PIMCO Strategic Global Government Fund,Inc.
Table of Contents

 

 

 

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 811-08216

 

 

 

PIMCO Strategic Global Government Fund, Inc.

(Exact name of registrant as specified in charter)

 

1345 Avenue of the Americas, New York, New York   10105
(Address of principal executive offices)   (Zip code)

 

Lawrence G. Altadonna - 1345 Avenue of the Americas, New York, New York 10105

(Name and address of agent for service)

 

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

 

Date of fiscal year end: January 31, 2008

 

Date of reporting period: July 31, 2008

 

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

 

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

 

 

 

 

 


Table of Contents

Item 1. Report to Shareholder

 

PIMCO Strategic Global Government Fund, Inc.

 

 

Semi-Annual Report

July 31, 2008

LOGO

 

Contents  

Letter to Shareholders

  1

Fund Insights

  2

Performance & Statistics

  3

Schedule of Investments

  4-18

Statement of Assets and Liabilities

  19

Statement of Operations

  20

Statement of Changes in Net Assets

  21

Statement of Cash Flows

  22

Notes to Financial Statements

  23-41

Financial Highlights

  42

Matters Relating to the Directors’ Consideration of the Investment Management & Portfolio Management Agreements

  43-44

Shareholder Meetings Results/Proxy Voting Policies & Procedures

  45

 

LOGO


Table of Contents

 

PIMCO Strategic Global Government Fund, Inc. Letter to Shareholders

 

 

September 19, 2008

 

Dear Shareholder:

 

We are pleased to provide you with the semi-annual report for PIMCO Strategic Global Government Fund, Inc. (the “Fund”) for the fiscal six-months ended July 31, 2008.

 

The Federal Reserve Board (the “Fed”) reduced short-term interest rates twice during the period, moving the Federal Funds target from 3.00% at the beginning of the reporting period to 2.00% at period end. The Fed declined to change rates at its June meeting, citing inflationary pressures. Bonds and stocks both weakened during the period.

 

During the six-month period ended July 31, 2008, U.S. government bonds, as represented by the Lehman Brothers U.S. Treasuries Index declined 1.03%. The Fund’s benchmark, the Lehman Brothers Intermediate Aggregate Bond Index decreased 0.39% for the period. Global bonds, as represented by the Lehman Brothers Global Aggregate Bond Index, fell slightly through the period as investors alternately focused on economic slowing and rising inflation.

 

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

 

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

 

We remain dedicated to serving your investment needs.

 

Sincerely,

 

LOGO    LOGO
Hans W. Kertess    Brian S. Shlissel
Chairman    President & Chief Executive Officer

 

7.31.08    PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report   1


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Fund Insights

July 31, 2008 (unaudited)

 

 

 

For the six-months ended July 31, 2008, PIMCO Strategic Global Government Fund, Inc. (the “Fund”) returned (2.92)% on net asset value (“NAV”) and (1.35)% on market price.

 

 

Global yields rose during the first half of 2008 as increasing inflationary pressure caused investors to re-evaluate the future path of interest rates.

 

 

The Agency Mortgage-Backed Securities market sold off during the first half of the year; these securities experienced their best single month performance ever in April, while experiencing significant sell-offs in March, June, and July.

 

 

Emerging Markets spreads widened on a general “flight to quality” as continued deterioration in global credit markets and growing worries about an imminent slowdown in world economic activity weighed on spreads.

 

Drivers of performance:

 

   

A curve steepening bias detracted from performance as the front-end of the curve sold off relative to longer maturities.

 

   

An underweighting to duration versus the benchmark added to returns as yields rose.

 

   

An overweighting to mortgage duration versus swaps detracted from performance as the liquidity crisis drove mortgage spreads to their all time wides in March and July.

 

   

Exposure to Emerging Markets detracted from performance as Emerging Market credits continued to underperform due to the global credit slowdown.

 

   

An emphasis on high quality corporate debt of select financial companies detracted from performance, as such debt continued to face additional sub-prime related write-downs.

 

2   PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report    7.31.08


Table of Contents

 

PIMCO Strategic Global Government Fund, Inc. Performance & Statistics

July 31, 2008 (unaudited)

 

 

Total Return(1):   Market Price   NAV

Six Months

  (1.35)%   (2.92)%

1 Year

  3.24%   2.88%

5 Year

  3.92%   4.92%

10 Year

  8.67%   6.46%

Commencement of Operations (2/24/1994) to 7/31/08

  7.42%   6.49%

 

Market Price/NAV Performance:

Commencement of Operations (2/24/1994) to 7/31/08

LOGO

Market Price/NAV:    

Market Price

  $9.80

NAV

  $9.17

Premium to NAV

  6.87%

Market Price Yield(2)

  7.96%

Moody’s Ratings

    (as a % of total investments)    

LOGO


(1) Past performance is no guarantee of future results. Total return is calculated by subtracting the value of an investment in the Fund at the beginning of the specified period from the value at the end of the period and dividing the remainder by the value of the investment at the beginning of the period and expressing the result as a percentage. The calculation assumes that all income dividends have been reinvested. Total return does not reflect broker commissions or sales charges. Total return for a period of less than one year is not annualized. Total return for a period of more than one year represents the average annual total return.

 

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

 

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

 

(2) Market Price Yield is determined by dividing the annualized current monthly per share dividend to shareholders by the market price per share at July 31, 2008.

 

7.31.08    PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report   3


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Schedule of Investments

July 31, 2008 (unaudited)

    

 

Principal
Amount
(000)
              Credit Rating
(Moody’s/S&P)
  Value

U.S. GOVERNMENT AGENCY SECURITIES – 170.6%

   

Fannie Mae – 80.9%

     
  $387    

4.25%, 11/25/24, CMO (h)

  Aaa/AAA   $331,879
  32    

4.25%, 3/25/33, CMO

  Aaa/AAA   31,229
  200    

5.00%, 5/25/16, CMO (h)

  Aaa/AAA   201,979
  24    

5.00%, 12/1/18, MBS (h)

  Aaa/AAA   23,824
  3,000    

5.00%, MBS, TBA (b)

  Aaa/AAA   2,848,593
  44    

5.271%, 4/1/30, FRN, MBS (h)

  Aaa/AAA   44,211
  124    

5.50%, 8/25/14, CMO (h)

  Aaa/AAA   126,839
  49    

5.50%, 12/25/16, CMO

  Aaa/AAA   50,305
  125    

5.50%, 7/25/24, CMO (h)

  Aaa/AAA   125,596
  148    

5.50%, 4/1/32, MBS (h)

  Aaa/AAA   146,100
  107    

5.50%, 12/25/32, CMO (h)

  Aaa/AAA   108,680
  887    

5.50%, 12/25/34, CMO (h)

  Aaa/AAA   859,952
  1,370    

5.50%, 4/25/35, CMO (h)

  Aaa/AAA   1,313,494
  13,500    

5.50%, MBS, TBA (b)

  Aaa/AAA   13,211,019
  26    

5.53%, 9/1/28, FRN, MBS (h)

  Aaa/AAA   26,622
  18    

5.54%, 2/1/32, FRN, MBS (h)

  Aaa/AAA   18,472
  173    

5.61%, 3/1/32, FRN, MBS (h)

  Aaa/AAA   175,488
  100    

5.75%, 6/25/33, CMO

  Aaa/AAA   96,807
  2,500    

5.807%, 8/25/43, CMO

  Aaa/AAA   2,530,604
  108    

6.00%, 2/25/17, CMO (h)

  Aaa/AAA   111,478
  365    

6.00%, 4/25/17, CMO (h)

  Aaa/AAA   377,020
  8,251    

6.00%, 1/25/44, CMO

  Aaa/AAA   8,528,598
  141,100    

6.00%, MBS, TBA (b)

  Aaa/AAA   141,739,324
  103    

6.23%, 12/1/28, FRN, MBS (h)

  Aaa/AAA   103,668
  1    

6.48%, 2/1/28, FRN, MBS

  Aaa/AAA   1,532
  67    

6.50%, 5/1/13, MBS (h)

  Aaa/AAA   69,602
  54    

6.50%, 10/1/13, MBS (h)

  Aaa/AAA   55,947
  478    

6.50%, 2/1/14, MBS (h)

  Aaa/AAA   496,252
  345    

6.50%, 6/25/23, CMO (h)

  Aaa/AAA   356,950
  3    

6.50%, 12/1/23, MBS

  Aaa/AAA   2,799
  (d)  

6.50%, 3/1/24, MBS

  Aaa/AAA   223
  38    

6.50%, 4/1/27, MBS (h)

  Aaa/AAA   39,627
  585    

6.50%, 11/18/27, CMO (h)

  Aaa/AAA   609,684
  13    

6.50%, 1/1/28, MBS (h)

  Aaa/AAA   13,518
  729    

6.50%, 2/1/28, MBS (h)

  Aaa/AAA   757,721
  67    

6.50%, 4/1/28, MBS (h)

  Aaa/AAA   69,606
  157    

6.50%, 9/1/28, MBS (h)

  Aaa/AAA   162,625
  1,069    

6.50%, 11/1/28, MBS (h)

  Aaa/AAA   1,109,134
  140    

6.50%, 1/1/29, MBS (h)

  Aaa/AAA   145,244
  58    

6.50%, 2/1/29, MBS (h)

  Aaa/AAA   59,896
  685    

6.50%, 3/1/29, MBS (h)

  Aaa/AAA   710,240
  107    

6.50%, 4/1/29, MBS (h)

  Aaa/AAA   110,596
  26    

6.50%, 5/1/29, MBS (h)

  Aaa/AAA   26,860
  93    

6.50%, 6/1/29, MBS (h)

  Aaa/AAA   96,059
  1,083    

6.50%, 7/1/29, MBS (h)

  Aaa/AAA   1,122,881
  25    

6.50%, 8/1/29, MBS (h)

  Aaa/AAA   25,997

 

4   PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report    7.31.08


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Schedule of Investments

July 31, 2008 (unaudited) (continued)

    

 

Principal
Amount
(000)
            Credit Rating
(Moody’s/S&P)
  Value

Fannie Mae (continued)

     
  $13  

6.50%, 9/1/29, MBS (h)

  Aaa/AAA   $13,052
  16  

6.50%, 12/1/29, MBS

  Aaa/AAA   16,147
  113  

6.50%, 8/1/31, MBS (h)

  Aaa/AAA   115,701
  2,145  

6.50%, 9/25/31, CMO (h)

  Aaa/AAA   2,228,980
  138  

6.50%, 10/1/31, MBS (h)

  Aaa/AAA   141,749
  65  

6.50%, 11/1/31, MBS (h)

  Aaa/AAA   66,805
  3,855  

6.50%, 3/25/32, CMO (h)

  Aaa/AAA   3,925,377
  80  

6.50%, 6/1/32, MBS (h)

  Aaa/AAA   81,675
  217  

6.50%, 8/1/32, MBS (h)

  Aaa/AAA   221,526
  125  

6.50%, 9/1/32, MBS (h)

  Aaa/AAA   127,379
  1,553  

6.50%, 12/25/41, CMO

  Aaa/AAA   1,618,448
  4,485  

6.50%, 7/25/42, CMO

  Aaa/AAA   4,718,612
  398  

6.50%, 8/25/42, CMO

  Aaa/AAA   418,368
  4,977  

6.50%, 9/25/42, CMO

  Aaa/AAA   5,243,585
  64  

6.50%, 10/25/42, CMO

  Aaa/AAA   67,609
  102  

6.50%, 12/25/42, CMO

  Aaa/AAA   104,467
  2,094  

6.50%, 6/25/44, CMO

  Aaa/AAA   2,212,684
  138  

6.746%, 12/1/25, FRN, MBS (h)

  Aaa/AAA   139,997
  70  

6.838%, 2/1/27, FRN, MBS (h)

  Aaa/AAA   70,675
  90  

6.85%, 12/18/27, CMO

  Aaa/AAA   93,735
  347  

7.00%, 7/18/12, CMO (h)

  Aaa/AAA   359,890
  193  

7.00%, 1/1/13, MBS (h)

  Aaa/AAA   202,238
  30  

7.00%, 2/1/15, MBS (h)

  Aaa/AAA   30,966
  346  

7.00%, 3/1/16, MBS (h)

  Aaa/AAA   366,518
  186  

7.00%, 5/1/16, MBS (h)

  Aaa/AAA   195,246
  234  

7.00%, 11/1/16, MBS (h)

  Aaa/AAA   240,660
  649  

7.00%, 5/1/17, MBS (h)

  Aaa/AAA   680,509
  175  

7.00%, 11/1/17, MBS (h)

  Aaa/AAA   183,561
  916  

7.00%, 7/1/21, MBS (h)

  Aaa/AAA   953,218
  140  

7.00%, 11/1/24, MBS (h)

  Aaa/AAA   147,204
  15  

7.00%, 10/1/25, MBS (h)

  Aaa/AAA   15,974
  67  

7.00%, 6/18/27, CMO

  Aaa/AAA   70,492
  8  

7.00%, 9/1/27, MBS

  Aaa/AAA   8,748
  15  

7.00%, 11/1/27, MBS (h)

  Aaa/AAA   15,696
  40  

7.00%, 12/1/27, MBS (h)

  Aaa/AAA   41,916
  13  

7.00%, 5/1/28, MBS

  Aaa/AAA   14,166
  43  

7.00%, 6/1/28, MBS (h)

  Aaa/AAA   45,506
  67  

7.00%, 2/1/29, MBS (h)

  Aaa/AAA   69,979
  206  

7.00%, 3/1/29, MBS (h)

  Aaa/AAA   217,476
  274  

7.00%, 4/1/29, MBS (h)

  Aaa/AAA   290,445
  94  

7.00%, 5/1/29, MBS (h)

  Aaa/AAA   98,932
  73  

7.00%, 6/1/29, MBS (h)

  Aaa/AAA   76,870
  33  

7.00%, 7/1/29, MBS (h)

  Aaa/AAA   34,515
  131  

7.00%, 9/1/29, MBS (h)

  Aaa/AAA   138,606
  53  

7.00%, 10/1/29, MBS (h)

  Aaa/AAA   56,162
  4  

7.00%, 11/1/29, MBS

  Aaa/AAA   4,708
  19  

7.00%, 3/1/30, MBS (h)

  Aaa/AAA   20,554
7.31.08    PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report   5


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Schedule of Investments

July 31, 2008 (unaudited) (continued)

    

 

Principal
Amount
(000)
            Credit Rating
(Moody’s/S&P)
  Value

Fannie Mae (continued)

     
  $9,370  

7.00%, 4/1/30, MBS (h)

  Aaa/AAA   $9,925,973
  143  

7.00%, 5/1/30, MBS (h)

  Aaa/AAA   151,134
  32  

7.00%, 4/1/31, MBS (h)

  Aaa/AAA   33,574
  23  

7.00%, 6/1/31, MBS (h)

  Aaa/AAA   24,395
  57  

7.00%, 7/1/31, MBS (h)

  Aaa/AAA   59,811
  124  

7.00%, 8/1/31, MBS (h)

  Aaa/AAA   130,423
  152  

7.00%, 9/1/31, MBS (h)

  Aaa/AAA   160,774
  19  

7.00%, 11/1/31, MBS (h)

  Aaa/AAA   19,966
  216  

7.00%, 12/1/31, MBS (h)

  Aaa/AAA   227,938
  236  

7.00%, 2/1/32, MBS (h)

  Aaa/AAA   248,379
  72  

7.00%, 4/1/32, MBS (h)

  Aaa/AAA   76,198
  211  

7.00%, 5/1/32, MBS (h)

  Aaa/AAA   222,973
  216  

7.00%, 6/1/32, MBS (h)

  Aaa/AAA   227,422
  75  

7.00%, 7/1/32, MBS (h)

  Aaa/AAA   79,492
  70  

7.00%, 8/1/32, MBS (h)

  Aaa/AAA   73,797
  278  

7.00%, 9/1/33, MBS (h)

  Aaa/AAA   291,489
  391  

7.00%, 11/1/33, MBS (h)

  Aaa/AAA   411,878
  670  

7.00%, 1/1/34, MBS (h)

  Aaa/AAA   700,624
  323  

7.00%, 7/1/34, MBS (h)

  Aaa/AAA   340,729
  128  

7.00%, 2/25/35, CMO (h)

  Aaa/AAA   137,134
  299  

7.00%, 3/1/35, MBS (h)

  Aaa/AAA   315,332
  6,127  

7.00%, 7/1/36, MBS (h)

  Aaa/AAA   6,351,216
  2,133  

7.00%, 9/25/41, CMO, VRN

  Aaa/AAA   2,235,918
  263  

7.00%, 10/25/41, CMO (h)

  Aaa/AAA   277,645
  104  

7.00%, 7/25/42, CMO

  Aaa/AAA   110,463
  544  

7.00%, 11/25/43, CMO

  Aaa/AAA   585,578
  553  

7.00%, 2/25/44, CMO

  Aaa/AAA   590,772
  3,586  

7.00%, 3/25/45, CMO (h)

  Aaa/AAA   3,716,923
  1,578  

7.00%, 12/1/46, MBS (h)

  Aaa/AAA   1,642,108
  848  

7.00%, 1/1/47, MBS (h)

  Aaa/AAA   882,247
  8  

7.025%, 10/1/31, FRN, MBS

  Aaa/AAA   8,539
  300  

7.065%, 3/1/32, FRN, MBS (h)

  Aaa/AAA   314,288
  85  

7.164%, 11/1/27, FRN, MBS (h)

