UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES

Investment Company Act file number 811-21238

Nicholas-Applegate Convertible & Income Fund II
(Exact name of registrant as specified in charter)

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

Lawrence G. Altadonna - 1345 Avenue of the Americas, New York, New York 10105
(Name and address of agent for service)

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

Date of fiscal year end: February 28, 2006

Date of reporting period: December 31, 2005

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.

ITEM 1. REPORT TO SHAREHOLDERS

 

 

Nicholas-Applegate Convertible & Income Fund II

 

 

 

 

 

S e m i - A n n u a l   R e p o r t          
D e c e m b e r   31,  2 0 0 5          

 

 Contents       
                
Letter to Shareholders    1   
       
Performance & Statistics    2   
       
Schedule of Investments    3-7   
       
Statement of Assets and Liabilities    8   
       
Statement of Operations    9   
       
Statement of Changes in Net Assets    10   
       
Notes to Financial Statements    11-14   
       
Financial Highlights    15   
       
Annual Shareholder Meeting Results    16   

 

 

 

 


      

Nicholas-Applegate Convertible & Income Fund II Letter to Shareholders

February 17, 2006

Dear Shareholder:

We are pleased to provide you with the semi-annual report for Nicholas-Applegate Convertible & Income Fund II (the “Fund”) for the six-months ended December 31, 2005. Please note that on December 15, 2005, the Board of Trustees announced that the Fund will change its fiscal year-end from June 30th to February 28th.

The second half of 2005 witnessed the Federal Reserve raise short-term interest rates four times, an aggregate increase of 100 basis points (1.0%) . During this period, both the convertible market and broader U.S. equity market produced modest returns while facing surging oil prices, rising interest rates, and a moderating economy. Despite these headwinds, corporate profits exceeded expectations and companies continued to use their strengthened balance sheets to improve shareholder value.

In this environment, the Fund returned of 6.43% based upon net asset value and 1.99% based upon market price for the six months ended December 31, 2005. The Merrill Lynch Convertible Bond All Qualities Index gained 4.36% during the same period, while stocks, as measured by the Standard & Poor’s 500 Index (S&P 500) rose 5.77% . Bonds did not fare as well in this rising rate environment, as the Lehman Brothers Aggregate Bond Index, a measure of the broader bond market, declined (0.80)% during the period.

Please refer to the following pages for Specific Fund information. If you have any questions regarding the information provided, we encourage you to contact your financial advisor or call the Fund’s shareholder servicing agent at (800) 331-1710. Also, note that a wide range of information and resources can be accessed through Web site, www.allianzinvestors.com.

Together with Allianz Global Investors Fund Management LLC, the Fund’s investment manager and Nicholas-Applegate Capital Management LLC, the Fund’s sub-adviser, we thank you for investing with us.

We remain dedicated to serving your investment needs.

Sincerely,


Robert E. Connor

Chairman
Brian S. Shlissel

President & Chief Executive Officer

 

| 12.31.05 | Nicholas-Applegate Convertible & Income Fund II Semi-Annual Report 1

Nicholas-Applegate Convertible & Income Fund II Performance & Statistics
December 31, 2005 (unaudited)
Symbol:    Primary Investments:   
Inception Date:
NCZ    At least 50% of total assets   
July 31, 2003
    in convertible securities.   
Objective:       
Total Net Assets(1) :
Seeks to provide total return       
$1,337.0 million
through a combination of         
capital appreciation and high       
Portfolio Manager:
current income.       
Douglas Forsyth
         
         

Total Return(2) :  Market Price Net Asset Value (“NAV”)  
Six months  1.99 %  6.43 % 
1 Year  (0.38 )%  2.99 % 
Commencement of Operations (7/31/03) to 12/31/05  8.18 %  11.77 % 

Common Share Market Price/NAV Performance:
Commencement of Operations (7/31/03) to 12/31/05
   Market Price/NAV:   
Market Price  $13.97  
NAV  $14.46  
Market Price Yield(3)  9.93 % 
Discount to NAV  (3.39 )% 
 
Moody's Ratings (as a % of total investments)

(1) Inclusive of net assets attributable to Preferred Shares outstanding.

(2) Past performance is no guarantee of future results. Total return is calculated by subtracting the value of an investment in the Fund at the begining of each specified period from the value at the end of the period and dividing the remainder by the value of the investment at the begining of the period and expressing the result as a percentage. The calculation assumes that all of the Fund’s income dividends and capital gain distributions have been reinvested at prices obtained under the dividend reinvestment plan. Total return does not reflect broker commissions or sales charges. Total return for a period of less than one year is not annualized. Total return for a period of more than one year represents the average annual return.

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

(3) Market Price Yield is determined by dividing the annualized current per share dividend to common shareholders by the market price per common share at December 31, 2005.

2 Nicholas-Applegate Convertible & Income Fund II Semi-Annual Report | 12.31.05 |

Nicholas-Applegate Convertible & Income Fund II Schedule of Investments
December 31, 2005 (unaudited)

Principal 
       
Amount 
    Credit Rating   
(000) 
             (Moody’s/S&P)   
Value 
CORPORATE BONDS & NOTES—40.7% 
   
  Apparel—1.2%     
  Levi Strauss & Co.     
$      2,000 
       9.75%, 1/15/15  Caa2/B-  $
2,090,000 
5,945 
       12.25%, 12/15/12  Caa2/B-   
6,628,675 
2,610 
  Oxford Industries, Inc., 8.875%, 6/1/11  B2/B   
2,658,938 
2,840 
  Phillips-Van Heusen Corp., 8.125%, 5/1/13  B1/BB   
2,996,200 
1,570 
  Warnaco, Inc., 8.875%, 6/15/13  B1/B+   
1,691,675 
       
16,065,488 
  Automotive—0.8%     
2,815 
  Goodyear Tire & Rubber Co., 11.25%, 3/1/11  B3/NR   
3,171,632 
10,030 
  HLI Operating Co., Inc., 10.50%, 6/15/10  Caa3/B-   
8,199,525 
       
11,371,157 
  Chemicals—4.1%     
4,988 
  Huntsman LLC, 11.625%, 10/15/10  Ba3/BB-   
5,680,085 
11,410 
  IMC Global, Inc., 11.25%, 6/1/11  Ba3/BB   
12,265,750 
  Lyondell Chemical Co.,     
4,435 
       9.625%, 5/1/07, Ser. A  B1/BB-   
4,629,031 
4,315 
       10.875%, 5/1/09  B3/B   
4,482,206 
4,565 
       11.125%, 7/15/12  B1/BB-   
5,107,094 
4,765 
  PolyOne Corp., 10.625%, 5/15/10  B3/B+   
5,110,463 
10,950 
  Resolution Performance Products LLC, 13.50%, 11/15/10  Caa2/B-   
11,579,625 
5,560 
  Rhodia S.A., 10.25%, 6/1/10  B3/CCC+   
6,116,000 
       
