N-Q
     
 
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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:
  June 30, 2008
Form N-Q is to be used by management investment companies, other than small business investment companies 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
June 30, 2008 (unaudited)
                     
Principal                
Amount         Credit Rating      
(000)         (Moody’s/S&P)   Value*  
MUNICIPAL BONDS & NOTES—97.7%            
       
Alabama—0.7%
            
$ 5,000    
Birmingham Baptist Medical Centers Special Care Facs. Financing Auth. Rev., 5.00%, 11/15/30, Ser. A
   Baa1/NR   $ 4,284,250  
  1,500    
Colbert Cnty., Northwest Health Care Auth., Health Care Facs. Rev., 5.75%, 6/1/27
   Baa3/NR     1,456,185  
       
 
          
       
 
         5,740,435  
       
 
          
       
 
            
       
Alaska—0.9%
            
  3,100    
Northern Tobacco Securitization Corp. Rev., 5.00%, 6/1/46, Ser. A
   Baa3/NR     2,315,917  
       
State Housing Finance Corp. Rev.,
            
  3,900    
5.00%, 12/1/33, Ser. A
   Aaa/AAA     3,695,835  
  1,000    
5.25%, 6/1/32, Ser. C (MBIA)
   Aaa/AAA     1,003,070  
       
 
          
       
 
         7,014,822  
       
 
          
       
 
            
       
Arizona—5.8%
            
       
Health Facs. Auth. Rev.,
            
  2,250    
Beatitudes Project, 5.20%, 10/1/37
   NR/NR     1,764,675  
       
John C. Lincoln Health Network, 7.00%, 12/1/25,
            
  2,200    
(Pre-refunded @ $102, 12/1/10) (b)
   NR/BBB     2,452,318  
  1,500    
Maricopa Cnty. Pollution Control Corp., Pollution Control Rev., 5.05%, 5/1/29 (AMBAC)
   Aaa/AAA     1,312,545  
  16,000    
Pima Cnty. Industrial Dev. Auth. Rev., Correctional Facs., 5.00%, 9/1/39
   Aa2/AA     15,701,440  
       
Salt River Project Agricultural Improvement & Power Dist. Rev., Ser. A (h),
            
  5,000    
5.00%, 1/1/35
   Aa1/NR     5,065,450  
  16,000    
5.00%, 1/1/37
   Aa1/AA     16,189,280  
  5,600    
Salt Verde Financial Corp. Rev., 5.00%, 12/1/37
   Aa3/AA-     4,880,624  
       
 
          
       
 
         47,366,332  
       
 
          
       
 
            
       
Arkansas—0.1%
            
  7,000    
Arkansas Dev. Finance Auth. Rev., zero coupon, 7/1/46 (AMBAC)
   Aaa/NR     862,470  
       
 
          
       
 
            
       
California—9.5%
            
  2,000    
Chula Vista Community Facs. Dist., Special Tax, 5.25%, 9/1/30
   NR/NR     1,716,760  
       
Golden State Tobacco Securitization Corp. Rev., Ser. A-1,
            
  25,735    
6.25%,6/1/33
   Aaa/AAA     27,819,278  
  21,000    
6.75%, 6/1/39, (Pre-refunded @ $100, 6/1/13) (b)
   Aaa/AAA     23,770,740  
       
State, GO,
            
  400    
5.00%, 6/1/37
   A1/A+     392,780  
  15,300    
5.00%, 11/1/37 (h)
   A1/A+     15,021,693  
  5,800    
5.00%, 12/1/37
   A1/A+     5,694,556  
  3,060    
Statewide Community Dev. Auth. Rev.,
Baptist Univ., 9.00%, 11/1/17, Ser. B (c)
   NR/NR     3,128,911  
       
 
          
       
 
         77,544,718  
       
 
          
       
 
            
       
Colorado—2.6%
            
  1,000    
Aurora Single Tree Metropolitan Dist., GO, 5.50%, 11/15/31
   NR/NR     891,560  
  9,955    
Colorado Springs Rev., 5.00%, 11/15/30, Ser. B (h)
   Aa2/AA     10,039,817  
  500    
Confluence Metropolitan Dist. Rev., 5.45%, 12/1/34
   NR/NR     409,810  
       
El Paso Cnty., CP, Ser. B (AMBAC),
            
  1,725    
5.00%, 12/1/23
   Aaa/AAA     1,723,085  

 

 

PIMCO Municipal Income Fund III Schedule of Investments
June 30, 2008 (unaudited)
                     
Principal                
Amount         Credit Rating      
(000)         (Moody’s/S&P)   Value*  
       
Colorado (continued)
            