  Aaa/AAA   85,932
  266  

7.50%, 6/19/30, CMO, VRN

  Aaa/AAA   278,483
  959  

7.50%, 6/1/17, MBS (h)

  Aaa/AAA   1,003,706
  71  

7.50%, 12/1/17, MBS (h)

  Aaa/AAA   77,243
  613  

7.50%, 5/1/22, MBS (h)

  Aaa/AAA   658,720
  93  

7.50%, 10/25/22, CMO

  Aaa/AAA   98,852
  930  

7.50%, 4/1/24, MBS (h)

  Aaa/AAA   999,504
  57  

7.50%, 7/1/26, MBS (h)

  Aaa/AAA   61,764
  56  

7.50%, 8/1/26, MBS (h)

  Aaa/AAA   60,833
  43  

7.50%, 11/1/26, MBS (h)

  Aaa/AAA   46,647
  9  

7.50%, 1/1/27, MBS (h)

  Aaa/AAA   10,212
  2  

7.50%, 3/1/27, MBS

  Aaa/AAA   2,160
  5  

7.50%, 5/1/27, MBS

  Aaa/AAA   5,535
  94  

7.50%, 7/1/27, MBS (h)

  Aaa/AAA   100,957
  22  

7.50%, 8/1/27, MBS (h)

  Aaa/AAA   23,716

 

6   PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report    7.31.08


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Schedule of Investments

July 31, 2008 (unaudited) (continued)

    

 

Principal
Amount
(000)
            Credit Rating
(Moody’s/S&P)
  Value

Fannie Mae (continued)

     
  $7  

7.50%, 9/1/27, MBS

  Aaa/AAA   $7,572
  1  

7.50%, 10/1/27, MBS

  Aaa/AAA   2,053
  10  

7.50%, 11/1/27, MBS

  Aaa/AAA   10,511
  37  

7.50%, 12/1/27, MBS (h)

  Aaa/AAA   39,930
  50  

7.50%, 1/1/28, MBS (h)

  Aaa/AAA   54,160
  42  

7.50%, 2/1/28, MBS (h)

  Aaa/AAA   45,167
  21  

7.50%, 9/1/29, MBS (h)

  Aaa/AAA   22,385
  13  

7.50%, 10/1/29, MBS (h)

  Aaa/AAA   14,266
  80  

7.50%, 11/1/29, MBS (h)

  Aaa/AAA   86,121
  46  

7.50%, 12/1/29, MBS (h)

  Aaa/AAA   49,580
  163  

7.50%, 4/1/30, MBS (h)

  Aaa/AAA   176,003
  274  

7.50%, 6/25/30, CMO

  Aaa/AAA   288,248
  1  

7.50%, 6/1/31, MBS

  Aaa/AAA   1,583
  49  

7.50%, 7/1/31, MBS (h)

  Aaa/AAA   52,730
  1,089  

7.50%, 7/1/32, MBS (h)

  Aaa/AAA   1,167,805
  3,587  

7.50%, 9/1/35, MBS

  Aaa/AAA   3,858,977
  1,513  

7.50%, 7/25/41, CMO

  Aaa/AAA   1,606,009
  1,736  

7.50%, 2/25/42, CMO, VRN

  Aaa/AAA   1,829,630
  97  

7.50%, 7/25/42, CMO

  Aaa/AAA   104,510
  10  

7.50%, 8/25/42, CMO

  Aaa/AAA   10,789
  1,517  

7.50%, 10/25/42, CMO

  Aaa/AAA   1,599,634
  1,038  

7.50%, 3/25/44, CMO

  Aaa/AAA   1,119,208
  3,844  

7.50%, 6/25/44, CMO

  Aaa/AAA   4,150,315
  140  

7.70%, 3/25/23, CMO (h)

  Aaa/AAA   150,217
  90  

7.75%, 3/1/31, FRN, MBS (h)

  Aaa/AAA   92,886
  244  

7.815%, 12/1/30, FRN, MBS (h)

  Aaa/AAA   250,477
  18  

8.00%, 4/1/19, MBS (h)

  Aaa/AAA   18,846
  4  

8.00%, 1/1/22, MBS

  Aaa/AAA   4,669
  4  

8.00%, 12/1/22, MBS

  Aaa/AAA   4,732
  8  

8.00%, 6/1/24, MBS

  Aaa/AAA   8,525
  553  

8.00%, 9/1/24, MBS (h)

  Aaa/AAA   596,909
  2  

8.00%, 12/1/24, MBS

  Aaa/AAA   2,394
  3  

8.00%, 9/1/27, MBS

  Aaa/AAA   3,303
  29  

8.00%, 4/1/30, MBS (h)

  Aaa/AAA   31,023
  120  

8.00%, 5/1/30, MBS (h)

  Aaa/AAA   129,455
  2  

8.00%, 6/1/30, MBS

  Aaa/AAA   1,922
  66  

8.00%, 7/1/30, MBS (h)

  Aaa/AAA   71,065
  2,388  

8.00%, 7/19/30, CMO, VRN

  Aaa/AAA   2,520,370
  56  

8.00%, 8/1/30, MBS (h)

  Aaa/AAA   60,440
  1  

8.00%, 9/1/30, MBS

  Aaa/AAA   1,230
  16  

8.00%, 10/1/30, MBS (h)

  Aaa/AAA   16,832
  22  

8.00%, 1/1/31, MBS (h)

  Aaa/AAA   23,998
  19  

8.00%, 3/1/31, MBS (h)

  Aaa/AAA   20,552
  137  

8.00%, 5/1/31, MBS (h)

  Aaa/AAA   147,700
  632  

8.00%, 7/1/31, MBS (h)

  Aaa/AAA   686,275
  49  

8.00%, 8/1/31, MBS (h)

  Aaa/AAA   53,172
  486  

8.00%, 10/1/31, MBS (h)

  Aaa/AAA   526,900
  86  

8.00%, 11/1/31, MBS (h)

  Aaa/AAA   93,001
7.31.08    PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report   7


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Schedule of Investments

July 31, 2008 (unaudited) (continued)

    

 

Principal
Amount
(000)
            Credit Rating
(Moody’s/S&P)
  Value

Fannie Mae (continued)

     
  $38  

8.00%, 1/1/32, MBS (h)

  Aaa/AAA   $40,888
  34  

8.00%, 6/1/32, MBS (h)

  Aaa/AAA   37,114
  3,662  

8.00%, 8/1/32, MBS (h)

  Aaa/AAA   3,972,836
  116  

8.50%, 4/1/16, MBS (h)

  Aaa/AAA   127,233
  1,922  

8.50%, 6/18/27, CMO (h)

  Aaa/AAA   2,089,028
  177  

8.50%, 6/25/30, CMO (h)

  Aaa/AAA   195,935
  2  

8.75%, 5/1/17, MBS

  Aaa/AAA   1,517
  10,062  

9.00%, 12/1/19, MBS (h)

  Aaa/AAA   11,285,283
  1,402  

9.420%, 5/15/21, MBS (h)

  Aaa/AAA   1,554,542
  470  

10.087%, 7/15/27, MBS (h)

  Aaa/AAA   532,336
  64  

10.30%, 4/25/19, CMO

  Aaa/AAA   67,544
         
        281,189,831
         
 

Federal Housing Administration – 0.0%

     
  185   7.43%, 6/1/24 (c)   Aaa/AAA   185,639
         
 

Freddie Mac – 46.4%

     
  200   5.00%, 10/15/16, CMO (h)   Aaa/AAA   201,412
  250  

5.00%, 11/15/16, CMO (h)

  Aaa/AAA   254,000
  69  

5.00%, 2/15/24, CMO

  Aaa/AAA   67,664
  101  

5.50%, 12/1/31, MBS (h)

  Aaa/AAA   98,803
  13  

5.78%, 4/1/33, FRN, MBS (h)

  Aaa/AAA   13,243
  117  

6.00%, 10/15/12, CMO (h)

  Aaa/AAA   120,622
  470  

6.00%, 9/15/16, CMO (h)

  Aaa/AAA   486,973
  4,954  

6.00%, 12/15/16, CMO (h)

  Aaa/AAA   5,132,249
  66  

6.00%, 3/15/17, CMO

  Aaa/AAA   68,703
  1,820  

6.00%, 4/1/17, MBS (h)

  Aaa/AAA   1,861,708
  1,398  

6.00%, 12/15/28, CMO (h)

  Aaa/AAA   1,422,066
  5  

6.00%, 3/1/31, MBS

  Aaa/AAA   4,554
  8  

6.00%, 12/1/31, MBS

  Aaa/AAA   8,213
  2,716  

6.00%, 3/1/33, MBS (h)

  Aaa/AAA   2,731,481
  80  

6.00%, 4/1/33, MBS (h)

  Aaa/AAA   80,575
  110  

6.00%, 3/15/35, CMO (h)

  Aaa/AAA   112,164
  2,240  

6.50%, 11/1/16, MBS (h)

  Aaa/AAA   2,322,546
  300  

6.50%, 4/15/18, CMO (h)

  Aaa/AAA   310,196
  30  

6.50%, 8/1/21, MBS (h)

  Aaa/AAA   31,510
  3,000  

6.50%, 10/15/23, CMO (h)

  Aaa/AAA   3,127,410
  104  

6.50%, 12/15/23, CMO

  Aaa/AAA   108,694
  12  

6.50%, 6/1/29, MBS (h)

  Aaa/AAA   12,171
  18,612  

6.50%, 6/15/31, CMO (h)

  Aaa/AAA   19,381,710
  100  

6.50%, 12/15/31, CMO

  Aaa/AAA   104,276
  1,780  

6.50%, 6/15/32, CMO (h)

  Aaa/AAA   1,833,182
  7,377  

6.50%, 7/15/32, CMO (h)

  Aaa/AAA   7,709,287
  8,992  

6.50%, 7/1/37, MBS (h)

  Aaa/AAA   9,165,765
  147  

6.50%, 2/25/43, CMO

  Aaa/AAA   150,170
  138  

6.50%, 9/25/43, CMO, VRN

  Aaa/AAA   140,297
  808  

6.50%, 10/25/43, CMO

  Aaa/AAA   820,080
  6,702  

6.50%, 3/25/44, CMO

  Aaa/AAA   6,940,259

 

8   PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report    7.31.08


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Schedule of Investments

July 31, 2008 (unaudited) (continued)

    

 

Principal
Amount
(000)
              Credit Rating
(Moody’s/S&P)
  Value

Freddie Mac (continued)

     
$   4,900    

6.50%, MBS, TBA (b)

  Aaa/AAA   $5,017,139
  12    

6.569%, 12/1/26, FRN, MBS (h)

  Aaa/AAA   11,547
  143    

6.783%, 9/1/31, FRN, MBS (h)

  Aaa/AAA   143,508
  2,231    

6.90%, 9/15/23, CMO (h)

  Aaa/AAA   2,333,773
  1,055    

6.95%, 7/15/21, CMO (h)

  Aaa/AAA   1,143,777
  (d)  

7.00%, 9/1/09, MBS

  Aaa/AAA   70
  2    

7.00%, 10/1/09, MBS

  Aaa/AAA   1,540
  4    

7.00%, 11/1/09, MBS

  Aaa/AAA   3,961
  1    

7.00%, 1/1/10, MBS

  Aaa/AAA   658
  (d)  

7.00%, 8/1/10, MBS

  Aaa/AAA   427
  10    

7.00%, 11/1/10, MBS (h)

  Aaa/AAA   10,429
  3    

7.00%, 1/1/11, MBS

  Aaa/AAA   3,373
  2,065    

7.00%, 9/1/11, MBS (h)

  Aaa/AAA   2,157,005
  14    

7.00%, 3/1/12, MBS (h)

  Aaa/AAA   14,300
  234    

7.00%, 7/15/12, CMO (h)

  Aaa/AAA   236,584
  301    

7.00%, 9/1/12, MBS (h)

  Aaa/AAA   316,026
  44    

7.00%, 10/1/12, MBS (h)

  Aaa/AAA   46,490
  27    

7.00%, 11/1/12, MBS (h)

  Aaa/AAA   28,339
  32    

7.00%, 12/1/12, MBS (h)

  Aaa/AAA   33,215
  1,361    

7.00%, 7/1/13, MBS (h)

  Aaa/AAA   1,421,010
  20    

7.00%, 1/1/14, MBS (h)

  Aaa/AAA   20,805
  793    

7.00%, 9/1/14, MBS (h)

  Aaa/AAA   831,291
  177    

7.00%, 11/1/14, MBS (h)

  Aaa/AAA   185,917
  57    

7.00%, 7/1/15, MBS (h)

  Aaa/AAA   60,389
  18    

7.00%, 8/1/15, MBS (h)

  Aaa/AAA   19,262
  61    

7.00%, 4/1/16, MBS (h)

  Aaa/AAA   63,877
  8    

7.00%, 6/1/16, MBS

  Aaa/AAA   8,672
  64    

7.00%, 7/1/16, MBS (h)

  Aaa/AAA   67,232
  16    

7.00%, 11/1/16, MBS (h)

  Aaa/AAA   17,203
  44    

7.00%, 3/1/17, MBS (h)

  Aaa/AAA   46,669
  1,524    

7.00%, 6/1/17, MBS (h)

  Aaa/AAA   1,594,926
  1,291    

7.00%, 8/1/21, MBS (h)

  Aaa/AAA   1,342,574
  1,518    

7.00%, 9/1/21, MBS (h)

  Aaa/AAA   1,578,131
  2,000    

7.00%, 1/15/24, CMO (h)

  Aaa/AAA   2,093,606
  100    

7.00%, 3/15/24, CMO (h)

  Aaa/AAA   105,864
  13    

7.00%, 7/1/24, MBS (h)

  Aaa/AAA   14,004
  1,185    

7.00%, 9/15/25, CMO (h)

  Aaa/AAA   1,253,348
  3,065    

7.00%, 7/1/26, MBS (h)

  Aaa/AAA   3,210,810
  1,513    

7.00%, 7/15/27, CMO (h)

  Aaa/AAA   1,586,353
  4,311    

7.00%, 3/15/29, CMO (h)

  Aaa/AAA   4,559,518
  156    

7.00%, 3/1/31, MBS (h)

  Aaa/AAA   164,112
  2,558    

7.00%, 6/15/31, CMO (h)

  Aaa/AAA   2,675,202
  1,040    

7.00%, 10/1/31, MBS (h)

  Aaa/AAA   1,096,450
  478    

7.00%, 1/1/32, MBS (h)

  Aaa/AAA   507,673
  29    

7.00%, 3/1/32, MBS (h)

  Aaa/AAA   30,664
  156    

7.00%, 4/1/32, MBS (h)

  Aaa/AAA   164,223
  1,275    

7.00%, 7/25/32, CMO, VRN

  Aaa/AAA   1,313,418
7.31.08    PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report   9


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Schedule of Investments

July 31, 2008 (unaudited) (continued)

    

 

Principal
Amount
(000)
            Credit Rating
(Moody’s/S&P)
  Value

Freddie Mac (continued)

     
  $649  

7.00%, 1/1/36, MBS (h)

  Aaa/AAA   $684,345
  10,813  

7.00%, 6/1/36, MBS (h)

  Aaa/AAA   11,208,271
  1,263  

7.00%, 7/1/36, MBS (h)

  Aaa/AAA   1,309,694
  9,872  

7.00%, 8/1/36, MBS (h)

  Aaa/AAA   10,233,035
  7,994  

7.00%, 9/1/36, MBS (h)

  Aaa/AAA   8,286,021
  3,369  

7.00%, 11/1/36, MBS (h)

  Aaa/AAA   3,494,609
  1,040  

7.00%, 12/1/36, MBS (h)

  Aaa/AAA   1,077,844
  8,914  

7.00%, 1/1/37, MBS (h)

  Aaa/AAA   9,239,625
  1,135  

7.00%, 2/25/43, CMO

  Aaa/AAA   1,205,280
  483  

7.00%, 9/25/43, CMO

  Aaa/AAA   510,363
  150  

7.00%, 10/25/43, CMO

  Aaa/AAA   160,742
  139  

7.50%, 1/1/16, MBS (h)

  Aaa/AAA   145,880
  1,325  

7.50%, 5/15/24, CMO (h)

  Aaa/AAA   1,409,789
  533  

7.50%, 8/1/24, MBS (h)

  Aaa/AAA   573,383
  4  

7.50%, 6/1/25, MBS

  Aaa/AAA   4,776
  30  

7.50%, 12/1/25, MBS (h)

  Aaa/AAA   32,658
  8  

7.50%, 1/1/26, MBS

  Aaa/AAA   8,984
  19  

7.50%, 2/1/26, MBS (h)

  Aaa/AAA   20,999
  30  

7.50%, 3/1/26, MBS (h)

  Aaa/AAA   32,166
  48  

7.50%, 4/1/26, MBS (h)

  Aaa/AAA   51,737
  43  

7.50%, 5/1/26, MBS (h)

  Aaa/AAA   46,368
  371  

7.50%, 6/1/26, MBS (h)

  Aaa/AAA   400,978
  279  

7.50%, 7/1/26, MBS (h)

  Aaa/AAA   300,978
  55  

7.50%, 8/1/26, MBS (h)

  Aaa/AAA   59,730
  15  

7.50%, 11/1/26, MBS (h)

  Aaa/AAA   16,034
  655  

7.50%, 12/1/26, MBS (h)

  Aaa/AAA   707,812
  288  

7.50%, 3/15/28, CMO (h)

  Aaa/AAA   296,251
  5  

7.50%, 2/1/30, MBS

  Aaa/AAA   5,233
  16  

7.50%, 4/1/30, MBS (h)

