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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
Investment Company Act File Number: 811-21187
Registrant Name: PIMCO Municipal Income Fund III
Address of Principal Executive Offices: 1345 Avenue of the Americas, New York, NY 10105
Name and Address of Agent for Service: Lawrence G. Altadonna 1345 Avenue of the Americas, New York, NY 10105
Registrant’s telephone number, including area code: 212-739-3371
Date of Fiscal Year End: September 30, 2008
Date of Reporting Period: December 31, 2007
Form N-Q is to be used by the registered management investment company, other than a small business investment company registered on Form N-5 (§§ 239.24 and 274.5 of this chapter), to file reports with the Commission, not later than 60 days after the close of the first and third fiscal quarters, pursuant to rule 30b1-5 under the Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission may use the information provided on Form N-Q in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public. A registrant is not required to the collection of information contained in Form N-Q 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 the 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. Schedule of Investments
PIMCO Municipal Income Fund III
Schedule of Investments
December 31, 2007 (unaudited)
Principal
Amount
(000)
Credit Rating
(Moody’s/S&P)
Value*
MUNICIPAL BONDS & NOTES–97.6%
Alabama–1.1%
Birmingham, GO, Ser. B, (Pre-refunded @ $100, 12/1/12) (AMBAC)(b),
$
1,000
5.00%, 12/1/27
Aaa/AAA
$
1,079,250
2,560
5.00%, 12/1/32
Aaa/AAA
2,762,880
5,000
Birmingham Baptist Medical Centers Special Care Facs. Financing Auth. Rev., 5.00%, 11/15/30, Ser. A
Baa1/NR
4,561,450
1,500
Colbert Cnty., Northwest Health Care Auth., Health Care Facs.
Rev., 5.75%, 6/1/27
Baa3/NR
1,457,250
9,860,830
Alaska–0.8%
3,100
Northern Tobacco Securitization Corp. Rev., 5.00%, 6/1/46, Ser. A
Baa3/NR
2,550,277
State Housing Finance Corp. Rev.,
3,900
5.00%, 12/1/33, Ser. A
Aaa/AAA
3,902,964
1,000
5.25%, 6/1/32, Ser. C (MBIA)
Aaa/AAA
1,001,410
7,454,651
Arizona–3.1%
Health Facs. Auth. Rev.,
2,250
Beatitudes Project, 5.20%, 10/1/37
NR/NR
1,851,705
2,200
John C. Lincoln Health Network,
7.00%, 12/1/25, (Pre-refunded @ $102, 12/1/10) (b)
NR/BBB
2,473,724
1,500
Maricopa Cnty. Pollution Control Corp., Pollution Control Rev., 5.05%, 5/1/29 (AMBAC)
Aaa/AAA
1,542,540
Salt River Project Agricultural Improvement & Power Dist. Rev., Ser. A (i),
5,000
5.00%, 1/1/35
Aa1/AA
5,200,300
16,000
5.00%, 1/1/37
Aa1/AA
16,629,920
27,698,189
Arkansas–0.1%
7,000
Arkansas Dev. Finance Auth. Rev., zero coupon, 7/1/46 (AMBAC)
Aaa/NR
991,130
California–6.7%
1,000
Alameda Public Financing Auth. Rev., 7.00%, 6/1/09
NR/NR
999,260
2,000
Chula Vista Community Facs. Dist., Special Tax, 5.25%, 9/1/30
NR/NR
1,776,860
Golden State Tobacco Securitization Corp., Tobacco Settlement Rev., Ser. A,
27,585
6.25%, 6/1/33
Aaa/AAA
30,272,882
21,000
6.75%, 6/1/39, (Pre-refunded @ $100, 6/1/13) (b)
Aaa/AAA
24,279,570
3,060
Statewide Community Dev. Auth. Rev., Baptist Univ.,
9.00%, 11/1/17, Ser. B (c)
NR/NR
3,186,776
60,515,348
Colorado–3.4%
1,000
Aurora Single Tree Metropolitan Dist., GO, 5.50%, 11/15/31
NR/NR
939,320
Colorado School of Mines Aux. Facs. Rev. (AMBAC),
340
5.00%, 12/1/37
Aaa/AAA
347,850
2,160
5.00%, 12/1/37, (Pre-refunded @ $100, 12/1/12) (b)
Aaa/AAA
2,331,180
PIMCO Municipal Income Fund III
Schedule of Investments
December 31, 2007 (unaudited) (continued)
Principal