$ 1,500    
5.00%, 12/1/27
   Aaa/AAA   $ 1,458,180  
  1,000    
Health Facs. Auth. Rev., American Baptist Homes, 5.90%, 8/1/37, Ser. A
   NR/NR     870,690  
  1,500    
Housing & Finance Auth. Rev., Evergreen Country Day School, 5.875%, 6/1/37 (c)
   NR/BB     1,335,705  
  4,000    
Saddle Rock Metropolitan Dist., GO, 5.35%, 12/1/31 (Radian)
   NR/AA     3,916,160  
  340    
State School Of Mines Auxiliary Facs. Rev., 5.00%, 12/1/37 (AMBAC)
   Aaa/AAA     340,384  
       
 
          
       
 
         20,985,391  
       
 
          
       
 
            
       
Florida—4.1%
            
  3,480    
Brevard Cnty. Health Facs. Auth. Rev., 5.00%, 4/1/34
   A2/A     3,189,211  
  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+     8,578,800  
  2,500    
Hillsborough Cnty. Industrial Dev. Auth. Rev., Tampa General Hospital, 5.25%, 10/1/34, Ser. B
   A3/NR     2,363,800  
  1,485    
Julington Creek Plantation Community Dev. Dist., Special Assessment, 5.00%, 5/1/29 (MBIA)
   Aaa/AAA     1,498,840  
  1,000    
Orange Cnty. Housing Finance Auth., Multifamily Rev., Palm Grove Gardens, 5.25%, 1/1/28, Ser. G
   Aaa/NR     980,990  
  3,895    
Sarasota Cnty. Health Fac. Auth. Rev., 5.75%, 7/1/45
   NR/NR     3,236,472  
  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-     8,040,675  
  5,615    
Tampa Water & Sewer Rev., 5.00%, 10/1/26, Ser. A
   Aa2/AA     5,713,319  
       
 
          
       
 
         33,602,107  
       
 
          
       
 
            
       
Georgia—0.7%
            
  1,750    
Fulton Cnty. Rev., 5.125%, 7/1/42, Ser. A
   NR/NR     1,352,085  
  4,000    
Griffin Combined Public Utility Rev., 5.00%, 1/1/32 (AMBAC)
   Aaa/AAA     3,940,200  
  400    
Medical Center Hospital Auth. Rev., 5.25%, 7/1/37
   NR/NR     322,792  
       
 
          
       
 
         5,615,077  
       
 
          
       
 
            
       
Idaho—0.8%
            
       
State Building Auth., Building Rev., Ser. A (XLCA),
            
  1,000    
5.00%, 9/1/33
   A3/AA-     1,000,760  
  5,750    
5.00%, 9/1/43
   A3/AA-     5,628,445  
       
 
          
       
 
         6,629,205  
       
 
          
       
 
            
       
Illinois—7.0%
            
       
Chicago, GO, Ser. A (MBIA),
            
  720    
5.00%, 1/1/31
   Aaa/AAA     723,435  
  1,530    
5.00%, 1/1/31, (Pre-refunded @ $101, 1/1/11) (b)
   Aaa/AAA     1,611,916  
       
Chicago, Lake Shore East, Special Assessment,
            
  1,600    
6.625%, 12/1/22
   NR/NR     1,612,720  
  3,456    
6.75%, 12/1/32
   NR/NR     3,469,962  
  500    
Chicago Board of Education School Reform, GO, zero coupon, 12/1/28, Ser. A (FGIC)
   A1/AA-     168,180  
  3,000    
Chicago Kingsbury Redev. Project, Tax Allocation, 6.57%, 2/15/13, Ser. A
   NR/NR     3,012,960  
  7,000    
Chicago Motor Fuel Tax Rev., 5.00%, 1/1/33, Ser. A (AMBAC)
   Aaa/AAA     7,012,250  
       
Educational Facs. Auth. Rev., Univ. of Chicago,
            
  4,780    
5.00%, 7/1/33
   Aa1/AA     4,811,453  

 

 

PIMCO Municipal Income Fund III Schedule of Investments
June 30, 2008 (unaudited)
                     
Principal                
Amount         Credit Rating      
(000)         (Moody’s/S&P)   Value*  
       
Illinois (continued)
            
$ 165    
5.25%, 7/1/41
   Aa1/AA   $ 167,610  
  4,160    
5.25%, 7/1/41, (Pre-refunded @ $101, 7/1/11) (b)
   Aa1/AA     4,446,970  
       
Finance Auth. Rev.,
            
  2,000    
Christian Homes, Inc., 5.75%, 5/15/31, Ser. A
   NR/NR     1,733,020  
  1,500    
Franciscan Communities, Inc., 5.50%, 5/15/37
   NR/NR     1,283,115  
       
