UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS
OF REGISTERED MANAGEMENT INVESTMENT COMPANY
| Investment Company Act File Number: | 811-21076 | |
| Registrant Name: | PIMCO Municipal Income Fund II | |
| Address of Principal Executive Offices: | 1633 Broadway | |
| New York, NY 10019 | ||
| Name and Address of Agent for Service: | William G. Galipeau | |
| 650 Newport Center Drive | ||
| Newport Beach, CA 92660 | ||
| Registrant’s telephone number, including area code: | (844) 337-4626 | |
| Date of Fiscal Year End: | May 31 | |
| Date of Reporting Period: | February 28, 2015 | |
Item 1. Schedule of Investments
Schedule of Investments
PIMCO Municipal Income Fund II
February 28, 2015 (Unaudited)
| PRINCIPAL AMOUNT (000s) |
MARKET VALUE (000s) |
|||||||
| INVESTMENTS IN SECURITIES 152.8% |
||||||||
| MUNICIPAL BONDS & NOTES 149.7% |
||||||||
| ALABAMA 4.8% |
||||||||
| Alabama Docks Department State Revenue Bonds, Series 2010 |
||||||||
| 6.000% due 10/01/2040 |
$ | 2,000 | $ | 2,323 | ||||
| Birmingham-Baptist Medical Centers Special Care Facilities Financing Authority, Alabama Revenue Bonds, Series 2005 |
||||||||
| 5.000% due 11/15/2030 |
1,000 | 1,024 | ||||||
| Jefferson County, Alabama Sewer Revenue Bonds, Series 2013 |
||||||||
| 0.000% due 10/01/2050 (a) |
21,000 | 13,471 | ||||||
| 6.500% due 10/01/2053 |
17,000 | 19,736 | ||||||
|
|
|
|||||||
| 36,554 | ||||||||
|
|
|
|||||||
| ARIZONA 13.0% |
||||||||
| Arizona Health Facilities Authority Revenue Bonds, Series 2008 |
||||||||
| 5.000% due 01/01/2035 |
3,500 | 3,783 | ||||||
| 5.500% due 01/01/2038 |
2,860 | 3,143 | ||||||
| Industrial Development Authority of the County, Arizona of Pima Revenue Bonds, Series 2008 |
||||||||
| 5.000% due 09/01/2039 |
29,700 | 32,320 | ||||||
| Industrial Development Authority of the County, Arizona of Pima Revenue Bonds, Series 2010 |
||||||||
| 5.250% due 10/01/2040 |
1,500 | 1,680 | ||||||
| Pinal County, Arizona Electric District No. 3 Revenue Bonds, Series 2011 |
||||||||
| 5.250% due 07/01/2036 |
1,750 | 1,997 | ||||||
| 5.250% due 07/01/2041 |
3,700 | 4,160 | ||||||
| Salt River Project Agricultural Improvement & Power District, Arizona Revenue Bonds, Series 2009 |
||||||||
| 5.000% due 01/01/2039 (b) |
10,000 | 11,162 | ||||||
| Salt Verde Financial Corp., Arizona Revenue Bonds, Series 2007 |
||||||||
| 5.000% due 12/01/2032 |
12,430 | 14,342 | ||||||
| 5.000% due 12/01/2037 |
22,400 | 25,907 | ||||||
|
|
|
|||||||
| 98,494 | ||||||||
|
|
|
|||||||
| CALIFORNIA 20.4% |
||||||||
| Bay Area Toll Authority, California Revenue Bonds, Series 2008 |
||||||||
| 5.000% due 04/01/2034 |
1,430 | 1,614 | ||||||
| Bay Area Toll Authority, California Revenue Bonds, Series 2010 |
||||||||
| 5.000% due 10/01/2029 |
6,000 | 6,997 | ||||||
| Bay Area Toll Authority, California Revenue Bonds, Series 2013 |
||||||||
| 5.250% due 04/01/2048 |
5,000 | 5,697 | ||||||
| California Health Facilities Financing Authority Revenue Bonds, (IBC/NPFGC Insured), Series 2007 |
||||||||
| 5.000% due 11/15/2042 |
6,300 | 6,688 | ||||||
| California Health Facilities Financing Authority Revenue Bonds, Series 2010 |
||||||||
| 5.000% due 11/15/2036 |
1,500 | 1,691 | ||||||
| 8.110% due 11/15/2036 (c) |
5,000 | 6,380 | ||||||
| California Health Facilities Financing Authority Revenue Bonds, Series 2011 |
||||||||
| 6.000% due 08/15/2042 |
3,000 | 3,596 | ||||||
| California Municipal Finance Authority Revenue Bonds, Series 2011 |
||||||||
| 7.750% due 04/01/2031 |
2,875 | 3,529 | ||||||
| California State General Obligation Bonds, Series 2007 |
||||||||
| 5.000% due 11/01/2032 |
2,925 | 3,223 | ||||||
| 5.000% due 06/01/2037 |
1,590 | 1,718 | ||||||
| California State General Obligation Bonds, Series 2008 |
||||||||
| 5.125% due 08/01/2036 |
5,200 | 5,828 | ||||||
| 5.250% due 03/01/2038 |
2,500 | 2,775 | ||||||
| California State General Obligation Bonds, Series 2009 |
||||||||
| 6.000% due 04/01/2038 |
9,500 | 11,388 | ||||||
| California State General Obligation Bonds, Series 2010 |
||||||||
| 5.250% due 11/01/2040 |
5,945 | 6,991 | ||||||
| 5.500% due 03/01/2040 |
5,750 | 6,761 | ||||||
| California Statewide Communities Development Authority Revenue Bonds, (FHA Insured), Series 2009 |
||||||||
| 6.625% due 08/01/2029 |
4,890 | 5,918 | ||||||
| 6.750% due 02/01/2038 |
17,415 | 21,085 | ||||||
| California Statewide Communities Development Authority Revenue Bonds, Series 2007 |
||||||||
| 5.750% due 11/01/2017 |
1,935 | 2,054 | ||||||
| California Statewide Communities Development Authority Revenue Bonds, Series 2010 |
||||||||
| 5.000% due 11/01/2040 |
1,000 | 1,103 | ||||||
| California Statewide Communities Development Authority Revenue Bonds, Series 2011 |
||||||||
| 5.000% due 12/01/2041 |
1,000 | 1,108 | ||||||
| 6.000% due 08/15/2042 |
5,690 | 6,820 | ||||||
| 6.500% due 11/01/2021 |
630 | 690 | ||||||
| Golden State, California Tobacco Securitization Corp. Revenue Bonds, Series 2007 |
||||||||
| 5.750% due 06/01/2047 |
4,000 | 3,417 | ||||||
| Hayward Unified School District, California General Obligation Bonds, Series 2008 |
||||||||
| 5.000% due 08/01/2033 |
2,000 | 2,111 | ||||||