  Aaa/AAA   17,398
  2  

7.50%, 6/1/30, MBS

  Aaa/AAA   2,854
  11  

7.50%, 10/1/30, MBS

  Aaa/AAA   12,378
  25  

7.50%, 11/1/30, MBS (h)

  Aaa/AAA   27,404
  1,420  

7.50%, 12/1/30, MBS (h)

  Aaa/AAA   1,536,119
  1,073  

7.50%, 5/1/32, MBS (h)

  Aaa/AAA   1,160,914
  307  

7.50%, 7/25/32, CMO, VRN

  Aaa/AAA   311,759
  298  

7.50%, 7/1/33, MBS (h)

  Aaa/AAA   314,104
  1,485  

7.50%, 3/1/37, MBS (h)

  Aaa/AAA   1,556,635
  90  

7.50%, 2/25/42, CMO

  Aaa/AAA   97,073
  63  

8.00%, 2/15/22, CMO

  Aaa/AAA   64,618
  111  

8.00%, 8/15/22, CMO (h)

  Aaa/AAA   118,778
  45  

8.00%, 7/1/24, MBS (h)

  Aaa/AAA   49,110
  72  

8.00%, 8/1/24, MBS (h)

  Aaa/AAA   78,142
  882  

8.00%, 12/1/26, MBS (h)

  Aaa/AAA   954,459
  293  

8.00%, 4/15/30, CMO (h)

  Aaa/AAA   317,259
  422  

8.50%, 4/15/22, CMO (h)

  Aaa/AAA   442,200
  541  

8.50%, 10/1/30, MBS (h)

  Aaa/AAA   580,263
         
        161,522,399
         

 

10   PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report    7.31.08


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Schedule of Investments

July 31, 2008 (unaudited) (continued)

    

 

Principal
Amount
(000)
              Credit Rating
(Moody’s/S&P)
  Value

Ginnie Mae – 39.9%

     
  $448    

5.50%, 6/20/35, FRN, MBS (h)

  Aaa/AAA   $451,870
  125,000    

6.00%, MBS, TBA (b)

  Aaa/AAA   126,347,625
  101    

6.50%, 6/20/32, CMO

  Aaa/AAA   105,576
  4    

7.00%, 4/15/24, MBS

  Aaa/AAA   4,379
  38    

7.00%, 7/15/25, MBS (h)

  Aaa/AAA   41,289
  62    

7.00%, 9/15/25, MBS (h)

  Aaa/AAA   66,345
  24    

7.00%, 11/15/25, MBS (h)

  Aaa/AAA   24,679
  14    

7.00%, 12/15/25, MBS (h)

  Aaa/AAA   14,157
  51    

7.00%, 3/15/26, MBS (h)

  Aaa/AAA   55,221
  11    

7.00%, 4/15/26, MBS

  Aaa/AAA   11,927
  5    

7.00%, 5/15/26, MBS

  Aaa/AAA   5,679
  72    

7.00%, 6/15/26, MBS (h)

  Aaa/AAA   77,247
  5,671    

7.00%, 3/20/31, CMO

  Aaa/AAA   5,958,951
  214    

7.25%, 7/16/28, CMO

  Aaa/AAA   217,965
  7    

7.50%, 1/15/17, MBS

  Aaa/AAA   7,469
  10    

7.50%, 2/15/17, MBS

  Aaa/AAA   10,874
  10    

7.50%, 3/15/17, MBS

  Aaa/AAA   10,766
  4    

7.50%, 4/15/17, MBS

  Aaa/AAA   4,001
  9    

7.50%, 5/15/17, MBS

  Aaa/AAA   9,910
  3    

7.50%, 7/15/17, MBS

  Aaa/AAA   3,224
  2    

7.50%, 6/15/23, MBS

  Aaa/AAA   1,668
  20    

7.50%, 10/15/25, MBS (h)

  Aaa/AAA   21,329
  (d)  

7.50%, 2/15/26, MBS

  Aaa/AAA   452
  169    

7.50%, 3/15/26, MBS (h)

  Aaa/AAA   181,264
  180    

7.50%, 6/20/26, CMO

  Aaa/AAA   189,674
  430    

7.50%, 9/15/26, MBS (h)

  Aaa/AAA   462,674
  11    

7.50%, 12/15/26, MBS (h)

  Aaa/AAA   11,831
  4    

7.50%, 1/15/27, MBS

  Aaa/AAA   4,503
  6    

7.50%, 2/15/27, MBS

  Aaa/AAA   6,292
  82    

7.50%, 3/15/27, MBS (h)

  Aaa/AAA   88,194
  365    

7.50%, 4/15/27, MBS (h)

  Aaa/AAA   392,832
  13    

7.50%, 5/15/27, MBS (h)

  Aaa/AAA   13,811
  140    

7.50%, 6/15/27, MBS (h)

  Aaa/AAA   150,709
  194    

7.50%, 7/15/27, MBS (h)

  Aaa/AAA   208,466
  60    

7.50%, 8/15/27, MBS (h)

  Aaa/AAA   64,939
  83    

7.50%, 12/15/27, MBS (h)

  Aaa/AAA   89,050
  460    

7.50%, 1/15/28, MBS (h)

  Aaa/AAA   494,097
  108    

7.50%, 2/15/28, MBS (h)

  Aaa/AAA   115,730
  175    

7.50%, 1/15/29, MBS (h)

  Aaa/AAA   188,330
  236    

7.50%, 2/15/29, MBS (h)

  Aaa/AAA   253,213
  185    

7.50%, 3/15/29, MBS (h)

  Aaa/AAA   198,279
  6    

8.00%, 6/15/16, MBS

  Aaa/AAA   5,974
  (d)  

8.00%, 7/15/16, MBS

  Aaa/AAA   265
  12    

8.00%, 1/15/17, MBS (h)

  Aaa/AAA   13,128
  4    

8.00%, 2/15/17, MBS

  Aaa/AAA   4,080
  14    

8.00%, 3/15/17, MBS (h)

  Aaa/AAA   15,761
  24    

8.00%, 4/15/17, MBS (h)

  Aaa/AAA   25,625
  18    

8.00%, 5/15/17, MBS (h)

  Aaa/AAA   19,309
7.31.08    PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report   11


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Schedule of Investments

July 31, 2008 (unaudited) (continued)

    

 

Principal
Amount
(000)
              Credit Rating
(Moody’s/S&P)
  Value

Ginnie Mae (continued)

     
  $21    

8.00%, 6/15/17, MBS (h)

  Aaa/AAA   $22,914
  14    

8.00%, 7/15/17, MBS (h)

  Aaa/AAA   15,172
  1    

8.00%, 1/15/20, MBS

  Aaa/AAA   679
  3    

8.00%, 2/15/20, MBS

  Aaa/AAA   2,973
  1    

8.00%, 5/15/21, MBS

  Aaa/AAA   747
  10    

8.00%, 11/15/21, MBS (h)

  Aaa/AAA   11,409
  7    

8.00%, 12/15/21, MBS

  Aaa/AAA   7,641
  11    

8.00%, 4/15/22, MBS (h)

  Aaa/AAA   11,909
  1    

8.00%, 5/15/22, MBS

  Aaa/AAA   931
  10    

8.00%, 11/15/22, MBS (h)

  Aaa/AAA   10,562
  496    

8.00%, 3/20/30, CMO

  Aaa/AAA   533,689
  (d)  

8.50%, 10/15/16, MBS

  Aaa/AAA   298
  1    

8.50%, 10/15/17, MBS

  Aaa/AAA   611
  (d)  

8.50%, 5/15/22, MBS

  Aaa/AAA   271
  1    

8.50%, 1/15/23, MBS

  Aaa/AAA   1,081
  9    

8.50%, 4/15/23, MBS (h)

  Aaa/AAA   10,573
  3    

8.50%, 8/15/30, MBS

  Aaa/AAA   3,822
  12    

8.50%, 2/15/31, MBS (h)

  Aaa/AAA   13,342
  18    

9.00%, 6/15/16, MBS (h)

  Aaa/AAA   19,692
  76    

9.00%, 11/15/16, MBS (h)

  Aaa/AAA   83,176
  100    

9.00%, 12/15/16, MBS (h)

  Aaa/AAA   109,291
  67    

9.00%, 9/15/17, MBS (h)

  Aaa/AAA   73,277
  79    

9.00%, 12/15/17, MBS (h)

  Aaa/AAA   87,972
  73    

9.00%, 3/15/18, MBS (h)

  Aaa/AAA   79,964
  141    

9.00%, 5/15/18, MBS (h)

  Aaa/AAA   154,070
  24    

9.00%, 6/15/18, MBS (h)

  Aaa/AAA   26,656
  451    

9.00%, 10/15/19, MBS (h)

  Aaa/AAA   493,655
  188    

9.00%, 11/15/19, MBS (h)

  Aaa/AAA   205,525
  128    

9.00%, 1/15/20, MBS (h)

  Aaa/AAA   140,201
         
    138,772,736
         

Small Business Administration – 1.0%

     
  1,181    

4.754%, 8/10/14

  Aaa/AAA   1,151,361
  922    

5.038%, 3/10/15

  Aaa/AAA   904,749
  212    

6.30%, 7/1/13

  Aaa/AAA   215,064
  553    

6.30%, 6/1/18

  Aaa/AAA   566,683
  223    

6.40%, 8/1/13

  Aaa/AAA   226,809
  71    

7.20%, 6/1/17

  Aaa/AAA   73,706
  61    

7.449%, 8/1/10

  Aaa/AAA   62,439
  112    

7.54%, 8/10/09

  Aaa/AAA   114,095
  47    

7.70%, 7/1/16

  Aaa/AAA   48,504
         
        3,363,410
         

Vendee Mortgage Trust, CMO – 2.4%

     
  588    

6.50%, 3/15/29

  Aaa/AAA   622,548
  118    

6.75%, 2/15/26

  Aaa/AAA   122,795
  266    

6.75%, 6/15/26

  Aaa/AAA   281,979

 

12   PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report    7.31.08


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Schedule of Investments

July 31, 2008 (unaudited) (continued)

    

 

Principal
Amount
(000)
            Credit Rating
(Moody’s/S&P)
  Value

Vendee Mortgage Trust, CMO (continued)

     
  $6,728  

7.50%, 9/15/30

  Aaa/AAA   $7,182,400
         
        8,209,722
         

Total U.S. Government Agency Securities (cost-$591,341,820)

  593,243,737
         
         
MORTGAGE-BACKED SECURITIES – 31.6%      
  92   Citigroup Mortgage Loan Trust, Inc., 7.00%, 9/25/33, CMO   Aaa/AAA   91,127
    Countrywide Alternative Loan Trust, CMO,      
  1,999  

6.25%, 8/25/37

  Aaa/AAA   1,361,493
  2,453  

6.50%, 7/25/35

  Aaa/AAA   2,126,298
    Countrywide Home Loan Mortgage Pass-Through Trust, CMO,      
  1,773  

5.780%, 8/25/34, FRN

  Aaa/AAA   1,504,822
  748  

6.00%, 11/25/26 (a)(j)

  Aaa/AAA   746,793
  5,448  

7.50%, 11/25/34 (a)(j)

  Aaa/AAA   5,481,769
    Credit Suisse First Boston Mortgage Securities Corp., CMO,      
  1,014  

3.111%, 3/25/34, FRN

  Aa2/AA+   898,908
  1,658  

7.00%, 2/25/34

  Aaa/AAA   1,537,237
  1,421   DLJ Commercial Mortgage Corp., 7.34%, 10/10/32, CMO   Aaa/AAA   1,453,466
  1,103   GMAC Mortgage Corp. Loan Trust, 5.212%, 8/19/34, CMO, FRN   Aaa/AAA   935,069
  4,773   GSAA Trust, 6.00%, 4/1/34, CMO   Aaa/AAA   4,658,173
    GSMPS Mortgage Loan Trust, CMO (a)(j),      
  4,924  

7.00%, 6/25/43

  NR/NR   4,819,036
  151  

7.50%, 6/19/27, VRN

  NR/NR   153,778
  2,276  

8.00%, 9/19/27, VRN

  NR/NR   2,328,241
    GSR Mortgage Loan Trust, CMO,      
  11,001  

5.247%, 11/25/35, VRN

  Aaa/AAA   9,666,827
  5,000  

5.50%, 11/25/35

  Aaa/AAA   4,013,736
  4,326  

6.50%, 1/25/34

  Aaa/AAA   4,416,943
    MASTR Alternative Loans Trust, CMO,      
  1,839  

6.50%, 3/25/34

  Aaa/AAA   1,871,281
  203  

7.00%, 4/25/34

  Aaa/AAA   185,925
    MASTR Reperforming Loan Trust, CMO,      
  4,090  

7.00%, 5/25/35 (a)(j)

  Aaa/AAA   4,180,438
  6,053  

7.50%, 7/25/35

  Aaa/AAA   6,333,304
    Nomura Asset Acceptance Corp., CMO (a)(j),      
  3,467  

7.00%, 10/25/34

  Aaa/AAA   3,580,078
  4,722  

7.50%, 3/25/34

  Aaa/AAA   4,469,755
  10,401  

7.50%, 10/25/34

  Aaa/AAA   10,518,773
    Residential Accredit Loans, Inc., CMO,      
  4,957  

2.641%, 6/25/46, FRN

  Aaa/AAA   3,096,389
  5,823  

6.00%, 8/25/35

  Aaa/AAA   5,276,364
    Residential Asset Mortgage Products, Inc., CMO,      
  211  

6.50%, 11/25/31

  Aaa/AAA   213,133
  2,462  

7.00%, 8/25/16

  Aaa/AAA   2,507,355
  1,521  

8.50%, 10/25/31

  Aaa/AAA   1,475,271
  2,188  

8.50%, 11/25/31

  Aaa/AAA   2,250,191
  826   Structured Adjustable Rate Mortgage Loan Trust,      
   

4.26%, 3/25/34, CMO, VRN

  Aaa/AAA   768,808
7.31.08    PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report   13


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Schedule of Investments

July 31, 2008 (unaudited) (continued)

    

 

Principal
Amount
(000)
            Credit Rating
(Moody’s/S&P)
  Value
  $7,432   Structured Asset Securities Corp., 7.50%, 10/25/36, CMO (a)(j)   Aaa/AAA   $8,020,932
    Washington Mutual, Inc., CMO,      
  3,927  

6.50%, 8/25/34

  Aaa/AAA   3,723,944
  724  

7.00%, 3/25/34

  Aaa/AAA   701,724
  3,069  

7.50%, 4/25/33

  Aaa/AAA   3,065,446
  1,800   Wells Fargo Mortgage-Backed Securities Trust,      
   

4.108%, 6/25/35, CMO, FRN

  Aaa/AAA   1,601,046
         

Total Mortgage-Backed Securities (cost-$116,976,483)

  110,033,873
         
         
CORPORATE BONDS & NOTES – 23.2%      

Financial Services – 7.7%

     
  1,500   ATF Bank, 8.875%, 11/9/09   Baa2/BB+   1,544,505
    Bear Stearns Cos., Inc.,      
  2,000  

6.40%, 10/2/17

  Aa2/AA-   1,967,396
  3,000  

6.95%, 8/10/12

  Aa2/AA-   3,098,328
  3,800   C10 Capital SPV Ltd., 6.722%, 12/31/16 (e)   NR/BBB-   3,473,010
  2,000   Desarrolladora Homex SAB de C.V., 7.50%, 9/28/15   Ba3/BB-   1,950,000
  3,000   General Motors Acceptance Corp. LLC, 6.00%, 12/15/11   B3/B-   1,882,467
  5,000   GPB Eurobond Finance PLC for Gazprombank, 6.50%, 9/23/15   A3/BBB-   4,541,305
  5,000   Teco Finance, Inc., 6.75%, 5/1/15   Baa3/BB+   5,066,750
  1,800   UBS AG, 5.875%, 12/20/17   Aa2/AA-   1,759,070
  2,000   Wells Fargo Capital X, 5.95%, 12/01/86      
   

(Converts to FRN on 12/15/36)

  Aa2/AA-   1,710,094
         
        26,992,925
         

Industrial – 13.2%

     
  1,000   Archer-Daniels-Midland Co., 6.45%, 1/15/38   A2/A   958,721
  2,000   Bon-Ton Stores, Inc., 10.25%, 3/15/14 (h)   Caa1/CCC+   1,070,000
  2,000   Cablemas S.A. de C.V., 9.375%, 11/15/15 (a)(j)   Ba3/BB-   2,140,000
  400   CODELCO, Inc., 6.15%, 10/24/36   Aa3/A   375,277
  3,700   CSN Islands IX Corp., 10.50%, 1/15/15   Ba2/BB+   4,338,250
    Dynegy Holdings, Inc.,      
  1,000  

7.125%, 5/15/18

  B2/B   882,500
  2,000  

8.375%, 5/1/16

  B2/B   1,995,000
  1,500   Echostar DBS Corp., 7.125%, 2/1/16   Ba3/BB-   1,391,250
    Gaz Capital S.A.,      
  1,000  

5.875%, 6/1/15 (a)(j)

  A3/BBB   1,389,870
  $3,000  

8.625%, 4/28/34

  A3/BBB   3,225,000
  2,000   Gazprom AG, 9.625%, 3/1/13   A3/BBB   2,200,000
    Georgia-Pacific LLC,      
  500  

7.00%, 1/15/15 (a)(j)