54,970,254 
  Commercial Services—0.8%     
2,300 
  Hertz Corp., 10.50%, 1/1/16 (a)  B3/B   
2,369,000 
8,595 
  Vertrue, Inc., 9.25%, 4/1/14  B2/B   
8,788,387 
       
11,157,387 
  Diversified Financial Services—2.0%     
9,400 
  Alamosa Delaware, Inc., 11.00%, 7/31/10  Caa1/CCC+   
10,598,500 
5,065 
  AMR Holdings Co., 10.00%, 2/15/15 (a)  Caa1/B-   
5,406,887 
  Ford Motor Credit Co.,     
2,500 
       6.875%, 2/1/06  Ba2/BB-   
2,494,625 
9,205 
       7.00%, 10/1/13  Ba2/BB-   
7,865,277 
1,000 
  MedCath Holdings Corp., 9.875%, 7/15/12  Caa1/B-   
1,055,000 
       
27,420,289 
  Electric—2.9%     
12,000 
  AES Corp., 9.50%, 6/1/09  B1/B-   
12,960,000 
10,250 
  Mission Energy Holdings Co., 13.50%, 7/15/08  B2/CCC+   
11,890,000 
9,820 
  PSEG Energy Holdings LLC, 10.00%, 10/1/09  Ba3/BB-   
10,802,000 
3,050 
  Reliant Resources, Inc., 9.50%, 7/15/13  B1/B+   
3,057,625 
       
38,709,625 
  Electronics—2.2%     
9,510 
  Imax Corp., 9.625, 12/1/10  B3/B-   
9,842,850 
8,710 
  Sanmina-SCI Corp., 10.375%, 1/15/10  Ba2/BB-   
9,624,550 
10,335 
  Stoneridge, Inc., 11.50%, 5/1/12  B1/B+   
10,515,862 
       
29,983,262 
  Environmental Control—0.7%     
9,060 
  Imco Recycling, Inc., 10.375%, 10/15/10  B2/B+   
9,898,050 
  Food Products—0.8%   
9,815 
  Pilgrim’s Pride Corp., 9.625%, 9/15/11  Ba2/BB-   
10,452,975 
  Healthcare—0.5%   
4,020 
  Alliance Imaging, Inc., 7.25%, 12/15/12  B3/B-   
3,346,650 
3,550 
  Hanger Orthopedic Group, Inc., 11.25%, 6/15/09  NR/CCC+   
3,536,687 
       
6,883,337 

12.31.05 | Nicholas-Applegate Convertible & Income Fund II Semi-Annual Report 3

Nicholas-Applegate Convertible & Income Fund II Schedule of Investments
December 31, 2005 (unaudited)

Principal 
       
Amount 
    Credit Rating   
(000) 
             (Moody’s/S&P)   
Value 
  Home Builders—1.6%     
$     11,500 
  Ryland Group, Inc., 9.125%, 6/15/11  Ba2/BB+  $
12,164,436 
9,800 
  William Lyon Homes, Inc., 10.75%, 4/1/13  B2/B   
10,118,500 
       
22,282,936 
  Household Products—1.6%     
8,750 
  Central Garden & Pet Co., 9.125%, 2/1/13  B1/B+   
9,231,250 
11,740 
  Jarden Corp., 9.75%, 5/1/12  B3/B-   
12,092,200 
       
21,323,450 
  Iron/Steel—1.9%     
6,490 
  AK Steel Corp., 7.875%, 2/15/09  B1/B+   
6,165,500 
5,710 
  Oregon Steel Mills, Inc., 10.00%, 7/15/09  Ba3/B+   
6,109,700 
11,450 
  United States Steel LLC, 10.75%, 8/1/08  Ba2/BB   
12,652,250 
       
24,927,450 
  Leisure—0.5%     
6,020 
  Equinox Holdings, Inc., 9.00%, 12/15/09  B3/B-   
6,433,875 
  Lodging—0.9%     
11,080 
  Mandalay Resort Group, Inc., 10.25%, 8/1/07, Ser. B  Ba3/B+   
11,814,050 
  Machinery-Diversified—0.9%     
11,730 
  Case New Holland, Inc., 9.25%, 8/1/11  Ba3/BB-   
12,551,100 
  Metals & Mining—0.8%     
9,835 
  Freeport-McMoRan Copper & Gold, Inc., 10.125%, 2/1/10  B1/B+   
10,806,206 
  Miscellaneous—2.0%     
27,830 
  Dow Jones CDX High Yield, 10.50%, 12/29/09 (a) (b)  NR/NR   
27,273,400 
  Miscellaneous Manufacturing—0.4%     
5,045 
  Clarke American Corp., 11.75%, 12/15/13 (a)  B2/B-   
5,070,225 
  Multi-Media—3.6%     
12,291 
  CCH I LLC, 11.00%, 10/1/15 Ser. AI (a)  Caa3/CCC-   
10,324,440 
2,285 
  CSC Holdings Inc., 10.50%, 5/15/16  B3/B   
2,433,525 
2,700 
  Lodgenet Entertainment Corp., 9.50%, 6/15/13  B3/B-   
2,936,250 
7,860 
  Mediacom Broadband LLC, 11.00%, 7/15/13  B2/B   
8,449,500 
5,735 
  Salem Communications Holding Corp., 9.00%, 7/1/11, Ser. B  B2/B-   
6,043,256 
6,860 
  Sirius Satellite Radio, Inc., 9.625%, 8/1/13 (a)  Caa1/CCC   
6,757,100 
10,055 
  XM Satellite Radio, Inc., 12.00%, 6/15/10  Caa1/CCC+   
11,286,738 
       
48,230,809 
  Office/Business Equipment—0.5%     
5,935 
  Xerox Corp., 9.75%, 1/15/09  Ba2/BB-   
6,565,594 
  Office Furnishings—1.1%     
  Interface, Inc.,     
4,625 
       9.50%, 2/1/14  Caa1/CCC   
4,625,000 
5,625 
       10.375%, 2/1/10  B2/B-   
6,089,063 
3,199 
  Tempur-Pedic, Inc., 10.25%, 8/15/10  B2/B   
3,458,919 
       
