign currency risk arising from the investment or anticipated
investment in securities denominated in foreign currencies. The Fund may also
enter into these contracts for purposes of increasing exposure to a foreign
currency or to shift exposure to foreign currency fluctuations from one country
to another. A forward foreign currency contract is an agreement between two
parties to buy and sell a currency at a set exchange rate on a future date. The
market value of a forward foreign currency contract fluctuates with changes in
forward currency exchange rates. All commitments are marked to market daily at
the applicable exchange rates and any resulting unrealized gains and losses are
recorded. Realized gains or losses are recorded at the time the forward contract
matures or by delivery of the currency. Risks may arise upon entering these
contracts from the potential inability of counterparties to meet the terms of
their contracts and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
(h) OPTION TRANSACTIONS
The Fund may purchase and write (sell) put and call options for hedging and/or
risk management purposes. The risk associated with purchasing an option is that
the Fund pays a premium whether or not the option is exercised. Additionally,
the Fund bears the risk of loss of premium and change in market value should the
counterparty not perform under the contract. Put and call options purchased are
accounted for in the same manner as portfolio securities. The cost of securities
acquired through the exercise of call options is increased by the premiums paid.
The proceeds from the securities sold through the exercise of put options is
decreased by the premiums paid.
When an option is written, the premium received is recorded as an asset with an
equal liability which is subsequently adjusted to the current market value of
the option written. Premiums received from writing options which expire
unexercised are recorded on the expiration date as a realized gain. The
difference between the premium received and the amount paid on effecting a
closing purchase transaction, including brokerage commissions, is also treated
as a realized gain, or if the premium is less than the amount paid for the
closing purchase transactions, as a realized loss. If a call option is
exercised, the premium is added to the proceeds from the sale of the underlying
security in determining whether there has been a realized gain or loss. If a put
option is exercised, the premium reduces the cost basis of the security. In
writing an option, the Fund bears the market risk of an unfavorable change in
the price of the security underlying the written option. Exercise of an written
option could result in the Fund purchasing a security at a price different from
the current market.
(i) 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 Fund is required to pledge to the broker an amount of cash or
securities equal to the minimum "initial margin" requirements of the exchange.
Pursuant to the contracts, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in the value of the contracts.
Such receipts or payments are known as "variation margin" and are recorded by
the Fund as unrealized appreciation or depreciation. When the contracts are
closed, the Fund records 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 of
counterparties to meet the terms of their contracts.
(j) LOAN PARTICIPATIONS
When the Fund purchases a loan participation, the Fund typically enters into a
contractual relationship with the lender or third party selling such
participations ("Selling Participant"), but not the borrower. When investing in
a loan participation, the Fund has the right to receive payments of principal,
interest and any fees to which it is entitled only from the lender selling the
loan agreement and only upon receipt by the lender of payments from the
borrower. The Fund generally has no right to enforce compliance with the terms
of the loan agreement with the borrower. As a result, the Fund assumes the
credit risk of the borrower, the Selling Participant and any other persons
interpositioned
15
between the Fund and the borrower. The Fund may not directly benefit from the
collateral supporting the senior loan in which it has purchased the loan
participation.
(k) CREDIT-LINKED TRUST CERTIFICATES
Credit-linked trust certificates are investments in a limited purpose trust or
other vehicle formed under state law which, in turn, invests in a basket of
derivative instruments, such as credit default swaps, interest rate swaps and
other securities, in order to provide exposure to the high yield or another
fixed income market.
Similar to an investment in a bond, investments in credit-linked trust
certificates represent the right to receive periodic income payments (in the
form of distributions) and payment of principal at the end of the term of the
certificate. However, these payments are conditioned on the trust's receipt of
payments from, and the trust's potential obligations to, the counterparties to
the derivative instruments and other securities in which the trust invests.
(l) CUSTODY CREDITS ON CASH BALANCES
The Fund benefits from an expense offset arrangement with its custodian bank
whereby uninvested cash balances earn credits which reduce monthly custodian
expenses. Had these cash balances been invested in income producing securities,
they would have generated income for the Fund.