  Ba3/BB-   467,500
  1,500  

7.70%, 6/15/15

  B2/B+   1,402,500
  1,500  

7.75%, 11/15/29

  B2/B+   1,312,500
    HCA, Inc.,      
  1,500  

9.00%, 12/15/14

  Caa1/B-   1,420,296
  700  

9.25%, 11/15/16

  B2/BB-   724,500
    Pemex Project Funding Master Trust,      
  900  

6.625%, 6/15/38 (a)(j)

  Baa1/BBB+   888,130
  80  

9.125%, 10/13/10

  Baa1/BBB+   86,520

 

14   PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report    7.31.08


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Schedule of Investments

July 31, 2008 (unaudited) (continued)

    

 

Principal
Amount
(000)
            Credit Rating
(Moody’s/S&P)
  Value

Industrial (continued)

     
  $2,300   Petroliam Nasional Bhd., 7.625%, 10/15/26   A1/A-   $2,727,195
  3,500   RH Donnelley Corp., 8.875%, 1/15/16   B3/B-   1,706,250
  1,500   SemGroup L.P., 8.75%, 11/15/15 (a)(j)(l)   NR/NR   210,000
  1,500   Service Corp. International, 7.625%, 10/1/18   B1/BB-   1,432,500
  2,000   Sino-Forest Corp., 9.125%, 8/17/11 (a)(j)   Ba2/BB   2,030,000
  1,000   Southern Copper Corp., 7.50%, 7/27/35   Baa2/BBB-   966,617
  1,500   SUPERVALU, Inc., 7.50%, 11/15/14   B1/B+   1,486,875
  2,854   United Air Lines, Inc., 6.636%, 1/2/24   Ba1/BBB-   2,342,275
    Vale Overseas Ltd.,      
  900  

6.25%, 1/23/17

  Baa2/BBB   891,604
  1,900  

6.875%, 11/21/36

  Baa2/BBB   1,831,956
  1,500   Verso Paper Holdings LLC, 9.125%, 8/1/14   B2/B+   1,350,000
  3,000   Vitro SAB de C.V., 8.625%, 2/1/12   B2/B   2,595,000
         
        45,838,086
         

Utilities – 2.3%

     
  2,000   Cia Energetica de Sao Paulo, 10.00%, 3/2/11 (a)(j)   Ba3/B2   2,160,000
  2,000   Enersis S.A., 7.375%, 1/15/14   Baa3/BBB   2,133,278
  2,500   Nevada Power Co., 6.50%, 5/15/18   Baa3/BBB   2,549,738
  1,250   Ras Laffan Liquefied Natural Gas Co. Ltd. III, 6.332%, 9/30/27 (i)   Aa2/A   1,118,445
         
        7,961,461
         

Total Corporate Bonds & Notes (cost-$87,647,135)

  80,792,472
         
         
SOVEREIGN DEBT OBLIGATIONS – 7.5%      

Colombia – 0.3%

     
  1,100   Colombia Government International Bond, 7.375%, 9/18/37   Ba1/BBB-   1,204,500
         

Dominican Republic – 1.6%

     
  5,465   Dominican Republic International Bond, 9.04%, 1/23/18   B2/B+   5,478,547
         

Jamaica – 1.6%

     
    Jamaica Government International Bond,      
  1,000  

8.50%, 2/28/36

  B1/B   975,000
  4,000  

10.625%, 6/20/17

  B1/B   4,480,000
         
        5,455,000
         

Panama – 1.4%

     
  3,641   Republic of Panama, 9.375%, 4/1/29   Ba1/BB+   4,782,453
         

Tunisia – 0.6%

     
  2,000   Banque Centrale de Tunisie, 7.375%, 4/25/12   Baa2/BBB   2,127,500
         

Ukraine – 1.7%

     
  6,200   Republic of Ukraine, 7.65%, 6/11/13   B1/B+   6,068,250
         

Venezuela – 0.3%

     
  1,000   Venezuela Government International Bond, 9.375%, 1/13/34   B2/BB-   861,500
         

Total Sovereign Debt Obligations (cost-$27,125,324)

  25,977,750
         
         
SENIOR LOANS (j)(k) – 0.6%      

Financial Services – 0.6%

     
  2,680   Chrysler Financial Corp., 6.78%, 8/3/12 (cost-$2,563,623)     2,205,212
         
7.31.08    PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report   15


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Schedule of Investments

July 31, 2008 (unaudited) (continued)

    

 

Principal
Amount
(000)
            Credit Rating
(Moody’s/S&P)
  Value
MUNICIPAL BONDS – 0.5%      

West Virginia – 0.5%

     
  $1,970   Tobacco Settlement Finance Auth. Rev., Ser. A,      
   

7.467%, 6/1/47 (cost-$1,852,219)

  Baa3/BBB   $1,759,821
         
         
ASSET-BACKED SECURITIES – 0.4%      
  541   ACE Securities Corp., 5.711%, 4/25/35, FRN (a)(j)   Ca/CC   18,278
    Ameriquest Mortgage Securities, Inc., FRN,      
  2,720  

5.986%, 11/25/32 (l)

  Caa3/D   272,429
  1,490  

8.086%, 2/25/33

  Ca/D   198,543
  1,156   Bear Stearns Alt-A Trust, 6.25%, 8/25/36, CMO, VRN   Aa1/AAA   704,700
  45   Residential Asset Mortgage Products, Inc., 8.50%, 12/25/31   NR/AAA   44,489
         

Total Asset-Backed Securities (cost-$2,694,869)

  1,238,439
         
         
SHORT-TERM INVESTMENTS – 14.7%      

U.S. Treasury Bills (f) – 4.0%

     
  13,965  

1.66%-1.97%, 9/11/08-9/25/08 (cost-$13,929,382)

    13,929,382
         

Corporate Notes – 1.2%

     

Financial Services – 1.2%

     
  2,500   General Motors Acceptance Corp. LLC, 3.926%, 5/15/09, FRN   B3/B   2,213,097
  2,000   VTB Capital S.A., 3.384%, 8/1/08, FRN (a)(j)(i)   NR/BBB+   2,000,000
         

Total Corporate Notes (cost-$4,500,000)

  4,213,097
         

U.S. Government Agency Securities – 0.1%

     
  78   Fannie Mae, 7.00%, 6/1/09, MBS (h)   Aaa/AAA   78,259
    Freddie Mac, MBS,      
  1  

7.00%, 1/1/09

  Aaa/AAA   762
  1  

7.00%, 2/1/09

  Aaa/AAA   1,599
  5  

7.00%, 3/1/09

  Aaa/AAA   4,855
  6  

7.00%, 4/1/09

  Aaa/AAA   6,497
  6  

7.00%, 6/1/09

  Aaa/AAA   6,229
         

Total U.S. Government Agency Securities (cost-$97,539)

  98,201
         

Repurchase Agreements – 9.4%

     
  578  

State Street Bank & Trust Co.,
dated 7/31/08, 1.65%, due 8/1/08, proceeds $578,026; collateralized by Federal Home Loan Bank, 3.625%, due 7/1/11, valued at $590,738 including accrued interest

    578,000
  32,100  

Credit Suisse First Boston,
dated 7/31/08, 2.02%, due 8/1/08, proceeds $32,101,801; collateralized by U.S. Treasury Notes, 4.75%, due 11/15/08, valued at $32,669,343 including accrued interest

    32,100,000
         

Total Repurchase Agreements (cost-$32,678,000)

  32,678,000
         

Total Short-Term Investments (cost-$51,204,921)

  50,918,680
         

 

16   PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report    7.31.08


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Schedule of Investments

July 31, 2008 (unaudited) (continued)

    

 

Contracts/
Notional
Amount
            Value
OPTIONS PURCHASED (g) – 0.2%      
Call Options – 0.2%      
200,000,000  

9-Year Interest Rate Swap (OTC),
Pay 3-Month USD-LIBOR Floating Rate Index,
strike rate 4.43%, expires 8/19/08

    $757,580
214  

U.S. Treasury Bonds 30 yr. Futures (CBOT),
strike price $128, expires 8/22/08

    4,284
811  

U.S. Treasury Notes 5 yr. Futures (CBOT),
strike price $126, expires 8/22/08

    6,987
       
      768,851
       
 
Put Options – 0.0%      
200,000,000  

9-Year Interest Rate Swap (OTC),
Pay 3-Month USD-LIBOR Floating Rate Index,
strike rate 6.04%, expires 8/19/08

    20
13,500,000  

Fannie Mae (OTC),
strike price $78, expires 10/7/08

    18
66,000,000  

strike price $88.50, expires 9/4/08

    89
4,900,000  

Freddie Mac (OTC),
strike price $91, expires 10/7/08

    57
40,000,000  

Ginnie Mae (OTC),
strike price $90, expires 8/13/08

   
127  

U.S. Treasury Notes 10 yr. Futures (CBOT),
strike price $92, expires 8/22/08

    1,815
       
      1,999
       
Total Options Purchased (cost-$3,172,458)     770,850
       
Total Investments (cost-$884,578,852) – 249.3%     866,940,834
       
Liabilities in excess of other assets – (149.3)%     (519,177,115)
       
Net Assets – 100.0%     $347,763,719
       

 

 

7.31.08    PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report   17


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Schedule of Investments

July 31, 2008 (unaudited) (continued)

    

 

Notes to Schedule of Investments:

(a) 144A Security – Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, typically only to qualified institutional buyers. Unless otherwise indicated, these securities are not considered to be illiquid.  
(b) Delayed-delivery security. To be delivered after July 31, 2008.  
(c) Securities with an aggregate value of $185,639, representing 0.05% of net assets, have been fair valued, using methods as described in Note 1(a) in the Notes to Financial Statements.  
(d) Principal amount less than $500.  
(e) Perpetual maturity security. Maturity date shown is the first call date. Interest rate is fixed until the first call date and variable thereafter.  
(f) All or partial amount segregated as collateral for futures contracts and swaps.  
(g) Non-income producing.  
(h) All or partial amount segregated as collateral for reverse repurchase agreements.  
(i) Illiquid security.  
(j) Private Placement – Restricted as to resale and may not have a readily available market. Securities with an aggregate value of $57,808,583, representing 16.62% of net assets.  
(k) These securities generally pay interest at rates which are periodically pre-determined by reference to a base lending rate plus a premium. These base lending rates are generally either the lending rate offered by one or more major European banks, such as the “LIBOR”, or the prime rate offered by one or more major United States banks, or the certificate of deposit rate. These securities are generally considered to be restricted as the Fund is ordinarily contractually obligated to receive approval from the Agent bank and/or borrower prior to disposition. Remaining maturities of senior loans may be less than the stated maturities shown as a result of contractual or optional payments by the borrower. Such prepayments cannot be predicted with certainty. The interest rate disclosed reflects the rate in effect on July 31, 2008.  
(l) Security in default.  

 

 

Glossary:

CBOT

  -   Chicago Board of Trade

CMO

  -   Collateralized Mortgage Obligation

  -   Euro

FRN

  -   Floating Rate Note. The interest rate disclosed reflects the rate in effect on July 31, 2008.

LIBOR

  -   London Inter-Bank Offered Rate

MBS

  -   Mortgage-Backed Securities

OTC

  -   Over the Counter

NR

  -   Not Rated

VRN

  -   Variable Rate Note. Instruments whose interest rates change on specified date (such as a coupon date or interest payment date) and/or whose interest rates vary with changes in a designated base rate (such as the prime interest rate). The interest rate disclosed reflects the rate in effect on July 31, 2008.

 

18   PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report    7.31.08    See accompanying Notes to Financial Statements


Table of Contents
PIMCO Strategic Global Government Fund, Inc. Statement of Assets and Liabilities   
July 31, 2008 (unaudited)     

 

 

Assets:

       

Investments, at value (cost-$884,578,852)

      $866,940,834

Cash (including foreign currency of $10,817,703 with a cost of $10,881,819)

      10,917,815

Unrealized appreciation of swaps

      74,383,006

Receivable for investments sold

      5,024,169

Interest receivable

      4,407,602

Deposits with brokers for futures contracts collateral

      860,100

Premium for swaps purchased

      710,513

Unrealized appreciation of forward foreign currency contracts

      179,903

Paydown receivable

      5,643

Prepaid expenses

      3,142

Total Assets

      963,432,727
 

Liabilities:

       

Payable for investments purchased

      298,337,621

Payable for reverse repurchase agreements

      213,370,000

Premium for swaps sold

      67,016,225

Unrealized depreciation of swaps

      32,907,290

Dividends payable to shareholders

      2,465,533

Interest payable for reverse repurchase agreements

      246,180

Investment management fees payable

      243,114

Unrealized depreciation of forward foreign currency contracts

      93,354

Payable for variation margin on futures contracts

      90,406

Administration fees payable

      8,894

Accrued expenses

      890,391

Total Liabilities

      615,669,008

Net Assets

      $347,763,719
 

Composition of Net Assets:

       

Common Stock:

       

Par value ($0.00001 per share, applicable to 37,931,271 shares issued and outstanding)

      $379

Paid-in-capital in excess of par

      440,254,514

Dividends in excess of net investment income

      (1,334,055)

Accumulated net realized loss

      (114,730,659)

Net unrealized appreciation of investments, futures contracts, swaps and foreign currency transactions

      23,573,540

Net Assets

      $347,763,719

Net Asset Value Per Share

      $9.17

 

See accompanying Notes to Financial Statements    7.31.08    PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report   19


Table of Contents
PIMCO Strategic Global Government Fund, Inc. Statement of Operations   
Six months ended July 31, 2008 (unaudited)     

 

 

Investment Income:

       

Interest Income (net of foreign withholding taxes of $6,666)

      $22,150,925
 

Expenses:

       

Interest expense

      3,412,599

Investment management fees

      1,474,204

Custodian and accounting agent fees

      116,568

Directors’ fees and expenses

      113,750

Administration fees

      79,861

Legal fees

      72,800

Shareholder communications

      29,120

Audit and tax services

      23,660

Transfer agent fees

      17,290

Miscellaneous

      177,862

Total expenses

      5,517,714

Less: custody credits earned on cash balances

      (4,806)

Net expenses

      5,512,908
 

Net Investment Income

      16,638,017
 

Realized and Change in Unrealized Gain (Loss):

       

Net realized gain (loss) on:

       

Investments

      5,397,346

Futures contracts

      (6,456,171)

Swaps

      500,635

Foreign currency transactions

      (672,738)

Net change in unrealized appreciation/depreciation of:

       

Investments

      (38,539,044)

Futures contracts

      5,174,604

Swaps

      7,336,341

Foreign currency transactions

      (126,497)

Net realized and change in unrealized loss on investments, futures contracts, swaps and foreign currency transactions

      (27,385,524)

Net Decrease in Net Assets Resulting from Investment Operations

      $(10,747,507)

 

20   PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report    7.31.08    See accompanying Notes to Financial Statements


Table of Contents
PIMCO Strategic Global Government Fund, Inc. Statement of Changes in Net Assets     

 

 
         Six Months
ended
July 31, 2008
(unaudited)
        Year ended
January 31, 2008
 

Investment Operations:

            

Net investment income

     $ 16,638,017       $ 22,454,684  

Net realized loss on investments, futures contracts, swaps and foreign currency transactions

       (1,230,928 )       (29,432,066 )

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

       (26,154,596 )       26,674,542  

Net increase (decrease) in net assets resulting from investment operations

       (10,747,507 )       19,697,160  

Dividends to Shareholders from Net Investment Income

       (14,760,027 )       (30,445,060 )

Capital Share Transactions:

            

Reinvestment of dividends

       2,102,762         3,532,771  

Total decrease in net assets

       (23,404,772 )       (7,215,129 )
   

Net Assets:

            

Beginning of period

       371,168,491         378,383,620  

End of period (including dividends in excess of net investment income of $(1,334,055) and $(3,212,045), respectively)

     $ 347,763,719       $ 371,168,491  
   

Shares Issued in Reinvestment of Dividends

       205,737         346,369  

 

See accompanying Notes to Financial Statements    7.31.08    PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report   21


Table of Contents
PIMCO Strategic Global Government Fund, Inc. Statement of Cash Flows   
Six months ended July 31, 2008 (unaudited)     

 

 

Cash Flows provided by Operating Activities:

       

Purchases of long-term investments

      $(2,003,325,099)

Proceeds from sales of long-term investments

      2,060,023,356

Decrease in deposits with brokers for futures collateral

      1,199,900

Interest and dividends income received

      23,257,591

Net cash provided by swap transactions

      29,432,953

Operating expenses paid

      (6,051,191)

Net cash used for futures transactions

      (2,183,193)

Net realized loss on foreign currency transactions

      (749,767)

Net increase in short-term investments

      (28,598,999)

Net cash provided by operating activities*

      73,005,551
 

Cash Flows used for Financing Activities:

       

Decrease in reverse repurchase agreements

      (49,756,000)

Cash dividends paid (excluding reinvestment of dividends of $2,102,762)

      (12,643,892)

Net cash used for financing activities

      (62,399,892)
 

Net increase in cash

      10,605,659

Cash at beginning of period

      312,156

Cash at end of period

      10,917,815
 
Reconciliation of Net Decrease in Net Assets Resulting from Investment Operations to Net Cash Provided by Operating Activities:        

Net decrease in net assets resulting from investment operations

      (10,747,507)

Decrease in payable for investments purchased

      (76,007,738)

Decrease in deposits with brokers for futures collateral

      1,199,900

Increase in receivable for investments sold

      (4,921,653)

Decrease in interest receivable

      794,259

Increase in paydown receivable

      (2,823)

Decrease in premium for swaps purchased

      6,043,380

Increase in premium for swaps sold

      22,888,938

Increase in prepaid expenses

      (272)

Decrease in investment management fees payable

      (7,323)

Decrease in administration fees payable

      (6,377)

Increase in net unrealized appreciation of swaps

      (7,336,341)

Decrease in net unrealized appreciation of forward foreign currency contracts

      110,911

Decrease in net payable for variation margin on futures contracts

      (901,626)

Increase in accrued expenses

     

343,266

Decrease in interest payable for reverse repurchase agreements

      (945,945)

Net decrease in investments

      142,502,502

Net cash provided by operating activities

      $73,005,551
* Included in operating expenses is cash paid for interest on reverse repurchase agreements of $4,358,544.

