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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, 2010
 
    
Date of Reporting Period:
  June 30, 2010
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 respond 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, 100 F Street, NE, Washington, DC 20549-2001. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
 
 

 

 

Item 1. Schedule of Investmets
PIMCO Municipal Income Fund III Schedule of Investments
June 30, 2010 (unaudited)
                         
Principal                    
Amount         Credit Rating      
(000s)         (Moody’s/S&P)   Value*  
 
MUNICIPAL BONDS & NOTES—96.9%                
       
Alabama—1.1%
                
$ 5,000    
Birmingham Baptist Medical Centers Special Care Facs. Financing Auth. Rev.,
                
       
Baptist Health Systems, Inc., 5.00%, 11/15/30, Ser. A
   Baa2/NR   $ 4,411,050  
  500    
Birmingham Special Care Facs. Financing Auth. Rev., Childrens Hospital, 6.00%, 6/1/39 (AGC)
   Aa3/AAA     540,395  
  1,500    
Colbert Cnty. Northwest Health Care Auth. Rev., 5.75%, 6/1/27
   Baa3/NR     1,466,640  
       
 
              
       
 
             6,418,085  
       
 
              
       
 
                
       
Alaska—1.2%
                
       
Housing Finance Corp. Rev.,
                
  3,900    
5.00%, 12/1/33, Ser. A
   Aaa/AAA     3,919,851  
  1,000    
5.25%, 6/1/32, Ser. C (NPFGC)
   Aa2/AA     1,009,150  
  3,100    
Northern Tobacco Securitization Corp. Rev., 5.00%, 6/1/46, Ser. A
   Baa3/NR     2,029,694  
       
 
              
       
 
             6,958,695  
       
 
              
       
 
                
       
Arizona—5.1%
                
       
Health Facs. Auth. Rev.,
                
       
Banner Health,
                
  1,250    
5.00%, 1/1/35, Ser. A
   NR/A+     1,198,888  
  900    
5.50%, 1/1/38, Ser. D
   NR/A+     922,158  
  2,250    
Beatitudes Campus Project, 5.20%, 10/1/37
   NR/NR     1,742,107  
  1,500    
Maricopa Cnty. Pollution Control Corp. Rev., Palo Verde Project, 5.05%, 5/1/29, Ser. A (AMBAC)
   Baa2/BBB-     1,446,915  
  13,000    
Pima Cnty. Industrial Dev. Auth. Rev., 5.00%, 9/1/39 (h)
   Aa1/AA     12,999,090  
  5,000    
Salt River Project Agricultural Improvement & Power Dist. Rev., 5.00%, 1/1/39, Ser. A (h)
   Aa1/AA     5,246,650  
  5,600    
Salt Verde Financial Corp. Rev., 5.00%, 12/1/37
   A3/A     4,992,568  
       
 
              
       
 
             28,548,376  
       
 
              
       
 
                
       
California—6.1%
                
  2,500    
Health Facs. Financing Auth. Rev., Catholic Healthcare West, 6.00%, 7/1/39, Ser. A
   A2/A     2,643,950  
  1,250    
Palomar Pomerado Health, CP, 6.75%, 11/1/39 State, GO,
   Baa2/NR     1,340,012  
  250    
5.00%, 11/1/37
   A1/A-     238,180  
  5,300    
5.00%, 12/1/37
   A1/A-     5,049,204  
  6,000    
6.00%, 4/1/38
   A1/A-     6,358,920  
       
Statewide Communities Dev. Auth. Rev.,
                
  1,000    
American Baptist Homes West, 6.25%, 10/1/39
   NR/BBB-     1,002,660  
  2,800    
California Baptist Univ., 9.00%, 11/1/17, Ser. B (a)(c)
   NR/NR     2,429,196  
       
Methodist Hospital Project (FHA),
                
  2,900    
6.625%, 8/1/29
   Aa2/AA     3,324,415  
  10,300    
6.75%, 2/1/38
   Aa2/AA     11,738,086  
       
 
              
       
 
             34,124,623  
       
 
              
       
 
                
       
Colorado—2.9%
                
  9,955    
Colorado Springs Utilities Rev., 5.00%, 11/15/30, Ser B. (h)
   Aa2/AA     10,235,134  
  500    
Confluence Metropolitan Dist. Rev., 5.45%, 12/1/34
   NR/NR     349,385  
  500    
Health Facs. Auth. Rev., Evangelical Lutheran, 6.125%, 6/1/38, Ser. A
   A3/A-     512,395  
  1,500    
Housing & Finance Auth. Rev., Evergreen Country Day School, Inc. Project, 5.875%, 6/1/37 (a)(c)
   NR/BB     1,066,770  

