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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 811-21077
PIMCO California Municipal Income Fund II |
(Exact name of registrant as specified in charter)
1633 Broadway, New York, New York | 10019 | |
(Address of principal executive offices) | (Zip code) |
Lawrence G. Altadonna 1633 Broadway, New York, New York 10019 |
(Name and address of agent for service)
Registrants telephone number, including area code: 212-739-3371
Date of fiscal year end: May 31, 2012
Date of reporting period: November 30, 2011
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, 100 F Street, NE, Washington, DC 20549-2001. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. REPORT TO SHAREHOLDERS
Semi-Annual Report
November 30, 2011
PIMCO Municipal Income Fund II
PIMCO California Municipal Income Fund II
PIMCO New York Municipal Income Fund II
11.30.11 | PIMCO Municipal Income Funds II Semi-Annual Report | 1 |
Hans W. Kertess
Chairman
Brian S. Shlissel
President & CEO
Municipal bonds delivered solid returns for investors during the six-month period ended November 30, 2011. Contributing to gains was a gradually improving U.S. economy, an overall decline in the issuance of new bonds and continued demand for tax-advantaged investment products.
Six-Months in Review
For the six-month period ended November 30, 2011:
| PIMCO Municipal Income Fund II advanced 9.84% on net asset value (NAV) and 10.69% on market price. |
| PIMCO California Municipal Income Fund II rose 8.63% on NAV and 5.91 % on market price. |
| PIMCO New York Municipal Income Fund II increased 6.62% on NAV and 6.22% on market price. |
U.S. gross domestic product (GDP), the value of goods and services produced in the country, the broadest measure of
economic activity and the principal indicator of economic performance, rose at an annual rate of 1.3% between April and June 2011 and at 1.8% between July and September 2011. Growth in the final two months of the fiscal period was expected to be similarly modest.
The Federal Reserve (the Fed) maintained a cautious stance during the six-month period as they revealed that key interest rates would remain at historic lows at least through mid-2013. The Fed also launched a third quantitative easing program, dubbed Operation Twist, which entails the selling of $400 billion in short-term U.S. debt and the purchase of a similar amount of longer-term debt. This move was intended to lower mortgage rates, already at the lowest levels in decades, in an attempt to bolster the housing market.
The Fed warned of significant downside risks to the economic outlook, including strains in global financial markets. To a certain respect this referred to the deepening sovereign debt crisis in the European Union (E.U.). The crisis has raised fears that the Euro-zone group of nations may break up. The economic and political implications on the rest of the world, including the United States, are uncertain.
Another downside risk is Americas burgeoning debt crisis. Standard & Poors, (S&P), was so concerned about the inability of Congress and the White House to solve the nations deepening fiscal problems that it downgraded the U.S. governments long-term credit rating from AAA to AA+. This concern was validated by the subsequent failure of a Congressional super committee to agree on $1.2 trillion in spending cuts.
2 | PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.11 |
Ironically, concerns regarding the level of U.S. debt did not hinder its reputation as a safe haven investment. In the wake of S&Ps downgrade, investors bid up prices the yield on the benchmark 10-year U.S. Treasury bond fell to a historic low of 1.72%. Since municipal bonds tend to correlate closely with comparable Treasury securities, they rallied as well.
In terms of issuance, the supply of new municipal bonds fell by approximately one-third during the six-month period ended November 30, 2011 compared to the same period in 2010.
Outlook
In addition to uncertainties surrounding the European and U.S. debt crisis, the Bush-era tax cuts are scheduled to expire on December 31, 2012. This possibility, combined with ongoing budget struggles at the state and local level, suggests that tax rates are likely to move higher. This bodes well for municipal bonds, which will continue to remain attractive for investors seeking reliable, tax-advantaged income.
For specific information on the Funds and their performance, please review the following pages. If you have any questions regarding the information provided, we encourage you to contact your financial advisor or call the Funds shareholder servicing agent at (800) 254-5197. In addition, a wide range of information and resources are available on our website, www.allianzinvestors.com/closedendfunds.
Together with Allianz Global Investors Fund Management LLC, the Funds investment manager, and Pacific Investment Management Company LLC (PIMCO), the Funds sub-adviser, we thank you for investing with us.
We remain dedicated to serving your investment needs.
Sincerely,
Hans W. Kertess Chairman |
Brian S. Shlissel President & CEO |
Receive this report electronically and eliminate paper mailings. To enroll, go to www.allianzinvestors.com/ edelivery.
11.30.11 | PIMCO Municipal Income Funds II Semi-Annual Report | 3 |
PIMCO Municipal Income Funds II Fund Insights
November 30, 2011 (unaudited)
For the six-months ended November 30, 2011, PIMCO Municipal Income Fund II returned 9.84% on net asset value (NAV) and 10.69% on market price.
For the six-months ended November 30, 2011, PIMCO California Municipal Income Fund II returned 8.63% on net asset value (NAV) and 5.91% on market price.
For the six-months ended November 30, 2011, PIMCO New York Municipal Income Fund II returned 6.62% on net asset value (NAV) and 6.22% on market price.
The municipal bond market produced positive returns during the six-month fiscal period ended November 30, 2011. The overall municipal market, as measured by the Barclays Capital Municipal Bond Index, posted positive returns during five of the six months in the reporting period. Factors supporting the market during the period included: robust investor demand as fear of mass defaults from earlier in the year were somewhat mitigated, as states experienced improving revenue and actively addressed structural budgetary issues; a sharp decline in new issuance of municipal securities; sharply declining interest rates due to several flights to quality.
During the reporting period, all three funds had a preference for revenue bonds versus general obligation bonds which was beneficial for results. California Municipal Income II also benefited from its allocation to general obligation bonds, given their solid results.
The Funds were rewarded for having exposure to tobacco bonds . This higher yielding sector outperformed the benchmark during the six-months ended November 30, 2011.
Exposure to health care was additive to the Funds performance as this sector outperformed the benchmarks. Municipal Income II and New York Municipal Income II benefited from exposure to the corporate-backed sector. California Municipal IIs performance was enhanced by exposure to the education sector.
Shorter duration than that of their benchmarks detracted from the performance of each fund, as municipal yields declined during the reporting period. A steepening yield curve bias also adversely effected the Funds results, as the municipal curve flattened during the six-month period.
4 | PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.11 |
PIMCO Municipal Income Funds II Performance & Statistics
November 30, 2011 (unaudited)
Municipal II: |
||||||||
Total Return(1): | Market Price | NAV | ||||||
Six Month |
10.69% | 9.84% | ||||||
1 Year |
13.66% | 10.43% | ||||||
5 Year |
0.04% | 0.01% | ||||||
Commencement of Operations (6/28/02) to 11/30/11 |
3.80% | 3.86% |
California Municipal II: |
||||||||
Total Return(1): | Market Price | NAV | ||||||
Six Month |
5.91% | 8.63% | ||||||
1 Year |
15.70% | 9.16% | ||||||
5 Year |
2.90% | | 4.89% | |||||
Commencement of Operations (6/28/02) to 11/30/11 |
2.28% | 0.93% |
11.30.11 | PIMCO Municipal Income Funds II Semi-Annual Report | 5 |
PIMCO Municipal Income Funds II Performance & Statistics
November 30, 2011 (unaudited)
New York Municipal II: |
||||||||
Total Return(1): | Market Price | NAV | ||||||
Six Month |
6.22% | 6.62% | ||||||
1 Year |
6.03% | 6.70% | ||||||
5 Year |
0.13% | | 0.56% | |||||
Commencement of Operations (6/28/02) to 11/30/11 |
3.62% | 3.36% |
(1) Past Performance is no guarantee of future results. Total return is calculated by determining the percentage change in NAV or market price (as applicable) in the specified period. The calculation assumes that all income dividends and capital gain distributions, if any, have been reinvested. Total return does not reflect broker commissions or sales charges in connection with the purchase or sale of Fund shares. Total return for a period of less than one year is not annualized. Total return for a period of more than one year represents the average annual total return.
Performance at market price will differ from results at NAV. Although market price returns typically reflect investment results over time, during shorter periods returns at market price can also be influenced by factors such as changing views about the Funds, market conditions, supply and demand for each Funds shares, or changes in Funds dividends.
An investment in the Funds involves risk, including the loss of principal. Total return, market price, market price yield and NAV will fluctuate with changes in market conditions. This data is provided for information purposes only and is not intended for trading purposes. Closed-end funds, unlike open-end funds, are not continuously offered. There is a one time public offering and once issued, shares of closed-end funds are traded in the open market through a stock exchange. NAV is equal to total assets attributable to common shareholders less total liabilities divided by the number of common shares outstanding. Holdings are subject to change daily.
(2) Market Price Yield is determined by dividing the annualized current monthly per common share dividend (comprised of net investment income) payable to common shareholders by the market price per common share at November 30, 2011.
6 | PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.11 |
PIMCO Municipal Income Fund II Schedule of Investments
November 30, 2011 (unaudited)
Principal Amount (000s) |
Value | |||||||||||
|
MUNICIPAL BONDS & NOTES 98.1% |
|||||||||||
Alabama 1.3% | ||||||||||||
$ |
10,000 |
|
Birmingham-Baptist Medical Centers Special Care Facs. Financing Auth. Rev., |
$ | 8,907,900 | |||||||
|
1,235 |
|
Montgomery BMC Special Care Facs. Financing Auth. Rev., |
1,149,106 | ||||||||
2,000 | State Docks Department Rev., 6.00%, 10/1/40 |
2,117,700 | ||||||||||
|
2,650 |
|
Tuscaloosa Public Educational Building Auth. Rev., Stillman College Project, |
2,172,231 | ||||||||
|
|
|||||||||||
14,346,937 | ||||||||||||
|
|
|||||||||||
Alaska 0.3% | ||||||||||||
5,900 | Northern Tobacco Securitization Corp. Rev., 5.00%, 6/1/46, Ser. A |
3,700,598 | ||||||||||
|
|
|||||||||||
Arizona 9.8% | ||||||||||||
Health Facs. Auth. Rev., Banner Health, |
||||||||||||
3,500 | 5.00%, 1/1/35, Ser. A |
3,519,880 | ||||||||||
2,860 | 5.50%, 1/1/38, Ser. D |
2,967,307 | ||||||||||
29,700 | Pima Cnty. Industrial Dev. Auth. Rev., |
|||||||||||
5.00%, 9/1/39 |
29,433,591 | |||||||||||
Pinal Cnty. Electric Dist. No. 3 Rev., |
||||||||||||
1,750 | 5.25%, 7/1/36 |
1,785,560 | ||||||||||
3,700 | 5.25%, 7/1/41 |
3,772,372 | ||||||||||
Salt River Project Agricultural Improvement & Power Dist. Rev., Ser. A (j), |
||||||||||||
41,100 | 5.00%, 1/1/37 |
42,488,769 | ||||||||||
10,000 | 5.00%, 1/1/39 |
10,541,100 | ||||||||||
11,400 | Salt Verde Financial Corp. Rev., 5.00%, 12/1/37 |
10,469,190 | ||||||||||
1,500 | Tuscon Electric Power Co., 5.25%, 10/1/40, Ser. A |
1,473,645 | ||||||||||
|
|
|||||||||||
106,451,414 | ||||||||||||
|
|
|||||||||||
California 14.4% | ||||||||||||
