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 811-21076
PIMCO Municipal Income Fund II
(Exact name of registrant as specified in charter)
1345 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10105
-----------------------------------------------------
(Address of principal executive offices) (Zip code)
BRIAN S. SHLISSEL - 1345 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10105
-------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-739-3369
Date of fiscal year end: MAY 31
Date of reporting period: MAY 31
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
Annual Report
5.31.03
ITEM 1. Report to Shareholders
PIMCO MUNICIPAL INCOME FUND II
PIMCO CALIFORNIA MUNICIPAL INCOME FUND II
PIMCO NEW YORK MUNICIPAL INCOME FUND II
CONTENTS
Letter to Shareholders ........................ 1
Performance Summary and Statistics ............ 2-4
Schedules of Investments ...................... 5-21
Statements of Assets and Liabilities .......... 22
Statements of Operations ...................... 23
Statements of Changes in Net Assets ........... 24
Notes to Financial Statements ................. 25-30
Financial Highlights .......................... 31
Report of Independent Auditors ................ 32
Tax Information ............................... 33
Dividend Reinvestment Plan .................... 34
Board of Trustees ............................. 35
Privacy Policy ................................ 36
[LOGO]
PML
Listed
THE NEW YORK STOCK EXCHANGE
[LOGO]
PCK
Listed
THE NEW YORK STOCK EXCHANGE
[LOGO]
PNI
Listed
THE NEW YORK STOCK EXCHANGE
PIMCO
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ADVISORS
PIMCO MUNICIPAL INCOME FUNDS II LETTER TO SHAREHOLDERS
July 16, 2003
Dear Shareholder:
We are pleased to provide you with the initial annual report of PIMCO Municipal
Income Fund II, PIMCO California Municipal Income Fund II, and PIMCO New York
Municipal Income Fund II ("PIMCO Municipal Income Funds" or the "Funds") for the
fiscal year ended May 31, 2003.
Please refer to the following pages for specific information for each of the
Funds. If you have any questions regarding the information provided, please
contact your financial advisor or call our shareholder services area at
1-800-331-1710. Please note that a wide range of information and resources can
be accessed through our Web site, www.pimcoadvisors.com.
We at the Funds, together with PIMCO Advisors Fund Management LLC, the Funds'
investment manager and Pacific Investment Management Co. LLC, the Funds'
sub-adviser, thank you for investing with us. We remain dedicated to serving
your investment needs.
Sincerely,
/s/ Stephen Treadway /s/ Brian S. Shlissel
Stephen Treadway Brian S. Shlissel
CHAIRMAN PRESIDENT, CHIEF EXECUTIVE OFFICER
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. There is no guarantee that
these or any other investment techniques will be effective under all market
conditions.
5.31.03 | PIMCO Municipal Income Funds II Annual Report 1
PIMCO MUNICIPAL INCOME FUND II PERFORMANCE SUMMARY AND STATISTICS
(UNAUDITED)
SYMBOL: PRIMARY INVESTMENTS: INCEPTION DATE:
PML Municipal fixed-income June 28, 2002
securities, the interest from
OBJECTIVE: which is exempt from federal TOTAL NET ASSETS(1):
PIMCO Municipal income tax. $1,351.9 million
Income Fund II (at 5/31/03)
seeks to provide
income exempt from PORTFOLIO MANAGER:
federal income tax. Mark McCray
TOTAL RETURN(2): Market Price NAV
--------------------------------------------------------------------------------
Commencement of Operations (6/28/02) to 5/31/03 5.20% 9.11%
COMMON SHARE PRICE PERFORMANCE (WEEKLY):
Commencement of Operations (6/28/02) to 5/31/03
[Table below represents a line chart in the printed report.]
at Market Price at NAV
--------------- ------
6/28/02 15 14.32
15.08 14.32
15.17 14.35
15.19 14.37
15.03 14.46
15.03 14.46
15.06 14.52
15 14.57
15.02 14.5
15.04 14.63
15.02 14.77
15.11 14.89
15.04 15.1
15 15.13
15.06 15.17
15.06 15.09
14.8 14.28
14.42 14.15
14.74 14.41
14.68 14.66
14.59 14.53
14.4 14.33
14.34 14.22
14.29 14.51
14.1 14.58
14.12 14.66
14.2 14.5
14.54 14.64
14.41 14.52
14.45 14.49
14.43 14.41
14.23 14.38
14.41 14.39
14.5 14.55
14.41 14.57
14.31 14.39
14.31 14.6
14.37 14.67
14.29 14.48
14.25 14.55
14.35 14.27
14.34 14.35
14.49 14.54
14.36 14.53
14.48 14.57
14.64 14.64
14.8 14.7
14.72 14.68
5/31/03 14.8 14.66
PORTFOLIO STATISTICS:
----------------------------------------
Market Price $14.80
----------------------------------------
Net Asset Value $14.66
----------------------------------------
Market Price Yield(3) 6.84%
----------------------------------------
(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 redeemable value at
the end of the period and dividing the remainder by the initial investment and
expressing the result as a percentage. The calculation assumes that all income
dividends and capital gain distributions by the Fund have been reinvested at
prices obtained under the Fund's dividend reinvestment plan. Total investment
return does not reflect broker commissions or sales charges. Total return for a
period of less than one year is not annualized.
An investment in the Fund involves risk, including the loss of principal.
Investment return, price, yield and net asset value will fluctuate with changes
in market conditions. This data is provided for information only and is not
intended for trading purposes. A portion of the income generated by the Fund may
be subject to federal, state and local taxes, and may at times be subject to the
alternative minimum tax. Closed-end funds, unlike open-end funds, are not
continuously offered. There is a one-time public offering and once issued,
shares of closed-end funds are sold in the open market through a stock exchange.
Net asset value is total assets applicable to common shareholders less total
liabilities divided by the number of common shares outstanding. Holdings are
subject to change daily.
(3) Market Price Yield is determined by dividing the annualized per share
dividend payable to common shareholders by the market price per common share.
2 PIMCO Municipal Income Funds II Annual Report | 5.31.03
PIMCO CALIFORNIA MUNICIPAL INCOME FUND II PERFORMANCE SUMMARY AND STATISTICS
(UNAUDITED)
SYMBOL: PRIMARY INVESTMENTS: INCEPTION DATE:
PCK Municipal fixed-income June 28, 2002
securities, the interest
OBJECTIVE: from which is exempt from TOTAL NET ASSETS(1):
PIMCO California federal and California $700.0 million
Municipal Income Fund II State income tax. (at 5/31/03)
seeks to provide current
income exempt from PORTFOLIO MANAGER:
federal and California Mark McCray
State income tax.
TOTAL RETURN(2): Market Price NAV
--------------------------------------------------------------------------------
Commencement of Operations (6/28/02) to 5/31/03 4.23% 8.25%
COMMON SHARE PRICE PERFORMANCE (WEEKLY):
Commencement of Operations (6/28/02) to 5/31/03
[Table below represents a line chart in the printed report.]
at Market Price at NAV
--------------- ------
6/28/02 15 14.33
15.1 14.33
15.28 14.42
15.26 14.42
15.04 14.47
15.29 14.44
15.28 14.49
15.28 14.56
15.22 14.48
15.05 14.6
15.18 14.7
15.25 14.86
15.25 15.02
15.1 15.02
15.07 14.98
15.07 14.8
14.26 14.07
14.42 13.93
14.72 14.25
14.8 14.54
14.67 14.34
14.27 14.16
14.35 14.03
14.1 14.26
14.18 14.36
14.18 14.48
14.25 14.45
14.25 14.48
14.11 14.32
14.05 14.23
14.08 14.17
14.05 14.11
14.12 14.13
14.06 14.25
14.1 14.26
14.19 14.2
14.5 14.47
14.36 14.54
14.36 14.32
14.4 14.38
14.31 14.06
14.24 14.12
14.25 14.34
14.28 14.33
14.54 14.42
14.64 14.47
14.78 14.59
14.82 14.69
5/31/03 14.78 14.66
PORTFOLIO STATISTICS:
----------------------------------------
Market Price $14.78
----------------------------------------
Net Asset Value $14.66
----------------------------------------
Market Price Yield(3) 6.60%
----------------------------------------
(1) Inclusive of net assets to attributable Preferred Shares outstanding.
(2) PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Total return is
determined by subtracting the initial investment from the redeemable value at
the end of the period and dividing the remainder by the initial investment and
expressing the result as a percentage. The calculation assumes that all income
dividends and capital gain distributions by the Fund have been reinvested at
prices obtained under the Fund's dividend reinvestment plan. Total investment
return does not reflect broker commissions or sales charges. Total return for a
period of less than one year is not annualized.
An investment in the Fund involves risk, including the loss of principal.
Investment return, price, yield and net asset value will fluctuate with changes
in market conditions. This data is provided for information only and is not
intended for trading purposes. A portion of the income generated by the Fund may
be subject to federal, state and local taxes, and may at times be subject to the
alternative minimum tax. Closed-end funds, unlike open-end funds, are not
continuously offered. There is a one-time public offering and once issued,
shares of closed-end funds are sold in the open market through a stock exchange.
Net asset value is total assets applicable to common shareholders less total
liabilities divided by the number of common shares outstanding. Holdings are
subject to change daily.
(3) Market Price Yield is determined by dividing the annualized per share
dividend payable to common shareholders by the market price per common share.
5.31.03 | PIMCO Municipal Income Funds II Annual Report 3
PIMCO NEW YORK MUNICIPAL INCOME FUND II PERFORMANCE SUMMARY AND STATISTICS
(UNAUDITED)
SYMBOL: PRIMARY INVESTMENTS: INCEPTION DATE:
PNI Municipal fixed-income June 28, 2002
securities, the interest
OBJECTIVE: from which is exempt from TOTAL NET ASSETS(1):
PIMCO New York Municipal federal, New York State $239.5 million
Income Fund II seeks to and New York City income (at 5/31/03)
provide current income tax.
exempt from federal, New PORTFOLIO MANAGER:
York State and New York Mark McCray
City income tax.
TOTAL RETURN(2): Market Price NAV
--------------------------------------------------------------------------------
Commencement of Operations (6/28/02) to 5/31/03 3.76% 6.61%
COMMON SHARE PRICE PERFORMANCE (WEEKLY):
Commencement of Operations (6/28/02) to 5/31/03
[Table below represents a line chart in the printed report.]
at Market Price at NAV
--------------- ------
6/28/02 15 14.33
15.2 14.31
15.11 14.36
15.35 14.38
15.02 14.42
15.35 14.46
15.08 14.52
15 14.56
15.16 14.48
15.06 14.59
15.14 14.69
15.12 14.76
15.14 14.91
15.03 14.91
15.06 15.02
14.97 14.95
14.65 14.29
14.25 14.16
14.06 14.35
14.32 14.62
14.3 14.51
14.13 14.33
14.22 14.19
14.06 14.44
14.1 14.55
14.05 14.63
14.02 14.62
14.15 14.71
14.17 14.54
14.09 14.54
13.95 14.42
14.03 14.4
14 14.44
14.03 14.53
14.2 14.48
14.23 14.38
14.34 14.51
14.26 14.62
14.22 14.36
14.23 14.43
14.29 13.78
14.15 13.86
14.1 14.11
14.18 14.02
14.16 14.08
14.4 14.2
14.75 14.25
14.65 14.39
5/31/03 14.71 14.45
PORTFOLIO STATISTICS:
-------------------------------------
Market Price $14.71
-------------------------------------
Net Asset Value $14.45
-------------------------------------
Market Price Yield(3) 6.63%
-------------------------------------
(1) Inclusive of net assets to Preferred Shares outstanding.
(2) PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Total return is
determined by subtracting the initial investment from the redeemable value at
the end of the period and dividing the remainder by the initial investment and
expressing the result as a percentage. The calculation assumes that all income
dividends and capital gain distributions by the Fund have been reinvested at
prices obtained under the Fund's dividend reinvestment plan. Total investment
return does not reflect broker commissions or sales charges. Total return for a
period of less than one year is not annualized.
An investment in the Fund involves risk, including the loss of principal.
Investment return, price, yield and net asset value will fluctuate with changes
in market conditions. This data is provided for information only and is not
intended for trading purposes. A portion of the income generated by the Fund may
be subject to federal, state and local taxes, and may at times be subject to the
alternative minimum tax. Closed-end funds, unlike open-end funds, are not
continuously offered. There is a one-time public offering and once issued,
shares of closed-end funds are sold in the open market through a stock exchange.
Net asset value is total assets applicable to common shareholders less total
liabilities divided by the number of common shares outstanding. Holdings are
subject to change daily.
(3) Market Price Yield is determined by dividing the annualized per share
dividend payable to common shareholders by the market price per common share.