Amount
(000)
Credit Rating
(Moody’s/S&P)
Value*
Colorado–(continued)
$
9,955
Colorado Springs Rev., 5.00%, 11/15/30, Ser. B (i)
Aa2/AA
$
10,248,573
500
Confluence Metropolitan Dist. Rev, 5.45%, 12/1/34
NR/NR
431,945
El Paso Cnty., CP (AMBAC),
1,735
5.00%, 12/1/23, Ser. A, (Pre-refunded @ $100, 12/1/12) (b)
Aaa/AAA
1,872,499
1,725
5.00%, 12/1/23, Ser. B
Aaa/AAA
1,791,775
2,820
5.00%, 12/1/27, Ser. A, (Pre-refunded @ $100, 12/1/12) (b)
Aaa/AAA
3,043,485
1,500
5.00%, 12/1/27, Ser. B
Aaa/AAA
1,545,960
1,500
Garfield Cnty. School Dist. Re-2, GO, 5.00%, 12/1/25 (FSA)
Aaa/NR
1,554,690
1,000
Health Facs. Auth. Rev., American Baptist Homes, 5.90%, 8/1/37, Ser. A
NR/NR
915,450
1,500
Housing & Finance Auth. Rev., Evergreen Country Day School,
5.875%, 6/1/37 (c)
NR/BB
1,436,280
4,000
Saddle Rock Metropolitan Dist., GO, 5.35%, 12/1/31 (Radian)
NR/AA
4,012,360
30,471,367
Florida–5.7%
3,480
Brevard Cnty. Health Facs. Auth. Rev., 5.00%, 4/1/34
A2/A
3,323,156
8,000
Highlands Cnty. Health Facs. Auth. Rev., Adventist Health System, 5.25%, 11/15/23, Ser. B, (Pre-refunded @ $100, 11/15/12) (b)
A1/A+
8,643,120
2,500
Hillsborough Cnty. Industrial Dev. Auth. Rev., Tampa General Hospital, 5.25%, 10/1/34, Ser. B
A3/NR
2,433,250
1,485
Julington Creek Plantation Community Dev. Dist., Special Assessment Rev., 5.00%, 5/1/29 (MBIA)
Aaa/AAA
1,527,516
1,000
Orange Cnty. Housing Finance Auth., Multifamily Rev., Palm Grove Gardens, 5.25%, 1/1/28, Ser. G
Aaa/NR
1,012,280
15,000
Pinellas Cnty. Health Facs. Auth. Rev., Baycare Health, 5.50%, 11/15/33, (Pre-refunded @ $100, 5/15/13) (b)
Aa3/NR
16,563,000
3,895
Sarasota Cnty. Health Facs. Auth. Rev., 5.75%, 7/1/45
NR/NR
3,471,536
7,500
South Miami Health Facs. Auth., Hospital Rev., Baptist Health, 5.25%, 11/15/33, (Pre-refunded @ $100, 2/1/13) (b)
Aaa/AA−
8,137,950
5,615
Tampa Water & Sewer Rev., 5.00%, 10/1/26
Aa2/AA
5,791,311
50,903,119
Georgia–0.6%
1,750
Fulton Cnty. Rev., 5.125%, 7/1/42, Ser. A
NR/NR
1,424,623
4,000
Griffin Combined Public Utility Rev., 5.00%, 1/1/32 (AMBAC)
Aaa/AAA
4,143,080
5,567,703
Idaho–0.8%
State Building Auth., Building Rev., Ser. A (XLCA),
1,000
5.00%, 9/1/33
Aaa/AAA
1,021,810
5,750
5.00%, 9/1/43
Aaa/AAA
5,854,190
6,876,000
Illinois–6.1%
Chicago, GO, Ser. A (MBIA),
1,530
5.00%, 1/1/31, (Pre-refunded @ $101, 1/1/11) (b)
Aaa/AAA
1,623,682
720
5.00%, 1/1/31
Aaa/AAA
733,810
PIMCO Municipal Income Fund III
Schedule of Investments
December 31, 2007 (unaudited) (continued)
Principal
Amount
(000)
Credit Rating
(Moody’s/S&P)
Value*
Illinois–(continued)
Chicago, Lake Shore East, Special Assessment,
$
1,600
6.625%, 12/1/22
NR/NR
$
1,646,656
3,456
6.75%, 12/1/32
NR/NR
3,551,489
500
Chicago Board of Education School Reform, GO, zero coupon, 12/1/28, Ser. A (FGIC)
Aaa/AAA
176,600
3,000
Chicago Kingsbury Redev. Project, Tax Allocation, 6.57%, 2/15/13, Ser. A
NR/NR
3,029,970
7,000
Chicago Motor Fuel Tax Rev., 5.00%, 1/1/33, Ser. A (AMBAC)
Dev. Finance Auth. Rev.,
Aaa/AAA
7,168,630
2,000
Christian Homes, Inc., 5.75%, 5/15/31, Ser. A
NR/NR
1,827,200
1,500
Franciscan Communities, 5.50%, 5/15/37
NR/NR
1,364,340
12,795
People Gas Light & Coke 5.00%, 2/1/33 (AMBAC)(i)
Aaa/AAA
13,018,017
1,500
Sedgebrook, 6.00%, 11/15/37, Ser. A
NR/NR
1,394,130
1,050
Three Crowns Park Plaza, 5.875%, 2/15/38
NR/NR
955,962
Educational Facs. Auth. Rev., Univ. of Chicago,
4,780
5.00%, 7/1/33
Aa1/AA
4,916,182
220
5.00%, 7/1/33, (Pre-refunded @ $100, 7/1/13) (b)
Aa1/AA
238,531
165
5.25%, 7/1/41
Aa1/AA
171,613
4,160
5.25%, 7/1/41, (Pre-refunded @ $101, 7/1/11) (b)
