PIMCO Municipal Income Funds III Semi-Annual
Notes to Financial Statements
1. Organization and Significant Accounting Policies
PIMCO Municipal Income Fund III (‘‘Municipal III’’), PIMCO California Municipal Income Fund III (‘‘California Municipal III’’) and PIMCO New York Municipal Income Fund III (‘‘New York Municipal III’’), collectively referred to as the ‘‘Funds’’ or ‘‘PIMCO Municipal Income Funds III’’, were organized as Massachusetts business trusts on August 20, 2002. Prior to commencing operations on October 31, 2002, the Funds had no operations other than matters relating to their organization and registration as non-diversified, closed-end management investment companies registered under the Investment Company Act of 1940 an d 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 i n 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 effec tiveness. 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
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 realize d 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 i ncome 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 lo ss 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
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 ex ercised, 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. Th e 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 dela yed-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
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 wa ive 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
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
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
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 PE A 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
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.
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3.31.07 | PIMCO Municipal Income Funds III Semi-Annual Report 41
PIMCO Municipal Income Fund III
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | |
| | | 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
| |
| * | 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
| | | | | | | | | | | | | | | | | | | | | | |
| | | 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
| |
| * | 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
| | | | | | | | | | | | | | | | | | | | | | |
| | | 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
| |
| * | 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
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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