 

 

PIMCO Municipal Income Fund III Schedule of Investments
June 30, 2010 (unaudited)
                     
Principal                
Amount         Credit Rating      
(000s)         (Moody’s/S&P)   Value*  
 
       
Colorado (continued)
           
$ 500    
Public Auth. for Colorado Energy Rev., 6.50%, 11/15/38
   A2/A   $ 551,355  
  4,000    
Saddle Rock Metropolitan, GO, 5.35%, 12/1/31 (Radian)
   NR/NR     3,492,880  
       
 
          
       
 
         16,207,919  
       
 
          
       
 
            
       
Connecticut—0.2%
            
  1,250    
Harbor Point Infrastructure Improvement Dist., Tax Allocation, 7.875%, 4/1/39, Ser. A
   NR/NR     1,318,312  
       
 
          
       
 
            
       
Delaware—0.3%
            
  1,500    
State Economic Dev. Auth. Rev., Delmarva Power & Light Co., 5.40%, 2/1/31
   Baa2/BBB     1,539,795  
       
 
          
       
 
            
       
District of Columbia—1.9%
            
  10,000    
Water & Sewer Auth. Rev., 5.50%, 10/1/39, Ser. A (h)
   Aa2/AA     10,831,400  
       
 
          
       
 
            
       
Florida—4.9%
            
  3,480    
Brevard Cnty. Health Facs. Auth. Rev., Health First, Inc. Project, 5.00%, 4/1/34
   A3/A-     3,294,690  
  500    
Broward Cnty. Airport Rev., 5.375%, 10/1/29, Ser. O
   A1/A+     522,725  
  4,500    
Broward Cnty. Water & Sewer Rev., 5.25%, 10/1/34, Ser. A (h)
   Aa2/AA     4,717,170  
  2,500    
Hillsborough Cnty. Industrial Dev. Auth. Rev., Tampa General Hospital Project, 5.25%, 10/1/34,
Ser. B
   A3/NR     2,489,600  
  1,000    
Miami-Dade Cnty. Airport Rev., 5.50%, 10/1/36, Ser. A
   A2/A-     1,026,120  
  3,895    
Sarasota Cnty. Health Facs. Auth. Rev., 5.75%, 7/1/45
   NR/NR     3,118,960  
  4,200    
State Board of Education, GO, 5.00%, 6/1/38, Ser. D (h)
   Aa1/AAA     4,346,244  
  6,900    
State Board of Governors Rev., Florida Univ., 6.50%, 7/1/33
   Aa2/AA     7,885,527  
       
 
          
       
 
         27,401,036  
       
 
          
       
 
            
       
Georgia—0.2%
            
  1,750    
Fulton Cnty. Residential Care Facs. for the Elderly Auth. Rev., Lenbrook Project, 5.125%, 7/1/42, Ser. A
   NR/NR     1,127,490  
  400    
Medical Center Hospital Auth. Rev., Spring Harbor Green Island Project, 5.25%, 7/1/37
   NR/NR     322,156  
       
 
          
       
 
         1,449,646  
       
 
          
       
 
            
       
Hawaii—0.3%
            
  1,500    
Hawaii Pacific Health Rev., 5.50%, 7/1/40, Ser. A
   A3/BBB+     1,476,165  
       
 
          
       
 
            
       
Idaho—1.2%
            
       
State Building Auth. Rev., Ser. A (XLCA),
            
  1,000    
5.00%, 9/1/33
   WR/AA-     1,010,820  
  5,750    
5.00%, 9/1/43
   WR/AA-     5,800,772  
       
 
          
       
 
         6,811,592  
       
 
          
       
 
            
       
Illinois—8.0%
            
  500    
Chicago Board of Education School Reform, GO,
            
       
zero coupon, 12/1/28, Ser. A (FGIC-NPFGC)
   Aa2/AA-     188,900  
       
Chicago, GO,
            
  720    
5.00%, 1/1/31, Ser. A (NPFGC)
   Aa2/AA-     730,908  
  5,000    
5.00%, 1/1/34, Ser. C (h)
   Aa2/AA-     5,075,950  
  7,000    
Chicago Motor Fuel Tax Rev., 5.00%, 1/1/33, Ser. A (AMBAC)
   Aa3/AA+     7,087,010  

