`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    811-21078
 

PIMCO New York 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)
 
Lawrence G. Altadonna - 1345 Avenue of the Americas, New York, New York 10105
(Name and address of agent for service)

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

Date of fiscal year end:    May 31, 2009 
 
Date of reporting period:   November 30, 2008 

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e -1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.


ITEM 1. REPORT TO SHAREHOLDERS

 

 

 

 

 

 

 

PIMCO Municipal Income Fund II

 

 

PIMCO California Municipal Income Fund II

 

 

PIMCO New York Municipal Income Fund II

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Semi-Annual Report

 

 

November 30, 2008

 

 

 

 

 

 

 


 

 

 

 

 

 

(PML LOGO)

(PCK LOGO)

(PNI LOGO)

 

Contents

 

 

 

 

 

 

 

 

 

Letter to Shareholders

 

1

 

 

 

 

 

 

 

Fund Insights/Performance & Statistics

 

2-4

 

 

 

 

 

 

 

Schedules of Investments

 

5-23

 

 

 

 

 

 

 

Statements of Assets and Liabilities

 

24

 

 

 

 

 

 

 

Statements of Operations

 

25

 

 

 

 

 

 

 

Statements of Changes in Net Assets

 

26-27

 

 

 

 

 

 

 

Statement of Cash Flows

 

28

 

 

 

 

 

 

 

Notes to Financial Statements

 

29-35

 

 

 

 

 

 

 

Financial Highlights

 

36-38

 

 

 

 

 

 

 

Matters Relating to the Trustees’ Consideration of the Investment Management and Portfolio Management Agreements

 

39-40

 

 

 

 

 

 

 

Subsequent Events/Proxy Voting Policies & Procedures

 

41-43

 

 

 

 

 

 

 

Annual Shareholder Meetings Results

 

44

 


 

 

(ALLIANZ LOGO)

 


 

 

PIMCO Municipal Income Funds II      Letter to Shareholders

   

January 15, 2009

Dear Shareholder:

We are pleased to provide you with the semi-annual report for PIMCO Municipal Income Fund II, PIMCO California Municipal Income Fund II and PIMCO New York Municipal Income Fund II (collectively, the “Funds”) for the six-month period ended November 30, 2008.

Tight credit conditions and a global economic slowdown caused municipal bond prices to fall during the period. The Barclays Capital Municipal Bond Index returned (4.98)% while the Barclays Capital U.S. Aggregate Bond Index, a broad credit market measure of government and corporate securities, posted a positive 0.24% return. Stocks fared worse in the downturn. The Standard & Poor’s 500 Index returned (35.20)% for the period, among the worst periods on record for equities. The Federal Reserve (the “Fed”) sought to inject liquidity into the economy through multiple initiatives, including reducing the Federal Funds rate twice during the reporting period. The Fed moves lowered the key target rate on loans between banks from 2.00% to 1.00%.

In the coming weeks or months, we would expect the de-leveraging of the private sector to meet its counterpart in the leveraging of the federal government as it seeks to inject more than a trillion dollars of liquidity into the nation’s financial system. This initiative holds potential to restore stability and some relative safety to debt securities outside of the shortest-term government issues.

Subsequent to the six month period ended November 30, 2008, a decision to redeem a portion of each Fund’s Auction Rate Preferred Shares (“ARPS”) was made at the recommendation of the Fund’s investment manager and approved by the Board of Trustees. These redemptions were intended to increase and maintain asset coverage for each Fund’s ARPS above the 200% level, permitting the Funds to pay previously declared common share dividends and to declare and pay future common share dividends. Depending on market conditions, coverage ratios may increase or decrease further. With respect to each of the Funds, as of the date of this letter, all dividend payments which were postponed have been paid and all dividend declarations which were postponed have subsequently been declared.

For specific information on the Funds and their performance, please review the following pages. If you have any questions regarding the information provided, we encourage you to contact your financial advisor or call the Funds’ shareholder servicing agent at (800) 331-1710. In addition, a wide range of information and resources is available on our Web site, www.allianzinvestors.com/closedendfunds.

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

Sincerely,

 

 

 

-s- Hans W. Kertess

 

-s- Brian S. Shlissel

Hans W. Kertess

 

Brian S. Shlissel

Chairman

 

President & Chief Executive Officer

11.30.08 | PIMCO Municipal Income Funds II Semi-Annual Report  1


 

 

PIMCO Municipal Income Fund II     Fund Insights/Performance & Statistics

November 30, 2008 (unaudited)

   

 

 

For the six-month period ended November 30, 2008, PIMCO Municipal Income Fund II returned (38.16)% on net asset value and (41.34)% on market price, compared to (19.82)% and (27.73)%, respectively for the Lipper Analytical General Municipal Debt Funds Leveraged (the “Benchmark”) average.

 

 

Municipal bond yields increased across the curve in all but the shortest maturities during the six-month period ended November 30, 2008.

 

 

Duration hedging strategies significantly detracted from performance during the period. Thirty-year Treasury and London Interbank Offered Rate (“LIBOR”) swaps rallied significantly, while municipal rates increased as investors moved away from risky assets.

 

 

Municipal to Treasury yield ratios moved higher during the reporting period crossing all time high levels in September, while continuing higher in October and November, continually setting new records along the way. The 10-year ratio increased to 138% and 30-year ratio increased to 156%.

 

 

Exposure to corporate backed munis detracted from performance as this sector underperformed during the period due to continued stress in the corporate sector.

 

 

Tobacco securitization sector holdings detracted from performance as muni investors continue to focus demand on the highest quality sectors of the market while avoiding lower quality higher yielding securities such as tobacco bonds.

 

 

Exposure to zero coupon municipals detracted from performance as their longer durations caused underperformance as rates moved higher during the reporting period, especially in the longer maturity portion of the yield curve. The Barclays Capital Zero Coupon Index returned (15.16)% for the six-month period ended November 30, 2008.

 

 

The Fund was generally positioned with a significant portion of its exposure in longer dated maturities due to the attractiveness of that portion of the curve. This detracted from performance as the muni curve steepened significantly during the period with longer rates increasing and most investors buying in the shorter maturity portion of the curve. The 15-, 20-, and 30-year maturity AAA General Obligation yields increased by 72, 80, and 87 basis points respectively while the two-year yield decreased by 13 basis points.

 

 

Long Municipals significantly underperformed Long Treasuries and also underperformed the taxable debt sector during the period as investors moved out of risky assets into Treasuries due to market volatility and continued uncertainty. The Barclays Capital Long Municipal Bond Index returned (14.77)% while the Long Government/Credit and the Long Barclays Capital Treasury Indices returned (1.36)% and 13.61%, respectively.

 

 

Municipal bond issuance remains at increased levels; although there has been a slow down in the furious pace of the first half of the year beginning in September. Although issuance has been stalled somewhat, municipalities have picked up their issuance again in order to meet upcoming funding needs. During the six-month period, issuance totaled over $367.7 billion compared to $400.42 billion for the same period a year ago.


 

 

 

 

 

 

 

 

Total Return(1):

 

 

  Market Price

 

Net Asset Value (“NAV”)

 

               

Six Months

 

 

(41.34

)%

 

(38.16

)%

               

1 Year

 

 

(37.85

)%

 

(38.63

)%

               

5 Year

 

 

(4.52

)%

 

(5.01

)%

               

Commencement of Operations (6/28/02) to 11/30/08

 

 

(3.31

)%

 

(2.13

)%

               

Common Share Market Price/NAV Performance:

Commencement of Operations (6/28/02) to 11/30/08

(LINE GRAPH)

 

 

 

 

 

Market Price/NAV:

 

 

 

 

         

Market Price

 

$

8.00

 

         

NAV

 

$

8.30

 

         

Discount to NAV

 

 

(3.61

)%

         

Market Price Yield(2)

 

 

9.75

%

         

 

Moody’s Ratings
(as a % of total investments)

 

 

(PIE CHART)


(1) Past performance is no guarantee of future results. Returns are calculated by determining the percentage change in net asset value or market share price (as applicable) in the period covered. The calculation assumes that all of the Fund’s income dividends and capital gain distributions have been reinvested. Total return does not reflect broker commissions or sales charges. Total return for a period of less than one year is not annualized. Total return for a period of more than one year represents the average annual total return.

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

An investment in the Fund involves risk, including the loss of principal. Total return, market price, market price yield and net asset value will fluctuate with changes in market conditions. This data is provided for information only and is not intended for trading purposes. Closed-end funds, unlike open-end funds, are not continuously offered. There is a one-time public offering, and once issued, shares of closed-end funds are sold in the open market through a stock exchange. Net asset value is equal to total assets attributable to common shareholders less total liabilities divided by the number of common shares outstanding. Holdings are subject to change daily.

(2) Market Price Yield is determined by dividing the annualized current monthly per share dividend (comprised from net investment income) payable to common shareholders by the market price per common share at November 30, 2008.

2  PIMCO Municipal Income Funds II Semi-Annual Report  | 11.30.08


 

 

PIMCO California Municipal Income Fund II    Fund Insights/Performance & Statistics

November 30, 2008 (unaudited)

 

 

 

 

For the six-month period ended November 30, 2008, PIMCO California Municipal Income Fund II returned (42.32)% on net asset value and (52.98)% on market price, compared to (52.96)% and (30.07)%, respectively for the Lipper California Municipal Debt Funds—Leveraged (the “Benchmark”) average.

 

 

Municipal bond yields increased across the curve in all but the shortest maturities during the six-month period ended November 30, 2008.

 

 

Duration hedging strategies significantly detracted from performance during the reporting period. Thirty-year Treasury and London Interbank Offered Rate (“LIBOR”) swaps rallied significantly, while municipal rates increased as investors moved away from risky assets.

 

 

Municipal to Treasury yield ratios moved higher during the period crossing all time high levels in September, while continuing higher in October and November, continually setting new records along the way. The 10-year ratio increased to 138% and 30-year ratio increased to 156%.

 

 

Exposure to hospital related munis detracted from performance as this sector underperformed the national market during the period.

 

 

Tobacco securitization sector holdings detracted from Fund performance as muni investors continue to focus demand on the highest quality sectors of the market while avoiding lower quality higher yielding securities such as tobacco bonds.

 

 

Exposure to zero coupon municipals detracted from Fund performance as their longer durations caused underperformance as rates moved higher during the period, especially in the longer maturity portion of the yield curve. The Barclays Capital Zero Coupon Index returned (15.16)% for the six-month period ended November 30, 2008.

 

 

Long Municipals significantly underperformed Long Treasuries and also underperformed the taxable debt sector during the period as investors moved out of risky assets into Treasuries due to market volatility and continued uncertainty. The Barclays Capital Long Municipal Bond Index returned (14.17)% while the Long Government/Credit and the Long Barclays Capital Treasury Indices returned (1.36)% and 13.61%, respectively.

 

 

Municipal bond issuance remains at increased levels; although we have seen a slow down in the furious pace of the first half of the year beginning in September. Although issuance has been stalled somewhat, municipalities have picked up their issuance again in order to meet upcoming funding needs. During the six-month period, issuance totaled over $367.7 billion compared to $400.42 billion for the same period a year ago.

 

 

Municipal bonds within California underperformed the Barclays Capital Municipal Bond Index returning (6.33)% and (4.98)%, respectively for the period. Year-to-date, California continues to lead all other states in new issue volume. The state’s issuance has decreased 20% from the same period last year to $51.6 billion.

 

 

The Fund was generally positioned with a significant portion of its exposure in longer dated maturities due to the attractiveness of that portion of the curve. This detracted from performance as long muni rates increased during this period. The shape of the California State AAA insured municipal yield curve steepened during the reporting period. Five-year maturity yields increased 26 basis points, 10-year yields increased 75 basis points, and 30-year yields increased 140 basis points.


 

 

 

 

 

 

 

 

Total Return(1):

 

 

  Market Price

 

Net Asset Value (“NAV”

)

               

Six Months

 

 

(52.98

)%

 

(42.32

)%

               

1 Year

 

 

(51.12

)%

 

(42.63

)%

               

5 Year

 

 

(8.41

)%

 

(6.36

)%

               

Commencement of Operations (6/28/02) to 11/30/08

 

 

(6.54

)%

 

(3.80

)%

               

Common Share Market Price/NAV Performance:

Commencement of Operations (6/28/02) to 11/30/08

(LINE GRAPH)

 

 

 

 

 

Market Price/NAV:

 

 

 

 

         

Market Price

 

$

6.44

 

         

NAV

 

$

7.42

 

         

Discount to NAV

 

 

(13.21

)%

         

Market Price Yield(2)

 

 

13.04

%

         

 

Moody’s Ratings
(as a % of total investments)

 

 

(PIE CHART)


(1) Past performance is no guarantee of future result. Returns are calculated by determining the percentage change in net asset value or market share price (as applicable) in the period covered. The calculation assumes that all of the Fund’s income dividends and capital gain distributions have been reinvested. Total return does not reflect broker commissions or sales charges. Total return for a period of less than one year is not annualized. Total return for a period of more than one year represents the average annual total return.

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

An investment in the Fund involves risk, including the loss of principal. Total return, market price, market price yield and net asset value will fluctuate with changes in market conditions. This data is provided for information only and is not intended for trading purposes. Closed-end funds, unlike open-end funds, are not continuously offered. There is a one-time public offering, and once issued, shares of closed-end funds are sold in the open market through a stock exchange. Net asset value is equal to total assets attributable to common shareholders less total liabilities divided by the number of common shares outstanding. Holdings are subject to change daily.

(2) Market Price Yield is determined by dividing the annualized current monthly per share dividend (comprised from net investment income) payable to common shareholders by the market price per common share at November 30, 2008.

11.30.08 | PIMCO Municipal Income Funds II Semi-Annual Report  3


 

 

PIMCO New York Municipal Income Fund II     Fund Insights/Performance & Statistics

November 30, 2008 (unaudited)

 

 

 

 

For the six-month period ended November 30, 2008, PIMCO New York Municipal Income Fund II returned (32.61)% on net asset value and (41.51)% on market price, compared to (41.54)% and (32.08)%, respectively for the Lipper New York Municipal Debt Funds—Leveraged (the “Benchmark”) average.

 

 

Municipal bond yields increased across the curve in all but the shortest maturities during the six-month reporting period ended November 30, 2008.

 

 

Duration hedging strategies significantly detracted from performance during the period. Thirty-year Treasury and London Interbank Offered Rate (“LIBOR”) swaps rallied significantly, while municipal rates increased as investors moved away from risky assets.

 

 

Municipal to Treasury yield ratios moved higher during the period crossing all time high levels in September, while continuing higher in October and November, continually setting new records along the way. The 10-year ratio increased to 138% and 30-year ratio increased to 156%.

 

 

Exposure to hospital related munis detracted from performance as this sector underperformed the national market during the period.

 

 

Tobacco securitization sector holdings detracted from performance as muni investors continue to focus demand on the highest quality sectors of the market while avoiding lower quality higher yielding securities such as tobacco bonds.

 

 

Exposure to zero coupon municipals detracted from performance as their longer durations caused underperformance as rates moved higher during the period, especially in the longer maturity portion of the yield curve. The Barclays Capital Zero Coupon Index returned (15.16)% for the six-month period ended November 30, 2008.

 

 

Long Municipals significantly underperformed Long Treasuries and also underperformed the taxable debt sector during the period as investors moved out of risky assets into Treasuries due to market volatility and continued uncertainty. The Barclays Capital Long Municipal Bond Index returned (14.77)% while the Long Government/Credit and the Long Barclays Capital Treasury Indices returned (1.36)% and 13.61%, respectively.

 

 

Municipal bond issuance remains at increased levels; although we have seen a slow down in the furious pace of the first half of the year beginning in September. Although issuance has been stalled somewhat, municipalities have picked up their issuance again in order to meet upcoming funding needs. During the six-month period, issuance totaled over $367.7 billion compared to $400.42 billion for the same period a year ago.

 

 

Municipal bonds within New York performed in-line with the Barclays Capital Municipal Bond Index returning (4.94)% and (4.98)%, respectively for the period. Year-to-date, issuers in New York State have issued $38.1 billion in bonds, 37.5% higher than the same period last year. New York now ranks second among states in terms of issuance.

 

 

The Fund was generally positioned with a significant portion of its exposure in longer dated maturities due to the attractiveness of that portion of the curve. This detracted from performance as long muni rates increased over this period. The shape of the New York Insured AAA municipal yield curve steepened during the period. Five-year maturity AAA credits increased 17 basis points, 10-year maturities increased 57 basis points, and 30-year maturities increased 105 basis points.


 

 

 

 

 

 

 

 

Total Return(1):

 

 

  Market Price

 

Net Asset Value (“NAV”

)

               

Six Months

 

 

(41.51

)%

 

(32.61

)%

               

1 Year

 

 

(36.40

)%

 

(32.32

)%

               

5 Year

 

 

(4.38

)%

 

(3.30

)%

               

Commencement of Operations (6/28/02) to 11/30/08

 

 

(3.25

)%

 

(1.20

)%

               

Common Share Market Price/NAV Performance:

Commencement of Operations (6/28/02) to 11/30/08

(LINE GRAPH)

 

 

 

 

 

Market Price/NAV:

 

 

 

 

         

Market Price

 

$

8.14

 

         

NAV

 

$

8.92

 

         

Discount to NAV

 

 

(8.74

)%

         

Market Price Yield(2)

 

 

9.77

%

         

 

Moody’s Ratings
(as a % of total investments)

 

 

(PIE CHART)


(1) Past performance is no guarantee of future results. Returns are calculated by determining the percentage change in net asset value or market share price (as applicable) in the period covered. The calculation assumes that all of the Fund’s income dividends and capital gain distributions have been reinvested. Total return does not reflect broker commissions or sales charges. Total return for a period of less than one year is not annualized. Total return for a period of more than one year represents the average annual total return.

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

An investment in the Fund involves risk, including the loss of principal. Total return, market price, market price yield and net asset value will fluctuate with changes in market conditions. This data is provided for information only and is not intended for trading purposes. Closed-end funds, unlike open-end funds, are not continuously offered. There is a one-time public offering, and once issued, shares of closed-end funds are sold in the open market through a stock exchange. Net asset value is equal to total assets attributable to common shareholders less total liabilities divided by the number of common shares outstanding. Holdings are subject to change daily.

(2) Market Price Yield is determined by dividing the annualized current monthly per share dividend (comprised from net investment income) payable to common shareholders by the market price per common share at November 30, 2008.

4  PIMCO Municipal Income Funds II Semi-Annual Report  | 11.30.08


 

 

PIMCO Municipal Income Fund II     Schedule of Investments

November 30, 2008 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

               

 

Principal
Amount
(000)

 

 

 

Credit Rating
(Moody’s/S&P)

 

Value

 

               

MUNICIPAL BONDS & NOTES—92.7%

 

 

 

 

 

 

 

 

 

 

Alabama—2.4%

 

 

 

 

 

 

 

$

10,000

 

Birmingham Baptist Medical Centers Special Care Facs.

 

 

 

 

 

 

 

 

 

 

Financing Auth. Rev., 5.00%, 11/15/30, Ser. A

 

 

Baa1/NR

 

 

$   6,781,000

 

 

1,750

 

Huntsville Health Care Auth. Rev.,

 

 

 

 

 

 

 

 

 

 

5.75%, 6/1/32, Ser. B, (Pre-refunded @ $101, 6/1/12) (c)

 

 

A2/NR

 

 

1,939,070

 

 

13,580

 

Jefferson Cnty. Sewer Rev.,

 

 

 

 

 

 

 

 

 

 

4.75%, 2/1/38, Ser. B, (Pre-refunded @ $100,

 

 

 

 

 

 

 

 

 

 

8/1/12) (FGIC)(c)

 

 

Aaa/AAA

 

 

14,519,329

 

 

 

 

Montgomery BMC Special Care Facs. Financing Auth.

 

 

 

 

 

 

 

 

 

 

Rev. (MBIA),

 

 

 

 

 

 

 

 

1,235

 

5.00%, 11/15/29, Ser. B

 

 

A3/AA

 

 

1,073,832

 

 

2,200

 

Baptist Health, 5.00%, 11/15/24

 

 

A3/AA

 

 

2,185,612

 

 

2,650

 

Tuscaloosa Educational Building Auth. Rev., Stillman College,

 

 

 

 

 

 

 

 

 

 

5.00%, 6/1/26

 

 

NR/BBB-

 

 

1,854,126

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

28,352,969

 

 

 

 

 

 

 

 

 

     

 

 

 

Alaska—0.5%

 

 

 

 

 

 

 

 

5,900

 

Northern Tobacco Securitization Corp. Rev.,

 

 

 

 

 

 

 

 

 

 

5.00%, 6/1/46, Ser. A

 

 

Baa3/NR

 

 

3,280,872

 

 

3,550

 

State Housing Finance Corp. Rev., 5.25%, 6/1/32,

 

 

 

 

 

 

 

 

 

 

Ser. C (MBIA)

 

 

Aa2/AA

 

 

3,033,865

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

6,314,737

 

 

 

 

 

 

 

 

 

     

 

 

 

Arizona—6.6%

 

 

 

 

 

 

 

 

 

 

Health Facs. Auth. Rev.,

 

 

 

 

 

 

 

 

6,500

 

Beatitudes Project, 5.20%, 10/1/37

 

 

NR/NR

 

 

3,940,755

 

 

1,300

 

Hospital System, 5.75%, 12/1/32, (Pre-refunded @ $101,

 

 

 

 

 

 

 

 

 

 

12/1/12) (c)

 

 

NR/BBB

 

 

1,447,251

 

 

 

 

Pima Cnty. Industrial Dev. Auth. Rev.,

 

 

 

 

 

 

 

 

3,500

 

Center for Academic Success, 5.50%, 7/1/37 (a)(d)

 

 

NR/BBB-

 

 

2,378,880

 

 

29,700

 

Correctional Facs., 5.00%, 9/1/39

 

 

Aa2/AA

 

 

25,572,294

 

 

41,100

 

Salt River Project Agricultural Improvement & Power Dist. Rev.,

 

 

 

 

 

 

 

 

 

 

5.00%, 1/1/37, Ser. A (h)

 

 

Aa1/AA

 

 

37,234,956

 

 

10,500

 

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

 

 

Aa3/AA-

 

 

6,725,145

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

77,299,281

 

 

 

 

 

 

 

 

 

     

 

 

 

Arkansas—0.1%

 

 

 

 

 

 

 

 

13,000

 

Arkansas Dev. Finance Auth. Rev., zero coupon, 7/1/46,

 

 

 

 

 

 

 

 

 

 

(AMBAC)

 

 

Aa3/NR

 

 

1,292,460

 

 

 

 

 

 

 

 

 

     

 

 

 

California—4.9%

 

 

 

 

 

 

 

 

9,610

 

Alameda Corridor Transportation Auth. Rev.,

 

 

 

 

 

 

 

 

 

 

zero coupon, 10/1/16, Ser. A (AMBAC)

 

 

A3/AA

 

 

6,685,389

 

 

 

 

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

 

 

 

 

 

 

 

 

6,000

 

5.00%, 6/1/33,

 

 

Baa3/BBB

 

 

3,763,560

 

 

9,000

 

6.75%, 6/1/39, (Pre-refunded @ $100, 6/1/13) (c)

 

 

NR/AAA

 

 

10,287,090

 

 

 

 

State, GO,

 

 

 

 

 

 

 

 

28,600

 

5.00%, 11/1/37 (h)

 

 

A1/A+

 

 

23,822,084

 

 

9,550

 

5.00%, 12/1/37

 

 

A1/A+

 

 

7,954,099

 

11.30.08 | PIMCO Municipal Income Funds II Semi-Annual Report  5


 