| Indian Wells Redevelopment Agency, California Tax Allocation Bonds, (AMBAC Insured), Series 2006 |
||||||||
| 4.750% due 09/01/2034 |
1,500 | 1,529 | ||||||
| Los Angeles Community College District, California General Obligation Bonds, (FGIC Insured), Series 2007 |
||||||||
| 5.000% due 08/01/2032 |
2,000 | 2,213 | ||||||
| Los Angeles Department of Water & Power, California Revenue Bonds, (AMBAC Insured), Series 2007 |
||||||||
| 5.000% due 07/01/2039 |
4,000 | 4,366 | ||||||
| Los Angeles Unified School District, California General Obligation Bonds, (AMBAC Insured), Series 2005 |
||||||||
| 5.000% due 07/01/2030 |
5,000 | 5,078 | ||||||
| M-S-R Energy Authority, California Revenue Bonds, Series 2009 |
||||||||
| 6.500% due 11/01/2039 |
1,750 | 2,421 | ||||||
| Montebello Unified School District, California General Obligation Bonds, (AGM Insured), Series 2008 |
||||||||
| 5.000% due 08/01/2033 |
2,000 | 2,277 | ||||||
| Newport Beach, California Revenue Bonds, Series 2011 |
||||||||
| 5.875% due 12/01/2030 |
3,000 | 3,821 | ||||||
| Peralta Community College District, California General Obligation Bonds, Series 2009 |
||||||||
| 5.000% due 08/01/2039 |
500 | 566 | ||||||
| San Diego County, California Water Authority Certificates of Participation Bonds, (AGM Insured), Series 2008 |
||||||||
| 5.000% due 05/01/2038 |
2,000 | 2,198 | ||||||
| San Marcos Unified School District, California General Obligation Bonds, Series 2011 |
||||||||
| 5.000% due 08/01/2038 |
3,300 | 3,760 | ||||||
| Santa Clara County, California Financing Authority Revenue Bonds, (AMBAC Insured), Series 2007 |
||||||||
| 5.750% due 02/01/2041 |
2,000 | 2,197 | ||||||
| Torrance, California Revenue Bonds, Series 2010 |
||||||||
| 5.000% due 09/01/2040 |
4,725 | 5,086 | ||||||
|
|
|
|||||||
| 154,694 | ||||||||
|
|
|
|||||||
| COLORADO 2.3% |
||||||||
| Aurora, Colorado Revenue Bonds, Series 2010 |
||||||||
| 5.000% due 12/01/2040 |
5,800 | 6,350 | ||||||
| Colorado Health Facilities Authority Revenue Bonds, Series 2007 |
||||||||
| 5.900% due 08/01/2037 |
1,000 | 1,011 | ||||||
| Colorado Health Facilities Authority Revenue Bonds, Series 2010 |
||||||||
| 5.000% due 01/01/2040 |
6,045 | 6,633 | ||||||
| Denver Health & Hospital Authority, Colorado Revenue Bonds, Series 2010 |
||||||||
| 5.625% due 12/01/2040 |
1,000 | 1,110 | ||||||
| Public Authority for Colorado Energy Revenue Bonds, Series 2008 |
||||||||
| 6.500% due 11/15/2038 |
1,430 | 1,990 | ||||||
|
|
|
|||||||
| 17,094 | ||||||||
|
|
|
|||||||
| CONNECTICUT 0.3% |
||||||||
| Connecticut State Health & Educational Facility Authority Revenue Bonds, Series 2011 |
||||||||
| 5.000% due 07/01/2041 |
1,000 | 1,085 | ||||||
| Harbor Point Infrastructure Improvement District, Connecticut Tax Allocation Bonds, Series 2010 |
||||||||
| 7.875% due 04/01/2039 |
1,250 | 1,494 | ||||||
|
|
|
|||||||
| 2,579 | ||||||||
|
|
|
|||||||
| FLORIDA 7.6% |
||||||||
| Brevard County, Florida Health Facilities Authority Revenue Bonds, Series 2009 |
||||||||
| 7.000% due 04/01/2039 |
1,000 | 1,234 | ||||||
| Broward County, Florida Airport System Revenue Bonds, Series 2009 |
||||||||
| 5.375% due 10/01/2029 |
600 | 685 | ||||||
| Broward County, Florida Airport System Revenue Bonds, Series 2012 |
||||||||
| 5.000% due 10/01/2042 |
12,100 | 13,400 | ||||||
| Broward County, Florida Water & Sewer Utility Revenue Bonds, Series 2009 |
||||||||
| 5.250% due 10/01/2034 (b) |
8,500 | 9,647 | ||||||
| Clearwater, Florida Water & Sewer Revenue Bonds, Series 2009 |
||||||||
| 5.250% due 12/01/2039 |
1,000 | 1,156 | ||||||
| Florida Development Finance Corp. Revenue Notes, Series 2011 |
||||||||
| 6.500% due 06/15/2021 |
320 | 346 | ||||||
| Florida State General Obligation Bonds, Series 2009 |
||||||||
| 5.000% due 06/01/2038 (b) |
7,900 | 8,820 | ||||||
| Highlands County, Florida Health Facilities Authority Revenue Bonds, Series 2005 |
||||||||
| 5.000% due 11/15/2031 |
1,830 | 1,892 | ||||||
| Highlands County, Florida Health Facilities Authority Revenue Bonds, Series 2008 |
||||||||
| 5.625% due 11/15/2037 |
3,000 | 3,488 | ||||||
| Orlando-Orange County, Florida Expressway Authority Revenue Bonds, Series 2010 |
||||||||
| 5.000% due 07/01/2040 |
10,000 | 11,181 | ||||||
| Sarasota County, Florida Health Facilities Authority Revenue Bonds, Series 2007 |
||||||||
| 5.750% due 07/01/2037 |
500 | 508 | ||||||
| Sumter Landing Community Development District, Florida Revenue Bonds, (NPFGC Insured), Series 2005 |
||||||||
| 4.750% due 10/01/2035 |
5,000 | 5,006 | ||||||
|
|
|
|||||||
| 57,363 | ||||||||
|
|
|
|||||||
| GEORGIA 0.6% |
||||||||
| Atlanta Department of Aviation, Georgia Revenue Bonds, Series 2010 |
||||||||
| 5.000% due 01/01/2040 |
1,500 | 1,668 |
| Medical Center Hospital Authority, Georgia Revenue Bonds, Series 2007 |
||||||||
| 5.250% due 07/01/2037 |
2,775 | 2,810 | ||||||
|
|
|
|||||||
| 4,478 | ||||||||
|
|
|
|||||||
| ILLINOIS 8.6% |
||||||||
| Chicago, Illinois Motor Fuel Tax Revenue Bonds, (AGC Insured), Series 2008 |
||||||||
| 5.000% due 01/01/2038 |
1,250 | 1,326 | ||||||
| Chicago, Illinois Special Assessment Bonds, Series 2003 |
||||||||
| 6.625% due 12/01/2022 |
2,277 | 2,282 | ||||||
