UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-21076
PIMCO Municipal Income Fund II
(Exact name of registrant as specified in charter)
1345 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10105
(Address of principal executive offices) (Zip code)
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
Date of reporting period: NOVEMBER 30
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. Report to Shareholder
Semi-Annual Report
11.30.04
PIMCO MUNICIPAL INCOME FUND II
PIMCOCALIFORNIA MUNICIPAL INCOME FUND II
PIMCO NEW YORK MUNICIPAL INCOME FUND II
--------------------------------------------------------------------------------
CONTENTS
[GRAPHIC OMITTED] Letter to Shareholders ...........................1
Performance & Statistics .......................2-4
Schedules of Investments ......................5-22
[GRAPHIC OMITTED] Statements of Assets and Liabilities ............24
Statements of Operations ........................25
Statements of Changes in Net Assets ..........26-27
[GRAPHIC OMITTED] Notes to Financial Statements ................28-34
Financial Highlights .........................35-37
Annual Shareholder Meeting Results ..............38
[PIMCO ADVISORS LOGO]
PIMCO MUNICIPAL INCOME FUNDS II LETTER TO SHAREHOLDERS
--------------------------------------------------------------------------------
January 14 2005
Dear Shareholder:
We are pleased to provide you with the semi-annual report of PIMCO Municipal
Income Fund II, PIMCO California Municipal Income Fund II, and PIMCO New York
Municipal Income Fund II ("PIMCO Municipal Income Funds II" or the "Funds") for
the six months ended November 30, 2004.
Please refer to the following pages for specific information for each of the
PIMCO Municipal Income Funds II. If you have any questions regarding the
information provided, please contact your financial advisor or call our
shareholder services area at 1-800-331-1710. Please note that a wide range of
information and resources can be accessed through our Web site,
www.pimcoadvisors.com.
Together with PA Fund Management LLC, the Funds' investment manager and Pacific
Investment Management Co. LLC, the Funds' sub-adviser, we thank you for
investing with us. We remain dedicated to serving your investment needs.
Sincerely,
/s/Robert E. Connor /s/ Brian S. Shlissel
------------------- ---------------------
Robert E. Connor Brian S. Shlissel
CHAIRMAN PRESIDENT, CHIEF EXECUTIVE OFFICER
11.30.04 | PIMCO Municipal Income Funds II Semi-Annual Report 1
PIMCO MUNICIPAL INCOME FUND II PERFORMANCE & STATISTICS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
SYMBOL:
PML
OBJECTIVE:
To provide income exempt from federal income tax.
PRIMARY INVESTMENTS:
Municipal fixed-income securities, the interest from which is exempt from
federal income tax.
INCEPTION DATE:
June 28, 2002
TOTAL NET ASSETS(1):
$1,342.7 million
PORTFOLIO MANAGER:
Mark McCray
TOTAL RETURN (2): MARKET PRICE NAV
--------------------------------------------------------------------------------
Six Months 9.85% 6.66%
1 Year 9.62% 5.67%
Commencement of Operations (6/28/02) to 11/30/04 4.51% 7.43%
COMMON SHARE PRICE PERFORMANCE:
Commencement of Operations (6/28/02) to 11/30/04
[ ] AT MARKET PRICE
[ ] AT NAV
[THE FOLLOWING DATA REPRESENTS A LINE CHART IN THE PRINTED DOCUMENT]
6/28/02 14.32 15.2
14.32 15.08
14.35 15.17
14.37 15.19
14.46 15.03
14.46 15.03
14.52 15.06
14.57 15
14.5 15.02
14.63 15.04
14.77 15.02
14.89 15.11
15.1 15.04
15.13 15
15.17 15.06
15.09 15.06
14.28 14.8
14.15 14.42
14.41 14.74
14.66 14.68
14.53 14.59
14.33 14.4
14.22 14.34
14.51 14.29
14.58 14.1
14.66 14.12
14.5 14.2
14.64 14.54
14.52 14.41
14.49 14.45
14.41 14.43
14.38 14.23
14.39 14.41
14.55 14.5
14.57 14.41
14.39 14.31
14.6 14.31
14.68 14.37
14.48 14.29
14.55 14.25
14.27 14.35
14.35 14.34
14.54 14.49
14.53 14.36
14.57 14.48
14.64 14.64
14.7 14.8
14.68 14.72
14.66 14.8
14.69 14.9
14.77 14.89
14.64 14.75
14.54 14.84
14.56 14.86
14.55 14.67
14.36 14.33
14.06 14.15
13.42 13.64
13.73 14
13.51 13.81
13.54 13.66
13.62 13.63
13.77 14
13.79 13.81
14.03 13.82
14.08 13.79
14.05 13.95
13.93 13.8
13.91 13.68
14.13 13.73
14.19 13.77
14.25 13.95
14.38 13.84
14.52 13.92
14.64 13.82
14.5 13.98
14.57 13.8
14.65 13.93
14.65 13.9
14.81 13.99
14.97 14.48
14.87 14.61
14.9 14.53
14.79 14.8
14.9 14.84
14.96 14.73
15.01 14.52
14.9 14.75
14.94 14.97
14.89 14.9
14.8 14.8
14.62 14.79
14.46 14.74
14.6 14.25
14.48 13.98
14.43 13.71
14.28 13.69
14.08 13.28
13.81 13.2
13.84 13.02
14.01 13.31
13.96 13.39
13.78 13.15
13.85 13.23
13.88 13.11
14.12 13.61
14.2 13.94
14.02 13.89
14.08 13.85
14.09 13.97
14.25 14.17
14.18 14.19
14.25 14.41
14.31 14.5
14.35 14.46
14.28 14.39
14.3 14.37
14.38 14.43
14.31 14.46
14.36 14.6
14.37 14.56
14.44 14.63
14.45 14.57
14.4 14.32
14.37 14.43
14.39 14.34
14.46 14.34
11/30/04 14.42 14.11
MARKET PRICE/NET ASSET VALUE:
----------------------------------------
Market Price $14.11
----------------------------------------
Net Asset Value $14.42
----------------------------------------
Discount to Net Asset Value 2.15%
----------------------------------------
Market Price Yield(3) 7.18%
----------------------------------------
MOODY'S RATINGS (AS A % OF TOTAL INVESTMENTS)
---------------------------------------------
BB 0.3%
B 0.6%
VMIG1 0.7%
NR 8.6%
AAA 50.3%
AA 8.0%
A 17.4%
BBB 14.1%
(1) Inclusive of net assets attributable to Preferred Shares outstanding.
(2) PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Total return is
calculated by subtracting the value of an investment in the Fund at the
beginning of each specified period from the value at the end of the period and
dividing the remainder by the value of the investment at the beginning of the
period and expressing the result as a percentage. The calculation assumes that
all income dividends and capital gain distributions have been reinvested at
prices obtained under the Fund's dividend reinvestment plan. Total return does
not reflect broker commissions or sales charges. Total return for a period of
greater than one year represents the average annual total return. Total return
for a period of less than one year is not annualized.
An investment in the Fund involves risk, including the loss of principal. Total
return, price, yield and net asset value will fluctuate with changes in market
conditions. This data is provided for information only and is not intended for
trading purposes. A portion of the income generated by the Fund may be subject
to federal, state and local taxes, and may at times be subject to the
alternative minimum tax. Closed-end funds, unlike open-end funds, are not
continuously offered. There is a one-time public offering and once issued,
shares of closed-end funds are sold in the open market through a stock exchange.
Net asset value is total assets applicable to common shareholders less total
liabilities divided by the number of common shares outstanding. Holdings are
subject to change daily.
(3) Market Price Yield is determined by dividing the annualized current monthly
per share dividend payable to common shareholders by the market price per common
share at November 30, 2004.
2 PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.04
PIMCO CALIFORNIA MUNICIPAL INCOME FUND II PERFORMANCE & STATISTICS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
SYMBOL: PCK
OBJECTIVE:
To provide income exempt from federal and California State income tax.
PRIMARY INVESTMENTS:
Municipal fixed-income securities, the interest from which is exempt from
federal and California State income tax.
INCEPTION DATE:
June 28, 2002
TOTAL NET ASSETS(1):
$685.1 million
PORTFOLIO MANAGER:
Mark McCray
TOTAL RETURN(2): MARKET PRICE NAV
--------------------------------------------------------------------------------
Six Months 8.80% 7.72%
1 Year 8.45% 6.24%
Commencement of Operations (6/28/02) to 11/30/04 3.59% 5.95%
COMMON SHARE PRICE PERFORMANCE:
Commencement of Operations (6/28/02) to 11/30/04
[ ] at Market Price
[ ] at NAV
[THE FOLLOWING DATA REPRESENTS A LINE CHART IN THE PRINTED DOCUMENT]
6/28/02 14.33 15
14.33 15.1
14.42 15.28
14.42 15.26
14.47 15.04
14.44 15.29
14.49 15.28
14.56 15.28
14.48 15.22
14.6 15.05
14.7 15.18
14.86 15.25
15.02 15.25
15.02 15.1
14.98 15.07
14.8 15.07
14.07 14.26
13.93 14.42
14.25 14.72
14.54 14.8
14.34 14.67
14.16 14.27
14.03 14.35
14.26 14.1
14.36 14.18
14.48 14.18
14.45 14.25
14.48 14.25
14.32 14.11
14.23 14.05
14.17 14.08
14.12 14.05
14.13 14.12
14.25 14.06
14.26 14.1
14.2 14.19
14.47 14.5
14.54 14.36
14.32 14.36
14.38 14.4
14.06 14.31
14.12 14.24
14.34 14.25
14.33 14.28
14.42 14.54
14.47 14.64
14.59 14.78
14.69 14.82
14.66 14.78
14.7 14.96
14.83 15
14.57 14.85
14.35 14.59
14.36 14.75
14.29 14.35
13.97 14.1
13.62 13.88
13.06 13.21
13.31 13.66
13.03 13.37
13.09 13.43
13.14 13.62
13.32 13.77
13.33 13.92
13.57 13.98
13.64 13.9
13.59 13.92
13.45 13.88
13.52 13.65
13.68 13.81
13.76 13.88
13.81 13.96
13.94 13.82
14.08 13.74
14.2 13.79
14.04 13.81
14.12 13.51
14.22 13.59
14.23 13.6
14.35 13.65
14.54 13.78
14.44 13.98
14.41 13.96
14.28 14.03
14.41 14.14
14.49 14.09
14.56 14.09
14.48 14.17
14.56 14.37
14.51 14.44
14.41 14.3
14.16 14.31
14.03 13.97
14.13 13.7
13.93 13.53
13.94 13.2
13.79 13.1
13.57 12.91
13.28 12.76
13.33 13.03
13.53 13.27
13.42 13.22
13.27 13.05
13.38 13.1
13.44 12.93
13.67 13.23
13.76 13.44
13.66 13.43
13.7 13.62
13.65 13.73
13.96 13.85
13.87 13.69
13.92 13.97
14.01 14.11
14.02 14.05
13.98 14.07
14.02 14.14
14.14 14.15
14.03 14.03
14.08 14.2
14.09 14.27
14.18 14.41
14.21 14.29
14.13 14.17
14.08 14.05
14.11 14.08
14.17 14.05
11/30/04 14.07 13.94
MARKET PRICE/NET ASSET VALUE:
-----------------------------------------
Market Price $13.94
-----------------------------------------
Net Asset Value $14.07
-----------------------------------------
Discount to Net Asset Value 0.92%
-----------------------------------------
Market Price Yield(3) 6.99%
-----------------------------------------
MOODY'S RATINGS (AS A % OF TOTAL INVESTMENTS)
---------------------------------------------
A2 0.5%
VMIG1 0.4%
Aaa 57.9%
NR 21.5%
Baa3 12.9%
Baa1 3.1%
A3 2.2%
Aa1 1.5%
(1) Inclusive of net assets attributable to Preferred Shares outstanding.
(2) PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Total return is
calculated by subtracting the value of an investment in the Fund at the
beginning of each specified period from the value at the end of the period and
dividing the remainder by the value of the investment at the beginning of the
period and expressing the result as a percentage. The calculation assumes that
all income dividends have been reinvested at prices obtained under the Fund's
dividend reinvestment plan. Total return does not reflect broker commissions or
sales charges. Total return for a period of greater than one year represents the
average annual total return. Total return for a period of less than one year is
not annualized.
An investment in the Fund involves risk, including the loss of principal. Total
return, price, yield and net asset value will fluctuate with changes in market
conditions. This data is provided for information only and is not intended for
trading purposes. A portion of the income generated by the Fund may be subject
to federal, state and local taxes, and may at times be subject to the
alternative minimum tax. Closed-end funds, unlike open-end funds, are not
continuously offered. There is a one-time public offering and once issued,
shares of closed-end funds are sold in the open market through a stock exchange.
Net asset value is total assets applicable to common shareholders less total
liabilities divided by the number of common shares outstanding. Holdings are
subject to change daily.
(3) Market Price Yield is determined by dividing the annualized current monthly
per share dividend payable to common shareholders by the market price per common
share at November 30, 2004.
11.30.04 | PIMCO Municipal Income Funds II Semi-Annual Report 3
PIMCO NEW YORK MUNICIPAL INCOME FUND II PERFORMANCE & STATISTICS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
SYMBOL: PNI
OBJECTIVE:
Seeks to provide current income exempt from federal, New York State and New York
City income tax.
PRIMARY INVESTMENTS:
Municipal fixed-income securities, the interest from which is exempt from
federal, New York State and New York City income tax.
Inception Date:
June 28, 2002
TOTAL NET ASSETS(1):
$235.4 million
PORTFOLIO MANAGER:
Mark McCray
TOTAL RETURN(2): MARKET PRICE NAV
--------------------------------------------------------------------------------
Six Months 13.47% 6.66%
1 Year 10.36% 4.11%
Commencement of Operations (6/28/02) to 11/30/04 4.66% 5.52%
COMMON SHARE PRICE PERFORMANCE:
Commencement of Operations (6/28/02) to 11/30/04
[ ] at Market Price
[ ] at NAV
[THE FOLLOWING DATA REPRESENTS A LINE CHART IN THE PRINTED DOCUMENT]
6/28/02 14.33 15
14.31 15.2
14.36 15.11
14.38 15.35
14.42 15.02
14.46 15.35
14.52 15.08
14.56 15
14.48 15.16
14.59 15.06
14.69 15.14
14.76 15.12
14.91 15.14
14.91 15.03
15.02 15.06
14.95 14.97
14.29 14.65
14.16 14.25
14.35 14.06
14.62 14.32
14.51 14.3
14.33 14.13
14.19 14.22
14.44 14.06
14.55 14.1
14.63 14.05
14.62 14.02
14.71 14.15
14.544 14.17
14.541 14.09
14.416 13.95
14.403 14.03
14.44 14
14.53 14.03
14.48 14.2
14.38 14.23
14.51 14.34
14.62 14.26
14.36 14.22
14.43 14.23
13.78 14.29
13.86 14.15
14.11 14.1
14.02 14.18
14.08 14.16
14.2 14.4
14.25 14.75
14.39 14.65
14.44 14.71
14.47 14.67
14.59 14.7
14.38 14.55
14.31 14.81
14.3 14.92
14.26 14.71
14.01 14.64
13.75 14.08
13.05 14
13.39 13.84
13.12 13.85
13.1 13.71
13.18 13.8
13.3 13.98
13.28 13.9
13.72 13.57
13.87 13.69
13.78 13.84
13.65 13.64
13.62 13.79
13.85 13.72
13.88 13.8
13.94 13.85
14.1 13.75
14.23 13.71
14.35 13.89
14.26 13.9
14.37 14.02
14.45 13.8
14.45 13.84
14.54 13.82
14.72 14.19
14.64 14.33
14.65 14.38
14.55 14.45
14.64 14.58
14.71 14.42
14.76 14.6
14.68 14.76
14.76 14.81
14.71 14.66
14.68 14.8
14.54 14.76
14.38 14.59
14.46 14.09
14.31 13.95
14.19 13.48
14.05 13.45
13.75 13.12
13.43 12.71
13.44 12.74
13.54 13.05
13.46 13.3
13.3 13
13.4 12.75
13.44 12.85
13.68 13.55
13.76 13.5
13.65 13.59
13.69 13.37
13.71 13.52
13.87 13.89
13.81 13.85
13.87 14.09
13.94 14.24
13.98 14.15
13.94 13.93
13.98 14.17
14.04 14.09
13.95 14.04
14 14.19
13.99 14.25
14.11 14.41
14.13 14.4
14.07 14.19
14.02 14.23
14.04 14.25
14.04 14.59
11/30/04 13.94 14.3
MARKET PRICE/NET ASSET VALUE:
--------------------------------------
Market Price $14.30
--------------------------------------
Net Asset Value $13.94
--------------------------------------
Premium to Net Asset Value 2.58%
--------------------------------------
Market Price Yield(3) 6.82%
--------------------------------------
MOODY'S RATINGS (AS A % OF TOTAL INVESTMENTS)
---------------------------------------------
BB 0.5%
NR 7.8%
AAA 27.9%
AA 15.8%
A 21.2%
BBB 26.8%
(1) Inclusive of net assets attributable to Preferred Shares outstanding.