 

 

PIMCO Municipal Income Fund III Schedule of Investments
June 30, 2010 (unaudited)
                     
Principal                
Amount         Credit Rating      
(000s)         (Moody’s/S&P)   Value*  
 
       
Illinois (continued)
            
       
Finance Auth. Rev.,
            
$ 1,175    
Elmhurst Memorial Healthcare, 5.50%, 1/1/22
   Baa1/NR   $ 1,179,853  
       
Leafs Hockey Club Project, Ser. A (b)(d),
            
  1,000    
5.875%, 3/1/27
   NR/NR     251,880  
  625    
6.00%, 3/1/37
   NR/NR     156,806  
  400    
OSF Healthcare System, 7.125%, 11/15/37, Ser. A
   A3/A     450,740  
  12,795    
Peoples Gas Light & Coke Co., 5.00%, 2/1/33 (AMBAC)
   A1/A-     12,809,842  
  1,000    
Swedish Covenant Hospital, 6.00%, 8/15/38, Ser. A
   NR/BBB+     1,007,180  
       
Univ. of Chicago,
            
  4,780    
5.00%, 7/1/33, Ser. A
   Aa1/AA     4,915,991  
  165    
5.25%, 7/1/41, Ser. A
   Aa1/AA     168,079  
  5,000    
5.50%, 7/1/37, Ser. B (h)
   Aa1/AA     5,472,600  
  5,000    
State Toll Highway Auth. Rev., 5.50%, 1/1/33, Ser. B
   Aa3/AA-     5,423,800  
       
 
          
       
 
         44,919,539  
       
 
          
       
 
            
       
Indiana—0.7%
            
  500    
Dev. Finance Auth. Rev., 5.00%, 3/1/30, Ser. B (AMBAC)
   A2/NR     499,990  
  2,000    
Finance Auth. Rev., United States Steel Corp., 6.00%, 12/1/26
   Ba2/BB     2,046,320  
       
Portage, Tax Allocation, Ameriplex Project,
            
  1,000    
5.00%, 7/15/23
   NR/A     941,500  
  775    
5.00%, 1/15/27
   NR/A     704,274  
       
 
          
       
 
         4,192,084  
       
 
          
       
 
            
       
Iowa—1.7%
            
       
Finance Auth. Rev., Deerfield Retirement Community, Inc., Ser. A,
            
  120    
5.50%, 11/15/27
   NR/NR     87,187  
  575    
5.50%, 11/15/37
   NR/NR     381,702  
  11,010    
Tobacco Settlement Auth. Rev., 5.60%, 6/1/34, Ser. B
   Baa3/BBB     9,310,827  
       
 
          
       
 
         9,779,716  
       
 
          
       
 
            
       
Kentucky—1.2%
            
       
Economic Dev. Finance Auth. Rev.,
            
       
Baptist Healthcare Systems, Ser. A,
            
  1,000    
5.375%, 8/15/24
   Aa3/NR     1,086,550  
  1,300    
5.625%, 8/15/27
   Aa3/NR     1,413,295  
  1,000    
Catholic Healthcare Partners, 5.25%, 10/1/30
   A1/AA-     1,008,510  
  2,000    
Owensboro Medical Healthcare Systems, 6.375%, 6/1/40, Ser. A
   Baa2/NR     2,059,900  
  1,250    
Ohio Cnty. Pollution Control Rev.,
            
       
Big Rivers Electric Corp., 6.00%, 7/15/31, Ser. A
   Baa1/BBB-     1,270,112  
       
 
          
       
 
         6,838,367  
       
 
          
       
 
            
       
Louisiana—1.0%
            
       
Local Gov’t Environmental Facs. & Community Dev. Auth. Rev.,
            
       
Woman’s Hospital Foundation, Ser. A,
            
  1,500    
5.875%, 10/1/40
   A3/BBB+     1,484,145  
  1,000    
6.00%, 10/1/44
   A3/BBB+     1,000,650  
  1,700    
Public Facs. Auth. Rev., Ochsner Clinic Foundation Project,
            
       
5.50%, 5/15/47, Ser. B
   Baa1/NR     1,548,598  
  1,595    
Tobacco Settlement Financing Corp. Rev., 5.875%, 5/15/39, Ser. 2001-B
   Baa3/BBB     1,561,250  
       
 
          
       
 
         5,594,643  
       
 
          
