-------------------------- OMB APPROVAL ------------ OMB Number: 3235-0578 Expires: February 28, 2006 Estimated average burden hours per response: 20.0 -------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM N-Q QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY Investment Company Act File Number: 811-21187 Registrant Name: PIMCO MUNICIPAL INCOME III FUND Address of Principal Executive Offices: 1345 Avenue of the Americas New York, New York 10105 Name and Address of Agent for Service: Lawrence G. Altadonna - 1345 Avenue of the Americas New York, New York 10105 Registrant's telephone number, including area code: 212-739-3371 Date of Fiscal Year End: September 30, 2005 Date of Reporting Period: June 30, 2005 Form N-Q is to be used by the registered management investment company, other than a small business investment company registered on Form N-5 (ss.ss. 239.24 and 274.5 of this chapter), to file reports with the Commission, not later than 60 days after the close of the first and third fiscal quarters, pursuant to rule 30b 1-5 under the Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission may use the information provided on Form N-Q in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public. A registrant is not required to the collection of information contained in Form N-Q unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. SCHEDULE OF INVESTMENTS PIMCO MUNICIPAL INCOME FUND III SCHEDULE OF INVESTMENTS June 30, 2005 (unaudited) <TABLE> ------------------------------------------------------------------------------------------------------------------------------------ Principal Amount Credit Rating (000) (Moody's/S&P) Value* ------------------------------------------------------------------------------------------------------------------------------------ MUNICIPAL BONDS & NOTES--90.9% ALABAMA--0.7% Birmingham, GO, Ser. B (AMBAC), $ 1,000 5.00%, 12/1/27 Aaa/AAA $ 1,053,010 2,560 5.00%, 12/1/32 Aaa/AAA 2,682,419 1,500 Colbert Cnty., Northwest Health Care Auth., Health Care Facs. Rev., 5.75%, 6/1/27 Baa3/NR 1,524,975 ------------- 5,260,404 ------------- ALASKA--0.7% State Housing Finance Corp. Rev., 3,900 5.00%, 12/1/33, Ser. A Aaa/AAA 4,023,903 1,000 5.25%, 6/1/32, Ser. C (MBIA) Aaa/AAA 1,021,710 ------------- 5,045,613 ------------- ARIZONA--0.6% 2,200 Health Facs. Auth. Hospital System Rev., 7.00%, 12/1/25 NR/BBB 2,474,186 1,500 Maricopa Cnty. Pollution Control Corp., Pollution Control Rev., 5.05%, 5/1/29 (AMBAC) Aaa/AAA 1,585,350 ------------- 4,059,536 ------------- CALIFORNIA--7.5% 1,000 Alameda Public Financing Auth. Rev., 7.00%, 6/1/09 NR/NR 1,027,660 Golden State Tobacco Securitization Corp., Tobacco Settlement Rev., Ser. 2003-A-1, 27,585 6.25%, 6/1/33 Baa3/BBB 30,093,580 21,000 6.75%, 6/1/39 Baa3/BBB 23,665,740 ------------- 54,786,980 ------------- COLORADO--2.7% El Paso Cnty., CP, (AMBAC), 1,735 5.00%, 12/1/23, Ser. A Aaa/AAA 1,844,010 1,725 5.00%, 12/1/23, Ser. B Aaa/AAA 1,833,382 2,820 5.00%, 12/1/27, Ser. A Aaa/AAA 2,975,015 1,500 5.00%, 12/1/27, Ser. B Aaa/AAA 1,582,455 1,500 Garfield Cnty. School Dist. Re-2, GO, 5.00%, 12/1/25 (FSA) Aaa/NR 1,588,335 La Plata Cnty. School Dist. No. 9-R, Durango, GO, (MBIA), 1,000 5.25%, 11/1/23 Aaa/NR 1,084,520 2,000 5.25%, 11/1/25 Aaa/NR 2,167,720 