14,172,982 
  Oil & Gas—0.4%     
5,000 
  Seitel, Inc., 11.75%, 7/15/11  B3/NR   
5,562,500 
  Paper Products—0.3%     
4,013 
  Buckeye Technologies, Inc., 9.25%, 9/15/08  Caa1/B   
4,013,000 
  Pharmaceuticals—0.7%     
9,310 
  Leiner Health Products, Inc., 11.00%, 6/1/12  Caa1/CCC+   
8,751,400 
  Pipelines—1.3%     
4,025 
  Dynegy Holdings, Inc., 10.125%, 7/15/13 (a)  B1/B-   
4,548,250 
12,240 
  Sonat, Inc., 7.625%, 7/15/11  Caa1/B-   
12,454,200 
       
17,002,450 

4 Nicholas-Applegate Convertible & Income Fund II Semi-Annual Report | 12.31.05

Nicholas-Applegate Convertible & Income Fund II Schedule of Investments
December 31, 2005 (unaudited)

Principal 
       
Amount 
    Credit Rating   
(000) 
             (Moody’s/S&P)   
Value 
  Real Estate—0.2%     
$      2,285 
  Host Marriot L.P., 9.50%, 1/15/07, Ser. I, REIT  Ba2/BB-  $
2,364,975 
  Retail—3.6%     
4,580 
  EPL Finance Corp., 11.75%, 11/15/13 (a)  Caa1/CCC+   
4,562,825 
5,130 
  GSC Holdings Corp., 8.00%, 10/1/12 (a)  Ba3/B+   
4,822,200 
3,345 
  Mothers Work, Inc., 11.25%, 8/1/10  Caa1/B-   
3,161,025 
7,325 
  Neiman-Marcus Group, Inc., 10.375%, 10/15/15 (a)  B3/B-   
7,444,031 
10,000 
  R.H. Donnelley Financial Corp., 10.875%, 12/15/12  B2/B+   
11,275,000 
11,460 
  Rite Aid Corp., 12.50%, 9/15/06  NR/B+   
11,990,025 
4,315 
  United Auto Group, Inc., 9.625%, 3/15/12  B3/B   
4,541,538 
       
47,796,644 
  Semi-Conductors—0.7%     
6,340 
  Amkor Technology, Inc., 10.50%, 5/1/09  Caa3/CCC   
5,832,800 
3,205 
  Avago Technologies Finance, 10.125%, 12/1/13 (a)  B3/B   
3,293,137 
       
9,125,937 
  Telecommunications—1.7%     
3,700 
  Hawaiian Telcom Communications, Inc., 12.50%, 5/1/15 (a)  Caa1/CCC+   
3,459,500 
11,760 
  Millicom International Cellular S.A., 10.00%, 12/1/13  B3/B-   
12,142,200 
7,510 
  Time Warner Telecom, Inc., 10.125%, 2/1/11  Caa1/CCC+   
7,866,725 
       
23,468,425 
  Total Corporate Bonds & Notes (cost-$550,797,538)     
546,449,232 
 
CONVERTIBLE BONDS & NOTES—30.9% 
   
  Aerospace—0.1%     
1,000 
  GenCorp, Inc., 4.00%, 1/16/24  Caa2/B   
1,236,250 
  Airlines—1.1%     
16,300 
  Continental Airlines, Inc., 4.50%, 2/1/07  Caa2/CCC+   
15,281,250 
  Auto Parts & Equipment—1.4%     
11,700 
  Goodyear Tire & Rubber Co., 4.00%, 6/15/34 (a)  B3/B-   
18,310,500 
  Chemicals—0.8%     
5,950 
  Millennium Chemicals, Inc., 4.00%, 11/15/23  B1/BB-   
11,178,562 
  Commercial Services—3.0%     
10,125 
  Bowne & Co., Inc., 5.00%, 10/1/33  B2/B-   
10,970,437 
17,985 
  Quebecor World USA, Inc., 6.00%, 10/1/07  B2/B+   
17,625,300 
11,000 
  Vertrue, Inc., 5.50%, 10/1/10  NR/B-   
11,632,500 
       
40,228,237 
  Computers—1.2%     
15,400 
  Maxtor Corp., 6.80%, 4/30/10  B2/NR   
16,035,250 
  Diversified Financial Services—0.7%     
8,758 
  E*Trade Financial Corp., 6.00%, 2/1/07  NR/B-   
8,889,370 
  Electric—1.1%     
5,425 
  PG&E Corp., 9.50%, 6/30/10  NR/NR   
15,135,750 
  Electrical Components & Equipment—0.9%     
8,150 
  Artesyn Technologies, Inc., 5.50%, 8/15/10  NR/NR   
11,471,125 
  Household Products—0.8%     
7,050 
  American Greetings Corp., 7.00%, 7/15/06  Ba2/BB+   
11,315,250 
  Metals & Mining—1.5%     
11,200 
  Freeport-McMoRan Copper & Gold, Inc., 7.00%, 2/11/11  NR/B+   
20,244,000 
  Multi-Media—1.4%     
18,500 
  EchoStar Communications Corp., 5.75%, 5/15/08  B2/B   
18,130,000 
  Oil & Gas—1.1%     
12,500 
  Devon Energy Corp., 4.95%, 8/15/08  Baa2/BBB   
14,453,125 

12.31.05 | Nicholas-Applegate Convertible & Income Fund II Semi-Annual Report 5

Nicholas-Applegate Convertible & Income Fund II Schedule of Investments
December 31, 2005 (unaudited)

Principal 
       
Amount 
    Credit Rating   
(000) 
             (Moody’s/S&P)   
Value 
  Pharmaceuticals—2.5%     
$      8,490 
  Ligand Pharmaceuticals, Inc., 6.00%, 11/16/07  NR/NR  $
15,377,513 
18,550 
  Sepracor, Inc., 5.00%, 2/15/07  NR/CCC+   
18,526,812 
       
33,904,325 
  Retail—1.9%     
5,200 
  Guitar Center, Inc., 4.00%, 7/15/13  B1/BB-   
7,741,500 
18,535 
  Sonic Automotive, Inc., 5.25%, 5/7/09  B3/B   
18,256,975 
       
25,998,475 
  Semi-conductors—2.6%     
14,100 
  Advanced Micro Devices, Inc., 4.75%, 2/1/22 (c)  B3/B-   
18,629,625 
  Amkor Technology, Inc.     
14,300 
       5.00%, 3/15/07  Caa3/CCC   
13,567,125 
3,000 
       5.75%, 6/1/06  Caa3/CCC   
2,981,250 
       