 

PIMCO Municipal Income Fund II     Schedule of Investments

November 30, 2008 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

               

 

Principal
Amount
(000)

 

 

 

Credit Rating
(Moody’s/S&P)

 

Value

 

               

 

 

 

California—(continued)

 

 

 

 

 

 

 

$

4,700

 

Statewide Community Dev. Auth. Rev., Baptist Univ.,

 

 

 

 

 

 

 

 

 

 

9.00%, 11/1/17, Ser. B (a)(d)

 

 

NR/NR

 

 

$   4,335,609

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

56,847,831

 

 

 

 

 

 

 

 

 

     

 

 

 

Colorado—4.9%

 

 

 

 

 

 

 

 

11,250

 

Denver City & Cnty. Rev., 5.00%, 11/15/25, Ser. B (FSA)

 

 

Aaa/AAA

 

 

10,363,725

 

 

 

 

E-470 Public Highway Auth. Rev., Ser. B (MBIA),

 

 

 

 

 

 

 

 

20,000

 

zero coupon, 9/1/35

 

 

Baa1/AA

 

 

2,647,600

 

 

15,000

 

zero coupon, 9/1/37

 

 

Baa1/AA

 

 

1,708,050

 

 

 

 

Health Facs. Auth. Rev.,

 

 

 

 

 

 

 

 

1,000

 

American Baptist Homes, 5.90%, 8/1/37, Ser. A

 

 

NR/NR

 

 

666,240

 

 

25,000

 

Catholic Health Initiatives, 5.50%, 3/1/32

 

 

NR/AA

 

 

25,669,000

 

 

18,305

 

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

 

 

A1/A-

 

 

14,808,928

 

 

2,000

 

Housing & Finance Auth. Rev., Evergreen Country Day School,

 

 

 

 

 

 

 

 

 

 

5.875%, 6/1/37 (a)(d)

 

 

NR/BB

 

 

1,403,220

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

57,266,763

 

 

 

 

 

 

 

 

 

     

 

 

 

Florida—3.4%

 

 

 

 

 

 

 

 

2,310

 

Dev. Finance Corp. Rev., Learning Gate Community School,

 

 

 

 

 

 

 

 

 

 

6.00%, 2/15/37

 

 

NR/BBB-

 

 

1,683,805

 

 

2,335

 

Hillsborough Cnty. Industrial Dev. Auth. Pollution Control Rev.,

 

 

 

 

 

 

 

 

 

 

Tampa Electric Co., 5.50%, 10/1/23

 

 

Baa2/BBB-

 

 

1,980,524

 

 

7,135

 

Jacksonville Health Facs. Auth. Rev., 5.25%, 11/15/32, Ser. A

 

 

Aa1/AA

 

 

6,078,949

 

 

3,000

 

Leesburg Hospital Rev., Leesburg Regional Medical Center

 

 

 

 

 

 

 

 

 

 

Project, 5.50%, 7/1/32

 

 

Baa1/BBB+

 

 

2,207,280

 

 

 

 

Orange Cnty. Health Facs. Auth. Rev., Adventist Health

 

 

 

 

 

 

 

 

 

 

System,

 

 

 

 

 

 

 

 

2,550

 

5.625%, 11/15/32, (Pre-refunded @ $101, 11/15/12) (c)

 

 

NR/NR

 

 

2,824,252

 

 

5,000

 

6.25%, 11/15/24, (Pre-refunded @ $100, 11/15/12) (c)

 

 

NR/NR

 

 

5,608,900

 

 

500

 

Sarasota Cnty. Health Fac. Auth. Rev., 5.75%, 7/1/37

 

 

NR/NR

 

 

325,045

 

 

6,205

 

State Governmental Utility Auth. Rev., Barefoot Bay Utilities

 

 

 

 

 

 

 

 

 

 

System, 5.00%, 10/1/29 (AMBAC)

 

 

Baa1/NR

 

 

5,610,747

 

 

5,000

 

Sumter Landing Community Dev. Dist. Rev.,

 

 

 

 

 

 

 

 

 

 

4.75%, 10/1/35, Ser. A (MBIA)

 

 

Baa1/AA

 

 

4,017,500

 

 

10,000

 

Tallahassee Rev., 5.00%, 10/1/37, Ser. 2617 (h)

 

 

Aa2/AA

 

 

9,080,300

 

 

1,500

 

Winter Springs Water & Sewer Rev., zero coupon,

 

 

 

 

 

 

 

 

 

 

10/1/29 (MBIA-FGIC)

 

 

NR/AA

 

 

453,195

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

39,870,497

 

 

 

 

 

 

 

 

 

     

 

 

 

Georgia—0.6%

 

 

 

 

 

 

 

 

2,775

 

Medical Center Hospital Auth. Rev., 5.25%, 7/1/37

 

 

NR/NR

 

 

1,693,055

 

 

9,600

 

Richmond Cnty. Dev. Auth. Rev., zero coupon, 12/1/21

 

 

Aaa/NR

 

 

4,951,776

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

6,644,831

 

 

 

 

 

 

 

 

 

     

 

 

 

Hawaii—1.4%

 

 

 

 

 

 

 

 

19,170

 

Honolulu City & Cnty. Wastewater System Rev., First Board

 

 

 

 

 

 

 

 

 

 

Resolution, 4.75%, 7/1/28 (MBIA-FGIC)

 

 

Aa3/NR

 

 

17,097,148

 

 

 

 

 

 

 

 

 

     

 

 

 

Illinois—19.1%

 

 

 

 

 

 

 

 

 

 

Central Lake Cnty. JT Action Water Agcy. Rev., Ser. A (AMBAC),

 

 

 

 

 

 

 

 

2,935

 

5.125%, 5/1/28

 

 

Aa3/NR

 

 

2,894,057

 

 

675

 

5.125%, 5/1/28 (Pre-refunded @ $100, 11/1/12) (c)

 

 

Aa3/NR

 

 

741,670

 

6  PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.08


 

 

PIMCO Municipal Income Fund II     Schedule of Investments

November 30, 2008 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

               

 

Principal
Amount
(000)

 

 

 

Credit Rating
(Moody’s/S&P)

 

Value

 

               

 

 

 

Illinois—(continued)

 

 

 

 

 

 

 

 

 

 

Chicago, GO (FGIC),

 

 

 

 

 

 

 

$

1,635

 

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

 

 

Aa3/AAA

 

 

$   1,536,377

 

 

4,065

 

5.50%, 1/1/40

 

 

Aa3/AA-

 

 

3,912,725

 

 

 

 

Chicago, Lake Shore East, Special Assessment,

 

 

 

 

 

 

 

 

3,162

 

6.625%, 12/1/22

 

 

NR/NR

 

 

2,740,063

 

 

6,700

 

6.75%, 12/1/32

 

 

NR/NR

 

 

5,438,323

 

 

 

 

Chicago Board of Education School Reform, GO (MBIA-FGIC),

 

 

 

 

 

 

 

 

15,535

 

zero coupon, 12/1/16, Ser. A

 

 

A1/AA

 

 

10,599,064

 

 

5,000

 

zero coupon, 12/1/28, Ser. A

 

 

A1/AA

 

 

1,370,600

 

 

4,500

 

zero coupon, 12/1/31

 

 

A1/AA

 

 

988,065

 

 

 

 

Chicago City Colleges, GO (FGIC),

 

 

 

 

 

 

 

 

32,670

 

zero coupon, 1/1/37

 

 

Aa3/AA

 

 

5,262,157

 

 

29,145

 

zero coupon, 1/1/38

 

 

Aa3/AA

 

 

4,374,082

 

 

32,670

 

zero coupon, 1/1/39

 

 

Aa3/AA

 

 

4,566,939

 

 

5,000

 

Cicero, GO, 5.25%, 12/1/31 (MBIA)

 

 

Baa1/AA

 

 

4,831,650

 

 

6,440

 

Cook Cnty., GO, 5.00%, 11/15/28, Ser. A (MBIA-FGIC)

 

 

Aa2/AA

 

 

6,112,461

 

 

 

 

Finance Auth. Rev.,

 

 

 

 

 

 

 

 

2,500

 

Christian Homes, Inc., 5.75%, 5/15/31, Ser. A

 

 

NR/NR

 

 

1,690,300

 

 

250

 

Leafs Hockey Club, 6.00%, 3/1/37, Ser. A

 

 

NR/NR

 

 

168,825

 

 

 

 

Regency Park,

 

 

 

 

 

 

 

 

10,000

 

zero coupon, 7/15/23

 

 

NR/AAA

 

 

4,628,800

 

 

122,650

 

zero coupon, 7/15/25

 

 

NR/AAA

 

 

49,386,249

 

 

1,500

 

Sedgebrook, Inc., 6.00%, 11/15/42, Ser. A

 

 

NR/NR

 

 

1,009,380

 

 

 

 

Health Facs. Auth. Rev,

 

 

 

 

 

 

 

 

5,000

 

Condell Medical Center, 5.50%, 5/15/32

 

 

Baa3/NR

 

 

3,524,200

 

 

20,100

 

Elmhurst Memorial Healthcare, 5.625%, 1/1/28

 

 

Baa1/NR

 

 

16,554,762

 

 

 

 

Hillside, Tax Allocation, Mannheim Redev. Project,

 

 

 

 

 

 

 

 

4,500

 

6.55%, 1/1/20

 

 

NR/NR

 

 

3,895,200

 

 

2,900

 

7.00%, 1/1/28

 

 

NR/NR

 

 

2,353,002

 

 

 

 

Metropolitan Pier & Exposition Auth. Rev. (MBIA),

 

 

 

 

 

 

 

 

60,000

 

zero coupon, 12/15/30

 

 

A1/AAA

 

 

15,037,800

 

 

50,000

 

zero coupon, 12/15/33

 

 

A1/AAA

 

 

10,106,500

 

 

2,460

 

zero coupon, 6/15/38

 

 

A1/AAA

 

 

362,506

 

 

68,470

 

State Sports Facs. Auth. Rev. zero coupon, 6/15/30

 

 

 

 

 

 

 

 

 

 

(converts to 5.50% on 6/16/10) (AMBAC)

 

 

Baa1/AA

 

 

58,689,060

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

222,774,817

 

 

 

 

 

 

 

 

 

     

 

 

 

Indiana—0.1%

 

 

 

 

 

 

 

 

4,125

 

Fort Wayne Pollution Control Rev., 6.20%, 10/15/25

 

 

Caa3/CCC+

 

 

613,883

 

 

990

 

Vigo Cnty. Hospital Auth. Rev., 5.80%, 9/1/47 (a)(d)

 

 

NR/NR

 

 

633,095

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

1,246,978

 

 

 

 

 

 

 

 

 

     

 

 

 

Iowa—3.8%

 

 

 

 

 

 

 

 

 

 

Finance Auth. Rev.,

 

 

 

 

 

 

 

 

 

 

Deerfield Retirement Community,

 

 

 

 

 

 

 

 

250

 

5.50%, 11/15/27, Ser. A

 

 

NR/NR

 

 

153,868

 

 

1,075

 

5.50%, 11/15/37

 

 

NR/NR

 

 

604,343

 

 

4,500

 

Edgewater LLC, 6.75%, 11/15/42

 

 

NR/NR

 

 

3,276,810

 

 

1,000

 

Wedum Walnut Ridge LLC, 5.625%, 12/1/45, Ser. A

 

 

NR/NR

 

 

570,230

 

11.30.08 | PIMCO Municipal Income Funds II Semi-Annual Report  7


 

 

PIMCO Municipal Income Fund II     Schedule of Investments

November 30, 2008 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

               

 

Principal
Amount
(000)

 

 

 

Credit Rating
(Moody’s/S&P)

 

Value

 

               

 

 

 

Iowa—(continued)

 

 

 

 

 

 

 

 

 

 

Tobacco Settlement Auth. of Iowa Rev., Ser. B,

 

 

 

 

 

 

 

$

46,000

 

5.60%, 6/1/34,

 

 

Baa3/BBB

 

 

$   32,240,480

 

 

7,050

 

5.60%, 6/1/35, (Pre-refunded @ $101, 6/1/11) (c)

 

 

NR/AAA

 

 

7,626,972

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

44,472,703

 

 

 

 

 

 

 

 

 

     

 

 

 

Kansas—0.3%

 

 

 

 

 

 

 

 

2,800

 

Univ. of Kansas Hospital Auth. Rev.,

 

 

 

 

 

 

 

 

 

 

5.625%, 9/1/32, (Pre-refunded @ $100, 9/1/12) (c)

 

 

NR/AAA

 

 

3,109,736

 

 

 

 

 

 

 

 

 

     

 

 

 

Kentucky—0.2%

 

 

 

 

 

 

 

 

2,500

 

Economic Dev. Finance Auth. Rev., Hospital Facs. Rev.,

 

 

 

 

 

 

 

 

 

 

Catholic Healthcare Partners, 5.25%, 10/1/30

 

 

A1/AA-

 

 

2,153,875

 

 

 

 

 

 

 

 

 

     

 

 

 

Louisiana—4.8%

 

 

 

 

 

 

 

 

 

 

Public Facs. Auth. Rev., Ochsner Clinic Foundation, Ser. B,

 

 

 

 

 

 

 

 

20,400

 

5.50%, 5/15/32, (Pre-refunded @ $100, 5/15/26) (c)

 

 

Aaa/NR

 

 

21,651,132

 

 

3,300

 

5.50%, 5/15/47

 

 

A3/NR

 

 

2,424,147

 

 

44,395

 

Tobacco Settlement Financing Corp. Rev., 5.875%,

 

 

 

 

 

 

 

 

 

 

5/15/39, Ser. B

 

 

Baa3/BBB

 

 

32,175,276

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

56,250,555

 

 

 

 

 

 

 

 

 

     

 

 

 

Maryland—0.3%

 

 

 

 

 

 

 

 

 

 

Health & Higher Educational Facs. Auth. Rev.,

 

 

 

 

 

 

 

 

1,010

 

5.30%, 1/1/37

 

 

NR/NR

 

 

543,370

 

 

4,050

 

6.00%, 1/1/43

 

 

NR/BBB-

 

 

2,878,173

 

 

1,000

 

Adventist Healthcare, 5.75%, 1/1/25, Ser. A

 

 

Baa2/NR

 

 

796,060

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

4,217,603

 

 

 

 

 

 

 

 

 

     

 

 

 

Massachusetts—6.1%

 

 

 

 

 

 

 

 

7,000

 

Boston Rev., 5.00%, 11/1/28, Ser. D (MBIA-FGIC)

 

 

Aa2/AA+

 

 

6,776,700

 

 

4,610

 

Dev. Finance Agcy. Rev., 6.75%, 10/15/37, Ser. A

 

 

NR/NR

 

 

3,291,632

 

 

12,050

 

State Water Res. Auth. Rev., 4.75%, 8/1/37, Ser. A (FSA)(h)

 

 

Aaa/AAA

 

 

10,171,526

 

 

 

 

State Turnpike Auth. Rev., Ser. A,

 

 

 

 

 

 

 

 

4,295

 

4.75%, 1/1/34 (AMBAC)

 

 

Baa1/AA

 

 

3,262,997

 

 

51,830

 

5.00%, 1/1/37 (MBIA)

 

 

Baa1/AA

 

 

40,473,529

 

 

10,325

 

5.00%, 1/1/39 (AMBAC)

 

 

Baa1/AA

 

 

7,924,954

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

71,901,338

 

 

 

 

 

 

 

 

 

     

 

 

 

Michigan—2.2%

 

 

 

 

 

 

 

 

4,545

 

Garden City Hospital Finance Auth. Rev., 5.00%,

 

 

 

 

 

 

 

 

 

 

8/15/38, Ser. A

 

 

NR/NR

 

 

2,495,614

 

 

800

 

Public Educational Facs. Auth. Rev., 6.50%, 9/1/37 (a)(d)

 

 

NR/BBB-

 

 

610,352

 

 

500

 

Star International Academy, CP, 6.125%, 3/1/37

 

 

NR/BB+

 

 

355,790

 

 

 

 

State Hospital Finance Auth. Rev.,

 

 

 

 

 

 

 

 

5,000

 

Ascension Health, 5.25%, 11/15/26, Ser. B

 

 

Aa1/AA

 

 

4,456,900

 

 

 

 

Oakwood Group, Ser. A,

 

 

 

 

 

 

 

 

13,500

 

5.75%, 4/1/32

 

 

A2/A

 

 

11,397,780

 

 

1,925

 

6.00%, 4/1/22

 

 

A2/A

 

 

1,863,131

 

 

6,000

 

Tobacco Settlement Finance Auth. Rev., 6.00%, 6/1/48, Ser. A

 

 

NR/BBB

 

 

3,828,540

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

25,008,107

 

 

 

 

 

 

 

 

 

     

 

 

 

Minnesota—0.5%

 

 

 

 

 

 

 

 

1,300

 

Meeker Cnty. Rev., 5.75%, 11/1/37

 

 

NR/NR

 

 

903,760

 

 

1,500

 

Minneapolis Rev., Providence Project, 5.75%, 10/1/37, Ser. A

 

 

NR/NR

 

 

965,745

 

8  PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.08


 

 

PIMCO Municipal Income Fund II     Schedule of Investments

November 30, 2008 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

                     

 

Principal
Amount
(000)

 

 

 

Credit Rating
(Moody’s/S&P)

 

Value

 

               

 

 

 

Minnesota—(continued)

 

 

 

 

 

 

 

$

280

 

Minneapolis, Tax Allocation, Grant Park Project, 5.35%, 2/1/30

 

 

NR/NR

 

 

$   191,962

 

 

 

 

North Oaks Presbyterian Homes Rev.,

 

 

 

 

 

 

 

 

2,640

 

6.00%, 10/1/33

 

 

NR/NR

 

 

1,931,741

 

 

1,530

 

6.125%, 10/1/39

 

 

NR/NR

 

 

1,109,724

 

 

500

 

Oronoco Multifamily Housing Rev., 5.40%, 6/1/41

 

 

NR/NR

 

 

300,265

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

5,403,197

 

 

 

 

 

 

 

 

 

     

 

 

 

Mississippi—0.3%

 

 

 

 

 

 

 

 

3,605

 

Business Finance Corp., Pollution Control Rev., 5.875%, 4/1/22

 

 

Ba1/BBB

 

 

2,851,014

 

 

740

 

Dev. Bank Special Obligation Projects & Equipment

 

 

 

 

 

 

 

 

 

 

Acquisitions Rev., 5.00%, 7/1/24 (AMBAC)

 

 

Baa1/AA

 

 

637,421

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

3,488,435

 

 

 

 

 

 

 

 

 

     

 

 

 

Missouri—0.3%

 

 

 

 

 

 

 

 

2,600

 

Branson Regional Airport Transportation Dev. Dist. Rev.,

 

 

 

 

 

 

 

 

 

 

6.00%, 7/1/37, Ser. A

 

 

NR/NR

 

 

1,679,392

 

 

740

 

Hanley Road & North of Folk Ave. Transportation Dist. Rev.,

 

 

 

 

 

 

 

 

 

 

5.00%, 10/1/25

 

 

NR/NR

 

 

542,028

 

 

1,500

 

St. Louis Parking Rev., Downtown Parking Facs.,

 

 

 

 

 

 

 

 

 

 

6.00%, 2/1/28, (Pre-refunded @ $100, 2/1/12) (c)

 

 

NR/NR

 

 

1,646,085

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

3,867,505

 

 

 

 

 

 

 

 

 

     

 

 

 

Nevada—0.2%

 

 

 

 

 

 

 

 

1,450

 

Clark Cnty., GO, 5.00%, 6/1/31 (FGIC)

 

 

Aa1/AA+

 

 

1,332,550

 

 

1,620

 

State, GO, 5.00%, 5/15/28 (FGIC)

 

 

Aa1/AAA

 

 

1,475,302

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

2,807,852

 

 

 

 

 

 

 

 

 

     

 

 

 

New Hampshire—0.3%

 

 

 

 

 

 

 

 

 

 

Health & Education Facs. Auth. Rev., Catholic Medical Center,

 

 

 

 

 

 

 

 

360

 

6.125%, 7/1/32

 

 

Baa1/BBB+

 

 

263,232

 

 

2,640

 

6.125%, 7/1/32, (Pre-refunded @ $101, 7/1/12) (c)

 

 

Baa1/BBB+

 

 

3,003,317

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

3,266,549

 

 

 

 

 

 

 

 

 

     

 

 

 

New Jersey—2.4%

 

 

 

 

 

 

 

 

950

 

Burlington Cnty. Bridge Commission Rev., 5.625%, 1/1/38

 

 

NR/NR

 

 

627,437

 

 

 

 

Economic Dev. Auth. Rev.,

 

 

 

 

 

 

 

 

 

 

Arbor Glen,

 

 

 

 

 

 

 

 

525

 

6.00%, 5/15/28

 

 

NR/NR

 

 

402,775

 

 

225

 

6.00%, 5/15/28, Ser. A, (Pre-refunded @ $102, 5/15/09) (c)

 

 

NR/NR

 

 

234,412

 

 

 

 

Kapkowski Road Landfill, Special Assessment,

 

 

 

 

 

 

 

 

4,000

 

5.75%, 10/1/21

 

 

Baa3/NR

 

 

3,461,920

 

 

11,405

 

5.75%, 4/1/31

 

 

Baa3/NR

 

 

8,905,138

 

 

1,100

 

Seabrook Village, 5.25%, 11/15/36

 

 

NR/NR

 

 

665,885

 

 

 

 

Health Care Facs. Financing Auth. Rev.,

 

 

 

 

 

 

 

 

1,500

 

St. Peters Univ. Hospital, 5.75%, 7/1/37

 

 

Baa2/BBB-

 

 

1,113,615

 

 

1,830

 

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

 

 

Baa3/BBB-

 

 

1,290,607

 

 

3,500

 

State Educational Facs. Auth. Rev.,

 

 

 

 

 

 

 

 

 

 

Fairfield Dickinson Univ., 6.00%, 7/1/25, Ser. D

 

 

NR/NR

 

 

2,805,810

 

 

 

 

Tobacco Settlement Financing Corp. Rev.,

 

 

 

 

 

 

 

 

13,150

 

5.00%, 6/1/41, Ser. 1A

 

 

Baa3/BBB

 

 

7,361,107

 

11.30.08 | PIMCO Municipal Income Funds II Semi-Annual Report  9


 

 

PIMCO Municipal Income Fund II     Schedule of Investments

November 30, 2008 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

                     

 

Principal
Amount
(000)

 

 

 

Credit Rating
(Moody’s/S&P)

 

Value

 

               

 

 

 

New Jersey—(continued)

 

 

 

 

 

 

 

$

1,285

 

6.00%, 6/1/37, (Pre-refunded @ $100, 6/1/12) (c)

 

 

Aaa/AAA

 

 

$   1,438,712

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

28,307,418

 

 

 

 

 

 

 

 

 

     

 

 

 

New Mexico—0.3%

 

 

 

 

 

 

 

 

5,000

 

Farmington Pollution Control Rev., 5.80%, 4/1/22

 

 

Baa3/BB+

 

 

3,924,750

 

 

 

 

 

 

 

 

 

     

 

 

 

New York—1.0%

 

 

 

 

 

 

 

 

1,200

 

Erie Cnty. Industrial Dev. Agcy., Orchard Park Rev., 6.00%,

 

 

 

 

 

 

 

 

 

 

11/15/36

 

 

NR/NR

 

 

800,880

 

 

10,000

 

Liberty Dev. Corp. Rev., 5.25%, 10/1/35 (h)

 

 

Aa3/AA-

 

 

7,156,000

 

 

1,100

 

