-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QoNbbIA6ZQuqj+MAzk75LvOXJF+b+jRtIKBJ0ACdgIuRQuDLyihO1q8OYxuzVzZc fwHewhmEvSO62fQw9ToGzQ== 0000950123-03-013874.txt : 20031217 0000950123-03-013874.hdr.sgml : 20031217 20031217123231 ACCESSION NUMBER: 0000950123-03-013874 CONFORMED SUBMISSION TYPE: N-CSRS/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031217 EFFECTIVENESS DATE: 20031217 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORGAN STANLEY MUNICIPAL INCOME OPPORTUNITIES TRUST III CENTRAL INDEX KEY: 0000861069 IRS NUMBER: 136946092 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: N-CSRS/A SEC ACT: 1940 Act SEC FILE NUMBER: 811-06052 FILM NUMBER: 031059349 BUSINESS ADDRESS: STREET 1: C/O MORGAN STANLEY TRUST STREET 2: HARBORSIDE FINANCIAL CENTER, PLAZA TWO CITY: JERSEY CITY STATE: NJ ZIP: 07311 BUSINESS PHONE: (212) 869-6397 FORMER COMPANY: FORMER CONFORMED NAME: MORGAN STANLEY DEAN WITTER MUNICIPAL INCOME OPPORTUNITIES TR DATE OF NAME CHANGE: 19981221 FORMER COMPANY: FORMER CONFORMED NAME: MUNICIPAL INCOME OPPORTUNITIES TRUST III/MA DATE OF NAME CHANGE: 19930721 FORMER COMPANY: FORMER CONFORMED NAME: ALLSTATE MUNICIPAL INCOME OPPORTUNITIES TRUST III DATE OF NAME CHANGE: 19920703 N-CSRS/A 1 y92358nvcsrsza.txt AMENDMENT TO FORM N-CSRS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR S/A CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-06052 Morgan Stanley Municipal Income Opportunities Trust III (Exact name of registrant as specified in charter) 1221 Avenue of the Americas, New York, New York 10020 (Address of principal executive offices) (Zip code) Ronald E. Robison 1221 Avenue of the Americas, New York, New York 10020 (Name and address of agent for service) Registrant's telephone number, including area code: 212-762-4000 Date of fiscal year end: March 31, 2004 Date of reporting period: September 30, 2003 Item 1 - Report to Shareholders Welcome, Shareholder: In this report, you'll learn about how your investment in Morgan Stanley Municipal Income Opportunities Trust III performed during the semiannual period. We will provide an overview of the market conditions, and discuss some of the factors that affected performance during the reporting period. In addition, this report includes the Fund's financial statements and a list of Fund investments. Market forecasts provided in this report may not necessarily come to pass. There is no assurance that the Fund will achieve its investment objective. The Fund is subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. FUND REPORT For the six-months ended September 30, 2003 MARKET OVERVIEW The six-month period ended September 30, 2003 was a volatile time for the fixed income markets. The U.S. economy struggled early in the period, but then showed signs of recovery. The bond market performed strongly during much of the spring, with yields falling steadily through the first half of June. At that point, however, signs of economic growth led investors to fear that interest rates were unsustainably low. Bond prices (which generally move in opposition to yields) fell sharply through the end of July, when investors shifted assets away from the debt markets. In August and September the fixed-income markets stabilized as investors tempered their reactions to the improvement in the economy. While municipal bonds also rallied early in the period, several factors caused them to lag Treasuries. Municipalities issued a record amount of debt to take advantage of low costs for financing and refinancing. Although this supply was readily absorbed by investors, it slowed the rally. Changes to the corporate dividend tax also caused investors to reassess the attractiveness of tax-free municipal bonds. The summer started out as one of the weakest periods for municipal bonds in the past 20 years. In July, bond prices plummeted as interest rates moved higher across the yield curve. However, the market stabilized by the end of September, recouping nearly half its losses. Although the pace of municipal new-issue volume slowed in the third quarter, annual underwriting volume remained on track to exceed $350 billion for the first time. PERFORMANCE ANALYSIS For the six-month period ended September 30, 2003, the net asset value (NAV) of Morgan Stanley Municipal Income Opportunities Trust III (OIC) decreased from $9.33 to $9.27 per share. Based on this change plus the reinvestment of tax-free dividends totaling $0.285 per share, the Fund's total NAV return was 2.58 percent. OIC's value on the New York Stock Exchange (NYSE) increased from $8.63 to $8.90 per share during