RCS Strategic Global Govt. Fund - Semi-Annual Report
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM N-CSRS

 

 

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)

 

840 Newport Center Drive, Newport Beach, CA 92660

(Address of principal executive offices)

 

 

John P. Hardaway

Treasurer

PIMCO Strategic Global

Government Fund, Inc.

840 Newport Center Drive

Newport Beach, CA 92660

(Name and address of agent for service)

 

 

Copies to:

 

Brendan C. Fox

Dechert LLP

1775 I Street, N.W.

Washington, D.C. 20006

 

 

Registrant’s telephone number, including area code: (866) 746-2606

 

 

Date of fiscal year end: January 31

 

 

Date of reporting period: February 1, 2006 – July 31, 2006

 

 

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. Reports to Shareholders.

 

The following is a copy of the report transmitted to shareholders pursuant to Rule 30e-1 under the Act (17 CFR 270.30e-1).


Table of Contents

PIMCO (logo)

 

PIMCO STRATEGIC GLOBAL

    GOVERNMENT FUND, INC.

 

   

SEMIANNUAL

REPORT

    July 31, 2006

LOGO

 

 


Table of Contents

Table of Contents

 

     Page

Chairman’s Letter

   1

Important Information About the Fund

   2-5

Performance Summary

   6-7

Financial Highlights

   8

Statement of Assets and Liabilities

   9

Statement of Operations

   10

Statements of Changes in Net Assets

   11

Statement of Cash Flows

   12

Schedule of Investments

   13-16

Notes to Financial Statements

   17-22

Privacy Policy

   23

Dividend Reinvestment Plan

   24-25

2006 Shareholder Meeting Results

   26

Approval of Renewal of Investment Management Agreement

   27-28


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Chairman’s Letter

 

Dear PIMCO Strategic Global Government Fund, Inc. Shareholder:

 

It is our pleasure to present to you the semiannual report for PIMCO Strategic Global Government Fund, Inc. (the “Fund”), covering the six-month period ended July 31, 2006, the Fund’s fiscal half-year end.

 

During the six-month period, the Fund returned 1.16% based on its net asset value performance and -1.76% based on its New York Stock Exchange (“NYSE”) share price. The Fund’s benchmark, the Lehman Brothers Intermediate Aggregate Bond Index (which includes treasury, investment-grade corporate, and mortgage-backed securities), returned 1.00% for the same period.

 

For the period since PIMCO assumed responsibility for managing the Fund on February 8, 2002 through July 31, 2006, the Fund achieved annualized returns of 6.38% based on its net asset value performance and 8.79% based on its NYSE share price, while the benchmark returned 4.19% on an annualized basis during the same period. On July 31, 2006, the Fund’s net assets stood at $373.6 million.

 

In response to a prolonged and difficult environment for bonds, the Fund’s Board of Directors announced on July 31 its decision to decrease the Fund’s monthly per share common dividend from 7.4 cents per share to 6.5 cents per share, effective with the August 14, 2006 dividend declaration.

 

Highlights of the global bond markets during the six-month period include:

 

  Most fixed-income sectors lost ground during the first half of 2006, as concern about accelerating inflation and central bank tightening pushed interest rates higher worldwide. On July 31, 2006, the benchmark ten-year Treasury yielded 4.98%, which was 0.46% higher than at January 31, 2006.

 

  The Federal Reserve Bank (the “Federal Reserve”) tightened credit four times during the reporting period, bringing the Federal Funds Rate to 5.25%. The Federal Reserve was not alone, as central banks in Europe, Japan, India, and China tightened credit for the first time since 2000.

 

On the following pages please find details on the Fund’s portfolio and total return investment performance, including our discussion of the primary factors that affected performance during the six-month reporting period.

 

We appreciate the trust you have placed in us, and we will strive to meet your investment needs. If you have any questions regarding your investment in the Fund, please contact your account manager or call one of our shareholder associates at 1-866-746-2606. We also invite you to visit the Fund’s website at www.rcsfund.com.

 

Sincerely,

 

LOGO

 

R. Wesley Burns

 

Chairman of the Board

 

August 31, 2006

 

Semiannual Report  |  July 31, 2006  1


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Important Information About the Fund

 

Background and Investment Objective

 

The PIMCO Strategic Global Government Fund, Inc. is a closed-end bond fund which trades on the NYSE under the ticker symbol “RCS.” Formed in 1994, the primary investment objective of the Fund 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. Pacific Investment Management Company LLC (“PIMCO”) assumed responsibility as portfolio manager of the Fund on February 8, 2002.

 

Primary Investments

 

The Fund attempts to achieve its investment objective by investing primarily in a portfolio of investment grade fixed-income securities of the United States and other countries. The Fund invests, under normal circumstances, at least 80% of its net assets plus borrowings for investment purposes in government securities. “Government securities” include bonds issued or guaranteed by the U.S. or foreign governments (including states, provinces, cantons, and municipalities), by their agencies, authorities or instrumentalities, or by supranational entities, and synthetic instruments with economic characteristics similar to such securities. “Government securities” also include mortgage-backed securities issued or guaranteed by certain U.S. government agencies and government-sponsored enterprises (including Freddie Mac, Fannie Mae and Ginnie Mae), which may or may not be backed by the full faith and credit of the U.S. government. Effective September 14, 2006, the Fund adopted a non-fundamental investment policy permitting it to invest up to 20% of its total assets in non-investment grade securities regardless of the issuer. Prior to the adoption of this policy, the only non-investment grade securities in which the Fund was permitted to invest were securities of emerging markets issuers, subject to a limit of 20% of total assets. The new policy expands the Fund’s ability to invest in non-investment grade securities beyond those of emerging markets issuers, to include other types of securities in which the Fund is permitted to invest, such as corporate, mortgage-backed and asset-backed securities. The Fund continues to be subject to a separate investment policy limiting its investments in securities of emerging markets issuers to 20% of total assets.

 

Dividend Policy

 

Effective with the August 14, 2006 dividend declaration, the Fund will pay a monthly dividend out of net investment income at a rate of $0.065 per share. The Fund may also pay a special dividend at the end of each calendar year in order to satisfy tax distribution rules applicable to regulated investment companies.

 

Shareholders who wish to have their dividends reinvested may elect to do so through the Fund’s Dividend Reinvestment Plan described in this report beginning on page 24. Shareholders who hold their shares through a financial intermediary may or may not be able to participate in the Fund’s Dividend Reinvestment Plan and should consult with their financial intermediary to determine eligibility.

 

2  PIMCO Strategic Global Government Fund, Inc.


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Risks of Making an Investment in the Fund

 

We believe that bond funds have an important role to play in a well-diversified investment portfolio. It is important to note, however, that it is possible to lose money in an investment in the Fund. The past and current dividend rates are not assured, and because the Fund’s shares trade at market value on an exchange, the shares may trade at a discount or premium to the Fund’s net asset value (“NAV”). An investment in the Fund is not a deposit in a bank and is not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.

 

Summary of Risks

 

The following provides a description of the Fund’s principal risks. The Fund may be subject to additional risks other than those described below.

 

  Interest rate risk, including the risk that bond prices fall as interest rates rise.

 

  Yield curve flattening risk, including the risk of a decrease in the difference between short-term interest rates and long-term interest rates and the risk that financing costs exceed the returns from longer-term investments purchased with borrowed funds.

 

  Market price versus NAV (discount risk), including the risk that the Fund’s shares may trade at a smaller premium or a larger discount from their NAV.

 

  Net investment income risk, including the risk that the Fund may not generate sufficient net income to meet the current monthly dividend rate.

 

  Duration risk, including the risk that investments with a longer final maturity may be more sensitive to interest rate changes than investments with a shorter final maturity.

 

  Derivative risk, including the risk of defaults by counterparties and the risk that a derivative performs differently from a direct investment in the instrument underlying the derivative.

 

  Small company risk, including the risk that securities issued by small companies may be less liquid than securities issued by larger companies.

 

  Non-U.S. security risk, including the risk that non-U.S. securities may present different risks (such as political, regulatory, accounting and tax risks) from similar securities issued by U.S. issuers.

 

  Credit and high-yield security risk, including the risk that offerings of debt securities or derivatives may default and the risk that below investment grade bonds may be subject to higher default rates than investment grade bonds.

 

  Sector-specific risk, including the risk that certain sectors of the bond market may have different risk attributes from the bond market as a whole.

 

  Leverage risk, including the risk that certain other risks will be magnified when the Fund pursues leveraging strategies and the risk that investments in excess of capital may increase the volatility of returns.

 

Semiannual Report  |  July 31, 2006  3


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Important Information About the Fund (Cont.)

 

  Concentration risk, which may result in additional volatility compared to a more diversified portfolio.

 

  Mortgage risk, including the risk that rising interest rates will extend the duration of mortgage-related securities, making them more sensitive to changes in interest rates (extension risk) and the risk that in an environment where interest rates are falling, borrowers will pay off their mortgages sooner than expected, causing the Fund to reinvest at the lower prevailing interest rates and reducing the Fund’s returns (contraction risk).

 

In an environment where interest rates may trend upward, rising rates will negatively impact the performance of most bond funds, and fixed-income securities held by a fund are likely to decrease in value. The price volatility of fixed-income securities can also increase during periods of rising interest rates resulting in increased losses to a fund. Bond funds and individual bonds with a longer duration (a measure of the expected life of a security) tend to be more sensitive to changes in interest rates, usually making them more volatile than securities or funds with shorter durations. The Fund’s duration, a measure of the portfolio’s sensitivity to interest rate changes, was 5.16 years as of July 31, 2006, compared to the duration of Lehman Brothers Intermediate Aggregate Bond Index which was 3.88 years. The Fund may use derivative instruments for hedging and leveraging purposes or as part of an investment strategy. Use of these instruments may involve certain costs and risks such as liquidity risk, interest rate risk, market risk, credit risk, management risk, leveraging risk and the risk that the Fund could not close out a position when it would be most advantageous to do so. A Fund investing in derivatives could lose more than the principal amount invested in these instruments. Investing in non-U.S. securities may entail risk due to non-U.S. economic and political developments; this risk may be enhanced when investing in emerging markets. High-yield bonds typically have a lower credit rating than other bonds. Lower-rated bonds, such as certain of the Fund’s emerging market holdings, generally involve a greater risk to principal than higher-rated bonds. As of July 31, 2006, the Fund’s holdings of high-yield bonds were approximately 8% of its total investments. The credit quality of the investments in the Fund’s portfolio does not ensure the stability or safety of the Fund’s portfolio.

 

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

 

4  PIMCO Strategic Global Government Fund, Inc.


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The Fund invests in dollar rolls, a simultaneous agreement to sell a security held in the portfolio with a purchase of a similar, but not identical security at a future date at an agreed-upon price, which may create leveraging risk for the Fund. The use of leverage may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so. Because leveraging tends to exaggerate the effect of any increase or decrease in the value of portfolio securities, leverage may cause the Fund to be more volatile than if the Fund had not been leveraged.

 

Sarbanes-Oxley Act and Other Information Available to Shareholders

 

On June 28, 2006, the Fund submitted a CEO annual certification to the NYSE on which the Fund’s principal executive officer certified that he was not aware, as of that 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 Securities and Exchange Commission (“SEC”) rules, the Fund’s principal executive and principal financial officers have 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.