Nassau Cnty. Industrial Dev. Agcy. Rev., Amsterdam at

 

 

 

 

 

 

 

 

 

 

Harborside, 6.70%, 1/1/43, Ser. A

 

 

NR/NR

 

 

832,777

 

 

2,830

 

New York City Municipal Water Finance Auth. Rev.,

 

 

 

 

 

 

 

 

 

 

5.00%, 6/15/37, Ser. D (h)

 

 

NR/AAA

 

 

2,562,706

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

11,352,363

 

 

 

 

 

 

 

 

 

     

 

 

 

North Carolina—0.1%

 

 

 

 

 

 

 

 

 

 

Medical Care Commission Rev.,

 

 

 

 

 

 

 

 

550

 

Salemtowne, 5.10%, 10/1/30

 

 

NR/NR

 

 

339,587

 

 

1,000

 

Village at Brookwood, 5.25%, 1/1/32

 

 

NR/NR

 

 

637,210

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

976,797

 

 

 

 

 

 

 

 

 

     

 

 

 

North Dakota—0.2%

 

 

 

 

 

 

 

 

3,710

 

Stark Cnty. Healthcare Rev., Benedictine Living Communities,

 

 

 

 

 

 

 

 

 

 

6.75%, 1/1/33

 

 

NR/NR

 

 

2,761,613

 

 

 

 

 

 

 

 

 

     

 

 

 

Ohio—0.6%

 

 

 

 

 

 

 

 

7,500

 

Lorain Cnty. Hospital Rev., Catholic Healthcare, 5.375%, 10/1/30

 

 

A1/AA-

 

 

6,571,950

 

 

 

 

 

 

 

 

 

     

 

 

 

Pennsylvania—5.3%

 

 

 

 

 

 

 

 

 

 

Allegheny Cnty. Hospital Dev. Auth. Rev.,

 

 

 

 

 

 

 

 

22,600

 

5.375%, 11/15/40, Ser. A

 

 

Ba3/BB  

 

 

12,740,298

 

 

470

 

9.25%, 11/15/15, Ser. B, (Pre-refunded @ $102, 11/15/10) (c)

 

 

Ba3/AAA

 

 

529,314

 

 

1,000

 

9.25%, 11/15/22, Ser. B, (Pre-refunded @ $102, 11/15/10) (c)

 

 

Ba3/AAA

 

 

1,142,980

 

 

5,700

 

9.25%, 11/15/30, Ser. B, (Pre-refunded @ $102, 11/15/10) (c)

 

 

Ba3/AAA

 

 

6,514,986

 

 

 

 

Cumberland Cnty. Auth., Retirement Community Rev.,

 

 

 

 

 

 

 

 

 

 

Messiah Village, Ser. A,

 

 

 

 

 

 

 

 

750

 

5.625%, 7/1/28

 

 

NR/BBB-

 

 

556,252

 

 

670

 

6.00%, 7/1/35

 

 

NR/BBB-

 

 

498,333

 

 

4,500

 

Wesley Affiliated Services,

 

 

 

 

 

 

 

 

 

 

7.25%, 1/1/35, Ser. A, (Pre-refunded @ $101, 1/1/13) (c)

 

 

NR/NR

 

 

5,253,525

 

 

3,250

 

Harrisburg Auth. Rev., 6.00%, 9/1/36

 

 

NR/NR

 

 

2,367,235

 

 

 

 

Montgomery Cnty. Higher Education & Health Auth. Hospital Rev.,

 

 

 

 

 

 

 

 

 

 

Abington Memorial Hospital, Ser. A,

 

 

 

 

 

 

 

 

5,000

 

5.125%, 6/1/27

 

 

NR/A

 

 

4,052,150

 

 

3,750

 

5.125%, 6/1/32

 

 

NR/A

 

 

2,858,175

 

 

11,600

 

Philadelphia Hospitals & Higher Education Facs. Auth.

 

 

 

 

 

 

 

 

 

 

Hospital Rev.,

 

 

 

 

 

 

 

 

 

 

Temple Univ. Hospital, 6.625%, 11/15/23, Ser. A

 

 

Baa3/BBB

 

 

9,449,012

 

 

17,000

 

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

 

 

Aaa/AAA

 

 

15,260,390

 

 

500

 

Pittsburgh & Allegheny Cntys. Public Auditorium Auth. Rev.,

 

 

 

 

 

 

 

 

 

 

5.00%, 2/1/29 (AMBAC)

 

 

Baa1/AA

 

 

469,155

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

61,691,805

 

 

 

 

 

 

 

 

 

     

10  PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.08


 

 

PIMCO Municipal Income Fund II     Schedule of Investments

November 30, 2008 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

                     

 

Principal
Amount
(000)

 

 

 

Credit Rating
(Moody’s/S&P)

 

Value

 

               

 

 

 

Rhode Island—4.8%

 

 

 

 

 

 

 

$

76,200

 

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

 

 

Baa3/BBB

 

 

$   56,094,630

 

 

 

 

 

 

 

 

 

     

 

 

 

South Carolina—3.0%

 

 

 

 

 

 

 

 

 

 

Jobs-Economic Dev. Auth. Rev., Bon Secours,

 

 

 

 

 

 

 

 

13,850

 

5.625%, 11/15/30

 

 

A3/A-

 

 

11,467,938

 

 

3,770

 

5.625%, 11/15/30, (Pre-refunded @ $100, 11/15/12) (c)

 

 

A3/A-

 

 

4,201,439

 

 

 

 

Lexington Cnty. Health Services Dist. Hospital Rev.,

 

 

 

 

 

 

 

 

10,800

 

5.50%, 11/1/32, (Pre-refunded @ $100, 11/1/13) (c)

 

 

A2/A+

 

 

12,113,172

 

 

3,400

 

5.50%, 5/1/37, (Pre-refunded @ $100, 5/1/14) (c)

 

 

A2/A+

 

 

3,836,016

 

 

3,250

 

Tobacco Settlement Rev. Management Auth. Rev.,

 

 

 

 

 

 

 

 

 

 

6.375%, 5/15/28, Ser. B, (Pre-refunded @ $101, 5/11/15) (c)

 

 

Baa3/BBB

 

 

3,492,580

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

35,111,145

 

 

 

 

 

 

 

 

 

     

 

 

 

Tennessee—0.5%

 

 

 

 

 

 

 

 

3,000

 

Energy Acquisition Corp. Rev., 5.00%, 2/1/23, Ser. C

 

 

Baa1/AA-

 

 

2,020,980

 

 

3,750

 

Knox Cnty. Health Educational & Housing Facs. Board Rev.,

 

 

 

 

 

 

 

 

 

 

5.25%, 10/1/30

 

 

A1/AA-

 

 

3,230,775

 

 

500

 

Sullivan Cnty. Health Educational & Housing Facs. Rev.,

 

 

 

 

 

 

 

 

 

 

5.25%, 9/1/36, Ser. C

 

 

NR/BBB+

 

 

324,370

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

5,576,125

 

 

 

 

 

 

 

 

 

     

 

 

 

Texas—9.1%

 

 

 

 

 

 

 

 

10

 

Arlington Independent School Dist., GO, 5.00%,

 

 

 

 

 

 

 

 

 

 

2/15/24 (PSF-GTD)

 

 

Aaa/NR

 

 

10,000

 

 

 

 

Aubrey Independent School Dist., GO (PSF-GTD),

 

 

 

 

 

 

 

 

130

 

5.50%, 2/15/33

 

 

Aaa/NR

 

 

131,892

 

 

4,350

 

5.50%, 2/15/33, (Pre-refunded @ $100, 8/15/14) (c)

 

 

Aaa/NR

 

 

4,947,429

 

 

6,500

 

Brazos Cnty. Health Facs. Dev. Corp. Rev., Franciscan

 

 

 

 

 

 

 

 

 

 

Services Corp., 5.375%, 1/1/32

 

 

NR/A-

 

 

4,754,165

 

 

2,700

 

Comal Cnty. Health Facs. Dev. Rev., McKenna Memorial

 

 

 

 

 

 

 

 

 

 

Hospital Project,

 

 

 

 

 

 

 

 

 

 

6.25%, 2/1/32, (Pre-refunded @ $100, 2/1/13) (c)

 

 

NR/AAA

 

 

3,082,752

 

 

20,000

 

Frisco Independent School Dist., GO, zero coupon, 8/15/34

 

 

 

 

 

 

 

 

 

 

(PSF-GTD)

 

 

Aaa/NR

 

 

3,912,800

 

 

700

 

HFDC of Central Texas, Inc. Rev., Village at Gleannloch Farms,

 

 

 

 

 

 

 

 

 

 

5.50%, 2/15/37, Ser. A

 

 

NR/NR

 

 

431,249

 

 

5,500

 

Houston Rev., 5.00%, 7/1/25, Ser. C (FGIC)

 

 

A1/AA

 

 

4,912,930

 

 

770

 

Keller Independent School Dist., GO, 4.875%, 8/15/31

 

 

 

 

 

 

 

 

 

 

(PSF-GTD)

 

 

Aaa/AAA

 

 

699,622

 

 

3,170

 

Little Elm Independent School Dist., GO,

 

 

 

 

 

 

 

 

 

 

5.30%, 8/15/29, Ser. A (PSF-GTD)

 

 

NR/AAA

 

 

3,173,645

 

 

6,250

 

North Dallas Thruway Auth. Rev., 4.75%, 1/1/29 (FGIC)

 

 

A2/AA

 

 

5,451,000

 

 

 

 

North Harris Cnty. Regional Water Auth. Rev.,

 

 

 

 

 

 

 

 

10,300

 

5.25%, 12/15/33

 

 

A3/A+

 

 

8,872,832

 

 

10,300

 

5.50%, 12/15/38

 

 

A3/A+

 

 

9,016,517

 

 

5,000

 

North Texas Tollway Auth. Rev., 5.625%, 1/1/33, Ser. B

 

 

A2/A-

 

 

4,472,450

 

 

2,000

 

Sabine River Auth. Rev., 5.20%, 5/1/28

 

 

Caa1/CCC

 

 

1,019,980

 

 

10,000

 

San Antonio Electric & Gas Sys Rev.,

 

 

 

 

 

 

 

 

 

 

5.00%, 2/1/32, Ser. 3247 (h)

 

 

Aa1/NR

 

 

9,263,300

 

11.30.08 | PIMCO Municipal Income Funds II Semi-Annual Report  11


 

 

PIMCO Municipal Income Fund II     Schedule of Investments

November 30, 2008 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

                   

 

Principal
Amount
(000)

 

 

 

Credit Rating
(Moody’s/S&P)

 

Value

 

                   

 

 

 

Texas—(continued)

 

 

 

 

 

 

 

 

 

State, Mobility Fund, GO (h),

 

 

 

 

 

 

$

17,500

 

4.75%, 4/1/36

 

Aa1/AA

 

 

$   15,323,350

 

 

10,025

 

4.75%, 4/1/35, Ser. A

 

Aa1/AA

 

 

9,000,746

 

 

1,000

 

State Public Finance Auth. Rev., 5.875%, 12/1/36, Ser. A

 

Baa3/BBB-

 

 

729,430

 

 

 

 

State Turnpike Auth. Central Turnpike System Rev., Ser. A

 

 

 

 

 

 

 

 

 

(AMBAC),

 

 

 

 

 

 

 

10,000

 

zero coupon, 8/15/19

 

Baa1/AA

 

 

5,378,000

 

 

8,880

 

5.00%, 8/15/42

 

Baa1/AA

 

 

6,409,229

 

 

3,250

 

State Water Financial Assistance, GO, 5.00%, 8/1/36

 

Aa1/AA

 

 

2,925,552

 

 

4,150

 

Willacy Cnty. Rev., 6.875%, 9/1/28, Ser. A-1

 

NR/NR

 

 

2,964,428

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

106,883,298

 

 

 

 

 

 

 

 

     

 

 

 

Virginia—0.1%

 

 

 

 

 

 

 

2,050

 

James City Cnty. Economic Dev. Auth. Rev., 5.50%,

 

 

 

 

 

 

 

 

 

7/1/37, Ser. A

 

NR/NR

 

 

1,274,546

 

 

 

 

 

 

 

 

     

 

 

 

Washington—1.2%

 

 

 

 

 

 

 

13,000

 

Health Care Facs. Auth. Rev., Virginia Mason Medical Center,

 

 

 

 

 

 

 

 

 

6.125%, 8/15/37, Ser. A

 

Baa2/BBB

 

 

9,127,560

 

 

6,800

 

State Housing Finance Commission Rev., Skyline at First Hill,

 

 

 

 

 

 

 

 

 

5.625%, 1/1/38, Ser. A

 

NR/NR

 

 

4,194,988

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

13,322,548

 

 

 

 

 

 

 

 

     

 

 

 

Wisconsin—0.8%

 

 

 

 

 

 

 

 

 

Badger Tobacco Asset Securitization Corp. Rev.,

 

 

 

 

 

 

 

1,125

 

6.00%, 6/1/17

 

Baa3/BBB

 

 

1,088,719

 

 

7,080

 

6.125%, 6/1/27

 

Baa3/BBB

 

 

6,691,308

 

 

 

 

Health & Educational Facs. Auth. Rev., Froedert & Community

 

 

 

 

 

 

 

 

 

Health Oblig.,

 

 

 

 

 

 

 

90

 

5.375%, 10/1/30

 

NR/AA-

 

 

78,951

 

 

910

 

5.375%, 10/1/30, (Pre-refunded @ $101, 10/1/11) (c)

 

NR/AA-

 

 

991,536

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

8,850,514

 

 

 

 

 

 

 

 

     

 

 

 

Total Municipal Bonds & Notes (cost—$1,243,526,036)

 

 

 

 

1,083,655,269

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

 

VARIABLE RATE NOTES (f)—1.2%

 

 

 

 

Florida—0.2%

 

 

 

 

 

 

 

2,830

 

Highlands Cnty. Health Facs. Auth. Rev., Adventist Health System,

 

 

 

 

 

 

 

 

 

5.00%, 11/15/31, Ser. C

 

A1/A+

 

 

2,270,990

 

 

 

 

 

 

 

 

     

 

 

 

Illinois—0.4%

 

 

 

 

 

 

 

5,000

 

State, GO, 8.12%, 4/1/27, Ser. 783 (FSA)(a)(d)(e)

 

Aaa/NR

 

 

5,017,400

 

 

 

 

 

 

 

 

     

 

 

 

Massachusetts—0.3%

 

 

 

 

 

 

 

2,200

 

State, GO, 1.10%, 11/1/30, Ser. 785 (FGIC-TCRS)(a)(d)(e)

 

Aa2/NR

 

 

3,018,290

 

 

 

 

 

 

 

 

     

 

 

 

Washington—0.3%

 

 

 

 

 

 

 

4,550

 

Central Puget Sound Regional Transit Auth. Sales Tax &

 

 

 

 

 

 

 

 

 

Motor Rev., 3.27%, 2/1/28, Ser. 360 (FGIC)(a)(d)(e)

 

Aa2/NR

 

 

3,797,840

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Variable Rate Notes (cost—$14,778,778)

 

 

 

 

14,104,520

 

 

 

 

 

 

 

 

     

12  PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.08


 

 

PIMCO Municipal Income Fund II     Schedule of Investments

November 30, 2008 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

                   

 

Principal
Amount
(000)

 

 

 

 

 

Value

 

                   

U.S. TREASURY BILLS (g)—6.1%

 

$

71,160

 

0.01%-1.10%,12/11/08-2/26/09 (cost—$71,150,807)

 

 

 

 

$        71,150,807

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investments (cost—$1,329,455,621)—100.0%

 

 

 

 

$   1,168,910,596

 

 

 

 

 

 

 

 

   

 

11.30.08 | PIMCO Municipal Income Funds II Semi-Annual Report  13


 

 

PIMCO California Municipal Income Fund II     Schedule of Investments

November 30, 2008 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

                   

 

Principal
Amount
(000)

 

 

 

Credit Rating
(Moody’s/S&P)

 

Value

 

                   

CALIFORNIA MUNICIPAL BONDS & NOTES—90.1%

 

 

 

 

 

 

 

 

 

 

 

$

2,000

 

ABC Unified School Dist., GO, zero coupon, 8/1/23,

 

 

 

 

 

 

 

 

 

Ser. B (MBIA-FGIC)

 

A1/AA

 

 

$   831,140

 

 

1,000

 

Alpine Union School Dist., GO, zero coupon, 8/1/24,

 

 

 

 

 

 

 

 

 

Ser. B (FSA)

 

Aaa/AAA

 

 

432,780

 

 

 

 

Assoc. of Bay Area Gov’t Finance Auth. Rev., Odd Fellows

 

 

 

 

 

 

 

 

 

Home (CA Mtg. Ins.),

 

 

 

 

 

 

 

5,300

 

5.20%, 11/15/22

 

NR/A+

 

 

5,141,318

 

 

26,000

 

5.35%, 11/15/32

 

NR/A+

 

 

23,453,040

 

 

2,000

 

Bay Area Gov’t Assoc., Lease Rev., 5.00%, 7/1/32,

 

 

 

 

 

 

 

 

 

Ser. 2002-1 (AMBAC)

 

Baa1/AA

 

 

1,777,040

 

 

1,945

 

Bay Area Gov’t Assoc., Special Assessment, Windmere

 

 

 

 

 

 

 

 

 

Ranch Dist.,

 

 

 

 

 

 

 

 

 

6.30%, 9/2/25, (Pre-refunded @ $102, 9/2/11) (c)

 

NR/AAA

 

 

2,208,761

 

 

1,085

 

Capistrano Unified School Dist.,

 

 

 

 

 

 

 

 

 

Special Tax, 5.70%, 9/1/20, (Pre-refunded @ $102, 9/1/09) (c)

 

NR/NR

 

 

1,144,252

 

 

2,300

 

Ceres Unified School Dist., GO, zero coupon, 8/1/27 (MBIA-FGIC)

 

NR/AA

 

 

695,888

 

 

1,160

 

Chula Vista Dist., Special Tax,

 

 

 

 

 

 

 

 

 

6.05%, 9/1/25, (Pre-refunded @ $102, 9/1/10) (c)

 

NR/NR

 

 

1,267,161

 

 

 

 

Chula Vista Community Facs. Dist., Special Tax,

 

 

 

 

 

 

 

 

 

Eastlake Woods,

 

 

 

 

 

 

 

1,825

 

6.15%, 9/1/26

 

NR/NR

 

 

1,463,376

 

 

4,380

 

6.20%, 9/1/33

 

NR/NR

 

 

3,438,388

 

 

2,880

 

Otay Ranch Village, 5.125%, 9/1/36

 

NR/NR

 

 

1,929,485

 

 

 

 

Clovis Unified School Dist., GO, Ser. B (MBIA-FGIC),

 

 

 

 

 

 

 

2,000

 

zero coupon, 8/1/23

 

NR/AA

 

 

818,260

 

 

3,535

 

zero coupon, 8/1/25

 

NR/AA

 

 

1,246,017

 

 

2,500

 

zero coupon, 8/1/27

 

NR/AA

 

 

760,625

 

 

1,410

 

Community College Financing Auth. Lease Rev.,

 

 

 

 

 

 

 

 

 

5.00%, 8/1/27, Ser. A (AMBAC)

 

Baa1/AA

 

 

1,219,269

 

 

 

 

Coronado Community Dev. Agcy., Tax Allocation (AMBAC),

 

 

 

 

 

 

 

9,945

 

4.875%, 9/1/35

 

NR/AA

 

 

7,893,545

 

 

10,000

 

4.875%, 9/1/35 (h)

 

NR/AA

 

 

7,937,200

 

 

 

 

Corona-Norco Unified School Dist. Public Financing Auth.,

 

 

 

 

 

 

 

 

 

Special Tax,

 

 

 

 

 

 

 

1,110

 

5.10%, 9/1/25 (AMBAC)

 

Baa1/AA

 

 

1,041,435

 

 

210

 

5.55%, 9/1/15, Ser. A

 

NR/NR

 

 

198,238

 

 

305

 

5.65%, 9/1/16, Ser. A

 

NR/NR

 

 

285,507

 

 

160

 

5.75%, 9/1/17, Ser. A

 

NR/NR

 

 

148,346

 

 

530

 

6.00%, 9/1/20, Ser. A

 

NR/NR

 

 

465,377

 

 

1,000

 

6.00%, 9/1/25, Ser. A

 

NR/NR

 

 

787,160

 

 

4,150

 

6.10%, 9/1/32, Ser. A

 

NR/NR

 

 

3,284,725

 

 

3,000

 

Dinuba Financing Auth. Lease Rev., 5.10%, 8/1/32 (MBIA)

 

Baa1/AA

 

 

2,876,490

 

 

 

 

Educational Facs. Auth. Rev., Loyola Marymount Univ.,

 

 

 

 

 

 

 

3,475

 

zero coupon, 10/1/34, Ser. A (MBIA)

 

A2/NR

 

 

662,648

 

 

2,000

 

Woodbury Univ., 5.00%, 1/1/36

 

Baa3/BBB-

 

 

1,309,500

 

14  PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.08


 

 

PIMCO California Municipal Income Fund II     Schedule of Investments

November 30, 2008 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

                   

 

Principal
Amount
(000)

 

 

 

Credit Rating
(Moody’s/S&P)

 

Value

 

                   

 

 

 

Empire Union School Dist., Special Tax (AMBAC),

 

 

 

 

 

 

$

1,560

 

zero coupon, 10/1/30

 

Baa1/AA

 

 

$   362,201

 

 

1,265

 

zero coupon, 10/1/32

 

Baa1/AA

 

 

262,488

 

 

1,000

 

Escondido Union School Dist., GO, zero coupon, 8/1/27 (FSA)

 

Aaa/AAA

 

 

321,170

 

 

2,440

 

Eureka Union School Dist., GO, zero coupon, 8/1/27 (FSA)

 

Aaa/AAA

 

 

762,671

 

 

 

 

Foothill Eastern Corridor Agcy. Toll Road Rev.,

 

 

 

 

 

 

 

7,100

 

zero coupon, 1/1/25, Ser. A

 

Aaa/AAA

 

 

2,967,587

 

 

3,270

 

zero coupon, 1/1/26, Ser. A

 

Aaa/AAA

 

 

1,290,309

 

 

1,500

 

zero coupon, 1/15/27 (MBIA-IBC)

 

Baa1/AA

 

 

1,224,210

 

 

1,440

 

Fremont Community Dist., Special Tax, 5.30%, 9/1/30

 

NR/NR

 

 

1,039,781

 

 

 

 

Golden State Tobacco Securitization Corp. Rev.,

 

 

 

 

 

 

 

2,000

 

zero coupon, 6/1/37, Ser. A-2

 

Baa3/BBB

 

 

844,980

 

 

8,000

 

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

 

Baa3/BBB

 

 

5,018,080

 

 

10,000

 

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

 

A2/A

 

 

7,674,400

 

 

45,000

 

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

 

A2/A

 

 

32,496,300

 

 

11,985

 

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

 

A2/AA

 

 

8,578,264

 

 

6,000

 

5.00%, 6/1/45, Ser. A (FGIC-TCRS)

 

A2/A

 

 

4,201,620

 

 

995

 

6.25%, 6/1/33, Ser. A-1

 

Aaa/AAA

 

 

1,057,317

 

 

31,200

 

6.75%, 6/1/39, Ser. A-1, (Pre-refunded @ $100,

 

 

 

 

 

 

 

 

 

6/1/13) (c)

 

NR/AAA

 

 

35,661,912

 

 

 

 

Health Facs. Finance Auth. Rev.,

 

 

 

 

 

 

 

4,000

 

Adventist Health System, 5.00%, 3/1/33

 

NR/A

 

 

3,070,560

 

 

495

 

Catholic Healthcare West, 5.00%, 7/1/28,

 

A2/A

 

 

379,947

 

 

2,115

 

Hope Rehabilitation, 5.375%, 11/1/20 (CA Mtg. Ins.)