| 6.750% due 12/01/2032 |
5,406 | 5,416 | ||||||
| Hillside Village, Illinois Tax Allocation Bonds, Series 2008 |
||||||||
| 6.550% due 01/01/2020 |
3,085 | 3,410 | ||||||
| 7.000% due 01/01/2028 |
2,900 | 3,182 | ||||||
| Illinois Finance Authority Revenue Bonds, Series 2007 |
||||||||
| 5.750% due 05/15/2031 |
2,500 | 2,723 | ||||||
| 6.000% due 03/01/2037 ^ |
250 | 50 | ||||||
| Illinois Finance Authority Revenue Bonds, Series 2009 |
||||||||
| 5.500% due 07/01/2037 (b) |
5,000 | 5,732 | ||||||
| 7.125% due 11/15/2037 |
700 | 845 | ||||||
| Illinois Finance Authority Revenue Bonds, Series 2010 |
||||||||
| 6.000% due 05/01/2028 |
2,000 | 2,293 | ||||||
| Illinois Sports Facilities Authority Revenue Bonds, (AMBAC Insured), Series 2001 |
||||||||
| 5.500% due 06/15/2030 |
37,000 | 37,870 | ||||||
|
|
|
|||||||
| 65,129 | ||||||||
|
|
|
|||||||
| INDIANA 0.7% |
||||||||
| Indiana Finance Authority Revenue Bonds, Series 2009 |
||||||||
| 6.000% due 08/01/2039 |
1,500 | 1,763 | ||||||
| Vigo County, Indiana Hospital Authority Revenue Bonds, Series 2007 |
||||||||
| 5.800% due 09/01/2047 |
990 | 1,005 | ||||||
| Vigo County, Indiana Hospital Authority Revenue Bonds, Series 2011 |
||||||||
| 7.500% due 09/01/2022 |
1,900 | 2,332 | ||||||
|
|
|
|||||||
| 5,100 | ||||||||
|
|
|
|||||||
| IOWA 3.5% |
||||||||
| Iowa Finance Authority Revenue Bonds, Series 2007 |
||||||||
| 6.750% due 11/15/2042 |
4,500 | 4,778 | ||||||
| Iowa Finance Authority Revenue Bonds, Series 2013 |
||||||||
| 5.250% due 12/01/2025 |
6,000 | 6,590 | ||||||
| Iowa Finance Authority Revenue Bonds, Series 2014 |
||||||||
| 2.000% due 05/15/2056 ^ |
144 | 1 | ||||||
| 2.700% due 11/15/2046 ^ |
769 | 311 | ||||||
| Iowa Finance Authority Revenue Notes, Series 2013 |
||||||||
| 5.500% due 12/01/2022 |
5,000 | 5,301 | ||||||
| Iowa Tobacco Settlement Authority Revenue Bonds, Series 2005 |
||||||||
| 5.600% due 06/01/2034 |
10,350 | 9,756 | ||||||
|
|
|
|||||||
| 26,737 | ||||||||
|
|
|
|||||||
| KANSAS 0.2% |
||||||||
| Kansas Development Finance Authority Revenue Bonds, Series 2009 |
||||||||
| 5.750% due 11/15/2038 |
500 | 586 | ||||||
| Manhattan, Kansas Revenue Bonds, Series 2007 |
||||||||
| 5.000% due 05/15/2036 |
850 | 853 | ||||||
|
|
|
|||||||
| 1,439 | ||||||||
|
|
|
|||||||
| KENTUCKY 0.2% |
||||||||
| Kentucky Economic Development Finance Authority Revenue Bonds, Series 2010 |
||||||||
| 6.375% due 06/01/2040 |
1,000 | 1,157 | ||||||
|
|
|
|||||||
| LOUISIANA 1.1% |
||||||||
| Louisiana Local Government Environmental Facilities & Community Development Authority Revenue Bonds, Series 2010 |
||||||||
| 5.875% due 10/01/2040 |
750 | 892 | ||||||
| 6.000% due 10/01/2044 |
1,000 | 1,194 | ||||||
| 6.500% due 11/01/2035 |
450 | 541 | ||||||
| Louisiana Public Facilities Authority Revenue Bonds, Series 2007 |
||||||||
| 5.500% due 05/15/2047 |
3,300 | 3,467 | ||||||
| Louisiana Public Facilities Authority Revenue Bonds, Series 2011 |
||||||||
| 6.500% due 05/15/2037 |
2,000 | 2,366 | ||||||
|
|
|
|||||||
| 8,460 | ||||||||
|
|
|
|||||||
| MARYLAND 2.0% |
||||||||
| Maryland Health & Higher Educational Facilities Authority Revenue Bonds, Series 2008 |
||||||||
| 6.000% due 01/01/2043 |
4,050 | 4,404 | ||||||
| Maryland Health & Higher Educational Facilities Authority Revenue Bonds, Series 2010 |
||||||||
| 6.250% due 01/01/2041 |
1,400 | 1,584 | ||||||
| Maryland Health & Higher Educational Facilities Authority Revenue Bonds, Series 2011 |
||||||||
| 5.000% due 08/15/2041 |
2,380 | 2,586 |
| Maryland Health & Higher Educational Facilities Authority Revenue Bonds, Series 2014 |
||||||||
| 5.000% due 07/01/2039 |
5,000 | 5,533 | ||||||
| Maryland Health & Higher Educational Facilities Authority Revenue Bonds, Series 2015 |
||||||||
| 5.000% due 07/01/2045 |
1,000 | 1,119 | ||||||
|
|
|
|||||||
| 15,226 | ||||||||
|
|
|
|||||||
| MASSACHUSETTS 1.3% |
||||||||
| Massachusetts Development Finance Agency Revenue Bonds, Series 2007 |
||||||||
| 6.750% due 10/15/2037 |
4,610 | 4,813 | ||||||
| Massachusetts Development Finance Agency Revenue Bonds, Series 2010 |
||||||||
| 7.000% due 07/01/2042 |
1,000 | 1,133 | ||||||
| 7.625% due 10/15/2037 |
565 | 631 | ||||||
| Massachusetts State College Building Authority Revenue Bonds, Series 2009 |
||||||||
| 5.500% due 05/01/2039 |
2,900 | 3,361 | ||||||
|
|
|
|||||||
| 9,938 | ||||||||
|
|
|
|||||||
| MICHIGAN 0.7% |
||||||||
| Detroit, Michigan General Obligation Bonds, Series 2010 |
||||||||
| 5.250% due 11/01/2035 |
1,000 | 1,095 | ||||||
| Michigan Public Educational Facilities Authority Revenue Bonds, Series 2007 |
||||||||
| 6.500% due 09/01/2037 ^ |
800 | 456 | ||||||
| Royal Oak Hospital Finance Authority, Michigan Revenue Bonds, Series 2009 |
||||||||
| 8.250% due 09/01/2039 |
3,000 | 3,755 | ||||||
|
|
|
|||||||
| 5,306 | ||||||||
|
|
|
|||||||
| MINNESOTA 0.4% |
||||||||
| North Oaks, Minnesota Revenue Bonds, Series 2007 |
||||||||
| 6.000% due 10/01/2033 |
2,640 | 2,829 | ||||||
| St Louis Park, Minnesota Revenue Bonds, Series 2009 |
||||||||
| 5.750% due 07/01/2039 |
400 | 461 | ||||||
|
|
|
|||||||
| 3,290 | ||||||||
|
|
|
|||||||
| MISSISSIPPI 0.0% |
||||||||