35,178,000 
  Telecommunications—6.5%     
16,250 
  American Tower Corp., 5.00%, 2/15/10  B1/BB-   
16,189,063 
13,600 
  CenturyTel, Inc., 4.75%, 8/1/32  Baa2/BBB+   
13,889,000 
2,650 
  Crown Castle International, Inc., 4.00%, 7/15/10  NR/NR   
6,694,563 
17,500 
  Lucent Technologies, Inc., 8.00%, 8/1/31  B3/CCC+   
17,850,000 
18,500 
  Nextel Communications, Inc., 5.25%, 1/15/10  Baa2/A-   
18,569,375 
1,396 
  NII Holdings, Inc., 3.50%, 9/15/33  NR/NR   
4,681,835 
9,940 
  Nortel Networks Corp., 4.25%, 9/1/08  B3/B-   
9,368,450 
       
87,242,286 
  Transportation—0.9%     
8,100 
  Yellow Roadway Corp., 5.00%, 8/8/23  Ba1/BBB-   
11,947,500 
  Trucking/Leasing—1.4%     
15,900 
  GATX Corp., 7.50%, 2/1/07  Baa3/BBB-   
18,662,625 
  Total Convertible Bonds & Notes (cost-$406,818,835)     
414,841,880 
 
CONVERTIBLE PREFERRED STOCK—22.7% 
   
Shares 
       
  Automotive—0.4%     
209,200 
  Ford Motor Co., Capital Trust II, 6.50%, 1/15/32  Ba2/B-   
5,773,920 
  Banking—1.1%     
275,000 
  Washington Mutual Capital Trust, 5.375%, 5/3/41  Baa1/BBB   
15,010,050 
  Commercial Services—1.5%     
468,500 
  United Rentals, Inc., 6.50%, 8/1/28  Caa2/B   
20,028,375 
  Diversified Financial Services—3.9%     
100,000 
  Citigroup Funding, Inc., 4.583%, 9/27/08, Ser. GNW (c)  Aa1/AA-   
3,285,000 
250,000 
  E Trade Group, Inc., 6.125%, 11/18/08  B3/NA   
7,120,000 
500,000 
  Lehman Brothers Holdings, Inc., 6.25%, 10/15/07  A1/A+   
13,145,000 
  Morgan Stanley     
190,000 
       20.00%, 12/14/06  Aa3/A+   
14,636,650 
250,400 
       20.00%, 12/22/06  Aa3/A+   
14,473,120 
       
52,659,770 
  Electric—2.5%     
344,400 
  AES Trust III, 6.75%, 10/15/29  B3/CCC+   
15,291,360 
296,050 
  FPL Group, Inc., 8.00%, 2/16/06  NR/A-   
18,346,219 
       
33,637,579 
  Environmental Control—0.5%     
137,500 
  Allied Waste Industries, Inc., 6.25%, 4/1/06  Caa3/B   
6,649,500 
  Food—0.6%     
370,600 
  Albertson’s, Inc., 7.25%, 5/16/07  Baa3/BBB-   
8,357,030 

6 Nicholas-Applegate Convertible & Income Fund II Semi-Annual Report | 12.31.05

Nicholas-Applegate Convertible & Income Fund II Schedule of Investments
December 31, 2005 (unaudited)

    Credit Rating     
Shares 
             (Moody’s/S&P)    Value 
  Gas—0.9%       
357,500 
  ONEOK, Inc., 8.50%, 2/16/06  Baa2/BBB  $ 11,611,600 
  Holding Companies—0.7%       
87,500 
  Williams Holdings of Delaware, Inc., 5.50%, 6/1/33  NR/B-    9,843,750 
  Insurance—4.4%       
407,500 
  Genworth Financial, Inc., 6.00%, 5/16/07  A2/A    15,509,450 
121,500 
  Metlife, Inc., 6.375%, 8/15/08, Ser. B  NR/BBB+    3,347,325 
220,000 
  Platinum Underwriters Holdings Ltd., 6.00%, 2/15/09  NR/BB+    6,930,000 
665,000 
  PMI Group, Inc., 5.875, 11/15/06  A1/A    16,392,250 
732,000 
  XL Capital Ltd., 6.50%, 5/15/07  A3/A-    16,352,880 
        58,531,905 
  Iron/Steel—0.5%       
42,650 
  U.S. Steel Corp., 7.00%, 6/15/06, Ser. B  NR/B    6,562,769 
  Office/Business Equipment—1.1%       
123,000 
  Xerox Corp., 6.25%, 7/1/06  B1/B-    15,055,200 
  Oil & Gas—2.7%       
170,000 
  Amerada Hess Corp., 7.00%, 12/1/06  Ba3/BB    18,373,600 
89,900 
  Chesapeake Energy Corp., 5.00%, 12/31/49  B2/B    17,654,112 
        36,027,712 
  Pharmaceuticals—1.1%       
276,400 
  Schering-Plough Corp., 6.00%, 9/14/07  Baa3/BBB    14,867,556 
  Telecommunications—0.8%       
188,000 
  Crown Castle International Corp., 6.25%, 8/15/12  NR/NR    9,964,000 
  Total Convertible Preferred Stock (cost-$288,219,913)      304,580,716 
 
U.S. GOVERNMENT SECURITIES—2.3% 
     
Principal 
         
Amount 
         
(000) 
         
  United States Treasury Notes,       
$     13,725 
       10.375%, 11/15/12      15,172,562 
13,725 
       12.00%, 8/15/13      16,287,718 
  Total U.S. Government Securities (cost-$32,135,622)      31,460,280 
 
SHORT-TERM INVESTMENT—3.4% 
     
  Time Deposit—3.4%       
45,097 
  Bank of America – London, 3.30%, 1/3/06       
       (cost-$45,097,233)      45,097,233 
  Total Investments (cost-$1,323,069,141)—100.0%    $ 1,342,429,341 
Notes to Schedule of Investments
(a)      144A-security — Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, typically only to qualified institutional buyers. Unless otherwise indicated these securites are not considered to be illiquid.
(b) Credit-linked trust certificate.
(c) Variable rate security. Interest rate disclosed reflects the rate in effect on December 31, 2005.
Glossary:
NR — Not Rated
REIT — Real Estate Investment Trust

See accompanying Notes to Financial Statements | 12.31.05 | Nicholas-Applegate Convertible & Income Fund II Semi-Annual Report 7