 

NR/A+

 

 

1,950,072

 

 

 

 

Paradise VY Estates (CA Mtg. Ins.),

 

 

 

 

 

 

 

5,500

 

5.125%, 1/1/22

 

NR/A+

 

 

4,854,685

 

 

3,875

 

5.25%, 1/1/26

 

NR/A+

 

 

3,309,715

 

 

1,750

 

Huntington Beach Community Facs. Dist., Special Tax,

 

 

 

 

 

 

 

 

 

6.30%, 9/1/32

 

NR/NR

 

 

1,409,397

 

 

200

 

Infrastructure & Economic Dev. Bank Rev., Bay Area Toll

 

 

 

 

 

 

 

 

 

Bridges, 5.00%, 7/1/36, (Pre-refunded @ $100,

 

 

 

 

 

 

 

 

 

1/1/28) (AMBAC)(c)

 

Aaa/AAA

 

 

202,702

 

 

7,000

 

Irvine Improvement Board Act 1915, Special Assessment,

 

 

 

 

 

 

 

 

 

5.70%, 9/2/26

 

NR/NR

 

 

5,388,250

 

 

1,000

 

Irvine Unified School Dist., Special Tax, 5.125%, 9/1/36, Ser. A

 

NR/NR

 

 

672,360

 

 

1,900

 

Jurupa Unified School Dist., GO, zero coupon, 5/1/27

 

 

 

 

 

 

 

 

 

(MBIA-FGIC)

 

NR/AA

 

 

567,625

 

 

2,450

 

Kings Canyon JT Unified School Dist., GO, zero coupon,

 

 

 

 

 

 

 

 

 

8/1/27 (MBIA-FGIC)

 

NR/AA

 

 

772,754

 

 

5,300

 

Livermore-Amador Valley Water Management Agcy. Rev.,

 

 

 

 

 

 

 

 

 

5.00%, 8/1/31, Ser. A (AMBAC)

 

A1/AA

 

 

4,604,587

 

 

 

 

Los Angeles, CP (MBIA),

 

 

 

 

 

 

 

9,895

 

5.00%, 2/1/27

 

A1/AA

 

 

9,461,896

 

 

2,685

 

5.00%, 10/1/27, Ser. AU

 

A2/AA

 

 

2,549,703

 

 

 

 

Los Angeles Department of Water & Power Rev.,

 

 

 

 

 

 

 

15,000

 

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

 

Aaa/AAA

 

 

12,856,050

 

 

30,000

 

5.00%, 7/1/35, Ser. A (FSA)(h)

 

Aaa/AAA

 

 

26,537,400

 

 

16,950

 

5.125%, 7/1/41, Ser. A (FGIC-TCRS)

 

Aa3/AA

 

 

15,068,380

 

11.30.08 | PIMCO Municipal Income Funds II Semi-Annual Report  15


 

 

PIMCO California Municipal Income Fund II     Schedule of Investments

November 30, 2008 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal
Amount
(000)

 

 

 

Credit Rating
(Moody’s/S&P)

 

Value

 

               

$

1,000

 

Manhattan Beach Unified School Dist., GO, zero coupon,

 

 

 

 

 

 

 

 

 

9/1/25 (MBIA-FGIC)

 

Aa3/AA

 

 

$   368,610

 

 

 

 

Manteca Redev. Agcy., Tax Allocation,

 

 

 

 

 

 

 

7,295

 

5.00%, 10/1/32 (FSA)

 

Aaa/AAA

 

 

6,556,965

 

 

10,000

 

5.00%, 10/1/36 (AMBAC)

 

Baa1/AA

 

 

8,481,100

 

 

 

 

Manteca Unified School Dist., Special Tax (MBIA),

 

 

 

 

 

 

 

2,365

 

zero coupon, 9/1/25

 

Baa1/AA

 

 

798,826

 

 

5,330

 

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

 

Baa1/AA

 

 

4,817,094

 

 

4,000

 

Merced Cnty., CP, Juvenile Justice Correctional Fac.,

 

 

 

 

 

 

 

 

 

5.00%, 6/1/32 (AMBAC)

 

A3/NR

 

 

3,527,880

 

 

 

 

Modesto Elementary School Dist. Stanislaus Cnty., GO,

 

 

 

 

 

 

 

 

 

Ser. A (MBIA-FGIC),

 

 

 

 

 

 

 

2,615

 

zero coupon, 8/1/23

 

A1/AA

 

 

1,110,146

 

 

2,705

 

zero coupon, 8/1/24

 

A1/AA

 

 

1,068,448

 

 

2,000

 

zero coupon, 5/1/27

 

A1/AA

 

 

646,380

 

 

2,150

 

Modesto High School Dist. Stanislaus Cnty., GO,

 

 

 

 

 

 

 

 

 

zero coupon, 8/1/26, Ser. A (MBIA-FGIC)

 

A1/AA

 

 

722,615

 

 

2,385

 

Monrovia Financing Auth. Lease Rev.,

 

 

 

 

 

 

 

 

 

Hillside Wilderness Preserve, 5.125%, 12/1/31 (AMBAC)

 

Baa1/AA

 

 

2,121,648

 

 

 

 

Montebello Unified School Dist., GO,

 

 

 

 

 

 

 

1,485

 

zero coupon, 8/1/24 (FSA)

 

Aaa/AAA

 

 

577,710

 

 

1,500

 

zero coupon, 8/1/24 (MBIA-FGIC)

 

NR/AA

 

 

569,490

 

 

2,830

 

zero coupon, 8/1/25 (MBIA-FGIC)

 

NR/AA

 

 

996,641

 

 

2,775

 

zero coupon, 8/1/27 (MBIA-FGIC)

 

NR/AA

 

 

842,407

 

 

4,700

 

Moreno Valley Unified School Dist. Community Facs. Dist.,

 

 

 

 

 

 

 

 

 

Special Tax, 5.20%, 9/1/36

 

NR/NR

 

 

3,206,387

 

 

2,400

 

Morgan Hill Unified School Dist., GO, zero coupon,

 

 

 

 

 

 

 

 

 

8/1/23 (FGIC)

 

NR/AAA

 

 

1,124,256

 

 

3,245

 

Newark Unified School Dist., GO, zero coupon,

 

 

 

 

 

 

 

 

 

8/1/26, Ser. D (FSA)

 

Aaa/AAA

 

 

1,109,498

 

 

19,805

 

Oakland, GO, 5.00%, 1/15/27, Ser. A (MBIA-FGIC)(h)

 

A1/A+

 

 

17,954,619

 

 

 

 

Palmdale Community Redev. Agcy., Tax Allocation (AMBAC),

 

 

 

 

 

 

 

1,230

 

zero coupon, 12/1/30

 

Baa1/AA

 

 

298,041

 

 

1,230

 

zero coupon, 12/1/31

 

Baa1/AA

 

 

280,686

 

 

1,225

 

zero coupon, 12/1/32

 

Baa1/AA

 

 

260,325

 

 

1,750

 

Paramount Unified School Dist., GO, zero coupon, 9/1/23,

 

 

 

 

 

 

 

 

 

Ser. B (FSA)

 

Aaa/AAA

 

 

744,642

 

 

 

 

Perris Public Financing Auth. Rev., Tax Allocation, Ser. C,

 

 

 

 

 

 

 

780

 

5.375%, 10/1/20

 

NR/A

 

 

763,581

 

 

1,800

 

5.625%, 10/1/31

 

NR/A

 

 

1,678,464

 

 

10,000

 

Placentia-Yorba Linda Unified School Dist., CP,

 

 

 

 

 

 

 

 

 

5.00%, 10/1/32 (MBIA-FGIC)

 

A2/AA

 

 

8,513,300

 

 

10,150

 

Placer Union High School Dist., GO, zero coupon, 8/1/33 (FSA)

 

Aaa/AAA

 

 

2,126,222

 

 

 

 

Poway Unified School Dist., Special Tax,

 

 

 

 

 

 

 

 

 

Community Facs. Dist. No. 6, Area A,

 

 

 

 

 

 

 

2,700

 

5.125%, 9/1/28

 

NR/BBB

 

 

1,967,328

 

 

3,000

 

5.60%, 9/1/33

 

NR/BBB

 

 

2,354,160

 

 

1,000

 

6.05%, 9/1/25

 

NR/NR

 

 

803,110

 

 

5,500

 

6.125%, 9/1/33

 

NR/NR

 

 

4,286,590

 

16  PIMCO Municipal Income Funds II Semi-Annual Report 11.30.08


 

 

PIMCO California Municipal Income Fund II    Schedule of Investments

November 30, 2008 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal
Amount
(000)

 

 

 

Credit Rating
(Moody’s/S&P)

 

Value

 

               

$

1,000

 

Community Facs. Dist. No. 10, 5.65%, 9/1/25

 

NR/NR

 

 

$   781,250

 

 

2,000

 

Rancho Cucamonga Community Facs. Dist.,

 

 

 

 

 

 

 

 

 

Special Tax, 6.375%, 9/1/31, Ser. A

 

NR/NR

 

 

1,636,660

 

 

1,500

 

Richmond Wastewater Rev., zero coupon, 8/1/30 (FGIC)

 

Baa3/AA-

 

 

425,685

 

 

3,510

 

Riverside, CP, 5.00%, 9/1/33 (AMBAC)

 

Baa1/AA

 

 

3,024,778

 

 

 

 

Riverside Unified School Dist. Community Facs. Dist. No. 15,

 

 

 

 

 

 

 

 

 

Special Tax, Ser. A,

 

 

 

 

 

 

 

1,000

 

5.15%, 9/1/25

 

NR/NR

 

 

752,950

 

 

1,000

 

5.25%, 9/1/30

 

NR/NR

 

 

710,770

 

 

1,000

 

5.25%, 9/1/35

 

NR/NR

 

 

690,910

 

 

 

 

Rocklin Unified School Dist., GO (FGIC),

 

 

 

 

 

 

 

5,000

 

zero coupon, 8/1/24 (MBIA)

 

A1/AA

 

 

1,960,000

 

 

4,000

 

zero coupon, 8/1/25 (MBIA)

 

A1/AA

 

 

1,458,000

 

 

4,000

 

zero coupon, 8/1/26

 

A1/AA

 

 

1,355,960

 

 

4,500

 

zero coupon, 8/1/27 (MBIA)

 

A1/AA

 

 

1,419,345

 

 

 

 

Roseville Redev. Agcy., Tax Allocation (MBIA),

 

 

 

 

 

 

 

3,730

 

5.00%, 9/1/27, Ser. B

 

A3/AA

 

 

3,381,916

 

 

3,365

 

5.00%, 9/1/32

 

A3/AA

 

 

2,862,269

 

 

2,030

 

5.00%, 9/1/33

 

A3/AA

 

 

1,716,020

 

 

4,335

 

Sacramento City Financing Auth. Rev.,

 

 

 

 

 

 

 

 

 

North Natomas CFD No. 2, 6.25%, 9/1/23, Ser. A

 

NR/NR

 

 

3,633,597

 

 

 

 

San Diego Cnty. Water Auth., CP, Ser. A (MBIA),

 

 

 

 

 

 

 

8,285

 

5.00%, 5/1/28

 

Aa3/AA+

 

 

7,527,834

 

 

8,000

 

5.00%, 5/1/29

 

Aa3/AA+

 

 

7,214,080

 

 

1,200

 

San Diego Community Facs. Dist. No. 3,

 

 

 

 

 

 

 

 

 

Special Tax, 5.60%, 9/1/21, Ser. A (a)

 

NR/NR

 

 

1,045,980

 

 

1,000

 

San Diego Public Facs. Financing Auth. Lease Rev. (MBIA),

 

 

 

 

 

 

 

 

 

5.00%, 5/15/29, Ser. A (FGIC)

 

A3/A+

 

 

864,040

 

 

1,500

 

Fire & Life Safety Facs., 5.00%, 4/1/32

 

Baa1/AA

 

 

1,170,390

 

 

11,000

 

Water Rev., 5.00%, 8/1/32

 

A3/AA

 

 

9,212,830

 

 

5,585

 

San Francisco City & Cnty. Airports Commission Rev.,

 

 

 

 

 

 

 

 

 

4.50%, 5/1/28, Ser. 2 (MBIA)

 

A1/AA

 

 

4,485,314

 

 

10,405

 

San Joaquin Hills Transportation Corridor Agcy. Toll Road Rev.,

 

 

 

 

 

 

 

 

 

zero coupon, 1/1/25

 

Aaa/AAA

 

 

4,348,978

 

 

 

 

San Jose, Libraries & Parks, GO,

 

 

 

 

 

 

 

14,970

 

5.00%, 9/1/32, Ser. 760 (MBIA)(h)

 

Aa1/AAA

 

 

14,058,477

 

 

10,190

 

5.125%, 9/1/31

 

Aa1/AAA

 

 

9,785,966

 

 

9,150

 

San Jose Unified School Dist., GO,

 

 

 

 

 

 

 

 

 

Santa Clara Cnty., 5.00%, 8/1/27, Ser. A (FSA)(h)

 

Aaa/AAA

 

 

8,508,036

 

 

 

 

San Juan Unified School Dist., GO (FSA),

 

 

 

 

 

 

 

1,770

 

zero coupon, 8/1/23

 

Aaa/AAA

 

 

751,418

 

 

6,105

 

zero coupon, 8/1/26

 

Aaa/AAA

 

 

2,087,361

 

 

2,300

 

San Mateo Union High School Dist., GO, zero coupon,

 

 

 

 

 

 

 

 

 

9/1/20 (MBIA-FGIC)

 

Aa3/AA

 

 

1,234,364

 

 

1,730

 

San Rafael City High School Dist., GO, 5.00%, 8/1/27,

 

 

 

 

 

 

 

 

 

Ser. B (FSA)

 

Aaa/AAA

 

 

1,662,893

 

 

3,280

 

San Rafael Elementary School Dist., GO, 5.00%, 8/1/27,

 

 

 

 

 

 

 

 

 

Ser. B (FSA)

 

Aaa/AAA

 

 

3,134,106

 

 

 

 

Santa Clara Unified School Dist., GO (MBIA),

 

 

 

 

 

 

 

2,155

 

5.00%, 7/1/25

 

Baa1/AA

 

 

2,010,076

 

 

3,040

 

5.00%, 7/1/27

 

Baa1/AA

 

 

2,776,371

 

11.30.08 PIMCO Municipal Income Funds II Semi-Annual Report  17


 

 

PIMCO California Municipal Income Fund II     Schedule of Investments

November 30, 2008 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal
Amount
(000)

 

 

 

Credit Rating
(Moody’s/S&P)

 

Value

 

                   

$

1,260

 

Santa Cruz Cnty., CP, 5.25%, 8/1/32

 

A3/NR

 

 

$   1,200,881

 

 

 

 

Santa Margarita Water Dist., Special Tax,

 

 

 

 

 

 

 

2,000

 

6.00%, 9/1/30, (Pre-refunded @ $100, 9/1/13) (c)

 

NR/NR

 

 

2,274,760

 

 

815

 

6.25%, 9/1/29, (Pre-refunded @ $102, 9/1/09) (c)

 

NR/NR

 

 

860,917

 

 

2,185

 

6.25%, 9/1/29

 

NR/NR

 

 

1,803,084

 

 

2,000

 

Santa Monica Community College Dist., GO,

 

 

 

 

 

 

 

 

 

zero coupon, 8/1/26, Ser. C (MBIA)

 

Aa2/AA

 

 

660,900

 

 

 

 

Saugus Hart School Facs. Financing Auth. Community Facs. Dist.,

 

 

 

 

 

 

 

 

 

Special Tax,

 

 

 

 

 

 

 

1,140

 

6.10%, 9/1/32

 

NR/NR

 

 

892,791

 

 

2,155

 

6.125%, 9/1/33

 

NR/NR

 

 

1,679,564

 

 

1,000

 

Shasta Union High School Dist., GO, zero coupon, 8/1/24 (FGIC)

 

NR/AA

 

 

392,000

 

 

2,745

 

South Tahoe JT Powers Parking Financing Auth. Rev.,

 

 

 

 

 

 

 

 

 

7.00%, 12/1/27, Ser. A

 

NR/NR

 

 

2,124,822

 

 

1,800

 

Southern Mono Health Care Dist., GO, zero coupon,

 

 

 

 

 

 

 

 

 

8/1/26 (MBIA)

 

Baa1/AA

 

 

584,622

 

 

 

 

State, GO,

 

 

 

 

 

 

 

400

 

5.00%, 6/1/37

 

A1/A+

 

 

333,448

 

 

14,400

 

5.00%, 11/1/37, Ser. 2670 (h)

 

A1/A+

 

 

11,994,336

 

 

2,400

 

5.00%, 12/1/37

 

A1/A+

 

 

1,998,936

 

 

 

 

Statewide Community Dev. Auth. Rev.,

 

 

 

 

 

 

 

1,600

 

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

 

NR/NR

 

 

968,128

 

 

3,495

 

Bentley School, 6.75%, 7/1/32 (a)(b)

 

NR/NR

 

 

2,805,646

 

 

 

 

Catholic Healthcare West,

 

 

 

 

 

 

 

1,800

 

5.50%, 7/1/31, Ser. D

 

A2/A

 

 

1,517,490

 

 

1,800

 

5.50%, 7/1/31, Ser. E

 

A2/A

 

 

1,517,472

 

 

1,250

 

Huntington Park Chapter School, 5.25%, 7/1/42, Ser. A

 

NR/NR

 

 

804,025

 

 

9,700

 

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

 

NR/A+

 

 

8,196,112

 

 

2,770

 

Kaiser Permanente, 5.50%, 11/1/32, Ser. A

 

NR/A+

 

 

2,287,134

 

 

3,000

 

Live Oak School, 6.75%, 10/1/30

 

NR/NR

 

 

2,474,610

 

 

500

 

Peninsula Project, 5.00%, 11/1/29

 

NR/NR

 

 

330,190

 

 

1,170

 

Wildwood Elementary School, CP, 6.10%, 11/1/15 (a)(b)

 

NR/NR

 

 

1,160,839

 

 

1,365

 

Windrush School, 5.50%, 7/1/37

 

NR/NR

 

 

907,889

 

 

 

 

Statewide Financing Auth. Tobacco Settlement Rev.,

 

 

 

 

 

 

 

1,610

 

5.625%, 5/1/29

 

Baa3/NR

 

 

1,253,466

 

 

20,000

 

6.00%, 5/1/37, Ser. B

 

Baa3/NR

 

 

13,862,400

 

 

 

 

Tobacco Securitization Agcy. Rev.,

 

 

 

 

 

 

 

4,500

 

Alameda Cnty., 6.00%, 6/1/42

 

Baa3/NR

 

 

3,036,960

 

 

 

 

Fresno Cnty.,

 

 

 

 

 

 

 

3,400

 

5.625%, 6/1/23

 

Baa3/BBB

 

 

3,390,956

 

 

10,000

 

6.00%, 6/1/35

 

Baa3/BBB

 

 

7,086,100

 

 

6,600

 

Gold Cnty., zero coupon, 6/1/33

 

NR/BBB

 

 

626,274

 

 

1,800

 

Stanislaus Funding, 5.875%, 6/1/43, Ser. A

 

Baa3/NR

 

 

1,188,756

 

 

8,000

 

Tobacco Securitization Auth. of Southern California Rev.,

 

 

 

 

 

 

 

 

 

5.00%, 6/1/37, Ser. A-1

 

Baa3/BBB

 

 

4,701,600

 

 

995

 

Tracy Community Facs. Dist., Special Tax,

 

 

 

 

 

 

 

 

 

South Macarthur Area, 6.00%, 9/1/27

 

NR/NR

 

 

801,542

 

18  PIMCO Municipal Income Funds II Semi-Annual Report 11.30.08


 

 

PIMCO California Municipal Income Fund II     Schedule of Investments

November 30, 2008 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal
Amount
(000)

 

 

 

Credit Rating
(Moody’s/S&P)

 

Value

 

               

 

 

 

Univ. Rev.,

 

 

 

 

 

 

$

5,500

 

4.75%, 5/15/35, Ser. F (FSA)(h)

 

NR/AAA

 

 

$   4,630,835

 

 

5,000

 

4.75%, 5/15/35, Ser. G (FGIC)(h)

 

Aa1/AA

 

 

4,117,200

 

 

5,650

 

4.75%, 5/15/38, Ser. B

 

Aa2/AA-

 

 

4,638,876

 

 

10,000

 

Ventura Cnty. Community College Dist. GO,

 

 

 

 

 

 

 

 

 

5.00%, 8/1/27, Ser. A (MBIA) (h)

 

Aa3/AA

 

 

9,498,800

 

 

1,555

 

Ventura Unified School Dist., GO, 5.00%, 8/1/32, Ser. F (FSA)

 

Aaa/AAA

 

 

1,431,455

 

 

 

 

Victor Elementary School Dist., GO, Ser. A (MBIA-FGIC),

 

 

 

 

 

 

 

1,125

 

zero coupon, 8/1/24

 

A2/AA

 

 

431,066

 

 

2,410

 

zero coupon, 8/1/26

 

A2/AA

 

 

796,240

 

 

1,000

 

Vista Unified School Dist., GO, zero coupon, 8/1/26, Ser. A (FSA)

 

Aaa/AAA

 

 

344,850

 

 

 

 

West Contra Costa Unified School Dist., GO, Ser. A (MBIA),

 

 

 

 

 

 

 

2,740

 

5.00%, 8/1/26

 

Baa1/AA

 

 

2,512,772

 

 

2,690

 

5.00%, 8/1/28

 

Baa1/AA

 

 

2,313,319

 

 

1,890

 

5.00%, 8/1/31

 

Baa1/AA

 

 

1,587,146

 

 

2,000

 

William S. Hart JT School Financing Auth. Rev., 5.625%,

 

 

 

 

 

 

 

 

 

9/1/34

 

NR/BBB+

 

 

1,568,740

 

 

2,110

 

Yuba City Unified School Dist., GO, zero coupon, 9/1/25

 

 

 

 

 

 

 

 

 

(MBIA-FGIC)

 

A3/AA

 

 

777,767

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total California Municipal Bonds & Notes (cost—$665,086,980)

 

 

 

 

580,869,853

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

OTHER MUNICIPAL BONDS & NOTES—3.4%

 

 

 

 

 

 

 

 

 

Iowa—1.7%

 

 

 

 

 

 

 

16,100

 

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

 

Baa3/BBB

 

 

11,284,168

 

 

 

 

 

 

 

 

   

 

 

 

 

New York—0.3%

 

 

 

 

 

 

 

1,900

 

New York City Municipal Water Finance Auth. Rev. Ser. D

 

 

 

 

 

 

 

 

 

5.00%, 6/15/37, Ser. 3240 (h)

 

Aa2/AAA

 

 

1,720,545

 

 

 

 

 

 

 

 

   

 

 

 

 

Pennsylvania—0.4%

 

 

 

 

 

 

 

4,300

 

Allegheny Cnty. Hospital Dev. Auth. Rev., 5.375%, 11/15/40,

 

 

 

 

 

 

 

 

 

Ser. A

 

Ba3/BB

 

 

2,424,039

 

 

 

 

 

 

 

 

   

 

 

 

 

Puerto Rico—1.0%

 

 

 

 

 

 

 

2,200

 

Aqueduct & Sewer Auth. Rev., 6.00%, 7/1/38, Ser. A

 

