UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-21189 --------- PIMCO New York Municipal Income Fund III -------------------------------------------------- (Exact name of registrant as specified in charter) 1345 Avenue of the Americas, New York, New York 10105 ----------------------------------------------------- (Address of principal executive offices) (Zip code) Lawrence G. Altadonna - 1345 Avenue of the Americas, New York, New York 10105 ----------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 212-739-3371 ------------ Date of fiscal year end: September 30, 2007 ------------------ Date of reporting period: March 31, 2007 -------------- Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507.
Item 1. Report to shareholders
Contents
Letter to Shareholders | 1 |
Performance & Statistics | 2-4 |
Schedules of Investments | 5-24 |
Statements of Assets and Liabilities | 25 |
Statements of Operations | 26 |
Statements of Changes in Net Assets | 28-29 |
Statements of Cash Flows | 30-32 |
Notes to Financial Statements | 33-40 |
Financial Highlights | 42-47 |
Annual Shareholder Meeting Results/ Corporate Changes |
48 |
May 1, 2007
Dear Shareholder:
We are pleased to provide you with the semi-annual report for PIMCO Municipal Income Fund III, PIMCO California Municipal Income Fund III and PIMCO New York Municipal Income Fund III (the ‘‘Funds’’) for the six-month period ended March 31, 2007.
The US bond market delivered stable, positive returns in the period as economic growth moderated and a correction in the US housing market caused some weakness for bonds. The Lehman Municipal Bond Index returned 1.93% for the period, providing a competitive return on a tax-adjusted basis to the broad market return of 2.76% logged by the Lehman Aggregate Bond Index. The Federal Reserve (the ‘‘Fed’’) left the Federal Funds rate unchanged at 5.25% through the period as inflation levels continued to track somewhat higher than the central bank’s stated comfort level.
For specific information on the Funds and their performance during the reporting period, please review the following pages. If you have any questions regarding the information provided, we encourage you to contact your financial advisor or call the Funds’ shareholder servicing agent at (800) 331-1710. You will also find a wide range of information and resources on our Web site, www.allianzinvestors.com/closedendfunds.
Together with Allianz Global Investors Fund Management LLC, the Funds’ investment manager, and Pacific Investment Management Company LLC, the Funds’ sub-adviser, we thank you for investing with us.
We remain dedicated to serving your investment needs.
Sincerely,
Hans W. Kertess
Chairman
Brian S. Shlissel
President & Chief Executive Officer
3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 1
• | For the 6 months ended March 31, 2007, PIMCO Municipal Income Fund III returned 4.21% on net asset value and 5.80% on market price, compared with 2.27% and 4.90%, respectively, for the Lipper Analytical General Municipal Debt Funds (Leveraged) average. |
• | Municipal bond issuance increased almost 13% from the previous six-month’s levels. For the six-month period, supply totaled $228 Billion. |
• | The municipal yield curve was mixed over the six-month period: 10-year and 20-year AAA General Obligation bonds increased by 9 basis points and 1 basis point, respectively. 30-year maturity AAA General Obligation yields declined by –5 basis points. |
• | Municipal yield curve flattened with the 2-30 year spread declining from 72 basis points to 58 basis points. The 10-year muni/Treasury ratio ended the period at 81% while the 30-year ratio was at 85%. |
• | Long municipals outperformed long Treasuries and the taxable debt sector; for the six-month period, the Lehman Long Municipal Bond Index returned +2.57%, while the Long Government/Credit and the Long Lehman Treasury Indices returned +2.04% and +1.54% respectively. |
• | Hedging strategies were positive for performance. |
• | Tobacco securitization sector holdings outperformed as yields on tobacco municipals continued to decline due to demand for higher yielding securities and advanced refunding possibilities. |
• | Exposure to non-callable zero coupon municipals was positive for performance. |
Total Return(1): | Market Price | Net Asset Value (‘‘NAV’’) | ||||||||
Six months | 5.80% | 4.21% | ||||||||
1 Year | 16.03% | 8.83% | ||||||||
Commencement of Operations (10/31/02) to 3/31/07 | 8.42% | 7.87% | ||||||||
Common Share Market Price / NAV Performance:
Commencement of Operations (10/31/02) to 3/31/07
Market Price / NAV: | ||||||
Market Price | $16.16 | |||||
NAV | $15.10 | |||||
Premium to NAV | 7.02% | |||||
Market Price Yield(2) | 5.20% | |||||
Moody’s Ratings
(as a % of total investments)
(1) | Past performance is no guarantee of future results. Total return is calculated by subtracting the value of an investment in the Fund at the beginning of each specified period from the value at the end of the period and dividing the remainder by the value of the investment at the beginning of the period and expressing the result as a percentage. The calculation assumes that all income dividends have been reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total return does not reflect broker commissions or sales charges. Total return for a period of less than one year is not annualized. Total return for a period of more than one year represents the average annual return. |
An investment in the Fund involves risk, including the loss of principal. Total return, price, yield and net asset value will fluctuate with changes in market conditions. This data is provided for information only and is not intended for trading purposes. A portion of the income generated by the Fund may be subject to federal, state and local taxes, and may at times be subject to the alternative minimum tax. Closed-end funds, unlike open-end funds, are not continuously offered. There is a one-time public offering and once issued, shares of closed-end funds are sold in the open market through a stock exchange. Net asset value is total assets applicable to common shareholders less total liabilities divided by the number of common shares outstanding. Holdings are subject to change daily. |
(2) | Market Price Yield is determined by dividing the annualized current monthly per share dividend to common shareholders by the market price per common share at March 31, 2007. |
2 PIMCO Municipal Income Funds III Semi-Annual Report | 3.31.07
• | For the 6 months ended March 31, 2007, PIMCO California Municipal Income Fund III returned 4.22% on net asset value and 4.08% on market price, compared with 2.25% and 3.79%, respectively, for the Lipper Analytical California Municipal Debt Funds average. |
• | Municipal bond issuance increased almost 13% from the previous six-month’s levels. For the six-month period, supply totaled $228 Billion. |
• | The municipal yield curve was mixed over the six-month period: 10-year and 20-year AAA General Obligation bonds increased by 9 basis points and 1 basis point, respectively. 30-year maturity AAA General Obligation yields declined by –5 basis points. |
• | Municipal yield curve flattened with the 2-30 year spread declining from 72 basis points to 58 basis points. The 10-year muni/Treasury ratio ended the period at 81% while the 30-year ratio was at 85% |
• | Long municipals outperformed long Treasuries and the taxable debt sector; for the six-month period, the Lehman Long Municipal Bond Index returned +2.57%, while the Long Government/Credit and the Long Lehman Treasury Indices returned +2.04% and +1.54% respectively. |
• | Hedging strategies were positive for performance. |
• | Tobacco securitization sector holdings outperformed as yields on tobacco municipals continued to decline due to demand for higher yielding securities and advanced refunding possibilities. |
• | Exposure to non-callable zero coupon municipals was positive for performance. |
• | Municipal bonds within California slightly outperformed the national index for the six-month period as the Lehman California Index returned 2.07% for the six-month period versus a return of 1.93% for the Lehman Municipal Bond Index. |
• | The California Insured AAA municipal yield curve was mixed over the six-month period: 5-year maturities increased by14 basis points, 10-year maturities increased by 10 basis points, while 30-year maturities declined −7 basis points. |
Total Return(1): | Market Price | Net Asset Value (‘‘NAV’’) | ||||||||
Six Months | 4.08% | 4.22% | ||||||||
1 Year | 14.36% | 8.79% | ||||||||
Commencement of Operations (10/31/02) to 3/31/07 | 9.88% | 7.78% | ||||||||
Common Share Market Price / NAV Performance:
Commencement of Operations (10/31/02) to 3/31/07
Market Price / NAV: | ||||||
Market Price | $17.14 | |||||
NAV | $14.99 | |||||
Premium to NAV | 14.34% | |||||
Market Price Yield(2) | 5.11% | |||||
Moody’s Ratings
(as a % of total investments)
(1) | Past performance is no guarantee of future results. Total return is calculated by subtracting the value of an investment in the Fund at the beginning of each specified period from the value at the end of the period and dividing the remainder by the value of the investment at the beginning of the period and expressing the result as a percentage. The calculation assumes that all income dividends have been reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total return does not reflect broker commissions or sales charges. Total return for a period of less than one year is not annualized. Total return for a period of more than one year represents the average annual return. |
An investment in the Fund involves risk, including the loss of principal. Total return, price, yield and net asset value will fluctuate with changes in market conditions. This data is provided for information only and is not intended for trading purposes. A portion of the income generated by the Fund may be subject to federal, state and local taxes, and may at times be subject to the alternative minimum tax. Closed-end funds, unlike open-end funds, are not continuously offered. There is a one-time public offering and once issued, shares of closed-end funds are sold in the open market through a stock exchange. Net asset value is equal total assets applicable to common shareholders less total liabilities divided by the number of common shares outstanding. Holdings are subject to change daily. |
(2) | Market Price Yield is determined by dividing the annualized current monthly per share dividend to common shareholders by the market price per common share at March 31, 2007. |
3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 3
• | For the 6 months ended March 31, 2007, PIMCO New York Municipal Income Fund III returned 3.55% on net asset value and 0.63 % on market price, compared with 2.16% and 4.87 %, respectively, for the Lipper Analytical New York Municipal Debt Funds average. |
• | Municipal bond issuance increased almost 13% from the previous six-month’s levels. For the six-month period, supply totaled $228 Billion. |
• | The municipal yield curve was mixed over the six-month period: 10-year and 20-year AAA General Obligation bonds increased by 9 basis points and 1 basis point, respectively. 30-year maturity AAA General Obligation yields declined by –5 basis points. |
• | Municipal yield curve flattened with the 2-30 year spread declining from 72 basis points to 58 basis points. The 10-year muni/Treasury ratio ended the period at 81% while the 30-year ratio was at 85%. |
• | Long municipals outperformed long Treasuries and the taxable debt sector; for the six-month period, the Lehman Long Municipal Bond Index returned +2.57%, while the Long Government/Credit and the Long Lehman Treasury Indices returned +2.04% and +1.54% respectively. |
• | Hedging strategies were positive for performance. |
• | Tobacco securitization sector holdings outperformed as yields on tobacco municipals continued to decline due to demand for higher yielding securities and advanced refunding possibilities. |
• | Exposure to non-callable zero coupon municipals was positive for performance. |
• | Municipal bonds within New York underperformed the national index for the six-month period as the Lehman New York Index returned 1.88% for the six-month period versus a return of 1.93% for the Lehman Municipal Bond Index. |
• | The New York Insured AAA municipal yield curve was mixed over the six-month period: both 5-year and 10-year maturities increased by 10 basis points while 30-year maturities declined by −5 basis points. |
Total Return(1): | Market Price | Net Asset Value (‘‘NAV’’) | ||||||||
Six months | 0.63% | 3.55% | ||||||||
1 Year | 12.87% | 8.02% | ||||||||
Commencement of Operations (10/31/02) to 3/31/07 | 8.10% | 7.78% | ||||||||
Common Share Market Price / NAV Performance:
Commencement of Operations (10/31/02) to 3/31/07
Market Price / NAV: | ||||||
Market Price | $16.12 | |||||
NAV | $15.21 | |||||
Premium to NAV | 5.98% | |||||
Market Price Yield(2) | 4.99% | |||||
Moody’s Ratings
(as a % of total investments)
(1) | Past performance is no guarantee of future results. Total return is calculated by subtracting the value of an investment in the Fund at the beginning of each specified period from the value at the end of the period and dividing the remainder by the value of the investment at the beginning of the period and expressing the result as a percentage. The calculation assumes that all income dividends have been reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total return does not reflect broker commissions or sales charges. Total return for a period of less than one year is not annualized. Total return for a period of more than one year represents the average annual return. |
An investment in the Fund involves risk, including the loss of principal. Total return, price, yield and net asset value will fluctuate with changes in market conditions. This data is provided for information only and is not intended for trading purposes. A portion of the income generated by the Fund may be subject to federal, state and local taxes, and may at times be subject to the alternative minimum tax. Closed-end funds, unlike open-end funds, are not continuously offered. There is a one-time public offering and once issued, shares of closed-end funds are sold in the open market through a stock exchange. Net asset value is equal total assets applicable to common shareholders less total liabilities divided by the number of common shares outstanding. Holdings are subject to change daily. |
(2) | Market Price Yield is determined by dividing the annualized current monthly per share dividend to common shareholders by the market price per common share at March 31, 2007. |