4,000 Saddle Rock Met. Dist., GO, 5.35%, 12/1/31 (Radian) NR/AA 4,171,320 2,500 School Mines Auxiliary Facs. Rev., 5.00%, 12/1/37 (AMBAC) Aaa/AAA 2,616,300 ------------- 19,863,057 ------------- FLORIDA--6.3% 8,000 Highlands Cnty. Health Facs. Auth. Rev., 5.25%, 11/15/23, Ser. B A2/A 8,459,120 2,500 Hillsborough Cnty. Industrial Dev. Auth., Hospital Rev., 5.25%, 10/1/34, Ser. B Baa1/NR 2,608,425 </TABLE> PIMCO MUNICIPAL INCOME FUND III SCHEDULE OF INVESTMENTS June 30, 2005 (unaudited) <TABLE> ------------------------------------------------------------------------------------------------------------------------------------ Principal Amount Credit Rating (000) (Moody's/S&P) Value* ------------------------------------------------------------------------------------------------------------------------------------ FLORIDA (CONTINUED) $ 1,485 Julington Creek Plantation Community Dev. Dist., Special Assessment Rev., 5.00%, 5/1/29 (MBIA) Aaa/AAA $ 1,571,516 1,000 Orange Cnty., Housing Finance Auth. Multifamily Rev., 5.25%, 1/1/28, Ser. G (FNMA) Aaa/NR 1,040,120 15,000 Pinellas Cnty. Health Facs. Auth. Rev., 5.50%, 11/15/33 A1/NR 16,003,200 7,500 South Miami Health Facs. Auth., Hospital Rev., 5.25%, 11/15/33 Aa3/AA- 7,862,100 2,500 State Board Public Education, GO, 5.00%, 6/1/13, Ser. A (MBIA) Aaa/AAA 2,780,575 5,615 Tampa, Water & Sewer Rev., 5.00%, 10/1/26, Ser. A Aa2/AA 5,949,934 ------------- 46,274,990 ------------- GEORGIA--1.0% 4,000 Griffin Combined Public Utility Rev., 5.00%, 1/1/32 (AMBAC) Aaa/AAA 4,254,680 2,805 State GO, 5.50%, 7/1/13, Ser. C Aaa/AAA 3,222,384 ------------- 7,477,064 ------------- IDAHO--1.0% State Building Auth. Building Rev., Ser. A (XLCA), 1,000 5.00%, 9/1/33 Aaa/AAA 1,051,170 5,750 5.00%, 9/1/43 Aaa/AAA 6,036,580 ------------- 7,087,750 ------------- ILLINOIS--8.2% 2,250 Chicago, GO , 5.00%, 1/1/31, Ser. A (MBIA) Aaa/AAA 2,349,968 Chicago Board of Education, GO, Ser. C (FSA) 500 zero coupon, 12/1/28, Ser. A (FGIC) Aaa/AAA 167,810 5,000 5.00%, 12/1/31 (Pre-refunded @ 100, 12/1/11) (a) Aaa/AAA 5,517,200 3,000 Chicago Kingsbury Redev. Project, Tax Allocation, 6.57%, 2/15/13, Ser. A NR/NR 3,151,590 7,000 Chicago Motor Fuel Tax Rev., 5.00%, 1/1/33, Ser. A (AMBAC) Aaa/AAA 7,352,380 4,000 Chicago Park Dist., GO, 5.00%, 1/1/29, Ser. D (FGIC) Aaa/AAA 4,169,960 Chicago, Special Assessment, 1,600 6.625%, 12/1/22 NR/NR 1,696,304 3,456 6.75%, 12/1/32 NR/NR 3,678,255 2,500 Chicago Water Rev., 5.00%, 11/1/31 (AMBAC) (Pre-refunded @100, 11/1/11) (a) Aaa/AAA 2,755,500 Educational Facs. Auth. Rev., 4,780 5.00%, 7/1/33 Aa1/AA 5,027,222 220 5.00%, 7/1/33 (Pre-refunded @ $100, 7/1/13) (a) Aa1/AA 245,740 165 5.25%, 7/1/41 Aa1/AA 176,004 4,160 5.25%, 7/1/41 (Pre-refunded @ $101, 7/1/11) (a) Aa1/AA 4,660,637 9,045 Metropolitan Pier & Exposition Auth., Dedicated State Tax Rev., 5.25%, 6/15/42 (MBIA) Aaa/AAA 9,673,627 4,300 Round Lake, Special Tax Rev., 6.70%, 3/1/33 NR/NR 4,689,279 1,175 State Health Facs. Auth. Rev., 5.50%, 1/1/22 A2/NR 1,253,584 3,050 University, Rev., 5.00%, 4/1/30, Ser. A (AMBAC) Aaa/AAA 3,171,451 ------------- 59,736,511 ------------- </TABLE> PIMCO MUNICIPAL INCOME FUND III SCHEDULE OF INVESTMENTS June 30, 2005 (unaudited) <TABLE> ------------------------------------------------------------------------------------------------------------------------------------ Principal