Baa3/BBB-

 

 

1,927,750

 

 

2,505

 

Public Building Auth. Rev., Gov’t Facs., 5.00%, 7/1/36,

 

 

 

 

 

 

 

 

 

Ser. I (GTD)

 

Baa3/BBB-

 

 

1,955,077

 

 

 

 

Sales Tax Financing Corp. Rev., Ser. A (AMBAC),

 

 

 

 

 

 

 

32,600

 

zero coupon, 8/1/47

 

A1/AA

 

 

2,100,418

 

 

12,500

 

zero coupon, 8/1/54

 

A1/A+

 

 

418,375

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

6,401,620

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Other Municipal Bonds & Notes (cost—$31,929,020)

 

 

 

 

21,830,372

 

 

 

 

 

 

 

 

   

 

11.30.08 | PIMCO Municipal Income Funds II Semi-Annual Report  19


 

 

PIMCO California Municipal Income Fund II     Schedule of Investments

November 30, 2008 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal
Amount
(000)

 

 

 

Credit Rating
(Moody’s/S&P)

 

Value

 

               

OTHER VARIABLE RATE NOTES (f)—0.8%

 

 

 

 

 

 

 

 

 

Puerto Rico—0.8%

 

 

 

 

 

 

$

5,300

 

Public Finance Corp. Rev., 5.75%, 8/1/27, Ser. A

 

 

 

 

 

 

 

 

 

(cost—$5,496,535)

 

Ba1/BBB-

 

 

$       5,275,408

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

U.S. TREASURY BILLS (g)—5.7%

 

 

 

 

 

 

 

36,470

 

0.01%-1.10%, 12/11/08-2/26/09 (cost—$36,465,321)

 

 

 

 

36,465,321

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investments (cost—$738,977,856)—100.0%

 

 

 

 

$   644,440,954

 

 

 

 

 

 

 

 

   

 

20  PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.08


 

 

PIMCO New York Municipal Income Fund II     Schedule of Investments

November 30, 2008 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal
Amount
(000)

 

 

 

Credit Rating
(Moody’s/S&P)

 

Value

 

               

NEW YORK MUNICIPAL BONDS & NOTES—87.2%

 

 

 

 

 

 

$

250

 

Buffalo Municipal Water Finance Auth.,

 

 

 

 

 

 

 

 

 

Water System Rev., 5.00%, 7/1/27, Ser. B, (Pre-refunded

 

 

 

 

 

 

 

 

 

@ $100, 7/1/12) (FSA)(c)

 

Aaa/AAA

 

 

$   274,315

 

 

2,400

 

Erie Cnty. Industrial Dev. Agcy., Orchard Park Rev., 6.00%,

 

 

 

 

 

 

 

 

 

11/15/36

 

NR/NR

 

 

1,601,760

 

 

10,000

 

Erie Cnty. Tobacco Asset Securitization Corp. Rev.,

 

 

 

 

 

 

 

 

 

6.50%, 7/15/32, (Pre-refunded @ $101, 7/15/10) (c)

 

NR/AAA

 

 

10,837,400

 

 

1,700

 

Liberty Dev. Corp. Rev.,

 

 

 

 

 

 

 

 

 

5.50%, 10/1/37

 

Aa3/AA-

 

 

1,256,011

 

 

2,500

 

Goldman Sachs Headquarters,

 

 

 

 

 

 

 

 

 

5.25%, 10/1/35, Ser. 1251 (h)

 

Aa3/AA-

 

 

1,789,000

 

 

 

 

Metropolitan Transportation Auth. Rev.,

 

 

 

 

 

 

 

1,850

 

5.00%, 11/15/30, Ser. A (FSA)

 

Aaa/AAA

 

 

1,573,036

 

 

10,000

 

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

 

A2/A

 

 

8,719,700

 

 

7,000

 

5.35%, 7/1/31, Ser. B

 

A1/AAA

 

 

6,273,330

 

 

3,570

 

Mortgage Agcy. Rev., 4.75%, 10/1/27, Ser. 128

 

Aa1/NR

 

 

2,903,481

 

 

2,400

 

Nassau Cnty. Industrial Dev. Agcy. Rev.,

 

 

 

 

 

 

 

 

 

Amsterdam at Harborside, 6.70%, 1/1/43, Ser. A

 

NR/NR

 

 

1,816,968

 

 

 

 

New York City Health & Hospital Corp. Rev.,

 

 

 

 

 

 

 

1,100

 

5.375%, 2/15/26, Ser. A

 

A1/A+

 

 

994,433

 

 

2,000

 

5.45%, 2/15/26, Ser. A

 

A1/A+

 

 

1,823,680

 

 

 

 

New York City Industrial Dev. Agcy. Rev.,

 

 

 

 

 

 

 

975

 

Eger Harbor, 4.95%, 11/20/32, (GNMA)

 

NR/AA+

 

 

812,565

 

 

1,415

 

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

 

Ba2/BB+

 

 

945,914

 

 

1,205

 

Staten Island Univ. Hospital, 6.45%, 7/1/32

 

B2/NR

 

 

887,892

 

 

1,500

 

United Jewish Appeal Fed., 5.00%, 7/1/27

 

Aa1/NR

 

 

1,450,605

 

 

 

 

Yankee Stadium,

 

 

 

 

 

 

 

5,000

 

5.00%, 3/1/31, (FGIC)

 

Baa3/BBB-

 

 

3,922,500

 

 

2,400

 

5.00%, 3/1/36, (MBIA)

 

Baa1/AA

 

 

1,820,304

 

 

 

 

New York City Municipal Water Finance Auth.,

 

 

 

 

 

 

 

 

 

Water & Sewer System Rev. (h),

 

 

 

 

 

 

 

7,500

 

4.50%, 6/15/33, Ser. C

 

Aa2/AA+

 

 

6,091,050

 

 

15,000

 

5.00%, 6/15/32, Ser. A

 

NR/AAA

 

 

14,047,950

 

 

10,000

 

New York City Transitional Finance Auth. Rev., 5.00%,

 

 

 

 

 

 

 

 

 

11/1/27, Ser. B

 

Aa1/AAA

 

 

9,609,300

 

 

7,785

 

New York City Trust for Cultural Res. Rev., 5.00%, 2/1/34,

 

 

 

 

 

 

 

 

 

(MBIA-FGIC)

 

Aa3/AA

 

 

6,993,421

 

 

4,000

 

New York City, GO, 5.00%, 3/1/33, Ser. I

 

Aa3/AA

 

 

3,458,600

 

 

3,600

 

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

 

 

 

 

 

 

 

 

 

5.00%, 4/15/32, Ser. 125 (FSA)

 

Aaa/AAA

 

 

3,382,596

 

 

 

 

State Dormitory Auth. Rev.,

 

 

 

 

 

 

 

80

 

5.25%, 9/1/28, (Pre-refunded @ $102, 9/1/09) (Radian)(c)

 

A3/AA

 

 

84,103

 

 

1,320

 

5.25%, 9/1/28, (Radian)

 

A3/AA

 

 

1,213,885

 

 

7,490

 

5.50%, 5/15/31, Ser. A (AMBAC)

 

Aa3/AA

 

 

7,319,902

 

 

2,600

 

Catholic Health of Long Island, 5.10%, 7/1/34

 

Baa1/BBB

 

 

1,813,942

 

 

2,000

 

Kaleida Health Hospital, 5.05%, 2/15/25, (FHA)

 

NR/AAA

 

 

1,776,540

 

 

5,300

 

Lenox Hill Hospital, 5.50%, 7/1/30

 

Ba1/NR

 

 

3,521,161

 

 

1,000

 

New York Univ. Hospital, 5.625%, 7/1/37, Ser. B

 

Ba2/BB

 

 

697,810

 

 

5,850

 

North General Hospital, 5.00%, 2/15/25

 

NR/AA-

 

 

5,411,952

 

 

5,000

 

Rochester General Hospital, 5.00%, 12/1/35, (Radian)

 

A3/BBB+

 

 

3,805,850

 

 

4,270

 

Teachers College, 5.00%, 7/1/32, (MBIA)

 

A1/NR

 

 

4,011,067

 

 

2,000

 

Yeshiva Univ., 5.125%, 7/1/34, (AMBAC)

 

Aa2/NR

 

 

1,889,720

 

11.30.08 | PIMCO Municipal Income Funds II Semi-Annual Report  21


 

 

PIMCO New York Municipal Income Fund II     Schedule of Investments

November 30, 2008 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal
Amount
(000)

 

 

 

Credit Rating
(Moody’s/S&P)

 

Value

 

               

$

2,000

 

State Environmental Facs. Corp.,

 

 

 

 

 

 

 

 

 

State Clean Water & Drinking Rev., 5.125%, 6/15/31

 

Aaa/AAA

 

 

$   1,923,720

 

 

 

 

Tobacco Settlement Asset Backed, Inc. Rev.,

 

 

 

 

 

 

 

25,000

 

5.00%, 6/1/34, Ser. 1

 

NR/BBB

 

 

17,592,250

 

 

25,000

 

5.75%, 7/15/32, Ser. 1, (Pre-refunded @ $100, 7/15/12) (c)

 

Aaa/AAA

 

 

28,013,000

 

 

10,000

 

6.375%, 7/15/39, Ser. 1, (Pre-refunded @ $101, 7/15/09) (c)

 

Aaa/AAA

 

 

10,428,900

 

 

710

 

Triborough Bridge & Tunnel Auth. Rev., 5.00%, 1/1/32,

 

 

 

 

 

 

 

 

 

(FGIC-TCRS)

 

Aa2/AA-

 

 

644,524

 

 

1,815

 

Ulster Cnty. Industrial Dev. Agcy. Rev., 6.00%, 9/15/37, Ser. A

 

NR/NR

 

 

1,257,704

 

 

2,000

 

Warren & Washington Cntys. Industrial Dev. Agcy. Rev.,

 

 

 

 

 

 

 

 

 

Glens Falls Hospital, 5.00%, 12/1/35, Ser. A (FSA)

 

Aaa/AAA

 

 

1,772,740

 

 

750

 

Westchester Cnty. Industrial Dev. Agcy. Continuing Care

 

 

 

 

 

 

 

 

 

Retirement Rev., Kendal on Hudson, 6.50%, 1/1/34,

 

 

 

 

 

 

 

 

 

(Pre-refunded @ $100, 1/1/13) (c)

 

NR/NR

 

 

863,085

 

 

 

 

 

 

 

 

   

 

 

 

 

Total New York Municipal Bonds & Notes (cost—$206,139,420)

 

 

 

 

187,327,666

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

OTHER MUNICIPAL BONDS & NOTES—7.3%

 

 

 

 

 

 

 

 

 

California—3.2%

 

 

 

 

 

 

 

 

 

Alameda Unified School Dist., GO, Alameda Cnty.(FSA),

 

 

 

 

 

 

 

3,500

 

zero coupon, 8/1/24, Ser. A

 

Aaa/AAA

 

 

1,365,210

 

 

3,000

 

zero coupon, 8/1/25, Ser. A

 

Aaa/AAA

 

 

1,089,540

 

 

3,130

 

Covina Valley Unified School Dist.,

 

 

 

 

 

 

 

 

 

GO, zero coupon, 6/1/25, Ser. B (MBIA-FGIC)

 

NR/AA

 

 

1,143,295

 

 

5,000

 

Tobacco Securitization Agcy. Rev.,

 

 

 

 

 

 

 

 

 

Los Angeles Cnty., zero coupon, 6/1/28

 

Baa3/NR

 

 

3,258,350

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

6,856,395

 

 

 

 

 

 

 

 

   

 

 

 

 

Puerto Rico—4.1%

 

 

 

 

 

 

 

4,600

 

Aqueduct & Sewer Auth. Rev., 6.00%, 7/1/38, Ser. A

 

Baa3/BBB-

 

 

4,030,750

 

 

5,675

 

Children’s Trust Fund Tobacco Settlement Rev., 5.625%,

 

 

 

 

 

 

 

 

 

5/15/43

 

Baa3/BBB

 

 

3,947,587

 

 

 

 

Sales Tax Financing Corp. Rev.,

 

 

 

 

 

 

 

14,250

 

zero coupon, 8/1/54, Ser. A (AMBAC)

 

A1/A+

 

 

476,947

 

 

12,900

 

zero coupon, 8/1/56, Ser. A

 

A1/A+

 

 

355,395

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

8,810,679

 

 

 

 

 

 

 

 

   

 

 

 

 

Total Other Municipal Bonds & Notes (cost—$21,112,875)

 

 

 

 

15,667,074

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

NEW YORK VARIABLE RATE NOTES (a)(d)(f)—0.3%

 

 

 

 

 

 

 

1,300

 

State Urban Dev. Corp. Rev., 19.167%, 3/15/35

 

 

 

 

 

 

 

 

 

(cost—$1,405,204)

 

NR/AAA

 

 

682,760

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

OTHER VARIABLE RATE NOTES (f)—1.4%

 

 

 

 

 

 

 

 

 

California—0.5%

 

 

 

 

 

 

 

2,000

 

Golden State Tobacco Securitization Corp. Rev.,

 

 

 

 

 

 

 

 

 

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

 

A2/A

 

 

1,069,760

 

 

 

 

 

 

 

 

   

 

 

 

 

Puerto Rico—0.9%

 

 

 

 

 

 

 

1,900

 

Public Finance Corp. Rev., 5.75%, 8/1/27, Ser. A

 

Ba1/BBB-

 

 

1,891,184

 

 

 

 

 

 

 

 

   

 

 

 

 

Total Other Variable Rate Notes (cost—$3,970,456)

 

 

 

 

2,960,944

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

U.S. TREASURY BILLS (g)—3.8%

 

 

 

 

 

 

 

8,140

 

0.12%-1.10%,12/26/08-2/26/09 (cost—$8,138,717)

 

 

 

 

8,138,717

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investments (cost—$240,766,672)—100.0%

 

 

 

 

$214,777,161

 

 

 

 

 

 

 

 

   

 

22  PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.08


 

 

PIMCO Municipal Income Funds II     Notes to Schedule of Investments

November 30, 2008 (unaudited)

 

 

 

 

 

 

   

Notes to Schedules of Investments:

 

(a)

Private Placement—Restricted as to resale and may not have a readily available market. Securities with an aggregate value of $21,194,686, representing 1.81% of total investments in Municipal Income II. Securities with an aggregate value of $5,012,465, representing 0.78% of total investments in California Municipal Income II. Securities with an aggregate value of $1,752,520, representing 0.82% of total investments in New York Municipal II.

 

(b)

Illiquid security.

 

(c)

Pre-refunded bonds are collateralized by U.S. Government or other eligible securities which are held in escrow and used to pay principal and interest and retire the bonds at the earliest refunding date (payment date) and/or whose interest rates vary with changes in a designated base rate (such as the prime interest rate).

 

(d)

144A Security—Security exempt from registration, under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, typically only to qualified institutional buyers. Unless otherwise indicated, these securities are not considered to be illiquid.

 

(e)

Inverse Floater—The interest rate shown bears an inverse relationship to the interest rate on another security or the value of an index. The interest rate disclosed reflects the rate in effect on November 30, 2008.

 

(f)

Variable Rate Notes—Instruments whose interest rates change on specified date (such as a coupon date or interest payment date) and/or whose interest rates vary with changes in a designated base rate (such as the prime interest rate). The interest rate disclosed reflects the rate in effect on November 30, 2008.

 

(g)

All or partial amount segregated as collateral for swaps.

 

(h)

Residual Interest Bonds Held in Trust—Securities represent underlying bonds transferred to a separate securitization trust established in a tender option bond transaction in which the Funds acquired the residual interest certificates. These securities serve as collateral in a financing transaction.

 

 

   

 

Glossary:

AMBAC — insured by American Municipal Bond Assurance Corp.

CA Mtg. Ins. — insured by California Mortgage Insurance

CA St. Mtg. — insured by California State Mortgage

CP — Certificates of Participation

FGIC — insured by Financial Guaranty Insurance Co.

FHA — insured by Federal Housing Administration

FSA — insured by Financial Security Assurance, Inc.

GNMA — insured by Government National Mortgage Association

GO — General Obligation Bond

GTD — Guaranteed

IBC — Insurance Bond Certificate

MBIA — insured by Municipal Bond Investors Assurance

NR — Not Rated

PSF — Public School Fund

Radian — insured by Radian Guaranty, Inc.

TCRS — Temporary Custodian Receipts

See accompanying Notes to Financial Statements  | 11.30.08 | PIMCO Municipal Income Funds II Semi-Annual Report  23


 

 

PIMCO Municipal Income Funds II     Statements of Assets and Liabilities

November 30, 2008 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal II

 

California   
Municipal II

 

New York   
Municipal II

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Investments, at value (cost—$1,329,455,621, $738,977,856 and $240,766,672, respectively)

 

 

$1,168,910,596

 

 

 

$644,440,954

 

 

 

$214,777,161

 

 

 

     

 

     

 

     

Cash

 

 

 

 

 

6,866,853

 

 

 

 

 

 

     

 

     

 

     

Premium for swaps purchased

 

 

39,583,727

 

 

 

21,398,729

 

 

 

6,520,624

 

 

 

     

 

     

 

     

Interest receivable

 

 

20,852,855

 

 

 

17,531,414

 

 

 

4,374,927

 

 

 

     

 

     

 

     

Receivable for investments sold

 

 

70,000

 

 

 

51,374

 

 

 

 

 

 

     

 

     

 

     

Prepaid expenses and other assets

 

 

52,401

 

 

 

401,469

 

 

 

358,396

 

 

 

     

 

     

 

     

Total Assets

 

 

1,229,469,579

 

 

 

690,690,793

 

 

 

226,031,108

 

 

 

     

 

     

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized depreciation on swaps

 

 

89,128,259

 

 

 

49,067,968

 

 

 

14,172,628

 

 

 

     

 

     

 

     

Payable for floating rate notes

 

 

81,697,152

 

 

 

110,420,820

 

 

 

13,552,563

 

 

 

     

 

     

 

     

Premium for swaps sold

 

 

48,000,000

 

 

 

26,000,000

 

 

 

8,000,000

 

 

 

     

 

     

 

     

Payable to custodian for cash overdraft

 

 

4,623,983

 

 

 

 

 

 

3,951,192

 

 

 

     

 

     

 

     

Dividends payable to common and preferred shareholders

 

 

3,960,485

 

 

 

2,211,247

 

 

 

724,919

 

 

 

     

 

     

 

     

Interest payable

 

 

3,403,811

 

 

 

8,708,932

 

 

 

480,619

 

 

 

     

 

     

 

     

Investment management fees payable

 

 

527,146

 

 

 

261,990

 

 

 

97,542

 

 

 

     

 

     

 

     

Accrued expenses and other payables

 

 

727,013

 

 

 

5,382,142

 

 

 

115,969

 

 

 

     

 

     

 

     

Total Liabilities

 

 

232,067,849

 

 

 

202,053,099

 

 

 

41,095,432

 

 

 

     

 

     

 

     

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

 

 

$492,401,730

 

 

 

$228,637,694

 

 

 

$94,935,676

 

 

 

     

 

     

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

Composition of Net Assets Applicable to Common Shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock:

 

 

 

 

 

 

 

 

 

 

 

 

Par value ($0.00001 per share)

 

 

$593

 

 

 

$308

 

 

 

$106

 

 

 

     

 

     

 

     

Paid-in-capital in excess of par

 

 

843,249,612

 

 

 

436,051,623

 

 

 

151,085,082

 

 

 

     

 

     

 

     

Undistributed (dividends in excess of) net investment income

 

 

2,499,400

 

 

 

(4,204,630

)

 

 

(1,091,114

)

 

 

     

 

     

 

     

Accumulated net realized loss

 

 

(103,674,286

)

 

 

(65,242,666

)

 

 

(14,635,408

)

 

 

     

 

     

 

     

Net unrealized depreciation of investments and swaps

 

 

(249,673,589

)

 

 

(137,966,941

)

 

 

(40,422,990

)

 

 

     

 

     

 

     

Net Assets Applicable to Common Shareholders

 

 

$492,401,730

 

 

 

$228,637,694

 

 

 

$94,935,676

 

 

 

     

 

     

 

     

Common Shares Outstanding

 

 

59,311,427

 

 

 

30,815,157

 

 

 

10,648,543

 

 

 

     

 

     

 

     

Net Asset Value Per Common Share

 

 

$8.30

 

 

 

$7.42

 

 

 

$8.92

 

 

 

     

 

     

 

     

24  PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.08 | See accompanying Notes to Financial Statements


 

 

PIMCO Municipal Income Funds II     Statements of Operations

For the six months ended November 30, 2008 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal II

 

California   
Municipal II

 

New York   
Municipal II

 

 

 

 

 

 

 

Investment Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest

 

 

$39,684,097

 

 

 

$21,391,691

 

 

 

$6,530,564

 

 

 

 

     

 

     

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment management fees

 

 

3,963,395

 

 

 

1,987,390

 

 

 

714,566

 

 

 

 

     

 

     

 

     

 

Interest expense

 

 

2,453,651

 

 

 

3,355,022

 

 

 

254,151

 

 

 

 

     

 

     

 

     

 

Auction agent fees and commissions

 

 

646,615

 

 

 

334,930

 

 

 

123,517

 

 

 

 

     

 

     

 

     

 

Custodian and accounting agent fees

 

 

80,565

 

 

 

52,743

 

 

 

18,198

 

 

 

 

     

 

     

 

     

 

Legal fees

 

 

75,983

 

 

 

50,883

 

 

 

31,904

 

 

 

 

     

 

     

 

     

 

Shareholder communications

 

 

74,790

 

 

 

40,644

 

 

 

4,215

 

 

 

 

     

 

     

 

     

 

Trustees’ fees and expenses

 

 

62,903

 

 

 

35,785

 

 

 

20,869

 

 

 

 

     

 

     

 

     

 

Audit and tax services

 

 

45,483

 

 

 

28,929

 

 

 

13,899

 

 

 

 

     

 

     

 

     

 

New York Stock Exchange listing fees

 

 

28,618

 

 

 

14,975

 

 

 

12,938

 

 

 

 

     

 

     

 

     

 

Transfer agent fees

 

 

18,168

 

 

 

12,087

 

 

 

18,256

 

 

 

 

     

 

     

 

     

 

Insurance expense

 

 

4,237

 

 

 

2,336

 

 

 

1,112

 

 

 

 

     

 

     

 

     

 

Miscellaneous

 

 

6,745

 

 

 

6,357

 

 

 

3,300

 

 

 

 

     

 

     

 

     

 

Total expenses

 

 

7,461,153

 

 

 

5,922,081

 

 

 

1,216,925

 

 

 

 

     

 

     

 

     

 

Less: investment management fees waived

 

 

(358,646

)

 

 

(180,053

)

 

 

(64,541

)

 

 

 

     

 

     

 

     

 

custody credits earned on cash balances

 

 

(40,932

)

 

 

(10,890

)

 

 

(10,482

)

 

 

 

     

 

     

 

     

 

Net expenses

 

 

7,061,575

 

 

 

5,731,138

 

 

 

1,141,902

 

 

 

 

     

 

     

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Investment Income

 

 

32,622,522

 

 

 

15,660,553

 

 

 

5,388,662

 

 

 

 

     

 

     

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Realized and Change In Unrealized Gain (Loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

Net realized gain (loss) on:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

 

(6,073,222

)

 

 

(6,428,795

)

 

 

512,921

 

 

 

 

     

 

     

 

     

 

Futures contracts

 

 

(7,068,860

)

 

 

(2,876,409

)

 

 

(960,187

)

 

 

 

     

 

     

 

     

 

Swaps

 

 

(12,370,154

)