 

PIMCO has adopted written proxy voting policies and procedures (“Proxy Policy”) as required by Rule 206(4)-6 under the Investment Advisers Act of 1940, as amended. The Proxy Policy has been adopted by the Fund as the policies and procedures that PIMCO will use when voting proxies on behalf of the Fund. Copies of the written Proxy Policy and the factors that PIMCO may consider in determining how to vote proxies for the Fund, and information about how the Fund voted proxies relating to portfolio securities held during the most recent twelve-month period ended June 30 are available without charge, upon request, by calling the Fund at 1-866-746-2606 and on the SEC website at http://www.sec.gov. The Fund’s proxy voting record is also available on the website maintained by PIMCO for the Fund at http://www.rcsfund.com. The Fund held no securities during the year ended June 30, 2006, in which there was a security holder vote. Accordingly, there are no proxy votes to report.

 

The Fund files a complete schedule of its portfolio holdings with the SEC on Form N-Q for the first and third quarters of each fiscal year, which are available on the SEC’s website at http://www.sec.gov. A copy of the Fund’s Form N-Q is also available without charge, upon request, by calling the Fund at 1-866-746-2606 or visiting the Fund’s website at http://www.rcsfund.com. In addition, the Fund’s Form N-Q 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 1-800-SEC-0330. Holdings are subject to change daily.

 

Semiannual Report  |  July 31, 2006  5


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Performance Summary Strategic Global Government Fund, Inc.

 

NYSE Symbol

RCS

 

Objective:

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.

  

Primary Investments:

Investment grade fixed-income government securities of the United States and other countries, including mortgage-backed securities (which may not be backed by the full faith and credit of the relevant government). The Fund may invest up to 20% of its total assets in non-investment grade securities and up to 20% of its total assets in emerging market debt instruments.

  

Fund Inception Date:

02/24/1994

 

Total Net Assets:

$373.6 million as of July 31, 2006

 

Portfolio Manager:

Dan Ivascyn

 

 

Cumulative Returns Through July 31, 2006

 

 

LOGO

 

MONTH


 

RCS

based on

NYSE Share Price


 

RCS

Based on

Net Asset Value


 

Lehman Brothers
Intermediate

Aggregate Bond

Index


   

01/31/1994

               

02/28/1994

  10,000   10,000   10,000    

03/31/1994

  9,800   9,631   9,802    

04/30/1994

  9,100   9,511   9,734    

05/31/1994

  8,758   9,507   9,752    

06/30/1994

  8,515   9,323   9,746    

07/31/1994

  8,371   9,465   9,905    

08/31/1994

  8,636   9,443   9,936    

09/30/1994

  8,388   9,455   9,828    

10/31/1994

  8,138   9,500   9,826    

11/30/1994

  8,303   9,403   9,786    

12/31/1994

  8,279   9,248   9,836    

01/31/1995

  8,279   9,282   10,017    

02/28/1995

  8,449   9,457   10,241    

03/31/1995

  8,514   9,435   10,296    

04/30/1995

  8,576   9,674   10,430    

05/31/1995

  9,081   9,958   10,749    

06/30/1995

  9,034   9,970   10,817    

07/31/1995

  9,099   10,017   10,825    

08/31/1995

  9,052   10,119   10,928    

09/30/1995

  9,119   10,239   11,013    

10/31/1995

  9,299   10,288   11,127    

11/30/1995

  9,251   10,520   11,266    

12/31/1995

  9,319   10,735   11,392    

01/31/1996

  9,620   10,776   11,486    

02/29/1996

  9,571   10,547   11,366    

03/31/1996

  9,346   10,617   11,314    

04/30/1996

  9,237   10,715   11,277    

05/31/1996

  9,307   10,682   11,260    

06/30/1996

  9,256   10,781   11,392    

07/31/1996

  9,572   10,824   11,429    

08/31/1996

  9,643   10,943   11,435    

09/30/1996

  9,777   11,220   11,606    

10/31/1996

  10,037   11,410   11,819    

11/30/1996

  10,235   11,709   11,980    

12/31/1996

  10,669   11,679   11,909    

01/31/1997

  10,926   11,909   11,970    

02/28/1997

  11,129   12,044   12,000    

03/31/1997

  11,075   11,835   11,906    

04/30/1997

  11,154   12,023   12,065    

05/31/1997

  11,362   12,232   12,171    

06/30/1997

  11,506   12,422   12,294    

07/31/1997

  11,714   12,623   12,536    

08/31/1997

  11,926   12,607   12,486    

09/30/1997

  12,139   12,759   12,636    

10/31/1997

  11,946   12,508   12,776    

11/30/1997

  12,231   12,597   12,809    

12/31/1997

  12,503   12,747   12,917    

01/31/1998

  12,538   12,986   13,070    

02/28/1998

  12,515   13,111   13,074    

03/31/1998

  12,385   13,182   13,121    

04/30/1998

  12,469   13,208   13,191    

05/31/1998

  12,124   13,212   13,285    

06/30/1998

  12,063   13,126   13,362    

07/31/1998

  12,221   13,278   13,416    

08/31/1998

  11,282   12,486   13,592    

09/30/1998

  11,812   13,109   13,863    

10/31/1998

  12,197   13,240   13,846    

11/30/1998

  12,136   13,453   13,874    

12/31/1998

  12,070   13,461   13,931    

01/31/1999

  12,147   13,544   14,017    

02/28/1999

  11,775   13,406   13,871    

03/31/1999

  11,944   13,770   13,971    

04/30/1999

  12,113   14,172   14,023    

05/31/1999

  12,363   13,752   13,927    

06/30/1999

  12,456   13,611   13,913    

07/31/1999

  12,390   13,345   13,863    

08/31/1999

  11,840   13,289   13,869    

09/30/1999

  11,774   13,692   14,041    

10/31/1999

  11,870   13,785   14,096    

11/30/1999

  11,757   13,878   14,110    

12/31/1999

  12,339   14,054   14,067    

01/31/2000

  12,518   13,679   13,986    

02/29/2000

  12,096   13,788   14,120    

03/31/2000

  12,280   13,831   14,271    

04/30/2000

  12,298   13,783   14,257    

05/31/2000

  12,135   13,698   14,271    

06/30/2000

  12,947   14,264   14,548    

07/31/2000

  13,236   14,364   14,651    

08/31/2000

  13,976   14,654   14,846    

09/30/2000

  13,981   14,892   14,990    

10/31/2000

  14,367   14,801   15,077    

11/30/2000

  13,930   14,960   15,293    

12/31/2000

  15,238   15,400   15,562    

01/31/2001

  15,789   15,870   15,812    

02/28/2001

  16,054   15,861   15,937    

03/31/2001

  16,244   15,881   16,044    

04/30/2001

  16,094   15,930   16,031    

05/31/2001

  16,521   16,183   16,127    

06/30/2001

  16,869   16,291   16,176    

07/31/2001

  17,287   16,475   16,493    

08/31/2001

  17,372   16,780   16,653    

09/30/2001

  17,264   17,011   16,903    

10/31/2001

  18,075   17,410   17,163    

11/30/2001

  18,015   17,234   16,993    

12/31/2001

  17,610   17,173   16,912    

01/31/2002

  18,230   17,453   17,032    

02/28/2002

  18,739   17,945   17,195    

03/31/2002

  18,593   17,731   16,967    

04/30/2002

  18,667   18,188   17,270    

05/31/2002

  19,636   18,307   17,422    

06/30/2002

  19,903   18,152   17,575    

07/31/2002

  20,886   18,013   17,786    

08/31/2002

  20,918   18,449   17,999    

09/30/2002

  21,161   18,352   18,240    

10/31/2002

  19,970   18,756   18,229    

11/30/2002

  20,334   18,879   18,207    

12/31/2002

  21,455   19,278   18,519    

01/31/2003

  21,868   19,439   18,537    

02/28/2003

  22,121   19,738   18,744    

03/31/2003

  21,319   19,849   18,755    

04/30/2003

  22,185   20,314   18,871    

05/31/2003

  22,607   20,508   19,106    

06/30/2003

  22,278   20,533   19,110    

07/31/2003

  23,163   19,530   18,650    

08/31/2003

  22,971   19,823   18,731    

09/30/2003

  22,775   20,530   19,145    

10/31/2003

  23,467   20,520   19,011    

11/30/2003

  23,228   20,654   19,043    

12/31/2003

  24,441   21,046   19,226    

01/31/2004

  24,575   21,201   19,351    

02/29/2004

  24,969   21,339   19,535    

03/31/2004

  25,507   21,534   19,662    

04/30/2004

  21,111   20,863   19,240    

05/31/2004

  21,653   20,549   19,172    

06/30/2004

  21,289   20,958   19,273    

07/31/2004

  22,630   21,275   19,441    

08/31/2004

  24,564   21,747   19,759    

09/30/2004

  24,852   21,833   19,791    

10/31/2004

  25,496   22,037   19,936    

11/30/2004

  24,459   22,064   19,808    

12/31/2004

  25,937   22,333   19,945    

01/31/2005

  27,857   22,362   20,014    

02/28/2005

  26,740   22,308   19,910    

03/31/2005

  25,186   22,072   19,834    

04/30/2005

  26,431   22,369   20,059    

05/31/2005

  27,956   22,626   20,232    

06/30/2005

  27,214   22,676   20,313    

07/31/2005

  28,078   22,622   20,168    

08/31/2005

  28,230   22,822   20,385    

09/30/2005

  28,475   22,787   20,234    

10/31/2005

  29,295   22,431   20,111    

11/30/2005

  25,490   22,482   20,189    

12/31/2005

  24,511   22,730   20,345    

01/31/2006

  27,036   22,936   20,371    

02/28/2006

  28,094   23,166   20,418    

03/31/2006

  28,190   22,886   20,294    

04/30/2006

  26,895   22,941   20,301    

05/31/2006

  26,081   22,723   20,284    

06/30/2006

  25,355   22,734   20,318    

07/31/2006

  26,559   23,202   20,575    

 

Past performance is no guarantee of future results. The line graph depicts the value of a net $10,000 investment made at the Fund’s inception on February 24, 1994 and held through July 31, 2006, compared to the Lehman Brothers Intermediate Aggregate Bond Index, an unmanaged market index which includes treasury, investment-grade corporate and mortgage-backed securities. It is not possible to invest directly in the Index. Investment performance assumes the reinvestment of dividends and capital gains distribution, if any. The Fund’s NYSE share price performance does not reflect the effect of sales loads or broker commissions. The performance data quoted represents past performance. Investment return and share value will fluctuate so that Fund shares, when sold, may be worth more or less than their original cost. Returns shown do not reflect the deduction of taxes that a shareholder would pay on (i) Fund distributions or (ii) the sale of Fund shares.


à PIMCO assumed responsibility for portfolio management of the Fund on February 8, 2002.

 

Average Annual Total Return for the period ended July 31, 2006

 

         6 Months(a)

    1 Year

    5 Years

    10 Years

    Since Inception
02/24/1994


    Since
02/08/2002(b)


 
LOGO  

RCS Based on NYSE Share Price

   -1.76 %   -5.41 %   8.97 %   10.74 %   8.19 %   8.79 %
LOGO  

RCS Based on Net Asset Value

   1.16 %   2.56 %   7.09 %   7.92 %   7.01 %   6.38 %
LOGO  

Lehman Brothers Intermediate Aggregate
Bond Index
(c)

   1.00 %   2.02 %   4.52 %   6.06 %   5.98 %(d)   4.19 %

All Fund returns are net of fees and expenses.

 

(a) Cumulative return.
(b) PIMCO assumed responsibility for portfolio management of the Fund on February 8, 2002.
(c) Lehman Brothers Intermediate Aggregate Bond Index represents securities that are taxable and dollar-denominated. The Index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities and asset-backed securities. These major sectors are subdivided into more specific indices that are calculated and reported on a regular basis. It is not possible to invest directly in this Index.
(d) Index comparisons began on February 28, 1994.