Amount Credit Rating (000) (Moody's/S&P) Value* ------------------------------------------------------------------------------------------------------------------------------------ INDIANA--4.2% $ 7,535 Bond Bank Rev., 5.00%, 2/1/33, Ser. A (FSA) Aaa/AAA $ 7,891,179 3,000 Brownsburg 1999 School Building Corp. Rev., 5.25%, 3/15/25, Ser. A (FSA) Aaa/AAA 3,259,560 1,375 Fort Wayne Pollution Control Rev., 6.20%, 10/15/25 Baa3/BB 1,343,843 5,000 Indianapolis Local Public Improvement Board, Tax Allocation 5.00%, 2/1/29, Ser. G (MBIA) Aaa/AAA 5,250,300 Michigan City Area Wide School Building Corp., Rev., (FGIC), 2,500 zero coupon, 1/15/21 Aaa/AAA 1,250,925 1,000 zero coupon, 7/15/21 Aaa/AAA 489,340 1,000 zero coupon, 1/15/22 Aaa/AAA 473,930 1,000 Plainfield Parks Facs. Corp. Lease Rent Rev., 5.00%, 1/15/22 (AMBAC) Aaa/AAA 1,073,580 3,500 State Dev. Finance Auth. Pollution Control Rev., 5.00%, 3/1/30 (AMBAC) Aaa/AAA 3,516,520 3,455 Valparaiso, Middle Schools Building Corp. Rev., 5.00%, 7/15/24 (MBIA) Aaa/AAA 3,659,156 2,440 Zionsville Community Schools Building Corp. Rev., 5.00%, 7/15/27, Ser. A (FSA) NR/AAA 2,604,529 ------------- 30,812,862 ------------- IOWA--0.1% 1,000 Tobacco Settlement Auth. Rev., 5.60%, 6/1/35, Ser. B Baa3/BBB 1,025,810 ------------- KENTUCKY--0.9% Economic Dev. Finance Auth. Hospital Facs., Rev., 1,000 5.25%, 10/1/30 Aa3/AA- 1,048,960 4,805 6.00%, 10/1/19 A3/A 5,361,323 ------------- 6,410,283 ------------- LOUISIANA--1.0% 5,000 Public Facs. Auth. Rev., Ochsner Clinic Foundation, 5.50%, 5/15/32, Ser. B A3/NR 5,276,800 1,595 Tobacco Settlement Financing Corp., Rev., 5.875%, 5/15/39, Ser. 2001B Baa3/BBB 1,665,674 ------------- 6,942,474 ------------- MARYLAND--0.2% 1,500 State Health & Higher Educational Facs. Auth. Rev., 5.50%, 7/1/36 A2/NR 1,599,585 ------------- MASSACHUSETTS--3.4% 1,000 State Dev. Finance Agcy. Rev., 5.75%, 7/1/33 Baa1/BBB 1,079,600 7,000 State Health & Educational Facs. Auth. Rev., 5.125%, 7/15/37, Ser. FF Aaa/AAA 7,434,070 4,910 State Housing Finance Agcy., Housing Rev., 5.125%, 6/1/43, Ser. H Aa3/AA- 5,038,642 3,225 State Water Pollution Abatement Trust Rev., 5.00%, 8/1/32, Ser. 8 Aaa/AAA 3,393,377 7,555 State Water Resources Auth. Rev., 5.00%, 8/1/32, Ser. J (FSA) Aaa/AAA 7,925,875 ------------- 24,871,564 ------------- </TABLE> PIMCO MUNICIPAL INCOME FUND III SCHEDULE OF INVESTMENTS June 30, 2005 (unaudited) <TABLE> ------------------------------------------------------------------------------------------------------------------------------------ Principal Amount Credit Rating (000) (Moody's/S&P) Value* ------------------------------------------------------------------------------------------------------------------------------------ MICHIGAN--7.0% $ 12,240 Detroit Water Supply System Rev., 5.00%, 7/1/34, Ser. B (MBIA) Aaa/AAA $ 12,949,553 5,000 State Building Auth., Rev., 5.00%, 10/15/26, Ser. III (FSA) Aaa/AAA 5,296,400 175 State Hospital Finance Auth. Rev., Detroit Medical Center, 5.25%, 8/15/23 Ba3/BB- 158,996 4,000 State Hospital Finance Auth. Rev., Henry Ford Health System, 5.00%, 3/1/17 A1/A- 4,220,760 State Hospital Finance Auth. Rev., Oakwood Group, Ser. A, 5,405 5.75%, 4/1/32 A2/A 5,772,702 