 

22   PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report    7.31.08    See accompanying Notes to Financial Statements


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Notes to Financial Statements

July 31, 2008 (unaudited)

 

 

1. Organization and Significant Accounting Policies

 

PIMCO Strategic Global Government Fund, Inc. (the “Fund”) commenced operations on February 24, 1994. The Fund is organized as a Maryland corporation and registered under the Investment Company Act of 1940, as amended (the “Act”), as a closed-end, non-diversified, management investment company. Allianz Global Investors Fund Management LLC (the “Investment Manager”), serves as the Fund’s Investment Manager and is an indirect, wholly-owned subsidiary of Allianz Global Investors of America L.P. (“Allianz Global”). Allianz Global is an indirect, majority-owned subsidiary of Allianz SE, a publicly traded European insurance and financial services company. The Fund has 500 million shares with a par value of $0.00001 per share of common stock authorized.

 

The Fund’s primary investment objective is to generate, over time, a level of income higher than that generated by high-quality, intermediate-term U.S. debt securities. As a secondary objective, the Fund seeks to maintain volatility in the net asset value of the shares of the Fund comparable to that of high quality, intermediate-term U.S. debt securities.

 

The preparation of the financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates.

 

In the normal course of business, the Fund enters into contracts that contain a variety of representations which provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet been asserted. However, the Fund expects the risk of any loss to be remote.

 

In July 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109” (the “Interpretation”). The Interpretation establishes for all entities, including pass-through entities such as the Fund, 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. Fund management has determined that its evaluation of the Interpretation has resulted in no material impact to the Fund’s financial statements at July 31, 2008. The Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service.

 

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS 161”). SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. SFAS 161 requires enhanced disclosures about a fund’s derivative and hedging activities. The Fund’s management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund’s financial statement disclosures.

 

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

 

(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 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.

 

Portfolio securities and other financial instruments for which market quotations are not readily available or if a development/event occurs that may significantly impact the value of a security, are fair-valued, in good faith, pursuant to procedures established by the Board of Directors, or persons

 

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Table of Contents

PIMCO Strategic Global Government Fund, Inc. Notes to Financial Statements

July 31, 2008 (unaudited)

 

 

1. Organization and Significant Accounting Policies (continued)

 

(a) Valuation of Investments (continued)

acting at their discretion pursuant to procedures established by the Board of Directors, including certain fixed income securities which may be valued with reference to securities whose prices are more readily available. The Fund’s investments, including over-the-counter options, are valued daily using prices supplied by an independent pricing service or dealer quotations, or by using the last sale price on the exchange that is the primary market for such securities, or the last quoted mean price for those securities for which the over-the-counter market is the primary market or for listed securities in which there were no sales. Prices obtained from independent pricing services use information provided by market makers or estimates of market values obtained from yield data relating to investments or securities with similar characteristics. Exchange traded options, futures and options on futures are valued at the settlement price determined by the relevant exchange. Securities purchased on a when-issued or delayed-delivery basis are marked to market daily until settlement at the forward settlement value. 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. Investments initially valued in currencies other than the U.S. dollar are converted to the U.S. dollar using exchange rates obtained from pricing services. As a result, the net asset value (“NAV”) of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of securities traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the New York Stock Exchange (“NYSE”) is closed and the NAV may change on days when an investor is not able to purchase or sell shares.

 

The prices used by the Fund to value securities may differ from the value that would be realized if the securities were sold and these differences could be material to the financial statements. The Fund’s NAV is normally determined as of the close of regular trading (normally, 4:00 p.m. Eastern time) on the NYSE on each day the NYSE is open for business.

 

(b) Fair Value Measurements

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

 

   

Level 1 – quoted prices in active markets for identical investments

   

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

   

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

 

The valuation techniques used by the Fund to measure fair value during the six months ended July 31, 2008 maximized the use of observable inputs and minimized the use of unobservable inputs. The Fund utilized the following fair value techniques: multi-dimensional relational pricing model and option adjusted spread pricing.

 

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

 

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Table of Contents

PIMCO Strategic Global Government Fund, Inc. Notes to Financial Statements

July 31, 2008 (unaudited)

 

 

1. Organization and Significant Accounting Policies (continued)

 

(b) Fair Value Measurements (continued)

The following is a summary of the inputs used as of July 31, 2008 in valuing the Fund’s investments carried at value:

 

Valuation Inputs   Investments in
Securities
  Other
Financial
Instruments
 

Level 1 – Quoted Prices

    $       —          $ (286,534 )

Level 2 – Other Significant Observable Inputs

    866,755,195     40,921,917  

Level 3 – Significant Unobservable Inputs

    185,639     640,348  
             

Total

  $ 866,940,834   $ 41,275,731  
             

 

A roll forward of fair value measurements using significant unobservable inputs (Level 3) as of July 31, 2008, were as follows:

 

     Investments in
Securities
    Other
Financial
Instruments

Beginning balance, 1/31/08

  $ 194,333     $   —

Net purchases (sales) and settlements

    (3,659 )    

Accrued discounts (premiums)

    87      

Total realized and unrealized gain (loss)

    (5,122 )     640,348

Transfers in and/or out of Level 3

         
             

Ending balance, 7/31/08

  $ 185,639     $ 640,348
             

 

(c) Investment Transactions and Investment Income

Investment transactions are accounted for on the trade date for financial reporting purposes. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses on investments are determined on the identified cost basis. Interest income is recorded on an accrual basis. Discounts or premiums on debt securities purchased are accreted or amortized to interest income over the lives of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date. Paydown gains and losses on mortgage related and other asset-backed securities are recorded as interest income on the Statement of Operations.

 

(d) Federal Income Taxes

The Fund intends to distribute all of its taxable income and to comply with the other requirements of the U.S. Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Accordingly, no provision for U.S. federal income taxes is required.

 

(e) Dividends and Distributions

The Fund declares dividends from net investment income monthly to shareholders. Distributions of net realized capital gains, if any, are paid at least annually. The Fund records dividends and distributions to its shareholders on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from generally accepted accounting principles. These “book-tax” differences are considered either temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their income tax treatment; temporary differences do not require reclassification. To the extent dividends and/or distributions exceed current and accumulated earnings and profits for federal income tax purposes they are reported as dividends and/or distributions of paid-in capital in excess of par.

 

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Table of Contents

PIMCO Strategic Global Government Fund, Inc. Notes to Financial Statements

July 31, 2008 (unaudited)

 

 

1. Organization and Significant Accounting Policies (continued)

 

(f) Foreign Currency Translation

The Fund’s accounting records are maintained in U.S. dollars as follows: (1) the foreign currency market value of investments and other assets and liabilities denominated in foreign currency are translated at the prevailing exchange rate at the end of the period; and (2) purchases and sales, income and expenses are translated at the prevailing exchange rate on the respective dates of such transactions. The resulting net foreign currency gain or loss is included in the Statements of Operations.

 

The Fund does not generally isolate that portion of the results of operations arising as a result of changes in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities. Accordingly, such foreign currency gain (loss) is included in net realized and unrealized gain (loss) on investments. However, the Fund does isolate the effect of fluctuations in foreign currency exchange rates when determining the gain or loss upon the sale or maturity of foreign currency denominated debt obligations pursuant to U.S. federal income tax regulations; such amount is categorized as foreign currency gain or loss for both financial reporting and income tax reporting purposes.

 

(g) Senior Loans

The Fund purchases assignments of Senior Loans originated, negotiated and structured by a U.S. or foreign commercial bank, insurance company, finance company or other financial institution (the “Agent”) for a lending syndicate of financial institutions (the “Lender”). When purchasing an assignment, the Fund succeeds all the rights and obligations under the loan agreement with the same rights and obligations as the assigning Lender. Assignments may, however, be arranged through private negotiations between potential assignees and potential assignors, and the rights and obligations acquired by the purchaser of an assignment may differ from, and be more limited than, those held by the assigning Lender.

 

(h) Option Transactions

The Fund may purchase and write (sell) put and call options for hedging purposes, risk management purposes or as a part of its investment strategy. The risk associated with purchasing an option is that the Fund pays a premium whether or not the option is exercised. Additionally, the Fund bears the risk of loss of premium and change in market value should the counterparty be unable or unwilling to perform under the contract. Put and call options purchased are accounted for in the same manner as portfolio securities. The cost of securities acquired through the exercise of call options is increased by the premiums paid. The proceeds from the securities sold through the exercise of put options are decreased by the premiums paid.

 

When an option is written, the premium received is recorded as an asset with an equal liability and is subsequently marked to market to reflect the current market value of the option written. These liabilities would be reflected as options written in the Statement of Assets and Liabilities. Premiums received from writing options which expire unexercised are recorded on the expiration date as a realized gain. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transactions, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether there has been a realized gain or loss. If a put option written by the Fund is exercised, the premium reduces the cost basis of the security. In writing an option, the Fund bears the market risk of an unfavorable change in the price of the security underlying the written option. Exercise of a written option could result in the Fund purchasing a security at a price different from its current market value.

 

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Table of Contents

PIMCO Strategic Global Government Fund, Inc. Notes to Financial Statements

July 31, 2008 (unaudited)

 

 

1. Organization and Significant Accounting Policies (continued)

 

(i) Swap Agreements

 

The Fund may invest in swap transactions, including, but not limited to, swap agreements on interest rates, security or commodity indexes, specific securities and commodities, and credit and event-linked swaps. To the extent the Fund may invest in foreign currency denominated securities; it also may invest in currency exchange rate swap agreements. Swap transactions are privately negotiated agreements between the Fund and a counterparty to exchange or swap investment cash flows, assets, foreign currencies or market-linked returns at specified, future intervals. The Fund may enter into interest rate, total return, cross-currency, credit default and other forms of swap agreements to manage its exposure to interest rates, currency and credit risk. In connection with these agreements, securities may be identified as collateral in accordance with the terms of the respective swap agreements.

 

Interest rate swap agreements involve the exchange by the Fund with another party 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, or (iv) callable interest rate swaps, under which the counterparty may terminate the interest rate swaps transaction in whole at zero cost by a predetermined date and time prior to the expiration date.

 

Total return swap agreements involve commitments to pay interest in exchange for a market-linked return, both based on notional amounts. To the extent the total return of the security or index underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the Fund will receive a payment from or make a payment to the counterparty.

 

Cross-currency swap agreements involve two parties exchanging two different currencies with an agreement to reverse the exchange at a later date at specified exchange rates. The exchange of currencies at the inception date of the contract takes place at the current spot rate. The re-exchange at maturity may take place at the same exchange rate, a specified rate, or the then current spot rate. Interest payments, if applicable, are made between the parties based on interest rates available in the two currencies at the inception of the contract. The terms of cross-currency swap contracts may extend for many years. Cross-currency swaps are usually negotiated with commercial and investment banks. Contracts are subject to risk of default by the counterparty and, depending on their terms, may be subject to exchange rate risk. Some cross-currency swaps may not provide for exchanging principal cash flows, only for exchanging interest cash flows.

 

Credit default swap agreements on corporate issues or sovereign issues of an emerging country involve one party making a stream of payments to another party in exchange for the right to receive a specified return in the event of a default. The Fund may use credit default swaps on corporate issues or sovereign issues of an emerging country to provide a measure of protection against defaults of the issuers (i.e., to reduce risk where the Fund owns or has exposure to the reference obligation) or to take an active long or short position with respect to the likelihood of a particular issuer’s default. As a seller of protection, the Fund generally receives an upfront payment or a fixed rate of income throughout the term of the swap provided that there is no credit event. If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will pay to the

 

7.31.08    PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report   27


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Notes to Financial Statements

July 31, 2008 (unaudited)

 

 

1. Organization and Significant Accounting Policies (continued)

 

(i) Swap Agreements (continued)

buyer of the protection an amount up to the notional value of the swap and in certain instances take delivery of the security. As the seller, a Fund would effectively add leverage to its portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the notional amount of the swap. As a buyer of protection, the Fund generally receives an amount up to the notional value of the swap if a credit event occurs.

 

Credit default swap agreements on credit indices involve one party making a stream of payments to another party in exchange for the right to receive a specified return in the event of a write-down, principal shortfall, interest shortfall or default of all or part of the reference entities comprising the credit index. A credit index is a list of credit instruments or exposures designed to be representative of some part of the credit market as a whole. These indices are made up of reference credits that are judged by a poll of dealers to be the most liquid entities in the credit default swap market based on the sector of the index. Components of the indices may include, but is not limited to, credit default swaps on investment grade securities, high yield securities, asset backed securities, emerging markets, and/or various credit ratings within each sector. Credit indices are traded using credit default swaps with standardized terms including a fixed spread and standard maturity dates. An index credit default swap references all the names in the index, and if there is a default, the credit event is settled based on that name’s weight in the index. The composition of the indices changes periodically, usually every six months, and for most indices, each name has an equal weight in the index.

 

The treatment of credit default swaps and other swap agreements that provide for contingent, non-periodic, bullet-type payments as “notional principal contracts” for U.S. federal income tax purposes is uncertain. If the U.S. Internal Revenue Service were to take the position that a credit default swap or other bullet-type swap is not a “notional principal contract” for U.S. federal income tax purposes, payments received by a Fund from such investments might be subject to U.S. excise or income taxes.

 

Swaps are marked to market daily based upon values from third party vendors or quotations from market makers to the extent available and the change in value, if any, is recorded as unrealized gain or loss on the Statement of Operations. In the event that market quotations are not readily available or deemed reliable, certain swap agreements may be valued, pursuant to guidelines established by the Board of Directors, with reference to other securities or indices. In the event that market quotes are not readily available, and the swap cannot be valued pursuant to one of the valuation methods, the value of the swap will be determined in good faith by the Valuation Committee of the Board of Directors, generally based upon recommendations provided by PIMCO. Payments received or made at the beginning of the measurement period are reflected as such on the Statement of Assets and Liabilities. These upfront payments are recorded as realized gain or loss on the Statement 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 Statement of Operations. Net periodic payments received or paid by the Fund is included as part of realized gain or loss on the Statement of Operations. Entering into these agreements involves, to varying degrees, elements of credit, market and documentation risk in excess of the amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of contractual terms in the agreements and that there may be unfavorable changes in interest rates.

 

(j) Futures Contracts

A futures contract is an agreement between two parties to buy and sell a financial instrument at a set price on a future date. Upon entering into such a contract, the Fund is required to pledge to the broker

 

28   PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report    7.31.08


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Notes to Financial Statements

July 31, 2008 (unaudited)

 

 

1. Organization and Significant Accounting Policies (continued)

 

(j) Futures Contracts (continued)

an amount of cash or securities equal to the minimum “initial margin” requirements of the exchange. Pursuant to the contracts, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contracts. Such receipts or payments are known as “variation margin” and are recorded by the Fund as unrealized appreciation or depreciation. When the contracts are closed, the Fund records a realized gain or loss equal to the difference between the value of the contracts at the time they were opened and the value at the time they were closed. Any unrealized appreciation or depreciation recorded is simultaneously reversed. The use of futures transactions involves the risk of an imperfect correlation in the movements in the price of futures contracts, interest rates and the underlying hedged assets, and the possible inability or unwillingness of counterparties to meet the terms of their contracts.

 

(k) Forward Foreign Currency Contracts

A forward foreign currency contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. The Fund may enter into forward foreign currency contracts for the purpose of hedging against foreign currency risk arising from the investment or anticipated investment in securities denominated in foreign currencies. The Fund may also enter these contracts for purposes of increasing exposure to a foreign currency or to shift exposure to foreign currency fluctuations from one country to another. The market value of a forward foreign currency contract fluctuates with changes in forward currency exchange rates. All commitments are marked to market daily at the applicable exchange rates and any resulting unrealized appreciation or depreciation is recorded. Realized gains or losses are recorded at the time the forward contract matures or by delivery of the currency. Risks may arise upon entering these contracts from the potential inability or unwillingness of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar.

 

(l) Borrowing Under Mortgage Dollar Rolls

The Fund enters into dollar rolls in which the Fund sells securities for delivery in the current month and simultaneously contracts to repurchase substantially similar (same type, same or similar interest rate and maturity) securities on a specified future date. The difference between the selling price and the future purchase price is an adjustment to interest income on the Statement of Operations. During the roll period, the Fund forgoes principal and interest paid on the securities. The Fund accounts for dollar rolls as financing transactions. The Fund’s dollar roll transactions are intended to enhance the Fund’s yield by earning a spread between the yield on the underlying mortgage securities and short-term interest rates. At July 31, 2008, there were $400,356 in dollar roll commitments outstanding.