(2) PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Total return is
calculated by subtracting the value of an investment in the Fund at the
beginning of each specified period from the value at the end of the period and
dividing the remainder by the value of the investment at the beginning of the
period and expressing the result as a percentage. The calculation assumes that
all income dividends have been reinvested at prices obtained under the Fund's
dividend reinvestment plan. Total return does not reflect broker commissions or
sales charges. Total return for a period of greater than one year represents the
average annual total return. Total return for a period of less than one year is
not annualized.
An investment in the Fund involves risk, including the loss of principal.
Investment return, price, yield and net asset value will fluctuate with changes
in market conditions. This data is provided for information only and is not
intended for trading purposes. A portion of the income generated by the Fund may
be subject to federal, state and local taxes, and may at times be subject to the
alternative minimum tax. Closed-end funds, unlike open-end funds, are not
continuously offered. There is a one-time public offering and once issued,
shares of closed-end funds are sold in the open market through a stock exchange.
Net asset value is total assets applicable to common shareholders less total
liabilities divided by the number of common shares outstanding. Holdings are
subject to change daily.
(3) Market Price Yield is determined by dividing the annualized current monthly
per share dividend payable to common shareholders by the market price per common
share at November 30, 2004.
4 PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.04
PIMCO MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) Moody's/S&P Value
====================================================================================================================================
MUNICIPAL BONDS & NOTES--88.7%
------------------------------------------------------------------------------------------------------------------------------------
ALABAMA--2.4%
$11,145 Birmingham Waterworks & Sewer Board. Rev.,
5.00%, 1/1/27-1/1/37, Ser. B (MBIA) Aaa/AAA $11,223,740
1,750 Huntsville Health Care Auth.,
5.75%, 6/1/32, Ser. B A2/NR 1,826,388
16,580 Jefferson Cnty. Sewer Rev.,
4.75%, 2/1/38, Ser. B (FGIC) (Prerefunded @100, 8/1/12) (a) Aaa/AAA 18,077,837
------------
31,127,965
============
ALASKA--0.3%
3,550 State Housing Finance Corp.,
5.25%, 6/1/32, Ser. C (MBIA) Aaa/AAA 3,567,005
============
ARIZONA--0.1%
1,300 Health Fac. Auth. Hospital System Rev.,
5.75%, 12/1/32 NR/BBB 1,275,183
============
CALIFORNIA--4.0%
9,610 Alameda Corridor Transportation Auth. Rev.,
zero coupon, 10/1/16, Ser. A. (AMBAC) Aaa/AAA 5,586,005
12,300 Golden State Tobacco Securitization Corp.,
Tobacco Settlement Rev.,
6.25%-6.75%, 6/1/33-6/1/39, Ser. 2003-A-1 Baa3/BBB 12,230,052
1,000 Rancho Cucamonga Community Facs. District, Special Tax,
6.30%, 9/1/23, Ser. A NR/NR 1,021,970
4,000 Southern California Public Power Auth.,
Transmission Project Rev.,
zero coupon, 7/1/13 Aa3/A+ 2,812,160
28,775 State Economic Recovery GO, 5.00%, 7/1/11, Ser. A. (MBIA) Aaa/AAA 31,842,703
------------
53,492,890
============
COLORADO--5.1%
30,000 Dawson Ridge District No. 1, GO,
zero coupon, 10/1/22, Ser. A Aaa/NR 12,287,700
5,000 Denver City & Cnty. CP,
5.50%, 12/1/25, Ser. B (AMBAC) Aaa/AAA 5,690,500
25,000 Health Fac. Auth. Rev., Catholic Health Initiatives,
5.50%, 3/1/32 Aa2/AA 27,701,250
18,305 Health Fac. Auth. Rev., Exempla Inc.,
5.625%, 1/1/33, Ser. A A1/A- 18,727,113
6,500 Health Fac. Auth. Rev., Retirement Fac. Rev., Liberty Height,
zero coupon, 7/15/22 Aaa/AAA 2,690,610
------------
67,097,173
============
DISTRICT OF COLUMBIA--1.3%
17,500 Washington DC Convention Center Auth. Tax Rev.,
4.75%, 10/1/28 (AMBAC) Aaa/AAA 17,108,175
============
11.30.04 | PIMCO Municipal Income Funds II Semi-Annual Report 5
PIMCO MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) Moody's/S&P Value
====================================================================================================================================
FLORIDA--3.8%
$ 8,000 Highlands Cnty. Health Fac. Auth. Rev.,
6.00%, 11/15/31, Ser. A A2/A $ 8,526,160
635 Hillsborough Cnty. Industrial Dev. Rev., Health Fac. Project,
5.625%, 8/15/23 Baa2/BBB 637,242
2,335 Hillsborough Cnty. Industrial Dev. Auth., Pollution Control
Rev., Tampa Electric Co. Project, 5.50%, 10/1/23 Baa2/BBB- 2,351,041
7,135 Jacksonville Health Facs. Auth. Rev.,
5.25%, 11/15/32, Ser. A Aa2/AA 7,246,805
7,500 JEA St. Johns River Power Park System Rev.,
5.00%, 10/1/09 Aa2/AA- 8,190,375
11,500 Lakeland Hospital System Rev., Regional Health System,
5.50%, 11/15/32 A1/NR 11,727,585
3,000 Leesburg Hospital Rev., Leesburg Regional Medical Center
Project, 5.50%, 7/1/32 A3/A- 3,042,510
7,550 Orange Cnty. Health Fac. Auth. Rev., Adventist Health System,
5.625%-6.25%, 11/15/24-11/15/32 A2/A 8,184,849
1,500 Winter Springs Water & Sewer Rev.,
zero coupon, 10/1/29 (FGIC) Aaa/AAA 412,290
-----------
50,318,857
===========
GEORGIA--0.7%
4,000 Atlanta Water & Wastewater Rev.,
5.00%, 11/1/39, Ser. A (MBIA) Aaa/AAA 4,017,040
1,500 Grantor Trust Gov't CP, 4.75%, 6/1/28, Ser. A (MBIA) Aaa/AAA 1,504,230
9,600 Richmond Cnty. Dev Auth. Rev., zero coupon, 12/1/21 Aaa/NR 4,133,664
-----------
9,654,934
===========
HAWAII--1.5%
19,170 Honolulu City & Cnty. Wastewater System Rev.,
First Board Resolution, 4.75%, 7/1/28 (FGIC) Aaa/NR 19,169,233
===========
ILLINOIS--17.8%
11,760 Central Lake Cnty. Water Agency Rev.,
5.125%, 5/1/28-5/1/32, Ser. A (AMBAC) Aaa/NR 12,033,118
5,000 Cicero GO, 5.25%, 12/1/31 (MBIA) Aaa/AAA 5,188,650
Chicago Board of Education School Reform GO,
15,535 zero coupon, 12/1/16, Ser. A Aaa/AAA 8,940,237
5,000 zero coupon, 12/1/28, Ser. A (FGIC) Aaa/AAA 1,353,750
4,500 zero coupon, 12/1/31 (FGIC) Aaa/AAA 1,018,575
94,485 Chicago City Colleges GO,
zero coupon, 1/1/37-1/1/39 (FGIC) Aaa/AAA 15,417,063
Chicago GO,
5,110 5.00%, 1/1/33, (AMBAC) Aaa/AAA 5,146,894
5,050 5.125%, 1/1/29, Ser. A (FGIC) Aaa/AAA 5,116,307
7,000 Chicago Midway Airport Rev.,
5.00%, 1/1/31, Ser. B (MBIA) Aaa/AAA 7,050,750
9,862 Chicago Special Assessment, Lake Shore East,
6.625%-6.75%, 12/1/22-12/1/32 NR/NR 10,235,460
144,650 Dev. Finance Auth. Retirement Housing Rev.,
zero coupon, 7/15/23-7/15/25 NR/AAA 49,906,037
6 PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.04
PIMCO MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) Moody's/S&P Value
====================================================================================================================================
ILLINOIS--(CONTINUED)
$ 20,100 Health Facs. Auth. Rev., Elmurst Memorial Healthcare,
5.625%, 1/1/28 A2/NR $ 20,670,036
1,000 McHenry & Kane Cnty. Community Consolidated
School District 158, zero coupon, 1/1/12 (FGIC) Aaa/AAA 750,840
110,000 Metropolitan Pier & Exposition Auth.,
zero coupon, 12/15/30-12/15/33 (MBIA) Aaa/AAA 25,300,600
4,500 Schaumburg, GO, 5.00%, 12/1/41, Ser. B (FGIC) Aaa/AAA 4,492,440
10,000 State GO, 5.00%, 3/1/34, Ser. A Aa3/AA 10,050,700
68,470 State Sports Facs. Auth, zero coupon, 6/15/30 (AMBAC) Aaa/AAA 52,822,551
-------------
235,494,008
=============
INDIANA--0.6%
3,000 Brownsburg 1999 School Building Corp.,
5.00%-5.25%, 3/15/25-9/15/25, Ser. A (FSA) Aaa/AAA 3,137,060
4,125 Fort Wayne Pollution Control Rev., 6.20%, 10/15/25 Baa2/BBB- 4,312,811
500 State Bank Rev., 5.25%, 4/1/30, Ser. D (AMBAC) Aaa/AAA 516,535
-------------
7,966,406
=============
IOWA--0.6%
8,850 Tobacco Settlement Auth.,
5.60%, 6/1/35, Ser. B Baa3/BBB 7,612,062
=============
KANSAS --0.2%
2,800 Univ. of Kansas, Hospital Auth. Health Facs. Rev.,
5.625%, 9/1/32 NR/A- 2,873,024
=============
KENTUCKY--0.9%
Economic Dev. Finance Auth. Hospital Facs. Rev.,
2,500 5.25%, 10/1/30 A1/AA- 2,543,125
8,210 6.00%, 10/1/19 A3/A 9,126,072
-------------
11,669,197
=============
LOUISIANA--4.6%
20,400 Public Facs. Auth. Rev., Ochsner Clinic Foundation,
5.50%, 5/15/32, Ser. B A3/NR 20,799,636
44,395 Tobacco Settlement Financing Corp.,
5.875%, 5/15/39, Ser. 2001B Baa3/BBB 39,982,137
-------------
60,781,773
=============
MARYLAND--0.1%
1,000 State Health & Higher Educational Fac. Auth. Rev.,
Adventist Healthcare, 5.75%, 1/1/25, Ser. A, Baa1/NR 1,036,420
=============
MASSACHUSETTS--3.7%
1,300 Bay Transportation Auth., 4.75%, 3/1/21, Ser. A (MBIA) Aaa/AAA 1,328,964
18,205 State College Building Auth. Project Rev.,
5.50%, 5/1/28-5/1/39, Ser. B (XLCA) Aaa/AAA 19,948,718
9,000 State GO, 5.00%, 8/1/11, Ser. A (MBIA) Aaa/AAA 9,924,840
4,295 State Turnpike Auth., 4.75%, 1/1/34 Ser. A (AMBAC) Aaa/AAA 4,221,684
State Water Res. Auth.,
12,050 4.75%, 8/1/37, Ser. A. (FSA) Aaa/AAA 11,737,062
2,300 4.75%, 12/1/21, Ser. B (MBIA) Aaa/AAA 2,325,553
-------------
49,486,821
=============
11.30.04 | PIMCO Municipal Income Funds II Semi-Annual Report 7
PIMCO MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) Moody's/S&P Value
====================================================================================================================================
MICHIGAN--2.7%
$ 10,250 Detroit City School District, GO,
5.00%-5.125%, 5/1/31-5/1/32, Ser. A Aaa/AAA $ 10,364,568
2,500 Detroit Water Supply System,
5.00%, 7/1/30, Ser. A (FGIC) Aaa/AAA 2,520,800
2,000 State GO, 5.25%, 12/1/09 Aa1/AA+ 2,213,140
5,000 State Hospital Finance Auth. Rev., Ascension Health,
5.25%, 11/15/26, Ser. B Aa2/AA 5,085,550
15,425 State Hospital Finance Auth. Rev., Oakwood Obligation Group,
5.75%-6.00%, 4/1/22-4/1/32, Ser. A A2/A 15,999,410
------------
36,183,468
============
MISSISSIPPI--0.4%
3,605 Business Finance Corp., Pollution Control Rev.,
5.875%, 4/1/22 Ba1/BBB 3,624,467
1,000 Dev. Bank Special Obligation, Projects &
Equipment Acquisitions, 5.00%, 7/1/24 (AMBAC) Aaa/AAA 1,061,890
------------
4,686,357
============
MISSOURI--0.1%
1,500 St. Louis Parking Facs. Rev., Downtown Parking Facility,
6.00%, 2/1/28 NR/NR 1,529,550
============
NEBRASKA--0.4%
5,140 University of Nebraska Rev., Lincoln Memorial Stadium,
5.25%, 11/1/29 A1/A- 5,605,427
============
NEVADA--1.8%
3,400 Clark Cnty. GO, 5.00%, 6/1/31 (FGIC) Aaa/AAA 3,431,892
17,030 Reno Transportation Project Rev.,
5.125%-5.25%, 6/1/27-6/1/41 (AMBAC) Aaa/AAA 17,446,660
3,290 Truckee Meadows Water Auth Rev.,
5.125%, 7/1/30, Ser. A (FSA) Aaa/AAA 3,373,829
------------
24,252,381
============
NEW HAMPSHIRE--0.2%
3,000 Health & Educational Facs. Auth. Hospital Rev.,
6.125%, 7/1/32 Baa1/BBB+ 3,053,070
============
NEW JERSEY--2.5%
60 Camden Cnty. Improvement Auth. Rev., Cooper Health,
5.875%-6.00%, 2/15/15-2/15/27 Baa3/BBB 61,306
15,405 Economic Dev. Auth., Kapkowski Road Landfill Project,
Special Assessment, 5.75%, 10/1/21-4/1/31 Baa3/NR 16,242,804
Economic Dev. Auth. Rev., Arbor Glen,
225 6.00%, 5/15/28, Ser. A (Pre-refunded @ 102, 5/15/09) (a) NR/NR 259,414
525 6.00%, 5/15/28, Ser. A NR/NR 505,817
3,500 State Educational Fac. Auth. Rev.,
6.00%, 7/1/25, Ser. D NR/NR 3,706,500
13,030 Tobacco Settlement Financing Corp., Rev.,
6.00%-6.75%, 6/1/37-6/1/43 Baa3/BBB 12,243,742
------------
33,019,583
============
8 PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.04
PIMCO MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) Moody's/S&P Value
====================================================================================================================================
NEW MEXICO--0.4%
$ 5,000 Farmington Pollution Control Rev., 5.80%, 4/1/22 Baa2/BBB $ 5,062,800
===========
NEW YORK--2.8%
Metropolitan Transportation Auth. Rev.,
10,600 5.00%, 11/15/30, Ser. A (FSA) Aaa/AAA 10,731,440
10,000 5.25%, 11/15/32 A2/A 10,287,400
7,000 New York City Municipal Water Finance Auth.,
Water & Sewer System Rev., 5.00%, 6/15/39, Ser. A Aa2/AA+ 7,015,680
6,700 State Dormitory Auth. Rev., 5.00%, 7/1/34, Ser. 1 Aa2/AA 6,778,926
2,000 State Environmental Facilities Corp., 5.00%, 6/15/28 Aaa/AAA 2,048,800
-----------
36,862,246
===========
OHIO--0.6%
7,500 Lorain Cnty. Hospital Rev., 5.375%, 10/1/30 A1/AA- 7,616,700
===========
PENNSYLVANIA--3.2%
7,250 Allegheny Cnty. Hospital Dev. Auth. Rev.,
9.25%, 11/15/15-11/15/30, Ser. B B1/B 8,394,803
4,500 Cumberland Cnty. Auth. Retirement Community Rev.,
7.25%, 1/1/35, Ser. A NR/NR 4,710,150
8,750 Montgomery Cnty. Higher Education & Health Auth.