Leafs Hockey Club, Ser. A,
            
  1,000    
5.875%, 3/1/27
   NR/NR     906,840  
  625    
6.00%, 3/1/37
   NR/NR     542,569  
  12,795    
Peoples Gas Light & Coke, 5.00%, 2/1/33 (AMBAC)
   Aa3/NR     12,687,138  
  1,500    
Sedgebrook, Inc., 6.00%, 11/15/37, Ser. A
   NR/NR     1,365,765  
  1,050    
Three Crowns Park Plaza, 5.875%, 2/15/38
   NR/NR     908,964  
  1,175    
Health Facs. Auth. Rev., Elmhurst Memorial Healthcare, 5.50%, 1/1/22
   A2/NR     1,182,414  
       
Hillside, Tax Allocation, Mannheim Redev. Project,
            
  2,400    
6.55%, 1/1/20
   NR/NR     2,367,672  
  1,600    
7.00%, 1/1/28
   NR/NR     1,571,664  
  4,283    
Round Lake, Special Tax Rev., 6.70%, 3/1/33, (Pre-refunded @ $102, 3/1/13) (b)
   NR/NR     4,836,792  
  600    
Southwestern Dev. Auth. Rev., Comprehensive Mental Health Center, 6.625%,6/1/37
   NR/NR     556,866  
       
 
          
       
 
         56,980,275  
       
 
          
       
 
            
       
Indiana—2.9%
            
  1,375    
Fort Wayne Pollution Control Rev., 6.20%, 10/15/25
   Caa1/B     1,089,935  
  7,535    
Indiana Bond Bank Rev., 5.00%, 2/1/33, Ser. A (FSA) (h)
   Aaa/AAA     7,578,326  
  5,000    
Indianapolis Local Public Improvement Board, Tax Allocation, 5.00%, 2/1/29, Ser. G (MBIA)
   Aaa/AAA     5,030,250  
       
Michigan City Area Wide School Building Corp., Rev. (FGIC),
            
  2,500    
zero coupon, 1/15/21
   A3/AA     1,293,050  
  1,000    
zero coupon, 7/15/21
   A3/AA     501,880  
  1,000    
zero coupon, 1/15/22
   A3/AA     486,210  
  1,000    
Plainfield Parks Facs. Corp. Lease Rent Rev., 5.00%, 1/15/22 (AMBAC)
   Aaa/AAA     1,016,390  
       
Portage Industrial Economic Dev. Rev., Tax Allocation,
            
  1,000    
5.00%, 7/15/23
   NR/BBB+     935,680  
  775    
5.00%, 1/15/27
   NR/BBB+     702,197  
  3,500    
State Dev. Finance Auth., Pollution Control Rev., 5.00%, 3/1/30 (AMBAC)
   Aaa/AAA     3,504,445  
  2,000    
Vigo Cnty. Hospital Auth. Rev., 5.70%, 9/1/37 (c)
   NR/NR     1,742,680  
       
 
          
       
 
         23,881,043  
       
 
          
       
 
            
       
Iowa—1.9%
            
  1,000    
Coralville, CP, 5.25%, 6/1/26, Ser. D
   A2/NR     991,930  
       
Finance Auth. Rev.,
            
  575    
5.50%, 11/15/37
   NR/NR     426,949  
  120    
Deerfield Retirement Community, 5.50%, 11/15/27, Ser. A
   NR/NR     95,988  
  3,715    
Wedum Walnut Ridge LLC, 5.625%, 12/1/45, Ser. A
   NR/NR     3,065,655  
       
Tobacco Settlement Auth. of Iowa Rev., Ser. B,
            
  11,010    
5.60%, 6/1/34
   Baa3/BBB     9,621,529  
  1,000    
5.60%, 6/1/35, (Pre-refunded @ $101, 6/1/11) (b)
   NR/AAA     1,072,690  
       
 
          
       
 
         15,274,741  
       
 
          
       
 
            
       
Kentucky—0.1%
            
  1,000    
Economic Dev. Finance Auth. Rev., Hospital Facs. Rev., Catholic Healthcare Partners, 5.25%, 10/1/30
   A1/AA-     973,050  
       
 
          

 

 

PIMCO Municipal Income Fund III Schedule of Investments
June 30, 2008 (unaudited)
                     
Principal                
Amount         Credit Rating      
(000)         (Moody’s/S&P)   Value*  
       
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   $ 5,524,500  
  1,700    
5.50%, 5/15/47
   A3/NR     1,594,192  
  1,595    
Tobacco Settlement Financing Corp. Rev., 5.875%, 5/15/39, Ser. 2001-B
   Baa3/BBB     1,451,019  
       
 
          
       
 
         8,569,711  
       
 
          
       
 
            
       
Maryland—0.2%
            
  1,500    
Health & Higher Educational Facs. Auth. Rev., Calvert Health Systems, 5.50%, 7/1/36
   A2/NR     1,509,120  
       
 
          
       
 
            
       