Bay Area Toll Auth. Rev., San Francisco Bay Area, |
||||||||||||
6,000 | 5.00%, 10/1/29 |
6,377,760 | ||||||||||
1,430 | 5.00%, 4/1/34, Ser. F-1 |
1,485,613 | ||||||||||
1,565 | Foothill-Eastern Transportation Corridor Agcy. Rev., 5.875%, 1/15/26 (IBC-NPFGC) |
1,569,132 | ||||||||||
Golden State Tobacco Securitization Corp. Rev., Ser. A-1, |
||||||||||||
8,750 | 5.00%, 6/1/33 |
5,975,638 | ||||||||||
7,000 | 5.75%, 6/1/47 |
4,939,830 | ||||||||||
2,000 | Hayward Unified School Dist., GO, 5.00%, 8/1/33 |
1,986,780 | ||||||||||
Health Facs. Financing Auth. Rev., |
||||||||||||
1,500 | Scripps Health, 5.00%, 11/15/36, Ser. A |
1,518,585 | ||||||||||
Sutter Health, |
||||||||||||
6,300 | 5.00%, 11/15/42, Ser. A (IBC-NPFGC) |
6,135,318 | ||||||||||
3,000 | 6.00%, 8/15/42, Ser. B |
3,266,550 |
11.30.11 | PIMCO Municipal Income Funds II Semi-Annual Report | 7 |
PIMCO Municipal Income Fund II Schedule of Investments
November 30, 2011 (unaudited) (continued)
Principal Amount (000s) |
Value | |||||||||||
California (continued) | ||||||||||||
$ | 1,500 | Indian Wells Redev. Agcy., Tax Allocation, Whitewater Project, |
$ | 1,250,955 | ||||||||
2,000 | Los Angeles Community College Dist., GO, 5.00%, 8/1/32, Ser. A (FGIC-NPFGC) |
2,086,860 | ||||||||||
4,000 | Los Angeles Department of Water & Power Rev., 5.00%, 7/1/39, Ser. A-1 (AMBAC) |
4,105,400 | ||||||||||
5,000 | Los Angeles Unified School Dist., GO, 5.00%, 7/1/30, Ser. E (AMBAC) |
5,196,850 | ||||||||||
1,365 | Lynwood Utility Auth. Rev., 5.00%, 6/1/29, Ser. A (AGC) |
1,408,857 | ||||||||||
2,000 | Montebello Unified School Dist., GO, 5.00%, 8/1/33 (AGM) |
2,076,660 | ||||||||||
1,750 | M-S-R Energy Auth. Rev., 6.50%, 11/1/39, Ser. B |
1,939,052 | ||||||||||
3,300 | Municipal Finance Auth. Rev., Azusa Pacific Univ. Project, 7.75%, 4/1/31, Ser. B |
3,544,002 | ||||||||||
|
650 |
|
Murrieta Valley Unified School Dist. Public Financing Auth., Special Tax, 4.75%, 9/1/36, Ser. A (AGC) |
619,054 | ||||||||
3,000 | Newport Beach Rev., Hoag Memorial Hospital Presbyterian, 5.875%, 12/1/30 |
3,290,970 | ||||||||||
500 | Peralta Community College Dist., GO, 5.00%, 8/1/39, Ser. C |
507,590 | ||||||||||
2,000 | San Diego Cnty. Water Auth., CP, 5.00%, 5/1/38, Ser. 2008-A (AGM) |
2,046,100 | ||||||||||
3,300 | San Marcos Unified School Dist., GO, 5.00%, 8/1/38, Ser. A |
3,378,507 | ||||||||||
|
2,000 |
|
Santa Clara Cnty. Financing Auth. Rev., El Camino Hospital, 5.75%, 2/1/41, Ser. A (AMBAC) |
2,059,060 | ||||||||
State, GO, |
||||||||||||
7,000 | 5.00%, 12/1/31 (NPFGC) |
7,096,320 | ||||||||||
2,925 | 5.00%, 11/1/32 |
2,972,677 | ||||||||||
1,590 | 5.00%, 6/1/37 |
1,594,532 | ||||||||||
5,200 | 5.125%, 8/1/36 |
5,300,932 | ||||||||||
2,500 | 5.25%, 3/1/38 |
2,546,350 | ||||||||||
5,945 | 5.25%, 11/1/40 |
6,076,206 | ||||||||||
5,750 | 5.50%, 3/1/40 |
6,072,862 | ||||||||||
9,500 | 6.00%, 4/1/38 |
10,485,815 | ||||||||||
2,300 | State Univ. Rev., 5.00%, 11/1/30, Ser. A (AMBAC) |
2,352,601 | ||||||||||
Statewide Communities Dev. Auth. Rev., |
||||||||||||
California Baptist Univ., |
||||||||||||
3,390 | 5.75%, 11/1/17, Ser. B (a)(c)(f) |
3,527,764 | ||||||||||
850 | 6.50%, 11/1/21 |
919,598 | ||||||||||
1,000 | Cottage Health, 5.00%, 11/1/40 |
984,920 | ||||||||||
Methodist Hospital Project (FHA), |
||||||||||||
5,500 | 6.625%, 8/1/29 |
6,562,490 | ||||||||||
19,500 | 6.75%, 2/1/38 |
22,490,715 | ||||||||||
5,690 | Sutter Health, 6.00%, 8/15/42, Ser. A |
6,195,556 | ||||||||||
4,725 | Torrance Rev., Memorial Medical Center, 5.00%, 9/1/40, Ser. A |
4,618,924 | ||||||||||
|
|
|||||||||||
156,563,385 | ||||||||||||
|
|
8 | PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.11 |
PIMCO Municipal Income Fund II Schedule of Investments
November 30, 2011 (unaudited) (continued)
Principal Amount (000s) |
Value | |||||||||||
Colorado 1.2% | ||||||||||||
$ | 5,800 | Aurora Rev., Childrens Hospital Assoc., 5.00%, 12/1/40 |
$ | 5,782,368 | ||||||||
1,000 | Denver Health & Hospital Auth. Rev., 5.625%, 12/1/40 |
990,810 | ||||||||||
2,500 | Health Facs. Auth. Rev., Ser. A, 5.00%, 2/1/41 |
2,477,100 | ||||||||||
1,000 | American Baptist Homes, 5.90%, 8/1/37 |
836,570 | ||||||||||
500 | Evangelical Lutheran, 6.125%, 6/1/38 |
504,285 | ||||||||||
|
2,000 |
|
Housing & Finance Auth. Rev., Evergreen Country Day School, Inc. Project, |
1,314,160 | ||||||||
1,430 | Public Auth. for Colorado Energy Rev., 6.50%, 11/15/38 |
1,538,923 | ||||||||||
|
|
|||||||||||
13,444,216 | ||||||||||||
|
|
|||||||||||
Connecticut 0.3% | ||||||||||||
1,250 | Harbor Point Infrastructure Improvement Dist., Tax Allocation, 7.875%, 4/1/39, Ser. A |
1,358,125 | ||||||||||
2,000 | State Health & Educational Fac. Auth. Rev., Hartford Healthcare, 5.00%, 7/1/41, Ser. A |
1,981,620 | ||||||||||
|
|
|||||||||||
3,339,745 | ||||||||||||
|
|
|||||||||||
Florida 4.2% | ||||||||||||
1,000 | Brevard Cnty. Health Facs. Auth. Rev., Health First, Inc. Project, 7.00%, 4/1/39 |
1,107,070 | ||||||||||
600 | Broward Cnty. Airport Rev., 5.375%, 10/1/29, Ser. O |
631,026 | ||||||||||
8,500 | Broward Cnty. Water & Sewer Rev., 5.25%, 10/1/34, Ser. A (j) |
9,107,410 | ||||||||||
1,000 | Clearwater Rev., 5.25%, 12/1/39, Ser. A |
1,069,230 | ||||||||||
340 | Dev. Finance Corp. Rev., Renaissance Charter School, 6.50%, 6/15/21, Ser. A |
342,149 | ||||||||||
6,205 | Governmental Utility Auth. Rev., Barefoot Bay Utilities System, 5.00%, 10/1/29 (AMBAC) |
6,207,792 | ||||||||||
3,000 | Highlands Cnty. Health Facs. Auth. Rev., Adventist Health System, 5.625%, 11/15/37, Ser. B |
3,131,580 | ||||||||||
7,135 | Jacksonville Health Facs. Auth. Rev., Ascension Health, 5.25%, 11/15/32, Ser. A |
7,269,281 | ||||||||||
3,000 | Leesburg Hospital Rev., Leesburg Regional Medical Center Project, 5.50%, 7/1/32 |
2,934,810 | ||||||||||
500 | Sarasota Cnty. Health Facs. Auth. Rev., 5.75%, 7/1/37 |
417,800 | ||||||||||
7,900 | State Board of Education, GO, 5.00%, 6/1/38, Ser. D (j) |
8,375,343 | ||||||||||
5,000 | Sumter Landing Community Dev. Dist. Rev., 4.75%, 10/1/35, Ser. A (NPFGC) |
4,320,500 | ||||||||||
|
|
|||||||||||
44,913,991 | ||||||||||||
|
|
|||||||||||
Georgia 0.4% | ||||||||||||
1,500 | Atlanta Airport Rev., 5.00%, 1/1/40, Ser. A |
1,516,830 | ||||||||||
2,775 | Medical Center Hospital Auth. Rev., Spring Harbor Green Island Project, 5.25%, 7/1/37 |
2,256,713 | ||||||||||
|
|
|||||||||||
3,773,543 | ||||||||||||
|
|
|||||||||||
Illinois 7.6% | ||||||||||||
10,000 | Chicago, GO, 5.00%, 1/1/34, Ser. C (j) |
10,029,200 | ||||||||||
Chicago, Special Assessment, Lake Shore East, |
||||||||||||
2,849 | 6.625%, 12/1/22 |
2,936,208 | ||||||||||
6,019 | 6.75%, 12/1/32 |
6,195,658 | ||||||||||
1,250 | Chicago Motor Fuel Tax Rev., 5.00%, 1/1/38, Ser. A (AGC) |
1,263,650 | ||||||||||
5,000 | Cicero, GO, 5.25%, 12/1/31 (NPFGC) |
5,050,650 |
11.30.11 | PIMCO Municipal Income Funds II Semi-Annual Report | 9 |
PIMCO Municipal Income Fund II Schedule of Investments
November 30, 2011 (unaudited) (continued)
Principal Amount (000s) |
Value | |||||||||||
Illinois (continued) | ||||||||||||
Finance Auth. Rev., |
||||||||||||
$ | 2,500 | Christian Homes, Inc., 5.75%, 5/15/31, Ser. A |
$ | 2,248,825 | ||||||||
250 | Leafs Hockey Club Project, 6.00%, 3/1/37, Ser. A (e) |
62,712 | ||||||||||
1,000 | Memorial Health Systems, 5.50%, 4/1/39 |
1,010,110 | ||||||||||
700 | OSF Healthcare System, 7.125%, 11/15/37, Ser. A |
779,989 | ||||||||||
2,000 | Provena Health, 6.00%, 5/1/28, Ser. A |
2,048,880 | ||||||||||
5,000 | Univ. of Chicago, 5.50%, 7/1/37, Ser. B (j) |
5,405,550 | ||||||||||
37,000 | Sports Facs. Auth. Rev., 5.50%, 6/15/30 (AMBAC) |
38,469,270 | ||||||||||
Village of Hillside, Tax Allocation, Mannheim Redev. Project, |
||||||||||||
4,500 | 6.55%, 1/1/20 |
4,270,275 | ||||||||||
2,900 | 7.00%, 1/1/28 |
2,566,094 | ||||||||||
|
|
|||||||||||
82,337,071 | ||||||||||||
|
|
|||||||||||
Indiana 0.4% | ||||||||||||
1,500 | Finance Auth. Rev., Duke Energy Indiana, Inc., 6.00%, 8/1/39, Ser. B |
1,630,080 | ||||||||||
Vigo Cnty. Hospital Auth. Rev., Union Hospital, Inc., |
||||||||||||
990 | 5.80%, 9/1/47 (a)(c) |
839,183 | ||||||||||
1,900 | 7.50%, 9/1/22 |
2,197,331 | ||||||||||
|
|
|||||||||||
4,666,594 | ||||||||||||
|
|
|||||||||||
Iowa 3.9% | ||||||||||||
Finance Auth. Rev., |
||||||||||||
Deerfield Retirement Community, Inc., Ser. A, |
||||||||||||
250 | 5.50%, 11/15/27 |
188,890 | ||||||||||
1,075 | 5.50%, 11/15/37 |
739,299 | ||||||||||
4,500 | Edgewater LLC Project, 6.75%, 11/15/42 |
3,858,660 | ||||||||||
46,000 | Tobacco Settlement Auth. Rev., 5.60%, 6/1/34, Ser. B |
37,250,340 | ||||||||||
|
|
|||||||||||
42,037,189 | ||||||||||||
|
|
|||||||||||
Kansas 0.1% | ||||||||||||
500 | Dev. Finance Auth. Rev., Adventist Health, 5.75%, 11/15/38 |
540,650 | ||||||||||
850 | Manhattan Rev., Meadowlark Hills Retirement, 5.00%, 5/15/36, Ser. A |
715,861 | ||||||||||
|
|
|||||||||||
1,256,511 | ||||||||||||
|
|
|||||||||||
Kentucky 0.3% | ||||||||||||
Economic Dev. Finance Auth. Rev., |
||||||||||||
2,500 | Catholic Healthcare Partners, 5.25%, 10/1/30 |
2,509,375 | ||||||||||
1,000 | Owensboro Medical Healthcare Systems, 6.375%, 6/1/40, Ser. A |
1,045,610 | ||||||||||
|
|
|||||||||||
3,554,985 | ||||||||||||
|
|
|||||||||||
Louisiana 4.7% | ||||||||||||
Local Govt Environmental Facs. & Community Dev. Auth. Rev., |
||||||||||||
450 | Westlake Chemical Corp., 6.50%, 11/1/35, Ser. A-2 |
469,732 |
10 | PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.11 |
PIMCO Municipal Income Fund II Schedule of Investments
November 30, 2011 (unaudited) (continued)
Principal Amount (000s) |
Value | |||||||||||
Louisiana (continued) | ||||||||||||
Womans Hospital Foundation, Ser. A, |
||||||||||||
$ | 750 | 5.875%, 10/1/40 |
$ | 757,898 | ||||||||
1,000 | 6.00%, 10/1/44 |
1,015,630 | ||||||||||
Public Facs. Auth. Rev., Ochsner Clinic Foundation Project, |
||||||||||||
3,300 | 5.50%, 5/15/47, Ser. B |
3,190,143 | ||||||||||
2,000 | 6.50%, 5/15/37 |
2,127,540 | ||||||||||
43,395 | Tobacco Settlement Financing Corp. Rev., 5.875%, 5/15/39, Ser. 2001-B |
43,434,056 | ||||||||||
|
|
|||||||||||
50,994,999 | ||||||||||||
|
|
|||||||||||
Maryland 0.9% | ||||||||||||
Health & Higher Educational Facs. Auth. Rev., |
||||||||||||
1,000 | Adventist Healthcare, 5.75%, 1/1/25, Ser. A |
1,007,900 | ||||||||||
1,400 | Charlestown Community, 6.25%, 1/1/41 |
1,470,056 | ||||||||||
1,010 | King Farm Presbyterian Community, 5.30%, 1/1/37, Ser. A |
756,167 | ||||||||||
2,380 | Medstar Health, 5.00%, 8/15/41 |
2,329,354 | ||||||||||
4,050 | Washington Cnty. Hospital, 6.00%, 1/1/43 |
4,111,438 | ||||||||||
|
|
|||||||||||
9,674,915 | ||||||||||||
|
|
|||||||||||
Massachusetts 0.8% | ||||||||||||
Dev. Finance Agcy. Rev., |
||||||||||||
Adventcare Project, |
||||||||||||
4,610 | 6.75%, 10/15/37, Ser. A |
4,341,928 | ||||||||||
580 | 7.625%, 10/15/37 |
593,961 | ||||||||||
1,000 | Foxborough Regional Charter School, |
|||||||||||
7.00%, 7/1/42, Ser. A |
1,034,390 | |||||||||||
2,900 | State College Building Auth. Rev., 5.50%, 5/1/39, Ser. A |
3,095,837 | ||||||||||
|
|
|||||||||||
9,066,116 | ||||||||||||
|
|
|||||||||||
Michigan 3.1% | ||||||||||||
1,000 | Detroit, GO, 5.25%, 11/1/35 |
1,019,180 | ||||||||||
800 | Public Educational Facs. Auth. Rev., Bradford Academy, 6.50%, 9/1/37 (a)(c) |
542,560 | ||||||||||
3,000 | Royal Oak Hospital Finance Auth. Rev., |
|||||||||||
William Beaumont Hospital, 8.25%, 9/1/39 |
3,549,750 | |||||||||||
State Hospital Finance Auth. Rev., |
||||||||||||
5,000 | Ascension Health, 5.25%, 11/15/26, Ser. B |
5,100,750 | ||||||||||
Oakwood Group, Ser. A, |
||||||||||||
13,500 | 5.75%, 4/1/32 |
13,587,480 | ||||||||||
1,925 | 6.00%, 4/1/22 |
1,996,668 | ||||||||||
11,000 | Tobacco Settlement Finance Auth. Rev., 6.00%, 6/1/48, Ser. A |
7,756,430 | ||||||||||
|
|
|||||||||||
33,552,818 | ||||||||||||
|
|
|||||||||||
Minnesota 0.6% | ||||||||||||
150 | Duluth Housing & Redev. Auth. Rev., 5.875%, 11/1/40, Ser. A |
136,751 | ||||||||||
1,500 | Minneapolis Rev., Providence Project, 5.75%, 10/1/37, Ser. A |
1,358,220 |
11.30.11 | PIMCO Municipal Income Funds II Semi-Annual Report | 11 |
PIMCO Municipal Income Fund II Schedule of Investments