Nicholas-Applegate Convertible & Income Fund II Statement of Assets and Liabilities
December 31, 2005 (unaudited)
Assets:       
Investments, at value (cost—$1,323,069,141)    $  1,342,429,341  
          
Interest and dividends receivable      21,857,310  
Interest rate cap premium paid      19,404,625  
Unrealized appreciation on interest rate cap      2,527,750  
Prepaid expenses      42,962  
   Total Assets      1,386,261,988  
 
Liabilities:       
Dividends payable to common and preferred shareholders      23,405,740  
Payable for investments purchased      21,511,029  
Unrealized depreciation on interest rate cap      3,297,426  
Investment management fees payable      808,858  
Accrued expenses      224,068  
   Total Liabilities      49,247,121  
Preferred Shares ($0.00001 par value; $25,000 net       
   asset and liquidation value per share applicable to 
     
   20,200 shares issued and outstanding)      505,000,000  
Net Assets Applicable to Common shareholders    $ 832,014,867  
 
Composition of Net Assets Applicable to       
   Common Shareholders:       
Common Stock:       
  Par value ($0.00001 per share applicable to 57,533,832 
     
       shares issued and outstanding)    $  575  
   Paid-in-capital in excess of par      817,978,758  
Dividends in excess of net investment income      (7,370,955 ) 
Accumulated net realized gain on investments      2,815,965  
Net unrealized appreciation of investments and interest rate caps      18,590,524  
Net Assets Applicable to Common Shareholders    $ 832,014,867  
Net Asset Value Per Common Share      $14.46  

8 Nicholas-Applegate Convertible & Income Fund II Semi-Annual Report | 12.31.05 | See accompanying Notes to Financial Statements

Nicholas-Applegate Convertible & Income Fund II Statement of Operations
Six Months ended December 31, 2005 (unaudited)

Investment Income:       
Interest   
$ 
37,486,746  
          
Dividends      8,891,844  
   Total Investment Income      46,378,590  
 
Expenses:       
Investment management fees      4,802,888  
Auction agent fees and commissions      646,592  
Reports and notices to shareholders      148,979  
Excise tax expense      90,868  
Audit and tax services      50,960  
Custodian and accounting agent fees      50,140  
Trustees’ fees and expenses      40,260  
New York Stock Exchange listing fees      27,878  
Transfer agent fees      25,060  
Legal fees      22,297  
Insurance expense      13,704  
Investor relations      8,253  
Miscellaneous      13,351  
   Total expenses      5,941,230  
 
Net Investment Income      40,437,360  
 
Realized and Change In Unrealized Gain (Loss):       
Net realized gain on:       
   Investments      16,491,701  
   Interest rate cap      4,837,775  
      21,329,476  
Net change in unrealized appreciation/depreciation of:       
     
   Investments      2,092,307  
   Interest rate caps      (1,713,271 ) 
      379,036  
Net realized and change in unrealized gain on investments and interest rate cap      21,708,512  
Net Increase in Net Assets Resulting from Investment Operations      62,145,872  
Dividends and Distributions on Preferred Shares from:       
     
   Net investment income      (8,177,324 ) 
   Net realized gains      (1,011,818 ) 
Total dividends and distributions on preferred shares      (9,189,142 ) 
Net Increase in Net Assets Applicable to Common       
   Shareholders Resulting from Investment Operations    $ 52,956,730  

See accompanying Notes to Financial Statements | 12.31.05 | Nicholas-Applegate Convertible & Income Fund II Semi-Annual Report 9

 
Nicholas-Applegate Convertible & Income Fund II 
Statement of Changes in Net Assets
 
Applicable to Common Shareholders

   
Six Months
   
ended
   
December 31, 2005
Year ended
   
(unaudited)
June 30, 2005
Investment Operations:         
Net investment income   
$
40,437,360    
$
82,903,663  
     
     
Net realized gain on investments and interest rate caps    21,329,476     22,695,873  
Net change in unrealized appreciation/depreciation of         
   investments and interest rate caps    379,036     (37,383,669 ) 
Net increase in net assets resulting from investment operations    62,145,872     68,215,867  
 
Dividends and Distributions on Preferred Shares from:         
Net investment income    (8,177,324 )    (11,768,307 ) 
Net realized gains    (1,011,818 )    (75,399 ) 
Total dividends and distributions on preferred shareholders    (9,189,142 )    (11,843,706 ) 
Net increase in net assets applicable to common shareholders         
   resulting from investment operations    52,956,730     56,372,161  
 
Dividends and Distributions to Common Shareholders from:         
Net investment income    (46,708,790 )    (81,000,846 ) 
Net realized gains    (15,188,931 )    (7,680,066 ) 
Total dividends and distributions to common shareholders    (61,897,721 )    (88,680,912 ) 
 
Capital Share Transactions:         
Reinvestment of dividends and distributions    6,046,443     11,434,945  
Net increase from capital share transactions    6,046,443     11,434,945  
Total decrease in net assets applicable         
   to common shareholders    (2,894,548 )    (20,873,806 ) 
 
Net Assets Applicable to Common Shareholders:         
Beginning of period    834,909,415     855,783,221  
End of period (including (dividends in excess of net investment income)/         
   undistributed net investment income of $(7,370,955) and         
   $7,077,799, respectively)   
$
832,014,867    
$
834,909,415  
 
Common Shares Issued and Reinvested:         
Issued in reinvestment of dividends and distributions    404,854     764,611  
Net Increase    404,854     764,611  

10 Nicholas-Applegate Convertible & Income Fund II Semi-Annual Report | 12.31.05 | See accompanying Notes to Financial Statements

Nicholas-Applegate Convertible & Income Fund II Notes to Financial Statements
December 31, 2005 (unaudited)

1. Organization and Significant accounting Policies
Nicholas-Applegate Convertible & Income Fund II (the “Fund”) was organized as a Massachusetts business trust on April 22, 2003. Prior to commencing operations on July 31, 2003, the Fund had no operations other than matters relating to its organization and registration as a diversified, closed-end management investment company under the Investment Company Act of 1940. Allianz Global Investors Fund Management LLC (the “Investment Manager”) serves as the Fund’s Investment Manager and is an indirect wholly-owned subsidiary of Allianz Global Investors of America L.P. (“Allianz Global”). Allianz Global is an indirect, majority-owned subsidiary of Allianz AG. The Fund has an unlimited amount of $0.00001 par value common stock authorized.