Massachusetts—0.8%
            
       
Dev. Finance Agcy. Rev.,
            
  1,000    
5.75%, 7/1/33, Ser. C, (Pre-refunded @ $101, 7/1/13) (b)
   A3/A-     1,106,810  
  750    
Linden Ponds, 5.75%, 11/15/35, Ser. A
   NR/NR     653,535  
  4,910    
State Housing Finance Agcy., Housing Rev., 5.125%, 6/1/43, Ser. H
   Aa3/AA-     4,910,736  
       
 
          
       
 
         6,671,081  
       
 
          
       
 
            
       
Michigan—13.6%
            
  500    
Conner Creek Academy East Rev., 5.25%, 11/1/36
   NR/BB+     409,015  
  250    
Crescent Academy, CP, 5.75%, 12/1/36
   NR/NR     197,395  
  33,040    
Detroit Sewer Disposal System Rev., 5.00%, 7/1/11, Ser. A (FSA) (h)
   NR/AAA     32,902,553  
       
Detroit Water Supply System Rev. (MBIA),
            
  35,000    
5.00%, 7/1/34, Ser. A
   Aaa/AA     33,527,200  
  7,555    
5.00%, 7/1/34, Ser. B
   Aaa/AAA     7,237,085  
  500    
Star International Academy, CP, 6.125%, 3/1/37
   NR/BB+     445,580  
  175    
State Hospital Finance Auth. Rev., Detroit Medical Center, 5.25%, 8/15/23
   Ba3/BB-     154,284  
       
Oakwood Group, Ser. A,
            
  5,405    
5.75%, 4/1/32
   A2/A     5,356,085  
  575    
6.00%, 4/1/22
   A2/A     590,180  
  20,000    
Trinity Health Credit, 5.375%, 12/1/30
   Aa2/AA     20,166,800  
  1,000    
State Technological Univ. Rev., 5.00%, 10/1/33 (XLCA)
   A1/A-     1,021,940  
  10,000    
Tobacco Settlement Finance Auth. Rev., 6.00%, 6/1/48, Ser. A
   NR/BBB     8,628,000  
       
 
          
       
 
         110,636,117  
       
 
          
       
 
            
       
Minnesota—0.3%
            
  2,400    
Upsala Independent School Dist. No. 487, GO, 5.00%, 2/1/28 (FGIC)
   A3/AAA     2,539,536  
       
 
          
       
 
            
       
Mississippi—0.5%
            
       
Business Finance Corp., Pollution Control Rev.,
            
  3,000    
5.875%, 4/1/22
   Ba1/BBB     2,940,180  
  1,250    
5.90%, 5/1/22
   Ba1/BBB     1,227,888  
       
 
          
       
 
         4,168,068  
       
 
          
       
 
            
       
Missouri—1.6%
            
  1,350    
St. Louis Cnty. Industrial Dev. Auth., Housing Dev. Rev., 5.20%, 1/20/36 (GNMA)
   NR/AAA     1,307,718  
       
St. Louis Industrial Dev. Auth. Rev. (GNMA),
            
  1,500    
5.125%, 12/20/29
   NR/AAA     1,438,725  
  1,500    
5.125%, 12/20/30
   NR/AAA     1,413,915  

 

 

PIMCO Municipal Income Fund III Schedule of Investments
June 30, 2008 (unaudited)
                     
Principal                
Amount         Credit Rating      
(000)         (Moody’s/S&P)   Value*  
       
Missouri (continued)
            
$ 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   $ 8,169,150  
  250    
Township of Jennings Rev., 5.00%, 11/1/23
   NR/NR     228,665  
  500    
Univ. Place Transportation Dev. Dist., Special Assessment, 5.00%, 3/1/32
   NR/NR     440,065  
       
 
          
       
 
         12,998,238  
       
 
          
       
 
            
       
Montana—1.4%
            
  11,250    
Forsyth Pollution Control Rev., Puget Sound Energy, 5.00%, 3/1/31 (AMBAC)
   Aaa/AAA     11,331,900  
       
 
          
       
 
            
       
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     3,388,550  
       
 
          
       
 
            
       
New Hampshire—0.6%
            
       
Manchester Water Works Rev. (FGIC),
            
  1,500    
5.00%, 12/1/28
   Aa3/AA     1,509,120  
  3,250    
5.00%, 12/1/34
   Aa3/AA     3,226,308  
       
 
          
       
 
         4,735,428  
       
 
          
       
 
            
       
New Jersey—6.1%
            
  1,000    
Camden Cnty., Improvement Auth. Rev., 5.00%, 2/15/35, Ser. A
   Baa3/BBB     845,630  
       
Economic Dev. Auth. Rev.,
            
  4,500    
Kapkowski Road Landfill, Special Assessment, 6.50%, 4/1/28
   Baa3/NR     4,723,245  
  300    
Newark Airport, 7.00%, 10/1/14
   Ba1/NR     300,747  
  450    
Seashore Gardens, 5.375%, 11/1/36
   NR/NR     368,874  
       