 

Past performance is no guarantee of future results. Performance data current to the most recent month-end is available at www.rcsfund.com or by calling 1-866-746-2606.

 

6  PIMCO Strategic Global Government Fund, Inc.


Table of Contents

Sector Breakdown % of Total Investments as of July 31, 2006                                    


      

U.S. Government Agencies and Sponsored Entities (“GSEs”) *

   72.4 %

Private Mortgage-Backed Securities

   14.4 %

Sovereign Issues

   6.0 %

Other

   7.2 %

* 64.4% of total investments are invested in mortgage-backed securities of U.S. government agencies not backed by the full faith and credit of the U.S. government.

 

Portfolio Insights

 

  The Fund seeks to achieve its investment objective by investing and actively managing investments in debt securities of issuers in three separate investment sectors: the U.S., developed foreign markets, and emerging markets.

 

  The Fund’s above-index duration exposure, or sensitivity to changes in market interest rates, was negative for performance as interest rates rose across the yield curve.

 

  Front-end curve positions detracted from performance over the six-month period as short-term interest rates rose dramatically in response to tightening by the Federal Reserve.

 

  A large overweight position to mortgage-backed securities (“MBS”), excluding GNMA mortgage-backed securities, contributed to performance over the period as MBS outperformed like-duration Treasuries.

 

  Positions in GNMA mortgage-backed securities hurt performance over the period as GNMA securities trailed like-duration Treasuries.

 

  Emerging markets holdings, with an emphasis on Brazil and Ecuador, were a significant positive as improving fundamentals caused spreads to tighten over the period.

 

  Avoiding corporate bonds detracted from returns over the period as investment-grade corporate bonds outperformed like-duration Treasuries.

 

  A modest exposure to the euro and yen currencies added to performance over the period as they gained versus the U.S. dollar.

 

Semiannual Report  |  July 31, 2006  7


Table of Contents

Financial Highlights

 

Seclected Per Share Data for            

the Year or Period Ended:


   07/31/2006+

    01/31/2006

    01/31/2005

    01/31/2004

    01/31/2003

    01/31/2002 (a)

 

Net Asset Value Beginning of Period

   $ 10.39     $ 11.01     $ 11.41     $ 11.33     $ 11.20     $ 11.14  

Net Investment Income

     0.33       0.75 (d)     0.82 (c)     0.78       1.01       0.90  

Net Realized/ Unrealized Gain (Loss) on Investments

     (0.22 )(e)     (0.48 )(e)     (0.23 )(e)     0.21       0.13       0.16  

Total Income from Investment Operations

     0.11       0.27       0.59       0.99       1.14       1.06  

Dividends from Net Investment Income

     (0.44 )     (0.89 )(d)     (0.99 )(c)     (0.91 )     (1.01 )     (1.00 )

Net Asset Value End of Period

   $ 10.06     $ 10.39     $ 11.01     $ 11.41     $ 11.33     $ 11.20  

NYSE Share Price End of Period

   $ 10.92     $ 11.58     $ 12.88     $ 12.41     $ 11.95     $ 10.90  

Total Investment Return (j)

                                                

Per Share NYSE Share Price (b)

     (1.76 )%     (2.95 )%     13.36 %     12.38 %     19.96 %     15.46 %

Per Share Net Asset Value (f)

     1.16 %     2.57 %     5.47 %     9.07 %     11.38 %     10.23 %

Ratios to Average Net Assets

                                                

Operating Expenses (Excluding Interest Expense)

     1.06 %*     1.06 %     1.05 %     1.04 %     1.15 %     1.15 %(g)(h)

Total Operating Expenses

     2.46 %*     1.52 %     1.06 %     1.05 %     1.15 %     1.15 %(g)(h)

Net Investment Income

     6.58 %*     6.99 %     7.38 %     6.84 %     9.02 %     8.09 %(i)

Supplemental Data

                                                

Net Assets End of Period (000s)

   $ 373,662     $ 382,618     $ 399,268     $ 407,099     $ 395,313     $ 382,831  

Portfolio Turnover Rate

     40 %     361 %     224 %     446 %     517 %     211 %

+ Unaudited
* Annualized
(a) On January 18, 2002, the Fund acquired all of the assets and liabilities of the Dresdner RCM Global Strategic Income Fund, Inc. in a tax-free exchange valued at $40,985,851.
(b) Total investment return on market value is the combination of reinvested dividend income, reinvested capital gains distributions, if any, and changes in market price per share during the period. Total investment returns exclude the effects of broker commissions.
(c) Net investment income for tax purposes was $0.98 per share. Net investment income for financial reporting purposes was $0.16 per share lower due to the inclusion of losses incurred on paydowns on mortgage-backed securities. In most cases paydown losses are treated as a reduction of net income for financial reporting purposes, but treated as capital losses for tax purposes. See the discussion of Dividends and Distributions to Shareholders in the Notes to the Financial Statements on page 18 for more information about the difference between amounts determined for financial reporting and tax purposes.
(d) Net investment income for tax purposes was $0.87 per share. Net investment income for financial reporting purposes was $0.12 per share lower due to the inclusion of losses incurred on paydowns on mortgage-backed securities. In most cases paydown losses are treated as a reduction of net income for financial reporting purposes, but treated as capital losses for tax purposes. See the discussion of Dividends and Distributions to Shareholders in the Notes to the Financial Statements on page 18 for more information about the difference between amounts determined for financial reporting and tax purposes.
(e) Net realized and unrealized losses as determined on a tax basis are deferred and do not reduce taxable net investment income.
(f) Total investment return on net asset value is the combination of reinvested dividend income on ex-date on a net asset value basis, reinvested capital gains distributions on a net asset value basis, if any, and changes in net asset value per share during the period.
(g) If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.18%.
(h) Ratio includes merger-related expenses of 0.04%.
(i) Ratio of net investment income to average net assets excluding merger related expenses is 8.13%.
(j) Past performance is no guarantee of future results.

 

8  PIMCO Strategic Global Government Fund, Inc.  |  See accompanying notes


Table of Contents

Statement of Assets and Liabilities

July 31, 2006 (Unaudited)

 

Amounts in thousands, except share and per share amounts

 

Assets:

        

Investments, at value

   $ 884,130  

Cash

     500  

Foreign currency, at value

     717  

Receivable for investments sold

     229  

Receivable for investments sold on delayed-delivery basis

     8,503  

Unrealized appreciation on forward foreign currency contracts

     7  

Interest and dividends receivable

     4,123  

Paydown receivable

     7  

Variation margin receivable

     324  

Swap premiums paid

     13,897  

Unrealized appreciation on swap agreements

     6,313  

Other assets

     1  
    


       918,751  
    


Liabilities:

        

Reverse repurchase agreement

   $ 111,036  

Payable for investments purchased

     415,607  

Unrealized depreciation on forward foreign currency contracts

     221  

Dividends payable

     2,749  

Accrued investment advisory fee

     242  

Accrued administration fee

     15  

Accrued printing expense

     5  

Accrued custodian expense

     25  

Accrued audit fee

     13  

Variation margin payable

     365  

Swap premiums received

     295  

Unrealized depreciation on swap agreements

     14,365  

Other liabilities

     151  
    


       545,089  
    


Net Assets

   $ 373,662  
    


Net Assets Consist of:

        

Capital stock–authorized 500 million shares, $.00001 par value; outstanding 37,148,649 shares

   $ 5  

Paid in capital

     435,613  

(Overdistributed) net investment income

     (5,784 )

Accumulated undistributed net realized (loss)

     (44,866 )

Net unrealized (depreciation)

     (11,306 )
    


     $ 373,662  
    


Net Asset Value Per Share Outstanding

   $ 10.06  
    


Cost of Investments Owned

   $ 886,274  
    


Cost of Foreign Currency Held

   $ 712  
    


 

Semiannual Report  |  July 31, 2006  9


Table of Contents

Statement of Operations

Six Months Ended July 31, 2006 (Unaudited)

 

Amounts in thousands

 

Investment Income:

        

Interest

   $ 16,828  

Miscellaneous income

     5  
    


Total Income

     16,833  
    


Expenses:

        

Investment advisory fees

     1,565  

Administration fees

     93  

Transfer agent fees

     24  

Directors’ fees

     68  

Printing expense

     26  

Legal fees

     43  

Audit fees

     22  

Custodian fees

     78  

Interest expense

     2,600  

Miscellaneous expense

     62  
    


Total Expenses

     4,581  
    


Net Investment Income

     12,252  
    


Net Realized and Unrealized Gain (Loss):

        

Net realized gain on investments

     6,017  

Net realized gain on futures contracts, options and swaps

     1,174  

Net realized (loss) on foreign currency transactions

     (201 )

Net change in unrealized (depreciation) on investments

     (17,824 )

Net change in unrealized appreciation on futures contracts, options and swaps

     2,879  

Net change in unrealized (depreciation) on translation of assets and liabilities denominated in foreign currencies

     (29 )
    


Net (Loss)

     (7,984 )
    


Net Increase in Net Assets Resulting from Operations

   $ 4,268  
    


 

10  PIMCO Strategic Global Government Fund, Inc.  |  See accompanying notes


Table of Contents

Statements of Changes in Net Assets

 

Amounts in thousands, except share amounts

 

     Six Months Ended
July 31, 2006
(Unaudited)


    Year Ended
January 31, 2006


 

Increase (Decrease) in Net Assets from:

                

Operations:

                

Net investment income

   $ 12,252     $ 27,270  

Net realized gain (loss)

     6,990       (2,771 )

Net change in unrealized (depreciation)

     (14,974 )     (15,534 )
    


 


Net increase resulting from operations

     4,268       8,965  
    


 


Distributions to Shareholders:

                

From net investment income

     (16,438 )     (32,475 )
    


 


Fund Share Transactions:

                

Issued as reinvestment of distributions (306,184 and 592,628 shares, respectively)

     3,214       6,860  
    


 


Total Decrease in Net Assets

     (8,956 )     (16,650 )
    


 


Net Assets:

                

Beginning of period

     382,618       399,268  
    


 


End of period *

   $ 373,662     $ 382,618  
    


 



                

*       Including (overdistributed) net investment income of:

   $ (5,784 )   $ (1,598 )
    


 


 

Semiannual Report  |  July 31, 2006  11


Table of Contents

Statement of Cash Flows

Six Months Ended July 31, 2006 (Unaudited)

 

Amounts in thousands

 

Increase (Decrease) in Cash and Foreign Currency from:

        

Financing Activities:

        

Cash distributions paid

   $ (13,202 )

Proceeds from financing transactions

     (3,269 )
    


Net (decrease) from financing activities

     (16,471 )
    


Operating Activities:

        

Purchases of long-term securities

     (3,163,400 )

Proceeds from sales of long-term securities

     3,155,624  

Purchases of short-term securities (net)

     6,101  

Net investment income

     12,252  

Change in other receivables/payables (net)

     7,102  
    


Net increase from operating activities

     17,679  
    


Net Increase in Cash and Foreign Currency

     1,208  
    


Cash and Foreign Currency:

        

Beginning of period

     9  
    


End of period

   $ 1,217  
    


 

12  PIMCO Strategic Global Government Fund, Inc.  |  See accompanying notes


Table of Contents

Schedule of Investments

July 31, 2006 (Unaudited)

 

     PRINCIPAL
AMOUNT
(000s)


   VALUE
(000s)


CORPORATE BONDS & NOTES 11.5%

             

BANKING & FINANCE 2.9%

             

ATF Bank JSC

             

8.875% due 11/09/2009

   $ 1,500    $ 1,536

Bank Negara Indonesia Tbk PT

             

10.000% due 11/15/2012

     2,000      2,072

Banque Centrale de Tunisie

             

7.375% due 04/25/2012

     2,000      2,120

GPB Eurobond Finance PLC for Gazprombank

             

6.500% due 09/23/2015

     5,000      4,864
           

              10,592
           

INDUSTRIALS 5.9%

             

Cablemas S.A. de C.V.