2. INVESTMENT MANAGER AND SUB-ADVISER
The Fund has entered into an Investment Management Agreement (the "Agreement")
with the Investment Manager to serve as Investment Manager of the Fund. Subject
to the supervision of the Fund's Board of Trustees, the Investment Manager is
responsible for managing, either directly or through others selected by it, the
investment activities of the Fund and its business affairs and other
administrative matters. Pursuant to the Agreement, the Investment Manager will
receive an annual fee, payable monthly, at an annual rate of 0.60% of the Fund's
average daily net assets, inclusive of net assets attributable to any preferred
shares that may be outstanding.
The Investment Manager has retained its affiliate, Pacific Investment Management
Company LLC (the "Sub-Adviser"), to manage the Fund's investments. Subject to
the supervision of the Investment Manager, the Sub-Adviser makes all investment
decisions with respect to the Fund's assets. The Investment Manager (not the
Fund) pays a portion of the fees it receives to the Sub-Adviser in return for
its services, at the maximum annual rate of 0.39% of the Fund's average daily
net assets inclusive of net assets attributable to any preferred shares that may
be outstanding for the period from commencement of operations through December
31, 2007 and at the maximum annual rate of 0.55% of average daily net assets
(inclusive of net assets attributable to any preferred shares that may be
outstanding) thereafter while the Agreement remains in effect, provided that the
fee will be reduced to 0.325% during the first five years of operations and
0.45% thereafter while the Agreement remains in effect. The Investment Manager
informed the Fund that it paid the Sub-Adviser $3,227,660 in connection with its
sub-advisory services for the six months ended May 31, 2004.
16
3. INVESTMENTS IN SECURITIES
For the six months ended May 31, 2004, purchases and sales of investments, other
than short-term securities, were $269,588,187 and $419,677,920, respectively.
(a) Futures contracts outstanding at May 31, 2004:
#OF EXPIRATION UNREALIZED
TYPE CONTRACTS DATE DEPRECIATION
---------------------------------------------------------------------------------------
Long: Financial Future Euro-Bond 10 Year EUX 400 12/13/04 $ 115,000
----------
(b) Credit default swap contracts outstanding at May 31, 2004 were as follows:
NOTIONAL
SWAP AMOUNT FIXED
COUNTERPARTY/ PAYABLE ON PAYMENTS UNREALIZED
REFERENCED DEBT DEFAULT TERMINATION RECEIVED APPRECIATION
OBLIGATION (000) DATE BY FUND (DEPRECIATION)
------------------------------------------------------------------------------------------------
Bank of America
IBOXX $ 25,000 9/20/2009 1.15% $ (9,720)
Bear Stearns
Bombardier
6.125%, 6/29/06 5,000 9/20/2004 2.70% 13,873
Bear Stearns
Russia Credit Federation
5.00%, 3/31/30 3,000 3/17/2005 1.00% (7,173)
Citigroup
IBOXX 45,000 9/20/2009 1.15% (82,521)
Credit Suisse
Echostar Credit
5.75%, 10/1/08 5,000 12/21/2004 1.40% 1,853
Goldman Sachs
Amerada Hess Credit
7.375%, 10/1/09 5,000 12/20/2004 0.65% 5,776
Goldman Sachs
Russia Credit Federation
5.00%, 3/31/30 2,000 3/6/2005 1.06% (3,531)
Goldman Sachs
Sprint Capital
8.375%, 3/15/12 2,000 6/20/2006 0.45% 744
Lehman Brothers
Electronic Data Systems Credit
6.00%, 8/1/13 3,000 12/20/2004 1.90% 5,741
Merrill Lynch
Sprint Capital
8.375%, 3/15/12 2,000 6/20/2006 0.59% (4,284)
Morgan Stanley & Co.