| Mississippi Development Bank Revenue Bonds, (AMBAC Insured), Series 1999 |
||||||||
| 5.000% due 07/01/2024 |
40 | 41 | ||||||
|
|
|
|||||||
| MISSOURI 1.5% |
||||||||
| Lee’s Summit, Missouri Tax Allocation Bonds, Series 2011 |
||||||||
| 5.625% due 10/01/2023 |
530 | 563 | ||||||
| Missouri State Health & Educational Facilities Authority Revenue Bonds, Series 2013 |
||||||||
| 5.000% due 11/15/2044 |
10,000 | 11,132 | ||||||
|
|
|
|||||||
| 11,695 | ||||||||
|
|
|
|||||||
| NEVADA 1.4% |
||||||||
| Clark County, Nevada General Obligation Bonds, Series 2006 |
||||||||
| 4.750% due 11/01/2035 (b) |
10,000 | 10,432 | ||||||
|
|
|
|||||||
| NEW HAMPSHIRE 0.3% |
||||||||
| New Hampshire Business Finance Authority Revenue Bonds, Series 2009 |
||||||||
| 6.125% due 10/01/2039 |
2,000 | 2,265 | ||||||
|
|
|
|||||||
| NEW JERSEY 6.4% |
||||||||
| Burlington County, New Jersey Bridge Commission Revenue Bonds, Series 2007 |
||||||||
| 5.625% due 01/01/2038 |
950 | 977 | ||||||
| New Jersey Economic Development Authority Revenue Bonds, Series 1998 |
||||||||
| 6.000% due 05/15/2028 |
525 | 316 | ||||||
| New Jersey Economic Development Authority Revenue Bonds, Series 2010 |
||||||||
| 5.875% due 06/01/2042 |
2,000 | 2,270 | ||||||
| New Jersey Economic Development Authority Special Assessment Bonds, Series 2002 |
||||||||
| 5.750% due 10/01/2021 |
4,000 | 4,479 | ||||||
| New Jersey Health Care Facilities Financing Authority Revenue Bonds, Series 2007 |
||||||||
| 5.750% due 07/01/2037 |
1,500 | 1,572 | ||||||
| New Jersey Health Care Facilities Financing Authority Revenue Bonds, Series 2011 |
||||||||
| 6.000% due 07/01/2037 |
1,500 | 1,817 | ||||||
| New Jersey Health Care Facilities Financing Authority Revenue Bonds, Series 2013 |
||||||||
| 5.500% due 07/01/2043 |
4,000 | 4,664 | ||||||
| New Jersey Health Care Facilities Financing Authority Revenue Bonds, Series 2014 |
||||||||
| 5.000% due 07/01/2044 |
4,000 | 4,470 | ||||||
| New Jersey State Turnpike Authority Revenue Bonds, Series 2009 |
||||||||
| 5.250% due 01/01/2040 |
2,000 | 2,219 | ||||||
| Tobacco Settlement Financing Corp., New Jersey Revenue Bonds, Series 2007 |
||||||||
| 4.750% due 06/01/2034 |
3,300 | 2,547 |
| 5.000% due 06/01/2041 |
30,105 | 23,390 | ||||||
|
|
|
|||||||
| 48,721 | ||||||||
|
|
|
|||||||
| NEW MEXICO 0.3% |
||||||||
| Farmington, New Mexico Revenue Bonds, Series 2010 |
||||||||
| 5.900% due 06/01/2040 |
2,000 | 2,234 | ||||||
|
|
|
|||||||
| NEW YORK 21.1% |
||||||||
| Hudson Yards Infrastructure Corp., New York Revenue Bonds, Series 2011 |
||||||||
| 5.250% due 02/15/2047 |
33,500 | 37,403 | ||||||
| Metropolitan Transportation Authority, New York Revenue Bonds, Series 2011 |
||||||||
| 5.000% due 11/15/2036 |
3,880 | 4,388 | ||||||
| Nassau County, New York Industrial Development Agency Revenue Bonds, Series 2014 |
||||||||
| 2.000% due 01/01/2049 |
298 | 24 | ||||||
| 6.700% due 01/01/2049 |
825 | 836 | ||||||
| New York City, New York Water & Sewer System Revenue Bonds, Series 2005 |
||||||||
| 5.000% due 06/15/2037 (b) |
2,830 | 2,861 | ||||||
| New York City, New York Water & Sewer System Revenue Bonds, Series 2007 |
||||||||
| 4.750% due 06/15/2035 (b) |
4,000 | 4,292 | ||||||
| New York City, New York Water & Sewer System Revenue Bonds, Series 2009 |
||||||||
| 5.000% due 06/15/2039 |
2,000 | 2,264 | ||||||
| New York Liberty Development Corp. Revenue Bonds, Series 2005 |
||||||||
| 5.250% due 10/01/2035 (b) |
11,505 | 13,743 | ||||||
| New York Liberty Development Corp. Revenue Bonds, Series 2010 |
||||||||
| 5.125% due 01/15/2044 |
1,000 | 1,123 | ||||||
| 5.625% due 07/15/2047 |
2,500 | 2,846 | ||||||
| 6.375% due 07/15/2049 |
1,250 | 1,424 | ||||||
| New York Liberty Development Corp. Revenue Bonds, Series 2011 |
||||||||
| 5.000% due 12/15/2041 |
10,000 | 11,330 | ||||||
| 5.750% due 11/15/2051 |
54,000 | 62,840 | ||||||
| New York Liberty Development Corp. Revenue Bonds, Series 2014 |
||||||||
| 5.000% due 11/15/2044 |
6,000 | 6,296 | ||||||
| New York State Dormitory Authority Revenue Bonds, Series 2010 |
||||||||
| 5.500% due 07/01/2040 |
1,750 | 2,008 | ||||||
| New York State Dormitory Authority Revenue Bonds, Series 2015 |
||||||||
| 5.000% due 03/15/2028 |
3,000 | 3,600 | ||||||
| TSASC, Inc., New York Revenue Bonds, Series 2006 |
||||||||
| 5.000% due 06/01/2026 |
3,000 | 3,022 | ||||||
|
|
|
|||||||
| 160,300 | ||||||||
|
|
|
|||||||
| NORTH CAROLINA 0.1% |
||||||||
| North Carolina Medical Care Commission Revenue Bonds, Series 2006 |
||||||||
| 5.100% due 10/01/2030 |
550 | 555 | ||||||
|
|
|
|||||||
| NORTH DAKOTA 0.5% |
||||||||
| Stark County, North Dakota Revenue Bonds, Series 2007 |
||||||||
| 6.750% due 01/01/2033 |
3,710 | 3,915 | ||||||
|
|
|
|||||||
| OHIO 9.6% |
||||||||
| Buckeye Tobacco Settlement Financing Authority, Ohio Revenue Bonds, Series 2007 |
||||||||
| 5.875% due 06/01/2047 |
29,100 | 24,040 | ||||||
| 6.500% due 06/01/2047 |
33,740 | 30,176 | ||||||
| Hamilton County, Ohio Sales Tax Revenue Bonds, Series 2011 |
||||||||
| 5.000% due 12/01/2030 |
3,900 | 4,376 | ||||||
| Ohio State Revenue Bonds, Series 2009 |
||||||||
| 5.500% due 01/01/2039 |
3,000 | 3,394 | ||||||