       
 
            
       
Maryland—0.5%
            
  1,000    
Economic Dev. Corp. Rev., 5.75%, 6/1/35, Ser. B
   Baa3/NR     1,019,600  
  1,500    
Health & Higher Educational Facs. Auth. Rev., Calvert Health System, 5.50%, 7/1/36
   A3/NR     1,530,585  
       
 
          
       
 
         2,550,185  
       
 
          

 

 

PIMCO Municipal Income Fund III Schedule of Investments
June 30, 2010 (unaudited)
                     
Principal                
Amount         Credit Rating      
(000s)         (Moody’s/S&P)   Value*  
 
       
Massachusetts—1.3%
            
$ 750    
Dev. Finance Agcy. Rev., Linden Ponds, Inc. Fac., 5.75%, 11/15/35, Ser. A
   NR/NR   $ 541,455  
  4,910    
Housing Finance Agcy. Rev., 5.125%, 6/1/43, Ser. H
   Aa3/AA-     4,937,840  
  1,600    
State College Building Auth. Rev., 5.50%, 5/1/39, Ser. A
   Aa2/AA-     1,750,656  
       
 
          
       
 
         7,229,951  
       
 
          
       
 
            
       
Michigan—14.8%
            
  500    
Conner Creek Academy East Rev., 5.25%, 11/1/36
   NR/BB+     370,185  
  1,500    
Detroit, GO, 5.25%, 11/1/35
   Aa3/AA-     1,485,360  
  9,320    
Detroit Sewer Rev., 5.00%, 7/1/32, Ser. A (AGM)
   Aa3/AAA     9,197,535  
       
Detroit Water Rev. (NPFGC),
            
  30,000    
5.00%, 7/1/34, Ser. A
   A2/A+     29,424,600  
  7,555    
5.00%, 7/1/34, Ser. B
   A1/A     7,349,202  
  1,500    
Royal Oak Hospital Finance Auth. Rev., William Beaumont Hospital, 8.25%, 9/1/39
   A1/A     1,790,790  
       
State Hospital Finance Auth. Rev.,
            
  175    
Detroit Medical Center, 5.25%, 8/15/23, Ser. A
   Ba3/BB-     150,337  
       
Oakwood Group, Ser. A,
            
  5,405    
5.75%, 4/1/32
   A2/A     5,432,944  
  575    
6.00%, 4/1/22
   A2/A     588,599  
  20,000    
Trinity Health Credit, 5.375%, 12/1/30, Ser. C
   Aa2/AA     20,189,400  
  10,000    
Tobacco Settlement Finance Auth. Rev., 6.00%, 6/1/48, Ser. A
   NR/BBB     7,311,400  
       
 
          
       
 
         83,290,352  
       
 
          
       
 
            
       
Mississippi—0.8%
            
       
Business Finance Corp. Rev., System Energy Res., Inc. Project,
            
  3,000    
5.875%, 4/1/22
   Ba1/BBB     3,011,370  
  1,250    
5.90%, 5/1/22
   Ba1/BBB     1,250,000  
       
 
          
       
 
         4,261,370  
       
 
          
       
 
            
       
Missouri—0.1%
            
  250    
Jennings Rev., Northland Redev. Area Project, 5.00%, 11/1/23
   NR/NR     223,883  
  500    
Manchester, Tax Allocation, Highway141/Manchester Road Project, 6.875%, 11/1/39
   NR/NR     501,465  
       
 
          
       
 
         725,348  
       
 
          
       
 
            
       
Nevada—0.7%
            
  4,000    
Clark Cnty., GO, 4.75%, 6/1/30 (AGM)
   Aaa/AAA     4,012,080  
       
 
          
       
 
            
       
New Hampshire—0.4%
            
  2,000    
Business Finance Auth. Rev., Elliot Hospital, 6.125%, 10/1/39, Ser. A
   Baa1/BBB+     2,038,600  
       
 
          
       
 
            
       
New Jersey—4.5%
            
  1,000    
Camden Cnty. Improvement Auth. Rev., Cooper Health Systems Group, 5.00%, 2/15/35, Ser. A
   Baa3/BBB     840,620  
  300    
Economic Dev. Auth. Rev., Newark Airport Marriott Hotel, 7.00%, 10/1/14
   Ba1/NR     300,606  
  4,500    
Economic Dev. Auth., Special Assessment, Kapkowski Road Landfill Project, 6.50%, 4/1/28
   Baa3/NR     4,951,170  