 

 

(6,700,500

)

 

 

(2,061,692

)

 

 

 

     

 

     

 

     

 

Net change in unrealized appreciation/depreciation of:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

 

(208,559,433

)

 

 

(110,713,622

)

 

 

(32,249,341

)

 

 

 

     

 

     

 

     

 

Futures contracts

 

 

(6,565,336

)

 

 

(4,502,969

)

 

 

(1,197,641

)

 

 

 

     

 

     

 

     

 

Swaps

 

 

(89,128,259

)

 

 

(49,067,968

)

 

 

(14,172,628

)

 

 

 

     

 

     

 

     

 

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

 

 

(329,765,264

)

 

 

(180,290,263

)

 

 

(50,128,568

)

 

 

 

     

 

     

 

     

 

Net Decrease in Net Assets Resulting from Investment Operations

 

 

(297,142,742

)

 

 

(164,629,710

)

 

 

(44,739,906

)

 

 

 

     

 

     

 

     

 

Dividends on Preferred Shares from Net Investment Income

 

 

(9,169,316

)

 

 

(4,720,836

)

 

 

(1,631,548

)

 

 

 

     

 

     

 

     

 

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

 

 

$(306,312,058

)

 

 

$(169,350,546

)

 

 

$(46,371,454

)

 

 

 

     

 

     

 

     

 

See accompanying Notes to Financial Statements | 11.30.08 | PIMCO Municipal Income Funds II Semi-Annual Report  25


 

 

PIMCO Municipal Income Funds II     

Statements of Changes in Net Assets

       

Applicable to Common Shareholders  

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal II

 

 

 

 

Six months
ended
November 30, 2008
(unaudited)

 

Year ended
May 31, 2008

 

 

 

 

 

 

Investment Operations:

 

 

 

 

 

 

 

 

Net investment income

 

 

$32,622,522

 

 

 

$66,423,523

 

 

 

   

 

   

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

 

 

(25,512,236

)

 

 

5,404,191

 

 

 

   

 

   

Net change in unrealized appreciation/depreciation of investments, futures contracts and swaps

 

 

(304,253,028

)

 

 

(78,458,658

)

 

 

   

 

   

Net decrease in net assets resulting from investment operations

 

 

(297,142,742

)

 

 

(6,630,944

)

 

 

   

 

   

 

 

 

 

 

 

 

 

 

Dividends to Preferred Shareholders from Net investment income

 

 

(9,169,316

)

 

 

(17,559,291

)

 

 

   

 

   

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

 

 

(306,312,058

)

 

 

(24,190,235

)

 

 

   

 

   

 

 

 

 

 

 

 

 

 

Dividends to Common Shareholders from Net Investment Income

 

 

(23,109,268

)

 

 

(46,046,478

)

 

 

   

 

   

 

 

 

 

 

 

 

 

 

Capital Share Transactions:

 

 

 

 

 

 

 

 

Reinvestment of dividends

 

 

2,083,433

 

 

 

3,161,576

 

 

 

   

 

   

Total decrease in net assets applicable to common shareholders

 

 

(327,337,893

)

 

 

(67,075,137

)

 

 

   

 

   

 

 

 

 

 

 

 

 

 

Net Assets Applicable to Common Shareholders:

 

 

 

 

 

 

 

 

Beginning of period

 

 

819,739,623

 

 

 

886,814,760

 

 

 

   

 

   

End of period (including undistributed (dividends in excess of) net investment income of $2,499,400 and $2,155,462; $(4,204,630) and $(2,219,623); $(1,091,114) and $(621,423); respectively)

 

 

$492,401,730

 

 

 

$819,739,623

 

 

 

   

 

   

 

 

 

 

 

 

 

 

 

Common Shares Issued in Reinvestment of Dividends

 

 

162,941

 

 

 

223,853

 

 

 

   

 

   

26  PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.08 | See accompanying Notes to Financial Statements


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

California Municipal II

 

New York Municipal II

 

 

Six months
ended
November 30, 2008
(unaudited)

 

Year ended
May 31, 2008

 

Six months
ended
November 30, 2008
(unaudited)

 

Year ended
May 31, 2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$15,660,553

 

 

 

$32,439,150

 

 

 

$5,388,662

 

 

 

$11,390,311

 

   

 

   

 

   

 

   

 

(16,005,704

)

 

 

(9,422,890

)

 

 

(2,508,958

)

 

 

436,283

 

   

 

   

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(164,284,559

)

 

 

(36,237,871

)

 

 

(47,619,610

)

 

 

(12,133,193

)

   

 

   

 

   

 

   

 

(164,629,710

)

 

 

(13,221,611

)

 

 

(44,739,906

)

 

 

(306,599

)

   

 

   

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,720,836

)

 

 

(8,660,050

)

 

 

(1,631,548

)

 

 

(3,073,529

)

   

 

   

 

   

 

   

 

(169,350,546

)

 

 

(21,881,661

)

 

 

(46,371,454

)

 

 

(3,380,128

)

   

 

   

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,924,724

)

 

 

(25,748,032

)

 

 

(4,226,805

)

 

 

(8,420,559

)

   

 

   

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,143,615

 

 

 

2,114,952

 

 

 

433,791

 

 

 

682,941

 

   

 

   

 

   

 

   

 

(181,131,655

)

 

 

(45,514,741

)

 

 

(50,164,468

)

 

 

(11,117,746

)

   

 

   

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

409,769,349

 

 

 

455,284,090

 

 

 

145,100,144

 

 

 

156,217,890

 

   

 

   

 

   

 

   

 

$228,637,694

 

 

 

$409,769,349

 

 

 

$94,935,676

 

 

 

$145,100,144

 

   

 

   

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

94,230

 

 

 

150,398

 

 

 

34,653

 

 

 

48,516

 

   

 

   

 

   

 

   

See accompanying Notes to Financial Statements | 11.30.08 | PIMCO Municipal Income Funds II Semi-Annual Report 27


 

 

PIMCO California Municipal Income Fund II     Statement of Cash Flows

For the six months ended November 30, 2008 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

Cash Flows provided by Operating Activities:

 

 

 

 

Purchases of long-term investments

 

 

$(2,388,320

)

 

 

   

Proceeds from sales of long-term investments

 

 

161,306,879

 

 

 

   

Decrease in deposits with brokers for futures contracts collateral

 

 

5,940,000

 

 

 

   

Interest received

 

 

17,063,672

 

 

 

   

Net cash used for swap transactions

 

 

(2,099,229

)

 

 

   

Operating expenses paid

 

 

(2,448,567

)

 

 

   

Net cash used for futures transactions

 

 

(8,364,011

)

 

 

   

Net increase in short-term investments

 

 

(39,749,758

)

 

 

   

Net cash provided by operating activities

 

 

129,260,666

 

 

 

   

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

Cash dividends paid (excluding reinvestment of $1,143,615)

 

 

(16,510,322

)

 

 

   

Payments to retire floating rate notes

 

 

(109,809,660

)

 

 

   

Cash paid on issuance of floating rate notes

 

 

(6,507,353

)

 

 

   

Net cash used for financing activities*

 

 

(132,827,335

)

 

 

   

 

 

 

 

Net decrease in cash

 

 

(3,566,669

)

 

 

   

Cash at beginning of period

 

 

10,433,522

 

 

 

   

Cash at end of period

 

 

6,866,853

 

 

 

   

 

 

 

 

 

Reconciliation of Net Decrease in Net Assets Resulting from Investment Operations to Net Cash Provided by Operating Activities:

 

 

 

 

Net decrease in net assets resulting from investment operations

 

 

(164,629,710

)

 

 

   

Decrease in deposits with brokers for futures contracts collateral

 

 

5,940,000

 

 

 

   

Decrease in interest receivable

 

 

1,178,980

 

 

 

   

Decrease in receivable for investments sold

 

 

1,099,078

 

 

 

   

Increase in premium for swaps purchased

 

 

(21,398,729

)

 

 

   

Increase in premium for swaps sold

 

 

26,000,000

 

 

 

   

Increase in prepaid expenses and other assets

 

 

(10,336

)

 

 

   

Decrease in investment management fees payable

 

 

(49,147

)

 

 

   

Increase in net unrealized depreciation on swaps

 

 

49,067,968

 

 

 

   

Decrease in net payable for variation margin on futures contracts

 

 

(984,634

)

 

 

   

Decrease in accrued expenses and other liabilities

 

 

(12,968

)

 

 

   

Net decrease in investments

 

 

233,060,164

 

 

 

   

 

 

 

 

 

 

 

   

Net cash provided by operating activities

 

 

$129,260,666

 

 

 

   

 

 

*

Supplemental Disclosure

 

 

Non-cash financing activity not included consists of interest expense on floating rate notes issued of $3,355,022.

28  PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.08 | See accompanying Notes to Financial Statements


 

 

PIMCO Municipal Income Funds II     Notes to Financial Statements

November 30, 2008 (unaudited)

 

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 non-diversified, closed-end management investment companies registered under the Investment Company Act of 1940 and the rules and regulations thereunder, as amended. Allianz Global Investors Fund Management LLC (the “Investment Manager”), serves as the investment manager and is an indirect, wholly-owned subsidiary of Allianz Global Investors of America L.P. (“Allianz Global”). Allianz Global is an indirect, majority-owned subsidiary of Allianz SE, a publicly traded European insurance and financial services company. The Funds have an unlimited amount of no par value per share of common stock authorized.

Under normal market conditions, Municipal II invests substantially all of its assets in a portfolio of municipal bonds, the interest from which is exempt from federal income taxes. Under normal market conditions, California Municipal II invests substantially all of its assets in municipal bonds which pay interest that is currently exempt from federal and California state income taxes. Under normal market conditions, New York Municipal II invests substantially all of its assets in municipal bonds which pay interest that is currently exempt from federal, New York State and New York City income taxes. The Funds will seek to avoid investing in bonds generating interest income which could potentially subject individuals to alternative minimum tax. The issuers’ abilities to meet their obligations may be affected by economic and political developments in a specific state or region.

The preparation of the financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in 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 occured. However, the Funds expect the risk of any loss to be remote.

In July 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, ‘‘Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109’’ (the ‘‘Interpretation’’). The Interpretation establishes for all entities, including pass-through entities such as the Funds, a minimum threshold for financial statement recognition of the benefit of positions taken in filing tax returns (including whether an entity is taxable in a particular jurisdiction), and requires certain expanded tax disclosures. The Funds’ management has determined that its evaluation of the Interpretation has resulted in no material impact to the Funds’ financial statements at November 30, 2008. The Funds’ federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service.

In March 2008, FASB issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS 161”). SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. SFAS 161 requires enhanced disclosures about a fund’s derivative and hedging activities.

In September 2008, FASB issued a FASB Staff Position No. 133-1 and FIN 45-4 “Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161” (“FSP”). FSP requires enhanced transparency of the effect of credit derivatives and guarantees on an issuer’s financial position, financial performance and cash flows. FSP is effective for fiscal years or interim periods beginning after November 15, 2008. This FSP applies to certain credit derivatives, hybrid instruments that have embedded credit derivatives (for example, credit-linked notes), and certain guarantees and it requires additional disclosures regarding credit derivatives with sold protection. The Funds’ have determined that the FSP has no impact to the financial statements at November 30, 2008.

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

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

11.30.08 | PIMCO Municipal Income Funds II Semi-Annual Report  29


 

 

PIMCO Municipal Income Funds II     Notes to Financial Statements

November 30, 2008 (unaudited)

 

1. Organization and Significant Accounting Policies (continued)

(a) Valuation of Investments (continued)
Portfolio securities and other financial instruments for which market quotations are not readily available or if a development/event occurs that may significantly impact the value of a security, are fair-valued, in good faith, pursuant to procedures established by the Board of Trustees, or persons acting at their discretion pursuant to procedures established by the Board of Trustees. The Funds’ investments are valued daily using prices supplied by an independent pricing service or dealer quotations, or by using the last sale price on the exchange that is the primary market for such securities, or the last quoted mean price for those securities for which the over-the-counter market is the primary market or for listed securities in which there were no sales. Prices obtained from independent pricing services use information provided by market makers or estimates of market values obtained from yield data relating to investments or securities with similar characteristics. Exchange traded options, futures and options on futures are valued at the settlement price determined by the relevant exchange. Short-term securities maturing in 60 days or less are valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days. The prices used by the Funds to value securities may differ from the value that would be realized if the securities were sold and these differences could be material to the financial statements. Each Funds’ net asset value is normally determined daily as of the close of regular trading (normally, 4:00 p.m. Eastern time) on the New York Stock Exchange (“NYSE”) on each day the NYSE is open for business.

(b) Fair Value Measurement
Effective June 1, 2008, the Funds adopted FASB Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of the fair value measurements. The three levels of the fair value hierarchy under SFAS 157 are described below:

 

 

Level 1 – quoted prices in active markets for identical investments

 

 

Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

 

 

Level 3 – significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of investments)

The valuation techniques used by the Funds to measure fair value during the six months ended November 30, 2008 maximized the use of observable inputs and minimized the use of unobservable inputs.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used as of November 30, 2008 in valuing the Funds’ investments carried at value:

Municipal Income II:

 

 

 

 

 

 

 

 

Valuation Inputs

 

Investments in
Securities

 

Other Financial
Instruments

 

           

Level 1 – Quoted Prices

 

$

 

$

 

Level 2 – Other Significant Observable Inputs

 

 

1,168,910,596

 

 

(89,128,259

)

Level 3 – Significant Unobservable Inputs

 

 

 

 

 

               

Total

 

$

1,168,910,596

 

$

(89,128,259

)

 

 

           

30  PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.08


 

 

PIMCO Municipal Income Funds II     Notes to Financial Statements

November 30, 2008 (unaudited)

 

1. Organization and Significant Accounting Policies (continued)

(b) Fair Value Measurement (continued)
California Municipal II:

 

 

 

 

 

 

 

 

Valuation Inputs

 

Investments in
Securities

 

Other Financial
Instruments

 

           

Level 1 – Quoted Prices

 

$

 

$

 

Level 2 – Other Significant Observable Inputs

 

 

644,440,954

 

 

(49,067,968

)

Level 3 – Significant Unobservable Inputs

 

 

 

 

 

               

Total

 

$

644,440,954

 

$

(49,067,968

)

 

 

           

New York Municipal II:

 

 

 

 

 

 

 

 

Valuation Inputs

 

Investments in
Securities

 

Other Financial
Instruments

 

           

Level 1 – Quoted Prices

 

$

 

$

 

Level 2 – Other Significant Observable Inputs

 

 

214,777,161

 

 

(14,172,628

)

Level 3 – Significant Unobservable Inputs

 

 

 

 

 

               

Total

 

$

214,777,161

 

$

(14,172,628

)

 

 

           

(c) Investment Transactions and Investment Income
Investment transactions are accounted for on the trade date. Securities purchased and sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses on investments are determined on the identified cost basis. Interest income is recorded on an accrual basis. Discounts or premiums on debt securities purchased are accreted or amortized to interest income over the lives of the respective securities using the effective interest method.

(d) 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.

(e) 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 considered either temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal income tax treatment; temporary differences do not require reclassification. To the extent dividends and/or distributions exceed current and accumulated earnings and profits for federal income tax purposes, they are reported as dividends and/or distributions of paid-in-capital in excess of par.

(f) Interest Rate Swaps
The Funds enter into interest rate swap contracts (“swaps”) for investment purposes, to manage their interest rate risk or to add leverage.

Interest rate swap agreements involve the exchange by the Funds with a counterparty of their respective commitments to pay or receive interest, e.g., an exchange of floating rate payments for fixed rate payments with respect to a notional amount of principal. Net periodic payments received (paid) by the Funds are included as part of realized gain (loss) and net periodic payments accrued, but not yet received (paid) are included in change in the unrealized appreciation/depreciation on the Statements of Operations.

Swaps are marked to market daily based upon quotations from brokers or market makers and the change in value, if any, is recorded as unrealized appreciation or depreciation in the Funds’ Statements of Operations.

11.30.08 | PIMCO Municipal Income Funds II Semi-Annual Report  31


 

 

PIMCO Municipal Income Funds II     Notes to Financial Statements

November 30, 2008 (unaudited)

 

1. Organization and Significant Accounting Policies (continued)

(f) Interest Rate Swaps (continued)
Entering into swaps involves, to varying degrees, elements of credit, market and documentation risk in excess of the amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of the contractual terms in the agreements, and that there may be unfavorable changes in net interest rates.

(g) Inverse Floating Rate Transactions—Residual Interest Municipal Bonds (‘‘RIBs’’) / Residual Interest Tax Exempt Bonds (‘‘RITEs’’)
The Funds invest in RIBs and RITEs, (‘‘Inverse Floaters’’) whose interest rates bear an inverse relationship to the interest rate on another security or the value of an index. In these transactions, the Funds sell a fixed rate municipal bond (‘‘Fixed Rate Bond’’) to a broker who places the Fixed Rate Bond in a special purpose trust (‘‘Trust’’) from which floating rate bonds (‘‘Floating Rate Notes’’) and Inverse Floaters are issued. The Funds simultaneously or within a short period of time purchase the Inverse Floaters from the broker. The Inverse Floaters held by the Funds provide the Funds with the right to: (1) cause the holders of the Floating Rate Notes to tender their notes at par, and (2) cause the broker to transfer the Fixed-Rate Bond held by the Trust to the Funds, thereby collapsing the Trust. Pursuant to Statement of Financial Accounting Standards No. 140 (‘‘FASB Statement No. 140’’), the Funds account for the transaction described above as a secured borrowing by including the Fixed Rate Bond in their Schedules of Investments, and account for the Floating Rate Notes as a liability under the caption ‘‘Payable for floating rate notes’’ in the Funds’ Statements of Assets and Liabilities. The Floating Rate Notes have interest rates that generally reset weekly, and their holders have the option to tender their notes to the broker for redemption at par at each reset date.

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

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

The Funds’ restrictions on borrowings do not apply to the secured borrowings deemed to have occurred for accounting purposes pursuant to FASB Statement No. 140. Inverse Floaters held by the Funds are exempt from registration under Rule 144A of the Securities Act of 1933.

(h) Custody Credits on Cash Balances
The Funds benefit from an expense offset arrangement with their custodian bank whereby uninvested cash balances earn credits which reduce monthly custodian and accounting agent expenses. Had these cash balances been invested in income producing securities, they would have generated income for the Funds.

(i) Interest Expense
Interest expense relates to the Funds’ liability in connection with floating rate notes held by third parties in conjunction with Inverse Floater transactions. Interest expense is recorded as it is incurred.

2. Investment Manager/Sub-Adviser
Each Fund has an Investment Management Agreement (collectively, the ‘‘Agreements’’) with the Investment Manager. 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 Fund’s investment activities, business affairs and administrative matters. Pursuant to the Agreements, the Investment Manager receives an annual fee, payable on a monthly basis, at an annual rate of 0.65% of each Fund’s average daily net assets, inclusive of net assets attributable to any preferred shares that may be outstanding. In order to reduce each Fund’s expenses, the Investment Manager has contractually agreed to waive a portion of its investment management fees for each Fund at the annual rate of 0.10% of each Fund’s average daily net assets, inclusive of net assets attributable to any preferred shares that may be outstanding through June 30, 2008. On July 1, 2008, the contractual fee waiver was reduced to 0.05% of each Funds’ average daily net assets, including net assets attributable to any preferred shares that may be outstanding through June 30, 2009. For the six months ended November

32  PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.08


 

 

PIMCO Municipal Income Funds II     Notes to Financial Statements

November 30, 2008 (unaudited)

 

2. Investment Manager/Sub-Adviser (continued)
30, 2008, each Fund paid investment management fees at an annualized effective rate of 0.59% of each Fund’s average daily net assets inclusive of net assets attributable to any preferred shares that may be outstanding.

The Investment Manager has retained its affiliate, Pacific Investment Management Company LLC (the ‘‘Sub-Adviser’’), to manage each Funds’ investments. Subject to the supervision of the Investment Manager, the Sub-Adviser is responsible for making all investment decisions for the Funds. The Investment Manager, not the Funds, pays a portion of the fees it receives to the Sub-Adviser in return for its services.

3. Investments in Securities
Purchases and sales of investments, other than short-term securities and U.S. government obligations for the six months ended November 30, 2008, were:

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal II

 

California
Municipal II

 

New York
Municipal II

 

                     

Purchases

 

$

297,059,881

 

$

2,388,320

 

$

16,999,700

 

Sales

 

 

418,168,904

 

 

160,207,802

 

 

16,776,988

 

 

 

 

 

 

 

 

 

 

 

 

(a) Interest rate swap agreements outstanding at November 30, 2008:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rate Type

 

 

 

 

 

 

 

 

 

 

 

 

 

Swap Counterparty

 

Notional
Amount
(000)

 

Termination
Date

 

Payments
Made by
Fund

Payments
Received by
Fund

 

Unrealized
Depreciation

 

                       

Municipal II:

 

 

 

 

 

 

 

 

 

 

 

 

 

Barclays Bank

 

$

111,400

 

12/17/28

 

5.00

%

3-Month USD-LIBOR

 

$

(25,045,836

)

Morgan Stanley

 

 

159,600

 

12/18/33

 

5.00

%

3-Month USD-LIBOR

 

 

(42,856,719

)

Royal Bank of Scotland

 

 

79,800

 

12/18/33

 

5.00

%

3-Month USD-LIBOR

 

 

(21,225,704

)

                           

 

 

 

 

 

 

 

 

 

 

 

$

(89,128,259

)

 

 

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

California Municipal II:

 

 

 

 

 

 

 

 

 

 

 

 

 

                           

Barclays Bank

 

$

34,600

 

12/17/28

 

5.00

%

3-Month USD-LIBOR

 

$

(7,779,048

)

Merrill Lynch & Co.

 

 

26,700

 

12/17/28

 

5.00

%

3-Month USD-LIBOR

 

 

(5,928,147

)

Morgan Stanley

 

 

88,200

 

12/18/33

 

5.00

%

3-Month USD-LIBOR

 

 

(23,683,976

)

Royal Bank of Scotland

 

 

43,900

 

12/18/33

 

5.00

%

3-Month USD-LIBOR

 

 

(11,676,797

)

                           

 

 

 

 

 

 

 

 

 

 

 

$

(49,067,968

)

 

 

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York Municipal II:

 

 

 

 

 

 

 

 

 

 

 

 

 

                           

Merrill Lynch & Co.

 

$

17,900

 

12/17/28

 

5.00

%

3-Month USD-LIBOR

 

$

(3,974,301

)

Morgan Stanley

 

 

25,300

 

12/18/33

 

5.00

%

3-Month USD-LIBOR

 

 

(6,793,703

)

Royal Bank of Scotland

 

 

12,800

 

12/18/33

 

5.00

%

3-Month USD-LIBOR

 

 

(3,404,624

)

                           

 

 

 

 

 

 

 

 

 

 

 

$

(14,172,628

)

 

 

 

 

 

 

 

 

 

 

 

     

LIBOR – London Inter-Bank Offered Rate

Municipal II, California Municipal II and New York Municipal II received $1,200,000, $600,000 and $200,000, respectively, in U.S. Treasury Bills as collateral for swaps.