The Fund’s investment objective is to provide total return through a combination of capital appreciation and high current income. The Fund attempts to achieve this objective by investing in a portfolio of convertible securities and non-convertible income-producing securities.

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

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

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

(a) Valuation of Investments
Portfolio securities and other financial instruments for which market quotations are readily available are stated at market value. Portfolio securities and other financial instruments for which market quotations are not readily available or if a development/event occurs that may significantly impact the value of a security, may be fair-valued, in good faith, pursuant to guidelines established by the Board of Trustees. The Fund’s investments are valued daily using prices provided by an independent pricing service or dealer quotations, or are valued at the last sale price on the exchange that is the primary market for such securities, or the last quoted bid price for those securities for which the over-the-counter market is the primary market or for listed securities in which there were no sales. 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. Short-term investments maturing in 60 days or less are valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days. The prices used by the Fund to value securities may differ from the value that would be realized if the securities were sold and the differences could be material to the financial statements. The Fund’s net asset value is determined daily as of the close of regular trading (normally, 4:00 p.m. Eastern time) on the New York Stock Exchange on each day the exchange is open for business.

(b) Investment Transactions and Investment Income
Investment transactions are accounted for on the trade date. Realized gains and losses on investments are determined on the identified cost basis. Interest income is recorded on an accrual basis. Discounts or premiums on debt securities purchased are accreted or amortized to interest income over the lives of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date.

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

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

12.31.05 | Nicholas-Applegate Convertible & Income Fund II Semi-Annual Report 11

Nicholas-Applegate Convertible & Income Fund II Notes to Financial Statements
December 31, 2005 (unaudited)


net realized gain (loss) in accordance with generally accepted accounting principles (“GAAP”). However, these amounts are treated as net income (loss) for federal income tax purposes. By using GAAP, Net Investment Income for the six months ended December 31, 2005 was $4,837,775 lower and Net Realized and Change in Unrealized Gain (Loss), correspondingly higher than if payments received from interest rate cap agreements were treated as net income (loss) in accordance with federal income tax treatment. In addition, income figures for the six months ended December 31, 2005 include amortization of market premium of $4,976,149. For tax purposes, the Fund has elected not to amortize market premium.

(e) Credit-Linked Trust Certificates
Credit-linked trust certificates are investments in a limited purpose trust or other vehicle formed under state law which, in turn, invests in a basket of derivative instruments, such as credit default swaps, interest rate swaps and other securities, in order to provide exposure to the high yield or another fixed income market.

Similar to an investment in a bond, investments in these credit-linked trust certificates represent the right to receive periodic income payments (in the form of distributions) and payment of principal at the end of the term of the certificate. However, these payments are conditioned on the trust’s receipt of payments from, and the trust’s potential obligations to, the counterparties to the derivative instruments and other securities in which the trust invests.

(f) Interest Rate Caps
In an interest rate cap, one party pays a fee while the other party pays the excess, if any, of a floating rate over a specified fixed rate. Interest rate caps are intended to manage the Fund’s exposure to changes in short-term interest rates and hedge the Auction Preferred Shares. Owning interest rate caps reduces the Fund’s duration, making it less sensitive to changes in interest rates from a market value perspective. The effect on income involves protection from rising short-term rates, which the Fund experiences primarily in the form of leverage. The Fund is exposed to credit loss in the event of non-performance by the other party to the interest rate cap.

(g) Concentration of Risk
It is the Fund’s policy to invest a significant portion of its assets in convertible securities. Although convertible securities do derive part of their value from that of the securities into which they are convertible, they are not considered derivative financial instruments. However, certain of the Fund’s investments include features which render them more sensitive to price changes in their underlying securities. Consequently, this exposes the Fund to greater downside risk than traditional convertible securities, but still less than that of the underlying common stock.

2. Investment Manager/Sub-Adviser
The Fund has entered into an Investment Management Agreement (the “Agreement”) with the Investment Manager. Subject to the supervision of the Fund’s Board of Trustees, the Investment Manager is responsible for managing, either directly or through others selected by it, the Fund’s investment activities, business affairs and administrative matters. Pursuant to the Agreement, the Fund pays the Investment Manager an annual fee, payable monthly, at the annual rate of 0.70% of the Fund’s average daily total managed assets. Total managed assets refer to the total assets of the Fund (including assets attributable to any Preferred Shares or other forms of leverage that may be outstanding) minus accrued liabilities (other than liabilities representing leverage).

The Investment Manager has retained its affiliate, Nicholas-Applegate Capital Management LLC (the “Sub-Adviser”), to manage the Fund’s investments. Subject to the supervision of the Investment Manager, the Sub-Adviser makes all of the Fund’s investment decisions.

3. Investment in Securities
For the six months ended December 31, 2005, purchases and sales of investments, other than short-term securities, were $344,962,051 and $368,045,063, respectively.

(a) Interest rate cap agreements outstanding at December 31, 2005:

         
Unrealized
  Notional  Termination    Payment received 
Appreciation
Counterparty  Amount  Date 
Premium 
by Fund 
(Depreciation)
UBS AG  $505,000,000   1/15/06  $ 4,936,375  1 month LIBOR-BBA  $ (3,297,426 ) 
        over 2% strike price   
 
UBS AG  505,000,000  1/15/08  14,468,250  1 month LIBOR-BBA  2,527,750  
over 3% strike price 
 
          $ (769,676 ) 
 

LIBOR—London Interbank Offered Rate

12 Nicholas-Applegate Convertible & Income Fund II Semi-Annual Report | 12.31.05

Nicholas-Applegate Convertible & Income Fund II Notes to Financial Statements
December 31, 2005 (unaudited)

4. Income Tax Information
The cost basis of portfolio securities for federal income tax and book purposes is $1,323,069,141. Aggregated gross unrealized appreciation for securities in which there is an excess value over tax cost is $58,331,667; aggregate gross unrealized depreciation for securities in which there is an excess of tax cost over value is $38,971,467; net unrealized appreciation for federal income tax purposes is $19,360,200.

5. Auction Preferred Shares
The Fund has issued 4,040 shares of Preferred Shares Series A, 4,040 shares of Preferred Shares Series B, 4,040 shares of Preferred Shares Series C, 4,040 shares of Preferred Shares Series D, and 4,040 shares of Preferred Shares Series E each with a net asset and liquidation value of $25,000 per share plus accrued dividends.

Dividends and distributions of long-term capital gains, if any, are accumulated daily at an annual rate set through auction procedures.