4 PIMCO Municipal Income Funds II Annual Report | 5.31.03
PIMCO MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
May 31, 2003
Principal
Amount Credit Ratings
(000) Moody's/S&P* Value**
--------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS & NOTES--89.2%
ALABAMA--4.9%
$ 45,645 Birmingham Waterworks & Sewer Board. Rev., Ser. B,
5.00%, 1/1/27-1/1/43 (MBIA) Aaa/AAA $ 47,331,353
1,750 Huntsville Health Care Auth., Ser. B, 5.75%, 6/1/32 A2/NR 1,838,183
16,580 Jefferson Cnty. Sewer Rev., Ser. B, 4.75%, 2/1/38 (FGIC) Aaa/AAA 16,874,958
-------------
66,044,494
-------------
ALASKA--1.3%
State Housing Fin. Corp.,
13,885 Ser. A, 5.00%, 12/1/39 Aaa/AAA 14,228,376
3,550 Ser. C, 5.25%, 6/1/32 (MBIA) Aaa/AAA 3,671,730
-------------
17,900,106
-------------
ARIZONA--0.1%
1,300 State Health Fac. Auth. Hosp. Rev., 5.75%, 12/1/32 NR/BBB 1,306,084
-------------
CALIFORNIA--2.3%
12,300 Golden State Tobacco Securitization Corp., Tobacco
Settlement Rev., Ser. 2003-A-1, 6.25%-6.75%,
6/1/33-6/1/39 Baa2/A- 11,383,575
17,955 State, GO, 5.25%, 2/1/29-4/1/32 A2/A 18,700,557
1,000 Rancho Cucamonga Community Facs. Dist. Ser. A,
6.30%, 9/1/23 NR/NR 1,035,270
-------------
31,119,402
-------------
COLORADO--4.9%
30,000 Dawson Ridge Dist. No. 1, GO, Ser. A,
zero coupon, 10/1/22 Aaa/NR 12,086,700
5,000 Denver Co. City & Cnty. Cert. of Participation, Ser. B,
5.50%, 12/1/25 (AMBAC) Aaa/AAA 5,521,950
25,000 Health Fac. Auth. Rev., Catholic Health Initiatives-A,
5.50%, 3/1/32 Aa2/AA 25,892,250
18,305 Health Fac. Auth. Rev., Exempla Inc., Ser. A,
5.625%, 1/1/33 A1/A 19,039,214
6,500 Health Fac. Auth. Rev., Liberty Height, Retirement Fac.,
zero coupon, 7/15/22 Aaa/AAA 2,638,025
-------------
65,178,139
-------------
DISTRICT OF COLUMBIA--1.3%
17,500 Washington DC Convention Ctr. Auth. Tax Rev.,
4.75%, 10/1/28 (AMBAC) Aaa/AAA 17,761,975
-------------
FLORIDA--4.2%
8,000 Highlands Cnty. Health Fac. Auth. Rev., Ser. A,
6.00%, 11/15/31 A3/A- 8,615,360
635 Hillsborough Cnty. Health Fac. Indl. Dev. Rev.,
5.625%, 8/15/23 Baa2/BBB 634,562
2,335 Hillsborough Cnty. Pollution Control Rev.,
Tampa Electric Co. Proj., 5.50%, 10/1/23 B aa/BBB- 2,323,488
7,135 Jacksonville Health Facs. Auth. Rev., Ser. A,
5.25%, 11/15/32 Aa2/AA 7,384,297
5,350 Lakeland Elec. & Water Rev., Ser. A,
5.00%, 10/1/28 (MBIA) Aaa/AAA 5,611,187
5.31.03 | PIMCO Municipal Income Funds II Annual Report 5
PIMCO MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
May 31, 2003
Principal
Amount Credit Ratings
(000) Moody's/S&P* Value**
--------------------------------------------------------------------------------------------------------------
FLORIDA--(CONTINUED)
$ 11,500 Lakeland Hosp. Syst. Rev., Regional Health Sys.,
5.50%, 11/15/32 A1/NR $ 11,868,575
3,000 Leesburg Hosp. Rev., Leesburg Regional Medical Center,
5.50%, 7/1/32 A2/A 3,077,400
1,410 Melbourne Water & Sewer Rev., Ser. A,
5.00%, 10/1/32 (FGIC) Aaa/AAA 1,482,869
7,550 Orange Cnty. Health Fac., Adventist Health Sys.,
5.625%-6.25%, 11/15/24-11/15/32 A3/A- 8,182,278
6,615 State Board Education Ser. B, GO, 5.00%, 6/1/27 (FGIC) Aaa/AAA 6,965,926
1,500 Winter Springs Water & Sewer Rev.,
zero coupon, 10/1/29 (FGIC) Aaa/AAA 417,255
-------------
56,563,197
-------------
GEORGIA--1.1%
9,000 Atlanta Water & Wastewater, Ser. A,
5.00%, 11/1/39 (MBIA) Aaa/AAA 9,400,860
1,500 Grantor Trust Gov't Cert. of Participation Ser. A,
4.75%, 6/1/28 (MBIA) Aaa/AAA 1,583,790
9,600 Richmond Cnty. Dev Auth. Rev., zero coupon, 12/1/21 Aaa/NR 4,081,632
-------------
15,066,282
-------------
HAWAII--1.5%
19,170 Honolulu City & Cnty. Wastewater Syst. Rev.,
First Board Resolution, 4.75%, 7/1/28 (FGIC) Aaa/NR 19,655,576
-------------
ILLINOIS--16.9%
11,760 Central Lake Cnty. Water Agy. Rev., Ser. A,
5.125%, 5/1/28-5/1/32 (AMBAC) Aaa/NR 12,429,144
5,000 Cicero Corp. GO, 5.25%, 12/1/31 (MBIA) Aaa/AAA 5,384,550
5,050 Chicago GO, Ser. A, 5.125%, 1/1/29 (FGIC) Aaa/AAA 5,259,828
94,485 Chicago City Colleges GO, zero coupon,
1/1/37-1/1/39 (FGIC) Aaa/AAA 16,654,216
Chicago Board of Education School Reform GO,
5,000 Ser. A, zero coupon, 12/1/28 (FGIC) Aaa/AAA 1,423,350
4,500 zero coupon, 12/1/31 (FGIC) Aaa/AAA 1,095,750
7,000 Chicago Midway Arpt. Rev., Ser. B, 5.00%, 1/1/31 (MBIA) Aaa/AAA 7,208,740
9,862 Chicago Special Assessment, Lake Shore East
6.625%-6.75%, 12/1/22-12/1/32 NR/NR 10,213,519
144,650 Dev. Fin. Auth. Retirement Housing Rev.,
zero coupon, 7/15/23-7/15/25 NR/AAA 49,800,878
20,100 Health Facs. Auth. Rev., Elmurst Memorial Healthcare,
5.625%, 1/1/28 A2/A- 20,829,027
110,000 Metropolitan Pier & Exposition Auth.,
zero coupon, 12/15/30-12/15/33 (MBIA) Aaa/AAA 26,336,200
68,470 State Sports Facs. Auth, 5.50%, 6/15/30 (AMBAC) Aaa/AAA 50,582,897
17,720 Univ. of Chicago Edl. Facs. Auth. Rev., Ser. A,
5.25%, 7/1/41 Aa1/AA 18,809,071
-------------
226,027,170
-------------
6 PIMCO Municipal Income Funds II Annual Report | 5.31.03
PIMCO MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
May 31, 2003
Principal
Amount Credit Ratings
(000) Moody's/S&P* Value**
--------------------------------------------------------------------------------------------------------------
INDIANA--0.4%
$ 500 State Bank Rev., Ser. D, 5.25%, 4/1/30 (AMBAC) Aaa/AAA $ 534,925
4,125 Fort Wayne Pollution Control Rev., 6.20%, 10/15/25 A3/BBB 4,424,269
-------------
4,959,194
-------------
KANSAS--0.2%
2,800 Univ. of Kansas, Hosp. Auth. Health Facs. Rev.,
5.625%, 9/1/32 NR/A- 2,904,916
-------------
KENTUCKY--0.2%
2,500 Economic Dev. Finance Auth. Hospital Facs. Rev.,
5.25%, 10/1/30 A1/AA- 2,587,400
-------------
IOWA--0.5%
8,850 Tobacco Settlement Auth., Ser. B, 5.60%, 6/1/35 Baa1/A- 6,863,971
-------------
LOUISIANA--4.3%
20,400 Ochsner Clinic Foundation Pub. Facs. Auth. Rev., Ser. B,
5.50%, 5/15/32 A3/NR 21,045,864
44,395 Tobacco Settlement Financing Corp., Ser. 2001B,
5.875%, 5/15/39. A1/A 36,148,629
-------------
57,194,493
-------------
MARYLAND--0.1%
1,000 State Health & Higher Educational. Fac. Auth.
Rev. John Hopkins Univ., Ser. B, 5.00%, 1/1/25 Aa2/Baa1 1,024,630
-------------
MASSACHUSETTS--6.2%
1,300 Massachusetts Bay Trans. Auth., Ser. A,
4.75%, 3/1/21 (MBIA) Aaa/AAA 1,344,447
32,000 Massachusetts Bay Trans. Auth., Sales Tax Rev., Ser. A,
5.00%, 7/1/32 Aaa2/AAA 33,544,960
20,000 State GO, Ser. C, 5.25%, 11/1/30 Aa2/AA- 21,440,600
4,295 State Turnpike Auth., Ser. A, 4.75%,
1/1/34 (AMBAC) Aaa/AAA 4,384,808
State Water Reserve Auth.,
19,300 Ser. A 4.75%, 8/1/37 Aaa/AAA 19,527,740
2,300 Ser. B, 4.75%, 12/1/21 Aaa/AAA 2,383,674
-------------
82,626,229
-------------
MICHIGAN--3.8%
10,250 Detroit City School Dist. Ser. A, 5.00%-5.125%,
5/1/31-5/1/32 Aaa/AAA 10,813,080
2,500 Detroit Water Supply Sys. Ser. A, 5.00%, 7/1/30 (FGIC)Aaa/AAA 2,618,250
15,425 State Hosp. Fin. Auth. Rev., Oakwood Obligation Group,
Ser. A, 5.75%-6.00%, 4/1/22-4/1/32 A2/A 16,167,460
5,000 State Hosp. Fin. Auth. Rev., Ascension Health, Ser. B,
5.25%, 11/15/26 Aa2/AA 5,183,000
7,775 West Ottawa Pub. School Dist., Ser. A, 5.00%, 5/1/32 Aaa/AAA 8,130,939
8,000 Whitehall Dist. Schools, 5.00%, 5/1/27 Aaa/AAA 8,362,640
-------------
51,275,369
-------------
MISSISSIPPI--0.4%
3,605 Business Finance Corp., Pollution Control Rev.,
5.875%, 4/1/22 Ba1/BBB- 3,606,586
5.31.03 | PIMCO Municipal Income Funds II Annual Report 7
PIMCO MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
May 31, 2003
Principal
Amount Credit Ratings
(000) Moody's/S&P* Value**
--------------------------------------------------------------------------------------------------------------
MISSISSIPPI--(CONTINUED)
$ 1,000 State Dev. Bank Oblig., Projects & Equipment Acquisitions,
5.00%, 7/1/24 (AMBAC) Aaa/AAA $ 1,108,140
-------------
4,714,726
-------------
MISSOURI--0.1%
1,500 St. Louis Parking Facs. Rev., Downtown Parking Facility,
6.00%, 2/1/28 NR/NR 1,536,450
-------------
NEVADA--1.9%
3,400 Clark Cnty. GO, 5.00%, 6/1/31 (FGIC) Aaa/AAA 3,564,220
17,030 Reno Lien Transp., 5.125%-5.25%, 6/1/27-6/1/41 (AMBAC) Aaa/AAA 18,172,505
3,290 Truckee Meadows Water Auth Rev., Ser. A,
5.125%, 7/1/30 (FSA) Aaa/AAA 3,466,541
-------------
25,203,266
-------------
NEW HAMPSHIRE--0.2%
3,000 Health & Educational Facs. Auth. Rev., 6.125%, 7/1/32 Baa1/BBB+ 3,108,480
-------------
NEW JERSEY--2.0%
60 Camden Cnty. Impt. Auth. Rev., Cooper Health,
5.875%-6.00%, 2/15/15-2/15/27 Ba3/NR 55,581
15,405 Economic Dev. Auth., Kapkowski Landfill Proj.,
5.75%, 10/1/21-4/1/31 Baa3/NR 16,301,227
750 Economic Dev. Auth., Arbor Glen, Ser. A, 6.00%, 5/15/28 NR/NR 677,542
3,500 State Educational Fac. Auth. Rev., Ser. D, 6.00%, 7/1/25 NR/NR 3,697,575
6,000 Tobacco Settlement Financing Corp., Rev.,
6.125%-6.75%, 6/1/39-6/1/42 Baa2/A- 5,346,655
-------------
26,078,580
-------------
NEW MEXICO--0.4%
3,000 Farmington Pollution Control Rev., 5.80%, 4/1/22 Baa3/NR 3,018,840
2,000 Farmington Pollution Control Rev., 5.80%, 4/1/22 Baa3/BBB- 2,010,660
-------------
5,029,500
-------------
NEW YORK--0.8%
10,600 Metropolitan Trans. Auth., Ser. A, 5.00%, 11/15/30 (FSA) Aaa/AAA 11,187,664
-------------
NORTH CAROLINA--1.5%
11,105 Cap. Facs. Fin. Agy. Rev., Duke Univ., Ser. A,
5.125%, 7/1/42 Aa1/AA+ 11,697,341
7,500 Lorian Cnty. Hospital Rev., 5.375%, 10/1/30 A1/AA- 7,772,625
-------------
19,469,966
-------------
PENNSYLVANIA--3.2%
7,250 Allegheny Cnty. Hosp. Dev. Auth. Rev., Ser. B,
9.25%, 11/15/15-11/15/30 B1/B+ 8,131,830
4,500 Cumberland Cnty. Auth. Rev., Ser A, 7.25%, 1/1/35 NR/NR 4,592,835
8,750 Montgomery Cnty. Higher Education & Health Auth.