Hospital Rev., 5.125%, 6/1/27-6/1/32, Ser. A NR/A 8,782,025
5,000 Philadelphia Auth. Dev. Lease Rev.,
5.25%, 10/1/30, Ser. B (FSA) Aaa/AAA 5,138,450
3,050 Philadelphia Auth. Industrial Dev. Rev. Doubletree,
6.50%, 10/1/27 NR/NR 3,101,758
3,000 Philadelphia GO, 5.25%, 9/15/25 (FSA) Aaa/AAA 3,133,440
8,520 Philadelphia Hospital & Higher Education Facs. Auth. Rev.,
6.85%, 7/1/22 Baa2/BBB 8,640,388
500 Pittsburgh & Allegheny Cnty. Public Auditorium,
5.00%, 2/1/29 (AMBAC) Aaa/AAA 502,415
-----------
42,403,429
===========
PUERTO RICO--0.3%
4,200 Electric Power Auth. Power Rev., 5.125%, 7/1/29, Ser NN A3/A- 4,283,034
===========
RHODE ISLAND--4.3%
62,000 Tobacco Settlement Financing. Corp.,
6.25%, 6/1/42, Ser. A Baa3/BBB 57,315,280
===========
SOUTH CAROLINA--5.8%
27,745 Greenville Cnty. School District, 5.50%, 12/1/28 A1/AA- 29,173,868
18,120 Jobs Economic Dev. Auth. Economic Dev. Rev.,
5.625%, 11/15/30 A3/A- 18,438,730
23,500 Lexington Cnty. Health Services District Hospital Rev.,
5.50%-5.75%, 11/1/28-5/1/37 A2/A 24,097,360
3,250 Tobacco Settlement Rev., 6.375%, 5/15/28, Ser. B Baa3/BBB 3,140,702
1,180 Transportation Infrastructure Rev.,
5.00%, 10/1/29, Ser. A (AMBAC) Aaa/NR 1,302,448
-----------
76,153,108
===========
11.30.04 | PIMCO Municipal Income Funds II Semi-Annual Report 9
PIMCO MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) Moody's/S&P Value
====================================================================================================================================
TENNESSEE--3.1%
$ 1,815 Knox Cnty., GO, 5.00%, 2/1/17, Ser. A Aa2/AA $ 1,990,184
3,750 Knox Cnty. Health Educational & Housing Facs. Board
Hospital Facs. Rev., 5.25%, 10/1/30 A1/AA- 3,834,225
32,785 Memphis Electric System Rev., 5.00%, 12/1/11 Ser. A (MBIA) Aaa/AAA 35,812,695
------------
41,637,104
============
TEXAS--10.5%
1,000 Arlington Independent School District GO,
5.00%, 2/15/24 (PSF) Aaa/NR 1,024,260
4,480 Aubrey Independent School Dist., GO,
5.50%, 2/15/33 (PSF) Aaa/NR 4,788,717
6,500 Brazos Cnty. Health Facs. Dev. Corp., Franciscan Services
Corp., 5.375%, 1/1/32 NR/A- 6,529,835
2,700 Comal Cnty. Health Facs., Mckenna Memorial Hospital
Project, 6.25%, 2/1/32 Baa2/BBB 2,744,523
5,000 Dallas Area Rapid Transit, 5.00%, 12/1/31 (AMBAC) Aaa/AAA 5,011,700
20,000 Frisco Independent School District GO,
zero coupon, 8/15/34 Aaa/NR 3,889,400
19,750 Harris Cnty. GO, 5.125%, 8/15/31 Aa1/AA+ 22,040,013
5,250 Harris Cnty. Health Facs. Dev. Corp. Rev.,
5.375%, 2/15/26, Ser. A NR/AA- 5,351,535
25,000 Harris Cnty. Senior Lien Toll Road,
5.00%, 8/15/30 (FSA) Aaa/AAA 25,204,750
7,500 Keller Independent School District GO,
4.875%, 8/15/31(PSF) Aaa/AAA 7,471,725
3,170 Little Elm Independent School District GO,
5.30%, 8/15/29, Ser. A (PSF) NR/AAA 3,299,716
6,250 North Dallas Thruway Auth. Rev.,
4.75%, 1/1/29 (FGIC) Aaa/AAA 6,161,563
5,000 Quinlin Independent School District GO,
5.10%, 2/15/32 (PSF) Aaa/NR 5,087,000
14,000 State Affordable Housing Corp., Multifamily Housing Rev.,
5.40%, 9/1/22, Ser. A Aaa/AAA 14,051,380
State Turnpike Auth. Central Turnpike System Rev.,
10,000 zero coupon, 8/15/19, Ser. A (AMBAC) Aaa/AAA 4,972,300
8,880 5.00%, 8/15/42, Ser. A (AMBAC) Aaa/AAA 8,879,378
4,900 State Water Financial Assistance, GO,
5.00%-5.25%, 8/1/35-8/1/36 Aa1/AA 4,982,436
8,000 Wichita Falls Water & Sewer Rev.,
5.00%, 8/1/27 (AMBAC) Aaa/AAA 8,121,680
------------
139,611,911
============
VIRGINIA--0.5%
6,500 Fredericksburg Industrial Dev., Medicorp Health System,
5.125%-5.25%, 6/15/27-6/15/33, Ser. B A3/NR 6,515,330
============
WASHINGTON--0.6%
2,250 Energy Northwest Electric Rev., 5.25%, 7/1/09, Ser. A Aaa/AAA 2,469,015
5,000 Tacoma Sewer Rev., 5.00%, 12/1/31, Ser. A (FGIC) Aaa/AAA 5,035,200
------------
7,504,215
============
10 PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.04
PIMCO MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) Moody's/S&P Value
====================================================================================================================================
WISCONSIN--0.8%
$ 10,175 Badger Tobacco Asset Securitization Corp.,
6.00%- 6.125%, 6/1/17-6/1/27 Baa3/BBB $ 10,066,883
1,000 State Health & Educational Facs. Auth. Rev.,
5.375%, 10/1/30 NR/A+ 1,009,140
--------------
11,076,023
==============
Total Municipal Bonds & Notes (cost-$1,131,664,256) 1,174,102,142
==============
------------------------------------------------------------------------------------------------------------------------------------
VARIABLE RATE NOTES (b) (c) (d)--9.3%
------------------------------------------------------------------------------------------------------------------------------------
ALABAMA--1.6%
9,000 Birmingham Waterworks & Sewer Board,
8.56%, 1/1/33, Ser. 947 (MBIA) Aaa/NR 9,670,680
6,675 Jefferson Cnty. Sewer Rev.,
12.95%, 11/1/30, Ser. 352 (FGIC) Aaa/NR 9,092,485
2,100 Montgomery Special Care Fac.,
12.16%, 11/15/29, Ser. 435 (MBIA) Aaa/NR 2,215,017
--------------
20,978,182
==============
COLORADO--0.2%
2,813 Denver City & Cnty. Airport Rev.,
14.06%, 11/15/25, Ser. 425 (FSA) Aaa/NR 2,997,337
==============
FLORIDA--0.5%
2,228 Orange Cnty. School Board, CP,
14.15%, 8/1/24, Ser. 328 (MBIA) Aaa/NR 2,498,008
4,052 State Governmental Utilities Auth. Rev.,
14.15%, 10/1/29, Ser. 327 (AMBAC) Aaa/NR 4,304,962
--------------
6,802,970
==============
ILLINOIS--1.2%
Chicago GO,
4,450 8.29%, 1/1/28, Ser. 332 (MBIA) Aaa/NR 4,564,276
3,300 13.83%, 1/1/40, Ser. 426 (FGIC) Aaa/NR 3,978,579
1,932 Cook Cnty., 12.16%, 11/15/28, Ser. 403 (FGIC) Aaa/NR 1,958,662
5,000 State GO, 8.56%, 4/1/27, Ser. 783 Aaa/NR 5,437,700
--------------
15,939,217
==============
MASSACHUSETTS--2.7%
2,100 Boston Water & Sewer Community Rev.,
12.25%, 11/1/28, Ser. 434 (FGIC) Aaa/NR 2,178,603
2,420 State GO, 17.17%, 11/1/30, Ser. 785 (FGIC) Aaa/NR 3,618,118
State Turnpike Auth. Rev.,
14,163 8.10%, 1/1/39, Ser. 335 (AMBAC) Aaa/NR 14,236,995
4,500 12.25%, 1/1/37, Ser. 489 (MBIA) NR/AAA 4,543,200
11,049 12.25%, 1/1/37, Ser. 334 (MBIA) Aaa/NR 11,155,070
--------------
35,731,986
===============
NEVADA--0.3%
3,300 State GO, 12.11%, 5/15/28, Ser. 344 (FGIC) Aaa/NR 3,368,871
===============
11.30.04 | PIMCO Municipal Income Funds II Semi-Annual Report 11
PIMCO MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) Moody's/S&P Value
====================================================================================================================================
NEW MEXICO--0.2%
$ 2,000 State Finance Auth., Transportation Rev.,
8.06%, 6/15/12 (AMBAC) Aaa/NR $ 2,388,720
============
OHIO--0.2%
1,975 Hamilton Cnty. Sales Tax,
14.24%, 12/1/27, Ser. 356 (MBIA) Aaa/NR 2,116,094
============
PENNSYLVANIA--0.5%
Philadelphia School District, GO,
2,505 11.28%, 4/1/27, Ser. 345 (MBIA) Aaa/NR 2,470,356
4,016 11.33%, 4/1/27, Ser. 496 (MBIA) Aaa/NR 3,959,966
------------
6,430,322
============
TENNESSEE--0.5%
6,000 Memphis Electric System Rev.,
8.06%, 12/1/11, Ser. 880 (MBIA) Aaa/NR 7,108,200
============
TEXAS--1.1%
3,075 Denton Utility System Rev.,
14.71%, 12/1/29, Ser. 428 (MBIA) Aaa/NR 3,292,956
1,650 Houston Airport System Rev.,
12.04%, 7/1/25, Ser. 404 (FGIC) Aaa/NR 1,715,670
Houston Water & Sewer System Rev.,
2,750 14.21%, 12/1/28, Ser. 427 (FSA) Aaa/NR 3,843,730
3,838 15.21%, 12/1/30, Ser. 495 (FGIC) NR/AAA 5,621,323
------------
14,473,679
============
WASHINGTON--0.3%
4,550 Central Puget Sound Regional Transit Auth. Sales Tax
& Motor,
7.54%, 2/1/28, Ser. 360 (FGIC) Aaa/NR 4,448,626
============
Total Variable Rate Notes (cost-$109,722,085) 122,784,204
============
------------------------------------------------------------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (d) (e)--0.7%
------------------------------------------------------------------------------------------------------------------------------------
CONNECTICUT--0.1%
1,000 State Health & Educational Fac. Auth. Rev., 1.60%,
12/1/04 VMIG1/A-1+ 1,000,000
============
ILLINOIS--0.4%
6,000 State Finance Auth. Rev., Northwestern University,
1.63%, 12/1/04 VMIG1/A-1+ 6,000,000
============
MISSOURI--0.2%
2,590 University of Missouri, University Rev.,
1.67%, 12/1/04, Ser. A VMIG1/A-1+ 2,590,000
============
Total Variable Rate Demand Notes (cost-$9,590,000) 9,590,000
============
12 PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.04
PIMCO MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) Moody's/S&P Value
====================================================================================================================================
U.S. TREASURY BILLS (f)--1.6%
------------------------------------------------------------------------------------------------------------------------------------
$ 21,828 1.56%-1.91%, 12/2/04-3/3/05 (cost-$21,801,027) Aaa/AAA $ 21,799,459
--------------
TOTAL INVESTMENTS BEFORE CALL OPTIONS WRITTEN
(cost-$1,272,777,368)--100.3% 1,328,275,805
==============
------------------------------------------------------------------------------------------------------------------------------------
CALL OPTIONS WRITTEN (g)--(0.3)%
------------------------------------------------------------------------------------------------------------------------------------
Contracts
---------
U.S. Treasury Bond Futures, Chicago Board of Trade:
(895) Strike Price $106, expires 2/18/05 (4,275,140)
(672) Strike Price $113, expires 2/18/05 (294,000)
--------------
Total options written (premiums received-$6,036,358) (4,569,140)
==============
TOTAL INVESTMENTS NET OF CALL OPTIONS WRITTEN
(cost-$1,266,741,010)--100% $1,323,706,665
==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
11.30.04 | PIMCO Municipal Income Funds II Semi-Annual Report 13
PIMCO CALIFORNIA MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) Moody's/S&P Value
====================================================================================================================================
CALIFORNIA MUNICIPAL BONDS & NOTES--86.7%
------------------------------------------------------------------------------------------------------------------------------------
$ 31,300 ABAG Financing Auth. Rev.,
5.20%-5.35%, 11/15/22-11/15/32, Ser. A NR/A $ 32,152,955
2,000 ABC Unified School Dist. GO,
zero coupon, 8/1/23, Ser. B (FGIC) Aaa/AAA 765,940
1,000 Alpine Union School Dist. GO,
zero coupon, 8/1/24, Ser B (FSA) Aaa/AAA 365,870
8,115 Anaheim City School Dist. GO,
5.00%, 8/1/26 (FGIC) Aaa/AAA 8,306,270
23,000 Bakersfield, CP, zero coupon, 4/15/21, Ser. B NR/AAA 10,282,150
1,945 Bay Area Govt. Assoc. Improvement Bd. Act 1915,
6.30%, 9/2/25 Aaa/AAA 1,998,410
2,000 Bay Area Govt. Assoc. Lease Rev.,
5.00%, 7/1/32 (AMBAC) Aaa/AAA 2,013,540
1,085 Capistrano Unified School Dist., Community
Fac. Dist. Special Tax, 5.70%, 9/1/20 NR/NR 1,103,705
2,300 Ceres Unified School Dist., GO,
zero coupon, 8/1/27 (FGIC) Aaa/AAA 655,132
9,865 Chula Vista Special Tax, 6.05%-6.20%, 9/1/25-9/1/33 NR/NR 10,090,222
8,035 Clovis Unified School Dist., GO,
zero coupon, 8/1/23-8/1/27, Ser. B (FGIC) Aaa/AAA 2,682,159
1,410 Community College Financing Auth. Lease Rev.,
5.00%, 8/1/27, Ser. A (AMBAC) Aaa/AAA 1,434,703
6,355 Corona-Norco Unified School Dist., Public Financing