             

9.375% due 11/15/2015

     2,000      2,130

CSN Islands IX Corp.

             

10.500% due 01/15/2015

     3,700      4,199

NAK Naftogaz Ukrainy

             

8.125% due 09/30/2009

     3,000      2,901

Pemex Project Funding Master Trust

             

9.125% due 10/13/2010

     370      411

5.750% due 12/15/2015

     7,000      6,704

Petroliam Nasional Bhd.

             

7.625% due 10/15/2026

     2,300      2,659

Sino-Forest Corp.

             

9.125% due 08/17/2011

     2,000      2,075

Southern Copper Corp.

             

7.500% due 07/27/2035

     1,000      994
           

              22,073
           

UTILITIES 2.7%

             

Cia Energetica de Sao Paulo

             

10.000% due 03/02/2011

     2,000      2,098

Enersis S.A.

             

7.375% due 01/15/2014

     2,000      2,064

Gaz Capital for Gazprom

             

8.625% due 04/28/2034

     3,000      3,626

Morgan Stanley Bank AG for OAO Gazprom

             

9.625% due 03/01/2013

     2,000      2,350
           

              10,138
           

Total Corporate Bonds & Notes
(Cost $41,475)

            42,803
           

U.S. GOVERNMENT AGENCIES 171.4%

             

Fannie Mae

             

4.250% due 11/25/2024 - 03/25/2033 (b)

     397      325

5.000% due 05/25/2016 - 12/01/2018 (b)

     234      229

5.500% due 08/25/2014 - 09/13/2036 (b)

     92,343      89,658

5.750% due 06/25/2033

     100      96

5.807% due 08/25/2043

     2,500      2,481

5.840% due 10/01/2031

     11      11

5.852% due 09/01/2028

     77      78

5.974% due 11/01/2027

     152      158

6.000% due 02/25/2017 - 04/25/2017 (b)

     23,082      22,947

6.000% due 01/25/2044 (c)

     11,824      11,808

6.150% due 10/01/2031

     52      54

6.354% due 12/01/2028

     219      223

6.414% due 02/01/2027

     103      104

6.459% due 12/01/2028

     135      139

6.478% due 12/01/2025

     184      188

6.486% due 04/01/2030

     88      90

6.500% due 11/01/2028 (c)

     1,451      1,476

6.500% due 09/25/2042 (c)

     7,287      7,389

6.500% due 05/01/2013 - 06/13/2036 (b)

     20,779      21,095

6.500% due 06/25/2044 (c)

     3,225      3,274

6.627% due 02/01/2028

     70      71

6.650% due 03/01/2032

     217      222

6.665% due 02/01/2032

     37      38

7.000% due 04/01/2030 (c)

     13,095      13,466

7.000% due 06/01/2036 (c)

     18,175      18,550

7.000% due 02/01/2015 - 11/25/2043 (b)

     250      294

7.000% due 03/25/2045 (c)

     5,482      5,611

7.065% due 03/01/2032

     300      292

7.220% due 02/01/2030

     101      104

7.500% due 05/01/2022 - 06/25/2044 (b)

     13,157      13,629

7.750% due 03/01/2031

     90      91

7.815% due 12/01/2030

     253      252

8.000% due 07/19/2030

     4,011      4,125

9.440% due 05/15/2021

     2,198      2,403

Federal Housing Administration

             

7.430% due 06/01/2024

     201      203

Freddie Mac

             

5.000% due 10/15/2016 - 02/15/2024 (b)

     524      514

5.500% due 12/01/2031

     541      525

5.574% due 04/01/2033

     73      73

5.999% due 12/01/2026

     55      56

6.000% due 12/15/2016 (c)

     7,816      7,897

6.000% due 04/01/2017 (c)

     2,371      2,389

6.000% due 03/01/2033 (c)

     3,539      3,513

6.000% due 10/15/2012 - 12/12/2036 (b)

     220,076      218,864

6.500% due 04/15/2018 - 03/25/2044 (b)

     77,885      79,179

6.950% due 07/15/2021

     1,607      1,606

7.000% due 06/01/2008 - 10/25/2043 (b)

     27,772      28,469

7.500% due 06/01/2025 - 07/01/2033 (b)

     3,462      3,589

8.000% due 02/15/2022 - 08/01/2024 (b)

     489      499

8.250% due 10/01/2007

     8      8

 

Semiannual Report  |  July 31, 2006  13


Table of Contents

Schedule of Investments (Cont.)

July 31, 2006 (Unaudited)

 

     PRINCIPAL
AMOUNT
(000s)


   VALUE
(000s)


8.500% due 10/01/2030

   $ 1,074    $ 1,129

Government National Mortgage Association

             

5.500% due 04/20/2035 - 06/20/2035 (b)

     1,161      1,128

6.500% due 06/20/2032 - 04/20/2036 (b)

     50,150      51,076

7.000% due 02/15/2024 - 03/20/2031 (b)

     9,818      10,181

7.500% due 07/15/2007 - 02/15/2028 (b)

     2,281      2,379

8.000% due 06/15/2016 - 03/20/2030 (b)

     1,038      1,084

8.500% due 10/15/2016 - 02/15/2031 (b)

     63      67

Small Business Administration

             

7.540% due 08/10/2009

     433      451

7.449% due 08/01/2010

     177      185

6.300% due 07/01/2013 - 06/01/2018 (b)

     1,457      1,487

6.400% due 08/01/2013

     372      379

4.754% due 08/10/2014

     1,762      1,677

5.038% due 03/10/2015

     995      960
           

Total U.S. Government Agencies
(Cost $650,939)

            640,538
           

PRIVATE MORTGAGE-BACKED SECURITIES 34.1%

             

Citigroup Mortgage Loan Trust, Inc.

             

7.000% due 09/25/2033

     150      151

Countrywide Alternative Loan Trust

             

6.500% due 07/25/2035

     2,453      2,418

Countrywide Home Loan Mortgage Pass-Through Trust

             

6.000% due 11/25/2026

     9,967      9,898

7.500% due 11/25/2034 (c)

     6,005      6,204

CS First Boston Mortgage Securities Corp.

             

7.000% due 02/25/2034 (c)

     3,398      3,432

DLJ Commercial Mortgage Corp.

             

7.340% due 10/10/2032

     1,500      1,578

GMAC Mortgage Corp. Loan Trust

             

5.230% due 08/19/2034

     1,388      1,350

GSAA Trust

             

6.000% due 04/01/2034

     7,591      7,491

GSMPS Mortgage Loan Trust

             

7.500% due 06/19/2027

     235      243

8.000% due 09/19/2027

     3,192      3,332

7.000% due 06/25/2043 (c)

     7,903      7,957

GSR Mortgage Loan Trust

             

6.500% due 01/25/2034 (c)

     5,676      5,705

5.500% due 11/25/2035

     5,000      4,693

MASTR Alternative Loans Trust

             

6.500% due 03/25/2034

     2,742      2,747

MASTR Reperforming Loan Trust

             

7.000% due 05/25/2035

     6,217      6,317

7.500% due 07/25/2035

     8,733      9,072

Nomura Asset Acceptance Corp.

             

7.500% due 03/25/2034 (c)

     7,132      7,376

7.000% due 10/25/2034

     5,207      5,324

7.500% due 10/25/2034

     15,620      16,250

Residential Asset Mortgage Products, Inc.

             

7.000% due 08/25/2016 (c)

     5,904      6,033

8.500% due 10/25/2031 (c)

     2,460      2,560

6.500% due 11/25/2031

     356      358

8.500% due 11/25/2031

     2,837      2,947

Washington Mutual MSC Mortgage Pass-Through CTFS

             

7.500% due 04/25/2033

     4,585      4,703

7.000% due 03/25/2034

     860      870

6.500% due 08/25/2034

     6,454      6,523

Wells Fargo Mortgage-Backed Securities Trust

             

4.109% due 06/25/2035

     1,800      1,737
           

Total Mortgage-Backed Securities
(Cost $130,763)

            127,269
           

ASSET-BACKED SECURITIES 0.0%

             

Residential Asset Mortgage Products, Inc.

             

8.500% due 12/25/2031

     68      71
           

Total Asset-Backed Securities
(Cost $70)

            71
           

SOVEREIGN ISSUES 14.1%

             

Brazilian Government International Bond

             

10.500% due 07/14/2014

     700      865

8.000% due 01/15/2018

     902      979

8.750% due 02/04/2025

     4,500      5,197

10.125% due 05/15/2027

     1,538      2,003

12.250% due 03/06/2030

     7,580      11,806

11.000% due 08/17/2040

     2,500      3,211

Ecuador Government International Bond

             

12.000% due 11/15/2012

     3,264      3,403

9.000% due 08/15/2030

     5,712      5,798

Jamaica Government International Bond

             

10.625% due 06/20/2017

     2,000      2,250

8.500% due 02/28/2036

     1,000      905

Pakistan Government International Bond

             

7.125% due 03/31/2016

     2,000      1,865

Panama Government International Bond

             

9.375% due 07/23/2012

     3,325      3,812

Russia Government International Bond

             

11.000% due 07/24/2018

     1,000      1,410

12.750% due 06/24/2028

     300      521

5.000% due 03/31/2030

     937      1,022

Ukraine Government International Bond

             

7.650% due 06/11/2013

     6,200      6,418

 

14  PIMCO Strategic Global Government Fund, Inc.


Table of Contents
     PRINCIPAL
AMOUNT
(000s)


   VALUE
(000s)


 

Venezuela Government International Bond

               

9.375% due 01/13/2034

   $ 1,000    $ 1,238  
           


Total Sovereign Issues
(Cost $42,721)

            52,703  
           


FOREIGN CURRENCY-DENOMINATED ISSUES (g) 2.6%

               

Gaz Capital for Gazprom

               

5.875% due 06/01/2015

   EUR 1,000      1,324  

Mexico Government International Bond

               

8.000% due 07/23/2008

   DEM 12,100      8,496  
           


Total Foreign Currency-Denominated Issues
(Cost $9,361)

            9,820  
           


     NOTIONAL
AMOUNT
(000s)


      

PURCHASED PUT OPTIONS 0.0%

               

Fannie Mae (OTC)

               

5.500% due 09/13/2036

               

Strike @ $88.000 Exp. 09/06/2006

   $ 90,000      0  

Freddie Mac (OTC)

               

6.00% due 11/13/2036

               

Strike @ $86.000 Exp. 11/06/2006

     70,000      1  
           


Total Purchased Put Options
(Cost $19)

            1  
           


     PRINCIPAL
AMOUNT
(000s)


      

SHORT-TERM INSTRUMENTS 2.9%

               

COMMERCIAL PAPER 1.8%

               

General Electric Capital Corp.

               

5.350% due 10/26/2006

   $ 6,800      6,712  
           


REPURCHASE AGREEMENT 0.6%

               

State Street Bank

               

4.900% due 08/01/2006

               

(Dated 07/31/2006. Collateralized by Federal Home Loan Bank 4.875% due 02/15/2007 valued at $2,185. Repurchase proceeds are $2,139.)