Bombardier
6.75%, 5/1/12 10,000 9/20/2004 2.75% 29,356
UBS AG
IBOXX 15,000 9/20/2009 1.15% 96,638
Wachovia Bank
IBOXX 32,000 9/20/2009 1.15% (58,065)
---------------
$ (11,313)
===============
17
(c) Interest rate swap contracts outstanding at May 31, 2004 were:
RATE TYPE
---------------------------------------
NOTIONAL UNREALIZED
SWAP AMOUNT TERMINATION PAYMENTS MADE BY PAYMENTS RECEIVED BY APPRECIATION
COUNTERPARTY (000) DATE THE FUND THE FUND (DEPRECIATION)
-----------------------------------------------------------------------------------------------------
Goldman Sachs $ 94,000 6/16/2024 5.00% 3 month Libor $ 457,188
3 month
Lehman Brothers 16,050 10/1/2006 7.43% LIBOR Plus 1.15% (1,125,890)
--------------
$ (668,702)
--------------
LIBOR - London Interbank Offered Rate
(d) Forward foreign currency contracts outstanding at May 31, 2004:
U.S.$ VALUE U.S.$ VALUE UNREALIZED
SOLD: ORIGINATION DATE MAY 31, 2004 DEPRECIATION
---------------------------------------------------------------------------------------------
EURO 39,203,000 settling 6/10/04 $ 47,632,880 $ 47,856,259 $ 223,379
==========
(e) Transactions in options written for the six months ended May 31, 2004 were:
CONTRACTS
(000) PREMIUMS
--------------------------------------------------------------------------------------------
Options outstanding, November 30, 2003 16,050 $ 0
Options written 500,000 895,000
---------- ----------
Options outstanding, May 31, 2004 516,050 $ 895,000
---------- ----------
4. AUCTION PREFERRED SHARES
The Fund has issued 4,520 shares of Preferred Shares Series M, 4,520 shares of
Preferred Shares Series T, 4,520 shares of Preferred Shares Series W, 4,520
shares of Preferred Shares Series TH, and 4,520 shares of Preferred Shares
Series F each with a net asset and liquidation value of $25,000 per share plus
accrued dividends.
Dividends are accumulated daily at an annual rate set through auction
procedures. Distributions of net realized capital gains, if any, are paid
annually.
For the six months ended May 31, 2004, the annualized dividend rate ranged from:
HIGH LOW AT MAY 31, 2004
------------------------------------------------------
Series M 1.50% 1.06% 1.39%
Series T 1.50% 1.10% 1.35%
Series W 1.48% 1.08% 1.36%
Series TH 1.48% 1.10% 1.42%
Series F 1.40% 1.05% 1.40%
The Fund is subject to certain limitations and restrictions while Preferred
Shares are outstanding. Failure to comply with these limitations and
restrictions could preclude the Fund from declaring any dividends or
distributions to common shareholders or repurchasing common shares and/or could
trigger the mandatory redemption of Preferred Shares at their liquidation value.
Preferred Shares, which are entitled to one vote per share, generally vote with
the common stock but vote separately as a class to elect two Trustees and on any
matters affecting the rights of the Preferred Shares.
5. SUBSEQUENT COMMON DIVIDEND AND DISTRIBUTION DECLARATIONS
On June 1, 2004, a dividend of $0.1375 per share was declared to common
shareholders payable July 1, 2004 to shareholders of record on June 11, 2004.
On July 1, 2004, a dividend of $0.1375 per share was declared to common
shareholders payable August 2, 2004 to shareholders of record on July 16, 2004.
18
6. LEGAL PROCEEDINGS
On May 6, 2004, the Securities and Exchange Commission (the "Commission") filed
a complaint in the U.S. District Court in the Southern District of New York
alleging that the Investment Manager, certain affiliates of the Investment
Manager, Stephen J. Treadway (the chief executive officer of the Investment
Manager as well as the chairman and a trustee of the Fund) had, among other
things, violated and/or aided and abetted violations of various antifraud
provisions of the federal securities laws in connection with alleged "marketing
timing" arrangements in certain open-end investment companies advised by the
Investment Manager. The complaint seeks injunctive relief, disgorgement plus
pre-judgment interest, monetary penalties, and an order permanently enjoining
the defendants from serving as investment advisers, principal underwriters,
officers, directors, or members of any advisory boards to any registered
investment companies.