November 30, 2011 (unaudited) (continued)
Principal Amount (000s) |
Value | |||||||||||
Minnesota (continued) | ||||||||||||
North Oaks Rev., Presbyterian Homes North Oaks, |
||||||||||||
$ | 2,640 | 6.00%, 10/1/33 |
$ | 2,651,299 | ||||||||
1,530 | 6.125%, 10/1/39 |
1,541,368 | ||||||||||
500 | Oronoco Rev., Wedum Shorewood Campus Project, 5.40%, 6/1/41 |
431,705 | ||||||||||
400 | St. Louis Park Rev., Nicollett Health Services, 5.75%, 7/1/39 |
410,588 | ||||||||||
|
|
|||||||||||
6,529,931 | ||||||||||||
|
|
|||||||||||
Mississippi 0.1% | ||||||||||||
|
605 |
|
Dev. Bank Special Obligation Rev., Capital Projects and Equipment Acquisition, |
598,859 | ||||||||
|
|
|||||||||||
Missouri 0.1% | ||||||||||||
750 | Lees Summit, Tax Allocation, Summit Fair Project, 5.625%, 10/1/23 |
757,770 | ||||||||||
|
|
|||||||||||
Nevada 0.9% | ||||||||||||
10,000 | Clark Cnty., GO, 4.75%, 11/1/35 (FGIC-NPFGC) (j) |
9,999,600 | ||||||||||
|
|
|||||||||||
New Hampshire 0.2% | ||||||||||||
2,000 | Business Finance Auth. Rev., Elliot Hospital, 6.125%, 10/1/39, Ser. A |
2,042,740 | ||||||||||
360 | Health & Education Facs. Auth. Rev., Catholic Medical Center, 6.125%, 7/1/32, Ser. A |
363,168 | ||||||||||
|
|
|||||||||||
2,405,908 | ||||||||||||
|
|
|||||||||||
New Jersey 4.8% | ||||||||||||
|
950 |
|
Burlington Cnty. Bridge Commission Rev., |
828,010 | ||||||||
Economic Dev. Auth., Special Assessment, Kapkowski Road Landfill Project, |
||||||||||||
4,000 | 5.75%, 10/1/21 |
4,062,600 | ||||||||||
11,405 | 5.75%, 4/1/31 |
11,004,570 | ||||||||||
Economic Dev. Auth. Rev., |
||||||||||||
525 | Arbor Glen, 6.00%, 5/15/28, Ser. A |
464,352 | ||||||||||
2,000 | MSU Student Housing Project, 5.875%, 6/1/42 |
2,042,160 | ||||||||||
Health Care Facs. Financing Auth. Rev., |
||||||||||||
1,500 | AHS Hospital Corp., 6.00%, 7/1/37 |
1,631,985 | ||||||||||
1,500 | St. Peters Univ. Hospital, 5.75%, 7/1/37 |
1,397,565 | ||||||||||
1,830 | Trinitas Hospital, 5.25%, 7/1/30, Ser. A |
1,698,716 | ||||||||||
2,000 | State Turnpike Auth. Rev., 5.25%, 1/1/40, Ser. E |
2,087,460 | ||||||||||
Tobacco Settlement Financing Corp. Rev., Ser. 1-A, |
||||||||||||
3,300 | 4.75%, 6/1/34 |
2,261,523 | ||||||||||
13,150 | 5.00%, 6/1/41 |
9,080,996 | ||||||||||
15,000 | Transportation Trust Fund Auth. Rev., 5.00%, 6/15/42, Ser. B (d) |
14,999,700 | ||||||||||
|
|
|||||||||||
51,559,637 | ||||||||||||
|
|
|||||||||||
New Mexico 0.2% | ||||||||||||
2,000 | Farmington Pollution Control Rev., 5.90%, 6/1/40, Ser. D |
2,034,680 | ||||||||||
|
|
12 | PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.11 |
PIMCO Municipal Income Fund II Schedule of Investments
November 30, 2011 (unaudited) (continued)
Principal Amount (000s) |
Value | |||||||||||
New York 9.0% | ||||||||||||
$ | 1,200 | Erie Cnty. Industrial Dev. Agcy. Rev., |
||||||||||
Orchard Park, Inc. Project, 6.00%, 11/15/36, Ser. A |
$ | 991,212 | ||||||||||
14,500 | Hudson Yards Infrastructure Corp. Rev., 5.25%, 2/15/47, Ser. A |
14,742,150 | ||||||||||
Liberty Dev. Corp. Rev., |
||||||||||||
1,000 | 5.125%, 1/15/44 |
1,002,250 | ||||||||||
2,500 | 5.625%, 7/15/47 |
2,475,150 | ||||||||||
1,250 | 6.375%, 7/15/49 |
1,288,550 | ||||||||||
Goldman Sachs Headquarters, |
||||||||||||
1,505 | 5.25%, 10/1/35 |
1,525,408 | ||||||||||
10,000 | 5.25%, 10/1/35 (j) |
10,135,600 | ||||||||||
1,100 | Nassau Cnty. Industrial Dev. Agcy. Rev., Amsterdam at Harborside, 6.70%, 1/1/43, Ser. A |
853,600 | ||||||||||
2,830 | New York City Municipal Water Finance Auth. Water & Sewer Rev., |
|||||||||||
5.00%, 6/15/37, Ser. D (j) |
2,944,898 | |||||||||||
Second Generation Resolutions, |
||||||||||||
4,000 | 4.75%, 6/15/35, Ser. DD (j) |
4,107,480 | ||||||||||
2,000 | 5.00%, 6/15/39, Ser. GG-1 |
2,094,440 | ||||||||||
50,000 | New York Liberty Dev. Corp. Rev., World Trade Center Project, 5.75%, 11/15/51 |
52,989,000 | ||||||||||
1,750 | State Dormitory Auth. Rev., The New School, 5.50%, 7/1/40 |
1,850,310 | ||||||||||
|
|
|||||||||||
97,000,048 | ||||||||||||
|
|
|||||||||||
North Carolina 0.1% | ||||||||||||
Medical Care Commission Rev., |
||||||||||||
550 | Salemtowne, 5.10%, 10/1/30 |
502,090 | ||||||||||
1,000 | Village at Brookwood, 5.25%, 1/1/32 |
798,180 | ||||||||||
|
|
|||||||||||
1,300,270 | ||||||||||||
|
|
|||||||||||
North Dakota 0.3% | ||||||||||||
3,710 | Stark Cnty. Healthcare Rev., Benedictine Living Communities, 6.75%, 1/1/33 |
3,580,632 | ||||||||||
|
|
|||||||||||
Ohio 2.3% | ||||||||||||
Buckeye Tobacco Settlement Financing Auth. Rev., Ser. A-2, |
||||||||||||
1,865 | 5.75%, 6/1/34 |
1,358,783 | ||||||||||
3,570 | 5.875%, 6/1/30 |
2,669,254 | ||||||||||
500 | 5.875%, 6/1/47 |
349,950 | ||||||||||
Hamilton Cnty. Rev., Ser. A, |
||||||||||||
3,180 | 5.00%, 12/1/29 |
3,301,603 | ||||||||||
3,900 | 5.00%, 12/1/30 |
4,020,627 | ||||||||||
Higher Educational Fac. Commission Rev., |
||||||||||||
550 | Ashland Univ. Project, 6.25%, 9/1/24 |
559,185 | ||||||||||
1,000 | Univ. Hospital Health Systems, 6.75%, 1/15/39, Ser. 2009-A |
1,057,150 | ||||||||||
7,500 | Lorain Cnty. Hospital Rev., Catholic Healthcare, 5.375%, 10/1/30 |
7,554,900 |
11.30.11 | PIMCO Municipal Income Funds II Semi-Annual Report | 13 |
PIMCO Municipal Income Fund II Schedule of Investments
November 30, 2011 (unaudited) (continued)
Principal Amount (000s) |
Value | |||||||||||
Ohio (continued) | ||||||||||||
$ | 1,000 | Montgomery Cnty. Rev., Miami Valley Hospital, 6.25%, 11/15/39, Ser. A |
$ | 1,040,170 | ||||||||
3,000 | State Rev., Cleveland Clinic Health System, 5.50%, 1/1/39, Ser. B |
3,141,030 | ||||||||||
|
|
|||||||||||
25,052,652 | ||||||||||||
|
|
|||||||||||
Oregon 0.2% | ||||||||||||
1,000 | Clackamas Cnty. Hospital Fac. Auth. Rev., Legacy Health System, 5.50%, 7/15/35, Ser. A |
1,051,290 | ||||||||||
1,155 | State Department of Administrative Services, CP, 5.25%, 5/1/39, Ser. A |
1,215,684 | ||||||||||
|
|
|||||||||||
2,266,974 | ||||||||||||
|
|
|||||||||||
Pennsylvania 5.0% | ||||||||||||
Cumberland Cnty. Municipal Auth. Rev., Messiah Village Project, Ser. A, |
||||||||||||
750 | 5.625%, 7/1/28 |
698,348 | ||||||||||
670 | 6.00%, 7/1/35 |
622,986 | ||||||||||
3,250 | Harrisburg Auth. Rev., Harrisburg Univ. of Science, 6.00%, 9/1/36, Ser. B |
2,943,948 | ||||||||||
Higher Educational Facs. Auth. Rev., |
||||||||||||
850 | Edinboro Univ. Foundation, 6.00%, 7/1/43 |
853,910 | ||||||||||
400 | Thomas Jefferson Univ., 5.00%, 3/1/40 |
411,672 | ||||||||||
500 | Luzerne Cnty. Industrial Dev. Auth. Rev., Pennsylvania American Water Co., 5.50%, 12/1/39 |
528,090 | ||||||||||
Montgomery Cnty. Higher Education & Health Auth. Rev., |
||||||||||||
Abington Memorial Hospital, Ser. A, |
||||||||||||
5,000 | 5.125%, 6/1/27 |
5,014,500 | ||||||||||
3,750 | 5.125%, 6/1/32 |
3,750,787 | ||||||||||
8,500 | Montgomery Cnty. Industrial Dev. Auth. Rev., 5.375%, 8/1/38 (FHA) |
8,866,775 | ||||||||||
17,000 | Philadelphia, GO, 5.25%, 12/15/32, Ser. A (AGM) |
17,533,290 | ||||||||||
11,015 | Philadelphia Hospitals & Higher Education Facs. Auth. Rev., Temple Univ. Hospital, |
11,023,371 | ||||||||||
500 | Philadelphia Water Rev., 5.25%, 1/1/36, Ser. A |
518,800 | ||||||||||
1,000 | Westmoreland Cnty. Industrial Dev. Auth. Rev., |
|||||||||||
Excela Health Project, 5.125%, 7/1/30 |
989,920 | |||||||||||
|
|
|||||||||||
53,756,397 | ||||||||||||
|
|
|||||||||||
Puerto Rico 0.5% | ||||||||||||
5,000 | Sales Tax Financing Corp. Rev., 5.25%, 8/1/41, Ser. C |
5,058,600 | ||||||||||
|
|
|||||||||||
Rhode Island 4.9% | ||||||||||||
56,200 | Tobacco Settlement Financing Corp. Rev., 6.25%, 6/1/42, Ser. A |
53,348,974 | ||||||||||
|
|
|||||||||||
South Carolina 1.4% | ||||||||||||
1,000 | Greenwood Cnty. Rev., Self Regional Healthcare, 5.375%, 10/1/39 |
1,016,190 | ||||||||||
Jobs-Economic Dev. Auth. Rev., |
||||||||||||
500 | Anmed Health, 5.50%, 2/1/38, Ser. B (AGC) |
508,530 | ||||||||||
13,850 | Bon Secours Health System, 5.625%, 11/15/30, Ser. B |
13,953,875 | ||||||||||
|
|
|||||||||||
15,478,595 | ||||||||||||
|
|
14 | PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.11 |
PIMCO Municipal Income Fund II Schedule of Investments
November 30, 2011 (unaudited) (continued)
Principal Amount (000s) |
Value | |||||||||||
Tennessee 0.6% | ||||||||||||
$ |
1,750 |
|
Claiborne Cnty. Industrial Dev. Board Rev., Lincoln Memorial Univ. Project, 6.625%, 10/1/39 |
$ | 1,854,230 | |||||||
|
1,000 |
|
Johnson City Health & Educational Facs. Board Rev., Mountain States Health Alliance, 6.00%, 7/1/38 |
1,024,150 | ||||||||
|
500 |
|
Sullivan Cnty. Health Educational & Housing Facs. Board Rev., Wellmont Health Systems Project, 5.25%, 9/1/36, Ser. C |
468,420 | ||||||||
Tennessee Energy Acquisition Corp. Rev., |
||||||||||||
3,000 | 5.00%, 2/1/23, Ser. C |
2,888,040 | ||||||||||
700 | 5.25%, 9/1/21, Ser. A |
689,983 | ||||||||||
|
|
|||||||||||
6,924,823 | ||||||||||||
|
|
|||||||||||
Texas 11.2% | ||||||||||||
130 | Aubrey Independent School Dist., GO, 5.50%, 2/15/33 (PSF-GTD) |
136,657 | ||||||||||
6,500 | Brazos Cnty. Health Facs. Dev. Corp. Rev., 5.375%, 1/1/32 |
6,501,625 | ||||||||||
2,500 | Dallas Rev., Dallas Civic Center, 5.25%, 8/15/38 (AGC) |
2,617,325 | ||||||||||
Harris Cnty. Cultural Education Facs. Finance Corp. Rev., Texas Childrens Hospital Project, |
||||||||||||
3,750 | 5.25%, 10/1/29 |
3,997,125 | ||||||||||
12,700 | 5.50%, 10/1/39 |
13,606,526 | ||||||||||
700 | HFDC of Central Texas, Inc. Rev., Village at Gleannloch Farms, 5.50%, 2/15/37, Ser. A |
504,448 | ||||||||||
North Harris Cnty. Regional Water Auth. Rev., |
||||||||||||
10,300 | 5.25%, 12/15/33 |
10,849,608 | ||||||||||
10,300 | 5.50%, 12/15/38 |
10,933,656 | ||||||||||
North Texas Tollway Auth. Rev., |
||||||||||||
5,250 | 4.75%, 1/1/29 (FGIC-NPFGC) |
5,250,525 | ||||||||||
5,750 | 5.00%, 1/1/38 |
5,683,702 | ||||||||||
1,300 | 5.50%, 9/1/41, Ser. A |
1,404,702 | ||||||||||
5,000 | 5.625%, 1/1/33, Ser. B |
5,268,650 | ||||||||||
1,200 | 5.75%, 1/1/33, Ser. F |
1,229,544 | ||||||||||
2,000 | Sabine River Auth. Pollution Control Rev., 5.20%, 5/1/28, Ser. C |
419,100 | ||||||||||
250 | San Juan Higher Education Finance Auth. Rev., 6.70%, 8/15/40, Ser. A |
258,275 | ||||||||||
State, Mobility Fund, GO (j), |
||||||||||||
10,025 | 4.75%, 4/1/35, Ser. A |
10,271,916 | ||||||||||
17,500 | 4.75%, 4/1/36 |
17,994,375 | ||||||||||
1,000 | State Public Finance Auth. Rev., Charter School Finance Corp., 5.875%, 12/1/36, Ser. A |
971,320 | ||||||||||
|
3,000 |
|
Tarrant Cnty. Cultural Education Facs. Finance Corp. Rev., Baylor Health Care Systems Project, 6.25%, 11/15/29 |
3,361,290 | ||||||||
Texas Municipal Gas Acquisition & Supply Corp. I Rev., |
||||||||||||
450 | 5.25%, 12/15/25, Ser. A |
435,249 | ||||||||||
15,300 | 6.25%, 12/15/26, Ser. D |
16,046,793 | ||||||||||
1,920 | Texas Private Activity Bond Surface Transportation Corp. Rev., 7.00%, 6/30/40 |
2,076,442 | ||||||||||
1,000 | Wise Cnty. Rev., Parker Cnty. Junior College Dist., 8.00%, 8/15/34 |
1,053,550 | ||||||||||
|
|
|||||||||||
120,872,403 | ||||||||||||
|
|
11.30.11 | PIMCO Municipal Income Funds II Semi-Annual Report | 15 |
PIMCO Municipal Income Fund II Schedule of Investments
November 30, 2011 (unaudited) (continued)
Principal Amount (000s) |
Value | |||||||||||
Virginia 0.2% | ||||||||||||
$ | 1,000 | Fairfax Cnty. Industrial Dev. Auth. Rev., Inova Health Systems, 5.50%, 5/15/35, Ser. A |
$ | 1,079,030 | ||||||||
|
2,050 |
|
James City Cnty. Economic Dev. Auth. Rev., United Methodist Homes, 5.50%, 7/1/37, Ser. A |
1,301,053 | ||||||||
|
|
|||||||||||
2,380,083 | ||||||||||||
|
|
|||||||||||
Washington 1.5% | ||||||||||||
Health Care Facs. Auth. Rev., |
||||||||||||
1,300 | Multicare Health Systems, 6.00%, 8/15/39, Ser. B (AGC) |
1,389,778 | ||||||||||
1,000 | Seattle Cancer Care Alliance, 7.375%, 3/1/38 |
1,112,500 | ||||||||||
13,000 | Virginia Mason Medical Center, 6.125%, 8/15/37, Ser. A |
13,132,080 | ||||||||||
|
|
|||||||||||
15,634,358 | ||||||||||||
|
|
|||||||||||
West Virginia 0.2% | ||||||||||||
2,000 | Hospital Finance Auth. Rev., Highland Hospital, 9.125%, 10/1/41 |
2,112,080 | ||||||||||
|
|
|||||||||||
Wisconsin 0.1% | ||||||||||||