4 PIMCO Municipal Income Funds III Semi-Annual Report | 3.31.07
Principal Amount (000) |
Credit Rating (Moody’s/S&P) |
Value | ||||||||||||
MUNICIPAL BONDS & NOTES–97.4% |
||||||||||||||
Alabama–1.1% | ||||||||||||||
Birmingham, GO, Ser. B (AMBAC), | ||||||||||||||
$1,000 | 5.00%, 12/1/27 | Aaa/AAA | $1,042,420 | |||||||||||
2,560 | 5.00%, 12/1/32 | Aaa/AAA | 2,662,042 | |||||||||||
5,000 | Birmingham Baptist Medical Centers Special Care Facs. Financing Auth. Rev., 5.00%, 11/15/30, Ser. A | Baa1/NR | 5,119,250 | |||||||||||
1,500 | Colbert Cnty., Northwest Health Care Auth., Health Care Facs. Rev., 5.75%, 6/1/27 | Baa3/NR | 1,550,475 | |||||||||||
10,374,187 | ||||||||||||||
Alaska–0.5% | ||||||||||||||
State Housing Finance Corp. Rev., | ||||||||||||||
3,900 | 5.00%, 12/1/33, Ser. A | Aaa/AAA | 3,995,082 | |||||||||||
1,000 | 5.25%, 6/1/32, Ser. C (MBIA) | Aaa/AAA | 1,021,700 | |||||||||||
5,016,782 | ||||||||||||||
Arizona–2.8% | ||||||||||||||
2,200 | Health Facs. Auth., John C. Lincoln Health Network Rev., 7.00%, 12/1/25, (Pre-refunded @ $102, 12/1/10) (a) |
NR/BBB | 2,485,428 | |||||||||||
1,500 | Maricopa Cnty. Pollution Control Corp., Pollution Control Rev., 5.05%, 5/1/29 (AMBAC) |
Aaa/AAA | 1,568,805 | |||||||||||
Salt River Project Agricultural Improvement & Power Dist. Rev., Ser. A (g), | ||||||||||||||
5,000 | 5.00%, 1/1/35 | Aa1/AA | 5,293,600 | |||||||||||
16,000 | 5.00%, 1/1/37 | Aa1/AA | 16,927,360 | |||||||||||
26,275,193 | ||||||||||||||
Arkansas–0.1% | ||||||||||||||
7,000 | Arkansas Dev. Finance Auth. Rev., zero coupon, 7/1/46 (AMBAC) | Aaa/NR | 1,135,120 | |||||||||||
California–7.0% | ||||||||||||||
1,000 | Alameda Public Financing Auth. Rev., 7.00%, 6/1/09 | NR/NR | 1,000,900 | |||||||||||
2,000 | Chula Vista Community Facs. Dist., Special Tax, 5.25%, 9/1/30 | NR/NR | 2,036,740 | |||||||||||
Golden State Tobacco Securitization Corp., Tobacco Settlement Rev., | ||||||||||||||
8,000 | 5.00%, 6/1/33, Ser. A-1 | Baa3/BBB | 7,918,800 | |||||||||||
27,585 | 6.25%, 6/1/33, Ser. 2003-A-1 | Aaa/AAA | 30,492,459 | |||||||||||
21,000 | 6.75%, 6/1/39, Ser. 2003-A-1, (Pre-refunded @ $100, 6/1/13) (a) | Aaa/AAA | 24,497,130 | |||||||||||
65,946,029 | ||||||||||||||
Colorado–3.2% | ||||||||||||||
1,000 | Aurora Single Tree Metropolitan Dist., GO, 5.50%, 11/15/31 | NR/NR | 1,001,330 | |||||||||||
9,955 | Colorado Springs Rev., 5.00%, 11/15/30, Ser. B (g) | Aa2/AA | 10,369,427 | |||||||||||
El Paso Cnty., CP (AMBAC), | ||||||||||||||
1,735 | 5.00%, 12/1/23, Ser. A, (Pre-refunded @ $100, 12/1/12) (a) | Aaa/AAA | 1,819,303 | |||||||||||
1,725 | 5.00%, 12/1/23, Ser. B | Aaa/AAA | 1,808,818 | |||||||||||
2,820 | 5.00%, 12/1/27, Ser. A, (Pre-refunded @ $100, 12/1/12) (a) | Aaa/AAA | 2,946,872 | |||||||||||
1,500 | 5.00%, 12/1/27, Ser. B | Aaa/AAA | 1,567,485 | |||||||||||
3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 5
Principal Amount (000) |
Credit Rating (Moody’s/S&P) |
Value | ||||||||||||
Colorado–3.2% (continued) | ||||||||||||||
$1,500 | Garfield Cnty. School Dist. Re-2, GO, 5.00%, 12/1/25 (FSA) | Aaa/NR | $1,569,795 | |||||||||||
2,000 | La Plata Cnty. School Dist. No. 9-R, Durango, GO, 5.25%, 11/1/25, (Pre-refunded @ $100, 11/1/12) (MBIA) (a) |
Aaa/NR | 2,160,040 | |||||||||||
4,000 | Saddle Rock Metropolitan Dist., GO, 5.35%, 12/1/31 (Radian) | NR/AA | 4,132,720 | |||||||||||
2,500 | School Mines Auxiliary Facs. Rev., 5.00%, 12/1/37 (AMBAC) | Aaa/AAA | 2,592,000 | |||||||||||
29,967,790 | ||||||||||||||
Florida–5.1% | ||||||||||||||
3,480 | Brevard Cnty. Health Facs. Auth. Rev., 5.00%, 4/1/34 | A2/A | 3,594,492 | |||||||||||
8,000 | Highlands Cnty. Health Facs. Auth. Rev., Adventist Health System, 5.25%, 11/15/23, Ser. B, (Pre-refunded @ $100, 11/15/12) (a) |
A2/A+ | 8,635,680 | |||||||||||
2,500 | Hillsborough Cnty. Industrial Dev. Auth. Rev., Tampa General Hospital, 5.25%, 10/1/34, Ser. B | A3/NR | 2,604,525 | |||||||||||
1,485 | Julington Creek Plantation Community Dev. Dist., Special Assessment Rev., 5.00%, 5/1/29 (MBIA) | Aaa/AAA | 1,556,176 | |||||||||||
1,000 | Orange Cnty. Housing Finance Auth., Multifamily Rev., Palm Grove Gardens, 5.25%, 1/1/28, Ser. G | Aaa/NR | 1,035,970 | |||||||||||
15,000 | Pinellas Cnty. Health Fac. Auth. Rev., Baycare Health, 5.50%, 11/15/33, (Pre-refunded @ $100, 5/15/13) (a) |
Aa3/NR | 16,464,600 | |||||||||||
7,500 | South Miami Health Facs. Auth., Hospital Rev., Baptist Health, 5.25%, 11/15/33 |
Aa3/AA− | 7,843,575 | |||||||||||
5,615 | Tampa, Water & Sewer Rev., 5.00%, 10/1/26, Ser. A | Aa2/AA | 5,850,044 | |||||||||||
47,585,062 | ||||||||||||||
Georgia–0.6% | ||||||||||||||
1,750 | Fulton Cnty. Rev., 5.125%, 7/1/42, Ser. A | NR/NR | 1,757,472 | |||||||||||
4,000 | Griffin Combined Public Utility Rev., 5.00%, 1/1/32 (AMBAC) | Aaa/AAA | 4,228,320 | |||||||||||
5,985,792 | ||||||||||||||
Idaho–0.8% | ||||||||||||||
State Building Auth., Building Rev., Ser. A (XLCA), | ||||||||||||||
1,000 | 5.00%, 9/1/33 | Aaa/AAA | 1,043,560 | |||||||||||
5,750 | 5.00%, 9/1/43 | Aaa/AAA | 5,969,995 | |||||||||||
7,013,555 | ||||||||||||||
Illinois–8.4% |
||||||||||||||
2,250 | Chicago, GO, 5.00%, 1/1/31, Ser. A (MBIA) | Aaa/AAA | 2,324,565 | |||||||||||
Chicago, Lake Shore East, Special Assessment, | ||||||||||||||
1,600 | 6.625%, 12/1/22 | NR/NR | 1,731,040 | |||||||||||
3,456 | 6.75%, 12/1/32 | NR/NR | 3,745,786 | |||||||||||
5,000 | Chicago Board of Education, GO, 5.00%, 12/1/31, Ser. C, (Pre-refunded @ $100, 12/1/11) (FSA) (a) |
Aaa/AAA | 5,284,350 | |||||||||||
500 | Chicago Board of Education School Reform, GO, zero coupon, 12/1/28, Ser. A (FGIC) |
Aaa/AAA | 189,510 | |||||||||||
3,000 | Chicago Kingsbury Redev. Project, Tax Allocation, 6.57%, 2/15/13, Ser. A |
NR/NR | 3,077,190 | |||||||||||
7,000 | Chicago Motor Fuel Tax Rev., 5.00%, 1/1/33, Ser. A (AMBAC) | Aaa/AAA | 7,269,150 | |||||||||||
4,000 | Chicago Park Dist., GO, 5.00%, 1/1/29, Ser. D (FGIC) | Aaa/AAA | 4,127,600 | |||||||||||
6 PIMCO Municipal Income Funds III Semi-Annual Report | 3.31.07
Principal Amount (000) |
Credit Rating (Moody’s/S&P) |
Value | ||||||||||||
Illinois–8.4% (continued) |
||||||||||||||
$2,500 | Chicago Water Rev., | |||||||||||||
5.00%, 11/1/31, (Pre-refunded @ $100, 11/1/11) (AMBAC) (a) | Aaa/AAA | $2,639,875 | ||||||||||||
1,050 | Dev. Finance Auth. Rev., Three Crowns Park Plaza, 5.875%, 2/15/38 | NR/NR | 1,092,934 | |||||||||||
Educational Facs. Auth. Rev., Univ. of Chicago, | ||||||||||||||
4,780 | 5.00%, 7/1/33 | Aa1/AA | 4,974,450 | |||||||||||
220 | 5.00%, 7/1/33, (Pre-refunded @ $100, 7/1/13) (a) | Aa1/AA | 235,671 | |||||||||||
165 | 5.25%, 7/1/41 | Aa1/AA | 173,565 | |||||||||||
4,160 | 5.25%, 7/1/41, (Pre-refunded @ $101, 7/1/11) (a) | Aa1/AA | 4,449,797 | |||||||||||
9,045 | Metropolitan Pier & Exposition Auth., Dedicated State Tax Rev., McCormick Place Expansion, 5.25%, 6/15/42 (MBIA) |
Aaa/AAA | 9,569,610 | |||||||||||
4,283 | Round Lake, Special Tax Rev., 6.70%, 3/1/33 | NR/NR | 4,650,953 | |||||||||||
2,935 | Springfield Rev., 5.00%, 3/1/35 (MBIA) | Aaa/AAA | 3,094,488 | |||||||||||
State Finance Auth. Rev., | ||||||||||||||
12,795 | 5.00%, 2/1/33 (AMBAC) (g) | NR/NR | 13,224,784 | |||||||||||
1,500 | 5.50%, 5/15/37 | NR/NR | 1,522,575 | |||||||||||
1,000 | 5.875%, 3/1/27, Ser. A | NR/NR | 998,190 | |||||||||||
1,175 | State Health Facs. Auth. Rev., Elmhurst Memorial Healthcare, | |||||||||||||
5.50%, 1/1/22 | A2/NR | 1,244,760 | ||||||||||||
3,050 | Univ. Rev., 5.00%, 4/1/30, Ser. A (AMBAC) | Aaa/AAA | 3,135,430 | |||||||||||
78,756,273 | ||||||||||||||
Indiana–2.8% |
||||||||||||||
7,535 | Bond Bank Rev., 5.00%, 2/1/33, Ser. A (FSA) | Aaa/AAA | 7,857,875 | |||||||||||
3,000 | Brownsburg 1999 School Building Corp. Rev., 5.25%, 3/15/25, Ser. A, (Pre-refunded @ $100, 9/15/13) (FSA) (a) |
Aaa/AAA | 3,262,710 | |||||||||||
1,375 | Fort Wayne Pollution Control Rev., 6.20%, 10/15/25 | Caa1/B− | 1,414,050 | |||||||||||
5,000 | Indianapolis Local Public Improvement Board, Tax Allocation, | |||||||||||||
5.00%, 2/1/29, Ser. G (MBIA) | Aaa/AAA | 5,209,750 | ||||||||||||
Michigan City Area Wide School Building Corp. Rev. (FGIC), | ||||||||||||||
2,500 | zero coupon, 1/15/21 | Aaa/AAA | 1,383,500 | |||||||||||
1,000 | zero coupon, 7/15/21 | Aaa/AAA | 541,640 | |||||||||||
1,000 | zero coupon, 1/15/22 | Aaa/AAA | 527,840 | |||||||||||
1,000 | Plainfield Parks Facs. Corp. Lease Rent Rev., 5.00%, 1/15/22 (AMBAC) | Aaa/AAA | 1,039,810 | |||||||||||
Portage Industrial Economic Dev. Rev., | ||||||||||||||
1,000 | 5.00%, 7/15/23 | NR/BBB+ | 1,023,040 | |||||||||||
775 | 5.00%, 1/15/27 | NR/BBB+ | 787,082 | |||||||||||
3,500 | State Dev. Finance Auth., Pollution Control Rev., 5.00%, 3/1/30 (AMBAC) | Aaa/AAA | 3,511,095 | |||||||||||
26,558,392 | ||||||||||||||
3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 7
Principal Amount (000) |
Credit Rating (Moody’s/S&P) |
Value | ||||||||||||
Iowa–1.4% |
||||||||||||||
$1,000 | Coralville, CP, 5.25%, 6/1/26, Ser. D | A2/B+ | $1,054,190 | |||||||||||
Tobacco Settlement Auth. of Iowa Rev., | ||||||||||||||
11,010 | zero coupon, 6/1/34, Ser. B | Baa3/BBB | 11,226,236 | |||||||||||
1,000 | 5.60%, 6/1/35, Ser. B, (Pre-refunded @ $101, 6/1/11) (a) | NR/AAA | 1,081,140 | |||||||||||
13,361,566 | ||||||||||||||
Kentucky–0.2% |
||||||||||||||
Economic Dev. Finance Auth., Hospital Facs. Rev., | ||||||||||||||
1,000 | Catholic Healthcare Partners, 5.25%, 10/1/30 | Aa3/AA− | 1,045,530 | |||||||||||
1,140 | St. Luke’s Hospital, 6.00%, 10/1/19, Ser. B | A3/A | 1,267,737 | |||||||||||
2,313,267 | ||||||||||||||
Louisiana–0.7% |
||||||||||||||
5,000 | Public Facs. Auth. Rev., Ochsner Clinic Foundation, | |||||||||||||
5.50%, 5/15/32, Ser. B | A3/NR | 5,261,650 | ||||||||||||
1,595 | Tobacco Settlement Financing Corp. Rev., | |||||||||||||
5.875%, 5/15/39, Ser. 2001-B | Baa3/BBB | 1,712,089 | ||||||||||||
6,973,739 | ||||||||||||||
Maryland–0.2% |
||||||||||||||
State Health & Higher Educational Facs. Auth. Rev., | ||||||||||||||
1,500 | Calvert Health Systems, 5.50%, 7/1/36 | A2/NR | 1,607,025 | |||||||||||
500 | King Farm Presbyterian, 5.30%, 1/1/37 | NR/NR | 511,415 | |||||||||||
2,118,440 | ||||||||||||||
Massachusetts–2.6% |
||||||||||||||
1,000 | State Dev. Finance Agcy. Rev., 5.75%, 7/1/33, Ser. C | A3/BBB+ | 1,068,670 | |||||||||||
7,000 | State Health & Educational Facs. Auth. Rev., Harvard Univ., | |||||||||||||
5.125%, 7/15/37, Ser. FF | Aaa/AAA | 7,357,490 | ||||||||||||
4,910 | State Housing Finance Agcy., Housing Rev., 5.125%, 6/1/43, Ser. H | Aa3/AA− | 5,031,670 | |||||||||||
3,225 | State Water Pollution Abatement Trust Rev., 5.00%, 8/1/32, Ser. 8 | Aaa/AAA | 3,359,289 | |||||||||||
7,555 | State Water Res. Auth. Rev., 5.00%, 8/1/32, Ser. J (FSA) | Aaa/AAA | 7,829,322 | |||||||||||
24,646,441 | ||||||||||||||
Michigan–13.1% |
||||||||||||||
500 | Corner Creek Academy East Rev., 5.25%, 11/1/36 | A1/BB+ | 504,095 | |||||||||||
250 | Crescent Academy, CP, 5.75%, 12/1/36 | NR/NR | 256,302 | |||||||||||
Detroit Water Supply System, Ser. B, | ||||||||||||||
33,040 | 5.00%, 7/1/32, Ser. A (FSA) (g) | NR/NR | 34,402,239 | |||||||||||
7,555 | 5.00%, 7/1/34 (MBIA) | Aaa/AAA | 7,891,802 | |||||||||||
4,685 | 5.00%, 7/1/34, (Pre-refunded @ $100, 7/1/13) (MBIA)(a) | Aaa/AAA | 5,018,713 | |||||||||||
35,000 | 5.00%, 7/1/34, Ser. A (MBIA) (g) | Aaa/AAA | 36,560,300 | |||||||||||
5,000 | State Building Auth. Rev., 5.00%, 10/15/26, Ser. III, (Pre-refunded @ $100, 10/15/12) (FSA) (a) |
Aaa/AAA | 5,327,500 | |||||||||||
8 PIMCO Municipal Income Funds III Semi-Annual Report | 3.31.07
Principal Amount (000) |
Credit Rating (Moody’s/S&P) |
Value | ||||||||||||
Michigan–13.1% (continued) |
||||||||||||||
State Hospital Finance Auth. Rev., | ||||||||||||||
$175 | Detroit Medical Center, 5.25%, 8/15/23 | Ba3/BB− | $171,045 | |||||||||||
4,000 | Henry Ford Health System, 5.00%, 3/1/17, (Pre-refunded @ $100, 3/1/13) (a) |
A1/A | 4,267,000 | |||||||||||
Oakwood Group, Ser. A, | ||||||||||||||
5,405 | 5.75%, 4/1/32 | A2/A | 5,744,704 | |||||||||||
575 | 6.00%, 4/1/22 | A2/A | 624,571 | |||||||||||
20,000 | Trinity Health Credit, 5.375%,12/1/30 | Aa2/AA− | 21,150,800 | |||||||||||
1,000 | State Technical Univ. Rev., 5.00%, 10/1/33 (XLCA) | Aaa/AAA | 1,040,910 | |||||||||||
122,959,981 | ||||||||||||||
Minnesota–0.4% |
||||||||||||||
750 | Cottage Grove Rev., 5.00%, 12/1/31 | NR/NR | 762,352 | |||||||||||
2,400 | Upsala Independent School Dist. No. 487, GO, 5.00%, 2/1/28 (FGIC) | Aaa/AAA | 2,550,384 | |||||||||||
3,312,736 | ||||||||||||||
Mississippi–0.5% |
||||||||||||||
Business Finance Corp., Pollution Control Rev., | ||||||||||||||
3,000 | 5.875%, 4/1/22 | Ba1/BBB− | 3,012,720 | |||||||||||
1,250 | 5.90%, 5/1/22 | Ba1/BBB− | 1,253,325 | |||||||||||
4,266,045 | ||||||||||||||
Missouri–2.4% |
||||||||||||||
4,000 | Bi-State Dev. Agcy. Rev., Missouri Illinois Metropolitan Dist., | |||||||||||||
5.00%, 10/1/32 (FSA) | Aaa/AAA | 4,189,440 | ||||||||||||
1,350 | St. Louis Cnty. Industrial Dev. Auth., Housing Dev. Rev., | |||||||||||||
5.20%, 1/20/36 (GNMA) | NR/AAA | 1,393,524 | ||||||||||||
St. Louis Industrial Dev. Auth. Rev. (GNMA), | ||||||||||||||
1,500 | 5.125%, 12/20/29 | NR/AAA | 1,553,145 | |||||||||||
1,500 | 5.125%, 12/20/30 | NR/AAA | 1,545,510 | |||||||||||
4,365 | State Environmental Improvement & Energy Res. Auth., | |||||||||||||
Water Pollution Control Rev., 5.00%, 7/1/23, Ser. B | Aaa/NR | 4,588,968 | ||||||||||||
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) (a) |
A2/A | 8,230,125 | |||||||||||
250 | Township of Jennings Rev., 5.00%, 11/1/23 | NR/NR | 249,768 | |||||||||||
500 | Univ. Place Transportation Dev. Dist., Special Assessment, | |||||||||||||
5.00%, 3/1/32 | NR/NR | 502,245 | ||||||||||||
22,252,725 | ||||||||||||||
Montana–1.3% |
||||||||||||||
11,250 | Forsyth Pollution Control Rev., Puget Sound Energy, | |||||||||||||
5.00%, 3/1/31 (AMBAC) | Aaa/AAA | 11,825,775 | ||||||||||||
3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 9
Principal Amount (000) |
Credit Rating (Moody’s/S&P) |
Value | ||||||||||||
Nevada–0.5% |
||||||||||||||
$3,355 | Henderson Health Care Fac. Rev., Catholic Healthcare West, | |||||||||||||
5.125%, 7/1/28 | A2/A | $3,410,324 | ||||||||||||
855 | Henderson Local Improvement Dist., Special Assessment, | |||||||||||||
5.80%, 3/1/23 | NR/NR | 883,779 | ||||||||||||
4,294,103 | ||||||||||||||
New Hampshire–0.5% |
||||||||||||||
Manchester Water Works Rev. (FGIC), | ||||||||||||||
1,500 | 5.00%, 12/1/28 | Aaa/AAA | 1,576,110 | |||||||||||
3,250 | 5.00%, 12/1/34 | Aaa/AAA | 3,403,335 | |||||||||||
4,979,445 | ||||||||||||||
New Jersey–3.6% |
||||||||||||||
1,000 | Camden Cnty., Improvement Auth. Rev., 5.00%, 2/15/35, Ser. A | Baa3/BBB | 1,023,440 | |||||||||||
Economic Dev. Auth., | ||||||||||||||