Auth. Special Tax, 5.55%-6.10%, 9/1/15-9/1/32, Ser. A NR/NR 6,424,035
1,110 Corona-Norco Unified School Dist. Special Tax,
5.10%, 9/1/25 (AMBAC) Aaa/AAA 1,141,369
2,800 Cotati Redev. Agcy. Tax Allocation,
5.00%, 9/1/31, Ser. A (MBIA) Aaa/AAA 2,807,728
3,000 Dinuba Financing Auth. Lease Rev., 5.10%, 8/1/32 (MBIA) Aaa/AAA 3,047,850
3,475 Educational Facs. Auth. Rev., Loyola Marymount Univ.,
zero coupon, 10/1/34 (MBIA) Aaa/NR 671,057
2,825 Empire Union School Dist. Special Tax.,
zero coupon, 10/1/30-10/1/32 (AMBAC) Aaa/AAA 641,853
1,000 Escondido Union School Dist. GO,
zero coupon, 8/1/27 (FSA) Aaa/AAA 292,430
2,440 Eureka Unified School Dist. GO, zero coupon, 8/1/27 (FSA) Aaa/AAA 713,529
Foothill Eastern Corridor Agcy. Toll Road Rev.,
32,010 zero coupon, 1/1/25-1/1/30, Ser. A Aaa/AAA 9,716,481
1,500 zero coupon, 1/15/27, Ser. A (MBIA) Aaa/AAA 1,255,950
400 Franklin-McKinley School Dist. GO,
5.00%, 8/1/27, Ser. B (FSA) Aaa/AAA 408,432
47,900 Golden State Tobacco Securitization Corp. Rev.,
6.25%-6.75%, 6/1/33-6/1/39, Ser. 2003-A-1 Baa3/BBB 47,657,452
565 Health Facs. Finance Auth.Rev., Catholic Healthcare Facs.,
5.00%, 7/1/28, Ser. A Baa1/BBB+ 537,208
11,490 Health Facs. Financing Auth. Rev.,
5.125%-5.375%, 11/1/20-1/1/26 NR/A 11,917,314
14 PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.04
PIMCO CALIFORNIA MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) Moody's/S&P Value
====================================================================================================================================
$ 1,750 Huntington Beach Community Facs. Dist. Special Tax,
6.30%, 9/1/32 NR/NR $ 1,788,447
2,080 Industry Urban Dev. Agcy. Tax Allocation,
4.75%, 5/1/21 (MBIA) Aaa/AAA 2,126,779
7,000 Irvine Improvement Board Act 1915 Special Assessment,
5.70%, 9/2/26 NR/NR 7,073,500
1,900 Jurupa Unified School Dist. GO, zero coupon, 5/1/27 (FGIC) Aaa/AAA 555,617
2,450 Kings Canyon JT Unified School Dist. GO,
zero coupon, 8/1/27 (FGIC) Aaa/AAA 716,453
5,300 Livermore-Amador Valley Water Management Agcy.,
Sewer Rev.,
5.00%, 8/1/31 (AMBAC) Aaa/AAA 5,344,467
5,935 Long Beach Unified School Dist., GO,
5.00%, 8/1/27, Ser. C (MBIA) Aaa/NR 6,051,801
Los Angeles, CP,
9,895 5.00%, 2/1/27 (MBIA) Aaa/AAA 10,043,029
2,685 5.00%, 10/1/27, Ser. AU (MBIA) Aaa/AAA 2,728,282
7,200 Los Angeles Wastewater Syst. Rev.,
5.00%, 6/1/30, Ser. A (FGIC) Aaa/AAA 7,271,640
1,000 Manhattan Beach Unified School Dist. GO,
zero coupon, 9/1/25 (FGIC) Aaa/AAA 333,780
7,295 Manteca Redev. Agcy Tax Allocation,
5.00%, 10/1/32 (FSA) Aaa/AAA 7,345,190
Manteca Unified School Dist.Special Tax,
5,330 5.00%, 9/1/29, Ser. C (MBIA) Aaa/AAA 5,387,564
2,365 zero coupon, 9/1/25 (MBIA) Aaa/AAA 781,467
4,000 Merced Cnty., CP, 5.00%, 6/1/32 (AMBAC) Aaa/NR 4,034,800
7,320 Modesto Elementary School Dist., Stanislaus Cnty. GO,
zero coupon, 8/1/23-5/1/27, Ser. A (FGIC) Aaa/AAA 2,540,440
2,150 Modesto High School Dist., Stanislaus Cnty. GO,
zero coupon, 8/1/26, Ser. A (FGIC) Aaa/AAA 673,638
1,000 Modesto Public Financing Auth. Lease Rev.,
5.00%, 9/1/29 (AMBAC) Aaa/AAA 1,012,730
2,385 Monrovia Financing Auth. Lease Rev.,
5.125%, 12/1/31 (AMBAC) Aaa/AAA 2,445,961
8,590 Montebello Unified School Dist. GO,
zero coupon, 8/1/24-8/1/27 (FGIC) Aaa/AAA 2,831,685
2,400 Morgan Hill Unified School Dist. GO,
zero coupon, 8/1/23 (FGIC) Aaa/AAA 919,128
1,500 Mountain View-Whisman School Dist. GO,
5.00%, 6/1/27 Ser. D (MBIA) Aaa/AAA 1,531,215
1,800 Murrieta Redev. Agcy. Tax, 5.00%, 8/1/32 (MBIA) Aaa/AAA 1,812,222
3,245 Newark Unified School Dist. GO,
zero coupon, 8/1/26, Ser D (FSA) Aaa/AAA 1,016,723
3,580 Oakland Redev. Agcy. Tax Allocation,
5.25%, 9/1/27-9/1/33 NR/A- 3,557,700
1,000 Orange Cnty. Community Facs. Dist. Special Tax,
6.00%, 8/15/25, Ser. A NR/NR 1,027,610
11.30.04 | PIMCO Municipal Income Funds II Semi-Annual Report 15
PIMCO CALIFORNIA MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) Moody's/S&P Value
====================================================================================================================================
$ 12,000 Orange Cnty. Sanitation Dist. CP, 5.25%, 2/1/30 (FGIC) Aaa/AAA $ 12,403,920
3,685 Palmdale Community Redev. Agcy. Tax Allocation,
zero coupon, 12/1/30-12/1/32 (AMBAC) Aaa/AAA 835,049
1,750 Paramount Unified School Dist. GO,
zero coupon, 9/1/23, Ser. B (FSA) Aaa/AAA 667,328
Perris Public Financing Auth. Rev., Tax Allocation,
1,190 4.75%, 10/1/23, Ser. B (MBIA) Aaa/AAA 1,212,396
2,580 5.375%-5.625%, 10/1/20-10/1/31, Ser. C NR/BBB 2,648,639
14,200 Poway Unified School Dist. Special Tax,
5.50%-6.125%, 9/1/25-9/1/33 NR/NR 14,259,104
2,000 Rancho Cucamonga Community Facs. Dist., Special Tax,
6.375%, 9/1/31, Ser. A NR/NR 2,038,980
1,500 Richmond Wastewater Rev., zero coupon, 8/1/30 (FGIC) Aaa/AAA 366,300
3,510 Riverside CP, 5.00%, 9/1/33 (AMBAC) NR/AAA 3,544,398
17,500 Rocklin Unified School Dist. GO,
zero coupon, 8/1/24-8/1/27 (FGIC) Aaa/AAA 5,704,905
9,250 Roseville Redev. Agcy. Tax Allocation,
5.00%, 9/1/27-9/1/33 (MBIA) Aaa/AAA 9,344,958
Sacramento City Financing Auth. Rev.,
4,500 5.00%, 12/1/32, Ser. A (FSA) Aaa/AAA 4,541,310
4,835 6.25%, 9/1/23 NR/NR 4,980,243
12,490 Sacramento Cnty. Airport Syst. Rev.,
5.00%, 7/1/32, Ser. A (FSA) Aaa/AAA 12,599,288
16,285 San Diego Cnty. Water Auth. Water Rev., CP,
5.00%, 5/1/28-5/1/29, Ser. A (MBIA) Aaa/AAA 16,462,393
1,500 San Diego Public Facs. Financing Auth. Lease Rev.,
5.00%, 4/1/32 (MBIA) Aaa/AAA 1,512,720
1,000 San Diego Public Facs. Financing Auth. Sewer Rev.,
5.00%, 5/15/29, Ser. A (FGIC) Aaa/AAA 1,020,400
14,000 San Diego Public Facs. Financing Auth. Water Rev.,
5.00%, 8/1/32 (MBIA) Aaa/AAA 14,123,200
San Francisco City & Cnty. Airport Community, Int'l
Airport Rev.,
5,585 4.50%, 5/1/28, Ser. 15B (MBIA) Aaa/AAA 5,305,471
20,300 5.00%, 5/1/32, Ser. 28B (MBIA) Aaa/AAA 20,537,104
10,405 San Joaquin Hills Transportation Corridor Agcy. Toll Road
Rev., zero coupon, 1/1/25 AAA/AAA 3,792,831
10,190 San Jose, GO, 5.125%, 9/1/31 Aa1/AA+ 10,407,557
7,875 San Juan Unified School Dist. GO,
zero coupon, 8/1/23-8/1/26 (FSA) Aaa/AAA 2,590,676
4,835 San Mateo Foster City School Dist. GO,
5.10%, 8/1/31 (FGIC) Aaa/AAA 4,932,957
2,300 San Mateo Union High School Dist. GO,
zero coupon, 9/1/20 (FGIC) Aaa/AAA 1,056,919
1,730 San Rafael City High School Dist. GO,
5.00% 8/1/27, Ser. B (FSA) Aaa/AAA 1,762,957
3,280 San Rafael Elementary School Dist. GO,
5.00%, 8/1/27, Ser. B (FSA) Aaa/AAA 3,342,484
16 PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.04
PIMCO CALIFORNIA MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) Moody's/S&P Value
====================================================================================================================================
$ 8,690 Santa Clara Unified School Dist. GO,
5.00%, 7/1/25-7/1/27 (MBIA) Aaa/AAA $ 8,891,978
1,260 Santa Cruz Cnty., CP, 5.25%, 8/1/32 A3/NR 1,279,958
5,000 Santa Margarita Water Dist. Special Tax,
6.00%-6.25%, 9/1/29-9/1/30 NR/NR 5,097,600
3,430 Saugus Hart School Facs. Financing Auth. Special Tax,
6.10%-6.125%, 9/1/32-9/1/33 NR/NR 3,490,185
1,000 Shasta Union High School Dist. GO,
zero coupon, 8/1/24 (FGIC) Aaa/AAA 358,930
4,745 South Tahoe JT Powers Parking Financing Auth. Rev.,
7.00%, 12/1/27, Ser. A NR/NR 4,981,396
1,800 Southern Mono Health Care Dist. GO,
zero coupon, 8/1/26 (MBIA) Aaa/AAA 552,222
35,000 State Economic Recovery GO,
5.00%, 7/11/11, Ser A (MBIA) Aaa/AAA 38,731,350
200 State Infrastructure & Economic Dev. Bk. Rev., Bay Area Toll,
5.00%, 7/1/36, Ser. B (AMBAC) Aaa/AAA 203,058
9,605 State Public Works Board Lease Rev.,
5.00%, 10/1/22, Ser. A (FSA) Aaa/AAA 9,982,573
1,710 State University Rev.
5.00%, 11/1/33, Ser. A (AMBAC) Aaa/AAA 1,725,493
1,000 State University Rev. & Colleges,
5.00%, 11/1/13, Ser. A (FSA) Aaa/AAA 1,109,910
1,170 Statewide Community. Dev. Auth. CP,
6.10%, 11/1/15 NR/NR 1,179,208
Statewide Community Dev. Auth., Rev.,
2,770 5.50%, 11/1/32, Ser. A A3/A 2,855,787
9,700 5.50%, 11/15/33, NR/A 10,088,776
3,000 6.75%, 10/1/30 NR/NR 3,106,410
3,555 6.75%, 7/1/32 (h) NR/NR 3,719,383
Statewide Financing Auth. Tobacco Settlement Rev.,
1,840 5.625%, 5/1/29, Ser. A Baa3/NR 1,688,255
20,000 6.00%, 5/1/37, Ser. B Baa3/NR 18,180,200
7,750 Tamalpais Union High School Dist. GO,
5.00%, 8/1/27 (FSA) Aaa/AAA 7,897,638
Tobacco Securization Agcy. Rev.,
14,705 5.625%-6.00%, 6/1/23-6/1/35 Baa3/BBB 13,626,277
1,800 5.875%, 6/1/43, Ser. A Baa3/NR 1,589,202
4,500 6.00%, 6/1/42 Baa3/NR 4,052,655
995 Tracy Community Facs. Dist. Special Tax,
6.00%, 9/1/27 NR/NR 1,005,318
6,250 University Revs.,
5.00%, 5/15/11, Ser. A (AMBAC) Aaa/AAA 6,923,875
10,000 Ventura Cnty. Community College Dist. GO,
5.00%, 8/1/27, Ser. A (MBIA) Aaa/AAA 10,210,800
1,555 Ventura Unified School Dist. GO,
5.00%, 8/1/32, Ser. F (FSA) Aaa/AAA 1,573,644
2,000 Vernon Electric Syst. Rev.,
5.50%, 4/1/33 A2/BBB+ 2,049,240
11.30.04 | PIMCO Municipal Income Funds II Semi-Annual Report 17
PIMCO CALIFORNIA MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) Moody's/S&P Value
====================================================================================================================================
$ 3,535 Victor Elementary School Dist.,
zero coupon, 8/1/24-8/1/26, Ser. A (FGIC) Aaa/AAA $ 1,158,897
1,000 Vista Unified School Dist. GO,
zero coupon, 8/1/26, Ser. A (FSA) Aaa/AAA 313,320
7,320 West Contra Costa University School Dist. GO,
5.00%, 8/1/26-8/1/31, Ser. A (MBIA) Aaa/AAA 7,457,510
3,375 Westlands Water Dist. Rev. CP, 5.00%, 9/1/34 (MBIA) Aaa/AAA 3,408,075
2,000 William S. Hart JT School Financing Auth. Rev.,
5.625%, 9/1/34 NR/BBB+ 2,067,600
2,110 Yuba City Unfied School Dist. GO, zero coupon, 9/1/25 (FGIC) Aaa/AAA 704,276
------------
Total California Municipal Bonds & Notes
(cost-$572,224,484) 583,291,098
============
------------------------------------------------------------------------------------------------------------------------------------
OTHER MUNICIPAL BONDS & NOTES--8.3%
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK--1.3%
3,250 State Dormitory Auth. Rev, 6.250%, 8/15/15 (FHA) Aa2/AAA 3,767,627
4,340 State Thruway Auth. Highway & Bridge Trust Fund,
5.25%, 4/1/11 Ser. C (MBIA) Aaa/AAA 4,824,778
------------
8,592,405
============
PUERTO RICO--3.3%
2,000 Electric Power Auth. Rev., 5.125%, 7/1/29, Ser. NN A3/A- 2,039,540
Public Building Auth. Rev.,
2,500 5.00%, 7/1/36, Ser. I Baa1/A- 2,514,368
11,000 5.00%, 7/1/36, Ser. J Aaa/AAA 12,043,680
5,300 Public Finance Corp., 5.75%, 8/1/27, Ser. A Baa2/BBB+ 5,889,678
------------
22,487,266
============
TENNESSEE--1.4%
8,535 Memphis Electric Syst. Rev., 5.00%, 12/1/16, Ser. A (MBIA) Aaa/AAA 9,187,757
============
TEXAS--2.3%
13,845 State Univ. Revs., 5.25%, 8/15/11-8/15/12, Ser. A Aaa/AAA 15,419,494
============
Total Other Municipal Bonds & Notes (cost-$55,242,247) 55,686,922
============
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA VARIABLE RATE NOTES (b) (c ) (d)--3.4%
------------------------------------------------------------------------------------------------------------------------------------
4,238 Los Angeles Dept. of Water & Power, Waterworks Rev.,
14.77%, 7/1/41, Ser. 754 (FGIC) Aaa/NR 4,458,528
1,875 Modesto Public Financing Auth. Lease Rev.,