 

(m) Repurchase Agreements

The Fund enters into transactions with its custodian bank or securities brokerage firms whereby it purchases securities under agreements to resell such securities at an agreed upon price and date (“repurchase agreements”). Such agreements are carried at the contract amount in the financial statements. Collateral pledged (the securities received), which consists primarily of U.S. government obligations and asset-backed securities, are held by the custodian bank until maturity of the repurchase agreement. Provisions of the repurchase agreements and the procedures adopted by the Fund require that the market value of the collateral, including accrued interest thereon, be sufficient in the event of default by the counterparty. If the counterparty defaults and the value of the collateral declines or if the counterparty enters an insolvency proceeding, realization of the collateral by the Fund may be delayed or limited.

 

7.31.08    PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report   29


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Notes to Financial Statements

July 31, 2008 (unaudited)

 

 

1. Organization and Significant Accounting Policies (continued)

 

(n) Reverse Repurchase Agreements

In a reverse repurchase agreement, the Fund sells securities to a bank or broker-dealer and agrees to repurchase the securities at a mutually agreed upon date and price. Generally, the effect of such a transaction is that the Fund can recover and reinvest all or most of the cash invested in the 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 Fund of the reverse repurchase transaction is less than the returns it obtains on investments purchased with the cash. Unless the Fund covers its positions in reverse repurchase agreements (by segregating liquid assets at least equal in amount to the forward purchase commitment), its obligations under the agreements will be subject to the Fund’s limitations on borrowings. Reverse repurchase agreements involve leverage risk and also the risk that the market value of the securities that the Fund is obligated to repurchase under the agreement 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 Fund’s use of the proceeds of the agreement may be restricted pending determination by the other party, or its director or receiver, whether to enforce the Fund’s obligation to repurchase the securities.

 

(o) Mortgage-Related and Other Asset-Backed Securities

The Fund may invest in mortgage-related or other asset-backed securities. These securities include mortgage pass-through securities, collateralized mortgage obligations (“CMOs”), commercial mortgage-backed securities, mortgage dollar rolls, CMO residuals, stripped mortgage-backed securities (“SMBSs”) and other securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property. The value of some mortgage-related or asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Fund to a lower rate of return upon reinvestment of principal. The value of these securities may fluctuate in response to the market’s perception of the creditworthiness of the issuers. Additionally, although mortgages and mortgage-related securities are generally supported by some form of government or private guarantee and/or insurance, there is no assurance that private guarantors or insurers will meet their obligations.

 

One type of SMBSs involves one class receiving all or a portion of the interest from the mortgage assets (the interest-only, or “IO” and/or the high coupon rate with relatively low principal amount, or “IOette” class), while the other class will receive all of the principal (the principal-only, or “PO” class). Payments received for IOs and IOettes are included in interest income on the Statement of Operations. Because little to no principal will be received at the maturity of an IO or IOettes, adjustments are made to the book value of the security on a daily basis until maturity. SMBS represent a participation in, or are secured by and payable from, mortgage loans on real property, and may be structured in classes with rights to receive varying proportions of principal and interest. SMBS include interest-only securities (IOs), which receive all of the interest, and principal-only securities (POs), which receive all of the principal. If the underlying mortgage assets experience greater than anticipated payments of principal, the Fund may fail to recoup some or all of its initial investment in these securities. The market value of these securities is highly sensitive to changes in interest rates. These adjustments are included in interest income on the Statement of Operations. Payments received for POs are treated as reductions to the cost and par value of the securities.

 

(p) U.S. Government Agencies or Government-Sponsored Enterprises

Securities issued by U.S. Government agencies or government-sponsored enterprises may not be guaranteed by the U.S. Treasury. The Government National Mortgage Association (“GNMA” or “Ginnie Mae”), a wholly owned U.S. Government corporation, is authorized to guarantee, with the full faith and

 

30   PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report    7.31.08


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Notes to Financial Statements

July 31, 2008 (unaudited)

 

 

1. Organization and Significant Accounting Policies (continued)

 

(p) U.S. Government Agencies or Government-Sponsored Enterprises (continued)

credit of the U.S. Government, the timely payment of principal and interest on securities issued by institutions approved by GNMA and backed by pools of mortgages insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. Government-related guarantors (i.e., not backed by the full faith and credit of the U.S. Government) include the Federal National Mortgage Association (“FNMA” or “Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“FHLMC” or “Freddie Mac”). Pass-through securities issued by FNMA are guaranteed as to timely payment of principal and interest by FNMA but are not backed by the full faith and credit of the U.S. Government. FHLMC guarantees the timely payment of interest and ultimate collection of principal, but its participation certificates are not backed by the full faith and credit of the U.S. Government.

 

(q) When-Issued/Delayed-Delivery Transactions

The Fund may purchase or sell securities on a when-issued or delayed-delivery basis. Such 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 Fund 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 Fund assumes the rights and risks of ownership of the security, including the risk of price and yield fluctuations, and take such fluctuations into account when determining its net asset value. The Fund 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 Fund does not participate in future gains and losses with respect to the security.

 

(r) Custody Credits on Cash Balances

The Fund benefits from an expense offset arrangement with its custodian bank, whereby uninvested cash balances earn credits which reduce monthly custodian and accounting agent expenses. Had these cash balances been invested in income producing securities, they would have generated income for the Fund.

 

2. Investment Manager/Administrator/Sub-Adviser

Effective August 27, 2008, the Fund entered into an Investment Management Agreement, as amended on July 7, 2008, (the “Agreement”) with the Investment Manager, replacing Pacific Investment Management Company LLC as the Fund’s investment Manager. Subject to the supervision of the Fund’s Board of Directors, the Investment Manager is responsible for managing, either directly or through others selected by it, the Fund’s investment activities, business affairs and administrative matters. Pursuant to the Agreement, the Investment Manager receives an annual fee, payable monthly, at an annual rate of 0.85% of the Fund’s average daily net assets (including daily net assets attributable to any preferred shares that may be outstanding).

 

Effective June 10, 2008, the Fund entered into an interim Investment Management Agreement and an interim Administrative Services Agreement with the Investment Manager (the “Interim Agreements”). Pursuant to the interim Investment Management Agreement, the Investment Manager received an annual fee, payable monthly, at an annual rate of 0.82% of the Fund’s average daily net assets. The Investment Manager waived receipt of any such fees in excess of 0.82% of the Fund’s average weekly net assets. Pursuant to the interim Administrative Services Agreement, the Investment Manager received an annual fee, payable monthly, at an annual rate of 0.03% of the Fund’s average daily net assets. The Interim Agreements were later replaced by the Agreement on August 27, 2008.

 

The Investment Manager has retained its affiliate, Pacific Investment Management Company LLC (the “Sub-Adviser”), to manage the Fund’s investments. Subject to the supervision of the Investment Manager, the Sub-Adviser is responsible for making all the Fund’s investment decisions. The

 

7.31.08    PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report   31


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Notes to Financial Statements

July 31, 2008 (unaudited)

 

 

2. Investment Manager/Administrator/Sub-Adviser (continued)

 

Investment Manager, and not the Fund, pays a portion of the fees it receives as Investment Manager to the Sub-Adviser in return for its services.

 

Prior to June 10, 2008, the Sub-Adviser also served as investment manager and administrator to the Fund and received annual fees, payable monthly of 0.82% and 0.05% of the Fund’s average weekly net assets for investment management and administrative services, respectively.

 

3. Investment in Securities

Purchases and sales of securities (excluding short-term investments) for the six months ended July 31, 2008, were:

 

U.S. Government Agency

  All Other
Purchases   Sales   Purchases   Sales

$1,899,415,193

  $ 1,980,662,410   $ 27,820,953   $ 48,738,617

 

(a) Futures contracts outstanding at July 31, 2008:

 

     Type   Contracts     Market
Value
(000)
    Expiration
Date
  Unrealized
Appreciation
(Depreciation)
 

Long:

  U.S. Treasury Notes 2 yr. Futures   100     $ 21,200     9/30/08     $3,125  

Short:

  U.S. Treasury Bond Futures   (202 )     (23,331 )   9/19/08     (289,659 )
               
          $ (286,534 )
               

 

The Fund pledged $860,100 in cash as collateral for futures contracts.

 

(b) Credit default swaps contracts outstanding at July 31, 2008:

 

Swap Counterparty:
Referenced Debt Issuer
  Notional Amount
Payable on Default
(000)
  Termination
Date
  Payments
Received
(Paid) by
Fund
    Unrealized
Appreciation
(Depreciation)
 

Citigroup:

       

Bear Stearns

  $  3,000   9/20/12   (4.05 )%   $ (364,453 )

Wachovia

  10,000   9/20/13   (2.40 )%     36,605  

Credit Suisse First Boston:

       

ABS Home Equity Index

  15,500   8/25/37   0.15 %     (678,060 )

Deutsche Bank:

       

AIG

  3,000   3/20/13   2.10 %     (35,351 )

Home Equity Index

  7,856   7/25/45   0.18 %     286,539  

Goldman Sachs:

       

Bear Stearns

  2,000   12/20/17   (3.00 )%     (298,621 )

JPMorgan Chase:

       

Lennar

  2,000   12/20/12   5.40 %     (142,861 )

Lehman Brothers:

       

ABX

  10,000   7/25/45   0.54 %     54,050  

Morgan Stanley:

       

Fannie Mae

  5,000   3/20/13   0.72 %     66,499  
             
        $ (1,075,653 )
             

 

32   PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report    7.31.08


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Notes to Financial Statements

July 31, 2008 (unaudited)

 

 

3. Investment in Securities (continued)

 

(c) Interest rate swap agreements outstanding at July 31, 2008:

 

    Notional Amount
(000)
 

Termination
Date

  Rate Type  

Unrealized

Appreciation
(Depreciation)

 
Swap Counterparty       Payments Made
by Fund
  Payments Received
by Fund
 

Bank of America

  $ 8,600   12/17/10   4.00%   3-Month USD-LIBOR   $ 3,961  

Bank of America

    12,000   1/27/15   3-Month USD-LIBOR   4.57%     140,323  

Deutsche Bank

    1,200   12/17/28   5.00%   3-Month USD-LIBOR     (14,670 )

Deutsche Bank

  £ 4,200   12/15/35   4.00%   6-Month GBP-LIBOR     (24,244 )

Deutsche Bank

  ¥ 550,000   12/15/35   6-Month JPY-LIBOR   2.50%     196,312  

Goldman Sachs

  ¥ 555,000   12/15/35   6-Month JPY-LIBOR   2.50%     292,805  

HSBC Bank

  £ 9,300   9/15/10   6-Month GBP-LIBOR   5.00%     (378,789 )

Merrill Lynch & Co.

  $ 1,900   12/17/23   5.00%   3-Month USD-LIBOR     (19,481 )

Merrill Lynch & Co.

    509,000   6/19/25   5.70%   3-Month USD-LIBOR     (19,227,574 )

Merrill Lynch & Co.

    350,000   6/21/26   3-Month USD-LIBOR   5.65%     31,724,308  

Merrill Lynch & Co.

    104,100   6/21/26   3-Month USD-LIBOR   5.80%     11,328,311  

Morgan Stanley

    21,750   12/17/18   5.00%   3-Month USD-LIBOR     375,455  

Morgan Stanley

    245,900   6/19/25   5.70%   3-Month USD-LIBOR     (9,288,920 )

Morgan Stanley

    245,900   6/21/26   3-Month USD-LIBOR   5.80%     26,759,191  

Morgan Stanley

    70,600   12/17/28   5.00%   3-Month USD-LIBOR     (296,188 )

Royal Bank of Scotland

    100   12/17/10   4.00%   3-Month USD-LIBOR     36  

Royal Bank of Scotland

    200,000   8/21/17   4.428%   3-Month USD-LIBOR     (2,136,926 )

Royal Bank of Scotland

    200,000   8/21/17   3-Month USD-LIBOR   6.04%     3,114,745  

Royal Bank of Scotland

    600   12/17/23   5.00%   3-Month USD-LIBOR     3,866  

Royal Bank of Scotland

    700   12/17/38   5.00%   3-Month USD-LIBOR     (1,152 )
               
          $ 42,551,369  
               

 

The Fund received $6,500,000 par value in U.S. Treasury Bills as collateral for swap contracts.

 

£ / GBP – British Pound

¥ / JPY – Japanese Yen

LIBOR – London Inter-Bank Offered Rate

 

(d) Forward foreign currency contracts outstanding at July 31, 2008:

 

     U.S.$ Value
Origination Date
  U.S.$ Value
July 31, 2008
  Unrealized
Appreciation
(Depreciation)
 

Purchased:

     

457,381,000 Japanese Yen settling 9/8/08

  $ 4,249,193   $ 4,241,208   $ (7,985 )

Sold:

     

1,076,700 Brazilian Real settling 12/2/08

    600,000     666,632     (66,632 )

6,507,000 Euro settling 8/26/08

    10,318,638     10,138,735     179,903  

3,828,000 British Pound settling 8/11/08

    7,557,959     7,576,696     (18,737 )
           
      $ 86,549  
           

 

7.31.08    PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report   33


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Notes to Financial Statements

July 31, 2008 (unaudited)

 

 

3. Investment in Securities (continued)

 

(e) The weighted average daily balance of reverse repurchase agreements outstanding during the six months ended July 31, 2008, was $242,510,646 at a weighted average interest rate of 2.78%.

 

Counterparty   Rate     Trade Date   Maturity Date   Principal & Interest   Principal

Lehman Brothers

  (1.00 )%   6/4/08   6/4/10   $ 1,367,793   $ 1,370,000
  2.38 %   7/14/08   8/13/08     206,357,273     206,112,000
  2.38 %   7/24/08   8/13/08     5,891,114     5,888,000
             
          $ 213,370,000
             

 

Details of underlying collateral for open reverse repurchase agreements at July 31, 2008, as reflected in the Schedule of Investments:

 

Counterparty   Description   Rate     Maturity Date   Principal   Value

Lehman Brothers

  Bon-Ton Stores, Inc.   10.25 %   3/15/14   $ 2,000,000   $ 1,070,000
  Fannie Mae   4.25 %   11/25/24     386,584     331,879
  Fannie Mae   5.00 %   5/25/16     200,000     201,979
  Fannie Mae   5.00 %   12/1/18     23,985     23,824
  Fannie Mae   5.271 %   4/1/30     43,511     44,211
  Fannie Mae   5.50 %   8/25/14     123,747     126,839
  Fannie Mae   5.50 %   7/25/24     125,000     125,596
  Fannie Mae   5.50 %   4/1/32     148,138     146,100
  Fannie Mae   5.50 %   12/25/32     106,604     108,680
  Fannie Mae   5.50 %   12/25/34     887,150     859,952
  Fannie Mae   5.50 %   4/25/35     1,370,000     1,313,494
  Fannie Mae   5.53 %   9/1/28     26,188     26,621
  Fannie Mae   5.54 %   2/1/32     18,273     18,472
  Fannie Mae   5.61 %   3/1/32     173,484     175,488
  Fannie Mae   6.00 %   2/25/17     107,763     111,478
  Fannie Mae   6.00 %   4/25/17     364,763     377,020
  Fannie Mae   6.23 %   12/1/28     102,681     103,668
  Fannie Mae   6.50 %   5/1/13     66,995     69,602
  Fannie Mae   6.50 %   10/1/13     53,851     55,947
  Fannie Mae   6.50 %   2/1/14     477,883     496,252
  Fannie Mae   6.50 %   6/25/23     344,520     356,950
  Fannie Mae   6.50 %   4/1/27     38,174     39,627
  Fannie Mae   6.50 %   11/18/27     584,709     609,684
  Fannie Mae   6.50 %   1/1/28     13,030     13,518
  Fannie Mae   6.50 %   2/1/28     729,281     757,721
  Fannie Mae   6.50 %   4/1/28     67,094     69,606
  Fannie Mae   6.50 %   9/1/28     156,755     162,625
  Fannie Mae   6.50 %   11/1/28     1,069,098     1,109,134
  Fannie Mae   6.50 %   1/1/29     140,015     145,244
  Fannie Mae   6.50 %   2/1/29     57,734     59,896
  Fannie Mae   6.50 %   3/1/29     675,343     700,226
  Fannie Mae   6.50 %   4/1/29     106,668     110,596
  Fannie Mae   6.50 %   5/1/29     25,906     26,860
  Fannie Mae   6.50 %   6/1/29     80,580     83,547

 

34   PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report    7.31.08


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Notes to Financial Statements

July 31, 2008 (unaudited)

 

 

3. Investment in Securities (continued)

 