4,500 | Kapkowski Rd. Landfill, 6.50%, 4/1/28 | Baa3/NR | 5,481,360 | |||||||||||
300 | Newark Airport, 7.00%, 10/1/14 | Ba1/NR | 304,803 | |||||||||||
Health Care Facs. Financing Auth. Rev., | ||||||||||||||
2,500 | Middlesex Cnty. Pollution Control Auth. Rev., 5.75%, 9/15/32 | Baa3/BBB− | 2,673,050 | |||||||||||
3,000 | Pascack Valley Hospital, 6.625%, 7/1/36 | Caa1/CCC | 3,156,540 | |||||||||||
2,000 | Somerset Medical Center, 5.50%, 7/1/33 | Ba1/NR | 2,071,300 | |||||||||||
2,000 | South Port Corp. Rev., 5.10%, 1/1/33 | NR/A | 2,080,300 | |||||||||||
1,500 | State Educational Facs. Auth. Rev., 6.00%, 7/1/25, Ser. D | NR/NR | 1,635,615 | |||||||||||
Tobacco Settlement Financing Corp. Rev., | ||||||||||||||
525 | 6.00%, 6/1/37, (Pre-refunded @ $100, 6/1/12) (a) | Aaa/AAA | 581,983 | |||||||||||
1,000 | 6.125%, 6/1/24 | Aaa/AAA | 1,072,340 | |||||||||||
230 | 6.125%, 6/1/42, (Pre-refunded @ $100, 6/1/12) (a) | Aaa/AAA | 256,303 | |||||||||||
350 | 6.25%, 6/1/43, (Pre-refunded @ $100, 6/1/13) (a) | Aaa/AAA | 398,730 | |||||||||||
10,750 | 6.75%, 6/1/39, (Pre-refunded @ $100, 6/1/13) (a) | Aaa/AAA | 12,540,198 | |||||||||||
33,275,962 | ||||||||||||||
New Mexico–0.1% |
||||||||||||||
1,000 | Farmington Pollution Control Rev., 5.80%, 4/1/22 | Baa2/BBB | 1,011,910 | |||||||||||
New York–4.8% |
||||||||||||||
10,000 | Metropolitan Transportation Auth. Rev., | |||||||||||||
5.25%, 11/15/32, Ser. B, (Pre-refunded @ $100, 11/15/13) (a) | A2/AAA | 10,944,600 | ||||||||||||
New York City Municipal Water Finance Auth., Water & Sewer | ||||||||||||||
System Rev., | ||||||||||||||
5,000 | 5.00%, 6/15/35, Ser. C | Aa2/AA+ | 5,230,100 | |||||||||||
8,180 | 5.00%, 6/15/37, Ser. D (g) | Aa2/AA+ | 8,594,644 | |||||||||||
1,500 | 5.00%, 6/15/39, Ser. A | Aa2/AA+ | 1,567,140 | |||||||||||
11,590 | State Dormitory Auth. Rev., Sloan-Kettering Center Memorial, | |||||||||||||
5.00%, 7/1/34, Ser. 1 | Aa2/AA | 12,093,701 | ||||||||||||
10 PIMCO Municipal Income Funds III Semi-Annual Report | 3.31.07
Principal Amount (000) |
Credit Rating (Moody’s/S&P) |
Value | ||||||||||||
New York–4.8% (continued) |
||||||||||||||
$3,800 | State Personal Income Tax, 5.00%, 3/15/32, (Pre-refunded @ $100, 3/15/13) (a) |
Aa3/AAA | $4,076,146 | |||||||||||
2,000 | State Environmental Facs. Corp. Rev., 5.00%, 6/15/28 | Aaa/AAA | 2,105,340 | |||||||||||
44,611,671 | ||||||||||||||
North Carolina–1.3% |
||||||||||||||
2,000 | Charlotte-Mecklenburg Hospital Auth., Healthcare System Rev., | |||||||||||||
5.00%, 1/15/33, Ser. A | Aa3/AA | 2,075,000 | ||||||||||||
Eastern Municipal Power Agcy., Power System Rev., | ||||||||||||||
2,000 | 5.125%, 1/1/23, Ser. D | Baa2/BBB | 2,078,900 | |||||||||||
2,000 | 5.125%, 1/1/26, Ser. D | Baa2/BBB | 2,073,760 | |||||||||||
3,795 | 5.375%, 1/1/17, Ser. C | Baa2/BBB | 4,052,073 | |||||||||||
1,500 | Medical Care Commission, Health Care Facs. Rev., Cleveland Cnty., 5.00%, 7/1/35 (AMBAC) | Aaa/AAA | 1,565,595 | |||||||||||
11,845,328 | ||||||||||||||
Ohio–0.8% |
||||||||||||||
2,500 | Lorain Cnty. Hospital Rev., Catholic Healthcare, 5.375%, 10/1/30 | Aa3/AA− | 2,633,950 | |||||||||||
5,000 | Ohio Air Quality Dev. Auth. Rev., 4.80%, 1/1/34, Ser. B (FGIC) (g) | Aaa/AAA | 5,122,800 | |||||||||||
7,756,750 | ||||||||||||||
Oklahoma–0.4% |
||||||||||||||
3,500 | Tulsa Cnty. Industrial Auth. Rev., Legacy Apartments, | |||||||||||||
4.90%, 11/20/46 (FHA-GNMA) | Aaa/NR | 3,626,735 | ||||||||||||
Pennsylvania–2.8% |
||||||||||||||
4,350 | Allegheny Cnty. Hospital Dev. Auth. Rev., 9.25%, 11/15/30, Ser. B | Ba3/B+ | 5,143,527 | |||||||||||
1,500 | Cumberland Cnty. Auth., Retirement Community Rev., Wesley Affiliated Services, 7.25%, 1/1/35, Ser. A, (Pre-refunded @ $101, 1/1/13) (a) |
NR/NR | 1,769,850 | |||||||||||
3,250 | Delaware River Toll Bridge, Commission Bridge Rev., 5.00%, 7/1/28 |
A2/A− | 3,385,818 | |||||||||||
1,250 | Harrisburg Auth. Rev., 6.00%, 9/1/36 | NR/NR | 1,289,750 | |||||||||||
3,000 | Lehigh Cnty. General Purpose Auth. Rev., St. Luke’s Bethlehem Hospital, 5.375%, 8/15/33, (Pre-refunded @ $100, 8/15/13) (a) | Baa1/BBB | 3,268,260 | |||||||||||
5,000 | Philadelphia School Dist., GO, 5.125%, 6/1/34, Ser. D (FGIC) | Aaa/AAA | 5,308,500 | |||||||||||
6,300 | St. Mary Hospital Auth., Bucks Cnty. Rev., | |||||||||||||
5.00%, 12/1/28, (Pre-refunded @ $101, 6/1/08) (a) | Aa2/NR | 6,303,213 | ||||||||||||
26,468,918 | ||||||||||||||
Puerto Rico–0.3% |
||||||||||||||
2,200 | Electric Power Auth., Power Rev., 5.125%, 7/1/29, Ser. NN | A3/BBB+ | 2,315,500 | |||||||||||
3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 11
Principal Amount (000) |
Credit Rating (Moody’s/S&P) |
Value | ||||||||||||
South Carolina–1.6% |
||||||||||||||
$7,500 | Florence Cnty. Rev., McLeod Regional Medical Center, | |||||||||||||
5.00%, 11/1/31, Ser. A (FSA) | Aaa/AAA | $7,885,650 | ||||||||||||
6,700 | Jobs Economic Dev. Auth. Rev., Bon Secours Health System, | |||||||||||||
5.625%, 11/15/30 | A3/A− | 7,090,342 | ||||||||||||
14,975,992 | ||||||||||||||
Tennessee–0.1% |
||||||||||||||
1,250 | Knox Cnty. Health Educational & Housing Facs., Board Hospital Facs. Rev., Catholic Healthcare Partners, 5.25%, 10/1/30 | Aa3/AA− | 1,309,400 | |||||||||||
Texas–14.8% |
||||||||||||||
4,135 | Canyon Independent School Dist., GO, 5.00%, 2/15/28, Ser. A, | |||||||||||||
(Pre-refunded @ $100, 2/15/13) (PSF-GTD) (a) | NR/AAA | 4,413,616 | ||||||||||||
2,500 | Columbia & Brazoria Independent School Dist., GO, | |||||||||||||
5.00%, 8/1/29 (PSF-GTD) | NR/AAA | 2,604,300 | ||||||||||||
1,300 | Comal Cnty. Health Facs., McKenna Memorial Hospital Project Rev., | |||||||||||||
6.25%, 2/1/32 | Baa2/BBB− | 1,427,621 | ||||||||||||
6,810 | Crowley Independent School Dist., GO, 4.75%, 8/1/35 (PSF-GTD) (g) | NR/NR | 6,950,422 | |||||||||||
12,975 | Dallas Area Rapid Transit Rev., | |||||||||||||
5.00%, 12/1/32, (Prerefunded @ $100, 12/1/12) (FGIC)(g) | Aa1/AA+ | 13,842,119 | ||||||||||||
Denton Independent School Dist., GO (PSF-GTD) , | ||||||||||||||
255 | zero coupon, 8/15/26 | Aaa/AAA | 90,788 | |||||||||||
5,745 | zero coupon, 8/15/26, (Pre-refunded @ $44.73, 8/15/12) (a) | Aaa/AAA | 2,091,065 | |||||||||||
255 | zero coupon, 8/15/27 | Aaa/AAA | 85,504 | |||||||||||
5,745 | zero coupon, 8/15/27, (Pre-refunded @ $42.17, 8/15/12) (a) | Aaa/AAA | 1,971,397 | |||||||||||
215 | zero coupon, 8/15/28 | Aaa/AAA | 67,916 | |||||||||||
4,785 | zero coupon, 8/15/28, (Pre-refunded @ $39.75, 8/15/12) (a) | Aaa/AAA | 1,547,756 | |||||||||||
255 | zero coupon, 8/15/29 | Aaa/AAA | 75,873 | |||||||||||
5,745 | zero coupon, 8/15/29, (Pre-refunded @ $37.46, 8/15/12) (a) | Aaa/AAA | 1,751,191 | |||||||||||
85 | zero coupon, 8/15/30 | Aaa/AAA | 23,818 | |||||||||||
1,915 | zero coupon, 8/15/30, (Pre-refunded @ $35.30, 8/15/12) (a) | Aaa/AAA | 550,007 | |||||||||||
340 | zero coupon, 8/15/31 | Aaa/AAA | 89,702 | |||||||||||
7,660 | zero coupon, 8/15/31, (Pre-refunded @ $33.25, 8/15/12) (a) | Aaa/AAA | 2,072,566 | |||||||||||
10,115 | 5.00%, 8/15/33 (g) | NR/NR | 10,484,804 | |||||||||||
4,400 | Harris Cnty., GO, 5.125%, 8/15/31, (Pre-refunded @ $100, 8/15/12) (a) | Aa1/AA+ | 4,702,324 | |||||||||||
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) (a) | Aaa/AAA | 5,229,850 | |||||||||||
2,750 | St. Luke’s Episcopal Hospital, 5.375%, 2/15/26, Ser. A, (Pre-refunded @ $100, 8/15/11) (a) |
NR/AAA | 2,936,203 | |||||||||||
19,500 | Harris Cnty. Rev., 5.125%, 8/15/32 (FSA) | Aaa/AAA | 20,529,405 | |||||||||||
4,005 | Houston, GO, 5.00%, 3/1/25 (MBIA) | Aaa/AAA | 4,158,231 | |||||||||||
5,000 | Houston Water & Sewer System Rev., 5.00%, 12/1/30, Ser. A, | |||||||||||||
(Pre-refunded @ $100, 12/1/12) (FSA) (a) | Aaa/AAA | 5,328,850 | ||||||||||||
7,000 | Judson Independent School Dist., GO, 5.00%, 2/1/30 (PSF-GTD) | Aaa/NR | 7,195,580 | |||||||||||
12 PIMCO Municipal Income Funds III Semi-Annual Report | 3.31.07
Principal Amount (000) |
Credit Rating (Moody’s/S&P) |
Value | ||||||||||||
Texas–14.8% (continued) |
||||||||||||||
$11,950 | Mansfield Independent School Dist., GO, 5.00%, 2/15/28 (PSF-GTD) (g) | NR/NR | $12,422,862 | |||||||||||
Mesquite Independent School Dist. No. 1, GO, Ser. A (PSF-GTD), | ||||||||||||||
1,365 | zero coupon, 8/15/16 | NR/AAA | 918,823 | |||||||||||
1,000 | zero coupon, 8/15/18 | NR/AAA | 608,260 | |||||||||||
1,000 | zero coupon, 8/15/19 | NR/AAA | 575,660 | |||||||||||
1,000 | zero coupon, 8/15/20 | NR/AAA | 545,780 | |||||||||||
2,105 | Northwest Harris Cnty. Municipal Utility Dist. No. 16, GO, | |||||||||||||
5.30%, 10/1/29 (Radian) | NR/AA | 2,169,118 | ||||||||||||
2,000 | Sabine River Auth. Rev., 5.20%, 5/1/28 | Baa2/BB | 2,017,820 | |||||||||||
4,000 | State of Texas, GO, 4.75%, 4/1/36 | Aa1/AA | 4,073,280 | |||||||||||
Univ. Rev., Ser. B, | ||||||||||||||
11,115 | 5.00%, 7/1/26 (g) | Aaa/AAA | 11,575,050 | |||||||||||
2,000 | 5.00%, 7/1/26, (Pre-refunded @ $100, 7/1/14) (a) | Aaa/AAA | 2,158,460 | |||||||||||
137,286,021 | ||||||||||||||
Utah–0.7% |
||||||||||||||
1,750 | Cnty. of Weber, IHC Health Services Rev., 5.00%, 8/15/30 | Aa1/AA+ | 1,791,808 | |||||||||||
4,100 | Salt Lake Cnty. Hospital Rev., IHC Health Services, | |||||||||||||
5.125%, 2/15/33 (AMBAC) | Aaa/AAA | 4,266,911 | ||||||||||||
750 | Spanish Fork City Rev., 5.70%, 11/15/36 | NR/NR | 772,890 | |||||||||||
6,831,609 | ||||||||||||||
Washington–9.8% |
||||||||||||||
6,375 | Chelan Cnty. Public Utility Dist. Rev., 5.125%, 7/1/33, Ser. C (AMBAC) |
Aaa/AAA | 6,655,564 | |||||||||||
King Cnty. Rev., Ser. A (g), | ||||||||||||||
10,000 | 5.00%, 1/1/35 (FGIC) | Aaa/AAA | 10,412,300 | |||||||||||
15,000 | 5.00%, 1/1/35 (FSA) | Aaa/AAA | 15,484,050 | |||||||||||
21,625 | Port Tacoma, GO, 5.00%, 12/1/33, (Pre-refunded @ $100, 12/1/13) (AMBAC) |
NR/NR | 23,256,390 | |||||||||||
10,000 | Seattle Rev., 5.00%, 7/1/32 (FGIC) | NR/NR | 10,367,500 | |||||||||||
23,100 | Tobacco Settlement Auth., Tobacco Settlement Rev., 6.50%, 6/1/26 | Baa3/BBB | 25,338,159 | |||||||||||
91,513,963 | ||||||||||||||
Wisconsin–0.1% | ||||||||||||||
560 | Badger Tobacco Asset Securitization Corp. Rev., 6.00%, 6/1/17 | Baa3/BBB | 603,585 | |||||||||||
Total Municipal Bonds & Notes (cost–$855,726,141) | 911,351,782 | |||||||||||||
3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 13
Principal Amount (000) |
Credit Rating (Moody’s/S&P) |
Value | ||||||||||||
VARIABLE RATE NOTES (b)(c)(d)–2.3% |
||||||||||||||
Florida–0.3% | ||||||||||||||
$2,554 | State Turnpike Auth., 8.26%, 7/1/31, Ser. 1450 | Aa2/A+ | $2,868,270 | |||||||||||
New York–1.7% | ||||||||||||||
4,660 | Liberty Dev. Corp. Rev., 10.80%, 10/1/35, Ser. 1451 | Aa3/BBB+ | 8,024,287 | |||||||||||
6,000 | State Dormitory Auth., Univ. & College Improvement. Rev., | |||||||||||||
9.43%, 3/15/35, Ser. 1216 | NR/AAA | 7,606,800 | ||||||||||||
15,631,087 | ||||||||||||||
Ohio–0.3% |
||||||||||||||
2,075 | Ohio Air Quality Dev. Auth. (FGIC), 8.39%, 1/1/34, Ser. 1223 | Aaa/AAA | 2,329,499 | |||||||||||
Pennsylvania–0.0% | ||||||||||||||
350 | Washington Cnty. Redev. Auth., Tax Allocation, 5.45%, 7/1/35, Ser. A |
NR/NR | 357,546 | |||||||||||
Total Variable Rate Notes (cost–$18,777,308) | 21,186,402 | |||||||||||||
U.S. TREASURY BILLS (f)–0.3% |
||||||||||||||
2,775 | 4.95%-5.04%, 5/31/07-6/14/07 (cost–$2,747,135) | 2,747,135 | ||||||||||||
Total Investments (cost–$877,250,584)–100.0% | $935,285,319 | |||||||||||||
14 PIMCO Municipal Income Funds III Semi-Annual Report | 3.31.07 | See accompanying Notes to Financial Statements
Principal Amount (000) |
Credit Rating (Moody’s/S&P) |
Value | ||||||||||||
CALIFORNIA MUNICIPAL BONDS & NOTES–96.3% |
||||||||||||||
$1,000 | Alameda Public Financing Auth. Rev., 7.00%, 6/1/09 | NR/NR | $1,000,900 | |||||||||||
Assoc. of Bay Area Gov’t Finance Auth. Rev., Odd Fellows Home, | ||||||||||||||
3,200 | 5.20%, 11/15/22 | NR/A+ | 3,347,008 | |||||||||||
11,725 | 5.35%, 11/15/32 | NR/A+ | 12,326,727 | |||||||||||
Burbank Public Finance Auth. Rev., San Fernando Redev. Project, | ||||||||||||||
1,135 | 5.50%, 12/1/28 | NR/BBB | 1,181,717 | |||||||||||
1,000 | 5.50%, 12/1/33 | NR/BBB | 1,038,850 | |||||||||||
2,000 | Butte-Glenn Community College, GO, 5.00%, 8/1/26, Ser. A (MBIA) | Aaa/NR | 2,104,980 | |||||||||||
2,000 | Capistrano Unified School Dist., Community Fac. Dist., Special Tax, | |||||||||||||
6.00%, 9/1/32, (Pre-refunded @ $100, 9/1/13) (a) | NR/NR | 2,266,320 | ||||||||||||
500 | Carson Public Financing Auth., Special Assessment, 5.00%, 9/2/31, Ser. B | NR/NR | 501,995 | |||||||||||
1,000 | Cathedral City Public Financing Auth., Tax Allocation, | |||||||||||||
5.00%, 8/1/33, Ser. A (MBIA) | Aaa/AAA | 1,046,090 | ||||||||||||
1,150 | Ceres Redev. Agcy., Tax Allocation, 5.00%, 11/1/33 (MBIA) | Aaa/AAA | 1,216,297 | |||||||||||
Ceres Unified School Dist., GO (FGIC), | ||||||||||||||
2,825 | zero coupon, 8/1/28 | Aaa/AAA | 872,445 | |||||||||||
2,940 | zero coupon, 8/1/29 | Aaa/AAA | 854,952 | |||||||||||
Chula Vista Community Facs. Dist., Special Tax, | ||||||||||||||
2,000 | 5.125%, 9/1/36 | NR/NR | 2,038,040 | |||||||||||
1,600 | 5.75%, 9/1/33 | NR/NR | 1,655,168 | |||||||||||
675 | 6.15%, 9/1/26 | NR/NR | 720,346 | |||||||||||
1,620 | 6.20%, 9/1/33 | NR/NR | 1,730,678 | |||||||||||
1,000 | City of Carlsbad, 6.00%, 9/2/34 | NR/NR | 1,042,520 | |||||||||||
8,000 | Contra Costa Cnty. Public Financing Auth., Tax Allocation Rev., | |||||||||||||
5.625%, 8/1/33, Ser. A | NR/BBB | 8,440,560 | ||||||||||||
3,775 | Cucamonga School Dist., CP, 5.20%, 6/1/27 | NR/A– | 3,886,060 | |||||||||||
Educational Facs. Auth. Rev., | ||||||||||||||
2,500 | Institute of Technology, 5.00%, 10/1/32, Ser. A, (Pre-refunded @ $100, 10/1/11) (a) | Aaa/AAA | 2,651,400 | |||||||||||
2,455 | Loyola Marymount Univ., zero coupon, 10/1/34 (MBIA) | Aaa/NR | 724,274 | |||||||||||
5,000 | Pepperdine Univ., 5.00%, 9/1/33, Ser. A (FGIC) | Aaa/AAA | 5,213,650 | |||||||||||
2,195 | Elk Grove Unified School Dist., Community Facs. Dist. No. 1, Special Tax, 5.00%, 12/1/35 (MBIA) | Aaa/AAA | 2,309,842 | |||||||||||
500 | Franklin-McKinley School Dist., GO, 5.00%, 8/1/27, Ser. B, (Pre-refunded @ $100, 8/1/13) (FSA) (a) | Aaa/AAA | 539,845 | |||||||||||
Fremont Community Facs. Dist. No. 1, Special Tax, | ||||||||||||||
1,250 | 5.30%, 9/1/30 | NR/NR | 1,275,250 | |||||||||||
5,000 | 6.30%, 9/1/31 | NR/NR | 5,258,750 | |||||||||||
9,500 | Fresno School Unified Dist., GO, 6.00%, 8/1/26, Ser. A (MBIA) | Aaa/AAA | 11,533,095 | |||||||||||
4,380 | Glendale Electric Works Rev., 5.00%, 2/1/27 (MBIA) | Aaa/AAA | 4,579,859 | |||||||||||
3.31.07 | PIMCO Municipal Income Fund III Semi-Annual Report 15
Principal Amount (000) |
Credit Rating (Moody’s/S&P) |
Value | ||||||||||||
Golden State Tobacco Securitization Corp., Tobacco Settlement Rev., | ||||||||||||||
$6,000 | 5.00%, 6/1/33, Ser. A-1 | Baa3/BBB | $5,939,100 | |||||||||||