Aa1/AA
4,479,741
Finance Auth. Rev.,
1,000
5.875%, 3/1/27, Ser. A
NR/NR
968,110
625
6.00%, 3/1/37, Ser. A
NR/NR
599,250
1,175
Health Facs. Auth. Rev., Elmhurst Memorial Healthcare, 5.50%, 1/1/22
A2/NR
1,222,211
4,283
Round Lake, Special Tax Rev., 6.70%, 3/1/33, (Pre-refunded @ $102, 3/1/13) (b)
NR/NR
4,906,690
600
Southwestern Dev. Auth. Rev., Comprehensive Mental Health Center, 6.625%, 6/1/37
NR/NR
589,662
54,582,476
Indiana–3.1%
7,535
Bond Bank Rev., 5.00%, 2/1/33, Ser. A (FSA)(i)
Aaa/AAA
7,700,996
3,000
Brownsburg 1999 School Building Corp. Rev., 5.25%, 3/15/25,
Ser. A, (Pre-refunded @ $100, 9/15/13) (FSA)(b)
Aaa/AAA
3,299,790
1,375
Fort Wayne Pollution Control Rev., 6.20%, 10/15/25
Caa1/B−
1,328,910
5,000
Indianapolis Local Public Improvement Board, Tax Allocation,
5.00%, 2/1/29, Ser. G (MBIA)
Aaa/AAA
5,114,400
Michigan City Area Wide School Building Corp., Rev. (FGIC),
2,500
zero coupon, 1/15/21
Aaa/AAA
1,380,450
1,000
zero coupon, 7/15/21
Aaa/AAA
539,730
1,000
zero coupon, 1/15/22
Aaa/AAA
523,250
1,000
Plainfield Parks Facs. Corp. Lease Rent Rev., 5.00%, 1/15/22 (AMBAC)
Aaa/AAA
1,031,650
Portage Industrial Economic Dev. Rev.,
1,000
5.00%, 7/15/23
NR/BBB+
940,650
775
5.00%, 1/15/27
NR/BBB+
715,937
PIMCO Municipal Income Fund III
Schedule of Investments
December 31, 2007 (unaudited) (continued)
Principal
Amount
(000)
Credit Rating
(Moody’s/S&P)
Value*
Indiana–(continued)
$
3,500
State Dev. Finance Auth., Pollution Control Rev., 5.00%, 3/1/30 (AMBAC)
Aaa/AAA
$
3,505,460
2,000
Vigo Cnty. Hospital Auth. Rev., 5.70%, 9/1/37 (c)
NR/NR
1,809,940
27,891,163
Iowa–1.7%
1,000
Coralville, CP, 5.25%, 6/1/26, Ser. D
A2/NR
1,028,000
3,715
Finance Auth. Rev., Wedum Walnut Ridge LLC, 5.625%, 12/1/45, Ser. A
NR/NR
3,235,691
Tobacco Settlement Auth. of Iowa Rev., Ser. B,
11,010
5.60%, 6/1/34
Baa3/BBB
10,007,539
1,000
5.60%, 6/1/35, (Pre-refunded @ $101, 6/1/11) (b)
NR/AAA
1,079,790
15,351,020
Kentucky–0.2%
Economic Dev. Finance Auth., Hospital Facs. Rev.,
1,000
Catholic Healthcare Partners, 5.25%, 10/1/30
A1/AA−
1,010,780
1,080
St. Luke’s Hospital, 6.00%, 10/1/19, Ser. B
A3/A
1,087,679
2,098,459
Louisiana–1.0%
Public Facs. Auth. Rev., Ochsner Clinic Foundation, Ser. B,
5,000
5.50%, 5/15/32, (Pre-refunded @ $100, 5/15/26) (b)
Aaa/NR
5,735,550
1,700
5.50%, 5/15/47
A3/NR
1,675,622
1,595
Tobacco Settlement Financing Corp. Rev., 5.875%, 5/15/39, Ser. 2001-B
Baa3/BBB
1,538,489
8,949,661
Maryland–0.2%
500
Health & Higher Educational Facs. Auth. Rev., 5.30%, 1/1/37
NR/NR
432,585
1,500
State Health & Higher Educational Facs. Auth. Rev., Calvert Health Systems, 5.50%, 7/1/36
A2/NR
1,543,650
1,976,235
Massachusetts–1.1%
1,000
State Dev. Finance Agcy. Rev.,
5.75%, 7/1/33, Ser. C, (Pre-refunded @ $101, 7/1/13) (b)
A3/A−
1,128,880
750
Linden Ponds, 5.75%, 11/15/35, Ser. A
NR/NR
677,063
4,910
State Housing Finance Agcy., Housing Rev., 5.125%, 6/1/43, Ser. H
Aa3/AA−
4,925,614
3,225
State Water Pollution Abatement Trust Rev., 5.00%, 8/1/32, Ser. 8
Aaa/AAA
3,312,365
10,043,922
Michigan–13.9%
500
Corner Creek Academy East Rev., 5.25%, 11/1/36
A1/BB+
430,560
250
Crescent Academy, CP, 5.75%, 12/1/36
NR/NR
221,835
Detroit Water Supply System Rev.,
33,040
5.00%, 7/1/32, Ser. A (FSA)(i)
Aaa/AAA
33,884,172
35,000
5.00%, 7/1/34, Ser. A (MBIA)(i)
Aaa/AAA
35,706,650
PIMCO Municipal Income Fund III
Schedule of Investments
December 31, 2007 (unaudited) (continued)
Principal
Amount
(000)
Credit Rating
(Moody’s/S&P)
Value*
Michigan–(continued)
$
7,555