Counterparty   Description   Rate     Maturity Date   Principal   Value
  Fannie Mae   6.50 %   7/1/29   $ 1,083,002   $ 1,122,881
  Fannie Mae   6.50 %   8/1/29     25,074     25,997
  Fannie Mae   6.50 %   9/1/29     12,588     13,052
  Fannie Mae   6.50 %   8/1/31     112,594     115,701
  Fannie Mae   6.50 %   9/25/31     2,144,514     2,228,980
  Fannie Mae   6.50 %   10/1/31     137,982     141,749
  Fannie Mae   6.50 %   11/1/31     65,039     66,804
  Fannie Mae   6.50 %   3/25/32     3,854,740     3,925,377
  Fannie Mae   6.50 %   6/1/32     79,615     81,675
  Fannie Mae   6.50 %   8/1/32     216,618     221,526
  Fannie Mae   6.50 %   9/1/32     124,644     127,379
  Fannie Mae   6.746 %   12/1/25     138,308     139,997
  Fannie Mae   6.838 %   2/1/27     69,863     70,675
  Fannie Mae   7.00 %   6/1/09     77,589     78,259
  Fannie Mae   7.00 %   7/18/12     347,247     359,890
  Fannie Mae   7.00 %   1/1/13     193,402     202,238
  Fannie Mae   7.00 %   2/1/15     29,685     30,966
  Fannie Mae   7.00 %   3/1/16     345,848     366,518
  Fannie Mae   7.00 %   5/1/16     186,381     195,246
  Fannie Mae   7.00 %   11/1/16     233,715     240,660
  Fannie Mae   7.00 %   5/1/17     649,208     680,509
  Fannie Mae   7.00 %   11/1/17     175,152     183,561
  Fannie Mae   7.00 %   7/1/21     915,727     953,218
  Fannie Mae   7.00 %   11/1/24     139,521     147,204
  Fannie Mae   7.00 %   10/1/25     15,079     15,974
  Fannie Mae   7.00 %   11/1/27     14,816     15,696
  Fannie Mae   7.00 %   12/1/27     39,568     41,916
  Fannie Mae   7.00 %   6/1/28     43,114     45,506
  Fannie Mae   7.00 %   2/1/29     62,599     66,042
  Fannie Mae   7.00 %   3/1/29     206,046     217,476
  Fannie Mae   7.00 %   4/1/29     274,179     290,445
  Fannie Mae   7.00 %   5/1/29     93,771     98,932
  Fannie Mae   7.00 %   6/1/29     72,863     76,870
  Fannie Mae   7.00 %   7/1/29     25,514     26,917
  Fannie Mae   7.00 %   9/1/29     118,150     124,648
  Fannie Mae   7.00 %   10/1/29     53,235     56,162
  Fannie Mae   7.00 %   3/1/30     19,482     20,554
  Fannie Mae   7.00 %   4/1/30     9,369,825     9,925,973
  Fannie Mae   7.00 %   5/1/30     143,352     151,134
  Fannie Mae   7.00 %   4/1/31     31,845     33,574
  Fannie Mae   7.00 %   6/1/31     23,137     24,395
  Fannie Mae   7.00 %   7/1/31     55,877     58,916
  Fannie Mae   7.00 %   8/1/31     123,694     130,423
  Fannie Mae   7.00 %   9/1/31     152,481     160,774
  Fannie Mae   7.00 %   11/1/31     18,935     19,966
  Fannie Mae   7.00 %   12/1/31     216,177     227,938
  Fannie Mae   7.00 %   2/1/32     235,562     248,378

 

7.31.08    PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report   35


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Notes to Financial Statements

July 31, 2008 (unaudited)

 

 

3. Investment in Securities (continued)

 

Counterparty   Description   Rate     Maturity Date   Principal   Value
  Fannie Mae   7.00 %   4/1/32   $ 71,839   $ 76,198
  Fannie Mae   7.00 %   5/1/32     211,444     222,973
  Fannie Mae   7.00 %   6/1/32     215,663     227,422
  Fannie Mae   7.00 %   7/1/32     75,382     79,492
  Fannie Mae   7.00 %   8/1/32     69,981     73,797
  Fannie Mae   7.00 %   9/1/33     278,232     291,489
  Fannie Mae   7.00 %   11/1/33     390,940     411,878
  Fannie Mae   7.00 %   1/1/34     669,946     700,624
  Fannie Mae   7.00 %   7/1/34     323,185     340,729
  Fannie Mae   7.00 %   2/25/35     127,671     137,134
  Fannie Mae   7.00 %   3/1/35     299,271     315,332
  Fannie Mae   7.00 %   7/1/36     6,127,191     6,351,216
  Fannie Mae   7.00 %   10/25/41     262,678     277,645
  Fannie Mae   7.00 %   3/25/45     3,586,362     3,716,923
  Fannie Mae   7.00 %   12/1/46     1,577,706     1,642,108
  Fannie Mae   7.00 %   1/1/47     847,645     882,247
  Fannie Mae   7.065 %   3/1/32     300,000     314,288
  Fannie Mae   7.164 %   11/1/27     84,649     85,932
  Fannie Mae   7.50 %   6/1/17     959,044     1,003,706
  Fannie Mae   7.50 %   12/1/17     71,475     77,243
  Fannie Mae   7.50 %   5/1/22     612,898     658,720
  Fannie Mae   7.50 %   4/1/24     930,472     999,504
  Fannie Mae   7.50 %   7/1/26     57,240     61,764
  Fannie Mae   7.50 %   8/1/26     56,377     60,833
  Fannie Mae   7.50 %   11/1/26     43,230     46,647
  Fannie Mae   7.50 %   1/1/27     9,464     10,212
  Fannie Mae   7.50 %   7/1/27     84,610     91,273
  Fannie Mae   7.50 %   8/1/27     18,878     20,365
  Fannie Mae   7.50 %   12/1/27     37,015     39,930
  Fannie Mae   7.50 %   1/1/28     47,037     50,741
  Fannie Mae   7.50 %   2/1/28     41,869     45,167
  Fannie Mae   7.50 %   9/1/29     20,773     22,385
  Fannie Mae   7.50 %   10/1/29     13,045     14,057
  Fannie Mae   7.50 %   11/1/29     60,236     64,912
  Fannie Mae   7.50 %   12/1/29     46,009     49,580
  Fannie Mae   7.50 %   4/1/30     163,257     176,003
  Fannie Mae   7.50 %   7/1/31     48,998     52,730
  Fannie Mae   7.50 %   7/1/32     1,088,591     1,167,805
  Fannie Mae   7.70 %   3/25/23     140,384     150,217
  Fannie Mae   7.75 %   3/1/31     89,825     92,886
  Fannie Mae   7.815 %   12/1/30     244,193     250,477
  Fannie Mae   8.00 %   4/1/19     17,763     18,846
  Fannie Mae   8.00 %   9/1/24     553,151     596,909
  Fannie Mae   8.00 %   4/1/30     28,725     31,023
  Fannie Mae   8.00 %   5/1/30     119,866     129,455
  Fannie Mae   8.00 %   7/1/30     65,801     71,065
  Fannie Mae   8.00 %   8/1/30     53,542     57,825

 

36   PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report    7.31.08


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Notes to Financial Statements

July 31, 2008 (unaudited)

 

 

3. Investment in Securities (continued)

 

Counterparty   Description   Rate     Maturity Date   Principal   Value
  Fannie Mae   8.00 %   10/1/30   $ 13,718   $ 14,815
  Fannie Mae   8.00 %   1/1/31     22,221     23,998
  Fannie Mae   8.00 %   3/1/31     18,942     20,552
  Fannie Mae   8.00 %   5/1/31     136,759     147,700
  Fannie Mae   8.00 %   7/1/31     632,380     686,275
  Fannie Mae   8.00 %   8/1/31     49,239     53,172
  Fannie Mae   8.00 %   10/1/31     485,710     526,900
  Fannie Mae   8.00 %   11/1/31     78,361     84,595
  Fannie Mae   8.00 %   1/1/32     37,875     40,888
  Fannie Mae   8.00 %   6/1/32     34,379     37,114
  Fannie Mae   8.00 %   8/1/32     3,662,155     3,972,836
  Fannie Mae   8.50 %   4/1/16     116,093     127,233
  Fannie Mae   8.50 %   6/18/27     1,921,909     2,089,028
  Fannie Mae   8.50 %   6/25/30     177,132     195,935
  Fannie Mae   9.00 %   12/1/19     10,062,057     11,285,283
  Fannie Mae   9.42 %   5/15/21     1,401,839     1,554,542
  Fannie Mae   10.087 %   7/15/27     470,269     532,336
  Freddie Mac   5.00 %   10/15/16     200,000     201,412
  Freddie Mac   5.00 %   11/15/16     250,000     254,000
  Freddie Mac   5.50 %   12/1/31     100,789     98,803
  Freddie Mac   5.78 %   4/1/33     13,067     13,243
  Freddie Mac   6.00 %   10/15/12     117,303     120,622
  Freddie Mac   6.00 %   9/15/16     438,438     454,147
  Freddie Mac   6.00 %   12/15/16     4,953,708     5,132,249
  Freddie Mac   6.00 %   4/1/17     1,820,171     1,861,708
  Freddie Mac   6.00 %   12/15/28     1,397,880     1,422,066
  Freddie Mac   6.00 %   3/1/33     2,715,845     2,731,481
  Freddie Mac   6.00 %   4/1/33     79,693     80,575
  Freddie Mac   6.00 %   3/15/35     109,871     112,164
  Freddie Mac   6.50 %   11/1/16     2,239,852     2,322,546
  Freddie Mac   6.50 %   4/15/18     300,000     310,196
  Freddie Mac   6.50 %   8/1/21     30,272     31,510
  Freddie Mac   6.50 %   10/15/23     3,000,000     3,127,410
  Freddie Mac   6.50 %   6/1/29     11,736     12,171
  Freddie Mac   6.50 %   6/15/31     18,612,103     19,381,710
  Freddie Mac   6.50 %   6/15/32     1,779,635     1,833,182
  Freddie Mac   6.50 %   7/15/32     7,377,136     7,709,287
  Freddie Mac   6.50 %   7/1/37     8,991,554     9,165,765
  Freddie Mac   6.569 %   12/1/26     11,472     11,547
  Freddie Mac   6.783 %   9/1/31     142,522     143,508
  Freddie Mac   6.90 %   9/15/23     2,231,063     2,333,773
  Freddie Mac   6.95 %   7/15/21     1,054,828     1,143,777
  Freddie Mac   7.00 %   11/1/10     10,233     10,429
  Freddie Mac   7.00 %   9/1/11     2,065,300     2,157,005
  Freddie Mac   7.00 %   3/1/12     13,629     14,300
  Freddie Mac   7.00 %   7/15/12     233,557     236,584
  Freddie Mac   7.00 %   9/1/12     301,213     316,025

 

7.31.08    PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report   37


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Notes to Financial Statements

July 31, 2008 (unaudited)

 

 

3. Investment in Securities (continued)

 

Counterparty   Description   Rate     Maturity Date   Principal   Value
  Freddie Mac   7.00 %   10/1/12   $ 39,204   $ 41,132
  Freddie Mac   7.00 %   11/1/12     26,090     27,373
  Freddie Mac   7.00 %   12/1/12     31,658     33,215
  Freddie Mac   7.00 %   7/1/13     1,360,596     1,421,010
  Freddie Mac   7.00 %   1/1/14     19,863     20,805
  Freddie Mac   7.00 %   9/1/14     793,135     831,291
  Freddie Mac   7.00 %   11/1/14     177,280     185,917
  Freddie Mac   7.00 %   7/1/15     51,124     53,668
  Freddie Mac   7.00 %   8/1/15     18,349     19,262
  Freddie Mac   7.00 %   4/1/16     60,946     63,877
  Freddie Mac   7.00 %   7/1/16     64,080     67,232
  Freddie Mac   7.00 %   11/1/16     16,414     17,203
  Freddie Mac   7.00 %   3/1/17     44,428     46,669
  Freddie Mac   7.00 %   6/1/17     1,523,588     1,594,926
  Freddie Mac   7.00 %   8/1/21     1,291,365     1,342,574
  Freddie Mac   7.00 %   9/1/21     1,517,937     1,578,131
  Freddie Mac   7.00 %   1/15/24     2,000,000     2,093,606
  Freddie Mac   7.00 %   3/15/24     100,000     105,864
  Freddie Mac   7.00 %   7/1/24     13,293     14,004
  Freddie Mac   7.00 %   9/15/25     1,184,880     1,253,348
  Freddie Mac   7.00 %   7/1/26     3,065,476     3,210,810
  Freddie Mac   7.00 %   7/15/27     1,513,353     1,586,353
  Freddie Mac   7.00 %   3/15/29     4,311,000     4,559,518
  Freddie Mac   7.00 %   3/1/31     155,643     164,112
  Freddie Mac   7.00 %   6/15/31     2,557,600     2,675,202
  Freddie Mac   7.00 %   10/1/31     1,039,870     1,096,450
  Freddie Mac   7.00 %   1/1/32     478,413     507,673
  Freddie Mac   7.00 %   3/1/32     28,887     30,664
  Freddie Mac   7.00 %   4/1/32     155,827     164,223
  Freddie Mac   7.00 %   1/1/36     649,031     684,345
  Freddie Mac   7.00 %   6/1/36     10,812,923     11,208,271
  Freddie Mac   7.00 %   7/1/36     1,263,497     1,309,694
  Freddie Mac   7.00 %   8/1/36     9,872,088     10,233,035
  Freddie Mac   7.00 %   9/1/36     7,993,749     8,286,021
  Freddie Mac   7.00 %   11/1/36     3,368,871     3,494,609
  Freddie Mac   7.00 %   12/1/36     1,039,825     1,077,844
  Freddie Mac   7.00 %   1/1/37     8,913,717     9,239,625
  Freddie Mac   7.50 %   1/1/16     139,434     145,880
  Freddie Mac   7.50 %   5/15/24     1,325,000     1,409,789
  Freddie Mac   7.50 %   8/1/24     532,854     573,383
  Freddie Mac   7.50 %   12/1/25     22,481     24,324
  Freddie Mac   7.50 %   2/1/26     19,408     20,999
  Freddie Mac   7.50 %   3/1/26     29,732     32,166
  Freddie Mac   7.50 %   4/1/26     47,822     51,737
  Freddie Mac   7.50 %   5/1/26     26,521     28,692
  Freddie Mac   7.50 %   6/1/26     364,778     394,639
  Freddie Mac   7.50 %   7/1/26     256,519     277,518

 

38   PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report    7.31.08


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Notes to Financial Statements

July 31, 2008 (unaudited)

 

 

3. Investment in Securities (continued)

 

Counterparty   Description   Rate     Maturity Date   Principal   Value
  Freddie Mac   7.50 %   8/1/26   $ 46,367   $ 50,163
  Freddie Mac   7.50 %   11/1/26     14,821     16,034
  Freddie Mac   7.50 %   12/1/26     645,699     698,557
  Freddie Mac   7.50 %   3/15/28     287,573     296,251
  Freddie Mac   7.50 %   4/1/30     14,756     15,916
  Freddie Mac   7.50 %   11/1/30     22,184     23,927
  Freddie Mac   7.50 %   12/1/30     1,419,884     1,536,119
  Freddie Mac   7.50 %   5/1/32     1,072,930     1,160,914
  Freddie Mac   7.50 %   7/1/33     298,472     314,104
  Freddie Mac   7.50 %   3/1/37     1,485,339     1,556,635
  Freddie Mac   8.00 %   8/15/22     110,536     118,778
  Freddie Mac   8.00 %   7/1/24     45,380     49,110
  Freddie Mac   8.00 %   8/1/24     72,207     78,142
  Freddie Mac   8.00 %   12/1/26     882,346     954,459
  Freddie Mac   8.00 %   4/15/30     292,769     317,259
  Freddie Mac   8.50 %   4/15/22     421,560     442,200
  Freddie Mac   8.50 %   10/1/30     541,211     580,263
  Ginnie Mae   5.50 %   6/20/35     448,015     451,870
  Ginnie Mae   7.00 %   7/15/25     38,568     41,289
  Ginnie Mae   7.00 %   9/15/25     61,959     66,345
  Ginnie Mae   7.00 %   11/15/25     16,544     17,715
  Ginnie Mae   7.00 %   12/15/25     9,545     10,220
  Ginnie Mae   7.00 %   3/15/26     49,378     52,853
  Ginnie Mae   7.00 %   6/15/26     66,814     71,527
  Ginnie Mae   7.50 %   10/15/25     19,824     21,329
  Ginnie Mae   7.50 %   3/15/26     167,878     180,594
  Ginnie Mae   7.50 %   9/15/26     430,097     462,674
  Ginnie Mae   7.50 %   12/15/26     10,998     11,831
  Ginnie Mae   7.50 %   3/15/27     82,005     88,194
  Ginnie Mae   7.50 %   4/15/27     358,349     385,391
  Ginnie Mae   7.50 %   5/15/27     9,963     10,715
  Ginnie Mae   7.50 %   6/15/27     136,782     147,104
  Ginnie Mae   7.50 %   7/15/27     174,892     188,090
  Ginnie Mae   7.50 %   8/15/27     60,382     64,939
  Ginnie Mae   7.50 %   12/15/27     79,575     85,583
  Ginnie Mae   7.50 %   1/15/28     459,640     494,097
  Ginnie Mae   7.50 %   2/15/28     107,659     115,730
  Ginnie Mae   7.50 %   1/15/29     172,454     185,304
  Ginnie Mae   7.50 %   2/15/29     234,743     252,234
  Ginnie Mae   7.50 %   3/15/29     178,523     191,825
  Ginnie Mae   8.00 %   1/15/17     12,092     13,128
  Ginnie Mae   8.00 %   3/15/17     14,518     15,761
  Ginnie Mae   8.00 %   4/15/17     23,605     25,625
  Ginnie Mae   8.00 %   5/15/17     14,775     16,040
  Ginnie Mae   8.00 %   6/15/17     19,667     21,350
  Ginnie Mae   8.00 %   7/15/17     12,618     13,699
  Ginnie Mae   8.00 %   11/15/21     9,313     10,151

 

7.31.08    PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report   39


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Notes to Financial Statements

July 31, 2008 (unaudited)

 

 

3. Investment in Securities (continued)

 

Counterparty   Description   Rate     Maturity Date   Principal   Value
  Ginnie Mae   8.00 %   4/15/22   $ 10,915   $ 11,909
  Ginnie Mae   8.00 %   11/15/22     9,690     10,562
  Ginnie Mae   8.50 %   4/15/23     9,588     10,573
  Ginnie Mae   8.50 %   2/15/31     12,168     13,342
  Ginnie Mae   9.00 %   6/15/16     18,078     19,692
  Ginnie Mae   9.00 %   11/15/16     76,359     83,176
  Ginnie Mae   9.00 %   12/15/16     100,334     109,291
  Ginnie Mae   9.00 %   9/15/17     67,067     73,277
  Ginnie Mae   9.00 %   12/15/17     79,236     87,972
  Ginnie Mae   9.00 %   3/15/18     73,118     79,964
  Ginnie Mae   9.00 %   5/15/18     140,879     154,070
  Ginnie Mae   9.00 %   6/15/18     24,373     26,656
  Ginnie Mae   9.00 %   10/15/19     450,861     493,655
  Ginnie Mae   9.00 %   11/15/19     187,709     205,525
  Ginnie Mae   9.00 %   1/15/20        127,902     140,201
             
          $ 226,967,697
             

 

4. Income Tax Information

The cost basis of portfolio securities of $884,578,852 is substantially the same for both federal income tax purposes and financial reporting purposes. Aggregated gross unrealized appreciation for securities in which there is an excess value over tax cost is $6,225,094; aggregate gross unrealized depreciation for securities in which there is an excess of tax cost over value is $23,863,112; and net unrealized depreciation for federal income tax purposes is $17,638,018.