10,000 | 5.00%, 6/1/35, Ser. A (FGIC) (g) | Aaa/AAA | 10,497,900 | |||||||||||
9,000 | 5.00%, 6/1/45, Ser. A (AMBAC-TCRS) (g) | Aaa/AAA | 9,378,810 | |||||||||||
4,000 | 5.00%, 6/1/45, Ser. A (FGIC-TCRS) (g) | Aaa/AAA | 4,168,360 | |||||||||||
18,000 | 6.25%, 6/1/33, Ser. 2003-A-1 | Aaa/AAA | 19,897,200 | |||||||||||
38,490 | 6.75%, 6/1/39, Ser. 2003-A-1, (Pre-refunded @ $100, 6/1/13) (a) | Aaa/AAA | 44,899,740 | |||||||||||
Health Facs. Finance Auth. Rev., | ||||||||||||||
5,000 | Adventist Health System, 5.00%, 3/1/33 | NR/A | 5,120,400 | |||||||||||
6,000 | Cottage Health System, 5.00%, 11/1/33, Ser. B (MBIA) | Aaa/AAA | 6,234,660 | |||||||||||
5,000 | Kaiser Permanente, 5.00%, 10/1/18, Ser. B | A3/AAA | 5,138,600 | |||||||||||
Paradise VY Estates (CA Mtg. Ins.), | ||||||||||||||
2,000 | 5.125%, 1/1/22 | NR/A+ | 2,091,300 | |||||||||||
1,550 | 5.25%, 1/1/26 | NR/A+ | 1,624,106 | |||||||||||
2,000 | Sutter Health, 6.25%, 8/15/35, Ser. A | Aa3/AA– | 2,180,820 | |||||||||||
Infrastructure & Economic Dev. Bank Rev., | ||||||||||||||
7,750 | Bay Area Toll Bridges, 5.00%, 7/1/36, Ser. A, (Pre-refunded @ $100, 1/1/28) (AMBAC) (a) (g) | Aaa/AAA | 8,659,695 | |||||||||||
2,750 | Claremount Univ. Consortium, 5.25%, 10/1/33 | Aa3/NR | 2,916,567 | |||||||||||
Kaiser Assistance Corp., | ||||||||||||||
3,000 | 5.50%, 8/1/31, Ser. B | A2/A | 3,187,980 | |||||||||||
8,000 | 5.55%, 8/1/31, Ser. A | NR/A+ | 8,516,880 | |||||||||||
3,725 | La Mesa-Spring Valley School Dist., GO, 5.00%, 8/1/26, Ser. A, (Pre-refunded @ $100, 8/1/12) (FGIC) (a) | Aaa/AAA | 3,984,782 | |||||||||||
20 | Lancaster Financing Auth., Tax Allocation, 4.75%, 2/1/34 (MBIA) | Aaa/AAA | 20,617 | |||||||||||
825 | Lee Lake Water Dist. Community Facs. Dist. No. 2, Montecito Ranch, Special Tax, 6.125%, 9/1/32 | NR/NR | 855,393 | |||||||||||
5,000 | Long Beach Community College Dist., GO, 5.00%, 5/1/28, Ser. A, (Pre-refunded @ $100, 5/1/13) (MBIA) (a) | Aaa/AAA | 5,384,450 | |||||||||||
Los Angeles Department of Water & Power Rev., | ||||||||||||||
6,000 | 4.75%, 7/1/30 (FSA) (g) | Aaa/AAA | 6,176,940 | |||||||||||
500 | 4.75%, 7/1/36 (FSA) | Aaa/AAA | 513,000 | |||||||||||
10,000 | 5.00%, 7/1/30, Ser. A (g) | Aa3/AA– | 10,384,500 | |||||||||||
20,000 | 5.00%, 7/1/35 (FSA) (g) | Aaa/AAA | 21,146,600 | |||||||||||
Los Angeles Unified School Dist., GO (MBIA) (a), | ||||||||||||||
7,650 | 5.00%, 1/1/28, Ser. A, (Pre-refunded @ $100, 7/1/13) | Aaa/AAA | 8,243,487 | |||||||||||
3,000 | 5.125%, 1/1/27, Ser. E, (Pre-refunded @ $100, 7/1/12) | Aaa/AAA | 3,224,010 | |||||||||||
1,000 | Lynwood Unified School Dist., GO, 5.00%, 8/1/27, Ser. A (FSA) | Aaa/NR | 1,051,920 | |||||||||||
5,280 | Modesto Irrigation Dist., CP, 5.00%, 7/1/33, Ser. A (MBIA) | Aaa/AAA | 5,521,296 | |||||||||||
4,585 | Moreno Valley Unified School Dist. Community Facs. Dist., Special Tax, 5.20%, 9/1/36 | NR/NR | 4,683,073 | |||||||||||
2,180 | Murrieta Valley Unified School Dist., Special Tax, 6.40%, 9/1/24, (Pre-refunded @ $102, 9/1/09) (a) | NR/NR | 2,361,114 | |||||||||||
5,000 | Oakland, GO, 5.00%, 1/15/33, Ser. A (MBIA) | Aaa/AAA | 5,213,500 | |||||||||||
16 PIMCO Municipal Income Fund III Semi-Annual Report | 3.31.07
Principal Amount (000) |
Credit Rating (Moody’s/S&P) |
Value | ||||||||||||
Oakland Redev. Agcy., Tax Allocation, (Pre-refunded @ $100, 3/1/13) (a), | ||||||||||||||
$985 | 5.25%, 9/1/27 | NR/A | $1,070,774 | |||||||||||
1,545 | 5.25%, 9/1/33 | NR/A | 1,681,254 | |||||||||||
5,000 | Orange Cnty. Community Facs. Dist., Ladera Ranch, Special Tax, 5.55%, 8/15/33, Ser. A | NR/NR | 5,146,600 | |||||||||||
5,000 | Orange Cnty. Unified School Dist., CP, 4.75%, 6/1/29 (MBIA) | Aaa/AAA | 5,027,050 | |||||||||||
Orange Cnty. Water Dist. Rev., CP, Ser. B (MBIA), | ||||||||||||||
1,000 | 5.00%, 8/15/28 | Aaa/AAA | 1,040,250 | |||||||||||
5,525 | 5.00%, 8/15/34 (g) | Aaa/AAA | 5,750,530 | |||||||||||
5,000 | Pajaro Valley Unified School Dist., GO, 5.00%, 8/1/26, Ser. A, (Pre-refunded @ $100, 8/1/13) (FSA) (a) (g) | NR/NR | 5,398,450 | |||||||||||
2,000 | Palm Desert Financing Auth., Tax Allocation, 5.00%, 4/1/25, Ser. A (MBIA) | Aaa/AAA | 2,097,300 | |||||||||||
6,455 | Pasadena Rev., 5.00%, 6/1/33 (FGIC) (g) | NR/NR | 6,746,572 | |||||||||||
1,410 | Pomona Public Financing Auth. Rev., 5.00%, 12/1/37, Ser. AF (MBIA) | Aaa/AAA | 1,464,764 | |||||||||||
Poway Unified School Dist., Community Facs. Dist. No. 6, Special Tax, | ||||||||||||||
3,650 | 5.125%, 9/1/28 | NR/NR | 3,738,732 | |||||||||||
1,285 | 6.05%, 9/1/25 | NR/NR | 1,362,203 | |||||||||||
2,100 | 6.125%, 9/1/33 | NR/NR | 2,223,186 | |||||||||||
5,000 | Riverside, CP, 5.00%, 9/1/33 (AMBAC) | Aaa/AAA | 5,205,400 | |||||||||||
500 | Rocklin Unified School Dist. Community Facs., Special Tax, 5.00%, 9/1/29 (MBIA) | Aaa/AAA | 522,825 | |||||||||||
7,680 | Rowland Unified School Dist., GO, 5.00%, 8/1/28, Ser. B (FSA) | Aaa/AAA | 8,052,480 | |||||||||||
1,400 | Sacramento City Financing Auth. Rev., North Natomas CFD No. 2, 6.25%, 9/1/23, Ser. A | NR/NR | 1,445,318 | |||||||||||
10,820 | Sacramento Cnty. Water Financing Auth. Rev., 5.00%, 6/1/34, (Pre-refunded @ 100, 6/1/13) (AMBAC) (a) (g) | NR/NR | 11,278,876 | |||||||||||
8,000 | Sacramento Muni Utility Dist., Electric Rev., 5.00%, 8/15/33, Ser. R (MBIA) (g) | Aaa/AAA | 8,368,320 | |||||||||||
12,075 | San Diego Community College Dist., GO, 5.00%, 5/1/28, Ser. A (FSA) (g) | Aaa/AAA | 12,640,593 | |||||||||||
San Diego Community Facs. Dist. No. 3, Special Tax, Ser. A, | ||||||||||||||
890 | 5.60%, 9/1/21 | NR/NR | 906,234 | |||||||||||
580 | 5.70%, 9/1/26 | NR/NR | 590,573 | |||||||||||
1,700 | 5.75%, 9/1/36 | NR/NR | 1,733,252 | |||||||||||
San Diego Unified School Dist., GO (FSA), | ||||||||||||||
480 | 5.00%, 7/1/26, Ser. C | Aaa/AAA | 514,834 | |||||||||||
11,000 | 5.00%, 7/1/26, Ser. E | Aaa/AAA | 11,796,180 | |||||||||||
8,425 | 5.00%, 7/1/28, Ser. E | Aaa/AAA | 9,034,802 | |||||||||||
1,500 | San Diego Univ. Foundation Auxiliary Organization, Rev., 5.00%, 3/1/27, Ser. A (MBIA) | Aaa/AAA | 1,555,365 | |||||||||||
3,000 | San Jose, Libraries & Parks, GO, 5.125%, 9/1/31 | Aa1/AA+ | 3,128,910 | |||||||||||
3.31.07 | PIMCO Municipal Income Fund III Semi-Annual Report 17
Principal Amount (000) |
Credit Rating (Moody’s/S&P) |
Value | ||||||||||||
$15,700 | San Marcos Public Facs. Auth., Tax Allocation, 5.00%, 8/1/33, Ser. A (FGIC) (g) | NR/NR | $16,381,537 | |||||||||||
Santa Ana Unified School Dist., GO, Ser. B (FGIC), | ||||||||||||||
2,515 | zero coupon, 8/1/26 | Aaa/AAA | 1,072,346 | |||||||||||
3,520 | zero coupon, 8/1/28 | Aaa/AAA | 1,368,400 | |||||||||||
2,500 | zero coupon, 8/1/30 | Aaa/AAA | 885,425 | |||||||||||
3,780 | zero coupon, 8/1/31 | Aaa/AAA | 1,277,451 | |||||||||||
3,770 | zero coupon, 8/1/32 | Aaa/AAA | 1,215,486 | |||||||||||
1,250 | Santa Clara Valley Transportation Auth., Sales Tax Rev., 5.00%, 6/1/26, Ser. A, (Pre-refunded @ $100, 6/1/11) (MBIA) (a) | Aaa/AAA | 1,320,425 | |||||||||||
Santa Margarita Water Dist., Community Facs. Dist. No. 99-1, Special Tax, | ||||||||||||||
2,500 | 6.25%, 9/1/29 | NR/NR | 2,656,425 | |||||||||||
3,470 | Escrow, 6.25%, 9/1/29 | NR/NR | 3,687,118 | |||||||||||
3,550 | Santa Monica Community College Dist., GO, zero coupon, 8/1/27, Ser. C (MBIA) | Aaa/AAA | 1,324,789 | |||||||||||
1,205 | Sequoia Union High School Dist., GO, 5.00%, 7/1/23, (Pre-refunded @ $102, 7/1/11) (MBIA) (a) | Aaa/NR | 1,294,929 | |||||||||||
4,250 | Sonoma Cnty. Jr. College Dist., GO, 5.00%, 8/1/27, Ser. A, (Pre-refunded @ $100, 8/1/13) (FSA) (a) | Aaa/AAA | 4,588,682 | |||||||||||
1,000 | Sonoma Cnty. Water Agcy., Water Rev., 5.00%, 7/1/32, Ser. A (MBIA) | Aaa/AAA | 1,042,390 | |||||||||||
South Tahoe JT Powers Financing Auth. Rev., | ||||||||||||||
2,500 | 5.125%, 10/1/09 | NR/NR | 2,519,000 | |||||||||||
4,425 | 5.45%, 10/1/33 | NR/BBB | 4,606,292 | |||||||||||
Southern CA Public Power Auth., Power Project Rev., Magnolia Power, | ||||||||||||||
15,010 | 5.00%, 7/1/33, Ser. A (AMBAC) (g) | Aaa/AAA | 15,695,957 | |||||||||||
12,200 | 5.00%, 7/1/33, Ser. 2003-A-1 (AMBAC) | Aaa/AAA | 12,757,540 | |||||||||||
4,095 | State Department Veteran Affairs Home Purchase Rev., | |||||||||||||
5.35%, 12/1/27, Ser. A (AMBAC) | Aaa/AAA | 4,353,968 | ||||||||||||
State Public Works Board Lease Rev., | ||||||||||||||
5,385 | CA State Univ., 5.00%, 10/1/19 | A1/A | 5,518,494 | |||||||||||
1,105 | Patton, 5.375%, 4/1/28 | A2/A | 1,168,350 | |||||||||||
4,600 | Univ. CA, M.I.N.D. Inst., 5.00%, 4/1/28, Ser. A | Aa2/AA– | 4,785,748 | |||||||||||
3,505 | Statewide Community Dev. Auth., Internext Group, CP, 5.375%, 4/1/30 | NR/BBB | 3,558,346 | |||||||||||
Statewide Community Dev. Auth. Rev., | ||||||||||||||
2,500 | Berkeley Montessori School, 7.25%, 10/1/33 | NR/NR | 2,642,750 | |||||||||||
Health Fac., | ||||||||||||||
7,300 | Jewish Home, 5.50%, 11/15/33 (CA St. Mtg.) | NR/A+ | 7,838,375 | |||||||||||
15,000 | Memorial Health Services, 5.50%, 10/1/33, Ser. A | A3/A+ | 15,917,400 | |||||||||||
10,000 | Sutter Health, 5.50%, 8/15/34, Ser. B | Aa3/AA– | 10,642,700 | |||||||||||
1,795 | Sunnyvale Financing Auth., Water & Wastewater Rev., 5.00%, 10/1/26 (AMBAC) | Aaa/AAA | 1,860,661 | |||||||||||
2,000 | Tamalpais Union High School Dist., GO, 5.00%, 8/1/26 (MBIA) | Aaa/AAA | 2,085,220 | |||||||||||
18 PIMCO Municipal Income Fund III Semi-Annual Report | 3.31.07
Principal Amount (000) |
Credit Rating (Moody’s/S&P) |
Value | ||||||||||||
$2,000 | Temecula Public Financing Auth., Crowne Hill, Special Tax, 6.00%, 9/1/33, Ser. A | NR/NR | $2,085,700 | |||||||||||
Tobacco Securitization Agcy. Rev., Alameda Cnty. | ||||||||||||||
8,100 | 5.875%, 6/1/35 | Baa3/NR | 8,607,060 | |||||||||||
7,000 | 6.00%, 6/1/42 | Baa3/NR | 7,494,690 | |||||||||||
5,000 | Gold Cnty., zero coupon, 6/1/33 | NR/BBB | 1,127,400 | |||||||||||
2,000 | Kern Cnty., 6.125%, 6/1/43, Ser. A | NR/BBB | 2,147,980 | |||||||||||
5,000 | Tobacco Securitization Auth. of Southern California Rev., 5.00%, 6/1/37, Ser. A1 | Baa3/BBB | 4,976,500 | |||||||||||
2,950 | Torrance Medical Center Rev., 5.50%, 6/1/31, Ser. A Univ. Rev. (FSA) (g), | A1/A+ | 3,132,340 | |||||||||||
5,500 | 4.75%, 5/15/35, Ser. F | NR/NR | 5,626,390 | |||||||||||
21,125 | 5.00%, 9/1/33, Ser. Q, (Pre-refunded @ 101, 9/1/11) (a) | NR/NR | 22,562,979 | |||||||||||
2,355 | 5.00%, 9/1/34, Ser. Q, (Pre-refunded @ 101, 9/1/11) (a) | NR/NR | 2,515,305 | |||||||||||
4,000 | Vernon Electric System Rev., Malburg Generating Station, | |||||||||||||
5.50%, 4/1/33, (Pre-refunded @ $100, 4/1/08) (a) | Aaa/NR | 4,078,480 | ||||||||||||
1,000 | West Basin Municipal Water Dist. Rev., CP, 5.00%, 8/1/30, Ser. A (MBIA) | Aaa/AAA | 1,047,370 | |||||||||||
2,500 | William S. Hart Union High School Dist., Special Tax, 6.00%, 9/1/33 | NR/NR | 2,647,150 | |||||||||||
2,750 | Woodland Finance Auth., Lease Rev., 5.00%, 3/1/32 (XLCA) | Aaa/AAA | 2,885,300 | |||||||||||
Total California Municipal Bonds & Notes (cost–$585,144,433) | 625,096,893 | |||||||||||||
OTHER MUNICIPAL BONDS & NOTES–1.6% |
||||||||||||||
New York–0.5% |
||||||||||||||
2,500 | State Dormitory Auth. Rev., Hospital, 6.25%, 8/15/15 (FHA) | Aa2/AAA | 2,794,550 | |||||||||||
Puerto Rico–1.1% |
||||||||||||||
1,500 | Electric Power Auth., Power Rev., 5.125%, 7/1/29, Ser. NN | A3/BBB+ | 1,578,750 | |||||||||||
Public Building Auth. Rev., | ||||||||||||||
4,420 | 5.00%, 7/1/36, Ser. I (GTD) | Baa3/BBB | 4,585,397 | |||||||||||
290 | 5.25%, 7/1/36, Ser. D | Baa3/BBB | 302,925 | |||||||||||
790 | 5.25%, 7/1/36, Ser. D, (Pre-refunded @ $100, 7/1/12) (a) | Baa3/BBB | 848,981 | |||||||||||
7,316,053 | ||||||||||||||
Total Other Municipal Bonds & Notes (cost–$9,444,323) | 10,110,603 | |||||||||||||
CALIFORNIA VARIABLE RATE NOTES (d)–1.2% |
||||||||||||||
Golden State Tobacco Securitization Corp., Tobacco Settlement Rev., | ||||||||||||||
2,000 | 9.777%, 6/1/35 (FGIC) | Aaa/AAA | 2,497,900 | |||||||||||
Los Angeles Unified School Dist., GO (MBIA) (c), | ||||||||||||||
1,745 | 8.488%, 1/1/23 | NR/NR | 2,004,621 | |||||||||||
2,090 | 11.579%, 1/1/11 | NR/NR | 3,172,181 | |||||||||||
Total California Variable Rate Notes (cost–$7,231,057) | 7,674,702 | |||||||||||||
3.31.07 | PIMCO Municipal Income Fund III Semi-Annual Report 19
Principal Amount (000) |
Credit Rating (Moody’s/S&P) |
Value | ||||||||||||
OTHER VARIABLE RATE NOTES (d)–0.6% |
||||||||||||||
Puerto Rico–0.6% |
||||||||||||||
$3,800 | Public Finance Corp. Rev., 5.75%, 8/1/27, Ser. A (cost–$4,007,563) | Ba1/BBB– | $4,073,448 | |||||||||||
U.S. TREASURY BILLS (f)–0.3% |
||||||||||||||
2,145 | 4.95%-5.04%, 5/31/07-6/14/07 (cost–$2,123,516) | 2,123,516 | ||||||||||||
Total Investments (cost–$607,950,892)–100.0% | $649,079,162 | |||||||||||||
20 PIMCO Municipal Income Fund III Semi-Annual Report | 3.31.07 | See accompanying Notes to Financial Statements
Principal Amount (000) |
Credit Ratings (Moody’s/S&P) |
Value | ||||||||||||
NEW YORK MUNICIPAL BONDS & NOTES–89.5% |
||||||||||||||
$ 750 | Amherst Industrial Dev. Agcy. Rev., 5.20%, 1/1/40 | NR/NR | $ 757,822 | |||||||||||
400 | Dutchess Cnty. Industrial Dev. Agcy. Rev., 5.25%, 1/1/37 | NR/NR | 402,576 | |||||||||||
East Rochester Housing Auth. Rev., | ||||||||||||||
2,800 | St. Mary’s Residence Project, 5.375%, 12/20/22 (GNMA) | NR/AAA | 3,037,580 | |||||||||||
1,400 | Woodland Project, 5.50%, 8/1/33 | NR/NR | 1,429,484 | |||||||||||
1,300 | Erie Cnty. Industrial Dev. Agcy., Orchard Park Rev., 6.00%, 11/15/36 | NR/NR | 1,389,999 | |||||||||||
1,000 | Hudson Yards Infrastructure Corp. Rev., 4.50%, 2/15/47, Ser A. (MBIA) |
AAA/AAA | 987,160 | |||||||||||
Liberty Dev. Corp. Rev., Goldman Sachs Headquarters, | ||||||||||||||
1,060 | 5.25%, 10/1/35 | Aa3/AA− | 1,213,053 | |||||||||||
2,990 | 5.25%, 10/1/35 (g) | Aa3/AA− | 3,421,726 | |||||||||||
1,000 | Long Island Power Auth., Electric System Rev., 5.00%, 9/1/27, Ser. C |
A3/A− | 1,043,360 | |||||||||||
Metropolitan Transportation Auth. Rev., | ||||||||||||||
5,000 | 5.00%, 11/15/31, Ser. F (MBIA) | Aaa/AAA | 5,220,850 | |||||||||||
6,220 | 5.00%, 11/15/32, Ser. A (FGIC)(g) | Aaa/AAA | 6,515,450 | |||||||||||
1,000 | Monroe Tobacco Asset Securitization Corp., Tobacco Settlement Rev., 6.375%, 6/1/35, (Pre-refunded @ $101, 6/1/10) (a) | Aaa/AAA | 1,091,960 | |||||||||||
2,190 | Mortgage Agcy. Rev., 4.75%, 10/1/27, Ser. 128 (g) | Aa1/NR | 2,250,685 | |||||||||||
2,000 | Nassau Cnty. Tobacco Settlement Corp. Rev., 6.60%, 7/15/39, (Pre-refunded @ $101, 7/15/09) (a) | Aaa/AAA | 2,150,820 | |||||||||||
New York City, GO, Ser. I, | ||||||||||||||
7,195 | 5.00%, 3/1/33 | A1/AA− | 7,451,214 | |||||||||||
465 | 5.375%, 3/1/27 | A1/AA− | 496,820 | |||||||||||
1,285 | 5.375%, 3/1/27, (Pre-refunded @ $100, 3/1/13) (a) | A1/AA− | 1,401,806 | |||||||||||