Hosp. Rev. Ser. A, 5.125%, 6/1/27-6/1/32 NR/A 8,841,088
5,000 Philadelphia Auth. Dev. Lease Rev.,
Ser. B, 5.25%, 10/1/30 (FSA) Aaa/AAA 5,397,050
3,050 Philadelphia Auth. Indl. Dev. Rev. Doubletree,
6.50%, 10/1/27 NR/NR 3,098,586
3,000 Philadelphia GO, 5.25%, 9/15/25 (FSA) Aaa/AAA 3,227,640
8 PIMCO Municipal Income Funds II Annual Report | 5.31.03
PIMCO MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
May 31, 2003
Principal
Amount Credit Ratings
(000) Moody's/S&P* Value**
--------------------------------------------------------------------------------------------------------------
PENNSYLVANIA--(CONTINUED)
$ 8,520 Philadelphia Hosp. & Higher Ed. Facs. Auth. Rev.,
6.85%, 7/1/22 Baa2/BBB $ 8,696,705
500 Pittsburgh & Allegheny Cnty. Pub. Auditorium,
5.00%, 2/1/29 (AMBAC) Aaa/AAA 525,430
-------------
42,511,164
-------------
RHODE ISLAND--4.2%
65,000 Tobacco Settlement Financing. Corp., Ser. A,
6.25%, 6/1/42 Baa2/A- 55,492,450
-------------
SOUTH CAROLINA--5.5%
27,745 Greenville Cnty. School District, 5.50%, 12/1/28 A1/AA- 29,497,652
18,120 Jobs Economic Dev. Auth. Economic Dev. Rev.,
5.625%, 11/15/30 A3/A- 18,936,125
20,000 Lexington Cnty. Health Services Dist. Inc. Hosp. Rev.,
5.50%-5.75%, 11/1/28-11/1/32 A2/A 20,919,750
3,250 Tobacco Settlement Rev., Ser. B, 6.375%, 5/15/28 A1/A 2,941,217
1,180 Transp. Infrastructure Rev., Ser. A, 5.00%, 10/1/29 (AMBAC) Aaa/NR 1,248,227
-------------
73,542,971
-------------
TENNESSEE--0.3%
3,750 Knox Cnty. Health Educational & Housing Facs. Board,
Hospital Facs. Rev., 5.25%, 10/1/30 A1/AA- 3,904,012
-------------
TEXAS--11.6%
1,000 Arlington Indpt. School Dist, GO, 5.00%, 2/15/24 Aaa/NR 1,043,710
4,480 Aubrey Indpt. School Dist., GO, 5.50%, 2/15/33 Aaa/NR 4,485,690
6,500 Brazos Cnty. Health Facs. Dev. Corp.,
Franciscan Services Corp., 5.375%, 1/1/32 NR/A- 6,586,060
2,700 Comal Cnty. Health Facs., Mckenna Memorial Hosp.,
6.25%, 2/1/32 Baa2/BBB 2,790,639
Dallas Area Rapid Transit.,
9,070 5.00%, 12/1/31 (AMBAC) Aaa/AAA 9,484,771
12,975 5.00%, 12/1/32 (FGIC) Aaa/AAA 13,635,428
500 El Paso Intl. Airport Rev., Marriott Corp., 7.875%, 3/1/22 Ba3/NR 505,220
20,000 Frisco Indpt. School Dist. GO, zero coupon, 8/15/34 Aaa/NR 4,194,400
10,260 Galena Park Indpt. School Dist., GO, zero coupon, 8/15/31 Aaa/AAA 2,521,190
19,750 Harris Cnty. GO, 4.75%, 8/15/31 Aa1/AA+ 20,700,370
5,250 Harris Cnty. Health Facs. Dev. Corp. Rev., Ser. A,
5.375%, 2/15/26 NR/AA- 5,444,985
25,000 Harris Cnty. Senior Lien Toll Road, 5.00%, 8/15/30 (FSA) Aaa/AAA 26,219,500
7,500 Keller Indpt. School Dist. GO, 4.875%, 8/15/31 Aaa/AAA 7,690,950
3,170 Little Elm Indpt. School Dist. Ser. A, GO, 5.30%, 8/15/29 NR/AAA 3,305,644
6,250 North Dallas Thruway Auth., 4.75%, 1/1/29 (FGIC) Aaa/AAA 6,344,562
5,000 Quinlin Indpt. School Dist. Go, 5.10%, 2/15/32 Aaa/NR 5,214,550
State Turnpike Auth. Highway Imps. Rev.,
10,000 zero coupon, 8/15/19 (AMBAC) Aaa/AAA 4,825,300
8,880 5.00%, 8/15/42 (AMBAC) Aaa/AAA 9,217,618
4,900 State Water Financial Assistance, GO,
5.00%-5.25%, 8/1/35-8/1/36 Aa1/AA 5,122,807
7,400 University Rev., Ser. B, 5.00%, 8/15/33 Aaa/AAA 7,798,564
5.31.03 | PIMCO Municipal Income Funds II Annual Report 9
PIMCO MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
May 31, 2003
Principal
Amount Credit Ratings
(000) Moody's/S&P* Value**
--------------------------------------------------------------------------------------------------------------
TEXAS--(CONTINUED)
$ 8,000 Wichita Falls Water & Sewer Rev.,
5.00%, 8/1/27 (AMBAC) Aaa/AAA $ 8,387,040
-------------
155,518,998
-------------
VIRGINIA--0.5%
6,500 Fredericksburg Industrial Dev., Medicorp Health Syst.,
Ser. B, 5.125%-5.25%, 6/15/27-6/15/33 A3/NR 6,660,425
-------------
WASHINGTON--1.6%
15,000 King Cnty. Sewer Rev., Ser. A, 5.00%, 1/1/35 (FSA) Aaa/AAA 15,691,200
5,000 Tacoma Sewer Rev., Ser. A, 5.00%, 12/1/31 (FGIC) Aaa/AAA 5,232,300
-------------
20,923,500
-------------
WISCONSIN--0.8%
9,725 Badger Tobacco Asset Securitization Corp.,
6.125%, 6/1/27 Baa2/A- 9,299,531
1,000 State Health & Educational Facs. Auth. Rev.,
5.375%, 10/1/30 NR/A+ 1,025,130
-------------
10,324,661
-------------
Total Municipal Bonds & Notes (cost-$1,130,991,337) 1,191,265,440
-------------
-------------------------------------------------------------------------------------------------------------
VARIABLE RATE NOTES (a)(b)(g)--9.4%
-------------------------------------------------------------------------------------------------------------
ALABAMA--1.3%
3,960 Birmingham Waterworks & Sewer Board. Rev.,
Ser. 781, 18.65%, 1/1/33 (MBIA) Aaa/NR 5,114,023
6,675 Jefferson Cnty. Sewer Rev., Ser. 352,
14.02%, 2/1/36 (FGIC) Aaa/NR 9,906,968
2,100 Montgomery Care Fac., Ser. 435,
13.23%, 11/15/29 (MBIA) Aaa/NR 2,378,964
-------------
17,399,955
-------------
COLORADO--0.2%
2,813 Denver City & Cnty. Airpt Rev., Ser. 425,
15.47%, 11/15/25 (FSA) Aaa/NR 3,197,138
-------------
FLORIDA--0.6%
2,228 Orange Cnty. School Board, Ser. 328,
15.38%, 8/1/24 (MBIA) Aaa/NR 2,691,889
4,052 State Governmental Utilities Rev., Ser. 327,
15.38%, 10/1/29 (AMBAC) Aaa/NR 4,833,440
-------------
7,525,329
-------------
ILLINOIS--0.9%
Chicago GO,
2,225 Ser. 332, 15.88%, 1/1/28 (MBIA) Aaa/NR 2,648,195
3,300 Ser. 426, 14.90%, 1/1/40 (FGIC) Aaa/NR 4,438,896
1,932 Cook Cnty., Ser. 403,
13.23%, 11/15/28 (FGIC) Aaa/NR 2,233,469
2,200 State GO, Ser. 783, 18.65%, 4/1/27 Aaa/NR 2,912,844
-------------
12,233,404
-------------
INDIANA--0.6%
6,429 Indianapolis Local Public Improvement Bond Bank,
Ser. 784, 18.65%, 7/1/33 (MBIA). Aaa/NR 8,515,255
-------------
10 PIMCO Municipal Income Funds II Annual Report | 5.31.03
PIMCO MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
May 31, 2003
Principal
Amount Credit Ratings
(000) Moody's/S&P* Value**
--------------------------------------------------------------------------------------------------------------
MASSACHUSETTS--2.8%
$ 2,100 Boston Water & Sewer Community Rev.,
Ser. 434, 13.37%, 11/1/28 (FGIC) Aa2/NR $ 2,430,792
2,420 State GO, Ser. 785, 18.87%, 11/1/30 (FGIC) Aaa/NR 3,255,432
1,190 State College Bldg. Auth. Proj. Rev.,
66.986%-67.852%, 11/1/22-11/1/31 NR/NR 4,537,185
State Turnpike Auth. Rev.,
8,498 Ser. 335, 13.37%, 1/1/39 (AMBAC) Aaa/NR 9,590,958
4,500 Ser. 489, 13.37%, 1/1/37 (AMBAC) Aaa/NR 5,001,300
11,049 Ser. 334, 13.37%, 1/1/37 (AMBAC) Aaa/NR 12,279,859
-------------
37,095,526
-------------
MICHIGAN--0.5%
4,950 Detroit Water Supply Sys., Ser. 782,
18.65%, 7/1/32 (MBIA) Aaa/NR 6,679,976
-------------
NEVADA--0.3%
3,300 State GO, Ser. 344, 13.07%, 5/15/28 (FGIC) Aaa/NR 3,778,896
-------------
OHIO--0.2%
1,975 Hamilton Cnty. Sales Tax, Ser. 356,
15.59%, 12/1/27 (MBIA) Aaa/NR 2,340,770
-------------
PENNSYLVANIA--0.5%
Philadelphia School Dist., GO,
2,505 Ser. 345, 12.24%, 4/1/27 (MBIA) Aaa/NR 2,713,917
4,016 Ser. 496, 12.42%, 4/1/27 (MBIA) Aaa/NR 4,350,393
-------------
7,064,310
-------------
TEXAS--1.3%
3,075 Denton Util. Sys. Rev., Ser. 428,
16.09%, 12/1/29 (MBIA) Aaa/NR 3,732,558
1,650 Houston Arpt. Sys. Rev., Ser. 404,
13.02%, 7/1/25 (FGIC) Aaa/NR 1,819,092
Houston Water & Sewer Syst. Rev.,
2,750 Ser. 427, 15.59%, 12/1/28 Aaa/NR 3,201,110
3,838 Ser. 495, 16.59%, 12/1/30 NR/AAA 4,813,453
3,080 State Affordable Housing, American Housing Foundation,
Ser. A, Ser. 780, 19.34%, 9/1/22 (MBIA) 4,192,650
-------------
17,758,863
-------------
WASHINGTON--0.2%
2,730 Central Puget Sound Regl. Tran. Auth. Sales Tax & Motor,
Ser. 360, 12.24%, 2/1/28 Aaa/NR 2,961,395
-------------
Total Variable Rate Notes (cost-$102,468,100) 126,550,817
-------------
-------------------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS (e)--2.2%
-------------------------------------------------------------------------------------------------------------
29,285 1.0148%-1.0899%, 8/7/03-8/14/03
Total U.S. Treasury Bills (cost-$29,223,729) Aaa/AAA 29,223,499
-------------
TOTAL INVESTMENTS, BEFORE CALL OPTIONS WRITTEN
(cost-$1,262,683,166+)--100.8% 1,347,039,756
-------------
5.31.03 | PIMCO Municipal Income Funds II Annual Report 11
PIMCO MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
May 31, 2003
Credit Ratings
Moody's/S&P* Value**
--------------------------------------------------------------------------------------------------------------
CALL OPTIONS WRITTEN (f)--(0.8)%
--------------------------------------------------------------------------------------------------------------
Contracts
U.S. Treasury Bond Futures, Chicago Board of Trade:
(686) Strike price $116, expires 6/20/03 $ (2,422,438)
(393) Strike price $114, expires 6/20/03 (2,093,953)
(1,508) Strike price $116, expires 8/22/03 (6,786,000)
--------------
Total call options written (premiums received-$2,227,143) (11,302,391)
--------------
TOTAL INVESTMENTS, NET OF CALL OPTIONS WRITTEN
(cost-$1,260,456,023)--100% $1,335,737,365
--------------
----------
+ The cost basis of portfolio securities for federal income tax purposes is
$1,262,683,166. Aggregate gross unrealized appreciation for securities in
which there is an excess of value over tax cost is $96,259,339 aggregate
gross unrealized depreciation for securities in which there is an excess of
tax cost over value is $11,902,749 and net unrealized depreciation for
federal income tax purposes is $84,356,590.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
12 PIMCO Municipal Income Funds II Annual Report | 5.31.03
PIMCO CALIFORNIA MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
May 31, 2003
Principal
Amount Credit Ratings
(000) Moody's/S&P* Value**
--------------------------------------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS & NOTES--83.0%
--------------------------------------------------------------------------------------------------------------
$ 34,300 ABAG Financing Auth. Rev., Ser. A,
5.20%-5.35%, 11/15/22-11/15/32 NR/A $ 35,561,507
ABC Unified School Dist. GO,
2,000 zero coupon, 8/1/23, Ser. B (FGIC) Aaa/AAA 767,220
2,150 zero coupon, 8/1/30-8/1/31 (FGIC) Aaa/AAA 555,603
1,000 Alpine Union School Dist. GO, Ser. B,
zero coupon, 8/1/24 (FSA) Aaa/AAA 362,040
8,115 Anaheim City School Dist. GO, 5.00%, 8/1/26 (FGIC) Aaa/AAA 8,622,918
53,000 Bakersfield, CP, Ser. B, zero coupon, 4/15/21 NR/AAA 23,438,190
1,965 Bay Area Govt. Assoc. Improvement Bd. Act 1915,
6.30%, 9/2/25 NR/NR 2,041,104
2,000 Bay Area Govt. Assoc. Lease Rev., Ser. 2002-1,
5.00%, 7/1/32 (AMBAC) Aaa/AAA 2,114,720
1,085 Capistrano Unified School Dist., Community Fac. Dist.
Special Tax, 5.70%, 9/1/20 NR/NR 1,095,188
565 Catholic Health Facs. Fin. Auth. Rev., Ser. A,
5.00%, 7/1/28 Baa2/BBB 534,869
2,300 Ceres Unified School Dist., GO, zero coupon, 8/1/27 (FGIC) Aaa/AAA 621,046
9,865 Chula Vista Special Tax, 6.05%-6.20%, 9/1/25-9/1/33 NR/NR 10,063,267
8,035 Clovis Unified School District, GO, Ser. B,
zero coupon, 8/1/23-8/1/27 (FGIC) Aaa/AAA 2,747,358
1,410 Community College Financing Auth. Lease Rev., Ser. A,
5.00%, 8/1/27 (AMBAC) Aaa/AAA 1,498,816
6,355 Corona-Norco Unified School Dist., Public Financing Auth.