The above complaint does not allege that any inappropriate activity took place
in the Fund and the Fund is not named in the complaint.
In addition, on June 1, 2004, ADAM and certain other affiliates of the
Investment Manager entered into a consent order and final judgment with the
Attorney General of the State of New Jersey (the "NJAG") in settlement of a
lawsuit filed by the NJAG on February 17, 2004 in connection with alleged
"market timing" arrangements. Under the terms of the settlement, ADAM and
certain of its affiliates agreed to pay the State of New Jersey a civil monetary
penalty of $15 million and $3 million for investigative costs. In addition, ADAM
and certain of its affiliates agreed to make several corporate governance
changes. Also on June 1, 2004, the NJAG dismissed its claims against the
Sub-Adviser, which had been filed as part of the same lawsuit.
If the Commission (or other regulator) were to obtain a court injunction against
the Investment Manager, its affiliates or Mr. Treadway, they and their
affiliates (including the Sub-Adviser) would, in the absence of exemptive relief
granted by the Commission, be barred from serving as an investment
adviser/sub-adviser or principal underwriter for any registered investment
company, including the Fund. In such a case, the Investment Manager and the
Sub-Adviser would in turn seek exemptive relief from the Commission, as
contemplated by the Investment Company Act, although there is no assurance that
such exemptive relief would be granted. The Commission also has the power by
order to prohibit the Investment Manager, the Sub-Adviser and their affiliates
from serving as investment advisers and underwriters, although to date it has
not exercised such powers with respect to market timing arrangements involving
other mutual fund complexes.
Since February, 2004, the Investment Manager, the Sub-Adviser and certain of
their affiliates, various investment companies advised by the Investment Manager
and the Sub-Adviser and their trustees (including Mr. Treadway) have been named
as defendants in multiple lawsuits filed in U.S. District Court in the Southern
District of New York, the Central District of California and the Districts of
New Jersey and Connecticut. The lawsuits have been commenced as putative class
actions on behalf of investors who purchased, held or redeemed shares of the
specified funds during specific periods or as derivative actions on behalf of
the specified funds. The lawsuits generally relate to the same facts that are
the subject of the regulatory proceedings discussed above. The lawsuits seek,
among other things unspecified compensatory damages plus interest and, in some
cases, punitive damages, the rescission of investment advisory contracts, and/or
the return of fees paid under those contracts and restitution. The Fund has been
named in several class action lawsuits. The Investment Manager and the
Sub-Adviser believe that other similar lawsuits may be filed in U.S. federal or
state courts naming ADAM, the Investment Manager, the Sub-Adviser, various
investment companies they advise (which may include the Fund), their boards of
trustees and/or their affiliates.
In November 2003, the Commission settled an enforcement action against an
unaffiliated broker-dealer relating to the undisclosed receipt of fees from
certain mutual fund companies in return for preferred marketing of their funds
and announced that it would be investigating mutual funds and their distributors
generally with respect to compensation arrangements relating to the sale of
mutual fund shares. In that connection, the Investment Manager, the Sub-Adviser
and certain of their affiliates are under investigation by the Commission
relating to revenue-sharing arrangements and the use of brokerage commissions to
recognize brokers effecting sales of open-end investment companies advised by
the Investment Manager, the Sub-Adviser and their affiliates. In addition, the
Attorney General of the State of California has publicly announced an
investigation into the brokerage recognition and revenue-sharing arrangements of
these open-end investment companies.
It is possible that these matters and/or other developments resulting from these
matters could lead to a decrease in the market price of the Fund's shares or
other adverse consequences to the Fund and its shareholders. However, the
Investment Manager and the Sub-Adviser believe that these matters are not likely
to have a material adverse effect on the Fund or on the Investment Manager's or
the Sub-Adviser's ability to perform its respective investment advisory services
related to the Fund.