Health & Educational Facs. Auth. Rev., |
||||||||||||
90 | Froedert & Community Health, 5.375%, 10/1/30 |
90,695 | ||||||||||
1,000 | Prohealth Care, Inc., 6.625%, 2/15/39 |
1,089,530 | ||||||||||
|
|
|||||||||||
1,180,225 | ||||||||||||
|
|
|||||||||||
Total Municipal Bonds & Notes (cost-$1,038,220,488) |
1,063,508,526 | |||||||||||
|
|
|||||||||||
|
VARIABLE RATE NOTES (h) 1.9% |
|||||||||||
California 0.5% | ||||||||||||
5,000 | Health Facs. Financing Auth. Rev., 9.44%, 11/15/36, Ser. 3193 (a)(c)(g) |
5,140,300 | ||||||||||
|
|
|||||||||||
Florida 0.2% | ||||||||||||
|
1,830 |
|
Highlands Cnty. Health Facs. Auth. Rev., Adventist Health System, 5.00%, 11/15/31, Ser. C |
1,843,615 | ||||||||
|
|
|||||||||||
Illinois 0.5% | ||||||||||||
6,000 | Chicago, GO, 11.64%, 1/1/34, Ser. 3190 (a)(c)(g) |
6,043,800 | ||||||||||
|
|
|||||||||||
Texas 0.5% | ||||||||||||
5,365 | State, GO, 8.93%, 4/1/37, Ser. 3197 (a)(c)(g) |
5,689,958 | ||||||||||
|
|
|||||||||||
West Virginia 0.2% | ||||||||||||
2,000 | Economic Dev. Auth. Rev., Appalachian Power, 5.375%, 12/1/38, Ser. A |
2,032,040 | ||||||||||
|
|
|||||||||||
Total Variable Rate Notes (cost-$20,310,620) |
20,749,713 | |||||||||||
|
|
|||||||||||
Total Investments (cost-$1,058,531,108) 100.0% |
$ | 1,084,258,239 | ||||||||||
|
|
16 | PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.11 |
PIMCO California Municipal Income Fund II Schedule of Investments
November 30, 2011 (unaudited)
Principal Amount (000s) |
Value | |||||||||
CALIFORNIA MUNICIPAL BONDS & NOTES 87.0% |
||||||||||
$ 2,000 | Alhambra Rev., Atherton Baptist Homes, 7.625%, 1/1/40, Ser. A |
$ | 2,084,680 | |||||||
20,000 | Bay Area Toll Auth. Rev., San Francisco Bay Area, 5.00%, 4/1/39, Ser. F-1 (j) |
20,777,800 | ||||||||
1,000 | Chula Vista Rev., San Diego Gas & Electric, 5.875%, 2/15/34, Ser. B |
1,094,570 | ||||||||
300 | City & Cnty. of San Francisco, Capital Improvement Projects, CP, 5.25%, 4/1/31, Ser. A |
307,116 | ||||||||
1,410 | Community College Financing Auth. Rev., 5.00%, 8/1/27, Ser. A (AMBAC) |
1,413,229 | ||||||||
9,360 | Coronado Community Dev. Agcy., Tax Allocation, 4.875%, 9/1/35 (AMBAC) |
8,801,489 | ||||||||
1,110 | Corona-Norco Unified School Dist. No. 98-1, Special Tax, 5.10%, 9/1/25 (AMBAC) |
1,092,684 | ||||||||
Corona-Norco Unified School Dist. Public Financing Auth., Special Tax, Ser. A, |
||||||||||
305 | 5.65%, 9/1/16 |
307,696 | ||||||||
160 | 5.75%, 9/1/17 |
160,938 | ||||||||
530 | 6.00%, 9/1/20 |
533,175 | ||||||||
1,000 | 6.00%, 9/1/25 |
1,005,490 | ||||||||
4,150 | 6.10%, 9/1/32 |
4,155,146 | ||||||||
3,000 | Dinuba Financing Auth. Rev., Public Works Projects, 5.10%, 8/1/32 (NPFGC) |
3,080,430 | ||||||||
8,300 | El Dorado Irrigation Dist. & El Dorado Water Agcy., CP, 5.75%, 8/1/39, Ser. A (AGC) |
8,533,396 | ||||||||
1,500 | Foothill-Eastern Transportation Corridor Agcy. Rev., 5.875%, 1/15/27 (IBC-NPFGC) |
1,503,960 | ||||||||
1,440 | Fremont Community Facs. Dist. No. 1, Special Tax, Pacific Commons, 5.30%, 9/1/30 |
1,333,454 | ||||||||
Golden State Tobacco Securitization Corp. Rev., |
||||||||||
13,885 | 5.00%, 6/1/45 (AMBAC-TCRS) |
12,517,744 | ||||||||
1,500 | 5.00%, 6/1/45, Ser. A |
1,352,295 | ||||||||
6,000 | 5.00%, 6/1/45, Ser. A (FGIC-TCRS) |
5,409,180 | ||||||||
8,500 | 5.125%, 6/1/47, Ser. A-1 |
5,462,950 | ||||||||
22,415 | 5.75%, 6/1/47, Ser. A-1 |
15,818,041 | ||||||||
Health Facs. Financing Auth. Rev., |
||||||||||
Adventist Health System, Ser. A, |
||||||||||
500 | 5.00%, 3/1/33 |
493,520 | ||||||||
250 | 5.75%, 9/1/39 |
260,585 | ||||||||
3,000 | Catholic Healthcare West, 6.00%, 7/1/39, Ser. A |
3,185,130 | ||||||||
1,200 | Childrens Hospital of Los Angeles, 5.25%, 7/1/38 (AGM) |
1,184,712 | ||||||||
500 | Childrens Hospital of Orange Cnty., 6.50%, 11/1/38, Ser. A |
539,985 | ||||||||
3,700 | Stanford Hospital, 5.25%, 11/15/40, Ser. A-2 |
3,806,745 | ||||||||
2,000 | Sutter Health, 5.00%, 11/15/42, Ser. A (IBC-NPFGC) |
1,947,720 | ||||||||
6,130 | Imperial Irrigation Dist. Rev., 5.00%, 11/1/41, Ser. B |
6,186,764 | ||||||||
175 | Infrastructure & Economic Dev. Bank Rev., 5.25%, 2/1/38 |
177,930 | ||||||||
1,000 | Irvine Unified School Dist., Special Tax, 6.70%, 9/1/35 |
1,060,900 | ||||||||
500 | Lancaster Redev. Agcy. Rev., Capital Improvements Projects, 5.90%, 12/1/35 |
463,790 | ||||||||
1,000 | Lancaster Redev. Agcy., Tax Allocation, 6.875%, 8/1/39 |
1,017,400 | ||||||||
7,500 | Long Beach Bond Finance Auth. Rev., Long Beach Natural Gas, 5.50%, 11/15/37, Ser. A |
6,790,875 | ||||||||
10,000 | Long Beach Unified School Dist., GO, 5.25%, 8/1/33, Ser. A (j) |
10,803,100 | ||||||||
11.30.11 | PIMCO Municipal Income Funds II Semi-Annual Report | 17 |
PIMCO California Municipal Income Fund II Schedule of Investments
November 30, 2011 (unaudited) (continued)
Principal Amount (000s) |
Value | |||||||||
$ 4,895 | Los Angeles, Equipment & Real Property Project, CP, 5.00%, 2/1/27, Ser. T (NPFGC) |
$ | 4,900,482 | |||||||
15,000 | Los Angeles Department of Water & Power Rev., 4.75%, 7/1/30, Ser. A-2 (AGM) (j) |
15,310,500 | ||||||||
11,000 | Los Angeles Unified School Dist., GO, 5.00%, 1/1/34, Ser. I |
11,363,550 | ||||||||
10,000 | Manteca Redev. Agcy., Tax Allocation, 5.00%, 10/1/36 (AMBAC) |
8,545,000 | ||||||||
5,330 | Manteca Unified School Dist. No. 89-2, Special Tax, 5.00%, 9/1/29, Ser. C (NPFGC) |
5,347,269 | ||||||||
4,000 | Merced Cnty., Juvenile Justice Correctional Fac., CP, 5.00%, 6/1/32 (AMBAC) |
4,019,120 | ||||||||
5,000 | Metropolitan Water Dist. of Southern California Rev., 5.00%, 7/1/37, Ser. A (j) |
5,237,200 | ||||||||
4,700 | Moreno Valley Unified School Dist. Community Facs. Dist. No. 2004-6, Special Tax, 5.20%, 9/1/36 |
4,098,165 | ||||||||
1,400 | M-S-R Energy Auth. Rev., 6.50%, 11/1/39, Ser. B |
1,551,242 | ||||||||
1,300 | Municipal Finance Auth. Rev., Azusa Pacific Univ. Project, 7.75%, 4/1/31, Ser. B |
1,396,122 | ||||||||
5,000 | Oakland Unified School Dist., Alameda Cnty., GO, 6.125%, 8/1/29, Ser. A |
5,343,950 | ||||||||
4,750 | Palomar Pomerado Health, CP, 6.75%, 11/1/39 |
4,907,985 | ||||||||
10,000 | Placentia-Yorba Linda Unified School Dist., CP, 5.00%, 10/1/32 (FGIC-NPFGC) |
10,051,100 | ||||||||
1,500 | Pollution Control Financing Auth. Rev., American Water Capital Corp. Project, 5.25%, 8/1/40 (a)(c) |
1,456,635 | ||||||||
3,000 | Riverside, CP, 5.00%, 9/1/33 (AMBAC) |
2,764,260 | ||||||||
Riverside Unified School Dist. Community Facs. School Dist. No. 15, Special Tax, Ser. A, |
||||||||||
1,000 | 5.25%, 9/1/30 |
926,790 | ||||||||
1,000 | 5.25%, 9/1/35 |
900,960 | ||||||||
Roseville Redev. Agcy., Tax Allocation, Ser. B (NPFGC), |
||||||||||
2,230 | 5.00%, 9/1/27 |
2,086,321 | ||||||||
3,365 | 5.00%, 9/1/32 |
3,034,860 | ||||||||
San Diego Public Facs. Financing Auth. Rev., |
||||||||||
11,000 | 5.00%, 8/1/32 (NPFGC) |
11,080,520 | ||||||||
4,000 | 5.25%, 8/1/38, Ser. A |
4,220,040 | ||||||||
1,000 | 5.25%, 5/15/39, Ser. A |
1,052,140 | ||||||||
1,500 | Fire & Life Safety Facs. Project, 5.00%, 4/1/32, Ser. B (NPFGC) |
1,475,460 | ||||||||
2,800 | San Diego Regional Building Auth. Rev., Cnty. Operations Center & Annex, |
2,965,872 | ||||||||
2,800 | San Diego Unified School Dist., GO, 4.75%, 7/1/27, Ser. D-2 (AGM) |
2,882,152 | ||||||||
1,000 | San Jose Rev., Convention Center Expansion, 6.50%, 5/1/36 |
1,053,830 | ||||||||
1,300 | San Marcos Unified School Dist., GO, 5.00%, 8/1/38, Ser. A |
1,330,927 | ||||||||
1,260 | Santa Cruz Cnty., CP, 5.25%, 8/1/32 |
1,294,990 | ||||||||
1,500 | Santa Cruz Cnty. Redev. Agcy., Tax Allocation, Live Oak/Soquel Community, |
1,671,075 | ||||||||
State, GO, |
||||||||||
2,500 | 5.00%, 9/1/31 |
2,559,075 | ||||||||
10,000 | 6.00%, 4/1/38 |
11,037,700 | ||||||||
State Public Works Board Rev., |
||||||||||
2,000 | 5.00%, 12/1/29, Ser. D |
1,988,260 | ||||||||
3,000 | 5.75%, 10/1/30, Ser. G-1 |
3,169,800 |
18 | PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.11 |
PIMCO California Municipal Income Fund II Schedule of Investments
November 30, 2011 (unaudited) (continued)
Principal Amount (000s) |
Value | |||||||||
$ 2,000 | California State Univ., 6.00%, 11/1/34, Ser. J |
$ | 2,122,480 | |||||||
7,915 | Regents Univ., 5.00%, 3/1/33, Ser. A |
8,105,989 | ||||||||
Statewide Communities Dev. Auth. Rev., |
||||||||||
Bentley School, |
||||||||||
11,180 | zero coupon, 7/1/50 |
319,972 | ||||||||
3,760 | 7.00%, 7/1/40, Ser. A |
3,159,378 | ||||||||
Catholic Healthcare West, |
||||||||||
1,520 | 5.50%, 7/1/31, Ser. D |
1,563,943 | ||||||||
1,520 | 5.50%, 7/1/31, Ser. E |
1,563,943 | ||||||||
Huntington Park Charter School Project, Ser. A, |
||||||||||
250 | 5.15%, 7/1/30 |
203,668 | ||||||||
1,250 | 5.25%, 7/1/42 |
957,787 | ||||||||
500 | International School of the Peninsula Project, 5.00%, 11/1/29 |
386,895 | ||||||||
2,770 | Kaiser Permanente, 5.50%, 11/1/32, Ser. A |
2,787,811 | ||||||||
1,000 | Lancer Student Housing Project, 7.50%, 6/1/42 |
1,047,700 | ||||||||
9,700 | Los Angeles Jewish Home, 5.50%, 11/15/33 (CA St. Mtg.) |
9,765,281 | ||||||||
Methodist Hospital Project (FHA), |
||||||||||
2,400 | 6.625%, 8/1/29 |
2,863,632 | ||||||||
8,800 | 6.75%, 2/1/38 |
10,149,656 | ||||||||
3,700 | St. Joseph Health System, 5.75%, 7/1/47, Ser. A (FGIC) |
3,820,213 | ||||||||
Sutter Health, Ser. A, |
||||||||||
5,500 | 5.00%, 11/15/43 |
5,354,415 | ||||||||
5,600 | 6.00%, 8/15/42 |
6,097,560 | ||||||||
1,365 | Windrush School, 5.50%, 7/1/37 (e) |
941,850 | ||||||||
1,435 | Statewide Financing Auth. Tobacco Settlement Rev., |
1,322,008 | ||||||||
Tobacco Securitization Agcy. Rev., |
||||||||||
4,500 | Alameda Cnty., 6.00%, 6/1/42 |
3,392,820 | ||||||||
1,800 | Stanislaus Cnty., 5.875%, 6/1/43, Ser. A |
1,328,670 | ||||||||
3,100 | Torrance Rev., Memorial Medical Center, 5.00%, 9/1/40, Ser. A |
3,030,405 | ||||||||
1,000 | Tustin Unified School Dist., Special Tax, 6.00%, 9/1/40, Ser. 2006-1 |
985,080 | ||||||||
Univ. of California Rev., |
||||||||||
5,500 | 4.75%, 5/15/35, Ser. F (AGM) (j) |
5,544,000 | ||||||||
5,000 | 4.75%, 5/15/35, Ser. G (FGIC-NPFGC) (j) |
5,028,500 | ||||||||
5,650 | 4.75%, 5/15/38, Ser. B |
5,658,870 | ||||||||
10,000 | Ventura Cnty. Community College Dist., GO, |
|||||||||
5.00%, 8/1/27, Ser. A (NPFGC) (j) |
10,259,600 | |||||||||
|
|
|||||||||
Total California Municipal Bonds & Notes (cost-$355,105,217) |
373,450,097 | |||||||||
|
|
11.30.11 | PIMCO Municipal Income Funds II Semi-Annual Report | 19 |
PIMCO California Municipal Income Fund II Schedule of Investments
November 30, 2011 (unaudited) (continued)
Principal Amount (000s) |
Value | |||||||||
CALIFORNIA VARIABLE RATE NOTES (a)(c)(h) 5.8% |
||||||||||
$ 6,035 | Desert Community College Dist., GO, 9.44%, 8/1/32, Ser. 3016-1 (AGC) (g) |
$ | 6,356,907 | |||||||
7,500 | JPMorgan Chase Putters/Drivers Trust Rev., 9.463%, 5/15/40, Ser. 3838 (g) |
8,193,900 | ||||||||
4,000 | Los Angeles Community College Dist., GO, 13.84%, 8/1/33, Ser. 3096 (g) |
4,538,480 | ||||||||
5,000 | San Diego Community College Dist., GO, 9.936%, 2/1/17 |
5,673,450 | ||||||||
|
|
|||||||||
Total California Variable Rate Notes (cost-$22,326,577) |
24,762,737 | |||||||||
|
|
|||||||||
OTHER MUNICIPAL BONDS & NOTES 4.8% |
||||||||||
New Jersey 0.7% | ||||||||||
Tobacco Settlement Financing Corp. Rev., Ser. 1-A, |
||||||||||
1,300 | 4.75%, 6/1/34 |
890,903 | ||||||||
3,000 | 5.00%, 6/1/41 |
2,071,710 | ||||||||
|
|
|||||||||
2,962,613 | ||||||||||
|
|
|||||||||
New York 0.3% | ||||||||||
1,250 | Liberty Dev. Corp. Rev., Goldman Sachs Headquarters, 5.25%, 10/1/35 |
1,266,950 | ||||||||
|
|
|||||||||
Ohio 0.4% | ||||||||||
2,250 | Buckeye Tobacco Settlement Financing Auth. Rev., 5.875%, 6/1/47, Ser. A-2 |
1,574,775 | ||||||||
|
|
|||||||||
Puerto Rico 1.0% | ||||||||||
Sales Tax Financing Corp. Rev., |
||||||||||
1,600 | 5.00%, 8/1/40, Ser. A (AGM) (j) |
1,612,688 | ||||||||
2,500 | 5.25%, 8/1/43, Ser. A-1 |
2,549,150 | ||||||||
|
|
|||||||||
4,161,838 | ||||||||||
|
|
|||||||||
Rhode Island 2.4% | ||||||||||
11,000 | Tobacco Settlement Financing Corp. Rev., 6.25%, 6/1/42, Ser. A |
10,441,970 | ||||||||
|
|
|||||||||
Total Other Municipal Bonds & Notes (cost-$18,782,818) |