Special Tax, Ser. A, 5.55%-6.10%, 9/1/15-9/1/32 NR/NR 6,475,861
1,110 Corona-Norco Unified School Dist. Special Tax,
5.10%, 9/1/25 (AMBAC) Aaa/AAA 1,185,791
2,800 Cotati Redev. Agcy. Tax Allocation, Ser. A,
5.00%, 9/1/31 (MBIA) Aaa/AAA 2,950,528
3,000 Dinuba Financing Auth. Lease Rev., 5.10%, 8/1/32 (MBIA) Aaa/AAA 3,232,860
2,825 Empire Union School Dist. Special Tax.,
zero coupon, 10/1/30-10/1/32 (AMBAC) Aaa/AAA 708,787
1,000 Escondido Union School Dist. GO,
zero coupon, 8/1/27 (FSA) Aaa/AAA 308,340
2,440 Eureka Unified School Dist. GO, zero coupon, 8/1/27 (FSA) Aaa/AAA 752,350
Foothill Eastern Corrider Agcy. Toll Road Rev.,
42,010 zero coupon, 1/1/25-1/1/30, Ser. A Aaa/AAA 13,290,392
1,500 zero coupon, 1/15/27 (MBIA) Aaa/AAA 1,193,895
400 Franklin-McKinley School Dist. GO,
5.00%, 8/1/27 Ser. B (FSA) Aaa/AAA 425,196
47,900 Golden State Tobacco Securitization Corp. Rev.,
Ser. 2003-A-1, 6.25%-6.75%, 6/1/33-6/1/39 A3/A- 44,351,995
850 Golden Valley Unified School Dist. GO, Ser. B,
zero coupon, 8/1/35 (FGIC) Aaa/AAA 175,304
2,115 Health Facs. Financing Auth. Rev., 5.375%, 11/1/20 NR/A 2,294,394
1,750 Huntington Beach Community Facs. Dist. Special Tax,
6.30%, 9/1/32 NR/NR 1,800,383
5.31.03 | PIMCO Municipal Income Funds II Annual Report 13
PIMCO CALIFORNIA MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
May 31, 2003
Principal
Amount Credit Ratings
(000) Moody's/S&P* Value**
--------------------------------------------------------------------------------------------------------------
$ 2,080 Industry Urban Dev. Agcy. Tax Allocation,
4.75%, 5/1/21 (MBIA) Aaa/AAA $ 2,160,122
7,000 Irvine Improvement Board Act 1915 Special Assessment,
5.70%, 9/2/26 NR/NR 7,135,310
1,900 Jurupa Unified School Dist. GO, zero coupon, 5/1/27 (FGIC) Aaa/AAA 585,846
2,450 Kings Canyon JT Unified School Dist. GO,
zero coupon, 8/1/27 (FGIC) Aaa/AAA 755,433
5,300 Livermore-Amador Valley Water Management Agcy.,
Sewer Rev., 5.00%, 8/1/31 (AMBAC) Aaa/AAA 5,582,543
5,935 Long Beach Unified School Dist., GO, Ser. C,
5.00%, 8/1/27 (MBIA) Aaa/NR 6,289,616
Los Angeles, CP,
9,895 5.00%, 2/1/27 (MBIA) Aaa/AAA 10,441,996
2,685 5.00%, 10/1/27, Ser. AU (MBIA) Aaa/AAA 2,842,797
7,200 Los Angeles Wastewater Syst. Rev., Ser. A,
5.00%, 6/1/30 (FGIC) Aaa/AAA 7,594,560
3,475 Loyola Marymount University Educational Facs. Auth. Rev.,
zero coupon, 10/1/34 (MBIA) Aaa/NR 746,604
1,000 Manhattan Beach Unified School Dist. GO,
zero coupon, 9/1/25 (FGIC) Aaa/AAA 340,720
7,295 Manteca Redev. Agcy. Tax Allocation,
5.00%, 10/1/32 (FSA) Aaa/AAA 7,735,180
Manteca Unified School Dist. Special Tax,
5,330 5.00%, 9/1/29, Ser. C Aaa/AAA 5,653,478
2,365 zero coupon, 9/1/25 (MBIA) Aaa/AAA 805,803
4,000 Merced Cnty., CP, 5.00%, 6/1/32 (AMBAC) Aaa/NR 4,216,120
7,320 Modesto Elementary School Dist., Stanislaus Cnty. GO,
Ser. A, zero coupon, 8/1/23-5/1/27 (FGIC) Aaa/AAA 2,606,678
2,150 Modesto High School Dist., Stanislaus Cnty. GO, Ser. A,
zero coupon, 8/1/26 (FGIC) Aaa/AAA 697,589
1,000 Modesto Public Financing Auth. Lease Rev.,
5.00%, 9/1/29 (AMBAC) Aaa/AAA 1,051,870
2,385 Monrovia Financing Auth. Lease Rev.,
5.125%, 12/1/31 (AMBAC) Aaa/AAA 2,579,950
Montebello Unified School Dist. GO,
7,105 zero coupon, 8/1/24-8/1/27 (FGIC) Aaa/AAA 2,366,818
1,485 zero coupon, 8/1/24 (FSA) Aaa/AAA 537,629
2,400 Morgan Hill Unified School Dist. GO,
zero coupon, 8/1/23 (FGIC) Aaa/AAA 920,664
1,500 Mountain View-Whisman School Dist. GO, Ser. D,
5.00%, 6/1/27 (MBIA) Aaa/AAA 1,593,315
1,800 Murrieta Redev. Agcy. Tax, 5.00%, 8/1/32 (MBIA) Aaa/AAA 1,907,370
3,245 Newark Unified School Dist. GO, Ser. D,
zero coupon, 8/1/26 (FSA) Aaa/AAA 1,041,028
2,750 North City West School Facs. Financing Auth., Special Tax,
zero coupon, 9/1/27 (AMBAC) Aaa/AAA 844,497
3,580 Oakland Redev. Agcy. Tax Allocation,
5.25%, 9/1/27-9/1/33 NR/A- 3,739,662
14 PIMCO Municipal Income Funds II Annual Report | 5.31.03
PIMCO CALIFORNIA MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
May 31, 2003
Principal
Amount Credit Ratings
(000) Moody's/S&P* Value**
--------------------------------------------------------------------------------------------------------------
$ 1,000 Orange Cnty. Community Facs. Dist. Special Tax, Ser. A,
6.00%, 8/15/25 NR/NR $ 1,029,880
7,625 Orange Cnty. Water Dist. CP, Rev., Ser. B,
5.00%, 8/15/34 (MBIA) Aaa/AAA 8,080,822
3,685 Palmdale Community Redev. Agcy. Tax Allocation,
zero coupon, 12/1/30-12/1/32 (AMBAC) Aaa/AAA 911,509
1,750 Paramount Unified School Dist. GO, Ser. B,
zero coupon, 9/1/23 (FSA) Aaa/AAA 668,658
Perris Public Financing Auth. Rev.,
1,190 4.75%, 10/1/23, Ser. B (MBIA) Aaa/AAA 1,239,718
2,580 5.375%-5.625%, 10/1/20-10/1/31, Ser. C NR/BBB 2,716,724
14,200 Poway Unified School Dist. Special Tax,
5.50%-6.125%, 9/1/25-9/1/33 NR/NR 14,233,848
2,000 Rancho Cucamonga Community Facs. Dist., Special Tax,
Ser. A, 6.375%, 9/1/31 NR/NR 2,057,520
1,500 Richmond Wastewater Rev., zero coupon, 8/1/30 (FGIC) Aaa/AAA 396,465
17,500 Rocklin Unified School Dist. GO,
zero coupon, 8/1/24-8/1/27 (FGIC) Aaa/AAA 5,863,930
9,250 Roseville Redev. Agcy. Tax Allocation,
5.00%, 9/1/27-9/1/33 (MBIA) Aaa/AAA 9,813,223
Sacramento City Financing Auth. Rev., Ser. A,
4,500 5.00%, 12/1/32 (FSA) Aaa/AAA 4,754,160
4,935 6.25%, 9/1/23 NR/NR 5,155,792
16,000 Sacramento Cnty. Airport Syst. Rev., Ser. A,
5.00%, 7/1/32 (FSA) Aaa/AAA 16,809,120
1,500 San Diego Public Facs. Financing Auth. Lease Rev.,
5.00%, 4/1/32 (MBIA) Aaa/AAA 1,579,725
1,000 San Diego Public Facs. Financing Auth. Sewer Rev., Ser. A,
5.00%, 5/15/29 (FGIC) Aaa/AAA 1,057,620
16,285 San Diego Cnty. Water Auth. Water Rev., CP, Ser. A,
5.00%, 5/1/28-5/1/29 (MBIA) Aaa/AAA 17,270,605
San Francisco City & Cnty. Airport Community, Int'l Airport Rev.,
5,585 4.50%, 5/1/28, Ser. 15B (MBIA) Aaa/AAA 5,613,260
20,300 5.00%, 5/1/32, Ser. 28B (MBIA) Aaa/AAA 21,310,940
7,660 San Francisco City & Cnty. Public Utilities Community
Water Rev., Ser. A, 5.00%, 11/1/27 (MBIA) Aaa/AAA 8,113,625
10,405 San Joaquin Hills Transportation Corridor Agcy.
Toll Road Rev., zero coupon, 1/1/25 AAA/AAA 3,787,004
10,190 San Jose, GO, 5.125%, 9/1/31 (MBIA) Aa1/AA+ 10,825,652
7,875 San Juan Unified School Dist. GO,
zero coupon, 8/1/23-8/1/26 (FSA) Aaa/AAA 2,659,818
5,000 Santa Margarita Community Fac. Water Dist. Special Tax,
6.00%-6.25%, 9/1/29-9/1/30 NR/NR 5,142,730
2,300 San Mateo Union High School Dist. GO,
zero coupon, 9/1/20 (FGIC) Aaa/AAA 1,053,538
4,835 San Mateo Foster City School Dist. GO,
5.10%, 8/1/31 (FGIC) Aaa/AAA 5,155,174
5.31.03 | PIMCO Municipal Income Funds II Annual Report 15
PIMCO CALIFORNIA MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
May 31, 2003
Principal
Amount Credit Ratings
(000) Moody's/S&P* Value**
--------------------------------------------------------------------------------------------------------------
$ 1,730 San Rafael City High School Dist. GO, Ser. B,
5.00% 8/1/27 (FSA) Aaa/AAA $ 1,836,931
3,280 San Rafael Elementary School Dist. GO, Ser. B,
5.00%, 8/1/27 (FSA) Aaa/AAA 3,482,737
8,690 Santa Clara Unified School Dist. GO,
5.00%, 7/1/25-7/1/27 (MBIA) NR/AAA 9,231,983
1,260 Santa Cruz Cnty., CP, 5.25%, 8/1/32 A2/NR 1,334,164
3,500 Saugus Hart School Facs. Financing Auth. Special Tax,
6.10%-6.125%, 9/1/32-9/1/33 NR/NR 3,592,925
1,000 Shasta Union High School Dist. GO,
zero coupon, 8/1/24 (FGIC) Aaa/AAA 362,040
12,975 South Gate Utility Auth. Rev., 5.00%, 10/1/32 (FGIC) NR/AAA 13,758,431
4,745 South Tahoe JT Powers Parking Financing Auth. Rev.,
Ser. A, 7.00%, 12/1/27 NR/NR 4,861,632
1,800 Southern Mono Health Care Dist. GO,
zero coupon, 8/1/26 (MBIA) Aaa/AAA 577,458
State GO,
1,650 5.00%, 4/1/27 (AMBAC) Aaa/AAA 1,742,301
7,780 5.25%, 2/1/30 (XLCA) Aaa/AAA 8,332,380
9,375 State Health Facs. Financing Auth. Rev.,
5.125%-5.25%, 1/1/22-1/1/26 NR/A 9,714,244
9,605 State Public Works Board Lease Rev., Ser. A,
5.00%, 10/1/22 (FSA) Aaa/AAA 10,274,180
1,710 State University Rev. & Colleges, Ser. A,
5.00%, 11/1/33 (AMBAC) Aaa/AAA 1,805,828
1,170 Statewide Community Dev. Auth. CP, 6.10%, 11/1/15 NR/NR 1,196,992
5,000 Statewide Community Dev. Auth. Rev.,
6.75%, 10/1/30-7/1/32 NR/NR 5,243,200
2,770 Statewide Community Dev. Auth., Rev., Ser. A,
5.50%, 11/1/32 A3/A 2,872,795
Statewide Financing Auth. Tobacco Settlement Rev.,
1,955 5.625%, 5/1/29, Ser. A A3/NR 1,696,099
20,000 6.00%, 5/1/37, Ser. B A3/NR 16,858,400
7,750 Tamalpais Union High School Dist. GO,
5.00%, 8/1/27 (FSA) Aaa/AAA 8,229,028
Tobacco Securization Agcy. Rev.,
15,000 5.625%-6.00%, 6/1/23-6/1/35 A3/A- 13,498,950
1,800 5.875%, 6/1/43, Ser. A A3/NR 1,472,490
4,500 6.00%, 6/1/42 A3/NR 3,757,455
1,000 Tracy Community Facs. Dist. Special Tax, 6.00%, 9/1/27 NR/NR 1,017,440
7,815 Tustin Unified School Dist. Special Tax,
5.00%, 9/1/38 (FSA) Aaa/AAA 8,246,388
1,555 Ventura Unified School Dist. GO, Ser. F,
5.00%, 8/1/32 (FSA) Aaa/AAA 1,652,327
10,000 Ventura Cnty. Community College Dist. GO, Ser. A,
5.00%, 8/1/27 (MBIA) Aaa/AAA 10,629,900
2,000 Vernon Elec. Syst. Rev., 5.50%, 4/1/33 A2/BBB+ 2,061,260
16 PIMCO Municipal Income Funds II Annual Report | 5.31.03
PIMCO CALIFORNIA MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
May 31, 2003
Principal
Amount Credit Ratings
(000) Moody's/S&P* Value**
--------------------------------------------------------------------------------------------------------------
$ 3,535 Victor Elementary School Dist., Ser. A,
zero coupon, 8/1/24-8/1/26 (FGIC) Aaa/AAA $ 1,188,996
1,000 Vista Unified School Dist. GO, Ser. A,
zero coupon, 8/1/26 (FSA) Aaa/AAA 324,460
7,320 West Contra Costa University School Dist. GO, Ser. A,
5.00%, 8/1/26-8/1/31 (MBIA) Aaa/AAA 7,752,555
3,375 Westlands Water Dist. Rev. CP, 5.00%, 9/1/34 (MBIA) Aaa/AAA 3,563,089
2,110 Yuba City Unified School Dist. GO,
zero coupon, 9/1/25 (FGIC) Aaa/AAA 718,919
-------------
Total California Municipal Bonds & Notes (cost-$549,953,619) 572,132,157
-------------
-------------------------------------------------------------------------------------------------------------
OTHER MUNICIPAL BONDS & NOTES--0.5%
-------------------------------------------------------------------------------------------------------------
PUERTO RICO--0.5%
3,500 Public Building Auth. Rev., Ser. G,
4.75%, 7/1/32 (cost-$3,494,280) Baa1/A- 3,525,550
-------------
-------------------------------------------------------------------------------------------------------------
CALIFORNIA VARIABLE RATE NOTES (a)(b)(g)--12.1%
-------------------------------------------------------------------------------------------------------------
Los Angeles Dept. of Water & Power, Waterworks Rev.,
4,238 16.27%, 7/1/41 (FGIC) (c) Aaa/NR 5,218,058
2,500 16.12%, 7/1/41 (MBIA) (c) Aaa/NR 3,078,500
12,465 Los Angeles Unified School Dist. GO,
27.68%-31.46%, 1/11/11 (FSA) (c) NR/NR 19,148,073
1,875 Modesto Public Financing Auth. Lease Rev., Ser. 354,
15.77%, 9/1/29 (AMBAC) (c) AAA/NR 2,264,025
4,952 Oakland, GO, Ser. 756, 15.77%, 1/15/32 (FGIC) (c) Aaa/NR 6,009,190
6,615 San Diego Public Facs. Financing Auth. Water Rev.,
15.77%, 8/1/32 (MBIA) (c) Aaa/NR 8,065,008
San Diego Unified School Dist. GO,
1,944 15.77%, 7/1/27 Ser. 758 (FGIC) (c) Aaa/NR 2,391,120
2,209 15.77%, 7/1/26 Ser. 759 (FSA) (c) NR/NR 2,807,020
3,743 San Jose GO, 15.77%, 9/1/32 (MBIA) (c) Aaa/NR 4,568,844
2,288 San Jose Unified School Dist. Santa Clara Cnty. GO,
15.77%, 8/1/27 (FSA) (c) Aaa/NR 2,853,062