| Ohio State Turnpike Commission Revenue Bonds, Series 2013 |
||||||||
| 5.000% due 02/15/2048 |
10,000 | 10,989 | ||||||
|
|
|
|||||||
| 72,975 | ||||||||
|
|
|
|||||||
| OREGON 0.3% |
||||||||
| Clackamas County, Oregon Hospital Facility Authority Revenue Bonds, Series 2009 |
||||||||
| 5.500% due 07/15/2035 |
1,000 | 1,151 | ||||||
| Oregon Department of Administrative Services State Certificates of Participation Bonds, Series 2009 |
||||||||
| 5.250% due 05/01/2039 |
1,155 | 1,310 | ||||||
|
|
|
|||||||
| 2,461 | ||||||||
|
|
|
|||||||
| PENNSYLVANIA 8.4% |
||||||||
| Berks County, Pennsylvania Municipal Authority Revenue Bonds, Series 2012 |
||||||||
| 5.000% due 11/01/2044 |
7,500 | 8,222 | ||||||
| Capital Region Water, Pennsylvania Revenue Bonds, Series 2007 |
||||||||
| 6.000% due 09/01/2036 ^ |
3,250 | 1,557 | ||||||
| Cumberland County, Pennsylvania Municipal Authority Revenue Bonds, Series 2008 |
||||||||
| 5.625% due 07/01/2028 |
1,000 | 1,104 | ||||||
| 6.000% due 07/01/2035 |
670 | 735 | ||||||
| Luzerne County, Pennsylvania Industrial Development Authority Revenue Bonds, Series 2009 |
||||||||
| 5.500% due 12/01/2039 |
500 | 570 | ||||||
| Montgomery County Industrial Development Authority, Pennsylvania Revenue Bonds, (FHA Insured), Series 2010 |
||||||||
| 5.375% due 08/01/2038 |
8,465 | 9,772 |
| Pennsylvania Higher Educational Facilities Authority Revenue Bonds, Series 2010 |
||||||||
| 5.000% due 03/01/2040 |
400 | 443 | ||||||
| 6.000% due 07/01/2043 |
850 | 930 | ||||||
| Pennsylvania Turnpike Commission Revenue Bonds, Series 2013 |
||||||||
| 5.000% due 12/01/2043 |
10,000 | 11,209 | ||||||
| Philadelphia Hospitals & Higher Education Facilities Authority, Pennsylvania Revenue Bonds, Series 2012 |
||||||||
| 5.625% due 07/01/2036 |
1,000 | 1,061 | ||||||
| 5.625% due 07/01/2042 |
7,000 | 7,384 | ||||||
| Philadelphia, Pennsylvania General Obligation Bonds, (AGM Insured), Series 2008 |
||||||||
| 5.250% due 12/15/2032 |
17,000 | 19,087 | ||||||
| Philadelphia, Pennsylvania Water & Wastewater Revenue Bonds, Series 2009 |
||||||||
| 5.250% due 01/01/2036 |
500 | 555 | ||||||
| Westmoreland County Industrial Development Authority, Pennsylvania Revenue Bonds, Series 2010 |
||||||||
| 5.125% due 07/01/2030 |
1,000 | 1,138 | ||||||
|
|
|
|||||||
| 63,767 | ||||||||
|
|
|
|||||||
| RHODE ISLAND 3.5% |
||||||||
| Tobacco Settlement Financing Corp., Rhode Island Revenue Bonds, Series 2002 |
||||||||
| 6.250% due 06/01/2042 |
26,200 | 26,322 | ||||||
|
|
|
|||||||
| SOUTH CAROLINA 2.9% |
||||||||
| Greenwood County, South Carolina Revenue Bonds, Series 2009 |
||||||||
| 5.375% due 10/01/2039 |
1,000 | 1,136 | ||||||
| South Carolina State Public Service Authority Revenue Bonds, Series 2013 |
||||||||
| 5.500% due 12/01/2053 |
10,000 | 11,454 | ||||||
| South Carolina State Public Service Authority Revenue Bonds, Series 2014 |
||||||||
| 5.500% due 12/01/2054 |
8,000 | 9,281 | ||||||
|
|
|
|||||||
| 21,871 | ||||||||
|
|
|
|||||||
| TENNESSEE 1.8% |
||||||||
| Claiborne County, Tennessee Industrial Development Board Revenue Bonds, Series 2009 |
||||||||
| 6.625% due 10/01/2039 |
1,750 | 2,002 | ||||||
| Johnson City Health & Educational Facilities Board, Tennessee Revenue Bonds, Series 2010 |
||||||||
| 6.000% due 07/01/2038 |
1,000 | 1,145 | ||||||
| Sullivan County, Tennessee Health Educational & Housing Facilities Board Revenue Bonds, Series 2006 |
||||||||
| 5.250% due 09/01/2036 |
500 | 523 | ||||||
| Tennessee Energy Acquisition Corp. Revenue Bonds, Series 2006 |
||||||||
| 5.000% due 02/01/2023 |
3,000 | 3,484 | ||||||
| 5.000% due 02/01/2027 |
6,000 | 6,901 | ||||||
|
|
|
|||||||
| 14,055 | ||||||||
|
|
|
|||||||
| TEXAS 20.6% |
||||||||
| Aubrey Independent School District, Texas General Obligation Bonds, (PSF Insured), Series 2002 |
||||||||
| 5.500% due 02/15/2033 |
130 | 130 | ||||||
| Austin Trust, Texas General Obligation Bonds, Series 2007 |
||||||||
| 4.750% due 04/01/2036 (b) |
17,500 | 18,347 | ||||||
| Central Texas Turnpike System Revenue Bonds, Series 2015 |
||||||||
| 5.000% due 08/15/2037 |
1,000 | 1,132 | ||||||
| Dallas, Texas Revenue Bonds, (AGC Insured), Series 2009 |
||||||||
| 5.250% due 08/15/2038 |
2,500 | 2,829 | ||||||
| Grand Parkway Transportation Corp., Texas Revenue Bonds, Series 2013 |
||||||||
| 5.000% due 04/01/2053 |
21,000 | 23,201 | ||||||
| Harris County, Texas Cultural Education Facilities Finance Corp. Revenue Bonds, Series 2009 |
||||||||
| 5.250% due 10/01/2029 |
3,750 | 4,330 | ||||||
| 5.500% due 10/01/2039 |
12,700 | 14,712 | ||||||
| HFDC of Central Texas, Inc. Revenue Bonds, Series 2006 |
||||||||
| 5.500% due 02/15/2037 |
700 | 706 | ||||||
| North Harris County, Texas Regional Water Authority Revenue Bonds, Series 2008 |
||||||||
| 5.250% due 12/15/2033 |
10,300 | 11,645 | ||||||
| 5.500% due 12/15/2038 |
10,300 | 11,788 | ||||||
| North Texas Tollway Authority Revenue Bonds, Series 2008 |
||||||||
| 5.625% due 01/01/2033 |
5,000 | 5,545 | ||||||
| 5.750% due 01/01/2033 |
1,200 | 1,324 | ||||||
| North Texas Tollway Authority Revenue Bonds, Series 2011 |
||||||||
| 5.000% due 01/01/2038 |
5,750 | 6,232 | ||||||
| 5.500% due 09/01/2041 |