20,408,146 | |||||||||
|
|
|||||||||
SHORT-TERM INVESTMENTS 2.4% |
||||||||||
California Variable Rate Demand Notes (i) 2.4% | ||||||||||
1,500 | Health Facs. Financing Auth. Rev., Adventist Health Systems, 0.06%, 12/1/11, Ser. A |
1,500,000 | ||||||||
4,000 | Pollution Control Financing Auth. Rev., Pacific Gas & Electric, 0.08%, 12/1/11, Ser. F |
4,000,000 | ||||||||
4,900 | Statewide Communities Dev. Auth. Rev. Childrens Hospital, 0.06%, 12/1/11, Ser. B |
4,900,000 | ||||||||
|
|
|||||||||
Total Short-Term Investments (cost-$10,400,000) |
10,400,000 | |||||||||
|
|
|||||||||
Total Investments (cost-$406,614,612) 100.0% |
$ | 429,020,980 | ||||||||
|
|
20 | PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.11 |
PIMCO New York Municipal Income Fund II Schedule of Investments
November 30, 2011 (unaudited)
Principal Amount (000s) |
Value | |||||||||
NEW YORK MUNICIPAL BONDS & NOTES 90.4% |
||||||||||
$1,000 | Chautauqua Cnty. Industrial Dev. Agcy. Rev., Dunkirk Power Project, 5.875%, 4/1/42 |
$ | 992,200 | |||||||
2,400 | Erie Cnty. Industrial Dev. Agcy. Rev., Orchard Park, Inc. Project, 6.00%, 11/15/36, Ser. A |
1,982,424 | ||||||||
9,000 | Hudson Yards Infrastructure Corp. Rev., 5.75%, 2/15/47, Ser. A |
9,512,370 | ||||||||
Liberty Dev. Corp. Rev., |
||||||||||
1,400 | 5.625%, 7/15/47 |
1,386,084 | ||||||||
1,300 | 6.375%, 7/15/49 |
1,340,092 | ||||||||
Goldman Sachs Headquarters, |
||||||||||
4,120 | 5.25%, 10/1/35 (j) |
4,175,867 | ||||||||
3,000 | 5.25%, 10/1/35 |
3,040,680 | ||||||||
3,500 | 5.50%, 10/1/37 |
3,528,665 | ||||||||
500 | Long Island Power Auth. Rev., 5.00%, 9/1/34, Ser. A (AMBAC) |
509,435 | ||||||||
Metropolitan Transportation Auth. Rev., |
||||||||||
1,850 | 5.00%, 11/15/30, Ser. A (AGM) |
1,903,946 | ||||||||
2,000 | 5.00%, 11/15/34, Ser. B |
2,112,620 | ||||||||
7,300 | 5.25%, 11/15/31, Ser. E |
7,520,095 | ||||||||
7,000 | 5.35%, 7/1/31, Ser. B |
7,144,410 | ||||||||
5,000 | 5.50%, 11/15/39, Ser. A |
5,338,250 | ||||||||
7,000 | Monroe Cnty. Industrial Dev. Corp. Rev., Unity Hospital Rochester Project, |
7,483,770 | ||||||||
2,870 | Mortgage Agcy. Rev., 4.75%, 10/1/27, Ser. 128 |
2,890,607 | ||||||||
2,400 | Nassau Cnty. Industrial Dev. Agcy. Rev., Amsterdam at Harborside, 6.70%, 1/1/43, Ser. A |
1,862,400 | ||||||||
4,000 | New York City, GO, 5.00%, 3/1/33, Ser. I |
4,064,600 | ||||||||
1,500 | New York City Health & Hospital Corp. Rev., 5.00%, 2/15/30, Ser. A |
1,564,410 | ||||||||
New York City Industrial Dev. Agcy. Rev., |
||||||||||
975 | Eger Harbor Project, 4.95%, 11/20/32, Ser. A (GNMA) |
1,003,606 | ||||||||
1,415 | Liberty Interactive Corp., 5.00%, 9/1/35 |
1,336,043 | ||||||||
1,500 | Queens Baseball Stadium, 6.50%, 1/1/46 (AGC) |
1,580,550 | ||||||||
1,135 | Staten Island Univ. Hospital Project, 6.45%, 7/1/32, Ser. C |
1,184,509 | ||||||||
1,500 | United Jewish Appeal Federation Project, 5.00%, 7/1/27, Ser. A |
1,552,605 | ||||||||
Yankee Stadium, |
||||||||||
750 | 5.00%, 3/1/31 (FGIC) |
755,288 | ||||||||
1,900 | 5.00%, 3/1/36 (NPFGC) |
1,876,193 | ||||||||
4,900 | 7.00%, 3/1/49 (AGC) |
5,533,031 | ||||||||
1,000 | New York City Municipal Water Finance Auth. Water & Sewer Rev., 5.25%, 6/15/40, Ser. EE |
1,075,170 | ||||||||
500 | Second Generation Resolutions, 5.00%, 6/15/39, Ser. GG-1 |
523,610 | ||||||||
New York City Transitional Finance Auth. Rev., |
||||||||||
3,745 | 5.00%, 11/1/27, Ser. B |
3,833,682 | ||||||||
2,255 | 5.00%, 11/1/27, Ser. B (Pre-refunded @ $100, 11/1/12) (b) |
2,350,770 | ||||||||
5,000 | 5.25%, 1/15/39, Ser. S-3 |
5,260,000 |
11.30.11 | PIMCO Municipal Income Funds II Semi-Annual Report | 21 |
PIMCO New York Municipal Income Fund II Schedule of Investments
November 30, 2011 (unaudited) (continued)
Principal Amount (000s) |
Value | |||||||||
$6,000 | New York Liberty Dev. Corp. Rev., World Trade Center Project, 5.75%, 11/15/51 |
$ | 6,358,680 | |||||||
1,000 | Onondaga Cnty. Rev., Syracuse Univ. Project, 5.00%, 12/1/36 |
1,064,720 | ||||||||
Port Auth. of New York & New Jersey Rev., |
||||||||||
3,600 | 5.00%, 4/15/32, Ser. 125 (AGM) |
3,673,224 | ||||||||
1,400 | JFK International Air Terminal, 6.00%, 12/1/36 |
1,472,422 | ||||||||
State Dormitory Auth. Rev., |
||||||||||
3,000 | 5.00%, 3/15/38, Ser. A |
3,158,580 | ||||||||
7,490 | 5.50%, 5/15/31, Ser. A (AMBAC) |
8,495,532 | ||||||||
2,600 | Catholic Health of Long Island, 5.10%, 7/1/34 |
2,631,096 | ||||||||
1,500 | Fordham Univ., 5.50%, 7/1/36, Ser. A |
1,605,930 | ||||||||
1,320 | Long Island Univ., 5.25%, 9/1/28 (Radian) |
1,320,607 | ||||||||
Memorial Sloan-Kettering Cancer Center, |
||||||||||
2,750 | 5.00%, 7/1/35, Ser. 1 |
2,834,810 | ||||||||
2,000 | 5.00%, 7/1/36, Ser. A-1 |
2,079,360 | ||||||||
2,000 | Mount Sinai Hospital, 5.00%, 7/1/31, Ser. A |
2,034,940 | ||||||||
2,100 | New York Univ., 5.00%, 7/1/38, Ser. A |
2,205,399 | ||||||||
1,000 | New York Univ. Hospital Center, 5.625%, 7/1/37, Ser. B |
1,019,320 | ||||||||
600 | North Shore-Long Island Jewish Health System, |
|||||||||
5.50%, 5/1/37, Ser. A |
629,700 | |||||||||
5,000 | Rochester General Hospital, 5.00%, 12/1/35 (Radian) |
4,823,950 | ||||||||
Teachers College, |
||||||||||
4,270 | 5.00%, 7/1/32 (NPFGC) |
4,293,058 | ||||||||
3,000 | 5.50%, 3/1/39 |
3,162,540 | ||||||||
1,000 | The New School, 5.50%, 7/1/40 |
1,057,320 | ||||||||
3,000 | Yeshiva Univ., 5.125%, 7/1/34 (AMBAC) |
3,084,600 | ||||||||
5,000 | State Environmental Facs. Corp. Rev., 5.125%, 6/15/38, Ser. A |
5,329,000 | ||||||||
1,000 | State Thruway Auth. Rev., 4.75%, 1/1/29, Ser. G (AGM) |
1,035,490 | ||||||||
6,000 | State Urban Dev. Corp. Rev., 5.00%, 3/15/36, Ser. B-1 (j) |
6,324,900 | ||||||||
Triborough Bridge & Tunnel Auth. Rev., |
||||||||||
710 | 5.00%, 1/1/32, Ser. A (FGIC-TCRS)(Pre-refunded @ $100, 1/1/12) (b) |
712,457 | ||||||||
5,000 | 5.25%, 11/15/34, Ser. A-2 (j) |
5,388,150 | ||||||||
150 | Troy Rev., Rensselaer Polytechnic Institute, 5.125%, 9/1/40, Ser. A |
150,670 | ||||||||
1,815 | Ulster Cnty. Industrial Dev. Agcy. Rev., 6.00%, 9/15/37, Ser. A |
1,317,018 | ||||||||
2,000 | Warren & Washington Cntys. Industrial Dev. Agcy. Rev., Glens Falls Hospital Project, 5.00%, 12/1/35, Ser. A (AGM) |
2,019,940 | ||||||||
1,490 | Westchester Cnty. Healthcare Corp. Rev., 6.125%, 11/1/37, Ser. C-2 |
1,571,950 | ||||||||
1,000 | Yonkers Economic Dev. Corp. Rev., 6.00%, 10/15/30, Ser. A |
956,450 | ||||||||
600 | Yonkers Industrial Dev. Agcy. Rev., Sarah Lawrence College Project, 6.00%, 6/1/41, Ser. A |
624,930 | ||||||||
|
|
|||||||||
Total New York Municipal Bonds & Notes (cost-$171,888,518) |
178,654,725 | |||||||||
|
|
22 | PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.11 |
PIMCO New York Municipal Income Fund II Schedule of Investments
November 30, 2011 (unaudited) (continued)
Principal Amount (000s) |
Value | |||||||||
OTHER MUNICIPAL BONDS & NOTES 6.7% |
||||||||||
Florida 0.6% | ||||||||||
$1,000 | Clearwater Rev., 5.25%, 12/1/39, Ser. A |
$ | 1,069,230 | |||||||
|
|
|||||||||
Louisiana 0.5% | ||||||||||
1,000 | East Baton Rouge Sewerage Commission Rev., 5.25%, 2/1/39, Ser. A |
1,064,890 | ||||||||
|
|
|||||||||
Ohio 0.5% | ||||||||||
1,435 | Buckeye Tobacco Settlement Financing Auth. Rev., 5.875%, 6/1/47, Ser. A-2 |
1,004,356 | ||||||||
|
|
|||||||||
Puerto Rico 4.6% | ||||||||||
5,675 | Childrens Trust Fund Rev., 5.625%, 5/15/43 |
4,621,209 | ||||||||
Sales Tax Financing Corp. Rev., |
||||||||||
2,000 | 5.00%, 8/1/40, Ser. A (AGM) (j) |
2,015,860 | ||||||||
1,300 | 5.25%, 8/1/43, Ser. A-1 |
1,325,558 | ||||||||
1,000 | 5.75%, 8/1/37, Ser. A |
1,061,510 | ||||||||
|
|
|||||||||
9,024,137 | ||||||||||
|
|
|||||||||
U. S. Virgin Islands 0.5% | ||||||||||
1,000 | Public Finance Auth. Rev., 6.00%, 10/1/39, Ser. A |
1,028,150 | ||||||||
|
|
|||||||||
Total Other Municipal Bonds & Notes (cost-$13,739,090) |
13,190,763 | |||||||||
|
|
|||||||||
NEW YORK VARIABLE RATE NOTES (a)(c)(g)(h) 2.8% |
||||||||||
5,000 | JPMorgan Chase Putters/Drivers Trust Rev., |
|||||||||
9.41%, 7/1/33, Ser. 3382 (cost-$4,880,512) |
5,611,350 | |||||||||
|
|
|||||||||
SHORT-TERM INVESTMENTS 0.1% |
||||||||||
U.S. Treasury Obligations (k) 0.1% | ||||||||||
199 | U.S. Treasury Bills, |
198,983 | ||||||||
|
|
|||||||||
Total Investments (cost-$190,707,103) 100.0% |
$ | 197,655,821 | ||||||||
|
|
11.30.11 | PIMCO Municipal Income Funds II Semi-Annual Report | 23 |
PIMCO Municipal Income Funds II Notes to Schedule of Investments
November 30, 2011 (unaudited) (continued)
(a) | Private Placement Restricted as to resale and may not have a readily available market. Securities with an aggregate value of $23,097,725, $26,219,372, and $5,611,350 representing 2.1%, 6.1% and 2.8% of total investments in Municipal II, California Municipal II, and New York Municipal II, respectively. |
(b) | Pre-refunded bonds are collateralized by U.S. Government or other eligible securities which are held in escrow and used to pay principal and interest and retire the bonds at the earliest refunding date (payment date) and/or whose interest rates vary with changes in a designated base rate (such as the prime interest rate). |
(c) | 144A Exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, typically only to qualified institutional buyers. Unless otherwise indicated, these securities are not considered to be illiquid. |
(d) | When-issued. To be settled after November 30, 2011. |
(e) | In default. |
(f) | Fair-Valued Security with an aggregate value of $3,527,764, representing 0.3% of total investments in Municipal II. See Note 1(a) and Note 1(b) in the Notes to Financial Statements. |
(g) | Inverse Floater The interest rate shown bears an inverse relationship to the interest rate on another security or the value of an index. The interest rate disclosed reflects the rate in effect on November 30, 2011. |
(h) | Variable Rate Notes Instruments whose interest rates change on specified dates (such as a coupon date or interest payment date) and/or whose interest rates vary with changes in a designated base rate (such as the prime interest rate). The interest rate disclosed reflects the rate in effect on November 30, 2011. |
(i) | Date shown is date of next put. |
(j) | Residual Interest Bonds held in Trust Securities represent underlying bonds transferred to a separate securitization trust established in a tender option bond transaction in which each Fund acquired the residual interest certificates. These securities serve as collateral in a financing transaction. |
(k) | Rates reflect the effective yields at purchase date. |
Glossary:
AGC | - | insured by Assured Guaranty Corp. | ||||
AGM | - | insured by Assured Guaranty Municipal Corp. | ||||
AMBAC | - | insured by American Municipal Bond Assurance Corp. | ||||
CA St. Mtg. | - | insured by California State Mortgage | ||||
CP | - | Certificates of Participation | ||||
FGIC | - | insured by Financial Guaranty Insurance Co. | ||||
FHA | - | insured by Federal Housing Administration | ||||
GNMA | - | insured by Government National Mortgage Association | ||||
GO | - | General Obligation Bond | ||||
GTD | - | Guaranteed | ||||
IBC | - | Insurance Bond Certificate | ||||
NPFGC | - | insured by National Public Finance Guarantee Corp. | ||||
PSF | - | Public School Fund | ||||
Radian | - | insured by Radian Guaranty, Inc. | ||||
TCRS | - | Temporary Custodian Receipts |
24 | PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.11 | See accompanying Notes to Financial Statements |
[THIS PAGE INTENTIONALLY LEFT BLANK]
11.30.11 | PIMCO Municipal Income Funds II Semi-Annual Report | 25 |
PIMCO Municipal Income Funds II Statements of Assets and Liabilities
November 30, 2011 (unaudited)
Municipal II | California Municipal II |
New York Municipal II |
||||||||||||||||
Assets: | ||||||||||||||||||
Investments, at value (cost-$1,058,531,108, $406,614,612 $190,707,103, respectively) |
$1,084,258,239 | $429,020,980 | $197,655,821 | |||||||||||||||
Cash |
3,626,624 | 12,067,314 | 2,922,425 | |||||||||||||||
Interest receivable |
18,519,108 | 9,167,951 | 3,540,902 | |||||||||||||||
Receivable for investments sold |
6,705,190 | | 2,915,808 | |||||||||||||||
Prepaid expenses and other assets |