Financing Auth. Rev.,
            
  2,500    
Middlesex Cnty. Pollution Control Auth. Rev., 5.75%, 9/15/32
   Baa3/BBB-     2,417,400  
  2,000    
South Port Corp., 5.10%, 1/1/33
   NR/A     2,004,760  
       
Health Care Facs. Financing Auth. Rev.,
            
  3,000    
Pascack Valley Hospital, 6.625%, 7/1/36 (d)
   NR/CC     1,860,000  
  2,000    
Somerset Medical Center, 5.50%, 7/1/33
   Ba2/NR     1,702,220  
  1,000    
St. Peters Univ. Hospital, 5.75%, 7/1/37
   Baa2/BBB-     960,530  
  1,150    
Trinitas Hospital, 5.25%, 7/1/30, Ser. A
   Baa3/BBB-     967,644  
  1,500    
State Educational Facs. Auth. Rev.,
            
       
Fairfield Dickinson Univ., 6.00%, 7/1/25, Ser. D
   NR/NR     1,522,305  
       
Tobacco Settlement Financing Corp. Rev.,
            
  22,645    
5.00%, 6/1/41, Ser. 1A
   Baa3/BBB     17,124,375  
  525    
6.00%, 6/1/37, (Pre-refunded @ $100, 6/1/12) (b)
   Aaa/AAA     575,584  
  950    
6.125%, 6/1/24
   Aaa/AAA     1,000,626  
  230    
6.125%, 6/1/42, (Pre-refunded @ $100, 6/1/12) (b)
   Aaa/AAA     253,207  
  350    
6.25%, 6/1/43, (Pre-refunded @ $100, 6/1/13) (b)
   Aaa/AAA     393,407  
  10,750    
6.75%, 6/1/39, (Pre-refunded @ $100, 6/1/13) (b)
   Aaa/AAA     12,323,908  
       
 
          
       
 
         49,344,462  
       
 
          
       
 
            
       
New Mexico—0.1%
            
  1,000    
Farmington Pollution Control Rev., 5.80%, 4/1/22
   Baa3/BB+     982,270  
       
 
          

 

 

PIMCO Municipal Income Fund III Schedule of Investments
June 30, 2008 (unaudited)
                     
Principal                
Amount         Credit Rating      
(000)         (Moody’s/S&P)   Value*  
       
New York—1.5%
            
$ 1,150    
Nassau Cnty. Industrial Dev. Agcy. Rev., Amsterdam at Harborside, 6.70%, 1/1/43, Ser. A
   NR/NR   $ 1,145,389  
       
New York City Municipal Water Finance Auth., Water & Sewer System Rev.,
            
  8,180    
5.00%, 6/15/37, Ser. D (h)
   Aa2/AA+     8,241,841  
  500    
5.00%, 6/15/39, Ser. A
   Aa2/AA+     503,055  
  2,000    
State Environmental Facs. Corp. Rev., 5.00%, 6/15/28
   Aaa/AAA     2,040,320  
       
 
          
       
 
         11,930,605  
       
 
          
       
 
            
       
North Carolina—1.4%
            
       
Eastern Municipal Power Agcy., Power System Rev.,
            
  2,000    
5.125%, 1/1/23, Ser. D
   Baa1/BBB     1,964,900  
  2,000    
5.125%, 1/1/26, Ser. D
   Baa1/BBB     1,938,240  
  3,795    
5.375%, 1/1/17, Ser. C
   Baa1/BBB     3,891,507  
       
Medical Care Commission Rev.,
            
  1,500    
Carolina Village, 6.00%, 4/1/38
   NR/NR     1,381,395  
  1,500    
Cleveland Cnty., 5.00%, 7/1/35 (AMBAC)
   Aaa/AAA     1,507,710  
  1,000    
Village at Brookwood, 5.25%, 1/1/32
   NR/NR     822,460  
       
 
          
       
 
         11,506,212  
       
 
          
       
 
            
       
Ohio—1.4%
            
  5,000    
Buckeye Tobacco Settlement Financing Auth. Rev., 5.875%, 6/1/47, Ser. A-2
   Baa3/BBB     4,178,350  
  2,500    
Lorain Cnty. Hospital Rev., Catholic Healthcare, 5.375%, 10/1/30
   A1/AA-     2,472,600  
  5,000    
Ohio Air Quality Dev. Auth. Rev., Dayton Power & Light Co., 4.80%, 1/1/34, Ser. B (FGIC)(h)
   A2/A     4,712,550  
       
 
          
       
 
         11,363,500  
       
 
          
       
 
            
       
Pennsylvania—3.8%
            
       
Allegheny Cnty. Hospital Dev. Auth. Rev.,
            
  11,300    
5.375%, 11/15/40, Ser. A
   Ba2/BB     9,329,054  
  4,350    
9.25%, 11/15/30, Ser. B, (Pre-refunded @ $102, 11/15/10) (b)
   Ba3/AAA     5,041,998  
       