1,300 | 1,564 | ||||||
| San Juan Higher Education Finance Authority, Texas Revenue Bonds, Series 2010 |
||||||||
| 6.700% due 08/15/2040 |
250 | 299 | ||||||
| Tarrant County, Texas Cultural Education Facilities Finance Corp. Revenue Bonds, Series 2009 |
||||||||
| 6.250% due 11/15/2029 |
3,000 | 3,505 | ||||||
| Texas Municipal Gas Acquisition & Supply Corp. Revenue Bonds, Series 2008 |
||||||||
| 6.250% due 12/15/2026 |
19,380 | 24,042 | ||||||
| Texas Municipal Gas Acquisition & Supply Corp. Revenue Bonds, Series 2012 |
||||||||
| 5.000% due 12/15/2026 |
5,000 | 5,649 | ||||||
| Texas State General Obligation Bonds, Series 2005 |
||||||||
| 4.750% due 04/01/2035 (b) |
10,025 | 10,302 | ||||||
| Texas State General Obligation Bonds, Series 2010 |
||||||||
| 7.683% due 04/01/2037 (c) |
5,365 | 6,395 | ||||||
| Texas State Public Finance Authority Charter School Finance Corp. Revenue Bonds, Series 2007 |
||||||||
| 5.875% due 12/01/2036 |
1,000 | 1,095 |
| Wise County, Texas Revenue Bonds, Series 2011 |
||||||||
| 8.000% due 08/15/2034 |
1,000 | 1,189 | ||||||
|
|
|
|||||||
| 155,961 | ||||||||
|
|
|
|||||||
| VIRGINIA 0.3% |
||||||||
| Fairfax County, Virginia Industrial Development Authority Revenue Bonds, Series 2009 |
||||||||
| 5.500% due 05/15/2035 |
1,000 | 1,150 | ||||||
| James City County, Virginia Economic Development Authority Revenue Bonds, Series 2013 |
||||||||
| 2.000% due 10/01/2048 ^ |
412 | 13 | ||||||
| 6.000% due 06/01/2043 |
1,273 | 1,215 | ||||||
|
|
|
|||||||
| 2,378 | ||||||||
|
|
|
|||||||
| WASHINGTON 2.2% |
||||||||
| Washington Health Care Facilities Authority Revenue Bonds, (AGC Insured), Series 2008 |
||||||||
| 6.000% due 08/15/2039 |
1,300 | 1,530 | ||||||
| Washington Health Care Facilities Authority Revenue Bonds, Series 2007 |
||||||||
| 6.125% due 08/15/2037 |
13,000 | 14,193 | ||||||
| Washington Health Care Facilities Authority Revenue Bonds, Series 2009 |
||||||||
| 7.375% due 03/01/2038 |
1,000 | 1,244 | ||||||
|
|
|
|||||||
| 16,967 | ||||||||
|
|
|
|||||||
| WEST VIRGINIA 0.6% |
||||||||
| West Virginia Economic Development Authority Revenue Bonds, Series 2010 |
||||||||
| 5.375% due 12/01/2038 |
2,000 | 2,212 | ||||||
| West Virginia Hospital Finance Authority Revenue Bonds, Series 2011 |
||||||||
| 9.125% due 10/01/2041 |
1,955 | 2,299 | ||||||
|
|
|
|||||||
| 4,511 | ||||||||
|
|
|
|||||||
| WISCONSIN 0.2% |
||||||||
| Wisconsin Health & Educational Facilities Authority Revenue Bonds, Series 2009 |
||||||||
| 6.625% due 02/15/2039 |
1,000 | 1,216 | ||||||
|
|
|
|||||||
| Total Municipal Bonds & Notes (Cost $1,018,318) |
1,135,680 | |||||||
|
|
|
|||||||
| SHORT-TERM INSTRUMENTS 3.1% |
||||||||
| REPURCHASE AGREEMENTS (d) 2.0% |
15,200 | |||||||
|
|
|
|||||||
| SHORT-TERM NOTES 1.1% |
||||||||
| Fannie Mae |
||||||||
| 0.101% due 05/21/2015 |
4,500 | 4,499 | ||||||
| Federal Home Loan Bank |
||||||||
| 0.061% due 04/29/2015 |
4,100 | 4,099 | ||||||
|
|
|
|||||||
| 8,598 | ||||||||
|
|
|
|||||||
| U.S. TREASURY BILLS 0.0% |
||||||||
| 0.020% due 05/14/2015 |
300 | 300 | ||||||
|
|
|
|||||||
| Total Short-Term Instruments (Cost $24,098) |
24,098 | |||||||
|
|
|
|||||||
| Total Investments in Securities (Cost $1,042,416) |
1,159,778 | |||||||
|
|
|
|||||||
| Total Investments 152.8% (Cost $1,042,416) |
$ | 1,159,778 | ||||||
| Preferred Shares (48.4%) | (367,000 | ) | ||||||
| Other Assets and Liabilities, net (4.4%) | (33,931 | ) | ||||||
|
|
|
|||||||
| Net Assets Applicable to Common Shareholders 100.0% | $ | 758,847 | ||||||
|
|
|
NOTES TO SCHEDULE OF INVESTMENTS (AMOUNTS IN THOUSANDS*, EXCEPT NUMBER OF CONTRACTS, SHARES, AND UNITS):
| * | A zero balance may reflect actual amounts rounding to less than one thousand. |
| ^ | Security is in default. |
| (a) | Security becomes interest bearing at a future date. |
| (b) | Residual Interest Bonds held in trust—Securities represent underlying bonds transferred to a separate securitization trust established in a tender option bond transaction in which the Fund acquired the residual interest certificates. These securities serve as collateral in a financing transaction. |
| (c) | 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 February 28, 2015. |
BORROWINGS AND OTHER FINANCING TRANSACTIONS
| (d) | REPURCHASE AGREEMENTS: |
| Counterparty | Lending Rate |
Settlement Date |
Maturity Date |
Principal Amount |
Collateralized By | Collateral Received, at Value |
Repurchase Agreements, at Value |
Repurchase to be |
||||||||||||||||||||
| SAL | 0.120% |
02/27/2015 | 03/02/2015 | $ | 15,200 | U.S. Treasury Notes 1.000% due 05/31/2018 | $ | (15,532 | ) | $ | 15,200 | $ | 15,200 | |||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Total Repurchase Agreements |
|
$ | (15,532 | ) | $ | 15,200 | $ | 15,200 | ||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
| (1) | Includes accrued interest. |
FAIR VALUE MEASUREMENTS
The following is a summary of the fair valuations according to the inputs used as of February 28, 2015 in valuing the Fund’s assets and liabilities:
| Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 02/28/2015 |
||||||||||
| Investments in Securities, at Value |
||||||||||||||