5.00%, 7/1/34, Ser. B (MBIA)
Aaa/AAA
$
7,707,535
500
Star International Academy, CP, 6.125%, 3/1/37
NR/BB+
499,610
5,000
State Building Auth. Rev., 5.00%, 10/15/26, Ser. III, (Pre-refunded @ $100, 10/15/12) (FSA)(b)
Aaa/AAA
5,386,600
State Hospital Finance Auth. Rev.,
175
Detroit Medical Center, 5.25%, 8/15/23
Ba3/BB−
157,537
4,000
Henry Ford Health System,
5.00%, 3/1/17, (Pre-refunded @ $100, 3/1/13) (b)
A1/A
4,304,200
Oakwood Group, Ser. A,
5,405
5.75%, 4/1/32
A2/A
5,574,339
575
6.00%, 4/1/22
A2/A
611,518
20,000
Trinity Health Credit, 5.375%, 12/1/30
Aa2/AA
20,505,400
1,000
State Technical Univ. Rev., 5.00%, 10/1/33 (XLCA)
Aaa/AAA
1,026,810
10,000
Tobacco Settlement Finance Auth. Rev., 6.00%, 6/1/48, Ser. A
NR/BBB
9,689,700
125,706,466
Minnesota–0.4%
750
Cottage Grove Rev., 5.00%, 12/1/31
NR/NR
631,133
2,400
Upsala Independent School Dist. No. 487, GO, 5.00%, 2/1/28 (FGIC)
Aaa/AAA
2,566,008
3,197,141
Mississippi–0.5%
Business Finance Corp., Pollution Control Rev.,
3,000
5.875%, 4/1/22
Ba1/BBB
3,002,520
1,250
5.90%, 5/1/22
Ba1/BBB
1,251,613
4,254,133
Missouri–1.5%
1,350
St. Louis Cnty. Industrial Dev. Auth.,
Housing Dev. Rev., 5.20%, 1/20/36 (GNMA)
NR/AAA
1,360,395
St. Louis Industrial Dev. Auth. Rev. (GNMA),
1,500
5.125%, 12/20/29
NR/AAA
1,514,670
1,500
5.125%, 12/20/30
NR/AAA
1,508,115
7,500
State Health & Educational Facs. Auth., Health Facs. Rev.,
St. Anthony’s Medical Center, 6.25%, 12/1/30,
(Pre-refunded @ $101, 12/1/10) (b)
A2/NR
8,220,525
250
Township of Jennings Rev., 5.00%, 11/1/23
NR/NR
228,722
500
Univ. Place Transportation Dev. Dist., Special Assessment, 5.00%, 3/1/32 (d)
NR/NR
444,760
13,277,187
Montana–1.3%
11,250
Forsyth Pollution Control Rev., Puget Sound Energy, 5.00%, 3/1/31 (AMBAC)
Aaa/AAA
11,579,400
Nevada–0.4%
3,355
Henderson Health Care Facs. Rev., Catholic Healthcare West,
5.125%, 7/1/28, (Pre-refunded @ $101, 7/1/08) (b)
A2/NR
3,423,912
PIMCO Municipal Income Fund III
Schedule of Investments
December 31, 2007 (unaudited) (continued)
Principal
Amount
(000)
Credit Rating
(Moody’s/S&P)
Value*
New Hampshire–0.5%
Manchester Water Works Rev. (FGIC),
$
1,500
5.00%, 12/1/28
Aaa/AAA
$
1,551,840
3,250
5.00%, 12/1/34
Aaa/AAA
3,345,258
4,897,098
New Jersey–5.7%
1,000
Camden Cnty., Improvement Auth. Rev., Cooper Health System,
5.00%, 2/15/35, Ser. A
Baa3/BBB
876,480
Economic Dev. Auth. Rev.,
4,500
Kapkowski Road Landfill Project, Special Assessment,
6.50%, 4/1/28
Baa3/NR
4,959,495
300
Newark Airport Rev., 7.00%, 10/1/14
Ba1/NR
301,485
450
Seashore Gardens, 5.375%, 11/1/36
NR/NR
388,035
Health Care Facs. Financing Auth. Rev.,
2,500
Middlesex Cnty. Pollution Control Auth. Rev., 5.75%, 9/15/32
Baa3/BBB−
2,500,775
3,000
Pascack Valley Hospital, 6.625%, 7/1/36 (j)
NR/CC
1,531,500
2,000
Somerset Medical Center, 5.50%, 7/1/33
Ba1/NR
1,791,300
2,000
South Port Corp., 5.10%, 1/1/33
NR/A
2,043,240
1,000
St. Peters Univ. Hospital, 5.75%, 7/1/37
Baa2/BBB−
975,060
1,150
Trinitas Hospital, 5.25%, 7/1/30, Ser. A
Baa3/BBB−
1,061,588
1,500
State Educational Facs. Auth. Rev., 6.00%, 7/1/25, Ser. D
NR/NR
1,544,850
Tobacco Settlement Financing Corp. Rev.,
22,645
5.00%, 6/1/41, Ser. 1A
Baa3/BBB
18,830,903
525
6.00%, 6/1/37, (Pre-refunded @ $100, 6/1/12) (b)
Aaa/AAA
582,466
1,000
6.125%, 6/1/24
Aaa/AAA
1,062,750
230
6.125%, 6/1/42, (Pre-refunded @ $100, 6/1/12) (b)
Aaa/AAA
256,346
350
6.25%, 6/1/43, (Pre-refunded @ $100, 6/1/13) (b)
Aaa/AAA
399,259
10,750
6.75%, 6/1/39, (Pre-refunded @ $100, 6/1/13) (b)
Aaa/AAA
12,526,545
51,632,077
New Mexico–0.1%
1,000