 

 

PIMCO Municipal Income Fund III Schedule of Investments
June 30, 2010 (unaudited)
                     
Principal                
Amount         Credit Rating      
(000s)         (Moody’s/S&P)   Value*  
 
       
New Jersey (continued)
            
       
Health Care Facs. Financing Auth. Rev.,
            
$ 1,070    
Pascack Valley Hospital Assoc., 6.625%, 7/1/36 (d)
   NR/NR   $ 16,045  
  1,000    
St. Peters Univ. Hospital, 5.75%, 7/1/37
   Baa2/BBB-     989,180  
  1,150    
Trinitas Hospital, 5.25%, 7/1/30, Ser. A
   Baa3/BBB-     1,037,967  
  2,000    
State Turnpike Auth. Rev., 5.25%, 1/1/40, Ser. E
   A3/A+     2,104,820  
  22,645    
Tobacco Settlement Financing Corp. Rev., 5.00%, 6/1/41, Ser. 1-A
   Baa3/BBB     14,848,553  
       
 
          
       
 
         25,088,961  
       
 
          
       
 
            
       
New Mexico—0.2%
            
  1,000    
Farmington Pollution Control Rev., 5.90%, 6/1/40, Ser. D
   Baa3/BB+     1,002,460  
       
 
          
       
 
            
       
New York—4.3%
            
  1,700    
Liberty Dev. Corp. Rev., Goldman Sachs Headquarters, 5.50%, 10/1/37
   A1/A     1,773,695  
  1,150    
Nassau Cnty. Industrial Dev. Agcy. Rev., Amsterdam at Harborside, 6.70%, 1/1/43, Ser. A
   NR/NR     1,139,454  
  10,450    
New York City Industrial Dev. Agcy. Rev., Yankee Stadium, 7.00%, 3/1/49 (AGC)
   Aa3/AAA     12,085,425  
       
New York City Municipal Water Finance Auth. Water & Sewer Rev. (h),
            
  4,900    
5.00%, 6/15/37, Ser. D
   Aa1/AAA     5,086,445  
  4,000    
Second Generation Resolutions, 4.75%, 6/15/35, Ser. DD
   Aa2/AA+     4,066,120  
       
 
          
       
 
         24,151,139  
       
 
          
       
 
            
       
North Carolina—1.0%
            
       
Eastern Municipal Power Agcy. Rev.,
            
  1,300    
5.125%, 1/1/23, Ser. D
   Baa1/A-     1,337,375  
  2,000    
5.125%, 1/1/26, Ser. D
   Baa1/A-     2,046,080  
  795    
5.375%, 1/1/17, Ser. C
   Baa1/A-     831,928  
  1,500    
Medical Care Commission Rev., Cleveland Cnty. Healthcare, 5.00%, 7/1/35, Ser. A (AMBAC)
   WR/A     1,448,130  
       
 
          
       
 
         5,663,513  
       
 
          
       
 
            
       
Ohio—4.2%
            
  15,375    
Air Quality Dev. Auth. Pollution Control Rev., Dayton Power, 4.80%, 1/1/34, Ser. B (FGIC)
   Aa3/A     15,510,454  
  500    
Allen Cnty. Catholic Healthcare Rev., Allen Hospital, 5.00%, 6/1/38, Ser. A
   A1/AA-     494,045  
  5,000    
Buckeye Tobacco Settlement Financing Auth. Rev., 5.875%, 6/1/47, Ser. A-2
   Baa3/BBB     3,589,900  
  500    
Higher Educational Fac. Commission Rev., Univ. Hospital Health Systems, 6.75%, 1/15/39,
Ser. 2009-A
   A2/A     534,620  
  2,500    
Lorain Cnty. Hospital Rev., Catholic Healthcare, 5.375%, 10/1/30
   A1/AA-     2,518,350  
  500    
Montgomery Cnty. Rev., Miami Valley Hospital, 6.25%, 11/15/39, Ser. A
   Aa3/NR     524,765  
  250    
State Rev., Ashland Univ. Project, 6.25%, 9/1/24
   Ba1/NR     254,012  
       
 
          
       
 
         23,426,146  
       
 
          
       
 
            
       
Oregon—0.2%
            
  1,000    
Medford Hospital Facs. Auth. Rev., Asante Health Systems, 5.00%, 8/15/40, Ser. A (AGM)
   Aa3/AAA     1,009,430  
       
 
          