6,220 State GO, 49.39%, 9/1/12 (MBIA) (c) Aaa/NR 20,319,496
5,228 University Revs., Ser. 762, 15.77%, 9/1/28 (FGIC)(c) Aaa/NR 6,503,324
-------------
Total California Variable Rate Notes (cost-$67,112,067) 83,225,720
-------------
-------------------------------------------------------------------------------------------------------------
CALIFORNIA SHORT-TERM VARIABLE RATE DEMAND NOTES (d)--3.1%
-------------------------------------------------------------------------------------------------------------
2,000 Eastern Municipal Water & Sewer Dist. Rev. CP, Ser. B,
1.10%, 6/5/03 (FGIC) VMIG1/A1+ 2,000,000
2,850 Irvine Ranch Water Dist. GO, Ser. B, 1.25%, 6/2/03 NR/A1+ 2,850,000
700 Los Angeles Dept. Water & Power Waterworks Rev.,
Ser. B-2, 1.20%, 6/2/03 VMIG1/A1+ 700,000
5,500 Metropolitan Water Dist. Southern Waterworks Rev.,
Ser. C-1, 1.25%, 6/2/03 VMIG1/A1+ 5,500,000
800 Orange Cnty. Sanitation Dist. CP, Ser. B, 1.25%, 6/2/03 VMIG1/A1+ 800,000
2,600 State Health Facs. Fin. Auth. Rev., Ser. B,
1.30%, 6/2/03 (AMBAC) VMIG1/A1+ 2,600,000
5.31.03 | PIMCO Municipal Income Funds II Annual Report 17
PIMCO CALIFORNIA MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
May 31, 2003
Principal
Amount Credit Ratings
(000) Moody's/S&P* Value**
--------------------------------------------------------------------------------------------------------------
$ 3,900 State Infrastructure & Economic Dev. Bk. Rev., Ser. B,
1.30%, 6/2/03 (AMBAC) Aaa/A1+ $ 3,900,000
2,000 State RAN, 1.32%, 6/20/03 MIG2/SP2 1,999,220
800 Statewide Community Dev. Auth. CP,
1.25%, 6/2/03 (AMBAC) VMIG1/A1 800,000
-------------
Total California Short-Term Variable Rate Demand Notes
(cost-$21,149,105) 21,149,220
-------------
-------------------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS (e)--1.9%
-------------------------------------------------------------------------------------------------------------
1,820 1.03%, 8/7/03 Aaa/AAA 1,816,396
11,450 1.04%, 8/14/03 Aaa/AAA 11,424,810
-------------
Total U.S. Treasury Bills (cost-$13,241,616) 13,241,206
-------------
TOTAL INVESTMENTS, BEFORE CALL OPTIONS WRITTEN
(cost-$654,950,687++)--100.6% 693,273,853
-------------------------------------------------------------------------------------------------------------
CALL OPTIONS WRITTEN (f)--(0.6)%
-------------------------------------------------------------------------------------------------------------
Contracts
U.S. Treasury Bond Futures, Chicago Board of Trade:
(201) Strike Price $114, expires 6/20/03 $ (1,070,953)
(373) Strike Price $116, expires 6/20/03 (1,317,156)
(373) Strike Price $116, expires 8/22/03 (1,678,500)
-------------
Total call options written (premiums received-$743,511) (4,066,609)
-------------
TOTAL INVESTMENTS, NET OF CALL OPTIONS WRITTEN
(cost-$654,207,176)--100.0% $ 689,207,244
-------------
----------
++ The cost basis of portfolio securities for federal income tax purposes is
$654,950,687. Aggregate gross unrealized appreciation for securities in
which there is an excess of value over tax cost is $45,964,508; aggregate
gross unrealized depreciation for securities in which there is an excess of
tax cost over value is $7,641,342, net unrealized appreciation for federal
income tax purposes is $38,323,166.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
18 PIMCO Municipal Income Funds II Annual Report | 5.31.03
PIMCO NEW YORK MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
May 31, 2003
Principal
Amount Credit Ratings
(000) Moody's/S&P* Value**
--------------------------------------------------------------------------------------------------------------
NEW YORK MUNICIPAL BONDS & NOTES--90.5%
--------------------------------------------------------------------------------------------------------------
$ 1,250 Buffalo Municipal Water Fin. Auth., Water Syst. Rev., Ser. B,
5.00%-5.125%, 7/1/27-7/1/32 (FSA) Aaa/AAA $ 1,333,148
10,000 Erie Cnty. Tobacco Asset 6.50%, 7/15/32 Baa2/A- 10,077,300
5,000 Metropolitan Transportation Auth. Dedicated Tax Fund,
Ser. A, 5.00%, 11/15/30 A1/AA- 5,206,200
Metropolitan Transportation Auth. Rev.,
1,850 5.00%, 11/15/30, Ser. A (FSA) Aaa/AAA 1,952,564
10,000 5.25%, 11/15/31, Ser. E A2/A 10,659,000
7,000 Metropolitan Transportation Auth. Service Contract,
Ser. B, 5.35%, 7/1/31 A3/AAA 7,509,110
New York City, GO
1,500 5.75%, 8/1/16, Ser. A A2/A 1,680,000
4,000 5.00%, 3/1/33, Ser. I A2/A 4,067,600
3,100 New York City Health & Hospital Corp., Rev., Ser. A,
5.375%-5.45%, 2/15/26 A3/BBB 3,225,618
1,250 New York City Indl. Dev. Agcy., Civic Fac. Rev.,
6.45%, 7/1/32 Baa3/NR 1,335,050
1,000 New York City Indl Dev. Agcy. Rev.,
4.95%, 11/20/32 (GNMA) NR/AAA 1,024,610
New York City Municipal Water Fin. Auth.,
Water & Sewer Sys. Rev., Ser. A,
5,000 5.00%, 6/15/32 Aa2/AA 5,201,050
15,000 5.125%, 6/15/34 Aa2/AA 15,860,250
New York City Transitional Fin. Auth. Rev.,
7,195 5.00%, 11/15/26, Ser. A. Aa2/AA+ 7,593,891
10,000 5.00%, 11/1/27, Ser. B Aa2/AA+ 10,536,600
3,600 Port Auth. New York & New Jersey, 5.00%, 4/15/32 Aaa/AAA 3,811,356
6,590 Sachem Central School District of Holbrook,
5.00%, 6/15/28-6/15/29 Aaa/AAA 6,998,784
7,500 State Dormitory Auth. Lease Rev., State Univ. Dormitory Facs.,
5.00%, 7/1/32 A1/AA- 7,822,050
3,225 State Dormitory Auth. Revs., FHA-NY & Presbyterian Hospital,
4.75%, 8/1/27(AMBAC) Aaa/AAA 3,335,424
5,000 State Dormitory Auth. Revs., FHA-Saint Barnabas, Ser. A,
5.00%, 2/1/31(AMBAC) Aaa/AAA 5,277,900
8,850 State Dormitory Auth. Revs., North General Hospital,
5.00%, 2/15/25 NR/AA- 9,116,828
5,300 State Dormitory Auth. Revs., Lenox Hill Hospital,
5.50%, 7/1/30 A3/NR 5,630,243
1,400 State Dormitory Auth. Revs., Long Island Univ.,
5.25%, 9/1/28 Baa3/AA 1,495,382
7,000 State Dormitory Auth. Revs., Memorial Sloan-Kettering
Center, Ser. 1, 5.00%, 7/1/34 Aa2/AA 7,309,610
4,270 State Dormitory Auth. Rev., Teachers College,
5.00%, 7/1/32 (MBIA) Aaa/NR 4,505,619
8,600 State Dormitory Auth. Rev., State Personal Income Tax,
5.00%, 3/15/32 NR/AA 8,957,330
5.31.03 | PIMCO Municipal Income Funds II Annual Report 19
PIMCO NEW YORK MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
May 31, 2003
Principal
Amount Credit Ratings
(000) Moody's/S&P* Value**
--------------------------------------------------------------------------------------------------------------
$ 2,000 State Environmental Facs. Corp., State Clean
Water & Drinking, 5.125%, 6/15/31 Aaa/AAA $ 2,144,040
2,500 State Power Auth., Ser. A, 4.75%, 11/15/22 Aa2/AA- 2,618,175
6,000 State Urban Dev. Corp., Correctional & Youth Facs. Services,
Ser. A, 5.50%, 1/1/17 NR/AA- 6,843,660
6,100 State Urban Dev. Corp., Personal Income Tax, Ser. C,
5.00%, 3/15/33 A1/AA 6,328,994
Tobacco Trust II Settlement Asset Backed, Inc.
25,000 5.75%, 7/15/32 A3/A- 22,926,000
10,000 6.375%, 7/15/39 A3/A 9,585,000
Triborough Bridge & Tunnel Auth. Revs., Ser. A,
4,700 5.00%, 1/1/32 (FGIC) Aaa/AAA 4,964,798
6,000 5.00%, 1/1/27 Aa3/AA- 6,329,160
750 Westchester Cnty. Indl Dev. Agcy. Continuing Care,
6.50%, 1/1/34 NR/NR 760,080
-------------
Total New York Municipal Bonds & Notes (cost-$206,712,172) 214,022,424
-------------
-------------------------------------------------------------------------------------------------------------
OTHER MUNICIPAL BONDS & NOTES--2.7%
-------------------------------------------------------------------------------------------------------------
PUERTO RICO--2.7%
5,675 Children Trust Fund Puerto Rico Tobacco Settlement Rev.,
5.625%, 5/15/43 Baa2/A- 4,864,156
1,500 Puerto Rico Commonwealth Highway & Transportation Auth.,
Ser. D, 5.25%, 7/1/38 Baa1/A 1,570,485
-------------
Total Other Municipal Bonds & Notes (cost-$6,967,227) 6,434,641
-------------
-------------------------------------------------------------------------------------------------------------
NEW YORK VARIABLE RATE NOTES (a) (b) (g)--5.6%
-------------------------------------------------------------------------------------------------------------
6,994 Long Island Power Auth. Elec. Syst. Rev., Ser. 339,
16.71%, 12/1/26 (MBIA) Aaa/NR 8,922,665
3,939 New York City Municipal Water Fin. Auth., Water & Sewer
Sys. Rev., Ser. 364, 12.31%, 6/15/25 (MBIA) Aaa/NR 4,404,747
-------------
Total New York Variable Rate Notes (cost-$10,526,506) 13,327,412
-------------
-------------------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS (e)--2.1%
-------------------------------------------------------------------------------------------------------------
4,960 1.00-1.07%, 8/7/03-8/14/03 (cost-$4,949,474) Aaa/AAA 4,949,292
-------------
TOTAL INVESTMENTS BEFORE CALL OPTIONS WRITTEN
(cost-$229,155,379+++)--100.9% 238,733,769
-------------
20 PIMCO Municipal Income Funds II Annual Report | 5.31.03
PIMCO NEW YORK MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
May 31, 2003
Value**
-------------------------------------------------------------------------------------------------------------
CALL OPTIONS WRITTEN (f)--(0.9)%
-------------------------------------------------------------------------------------------------------------
Contracts U.S. Treasury Bond Futures, Chicago Board of Trade:
(116) Strike price $116, expires 6/20/03 $ (363,719)
(114) Strike price $114, expires 6/20/03 (367,641)
(116) Strike price $116, expires 8/22/03 (1,507,500)
-------------
Total call options written (premiums received-$453,255) (2,238,860)
-------------
TOTAL INVESTMENTS, NET OF CALL OPTIONS WRITTEN
(cost-$228,702,123)--100% $ 236,494,909
-------------
--------------------------------------------------------------------------------
+++ The cost basis of portfolio securities for federal income tax purposes is
$229,155,379. Aggregate gross unrealized appreciation for securities in
which there is an excess of value over tax cost is $12,671,179, aggregate
gross unrealized depreciation for securities in which there is an excess of
tax cost over value is $3,092,789 and net unrealized appreciation for
federal income tax purposes is $9,578,390.
--------------------------------------------------------------------------------
NOTES TO SCHEDULES OF INVESTMENTS:
* Unaudited
** Long-term debt securities are valued by an independent price service
authorized by the Board of Trustees.
(a) Variable Rate Notes are instruments whose interest rates change on specified
date (such as a coupon date or interest payment date) and/or whose interest
rates vary with changes in a designated base rate (such as the prime
interest rate).
(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. At May 31,
2003, these securities amounted to $126,550,817 or 9.4% of investments,
$85,224,940 or 12.4% of investments and $13,327,412 or 5.6% of investments,
respectively, for Municipal, California and New York Municipal.
(c) Security deemed illiquid.
(d) Maturity date shown is date of next call.
(e) All or partial principal amount segregated as initial margin on futures
contracts.
(f) Non-income producing security.
(g) Residual Interest Municipal Bonds. The interest rate shown bears an inverse
relationship to the interest rate on another security or the value of an
index.
--------------------------------------------------------------------------------
GLOSSARY:
AMBAC -- insured by American Municipal Bond Assurance Corp.
CP -- Certificates of Participation
FGIC -- insured by insured Financial Guaranty Insurance Co.
FSA -- insured by Financial Security Assurance, Inc.