5,000 | New York City Municipal Water Finance Auth., Water & Sewer System Rev., 5.00%, 6/15/32, Ser. A | Aa2/AA+ | 5,158,000 | |||||||||||
5,000 | New York City Trust for Cultural Res. Rev., 5.00%, 2/1/34 (FGIC)(g) | NR/NR | 5,256,150 | |||||||||||
2,995 | New York Cntys. Tobacco Settlement Trust Rev., 5.625%, 6/1/35 | Ba1/BBB | 3,114,830 | |||||||||||
1,000 | Niagara Falls Public Water Auth., Water & Sewer System Rev., 5.00%, 7/15/34, Ser. A (MBIA) | Aaa/AAA | 1,047,640 | |||||||||||
1,855 | Sachem Central School Dist. of Holbrook, GO, 5.00%, 6/15/30 (MBIA) | Aaa/AAA | 1,994,811 | |||||||||||
State Dormitory Auth. Rev., | ||||||||||||||
1,400 | Catholic Health of Long Island, 5.10%, 7/1/34 | Baa1/BBB | 1,443,470 | |||||||||||
2,250 | Jewish Board Family & Children, 5.00%, 7/1/33 (AMBAC) | Aaa/AAA | 2,356,605 | |||||||||||
2,000 | Kaleida Health Hospital, 5.05%, 2/15/25 (FHA) | NR/AAA | 2,081,000 | |||||||||||
3,250 | Lenox Hill Hospital, 5.50%, 7/1/30 | Ba2/NR | 3,403,108 | |||||||||||
Long Island Univ., Ser. A (Radian), | ||||||||||||||
2,040 | 5.00%, 9/1/23 | Aa3/AA | 2,112,155 | |||||||||||
4,000 | 5.00%, 9/1/32 | Aa3/AA | 4,147,360 | |||||||||||
3,000 | Lutheran Medical Hospital, 5.00%, 8/1/31 (FHA-MBIA) | Aaa/AAA | 3,129,000 | |||||||||||
3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 21
Principal Amount (000) |
Credit Ratings (Moody’s/S&P) |
Value | ||||||||||||
Mount St. Mary College (Radian), | ||||||||||||||
$ 2,000 | 5.00%, 7/1/27 | NR/AA | $ 2,091,400 | |||||||||||
2,000 | 5.00%, 7/1/32 | NR/AA | 2,083,580 | |||||||||||
1,000 | New York Univ., 5.00%, 7/1/31, Ser. 2 (AMBAC) | Aaa/AAA | 1,036,230 | |||||||||||
6,150 | North General Hospital, 5.00%, 2/15/25 | NR/AA− | 6,396,554 | |||||||||||
1,000 | North Shore L.I. Jewish Group, 5.50%, 5/1/33 | A3/NR | 1,066,830 | |||||||||||
1,000 | NY & Presbyterian Hospital Rev., 4.75%, 8/1/27 (AMBAC-FHA) | Aaa/AAA | 1,011,260 | |||||||||||
7,000 | Rockefeller Univ., Ser. A1, 5.00%, 7/1/32 (g) | Aaa/AAA | 7,337,750 | |||||||||||
1,000 | School Dist. Financing, 5.00%, 10/1/30, Ser. D (MBIA) | Aaa/AAA | 1,047,860 | |||||||||||
1,250 | Skidmore College, 5.00%, 7/1/28 (FGIC) | Aaa/NR | 1,324,612 | |||||||||||
2,500 | Sloan-Kettering Center Memorial, 5.00%, 7/1/34, Ser. 1 | Aa2/AA | 2,608,650 | |||||||||||
3,740 | St. Barnabas Hospital, 5.00%, 2/1/31, Ser. A (AMBAC-FHA) | Aaa/AAA | 3,888,478 | |||||||||||
3,600 | State Personal Income Tax, | |||||||||||||
5.00%, 3/15/32, (Pre-refunded @ $100, 3/15/13) (a) | Aa3/AAA | 3,861,612 | ||||||||||||
1,250 | Student Housing Corp., 5.125%, 7/1/34 (FGIC) | Aaa/AAA | 1,335,150 | |||||||||||
1,500 | Teachers College, 5.00%, 7/1/32 (MBIA) | Aaa/NR | 1,568,040 | |||||||||||
2,500 | Winthrop-Nassau Univ., 5.75%, 7/1/28 | Baa1/NR | 2,687,925 | |||||||||||
620 | Winthrop Univ. Hospital Assoc., 5.50%, 7/1/32, Ser. A | Baa1/NR | 654,745 | |||||||||||
2,000 | Yeshiva Univ., 5.125%, 7/1/34, (AMBAC) | Aaa/NR | 2,136,240 | |||||||||||
State Environmental Facs. Corp. Rev. (g), | ||||||||||||||
5,575 | 4.75%, 7/15/28 | NR/NR | 5,764,160 | |||||||||||
8,855 | 4.75%, 7/15/33 | NR/NR | 9,130,745 | |||||||||||
7,375 | State Housing Finance Agcy., Economic Dev. Rev., 5.00%, 3/15/33, Ser. A, (Pre-refunded @ $100, 3/15/13) (a)(g) |
NR/NR | 7,910,941 | |||||||||||
1,900 | State Urban Dev. Corp., Personal Income Tax Rev., 5.00%, 3/15/33, Ser. C-1, (Pre-refunded @ $100, 3/15/13) (a) |
Aa3/AAA | 2,038,073 | |||||||||||
4,000 | Triborough Bridge & Tunnel Auth. Rev., 5.00%, 11/15/32 (MBIA)(g) | Aaa/AAA | 4,193,040 | |||||||||||
2,000 | Warren & Washington Cntys. Industrial Dev. Agcy. Fac. Rev., Glens Falls Hospital, 5.00%, 12/1/35, Ser. A (FSA) | Aaa/AAA | 2,091,980 | |||||||||||
1,250 | Westchester Cnty. Industrial Dev. Agcy. Continuing Care Retirement Rev., Kendal on Hudson, 6.50%, 1/1/34 | NR/NR | 1,339,238 | |||||||||||
Total New York Municipal Bonds & Notes (cost–$142,718,246) | 150,111,587 | |||||||||||||
OTHER MUNICIPAL BONDS & NOTES–9.2% |
||||||||||||||
California–3.9% |
||||||||||||||
5,560 | Golden State Tobacco Securitization Corp., Tobacco Settlement Rev., 6.75%, 6/1/39, Ser. 2003-A-1, (Pre-refunded @ $100, 6/1/13) (a) | Aaa/AAA | 6,485,907 | |||||||||||
District of Columbia–0.1% |
||||||||||||||
175 | Tobacco Settlement Financing Corp. Rev., 6.50%, 5/15/33 | Baa3/BBB | 208,702 | |||||||||||
Puerto Rico–4.5% |
||||||||||||||
Children’s Trust Fund, Tobacco Settlement Rev., | ||||||||||||||
1,700 | 5.50%, 5/15/39 | Baa3/BBB | 1,781,549 | |||||||||||
580 | 5.625%, 5/15/43 | Baa3/BBB | 610,293 | |||||||||||
22 PIMCO Municipal Income Funds III Semi-Annual Report | 3.31.07
Principal Amount (000) |
Credit Ratings (Moody’s/S&P) |
Value | ||||||||||||
$1,000 | Electric Power Auth., Power Rev., 5.125%, 7/1/29, Ser. NN | A3/BBB+ | $1,052,500 | |||||||||||
4,000 | Public Building Auth. Rev., Gov’t Facs., 5.00%, 7/1/36, Ser. I (GTD) |
Baa3/BBB | 4,149,680 | |||||||||||
7,594,022 | ||||||||||||||
Rhode Island–0.3% |
||||||||||||||
500 | Tobacco Settlement Financing Corp. Rev., 6.125%, 6/1/32, Ser. A | Baa3/BBB | 534,625 | |||||||||||
South Carolina–0.3% |
||||||||||||||
370 | Tobacco Settlement Rev. Management Auth., 6.375%, 5/15/30, Ser. B | Baa3/BBB | 429,707 | |||||||||||
Washington–0.1% |
||||||||||||||
135 | Tobacco Settlement Auth., Tobacco Settlement Rev., 6.625%, 6/1/32 | Baa3/BBB | 148,519 | |||||||||||
Total Other Municipal Bonds & Notes (cost–$12,669,711) | 15,401,482 | |||||||||||||
NEW YORK VARIABLE RATE NOTES (d)–0.5% |
||||||||||||||
700 | State Urban Dev. Corp. Rev., 9.697%, 3/15/35 (cost–$766,259) | NR/AAA | 875,385 | |||||||||||
NEW YORK VARIABLE RATE DEMAND NOTES (d)(e)–0.5% |
||||||||||||||
New York City, GO (MBIA), |
||||||||||||||
400 | 3.76%, 4/2/07, Ser. B | VMIG1/A-1+ | 400,000 | |||||||||||
400 | 3.76%, 4/2/07, Ser. H | VMIG1/A-1 | 400,000 | |||||||||||
Total New York Variable Rate Demand Notes (cost–$800,000) | 800,000 | |||||||||||||
U.S. TREASURY BILLS (f)–0.3% |
||||||||||||||
510 | 4.95%-5.04%, 5/31/07-6/14/07 (cost–$504,931) | 504,931 | ||||||||||||
Total Investments (cost–$157,459,147)–100.0% | $167,693,385 | |||||||||||||
3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 23
Notes to Schedule of Investments:
(a) | 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). |
(b) | 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. |
(c) | Inverse Floater – The interest rate shown bears an inverse relationship to the interest rate on another security or the value of an index. |
(d) | 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 March 31, 2007. |
(e) | Maturity date shown is date of next put. |
(f) | All or partial amount segregated as collateral for futures contracts. |
(g) | 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 Funds acquired the residual interest certificates. These securities serve as collateral in a financing transaction. |
Glossary
AMBAC – insured by American Municipal Bond Assurance Corp. |
CA Mtg. Ins. – insured by California Mortgage Insurance |
CA St. Mtg. – insured by California State Mortgage |
CP – Certificates of Participation |
FGIC – insured by Financial Guaranty Insurance Co. |
FHA – insured by Federal Housing Administration |
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. |
TCRS – Temporary Custodian Receipts |
XLCA – insured by XL Capital Assurance |
24 PIMCO Municipal Income Funds III Semi-Annual Report | 3.31.07 | See accompanying Notes to Financial Statements
Municipal III | California Municipal III |
New York Municipal III |
||||||||||||
Assets: | ||||||||||||||
Investments, at value (cost-$877,250,584, $607,950,892 and $157,459,147, respectively) | $ | 935,285,319 | $ | 649,079,163 | $ | 167,693,385 | ||||||||
Cash | — | — | 1,662,754 | |||||||||||
Interest receivable | 12,508,079 | 8,281,485 | 1,908,818 | |||||||||||
Receivable for variation margin on futures contracts | 663,100 | 443,200 | 110,937 | |||||||||||
Prepaid expenses and other assets | 88,167 | 493,154 | 60,060 | |||||||||||
Total Assets | 948,544,665 | 658,297,002 | 171,435,954 | |||||||||||
Liabilities: | ||||||||||||||
Payable for floating rate notes | 192,396,268 | 144,258,275 | 38,823,917 | |||||||||||
Payable to custodian | 7,006,768 | 3,688,328 | — | |||||||||||
Dividends payable to common and preferred shareholders | 2,299,117 | 1,618,635 | 389,101 | |||||||||||
Interest payable | 1,658,710 | 1,174,038 | 375,099 | |||||||||||
Payable for investments purchased | — | — | 401,132 | |||||||||||
Investment management fees payable | 316,963 | 216,092 | 55,655 | |||||||||||
Accrued expenses and other payables | 479,500 | 48,678 | 668,893 | |||||||||||
Total Liabilities | 204,157,326 | 151,004,046 | 40,713,797 | |||||||||||
Preferred shares ($0.00001 par value and $25,000 net asset and liquidation value per share applicable to an aggregate of 10,800, 7,400 and 1,880 shares issued and outstanding, respectively) | 270,000,000 | 185,000,000 | 47,000,000 | |||||||||||
Net Assets Applicable to Common Shareholders | $ | 474,387,339 | $ | 322,292,956 | $ | 83,722,157 | ||||||||
Composition of Net Assets Applicable to Common Shareholders: | ||||||||||||||
Common Stock: | ||||||||||||||
Par value ($0.00001 per share) | $ | 314 | $ | 215 | $ | 55 | ||||||||
Paid-in-capital in excess of par | 446,242,772 | 305,331,408 | 78,106,209 | |||||||||||
Dividends in excess of net investment income | (845,883 | ) | (1,259,054 | ) | (365,022 | ) | ||||||||
Accumulated net realized loss on investments | (33,706,085 | ) | (25,008,410 | ) | (5,512,132 | ) | ||||||||
Net unrealized appreciation of investments and futures contracts | 62,696,221 | 43,228,797 | 11,493,047 | |||||||||||
Net Assets Applicable to Common Shareholders | $ | 474,387,339 | $ | 322,292,956 | $ | 83,722,157 | ||||||||
Common Shares Outstanding | 31,415,801 | 21,499,599 | 5,504,777 | |||||||||||
Net Asset Value Per Common Share | $ | 15.10 | $ | 14.99 | $ | 15.21 | ||||||||
See accompanying Notes to Financial Statements | 3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 25
Municipal III | California Municipal III |
New York Municipal III |
||||||||||||
Investment Income: | ||||||||||||||
Interest | $ | 24,145,537 | $ | 16,250,066 | $ | 4,173,364 | ||||||||
Expenses: | ||||||||||||||
Interest expense | 3,184,247 | 2,908,197 | 785,538 | |||||||||||
Investment management fees | 2,408,039 | 1,643,728 | 423,730 | |||||||||||
Auction agent fees and commissions | 348,015 | 235,294 | 61,196 | |||||||||||
Custodian and accounting agent fees | 68,257 | 128,973 | 83,623 | |||||||||||
Shareholder Communications | 46,085 | 22,929 | 3,730 | |||||||||||
Audit and tax services | 30,094 | 25,218 | 17,398 | |||||||||||
Trustees’ fees and expenses | 27,998 | 18,002 | 11,718 | |||||||||||
Transfer agent fees | 16,415 | 14,909 | 15,824 | |||||||||||
New York Stock Exchange listing fees | 10,835 | 8,768 | 9,152 | |||||||||||
Insurance expense | 8,694 | 5,707 | 2,541 | |||||||||||
Legal fees | 8,444 | 5,936 | 1,563 | |||||||||||
Investor relations | 4,636 | 3,548 | 1,517 | |||||||||||
Miscellaneous | 10,234 | 8,833 | 10,932 | |||||||||||
Total expenses | 6,171,993 | 5,030,042 | 1,428,462 | |||||||||||
Less: investment management fees waived | (555,702 | ) | (379,322 | ) | (97,784 | ) | ||||||||
custody credits earned on cash balances | (43,786 | ) | (34,263 | ) | (13,911 | ) | ||||||||
Net expenses | 5,572,505 | 4,616,457 | 1,316,767 | |||||||||||
Net Investment Income | 18,573,032 | 11,633,609 | 2,856,597 | |||||||||||
Realized and Change In Unrealized Gain (Loss): | ||||||||||||||
Net realized gain (loss) on: | ||||||||||||||
Investments | 549,706 | 263,764 | 313,270 | |||||||||||
Futures contracts | (4,032,595 | ) | (2,741,616 | ) | (669,925 | ) | ||||||||
Options written | 218,951 | 165,849 | 32,355 | |||||||||||
Net change in unrealized appreciation of: | ||||||||||||||
Investments | 1,894,038 | 2,291,390 | 8,023 | |||||||||||
Futures contracts | 6,814,423 | 4,383,667 | 1,117,062 | |||||||||||
Options written | 243,573 | 212,874 | 31,202 | |||||||||||
Net realized and change in unrealized gain on investments, futures contracts and options written | 5,688,096 | 4,575,928 | 831,987 | |||||||||||
Net Increase in Net Assets Resulting from Investment Operations |
24,261,128 | 16,209,537 | 3,688,584 | |||||||||||
Dividends on Preferred Shares from Net Investment Income |
(4,661,903 | ) | (3,015,447 | ) | (780,799 | ) | ||||||||
Net Increase in Net Assets Applicable to Common Shareholders Resulting from Investment Operations | $ | 19,599,225 | $ | 13,194,090 | $ | 2,907,785 | ||||||||
26 PIMCO Municipal Income Funds III Semi-Annual Report | 3.31.07 | See accompanying Notes to Financial Statements
3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 27
Municipal III | ||||||||||
Six Months ended March 31, 2007 (unaudited) |
Year ended September 30, 2006 |
|||||||||
Investment Operations: | ||||||||||
Net investment income | $ | 18,573,032 | $ | 35,260,941 | ||||||
Net realized gain (loss) on investments, futures contracts and options written | (3,263,938 | ) | 6,330,979 | |||||||
Net change in unrealized appreciation/depreciation of investments, futures contracts and options written | 8,952,034 | 1,391,010 | ||||||||
Net increase in net assets resulting from investment operations | 24,261,128 | 42,982,930 | ||||||||
Dividends on Preferred Shares from Net Investment Income | (4,661,903 | ) | (8,494,652 | ) | ||||||
Net increase in net assets applicable to common shareholders resulting from investment operations |
19,599,225 | 34,488,278 | ||||||||
Dividends on Common Shareholders from Net Investment Income | (13,177,110 | ) | (27,885,144 | ) | ||||||
Capital Share Transactions: | ||||||||||
Reinvestment of dividends | 1,453,888 | 2,420,836 | ||||||||
Total increase in net assets applicable to common shareholders | 6,422,115 | 9,023,970 | ||||||||
Net Assets Applicable to Common Shareholders: | ||||||||||
Beginning of period | 466,511,336 | 457,487,366 | ||||||||
End of period (including dividends in excess of net investment income of $(845,883) and $(1,579,902); $(1,259,054) and $(17,465); $(365,022) and $(181,080); respectively) | $ | 472,933,451 | $ | 466,511,336 | ||||||
Common Shares Issued in Reinvestment of Dividends | 96,094 | 164,906 | ||||||||
28 PIMCO Municipal Income Funds III Semi-Annual Report | 3.31.07 | See accompanying Notes to Financial Statements
California Municipal III | New York Municipal III | |||||||||||||
Six Months ended March 31, 2007 (unaudited) |
Year ended September 30, 2006 |
Six Months ended March 31, 2007 (unaudited) |
Year ended September 30, 2006 |
|||||||||||
$11,633,609 | $23,693,004 | $2,856,597 | $5,883,175 | |||||||||||
(2,312,003) | 3,900,907 | (324,300) | 1,238,948 | |||||||||||
6,887,931 | (1,057,635) | 1,156,287 | (528,825) | |||||||||||
16,209,537 | 26,536,276 | 3,688,584 | 6,593,298 | |||||||||||