14.27%, 9/1/29, Ser. 354 (AMBAC) AAA/NR 1,970,475
4,952 Oakland, GO, 14.27%, 1/15/32, Ser. 756 (FGIC) Aaa/NR 5,212,444
1,944 San Diego Unified School Dist. GO,
14.27%, 7/1/27, Ser. 758 (FGIC) Aaa/NR 2,090,966
3,743 San Jose GO, 14.27%, 9/1/32 (MBIA) Aaa/NR 3,942,799
2,288 San Jose Unified School Dist. Santa Clara Cnty. GO,
14.27%, 8/1/27, Ser. 761 (FSA) Aaa/NR 2,461,808
2,500 University Revs., 14.27%, 9/1/28, Ser. 762 (FGIC) NR/NR 2,696,525
------------
Total California Variable Rate Notes (cost-$21,808,652) 22,833,545
============
18 PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.04
PIMCO CALIFORNIA MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) Moody's/S&P Value
====================================================================================================================================
CALIFORNIA VARIABLE RATE DEMAND NOTES (d) (e)--0.6%
------------------------------------------------------------------------------------------------------------------------------------
$ 1,500 Bay Area Toll Auth., Toll Bridge Rev.,
1.64%, 12/2/04 (AMBAC) VMIG1/A-1+ $ 1,500,000
2,000 Irvine Improvement Board Act of 1915, 1.62%, 12/1/04 VMIG1/A-1+ 2,000,000
700 Metropolitan Water Dist. Southern California
Waterworks Rev., 1.62%, 12/1/04, Ser. B3. VMIG1/A1+ 700,000
------------
Total California Variable Rate Demand Notes (cost-$4,200,000) 4,200,000
============
------------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS (f)--1.4%
------------------------------------------------------------------------------------------------------------------------------------
9,410 1.56%-1.69%, 12/2/04-3/3/05 (cost-$9,399,944) Aaa/AAA 9,399,128
------------
TOTAL INVESTMENTS BEFORE CALL OPTION WRITTEN
(cost-$662,875,327)--100.4% 675,410,693
============
------------------------------------------------------------------------------------------------------------------------------------
CALL OPTIONS WRITTEN (g)--(0.4)%
------------------------------------------------------------------------------------------------------------------------------------
Contracts
---------
U.S. Treasury Bond Futures, Chicago Board of Trade:
(470) Strike Price $106, expires 2/18/05 (2,223,641)
(754) Strike Price $113, expires 2/18/05 (469,275)
------------
Total call options written (premiums received-$3,577,848) (2,692,916)
============
TOTAL INVESTMENTS NET OF CALL OPTIONS WRITTEN
(cost-$659,297,479)--100% $672,717,777
============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
| 11.30.04 | PIMCO Municipal Income Funds II Semi-Annual Report 19
PIMCO NEW YORK MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) Moody's/S&P Value
====================================================================================================================================
NEW YORK MUNICIPAL BONDS & NOTES--88.4%
------------------------------------------------------------------------------------------------------------------------------------
$ 1,250 Buffalo Municipal Water Finance. Auth., Water System. Rev.,
5.00%-5.125%, 7/1/27-7/1/32, Ser. B, (FSA) Aaa/AAA $ 1,280,075
10,000 Erie Cnty. Tobacco Asset Securization Corp. Rev,
6.50%, 7/15/32 Baa1/BBB 10,100,600
Metropolitan Transportation Auth. Rev.,
1,850 5.00%, 11/15/30, Ser. A (FSA) Aaa/AAA 1,872,940
10,000 5.25%, 11/15/31, Ser. E A2/A 10,267,600
7,000 Metropolitan Transportation Auth. Service Contract,
5.35%, 7/1/31, Ser. B A2/AAA 7,246,400
4,000 New York City, GO, 5.00%, 3/1/33, Ser.I A2/A 3,999,680
3,100 New York City Health & Hospital Corp., Rev.,
5.375%-5.45%, 2/15/26, Ser. A A3/BBB 3,167,794
New York City Industrial. Dev. Agcy., Civic Fac. Rev.,
1,500 5.00%, 7/1/27, Aa2/NR 1,534,335
1,240 6.45%, 7/1/32 Ba3/NR 1,190,648
1,000 New York City Industrial Dev. Agcy. Rev.,
4.95%, 11/20/32 (GNMA) NR/AA+ 1,006,240
New York City Municipal Water Finance Auth.,
Water & Sewer System. Rev.,
3,055 4.75%, 6/15/25, Ser. D (MBIA) Aaa/AAA 3,073,513
20,000 5.00%-5.125%, 6/15/32-6/15/34, Ser A Aa2/AA 20,284,950
10,000 New York City Transitional Finance Auth. Rev.,
5.00%, 11/1/27, Ser. B Aa2/AA+ 10,162,800
7,785 New York City Trust Cultural Rev., 5.00%, 2/1/34 Aaa/AAA 7,875,773
3,600 Port Auth. New York & New Jersey, 5.00%, 4/15/32 Aaa/AAA 3,659,040
6,340 Sachem Central School District of Holbrook,
5.00%, 6/15/28-6/15/29 (MBIA) Aaa/AAA 6,477,152
7,500 State Dormitory Auth. Lease Rev., State Univ. Dormitory Facs.,
5.00%, 7/1/32 (Pre-refunded @100, 7/1/12) A1/AA- 8,295,525
2,600 State Dormitory Auth. Revs., Catholic Health of Long Island
5.00%, 7/1/34 (AMBAC) Baa1/BBB 2,522,650
2,000 State Dormitory Auth. Revs., FHA-Kaleida Health Hospital.,
5.05%, 2/15/25 (FHA) NR/AAA 2,048,660
3,225 State Dormitory Auth. Revs., FHA-NY & Presbyterian Hospital,
4.75%, 8/1/27(AMBAC) Aaa/AAA 3,215,938
5,000 State Dormitory Auth. Revs., FHA-Saint Barnabas,
5.00%, 2/1/31, Ser. A(AMBAC) Aaa/AAA 5,056,750
5,300 State Dormitory Auth. Revs., Lenox Hill Hospital,
5.50%, 7/1/30 Baa2/NR 5,235,234
1,400 State Dormitory Auth. Revs., Long Island Univ.,
5.25%, 9/1/28 (Radian) Baa3/AA 1,443,960
1,500 State Dormitory Auth. Revs., Memorial Sloan-Kettering Center,
5.00%, 7/1/34, Ser. 1 Aa2/AA 1,517,670
8,850 State Dormitory Auth. Revs., North General Hospital,
5.00%, 2/15/25 NR/AA- 8,938,323
8,600 State Dormitory Auth. Revs., State Personal Income Tax,
5.00%, 3/15/32 A1/AA 8,657,362
1,250 State Dormitory Auth. Revs., Student Housing Corp.,
5.125%, 7/1/34 (FGIC) Aaa/AAA 1,283,750
4,270 State Dormitory Auth. Revs., Teachers College,
5.00%, 7/1/32 (MBIA) Aaa/NR 4,315,433
20 PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.04
PIMCO NEW YORK MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) Moody's/S&P Value
====================================================================================================================================
$ 2,000 State Dormitory Auth. Revs., Yeshiva Univ.,
5.125%, 7/1/34 (AMBAC) Aaa/Aa2 $ 2,054,000
2,000 State Environmental Facs. Corp., State Clean
Water & Drinking Rev., 5.125%, 6/15/31 Aaa/AAA 2,057,200
5,000 State Municipal Board Bank Agcy. Special School Purpose Rev.,
5.00%, 6/1/23, Ser. C. NR/A+ 5,100,550
6,100 State Urban Dev. Corp., Personal Income Tax,
5.00%, 3/15/33, Ser. C A1/AA 6,140,686
4,700 Triborough Bridge & Tunnel Auth. Revs.,
5.00%, 1/1/32, Ser. A (FGIC) Aaa/AAA 4,747,235
TOB Settlement Asset Backed, Inc.,
25,000 5.75%, 7/15/32, Ser.1 Baa3/BBB 23,425,750
10,000 6.375%, 7/15/39 Baa3/BBB+ 10,043,500
2,000 Warren & Washington Cnty. Industrial Dev. Agcy. Fac. Rev.,
5.00%, 12/1/35, Ser A (FSA) Aaa/AAA 2,008,620
750 Westchester Cnty. Industrial Dev. Agcy.
Continuing Care Retirement, 6.50%, 1/1/34 NR/NR 772,718
------------
Total New York Municipal Bonds & Notes (cost-$198,785,535) 202,081,054
============
------------------------------------------------------------------------------------------------------------------------------------
OTHER MUNICIPAL BONDS & NOTES--5.7%
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA--1.5%
6,500 Alamada Univ. School District , Alamada County,
zero coupon, 8/1/24-8/1/25 (FSA) Aaa/AAA 2,262,035
3,130 Covina Valley Unified School District,
zero coupon, 6/1/25, Ser. B (FGIC) Aaa/AAA 1,058,660
------------
3,320,695
============
COLORADO--0.0%
210 Dawson Ridge Met. District No. 1
zero coupon, 10/1/22, Ser. A Aaa/NR 86,014
============
PUERTO RICO--4.2%
5,675 Children Trust Fund Tobacco Settlement Rev.,
5.625%, 5/15/43 Baa3/BBB 5,152,957
1,500 Commonwealth Highway & Transportation Auth.Rev.,
5.25%, 7/1/38, Ser. D Baa1/A 1,534,740
750 Electric Power Authority, Power Rev.,
5.125%, 7/1/29, Ser. NN A3/A- 764,827
1,900 Public Finance Corp., 5.75%, 8/1/27, Ser. A Baa2/BBB2 2,111,394
------------
9,563,918
============
Total Other Municipal Bonds & Notes (cost-$13,221,605) 12,970,627
============
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK VARIABLE RATE NOTES (b) (c) (d)--3.6%
------------------------------------------------------------------------------------------------------------------------------------
6,994 Long Island Power Auth. Electric System. Rev., Ser. 339,
15.270%, 12/1/26, Ser. 339 (MBIA) (cost-$7,005,927) Aaa/NR 8,149,409
============
------------------------------------------------------------------------------------------------------------------------------------
OTHER VARIABLE RATE NOTES (b) (c) (d)--1.2%
------------------------------------------------------------------------------------------------------------------------------------
1,800 California State Economic Recovery,
18.575%, 1/1/10 (cost-$2,455,107) Aa3/NR 2,760,390
============
11.30.04 | PIMCO Municipal Income Funds II Semi-Annual Report 21
PIMCO NEW YORK MUNICIPAL INCOME FUND II SCHEDULE OF INVESTMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
Principal
Amount Credit Rating
(000) Moody's/S&P Value
====================================================================================================================================
U.S. TREASURY BILLS (f)--1.5%
------------------------------------------------------------------------------------------------------------------------------------
$ 3,395 1.56%-1.69%, 12/2/04-3/3/05 (cost-$3,390,064) Aaa/AAA $ 3,389,887
------------
TOTAL INVESTMENTS BEFORE CALL OPTIONS WRITTEN
(cost-$224,858,238)--100.4% 229,351,367
============
------------------------------------------------------------------------------------------------------------------------------------
CALL OPTIONS WRITTEN (G)--(0.4)%
------------------------------------------------------------------------------------------------------------------------------------
Contracts
---------
U.S. Treasury Bond Futures, Chicago Board of Trade:
(132) Strike Price $106, expires 2/18/05 (632,766)
(269) Strike Price $113, expires 2/18/05 (168,687)
------------
Total call options written (premium received-$1,011,121) (801,453)
============
TOTAL INVESTMENTS NET OF CALL OPTIONS WRITTEN
(cost-$223,847,117)--100% $228,549,914
============
--------------------------------------------------------------------------------
NOTES TO SCHEDULES OF INVESTMENTS:
(a) 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.
(b) 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
investors.
(c) Residual Interest Municipal Bonds. The interest rate shown bears an inverse
relationship to the interest rate on another security or the value of an
index.
(d) 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).
(e) Maturity date shown is date of next call.
(f) All or partial principal amount segregated as initial margin on financial
futures contracts.
(g) Non-income producing securities.
(h) Illiquid security.
--------------------------------------------------------------------------------
GLOSSARY:
---------
AMBAC -- insured by American Municipal Bond Assurance Corp.
CP -- Certificates of Participation
FGIC -- insured by Financial Guaranty Insurance Co.
FNMA -- Federal National Mortgage Association
FSA -- insured by Financial Security Assurance, Inc.
GO -- General Obligation Bonds
GNMA -- Government National Mortgage Association
MBIA -- insured by Municipal Bond Investors Assurance
NR -- Not Rated
PSF -- Public School Fund
Radian -- insured by Radian Guaranty Inc.