GNMA -- Government National Mortgage Association
GO -- General Obligation Bonds
MBIA -- insured by Municipal Bond Investors Assurance
NR -- Not Rated
RAN -- Revenue Anticipation Note
XLCA -- insured by XL Capital Assurance
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
5.31.03 | PIMCO Municipal Income Funds II Annual Report 21
PIMCO MUNICIPAL INCOME FUNDS II STATEMENTS OF ASSETS AND LIABILITIES
May 31, 2003
CALIFORNIA NEW YORK
MUNICIPAL II MUNICIPAL II MUNICIPAL II
-------------- ------------- -------------
ASSETS:
Investments, at value (cost-$1,262,683,166, $654,950,687
and $229,155,379, respectively) $1,347,039,756 $693,273,853 $238,733,769
--------------------------------------------------------- -------------- ------------ ------------
Cash -- 115,742 --
--------------------------------------------------------- -------------- ------------ ------------
Interest receivable 21,860,250 11,735,657 4,223,197
--------------------------------------------------------- -------------- ------------ ------------
Receivable for investments sold -- 1,600,095 --
--------------------------------------------------------- -------------- ------------ ------------
Receivable for variation margin on futures contracts 212,069 97,859 78,328
--------------------------------------------------------- -------------- ------------ ------------
Prepaid expenses 76,700 50,198 32,405
--------------------------------------------------------- -------------- ------------ ------------
Total Assets 1,369,188,775 706,873,404 243,067,699
--------------------------------------------------------- -------------- ------------ ------------
LIABILITIES:
Due to custodian 324,177 -- 233,015
--------------------------------------------------------- -------------- ------------ ------------
Dividends payable to common and preferred shareholders 4,934,476 2,460,782 851,976
--------------------------------------------------------- -------------- ------------ ------------
Options written, at value (premiums received-
$2,227,143, $743,511, $453,255, respectively) 11,302,391 4,066,609 2,238,860
--------------------------------------------------------- -------------- ------------ ------------
Investment management fees payable 573,773 295,722 100,805
--------------------------------------------------------- -------------- ------------ ------------
Accrued expenses 168,771 79,893 37,442
--------------------------------------------------------- -------------- ------------ ------------
Total Liabilities 17,303,588 6,903,006 3,462,098
--------------------------------------------------------- -------------- ------------ ------------
PREFERRED SHARES ($0.00001 PAR VALUE AND $25,000 NET
ASSET AND LIQUIDATION VALUE PER SHARE APPLICABLE TO
AN AGGREGATE OF 20,200, 10,400 AND 3,600 SHARES ISSUED
AND OUTSTANDING, RESPECTIVELY) 505,000,000 260,000,000 90,000,000
--------------------------------------------------------- -------------- ------------ ------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS $846,885,187 $439,970,398 $149,605,601
--------------------------------------------------------- -------------- ------------ ------------
COMPOSITION OF NET ASSETS APPLICABLE TO
COMMON SHAREHOLDERS:
Common Stock:
Par value ($0.00001 per share) $ 578 $ 300 $ 104
--------------------------------------------------------- -------------- ------------ ------------
Paid-in-capital in excess of par 821,208,452 426,317,796 146,978,939
--------------------------------------------------------- -------------- ------------ ------------
Undistributed (dividends in excess of) net investment income 725,557 (465,795) (322,399)
--------------------------------------------------------- -------------- ------------ ------------
Accumulated net realized loss (39,952,745) (16,230,403) (4,710,282)
--------------------------------------------------------- -------------- ------------ ------------
Net unrealized appreciation of investments,
futures contracts and options written 64,903,345 30,348,500 7,659,239
--------------------------------------------------------- -------------- ------------ ------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS $846,885,187 $439,970,398 $149,605,601
--------------------------------------------------------- -------------- ------------ ------------
Common Shares Outstanding 57,780,866 30,006,873 10,354,582
--------------------------------------------------------- -------------- ------------ ------------
NET ASSET VALUE PER COMMON SHARE $14.66 $14.66 $14.45
--------------------------------------------------------- -------------- ------------ ------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
22 PIMCO Municipal Income Funds II Annual Report | 5.31.03
PIMCO MUNICIPAL INCOME FUNDS II STATEMENTS OF OPERATIONS
For the period June 28, 2002* through May 31, 2003
CALIFORNIA NEW YORK
MUNICIPAL II MUNICIPAL II MUNICIPAL II
-------------- ------------- -------------
INVESTMENT INCOME:
Interest $60,992,145 $29,744,348 $10,195,370
-------------------------------------------------------- ----------- ----------- -----------
EXPENSES:
Investment management fees 7,555,858 3,891,841 1,345,276
-------------------------------------------------------- ----------- ----------- -----------
Auction agent fees and commissions 997,739 522,827 182,737
-------------------------------------------------------- ----------- ----------- -----------
Custodian and accounting agent fees 214,821 118,107 75,465
-------------------------------------------------------- ----------- ----------- -----------
Trustees' fees and expenses 92,930 42,690 14,702
-------------------------------------------------------- ----------- ----------- -----------
Legal fees 33,795 17,200 6,595
-------------------------------------------------------- ----------- ----------- -----------
Audit and tax service fees 59,655 57,816 27,390
-------------------------------------------------------- ----------- ----------- -----------
New York Stock Exchange listing fees 48,264 33,120 24,982
-------------------------------------------------------- ----------- ----------- -----------
Reports to shareholders 47,361 22,324 8,700
-------------------------------------------------------- ----------- ----------- -----------
Transfer agent fees 26,031 24,974 24,370
-------------------------------------------------------- ----------- ----------- -----------
Insurance expenses 6,207 3,479 1,551
-------------------------------------------------------- ----------- ----------- -----------
Miscellaneous 7,426 5,139 2,138
-------------------------------------------------------- ----------- ----------- -----------
Total expenses 9,090,087 4,739,517 1,713,906
-------------------------------------------------------- ----------- ----------- -----------
Less: investment management fees waived (1,743,658) (898,117) (310,448)
-------------------------------------------------------- ----------- ----------- -----------
custody credits earned on cash balances (130,921) (117,097) (73,960)
-------------------------------------------------------- ----------- ----------- -----------
Net expenses 7,215,508 3,724,303 1,329,498
-------------------------------------------------------- ----------- ----------- -----------
NET INVESTMENT INCOME 53,776,637 26,020,045 8,865,872
-------------------------------------------------------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments 5,189,194 1,919,963 216,072
-------------------------------------------------------- ----------- ----------- -----------
Futures contracts (39,249,756) (18,150,366) (4,926,354)
-------------------------------------------------------- ----------- ----------- -----------
Net unrealized appreciation of investments,
futures contracts and options written 64,903,345 30,348,500 7,659,239
-------------------------------------------------------- ----------- ----------- -----------
Net realized and unrealized gain on investments,
futures contracts and options written 30,842,783 14,118,097 2,948,957
-------------------------------------------------------- ----------- ----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM
INVESTMENT OPERATIONS 84,619,420 40,138,142 11,814,829
-------------------------------------------------------- ----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS ON PREFERRED SHARES FROM:
Net Investment Income (4,384,249) (2,140,933) (794,061)
-------------------------------------------------------- ----------- ----------- -----------
Net Realized Gains (504,626) -- --
-------------------------------------------------------- ----------- ----------- -----------
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON
SHAREHOLDERS RESULTING FROM INVESTMENT OPERATIONS $79,730,545 $37,997,209 $11,020,768
-------------------------------------------------------- ----------- ----------- -----------
* Commencement of operations
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
5.31.03 | PIMCO Municipal Income Funds II Annual Report 23
PIMCO MUNICIPAL INCOME FUNDS II STATEMENTS OF CHANGES IN NET ASSETS
APPLICABLE TO COMMON SHAREHOLDERS
For the period June 28, 2002* through May 31, 2003
CALIFORNIA NEW YORK
MUNICIPAL II MUNICIPAL II MUNICIPAL II
-------------- ------------- -------------
INVESTMENT OPERATIONS:
Net investment income $ 53,776,637 $ 26,020,045 $ 8,865,872
----------------------------------------------------------- ------------ ------------ -----------
Net realized loss on investments and futures contracts (34,060,562) (16,230,403) (4,710,282)
----------------------------------------------------------- ------------ ------------ -----------
Net unrealized appreciation on investments, futures contracts
and options written 64,903,345 30,348,500 7,659,239
----------------------------------------------------------- ------------ ------------ -----------
Net increase in net assets resulting from investment
operations 84,619,420 40,138,142 11,814,829
----------------------------------------------------------- ------------ ------------ -----------
DIVIDENDS AND DISTRIBUTIONS ON PREFERRED SHARES FROM:
Net investment income (4,384,249) (2,140,933) (794,061)
----------------------------------------------------------- ------------ ------------ -----------
Net realized gains (504,626) -- --
----------------------------------------------------------- ------------ ------------ -----------
Net increase in net assets applicable to common
shareholders resulting from investment operations. 79,730,545 37,997,209 11,020,768
----------------------------------------------------------- ------------ ------------ -----------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS
FROM:
Net investment income (48,666,775) (24,344,907) (8,394,210)
----------------------------------------------------------- ------------ ------------ -----------
Net realized gains (5,387,613) -- --
----------------------------------------------------------- ------------ ------------ -----------
Total dividends and distributions to
common shareholders (54,054,388) (24,344,907) (8,394,210)
----------------------------------------------------------- ------------ ------------ -----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from the sale of common stock 823,703,945 428,317,500 147,473,483
----------------------------------------------------------- ------------ ------------ -----------
Preferred shares underwriting discount charged to paid-in
capital in excess of par (5,050,000) (2,600,000) (900,000)
----------------------------------------------------------- ------------ ------------ -----------
Common stock and preferred shares offering costs charged to
paid-in capital in excess of par (1,540,514) (951,964) (458,454)
----------------------------------------------------------- ------------ ------------ -----------
Reinvestment of dividends and distributions 3,995,596 1,452,557 764,011
----------------------------------------------------------- ------------ ------------ -----------
Net increase from capital transactions 821,109,027 426,218,093 146,879,040
----------------------------------------------------------- ------------ ------------ -----------
Total increase in net assets applicable to common
shareholders 846,785,184 439,870,395 149,505,598
----------------------------------------------------------- ------------ ------------ -----------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS:
Beginning of period 100,003 100,003 100,003
----------------------------------------------------------- ------------ ------------ -----------
End of period (including undistributed (dividends in excess of)
net investment income of $725,557, $(465,795) and
$(322,399), respectively. $846,885,187 $439,970,398 $149,605,601
----------------------------------------------------------- ------------ ------------ -----------
COMMON SHARES ISSUED AND REINVESTED:
Issued 57,501,148 29,900,000 10,294,833
----------------------------------------------------------- ------------ ------------ -----------
Issued in reinvestment of dividends and distributions 272,737 99,892 52,768
----------------------------------------------------------- ------------ ------------ -----------
NET INCREASE 57,773,885 29,999,892 10,347,601
----------------------------------------------------------- ------------ ------------ -----------
* Commencement of operations
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
24 PIMCO Municipal Income Funds II Annual Report | 5.31.03
PIMCO MUNICIPAL INCOME FUNDS II NOTES TO FINANCIAL STATEMENTS
May 31, 2003
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PIMCO Municipal Income Fund II ("Municipal II"), PIMCO California Municipal
Income Fund II ("California Municipal II") and PIMCO New York Municipal Income
Fund II ("New York Municipal II") collectively referred to as the "Funds" or
"PIMCO Municipal Income Funds II", were organized as Massachusetts business
trusts on March 29, 2002. Prior to commencing operations on June 28, 2002, the
Funds had no operations other than matters relating to their organization and
registration as closed-end management investment companies registered under the
Investment Company Act of 1940 and the rules and regulations thereunder, as
amended, and the sale and issuance of 6,981 shares of beneficial interest of
each Fund at an aggregate purchase price of $100,003 per Fund to Allianz
Dresdner Asset Management of America L.P., ("ADAM"). PIMCO Advisors Fund
Management LLC, (the "Investment Manager"), 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 Funds have an unlimited
amount of $0.00001 par value common stock authorized.
Municipal II invests substantially all of its assets in a portfolio of municipal
bonds, the interest from which is exempt from federal income taxes. California
Municipal II invests substantially all of its assets in municipal bonds which
pay interest that is exempt from federal and California income taxes. New York
Municipal II invests substantially all of its assets in municipal bonds which
pay interest that is exempt from federal, New York State and New York City
income taxes. The Funds will seek to avoid bonds generating interest income
which could potentially subject individuals to alternative minimum tax. The
issuers' abilities to meet their obligations may be affected by economic and
political developments in a specific state or region.
Municipal II, California Municipal II and New York Municipal II issued
50,500,000, 26,000,000 and 9,000,000 shares of common stock, respectively, in
their initial public offerings. An additional 7,001,148, 3,900,000 and 1,294,833
shares of Municipal II, California Municipal II and New York Municipal II,
respectively, were issued in connection with the exercises of the underwriters'
over-allotment option on July 15, 2002 and August 6, 2002. These shares were all
issued at $15.00 per share before an underwriting discount of $0.675 per share.
The Investment Manager has agreed to reimburse the amount by which the aggregate
of each Fund's organizational and offering cost (other than sales load) exceeds
$0.03 per share. Offering costs of $1,174,197, $682,616 and $308,845
(representing $0.02 per share for Municipal II and California Municipal II and
$0.03 per share for New York Municipal II), were offset against the proceeds of
the offerings and have been charged to paid-in capital in excess of par.
In addition, the underwriters discount and offering costs associated with the
Funds' issuance of Preferred Shares in the amounts of $5,050,000 and $366,317,
$2,600,000 and $269,348 and $900,000 and $149,609, for Municipal II, California
Municipal II and New York Municipal II, respectively, have been 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
those estimates. In the normal course of business the Funds enter into contracts
that contain a variety of representations which provide general
indemnifications. The Funds' maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the Funds
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 assets for which market quotations are readily
available are valued each day at market value. Market value is generally
determined on the basis of the last reported sales price, or if no sales are
reported, based on quotes obtained from a quotation reporting system,
established market makers, or independent pricing services approved by the Board
of Trustees. Any security or other asset for which market quotations are not
readily available is valued at fair value as determined in good faith under
procedures established by the Board of Trustees.
(b) FEDERAL INCOME TAXES
The Funds intend to distribute all of their taxable income and to comply with
the other requirements of the U.S. Internal Revenue Code of 1986, as amended,
applicable to regulated investment companies. Accordingly, no provision for U.S.
federal income taxes is required. In addition, by distributing substantially all
of their taxable ordinary income and long-term capital gains, if any, during
each calendar year, the Funds intend not to be subject to U.S. federal excise
tax.
5.31.03 | PIMCO Municipal Income Funds II Annual Report 25
PIMCO MUNICIPAL INCOME FUNDS II NOTES TO FINANCIAL STATEMENTS
May 31, 2003
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(c) INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on the trade date. Realized gains and
losses on investments are determined on the identified cost basis. Interest
income is recorded on an accrual basis. Original issue discounts or premiums on
debt securities purchased are accreted or amortized daily to non-taxable
interest income. Market discount, if any, is accreted daily to taxable income.
(d) DIVIDENDS AND DISTRIBUTIONS--COMMON STOCK
The Funds declare dividends from net investment income monthly to common
shareholders. Distributions of net realized capital gains, if any, are paid at
least annually. Each Fund records dividends and distributions to its
shareholders on the ex-dividend date. The amount of dividends and distributions
from net investment income and net realized capital gains are determined in
accordance with federal income tax regulations, which may differ from generally
accepted accounting principles. These "book-tax" differences are either
considered temporary or permanent in nature. To the extent these differences are
permanent in nature, such amounts are reclassified within the capital accounts
based on their federal income tax treatment; temporary differences do not
require reclassification. To the extent dividends and/or distributions exceed
current and accumulated earnings and profits for federal income tax purposes
they are reported as dividends and/or distributions of paid-in capital in excess
of par.
(e) CUSTODY CREDITS EARNED 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
expenses. Had these cash balances been invested in income producing securities,
they would have generated income for the Funds.
(f) 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 exchange.
Pursuant to the contracts, the Funds agree to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in the value of the contracts.
Such receipts or payments are known as "variation margin" and are recorded by
the Funds as unrealized appreciation or depreciation. When the contracts are
closed, the Funds record a realized gain or loss equal to the difference between
the value of the contracts at the time they were opened and the value at the
time they were closed. Any unrealized appreciation or depreciation recorded is
simultaneously reversed. The use of futures transactions 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.
Futures contracts outstanding at May 31, 2003 were as follows:
Unrealized
# of Expiration Appreciation
Fund Type Contracts Date (Depreciation)
----------------------------------------------------------------------------------------------------
Municipal II Short: U.S. Treasury 30 Year Bond 1,622 6/19/03 $(10,180,772)
U.S. Treasury 30 Year Bond 765 9/19/03 (197,225)
------------
$(10,377,997)
============
California Municipal II Short: U.S. Treasury 30 Year Bond 751 6/19/03 $ (4,561,334)
U.S. Treasury 30 Year Bond 350 9/30/03 (90,234)
------------
$ (4,651,568)
============
New York Municipal II Short: U.S. Treasury 30 Year Bond 22 6/30/03 $ (133,546)
============
26 PIMCO Municipal Income Funds II Annual Report | 5.31.03
PIMCO MUNICIPAL INCOME FUNDS II NOTES TO FINANCIAL STATEMENTS
May 31, 2003
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONCLUDED)
(g) OPTION TRANSACTIONS
For hedging purposes, the Funds may purchase and write (sell) put and call
options on Municipal Bonds, U.S. government securities, swap agreements, indexes
or futures contracts which are standardized and traded on a U.S. or other
exchange, boards of trade, or similar entity, or quoted on an automated
quotation system. The risk associated with purchasing an option is that the
Funds pay a premium whether or not the option is exercised. Additionally, the
Funds bear the risk of loss of premium and change in market value should the
counterparty not perform under the contract. Put and call options purchased are
accounted for in the same manner as portfolio securities.