 

5. Subsequent Dividend Declarations

On August 1, 2008, a dividend of $0.065 per share was declared to shareholders payable September 2, 2008 to shareholders of record on August 11, 2008.

 

On September 2, 2008, a dividend of $0.065 per share was declared to shareholders payable October 1, 2008 to shareholders of record on September 12, 2008.

 

6. Legal Proceedings

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

 

Since February 2004, the Investment Manager and certain of its affiliates and their employees have been named as defendants in a number of pending lawsuits concerning “market timing,” which allege the same or similar conduct underlying the regulatory settlements proceedings discussed above. The market timing lawsuits have been consolidated in a multi-district litigation proceeding in the U.S. District Court for the District of Maryland. Any

 

40   PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report    7.31.08


Table of Contents

PIMCO Strategic Global Government Fund, Inc. Notes to Financial Statements

July 31, 2008 (unaudited)

 

 

6. Legal Proceedings (continued)

 

potential resolution of these matters may include, but not be limited to, judgments or settlements for damages against the Investment Manager or its affiliates or related injunctions.

 

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

 

The foregoing speaks only as of the date hereof.

 

7. Appointment of New Director

In June 2008, the Fund’s Board of Directors appointed Diana L. Taylor as a Director.

 

 

Subsequent Event – Market Conditions

Recent events in the financial sector have resulted in an unusually high degree of volatility in the financial markets and the net asset value of many mutual funds, including to some extent the Fund. Such events occurring subsequent to the date of this report have included, but are not limited to, the seizure of the Federal National Mortgage Association, and the Federal Home Loan Mortgage Corporation by U.S. banking regulators, and the bankruptcy filing of Lehman Brothers, and sale of Merrill Lynch to Bank of America, and the U.S. Government bailout of AIG. These companies represent investment banks with which the Fund may conduct business, and/or whose securities are or may be held by the Fund. The potential investment of the Fund’s investments in these issuers, and the financial sector in general, as reflected in the Fund’s Schedule of Investments, exposes investors to the negative (or positive) performance resulting from these and other events. U.S. Government Agency securities and collateral received by the Fund under various arrangements may include bonds issued by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.

 

7.31.08    PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report   41


Table of Contents
PIMCO Strategic Global Government Fund, Inc. Financial Highlights   
For a share outstanding throughout each period:     

 

        Six Months
ended
July 31, 2008
(unaudited)
        Year ended January 31,  
              2008         2007         2006         2005         2004    

Net asset value,

beginning of period

    $9.84       $10.12       $10.39       $11.01       $11.41       $11.33  

Investment Operations:

                                 

Net investment income

    0.44       0.60 (1)     0.65 (1)     0.75 (1)     0.82 (1)     0.78 (1)
Net realized and change in unrealized gain (loss) on investments, futures contracts, swaps and foreign currency transactions     (0.72 )     (0.07 )     (0.09 )     (0.48 )     (0.23 )     0.21  
Total from investment operations     (0.28 )     0.53       0.56       0.27       0.59       0.99  
Dividends to Shareholders from Net Investment Income     (0.39 )     (0.81 )     (0.83 )     (0.89 )     (0.99 )     (0.91 )
Net asset value, end of period     $9.17       $9.84       $10.12       $10.39       $11.01       $11.41  
Market price, end of period     $9.80       $10.39       $11.14       $11.58       $12.88       $12.41  
Total Investment Return (2)     (1.35 )%     1.02 %     4.21 %     (2.95 )%     13.36 %     12.38 %
RATIOS/SUPPLEMENTAL DATA:                                  
Net assets, end of period (000)     $347,764       $371,168       $378,385       $382,618       $399,268       $407,099  
Ratio of expenses to average net assets, including interest expense     3.07 %(3)(4)     5.48 %     3.03 %     1.52 %     1.06 %     1.05 %
Ratio of expenses to average net assets, excluding interest expense     1.17 %(3)(4)     1.07 %     1.06 %     1.06 %     1.05 %     1.04 %
Ratio of net investment income to average net assets     9.25 %(4)     5.98 %     6.42 %     6.99 %     7.38 %     6.84 %
Portfolio turnover     21 %     154 %     123 %     361 %     224 %     446 %
(1) Per share amounts based on average number of shares outstanding during the period.
(2) Total investment return is calculated assuming a purchase of common stock at the current market price on the first day and a sale of share of common stock at the current market price on the last day of each period reported. Dividends and distributions are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total investment return does not reflect brokerage commissions or sales charges. Total investment return for a period of less than one year is not annualized.
(3) Inclusive of expenses offset by custody credits earned on cash balances at the custodian bank. (See note 1(r) in Notes to Financial Statements).
(4) Annualized.

 

42   PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report    7.31.08    See accompanying Notes to Financial Statements


Table of Contents
PIMCO Strategic Global Government Fund, Inc.
Matters Relating to the Directors’ Consideration of the Investment Management & Portfolio Management Agreements
(unaudited)
    

 

 

The Investment Company Act of 1940 requires that both the full Board of Directors (the “Directors”) and a majority of the non-interested (“Independent”) Directors, voting separately, approve the Fund’s Investment Management Agreement (the “Advisory Agreement”) with Allianz Global Investors Fund Management LLC (the “Investment Manager”) and Portfolio Management Agreement (the “Sub-Advisory Agreement”) between the Investment Manager and Pacific Investment Management Company LLC (“PIMCO” or the “Sub-Adviser). The Directors met on June 10, 2008 (the “contract review meeting”) for the specific purpose of considering whether to approve (i) the interim Investment Management Agreement and interim Administrative Services Agreement with the Investment Manager and the interim Portfolio Management Agreement between the Investment Manager and PIMCO (together the “Interim Agreements”), each for a maximum period of 150 days starting from June 10, 2008, pending Shareholder approval of the Advisory Agreement and Sub-Advisory Agreement and (ii) the Advisory Agreement and the Sub-Advisory Agreement (together with the Interim Agreements, the “Agreements”). The Independent Directors were assisted in their evaluation of the Agreements by independent legal counsel, from whom they received separate legal advice and with whom they met separately from Fund management during the contract review meeting.

 

Based on their evaluation of factors that they deemed to be material, including those factors described below, the Board of Directors, including a majority of the Independent Directors, concluded that 1) the Interim Agreements should be approved for an interim period according to their terms and 2) the Advisory Agreement and the Sub-Advisory Agreement should be approved. The Advisory Agreement and the Sub-Advisory Agreement were approved by shareholders at a special meeting of the stockholders held on August 27, 2008.

 

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

 

In connection with their contract review meeting, the Directors received and relied upon materials provided by the Investment Manager which included, among other items: (i) information provided by Lipper Inc. (“Lipper”) on the total return performance for various time periods of a group of funds with substantially similar investment classifications/objectives as the Fund identified by Lipper, (ii) information on the management fees and other expenses of comparable funds identified by Lipper (iii) an estimate of the profitability to the Investment Manager and the Sub-Adviser from their relationship with the Fund, (iv) descriptions of various functions to be performed by the Investment Manager and the Sub-Adviser for the Fund, such as portfolio management, compliance monitoring and portfolio trading practices, and (v) information regarding the overall organization of the Investment Manager and the Sub-Adviser, including information regarding senior management, portfolio managers and other personnel providing investment management, administrative and other services to the Fund.

 

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

 

As part of their review, the Directors examined the Investment Manager’s and the Sub-Adviser’s abilities to provide high quality investment management and other services to the Fund. The Directors considered the investment philosophy and research and decision-making processes of the Sub-Adviser; the experience of key advisory personnel of the Sub-Adviser responsible for portfolio management of the Fund; the ability of the Investment Manager and the Sub-Adviser to attract and retain capable personnel; the capability and integrity of the senior management and staff of the Investment Manager and the Sub-Adviser; and the level of skill required to manage the Fund. In addition, the Directors reviewed the quality of the Investment Manager’s and the Sub-Adviser’s

 

7.31.08    PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report   43


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PIMCO Strategic Global Government Fund, Inc.
Matters Relating to the Directors’ Consideration of the Investment Management & Portfolio Management Agreements
(unaudited) (continued)
    

 

 

services with respect to regulatory compliance and compliance with the investment policies of the Fund; the nature and quality of certain administrative services the Investment Manager would be responsible for providing to the Fund; and conditions that might affect the Investment Manager’s or the Sub-Adviser’s ability to provide high quality services to the Fund in the future under the Agreements, including each organization’s respective business reputation, financial condition and operational stability. Based on the foregoing, the Directors concluded that the Sub-Adviser’s investment process, research capabilities and philosophy were well suited to the Fund given its investment objectives and policies, and that the Investment Manager and the Sub-Adviser would be able to continue to meet any reasonably foreseeable obligations under the Agreements.

 

In assessing the reasonableness of the Fund’s fees under the Agreements, the Directors considered, among other information, the Fund’s management fee and the estimated total expense ratio as a percentage of anticipated average daily total managed assets and the total expense ratios of comparable funds identified by Lipper. The Directors noted that the total advisory and administrative fees paid by the Fund under the prior agreements with PIMCO was 0.87% of the Fund’s average weekly net assets and under the Advisory Agreements would be 0.85% of the Fund’s average daily net assets.

 

The Directors specifically took note of how the Fund compared to its Lipper peers as to total expense ratio. The Directors found the Fund’s total expenses to be higher than the median. The Directors noted that while the Fund will not be charged a separate administration fee, it was not clear whether the peer funds in the Lipper categories were charged such a fee by their investment managers. Thus, the Directors, at the recommendation of the Investment Manager, considered the total expense ratio of the Fund compared to the total expenses of the peer funds, recognizing that the fees for management, administrative services and other non-management services would be subsumed within the total expense ratio.

 

The Directors also considered that PIMCO does not manage closed-end bond funds or other types of accounts with similar investment objectives to that of the Fund.

 

Based on the anticipated profitability analysis provided by the Investment Manager, the Directors also considered the estimate of the profitability of the Investment Manager and the Sub-Adviser from their relationship with the Fund and determined that such profitability was not excessive in light of the nature, scope and quality of services provided to the Fund.

 

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

 

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

 

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

 

44   PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report    7.31.08


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PIMCO Strategic Global Government Fund, Inc.
Shareholder Meetings Results/ Proxy Voting Policies & Procedures
(unaudited)

 

Shareholder Meetings Results:

The Fund held its annual meeting of shareholders on June 9, 2008. Shareholders voted to elect as new Directors of the Fund: Hans W. Kertess, (Chairman of the Board of Directors), Paul Belica, Robert E. Connor, John J. Dalessandro II, John C. Maney, William B. Ogden, IV and R. Peter Sullivan III as indicated below:

 

          Affirmative   Withheld
Authority
  Against

Class I Directors:

  Election of John J. Dalessandro II to serve until 2010*   27,652,391   397,901  
  Election of William B. Ogden, IV to serve until 2010   27,680,634   369,658  

Class II Directors:

  Election of Hans W. Kertess to serve until 2011   27,672,083   378,209  
  Election of John C. Maney to serve until 2011   27,673,981   376,311  
  Election of R. Peter Sullivan III to serve until 2011   27,676,944   373,348  

Class III Directors:

  Election of Paul Belica to serve until 2009   27,634,872   415,420  
  Election of Robert E. Connor to serve until 2009   27,654,278   396,014  

 

* Mr. Dalessandro II served as a Class I Director of the Fund until his death on September 14, 2008.

 

The Fund held a special meeting of shareholders on August 27, 2008. Shareholders voted to approve the following proposals:

 

          For   Against   Abstain

Proposal One:

  To approve a new Investment Management Agreement between the Fund and Allianz Global Investors Fund Management (“AGIFM”) LLC   17,784,065   875,233   705,768

Proposal Two:

  To approve a new Portfolio Management Agreement relating to the Fund between AGIFM and Pacific Investment Management Company LLC   17,791,194   877,707   696,162

 

 

 

Proxy Voting Policies & Procedures:

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

 

7.31.08    PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report   45


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Directors and Principal Officers

Hans W. Kertess

Director, Chairman of the Board of Directors

  

Brian S. Shlissel

President & Chief Executive Officer

Paul Belica

Director

  

Lawrence G. Altadonna

Treasurer, Principal Financial & Accounting Officer

Robert E. Connor

Director

  

Thomas J. Fuccillo

Vice President, Secretary & Chief Legal Officer

John C. Maney

Director

  

Scott Whisten

Assistant Treasurer

William B. Ogden, IV

Director

  

Richard J. Cochran

Assistant Treasurer

R. Peter Sullivan III

Director

  

Youse E. Guia

Chief Compliance Officer

Diana L. Taylor

Director

  

William V. Healey

Assistant Secretary

  

Richard H. Kirk

Assistant Secretary

  

Kathleen A. Chapman

Assistant Secretary

  

Lagan Srivastava

Assistant Secretary

Investment Manager

Allianz Global Investors Fund Management LLC

1345 Avenue of the Americas,

New York, NY 10105

 

Sub-Adviser

Pacific Investment Management Company LLC

840 Newport Center Drive

Newport Beach, CA 92660

 

Custodian & Accounting Agent

State Street Bank & Trust Co.

801 Pennsylvania

Kansas City, MO 64105-1307

 

Transfer Agent, Dividend Paying Agent and Registrar

PNC Global Investment Servicing

P.O. Box 43027

Providence, RI 02940-3027

 

Independent Registered Public Accounting Firm

PricewaterhouseCoopers LLP

1055 Broadway

Kansas City, MO 64105

 

Legal Counsel

Ropes & Gray LLP

One International Place

Boston, MA 02110-2624

 

This report, including the financial information herein, is transmitted to the shareholders of PIMCO Strategic Global Government Fund, Inc. for their information. It is not a prospectus, circular or representation intended for use in the purchase of shares of the Fund or any securities mentioned in this report.

 

The financial information included herein is taken from the records of the Fund without examination of an independent registered accounting firm, who did not express an opinion thereon.

 

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

 

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

 

On August 18, 2008, the Fund submitted a CEO annual certification to the New York Stock Exchange (“NYSE”) on which the Fund’s principal executive officer certified that he was not aware, as of the date, of any violation by the Fund of the NYSE’s Corporate Governance listing standards. In addition, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and related SEC rules, the Fund’s principal executive and principal financial officer made quarterly certifications, included in filings with the SEC on Forms N-CSR and N-Q relating to, among other things, the Fund’s disclosure controls and procedures and internal control over financial reporting, as applicable.

 

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

 

7.31.08    PIMCO Strategic Global Government Fund, Inc. Semi-Annual Report  


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LOGO

 

 


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ITEM 2. CODE OF ETHICS

 

Not required in this filing.

 

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT

 

Not required in this filing.

 

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

Not required in this filing.

 

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANT

 

Not required in this filing.

 

ITEM 6. SCHEDULE OF INVESTMENTS

 

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

 

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

 

Not required in this filing.

 

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

 

Not required in this filing.

 

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED COMPANIES

 

     None

 

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

 

The Registrant’s Board of Directors adopted a Nominating Committee Charter governing the affairs of the Nominating Committee of the Board, which is posted on the Allianz Global Investors website at www.allianzinvestors.com. Appendix B to the Nominating Committee Charter includes “Procedures for Shareholders to Submit Nominee Candidates,” which sets forth the procedures by which shareholders may recommend nominees to the Registrant’s Board of Directors. Among other requirements, the procedures


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provide that the recommending shareholder must submit any recommendation in writing to the Registrant to the attention of the Registrant’s Secretary, at the address of the principal executive offices of the Registrant and that there have been no material changes to the procedures by which shareholders may recommend nominees to the Fund’s Board of Directors since the Fund last provided disclosure in response to this item.

 

ITEM 11. CONTROLS AND PROCEDURES

 

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

 

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

 

ITEM 12. EXHIBITS

 

(a) (1) Exhibit 99.302 Cert. - Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

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


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Signature

 

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

 

(Registrant) PIMCO Strategic Global Government Fund, Inc.
By    /s/    Brian S. Shlissel
  President and Chief Executive Officer

 

Date October 8, 2008

 

By    /s/    Lawrence G. Altadonna
 

Treasurer, Principal Financial &

Accounting Officer

 

Date October 8, 2008

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By    /s/    Brian S. Shlissel
  President and Chief Executive Officer

 

Date October 8, 2008

 

By    /s/    Lawrence G. Altadonna
 

Treasurer, Principal Financial &

Accounting Officer

 

Date October 8, 2008