       
 
            
       
Pennsylvania—2.7%
            
       
Allegheny Cnty. Hospital Dev. Auth. Rev.,
           
  1,000    
Univ. of Pittsburgh Medical Center, 5.625%, 8/15/39
  Aa3/A+     1,037,810  
  1,000    
West Penn Allegheny Health System, 5.375%, 11/15/40, Ser. A
   B1/BB-     756,390  

 

 

PIMCO Municipal Income Fund III Schedule of Investments
June 30, 2010 (unaudited)
                     
Principal                
Amount         Credit Rating      
(000s)         (Moody’s/S&P)   Value*  
 
       
Pennsylvania (continued)
            
       
Cumberland Cnty. Municipal Auth. Rev., Messiah Village Project, Ser. A,
            
$ 750    
5.625%, 7/1/28
   NR/BBB-   $ 657,915  
  670    
6.00%, 7/1/35
   NR/BBB-     600,106  
  1,000    
Dauphin Cnty. General Auth. Rev., Pinnacle Health System Project, 6.00%, 6/1/36, Ser. A
   A2/A     1,043,340  
  1,250    
Harrisburg Auth. Rev., Harrisburg Univ. of Science, 6.00%, 9/1/36, Ser. B
   NR/NR     1,104,900  
  100    
Luzerne Cnty. Industrial Dev. Auth. Rev., Pennsylvania American Water Co., 5.50%, 12/1/39
   A2/A     102,878  
  6,200    
Philadelphia Hospitals & Higher Education Facs. Auth. Rev.,
            
       
Temple Univ. Hospital, 6.625%, 11/15/23, Ser. A
   Baa3/BBB     6,201,612  
  500    
Philadelphia Water Rev., 5.25%, 1/1/36, Ser. A
   A1/A     517,995  
  3,000    
Turnpike Commission Rev., 5.125%, 12/1/40, Ser. D
   A2/A-     3,082,080  
       
 
          
       
 
         15,105,026  
       
 
          
       
 
            
       
Puerto Rico—1.1%
            
       
Sales Tax Financing Corp. Rev.,
            
  2,400    
5.00%, 8/1/40, Ser. A (AGM) (h)
   Aa3/AAA     2,414,424  
  3,000    
5.375%, 8/1/38, Ser. C
   A1/A+     3,005,640  
  1,000    
5.50%, 8/1/42, Ser. A
   A1/A+     1,011,080  
       
 
          
       
 
         6,431,144  
       
 
          
       
 
            
       
South Carolina—1.1%
            
  1,000    
Greenwood Cnty. Rev., Self Regional Healthcare, 5.375%, 10/1/39
   A2/A     1,009,700  
  5,305    
Jobs-Economic Dev. Auth. Rev., Bon Secours Health System, 5.625%, 11/15/30, Ser. B
   A3/A-     5,321,392  
       
 
          
       
 
         6,331,092  
       
 
          
       
 
            
       
Tennessee—0.7%
            
  1,250    
Claiborne Cnty. Industrial Dev. Board Rev., Lincoln Memorial Univ. Project,
            
       
6.625%, 10/1/39
   NR/NR     1,288,550  
  1,000    
Johnson City Health & Educational Facs. Board Rev.,
            
       
Mountain States Health Alliance, 6.00%, 7/1/38
   Baa1/BBB+     1,018,020  
       
Tennessee Energy Acquisition Corp. Rev., Ser. A,
            
  1,200    
5.25%, 9/1/21
   Ba3/BB+     1,200,912  
  365    
5.25%, 9/1/22
   Ba3/BB+     363,354  
       
 
          
       
 
         3,870,836  
       
 
          
       
 
            
       
Texas—10.2%
            
  6,810    
Crowley Independent School Dist., GO, 4.75%, 8/1/35 (PSF-GTD)
   Aaa/AAA     6,941,842  
  1,300    
Dallas Rev., Dallas Civic Center, 5.25%, 8/15/38 (AGC)
   Aa3/AAA     1,338,818  
  10,115    
Denton Independent School Dist., GO, 5.00%, 8/15/33 (PSF-GTD) (h)
   Aaa/AAA     10,399,636  
  465    
Judson Independent School Dist., GO, 5.00%, 2/1/30 (PSF-GTD)
   Aaa/NR     468,441  
       
Municipal Gas Acquisition & Supply Corp. I Rev.,
            
  150    
5.25%, 12/15/26, Ser. A
   A2/A     141,171  
  8,100    
6.25%, 12/15/26, Ser. D
   A2/A     8,465,067  
       