The cost of securities acquired through the exercise of call options is
increased by the premiums paid. The proceeds from the securities sold through
the exercise of put options is decreased by the premiums paid.
When an option is written, the premium received is recorded as an asset with an
equal liability which is subsequently adjusted to the current market value of
the option written. Premiums received from writing options which expire
unexercised are recorded on the expiration date as a realized gain. The
difference between the premium received and the amount paid on effecting a
closing purchase transaction, including brokerage commissions, is also treated
as a realized gain, or if the premium is less than the amount paid for the
closing purchase transactions, as a realized loss. If a call option is
exercised, the premium is added to the proceeds from the sale of the underlying
security in determining whether there has been a realized gain or loss. If a put
option is exercised, the premium reduces the cost basis of the security. In
writing an option, the Funds bear the market risk of an unfavorable change in
the price of the security underlying the written option. Exercise of an option
written could result in the Funds purchasing a security at a price different
from the current market price.
Transactions in options written for the period ended May 31, 2003 were:
Contracts Premiums
--------------------------------------------------------------------------------
Municipal II:
-------------
Options outstanding, beginning of period -- --
Options written 2,587 $2,227,143
------- ----------
Options outstanding, May 31, 2003 2,587 $2,227,143
======= ==========
California Municipal II:
------------------------
Options outstanding, beginning of period -- --
Options written 947 $ 743,511
------- ----------
Options outstanding, May 31, 2003 947 $ 743,511
======= ==========
New York Municipal II:
----------------------
Options outstanding, beginning of period -- --
Options written 507 $ 453,255
------- ----------
Options outstanding, May 31, 2003 507 $ 453,255
======= ==========
2. INVESTMENT MANAGER AND SUB-ADVISER
Each Fund has entered into an Investment Management Agreement (the "Agreements")
with the Investment Manager to serve as Investment Manager to each Fund. Subject
to the supervision by each Fund's Board of Trustees, the Investment Manager is
responsible for managing, either directly or through others selected by it, the
investment activities of the Fund and the Fund's business affairs and other
administrative matters. Pursuant to the Agreements, the Investment Manager will
receive an annual fee, payable monthly, at the annual rate of 0.65% of each
Fund's average daily net assets (including net assets attributable to any
preferred shares that may be outstanding). In order to reduce Fund expenses, the
Investment Manager has contractually agreed to reimburse each Fund for fees and
expenses at the annual rate of 0.15% of the Fund's average daily net assets
(including net assets attributable to any preferred shares that may be
outstanding) from the commencement of operations through June 30, 2007, and for
a declining amount thereafter through June 30, 2009.
The Investment Manager has retained its affiliate, Pacific Investment Management
Company LLC (the "Sub-Adviser") to manage each Fund's investments. Subject to
the supervision of the Investment Manager, the Sub-Adviser makes all investment
decisions with respect to each Fund's assets. The Investment Manager (not the
Funds) pays a portion of the fees it receives to the Sub-Adviser in return for
its services, at the maximum annual rate of 0.50% of each Fund's average daily
net assets
5.31.03 | PIMCO Municipal Income Funds II Annual Report 27
PIMCO MUNICIPAL INCOME FUNDS II NOTES TO FINANCIAL STATEMENTS
May 31, 2003
2. INVESTMENT MANAGER AND SUB-ADVISER (CONCLUDED)
(including net assets attributable to any preferred shares that may
be outstanding). The Sub-Adviser has contractually agreed to waive a portion of
the fees it is entitled to receive from the Investment Manager, such that the
Sub-Adviser will receive 0.26% of each Fund's average daily net assets
(including net assets attributable to any preferred shares that may be
outstanding) from the commencement of the Funds' operations through June 30,
2007, and will receive an increasing amount (not to exceed 0.50% of each Fund's
average daily net assets, including net assets attributable to any preferred
shares that may be outstanding) thereafter through June 30, 2009. The Investment
Manager informed the Funds that it paid the Sub-Adviser $3,022,340, $1,556,737
and $538,110 in connection with sub-advisory services for Municipal II,
California Municipal II and New York Municipal II, respectively, for the period
ended May 31, 2003.
3. INVESTMENTS IN SECURITIES
For the period ended May 31, 2003, purchases and sales of investments, other
than short-term securities, were as follows:
California New York
Municipal II Municipal II Municipal II
--------------------------------------------------------------------------------
Purchases $1,521,993,996 $882,949,540 $285,262,209
Sales 300,096,771 480,587,216 51,546,891
4. INCOME TAX INFORMATION
Municipal II:
-------------
The tax character of dividends and distributions paid for the period June 28,
2002 (commencement of operations) through May 31, 2003 were:
Ordinary Income $ 4,567,905
Tax Exempt Income $51,126,211
Long-Term Capital Gain $ 3,249,147
At May 31, 2003, the tax character of distributable earnings of $725,557 was
composed entirely of tax exempt income.
In accordance with U.S. Treasury regulations, Municipal II elected to defer
realized capital losses of $59,405,989, arising after October 31, 2002. Such
losses are treated for tax purposes as arising on June 1, 2003.
California Municipal II:
------------------------
The tax character of dividends paid for the period June 28, 2002 (commencement
of operations) through May 31, 2003 were:
Ordinary Income $ 406,539
Tax Exempt Income $26,079,301
At May 31, 2003, the tax basis of overdistributed earnings of $465,795 was
composed entirely of tax exempt income.
At May 31, 2003, California Municipal II had a capital loss carryforward of
$1,122,615, all of which will expire in 2011, 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, California Municipal II elected to
defer realized capital losses of $23,082,454, arising after October 31, 2002.
Such losses are treated for tax purposes as arising on June 1, 2003.
New York Municipal II:
----------------------
The tax character of dividends paid for the period June 28, 2002 (commencement
of operations) through May 31, 2003 were:
Ordinary Income $ 35,774
Tax Exempt Income $9,152,497
At May 31, 2003, the tax basis of overdistributed earnings of $322,399 was
composed entirely of tax exempt income.
28 PIMCO Municipal Income Funds II Annual Report | 5.31.03
PIMCO MUNICIPAL INCOME FUNDS II NOTES TO FINANCIAL STATEMENTS
May 31, 2003
4. INCOME TAX INFORMATION (CONCLUDED)
At May 31, 2003, New York Municipal II had a capital loss carryforward of
$214,685, all of which expires in 2011, 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, New York Municipal II elected to
defer realized capital losses of $6,147,656, arising after October 31, 2002.
Such losses are treated for tax purposes as arising on June 1, 2003.
5. AUCTION PREFERRED SHARES
Municipal II has issued 4,040 shares of Preferred Shares Series A, 4,040 shares
of Preferred Shares Series B, 4,040 shares of Preferred Shares Series C, 4,040
shares of Preferred Shares Series D and 4,040 shares of Preferred Shares Series
E, each with a net asset and liquidation value of $25,000 per share plus accrued
dividends.
California Municipal II has issued 2,080 shares of Preferred Shares Series A,
2,080 shares of Preferred Shares Series B, 2,080 shares of Preferred Shares
Series C, 2,080 shares of Preferred Shares Series D and 2,080 shares of
Preferred Shares Series E, each with a net asset and liquidation value of
$25,000 per share plus accrued dividends.
New York Municipal II has issued 1,800 shares of Preferred Shares Series A and
1,800 shares of Preferred Shares Series B, 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 period ended May 31, 2003, the annualized dividend rates ranged from:
High Low At 5/31/03
--------------------------------------------------------------------------------
Municipal II:
-------------
Series A 1.75% 0.85% 1.15%
Series B 1.90% 0.80% 1.10%
Series C 1.75% 0.90% 1.10%
Series D 1.97% 0.80% 1.10%
Series E 1.80% 0.90% 1.10%
California Municipal II:
------------------------
Series A 1.50% 0.60% 0.65%
Series B 1.50% 0.60% 0.85%
Series C 1.50% 0.60% 0.65%
Series D 1.50% 0.65% 1.05%
Series E 1.55% 0.60% 1.05%
New York Municipal II:
----------------------
Series A 1.50% 0.60% 1.05%
Series B 1.60% 0.85% 1.05%
The Funds are subject to certain limitations and restrictions while Preferred
Shares are outstanding. Failure to comply with these limitations and
restrictions could preclude the Funds from declaring any dividends or
distributions to common shareholders or repurchasing common shares and/or could
trigger the mandatory redemption of Preferred Shares at their liquidation value.
Preferred Shares, which are entitled to one vote per share, generally vote with
the common stock but vote separately as a class to elect two Trustees and on any
matters affecting the rights of the Preferred Shares.
5.31.03 | PIMCO Municipal Income Funds II Annual Report 29
PIMCO MUNICIPAL INCOME FUNDS II NOTES TO FINANCIAL STATEMENTS
May 31, 2003
6. SUBSEQUENT DIVIDEND DECLARATIONS--COMMON SHAREHOLDERS
On June 16, 2003, the following dividends were declared to common shareholders
payable July 15, 2003 to shareholders of record on June 27, 2003:
Municipal II $0.084375 per common share
California Municipal II $0.08125 per common share
New York Municipal II $0.08125 per common share
On July 15, 2003, the following dividends were declared to common shareholders
payable August 15, 2003 to shareholders of record on July 25, 2003:
Municipal II $0.084375 per common share
California Municipal II $0.08125 per common share
New York Municipal II $0.08125 per common share
7. CHANGE IN INVESTMENT POLICY
On December 17, 2002, the Board of Trustees approved a change in the investment
policy of each Fund to invest, under normal market conditions, at least 90% of
each of its "total" assets in municipal bonds to at least 90% of each of its
"net" assets (and not "total" assets) in municipal bonds.
30 PIMCO Municipal Income Funds II Annual Report | 5.31.03
PIMCO MUNICIPAL INCOME FUNDS II FINANCIAL HIGHLIGHTS
For a share of common stock outstanding for the period June 28, 2002* through
May 31, 2003
CALIFORNIA NEW YORK
MUNICIPAL II MUNICIPAL II MUNICIPAL II
-------------- ------------- -------------
Net asset value, beginning of period $14.33** $14.33** $14.33**
----------------------------------------------------------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.93 0.87 0.86
----------------------------------------------------------- -------- -------- --------
Net realized and unrealized gain on investments,
futures contracts and options written 0.53 0.46 0.28
----------------------------------------------------------- -------- -------- --------
Total from investment operations 1.46 1.33 1.14
----------------------------------------------------------- -------- -------- --------
DIVIDENDS AND DISTRIBUTIONS ON PREFERRED SHARES FROM:
Net investment income (0.08) (0.07) (0.08)
----------------------------------------------------------- -------- -------- --------
Net realized gains (0.01) -- --
----------------------------------------------------------- -------- -------- --------
Total dividends and distributions on preferred shares (0.09) (0.07) (0.08)
----------------------------------------------------------- -------- -------- --------
Net increase in net assets applicable to common
shareholders resulting from investment operations 1.37 1.26 1.06
----------------------------------------------------------- -------- -------- --------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS FROM:
Net investment income (0.84) (0.81) (0.81)
----------------------------------------------------------- -------- -------- --------
Net realized gains (0.09) -- --
----------------------------------------------------------- -------- -------- --------
Total dividends and distributions to common shareholders (0.93) (0.81) (0.81)
----------------------------------------------------------- -------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Common stock offering costs charged to paid-in capital
in excess of par (0.02) (0.02) (0.03)
----------------------------------------------------------- -------- -------- --------
Preferred shares offering costs/underwriting discounts
charged to paid-in capital in excess of par (0.09) (0.10) (0.10)
----------------------------------------------------------- -------- -------- --------
Total capital share transactions (0.11) (0.12) (0.13)
----------------------------------------------------------- -------- -------- --------
Net asset value, end of period $14.66 $14.66 $14.45
----------------------------------------------------------- -------- -------- --------
Market price, end of period $14.80 $14.78 $14.71
----------------------------------------------------------- -------- -------- --------
TOTAL INVESTMENT RETURN (1) 5.2% 4.2% 3.8%
----------------------------------------------------------- -------- -------- --------
RATIOS/SUPPLEMENTAL DATA:
Net assets applicable to common shareholders,
end of period (000) $846,885 $439,970 $149,606
----------------------------------------------------------- -------- -------- --------
Ratio of expenses to average net assets (2)(3)(4) 0.95%(5) 0.97%(6) 1.02%(7)
----------------------------------------------------------- -------- -------- --------
Ratio of net investment income to average net assets (2)(4) 6.99%(5) 6.56%(6) 6.47%(7)
----------------------------------------------------------- -------- -------- --------
Preferred shares asset coverage per share $66,920 $67,301 $66,552
----------------------------------------------------------- -------- -------- --------
Portfolio turnover 27% 84% 27%
-----------------------------------------------------------------------------------------------------
* 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 of the period and a sale at the
current market price on the last day for the 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 on cash balances from
custodian bank. (See note 1(e) in Notes to Financial Statements).
(4) Annualized.
(5) During the period indicated above, the Investment Manager waived a portion
of its investment management fee. If such waiver had not been in effect, the
ratio of expenses to average net assets and the ratio of net investment
income to average net assets would have been 1.18% (annualized) and 6.76%
(annualized), respectively.
(6) During the period indicated above, the Investment Manager waived a portion
of its investment management fee. If such waiver had not been in effect, the
ratio of expenses to average net assets and the ratio of net investment
income to average net assets would have been 1.20% (annualized) and 6.34%
(annualized), respectively.