| Municipal Bonds & Notes |
||||||||||||||
| Alabama |
$ 0 | $ | 36,554 | $ | 0 | $ | 36,554 | |||||||
| Arizona |
0 | 98,494 | 0 | 98,494 | ||||||||||
| California |
0 | 154,694 | 0 | 154,694 | ||||||||||
| Colorado |
0 | 17,094 | 0 | 17,094 | ||||||||||
| Connecticut |
0 | 2,579 | 0 | 2,579 | ||||||||||
| Florida |
0 | 57,363 | 0 | 57,363 | ||||||||||
| Georgia |
0 | 4,478 | 0 | 4,478 | ||||||||||
| Illinois |
0 | 65,129 | 0 | 65,129 | ||||||||||
| Indiana |
0 | 5,100 | 0 | 5,100 | ||||||||||
| Iowa |
0 | 26,737 | 0 | 26,737 | ||||||||||
| Kansas |
0 | 1,439 | 0 | 1,439 | ||||||||||
| Kentucky |
0 | 1,157 | 0 | 1,157 | ||||||||||
| Louisiana |
0 | 8,460 | 0 | 8,460 | ||||||||||
| Maryland |
0 | 15,226 | 0 | 15,226 | ||||||||||
| Massachusetts |
0 | 9,938 | 0 | 9,938 | ||||||||||
| Michigan |
0 | 5,306 | 0 | 5,306 | ||||||||||
| Minnesota |
0 | 3,290 | 0 | 3,290 | ||||||||||
| Mississippi |
0 | 41 | 0 | 41 | ||||||||||
| Missouri |
0 | 11,695 | 0 | 11,695 | ||||||||||
| Nevada |
0 | 10,432 | 0 | 10,432 | ||||||||||
| New Hampshire |
0 | 2,265 | 0 | 2,265 | ||||||||||
| New Jersey |
0 | 48,721 | 0 | 48,721 | ||||||||||
| New Mexico |
0 | 2,234 | 0 | 2,234 | ||||||||||
| New York |
0 | 160,300 | 0 | 160,300 | ||||||||||
| North Carolina |
0 | 555 | 0 | 555 | ||||||||||
| North Dakota |
0 | 3,915 | 0 | 3,915 | ||||||||||
| Ohio |
0 | 72,975 | 0 | 72,975 | ||||||||||
| Oregon |
0 | 2,461 | 0 | 2,461 | ||||||||||
| Pennsylvania |
0 | 63,767 | 0 | 63,767 | ||||||||||
| Rhode Island |
0 | 26,322 | 0 | 26,322 | ||||||||||
| South Carolina |
0 | 21,871 | 0 | 21,871 | ||||||||||
| Tennessee |
0 | 14,055 | 0 | 14,055 | ||||||||||
| Texas |
0 | 155,961 | 0 | 155,961 | ||||||||||
| Virginia |
0 | 2,378 | 0 | 2,378 | ||||||||||
| Washington |
0 | 16,967 | 0 | 16,967 | ||||||||||
| West Virginia |
0 | 4,511 | 0 | 4,511 | ||||||||||
| Wisconsin |
0 | 1,216 | 0 | 1,216 | ||||||||||
| Short-Term Instruments |
||||||||||||||
| Repurchase Agreements |
0 | 15,200 | 0 | 15,200 | ||||||||||
| Short-Term Notes |
0 | 8,598 | 0 | 8,598 | ||||||||||
| U.S. Treasury Bills |
0 | 300 | 0 | 300 | ||||||||||
| Total Investments |
$ 0 | $ | 1,159,778 | $ | 0 | $ | 1,159,778 | |||||||
There were no significant transfers between Levels 1, 2, or 3 during the period ended February 28, 2015.
See Accompanying Notes
Notes to Financial Statements
1. INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS
(a) Investment Valuation Policies The Net Asset Value (“NAV”) of the Fund’s shares is valued as of the close of regular trading (normally 4:00 p.m., Eastern time) (the “NYSE Close”) on each day that the New York Stock Exchange (“NYSE”) is open (each a “Business Day”). Information that becomes known to the Fund or its agents after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the price of a security or the NAV determined earlier that day.
For purposes of calculating the NAV, portfolio securities and other financial derivative instruments are valued on each Business Day using valuation methods as adopted by the Board of Trustees (the “Board”) of the Fund. The Board has formed a Valuation Committee, whose function is to monitor the valuation of portfolio securities and other financial derivative instruments and, as required by the Fund’s valuation policies, determine in good faith the fair value of portfolio holdings after consideration of all relevant factors, including recommendations provided by the investment manager (the “Manager”). The Board has delegated responsibility for applying the valuation methods to the Manager. The Manager monitors the continual appropriateness of methods applied and determines if adjustments should be made in light of market factor changes and events affecting issuers.
Where market quotes are readily available, fair market value is generally determined on the basis of official closing prices or the last reported sales prices, or if no sales are reported, based on quotes obtained from a quotation reporting system, established market makers, or pricing services. Where market quotes are not readily available, portfolio securities and other financial derivative instruments are valued at fair value, as determined in good faith by the Board, its Valuation Committee, or the Manager pursuant to instructions from the Board or its Valuation Committee. Market quotes are considered not readily available in circumstances where there is an absence of current or reliable market-based data (e.g., trade information, bid/ask information, or broker quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close, that materially affect the values of the Fund’s securities or financial derivative instruments. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which securities trade do not open for trading for the entire day and no other market prices are available. The Board has delegated to the Manager, PIMCO, the responsibility for monitoring significant events that may materially affect the values of the Fund’s securities or financial derivative instruments and for determining whether the value of the applicable securities or financial derivative instruments should be re-evaluated in light of such significant events.