575 6.00%, 4/1/22 A2/A 635,519 20,000 State Hospital Finance Auth. Rev., Trinity Health Credit, 5.375%, 12/1/30 Aa3/AA- 21,245,800 1,000 Technological University Rev., 5.00%, 10/1/33 (XLCA) Aaa/AAA 1,049,620 ------------- 51,329,350 ------------- MINNESOTA--0.3% 2,400 Upsala Independent School Dist. No. 487, GO, 5.00%, 2/1/28 (FGIC) Aaa/AAA 2,540,880 ------------- MISSISSIPPI--0.6% Business Finance Corp., Pollution Control Rev., 3,000 5.875%, 4/1/22 Ba1/BBB- 3,046,140 1,250 5.90%, 5/1/22 Ba1/BBB- 1,271,938 ------------- 4,318,078 ------------- MISSOURI--3.0% 4,000 Bi-State Dev. Agcy., Missouri Illinois Met. Dist. Rev., 5.00%, 10/1/32 (FSA) Aaa/AAA 4,229,160 1,350 St. Louis Cnty. Industrial Dev. Auth., Housing Dev. Rev., 5.20%, 1/20/36 (GNMA) St. NR/AAA 1,394,118 Louis Industrial Dev. Auth. Rev., (GNMA), 1,500 5.125%, 12/20/29 NR/AAA 1,560,240 1,500 5.125%, 12/20/30 NR/AAA 1,550,625 4,365 State Environmental Improvement & Energy Resources Auth., Water Pollution Control Rev., 5.00%, 7/1/23, Ser. B Aaa/NR 4,674,129 7,500 State Health & Educational Facs. Auth., Health Facs. Rev., 6.25%, 12/1/30 A2/A 8,133,075 ------------- 21,541,347 ------------- MONTANA--1.6% 11,250 Forsyth Pollution Control Rev., 5.00%, 3/1/31 (AMBAC) Aaa/AAA 11,854,913 ------------- NEVADA--0.6% 3,355 Henderson Health Care Rev., 5.125%, 7/1/28 Baa1/A- 3,399,152 995 Henderson Local Improvement Dists., Special Assessment, 5.80%, 3/1/23 NR/NR 1,026,123 ------------- 4,425,275 ------------- </TABLE> PIMCO MUNICIPAL INCOME FUND III SCHEDULE OF INVESTMENTS June 30, 2005 (unaudited) <TABLE> ------------------------------------------------------------------------------------------------------------------------------------ Principal Amount Credit Rating (000) (Moody's/S&P) Value* ------------------------------------------------------------------------------------------------------------------------------------ NEW HAMPSHIRE--0.7% Manchester Water Works Rev., (FGIC), $ 1,500 5.00%, 12/1/28 Aaa/AAA $ 1,596,180 3,250 5.00%, 12/1/34 Aaa/AAA 3,432,358 ------------- 5,028,538 ------------- NEW JERSEY--4.5% 1,540 Camden Cnty., Improvement Auth. Rev., 6.00%, 2/15/27 Baa3/BBB 1,580,471 4,500 Economic Dev. Auth., Economic Dev., 6.50%, 4/1/28 Baa3/NR 5,341,725 300 Economic Dev. Auth., Industrial Dev. Rev., 7.00%, 10/1/14 Ba3/NR 312,282 3,000 Health Care Facs. Financing Auth. Rev., Pascack Valley Hospital, 6.625%, 7/1/36 NR/B+ 3,005,670 2,000 Health Care Facs. Financing Auth. Rev., Somerset Medical Center, 5.50%, 7/1/33 Baa3/NR 2,059,860 2,500 Middlesex Cnty. Pollution Control Auth., Rev., 5.75%, 9/15/32 Ba1/BBB- 2,653,250 2,000 South Port Corp., Rev., 5.10%, 1/1/33 NR/A- 2,097,300 1,500 State Educational Facs. Auth. Rev., 6.00%, 7/1/25, Ser. D NR/NR 1,625,475 Tobacco Settlement Financing Corp., Rev., 525 6.00%, 6/1/37 Baa3/BBB 549,065 1,000 6.125%, 6/1/24 Baa3/BBB 1,069,280 230 6.125%, 6/1/42 Baa3/BBB 241,514 350 6.25%, 6/1/43 Baa3/BBB 372,383 10,750 6.75%, 6/1/39 Baa3/BBB 12,017,103 ------------- 32,925,378 ------------- NEW MEXICO--0.1% 1,000 Farmington Pollution Control Rev., 5.80%, 4/1/22 Baa2/BBB 1,019,780 ------------- NEW YORK--5.9% 10,000 Metropolitan Transportation Auth. Rev., 5.25%, 11/15/32, Ser. B A2/A 10,799,000 New York City Muni. Water Finance Auth., Water & Sewer System Rev., 5,000 5.00%, 6/15/35, Ser. C Aa2/AA+ 5,295,500 2,555 5.00%, 6/15/37, Ser. D Aa2/AA+ 2,719,670 1,500 5.00%, 6/15/39, Ser. A Aa2/AA+ 1,588,650 11,590 State Dormitory Auth. Rev., 5.00%, 7/1/34, Ser. 1 Aa2/AA 12,053,948 3,825 St. Barnabas, 5.125%, 2/1/22, Ser. A (FHA-AMBAC) Aaa/AAA 4,134,060 3,800 State Personal Income Tax, Rev., 5.00%, 3/15/32 (Pre-refunded @ $100, 3/15/13) (a) A1/AA 4,230,045 2,000 State Environmental Fac. Corp. Clean Water & Drinking Rev., 5.00%, 6/15/28 Aaa/AAA 2,127,880 ------------- 42,948,753 ------------- NORTH CAROLINA--1.6% 2,000 Charlotte-Mecklenburg Hospital Auth., Healthcare System Rev., 5.00%, 1/15/33, Ser. A Aa3/AA 2,076,140 </TABLE> PIMCO MUNICIPAL INCOME FUND III SCHEDULE OF INVESTMENTS June 30, 2005 (unaudited) <TABLE> ------------------------------------------------------------------------------------------------------------------------------------ Principal Amount Credit Rating (000) (Moody's/S&P) Value* ------------------------------------------------------------------------------------------------------------------------------------ NORTH CAROLINA (CONTINUED) Eastern Municipal Power Agcy, Power System Rev., $ 2,000 5.125%, 1/1/23, Ser. D Baa2/BBB $ 2,078,680 2,000 5.125%, 1/1/26, Ser. D Baa2/BBB 2,074,820 3,795 5.375%, 1/1/17, Ser. C Baa2/BBB 4,083,913 1,500 Medical Care Commission, Health Care Facs. Rev., 5.00%, 7/1/35 (AMBAC) Aaa/AAA 1,579,860 ------------- 11,893,413 ------------- OHIO--0.4% 2,500 Lorain Cnty. Hospital Rev., 5.375%, 10/1/30 A1/AA- 2,633,650 ------------- PENNSYLVANIA--3.8% 4,350 Allegheny Cnty. Hospital Dev. Auth. Rev., 9.25%, 11/15/30, Ser. B B1/B 5,248,058 1,500 Cumberland Cnty. Auth. Retirement Community Rev., 7.25%, 1/1/35, Ser. A NR/NR 1,628,160 3,250 Delaware River Joint Toll Bridge, Commission Bridge Rev., 5.00%, 7/1/28 A2/A- 3,406,845 3,000 Lehigh Cnty. General Purpose Auth. Rev., 5.375%, 8/15/33 Baa2/BBB 3,112,530 5,000 Philadelphia School Dist., GO, 5.125%, 6/1/34, Ser. D ( FGIC) Aaa/AAA 5,371,150 2,500 Radnor Township School Dist., GO, 5.00%, 2/15/35, Ser. B (FSA) Aaa/NR 2,680,275 6,300 St. Mary Hospital Auth., Bucks Cnty. Rev., 5.00%, 12/1/28, (Partially pre-refunded @ 101, 6/1/08) (a) Aa2/NR 6,393,996 ------------- 27,841,014 ------------- PUERTO RICO--0.3% 2,200 Electric Power Auth., Power Rev., 5.125%, 7/1/29, Ser. NN A3/A- 2,339,920 ------------- SOUTH CAROLINA--2.1% 7,500 Florence Cnty. Hospital Rev., 5.00%, 11/1/31, Ser. A (FSA) Aaa/AAA 7,946,475 6,700 Jobs Economic Dev. Auth. Rev., 5.625%, 11/15/30 A3/A- 7,043,040 ------------- 14,989,515 ------------- TENNESSEE--0.7% 1,250 Knox Cnty. Health Educational & Housing Facs. Board, Hospital Facs. Rev., 5.25%, 10/1/30 Aa3/AA- 1,314,363 3,500 Memphis Electric System Rev., 5.00%, 12/1/12, Ser. A (MBIA) Aaa/AAA 3,880,590 ------------- 5,194,953 ------------- TEXAS--11.2% 4,135 Canyon Independent School Dist., GO, 5.00%, 2/15/28, Ser. A (PSF) NR/AAA 4,351,095 2,500 Columbia & Brazoria Independent School Dist., GO, 5.00%, 8/1/29 (PSF) NR/AAA 2,632,125 1,300 Comal Cnty. Health Facs., Mckenna Memorial Hospital Project Rev., 6.25%, 2/1/32 Baa2/BBB 1,405,560 6,810 Crowley Independent School Dist., GO, 4.75%, 8/1/35 (PSF) Aaa/AAA 6,929,856 </TABLE> PIMCO MUNICIPAL INCOME FUND III SCHEDULE