During the six months ended December 31, 2005, the annualized dividend rate ranged from:

 
High
Low
At 12/31/05
Series A 
3.50 %  1.45 %  3.25 % 
Series B 
3.35 %  1.45 %  3.35 % 
Series C 
3.45 %  1.35 %  3.45 % 
Series D 
3.40 %  1.487 %  3.15 % 
Series E 
3.45 %  1.547 %  3.22 % 

The Fund is subject to certain limitations and restrictions while preferred shares are outstanding. Failure to comply with these limitations and restrictions could preclude the Fund from declaring any dividends or distributions to common shareholders or repurchasing common shares and/or could trigger the mandatory redemption of Preferred Shares at their liquidation value.

Preferred Shares, which are entitled to one vote per share, generally vote with the common stock but vote separately as a class to elect two Trustees and on any matters affecting the rights of the Preferred Shares.

6. Subsequent Common Dividend Declarations
On January 4, 2006, a dividend of $0.115625 per share was declared to common shareholders payable February 1, 2006 to shareholders of record on January 13, 2006.

On February 1, 2006, a dividend of $0.115625 per share was declared to common shareholders payable March 1, 2006 to shareholders of record on February 10, 2006.

7. Legal Proceedings
In June and September 2004, the Investment Manager, certain of its affiliates (Allianz Global Investors Distributors LLC and PEA Capital LLC) and Allianz Global, agreed to settle, without admitting or denying the allegations, claims brought by the Securities and Exchange Commission (the “Commission”), the New Jersey Attorney General and the California Attorney General alleging violations of federal and state securities laws with respect to certain open-end funds for which the Investment Manager serves as investment adviser. Two settlements (with the Commission and New Jersey) related to an alleged “market timing” arrangement in certain open-end funds sub-advised by PEA Capital. Two settlements (with the Commission and California) related to the alleged use of cash and fund portfolio commissions to finance “shelf-space” arrangements with broker-dealers for open-end funds. The Investment Manager and its affiliates agreed to pay a total of $68 million to settle the claims related to market timing and $20.6 million to settle the claims related to shelf space. The settling parties also agreed to make certain corporate governance changes. None of the settlements allege that any inappropriate activity took place with respect to the Fund.

Since February 2004, the Investment Manager and certain of its affiliates and their employees have been named as defendants in a number of pending lawsuits concerning “market timing,” and “revenue sharing/shelf space/directed brokerage,” which allege the same or similar conduct underlying the regulatory settlements discussed above. The market timing lawsuits have been consolidated in a Multi-District Litigation in the United States District Court for the District of Maryland, and the revenue sharing/shelf space/directed brokerage lawsuits have been consolidated in the United States District Court for the District of Connecticut. An additional market timing lawsuit filed by the Attorney General of West Virginia against a number of fund companies, including the Investment Manager and two of its affiliates, has also been transferred to

12.31.05 | Nicholas-Applegate Convertible & Income Fund II Semi-Annual Report 13

Nicholas-Applegate Convertible & Income Fund II Notes to Financial Statements
December 31, 2005 (unaudited)

the Multi-District Litigation in Maryland. Any potential resolution of these matters may include, but not be limited to, judgments or settlements for damages against the Investment Manager or its affiliates or related injunctions. The Investment Manager believes that other similar lawsuits may be filed in federal or state courts in the future.

Under Section 9(a) of the 1940 Act, if any of the various regulatory proceedings or lawsuits were to result in a court injunction against the Investment Manager, Allianz Global and/or their affiliates, they and their affiliates would, in the absence of exemptive relief granted by the Commission, be barred from serving as an investment adviser/sub-adviser or principal underwriter for any registered investment company, including the Fund. In connection with an inquiry from the Commission concerning the status of the New Jersey settlement referenced above with regard to any implications under Section 9(a), the Investment Manager and certain of its affiliates, including the Investment Adviser, (together, the “Applicants”) have sought exemptive relief from the Commission under Section 9(c) of the 1940 Act. The Commission has granted the Applicants a temporary exemption from the provisions of Section 9(a) with respect to the New Jersey settlement until the earlier of (i) September 13, 2006 and (ii) the date on which the Commission takes final action on their application for a permanent exemptive order. There is no assurance that the Commission will issue a permanent order. If a court injunction were to issue against the Investment Manager or the Affiliates with respect to any of the other matters referenced above, the Investment Manager or the affiliates would, in turn, seek similar exemptive relief under Section 9(c) with respect to that matter, although there is no assurance that such exemptive relief would be granted.

The foregoing speaks only as of the date hereof.

8. Change in Fiscal Year-End
On December 15, 2005, the Board of Trustees announced that the Fund will change its fiscal year end from June 30th to February 28th.

14 Nicholas-Applegate Convertible & Income Fund II Semi-Annual Report | 12.31.05

Nicholas-Applegate Convertible & Income Fund II Financial Highlights
For a share of common stock outstanding throughout each period:
   
Six Months
For the Period
   
ended
July 31, 2003*
   
December 31, 2005
Year ended
through
   
(unaudited)
June 30, 2005
June 30, 2004
     
     
Net asset value, beginning of period    $ 14.61     $ 15.18     $ 14.33 ** 
     
Income from Investment Operations:             
Net investment income    0.70     1.59     1.23  
Net realized and change in unrealized gain (loss) on             
   investments and interest rate caps    0.38     (0.39 )    1.10  
Total from investment operations    1.08     1.20     2.33  
Dividends and Distributions on Preferred Shares from:             
Net investment income    (0.14 )    (0.21 )    (0.08 ) 
Net realized gains    (0.02 )    (0.00 )†    —  
Total dividends and distributions on preferred shares    (0.16 )    (0.21 )    (0.08 ) 
Net increase in net assets applicable to common             
   shareholders resulting from investment operations 
  0.93     0.99     2.25  
Dividends and Distributions to Common Shareholders from:          
Net investment income    (0.81 )    (1.42 )    (1.24 ) 
Net realized gains    (0.26 )    (0.14 )    (0.03 ) 
Total dividends and distributions to common shareholders    (1.07 )    (1.56 )    (1.27 ) 
Capital Share Transactions:             
Common stock offering costs charged to paid-in             
   capital in excess of par    —     —     (0.03 ) 
Preferred shares offering costs/underwriting discounts             
   charged to paid-in capital in excess of par    —     —     (0.10 ) 
Total capital share transactions    —     —     (0.13 ) 
Net asset value, end of period    $ 14.46     $ 14.61     $ 15.18  
Market price, end of period    $ 13.97     $ 14.74     $ 14.05  
Total Investment Return (1)    1.99 %    16.44 %    1.88 % 
RATIOS/SUPPLEMENTAL DATA:             
Net assets applicable to common shareholders,             
   end of period (000)    $ 832,015     $ 834,909     $ 855,783  
Ratio of expenses to average net assets (2)    1.38 %(3)   1.35 %    1.23 %(3)
Ratio of net investment income to average net assets (2)    9.37 %(3)   9.79 %    8.87 %(3)
Preferred shares asset coverage per share    $ 65,940     $ 66,319     $ 67,359  
Portfolio turnover    27 %    67 %    73 % 
*
Commencement of operations
**
Initial public offering price of $15.00 per share less underwriting discount of $0.675 per share.
†
Less than $0.005 per share.
(1)     
Total investment return is calculated assuming a purchase of a share of common stock at the current market price on the first day of each period and a sale of a share of common stock at the current market price on the last day of each period reported. Dividends and distributions are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total investment return does not reflect brokerage commissions or sales charges. Total investment return for a period of less than one year is not annualized.
(2)
Calculated on the basis of income and expenses applicable to both common and preferred shares relative to the average net assets of common shareholders.
(3) Annualized.
 