XLCA -- insured by XL Capital Assurance
22 PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.04 |
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
PIMCO MUNICIPAL INCOME FUNDS II STATEMENTS OF ASSETS AND LIABILITIES
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
CALIFORNIA NEW YORK
MUNICIPAL II MUNICIPAL II MUNICIPAL II
--------------- --------------- ---------------
ASSETS:
Investments, at value (cost-$1,272,777,368, $662,875,327
and $224,858,238, respectively) $ 1,328,275,805 $ 675,410,693 $ 229,351,367
------------------------------------------------------------------ --------------- --------------- ---------------
Cash 5,673,942 7,323,463 3,986,781
------------------------------------------------------------------ --------------- --------------- ---------------
Interest receivable 20,304,610 10,491,922 4,447,240
------------------------------------------------------------------ --------------- --------------- ---------------
Receivable for variation margin on futures contracts 1,908,906 461,594 159,231
------------------------------------------------------------------ --------------- --------------- ---------------
Receivable for investments sold 85,000 -- --
------------------------------------------------------------------ --------------- --------------- ---------------
Prepaid expenses 41,933 33,054 15,594
------------------------------------------------------------------ --------------- --------------- ---------------
Total Assets 1,356,290,196 693,720,726 237,960,213
================================================================== =============== =============== ===============
LIABILITIES:
Dividends payable to common and preferred shareholders 4,989,734 2,487,203 859,541
------------------------------------------------------------------ --------------- --------------- ---------------
Options written, at value (premiums received-
$6,036,358, $3,577,848 and $1,011,121) 4,569,140 2,692,916 801,453
------------------------------------------------------------------ --------------- --------------- ---------------
Payable for investments purchased 3,311,650 3,019,352 716,032
------------------------------------------------------------------ --------------- --------------- ---------------
Investment management fees payable 551,512 282,257 97,196
------------------------------------------------------------------ --------------- --------------- ---------------
Accrued expenses 159,722 101,636 59,492
------------------------------------------------------------------ --------------- --------------- ---------------
Total Liabilities 13,581,758 8,583,364 2,533,714
------------------------------------------------------------------ --------------- --------------- ---------------
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 $ 837,708,438 $ 425,137,362 $ 145,426,499
================================================================== =============== =============== ===============
COMPOSITION OF NET ASSETS APPLICABLE TO
COMMON SHAREHOLDERS:
Common Stock:
Par value ($0.00001 per share) $ 581 $ 302 $ 104
------------------------------------------------------------------ --------------- --------------- ---------------
Paid-in-capital in excess of par 825,802,301 429,131,877 148,056,183
------------------------------------------------------------------ --------------- --------------- ---------------
Undistributed net investment income 8,210,314 3,031,052 370,102
------------------------------------------------------------------ --------------- --------------- ---------------
Accumulated net realized loss (60,775,967) (21,101,706) (8,440,785)
------------------------------------------------------------------ --------------- --------------- ---------------
Net unrealized appreciation of investments, futures
contracts and options written 64,471,209 14,075,837 5,440,895
------------------------------------------------------------------ --------------- --------------- ---------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS $ 837,708,438 $ 425,137,362 $ 145,426,499
================================================================== =============== =============== ===============
Common Shares Outstanding 58,100,052 30,208,903 10,431,018
------------------------------------------------------------------ --------------- --------------- ---------------
NET ASSET VALUE PER COMMON SHARE $ 14.42 $ 14.07 $ 13.94
================================================================== =============== =============== ===============
24 PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.04 |
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
PIMCO MUNICIPAL INCOME FUNDS II STATEMENTS OF OPERATIONS
For the six months ended November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
CALIFORNIA NEW YORK
MUNICIPAL II MUNICIPAL II MUNICIPAL II
------------ ------------ ------------
INVESTMENT INCOME:
Interest $ 37,268,450 $ 18,132,639 $ 6,485,354
------------------------------------------------------------------ ------------ ------------ ------------
EXPENSES:
Investment management fees 4,334,669 2,211,015 762,862
------------------------------------------------------------------ ------------ ------------ ------------
Auction agent fees and commissions 644,582 337,142 117,410
------------------------------------------------------------------ ------------ ------------ ------------
Custodian and accounting agent fees 111,014 79,819 44,636
------------------------------------------------------------------ ------------ ------------ ------------
Reports to shareholders 42,456 21,960 8,418
------------------------------------------------------------------ ------------ ------------ ------------
New York Stock Exchange listing fees 35,240 18,395 16,230
------------------------------------------------------------------ ------------ ------------ ------------
Trustees' fees and expenses 34,674 19,581 9,699
------------------------------------------------------------------ ------------ ------------ ------------
Audit and tax services 33,855 22,875 18,300
------------------------------------------------------------------ ------------ ------------ ------------
Transfer agent fees 18,300 17,751 16,653
------------------------------------------------------------------ ------------ ------------ ------------
Legal fees 17,934 11,895 3,111
------------------------------------------------------------------ ------------ ------------ ------------
Insurance expense 12,476 7,324 3,613
------------------------------------------------------------------ ------------ ------------ ------------
Investor relations 7,869 4,026 2,562
------------------------------------------------------------------ ------------ ------------ ------------
Miscellaneous 13,286 8,563 7,254
------------------------------------------------------------------ ------------ ------------ ------------
Total expenses 5,306,355 2,760,346 1,010,748
------------------------------------------------------------------ ------------ ------------ ------------
Less: investment management fees waived (1,000,308) (510,234) (176,045)
------------------------------------------------------------------ ------------ ------------ ------------
custody credits earned on cash balances (31,775) (16,318) (1,448)
------------------------------------------------------------------ ------------ ------------ ------------
Net expenses 4,274,272 2,233,794 833,255
------------------------------------------------------------------ ------------ ------------ ------------
NET INVESTMENT INCOME $ 32,994,178 $ 15,898,845 $ 5,652,099
================================================================== ============ ============ ============
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments (1,442,268) 558,933 28,578
------------------------------------------------------------------ ------------ ------------ ------------
Futures contracts (43,102,005) (10,439,895) (4,918,664)
------------------------------------------------------------------ ------------ ------------ ------------
Options written (489,677) (646,159) (9,409)
------------------------------------------------------------------ ------------ ------------ ------------
Net change in unrealized appreciation/depreciation of:
Investments 64,576,849 28,880,795 8,651,581
------------------------------------------------------------------ ------------ ------------ ------------
Futures contracts 2,432,281 (2,384,805) 262,723
------------------------------------------------------------------ ------------ ------------ ------------
Options written 1,076,218 687,732 141,668
------------------------------------------------------------------ ------------ ------------ ------------
Net realized and unrealized gain on investments,
futures contracts and options written 23,051,398 16,656,601 4,156,477
------------------------------------------------------------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM
INVESTMENT OPERATIONS 56,045,576 32,555,446 9,808,576
================================================================== ============ ============ ============
DIVIDENDS ON PREFERRED SHARES FROM
NET INVESTMENT INCOME (3,172,332) (1,432,817) (559,838)
------------------------------------------------------------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS APPLICABLE TO
COMMON SHAREHOLDERS RESULTING FROM INVESTMENT
OPERATIONS $ 52,873,244 $ 31,122,629 $ 9,248,738
================================================================== ============ ============ ============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
| 11.30.04 | 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 For the Year
November 30, 2004 ended
(unaudited) May 31, 2004
----------------- ---------------
INVESTMENT OPERATIONS:
Net investment income $ 32,994,178 $ 67,925,448
------------------------------------------------------------------------------------------ ------------ ------------
Net realized gain (loss) on investments, futures contracts and options written (45,033,950) 24,210,728
------------------------------------------------------------------------------------------ ------------ ------------
Net change in unrealized appreciation/depreciation of investments, futures
contracts and options written 68,085,348 (68,517,484)
------------------------------------------------------------------------------------------ ------------ ------------
Net increase (decrease) in net assets resulting from investment operations 56,045,576 23,618,692
------------------------------------------------------------------------------------------ ------------ ------------
DIVIDENDS ON PREFERRED SHARES FROM NET INVESTMENT INCOME (3,172,332) (4,680,202)
------------------------------------------------------------------------------------------ ------------ ------------
Net increase (decrease) in net assets applicable to common shareholders
resulting from investment operations. 52,873,244 18,938,490
------------------------------------------------------------------------------------------ ------------ ------------
DIVIDENDS TO COMMON SHAREHOLDERS FROM NET INVESTMENT INCOME (29,377,033) (56,205,302)
------------------------------------------------------------------------------------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Reinvestment of dividends and distributions 1,541,928 3,051,924
------------------------------------------------------------------------------------------ ------------ ------------
Total increase (decrease) in net assets applicable to common shareholders 25,038,139 (34,214,888)
========================================================================================== ============ ============
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS:
Beginning of period 812,670,299 846,885,187
------------------------------------------------------------------------------------------ ------------ ------------
End of period (including undistributed net investment income of
$8,210,314 and $7,765,501; $3,031,052 and $3,271,140; $370,102
and $356,073; respectively) $837,708,438 $812,670,299
========================================================================================== ============ ============
COMMON SHARES ISSUED IN REINVESTMENT OF DIVIDENDS: 107,439 211,747
========================================================================================== ============ ============
26 PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.04 |
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL II NEW YORK MUNICIPAL II
------------------------------------ --------------------------------------
Six Months Six Months
ended For the Year ended For the Year
November 30, 2004 ended November 30, 2004 ended
(unaudited) May 31, 2004 (unaudited) May 31, 2004
------------------ -------------- ----------------- -------------
$15,898,845 $ 33,940,350 $ 5,652,099 $11,106,041
----------- ------------ ----------- -----------
(10,527,121) 5,655,818 (4,899,495) 1,168,992
----------- ------------ ----------- -----------
27,183,722 (43,456,385) 9,055,972 (11,274,316)
----------- ------------ ----------- -----------
32,555,446 (3,860,217) 9,808,576 1,000,717
----------- ------------ ----------- -----------
(1,432,817) (2,082,467) (559,838) (718,744)
----------- ------------ ----------- -----------
31,122,629 (5,942,684) 9,248,738 281,973
----------- ------------ ----------- -----------
(14,706,116) (28,120,948) (5,078,232) (9,708,825)
----------- ------------ ----------- -----------
1,061,693 1,752,390 298,360 778,884
----------- ------------ ----------- -----------
17,478,206 (32,311,242) 4,468,866 (8,647,968)
============ ============ ============ ============
407,659,156 439,970,398 140,957,633 149,605,601
----------- ------------ ----------- -----------
$425,137,362 $407,659,156 $145,426,499 $140,957,633
============ ============ ============ ============
76,041 125,989 21,300 55,136
============ ============ ============ ============
11.30.04 | PIMCO Municipal Income Funds II Semi-Annual Report 27
PIMCO MUNICIPAL INCOME FUNDS II NOTES TO FINANCIAL STATEMENTS
November 30, 2004 (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 closed-end management investment companies registered under the
Investment Company Act of 1940 and the rules and regulations thereunder, as
amended. PA Fund Management LLC, (the "Investment Manager"), serves as the
Funds' Investment Manager and is an indirect, wholly-owned subsidiary of Allianz
Global Investors of America L.P. ("AGI"), formerly Allianz Dresdner Asset
Management of America L.P. AGI is an indirect, majority-owned subsidiary of
Allianz AG. The Funds have an unlimited amount of $0.00001 par value common
stock authorized.
Municipal II invests substantially all of its assets in a portfolio of municipal
bonds, the interest from which is exempt from federal income taxes. California
Municipal II invests substantially all of its assets in municipal bonds which
pay interest that is exempt from federal and California state income taxes. New
York Municipal II invests substantially all of its assets in municipal bonds
which pay interest that is exempt from federal, New York State and New York City
income taxes. The Funds will seek to avoid bonds generating interest income
which could potentially subject individuals to alternative minimum tax. The
issuers' abilities to meet their obligations may be affected by economic and
political developments in a specific state or region.
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 based upon events that have not
yet been asserted. However, the Funds expect the risk of any loss to be remote.
The following is a summary of significant accounting policies consistently
followed by the Funds:
(a) VALUATION OF INVESTMENTS
Portfolio securities and other financial instruments for which market quotations
are readily available are stated at market value. Portfolio securities and other
financial instruments for which market quotations are not readily available or
if a development/event occurs that may impact the value of the security, may be
fair-valued in good faith pursuant to procedures established by the Board of
Trustees. The Funds' investments are valued daily by an independent pricing
service. The independent pricing service uses information provided by market
makers or estimates of market values obtained from yield data relating to
investments or securities with similar characteristics. Short-term investments
maturing in sixty days or less are valued at amortized cost, if their original
maturity was 60 days or less or by amortizing their value on the 61st day prior
to maturity, if the original term to maturity exceeded 60 days. Exchange traded
options, futures and options on futures are valued at the settlement price
determined by the relevant exchange. The prices used by the Funds to value
securities may differ from the value that would be realized if the securities
were sold and the differences could be material to the financial statements. The
Funds net asset value is determined daily at the close of regular trading
(normally 4:00 p.m. Eastern time) on the New York Stock Exchange.
(b) INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on the trade date. Realized gains and
losses on investments are determined on the identified cost basis. Interest
income is recorded on an accrual basis. Original issue discounts or premiums on
debt securities purchased are accreted or amortized daily to non-taxable
interest income. Market discount, if any, is accreted daily to taxable income.
(b) FEDERAL INCOME TAXES
The Funds intend to distribute all of their taxable income and to comply with
the other requirements of the U.S. Internal Revenue Code of 1986, as amended,
applicable to regulated investment companies. Accordingly, no provision for U.S.
federal income taxes is required. In addition, by distributing substantially all
of their taxable ordinary income and long-term capital gains, if any, during
each calendar year, the Funds intend not to be subject to U.S. federal excise
tax.
28 PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.04
PIMCO MUNICIPAL INCOME FUNDS II NOTES TO FINANCIAL STATEMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(d) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
financial instrument at a set price on a future date. Upon entering into such a
contract, the Funds are required to pledge to the broker an amount of cash or
securities, equal to the minimum "initial margin" requirements of the exchange.
Pursuant to the contracts, the Funds agree to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in the value of the contracts.
Such receipts or payments are known as "variation margin" and are recorded by
the Funds as unrealized appreciation or depreciation. When the contracts are
closed, the Funds record a realized gain or loss equal to the difference between
the value of the contracts at the time they were opened and the value at the
time they were closed. Any unrealized appreciation or depreciation recorded is
simultaneously reversed. The use of futures transactions involves the risk of an
imperfect correlation in the movements in the price of futures contracts,
interest rates and the underlying hedged assets, and the possible inability of
counterparties to meet the terms of their contracts.
(e) OPTION TRANSACTIONS
The Funds may purchase and write (sell) put and call options for hedging on. The
risk associated with purchasing an option is that the Funds pay a premium
whether or not the option is exercised. Additionally, the Funds bear the risk of
loss of premium and change in market value should the counterparty not perform
under the contract. Put and call options purchased are accounted for in the same
manner as portfolio securities. The cost of securities acquired through the
exercise of call options is increased by the premiums paid. The proceeds from
the securities sold through the exercise of put options is decreased by the
premiums paid.
When an option is written, the premium received is recorded as a liability and
subsequently marked to market to reflect the current market value of the option
written. These liabilities are reflected as options written in the Statements of
Assets and Liabilities. Premiums received from writing options which expire
unexercised are recorded on the expiration date as a realized gain. The
difference between the premium received and the amount paid on effecting a
closing purchase transaction, including brokerage commissions, is also treated
as a realized gain, or if the premium is less than the amount paid for the
closing purchase transactions, as a realized loss. If a call option is
exercised, the premium is added to the proceeds from the sale of the underlying
security in determining whether there has been a realized gain or loss. If a put
option is exercised, the premium reduces the cost basis of the security. In
writing an option, the Funds bear the market risk of an unfavorable change in
the price of the security underlying the written option. Exercise of an option
written could result in the Funds purchasing a security at a price different
from the current market price.
(f) RESIDUAL INTEREST MUNICIPAL BONDS ("RIBS")/RESIDUAL INTEREST TAX EXEMPT
BONDS ("RITES") The Funds invest in RIBS and RITES whose interest rates bear an
inverse relationship to the interest rate on another security or the value of an
index. RIBS and RITES 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 normally every seven 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 interest rates
result in lower income for the longer-term portion, and vice versa. The
longer-term bonds may be more volatile and less liquid than other municipal
bonds of comparable maturity. An investment in RITES typically will involve
greater risk than an investment in a fixed rate bond.
(g) DIVIDENDS AND DISTRIBUTIONS--COMMON STOCK The Funds declare dividends from
net investment income monthly to common shareholders. Distributions of net
realized capital gains, if any, are paid at least annually. Each Fund records
dividends and distributions to its shareholders on the ex-dividend date. The
amount of dividends and distributions from net investment income and net
realized capital gains are determined in accordance with federal income tax
regulations, which may differ from generally accepted accounting principles.
These "book-tax" differences are either considered 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.
(h) CUSTODY CREDITS EARNED ON CASH BALANCES
The Funds benefit from an expense offset arrangement with their custodian bank
whereby uninvested cash balances earn credits which reduce monthly custodian and
accounting agent expenses. Had these cash balances been invested in income
producing securities, they would have generated income for the Funds.
11.30.04 | PIMCO Municipal Income Funds II Semi-Annual Report 29
PIMCO MUNICIPAL INCOME FUNDS II NOTES TO FINANCIAL STATEMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
2. INVESTMENT MANAGER AND SUB-ADVISER
Each Fund has entered into an Investment Management Agreement (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 other administrative matters. Pursuant to the Agreements, the
Investment Manager receives an annual fee, payable monthly, at the annual rate
of 0.65% of each Fund's average daily net assets, including net assets
attributable to any preferred shares that may be outstanding. In order to reduce
Fund expenses, the Investment Manager has contractually agreed to reimburse each
Fund for fees and expenses at the annual rate of 0.15% of each Fund's average
daily net assets, including net assets attributable to any preferred shares that
may be outstanding, from the commencement of operations through June 30, 2007,
and for a declining amount thereafter through June 30, 2009.
The Investment Manager has retained its affiliate, Pacific Investment Management
Company LLC (the "Sub-Adviser") to manage each Fund's investments. Subject to
the supervision of the Investment Manager, the Sub-Adviser makes all the Fund's
investment decisions. The Investment Manager, and not the Funds pays a portion
of the fees it receives to the Sub-Adviser in return for its services, at the
maximum annual rate of 0.50% of each Fund's average daily net assets including
net assets attributable to any preferred shares that may be outstanding. The
Sub-Adviser has contractually agreed to waive a portion of the fees it is
entitled to receive from the Investment Manager, such that the Sub-Adviser will
receive 0.26% of each Fund's average daily net assets, including net assets
attributable to any preferred shares that may be outstanding, from the
commencement of the Funds' operations through June 30, 2007, and will receive an
increasing amount not to exceed 0.50% of each Fund's average daily net assets,
including net assets attributable to any preferred shares that may be
outstanding thereafter through June 30, 2009. The Investment Manager informed
the Funds that it paid the Sub-Adviser $1,733,868, $884,406 and $305,145 in
connection with sub-advisory services for Municipal II, California Municipal II
and New York Municipal II, respectively, for the six months ended November 30,
2004.
