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 811-21188
                                   ---------


                   PIMCO California 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

PIMCO Municipal Income Fund III
PIMCO California Municipal Income Fund III
PIMCO New York Municipal Income Fund III
Semi-Annual Report
March 31, 2007

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



PIMCO Municipal Income Funds III Letter to Shareholders 

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




PIMCO Municipal Income Fund III  
Performance & Statistics
March 31, 2007 (unaudited)

•  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




PIMCO California Municipal Income Fund III 
Performance & Statistics
March 31, 2007 (unaudited)

•  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




PIMCO New York Municipal Income Fund III 
Performance & Statistics
March 31, 2007 (unaudited)

•  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




PIMCO Municipal Income Fund III 
Schedule of Investments
March 31, 2007 (unaudited)


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




PIMCO Municipal Income Fund III 
Schedule of Investments
March 31, 2007 (unaudited) (continued)


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




PIMCO Municipal Income Fund III 
Schedule of Investments
March 31, 2007 (unaudited) (continued)


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




PIMCO Municipal Income Fund III 
Schedule of Investments
March 31, 2007 (unaudited) (continued)


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




PIMCO Municipal Income Fund III 
Schedule of Investments
March 31, 2007 (unaudited) (continued)


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




PIMCO Municipal Income Fund III 
Schedule of Investments
March 31, 2007 (unaudited) (continued)


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




PIMCO Municipal Income Fund III 
Schedule of Investments
March 31, 2007 (unaudited) (continued)


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




PIMCO Municipal Income Fund III 
Schedule of Investments
March 31, 2007 (unaudited) (continued)


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




PIMCO Municipal Income Fund III 
Schedule of Investments
March 31, 2007 (unaudited) (continued)


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




PIMCO Municipal Income Fund III 
Schedule of Investments
March 31, 2007 (unaudited) (continued)


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




PIMCO California Municipal Income Fund III 
Schedule of Investments
March 31, 2007 (unaudited)


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




PIMCO California Municipal Income Fund III 
Schedule of Investments
March 31, 2007 (unaudited) (continued)


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




PIMCO California Municipal Income Fund III 
Schedule of Investments
March 31, 2007 (unaudited) (continued)


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




PIMCO California Municipal Income Fund III 
Schedule of Investments
March 31, 2007 (unaudited) (continued)


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




PIMCO California Municipal Income Fund III 
Schedule of Investments
March 31, 2007 (unaudited) (continued)


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




PIMCO California Municipal Income Fund III 
Schedule of Investments
March 31, 2007 (unaudited) (continued)


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




PIMCO New York Municipal Income Fund III 
Schedule of Investments
March 31, 2007 (unaudited)


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




PIMCO New York Municipal Income Fund III 
Schedule of Investments
March 31, 2007 (unaudited) (continued)


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




PIMCO New York Municipal Income Fund III 
Schedule of Investments
March 31, 2007 (unaudited) (continued)


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




PIMCO New York Municipal Income Fund III 
Schedule of Investments
March 31, 2007 (unaudited) (continued)

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




PIMCO Municipal Income Funds III 
Statements of Assets and Liabilities
March 31, 2007 (unaudited)


  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




PIMCO Municipal Income Funds III 
Statements of Operations
March 31, 2007 (unaudited)


  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




(This page intentionally left blank)

3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 27




PIMCO Municipal Income Funds III 
Statements of Changes in Net Assets
Applicable to Common Shareholders


  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




PIMCO Municipal Income Fund III 
Statement of Cash Flows
For the six months ended March 31, 2007 (unaudited)


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




PIMCO California Municipal Income Fund III 
Statement of Cash Flows
For the six months ended March 31, 2007 (unaudited)


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




PIMCO New York Municipal Income Fund III 
Statement of Cash Flows
For the six months ended March 31, 2007 (unaudited)


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




PIMCO Municipal Income Funds III Semi-Annual 
Notes to Financial Statements
March 31, 2007 (unaudited)

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




PIMCO Municipal Income Funds III Semi-Annual 
Notes to Financial Statements
March 31, 2007 (unaudited)

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




PIMCO Municipal Income Funds III Semi-Annual 
Notes to Financial Statements
March 31, 2007 (unaudited)

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




PIMCO Municipal Income Funds III Semi-Annual 
Notes to Financial Statements
March 31, 2007 (unaudited)

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




PIMCO Municipal Income Funds III Semi-Annual 
Notes to Financial Statements
March 31, 2007 (unaudited)

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




PIMCO Municipal Income Funds III Semi-Annual 
Notes to Financial Statements
March 31, 2007 (unaudited)

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




PIMCO Municipal Income Funds III Semi-Annual 
Notes to Financial Statements
March 31, 2007 (unaudited)

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




PIMCO Municipal Income Funds III Semi-Annual 
Notes to Financial Statements
March 31, 2007 (unaudited)

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




(This page intentionally left blank)

3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 41




PIMCO Municipal Income Fund III 
Financial Highlights
For a share of common stock outstanding throughout each period:


  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




PIMCO Municipal Income Fund III 
Financial Highlights
For a share of common stock outstanding throughout each period:

* 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




PIMCO California Municipal Income Fund III 
Financial Highlights
For a share of common stock outstanding throughout each period:


  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




PIMCO California Municipal Income Fund III 
Financial Highlights
For a share of common stock outstanding throughout each period:

* 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




PIMCO New York Municipal Income Fund III 
Financial Highlights
For a share of common stock outstanding throughout each period:


  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




PIMCO New York Municipal Income Fund III 
Financial Highlights
For a share of common stock outstanding throughout each period:

* 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




PIMCO Municipal Income Funds III 
Annual Shareholder Meetings Results/
Corporate Changes (unaudited)


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




(This page intentionally left blank)

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               16.122           7,710                      N/A
November 2006               N/A               16.149           7,806                      N/A
December 2006               N/A               16.618          14,789                      N/A
January 2007                N/A                 N/A             N/A                       N/A
February 2007               N/A               15.94            7,108                      N/A
March 2007                  N/A               15.732           7,176                      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 California 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