     2,139      2,139  
           


U.S. TREASURY BILLS 0.5%

               

4.787% due 08/31/2006 - 09/14/2006 (b)(d)(e)

     2,085      2,074  
           


Total Short-Term Instruments
(Cost $10,926)

            10,925  
           


Total Investments (a) 236.6%
(Cost $886,274)

          $ 884,130  

Other Assets and Liabilities (Net) (136.6%)

            (510,468 )
           


Net Assets 100.0%

          $ 373,662  
           


 

Notes to Schedule of Investments (amounts in thousands, except number of contracts):

 

(a) As of July 31, 2006, portfolio securities with an aggregate market value of $27,825 were valued in good faith and pursuant to guidelines established by the Board of Directors.

 

(b) Securities are grouped by coupon or range of coupons and represent a range of maturities.

 

(c) On July 31, 2006, securities valued at $114,640 were pledged as collateral for reverse repurchase agreements.

 

(d) Securities with an aggregate market value of $995 have been pledged as collateral for swap and swaption contracts on July 31, 2006.

 

(e) Securities with an aggregate market value of $1,079 have been segregated with the custodian to cover margin requirements for the following open futures contracts on July 31, 2006:

 

Description        


   Type

   Expiration
Month


   # of
Contracts


   Unrealized
(Depreciation)


 

U.S. Treasury 5-Year Note September Futures

   Short    09/2006    483    $ (128 )

U.S. Treasury 10-Year Note September Futures

   Short    09/2006    588      (464 )

U.S. Treasury 30-Year Bond September Futures

   Short    09/2006    255      (307 )
                   


                    $ (899 )
                   


 

Semiannual Report  |  July 31, 2006  15


Table of Contents

Schedule of Investments (Cont.)

 

(f) Swap agreements outstanding on July 31, 2006:

 

Interest Rate Swaps

 

Counterparty        


   Floating Rate Index

   Pay/Receive
Floating Rate


   Fixed
Rate


    Expiration
Date


   Notional
Amount


   Unrealized
Appreciation/
(Depreciation)


 

Deutsche Bank AG

   6-month GBP-LIBOR    Receive    4.000 %   12/15/2035    GBP 4,200    $ (37 )

HSBC Bank USA

   6-month GBP-LIBOR    Pay    5.000 %   09/15/2010      9,300      (171 )

Goldman Sachs & Co.

   6-month JPY-LIBOR    Pay    2.500 %   12/15/2035    JPY 555,000      (43 )

Bank of America

   3-month USD-LIBOR    Pay    4.570 %   01/27/2015    $ 12,000      (768 )

Barclays Bank PLC

   3-month USD-LIBOR    Receive    5.000 %   12/20/2008      8,300      (31 )

Barclays Bank PLC

   3-month USD-LIBOR    Pay    5.650 %   06/21/2026      350,000      (650 )

Barclays Bank PLC

   3-month USD-LIBOR    Receive    5.650 %   06/21/2026      350,000      (5,875 )

Barclays Bank PLC

   3-month USD-LIBOR    Receive    5.000 %   12/20/2026      26,000      (105 )

UBS Warburg LLC

   3-month USD-LIBOR    Receive    5.800 %   06/21/2026      350,000      (5,927 )

UBS Warburg LLC

   3-month USD-LIBOR    Pay    5.800 %   06/21/2026      350,000      6,313  

UBS Warburg LLC

   3-month USD-LIBOR    Receive    5.000 %   12/20/2026      47,400      (758 )
                                


                                 $ (8,052 )
                                


 

(g) Forward foreign currency contracts outstanding on July 31, 2006:

 

Type  


        Principal
Amount
Covered by
Contract


   Settlement
Month


   Unrealized
Appreciation


   Unrealized
(Depreciation)


    Net Unrealized
(Depreciation)


 

Sell

   EUR    7,617    08/2006    $ 0    $ (180 )   $ (180 )

Sell

   GBP    68    09/2006      0      (1 )     (1 )

Buy

   JPY    475,926    08/2006      7      (38 )     (31 )

Sell

        26,902    08/2006      0      (2 )     (2 )
                   

  


 


                    $ 7    $ (221 )   $ (214 )
                   

  


 


 

16  PIMCO Strategic Global Government Fund, Inc.


Table of Contents

Notes to Financial Statements

July 31, 2006 (Unaudited)

 

1. GENERAL INFORMATION

 

The Fund commenced operations on February 24, 1994. The Fund is registered under the Investment Company Act of 1940 (the “Act”), as amended, as a closed-end, non-diversified, investment management company organized as a Maryland corporation. The stock exchange symbol of the Fund is “RCS.” Shares of the Fund are traded on the New York Stock Exchange.

 

2. SIGNIFICANT ACCOUNTING POLICIES

 

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

 

Security Valuation. Portfolio securities and other financial instruments for which market quotations are readily available are stated at market value. Portfolio securities and other financial instruments for which market quotes are not readily available are valued at fair value, as determined in good faith and pursuant to guidelines established by the Board of Directors, including certain fixed-income securities which may be valued with reference to securities whose prices are more readily obtainable. Market value is determined at the close of regular trading (normally 4:00 p.m. Eastern Time) on the New York Stock Exchange on each day the New York Stock Exchange is open. Market value is determined on the basis of last reported sales price, or if no sales are reported, as is the case for most securities traded over-the-counter, the mean between representative bid and asked quotations obtained from a quotation reporting system or from established market makers. The prices of certain portfolio securities or other financial instruments may be determined at a time prior to the close of regular trading on the New York Stock Exchange. Fair valuation may be used if significant events occur after the close of the relevant markets and prior to the close of regular trading on the New York Stock Exchange that materially affect the values of such securities or financial instruments. The net asset value per share (“NAV”) is determined on each business day as of 4:00 p.m. Eastern Time. Fixed-income securities are normally valued on the basis of quotes obtained from brokers and dealers or pricing services. 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. Certain fixed-income securities purchased on a delayed-delivery basis are marked to market daily until settlement at the forward settlement value. Short-term investments, which mature in 60 days or less are valued at amortized cost, which approximates market value. Exchange traded options, futures and options on futures are valued at the settlement price determined by the relevant exchange. The prices used by the Fund may differ from the value that would be realized if the securities were sold and the differences could be material to the financial statements. The NAV is available on the website maintained by PIMCO on behalf of the Fund at www.rcsfund.com, by clicking on the Daily NAV link.

 

Securities Transactions and Investment Income. Securities transactions are recorded as of the trade date. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Securities purchased on a when-issued basis are subject to market value fluctuations during this period. On the commitment date of such purchases, the Fund designates specific assets with a value at least equal to the commitment, to be utilized to settle the commitment. The proceeds to be received from delayed-delivery sales are included in the Fund’s net assets on the date the commitment is executed. Accordingly, any fluctuation in the value of such assets is excluded from the Fund’s net asset value while the commitment is in effect. Realized gains and losses from securities sold are recorded on the identified cost basis. Dividend income is recorded on the ex-dividend date, except certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Interest income, adjusted for the accretion of discounts and amortization of premiums, is recorded on the accrual basis. Paydown gains and losses on mortgage-and asset-backed securities are recorded as a component of interest income in the Statement of Operations.

 

Borrowing Under Mortgage Dollar Rolls and Forward Commitments. 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 in the Statement of Operations. During the roll period, the Fund forgoes principal and interest paid on the securities.

 

Semiannual Report  |  July 31, 2006  17


Table of Contents

Notes to Financial Statements (Cont.)

 

The Fund accounts for dollar rolls as financing transactions. Dollar rolls 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, 2006, there were $379,894,824 in dollar roll commitments.

 

Leverage. The Fund is authorized to borrow funds and utilize leverage subject to certain limitations under the Act. The Fund’s ability to use leverage creates an opportunity for increased net income, but at the same time poses special risks. Certain transactions may give rise to a form of leverage. Such transactions may include, among others, reverse repurchase agreements, loans of portfolio securities, and the use of mortgage-dollar rolls, when-issued, delayed-delivery or forward commitment transactions. The use of leverage increases the overall duration risk of the Fund and creates an increased sensitivity of the Fund to rising short-term interest rates. The use of leverage, which is generally the economic equivalent of borrowing to purchase securities, thus creates risks of greater volatility of the net asset value and market value of Fund shares. If the income from the securities purchased with borrowed funds is not sufficient to cover the cost of borrowing, the net income of the Fund will be less than if borrowing has not been used, reducing the amount available for distribution to shareholders. Yield curve flattening reduces the potential benefits to the Fund from borrowing. Conversely, a steep yield curve increases the potential benefit to the Fund from borrowing.

 

Dividends and Distributions to Shareholders. The Fund expects to pay monthly dividends of net investment income (other than net realized gains) to the shareholders. Under the Fund’s current policy, which may be changed at any time by the Fund’s Board of Directors, the Fund’s monthly dividends will be made at a level that reflects the past and projected performance of the Fund, which over time is expected to result in the distribution of all net investment income of the Fund. Distributions, if any, of net realized short- or long-term capital gains will be distributed no less frequently than once each year. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States (“GAAP”). Differences between tax regulations and GAAP may change the fiscal year when income and capital items are recognized for tax and GAAP purposes. Examples of events that give rise to timing differences include wash sales, straddles, net operating losses and capital loss carryforwards. Further, the character of investment income and capital gains may be different for certain transactions under the two methods of accounting. Examples of characterization differences include the treatment of mortgage paydowns, swaps, foreign currency transactions and contingent debt instruments. As a result, income dividends and capital gain distributions paid during a fiscal period may differ significantly from the net investment income and realized capital gain reported in a Fund’s annual financial statements presented under GAAP.

 

Federal Income Taxes. The Fund intends to qualify as a regulated investment company and distribute all of its taxable income and net realized gains, if applicable, to shareholders. Accordingly, no provision for federal income taxes has been made.

 

Foreign Currency. The accounting records of the Fund are maintained in U.S. dollar. The market values of foreign securities, currency holdings and other assets and liabilities are translated into U.S. dollar based on the current exchange rates each business day. Fluctuations in the value of currency holdings and other assets and liabilities resulting from changes in exchange rates are recorded as unrealized foreign currency gains or losses. Realized gains or losses and unrealized appreciation or depreciation on investment securities and income and expenses are translated on the respective dates of such transactions. The effects of changes in foreign currency exchange rates on investments in securities are not segregated in the Statement of Operations from the effects of changes in market prices of those securities, but are included with the net realized and unrealized gain or loss on investment securities. Investing in securities of foreign companies and foreign governments involves special risks and considerations not typically associated with investing in U.S. companies and securities of the U.S. government. These risks include revaluation of currencies and the risk of expropriation. Moreover, the markets for securities of many foreign companies and foreign governments may be less liquid and the prices of such securities may be more volatile than those of comparable U.S. companies and the U.S. government.

 

Non-U.S. currency symbols utilized throughout reports are defined as follows:

 

DEM

  German mark

EUR

  euro

GBP

  British pound

JPY

  Japanese yen

 

18  PIMCO Strategic Global Government Fund, Inc.


Table of Contents

July 31, 2006 (Unaudited)

 

Forward Currency Transactions. The Fund may enter into forward currency contracts and forward cross-currency contracts in connection with settling planned purchases or sales of securities, to hedge the currency exposure associated with some or all of the Fund’s securities or as a part of an investment strategy. A forward currency contract is an agreement between two parties to buy and sell a currency at a set price on a future date. The market value of a forward currency contract fluctuates with changes in forward currency exchange rates. Forward currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. Realized gains or losses equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed are recorded upon delivery or receipt of the currency or, if a forward currency contract is offset by entering into another forward currency contract with the same broker, upon settlement of the net gain or loss. These contracts may involve market risk in excess of the unrealized gain or loss reflected in the Fund’s Statement of Assets and Liabilities. In addition, the Fund could be exposed to risk if the counterparties are unable to meet the terms of the contracts or if the value of the currency changes unfavorably to the U.S. dollar.