Cumberland Cnty. Auth., Retirement Community Rev.,
            
       
Messiah Village, Ser. A,
            
  750    
5.625%, 7/1/28
   NR/BBB-     700,958  
  670    
6.00%, 7/1/35
   NR/BBB-     643,234  
  1,500    
Wesley Affiliated Services, 7.25%, 1/1/35, Ser. A, (Pre-refunded @ $101, 1/1/13) (b)
   NR/NR     1,742,850  
  3,250    
Delaware River JT Toll Bridge, Commission Bridge Rev., 5.00%, 7/1/28
   A2/A-     3,268,525  
  1,250    
Harrisburg Auth. Rev., 6.00%, 9/1/36
   NR/NR     1,195,187  
  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+     3,256,920  
  5,000    
Philadelphia School Dist., GO, 5.125%, 6/1/34, Ser. D, (Pre-refunded @ $100, 6/1/14) (FGIC)(b)
   A1/A+     5,416,450  
       
 
          
       
 
         30,595,176  
       
 
          
       
 
            
       
Puerto Rico—0.3%
            
       
Electric Power Auth. Power Rev., Ser. NN, (Pre-refunded @ $100, 7/1/13) (b),
            
  1,740    
5.125%, 7/1/29
   A3/AAA     1,882,610  
  460    
5.125%, 7/1/29
   A3/BBB+     496,607  
       
 
          
       
 
         2,379,217  
       
 
          
       
 
            
       
South Carolina—1.8%
            
  7,500    
Florence Cnty. Rev., McLeod Regional Medical Center, 5.00%, 11/1/31, Ser. A (FSA)
   Aaa/AAA     7,499,475  

 

 

PIMCO Municipal Income Fund III Schedule of Investments
June 30, 2008 (unaudited)
                     
Principal                
Amount         Credit Rating      
(000)         (Moody’s/S&P)   Value*  
       
South Carolina (continued)
            
       
Jobs-Economic Dev. Auth. Rev., Bon Secours,
            
$ 5,305    
5.625%, 11/15/30
   A3/A-   $ 5,315,769  
  1,395    
5.625%, 11/15/30, (Pre-refunded @ $100, 11/15/12) (b)
   A3/A-     1,519,908  
  750    
Woodlands at Furman, 6.00%, 11/15/37, Ser. A
   NR/NR     668,018  
       
 
          
       
 
         15,003,170  
       
 
          
       
 
            
       
South Dakota—0.2%
            
  1,705    
Minnehaha Cnty. Health Facs. Rev., Bethany Lutheran, 5.375%, 12/1/27
   NR/NR     1,496,751  
       
 
          
       
 
            
       
Tennessee—0.1%
            
  1,250    
Knox Cnty. Health Educational & Housing Facs. Board Rev., Catholic Healthcare Partners, 5.25%, 10/1/30
   A1/AA-     1,216,312  
       
 
          
       
 
            
       
Texas—13.1%
            
  1,300    
Comal Cnty. Health Facs. Dev. Rev., McKenna Memorial Hospital Project, 6.25%, 2/1/32, (Pre-refunded @ $100, 2/1/13) (b)
   Baa2/AAA     1,451,125  
  6,810    
Crowley Independent School Dist., GO, 4.75%, 8/1/35 (PSF-GTD) (h)
   Aaa/AAA     6,529,428  
       
Denton Independent School Dist., GO (PSF-GTD),
            
  5,745    
zero coupon, 8/15/26, (Pre-refunded @ $44.73, 8/15/12) (b)
   Aaa/AAA     2,205,276  
  255    
zero coupon, 8/15/26
   Aaa/AAA     92,963  
  5,745    
zero coupon, 8/15/27, (Pre-refunded @ $42.17, 8/15/12) (b)
   Aaa/AAA     2,079,058  
  255    
zero coupon, 8/15/27
   Aaa/AAA     87,470  
  4,785    
zero coupon, 8/15/28, (Pre-refunded @ $39.75, 8/15/12) (b)
   Aaa/AAA     1,632,307  
  215    
zero coupon, 8/15/28
   Aaa/AAA     69,376  
  5,745    
zero coupon, 8/15/29, (Pre-refunded @ $37.46, 8/15/12) (b)
   Aaa/AAA     1,846,845  
  255    
zero coupon, 8/15/29
   Aaa/AAA     77,387  
  1,915    
zero coupon, 8/15/30, (Pre-refunded @ $35.30, 8/15/12) (b)
   Aaa/AAA     580,054  
  85    
zero coupon, 8/15/30
   Aaa/AAA     24,267  
  7,660    
zero coupon, 8/15/31, (Pre-refunded @ $33.25, 8/15/12) (b)
   Aaa/AAA     2,185,781  
  340    
zero coupon, 8/15/31
   Aaa/AAA     91,331  
  10,115    
5.00%, 8/15/33 (h)
   Aaa/AAA     10,133,105  
  12,855    
El Paso, GO, 4.75%, 8/15/33, (FSA)(h)
   NR/AAA     12,487,090  
       