The Board has adopted methods for valuing securities and other financial derivative instruments that may require fair valuation under particular circumstances. The Manager monitors the continual appropriateness of fair valuation methods applied and determines if adjustments should be made in light of market changes, events affecting the issuer, or other factors. If the Manager determines that a fair valuation method may no longer be appropriate, another valuation method may be selected, or the Valuation Committee will take any appropriate action in accordance with procedures set forth by the Board. The Board reviews the appropriateness of the valuation methods from time to time and these methods may be amended or supplemented from time to time by the Valuation Committee.
In circumstances in which daily market quotes are not readily available, investments may be valued pursuant to guidelines established by the Board. In the event that the security or asset cannot be valued pursuant to the established guidelines, the value of the security or other financial derivative instrument will be determined in good faith by the Valuation Committee of the Board, generally based upon recommendations provided by PIMCO. These methods may require subjective determinations about the value of a security. While the Fund’s policy is intended to result in a calculation of the Fund’s NAV that fairly reflects security values as of the time of pricing, the Fund cannot guarantee that values determined by the Board or persons acting at their direction would accurately reflect the price that the Fund could obtain for a security if it were to dispose of that security as of the time of pricing (for instance, in a forced or distressed sale). The prices used by the Fund may differ from the value that would be realized if the securities were sold.
(b) Fair Value Hierarchy U.S. GAAP describes fair market value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. It establishes a fair value hierarchy that prioritizes inputs to valuation methods and requires disclosure of the fair value hierarchy, separately for each major category of assets and liabilities, that segregates fair value measurements into levels (Level 1, 2, and 3). The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Levels 1, 2, and 3 of the fair value hierarchy are defined as follows:
| • | Level 1—Inputs using (unadjusted) quoted prices in active markets or exchanges for identical assets and liabilities. |
| • | Level 2—Significant other observable inputs, which may include, but are not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market corroborated inputs. |
| • | Level 3—Significant unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available, which may include assumptions made by the Board or persons acting at their direction that are used in determining the fair value of investments. |
In accordance with the requirements of U.S. GAAP, the amounts of transfers between Levels 1 and 2 and transfers in and out of Level 3, if material, are disclosed in the Notes to Schedule of Investments of the Fund.
For fair valuations using significant unobservable inputs, U.S. GAAP requires a reconciliation of the beginning to ending balances for reported fair values that presents changes attributable to total realized and unrealized gains or losses, purchases and sales, and transfers in or out of the Level 3 category during the period. The end of period timing recognition is used for the transfers between Levels of the Fund’s assets and liabilities. Additionally, U.S. GAAP requires quantitative information regarding the significant unobservable inputs used in the determination of fair value of assets or liabilities categorized as Level 3 in the fair value hierarchy. In accordance with the requirements of U.S. GAAP, a fair value hierarchy, and if material, a Level 3 reconciliation and details of significant unobservable inputs, have been included in the Notes to Schedule of Investments for the Fund.
(c) Valuation Techniques and the Fair Value Hierarchy
Level 1 and Level 2 trading assets and trading liabilities, at fair market value The valuation methods (or “techniques”) and significant inputs used in determining the fair market values of portfolio securities or financial derivative instruments categorized as Level 1 and Level 2 of the fair value hierarchy are as follows:
Fixed income securities including corporate, convertible and municipal bonds and notes, U.S. government agencies, U.S. treasury obligations, sovereign issues, bank loans, convertible preferred securities and non-U.S. bonds are normally valued by pricing service providers that use broker-dealer quotations, reported trades or valuation estimates from their internal pricing models. The service providers’ internal models use inputs that are observable such as issuer details, interest rates, yield curves, prepayment speeds, credit risks/spreads, default rates and quoted prices for similar assets. Securities that use similar valuation techniques and inputs as described above are categorized as Level 2 of the fair value hierarchy.
Short-term investments having a maturity of 60 days or less and repurchase agreements are generally valued at amortized cost which approximates fair market value. These investments are categorized as Level 2 of the fair value hierarchy.
2. FEDERAL INCOME TAX MATTERS
The Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (the “Code”) and distribute all of its taxable income and net realized gains, if applicable, to shareholders. Accordingly, no provision for Federal income taxes has been made.
In accordance with U.S. GAAP, the Manager has reviewed the Fund’s tax positions for all open tax years. As of February 28, 2015, the Fund has recorded no liability for net unrecognized tax benefits relating to uncertain income tax positions it has taken or expects to take in future tax returns.
The Fund files U.S. tax returns. While the statute of limitations remains open to examine the Fund’s U.S. tax returns filed for the fiscal years ending in 2012-2014, no examinations are in progress or anticipated at this time. The Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
As of February 28, 2015, the aggregate cost and the net unrealized appreciation/(depreciation) of investments for federal income tax purposes are as follows (amounts in thousands):
| Federal Tax Cost |
Aggregate Gross Unrealized Appreciation |
Aggregate Gross Unrealized (Depreciation) |
Net Unrealized Appreciation/ (Depreciation) (1) | |||
| $ 1,042,416 | $ 123,503 | $ (6,141) | $ 117,362 |
| (1) | Primary differences, if any, between book and tax net unrealized appreciation/(depreciation) are attributable to wash sale loss deferrals for federal income tax purposes. |
| Glossary: (abbreviations that may be used in the preceding statements) | (Unaudited) | |||||||||
| Counterparty Abbreviations: | ||||||||||
| SAL | Citigroup Global Markets, Inc. | |||||||||
| Currency Abbreviations: | ||||||||||
| USD (or $) | United States Dollar | |||||||||
| Municipal Bond or Agency Abbreviations: | ||||||||||
| AGC | Assured Guaranty Corp. | FGIC | Financial Guaranty Insurance Co. | NPFGC | National Public Finance Guarantee Corp. | |||||
| AGM | Assured Guaranty Municipal | FHA | Federal Housing Administration | PSF | Public School Fund | |||||
| AMBAC | American Municipal Bond Assurance Corp. | IBC | Insured Bond Certificate | |||||||
Item 2. Controls and Procedures
(a) The registrant’s President, Principal Executive Officer and Treasurer, Principal Financial & Accounting Officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Act (17 CFR 270.30a-3(c))), are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.
(b) There were no significant changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d))) that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 3. Exhibits
A separate certification for each principal executive officer and principal financial & accounting officer of the registrant as required by Rule 30a-2 under the 1940 Act is attached as Exhibit 99.CERT.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
PIMCO Municipal Income Fund II
| By: | /s/ Peter G. Strelow | |
| Peter G. Strelow | ||
| President, Principal Executive Officer | ||
| Date: April 27, 2015 | ||
| By: | /s/ William G. Galipeau | |
| William G. Galipeau, Treasurer, | ||
| Principal Financial & Accounting Officer | ||
| Date: April 27, 2015 | ||
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By: | /s/ Peter G. Strelow | |
| Peter G. Strelow, | ||
| President, Principal Executive Officer | ||
| Date: April 27, 2015 | ||
| By: | /s/ William G. Galipeau | |
| William G. Galipeau, Treasurer, | ||
| Principal Financial & Accounting Officer | ||
| Date: April 27, 2015 | ||