OF INVESTMENTS June 30, 2005 (unaudited) <TABLE> ------------------------------------------------------------------------------------------------------------------------------------ Principal Amount Credit Rating (000) (Moody's/S&P) Value* ------------------------------------------------------------------------------------------------------------------------------------ TEXAS (CONTINUED) Denton Independent School Dist., GO, (PSF), $ 6,000 zero coupon, 8/15/26 Aaa/AAA $ 1,939,740 6,000 zero coupon, 8/15/27 Aaa/AAA 1,817,340 5,000 zero coupon, 8/15/28 Aaa/AAA 1,424,550 6,000 zero coupon, 8/15/29 Aaa/AAA 1,602,060 2,000 zero coupon, 8/15/30 Aaa/AAA 500,740 8,000 zero coupon, 8/15/31 Aaa/AAA 1,884,320 4,400 Harris Cnty., GO, 5.125%, 8/15/31 (Pre-refunded @ $100, 8/15/12) (a) Aa1/AA+ 4,913,788 Harris Cnty. Health Facs. Dev. Corp. Rev., Ser. A, 2,750 5.375%, 2/15/26 NR/AA- 2,883,128 5,000 5.375%, 7/1/29, (MBIA) Aaa/AAA 5,341,350 19,500 Harris Cnty. Rev., 5.125%, 8/15/32 (FSA) Aaa/AAA 20,622,225 4,005 Houston, GO, 5.00%, 3/1/25 (MBIA) Aaa/AAA 4,215,182 5,000 Houston Water & Sewer System Rev., 5.00%, 12/1/30, Ser. A (FSA) (Pre-refunded @ 100, 12/1/12) (a) Aaa/AAA 5,498,900 7,000 Judson Independent School Dist., GO, 5.00%, 2/1/30 (PSF) Aaa/NR 7,261,240 415 Leander Independent School Dist., GO, 5.00%, 8/15/32 (PSF) NR/AAA 433,389 1,500 North Thruway Auth., Dallas North Thruway System Rev., 5.00%, 1/1/33, Ser. A (AMBAC) Aaa/AAA 1,572,465 2,105 Northwest Harris Cnty. Muni. Utility Dist. No. 16, GO, 5.30%, 10/1/29 (Radian) NR/AA 2,197,599 2,000 University of Texas Rev., 5.00%, 7/1/26, Ser. B Aaa/AAA 2,131,060 ------------- 81,557,712 ------------- UTAH--0.8% 4,100 Salt Lake Cnty. Hospital Rev., 5.125%, 2/15/33 (AMBAC) Aaa/AAA 4,316,685 1,750 Weber Cnty., Hospital Rev., 5.00%, 8/15/30 Aa1/AA+ 1,798,965 ------------- 6,115,650 ------------- WASHINGTON--7.1% 6,375 Chelan Cnty. Public Utility Dist. Rev., 5.125%, 7/1/33, Ser. C (AMBAC) Aaa/AAA 6,732,765 15,000 King Cnty. Sewer Rev., 5.00%, 1/1/35, Ser. A (FSA) Aaa/AAA 15,640,500 3,000 Port Seattle, Rev., 5.00%, 9/1/24 (FGIC) Aaa/AAA 3,179,130 23,700 Tobacco Settlement Auth., Tobacco Settlement Rev., 6.50%, 6/1/26 Baa3/BBB 25,915,239 ------------- 51,467,634 ------------- WISCONSIN--0.1% 560 Badger Tobacco Asset Securitization Corp. Rev., 6.00%, 6/1/17 Baa3/BBB 590,649 ------------- Total Municipal Bonds & Notes (cost--$617,422,270) 663,810,885 ------------- VARIABLE RATE NOTES (b)(c)(g)--7.3% CALIFORNIA--1.4% 7,000 State Economic Recovery, GO, 15.005%, 7/1/11, Ser. 930 (MBIA) NR/AAA 10,392,830 ------------- </TABLE> PIMCO MUNICIPAL INCOME FUND III SCHEDULE OF INVESTMENTS June 30, 2005 (unaudited) <TABLE> ------------------------------------------------------------------------------------------------------------------------------------ Principal Amount Credit Rating (000) (Moody's/S&P) Value* ------------------------------------------------------------------------------------------------------------------------------------ COLORADO--0.4% $ 1,994 Colorado Springs Utilities Rev., 14.869%, 11/15/30, Ser. 1141 Aa2/NR $ 2,537,745 ------------- FLORIDA--0.4% 2,554 State Department of Transportation Turnpike Rev., 13.635%, 7/1/31, Ser. 1128 Aa2/NR 2,943,230 ------------- ILLINOIS--0.3% 1,990 