 

Futures Contracts. The Fund is authorized to enter into futures contracts. The Fund may use futures contracts to manage its exposure to the securities markets or to movements in interest rates and currency values. The primary risks associated with the use of futures contracts are the imperfect correlation between the change in market value of the securities held by the Fund and the prices of futures contracts, the possibility of an illiquid market, and the inability of the counterparty to meet the terms of the contract. Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, the Fund is required to deposit with its custodian, in a segregated account in the name of the futures broker, an amount of cash or U.S. government and agency obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed in the Statement of Assets and Liabilities.

 

Guarantees and Indemnifications. Under the Fund’s organizational documents, each Director, officer, employee or other agent of the Fund (including the Fund’s investment manager) is indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of indemnification clauses. 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 occurred. However, the Fund has not had prior claims or losses pursuant to these contracts, and believes the risk of loss to be remote.

 

Options Contracts. The Fund may write call and put options on futures, swaps, securities or currencies it owns or in which it may invest. Writing put options tends to increase the Fund’s exposure to the underlying instrument. Writing call options tends to decrease the Fund’s exposure to the underlying instrument. When the Fund writes a call or put option, an amount equal to the premium received is recorded as a liability and subsequently marked to market to reflect the current value of the option written. These liabilities are reflected as written options outstanding in the Statement of Assets and Liabilities. Payments received or made, if any, from writing options with premiums to be determined on a future date are reflected as such on the Statement of Assets and Liabilities. Premiums received from writing options which expire are treated as realized gains. Premiums received from writing options which are exercised or closed are added to the proceeds or offset against amounts paid on the underlying future, swap, security or currency transaction to determine the realized gain or loss. The Fund as a writer of an option has no control over whether the underlying future, swap, security or currency may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the future, swap, security or currency underlying the written option. There is the risk the Fund may not be able to enter into a closing transaction because of an illiquid market.

 

The Fund may also purchase put and call options. Purchasing call options tends to increase the Fund’s exposure to the underlying instrument. Purchasing put options tends to decrease the Fund’s exposure to the underlying instrument. The Fund pays a premium which is included in the Fund’s Statement of Assets and Liabilities as an investment and subsequently marked to market to reflect the current value of the option. Premiums paid for purchasing options which expire are treated as realized losses. The risk associated with purchasing put and call options is limited to the premium paid. Premiums paid for purchasing options which are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying future, swap, security or currency transaction to determine the realized gain or loss.

 

Semiannual Report  |  July 31, 2006  19


Table of Contents

Notes to Financial Statements (Cont.)

 

Repurchase Agreements. The Fund may engage in repurchase transactions. Under the terms of a typical repurchase agreement, the Fund takes possession of an underlying debt obligation subject to an obligation of the seller to repurchase, and the Fund to resell, the obligation at an agreed-upon price and time. The market value of the collateral must be equal at all times to the total amount of the repurchase obligations, including interest. Securities purchased under repurchase agreements are reflected as an asset in the Statement of Assets and Liabilities. Generally, in the event of counterparty default, the Fund has the right to use the collateral to offset losses incurred. If the counterparty should default, the Fund will seek to sell the securities which it holds as collateral. This could involve procedural costs or delays in addition to a loss on the securities if their value should fall below their repurchase price.

 

Reverse Repurchase Agreements. Reverse repurchase agreements involve the sale of a portfolio-eligible security by the Fund, coupled with an agreement to repurchase the security at a specified date and price. Reverse repurchase agreements involve the risk that the market value of securities retained by the Fund may decline below the repurchase price of the securities sold by the Fund, which the Fund is obligated to repurchase. Reverse repurchase agreements are considered to be borrowings by the Fund. To the extent the Fund collateralizes its obligations under reverse repurchase agreements, such transactions will not be deemed subject to the 300% asset coverage requirements imposed by the Act. The Fund will segregate assets determined to be liquid by PIMCO or otherwise cover its obligations under reverse repurchase agreements. The average amount of borrowings outstanding during the six months ended July 31, 2006 was $107,120,965 at a weighted average interest rate of 4.90%.

 

Swap Agreements. The Fund may invest in swap agreements. A swap is an agreement to exchange the return generated by one instrument for the return generated by another instrument. The Fund may enter into interest rate swap agreements to manage its exposure to interest rates and credit risks.

 

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.

 

Swaps are marked to market daily based upon quotations from market makers and the change in value, if any, is recorded as unrealized gain or loss in the Statement of Operations. 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 in 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 by the Fund are included as part of realized gain (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.

 

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. GNMA, a wholly owned U.S. government corporation, is authorized to guarantee, with the full faith and 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.

 

3. FEES, EXPENSES AND RELATED PARTY TRANSACTIONS

 

Investment Advisory Fee. PIMCO is a majority-owned subsidiary of Allianz Global Investors of America L.P. (“AGI”) and serves as investment adviser (the “Adviser”) to the Fund, pursuant to an investment advisory contract. The Adviser receives a monthly fee from the Fund at an annual rate of 0.82% based on average daily net assets of the Fund during the month. Prior to June 1, 2006, the investment advisory fee was 0.85%.

 

20  PIMCO Strategic Global Government Fund, Inc.


Table of Contents

July 31, 2006 (Unaudited)

 

Administration Fee. PIMCO serves as administrator (the “Administrator”) and provides administrative services to the Fund for which it receives from the Fund a monthly administrative fee at an annual rate of 0.05% based on average daily net assets of the Fund during the month.

 

Expenses. The Fund is responsible for the following expenses: (i) independent auditors’ fees; (ii) printing fees; (iii) transfer agent fees; (iv) custody and accounting fees; (v) taxes and governmental fees; (vi) brokerage fees and commissions and other portfolio transaction expenses; (vii) the costs of borrowing money, including interest expenses and bank overdraft charges; (viii) fees and expenses of the Directors who are not “interested persons”, as defined in the Act, of PIMCO or the Fund (each an “Independent Director”), and any counsel retained exclusively for their benefit; (ix) legal fees; and (x) extraordinary expenses, including costs of litigation and indemnification expenses.

 

Each Independent Director receives from the Fund an annual retainer of $10,000, plus $2,000 for each regular meeting of the Board of Directors, $1,500 for each special meeting of the Board, and $1,000 for each committee meeting, in each case attended either in person or telephonically, plus reimbursement of related expenses.

 

4. PURCHASES AND SALES OF SECURITIES

 

The length of time the Fund has held a particular security is not generally a consideration in investment decisions. A change in the securities held by the Fund is known as “portfolio turnover.” The Fund may engage in frequent and active trading of portfolio securities to achieve its investment objective, particularly during periods of volatile market movements. High portfolio turnover (e.g., over 100%) involves correspondingly greater expenses to the Fund, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestments in other securities. Such sales may also result in realization of taxable capital gains, including short-term capital gains (which are generally taxed at ordinary income tax rates). The trading costs and tax effects associated with portfolio turnover may adversely affect the Fund’s performance.

 

Purchases and sales of securities (excluding short-term investments) for the six months ended July 31, 2006 were as follows (amounts in thousands):

 

U.S Government/Agency    Non-U.S. Government/Agency
Purchases    Sales    Purchases    Sales
$ 435,766    $ 398,897    $ 24,656    $ 9,837

 

5. FEDERAL INCOME TAX MATTERS

 

As of July 31, 2006, the aggregate cost of investments was the same for federal income tax and financial statement purposes. The net unrealized appreciation (depreciation) of investments securities for federal income tax purposes were as follows (amounts in thousands):

 

Aggregate Gross
Unrealized
Appreciation
   Aggregate Gross
Unrealized
(Depreciation)
    Net Unrealized
(Depreciation)
 
$ 12,348    $ (14,492 )   $ (2,144 )

 

6. REGULATORY AND LITIGATION MATTERS

 

Since February 2004, PIMCO, Allianz Global Investors of America L.P. (formerly known as Allianz Dresdner Asset Management of America L.P.), PEA Capital LLC (an entity affiliated with PIMCO through common ownership) and Allianz Global Investors Distributors LLC (an entity affiliated with PIMCO through common ownership), and certain of their affiliates, including the PIMCO Funds, the Allianz Funds (formerly known as PIMCO Funds: Multi-Manager Series), and the Trustees and employees of the PIMCO Funds, have been named as defendants in fifteen lawsuits filed in various jurisdictions. Eleven of those lawsuits concern “market timing,” and they have been transferred to and consolidated for pre-trial proceedings in a multi-district litigation proceeding in the U.S. District Court for the District of Maryland; the other four lawsuits concern “revenue sharing” and have been consolidated into a single action in the U.S. District Court for the District of Connecticut. The lawsuits have been commenced as putative class actions on behalf of investors who purchased, held or redeemed shares of the various series of the PIMCO Funds and the Allianz Funds during specified periods, or as derivative actions on behalf of the PIMCO Funds and Allianz Funds.

 

Semiannual Report  |  July 31, 2006  21


Table of Contents

Notes to Financial Statements (Cont.)

 

The market timing actions in the District of Maryland generally allege that certain hedge funds were allowed to engage in “market timing” in certain of the Allianz Funds and the PIMCO Funds and this alleged activity was not disclosed. Pursuant to tolling agreements entered into with the derivative and class action plaintiffs, PIMCO, the Trustees, and certain employees of PIMCO who were previously named as defendants have all been dropped as defendants in the market timing actions; the plaintiffs continue to assert claims on behalf of the shareholders of the PIMCO Funds or on behalf of the PIMCO Funds themselves against other defendants. By order dated November 3, 2005, the U.S. District Court for the District of Maryland granted the PIMCO Funds’ motion to dismiss claims asserted against it in a consolidated amended complaint where the PIMCO Funds were named, in the complaint, as a nominal defendant. The revenue sharing action in the District of Connecticut generally alleges that fund assets were inappropriately used to pay brokers to promote the Allianz Funds and PIMCO Funds, including directing fund brokerage transactions to such brokers, and that such alleged arrangements were not fully disclosed to shareholders. On August 11, 2005 the U.S. District Court for the District of Connecticut conducted a hearing on defendants’ motion to dismiss the consolidated amended complaint in the revenue sharing action but has not yet ruled on the motion to dismiss. The market timing and revenue sharing lawsuits seek, among other things, unspecified compensatory damages plus interest and, in some cases, punitive damages, the rescission of investment advisory contracts, the return of fees paid under those contracts and restitution.

 

Two nearly identical class action civil complaints have been filed in August 2005, in the Northern District of Illinois Eastern Division, alleging that the plaintiffs each purchased and sold a 10-year Treasury note futures contract and suffered damages from an alleged shortage when PIMCO held both physical and futures positions in 10-year Treasury notes for its client accounts. The two actions have been consolidated into one action, and the two separate complaints have been replaced by a consolidated complaint. PIMCO is a named defendant, and the PIMCO Funds have been added as a defendant, to the consolidated action. PIMCO strongly believes the complaint (and any consolidated complaint filed hereafter) is without merit and intends to vigorously defend itself.