North Harris Cnty. Regional Water Auth. Rev.,
            
  5,500    
5.25%, 12/15/33
   A1/A+     5,639,260  
  5,500    
5.50%, 12/15/38
   A1/A+     5,691,125  

 

 

PIMCO Municipal Income Fund III Schedule of Investments
June 30, 2010 (unaudited)
                     
Principal                
Amount         Credit Rating      
(000s)         (Moody’s/S&P)   Value*  
 
       
Texas (continued)
            
       
North Texas Tollway Auth. Rev.,
            
$ 10,800    
5.625%, 1/1/33, Ser. A
   A2/A-   $ 11,265,048  
  700    
5.75%, 1/1/33, Ser. F
   A3/BBB+     731,115  
  2,000    
6.25%, 1/1/39, Ser. A
   A2/A-     2,172,600  
  2,000    
Sabine River Auth. Pollution Control Rev., 5.20%, 5/1/28, Ser. C
   Caa3/NR     1,003,960  
  3,000    
Tarrant Cnty. Cultural Education Facs. Finance Corp. Rev.,
            
       
Baylor Health Care Systems Project, 6.25%, 11/15/29
   Aa2/AA-     3,346,680  
       
 
          
       
 
         57,604,763  
       
 
          
       
 
            
       
Virginia—0.3%
            
  1,000    
Fairfax Cnty. Industrial Dev. Auth. Rev., Inova Health Systems,
            
       
5.50%, 5/15/35, Ser. A
   Aa2/AA+     1,076,120  
  1,000    
James City Cnty. Economic Dev. Auth. Rev., United Methodist Homes,
            
       
5.50%, 7/1/37, Ser. A
   NR/NR     615,930  
       
 
          
       
 
         1,692,050  
       
 
          
       
 
            
       
Washington—7.5%
            
  6,375    
Chelan Cnty. Public Utility Dist. No. 1 Rev., Chelan Hyrdo Systems, 5.125%, 7/1/33,
Ser. C (AMBAC)
   Aa2/AA     6,472,856  
  1,000    
Health Care Facs. Auth. Rev., Seattle Cancer Care Alliance, 7.375%, 3/1/38
   A3/NR     1,119,580  
  15,000    
King Cnty. Sewer Rev., 5.00%, 1/1/35, Ser. A (AGM) (h)
   Aa2/AAA     15,136,650  
  19,265    
Tobacco Settlement Auth. Rev., 6.50%, 6/1/26
   Baa3/BBB     19,704,242  
       
 
          
       
 
         42,433,328  
       
 
          
       
 
            
       
Wisconsin—2.3%
            
       
Health & Educational Facs. Auth. Rev.,
            
  1,000    
Aurora Health Care, Inc., 5.625%, 4/15/39, Ser. A
   A3/NR     1,010,770  
  1,000    
Prohealth Care, Inc., 6.625%, 2/15/39
   A1/A+     1,087,690  
  10,000    
State Rev., 6.00%, 5/1/36, Ser. A
   Aa3/AA-     10,997,200  
       
 
          
       
 
         13,095,660  
       
 
          
       
Total Municipal Bonds & Notes (cost—$533,412,548)
         545,423,427  
       
 
          
       
 
            
VARIABLE RATE NOTES (a)(c)(e)(f)—2.2%            
       
California—0.3%
            
  1,675    
Los Angeles Community College Dist., GO, 13.56%, 8/1/33, Ser. 3096
   NR/AA     1,777,242  
       
 
          
       
 
            
       
Florida—0.6%
            
  3,335    
Greater Orlando Aviation Auth. Rev., 13.53%, 10/1/39, Ser. 3174
   NR/NR     3,380,690  
       
 
          
       
 
            
       
Texas—1.3%
            
  6,500    
JPMorgan Chase Putters/Drivers Trust, GO, 9.24%, 2/1/17, Ser. 3480
   NR/AA+     7,235,475  
       
 
          
       
Total Variable Rate Notes (cost—$11,404,771)
         12,393,407  
       
 
          
       
 
            
SHORT-TERM INVESTMENTS (g)—0.9%            
       
Corporate Notes—0.9%
            
       
Financial Services—0.9%
            
  5,000    
SLM Corp., 0.476%, 7/26/10, FRN (cost—$4,969,522)
   Ba1/BBB-     4,999,645  
       
 
          
       
 
                
       
Total Investments (cost—$549,786,841)— 100.0%
       $ 562,816,479  
       
 
          

 

 

Notes to Schedule of Investments:
 
*   Portfolio securities and other financial instruments for which market quotations are readily available are stated at market value. Market value is generally determined on the basis of last reported sales prices, or if no sales are reported, on the basis of quotes obtained from a quotation reporting system, established market makers, or independent pricing services.
 