12.31.05 | Nicholas-Applegate Convertible & Income Fund II Semi-Annual Report 15

   
Nicholas-Applegate Convertible & Income Fund II 
Annual Shareholder Meeting
Results (unaudited)

The Fund held its annual meeting of shareholders on October 18, 2005. Common and Preferred shareholders voted to re-elect R. Peter Sullivan III as a Class II Trustee to serve until 2008 and David C. Flattum as a Class III Trustee to serve until 2006. Preferred shareholders voted to re-elect John J. Dalessandro II as a Class II Trustee to serve until 2008. The results were as follows:

    Withhold   
  Affirmative  Authority   
Re-election of David C. Flattum  51,909,219  649,256   
       
Re-election of R. Peter Sullivan III  51,899,823  658,652   
       
Re-election of John J. Dalessandro  14,750  55   

Paul Belica, Robert E. Connor and Hans W. Kertess* continue to serve as Trustees of the Fund.

     *      Preferred Shares Trustee

 

16 Nicholas-Applegate Convertible & Income Fund II Semi-Annual Report | 12.31.05 

Trustees and Principal Officers
Robert E. Connor
     Trustee, Chairman of the Board of Trustees
Paul Belica
     Trustee
John J. Dalessandro II
     Trustee
David C. Flattum
     Trustee
Hans W. Kertess
     Trustee
R. Peter Sullivan III
     Trustee
Brian S. Shlissel
     President & Chief Executive Officer
Lawrence G. Altadonna
     Treasurer, Principal Financial & Accounting Officer
Thomas J. Fuccillo
     Secretary & Chief Legal Officer
Youse Guia
     Chief Compliance Officer

Investment Manager
Allianz Global Investors Fund Management LLC
1345 Avenue of the Americas
New York, NY 10105

Sub-Adviser
Nicholas-Applegate Capital Management LLC
600 West Broadway, 30th Fl
San Diego, California 92101

Custodian & Accounting Agent
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109

Transfer Agent, Dividend Paying Agent and Registrar
PFPC Inc.
P.O. Box 43027
Providence, RI 02940-3027

Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
300 Madison Avenue
New York, NY 10017

Legal Counsel
Ropes & Gray LLP
One International Place
Boston, MA 02210-2624

This report, including the financial information herein, is transmitted to the shareholders of Nicholas-Applegate Convertible & Income Fund II for their information. It is not a prospectus, circular or representation intended for use in the purchase of shares of the Fund or any securities mentioned in this report.

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

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

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

On November 7, 2005, the Fund submitted a CEO annual certification to the New York Stock Exchange (”NYSE”) on which the Fund’s principal executive officer certified that he was not aware, as of the date, of any violation by the Fund of the NYSE’s Corporate Governance listing standards. In addition, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and related SEC rules, the Fund’s principal executive and principal financial officer made quarterly certifications, included in filings with the SEC on Forms N-CSR and N-Q relating to, among other things, the Fund’s disclosure controls and procedures and internal control over financial reporting, as applicable.

A description of the policies and procedures that the Fund has adopted to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities held during the twelve months ended June 30, 2005 is available (i) without charge upon request by calling the Fund’s shareholder servicing agent at (800) 331-1710; (ii) on that Fund’s website at www.allianzinvestors.com; and (iii) on the Securities and Exchange Commission website at www.sec.gov.

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

 

 


ITEM 2. CODE OF ETHICS

               Not required in this filing.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT

               Not required in this filing

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES

               Not required in this filing

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANT

               Not required in this filing

ITEM 6. SCHEDULE OF INVESTMENTS Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this form.

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

               Not required in this filing

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

               Not required in this filing

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

Total Number
of Shares Purchased
Maximum Number of
Total Number
Average
as Part of Publicly
Shares that May yet Be
of Shares
Price Paid
Announced Plans or
Purchased Under the Plans
Period
Purchased
Per Share
Programs
or Programs
July 2005
N/A
14.66
85,599
N/A
August 2005
N/A
15.18
82,221
N/A
September 2005
N/A
15.25
80,780
N/A
October 2005
N/A
N/A
N/A
N/A
November 2005
N/A
14.69
79,183
N/A
December 2005
N/A
14.90
77,071
N/A

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

There have been no material changes to the procedures by which shareholders may recommend nominees to the Fund’s Board of Trustees since the Fund last provided discolosure in response to this item.

ITEM 11. CONTROLS AND PROCEDURES

(a)      The registrant's President and Chief Executive Officer and Principal Financial Officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.

(b)      There were no significant changes in the registrant's internal controls or in factors that could affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

ITEM 12. EXHIBITS

(a)(1)       Exhibit 99.302 Cert. - Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
   
(b) Exhibit 99.906 Cert. - Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 

Signature

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

Nicholas-Applegate Convertible & Income Fund II

By /s/ Brian S. Shlissel
------------------------
Brian S. Shlissel, President & Chief Executive Officer

Date: March 9, 2006

By /s/ Lawrence G. Altadonna
----------------------------
Lawrence G. Altadonna, Treasurer, Principal Financial & Accounting Officer

Date: March 9, 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/ Brian S. Shlissel
------------------------
Brian S. Shlissel, President & Chief Executive Officer

Date: March 9, 2006

By /s/ Lawrence G. Altadonna
----------------------------
Lawrence G. Altadonna, Treasurer, Principal Financial & Accounting Officer

Date: March 9, 2006