 

Certain series of the PIMCO Funds were recently served in an adversary proceeding brought by the Official Committee of Asbestos Claimants of G-I Holdings, Inc. in G-I Holdings, Inc.’s bankruptcy in the District of New Jersey. PIMCO was previously named in this lawsuit and remains a defendant. The plaintiff seeks to recover for the bankruptcy estate assets that were transferred by the predecessor entity of G-I Holdings, Inc. to a wholly-owned subsidiary in 1994. The subsidiary has since issued notes, of which certain series of the PIMCO Funds are alleged to be holders. The complaint alleges that in 2000, more than two hundred noteholders—including certain series of the PIMCO Funds - were granted a second priority lien on the assets of the subsidiary in exchange for their consent to a refinancing transaction and the granting of a first priority lien to the lending banks. The plaintiff is seeking invalidation of the lien in favor of the noteholders and/or the value of the lien. On June 21, 2006, the District of New Jersey overturned the Bankruptcy Court’s decision giving permission to file the adversary proceeding and remanded the matter to Bankruptcy Court for further proceedings. On June 30, 2006, the plaintiff filed a motion to reconsider in the District Court.

 

The foregoing speaks only as of the date of this report. None of the aforementioned complaints alleges that any improper activity took place in the Fund. PIMCO believes that these developments will not have a material adverse effect on the Fund or on PIMCO’s ability to perform its investment advisory services on behalf of the Fund.

 

22  PIMCO Strategic Global Government Fund, Inc.


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Privacy Policy* (Unaudited)

 

The Funds consider customer privacy to be a fundamental aspect of their relationships with shareholders and are committed to maintaining the confidentiality, integrity and security of their current, prospective and former shareholders’ personal information. To ensure their shareholders’ privacy, the Funds have developed policies that are designed to protect this confidentiality, while allowing shareholder needs to be served.

 

Obtaining Personal Information

 

In the course of providing shareholders with products and services, the Funds and certain service providers to the Funds, such as the Funds’ investment advisers (“Advisers”), may obtain non-public personal information about shareholders, which may come from sources such as account applications and other forms, from other written, electronic or verbal correspondence, from shareholder transactions, from a shareholder’s brokerage or financial advisory firm, financial adviser or consultant, and/or from information captured on the Funds’ internet websites.

 

Respecting Your Privacy

 

As a matter of policy, the Funds do not disclose any personal or account information provided by shareholders or gathered by the Funds to non-affiliated third parties, except as required or permitted by law or as necessary for such third parties to perform their agreements with respect to the Funds. As is common in the industry, non-affiliated companies may from time to time be used to provide certain services, such as preparing and mailing prospectuses, reports, account statements and other information, conducting research on shareholder satisfaction and gathering shareholder proxies. A Fund’s Distributor may also retain non-affiliated companies to market the Fund’s shares or products which use the Fund’s shares and enter into joint marketing agreements with other companies. These companies may have access to a shareholder’s personal and account information, but are permitted to use this information solely to provide the specific service or as otherwise permitted by law. In most cases, the shareholders will be clients of a third party, but the Funds may also provide a shareholder’s personal and account information to the shareholder’s respective brokerage or financial advisory firm.

 

Sharing Information with Third Parties

 

The Funds reserve the right to disclose or report personal information to non-affiliated third parties, in limited circumstances, where the Funds believe in good faith that disclosure is required under law to cooperate with regulators or law enforcement authorities, to protect their rights or property or upon reasonable request by any Fund in which a shareholder has chosen to invest. In addition, the Funds may disclose information about a shareholder’s accounts to a non-affiliated third party with the consent of the shareholder.

 

Sharing Information with Affiliates

 

The Funds may share shareholder information with their affiliates in connection with servicing their shareholders’ accounts or to provide shareholders with information about products and services that the Funds or their Advisers, principal underwriters or their affiliates (“Service Affiliates”) believe may be of interest to such shareholders. The information that the Funds share may include, for example, a shareholder’s participation in one of the Funds or in other investment programs sponsored by a Service Affiliate, a shareholder’s ownership of certain types of accounts (such as IRAs), or other data about a shareholder’s accounts. The Funds’ Service Affiliates, in turn, are not permitted to share shareholder information with non-affiliated entities, except as required or permitted by law.

 

Procedures to Safeguard Private Information

 

The Funds take seriously the obligation to safeguard shareholder non-public personal information. In addition to this policy, the Funds have also implemented procedures that are designed to restrict access to a shareholder’s non-public personal information only to internal personnel who need to know that information in order to provide products or services to such shareholders. In order to guard a shareholder’s non-public personal information, physical, electronic and procedural safeguards are in place.

 


* This Privacy Policy applies to the following entities: PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO Commercial Mortgage Securities Trust, Inc. and PIMCO Strategic Global Government Fund, Inc. (collectively, the “Funds”).

 

Semiannual Report  |  July 31, 2006  23


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Dividend Reinvestment Plan (Unaudited)

 

What is the Dividend Reinvestment Plan for the Fund?

 

The Dividend Reinvestment Plan (the “Plan”) offers shareholders in the Fund an efficient and simple way to reinvest dividends and capital gains distributions, if any, in additional shares of the Fund. Each month the Fund will distribute to shareholders substantially all of its net investment income. The Fund expects to distribute at least annually any net realized long-term or short-term capital gains. Computershare Trust Co., N.A. acts as the Plan Agent for shareholders in administering the Plan.

 

Who can participate in the Plan?

 

All shareholders in the Fund may participate in the Plan by following the instructions for enrollment provided later in this section.

 

What does the Plan offer?

 

The Plan offers shareholders a simple and convenient means to reinvest dividends and capital gains distributions in additional shares of the Fund.

 

How is the reinvestment of income dividends and capital gains distributions accomplished?

 

If you are a participant in the Plan, your dividends and capital gains distributions will be reinvested automatically for you, increasing your holding in the Fund. If the Fund declares a dividend or capital gains distribution payable either in cash or in shares of the Fund, you will automatically receive shares of the Fund. If the market price of shares is equal to or exceeds the net asset value per share on the Valuation Date (as defined below), Plan participants will be issued shares valued at the net asset value most recently determined or, if net asset value is less than 95% of the then-current market price, then at 95% of the market price.

 

If the market price is less than the net asset value on the Valuation Date, the Plan Agent will buy shares in the open market, on the New York Stock Exchange (“NYSE”) or elsewhere, for the participants’ accounts. If, following the commencement of the purchase and before the Plan Agent has completed its purchases, the market price exceeds the net asset value, the average per share purchase price paid by the Plan Agent may exceed the net asset value, resulting in the acquisition of fewer shares than if the dividend or capital gains distribution had been paid in shares issued by the Fund at net asset value. Additionally, if the market price exceeds the net asset value before the Plan Agent has completed its purchases, the Plan Agent is permitted to cease purchasing shares and the Fund may issue the remaining shares at a price equal to the greater of net asset value or 95% of the then-current market price. In a case where the Plan Agent has terminated open market purchases and the Fund has issued the remaining shares, the number of shares received by the participant will be based on the weighted average of prices paid for shares purchased in the open market and the price at which the Fund issues the remaining shares. The Plan Agent will apply all cash received to purchase shares as soon as practicable after the payment date of the dividend or capital gains distribution, but in no event later than 30 days after that date, except when necessary to comply with applicable provisions of the federal securities laws.

 

The Valuation Date is the dividend or capital gains distribution payment date or, if that date is not a NYSE trading day, the immediately preceding trading day. All reinvestments are in full and fractional shares, carried to three decimal places.

 

Is there a cost to participate?

 

There is no direct charge to participants for reinvesting dividends and capital gains distributions, since the Plan Agent’s fees are paid by the Fund. There are no brokerage charges for shares issued directly by the Fund. Whenever shares are purchased on the NYSE or elsewhere in connection with the reinvestment of dividends or capital gains distributions, each participant will pay a pro rata portion of brokerage commissions. Brokerage charges for purchasing shares through the Plan are expected to be less than the usual brokerage charges for individual transactions, because the Plan Agent will purchase shares for all participants in blocks, resulting in lower commissions for each individual participant.

 

What are the tax implications for participants?

 

You will receive tax information annually for your personal records to help you prepare your federal income tax return. The automatic reinvestment of dividends and capital gains distributions does not affect the tax characterization of the dividends and capital gains. Other questions should be directed to your tax adviser.

 

24  PIMCO Strategic Global Government Fund, Inc.


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(Unaudited)

 

How do participating shareholders benefit?

 

You will build holdings in the Fund easily and automatically at reduced costs. You will receive a detailed account statement from the Plan Agent, showing total dividends and distributions, dates of investments, shares acquired and price per share, and total shares of record held by you and by the Plan Agent for you. The proxy you receive in connection with the Fund’s shareholder meetings will include shares purchased for you by the Plan Agent according to the Plan.

 

As long as you participate in the Plan, shares acquired through the Plan will be held for you in safekeeping in non-certificated form by Computershare Trust Co., N.A., the Plan Agent. This convenience provides added protection against loss, theft or inadvertent destruction of certificates.

 

Whom should I contact for additional information?

 

If you hold shares in your own name, please address all notices, correspondence, questions or other communications regarding the Plan to:

 

PIMCO Strategic Global Government Fund, Inc.

c/o Computershare Trust Co., N.A.

250 Royall Street

Canton, MA 02021

Telephone: 1-800-213-3606

 

If your shares are not held in your name, you should contact your brokerage firm, bank or other nominee for more information.

 

How do I enroll in the Plan?

 

If you hold shares of the Fund in your own name, you are already enrolled in this Plan. Your reinvestments will begin with the first dividend after you purchase your shares. If your shares are held in the name of a brokerage firm, bank, or other nominee, you should contact your nominee to see if it will participate in the Plan on your behalf. If your nominee is unable to participate in the Plan on your behalf, you may want to request that your shares be registered in your name with the Plan Agent so that you can participate in the Plan.

 

Once enrolled in the Plan, may I withdraw from it?

 

You may withdraw from the Plan without penalty at any time by providing written notice to Computershare Trust Co., N.A. Elections to withdraw from the Plan will be effective for distributions with a Record Date of at least ten days after such elections are received by the Plan Agent.

 

If you withdraw, you will receive, without charge, a share certificate issued in your name for all full shares accumulated in your account from dividend and capital gains distributions, plus a check for any fractional shares based on market price.

 

Experience under the Plan may indicate that changes are desirable. Accordingly, either the Fund or the Plan Agent may amend or terminate the Plan. Participants will receive written notice at least 30 days before the effective date of any amendment. In the case of termination, participants will receive written notice at least 30 days before the record date of any dividend or capital gains distribution by the Fund.

 

Semiannual Report  |  July 31, 2006  25


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2006 Shareholder Meeting Results (Unaudited)

 

The Fund’s annual shareholders meeting was held on June 9, 2006. The results of votes taken among shareholders on the proposal presented at the meeting are listed below.

 

Proposal 1

 

To elect one Director to the Board of Directors of the Fund

 

    

# of

Shares Voted


   % of
Shares Voted


 

R. Wesley Burns

           

For

   35,034,286    98.6 %

Withheld

   486,725    1.4 %
    
  

Total

   35,521,011    100.0 %
    
  

 

Carter W. Dunlap, Jr., Francis E. Lundy, James M. Whitaker and Gregory S. Young continued in office as Directors.

 

26  PIMCO Strategic Global Government Fund, Inc.


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Approval of Renewal of Investment Management Agreement (Unaudited)

 

On May 24, 2006, the Board of Directors (the “Board”) of PIMCO Strategic Global Government Fund, Inc. (the “Fund”), including a majority of the independent Directors, approved the renewal of the Fund’s Investment Management Agreement (the “Agreement”) with Pacific Investment Management Company LLC (“PIMCO”) for an additional one-year term. The information, material factors and conclusions that formed the basis for the Board’s approval are described below.