56,145 | 57,270 | 24,341 | |||||||||||||||
Deposits with brokers |
| | 231,000 | |||||||||||||||
Total Assets |
1,113,165,306 | 450,313,515 | 207,290,297 | |||||||||||||||
Liabilities: | ||||||||||||||||||
Payable for floating rate notes issued |
77,979,473 | 41,020,833 | 13,851,894 | |||||||||||||||
Payable for investments purchased |
14,883,450 | | | |||||||||||||||
Dividends payable to common and preferred shareholders |
3,941,349 | 1,968,508 | 721,241 | |||||||||||||||
Interest payable |
721,209 | 2,248,319 | 987,811 | |||||||||||||||
Investment management fees payable |
498,727 | 198,454 | 94,342 | |||||||||||||||
Accrued expenses and other liabilities |
335,369 | 1,878,923 | 251,045 | |||||||||||||||
Total Liabilities |
98,359,577 | 47,315,037 | 15,906,333 | |||||||||||||||
Preferred Shares ($0.00001 par value and $25,000 liquidation preference per share applicable to an aggregate of 14,680, 6,520 and 3,160 shares issued and outstanding, respectively) |
367,000,000 | 163,000,000 | 79,000,000 | |||||||||||||||
Net Assets Applicable to Common Shareholders | $647,805,729 | $239,998,478 | $112,383,964 | |||||||||||||||
Composition of Net Assets Applicable to Common Shareholders: | ||||||||||||||||||
Common Shares: |
||||||||||||||||||
Par value ($0.00001 per share) |
$605 | $314 | $109 | |||||||||||||||
Paid-in-capital in excess of par |
854,907,979 | 432,827,598 | 152,902,915 | |||||||||||||||
Undistributed (dividends in excess of) net investment income |
18,700,999 | (2,614,761) | 2,147,284 | |||||||||||||||
Accumulated net realized loss |
(251,527,206) | (212,775,552) | (49,634,005) | |||||||||||||||
Net unrealized appreciation of investments |
25,723,352 | 22,560,879 | 6,967,661 | |||||||||||||||
Net Assets Applicable to Common Shareholders | $647,805,729 | $239,998,478 | $112,383,964 | |||||||||||||||
Common Shares Issued and Outstanding |
60,510,483 | 31,438,080 | 10,852,987 | |||||||||||||||
Net Asset Value Per Common Share | $10.71 | $7.63 | $10.36 |
26 | PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.11 | See accompanying Notes to Financial Statements |
PIMCO Municipal Income Funds II Statements of Operations
Six Months ended November 30, 2011 (unaudited)
Municipal II | California Municipal II |
New York Municipal II |
||||||||||||||||
Investment Income: | ||||||||||||||||||
Interest |
$31,157,999 | $13,025,176 | $5,400,714 | |||||||||||||||
Expenses: | ||||||||||||||||||
Investment management fees |
3,258,710 | 1,304,706 | 619,492 | |||||||||||||||
Interest expense |
314,730 | 188,454 | 55,549 | |||||||||||||||
Auction agent fees and commissions |
288,238 | 134,644 | 64,523 | |||||||||||||||
Custodian and accounting agent fees |
81,499 | 60,617 | 34,969 | |||||||||||||||
Trustees fees and expenses |
50,049 | 16,596 | 9,374 | |||||||||||||||
Legal fees |
46,802 | 10,394 | 3,644 | |||||||||||||||
Shareholder communications |
35,250 | 23,535 | 17,354 | |||||||||||||||
New York Stock Exchange listing fees |
28,112 | 14,606 | 12,331 | |||||||||||||||
Audit and tax services |
18,803 | 24,519 | 15,101 | |||||||||||||||
Transfer agent fees |
14,426 | 14,644 | 16,314 | |||||||||||||||
Insurance expense |
11,673 | 4,682 | 2,371 | |||||||||||||||
Miscellaneous |
7,119 | 6,141 | 5,852 | |||||||||||||||
Total Expenses |
4,155,411 | 1,803,538 | 856,874 | |||||||||||||||
Less: investment management fees waived |
(210,253) | (84,102) | (39,909) | |||||||||||||||
custody credits earned on cash balances |
(652) | (317) | (190) | |||||||||||||||
Net Expenses |
3,944,506 | 1,719,119 | 816,775 | |||||||||||||||
Net Investment Income | 27,213,493 | 11,306,057 | 4,583,939 | |||||||||||||||
Realized and Change In Unrealized Gain (Loss) | ||||||||||||||||||
Net realized gain (loss) on: |
||||||||||||||||||
Investments |
2,238,261 | 4,500,370 | (49,418) | |||||||||||||||
Futures contracts |
562,943 | 224,084 | 109,309 | |||||||||||||||
Swaps |
(18,499,218) | (11,575,764) | (3,804,241) | |||||||||||||||
Net change in unrealized appreciation/depreciation of: |
||||||||||||||||||
Investments |
40,863,125 | 11,096,036 | 5,194,737 | |||||||||||||||
Swaps |
6,850,035 | 4,176,010 | 1,153,882 | |||||||||||||||
Net realized and change in unrealized gain on investments, futures contracts and swaps |
32,015,146 | 8,420,736 | 2,604,269 | |||||||||||||||
Net Increase in Net Assets Resulting from Investment Operations |
59,228,639 | 19,726,793 | 7,188,208 | |||||||||||||||
Dividends on Preferred Shares from Net Investment Income |
(402,733) | (178,871) | (87,077) | |||||||||||||||
Net Increase in Net Assets Applicable to Common Shareholders Resulting from Investment Operations |
$58,825,906 | $19,547,922 | $7,101,131 |
See accompanying Notes to Financial Statements | 11.30.11 | PIMCO Municipal Income Funds II Semi-Annual Report | 27 |
PIMCO Municipal Income Funds II Statements of Changes in Net Assets
Applicable to Common Shareholders
Municipal II | ||||||||||||
Six Months ended November 30, 2011 (unaudited) |
Year ended May 31, 2011 |
|||||||||||
Investment Operations: | ||||||||||||
Net investment income |
$27,213,493 | $54,597,730 | ||||||||||
Net realized gain (loss) on investments, futures contracts and swaps |
(15,698,014) | 7,846,166 | ||||||||||
Net change in unrealized appreciation/depreciation of investments and swaps |
47,713,160 | (52,677,814) | ||||||||||
Net increase in net assets resulting from investment operations |
59,228,639 | 9,766,082 | ||||||||||
Dividends on Preferred Shares from Net Investment Income | (402,733) | (1,520,460) | ||||||||||
Net increase (decrease) in net assets applicable to common shareholders resulting from investment operations |
58,825,906 | 8,245,622 | ||||||||||
Dividends to Common Shareholders from Net Investment Income |
(23,572,608) | (46,931,445) | ||||||||||
Common Share Transactions: | ||||||||||||
Reinvestment of dividends |
1,752,913 | 3,896,483 | ||||||||||
Total increase (decrease) in net assets applicable to common shareholders |
37,006,211 | (34,789,340) | ||||||||||
Net Assets Applicable to Common Shareholders: | ||||||||||||
Beginning of period |
610,799,518 | 645,588,858 | ||||||||||
End of period (including undistributed (dividends in excess of) net investment income of $18,700,999 and $15,462,847; $(2,614,761) and $(1,965,053); $2,147,284 and $1,959,285; respectively) |
$647,805,729 | $610,799,518 | ||||||||||
Common Shares Issued in Reinvestment of Dividends | 167,301 | 373,938 |
28 | PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.11 | See accompanying Notes to Financial Statements |
PIMCO Municipal Income Funds II Statements of Changes in Net Assets
Applicable to Common Shareholders (continued)
California Municipal II | New York Municipal II | |||||||||||||||||
Six Months ended November 30, 2011 (unaudited) |
Year ended May 31, 2011 |
Six Months ended November 30, 2011 (unaudited) |
Year ended May 31, 2011 |
|||||||||||||||
$11,306,057 | $23,136,186 | $4,583,939 | $9,489,719 | |||||||||||||||
(6,851,310) | 62,159 | (3,744,350) | (1,115,356) | |||||||||||||||
15,272,046 | (21,991,348) | 6,348,619 | (8,091,130) | |||||||||||||||
19,726,793 | 1,206,997 | 7,188,208 | 283,233 | |||||||||||||||
(178,871) | (689,435) | (87,077) | (329,688) | |||||||||||||||
19,547,922 | 517,562 | 7,101,131 | (46,455) | |||||||||||||||
(11,776,894) | (23,452,319) | (4,308,863) | (8,576,979) | |||||||||||||||
741,629 | 1,604,973 | 335,419 | 718,710 | |||||||||||||||
8,512,657 | (21,329,784) | 3,127,687 | (7,904,724) | |||||||||||||||
231,485,821 | 252,815,605 | 109,256,277 | 117,161,001 | |||||||||||||||
$239,998,478 | $231,485,821 | $112,383,964 | $109,256,277 | |||||||||||||||
84,255 | 183,513 | 32,053 | 67,458 |
See accompanying Notes to Financial Statements | 11.30.11 | PIMCO Municipal Income Funds II Semi-Annual Report | 29 |
PIMCO Municipal Income Funds II Notes to Financial Statements
November 30, 2011 (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), each a Fund and collectively referred to as the Funds or PIMCO Municipal Income Funds II, were organized as Massachusetts business trusts on March 29, 2002. Prior to commencing operations on June 28, 2002, the Funds had no operations other than matters relating to their organization and registration as non-diversified, closed-end management investment companies registered under the Investment Company Act of 1940 and the rules and regulations thereunder, as amended. Allianz Global Investors Fund Management LLC (the Investment Manager) serves as the Investment Manager and is an indirect, wholly-owned subsidiary of Allianz Asset Management of America L.P. (Allianz Global). Allianz Global is an indirect, wholly-owned subsidiary of Allianz SE, a publicly traded European insurance and financial services company. Each Fund has an unlimited amount of $0.00001 par value per share of common shares authorized.
Under normal market conditions, Municipal II invests substantially all of its assets in a portfolio of municipal bonds, the interest from which is exempt from federal income taxes. Under normal market conditions, California Municipal II invests substantially all of its assets in municipal bonds which pay interest that is exempt from federal and California state income taxes. Under normal market conditions, New York Municipal II invests substantially all of its assets in municipal bonds which pay interest that is exempt from federal, New York State and New York City income taxes. There is no guarantee that the Funds will meet their stated objectives. The Funds will generally seek to avoid investing in bonds generating interest income which could potentially subject individuals to alternative minimum tax. The issuers abilities to meet their obligations may be affected by economic 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 each Funds 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 that provide general indemnifications. The Funds maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred.
In May 2011, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) to develop common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRSs). FASB concluded that the amendments in this ASU will improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with GAAP and IFRSs. The ASU is effective prospectively during interim or annual periods beginning on or after December 15, 2011. The Funds management is evaluating the implications of this change.
The following is a summary of significant accounting policies consistently followed by the Funds:
(a) Valuation of Investments
Portfolio securities and other financial instruments for which market quotations are readily available are stated at market value. Market value is generally determined on the basis of last reported sales prices, or if no sales are reported, on the basis of quotes obtained from a quotation reporting system, established market makers, or independent pricing services.
Portfolio securities and other financial instruments for which market quotations are not readily available, or for which a development/event occurs that may significantly impact the value of a security, are fair-valued, in good faith, pursuant to procedures established by the Board of Trustees, or persons acting at their discretion pursuant to procedures established by the Board of Trustees, including certain fixed income securities which may be valued with reference to securities whose prices are more readily available. The Funds investments are valued daily using prices supplied by an independent pricing service or dealer quotations, or by using the last sale price on the exchange that is the primary market for such securities, or the mean between the last quoted bid and ask price. Independent pricing services use information provided by market makers or estimates of market values obtained from yield data relating to investments or securities with similar characteristics. Securities purchased on a when-issued basis are marked to market daily until settlement at the forward settlement date. Short-term securities maturing in 60 days or less are valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.