11.30.08 | PIMCO Municipal Income Funds II Semi-Annual Report  33


 

 

PIMCO Municipal Income Funds II     Notes to Financial Statements

November 30, 2008 (unaudited)

 

4. Income Tax Information
The cost of investments for federal income tax purposes and gross unrealized appreciation and gross unrealized depreciation of investments at November 30, 2008 were:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of
Investments

 

Gross
Unrealized
Appreciation

 

Gross
Unrealized
Depreciation

 

Net
Unrealized
Depreciation

 

                   

Municipal II

 

$

1,250,545,307

 

$

19,805,090

 

$

183,623,841

 

$

(163,818,751

)

California Municipal II

 

 

621,918,622

 

 

7,197,684

 

 

100,018,065

 

 

(92,820,381

)

New York Municipal II

 

 

229,987,366

 

 

4,461,311

 

 

32,972,925

 

 

(28,511,614

)

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 (typically re-set every seven days) through auction procedures. Distributions of net realized capital gains, if any, are paid annually.

For the six months ended November 30, 2008, the annualized dividend rates ranged from:

 

 

 

 

 

 

 

 

 

 

High

 

Low

 

At November 30, 2008

             

Municipal II:

 

 

 

 

 

 

 

Series A

 

11.347

%

1.608

%

1.608

%

Series B

 

12.565

%

1.564

%

1.564

%

Series C

 

12.261

%

1.584

%

1.597

%

Series D

 

11.728

%

1.569

%

1.597

%

Series E

 

10.205

%

1.569

%

1.569

%

 

 

 

 

 

 

 

 

California Municipal II:

 

 

 

 

 

 

 

Series A

 

11.347

%

1.608

%

1.608

%

Series B

 

12.565

%

1.564

%

1.564

%

Series C

 

12.261

%

1.584

%

1.597

%

Series D

 

11.728

%

1.569

%

1.597

%

Series E

 

10.205

%

1.569

%

1.569

%

 

 

 

 

 

 

 

 

New York Municipal II:

 

 

 

 

 

 

 

Series A

 

12.261

%

1.584

%

1.597

%

Series B

 

10.205

%

1.569

%

1.569

%

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 shares but vote separately as a class to elect two Trustees and on any matters affecting the rights of the Preferred Shares.

Since mid-February 2008, holders of auction-rate preferred shares (“ARPS”) issued by the Funds have been directly impacted by an unprecedented lack of liquidity, which has similarly affected ARPS holders in many of the nation’s closed-end funds.

34  PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.08


 

 

PIMCO Municipal Income Funds II     Notes to Financial Statements

November 30, 2008 (unaudited)

 

5. Auction Preferred Shares (continued)
Since then, regularly scheduled auctions for ARPS issued by the Funds have consistently “failed” because of insufficient demand (bids to buy shares) to meet the supply (shares offered for sale) at each auction. In a failed auction, ARPS holders cannot sell all, and may not be able to sell any, of their shares tendered for sale. While repeated auction failures have affected the liquidity for ARPS, they do not constitute a default or alter the credit quality of the ARPS, and ARPS holders have continued to receive dividends at the defined “maximum rate” as the higher of the 30-day “AA” Composite Commercial Paper Rate multiplied by 110% or the Taxable Equivalent of the Short-Term Municipal Obligations Rate-defined as 90% of the quotient of (A) the per annum rate expressed on an interest equivalent basis equal to the Kenny S&P 30-day High Grade Index divided by (B) 1.00 minus the Marginal Tax Rate (expressed as a decimal) multiplied by 110% (which is a function of short-term interest rates and typically higher than the rate that would have otherwise been set through a successful auction).

These developments with respect to ARPS have not affected the management or investment policies of the Funds, and the Funds’ outstanding common shares continue to trade on the NYSE. If the Funds’ ARPS auctions continue to fail and the “maximum rate” payable on the ARPS rises as a result of changes in short-term interest rates, returns for the Funds’ common shareholders could be adversely affected.

6. Subsequent Common Dividend Declarations

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount Per
Common Share

 

Declaration
Date

 

Payable
Date

 

Record
Date

 

                     

Municipal II

 

$

0.065

 

1/8/09

 

1/23/09

 

1/20/09

 

California Municipal II

 

$

0.07

 

1/6/09

 

1/21/09

 

1/16/09

 

New York Municipal II

 

$

0.06625

 

12/31/08

 

12/31/08

 

12/11/08

 

 

Municipal II

 

$

0.065

 

1/8/09

 

2/2/09

 

1/20/09

 

California Municipal II

 

$

0.07

 

1/6/09

 

2/2/09

 

1/16/09

 

New York Municipal II

 

$

0.06625

 

1/13/09

 

2/2/09

 

1/23/09

 

See Subsequent Event Notes, pages 41-43.

7. Legal Proceedings

In June and September 2004, the Investment Manager and certain of its affiliates (including PEA Capital LLC (“PEA”), Allianz Global Investors Distributors LLC and Allianz Global Investors of America L.P.), agreed to settle, without admitting or denying the allegations, claims brought by the Securities and Exchange Commission and the New Jersey Attorney General alleging violations of federal and state securities laws with respect to certain open-end funds for which the Investment Manager serves as investment adviser. The settlements related to an alleged “market timing” arrangement in certain open-end funds formerly sub-advised by PEA. The Investment Manager and its affiliates agreed to pay a total of $68 million to settle the claims. In addition to monetary payments, the settling parties agreed to undertake certain corporate governance, compliance and disclosure reforms related to market timing and consented to cease and desist orders and censures. Subsequent to these events, PEA deregistered as an investment adviser and dissolved. None of the settlements alleged that any inappropriate activity took place with respect to the Funds.

Since February 2004, the Investment Manager and certain of its affiliates and their employees have been named as defendants in a number of pending lawsuits concerning “market timing”, which allege the same or similar conduct underlying the regulatory settlements discussed above. The market timing lawsuits have been consolidated in a multi-district litigation proceeding in the U.S. District Court of Maryland. Any potential resolution of these matters may include, but not be limited to, judgments or settlements for damages against the Investment Manager or its affiliates or related injunctions.

The Investment Manager and the Sub-Adviser believe that these matters are not likely to have a material adverse effect on the Funds or on their ability to perform their respective investment advisory activities relating to the Funds.

The foregoing speaks only as of the date hereof.

11.30.08 | PIMCO Municipal Income Funds II Semi-Annual Report  35


 

 

PIMCO Municipal Income Funds II     Financial Highlights

For a share of common stock outstanding throughout each period:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months
ended
November 30,
2008
(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended May 31,

 

 

 

 

 

 

 

 

2008

 

2007

 

2006

 

2005

 

2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

 

 

$13.86

 

 

 

$15.05

 

 

 

$14.71

 

 

 

$14.81

 

 

 

$14.01

 

 

 

$14.66

 

 

 

     

 

     

 

     

 

     

 

     

 

     

Investment Operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

0.55

 

 

 

1.13

 

 

 

1.13

 

 

 

1.08

 

 

 

1.11

 

 

 

1.17

 

 

 

     

 

     

 

     

 

     

 

     

 

     

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

 

 

(5.57

)

 

 

(1.24

)

 

 

0.33

 

 

 

0.01

 

 

 

0.84

 

 

 

(0.77

)

 

 

     

 

     

 

     

 

     

 

     

 

     

Total from investment operations

 

 

(5.02

)

 

 

(0.11

)

 

 

1.46

 

 

 

1.09

 

 

 

1.95

 

 

 

0.40

 

 

 

     

 

     

 

     

 

     

 

     

 

     

Dividends on Preferred Shares from Net Investment Income

 

 

(0.15

)

 

 

(0.30

)

 

 

(0.30

)

 

 

(0.23

)

 

 

(0.14

)

 

 

(0.08

)

 

 

     

 

     

 

     

 

     

 

     

 

     

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

 

 

(5.17

)

 

 

(0.41

)

 

 

1.16

 

 

 

0.86

 

 

 

1.81

 

 

 

0.32

 

 

 

     

 

     

 

     

 

     

 

     

 

     

Dividends to Common Shareholders from Net Investment Income

 

 

(0.39

)

 

 

(0.78

)

 

 

(0.82

)

 

 

(0.96

)

 

 

(1.01

)

 

 

(0.97

)

 

 

     

 

     

 

     

 

     

 

     

 

     

Net asset value, end of period

 

 

$8.30

 

 

 

$13.86

 

 

 

$15.05

 

 

 

$14.71

 

 

 

$14.81

 

 

 

$14.01

 

 

 

     

 

     

 

     

 

     

 

     

 

     

Market price, end of period

 

 

$8.00

 

 

 

$14.14

 

 

 

$15.42

 

 

 

$14.45

 

 

 

$15.02

 

 

 

$13.31

 

 

 

     

 

     

 

     

 

     

 

     

 

     

Total Investment Return (1)

 

 

(41.34

)%

 

 

(3.09

)%

 

 

12.64

%

 

 

2.63

%

 

 

21.00

%

 

 

(3.69

)%

 

 

     

 

     

 

     

 

     

 

     

 

     

RATIOS/SUPPLEMENTAL DATA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

$492,402

 

 

 

$819,740

 

 

 

$886,815

 

 

 

$862,832

 

 

 

$862,290

 

 

 

$812,670

 

 

 

     

 

     

 

     

 

     

 

     

 

     

Ratio of expenses to average net assets including interest expense (2)(3)(4)(5)

 

 

1.99

%#

 

 

1.68

%

 

 

1.50

%

 

 

1.30

%

 

 

1.05

%

 

 

1.08

%

 

 

     

 

     

 

     

 

     

 

     

 

     

Ratio of expenses to average net assets, excluding interest expense (2)(3)(4)(5)

 

 

1.30

%#

 

 

1.19

%

 

 

1.01

%

 

 

1.05

%

 

 

1.02

%

 

 

1.03

%

 

 

     

 

     

 

     

 

     

 

     

 

     

Ratio of net investment income to average net assets (2)(5)

 

 

9.15

%#

 

 

7.90

%

 

 

7.45

%

 

 

7.31

%

 

 

7.71

%

 

 

8.16

%

 

 

     

 

     

 

     

 

     

 

     

 

     

Preferred shares asset coverage per share

 

 

$49,371

 

 

 

$65,570

 

 

 

$68,889

 

 

 

$67,701

 

 

 

$67,676

 

 

 

$65,224

 

 

 

     

 

     

 

     

 

     

 

     

 

     

Portfolio turnover

 

 

21

%

 

 

21

%

 

 

4

%

 

 

20

%

 

 

9

%

 

 

26

%

 

 

     

 

     

 

     

 

     

 

     

 

     

 

 

#

Annualized.

(1)

Total investment return is calculated assuming a purchase of a share of common stock at the current market price on the first day of each period and a sale of a share of common stock at the current market price on the last day of each period reported. Dividends and distributions are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total investment return does not reflect brokerage commissions or sales charges. Total investment return for a period of less than one year is not annualized.

(2)

Calculated on the basis of income and expenses applicable to both common and preferred shares relative to the average net assets of common shareholders.

(3)

Inclusive of expenses offset by custody credits earned on cash balances at the custodian bank. (See note 1(i) in Notes to Financial Statements).

(4)

Interest expense relates to the liability for floating rate notes issued in connection with inverse floater transactions.

(5)

During the periods indicated above, the Investment manager waived a portion of its investment management fee. The effect of such waiver relative to the average net assets of common shareholders was 0.10% (annualized), 0.17%, 0.24%, 0.24%, 0.24% and 0.25% for the period ended November 30, 2008, years ended May 31, 2008, May 31, 2007, May 31, 2006, May 31, 2005, and May 31, 2004, respectively.

36  PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.08 | See accompanying Notes to Financial Statements


 

 

PIMCO California Municipal Income Fund II       Financial Highlights

For a share of common stock outstanding throughout each period:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months
ended
November 30,
2008
(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended May 31,

 

 

 

 

 

 

 

 

2008

 

2007

 

2006

 

2005

 

2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

 

 

$13.34

 

 

 

$14.89

 

 

 

$14.58

 

 

 

$14.61

 

 

 

$13.53

 

 

 

$14.66

 

 

 

     

 

     

 

     

 

     

 

     

 

     

Investment Operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

0.51

 

 

 

1.06

 

 

 

1.08

 

 

 

1.06

 

 

 

1.05

 

 

 

1.13

 

 

 

     

 

     

 

     

 

     

 

     

 

     

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

 

 

(5.86

)

 

 

(1.49

)

 

 

0.34

 

 

 

0.05

 

 

 

1.13

 

 

 

(1.26

)

 

 

     

 

     

 

     

 

     

 

     

 

     

Total from investment operations

 

 

(5.35

)

 

 

(0.43

)

 

 

1.42

 

 

 

1.11

 

 

 

2.18

 

 

 

(0.13

)

 

 

     

 

     

 

     

 

     

 

     

 

     

Dividends on Preferred Shares from Net Investment Income

 

 

(0.15

)

 

 

(0.28

)

 

 

(0.27

)

 

 

(0.21

)

 

 

(0.12

)

 

 

(0.07

)

 

 

     

 

     

 

     

 

     

 

     

 

     

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

 

 

(5.50

)

 

 

(0.71

)

 

 

1.15

 

 

 

0.90

 

 

 

2.06

 

 

 

(0.20

)

 

 

     

 

     

 

     

 

     

 

     

 

     

Dividends to Common Shareholders from Net Investment Income

 

 

(0.42

)

 

 

(0.84

)

 

 

(0.84

)

 

 

(0.93

)

 

 

(0.98

)

 

 

(0.93

)

 

 

     

 

     

 

     

 

     

 

     

 

     

Net asset value, end of period

 

 

$7.42

 

 

 

$13.34

 

 

 

$14.89

 

 

 

$14.58

 

 

 

$14.61

 

 

 

$13.53

 

 

 

     

 

     

 

     

 

     

 

     

 

     

Market price, end of period

 

 

$6.44

 

 

 

$14.25

 

 

 

$15.96

 

 

 

$14.62

 

 

 

$14.76

 

 

 

$13.27

 

 

 

     

 

     

 

     

 

     

 

     

 

     

Total Investment Return (1)

 

 

(52.98

)%

 

 

(5.17

)%

 

 

15.35

%

 

 

5.50

%

 

 

19.14

%

 

 

(3.92

)%

 

 

     

 

     

 

     

 

     

 

     

 

     

RATIOS/SUPPLEMENTAL DATA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

$228,638

 

 

 

$409,769

 

 

 

$455,284

 

 

 

$443,379

 

 

 

$441,596

 

 

 

$407,659

 

 

 

     

 

     

 

     

 

     

 

     

 

     

Ratio of expenses to average net assets including interest expense (2)(3)(4)(5)

 

 

3.27

%#

 

 

3.23

%

 

 

2.89

%

 

 

2.02

%

 

 

1.36

%

 

 

1.60

%

 

 

     

 

     

 

     

 

     

 

     

 

     

Ratio of expenses to average net assets, excluding interest expense (2)(3)(4)(5)

 

 

1.36

%#

 

 

1.18

%

 

 

1.01

%

 

 

1.06

%

 

 

1.06

%

 

 

1.07

%

 

 

     

 

     

 

     

 

     

 

     

 

     

Ratio of net investment income to average net assets (2)(5)

 

 

8.93

%#

 

 

7.65

%

 

 

7.28

%

 

 

7.24

%

 

 

7.37

%

 

 

8.05

%

 

 

     

 

     

 

     

 

     

 

     

 

     

Preferred shares asset coverage per share

 

 

$46,980

 

 

 

$64,390

 

 

 

$68,765

 

 

 

$67,620

 

 

 

$67,451

 

 

 

$64,191

 

 

 

     

 

     

 

     

 

     

 

     

 

     

Portfolio turnover

 

 

%(6)

 

 

6

%

 

 

3

%

 

 

12

%

 

 

5

%

 

 

20

%

 

 

     

 

     

 

     

 

     

 

     

 

     

 

 

#

Annualized.

(1)

Total investment return is calculated assuming a purchase of a share of common stock at the current market price on the first day of each period and a sale of a share of common stock at the current market price on the last day of each period reported. Dividends and distributions are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total investment return does not reflect brokerage commissions or sales charges. Total investment return for a period of less than one year is not annualized.

(2)

Calculated on the basis of income and expenses applicable to both common and preferred shares relative to the average net assets of common shareholders.

(3)

Inclusive of expenses offset by custody credits earned on cash balances at the custodian bank. (See note 1(i) in Notes to Financial Statements).

(4)

Interest expense relates to the liability for floating rate notes issued in connection with inverse floater transactions.

(5)

During the periods indicated above, the Investment manager waived a portion of its investment management fee. The effect of such waiver relative to the average net assets of common shareholders was 0.10% (annualized), 0.17%, 0.24%, 0.24%, 0.24% and 0.24% for the period ended November 30, 2008, years ended May 31, 2008, May 31, 2007, May 31, 2006, May 31, 2005, and May 31, 2004, respectively.

(6)

Amount is less than 1%.

See accompanying Notes to Financial Statements | 11.30.08 | PIMCO Municipal Income Funds II Semi-Annual Report  37


 

 

PIMCO New York Municipal Income Fund II     Financial Highlights

For a share of common stock outstanding throughout each period:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                     
 

 

 

 

Six Months
ended
November 30,
2008
(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended May 31,

 

 

 

 

 

 

 

2008

 

2007

 

2006

 

2005

 

2004

 

 

   

 

   

 

   

 

   

 

   

 

   

Net asset value, beginning of period

 

 

$13.67

 

 

 

$14.79

 

 

 

$14.66

 

 

 

$14.62

 

 

 

$13.54

 

 

 

$14.45

 

 

 

     

 

     

 

     

 

     

 

     

 

     

Investment Operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

0.51

 

 

 

1.07

 

 

 

1.10

 

 

 

1.07

 

 

 

1.07

 

 

 

1.06

 

 

 

     

 

     

 

     

 

     

 

     

 

     

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

 

 

(4.71

)

 

 

(1.11

)

 

 

0.11

 

 

 

0.11

 

 

 

1.12

 

 

 

(0.97

)

 

 

     

 

     

 

     

 

     

 

     

 

     

Total from investment operations

 

 

(4.20

)

 

 

(0.04

)

 

 

1.21

 

 

 

1.18

 

 

 

2.19

 

 

 

0.09

 

 

 

     

 

     

 

     

 

     

 

     

 

     

Dividends on Preferred Shares from net investment income

 

 

(0.15

)

 

 

(0.29

)

 

 

(0.28

)

 

 

(0.23

)

 

 

(0.13

)

 

 

(0.07

)

 

 

     

 

     

 

     

 

     

 

     

 

     

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

 

 

(4.35

)

 

 

(0.33

)

 

 

0.93

 

 

 

0.95

 

 

 

2.06

 

 

 

0.02

 

 

 

     

 

     

 

     

 

     

 

     

 

     

Dividends to Common Shareholders from Net Investment Income

 

 

(0.40

)

 

 

(0.79

)

 

 

(0.80

)

 

 

(0.91

)

 

 

(0.98

)

 

 

(0.93

)

 

 

     

 

     

 

     

 

     

 

     

 

     

Net asset value, end of period

 

 

$8.92

 

 

 

$13.67

 

 

 

$14.79

 

 

 

$14.66

 

 

 

$14.62

 

 

 

$13.54

 

 

 

     

 

     

 

     

 

     

 

     

 

     

Market price, end of period

 

 

$8.14

 

 

 

$14.42

 

 

 

$15.49

 

 

 

$14.14

 

 

 

$14.80

 

 

 

$13.05

 

 

 

     

 

     

 

     

 

     

 

     

 

     

Total Investment Return (1)

 

 

(41.51

)%

 

 

(1.46

)%

 

 

15.51

%

 

 

1.65

%

 

 

21.45

%

 

 

(5.15

)%

 

 

     

 

     

 

     

 

     

 

     

 

     

RATIOS/SUPPLEMENTAL DATA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

$94,936

 

 

 

$145,100

 

 

 

$156,218

 

 

 

$154,088

 

 

$152,812

 

 

$140,958

 

 

 

     

 

     

 

     

 

     

 

     

 

     

Ratio of expenses to average net assets including interest expense (2)(3)(4)(5)

 

 

1.78

%#

 

 

2.07

%

 

 

2.13

%

 

 

1.89

%

 

 

1.25

%

 

 

1.16

%

 

 

     

 

     

 

     

 

     

 

     

 

     

Ratio of expenses to average net assets, excluding interest expense (2)(3)(4)(5)

 

 

1.39

%#

 

 

1.25

%

 

 

1.14

%

 

 

1.13

%

 

 

1.14

%

 

 

1.15

%

 

 

     

 

     

 

     

 

     

 

     

 

     

Ratio of net investment income to average net assets (2)(5)

 

 

8.31

%#

 

 

7.69

%

 

 

7.33

%

 

 

7.29

%

 

 

7.53

%

 

 

7.58

%

 

 

     

 

     

 

     

 

     

 

     

 

     

Preferred shares asset coverage per share

 

 

$51,365

 

 

 

$65,294

 

 

 

$68,386

 

 

 

$67,785

 

 

 

$67,439

 

 

 

$64,148

 

 

 

     

 

     

 

     

 

     

 

     

 

     

Portfolio turnover

 

 

7

%

 

 

9

%

 

 

3

%

 

 

26

%

 

 

11

%

 

 

14

%

 

 

     

 

     

 

     

 

     

 

     

 

     

 

 

#

Annualized.

(1)

Total investment return is calculated assuming a purchase of a share of common stock at the current market price on the first day of each period and a sale of a share of common stock at the current market price on the last day of each period reported. Dividends and distributions are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total investment return does not reflect brokerage commissions or sales charges. Total investment return for a period of less than one year is not annualized.

(2)

Calculated on the basis of income and expenses applicable to both common and preferred shares relative to the average net assets of common shareholders.

(3)

Inclusive of expenses offset by custody credits earned on cash balances at the custodian bank. (See note 1(i) in Notes to Financial Statements).

(4)

Interest expense relates to the liability for floating rate notes issued in connection with inverse floater transactions.

(5)

During the periods indicated above, the Investment manager waived a portion of its investment management fee. The effect of such waiver relative to the average net assets of common shareholders was 0.10% (annualized), 0.17%, 0.24%, 0.24%, 0.24% and 0.24% for the period ended November 30, 2008, years ended May 31, 2008, May 31, 2007, May 31, 2006, May 31, 2005, and May 31, 2004, respectively.

38  PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.08 | See accompanying Notes to Financial Statements


 

 

PIMCO Municipal Income Funds II     

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

   

The Investment Company Act of 1940 requires that both the full Board of Trustees (the “Trustees”) and a majority of the non-interested (“Independent”) Trustees, voting separately, approve the Funds’ Management Agreements (the “Advisory Agreements”) with the Investment Manager and Portfolio Management Agreements (the “Sub-Advisory Agreements”, and together with the Advisory Agreements, the “Agreements”) between the Investment Manager and the Sub-Adviser. The Trustees met on June 10-11, 2008 (the “contract review meeting”) for the specific purpose of considering whether to approve the Advisory Agreements and the Sub-Advisory Agreements. The Independent Trustees were assisted in their evaluation of the Agreements by independent legal counsel, from whom they received separate legal advice and with whom they met separately from Fund management during the contract review meeting.

Based on their evaluation of factors that they deemed to be material, including those factors described below, the Board of Trustees, including a majority of the Independent Trustees, concluded that the continuation of the Funds’ Advisory Agreements and the Sub-Advisory Agreements should be approved for a one-year period commencing July 1, 2008.

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

In connection with their contract review meeting, the Trustees received and relied upon materials provided by the Investment Manager which included, among other items: (i) information provided by Lipper Inc. (“Lipper”) on the total return investment performance (based on net assets) of the Funds for various time periods and the investment performance of a group of funds with substantially similar investment classifications/objectives as the Funds identified by Lipper and the performance of applicable benchmark indices, (ii) information provided by Lipper on the Funds’ management fees and other expenses and the management fees and other expenses of comparable funds identified by Lipper, (iii) information regarding the investment performance and management fees of comparable portfolios of other clients of the Sub-Advisers, (iv) the profitability to the Investment Manager and the Sub-Adviser from their relationship with the Funds for the twelve months ended March 31, 2008, (v) descriptions of various functions performed by the Investment Manager and the Sub-Adviser for the Funds, such as portfolio management, compliance monitoring and portfolio trading practices, and (vi) information regarding the overall organization of the Investment Manager and the Sub-Adviser, including information regarding senior management, portfolio managers and other personnel providing investment management, administrative and other services to the Funds.