(7) During the period indicated above, the Investment Manager waived a portion
of its investment management fee. If such waiver had not been in effect, the
ratio of expenses to average net assets and the ratio of net investment
income to average net assets would have been 1.25% (annualized) and 6.25%
(annualized), respectively.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
5.31.03 | PIMCO Municipal Income Funds II Annual Report 31
PIMCO MUNICIPAL INCOME FUNDS II REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Trustees of
PIMCO Municipal Income Fund II, PIMCO California Municipal Income Fund II and
PIMCO New York Municipal Income Fund II
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 II, PIMCO California Municipal Income Fund II and
PIMCO New York Municipal Income Fund II (collectively hereafter referred to as
the "Funds") at May 31, 2003, and the results of each of their operations, the
changes in each of their net assets applicable to common shareholders and the
financial highlights for the period June 28, 2002 (commencement of operations)
through May 31, 2003, 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 audit. We conducted our audit
of these financial statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit, which included confirmation of securities at May 31,
2003 by correspondence with the custodian and broker, provides a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
July 16, 2003
32 PIMCO Municipal Income Funds II Annual Report | 5.31.03
PIMCO MUNICIPAL INCOME FUNDS II TAX INFORMATION (UNAUDITED)
Subchapter M of the Internal Revenue Code of 1986, as amended, required the
Funds to advise shareholders within 60 days of the Funds' tax year end (May 31,
2003) as to the federal tax status of dividends and distributions received by
shareholders during such tax year. Accordingly, please note that substantially
all dividends paid from net investment income from the Funds during the tax
period ended May 31, 2003 were federally exempt interest dividends. However,
these Funds invested in municipal bonds containing market discount, whose
accretion is taxable. Accordingly, the percentage of dividends paid from net
investment income during the tax year which are taxable were:
Municipal II 8.20%
California Municipal II 1.53%
New York Municipal II 0.39%
Municipal II distributed $3,249,147 of long-term capital gains. California
Municipal II and New York Municipal II did not distribute long-term capital
gains.
Since the Funds' fiscal year is not the calendar year, another notification will
be sent with respect to calendar year 2003. In January 2004, you will be advised
on IRS Form 1099 DIV as to the federal tax status of the dividends and
distributions received during the calendar year 2003. The amount that will be
reported, will be the amount to use on your 2003 federal income tax return and
may differ from the amount which must be reported in connection with each Fund's
tax year ended May 31, 2003. Shareholders are advised to consult with their tax
advisors as to the federal, state and local tax status of the income received
from the Funds. In January 2004, an allocation of interest by state will be
provided which may be of value in reducing a shareholder's state or local tax
liability, if any.
5.31.03 | PIMCO Municipal Income Funds II Annual Report 33
PIMCO MUNICIPAL INCOME FUNDS II DIVIDEND REINVESTMENT PLAN (UNAUDITED)
Pursuant to the Funds' Dividend Reinvestment Plan (the "Plan"), all Common
Shareholders whose shares are registered in their own names will have all
dividends, including any capital gain dividends, reinvested automatically in
additional Common Shares by PFPC Inc., as agent for the Common Shareholders (the
"Plan Agent"), unless the shareholder elects to receive cash. An election to
receive cash may be revoked or reinstated at the option of the shareholder. In
the case of record shareholders such as banks, brokers or other nominees that
hold Common Shares for others who are the beneficial owners, the Plan Agent will
administer the Plan on the basis of the number of Common Shares certified from
time to time by the record shareholder as representing the total amount
registered in such shareholder's name and held for the account of beneficial
owners who are to participate in the Plan. Shareholders whose shares are held in
the name of a bank, broker or nominee should contact the bank, whose broker or
nominee elects not to participate on the investor's behalf), will be paid in
cash by check mailed, in the case of direct shareholder, to the record holder by
PFPC Inc., as the Funds' dividend disbursement agent.
Unless you (or your broker or nominee) elects not to participate in the Plan,
the number of Common Shares you will receive will be determined as follows:
(1) If Common Shares are trading at or above net asset value on the payment
date, the Funds will issue new shares at the greater of (i) the net asset
value per Common Share on the payment date or (ii) 95% of the market
price per Common Share on the payment date; or
(2) If Common Shares are trading below net asset value (minus estimated
brokerage commissions that would be incurred upon the purchase of Common
Shares on the open market) on the payment date, the Plan Agent will
receive the dividend or distribution in cash and will purchase Common
Shares in the open market, on the New York Stock Exchange or elsewhere,
for the participants' accounts. It is possible that the market price for
the Common Shares may increase before the Plan Agent has completed its
purchases. Therefore, the average purchase price per share paid by the
Plan Agent may exceed the market price on the payment date, resulting in
the purchase of fewer shares than if the dividend or distribution had
been paid in Common Shares issued by the Funds. The Plan Agent will use
all dividends and distributions received in cash to purchase Common
Shares in the open market on or shortly after the payment date, but in no
event later than the ex-dividend date for the next distribution. Interest
will not be paid on any uninvested cash payments.
You may withdraw from the Plan at any time by giving notice to the Plan Agent.
If you withdraw or the Plan is terminated, you will receive a certificate for
each whole share in your account under the Plan and you will receive a cash
payment for any fraction of a share in your account. If you wish, the Plan Agent
will sell your shares and send you the proceeds, minus brokerage commissions.
The Plan Agent maintains all shareholders' accounts in the Plan and gives
written confirmation of all transactions in the accounts, including information
you may need for tax records. The Plan Agent will also furnish each person who
buys Common Shares with written instructions detailing the procedures for
electing not to participate in the Plan and to instead receive distributions in
cash. Common Shares in your account will be held by the Plan Agent in
non-certificated form. Any proxy you receive will include all Common Shares you
have received under the Plan.
There is no brokerage charge for reinvestment of your dividends or distributions
in Common Shares. However, all participants will pay a pro rata share of
brokerage commissions incurred by the Plan Agent when it makes open market
purchases.
Automatically reinvested dividends and distributions are taxed in the same
manner as cash dividends and distributions.
The Funds and the Plan Agent reserve the right to amend or terminate the Plan.
There is no direct service charge to participants in the Plan; however, the
Funds reserve the right to amend the Plan to include a service charge payable by
the participants. Additional information about the Plan may be obtained from
PFPC Inc., 400 Belleview Parkway, Wilmington, DE 19809, telephone number
1-800-331-1710.
OTHER INFORMATION:
Since June 28, 2002, there has been no: (i) material changes in the Funds'
investment objectives or policies; (ii) changes to the Funds' charter or
by-laws; (iii) material changes in the principal risk factors associated with
investment in the Funds; or (iv) change in the person primarily responsible for
the day-to-day management of each Fund's portfolio.
34 PIMCO Municipal Income Funds II Annual Report | 5.31.03
PIMCO MUNICIPAL INCOME FUNDS II BOARD OF TRUSTEES
STEPHEN TREADWAY, TRUSTEE, CHAIRMAN, CHAIRMAN OF THE BOARD
1345 Avenue of the Americas, New York, NY 10105
Age: 55
Trustee since: 2002
Term of office: After initial term, expected to stand for re-election at 2005
annual meeting of shareholders.
Trustee/Director of 51 funds in Fund Complex; Trustee/Director of no funds
outside of Fund Complex
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Managing Director of Allianz
Dresdner Asset Management of America L.P.; Managing Director and Chief Executive
Officer of PIMCO Advisors Distributors LLC; Managing Director and Chief
Executive Officer PIMCO Advisors Fund Management; Member of the Board of
Management of Allianz Dresdner Asset Management GmbH. Mr. Treadway serves as a
director/trustee and holds various executive officer positions in connection
with Allianz Dresdner Asset Management of America L.P.'s affiliated open- and
closed-end mutual funds.
PAUL BELICA, TRUSTEE
1345 Avenue of the Americas, New York, NY 10105
Age: 81
Trustee since: 2002
Term of office: After initial term, expected to stand for re-election at 2004
annual meeting of shareholders.
Trustee of 14 funds in Fund Complex; Trustee of 2 funds outside of Fund Complex
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Trustee of thirteen open- and
closed-end management investment companies affiliated with Allianz Dresdner
Asset Management of America L.P.; Manager, Stratigos Fund, L.L.C., Whistler
Fund, L.L.C., Xanthus Fund, L.L.C., and Wynstone Fund, L.L.C.; Director, Student
Loan Finance Corp., Education Loans, Inc., Goal Funding, Inc. Surety Loan
Funding, Inc.; Formerly, Advisor, Smith Barney, Inc.; Director, The Central
European Value Fund, Inc.; Deck House Inc.
ROBERT E. CONNOR, TRUSTEE
1345 Avenue of the Americas, New York, NY 10105
Age: 68
Trustee since: 2002
Term of office: After initial term, expected to stand for re-election at 2006
annual meeting of shareholders.
Trustee/Director of 16 funds in Fund Complex; Trustee/Director of no funds
outside of Fund Complex
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Director/Trustee of fifteen open-
and closed-end management investment companies affiliated with Allianz Dresdner
Asset Management of America L.P.; Corporate Affairs Consultant; Formerly, Senior
Vice President, Corporate Office, Smith Barney Inc.
JOHN J. DALESSANDRO II, TRUSTEE
1345 Avenue of the Americas, New York, NY 10105
Age: 65
Trustee since: 2002
Term of office: After initial term, expected to stand for re-election at 2004
annual meeting of shareholders.
Trustee of 13 funds in Fund Complex; Trustee of no funds outside of Fund Complex
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President and Director, J.J.
Dalessandro II ltd., registered broker-dealer and member of the New York Stock
exchange; Trustee of thirteen closed-end management investment companies
affiliated with Allianz Dresdner Asset Management of America L.P.
HANS W. KERTESS, TRUSTEE
1345 Avenue of the Americas, New York, NY 10105
Age: 63
Trustee since: 2002
Term of office: After initial term, expected to stand for re-election at 2006
annual meeting of shareholders.
Trustee of 8 funds in Fund Complex; Trustee of no funds outside of Fund Complex
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Consultant, Dain Raucher Inc;
Trustee of eight closed-end management investment companies affiliated with
Allianz Dresdner Asset Management of America L.P. Formerly, Managing Director,
Salomon Brothers; Managing Director, Dain Rauscher Inc.
R. PETER SULLIVAN III, TRUSTEE
1345 Avenue of the Americas, New York, NY 10105
Age: 61
Trustee since: 2002
Term of office: After initial term, expected to stand for re-election at 2005
annual meeting of shareholders.
Trustee of 7 funds in Fund Complex; Trustee of no funds outside of Fund Complex
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Trustee of seven closed-end
management investment companies affiliated with Allianz Dresdner Asset
Management of America L.P. Formerly, Managing Partner, Bear Wagner Specialists
LLC (formerly, Wagner Stott Mercator LLC), specialist firm on the New York Stock
Exchange.
5.31.03 | PIMCO Municipal Income Funds II Annual Report 35
PIMCO MUNICIPAL INCOME FUNDS II PRIVACY POLICY
OUR COMMITMENT TO YOU
We consider customer privacy to be a fundamental aspect of our relationship with
clients. We are committed to maintaining the confidentiality, integrity, and
security of our current, prospective and former clients' personal information.
We have developed policies designed to protect this confidentiality, while
allowing client needs to be served.
OBTAINING PERSONAL INFORMATION
In the course of providing you with products and services, we may obtain
non-public personal information about you. This information may come from
sources such as account applications and other forms, from other written,
electronic or verbal correspondence, from your transactions, from your brokerage
or financial advisory firm, financial adviser or consultant, and/or from
information captured on our internet web sites.
RESPECTING YOUR PRIVACY
We do not disclose any personal or account information provided by you or
gathered by us to non-affiliated third parties, except as required or permitted
by law. As is common in the industry, non-affiliated companies may from time to
time be used to provide certain services, such as preparing and mailing
prospectuses, reports, account statements and other information, conducting
research on client satisfaction, and gathering shareholder proxies. We may also
retain non-affiliated companies to market our products and enter in joint
marketing agreements with other companies. These companies may have access to
your personal and account information, but are permitted to use the information
solely to provide the specific service or as otherwise permitted by law. We may
also provide your personal and account information to your brokerage or
financial advisory firm and/or to your financial adviser or consultant.
SHARING INFORMATION WITH THIRD PARTIES
We do reserve the right to disclose or report personal information to
non-affiliated third parties in limited circumstances where we believe in good
faith that disclosure is required under law, to cooperate with regulators or law
enforcement authorities, to protect our rights or property, or upon reasonable
request by any mutual fund in which you have chosen to invest. In addition, we
may disclose information about you or your accounts to a non-affiliated third
party at your request or if you consent in writing to the disclosure.
SHARING INFORMATION WITH AFFILIATES
We may share client information with our affiliates in connection with servicing
your account or to provide you with information about products and services that
we believe may be of interest to you. The information we share may include, for
example, your participation in our mutual funds or other investment programs,
your ownership of certain types of accounts (such as IRAs), or other data about
your accounts. Our affiliates, in turn, are not permitted to share your
information with non-affiliated entities, excpet as required or permitted by
law.
IMPLEMENTATION OF PROCEDURES
We take seriously the obligation to safeguard your non-public personal
information. We have implemented procedures designed to restrict access to your
non-public personal information to our personnel who need to know that
information to provide products or services to you. To guard your non-public
personal information, physical, electronic, and procedural safeguards are in
place.
36 PIMCO Municipal Income Funds II Annual Report | 5.31.03
TRUSTEES AND PRINCIPAL OFFICERS
Stephen Treadway
Trustee, Chairman, Chairman of the Board
Paul Belica
Trustee
Robert E. Connor
Trustee
John J. Dalessandro II
Trustee
Hans W. Kertess
Trustee
R. Peter Sullivan, III
Trustee
Brian S. Shlissel
President & Chief Executive Officer
Newton B. Schott, Jr.
Executive Vice President & Secretary
Mark V. McCray
Vice President
Lawrence G. Altadonna
Treasurer, Principal Financial & Accounting Officer
INVESTMENT MANAGER
PIMCO Advisors 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.
400 Bellevue Parkway
Wilmington, DE 19809
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, MA 02210-2624
This report, including the financial information herein, is transmitted to the
shareholders of PIMCO Municipal Income Fund II, PIMCO California Municipal
Income Fund II and PIMCO New York Municipal Income Fund II for their
information. It is not a prospectus, circular or representation intended for use
in the purchase of shares of the Funds or any securities mentioned in this
report.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that from time to time each Fund may purchase
shares of its common stock in the open market.
Daily information on the Funds is available at www.pimcoadvisors.com or by
calling 1-800-331-1710.
PIMCO
--------
ADVISORS
ITEM 2. CODE OF ETHICS Disclosure requirement not currently effective
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT Disclosure requirement not currently
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES Disclosure requirement not
currently effective
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANT Disclosure requirement not
currently effective
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES Disclosure requirement not currently effective
ITEM 8. [RESERVED]
ITEM 9. 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 10. EXHIBITS
(a) Disclosure requirement not currently effective.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act
(17 CFR 270.30a-2).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) PIMCO MUNICIPAL INCOME FUND II
-----------------------------------------------------
By /s/ Brian S. Shlissel
-------------------------------------------------------------
President and Chief Executive Officer
Date July 31, 2003
-------------------------------------------------------------
By /s/ Lawrence G. Altadonna
-------------------------------------------------------------
Treasurer
Date July 31, 2003
-------------------------------------------------------------
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 July 31, 2003
-------------------------------------------------------------
By /s/ Lawrence G. Altadonna
-------------------------------------------------------------
Treasurer
Date July 31, 2003
-------------------------------------------------------------