30 | PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.11 |
PIMCO Municipal Income Funds II Notes to Financial Statements
November 30, 2011 (unaudited)
1. Organization and Significant Accounting Policies (continued)
The prices used by the Funds to value securities may differ from the value that would be realized if the securities were sold and these differences could be material to the Funds financial statements. Each Funds net asset value (NAV) is normally determined as of the close of regular trading (normally, 4:00 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open for business.
(b) Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. the exit price) in an orderly transaction between market participants. The three levels of the fair value hierarchy are described below:
| Level 1 quoted prices in active markets for identical investments that the Funds have the ability to access |
| Level 2 valuations based on other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) or quotes from inactive exchanges |
| Level 3 valuations based on significant unobservable inputs (including the Funds own assumptions in determining the fair value of investments) |
An investment assets or liabilitys level within the fair value hierarchy is based on the lowest level input, individually or in aggregate, that is significant to fair value measurement. The objective of fair value measurement remains the same even when there is a significant decrease in the volume and level of activity for an asset or liability and regardless of the valuation technique used.
The valuation techniques used by the Funds to measure fair value during the six months ended November 30, 2011 maximized the use of observable inputs and minimized the use of unobservable inputs. When fair valuing securities, the Funds utilized option adjusted spread pricing techniques.
The inputs or methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities. The following are certain inputs and techniques that the Funds generally use to evaluate how to classify each major category of assets and liabilities for Level 2 and Level 3, in accordance with GAAP.
Municipal Bonds & Notes and Variable Rate Notes Municipal bonds and notes and variable rate notes are valued by independent pricing services based on pricing models that take into account, among other factors, information received from market makers and broker-dealers, current trades, bid-want lists, offerings, market movements, the callability of the bond, state of issuance, benchmark yield curves, and bond insurance. To the extent that these inputs are observable, the values of municipal bonds and notes and variable rate notes are categorized as Level 2. To the extent that these inputs are unobservable, the values are categorized as Level 3.
U.S. Treasury Obligations U.S. Treasury obligations are valued by independent pricing services based on pricing models that evaluate the mean between the most recently quoted bid and ask price. The models also take into consideration data received from active market makers and broker-dealers, yield curves, and the spread over comparable U.S. Treasury issues. The spreads change daily in response to market conditions and are generally obtained from the new issue market and broker-dealer sources. To the extent that these inputs are observable, the values of U.S. Treasury obligations are categorized as Level 2. To the extent that these inputs are unobservable, the values are categorized as Level 3.
The Funds policy is to recognize transfers between levels at the end of the reporting period.
11.30.11 | PIMCO Municipal Income Funds II Semi-Annual Report | 31 |
PIMCO Municipal Income Funds II Notes to Financial Statements
November 30, 2011 (unaudited)
1. Organization and Significant Accounting Policies (continued)
A summary of the inputs used at November 30, 2011 in valuing each Funds assets and liabilities is listed below (Refer to Schedules of Investments for detailed information on Investments in Securities and Other Financial Instruments):
Municipal II: | ||||||||||||||||
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at 11/30/11 |
|||||||||||||
Investments in Securities Assets | ||||||||||||||||
Municipal Bonds & Notes: |
||||||||||||||||
California |
| $ | 153,035,621 | $ | 3,527,764 | $ | 156,563,385 | |||||||||
All Other |
| 906,945,141 | | 906,945,141 | ||||||||||||
Variable Rate Notes |
| 20,749,713 | | 20,749,713 | ||||||||||||
Total Investments | | $ | 1,080,730,475 | $ | 3,527,764 | $ | 1,084,258,239 | |||||||||
California Municipal II: | ||||||||||||||||
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at 11/30/11 |
|||||||||||||
Investments in Securities Assets | ||||||||||||||||
California Municipal Bonds & Notes |
| $373,450,097 | | $373,450,097 | ||||||||||||
California Variable Rate Notes |
| 24,762,737 | | 24,762,737 | ||||||||||||
Other Municipal Bonds & Notes |
| 20,408,146 | | 20,408,146 | ||||||||||||
Short-Term Investments |
| 10,400,000 | | 10,400,000 | ||||||||||||
Total Investments | | $429,020,980 | | $429,020,980 | ||||||||||||
New York Municipal II: | ||||||||||||||||
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at 11/30/11 |
|||||||||||||
Investments in Securities Assets | ||||||||||||||||
New York Municipal Bonds & Notes |
| $178,654,725 | | $178,654,725 | ||||||||||||
Other Municipal Bonds & Notes |
| 13,190,763 | | 13,190,763 | ||||||||||||
New York Variable Rate Notes |
| 5,611,350 | | 5,611,350 | ||||||||||||
Short-Term Investments |
| 198,983 | | 198,983 | ||||||||||||
Total Investments | | $197,655,821 | | $197,655,821 | ||||||||||||
There were no significant transfers between Levels 1 and 2 during the six months ended November 30, 2011.
A roll forward of fair value measurements using significant unobservable inputs (Level 3) for the six months ended November 30, 2011, was as follows (not applicable for California Municipal II and New York Municipal II):
Municipal II: | ||||||||||||||||||||||||||||||||||||
Beginning Balance 5/31/11 |
Purchases | Sales | Accrued Discounts (Premiums) |
Net Realized Gain (Loss) |
Net Change in Unrealized Appreciation/ Depreciation |
Transfers into Level 3 |
Transfers out of Level 3 |
Ending Balance 11/30/11 |
||||||||||||||||||||||||||||
Investments in Securities Assets | ||||||||||||||||||||||||||||||||||||
Municipal Bonds & Notes: |
|
|||||||||||||||||||||||||||||||||||
California |
| $ | 3,700,000 | $ | (310,000 | ) | | | $ | 137,764 | | | $ | 3,527,764 | ||||||||||||||||||||||
Total Investments | | $ | 3,700,000 | $ | (310,000 | ) | | | $ | 137,764 | | | $ | 3,527,764 | ||||||||||||||||||||||
32 | PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.11 |
PIMCO Municipal Income Funds II Notes to Financial Statements
November 30, 2011 (unaudited)
1. Organization and Significant Accounting Policies (continued)
The net change in unrealized appreciation/depreciation of Level 3 investments which Municipal II held at November 30, 2011 was $137,764. Net change in unrealized appreciation/depreciation is reflected on the Statements of Operations.
(c) Investment Transactions and Investment Income
Investment transactions are accounted for on the trade date. Securities purchased and sold on a when-issued basis may be settled a month or more after the trade date. Realized gains and losses on investments are determined on an identified cost basis. Interest income adjusted for the accretion of discounts and amortization of premiums is recorded on an accrual basis. Discounts or premiums on debt securities purchased are accreted or amortized, respectively, to interest income over the lives of the respective securities.
(d) Federal Income Taxes
The Funds intend to distribute all of their taxable income and to comply with the other requirements of Subchapter M 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.
Accounting for uncertainty in income taxes establishes for all entities, including pass-through entities such as the Funds, a minimum threshold for financial statement recognition of the benefit of positions taken in filing tax returns (including whether an entity is taxable in a particular jurisdiction), and requires certain expanded tax disclosures. The Funds management has determined that its evaluation has resulted in no material impact to the Funds financial statements at November 30, 2011. The Funds federal tax returns for the prior three years remain subject to examination by the Internal Revenue Service.
(e) Dividends and Distributions Common Shares
The Funds declare dividends from net investment income monthly to common shareholders. Distributions of net realized capital gains, if any, are paid at least annually. The Funds record dividends and distributions to their respective 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 GAAP. These book-tax differences are considered either temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal income tax treatment. Temporary differences do not require reclassification. To the extent dividends and/or distributions exceed current and accumulated earnings and profits for federal income tax purposes, they are reported as dividends and/or distributions to shareholders from return of capital.
(f) Reverse Repurchase Agreements
In a reverse repurchase agreement, the Funds sell securities to a bank or broker-dealer and agree to repurchase the securities at a mutually agreed upon date and price. Generally, the effect of such a transaction is that the Funds can recover and reinvest all or most of the cash invested in portfolio securities involved during the term of the reverse repurchase agreement and still be entitled to the returns associated with those portfolio securities. Such transactions are advantageous if the interest cost to the Funds of the reverse repurchase transaction is less than the returns they obtain on investments purchased with the cash. To the extent the Funds do not cover their positions in reverse repurchase agreements (by segregating liquid assets at least equal in amount to the forward purchase commitment), the Funds uncovered obligations under the agreements will be subject to the Funds limitations on borrowings. Reverse repurchase agreements involve leverage risk and also the risk that the market value of the securities that the Funds are obligated to repurchase under the agreements may decline below the repurchase price. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, the Funds use of the proceeds of the agreement may be restricted pending determination by the other party, or their trustee or receiver, whether to enforce the Funds obligation to repurchase the securities. There were no reverse repurchase agreements open as of November 30, 2011.
(g) Inverse Floating Rate Transactions Residual Interest Municipal Bonds (RIBs)/Residual Interest Tax Exempt Bonds (RITEs)
The Funds invest in RIBs and RITEs (Inverse Floaters), whose interest rates bear an inverse relationship to the interest rate on another security or the value of an index. In inverse floating rate transactions, the Funds sell a fixed rate municipal bond (Fixed Rate Bond) to a broker who places the Fixed Rate Bond in a special purpose trust (Trust) from which floating rate bonds (Floating Rate Notes) and Inverse Floaters are issued. The Funds simultaneously, or within a short period of time, purchase the Inverse Floaters from the broker. The Inverse Floaters held by the Funds provide the
11.30.11 | PIMCO Municipal Income Funds II Semi-Annual Report | 33 |
PIMCO Municipal Income Funds II Notes to Financial Statements
November 30, 2011 (unaudited)
1. Organization and Significant Accounting Policies (continued)
Funds with the right to: (1) cause the holders of the Floating Rate Notes to tender their notes at par, and (2) cause the broker to transfer the Fixed-Rate Bond held by the Trust to the Funds, thereby collapsing the Trust. The Funds account for the transaction described above as a secured borrowing by including the Fixed Rate Bond in their Schedules of Investments, and account for the Floating Rate Notes as a liability under the caption Payable for floating rate notes issued in the Funds Statements of Assets and Liabilities. The Floating Rate Notes have interest rates that generally reset weekly and their holders have the option to tender their notes to the broker for redemption at par at each reset date.
The Funds may also invest in Inverse Floaters without transferring a fixed rate municipal bond into a special purpose trust, which are not accounted for as secured borrowings. The Funds may also invest in Inverse Floaters for the purpose of increasing leverage.
The Inverse Floaters are created by dividing the income stream provided by the underlying bonds to create two securities, one short-term and one long-term. The interest rate on the short-term component is reset by an index or auction process typically every 7 to 35 days. After income is paid on the short-term securities at current rates, the residual income from the underlying bond(s) goes to the long-term securities. Therefore, rising short-term rates result in lower income for the long-term component and vice versa. The longer-term bonds may be more volatile and less liquid than other municipal bonds of comparable maturity. Investments in Inverse Floaters typically will involve greater risk than in an investment in fixed rate bonds.
The Funds restrictions on borrowings do not apply to the secured borrowings deemed to have occurred for accounting purposes. Inverse Floaters held by the Funds are exempt from registration under Rule 144A of the Securities Act of 1933.
In addition to general market risks, the Funds investments in Inverse Floaters may involve greater risk and volatility than an investment in a fixed rate bond, and the value of Inverse Floaters may decrease significantly when market interest rates increase. Inverse Floaters have varying degrees of liquidity, and the market for these securities may be volatile. These securities tend to underperform the market for fixed rate bonds in a rising interest rate environment, but tend to outperform the market for fixed rate bonds when interest rates decline or remain relatively stable. Although volatile, Inverse Floaters typically offer the potential for yields exceeding the yields available on fixed rate bonds with comparable credit quality, coupon, call provisions and maturity. Trusts in which Inverse Floaters may be held could be terminated due to market, credit or other events beyond the Funds control, which could require the Funds to reduce leverage and dispose of portfolio investments at inopportune times and prices.
(h) When-Issued/Delayed-Delivery Transactions
When-issued or delayed-delivery transactions involve a commitment to purchase or sell securities for a predetermined price or yield, with payment and delivery taking place beyond the customary settlement period. When delayed-delivery purchases are outstanding, the Funds will set aside and maintain until the settlement date in a designated account, liquid assets in an amount sufficient to meet the purchase price. When purchasing a security on a delayed-delivery basis, the Funds assume the rights and risks of ownership of the security, including the risk of price and yield fluctuations; consequently, such fluctuations are taken into account when determining the net asset value. The Funds may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell when-issued securities before they are delivered, which may result in a realized gain or loss. When a security is sold on a delayed-delivery basis, the Funds do not participate in future gains and losses with respect to the security.
(i) Restricted Securities
The Funds are permitted to invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expenses, and prompt sale at an acceptable price may be difficult.
(j) Custody Credits on Cash Balances
The Funds benefit from an expense offset arrangement with their custodian bank, whereby uninvested cash balances earn credits that 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. Cash overdraft charges, if any, are included in custodian and accounting agent fees.
34 | PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.11 |
PIMCO Municipal Income Funds II Notes to Financial Statements
November 30, 2011 (unaudited)
(k) Interest Expense
Interest expense primarily relates to the Funds participation in floating rate notes held by third parties in conjunction with Inverse Floater transactions.
2. Principal Risks
In the normal course of business, the Funds trade financial instruments and enter into financial transactions where risk of potential loss exists due to, among other things, changes in the market (market risk) or failure of the other party to a transaction to perform (counterparty risk). The Funds are also exposed to other risks such as, but not limited to, interest rate, and credit risks.
Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the value of certain fixed income securities held by the Funds are likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is used primarily as a measure of the sensitivity of a fixed income securitys market price to interest rate (i.e. yield) movements.
Variable and floating rate securities generally are less sensitive to interest rate changes but may decline in value if their interest rates do not rise as much, or as quickly, as interest rates in general. Conversely, floating rate securities will not generally increase in value if interest rates decline. Inverse floating rate securities may decrease in value if interest rates increase. Inverse floating rate securities may also exhibit greater price volatility than a fixed rate obligation with similar credit quality. When the Funds hold variable or floating rate securities, a decrease (or, in the case of inverse floating rate securities, an increase) in market interest rates will adversely affect the income received from such securities and the NAV of the Funds shares.
The Funds are exposed to credit risk, which is the risk of losing money if the issuer or guarantor of a fixed income security is unable or unwilling, or is perceived (whether by market participants, rating agencies, pricing services or otherwise) as unable or unwilling, to make timely principal and/or interest payments, or to otherwise honor its obligations. Securities are subject to varying degrees of credit risk, which are often reflected in credit ratings.
The market values of securities may decline due to general market conditions (market risk) which are not specifically related to a particular company, such as real or perceived adverse economic conditions changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment. They may also decline due to factors that affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity-related investments generally have greater market price volatility than fixed income securities.