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     5,215,850  
  2,750    
St. Luke’s Episcopal Hospital, 5.375%, 2/15/26, Ser. A, (Pre-refunded @ $100, 8/15/11) (b)
   NR/AAA     2,922,618  
  5,000    
Houston Water & Sewer System Rev., 5.00%, 12/1/30, Ser. A, (Pre-refunded @ $100, 12/1/12) (FSA)(b)
   Aaa/AAA     5,325,000  
       
Judson Independent School Dist., GO (PSF-GTD),
            
  6,535    
5.00%, 2/1/30, (Pre-refunded @ $100, 2/1/11) (b)
   Aaa/NR     6,841,818  
  465    
5.00%, 2/1/30
   Aaa/NR     467,548  
  11,950    
Mansfield Independent School Dist., GO, 5.00%, 2/15/28 (PSF-GTD) (h)
   Aaa/AAA     12,076,909  
       
Mesquite Independent School Dist. No. 1, GO, Ser. A (PSF-GTD),
            
  1,365    
zero coupon, 8/15/16
   NR/AAA     950,682  
  1,000    
zero coupon, 8/15/18
   NR/AAA     623,140  
  1,000    
zero coupon, 8/15/19
   NR/AAA     583,500  
  1,000    
zero coupon, 8/15/20
   NR/AAA     547,750  
  11,800    
North Texas Tollway Auth. Rev., 5.625%, 1/1/33, Ser. A
   A2/A-     11,838,704  
  2,105    
Northwest Harris Cnty. Municipal Utility Dist. No. 16, GO, 5.30%, 10/1/29 (Radian)
   NR/AA     2,154,867  
  2,000    
Sabine River Auth. Rev., 5.20%, 5/1/28
   NR/CCC     1,453,840  

 

 

PIMCO Municipal Income Fund III Schedule of Investments
June 30, 2008 (unaudited)
                     
Principal                
Amount         Credit Rating      
(000)         (Moody’s/S&P)   Value*  
       
Texas (continued)
            
$ 11,115    
Univ. Rev., 5.00%, 8/15/33, Ser. B, (Pre-refunded @ $100, 8/15/13) (b)(c)(h)
   Aaa/AAA   $ 11,740,108  
  2,500    
Willacy Cnty. Rev., 6.875%, 9/1/28, Ser. A-1
   NR/NR     2,449,550  
       
 
          
       
 
         106,764,747  
       
 
          
       
 
            
       
Utah—0.4%
            
  1,750    
Cnty. Of Weber, IHC Health Services Rev., 5.00%, 8/15/30
   Aa1/NR     1,658,002  
  750    
Spanish Fork City Rev., 5.70%, 11/15/36
   NR/NR     661,268  
  720    
Utah Cnty. Lincoln Academy Charter School Rev., GO, 5.875%, 6/15/37, Ser. A (c)
   NR/NR     651,240  
       
 
          
       
 
         2,970,510  
       
 
          
       
 
            
       
Virginia—0.1%
            
  1,000    
James City Cnty. Economic Dev. Auth. Rev., 5.50%, 7/1/37, Ser. A
   NR/NR     837,420  
       
 
          
       
 
            
       
Washington—9.8%
            
  6,375    
Chelan Cnty. Public Utility Dist. Rev., 5.125%, 7/1/33, Ser. C (AMBAC)
   Aaa/AAA     6,451,819  
  15,000    
King Cnty. Sewer Rev., 5.00%, 1/1/35, Ser. A (FSA)(h)
   Aaa/AAA     15,114,600  
  21,625    
Port Tacoma, GO, 5.00%, 12/1/33, (Pre-refunded @ $100, 12/1/13) (AMBAC)(b)(h)
   Aaa/AAA     23,232,818  
  10,000    
Seattle Drain & Wastewater Rev., 5.00%, 7/1/32 (FGIC)
   Aa2/NR     10,028,700  
  3,400    
State Housing Finance Commission Rev., Skyline at First Hill, 5.625%, 1/1/38, Ser. A
   NR/NR     2,898,024  
  21,505    
Tobacco Settlement Auth., Tobacco Settlement Rev., 6.50%, 6/1/26
   Baa3/BBB     21,791,232  
       
 
          
       
 
         79,517,193  
       
 
          
       
 
            
       
Wisconsin—0.1%
            
  560    
Badger Tobacco Asset Securitization Corp. Rev., 6.00%, 6/1/17
   Baa3/BBB     558,818  
  700    
Milwaukee Redev. Auth. Rev., 5.65%, 8/1/37, Ser. A
   NR/NR     608,797  
       