19
PIMCO CORPORATE OPPORTUNITY FUND FINANCIAL HIGHLIGHTS
For a share of common stock outstanding throughout each period
SIX MONTHS FOR THE PERIOD
ENDED DECEMBER 27, 2002*
MAY 31, 2004 THROUGH
(UNAUDITED) NOVEMBER 30, 2003
------------ ------------------
Net asset value, beginning of period $ 17.08 $ 14.33**
----------------------------------------------------------------------------- ------------ ------------------
INVESTMENT OPERATIONS:
Net investment income 0.91 1.62
----------------------------------------------------------------------------- ------------ ------------------
Net realized and unrealized gain (loss) on investments, futures contracts,
options written, swaps and foreign currency transactions (0.56) 2.71
----------------------------------------------------------------------------- ------------ ------------------
Total from investment operations 0.35 4.33
----------------------------------------------------------------------------- ------------ ------------------
DIVIDENDS ON PREFERRED SHARES FROM NET INVESTMENT INCOME (0.05) (0.08)
----------------------------------------------------------------------------- ------------ ------------------
Net increase in net assets applicable to common shares resulting from
investment operations 0.30 4.25
----------------------------------------------------------------------------- ------------ ------------------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS FROM:
Net investment income (0.91) (1.38)
----------------------------------------------------------------------------- ------------ ------------------
Net realized gains (0.27) --
----------------------------------------------------------------------------- ------------ ------------------
Total dividends and distributions to common shareholders (1.18) (1.38)
----------------------------------------------------------------------------- ------------ ------------------
CAPITAL SHARE TRANSACTIONS:
Common stock offering costs charged to paid-in capital in excess of par -- (0.02)
----------------------------------------------------------------------------- ------------ ------------------
Preferred shares offering costs/underwriting discount charged to paid-in
capitalin excess of par -- (0.10)
----------------------------------------------------------------------------- ------------ ------------------
Total capital share transactions -- (0.12)
----------------------------------------------------------------------------- ------------ ------------------
Net asset value, end of period $ 16.20 $ 17.08
----------------------------------------------------------------------------- ------------ ------------------
Market price, end of period $ 15.89 $ 16.88
----------------------------------------------------------------------------- ------------ ------------------
Total Investment Return (1) 0.77% 22.50%
----------------------------------------------------------------------------- ------------ ------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets applicable to common shareholders, end of period (000) $ 1,033,594 $ 1,088,428
----------------------------------------------------------------------------- ------------ ------------------
Ratio of expenses to average net assets (2)(3)(4) 1.12% 1.07%
----------------------------------------------------------------------------- ------------ ------------------
Ratio of net investment income to average net assets (2)(4) 10.65% 11.13%
----------------------------------------------------------------------------- ------------ ------------------
Preferred shares asset coverage per share $ 70,727 $ 73,145
----------------------------------------------------------------------------- ------------ ------------------
Portfolio turnover 18% 26%
----------------------------------------------------------------------------- ------------ ------------------
* Commencement of operations.
** Initial public offering price of $15.00 per share less underwriting
discount of $0.675 per share.
(1) Total investment return is calculated assuming a purchase of common stock
at the current market price on the first day and a sale at the current
market price on the last day of each period reported. Dividends and
distributions are assumed, for purposes of this calculation, to be
reinvested at prices obtained under the Fund's dividend reinvestment plan.
Total investment return does not reflect brokerage commissions or sales
charges. Total investment return for a period of less than one year is not
annualized.
(2) Calculated on the basis of income and expenses applicable to both common
and preferred shares relative to the average net assets of common
shareholders.
(3) Inclusive of expenses offset by custody credits earned on cash balances at
the custodian bank. (See note 1(l) in Notes to Financial Statements).
(4) Annualized.
20
TRUSTEES AND PRINCIPAL OFFICERS
Stephen Treadway
Chairman
Paul Belica
Trustee
Robert E. Connor
Trustee
John J. Dalessandro II
Trustee
Hans W. Kertess
Trustee
Brian S. Shlissel
President & Chief Executive Officer
Newton B. Schott, Jr.