Farmington Pollution Control Rev., 5.80%, 4/1/22
Baa2/BBB−
1,002,310
New York–3.6%
10,000
Metropolitan Transportation Auth. Rev., 5.25%, 11/15/32, Ser. B, (Pre-refunded @ $100, 11/15/13) (b)
A2/AAA
11,054,000
New York City Municipal Water Finance Auth., Water & Sewer System Rev.,
5,000
5.00%, 6/15/35, Ser. C
Aa2/AA+
5,146,900
8,180
5.00%, 6/15/37, Ser. D (i)
Aa2/AA+
8,441,433
1,500
5.00%, 6/15/39, Ser. A
Aa2/AA+
1,542,375
3,800
State Dormitory Auth. Rev., State Personal Income Tax, 5.00%, 3/15/32, (Pre-refunded @ $100, 3/15/13) (b)
Aa3/AAA
4,113,576
2,000
State Environmental Facs. Corp. Rev., 5.00%, 6/15/28
Aaa/AAA
2,076,160
32,374,444
North Carolina–1.3%
2,000
Charlotte-Mecklenburg Hospital Auth., Healthcare System Rev.,
5.00%, 1/15/33, Ser. A, (Pre-refunded @ $100, 1/15/13) (b)
Aa3/AA−
2,148,720
PIMCO Municipal Income Fund III
Schedule of Investments
December 31, 2007 (unaudited) (continued)
Principal
Amount
(000)
Credit Rating
(Moody’s/S&P)
Value*
North Carolina–(continued)
Eastern Municipal Power Agcy., Power System Rev.,
$
2,000
5.125%, 1/1/23, Ser. D
Baa1/BBB
$
2,034,760
2,000
5.125%, 1/1/26, Ser. D
Baa1/BBB
2,022,340
3,795
5.375%, 1/1/17, Ser. C
Baa1/BBB
3,964,371
1,500
Medical Care Commission, Health Care Facs. Rev., Cleveland Cnty., 5.00%, 7/1/35 (AMBAC)
Aaa/AAA
1,542,660
11,712,851
Ohio–1.4%
5,000
Buckeye Tobacco Settlement Financing Auth. Rev., 5.875%, 6/1/47, Ser. A-2
Baa3/BBB
4,775,300
2,500
Lorain Cnty. Hospital Rev., Catholic Healthcare, 5.375%, 10/1/30
A1/AA−
2,540,000
5,000
Ohio Air Quality Dev. Auth. Rev., Dayton Power & Light Co.,
4.80%, 1/1/34, Ser. B (FGIC)(i)
Aaa/AAA
4,977,900
12,293,200
Pennsylvania–4.0%
Allegheny Cnty. Hospital Dev. Auth. Rev.,
11,300
5.375%, 11/15/40, Ser. A
Ba2/BB
9,786,365
4,350
9.25%, 11/15/30, Ser. B, (Pre-refunded @ $102, 11/15/10) (b)
Ba3/AAA
5,130,694
1,500
Cumberland Cnty. Auth., Retirement Community Rev., Wesley Affiliated Services, 7.25%, 1/1/35, Ser. A, (Pre-refunded @ $101, 1/1/13) (b)
NR/NR
1,773,480
3,250
Delaware River Toll Bridge, Commission Bridge Rev., 5.00%, 7/1/28
A2/A−
3,337,815
1,250
Harrisburg Auth. Rev., 6.00%, 9/1/36
NR/NR
1,224,762
3,000
Lehigh Cnty. General Purpose Auth. Rev., St. Luke’s Bethlehem Hospital,5.375%, 8/15/33, (Pre-refunded @ $100, 8/15/13) (b)
Baa1/BBB
3,295,560
5,000
Philadelphia School Dist., GO, 5.125%, 6/1/34, Ser. D, (Pre-refunded @ $100, 6/1/14) (FGIC)(b)
Aaa/AAA
5,495,750
6,300
St. Mary Hospital Auth., Bucks Cnty. Rev.,5.00%, 12/1/28, (Partially Pre-refunded @ $101, 6/1/08) (b)
Aa2/NR
6,203,358
36,247,784
Puerto Rico–0.3%
Electric Power Auth. Power Rev.,
2,200
5.125%, 7/1/29, Ser. NN, (Pre-refunded @ $100, 7/1/13) (b)
A3/BBB+
2,402,466
South Carolina–1.7%
7,500
Florence Cnty. Rev., McLeod Regional Medical Center, 5.00%, 11/1/31, Ser. A (FSA)
Aaa/AAA
7,784,775
Jobs Economic Dev. Auth. Rev., Bon Secours Health System,
6,700
5.625%, 11/15/30
A3/A−
6,817,652
750
6.00%, 11/15/37, Ser. A
NR/NR
685,208
15,287,635
South Dakota–0.2%
1,705
Minnehaha Cnty. Health Facs. Rev., Bethany Lutheran, 5.375%, 12/1/27
NR/NR
1,554,363
PIMCO Municipal Income Fund III
Schedule of Investments
December 31, 2007 (unaudited) (continued)
Principal
Amount
(000)
Credit Rating
(Moody’s/S&P)
Value*
Tennessee–0.1%
$
1,250
Knox Cnty. Health Educational & Housing Facs., Board Hospital Facs. Rev., Catholic Healthcare Partners, 5.25%, 10/1/30
A1/AA−
$
1,263,475
Texas–14.3%
2,500
Columbia & Brazoria Independent School Dist., GO, 5.00%, 8/1/29 (PSF-GTD)
NR/AAA
2,575,850
1,300