The Funds are exposed to counterparty risk, or the risk that an institution or other entity with which the Funds have unsettled or open transactions will default. The potential loss to the Funds could exceed the value of the financial assets recorded in the Funds financial statements. Financial assets, which potentially expose the Funds to counterparty risk, consist principally of cash due from counterparties and investments. The Funds Sub-Adviser, Pacific Investment Management Company LLC (the Sub-Adviser), an affiliate of the Investment Manager, seeks to minimize the Funds counterparty risk by performing reviews of each counterparty and by minimizing concentration of counterparty risk by undertaking transactions with multiple customers and counterparties on recognized and reputable exchanges. Delivery of securities sold is only made once the Funds have received payment. Payment is made on a purchase once the securities have been delivered by the counterparty. The trade will fail if either party fails to meet its obligation.
Leverage will cause the value of the Funds shares to be more volatile than if the Funds did not use leverage. This is because leverage tends to exaggerate the effect of any increase or decrease in the value of the Funds portfolio securities. The Funds may engage in transactions or purchase instruments that give rise to forms of leverage. In addition, to the extent the Funds employ leverage, interest costs may not be recovered by any appreciation of the securities purchased with the leverage proceeds and could exceed the Funds investment returns, resulting in greater losses.
The Funds are party to International Swaps and Derivatives Association, Inc. Master Agreements (ISDA Master Agreements) with select counterparties that govern transactions, over-the-counter derivatives and foreign exchange
11.30.11 | PIMCO Municipal Income Funds II Semi-Annual Report | 35 |
PIMCO Municipal Income Funds II Notes to Financial Statements
November 30, 2011 (unaudited)
2. Principal Risks (continued)
contracts entered into by the Funds and those counterparties. The ISDA Master Agreements contain provisions for general obligations, representations, agreements, collateral and events of default or termination. Events of termination include conditions that may entitle counterparties to elect to terminate early and cause settlement of all outstanding transactions under the applicable ISDA Master Agreement. Any election to terminate early could be material to the financial statements of the Funds.
3. Financial Derivative Instruments
Disclosure about derivatives and hedging activities requires qualitative disclosure regarding objectives and strategies for using derivatives, quantitative disclosure about fair value amounts of gains and losses on derivatives, and disclosure about credit-risk-related contingent features in derivative agreements. The disclosure requirements distinguish between derivatives, which are accounted for as hedges, and those that do not qualify for such accounting. Although the Funds sometimes use derivatives for hedging purposes, the Funds reflect derivatives at fair value and recognize changes in fair value through the Funds Statements of Operations, and such derivatives do not qualify for hedge accounting treatment.
(a) Swap Agreements
Swap agreements are bilaterally negotiated agreements between the Funds and a counterparty to exchange or swap investment cash flows, assets, foreign currencies or market-linked returns at specified, future intervals. Swap agreements are privately negotiated in the over-the-counter market (OTC Swaps) and may be executed in a multilateral or other trade facility platform, such as a registered commodities exchange (Centrally cleared swaps). The Funds enter into credit default, cross-currency, interest rate, total return, variance and other forms of swap agreements in order to manage their exposure to credit, currency and interest rate risk. In connection with these agreements, securities or cash may be identified as collateral or margin in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default or bankruptcy/insolvency.
OTC swap payments received or made at the beginning of the measurement period are reflected as such on the Funds Statements of Assets and Liabilities and represent payments made or received upon entering into the swap agreement to compensate for differences between the stated terms of the swap agreement and prevailing market conditions (credit spreads, currency exchange rates, interest rates, and other relevant factors). These upfront payments if any, are recorded as realized gains or losses on the Funds Statements of Operations upon termination or maturity of the swap. A liquidation payment received or made at the termination of the swap is recorded as realized gain or loss on the Funds Statements of Operations. Net periodic payments received or paid by the Funds if any, are included as part of realized gains or losses on the Funds Statements of Operations. Changes in market value, if any, are reflected as a component of net changes in unrealized appreciation/depreciation on the Funds Statements of Operations. Daily changes in valuation of centrally cleared swaps, if any, are recorded as a receivable or payable for variation margin on centrally cleared swaps on the Funds Statements of Assets and Liabilities.
Entering into these agreements involves, to varying degrees, elements of credit, legal, market and documentation risk in excess of the amounts recognized on the Funds Statements of Assets and Liabilities. Such risks include the possibility that there will be no liquid market for these agreements, that the counterparties to the agreements may default on their obligation to perform or disagree as to the meaning of contractual terms in the agreements and that there may be unfavorable changes in interest rates.
Interest Rate Swap Agreements Interest rate swap agreements involve the exchange by the Funds with a counterparty of their respective commitments to pay or receive interest, e.g., an exchange of floating rate payments for fixed rate payments, with respect to the notional amount of principal. Certain forms of interest rate swap agreements may include: (i) interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or cap, (ii) interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified rate, or floor, (iii) interest rate collars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels, (iv) callable interest rate swaps, under which the counterparty may terminate the swap transaction in whole at zero cost by a predetermined date and time prior
36 | PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.11 |
PIMCO Municipal Income Funds II Notes to Financial Statements
November 30, 2011 (unaudited)
3. Financial Derivative Instruments (continued)
to the maturity date, (v) spreadlocks, which allow the interest rate swap users to lock in the forward differential (or spread) between the interest rate swap rate and a specified benchmark, or (vi) basis swaps, under which two parties can exchange variable interest rates based on different money markets.
The following is a summary of the fair valuation of the Funds derivatives categorized by risk exposure.
The effect of derivatives on the Statements of Operations for the six months ended November 30, 2011:
Municipal II: | ||||
Location | Interest Rate Contracts |
|||
Net realized gain (loss) on: | ||||
Futures contracts |
$ | 562,943 | ||
Swaps |
(18,499,218 | ) | ||
|
|
|||
Total net realized gain (loss) | $ | (17,936,275 | ) | |
|
|
|||
Net change in unrealized appreciation/depreciation of: | ||||
Swaps |
$ | 6,850,035 | ||
|
|
|||
California Municipal II: | ||||
Location | Interest Rate Contracts |
|||
Net realized gain (loss) on: | ||||
Futures contracts |
$ | 224,084 | ||
Swaps |
(11,575,764 | ) | ||
|
|
|||
Total net realized gain (loss) | $ | (11,351,680 | ) | |
|
|
|||
Net change in unrealized appreciation/depreciation of: | ||||
Swaps |
$ | 4,176,010 | ||
|
|
|||
New York Municipal II: | ||||
Location | Interest Rate Contracts |
|||
Net realized gain (loss) on: | ||||
Futures contracts |
$ | 109,309 | ||
Swaps |
(3,804,241 | ) | ||
|
|
|||
Total net realized gain (loss) | $ | (3,694,932 | ) | |
|
|
|||
Net change in unrealized appreciation/depreciation of: | ||||
Swaps |
$ | 1,153,882 | ||
|
|
During the six months ended November 30, 2011 the average volume (measured at each fiscal quarter end) of derivative activity was:
Interest
Rate Swap Agreements(1) |
||||
Municipal II |
$ | 39,400 | ||
California Municipal II |
26,633 | |||
New York Municipal II |
8,100 |
(1) | Notional amount (in thousands) |
11.30.11 | PIMCO Municipal Income Funds II Semi-Annual Report | 37 |
PIMCO Municipal Income Funds II Notes to Financial Statements
November 30, 2011 (unaudited)
4. Investment Manager/Sub-Adviser
Each Fund has an Investment Management Agreement (each an Agreement) with the Investment Manager. Subject to the supervision of the Funds Board of Trustees, the Investment Manager is responsible for managing, either directly or through others selected by it, the Funds investment activities, business affairs and administrative matters. Pursuant to each Agreement, the Investment Manager receives an annual fee, payable monthly, at an annual rate of 0.65% of each Funds average daily net assets, inclusive of daily net assets attributable to any Preferred Shares outstanding.
The Investment Manager has voluntarily agreed to waive a portion of its fees for each Fund at the annual rate of 0.05% of each Funds average daily net assets, inclusive of net assets attributable to any Preferred Shares that may be outstanding, for the period July 1, 2011 through June 30, 2012. For the six months ended November 30, 2011, each Fund paid investment management fees at an effective rate of 0.60% of each Funds average daily net assets, inclusive of net assets attributable to any Preferred Shares that were outstanding.
The Investment Manager has retained the Sub-Adviser to manage the Funds investments. Subject to the supervision of the Investment Manager, the Sub-Adviser is responsible for making all of the Funds investment decisions. The Investment Manager, and not the Funds, pays a portion of the fees it receives as Investment Manager to the Sub-Adviser in return for its services.
5. Investments in Securities
Purchases and sales of investments, other than short-term securities and U.S. government obligations, for the six months ended November 30, 2011:
Municipal II | California Municipal II |
New York Municipal II |
||||||||||
Purchases |
$ | 161,085,765 | $ | 36,584,128 | $ | 25,986,227 | ||||||
Sales |
155,521,084 | 48,776,892 | 34,050,243 |
(a) Floating rate notes:
The weighted average daily balance of floating rate notes outstanding during the six months ended November 30, 2011 for Municipal II, California Municipal II and New York Municipal II was $77,979,473, $40,220,833 and $13,851,894 at a weighted average interest rate, including fees, of 0.40%, 0.46% and 0.40%, respectively.
6. Income Tax Information
Under the recently enacted Regulated Investment Company Modernization Act of 2010, the Funds will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010, for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years. As a result, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term capital losses.
The cost basis of investments for federal income tax purposes and gross unrealized appreciation and gross unrealized depreciation of investments at November 30, 2011 were:
Cost of Investments |
Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net Unrealized Appreciation |
|||||||||||||
Municipal II |
$ | 978,992,892 | $ | 53,181,997 | $ | 26,087,445 | $ | 27,094,552 | ||||||||
California Municipal II |
364,379,991 | 28,470,251 | 6,614,480 | 21,855,771 | ||||||||||||
New York Municipal II |
176,640,052 | 9,781,788 | 2,826,216 | 6,955,572 |
Differences between book and tax cost were attributable to inverse floater transactions.
38 | PIMCO Municipal Income Funds II Semi-Annual Report | 11.30.11 |
PIMCO Municipal Income Funds II Notes to Financial Statements
November 30, 2011 (unaudited)
7. Auction-Rate Preferred Shares
Municipal II has 2,936 shares of Preferred Shares Series A, 2,936 shares of Preferred Shares Series B, 2,936 shares of Preferred Shares Series C, 2,936 shares of Preferred Shares Series D and 2,936 shares of Preferred Shares Series E outstanding, each with a liquidation preference value of $25,000 per share plus any accumulated, unpaid dividends.
California Municipal II has 1,304 shares of Preferred Shares Series A, 1,304 shares of Preferred Shares Series B, 1,304 shares of Preferred Shares Series C, 1,304 shares of Preferred Shares Series D and 1,304 shares of Preferred Shares Series E outstanding, each with a liquidation preference value of $25,000 per share plus any accumulated, unpaid dividends.
New York Municipal II has 1,580 shares of Preferred Shares Series A and 1,580 shares of Preferred Shares Series B outstanding, each with a liquidation preference value of $25,000 per share plus any accumulated, unpaid dividends.
Dividends are accumulated daily at an annual rate (typically re-set every seven days) through auction procedures (or through default provisions in the event of failed auctions). Distributions of net realized capital gains, if any, are paid annually.
For the six months ended November 30, 2011, the annualized dividend rates for each Fund ranged from:
High | Low | At November 30, 2011 |
||||||||||
Municipal II: |
||||||||||||
Series A |
0.305 | % | 0.107 | % | 0.213 | % | ||||||
Series B |
0.305 | % | 0.107 | % | 0.198 | % | ||||||
Series C |
0.305 | % | 0.110 | % | 0.229 | % | ||||||
Series D |
0.305 | % | 0.107 | % | 0.229 | % | ||||||
Series E |
0.305 | % | 0.107 | % | 0.229 | % | ||||||
California Municipal II: |
||||||||||||
Series A |
0.305 | % | 0.107 | % | 0.213 | % | ||||||
Series B |
0.305 | % | 0.107 | % | 0.198 | % | ||||||
Series C |
0.305 | % | 0.110 | % | 0.229 | % | ||||||
Series D |
0.305 | % | 0.107 | % | 0.229 | % | ||||||
Series E |
0.305 | % | 0.107 | % | 0.229 | % | ||||||
New York Municipal II: |
||||||||||||
Series A |
0.305 | % | 0.110 | % | 0.229 | % | ||||||
Series B |
0.305 | % | 0.107 | % | 0.229 | % |
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 or paying any dividends or distributions to common shareholders or repurchasing common shares and/or could trigger the mandatory redemption of Preferred Shares at their liquidation preference value plus any accumulated, unpaid dividends.
Preferred shareholders, who are entitled to one vote per share, generally vote together with the common shareholders but vote separately as a class to elect two Trustees and on any matters affecting the rights of the Preferred Shares.
Since mid-February 2008, holders of auction-rate preferred shares (ARPS) issued by the Funds have been directly impacted by an unprecedented lack of liquidity, which has similarly affected ARPS holders in many of the nations closed-end funds. Since then, regularly scheduled auctions for ARPS issued by the Funds have consistently failed because of insufficient demand (bids to buy shares) to meet the supply (shares offered for sale) at each auction. In a failed auction, ARPS holders cannot sell all, and may not be able to sell any, of their shares tendered for sale. While repeated auction failures have affected the liquidity for ARPS, they do not constitute a default or automatically alter the credit quality of the ARPS, and the ARPS holders have continued to receive dividends at the defined maximum rate equal to the higher of the 30-day AA Composite Commercial Paper Rate multiplied by 110% or the Taxable Equivalent
11.30.11 | PIMCO Municipal Income Funds II Semi-Annual Report | 39 |
PIMCO Municipal Income Funds II Notes to Financial Statements
November 30, 2011 (unaudited)
7. Auction-Rate Preferred Shares (continued)
of the Short-Term Municipal Obligations Rate-defined as 90% of the quotient of (A) the per annum rate expressed on an interest equivalent basis equal to the Kenny S&P 30-day High Grade Index divided by (B) 1.00 minus the Marginal Tax Rate (expressed as a decimal) multiplied by 110% (which is a function of short-term interest rates and typically higher than the rate that would have otherwise been set through a successful auction). If the Funds ARPS auctions continue to fail and the maximum rate payable on the ARPS rises as a result of changes in short-term interest rates, returns for the Funds common shareholders could be adversely affected.
See Note 8. Legal Proceedings, for a discussion of shareholder demand letters received by Municipal II and certain other closed-end funds managed by the Investment Manager.
8. Legal Proceedings
Beginning in May 2010, several closed-end funds managed by the Investment Manager, including Municipal II and certain other funds sub-advised by the Sub-Adviser, each received a demand letter from a law firm on behalf of certain common shareholders. The demand letters allege that the Investment Manager and certain officers and trustees of the funds breached their fiduciary duties in connection with the redemption at par of a portion of the funds ARPS and demand that the boards of trustees take certain action to remedy those alleged breaches. After conducting an investigation in August 2010, the independent trustees of Municipal II rejected the demands made in the demand letters.
The Investment Manager and the Sub-Adviser believe that this matter is not likely to have a material adverse effect on the Funds or on their ability to perform their respective investment advisory activities relating to the Funds.
9. Subsequent Events
On December 1, 2011, the following dividends were declared to common shareholders payable January 3, 2012 to shareholders of record on December 12, 2011:
Municipal II | $0.065 per common share | |
California Municipal II | $0.0625 per common share | |
New York Municipal II | $0.06625 per common share |
Paul Belica retired from the Funds Board of Trustees on December 31, 2011.