 
          
       
 
         1,167,615  
       
 
          
       
Total Municipal Bonds & Notes (cost—$798,309,589)
         796,092,575  
       
 
          
       
 
            
VARIABLE RATE NOTES (f)—2.1%            
       
Florida—0.3%
            
  3,190    
State Turnpike Auth. Rev., 13.81%, 7/1/31, Ser. 1450 (a)(c)(e)
   Aa2/NR     2,622,116  
       
 
          
       
 
            
       
New York—1.4%
            
  4,660    
Liberty Dev. Corp. Rev., 19.40%, 10/1/35, Ser. 1451 (a)(c)(e)
   Aa3/NR     5,031,635  
  6,000    
State Dormitory Auth. Rev., Univ. & College Improvement., 18.03%, 3/15/35, Ser. 1216 (a)(c)(e)
   NR/AAA     6,355,200  
       
 
          
       
 
         11,386,835  
       
 
          
       
 
            
       
Ohio—0.4%
            
  3,460    
State Air Quality Dev. Auth. Rev., 2.971%, 1/1/34 (FGIC)(a)(c)(e)
   A2/NR     2,877,440  
       
 
          
       
 
            
       
Pennsylvania—0.0%
            
  350    
Washington Cnty. Redev. Auth., Tax Allocation, 5.45%, 7/1/35, Ser. A
   NR/NR     302,169  
       
 
          
       
Total Variable Rate Notes (cost—$20,693,308)
         17,188,560  
       
 
          

 

 

PIMCO Municipal Income Fund III Schedule of Investments
June 30, 2008 (unaudited)
                     
Principal                
Amount         Credit Rating      
(000)         (Moody’s/S&P)   Value*  
SHORT-TERM INVESTMENTS—0.2%            
       
Municipal Bonds & Notes—0.1%
            
       
California—0.1%
            
$ 1,000    
Alameda Public Financing Auth. Rev., 7.00%, 6/1/09
   NR/NR   $ 728,760  
       
 
          
       
 
            
       
U.S. Treasury Bills (g)—0.1%
            
  900    
1.88%-1.97%,8/28/08-9/11/08
         896,502  
       
 
          
       
Total Short-Term Investments (cost—$1,894,301)
         1,625,262  
       
 
          
       
 
            
       
Total Investments (cost—$820,897,198)—100.0%
       $ 814,906,397  
       
 
          

 

 

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 procedures 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 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. Exchange traded options and futures are valued at the settlement price determined by the relevant exchange. 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 determined daily 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 $16,886,391, representing 2.07% 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)   Security in default.
 
(e)   Inverse Floater—The interest rate shown bears an inverse relationship to the interest rate on another security or the value of an index. The interest rate disclosed reflects the rate in effect on June 30, 2008.
 
(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 June 30, 2008.
 
(g)   All or partial amount segregated as collateral for futures contracts.
 
(h)   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.
Glossary:
AMBAC—insured by American Municipal Bond Assurance Corp.
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
GTD—Guaranteed
MBIA—insured by Municipal Bond Investors Assurance
NR—Not Rated
PSF—Public School Fund
Radian—insured by Radian Guaranty, Inc.
XLCA—insured by XL Capital Assurance

 

 

Notes to Schedule of Investments:
Other Investments:
(1)   Futures contracts outstanding at June 30, 2008:
                                 
            Market              
            Value     Expiration     Unrealized  
Type   Contracts     (000)     Date     Depreciation  
 
Short: U.S. Treasury Bond Futures
     (1,917 )   $ (221,593 )     9/19/08     $ (1,168,031 )
 
                              
     The Fund pledged $4,485,000, in cash as collateral for futures contracts.
(2)   Transactions in options written for the nine months ended June 30, 2008:
                 
    Contracts   Premiums
 
Options outstanding, September 30, 2007
     —     $ —  
Options written
     1,873       1,336,920  
Options expired
     (1,873 )     (1,336,920 )
             
Options outstanding, June 30, 2008
     —     $ —  
             

 

 

Item 2. Controls and Procedures
(a) The registrant’s President & Chief Executive Officer and Treasurer, Principal Financial & Accounting Officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Act (17 CFR 270.30a -3(c))), are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.
(b) There were no significant changes in the registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a -3(d))) that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 3. Exhibits
     (a) 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: August 25, 2008
     
By /s/ Lawrence G. Altadonna
 
    
Treasurer, Principal Financial & Accounting Officer
    
Date: August 25, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
     
By /s/ Brian S. Shlissel
 
    
President & Chief Executive Officer
    
Date: August 25 2008
     
By /s/ Lawrence G. Altadonna
 
    
Treasurer, Principal Financial & Accounting Officer
    
Date August 25, 2008