(3,015,447) | (5,334,873) | (780,799) | (1,423,170) | |||||||||||
13,194,090 | 21,201,403 | 2,907,785 | 5,170,128 | |||||||||||
(9,859,751) | (20,551,567) | (2,259,740) | (4,819,623) | |||||||||||
722,333 | 1,623,866 | 238,024 | 442,975 | |||||||||||
3,334,339 | 2,273,702 | 648,045 | 793,480 | |||||||||||
318,236,284 | 315,962,582 | 82,836,088 | 82,042,608 | |||||||||||
$321,570,623 | $318,236,284 | $83,484,133 | $82,836,088 | |||||||||||
44,589 | 108,206 | 15,376 | 29,518 | |||||||||||
See accompanying Notes to Financial Statements | 3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 29
Cash Flows provided by Operating Activities: | ||||||
Purchases of long-term investments | $(22,628,810) | |||||
Proceeds from sales of long-term investments | 17,110,600 | |||||
Interest received | 19,410,557 | |||||
Net cash provided by options written | 129,774 | |||||
Operating expenses paid | (2,410,330) | |||||
Net cash provided by futures transactions | 2,066,778 | |||||
Net decrease in short-term investments | 41,395 | |||||
Net cash provided by operating activities | 13,719,964 | |||||
Cash Flows from Financing Activities: | ||||||
Custody overdraft | 7,006,768 | |||||
Cash dividends paid (excluding reinvestment of dividends of $1,453,888) | (16,379,624) | |||||
Net cash used for financing activities* | (9,372,856) | |||||
Net increase in cash | 4,347,108 | |||||
Cash at beginning of period | (4,347,108) | |||||
Cash at end of period | — | |||||
Reconciliation of Net Increase in Net Assets From Investment Operations to Net Cash Provided by Operating Activities: |
||||||
Net increase in net assets resulting from investment operations | 24,261,128 | |||||
Decrease in receivable for investments sold | 3,460,000 | |||||
Decrease in interest receivable | 422,047 | |||||
Decrease in premium on options written | (89,177) | |||||
Increase in prepaid expenses and other assets | (20,771) | |||||
Increase in investment management fees payable | 14,565 | |||||
Decrease in variation margin payable on futures contracts | (64,763) | |||||
Increase in variation margin receivable on futures contracts | (650,287) | |||||
Increase in net unrealized appreciation on options written | (243,573) | |||||
Decrease in accrued expenses and other payables | (15,866) | |||||
Net increase in investments | (13,353,339) | |||||
Net cash provided by operating activities | $13,719,964 | |||||
* | Supplemental Disclosure |
Non-cash financing activity not included consists of interest expense on floating rate notes issued of $3,184,247. |
30 PIMCO Municipal Income Funds III Semi-Annual Report | 3.31.07 | See accompanying Notes to Financial Statements
Cash Flows provided by Operating Activities: | ||||||
Purchases of long-term investments | $(6,362,419) | |||||
Proceeds from sales of long-term investments | 6,834,780 | |||||
Interest received | 13,363,856 | |||||
Net cash provided by options written | 87,911 | |||||
Operating expenses paid | (1,770,863) | |||||
Net cash provided by futures transactions | 1,184,138 | |||||
Net increase in short-term investments | (7,928) | |||||
Net cash provided by operating activities | 13,329,475 | |||||
Cash Flows from Financing Activities: | ||||||
Custody overdraft | 3,688,328 | |||||
Cash dividends paid (excluding reinvestment of dividends of $722,333) | (12,300,404) | |||||
Net cash used for financing activities* | (8,612,076) | |||||
Net increase in cash | 4,717,399 | |||||
Cash at beginning of period | (4,717,399) | |||||
Cash at end of period | — | |||||
Reconciliation of Net Increase in Net Assets From Investment Operations to Net Cash Provided by Operating Activities: |
||||||
Net increase in net assets resulting from investment operations | 16,209,537 | |||||
Decrease in interest receivable | 80,767 | |||||
Decrease in premium on options written | (77,938) | |||||
Increase in prepaid expenses and other assets | (13,452) | |||||
Increase in investment management fees payable | 9,383 | |||||
Decrease in variation margin payable on futures contracts | (16,425) | |||||
Increase in variation margin receivable on futures contracts | (441,487) | |||||
Increase in net unrealized appreciation on options written | (212,874) | |||||
Decrease in accrued expenses and other payables | (58,534) | |||||
Net increase in investments | (2,149,502) | |||||
Net cash provided by operating activities | $13,329,475 | |||||
* | Supplemental Disclosure |
Non-cash financing activity not included consists of interest expense on floating rate notes issued of $2,908,197. |
See accompanying Notes to Financial Statements | 3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 31
Cash Flows provided by Operating Activities: | ||||||
Purchases of long-term investments | $(7,275,534) | |||||
Proceeds from sales of long-term investments | 12,178,644 | |||||
Interest received | 3,379,542 | |||||
Net cash provided by options written | 20,931 | |||||
Operating expenses paid | (568,656) | |||||
Net cash provided by futures transactions | 330,669 | |||||
Net increase in short-term investments | (2,413) | |||||
Net cash provided by operating activities | 8,063,183 | |||||
Cash Flows from Financing Activities: | ||||||
Cash dividends paid (excluding reinvestment of dividends of $2,750,671) | (2,818,284) | |||||
Net cash used for financing activities* | (2,818,284) | |||||
Net increase in cash | 5,244,899 | |||||
Cash at beginning of period | (3,582,145) | |||||
Cash at end of period | 1,662,754 | |||||
Reconciliation of Net Increase in Net Assets From Investment Operations to Net Cash Provided by Operating Activities: |
||||||
Net increase in net assets resulting from investment operations | 3,688,584 | |||||
Increase in payable for investments purchased | 401,132 | |||||
Decrease in interest receivable | 35,767 | |||||
Decrease in premium on options written | (11,423) | |||||
Increase in prepaid expenses and other assets | (13,115) | |||||
Increase in investment management fees payable | 2,368 | |||||
Decrease in variation margin payable on futures contracts | (9,187) | |||||
Increase in variation margin receivable on futures contracts | (107,281) | |||||
Increase in net unrealized appreciation on options written | (31,202) | |||||
Decrease in accrued expenses and other payables | (26,680) | |||||
Net decrease in investments | 4,134,220 | |||||
Net cash provided by operating activities | $8,063,183 | |||||
* | Supplemental Disclosure |
Non-cash financing activity not included consists of interest expense on floating rate notes issued of $785,538. |
32 PIMCO Municipal Income Funds III Semi-Annual Report | 3.31.07 | See accompanying Notes to Financial Statements
1. Organization and Significant Accounting Policies
PIMCO Municipal Income Fund III (‘‘Municipal III’’), PIMCO California Municipal Income Fund III (‘‘California Municipal III’’) and PIMCO New York Municipal Income Fund III (‘‘New York Municipal III’’), collectively referred to as the ‘‘Funds’’ or ‘‘PIMCO Municipal Income Funds III’’, were organized as Massachusetts business trusts on August 20, 2002. Prior to commencing operations on October 31, 2002, the Funds had no operations other than matters relating to their organization and registration as non-diversified, closed-end management investment companies registered under the Investment Company Act of 1940 and the rules and regulations thereunder, as amended. Allianz Global Investors Fund Management LLC (the ‘‘Investment Manager’’), serves as the investment manager and is an indirect, wholly-owned subsidiary of Allianz Global Investors of America L.P. (‘‘Allianz Global’’). Allianz Global is an indirect majority-owned subsidiary of Allianz SE, a publicly traded insurance and financial services company. The Funds have an unlimited amount of $0.00001 par value common stock authorized.
Municipal III invests substantially all of its assets in a portfolio of municipal bonds, the interest from which is exempt from federal income taxes. California Municipal III invests substantially all of its assets in municipal bonds which pay interest that is exempt from federal and California state income taxes. New York Municipal III invests substantially all of its assets in municipal bonds which pay interest that is exempt from federal, New York State and New York City income taxes. The Funds will seek to avoid bonds generating interest income which could potentially subject individuals to alternative minimum tax. The issuers’ abilities to meet their obligations may be affected by economic and political developments in a specific state or region.
The preparation of the financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
In July 2006, the Financial Accounting Standards Board issued interpretation No. 48, ‘‘Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109’’ (the ‘‘Interpretation’’). The Interpretation establishes for all entities, including pass-through entities such as the Funds, a minimum threshold for financial statement recognition of the benefit of positions taken in filing tax returns (including whether an entity is taxable in a particular jurisdiction), and requires certain expanded tax disclosures. The Interpretation is effective for fiscal years beginning after December 15, 2006, and is to be applied to all open tax years as of the date of effectiveness. Fund management has recently begun to evaluate the application of the Interpretation, and is not in a position at this time to estimate the significance of its impact, if any, on the Funds’ financial statements. On December 22, 2006, the Securities & Exchange Commission announced that it would not object if a fund implements Interpretation 48 in its NAV calculation as late as its last NAV calculation in the first required financial statement reporting period for its fiscal year beginning after December 15, 2006. Consequently, the Funds will be required to comply with the Interpretation by March 31, 2008.
In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (‘‘SFAS’’) 157, Fair Value Measurements, which clarifies the definition of fair value and requires companies to expand their disclosure about the use of fair value to measure assets and liabilities in interim and annual periods subsequent to initial recognition. Adoption of SFAS 157 requires the use of the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. At this time, the Funds are in the process of reviewing the Standard against its current valuation policies to determine future applicability.
In the normal course of business the Funds enter into contracts that contain a variety of representations which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds based upon events that have not been asserted. However, the Funds expect the risk of any loss to be remote.
The following is a summary of significant accounting policies consistently followed by the Funds:
(a) Valuation of Investments
Portfolio securities and other financial instruments for which market quotations are readily available are stated at market value. Portfolio securities and other financial instruments for which market quotations are not readily available or if a development/event occurs that may significantly impact the value of a security are fair-valued, in good faith, pursuant to guidelines established by the Board of Trustees, including certain fixed income securities which may be valued with reference to securities whose prices are more readily available. The Funds’ investments are valued daily using prices supplied by an independent pricing service or dealer quotations, or by using the last sale price on the
3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 33
1. Organization and Significant Accounting Policies (continued)
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 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 Funds to value securities may differ from the value that would be realized if the securities were sold and the differences could be material to the financial statements. The Funds’ net asset values are 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.
(b) Investment Transactions and Investment Income
Investment transactions are accounted for on the trade date. Securities purchased and sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses on investments are determined on the identified cost basis. Interest income is recorded on an accrual basis. Discounts or premiums on debt securities purchased are accreted or amortized to interest income over the lives of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date.
(c) Federal Income Taxes
The Funds intend to distribute all of their taxable income and to comply with the other requirements of the U.S. Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Accordingly, no provision for U.S. federal income taxes is required.
(d) Dividends and Distributions — Common Stock
The Funds declare dividends from net investment income monthly to common shareholders. Distributions of net realized capital gains, if any, are paid at least annually. The Funds record dividends and distributions to its shareholders on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from generally accepted accounting principles. These ‘‘book-tax’’ differences are considered either temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal income tax treatment; temporary differences do not require reclassification. To the extent dividends and/or distributions exceed current and accumulated earnings and profits for federal income tax purposes; they are reported as dividends and/or distributions of paid-in capital.
(e) Futures Contracts
A futures contract is an agreement between two parties to buy and sell a financial instrument at a set price on a future date. Upon entering into such a contract, the Funds are required to pledge to the broker an amount of cash or securities, equal to the minimum ‘‘initial margin’’ requirements of the exchange. Pursuant to the contracts, the Funds agree to receive from or pay to the broker an amount of cash or securities equal to the daily fluctuation in the value of the contracts. Such receipts or payments are known as ‘‘variation margin’’ and are recorded by the Funds as unrealized appreciation or depreciation. When the contracts are closed, the Funds record a realized gain or loss equal to the difference between the value of the contracts at the time they were opened and the value at the time they were closed. Any unrealized appreciation or depreciation recorded is simultaneously reversed. The use of futures transactions involves the risk of an imperfect correlation in the movements in the price of futures contracts, interest rates and the underlying hedged assets, and the possible inability of counterparties to meet the terms of their contracts.