 

1. Information Received

 

A. Materials Reviewed

 

During the course of each year, the Directors receive a wide variety of materials relating to the services provided by PIMCO. At each of its quarterly meetings, the Board reviews the Fund’s investment performance and matters relating to fund operations, including the Fund’s compliance program, shareholder services, valuation, custody, and other information relating to the nature, extent and quality of services provided by PIMCO to the Fund. In considering whether to approve renewal of the Agreement, the Board also reviewed supplementary information, including comparative industry data, with regard to investment performance, advisory fees and expenses, financial and profitability information regarding PIMCO and information about the personnel providing investment management and administrative services to the Fund.

 

B. Review Process

 

In connection with the renewal of the Agreement, the Board reviewed written materials prepared by PIMCO dated April 27 and May 19, 2006, in response to a request from counsel to the independent Directors. On May 9 and May 22, 2006, the independent Directors met to discuss the information provided by PIMCO. The Board received assistance and advice regarding applicable legal standards from counsel to the independent Directors, and reviewed comparative fee and performance data prepared at the Board’s request by Lipper, Inc. (“Lipper”), an independent provider of investment company performance and fee and expense data, and a report prepared by PIMCO containing comparative performance and expense ratio information from Morningstar. The Board also heard oral presentations on matters related to the Agreement and met both as a full Board and as the independent Directors alone, without management present. In deciding to recommend the renewal of the Agreement, the Board did not identify any single factor or particular information that, in isolation, was controlling. This summary describes the most important, but not all, of the factors considered by the Board.

 

2. Nature, Extent and Quality of Services

 

A. PIMCO and its Personnel and Resources

 

The Board considered the depth and quality of PIMCO’s investment management process, including: its global research capabilities; the experience, capability and integrity of its senior management and other personnel; the low turnover rate of its key personnel; the overall financial strength and stability of its organization; and the ability of its organizational structure to address the recent growth in assets under PIMCO’s management. The Board also considered that PIMCO makes available to its investment professionals a variety of resources and systems relating to investment management, compliance, trading, performance and portfolio accounting. The Board considered PIMCO’s commitment to investing in information technology supporting investment management and compliance, as well as PIMCO’s continuing efforts to attract and retain qualified personnel and to maintain and enhance its resources and systems.

 

B. Other Services

 

The Board considered PIMCO’s policies, procedures and systems to assure compliance with applicable laws and regulations and its commitment to these programs; its efforts to keep the Directors informed about matters relevant to the Fund and its shareholders; and its attention to matters that may involve conflicts of interest with the Fund. The Board also considered the nature, extent, quality and cost of administrative services provided by PIMCO to the Fund under the Agreement and the terms of the Agreement. Ultimately, the Board concluded that the nature, extent and quality of the services provided by PIMCO has benefited and will likely continue to benefit the Fund and its shareholders.

 

3. Investment Performance

 

The Board examined both the short-term and long-term investment performance of the Fund relative to its relevant index for the one-, two-, three-, five-, ten-year, and since inception periods ended January 31, 2006, in a report prepared by Lipper. The Board also considered the performance of the Fund relative to its peer group of similar funds in a report prepared by PIMCO containing information from Morningstar. It was noted that PIMCO had assumed management of the Fund in February 2002, and that the three year annualized net asset value return for the Fund for the

 

Semiannual Report  |  July 31, 2006  27


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Approval of Renewal of Investment Management Agreement (Cont.)

 

period ended March 31, 2006 was 4.86% versus 2.66% for the Fund’s primary benchmark, the Lehman Brothers Intermediate Aggregate Bond Index. With respect to the performance of the Fund relative to its peer group, it was noted that the Fund’s net asset value performance was below average compared to its Morningstar peers for the one- and three-year periods ended March 31, 2006 but above average for the five-year period ended March 31, 2006. It was also noted that the Fund’s net asset value performance was below average compared to its Lipper peer group. The Directors noted that, in PIMCO’s view, many funds in the Morningstar and Lipper peer groups have greater investment discretion than the Fund, thereby limiting the usefulness of the comparisons of the Fund’s performance with that of the funds in those peer groups. Overall, the Directors determined that while the Fund had underperformed relative to its peer groups, the Fund continued to outperform its benchmark and PIMCO’s continued management is likely to benefit the Fund and its shareholders.

 

4. Advisory Fees

 

The Board considered the services to be provided under the Agreement and the advisory fees. The Board compared the Fund’s total expenses to other funds in the Expense Group provided by Lipper and PIMCO and found the Fund’s total expenses to be reasonable. The Board noted that although the Fund’s combined fees under the Agreement and the Administrative Services Agreement were slightly higher than the actual management fees paid by its Lipper peer group average, the Fund’s total expense ratio was lower than the peer group average. It was also noted that PIMCO proposed a reduction in its advisory fee from an annual rate of 0.85% to 0.82% of the Fund’s average daily net assets. PIMCO does not manage any separate accounts with a similar investment objective to the Fund; therefore the Board could not consider the fees charged by PIMCO to comparable separate accounts. The Board concluded that the Fund’s advisory fees were reasonable in relation to the value of the services provided.

 

Based on the information presented by PIMCO and Lipper, members of the Board then determined, in the exercise of their business judgment, that the level of the advisory fees charged by PIMCO, as well as the total expenses of the Fund, is reasonable and renewal of the Agreement will likely benefit the Fund and its shareholders.

 

5. Adviser Costs, Level of Profits and Economies of Scale

 

The Board reviewed information regarding PIMCO’s costs of providing services to the Fund as a whole, as well as the resulting level of profits to PIMCO and reviewed information on the reported results of several large publicly held investment management companies. The Board noted that it had also received information regarding the structure and manner in which PIMCO’s investment professionals were compensated, and PIMCO’s view of the relationship of such compensation to the attraction and retention of quality personnel. The Board considered PIMCO’s need to invest in technology, infrastructure and staff to reinforce and offer new services and to accommodate changing regulatory requirements.

 

With respect to potential economies of scale, the Board noted that, as a closed-end fund, the Fund was not expected to materially increase in size. Therefore, the Board did not consider economies of scale as a principal factor in assessing the fee rates payable under the Agreement.

 

6. Ancillary Benefits

 

The Board considered other benefits received by PIMCO and its affiliates as a result of PIMCO’s relationship with the Fund, including possible ancillary benefits to PIMCO’s institutional investment management business due to the reputation and market penetration of the Fund. The Board also reviewed PIMCO’s soft dollar policies and procedures, noting that PIMCO has adopted a policy not to accept soft dollars.

 

7. Conclusions

 

Based on their review, including their consideration of each of the factors referred to above, the Board concluded that the Agreement, revised to reflect the reduction of the advisory fee to an annual rate of 0.82% of the Fund’s average daily net assets, continued to be fair and reasonable to the Fund and its shareholders, that the Fund’s shareholders received reasonable value in return for the advisory fees and other amounts paid to PIMCO by the Fund, and that the renewal of the Agreement was in the best interests of the Fund and its shareholders.

 

28  PIMCO Strategic Global Government Fund, Inc.


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OTHER INFORMATION

 

Investment Adviser and Administrator

 

Pacific Investment Management Company LLC

840 Newport Center Drive

Newport Beach, California 92660

 

Transfer Agent

 

Computershare Trust Co., N.A.

250 Royall Street

Canton, Massachusetts 02021

 

Custodian

 

State Street Bank & Trust Co.

801 Pennsylvania Avenue

Kansas City, Missouri 64105

 

Legal Counsel

 

Dechert LLP

1775 I Street, N.W.

Washington, D.C. 20006

 

Independent Registered Public Accounting Firm

 

PricewaterhouseCoopers LLP

1055 Broadway

Kansas City, Missouri 64105


Table of Contents

PIMCO STRATEGIC GLOBAL

GOVERNMENT FUND, INC.

 

This report, including the financial statements herein, is provided to the shareholders of PIMCO Strategic Global Government Fund, Inc. for their information. This 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

 

3675-SAR-06


Table of Contents

Item 2.

  

Code of Ethics.

     The information required by this item 2 is only required in an annual report on this Form N-CSR.

Item 3.

   Audit Committee Financial Expert.
     The information required by this item 3 is only required in an annual report on this Form N-CSR.

Item 4.    

   Principal Accountant Fees and Services.
     The information required by this item 4 is only required in an annual report on this Form N-CSR.

Item 5.

   Audit Committee of Listed Registrants.
     The information required by this item 5 is only required in an annual report on this Form N-CSR.

Item 6.

   Schedule of Investments.
    

The schedule of investments is included as part of the report to shareholders under Item 1.

Item 7.

   Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
     The information required by this item 7 is only required in an annual report on this Form N-CSR.

Item 8.

   Portfolio Managers of Closed-End Management Investment Companies.
     The information required by this item 8 is only required in an annual report on this Form N-CSR.

Item 9.

   Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchases.

 

Registrant Purchases of Equity Securities

Period


   (a) Total
Number of
Shares (or Units)
Purchased*


   (b) Average
Price Paid
per Share
(or Unit)


  

(c) Total Number of Shares

(or Units) Purchased as Part
of Publicly Announced Plans
or Programs*


   

(d) Maximum Number (or

Approximate Dollar Value)

of Shares (or Units)that

May Yet Be Purchased

Under the Plans

or Programs


Month #1 (February 1, 2006 - February 28, 2006)

   52,316.33    $ 10.64    52,316.33 (1)   N/A

Month #2 (March 1, 2006 - March 31, 2006)

   51,264.19    $ 10.92    51,264.19 (1)   N/A

Month #3 (April 1, 2006 - April 30, 2006)

   51,086.96    $ 10.73    51,086.96 (1)   N/A

Month #4 (May 1, 2006 - May 31, 2006)

   52,758.22    $ 10.33    52,758.22 (1)   N/A

Month #5 (June 1, 2006 - June 30, 2006)

   51,560.88    $ 10.09    51,560.88 (1)   N/A

Month #6 (July 1, 2006 - July 31, 2006)

   47,197.04    $ 10.24    47,197.04 (1)   N/A

Total

   306,183.62           306,183.62     N/A

 

*   Shares purchased include purchases made at NAV as well as open market by the agent of the Fund’s Dividend Reinvestment

 

     Plan pursuant to such plan.
(1)   Purchased from original issue at 95% of market price.

 

Item 10.

       Submission of Matters to a Vote of Security Holders—Not applicable.

Item 11.

       Controls and Procedures.
              (a)    The chief executive officer and chief financial officer of PIMCO Strategic Global Government Fund, Inc. (the “Fund”) have concluded that the Fund’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the Fund is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing of this report.
              (b)    There were no changes in the Fund’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Fund’s internal control over financial reporting.

Item 12.

        Exhibits.

(a)(1)

 

Code of Ethics—Not applicable for semiannual reports.

(a)(2)

 

Exhibit 99.CERT—Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

(b)

 

Exhibit 99.906CERT—Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


Table of Contents

Signatures

 

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

 

PIMCO Strategic Global Government Fund, Inc.

By:

 

/s/    ERNEST L. SCHMIDER        


   

Ernest L. Schmider

   

President, Chief Executive Officer

Date:

 

October 6, 2006

 

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/    ERNEST L. SCHMIDER


   

Ernest L. Schmider

   

President, Chief Executive Officer

Date:

 

October 6, 2006

By:

 

/s/    JOHN P. HARDAWAY        


   

John P. Hardaway

   

Treasurer, Chief Financial Officer

Date:

 

October 6, 2006