    Portfolio securities and other financial instruments for which market quotations are not readily available, or for which 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, or persons acting at their discretion 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 by using the last sale price on the exchange that is the primary market for such securities, or the mean between the last quoted bid and ask 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 securities maturing in 60 days or less are valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.
 
    The prices used by the Fund to value securities may differ from the value that would be realized if the securities were sold and these differences could be material. 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 $15,889,373 representing 2.8% of total investments.
 
(b)   Illiquid.
 
(c)   144A—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)   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, 2010.
 
(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, 2010.
 
(g)   All or partial amount segregated as collateral for reverse repurchase agreement.
 
(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:
AGC—insured by Assured Guaranty Corp.
AGM—insured by Assured Guaranty Municipal Corp.
AMBAC—insured by American Municipal Bond Assurance Corp.
CP—Certificates of Participation
FGIC—insured by Financial Guaranty Insurance Co.
FHA—insured by Federal Housing Administration
FRN—Floating Rate Note. The interest rate disclosed reflects the rate in effect on June 30, 2010.
GO—General Obligation Bond
GTD—Guaranteed
NPFGC—insured by National Public Finance Guarantee Corp.
NR—Not Rated
PSF—Public School Fund
Radian—insured by Radian Guaranty, Inc.
WR—Withdrawn Rating
XLCA—insured by XL Capital Assurance
Other Investments:
(A) Open reverse repurchase agreement at June 30, 2010 was:
                                         
Counterparty   Rate     Trade Date     Maturity Date     Principal & Interest     Principal  
 
Barclays Bank
     0.48%       6/8/2010       7/9/2010       $4,751,457     $ 4,750,000  
 
                                      
The weighted average daily balance of reverse repurchase agreements outstanding during the nine months ended June 30, 2010 was $5,265,205, at a weighted average interest rate of 0.60%. The total market value of underlying collateral (refer to the Schedule of Investments for positions segregated as collateral for reverse repurchase agreement) for open reverse repurchase agreement at June 30, 2010 was $4,999,645.

 

 

Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. the “exit price”) in an orderly transaction between market participants. The three levels of the fair value hierarchy are described below:
  •   Level 1 — quoted prices in active markets for identical investments that the Fund has the ability to access
 
  •   Level 2 — valuations based on other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) or quotes from inactive exchanges
 
  •   Level 3 — valuations based on significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)
An investment asset’s or liability’s level within the fair value hierarchy is based on the lowest level input, individually or in the aggregate, that is significant to fair value measurement. The objective of fair value measurement remains the same even when there is a significant decrease in the volume and level of activity for an asset or liability and regardless of the valuation technique used.
The valuation techniques used by the Fund to measure fair value during the nine months ended June 30, 2010 maximized the use of observable inputs and minimized the use of unobservable inputs.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The Fund’s policy is to recognize transfers between levels at the end of the reporting period.
A summary of the inputs used at June 30, 2010 in valuing the Fund’s assets and liabilities is listed below:
                                 
            Level 2 -   Level 3 -    
            Other Significant   Significant    
    Level 1 -   Observable   Unobservable   Value at
    Quoted Prices   Inputs   Inputs   6/30/10
 
Investments in Securities — Assets
                                
Municipal Bonds & Notes
     —     $ 545,423,427       —     $ 545,423,427  
Variable Rate Notes
     —       12,393,407       —       12,393,407  
Short—Term Investments
     —       4,999,645       —       4,999,645  
 
Total Investments
     —     $ 562,816,479       —     $ 562,816,479  
 
There were no transfers into and out of Levels 1 and 2 during the nine months ended June 30, 2010.

 

 

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 17, 2010    
 
        
By
  /s/ Lawrence G. Altadonna    
 
       
Treasurer, Principal Financial & Accounting Officer    
Date: August 17, 2010    
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 17, 2010    
 
        
By
  /s/ Lawrence G. Altadonna    
 
       
Treasurer, Principal Financial & Accounting Officer    
Date: August 17, 2010