(f) Option Transactions
The Funds may purchase and write (sell) put and call options on securities for hedging purposes, risk management purposes or as part of its investment strategy. The risk associated with purchasing an option is that the Funds pay a premium whether or not the option is exercised. Additionally, the Funds bear the risk of loss of premium and change in market value should the counterparty not perform under the contract. Put and call options purchased are accounted for in the same manner as portfolio securities. The cost of securities acquired through the exercise of call options is increased by the premiums paid. The proceeds from securities sold through the exercise of put options is decreased by the premiums paid.
34 PIMCO Municipal Income Funds III Semi-Annual Report | 3.31.07
1. Organization and Significant Accounting Policies (continued)
When an option is written, the premium received is recorded as an asset with an equal liability which is subsequently marked to market to reflect the current market value of the option written. These liabilities are reflected as options written in the Statements of Assets and Liabilities. Premiums received from writing options which expire unexercised are recorded on the expiration date as a realized gain. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchased transactions, as a realized loss. If a call option written by the Funds is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether there has been a realized gain or loss. If a put option written by the Funds is exercised, the premium reduces the cost basis of the security. In writing an option, the Funds bear the market risk of an unfavorable change in the price of the security underlying the written option. Exercise of a written option could result in the Funds purchasing a security at a price different from the current market value.
(g) Inverse Floating Rate Transactions — Residual Interest Municipal Bonds (‘‘RIBs’’)/Residual Interest Tax Exempt Bonds (‘‘RITEs’’)
The Funds invest in RIBs and RITEs (‘‘Inverse Floaters’’) whose interest rates bear an inverse relationship to the interest rate on another security or the value of an index. In these transactions, the Funds transfer a fixed rate municipal bond (‘‘Fixed Rate Bond’’) to a broker who places the Fixed Rate Bond in a special purpose trust (‘‘Trust’’) from which floating rate bonds (‘‘Floating Rate Notes’’) and Inverse Floaters are issued. The Funds simultaneously or within a short period of time receive the Inverse Floaters from the broker. The Inverse Floaters held by the Funds provide the Funds with the right to: (1) cause the holders of the Floating-Rate Notes to tender their notes at par, and (2) cause the broker to transfer the Fixed-Rate Bond held by the Trust to the Funds, thereby collapsing the Trust. Pursuant to Statement of Financial Accounting Standards No. 140 (‘‘FASB Statement No. 140’’). the Funds account for the transaction described above as a secured borrowing by including the Fixed-Rate Bond in their Schedule of Investments, and recording for the Floating-Rate Notes as a liability under the caption ‘‘Payable for floating rate notes’’ in the Funds’ ‘‘Statements of Assets and Liabilities’’. The Floating Rate Notes have interest rates that generally reset weekly and their holders have the option to tender their notes to the broker for redemption at par at each reset date.
The Funds may also invest in Inverse Floaters without transferring a fixed rate municipal bond into a special purpose trust which are not accounted for as secured borrowings.
Inverse Floaters are created by dividing the income stream provided by the underlying bonds to create two securities, one short-term and one long-term. The interest rate on the short-term component is reset by an index or auction process typically every 7 to 35 days. After income is paid on the short-term securities at current rates, the residual income from the underlying bond(s) goes to the long-term securities. Therefore, rising short-term rates result in lower income for the long-term component and visa versa. The longer-term bonds may be more volatile and less liquid than other municipal bonds of comparable maturity. Investments in Inverse Floaters typically will involve greater risk than investments in Fixed Rate Bonds. The Funds may also invest in Inverse Floaters for the purpose of increasing leverage.
The Funds’ investment policies and restrictions expressly permits investment in Inverse Floaters. The Funds’ restrictions on borrowings do not apply to the secured borrowings deemed to have occurred for accounting purposes pursuant to FASB Statement No. 140. Inverse Floaters held by the Funds are exempt from registration under Rule 144A of the Securities Act of 1933.
(h) When-Issued/Delayed-Delivery Transactions
When-issued or delayed-delivery basis transactions involve a commitment to purchase or sell securities for a predetermined price or yield, with payment and delivery taking place beyond the customary settlement period. When delayed-delivery purchases are outstanding, the Funds will set aside and maintain until the settlement date in a designated account, liquid assets in an amount sufficient to meet the purchase price. When purchasing a security on a delayed-delivery basis, the Funds assume the rights and risks of ownership of the security, including the risk of price and yield fluctuations, consequently, such fluctuations are taken into account when determining its net asset value. The Funds may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell when-issued securities before they are delivered, which may result in a realized gain or loss. When a security on a delayed-delivery basis is sold, the Funds do not participate in future gains and losses with respect to the security.
(i) Custody Credits Earned on Cash Balances
The Funds benefit from an expense offset arrangement with its custodian bank whereby uninvested cash balances earn credits which reduce monthly custodian and accounting agent expenses. Had these cash balances been invested in income producing securities, they would have generated income for the Funds.
3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 35
2. Investment Manager/Sub-Adviser
Each Fund has an Investment Management Agreement (the ‘‘Agreement’’) with the Investment Manager. Subject to the supervision of the Funds’ Board of Trustees, the Investment Manager is responsible for managing, either directly or through others selected by it, each Fund’s investment activities, business affairs and administrative matters. Pursuant to the respective Agreement, the Investment Manager receives an annual fee, payable monthly, at an annual rate of 0.65% of each Fund’s average daily net assets, inclusive of net assets attributable to any preferred shares that may be outstanding. In order to reduce each Fund’s expenses, the Investment Manager has contractually agreed to waive a portion of its investment management fee for each Fund at the annual rate of 0.15% of each Fund’s average daily net assets, including net assets attributable to any preferred shares that may be outstanding, from the commencement of operations through October 31, 2007, and for a declining amount thereafter through October 31, 2009.
The Investment Manager has retained its affiliate, Pacific Investment Management Company LLC (the ‘‘Sub-Adviser’’), to manage the Funds’ investments. Subject to the supervision of the Investment Manager, the Sub-Adviser is responsible for making all of the Funds’ investment decisions. The Investment Manager, and not the Funds, pays a portion of the fees it receives to the Sub-Adviser in return for its services, at the maximum annual rate of 0.50% of each Fund’s average daily net assets, inclusive of net assets attributable to any preferred shares that may be outstanding. The Sub-Adviser has contractually agreed to waive a portion of the fees it is entitled to receive from the Investment Manager, such that the Sub-Adviser will receive 0.26% of each Fund’s average daily net assets, including net assets attributable to any preferred shares that may be outstanding, from the commencement of the Funds’ operations through October 31, 2007, and will receive an increasing amount not to exceed 0.40% of each Fund’s average daily net assets, inclusive of net assets attributable to any preferred shares that may be outstanding thereafter through October 31, 2009.
3. Investments in Securities
For the six months ended March 31, 2007, purchases and sales of investments, other than short-term securities and U.S. government obligations, were:
Municipal III | California Municipal III |
New York Municipal III |
||||||||||||
Purchases | $22,628,810 | $6,362,420 | $7,112,550 | |||||||||||
Sales | 11,891,600 | 6,834,780 | 11,615,660 | |||||||||||
36 PIMCO Municipal Income Funds III Semi-Annual Report | 3.31.07
3. Investments in Securities (continued)
(a) Futures contracts outstanding at March 31, 2007:
Fund | Type | Contracts | Market Value (000) |
Expiration Date |
Unrealized Appreciation (Depreciation) |
|||||||||||||||||
Municipal III | Long: Financial Future Euro—90 day | 57 | $13,500 | 6/18/07 | $ (49,263) | |||||||||||||||||
Financial Future Euro—90 day | 57 | 13,527 | 9/17/07 | (24,113) | ||||||||||||||||||
Financial Future Euro—90 day | 57 | 13,555 | 12/17/07 | 3,675 | ||||||||||||||||||
Financial Future Euro—90 day | 57 | 13,577 | 3/17/08 | 26,475 | ||||||||||||||||||
U.S. Treasury Notes 5 yr. Futures | 812 | 85,907 | 6/29/08 | 433,016 | ||||||||||||||||||
Short: U.S. Treasury Bond Futures | (2,222) | (247,198) | 6/30/07 | 3,945,399 | ||||||||||||||||||
U.S. Treasury Notes 10 yr. Futures | (190) | (20,544) | 6/20/07 | (17,813) | ||||||||||||||||||
$4,317,376 | ||||||||||||||||||||||
California Municipal III | Long: Financial Future Euro—90 day | 124 | $29,368 | 6/18/07 | $ (95,375) | |||||||||||||||||
Financial Future Euro—90 day | 124 | 29,427 | 9/17/07 | (40,150) | ||||||||||||||||||
Financial Future Euro—90 day | 124 | 29,489 | 12/17/07 | 20,300 | ||||||||||||||||||
Financial Future Euro—90 day | 124 | 29,535 | 3/17/08 | 69,900 | ||||||||||||||||||
U.S. Treasury Notes 5 yr. Futures | 284 | 30,046 | 6/29/07 | 150,875 | ||||||||||||||||||
Short: U.S. Treasury Bond Futures | (1,378) | (153,303) | 6/30/07 | 2,487,617 | ||||||||||||||||||
U.S. Treasury Notes 10 yr. Futures | (317) | (34,276) | 6/20/07 | (29,719) | ||||||||||||||||||
$2,563,448 | ||||||||||||||||||||||
New York Municipal III | Long: U.S. Treasury Notes 5 yr. Futures | 117 | $12,378 | 6/29/07 | $62,914 | |||||||||||||||||
Short: U.S. Treasury Bond Futures | (358) | (39,828) | 6/30/07 | 636,359 | ||||||||||||||||||
U.S. Treasury Notes 10 yr. Futures | (51) | (5,514) | 6/20/07 | (4,781) | ||||||||||||||||||
$694,492 | ||||||||||||||||||||||
3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 37
3. Investments in Securities (continued)
(b) Transactions in options written for the six months ended March 31, 2007:
Contracts/Notional | Premiums | |||||||||
Municipal III: | ||||||||||
Options outstanding, September 30, 2006 | 484 | $ 89,177 | ||||||||
Options written | 310 | 129,774 | ||||||||
Options expired | (794) | (218,951) | ||||||||
Options outstanding, March 31, 2007 | — | $ — | ||||||||
California Municipal III: | ||||||||||
Options outstanding, September 30, 2006 | 423 | $ 77,938 | ||||||||
Options written | 210 | 87,911 | ||||||||
Options expired | (633) | (165,849) | ||||||||
Options outstanding, March 31, 2007 | — | $ — | ||||||||
New York Municipal III: | ||||||||||
Options outstanding, September 30, 2006 | 62 | $ 11,423 | ||||||||
Options written | 50 | 20,931 | ||||||||
Options expired | (112) | (32,354) | ||||||||
Options outstanding, March 31, 2007 | — | $ — | ||||||||
4. Income Tax Information
The cost of investments for federal income tax purposes and gross unrealized appreciation and gross unrealized depreciation of investments at March 31, 2007 were:
Cost of Investments |
Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net Unrealized Appreciation |
|||||||||||||||
Municipal III | $877,250,584 | $65,949,855 | $7,915,120 | $58,034,735 | ||||||||||||||
California Municipal III | 607,950,892 | 47,140,725 | 6,012,455 | 41,128,270 | ||||||||||||||
New York Municipal III | 157,459,147 | 12,646,502 | 2,412,264 | 10,234,238 | ||||||||||||||
5. Auction Preferred Shares
Municipal III has issued 2,160 shares of Preferred Shares Series A, 2,160 shares of Preferred Shares Series B, 2,160 shares of Preferred Shares Series C, 2,160 shares of Preferred Shares Series D and 2,160 shares of Preferred Shares Series E, each with a net asset and liquidation value of $25,000 per share plus accrued dividends.
California Municipal III has issued 3,700 shares of Preferred Shares Series A and 3,700 shares of Preferred Shares Series B, each with a net asset and liquidation value of $25,000 per share plus accrued dividends.
New York Municipal III has issued 1,880 shares of Preferred Shares Series A with a net asset and liquidation value of $25,000 per share plus accrued dividends.
Dividends are accumulated daily at an annual rate (typically re-set every seven days) through auction procedures. Distributions of net realized capital gains, if any, are paid annually.
38 PIMCO Municipal Income Funds III Semi-Annual Report | 3.31.07
5. Auction Preferred Shares (continued)
For the six months ended March 31, 2007, the annualized dividend rates ranged from:
High | Low | At March 31, 2007 | ||||||||||||
Municipal III: | ||||||||||||||
Series A | 5.32% | 3.10% | 3.10% | |||||||||||
Series B | 3.61% | 3.10% | 3.50% | |||||||||||
Series C | 4.25% | 3.00% | 3.60% | |||||||||||
Series D | 3.80% | 3.25% | 3.60% | |||||||||||
Series E | 5.32% | 3.35% | 3.35% | |||||||||||
California Municipal III: | ||||||||||||||
Series A | 5.32% | 2.98% | 3.20% | |||||||||||
Series B | 3.40% | 2.95% | 3.30% | |||||||||||
New York Municipal III: | ||||||||||||||
Series A | 5.32% | 3.00% | 3.15% | |||||||||||
The Funds are subject to certain limitations and restrictions while Preferred Shares are outstanding. Failure to comply with these limitations and restrictions could preclude the Funds from declaring any dividends or distributions to common shareholders or repurchasing common shares and/or could trigger the mandatory redemption of Preferred Shares at their liquidation value.
6. Subsequent Common Dividend Declarations
On April 2, 2007, the following dividends were declared to common shareholders payable May 1, 2007 to shareholders of record on April 12, 2007:
Municipal III | $0.070 per common share | |||||
California Municipal III | $0.073 per common share | |||||
New York Municipal III | $0.067 per common share | |||||
On May 1, 2007 the following dividends were declared to common shareholders payable June 1, 2007 to shareholders of record on May 11, 2007:
Municipal III | $0.070 per common share | |||||
California Municipal III | $0.073 per common share | |||||
New York Municipal III | $0.067 per common share | |||||
7. Legal Proceedings
In June and September 2004, the Investment Manager, certain of its affiliates (including Allianz Global Investors Distributors LLC and PEA Capital LLC) and Allianz Global, agreed to settle, without admitting or denying the allegations, claims brought by the Securities and Exchange Commission (the ‘‘Commission’’), the New Jersey Attorney General and the California Attorney General alleging violations of federal and state securities laws with respect to certain open-end funds for which the Investment Manager serves as investment adviser. Two settlements (with the Commission and New Jersey) related to an alleged ‘‘market timing’’ arrangement in certain open-end funds sub-advised by PEA Capital LLC. Two settlements (with the Commission and California) related to the alleged use of cash and fund portfolio commissions to finance ‘‘shelf-space’’ arrangements with broker-dealers for open-end funds. The Investment Manager and its affiliates agreed to pay a total of $68 million to settle the claims related to market timing and $20.6 million to settle the claims related to shelf space. In addition to monetary payments, the settling parties agreed to undertake certain corporate governance, compliance and disclosure reforms related to market timing, brokerage commissions, revenue sharing and shelf space arrangements, and consented to cease and desist orders and censures. None of the settlements allege that any inappropriate activity took place with respect to the Funds.
Since February 2004, the Investment Manager and certain of its affiliates and their employees have been named as defendants in a number of pending lawsuits concerning ‘‘market timing,’’ and ‘‘revenue sharing/shelf-space/directed
3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 39
7. Legal Proceedings (continued)
brokerage,’’ which allege the same or similar conduct underlying the regulatory settlements discussed above. The market timing lawsuits have been consolidated in a multi-district litigation proceeding in the United States District Court for the District of Maryland, and the revenue sharing/shelf-space/directed brokerage lawsuits have been consolidated in the United States District Court for the District of Connecticut. Any potential resolution of these matters may include, but not be limited to, judgments or settlements for damages against the Investment Manager or their affiliates or related injunctions.
The Investment Manager and the Sub-Adviser believe that these matters are not likely to have a material adverse effect on the Funds or on their ability to perform their respective investment advisory activities relating to the Funds.
The foregoing speaks only as of the date hereof.
8. Corporate Changes:
On December 12, 2006, the Fund’s Board of Trustees appointed John C. Maney, as Class III (interested) Trustee, and appointed Hans W. Kertess as Chairman of the Board of Trustees, effective January 1, 2007.