Comal Cnty. Health Facs. Dev., McKenna Memorial Hospital Project Rev., 6.25%, 2/1/32
Baa2/BBB−
1,317,927
6,810
Crowley Independent School Dist., GO, 4.75%, 8/1/35 (PSF-GTD)(i)
Aaa/AAA
6,839,896
12,975
Dallas Area Rapid Transit Rev., 5.00%, 12/1/32, (Pre-refunded @ $100, 12/1/12) (FGIC)(b)(i)
Aaa/AAA
14,003,269
Denton Independent School Dist., GO, (PSF-GTD),
5,745
zero coupon, 8/15/26, (Pre-refunded @ $44.73, 8/15/12) (b)
Aaa/AAA
2,190,568
255
zero coupon, 8/15/26
Aaa/AAA
93,223
5,745
zero coupon, 8/15/27, (Pre-refunded @ $42.17, 8/15/12) (b)
Aaa/AAA
2,065,213
255
zero coupon, 8/15/27
Aaa/AAA
87,733
4,785
zero coupon, 8/15/28, (Pre-refunded @ $39.75, 8/15/12) (b)
Aaa/AAA
1,621,397
215
zero coupon, 8/15/28
Aaa/AAA
69,598
5,745
zero coupon, 8/15/29, (Pre-refunded @ $37.46, 8/15/12) (b)
Aaa/AAA
1,834,551
255
zero coupon, 8/15/29
Aaa/AAA
77,688
1,915
zero coupon, 8/15/30, (Pre-refunded @ $35.30, 8/15/12) (b)
Aaa/AAA
576,185
85
zero coupon, 8/15/30
Aaa/AAA
24,367
7,660
zero coupon, 8/15/31, (Pre-refunded @ $33.25, 8/15/12) (b)
Aaa/AAA
2,171,227
340
zero coupon, 8/15/31
Aaa/AAA
91,735
10,115
5.00%, 8/15/33 (i)
Aaa/AAA
10,340,059
4,400
Harris Cnty., GO, 5.125%, 8/15/31, (Pre-refunded @ $100, 8/15/12) (b)
Aa1/AA+
4,748,744
Harris Cnty. Health Facs. Dev. Corp. Rev.,
5,000
Christus Health, 5.375%, 7/1/29, Ser. A, (Pre-refunded @ $101, 7/1/09) (MBIA)(b)
Aaa/AAA
5,219,050
2,750
St. Luke’s Episcopal Hospital, 5.375%, 2/15/26, Ser. A, (Pre-refunded @ $100, 8/15/11) (b)
NR/AAA
2,954,435
19,500
Harris Cnty. Rev., 5.125%, 8/15/32, (Pre-refunded @ $100, 8/15/12) (FSA)(b)
Aaa/AAA
21,062,925
5,000
Houston Water & Sewer System Rev.,5.00%, 12/1/30, Ser. A, (Pre-refunded @ $100, 12/1/12) (FSA)(b)
Aaa/AAA
5,391,550
Judson Independent School Dist., GO, (PSF-GTD),
6,535
5.00%, 2/1/30, (Pre-refunded @ $100, 2/1/11) (b)
Aaa/NR
6,884,557
465
5.00%, 2/1/30
Aaa/NR
472,793
11,950
Mansfield Independent School Dist., GO, 5.00%, 2/15/28 (PSF-GTD)(i)
Aaa/AAA
12,296,670
Mesquite Independent School Dist. No. 1, GO, Ser. A (PSF-GTD),
1,365
zero coupon, 8/15/16
NR/AAA
949,535
1,000
zero coupon, 8/15/18
NR/AAA
625,510
1,000
zero coupon, 8/15/19
NR/AAA
586,880
1,000
zero coupon, 8/15/20
NR/AAA
553,240
2,105
Northwest Harris Cnty. Municipal Utility Dist. No. 16, GO, 5.30%, 10/1/29 (Radian)
NR/AA
2,127,271
PIMCO Municipal Income Fund III
Schedule of Investments
December 31, 2007 (unaudited) (continued)
Principal
Amount
(000)
Credit Rating
(Moody’s/S&P)
Value*
Texas–(continued)
$
2,000
Sabine River Auth. Rev., 5.20%, 5/1/28
NR/CCC
$
1,640,600
Univ. Rev., Ser. B (b),
2,000
5.00%, 7/1/26, (Pre-refunded @ $100, 7/1/14)
Aaa/AAA
2,186,220
11,115
5.00%, 8/15/33, (Pre-refunded @ $100, 8/15/13) (i)
Aaa/AAA
12,069,778
2,500
Willacy Cnty. Rev., 6.875%, 9/1/28, Ser. A-1
NR/NR
2,609,200
128,359,444
Utah–0.3%
750
Spanish Fork City Rev., 5.70%, 11/15/36
NR/NR
696,045
720
Utah Cnty. Lincoln Academy Charter School, GO, 5.875%, 6/15/37, Ser. A (c)
NR/NR
685,678
1,750
Weber Cnty., IHC Health Services Rev., 5.00%, 8/15/30
Aa1/NR
1,757,367
3,139,090
Virginia–0.1%
1,000
James City Cnty. Economic Dev. Auth. Rev., 5.50%, 7/1/37, Ser. A
NR/NR
887,320
Washington–10.2%
6,375
Chelan Cnty. Public Utility Dist. Rev., 5.125%, 7/1/33, Ser. C (AMBAC)
Aaa/AAA
6,566,760
King Cnty. Sewer Rev., Ser. A (i),
10,000
5.00%, 1/1/35 (FGIC)
Aaa/AAA
10,226,200
15,000
5.00%, 1/1/35 (FSA)
Aaa/AAA
15,326,100
21,625
Port Tacoma, GO, 5.00%, 12/1/33, (Pre-refunded @ $100, 12/1/13) (AMBAC)(b)(i)
Aaa/AAA
23,571,034
10,000
Seattle Drain & Wastewater Rev., 5.00%, 7/1/32 (FGIC)(i)