Vice President & Secretary
David C. Hinman
Vice President
Mark R. Kiesel
Vice President
Lawrence G. Altadonna
Treasurer, Principal Financial & Accounting Officer
Jennifer A. Patula
Assistant Secretary
INVESTMENT MANAGER
PA Fund Management LLC
1345 Avenue of the Americas
New York, NY 10105
SUB-ADVISER
Pacific Investment Management Company LLC
840 Newport Center Drive
Newport Beach, CA 92660
TRANSFER AGENT, DIVIDEND PAYING AGENT AND REGISTRAR
PFPC Inc.
P.O. Box 43027
Providence, RI 02940-3027
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL
Ropes & Gray LLP
One International Place
Boston, MA 02210-2624
This report, including the financial information herein, is transmitted to the
shareholders of PIMCO Corporate Opportunity Fund for their information. It is
not a prospectus, circular or representation intended for use in the purchase of
shares of the Fund or any securities mentioned in this report.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that from time to time the Fund may purchase
shares of its common stock in the open market.
The financial information included herein is taken from the records of the Fund
without examination by an independent registered public accounting firm, who did
not express an opinion hereon.
Daily Information on the Fund is available at www.pimcoadvisors.com or by
calling 1-800-331-1710
[PIMCO ADVISORS LOGO]
ITEM 2. CODE OF ETHICS Not required in this filing.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT Not required in this filing.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES Not required in this filing
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANT Not required in this filing.
ITEM 6. SCHEDULE OF INVESTMENTS Schedule of Investments is included as part of
the report to shareholders filed under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES Not required in this filing.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED COMPANIES The registrant or any affiliated purchaser
did not purchase shares or other units of any class of the registrant's
equity securities that is registered by the registrant pursuant to Section 12
of the Exchange Act (15 U.S.C. 781)
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
In January 2004, the Registrant's Board of Trustees adopted a Nominating
Committee Charter governing the affairs of the Nominating Committee of the
Board, which is posted on the PIMCO Advisors website at www.pimcoadvisors.com.
Appendix B to the Nominating Committee Charter includes "Procedures for
Shareholders to Submit Nominee Candidates, "which sets forth the procedures by
which shareholders may recommend nominees to the Registrant's Board of Trustees.
Among other requirements, the procedures provide that the recommending
shareholder must submit any recommendation in writing to the Registrant to the
attention of the Registrant's Secretary, at the address of the principal
executive offices of the Registrant and that such submission must be received at
such offices not less than 45 days nor more than 75 days prior to the date of
the Board or shareholder meeting at which the nominee would be elected. Any
recommendation must include certain biographical and other information regarding
the candidate and the recommending shareholder, and must include a written and
signed consent of the candidate to be named as a nominee and to serve as a
Trustee if elected. The foregoing description of the requirements is only a
summary and is qualified in its entirety by reference to Appendix B of the
Nominating Committee Charter.
ITEM 10. CONTROLS AND PROCEDURES
(a) The registrant's President and Chief Executive Officer and Principal
Financial Officer have concluded that the registrant's disclosure controls
and procedures (as defined in Rule 30a-2(c) under the Investment Company
Act of 1940, as amended are effective based on their evaluation of these
controls and procedures as of a date within 90 days of the filing date of
this document.
(b) There were no significant changes in the registrant's internal controls or
in factors that could affect these controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
ITEM 11. EXHIBITS
(a) Exhibit 99. Cert. - Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
(b) Exhibit 99.906 Cert. - Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) PIMCO CORPORATE OPPORTUNITY INCOME FUND
By /s/ Brian S. Shlissel
------------------------
President and Chief Executive Officer
Date August 5, 2004
-------------------
By /s/ Lawrence G. Altadonna
----------------------------
Treasurer, Principal Financial & Accounting Officer
Date August 5, 2004
-------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ Brian S. Shlissel
------------------------
President and Chief Executive Officer
Date August 5, 2004
-------------------
By /s/ Lawrence G. Altadonna
----------------------------
Treasurer, Principal Financial & Accounting Officer
Date August 5, 2004
-------------------