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

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

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

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

11.30.08 | PIMCO Municipal Income Funds II Semi-Annual Report  39


 

 

PIMCO Municipal Income Funds II     

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

   

For each of the Funds, the Trustees specifically took note of how each Fund compared to its Lipper peers as to performance, management fee expenses and total expenses. The Trustees noted that the Investment Manager had provided a memorandum containing comparative information on the performance and expenses information of the Funds compared to the their Lipper peer categories. The Trustees noted that while the Funds are not charged a separate administration fee, it was not clear whether the peer funds in the Lipper categories were charged such a fee by their investment managers.

 

Municipal II:

The Trustees noted that PML had outperformed its peer group’s low returns but had underperformed its peer group’s median and high returns for the one-year and three-year periods ended March 31, 2008. The Trustees noted that PML had outperformed its peer group’s median and low returns but had underperformed its peer group’s high returns for the five-year period ended March 31, 2008. The Trustees also noted that PML’s expense ratio (after taking into account waivers) was below the high for its peer group but above the median and the low for its peer group.

 

California Municipal II:

The Trustees noted that PCK had outperformed its peer group’s low returns for the one-year, three-year and five-year periods but had underperformed its peer group’s median and high returns for the one-year, three-year and five-year periods ended March 31, 2008. The Trustees also noted that PCK’s expense ratio (after taking into account waivers) was above the median and low for its peer group and was in line with its peer group’s high.

 

New York Municipal II:

The Trustees noted that PNI had outperformed its peer group’s low returns but had underperformed its peer group’s median and high returns for the one-year, three-year and five-year periods ended March 31, 2008. The Trustees also noted that PNI’s expense ratio (after taking into account waivers) was below the high for its peer group but above the median and the low for its peer group.

 

After reviewing these and related factors, the Trustees concluded, within the context of their overall conclusions regarding the Agreements, that they were satisfied with the Investment Manager’s and the Sub-Adviser’s responses and efforts relating to investment performance and the comparative positioning of each Fund with respect to the management fee paid to the Investment Manager.

 

The Trustees noted that the management fees paid by the Funds are generally higher than the fees paid by the open-end funds offered for comparison but were advised that there are additional portfolio management challenges in managing the Funds, such as the use of leverage and meeting a regular dividend.

 

The Trustees also took into account that the Funds have preferred shares outstanding, which increases the amount of fees received by the Investment Manager and the Sub-Adviser under the Agreements (because the fees are calculated based on either the Fund’s net assets or total managed assets, including assets attributable to preferred shares and other forms of leverage outstanding but not deducting any liabilities connected to the leverage). In this regard, the Trustees took into account that the Investment Manager and the Sub-Adviser have a financial incentive for the Funds to continue to have preferred shares outstanding, which may create a conflict of interest between the Investment Manager and the Sub-Adviser, on one hand, and the Fund’s common shareholders, on the other. In this regard, the Trustees considered information provided by the Investment Manager and the Sub-Adviser indicating that each Fund’s use of leverage through preferred shares continues to be appropriate and in the interests of the respective Fund’s common shareholders.

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

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

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

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

40  PIMCO Municipal Income Funds II Semi-Annual Report  | 11.30.08


 

 

PIMCO Municipal Income Fund II     

Subsequent Events (unaudited)

   

Subsequent Event — Municipal II Postponement of Payment and Declaration of Common Share Dividend

On December 1, 2008, Municipal II announced that due to recent market conditions and requirements under the Fund’s By-laws and the Investment Company Act of 1940, as amended (the “1940 Act”) it has postponed the payment of the previously declared (November 3, 2008) dividend on the Fund’s common shares scheduled for payment on December 1, 2008 and the declaration of the next dividend on the Fund’s common shares, which would have been paid on December 31, 2008.

The declared dividend ($0.065 per common share) payable on December 1, 2008 to the shareholders of record on November 13, 2008, with an ex-dividend date of November 10, 2008, was not paid on December 1, 2008.

In accordance with the 1940 Act and the Fund’s By-laws, the Fund is not permitted to pay or declare common share dividends unless the Fund’s ARPS have a minimum asset coverage of 200% (“200% Level”) after payment of the common share dividend or declaration of the common share dividend. Due to continued severe market dislocations and recent further erosions in the municipal market, the value of the Fund’s portfolio securities has declined, which has caused the Fund’s asset coverage ratio to fall below the 200% Level.

On January 8, 2009, Municipal II announced that the previously declared November dividend of $0.065 per common share, which was declared on November 3, 2008 and postponed on December 1, 2008 will be paid on January 8, 2009 to shareholders of record on November 13, 2008.

In addition, the Municipal II also announced that it declared a $0.065 per common share dividend for December 2008 and a $0.065 per common share dividend for January 2009.

The dividend declared for December 2008 will be payable on January 23, 2009 to shareholders of record on January 20, 2009, with an ex-dividend date of January 15, 2009. The dividend declared for January 2009 will be payable on February 2, 2009 to shareholders of record on January 20, 2009, with an ex-dividend date of January 15, 2009.

 

 

Subsequent Event — Municipal II Partial Redemption of Auction Rate Preferred Shares (“ARPS”)

On December 18, 2008, Municipal II announced that it will redeem, at par value, $138 million of its ARPS beginning January 5, 2009 and concluding January 9, 2009. The redemption was transacted at the full liquidation preference of $25,000 per share plus accumulated but unpaid dividends.

The decision to redeem a portion of the Fund’s ARPS was made by the Fund’s Board of Trustees at the recommendation of the Investment Manager and Sub-Adviser and is intended to increase asset coverage of the Fund’s ARPS above the 200% Level (subject to future market conditions), permitting the Fund to pay the previously declared common share dividend originally scheduled to be paid in December, 2008 and to declare future common share dividends.

11.30.08 | PIMCO Municipal Income Funds II Semi-Annual Report  41


 

 

PIMCO California Municipal Income Fund II     

Subsequent Events (unaudited)

   

Subsequent Event — California Municipal II Postponement of Payment and Declaration of Common Share Dividend

On December 1, 2008, California Municipal II announced that due to recent market conditions and requirements under the Fund’s By-laws and the 1940 Act, it has postponed the payment of the previously declared (November 3, 2008) dividend on the Fund’s common shares scheduled for payment on December 1, 2008 and the declaration of the next dividend on the Fund’s common shares, which would have been paid on December 31, 2008.

The declared dividend ($0.07 per common share) payable on December 1, 2008 to the shareholders of record on November 13, 2008, with an ex-dividend date of November 10, 2008, was not paid on December 1, 2008.

In accordance with the 1940 Act and the Fund’s By-laws, the Fund is not permitted to pay or declare common share dividends unless the Fund’s auction rate preferred shares (“ARPS”) have a minimum asset coverage of 200% (“200% Level”) after payment of the common share dividend or declaration of the common share dividend. Due to continued severe market dislocations and recent further erosions in the municipal market, the value of the Fund’s portfolio securities has declined, which has caused the Fund’s asset coverage ratio to fall below the 200% Level.

On January 6, 2009, California Municipal II announced that the previously declared November dividend of $0.07 per common share, which was declared on November 3, 2008 and postponed on December 1, 2008 will be paid on January 6, 2009 to shareholders of record on November 13, 2008.

In addition, California Municipal II also announced that it declared a $0.07 per common share dividend for December 2008 and a $0.07 per common share dividend for January 2009.

The dividend declared for December 2008 will be payable on January 21, 2009 to shareholders of record on January 16, 2009, with an ex-dividend date of January 14, 2009. The dividend declared for January 2009 will be payable on February 2, 2009 to shareholders of record on January 16, 2009, with an ex-dividend date of January 14, 2009.

 

 

Subsequent Event — California Municipal II Partial Redemption of Auction Rate Preferred Shares (“ARPS”)

On December 18, 2008, California Municipal II announced that it will redeem, at par value $97 million of its ARPS beginning January 5, 2009 and concluding January 9, 2009. The redemption was transacted at the full liquidation preference of $25,000 per share plus accumulated but unpaid dividends.

The decision to redeem a portion of the Fund’s ARPS was made by the Fund’s Board of Trustees at the recommendation of the Investment Manager and Sub-Adviser and is intended to increase asset coverage of the Fund’s ARPS above the 200% Level (subject to future market conditions), permitting the Fund to pay the previously declared common share dividend originally scheduled to be paid in December, 2008 and to declare future common share dividends.

42  PIMCO Municipal Income Funds II Semi-Annual Report  | 11.30.08


 

 

PIMCO Municipal Income Funds II     

New York Municipal II Subsequent Events/
Proxy Voting Policies & Procedures

(unaudited)

   

Subsequent Event — New York Municipal II Postponement of Payment and Declaration of Common Share Dividend

On December 31, 2008, New York Municipal II announced that due to recent market conditions and requirements under the Fund’s By-laws and the 1940 Act, it has postponed the payment of the previously declared (December 1, 2008) dividend on the Fund’s common shares scheduled for payment on December 31, 2008 and the declaration of the next dividend on the Fund’s common shares, which would have been paid on February 2, 2009.

The declared dividend ($0.06625 per common share) payable on December 31, 2008 to the shareholders of record on December 11, 2008, with an ex-dividend date of December 9, 2008, was not paid on December 31, 2008.

In accordance with the 1940 Act and the Fund’s By-laws, the Fund is not permitted to pay or delcare common share dividends unless the Fund’s auction rate preferred shares (“ARPS”) have a minimum asset coverage of 200% (“200% Level”) after payment of the common share dividend or declaration of the common share dividend. Due to continued severe market dislocations and recent further erosions in the municipal market, the value of the Fund’s portfolio securities has declined, which has caused the Fund’s asset coverage ratio to fall below the 200% Level.

On January 12, 2009, New York Municipal II announced that the previously declared December dividend of $0.06625 per common share, which was declared on December 1, 2008 and postponed on December 31, 2008 will be paid on January 12, 2009 to shareholders of record on December 11, 2008.

On January 13, 2009, New York Municipal II declared a $0.06625 per common share dividend for January 2009. The dividend will be payable February 2, 2009 to shareholders of record January 23, 2009, with an ex-dividend date of January 21, 2009.

 

 

Subsequent Event — New York Municipal II Partial Redemption of Auction Rate Preferred Shares (“ARPS”)

On January 9, 2009, New York Municipal II announced that it will redeem, at par value $11 million of its ARPS beginning January 26, 2009 and concluding January 29, 2009. The redemption was transacted at the full liquidation preference of $25,000 per share plus accumulated but unpaid dividends.

The decision to redeem a portion of the ARPS was made by the Fund’s Board of Trustees at the recommendation of the Investment Manager and Sub-Adviser and is intended to increase asset coverage of the ARPS above the 200% Level (subject to future market conditions), permitting New York Municipal II to pay the previously declared common share dividend originally scheduled to be paid in December 2008 and to declare future common share dividends.

 

 

Proxy Voting Policies and Procedures:

A description of the policies and procedures that the Funds have adopted to determine how to vote proxies relating to portfolio securities and information about how the Funds voted proxies relating to portfolio securities held during the twelve month period ended June 30 is available (i) without charge, upon request, by calling the Funds’ shareholder servicing agent at (800) 331-1710; (ii) on the Funds’ website at www.allianzinvestors.com/closedendfunds; and (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

11.30.08 | PIMCO Municipal Income Funds II Semi-Annual Report  43


 

 

PIMCO Municipal Income Funds II     

Annual Shareholder Meetings Results

 

(unaudited)

   


The Funds held their annual meetings of shareholders on December 23, 2008. Common/Preferred shareholders of each fund voted to re-elect R. Peter Sullivan III and John C. Maney as class III Trustees to serve until 2011 and to elect Diana L. Taylor as Class II Trustee to serve until 2010. The resulting vote count is indicated below:


 

 

 

 

 

 

 

 

 

 

Affirmative

 

Withheld
Authority

 

               

 

 

 

 

 

 

 

 

Municipal II:

 

 

 

 

 

 

 

Re-Election of R. Peter Sullivan III

 

 

48,215,403

 

 

3,828,730

 

Re-Election of John C. Maney

 

 

48,230,919

 

 

3,813,214

 

Election of Diana L. Taylor*

 

 

15,441

 

 

2,465

 

 

 

 

 

 

 

 

 

California Municipal II:

 

 

 

 

 

 

 

Re-Election of R. Peter Sullivan III

 

 

26,123,380

 

 

2,551,859

 

Re-Election of John C. Maney

 

 

26,076,993

 

 

2,598,246

 

Election of Diana L. Taylor*

 

 

7,956

 

 

8

 

 

 

 

 

 

 

 

 

New York Municipal II:

 

 

 

 

 

 

 

Re-Election of R. Peter Sullivan III

 

 

9,500,031

 

 

717,431

 

Re-Election of John C. Maney

 

 

9,497,856

 

 

719,606

 

Election of Diana L Taylor*

 

 

3,511

 

 

262

 

Messrs. Hans W. Kertess*, Robert E. Connor, William B. Ogden IV and Paul Belica continue to serve as Trustees of the Funds.

Mr. John Dalessandro served as a Trustee of the Funds until his death on September 14, 2008.

 

 

 

* Preferred Shares Trustee

44  PIMCO Municipal Income Funds II Semi-Annual Report 11.30.08


Trustees and Principal Officers

 

 

Hans W. Kertess

Brian S. Shlissel

Trustee, Chairman of the Board of Trustees

President & Chief Executive Officer

Paul Belica

Lawrence G. Altadonna

Trustee

Treasurer, Principal Financial & Accounting Officer

Robert E. Connor

Thomas J. Fuccillo

Trustee

Vice President, Secretary & Chief Legal Officer

John C. Maney

Scott Whisten

Trustee

Assistant Treasurer

William B. Ogden, IV

Richard J. Cochran

Trustee

Assistant Treasurer

R. Peter Sullivan III

Youse E. Guia

Trustee

Chief Compliance Officer

Diana L. Taylor

William V. Healey

Trustee

Assistant Secretary

 

Richard H. Kirk

 

Assistant Secretary

 

Kathleen A. Chapman

 

Assistant Secretary

 

Lagan Srivastava

 

Assistant Secretary

Investment Manager
Allianz Global Investors 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

Custodian & Accounting Agent
State Street Bank & Trust Co.
225 Franklin Street
Boston, MA 02110

Transfer Agent, Dividend Paying Agent and Registrar
PNC Global Investment Servicing
P.O. Box 43027
Providence, RI 02940-3027

Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
300 Madison Avenue
New York, NY 10017

Legal Counsel
Ropes & Gray LLP
One International Place
Boston, MA 02110-2624

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 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.

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

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

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

On January 9, 2009, each Fund submitted a CEO annual certification to the New York Stock Exchange (“NYSE”) on which the Funds’ principal executive officer certified that he was not aware, as of the date, of any violation by the Funds of the NYSE’s Corporate Governance listing standards. In addition, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and related SEC rules, each Funds’ principal executive and principal financial officer made quarterly certifications, included in filings with the SEC on Forms N-CSR and N-Q relating to, among other things, the Funds’ disclosure controls and procedures and internal control over financial reporting, as applicable.

Information on the Funds is available at www.allianzinvestors.com/closedendfunds or by calling the Funds’ shareholder servicing agent at (800) 331-1710.


(ALLIANZ LOGO)


ITEM 2. CODE OF ETHICS

Not required in this filing.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT

Not required in this filing.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Not required in this filing.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANT

Not required in this filing.

ITEM 6. SCHEDULE OF INVESTMENTS

Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this form.

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

Not required in this filing.


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

(a)(1)

          As of February 4, 2009, the following individual has primary responsibility for the day-to-day implementation of the PIMCO Municipal Income Fund II (PML), PIMCO California Municipal Income Fund II (PCK) and PIMCO New York Municipal Income Fund II (PNI) (each a “Fund” and collectively, the “Funds”):

John S. Cummings
Mr. Cummings has been the portfolio manager for the Fund since December 11, 2008. Mr. Cummings is an executive vice president and a municipal bond portfolio manager at PIMCO in the Newport Beach office. Prior to joining PIMCO in 2002, he was vice president, municipal trading at Goldman Sachs, responsible for a number of municipal sectors, including industrials, airlines, utilities, healthcare and high-yield. He has 20 years of investment experience and holds an MBA, as well as his undergraduate degree, from Rutgers University.

(a)(2)

          The following summarizes information regarding each of the accounts, excluding the respective Fund managed by the Portfolio Manager as of December 31, 2008, including accounts managed by a team, committee, or other group that includes the Portfolio Manager. Unless mentioned otherwise, the advisory fee charged for managing each of the accounts listed below is not based on performance.

 

 

 

 

 

 

 

 

 

 

Registered Investment Companies

Other Pooled Investment Vehicles

Other Accounts

               

PM

Fund

#

AUM($million)

#

AUM($million)

#

AUM($million)

               

John S.
Cummings

PML

19

4,175.20

4

677.58

52

2,905.83

             

PCK

19

4,647.12

4

677.58

52

2,905.83

               

 

PNI

19

4,936.88

4

677.58

52

2, 905.88

From time to time, potential conflicts of interest may arise between a portfolio manager’s management of the investments of a fund, on the one hand, and the management of other accounts, on the other. The other accounts might have similar investment objectives or strategies as the funds, track the same index a fund tracks or otherwise hold, purchase, or sell securities that are eligible to be held, purchased or sold by the funds. The other accounts might also have different investment objectives or strategies than the funds.

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

Investment Opportunities. A potential conflict of interest may arise as a result of the portfolio manager’s management of a number of accounts with varying investment guidelines. Often, an investment opportunity may be suitable for both a fund and other accounts managed by the portfolio manager, but may not be available in sufficient quantities for both the fund and the other accounts to participate fully. Similarly,


there may be limited opportunity to sell an investment held by a fund and another account. PIMCO has adopted policies and procedures reasonably designed to allocate investment opportunities on a fair and equitable basis over time.

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

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

(a) (3)

          As of December 31, 2008, the following explains the compensation structure of the individual that shares primary responsibility for day-to-day portfolio management of the Funds:

          PIMCO has adopted a “Total Compensation Plan” for its professional level employees, including its portfolio managers, that is designed to pay competitive compensation and reward performance, integrity and teamwork consistent with the firm’s mission statement. The Total Compensation Plan includes a significant incentive component that rewards high performance standards, work ethic and consistent individual and team contributions to the firm. The compensation of portfolio managers consists of a base salary, a bonus, and may include a retention bonus. Portfolio managers who are Managing Directors of PIMCO also receive compensation from PIMCO’s profits. Certain employees of PIMCO, including portfolio managers, may elect to defer compensation through PIMCO’s deferred compensation plan. PIMCO also offers its employees a non-contributory defined contribution plan through which PIMCO makes a contribution based on the employee’s compensation. PIMCO’s contribution rate increases at a specified compensation level, which is a level that would include portfolio managers.

Salary and Bonus. Base salaries are determined by considering an individual portfolio manager’s experience and expertise and may be reviewed for adjustment annually. Portfolio managers are entitled to receive bonuses, which may be significantly more than their base salary, upon attaining certain performance objectives based on predetermined measures of group or department success. These goals are specific to individual portfolio managers and are mutually agreed upon annually by each portfolio manager and his or her manager. Achievement of these goals is an important, but not exclusive, element of the bonus decision process.

In addition, the following non-exclusive list of qualitative criteria (collectively, the “Bonus Factors”) may be considered when determining the bonus for portfolio managers:

 

 

 

 

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

 

 

 

 

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

 

 

 

 

Amount and nature of assets managed by the portfolio manager;

 

 

 

 

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

 

 

 

 

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



 

 

 

 

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

 

 

 

 

Contributions to asset retention, gathering and client satisfaction;

 

 

 

 

Contributions to mentoring, coaching and/or supervising; and

 

 

 

 

Personal growth and skills added.

A portfolio manager’s compensation is not based directly on the performance of any fund or any other account managed by that portfolio manager. Final bonus award amounts are determined by the PIMCO Compensation Committee.

Investment professionals, including portfolio managers, are eligible to participate in a Long Term Cash Bonus Plan (“Cash Bonus Plan”), which provides cash awards that appreciate or depreciate based upon the performance of PIMCO’s parent company, Allianz Global Investors, and PIMCO over a three-year period. The aggregate amount available for distribution to participants is based upon Allianz Global Investors’ profit growth and PIMCO’s profit growth. Participation in the Cash Bonus Plan is based upon the Bonus Factors, and the payment of benefits from the Cash Bonus Plan, is contingent upon continued employment at PIMCO.

Key employees of PIMCO, including certain Managing Directors, Executive Vice Presidents, and Senior Vice Presidents, are eligible to participate in the PIMCO Class M Unit Equity Participation Plan, a long-term equity plan. The Class M Unit Equity Participation Plan grants options on PIMCO equity that vest in years three, four and five. Upon vesting, the options will convert into PIMCO M Units, which are non-voting common equity of PIMCO. M Units pay out quarterly distributions equal to a pro-rata share of PIMCO’s net profits. There is no assured liquidity and they may remain outstanding perpetually.

Profit Sharing Plan. Instead of a bonus, portfolio managers who are Managing Directors of PIMCO receive compensation from a non-qualified profit sharing plan consisting of a portion of PIMCO’s net profits. Portfolio managers who are Managing Directors receive an amount determined by the Partner Compensation Committee, based upon an individual’s overall contribution to the firm and the Bonus Factors. Under his employment agreement, William Gross receives a fixed percentage of the profit sharing plan.

Allianz Transaction Related Compensation. In May 2000, a majority interest in the predecessor holding company of PIMCO was acquired by a subsidiary of Allianz AG (currently known as Allianz SE) (“Allianz”). In connection with the transaction, Mr. Gross received a grant of restricted stock of Allianz, the last of which vested on May 5, 2005.

Portfolio managers who are Managing Directors also have long-term employment contracts, which guarantee severance payments in the event of involuntary termination of a Managing Director’s employment with PIMCO.

(a)(4)

          The following summarizes the dollar range of securities the portfolio manager for the Funds beneficially owned of the Funds that he managed as of 12/31/08.

 

 

   

PIMCO Municipal Income Fund II
PIMCO California Municipal Income Fund II
PIMCO New York Municipal Income Fund II

   

Portfolio Manager

Dollar Range of Equity Securities in the Fund

   

John S. Cummings

None

   


ITEM 9.

Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Companies

None

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

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


ITEM 11. CONTROLS AND PROCEDURES

(a) The registrant’s President and Chief Executive Officer and Treasurer, Principal Financial & Accounting Officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR 270.30a -3(c))), as amended are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.

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

ITEM 12. EXHIBITS

(a) (2) Exhibit 99 Cert. - Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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


Signature

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

(Registrant) PIMCO New York Municipal Income Fund II

 

 

 

By

/s/ Brian S. Shlissel

 

 

 

 

President and Chief Executive Officer

 

 

 

Date February 4, 2009

 

 

 

 

By

/s/ Lawrence G. Altadonna

 

 

 

 

Treasurer, Principal Financial & Accounting Officer

 

 

 

Date February 4, 2009

 

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 February 4, 2009

 

 

 

 

By

/s/ Lawrence G. Altadonna

 

 

 

 

Treasurer, Principal Financial & Accounting Officer

 

 

 

Date February 4, 2009