Aaa/AAA
10,213,500
3,400
State Housing Finance Commission Rev., Skyline at First Hill, 5.625%, 1/1/38, Ser. A
NR/NR
3,017,636
22,415
Tobacco Settlement Auth., Tobacco Settlement Rev., 6.50%, 6/1/26
Baa3/BBB
23,343,653
92,264,883
Wisconsin–0.1%
560
Badger Tobacco Asset Securitization Corp. Rev., 6.00%, 6/1/17
Baa3/BBB
580,535
700
Milwaukee Redev. Auth. Rev., 5.65%, 8/1/37, Ser. A
NR/NR
641,018
1,221,553
Total Municipal Bond & Notes (cost—$847,822,704)
879,209,505
VARIABLE RATE NOTES (f)–2.0%
Florida–0.3%
2,554
State Turnpike Auth. Rev., 9.02%, 7/1/31, Ser. 1450 (a)(c)(e)
Aa2/NR
2,666,121
New York–1.5%
4,660
Liberty Dev. Corp. Rev., 11.60%, 10/1/35, Ser. 1451 (a)(c)(e)
Aa3/NR
5,851,562
PIMCO Municipal Income Fund III
Schedule of Investments
December 31, 2007 (unaudited) (continued)
Principal
Amount
(000)
Credit Rating
(Moody’s/S&P)
Value*
New York–(continued)
$
6,000
State Dormitory Auth. Rev., Univ. & College Improvement.,
10.23%, 3/15/35, Ser. 1216 (a)(c)(e)
NR/AAA
$
7,154,400
13,005,962
Ohio–0.2%
2,075
Ohio Air Quality Dev. Auth. Rev., 8.47%, 1/1/34, Ser. 1223 (FGIC)
(a)(c)(e)
Aaa/NR
2,044,435
Pennsylvania–0.0%
350
Washington Cnty. Redev. Auth., Tax Allocation, 5.45%, 7/1/35, Ser. A
NR/NR
319,245
Total Variable Rate Notes (cost–$18,715,469)
18,035,763
U.S. TREASURY BILLS (g)–0.5%
4,425
2.99%-3.21%, 2/28/08-3/13/08 (cost–$4,399,478)
4,399,478
Total Investments before options written (cost–$870,937,651)
–100.1%
901,644,746
Contracts
OPTIONS WRITTEN (h)–(0.1)%
Call Options–(0.1)%
U.S. Treasury Notes 10 yr. Futures (CBOT),
761
strike price $114, expires 2/22/08
(856,125
)
Put Options–(0.0)%
U.S. Treasury Notes 10 yr. Futures (CBOT),
761
strike price $110, expires 2/22/08
(190,250
)
Total Options Written (premiums received–$1,050,188)
(1,046,375
)
Total Investments net of options written (cost–$869,887,463)
–100.0%
$
900,598,371
Notes to Schedule 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 are fair-valued, in good faith, pursuant to guidelines established by the Board of Trustees or persons acting at their discretion pursuant to guidelines established by the Board of Trustees. The Fund’s investments are valued daily using prices supplied by an independent pricing service or dealer quotations, or by using the last sale price on the exchange that is the primary market for such securities, or the last quoted mean price for those securities for which the over-the-counter market is the primary market or for listed securities in which there were no sales. Independent pricing services use information provided by market makers or estimates of market values obtained from yield data relating to investments or securities with similar characteristics. Exchange traded options and futures are valued at the settlement price determined by the relevant exchange. Securities purchased on a when-issued or delayed-delivery basis are marked to market daily until settlement at the forward settlement date. 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. The Fund’s net asset value is normally determined as of the close of regular trading (normally, 4:00 p.m. Eastern time) on the New York Stock Exchange (‘‘NYSE’’) on each day the NYSE is open for business.
(a)
Private Placement – Restricted as to resale and may not have a readily available market. Securities with an aggregate value of $17,716,518, representing 1.97% of total investments.
(b)