Dev. Finance Auth., Gas Supply Rev., 18.429%, 2/1/11 (AMBAC) NR/NR 2,479,301 ------------- MICHIGAN--2.0% Detroit Sewer Disposal Rev., 4,990 18.903%, 7/1/11 (FSA) NR/AAA 6,813,446 Detroit Water Supply System Rev., 5,720 17.660%, 1/1/11 (MBIA) NR/AAA 7,748,998 ------------- 14,562,444 ------------- NEW MEXICO--0.1% 405 State Finance Auth., Transportation Rev., 14.873%, 6/15/12, Ser. 949 (AMBAC) Aaa/NR 612,814 ------------- TEXAS--1.5% 2,450 Dallas Area Rapid Transit Rev., 15.623%, 12/1/32 (FGIC) NR/NR 3,078,768 2,028 Denton Independent School Dist., GO, 14.858%, 8/15/33 (PSF) Aaa/NR 2,469,333 1,870 Mansfield Independent School Dist., GO, 18.332%, 2/15/28 (PSF) NR/NR 2,494,505 2,060 University of Texas Rev., 15.913%, 8/15/33 NR/NR 2,696,561 ------------- 10,739,167 ------------- WASHINGTON--1.2% 1,520 King Cnty. Sewer Rev., 18.798%, 7/1/11 (FGIC) NR/NR 2,030,310 3,655 Port Tacoma, GO, 17.159%, 12/1/33 (AMBAC) NR/NR 4,805,667 1,510 Seattle Drain & Wastewater Rev., 18.906%, 7/1/10 (FGIC) NR/NR 1,971,501 ------------- 8,807,478 ------------- Total Variable Rate Notes (cost--$44,610,199) 53,075,009 ------------- VARIABLE RATE DEMAND NOTES (b)(d)--1.1% ALASKA--0.5% 4,000 State Housing Finance Corp. Rev., 2.40%, 7/7/05, Ser. B (FSA) VMIG1/A-1+ 4,000,000 ------------- DISTRICT OF COLUMBIA--0.5% 2,000 American University Rev., 2.21%, 7/6/05 NR/A-1 2,000,000 2,000 John F. Kennedy Ctr. Performing Arts Rev., 2.21%, 7/6/05 (AMBAC) VMIG1/A-1+ 2,000,000 ------------- 4,000,000 ------------- </TABLE> PIMCO MUNICIPAL INCOME FUND III SCHEDULE OF INVESTMENTS June 30, 2005 (unaudited) <TABLE> ------------------------------------------------------------------------------------------------------------------------------------ Principal Amount Credit Rating (000) (Moody's/S&P) Value* ------------------------------------------------------------------------------------------------------------------------------------ NEW YORK--0.1% $ 400 Triborough Bridge & Tunnel Auth. Rev., 2.23%, 7/6/05, Ser. C (AMBAC) VMIG1/A-1+ $ 400,000 ------------- Total Variable Rate Demand Notes (cost--$8,400,000) 8,400,000 ------------- U.S. TREASURY BILLS (e)--1.0% 7,280 2.92%-3.05%, 9/1/05-9/15/05 (cost--$7,237,007) Aaa/AAA 7,236,949 -------------- TOTAL INVESTMENTS BEFORE OPTIONS WRITTEN (cost--$677,669,476)--100.3% 732,522,843 -------------- OPTIONS WRITTEN (f)--(0.3%) Contracts --------- CALL OPTIONS--(0.3%) U.S. Treasury Notes 10 yr. Futures, Chicago Board of Trade, 331 strike price $112, expires 8/26/05 (615,453) 1,593 strike price $113, expires 8/26/05 (1,866,797) ------------- (2,482,250) -------------- PUT OPTIONS--(0.0%) U.S. Treasury Notes 10 yr. Futures, Chicago Board of Trade, 1,135 strike price $113, expires 8/26/05 (177,344) ------------- Total Options Written (premiums received---$2,643,058) (2,659,594) -------------- TOTAL INVESTMENTS NET OF OPTIONS WRITTEN (cost--$675,206,418)--100.0% $729,863,249 -------------- </TABLE> OTHER INVESTMENTS: Futures contracts outstanding at June 30, 2005: <TABLE> Notional Amount Expiration Unrealized Type (000) Date Depreciation ------------------------------------------------------------------------------------------------------ Short: U.S. Treasury 30 Year Bond $30,700 9/21/05 $225,453 </TABLE> NOTES TO SCHEDULE