3. INVESTMENTS IN SECURITIES
(a) For the six months ended November 30, 2004, purchases and sales of
investments, other than short-term securities, were::
California New York
Municipal II Municipal II Municipal II
------------------------------------------------------------------------------------------------------------------------------------
Purchases $ 81,558,310 $49,764,963 $22,274,116
Sales 105,851,596 24,288,994 24,982,402
(b) Futures contracts outstanding at November 30, 2004:
Notional Unrealized
Amount Expiration Appreciation
Fund Type (000) Date (Depreciation)
------------------------------------------------------------------------------------------------------------------------------------
Municipal II Short: U.S. Treasury 30 Year Bond $(4,337) 3/21/05 $ 9,453,304
Long: Eurodollar Futures 3,675 9/19/05 (1,947,750)
-----------
$ 7,505,554
===========
California Municipal II Short: U.S. Treasury 30 Year Bond (98) 12/20/04 $(240,406)
Short: U.S. Treasury 30 Year Bond (927) 3/21/05 2,020,570
Long: Eurodollar Futures 2,125 9/19/05 (1,124,625)
-----------
$ 655,539
===========
New York Municipal II Short: U.S. Treasury 30 Year Bond (341) 3/21/05 $ 743,273
Long: Eurodollar Futures 518 9/19/05 (5,175)
-----------
$ 738,098
===========
30 PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.04
PIMCO MUNICIPAL INCOME FUNDS II NOTES TO FINANCIAL STATEMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
3. INVESTMENTS IN SECURITIES (CONTINUED)
(c) Transactions in options written for the six months ended November 30, 2004:
Contracts Premiums
------------------------------------------------------------------------------------------------------------------------------------
Municipal II:
-------------
Options outstanding, May 31, 2004 1,150 $ 759,359
Options written 6,926 12,174,653
Options terminated in closing purchase transactions (6,092) (6,599,499)
Options exercised (417) (298,155)
------------ ------------
Options outstanding, November 30, 2004 1,567 $ 6,036,358
============ ============
California Municipal II:
------------------------
Options outstanding, May 31, 2004 580 $ 382,981
Options written 3,658 6,548,484
Options terminated in closing purchase transactions (2,803) (3,202,752)
Options exercised (211) (150,865)
------------ ------------
Options outstanding, November 30, 2004 1,224 $ 3,577,848
============ ============
New York Municipal II:
----------------------
Options outstanding, May 31, 2004 200 $ 132,063
Options written 1,189 2,011,573
Options terminated in closing purchase transactions (915) (1,080,320)
Options exercised (73) (52,195)
------------ ------------
Options outstanding, November 30, 2004 401 $ 1,011,121
============ ============
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,
2004 were:
Gross Gross Net
Cost of Unrealized Unrealized Unrealized
Investments Appreciation Depreciation Appreciation
------------------------------------------------------------------------------------------------------------------------------------
Municipal II $1,272,777,368 $58,601,186 $3,102,749 $55,498,437
California Municipal II 662,875,327 16,007,074 3,471,708 12,535,366
New York Municipal II 224,858,238 6,419,763 1,926,634 4,493,129
5. AUCTION PREFERRED SHARES
Municipal II has issued 4,040 shares of Preferred Shares Series A, 4,040 shares
of Preferred Shares Series B, 4,040 shares of Preferred Shares Series C, 4,040
shares of Preferred Shares Series D and 4,040 shares of Preferred Shares Series
E, each with a net asset and liquidation value of $25,000 per share plus accrued
dividends.
California Municipal II has issued 2,080 shares of Preferred Shares Series A,
2,080 shares of Preferred Shares Series B, 2,080 shares of Preferred Shares
Series C, 2,080 shares of Preferred Shares Series D and 2,080 shares of
Preferred Shares Series E, each with a net asset and liquidation value of
$25,000 per share plus accrued dividends.
New York Municipal II has issued 1,800 shares of Preferred Shares Series A and
1,800 shares of Preferred Shares Series B, each with a net asset and liquidation
value of $25,000 per share, plus accrued dividends.
Dividends are accumulated daily at an annual rate set through auction
procedures. Distributions of net realized capital gains, if any, are paid
annually.
11.30.04 | PIMCO Municipal Income Funds II Semi-Annual Report 31
PIMCO MUNICIPAL INCOME FUNDS II NOTES TO FINANCIAL STATEMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
5. AUCTION PREFERRED SHARES (CONTINUED)
For the six months ended November 30, 2004, the annualized dividend rates ranged
from:
High Low At 11/30/04
--------------------------------------------------------------------------------
MUNICIPAL II:
Series A 1.66% 0.99% 1.50%
Series B 1.65% 1.00% 1.50%
Series C 1.70% 0.95% 1.70%
Series D 1.70% 0.99% 1.70%
Series E 1.64% 1.00% 1.30%
CALIFORNIA MUNICIPAL II:
------------------------
Series A 1.50% 0.62% 0.95%
Series B 1.55% 0.70% 0.95%
Series C 1.26% 0.75% 1.10%
Series D 1.45% 0.98% 1.10%
Series E 1.70% 0.70% 1.70%
NEW YORK MUNICIPAL II:
----------------------
Series A 1.65% 0.90% 1.55%
Series B 1.66% 0.45% 1.00%
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
triggering the mandatory redemption of Preferred Shares at their liquidation
value.
Preferred Shares, which are entitled to one vote per share, generally vote
together with the common stock but vote separately as a class to elect two
Trustees and on any matters affecting the rights of the Preferred Shares.
6. SUBSEQUENT COMMON DIVIDEND DECLARATIONS
On December 1, 2004, the following dividends were declared to common
shareholders payable December 31, 2004 to shareholders of record on December 17,
2004:
Municipal II $0.084375 per common share
California Municipal II $0.08125 per common share
New York Municipal II $0.08125 per common share
On January 3, 2005, the following dividends were declared to common shareholders
payable February 1, 2005 to shareholders of record on January 14, 2005:
Municipal II $0.084375 per common share
California Municipal II $0.08125 per common share
New York Municipal II $0.08125 per common share
7. LEGAL PROCEEDINGS
On September 13, 2004, the Securities and Exchange Commission (the "Commission")
announced that the Investment Manager and certain of its affiliates had agreed
to a settlement of charges that they and certain of their officers had, among
other things, violated various antifraud provisions of the federal securities
laws in connection with an alleged market-timing arrangement involving trading
of shares of various open-end investment companies ("open-end funds") advised or
distributed by the Investment Manager and certain of its affiliates. In their
settlement with the Commission, the Investment Manager and their affiliates
consented to the entry of an order by the Commission and, without admitting or
denying the findings contained in the order, agreed to implement certain
compliance and governance changes and consented to cease-and-desist orders and
censures. In addition, the Investment Manager and its affiliates agreed to pay
civil money penalties in the aggregate amount $40 million and to pay
disgorgement in the amount of $10 million, for an aggregate payment of
32 PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.04
PIMCO MUNICIPAL INCOME FUNDS II NOTES TO FINANCIAL STATEMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
7. LEGAL PROCEEDINGS (CONTINUED)
$50 million. In connection with the settlement, the Investment Manager and its
affiliates have been dismissed from the related complaint the Commission filed
on May 6, 2004 in the U.S. District Court in the Southern District of New York.
Neither the complaint nor the order alleges any inappropriate activity took
place with respect to the Funds.
In a related, action on June 1, 2004, the Attorney General of the State of New
Jersey announced that it had entered into a settlement agreement with AGI and
certain other affiliates of the Investment Manager, in connection with a
complaint filed by the New Jersey Attorney General ("NJAG") on February 17,
2004. The NJAG dismissed claims against the Sub-Adviser, which had been part of
the same complaint. In the settlement, AGI and other named affiliates neither
admitted nor denied the allegations or conclusions of law, but did agree to pay
New Jersey a civil fine of $15 million and $3 million for investigative costs
and further potential enforcement initiatives against unrelated parties. They
also undertook to implement certain governance changes. The complaint relating
to the settlement contained allegations arising out of the same matters that
were subject of the Commission order regarding market timing described above.
On September 15, 2004, the Commission announced that the Investment Manager and
certain of its affiliates agreed to settle an enforcement action in connection
with charges that they violated various antifraud and other provisions of
federal securities laws as a result of, among other things, their failure to
disclose to the board of trustees and shareholders of various open-end funds
advised or distributed by the Investment Manager and its affiliates material
facts and conflicts of interest that arose from their use of brokerage
commissions on portfolio transactions to pay for so-called "shelf space"
arrangements with certain broker-dealers. In the settlement, the Investment
Manager and its affiliates consented to the entry of an order by the Commission
without admitting or denying the findings contained in the order. In connection
with the settlement, the Investment Manager and its affiliates agreed to
undertake certain compliance and disclosure reforms and consented to
cease-and-desist orders and censures. In addition, the Investment Manager and
these affiliates agreed to pay a civil money penalty of $5 million and to pay
disgorgement of $6.6 million based upon the amount of brokerage commissions
alleged to have been paid by such open-end funds in connection with these
arrangements (and related interest). In a related action, the California
Attorney General announced on September 15, 2004 that it had entered an
agreement with an affiliate of the Investment Manager in resolution of an
investigation into matters that are similar to those discussed in the
Commission's order. The settlement agreement resolves matters described in the
compliant filed by the California Attorney General in the Superior Court of the
State of California alleging, among other things, that this affiliate violated
certain antifraud provisions of California law by failing to disclose matters
related to the shelf-space arrangements described above. In the settlement
agreement, the affiliate did not admit to any liability but agreed to pay $5
million in civil penalties and $4 million in recognition of the California
Attorney General's fees and costs associated with the investigation and related
matters. Neither the Commission's order nor the California Attorney General's
complaint alleges any inappropriate activity took place with respect to the
Funds.
Since February 2004, the Investment Manager, the Sub-Adviser and certain of
their affiliates have been named as defendants in 14 lawsuits filed in U.S.
District Court in the Southern District of New York, the Central District of
California and the Districts of New Jersey and Connecticut. Ten of those
lawsuits concern "market timing," and they have been transferred to and
consolidated for pre-trial proceedings in the U.S. District Court for the
District of Maryland; the remaining four lawsuits concern "revenue sharing" with
brokers offering "shelf space" and have been consolidated into a single action
in the U.S. District Court for the District of Connecticut. The lawsuits have
been commenced as putative class actions on behalf of investors who purchased,
held or redeemed shares of affiliated funds during specified periods or as
derivative actions on behalf of the funds. The lawsuits generally relate to the
same facts that are the subject of the regulatory proceedings discussed above.
The lawsuits seek, among other things, unspecified compensatory damages plus
interest and, in some cases, punitive damages, the rescission of investment
advisory contracts, the return of fees paid under those contracts and
restitution. The Investment Manager and the Sub-Adviser believe that other
similar lawsuits may be filed in U.S. federal or state courts naming as
defendants the Investment Manager, the Sub-Adviser, AGI, the Funds, other open-
and closed-end funds advised or distributed by the Investment Manager, the
Sub-Adviser and/or their affiliates, the boards of trustees of `those funds,
and/or other affiliates and their employees.
Under Section 9(a) of the Investment Company Act of 1940, if any of the various
regulatory proceedings or lawsuits were to result in a court injunction against
the Investment Manager, the Sub-Adviser, AGI and/or their affiliates, they and
their affiliates would, in the absence of exemptive relief granted by the
Commission, be barred from serving as an investment adviser/sub-adviser or
principal underwriter for any registered investment company, including the
Funds. In connection with an inquiry from the Commission concerning the status
of the New Jersey settlement described above under
11.30.04 | PIMCO Municipal Income Funds II Semi-Annual Report 33
PIMCO MUNICIPAL INCOME FUNDS II NOTES TO FINANCIAL STATEMENTS
November 30, 2004 (unaudited)
--------------------------------------------------------------------------------
7. LEGAL PROCEEDINGS (CONTINUED)
Section 9(a), the Investment Manager, the Sub-Adviser, and certain of their
affiliates (together, the "Applicants") have sought exemptive relief from the
Commission under Section 9(c) of the Investment Company Act of 1940. The
Commission has granted the Applicants a temporary exemption from the provisions
of Section 9(a) with respect to the New Jersey settlement until the earlier of
(i) September) 13, 2006 and (ii) the date on which the Commission takes final
action on their application for a permanent order. There is no assurance that
the Commission will issue a permanent order.
It is possible that these matters and/or other developments resulting from these
matters could lead to a decrease in the market price of the Funds' shares or
other adverse consequences to the Funds and their shareholders. However, 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 the Investment Manager's or
the Sub-Adviser's ability to perform its respective investment advisory services
relating to the Funds.
8. CORPORATE CHANGES
On July 29, 2004, Stephen Treadway resigned as the Funds' Chairman. On September
14, 2004, David C. Flattum was appointed to the Board of Trustees and Youse Guia
was named as the Funds' Chief Compliance Officer. On October 5, 2004, the Board
of Trustees elected Robert E. Connor as Chairman. On December 14, 2004, Thomas
J. Fuccillo was appointed as the Funds' Secretary.
34 PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.04
PIMCO MUNICIPAL INCOME FUNDS II FINANCIAL HIGHLIGHTS
For a share of common stock outstanding throughout each period
--------------------------------------------------------------------------------
MUNICIPAL II
----------------------------------------------------
Six months For the Period
ended For the Year June 28, 2002*
November 30, 2004 ended through
(unaudited) May 31, 2004 May 31, 2003
----------------- ------------ ---------------
Net asset value, beginning of period $ 14.01 $ 14.66 $ 14.33**
-------------------------------------------------------------------------- -------- -------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.57 1.17 0.93
-------------------------------------------------------------------------- -------- -------- ---------
Net realized and unrealized gain (loss) on investments,
futures contracts and options written 0.40 (0.77) 0.53
-------------------------------------------------------------------------- -------- -------- ---------
Total from investment operations 0.97 0.40 1.46
-------------------------------------------------------------------------- -------- -------- ---------
DIVIDENDS AND DISTRIBUTIONS ON PREFERRED SHARES FROM:
Net investment income (0.05) (0.08) (0.08)
-------------------------------------------------------------------------- -------- -------- ---------
Net realized gains -- -- (0.01)
-------------------------------------------------------------------------- -------- -------- ---------
Total dividends and distributions on preferred shares (0.05) (0.08) (0.09)
-------------------------------------------------------------------------- -------- -------- ---------
Net increase in net assets applicable to common
shareholders resulting from investment operations 0.92 0.32 1.37
-------------------------------------------------------------------------- -------- -------- ---------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS FROM:
Net investment income (0.51) (0.97) (0.84)
-------------------------------------------------------------------------- -------- -------- ---------
Net realized gains -- -- (0.09)
-------------------------------------------------------------------------- -------- -------- ---------
Total dividends and distributions to common shareholders (0.51) (0.97) (0.93)
-------------------------------------------------------------------------- -------- -------- ---------
CAPITAL SHARE TRANSACTIONS:
Common stock offering costs charged to paid-in capital
in excess of par -- -- (0.02)
-------------------------------------------------------------------------- -------- -------- ---------
Preferred shares offering costs/underwriting discounts
charged to paid-in capital in excess of par -- -- (0.09)
-------------------------------------------------------------------------- -------- -------- ---------
Total capital share transactions -- -- (0.11)
-------------------------------------------------------------------------- -------- -------- ---------
Net asset value, end of period $ 14.42 $ 14.01 $ 14.66
-------------------------------------------------------------------------- -------- -------- ---------
Market price, end of period $ 14.11 $ 13.31 $ 14.80
-------------------------------------------------------------------------- -------- -------- ---------
TOTAL INVESTMENT RETURN (1) 9.85% (3.69)% 5.19%
-------------------------------------------------------------------------- -------- -------- ---------
RATIOS/SUPPLEMENTAL DATA:
Net assets applicable to common shareholders,
end of period (000) $837,708 $812,670 $846,885
-------------------------------------------------------------------------- -------- -------- ---------
Ratio of expenses to average net assets (2)(3)(5) 1.04%(4) 1.03% 0.95%(4)
-------------------------------------------------------------------------- -------- -------- ---------
Ratio of net investment income to average net assets (2)(5) 7.98%(4) 8.16% 6.99%(4)
-------------------------------------------------------------------------- -------- -------- ---------
Preferred shares asset coverage per share $ 66,464 $ 65,224 $ 66,920
-------------------------------------------------------------------------- -------- -------- ---------
Portfolio turnover 6% 26% 27%
-------------------------------------------------------------------------- -------- -------- ---------
* Commencement of operations
** Initial public offering price of $15.00 per share less underwriting
discount of $0.675 per share.