Pre-refunded bonds are collateralized by U.S. Government or other eligible securities which are held in escrow and used to pay principal and interest and retire the bonds at the earliest refunding date (payment date) and/or whose interest rates vary with changes in a designated base rate (such as the prime interest rate).
(c)
144A Security – Security exempt from registration, under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, typically only to qualified institutional buyers. Unless otherwise indicated, these securities are not considered to be illiquid.
(d)
When-issued or delayed-delivery security. To be settled/delivered after December 31, 2007.
(e)
Inverse Floater – The interest rate shown bears an inverse relationship to the interest rate on another security or the value of an index.
(f)
Variable Rate Notes – Instruments whose interest rates change on specified date (such as a coupon date or interest payment date) and/or whose interest rates vary with changes in a designated base rate (such as the prime interest rate). The interest rate disclosed reflects the rate in effect on December 31, 2007.
(g)
All or partial amount segregated as collateral for futures contracts.
(h)
Non-income producing.
(i)
Residual Interest Bonds held in trust – Securities represent underlying bonds transferred to a separate securitization trust established in a tender option bond transaction in which the Fund acquired the residual interest certificates. These securities serve as collateral in a financing transaction.
(j)
Security in default.
Glossary:
AMBAC – insured by American Municipal Bond Assurance Corp.
CBOT – Chicago Board of Trade
CP – Certificates of Participation
FGIC – insured by Financial Guaranty Insurance Co.
FSA – insured by Financial Security Assurance, Inc.
GNMA – insured by Government National Mortgage Association
GO – General Obligation Bond
MBIA – insured by Municipal Bond Investors Assurance
NR – Not Rated
PSF-GTD – Public School Fund-Guaranteed
Radian – insured by Radian Guaranty, Inc.
XLCA – insured by XL Capital Assurance
Other Investments:
(1) Futures contracts outstanding at December 31, 2007:
Type
Contracts
Market
Value
(000)
Expiration
Date
Unrealized
Appreciation
Long:
U.S. Treasury Notes 10 yr. Futures
31
$
3,515
3/19/08
$
31,000
Short:
U.S. Treasury Bond Futures
(1,456)
(169,442
)
3/19/08
1,274,859
$
1,305,859
(2) Transactions in options written for the three months ended December 31, 2007:
Contracts
Premiums
Options outstanding, September 30, 2007
—
$—
Options written
1,522
1,050,188
Options outstanding, December 31, 2007
1,522
$1,050,188
Item 2. 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 Act (17CFR270.30a -3(c)), are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.
(b)
There were no significant changes in the registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d)) under the Act (17 CFR270.30a -3(d)) that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 3. Exhibits
(a)
Exhibit 99.302 Cert. – Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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.
Registrant: PIMCO Municipal Income Fund III
By /s/ Brian S. Shlissel
President & Chief Executive Officer
Date: February 29, 2008
By /s/ Lawrence G. Altadonna
Treasurer, Principal Financial & Accounting Officer
Date: February 29, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dated indicated.
By /s/ Brian S. Shlissel
President & Chief Executive Officer
Date: February 29, 2008
By /s/ Lawrence G. Altadonna
Treasurer, Principal Financial & Accounting Officer
Date: February 29, 2008