OF INVESTMENTS: * Portfolio securities and other financial instruments for which market quotations are readily available are stated at market value. Portfolio securities and other financial instruments for which market quotations are not readily available or if a development/event occurs that may significantly impact the value of the security, may be fair-valued, in good faith, pursuant to guidelines established by the Board of Trustees. The Fund's investments are valued daily by an independent pricing service. The independent pricing service uses 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 issued on a when-issued or delayed-delivery basis are marked to market daily until settlement at the forward settlement value. Short-term investments maturing in 60 days or less are valued at amortized cost, if their original maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days. The prices used by the Fund to value securities may differ from the value that would be realized if the securities were sold. The Fund's net asset value is determined daily at the close of regular trading (normally 4:00 p.m. Eastern time) on the New York Stock Exchange. (a) Pre-refunded Bonds- 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. (b) Variable Rate Notes --- instruments whose interest rates change on a 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 rate shown is the rate in effect at June 30, 2005. (c) Residual Interest/Tax Exempt Municipal Bonds - The interest rate shown bears an inverse relationship to the interest rate on another security or the value of an index. (d) Maturity date shown is date of next put. (e) All or partial amount segregated as collateral for futures contracts, when-issued or delay-delivery securities. (f) Non-income producing. (g) 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 investors. GLOSSARY: AMBAC -- insured by American Municipal Bond Assurance Corp. FGIC -- insured by Financial Guaranty Insurance Co. FHA - Federal Housing Administration FNMA -- Federal National Mortgage Association FSA -- insured by Financial Security Assurance, Inc. GNMA -- Government National Mortgage Association GO - General Obligation Bond MBIA -- insured by Municipal Bond Investors Assurance PSF-- Public School Fund Radian - insured by Radian Guaranty Inc. NR - Not Rated XLCA -- insured by XL Capital Assurance ITEM 2. CONTROLS AND PROCEDURES (a) The registrant's President and Chief Executive Officer and Principal Financial Officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document. (b) There were no significant changes in the registrant's internal controls or in factors that could affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. ITEM 3. EXHIBITS (a) Exhibit 99.302 Cert. - Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant: PIMCO Municipal Income III Fund By /s/ Brian S. Shlissel President & Chief Executive Officer Date: August 25, 2005 By /s/ Lawrence G. Altadonna Treasurer, Principal Financial & Accounting Officer Date: August 25, 2005 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dated indicated. By /s/ Brian S. Shlissel President & Chief Executive Officer Date: August 25, 2005 By /s/ Lawrence G. Altadonna Treasurer, Principal Financial & Accounting Officer Date: August 25, 2005