(1) Total investment return is calculated assuming a purchase of common stock
at the current market price on the first day of each period and a sale at
the current market price on the last day for 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(h) in Notes to Financial Statements).
(4) Annualized.
(5) During the periods indicated above, the Investment Manager waived a portion
of its investment management fee. If such waiver had not been in effect,
the ratio of expenses to average net assets and the ratio of net investment
income to average net assets would have been 1.28% (annualized) and 7.74%
(annualized) respectively for the six months ended November 30, 2004; 1.28%
and 7.92%, respectively for the year ended May 31, 2004; 1.18% (annualized)
and 6.76% (annualized), respectively for the period June 28, 2002
(commencement of operations) through May 31, 2003.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
| 11.30.04 | 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
--------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL II
----------------------------------------------------
Six months For the Period
ended For the Year June 28, 2002*
November 30, 2004 ended through
(unaudited) May 31, 2004 May 31, 2003
----------------- ------------ --------------
Net asset value, beginning of period $ 13.53 $ 14.66 $ 14.33**
----------------------------------------------------------------------------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.53 1.13 0.87
----------------------------------------------------------------------------- -------- -------- --------
Net realized and unrealized gain (loss) on investments,
futures contracts and options written 0.55 (1.26) 0.46
----------------------------------------------------------------------------- -------- -------- --------
Total from investment operations 1.08 (0.13) 1.33
----------------------------------------------------------------------------- -------- -------- --------
DIVIDENDS AND DISTRIBUTIONS ON PREFERRED SHARES FROM:
Net investment income (0.05) (0.07) (0.07)
----------------------------------------------------------------------------- -------- -------- --------
Net realized gains -- -- --
----------------------------------------------------------------------------- -------- -------- --------
Total dividends and distributions on preferred shares (0.05) (0.07) (0.07)
----------------------------------------------------------------------------- -------- -------- --------
Net increase (decrease) in net assets applicable to common
shareholders resulting from investment operations 1.03 (0.20) 1.26
----------------------------------------------------------------------------- -------- -------- --------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS FROM:
Net investment income (0.49) (0.93) (0.81)
----------------------------------------------------------------------------- -------- -------- --------
Net realized gains -- -- --
----------------------------------------------------------------------------- -------- -------- --------
Total dividends and distributions to common shareholders (0.49) (0.93) (0.81)
----------------------------------------------------------------------------- -------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Common stock offering costs charged to paid-in capital
in excess of par -- -- (0.02)
----------------------------------------------------------------------------- -------- -------- --------
Preferred shares offering costs/underwriting discounts
charged to paid-in capital in excess of par -- -- (0.10)
----------------------------------------------------------------------------- -------- -------- --------
Total capital share transactions -- -- (0.12)
----------------------------------------------------------------------------- -------- -------- --------
Net asset value, end of period $ 14.07 $ 13.53 $ 14.66
----------------------------------------------------------------------------- -------- -------- --------
Market price, end of period $ 13.94 $ 13.27 $ 14.78
----------------------------------------------------------------------------- -------- -------- --------
TOTAL INVESTMENT RETURN (1) 8.80% (3.92)% 4.23%
----------------------------------------------------------------------------- -------- -------- --------
RATIOS/SUPPLEMENTAL DATA:
Net assets applicable to common shareholders,
end of period (000) $425,137 $407,659 $439,970
----------------------------------------------------------------------------- -------- -------- --------
Ratio of expenses to average net assets (2)(3)(5) 1.07%(4) 1.07% 0.97%(4)
----------------------------------------------------------------------------- -------- -------- --------
Ratio of net investment income to average net assets (2)(5) 7.58%(4) 8.08% 6.56%(4)
----------------------------------------------------------------------------- -------- -------- --------
Preferred shares asset coverage per share $ 65,874 $ 64,191 $ 67,301
----------------------------------------------------------------------------- -------- -------- --------
Portfolio turnover 4% 43% 84%
----------------------------------------------------------------------------- -------- -------- --------
* Commencement of operations
** Initial public offering price of $15.00 per share less underwriting
discount of $0.675 per share.
(1) Total investment return is calculated assuming a purchase of common stock
at the current market price on the first day of each period and a sale at
the current market price on the last day for 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(h) in Notes to Financial Statements).
(4) Annualized.
(5) During the periods indicated above, the Investment Manager waived a portion
of its investment management fee. If such waiver had not been in effect,
the ratio of expenses to average net assets and the ratio of net investment
income to average net assets would have been 1.32% (annualized) and 7.33%
(annualized) respectively, for the six months ended November 30, 2004;
1.31% and 7.83%, respectively for the year ended May 31, 2004; 1.20%
(annualized) and 6.34% (annualized), respectively for the period June 28,
2002 (commencement of operations) through May 31, 2003.
36 PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.04 |
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
PIMCO MUNICIPAL INCOME FUNDS II FINANCIAL HIGHLIGHTS
For a share of common stock outstanding throughout each period
--------------------------------------------------------------------------------
NEW YORK MUNICIPAL II
----------------------------------------------------
Six months For the Period
ended For the Year June 28, 2002*
November 30, 2004 ended through
(unaudited) May 31, 2004 May 31, 2003
----------------- ------------ --------------
Net asset value, beginning of period $ 13.54 $ 14.45 $ 14.33**
----------------------------------------------------------------------------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.54 1.06 0.86
----------------------------------------------------------------------------- -------- -------- --------
Net realized and unrealized gain (loss) on investments,
futures contracts and options written 0.40 (0.97) 0.28
----------------------------------------------------------------------------- -------- -------- --------
Total from investment operations 0.94 0.09 1.14
----------------------------------------------------------------------------- -------- -------- --------
DIVIDENDS AND DISTRIBUTIONS ON PREFERRED SHARES FROM:
Net investment income (0.05) (0.07) (0.08)
----------------------------------------------------------------------------- -------- -------- --------
Net realized gains -- -- --
----------------------------------------------------------------------------- -------- -------- --------
Total dividends and distributions on preferred shares (0.05) (0.07) (0.08)
----------------------------------------------------------------------------- -------- -------- --------
Net increase in net assets applicable to common
shareholders resulting from investment operations 0.89 0.02 1.06
----------------------------------------------------------------------------- -------- -------- --------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS FROM:
Net investment income (0.49) (0.93) (0.81)
----------------------------------------------------------------------------- -------- -------- --------
Net realized gains -- -- --
----------------------------------------------------------------------------- -------- -------- --------
Total dividends and distributions to common shareholders (0.49) (0.93) (0.81)
----------------------------------------------------------------------------- -------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Common stock offering costs charged to paid-in capital
in excess of par -- -- (0.03)
----------------------------------------------------------------------------- -------- -------- --------
Preferred shares offering costs/underwriting discounts
charged to paid-in capital in excess of par -- -- (0.10)
----------------------------------------------------------------------------- -------- -------- --------
Total capital share transactions -- -- (0.13)
----------------------------------------------------------------------------- -------- -------- --------
Net asset value, end of period $ 13.94 $ 13.54 $ 14.45
----------------------------------------------------------------------------- -------- -------- --------
Market price, end of period $ 14.30 $ 13.05 $ 14.71
----------------------------------------------------------------------------- -------- -------- --------
TOTAL INVESTMENT RETURN (1) 13.47% (5.15)% 3.76%
----------------------------------------------------------------------------- -------- -------- --------
RATIOS/SUPPLEMENTAL DATA:
Net assets applicable to common shareholders,
end of period (000) $145,426 $140,958 $149,606
----------------------------------------------------------------------------- -------- -------- --------
Ratio of expenses to average net assets (2)(3)(5) 1.16%(4) 1.15% 1.02%(4)
----------------------------------------------------------------------------- -------- -------- --------
Ratio of net investment income to average net assets (2)(5) 7.82%(4) 7.58% 6.47%(4)
----------------------------------------------------------------------------- -------- -------- --------
Preferred shares asset coverage per share $ 65,391 $ 64,148 $ 66,552
----------------------------------------------------------------------------- -------- -------- --------
Portfolio turnover 10% 18% 27%
----------------------------------------------------------------------------- -------- -------- --------
* Commencement of operations
** Initial public offering price of $15.00 per share less underwriting
discount of $0.675 per share.
(1) Total investment return is calculated assuming a purchase of common stock
at the current market price on the first day of each period and a sale at
the current market price on the last day for each period reported.
Dividends 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(h) in Notes to Financial Statements).
(4) Annualized.
(5) During the periods indicated above, the Investment Manager waived a portion
of its investment management fee. If such waiver had not been in effect,
the ratio of expenses to average net assets and the ratio of net investment
income to average net assets would have been 1.40% (annualized) and 7.58%
(annualized) respectively; for the six months ended November 30, 2004;
1.39% and 7.34%, respectively for the year ended May 31, 2004; 1.25%
(annualized) and 6.25% (annualized), respectively for the period June 28,
2002 (commencement of operations) through May 31, 2003.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
| 11.30.04 | PIMCO Municipal Income Funds II Semi-Annual Report 37
PIMCO MUNICIPAL INCOME FUNDS II ANNUAL SHAREHOLDER MEETINGS (unaudited)
--------------------------------------------------------------------------------
The Funds held their annual meetings of shareholders on December 29, 2004.
Common/Preferred shareholders voted to re-elect Paul Belica as a Class II
Trustee to serve until 2007 and David C. Flattum as a Class III Trustee to serve
until 2005. Preferred shareholders voted to re-elect John J. Dalessandro II as a
Class II Trustee to serve until 2007.
The resulting vote count is indicated below:
Withhold
Affirmative Authority
--------------------------------------------------------------------------------
MUNICIPAL II:
-------------
Election of Paul Belica 43,906,733 626,448
Election of David C. Flattum 43,970,951 462,230
Election of John J. Dalessandro II* 19,591 77
CALIFORNIA MUNICIPAL II:
------------------------
Election of Paul Belica 21,609,776 184,539
Election of David C. Flattum 21,644,845 149,470
Election of John J. Dalessandro II* 7,745 94
NEW YORK MUNICIPAL II:
----------------------
Election of Paul Belica 7,536,550 131,036
Election of David C. Flattum 7,545,768 121,818
Election of John J. Dalessandro II* 3,253 1
Robert E. Connor, Hans W. Kertess*, and R. Peter Sullivan continue to serve as
Trustees of the Funds.
-------------------------
* Preferred Stock Trustee
38 PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.04
TRUSTEES AND PRINCIPAL OFFICERS
Robert E. Connor
Chairman of the Board of Trustees
Paul Belica
Trustee
John J. Dalessandro II
Trustee
David C. Flattum
Trustee
Hans W. Kertess
Trustee
R. Peter Sullivan III
Trustee
Brian S. Shlissel
President & Chief Executive Officer
Newton B. Schott, Jr.
Vice President
Mark V. McCray
Vice President
Lawrence G. Altadonna
Treasurer, Principal Financial & Accounting Officer
Thomas J. Fuccillo
Secretary
Youse Guia
Chief Compliance Officer
Jennifer A. Patula
Assistant Secretary
INVESTMENT MANAGER
PA Fund Management LLC
1345 Avenue of the Americas
New York, NY 10105
SUB-ADVISER
Pacific Investment Management Company LLC
840 Newport Center Drive
Newport Beach, CA 92660
TRANSFER AGENT, DIVIDEND PAYING AGENT AND REGISTRAR
PFPC Inc.
P.O. Box 43027
Providence, RI 02940-3027
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
300 Madison Avenue
New York, NY 10017
LEGAL COUNSEL
Ropes & Gray LLP
One International Place
Boston, MA 02210-2624
This report, including the financial information herein, is transmitted to the
shareholders of PIMCO Municipal Income Fund II, PIMCO California Municipal
Income Fund II and PIMCO New York Municipal Income Fund II for their
information. It is not a prospectus, circular or representation intended for use
in the purchase of shares of the Funds or any securities mentioned in this
report.
The financial information included herein is taken from the records of the Funds
without examination by an independent registered public accounting firm, who did
not express an opinion hereon.
A description of the policies and procedures that the Funds have adopted to
determine how to vote proxies relating to portfolio securities is available (i)
without charge, upon request, by calling the Funds at (800) 331-1710; (ii) on
the Funds' website at www.pimcoadvisors.com; and (iii) on the Securities and
Exchange Commission's website at www.sec.gov.
The Funds file their complete schedules of portfolio holdings with the
Securities and Exchange Commission (the "Commission") for the first and third
quarters of its fiscal year on Form N-Q. Form N-Q is available (i) on the Funds'
website at www.pimcoadvisors.com (ii) on the Commission's website at
www.sec.gov, and (iii) at the Commission's Public Reference Room located at the
Commission's headquarters' office, 450 5th Street N.W. Room 1200, Washington,
D.C. 20459, (202) 942-8090.
Information on the Funds is available at www.pimcoadvisors.com or by calling the
Funds' transfer agent 1-800-331-1710.
[PIMCO ADVISORS LOGO]
ITEM 2. CODE OF ETHICS Not required in this filing.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT Not required in this filing.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES Not required in this filing.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANT Not required in this filing.
ITEM 6. SCHEDULE OF INVESTMENTS Schedule of Investments is included as part of
the report to shareholders filed under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES Not required in this filing.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED COMPANIES.
TOTAL NUMBER
OF SHARES PURCHASED MAXIMUM NUMBER OF
TOTAL NUMBER AVERAGE AS PART OF PUBLICLY SHARES THAT MAY YET BE
OF SHARES PRICE PAID ANNOUNCED PLANS OR PURCHASED UNDER THE PLANS
PERIOD PURCHASED PER SHARE PROGRAMS OR PROGRAMS
------ ------------ ---------- ------------------- -------------------------
June 2004 N/A N/A N/A N/A
July 2004 N/A N/A N/A N/A
August 2004 N/A N/A N/A N/A
September 2004 N/A 14.28 36,446 N/A
October 2004 N/A 14.31 36,208 N/A
November 2004 N/A 14.47 34,785 N/A
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS In January 2004, the
Registrant's Board of Trustees adopted a Nominating Committee Charter governing
the affairs of the Nominating Committee of the Board, which is posted on the
PIMCO Advisors website at www.pimcoadvisors.com. Appendix B to the Nominating
Committee Charter includes "Procedures for Shareholders to Submit Nominee
Candidates," which sets forth the procedures by which shareholders may recommend
nominees to the Registrant's Board of Trustees. Among other requirements, the
procedures provide that the recommending shareholder must submit any
recommendation in writing to the Registrant to the attention of the Registrant's
Secretary, at the address of the principal executive offices of the Registrant
and that such submission must be received at such offices not less than 45 days
nor more than 75 days prior to the date of the Board or shareholder meeting at
which the nominee would be elected. Any recommendation must include certain
biographical and other information regarding the candidate and the recommending
shareholder, and must include a written and signed consent of the candidate to
be named as a nominee and to serve as a Trustee if elected. The foregoing
description of the requirements is only a summary and is qualified in its
entirety by reference to Appendix B of the Nominating Committee Charter.
ITEM 10. CONTROLS AND PROCEDURES
(a) The registrant's President and Chief Executive Officer and Principal
Financial Officer have concluded that the registrant's disclosure controls and
procedures (as defined in Rule 30a-2(c) under the Investment Company Act of
1940, as amended are effective based on their evaluation of these controls and
procedures as of a date within 90 days of the filing date of this document.
(b) There were no significant changes in the registrant's internal controls or
in factors that could affect these controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
ITEM 11. EXHIBITS
(a) Exhibit 99.302 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.
PIMCO Municipal Income Fund II
By /s/ Brian S. Shlissel
------------------------
Brian S. Shlissel, President & Chief Executive Officer
Date: February 09, 2005
By /s/ Lawrence G. Altadonna
----------------------------
Lawrence G. Altadonna, Treasurer, Principal Financial & Accounting Officer
Date: February 09, 2005
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
------------------------
Brian S. Shlissel, President & Chief Executive Officer
Date: February 09, 2005
By /s/ Lawrence G. Altadonna
----------------------------
Lawrence G. Altadonna, Treasurer, Principal Financial & Accounting Officer
Date: February 09, 2005