40 PIMCO Municipal Income Funds III Semi-Annual Report | 3.31.07
3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 41
Six Months ended March 31, 2007 (unaudited) |
Year Ended, September 30, |
For the period October 31, 2002* through September 30, 2003 |
||||||||||||||||||||
2006 | 2005 | 2004 | ||||||||||||||||||||
Net asset value, beginning of period | $14.90 | $14.68 | $14.36 | $14.05 | $14.33 | ** | ||||||||||||||||
Investment Operations: | ||||||||||||||||||||||
Net investment income | 0.59 | 1.12 | 1.14 | 1.18 | 0.78 | |||||||||||||||||
Net realized and unrealized gain (loss) on investments, futures contracts and options written | 0.18 | 0.26 | 0.36 | 0.22 | (0.08 | ) | ||||||||||||||||
Total from investment operations | 0.77 | 1.38 | 1.50 | 1.40 | 0.70 | |||||||||||||||||
Dividends on Preferred Shares from Net Investment Income: |
(0.15 | ) | (0.27 | ) | (0.18 | ) | (0.09 | ) | (0.06 | ) | ||||||||||||
Net increase in net assets applicable to common shareholders resulting from investment operations | 0.62 | 1.11 | 1.32 | 1.31 | 0.64 | |||||||||||||||||
Dividends to Common Shareholders from Net Investment Income: | (0.42 | ) | (0.89 | ) | (1.00 | ) | (1.00 | ) | (0.79 | ) | ||||||||||||
Capital Share Transactions: | ||||||||||||||||||||||
Common stock offering costs charged to paid-in capital in excess of par | — | — | — | — | (0.03 | ) | ||||||||||||||||
Preferred shares offering costs/underwriting discounts charged to paid-in capital in excess of par | — | — | — | — | (0.10 | ) | ||||||||||||||||
Total capital share transactions | — | — | — | — | (0.13 | ) | ||||||||||||||||
Net asset value, end of period | $15.10 | $14.90 | $14.68 | $14.36 | $14.05 | |||||||||||||||||
Market price, end of period | $16.16 | $15.70 | $15.49 | $14.30 | $14.20 | |||||||||||||||||
Total Investment Return (1) | 5.80 | % | 7.69 | % | 15.95 | % | 8.10 | % | 0.05 | % | ||||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||||
Net assets applicable to common shareholders, end of period (000) | $474,387 | $466,511 | $457,487 | $445,679 | $435,169 | |||||||||||||||||
Ratio of expenses to average net assets, including interest expense (2)(3)(4)(5) | 2.36 | %# | 2.71 | % | 1.97 | % | 1.54 | % | 1.10 | %# | ||||||||||||
Ratio of expenses to average net assets, excluding interest expense (2)(3)(5) | 1.01 | % # | 1.06 | % | 1.03 | % | 1.05 | % | 0.99 | %# | ||||||||||||
Ratio of net investment income to average net assets (2)(5) | 7.88 | %# | 7.71 | % | 7.74 | % | 8.25 | % | 6.05 | %# | ||||||||||||
Preferred shares asset coverage per share | $68,908 | $68,179 | $67,352 | $66,261 | $65,284 | |||||||||||||||||
Portfolio turnover | 2 | % | 15 | % | 3 | % | 13 | % | 18 | % | ||||||||||||
42 PIMCO Municipal Income Funds III Semi-Annual Report | 3.31.07 | See accompanying Notes to Financial Statements
* | Commencement of operations. |
** | Initial public offering price of $15.00 per share less underwriting discount of $0.675 per share. |
# | Annualized. |
(1) | Total investment return is calculated assuming a purchase of a share of common stock at the current market price on the first day of each period and a sale of a share of common stock at the current market price on the last day of each period reported. Dividends and distributions are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total investment return does not reflect brokerage commissions or sales charges. Total investment return for a period of less than one year is not annualized. |
(2) | Calculated on the basis of income and expenses applicable to both common and preferred shares relative to the average net assets of common shareholders. |
(3) | Inclusive of expenses offset by custody credits earned on cash balances at the custodian bank. (See note 1(i) in Notes to Financial Statements). |
(4) | Interest expense relates to the liability for floating rate notes issued in connection with inverse floater transactions. |
(5) | During the periods indicated above, the Investment Manager waived a portion of its investment management fee. The effect of such waivers relative to the average net assets of common shareholders was 0.24% (annualized), 0.24%, 0.24%, 0.24% and 0.23% (annualized) for the six months ended March 31, 2007, and the years ended September 30, 2006, September 30, 2005, September 30, 2004 and for the period October 31, 2002 (commencement of operations) through September 30, 2003. |
See accompanying Notes to Financial Statements | 3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 43
Six Months ended March 31, 2007 (unaudited) |
Year Ended September 30, |
For the period October 31, 2002* through September 30, 2003 |
||||||||||||||||||||
2006 | 2005 | 2004 | ||||||||||||||||||||
Net asset value, beginning of period | $14.83 | $14.80 | $14.12 | $13.43 | $14.33 | ** | ||||||||||||||||
Investment Operations: | ||||||||||||||||||||||
Net investment income | 0.53 | 1.11 | 1.14 | 1.23 | 0.67 | |||||||||||||||||
Net realized and unrealized gain (loss) on investments, futures contracts and options written | 0.22 | 0.13 | 0.65 | 0.51 | (0.62 | ) | ||||||||||||||||
Total from investment operations | 0.75 | 1.24 | 1.79 | 1.74 | 0.05 | |||||||||||||||||
Dividends on Preferred Shares from Net Investment Income: |
(0.14 | ) | (0.25 | ) | (0.15 | ) | (0.09 | ) | (0.06 | ) | ||||||||||||
Net increase (decrease) in net assets applicable to common shareholders resulting from investment operations | 0.61 | 0.99 | 1.64 | 1.65 | (0.01 | ) | ||||||||||||||||
Dividends to Common Shareholders from Net Investment Income: |
(0.45 | ) | (0.96 | ) | (0.96 | ) | (0.96 | ) | (0.76 | ) | ||||||||||||
Capital Share Transactions: | ||||||||||||||||||||||
Common stock offering costs charged to paid-in capital in excess of par | — | — | — | — | (0.03 | ) | ||||||||||||||||
Preferred shares offering costs/ underwriting discounts charged to paid-in capital in excess of par | — | — | — | (0.10 | ) | |||||||||||||||||
Total capital share transactions | — | — | — | — | (0.13 | ) | ||||||||||||||||
Net asset value, end of period | $14.99 | $14.83 | $14.80 | $14.12 | $13.43 | |||||||||||||||||
Market price, end of period | $17.14 | $16.94 | $15.11 | $13.74 | $13.62 | |||||||||||||||||
Total Investment Return (1) | 4.08 | % | 19.43 | % | 17.48 | % | 8.22 | % | (4.10 | )% | ||||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||||
Net assets applicable to common shareholders, end of period (000) |
$322,293 | $318,236 | $315,963 | $300,860 | $285,279 | |||||||||||||||||
Ratio of expenses to average net assets, including interest expense (2)(3)(4)(5) | 2.87 | %# | 2.69 | % | 1.94 | % | 1.55 | % | 1.14 | %# | ||||||||||||
Ratio of expenses to average net assets, excluding interest expense (2)(3)(5) | 1.06 | %# | 1.06 | % | 1.05 | % | 1.08 | % | 1.01 | %# | ||||||||||||
Ratio of net investment income to average net assets (2)(5) | 7.24 | %# | 7.56 | % | 7.82 | % | 8.79 | % | 5.30 | %# | ||||||||||||
Preferred shares asset coverage per share | $68,542 | $67,993 | $67,692 | $65,650 | $63,539 | |||||||||||||||||
Portfolio turnover | 1 | % | 7 | % | 5 | % | 33 | % | 58 | % | ||||||||||||
44 PIMCO Municipal Income Funds III Semi-Annual Report | 3.31.07 | See accompanying Notes to Financial Statements
* | Commencement of operations. |
** | Initial public offering price of $15.00 per share less underwriting discount of $0.675 per share. |
# | Annualized. |
(1) | Total investment return is calculated assuming a purchase of a share of common stock at the current market price on the first day of each period and a sale of a share of common stock at the current market price on the last day of each period reported. Dividends and distributions are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total investment return does not reflect brokerage commissions or sales charges. Total investment return for a period of less than one year is not annualized. |
(2) | Calculated on the basis of income and expenses applicable to both common and preferred shares relative to the average net assets of common shareholders. |
(3) | Inclusive of expenses offset by custody credits earned on cash balances at the custodian bank. (See note 1(i) in Notes to Financial Statements). |
(4) | Interest expense relates to the liability for floating rate notes issued in connection with inverse floater transactions. |
(5) | During the periods indicated above, the Investment Manager waived a portion of its investment management fee. The effect of such waivers relative to the average net assets of common shareholders was 0.24% (annualized), 0.24%, 0.24%, 0.24% and 0.23% (annualized) for the six months ended March 31, 2007, and the years ended September 30, 2006, September 30, 2005, September 30, 2004 and for the period October 31, 2002 (commencement of operations) through September 30, 2003. |
See accompanying Notes to Financial Statements | 3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 45
Six Months ended March 31, 2007 (unaudited) |
Year Ended September 30, | For the period October 31, 2002* through September 30, 2003 |
||||||||||||||||||||
2006 | 2005 | 2004 | ||||||||||||||||||||
Net asset value, beginning of period | $15.09 | $15.03 | $14.41 | $14.14 | $14.33 | ** | ||||||||||||||||
Investment Operations: | ||||||||||||||||||||||
Net investment income | 0.52 | 1.07 | 1.13 | 1.19 | 0.70 | |||||||||||||||||
Net realized and unrealized gain on investments, futures contracts and options written | 0.15 | 0.13 | 0.61 | 0.12 | 0.08 | |||||||||||||||||
Total from investment operations | 0.67 | 1.20 | 1.74 | 1.31 | 0.78 | |||||||||||||||||
Dividends on Preferred Shares from Net Investment Income: | (0.14 | ) | (0.26 | ) | (0.16 | ) | (0.08 | ) | (0.06 | ) | ||||||||||||
Net increase in net assets applicable to common shareholders resulting from investment operations | 0.53 | 0.94 | 1.58 | 1.23 | 0.72 | |||||||||||||||||
Dividends to Common Shareholders from Net Investment Income: | (0.41 | ) | (0.88 | ) | (0.96 | ) | (0.96 | ) | (0.76 | ) | ||||||||||||
Capital Share Transactions: | ||||||||||||||||||||||
Common stock offering costs charged to paid-in capital in excess of par | — | — | — | — | (0.03 | ) | ||||||||||||||||
Preferred shares offering costs/underwriting discounts charged to paid-in capital in excess of par | — | — | — | — | (0.12 | ) | ||||||||||||||||
Total capital share transactions | — | — | — | — | (0.15 | ) | ||||||||||||||||
Net asset value, end of period | $15.21 | $15.09 | $15.03 | $14.41 | $14.14 | |||||||||||||||||
Market price, end of period | $16.12 | $16.45 | $16.04 | $14.30 | $13.68 | |||||||||||||||||
Total Investment Return (1) | 0.63 | % | 8.73 | % | 19.65 | % | 11.93 | % | (3.77 | )% | ||||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||||
Net assets applicable to common shareholders, end of period (000) | $83,722 | $82,836 | $82,043 | $78,465 | $76,975 | |||||||||||||||||
Ratio of expenses to average net assets, including interest expense (2)(3)(4)(5) | 3.15 | %# | 2.89 | % | 2.36 | % | 1.73 | % | 1.26 | %# | ||||||||||||
Ratio of expenses to average net assets, excluding interest expense (2)(3)(5) | 1.27 | %# | 1.16 | % | 1.24 | % | 1.19 | % | 1.14 | % # | ||||||||||||
Ratio of net investment income to average net assets (2)(5) | 6.84 | %# | 7.23 | % | 7.54 | % | 8.23 | % | 4.99 | %# | ||||||||||||
Preferred shares asset coverage per share | $69,514 | $69,042 | $68,627 | $66,732 | $65,942 | |||||||||||||||||
Portfolio turnover | 6 | % | 8 | % | 4 | % | 12 | % | 111 | % | ||||||||||||
46 PIMCO Municipal Income Funds III Semi-Annual Report | 3.31.07 | See accompanying Notes to Financial Statements
* | Commencement of operations. |
** | Initial public offering price of $15.00 per share less underwriting discount of $0.675 per share. |
# | Annualized. |
(1) | Total investment return is calculated assuming a purchase of a share of common stock at the current market price on the first day of each period and a sale of a share of common stock at the current market price on the last day of each period reported. Dividends and distributions are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total investment return does not reflect brokerage commissions or sales charges. Total investment return for a period of less than one year is not annualized. |
(2) | Calculated on the basis of income and expenses applicable to both common and preferred shares relative to the average net assets of common shareholders. |
(3) | Inclusive of expenses offset by custody credits earned on cash balances at the custodian bank. (See note 1(i) in Notes to Financial Statements). |
(4) | Interest expense relates to the liability for floating rate notes issued in connection with inverse floater transactions. |
(5) | During the periods indicated above, the Investment Manager waived a portion of its investment management fee. The effect of such waivers relative to the average net assets of common shareholders was 0.24% (annualized), 0.24%, 0.24%, 0.24% and 0.23% (annualized) for the six months ended March 31, 2007, and the years ended September 30, 2006, September 30, 2005, September 30, 2004 and for the period October 31, 2002 (commencement of operations) through September 30, 2003. |
See accompanying Notes to Financial Statements | 3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 47
Annual Shareholder Meetings Results:
The Funds held their annual meetings of shareholders on December 20, 2006. Common/Preferred shareholders of each fund voted to re-elect Robert E. Connor and Hans W. Kertess* and elect William B. Ogden IV* as Class I Trustees.
The resulting vote count is indicated below:
Affirmative | Withheld Authority |
|||||||||
Municipal III: | ||||||||||
Re-Election of Hans W. Kertess | 27,421,378 | 330,163 | ||||||||
Election of William B. Ogden IV | 27,421,656 | 329,885 | ||||||||
Re-Election of Robert E. Connor | 9,170 | 32 | ||||||||
California Municipal III: | ||||||||||
Re-Election of Hans W. Kertess | 18,004,040 | 155,851 | ||||||||
Election of William B. Ogden IV | 18,004,649 | 155,242 | ||||||||
Re-Election of Robert E. Connor | 6,050 | 11 | ||||||||
New York Municipal III: | ||||||||||
Re-Election of Hans W. Kertess | 4,683,009 | 45,718 | ||||||||
Election of William B. Ogden IV | 4,689,898 | 38,829 | ||||||||
Re-Election of Robert E. Connor | 1,732 | 2 | ||||||||
Messrs. Paul Belica, Jack J. Dalessandro*, John C. Maney and R. Peter Sullivan III continue to serve as Trustees of the Funds. | ||||||||||
* Preferred Shares Trustee |
Corporate Changes:
On December 12, 2006, the Fund’s Board of Trustees appointed John C. Maney, as Class III (interested) Trustee, and appointed Hans W. Kertess as Chairman of the Board of Trustees, effective January 1, 2007.
48 PIMCO Municipal Income Funds III Semi-Annual Report | 3.31.07
3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 49
Trustees and Principal Officers
Hans W. Kertess | Lawrence G. Altadonna | |||||
Trustee, Chairman of the Board of Trustees | Treasurer, Principal Financial & Accounting Officer | |||||
Paul Belica | Thomas J. Fuccillo | |||||
Trustee | Vice President, Secretary & Chief Legal Officer | |||||
Robert E. Connor | Scott Whisten | |||||
Trustee | Assistant Treasurer | |||||
John J. Dalessandro II | Youse E. Guia | |||||
Trustee | Chief Compliance Officer | |||||
John C. Maney | Kathleen A. Chapman | |||||
Trustee | Assistant Secretary | |||||
William B. Ogden, IV | William V. Healy | |||||
Trustee | Assistant Secretary | |||||
R. Peter Sullivan III | Richard H. Kirk | |||||
Trustee | Assistant Secretary | |||||
Brian S. Shlissel | Lagan Srivastava | |||||
President & Chief Executive Officer | Assistant Secretary | |||||
Investment Manager
Allianz Global Investors Fund Management LLC
1345 Avenue of the Americas
New York, NY 10105
Sub-Adviser
Pacific Investment Management Company LLC
840 Newport Center Drive
Newport Beach, CA 92660
Custodian & Accounting Agent
State Street Bank & Trust Co.
225 Franklin Street
Boston, MA 02110
Transfer Agent, Dividend Paying Agent and Registrar
PFPC Inc.
P.O. Box 43027
Providence, RI 02940-3027
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
300 Madison Avenue
New York, NY 10017
Legal Counsel
Ropes & Gray LLP
One International Place
Boston, MA 02210-2624
This report, including the financial information herein, is transmitted to the shareholders of PIMCO Municipal Income Fund III, PIMCO California Municipal Income Fund III and PIMCO New York Municipal Income Fund III for their information. It is not a prospectus, circular or representation intended for use in the purchase of shares of the Funds or any securities mentioned in this report.
The financial information included herein is taken from the records of the Funds without examination by an independent registered accounting firm, who did not express an opinion hereon.
Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940, as amended, that from time to time the Fund may purchase shares of its common stock in the open market.
The Funds file their complete schedules of portfolio holdings with the Securities and Exchange Commission (‘‘SEC’’) for the first and third quarter of its fiscal year on Form N-Q. The Funds’ Form N-Qs are available on the SEC’s website at www.sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. The information on Form N-Q is also available on the Fund’s website at www.allianzinvestors.com/closedendfunds.
On January 3, 2007, the Funds submitted a CEO annual certification to the New York Stock Exchange (‘‘NYSE’’) on which the Funds’ principal executive officer certified that he was not aware, as of that date, of any violation by the Fund of the NYSE’s Corporate Governance listing standards. In addition, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and related SEC rules each Fund’s principal executive and principal financial officer made quarterly certifications, included in filings with the SEC on Forms N-CSR and N-Q, relating to, among other things, the Funds’ disclosure controls and procedures and internal control over financial reporting, as applicable.
Information on the Funds is available at www.allianzinvestors.com/closedendfunds or by calling the Funds’ shareholder servicing agent at (800) 331-1710.
ITEM 2. CODE OF ETHICS Not required in this filing. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT Not required in this filing. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES Not required in this filing. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANT Not required in this filing. ITEM 6. SCHEDULE OF INVESTMENTS Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this form. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES Not required in this filing. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES Not required in this filing. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED COMPANIES. TOTAL NUMBER OF SHARES PURCHASED MAXIMUM NUMBER OF TOTAL NUMBER AVERAGE AS PART OF PUBLICLY SHARES THAT MAY YET BE OF SHARES PRICE PAID ANNOUNCED PLANS OR PURCHASED UNDER THE PLANS PERIOD PURCHASED PER SHARE PROGRAMS OR PROGRAMS October 2006 N/A 15.571 2,388 N/A November 2006 N/A 15.675 2,535 N/A December 2006 N/A 15.503 5,241 N/A January 2007 N/A N/A N/A N/A February 2007 N/A 15.314 2,616 N/A March 2007 N/A 15.33 2,596 N/A ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There have been no material changes to the procedures by which shareholders may recommend nominees to the Fund's Board of Trustees since the Fund last provided disclosure in response to this item. ITEM 11. CONTROLS AND PROCEDURES (a) The Registrant's President and Chief Executive Officer and Principal Financial Officer have concluded that the Registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document. (b) In January 2007, during the Registrant's second fiscal quarter covered by this report, the principal executive and financial officers became aware of matters relating to the Registrant's purchase of certain inverse floating rate obligations that required enhancements to certain controls. The Registrant's management determined that controls relating to the review and analysis of the relevant contractual terms and conditions of transfers of securities in connection with the purchase of certain inverse floating rate obligations were not effective in identifying whether these transfers qualified for sale accounting under the provisions of Statement of Financial Accounting Standards No. 140 ("SFAS 140"). The Registrant's management has taken such further actions as are necessary to revise its controls and procedures in order to increase the effectiveness of these controls and procedures in identifying such transactions that require accounting treatment under SFAS 140. ITEM 12. EXHIBITS (a) (1) Exhibit 99.302 CERT - Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (b) Exhibit 99.906 Cert. - Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Signature Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PIMCO New York Municipal Income Fund III By /s/ Brian S. Shlissel ------------------------ Brian S. Shlissel, President & Chief Executive Officer Date: June 6, 2007 By /s/ Lawrence G. Altadonna ---------------------------- Lawrence G. Altadonna, Treasurer, Principal Financial & Accounting Officer Date: June 6, 2007 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /s/ Brian S. Shlissel ------------------------ Brian S. Shlissel, President & Chief Executive Officer Date: June 6, 2007 By /s/ Lawrence G. Altadonna ---------------------------- Lawrence G. Altadonna, Treasurer, Principal Financial & Accounting Officer Date: June 6, 2007