the same period. Based on this change plus the reinvestment of tax-free dividends, OIC's total market return was 6.48 percent. OIC's share price was trading at a 3.99 percent discount to its NAV on September 30, 2003. Past performance is no guarantee of future results. Monthly dividends for the fourth quarter of 2003, declared in September were decreased to $0.045 per share to reflect the Fund's current and projected earnings level. The Fund's level of undistributed net investment income was $0.10 per share on September 30, 2003, versus $0.12 per share six months earlier. The Fund's performance benefited from several positive factors. Previous decisions to avoid tobacco bonds and to maintain our position in airline-backed securities helped the Fund's performance. The Fund's investment in the nonrated sector was another positive contributor. The prices of these securities are typically less sensitive than investment-grade bonds to movements in interest rates. As a result they declined less than investment-grade bonds when interest rates jumped in July. Purchases during the period focused on health-care issues to take advantage of supply and attractive yield opportunities. The Fund's procedure for reinvestment of all dividends and distributions on common shares is through purchases in the open market. This method helps support the market value of the Fund's shares. In addition, we would like to remind you that the Trustees have approved a procedure whereby the Fund may, when appropriate, purchase shares in the open market or in privately negotiated transactions at a price not above market value or net asset value, whichever is lower at the time of purchase. 2
LARGEST INDUSTRIES Hospital 20.4% IDR/PCR* 17.4 Retirement & Life Care Facilities 15.8 Recreational Facilities 14.1 Nursing & Health Related Facilities 9.2 Mortgage 6.8 Education 6.4
* Industrial Development/Pollution Control Revenue.
CREDIT ANALYSIS Aaa/AAA 4.7% Aa/AA 0.6 A/A 2.6 Baa/BBB 29.2 Ba/BB or less 8.7 NR 54.2
Subject to change daily. Largest industries' percentages are as a percentage of net assets and credit analysis is as a percentage of total long-term investments. Provided for information purposes only and should not be deemed as a recommendation to buy or sell the securities mentioned. Morgan Stanley is a full-service firm engaged in securities trading and brokerage activities, investment banking, research and analysis, financing and financial advisory services. 3 CALL AND COST (BOOK) YIELD STRUCTURE PERCENT OF BONDS CALLABLE -- WEIGHTED AVERAGE CALL PROTECTION: 5 YEARS (Based on Long-Term Portfolio) As of 9/30/03 % ---- 2003(a) 16% 2004 5% 2005 8% 2006 3% 2007 1% 2008 9% 2009 10% 2010 13% 2011 10% 2012 16% 2013+ 9%
COST (BOOK) YIELD(b) -- WEIGHTED AVERAGE BOOK YIELD: 6.9% (Based on Long-Term Portfolio) As of 9/30/03 % --- 2003(a) 8.1% 2004 6.7% 2005 6.9% 2006 7.6% 2007 6.0% 2008 6.3% 2009 6.1% 2010 6.8% 2011 7.4% 2012 6.7% 2013+ 6.6%
(a) Includes issues callable in previous years. (b) Cost or "book" yield is the annual income earned on a portfolio investment based on its original purchase price before the Fund's operating expenses. For example, the Fund is earning a book yield of 8.1% on 16% of the long-term portfolio that is callable in 2003. Portfolio structure is subject to change. 4 Morgan Stanley Municipal Income Opportunities Trust III PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 2003 (UNAUDITED)
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - --------------------------------------------------------------------------------------------------------- Tax-Exempt Municipal Bonds (95.3%) Educational Facilities Revenue (6.4%) $ 800 ABAG Finance Authority for Nonprofit Corporations, California, National Center for International Schools COPs..................................................... 7.50% 05/01/11 $ 861,176 1,200 San Diego County, California, The Burnham Institute COPs... 6.25 09/01/29 1,242,528 1,500 Upland, Indiana, Taylor University Ser 2002................ 6.25 09/01/28 1,585,425 2,000 New York City Industrial Development Agency, New York, Polytechnic University 2000.............................. 6.125 11/01/30 1,745,200 ----------- ------- 5,434,329 5,500 ----------- ------- Hospital Revenue (20.4%) 1,000 Colbert County-Northwest Health Care Authority, Alabama, Helen Keller Hospital Ser 2003........................... 5.75 06/01/27 952,760 1,000 Arizona Health Facilities Authority, John C Lincoln Health Ser 2002................................................. 6.375 12/01/37 1,034,290 1,500 Hawaii Department of Budget & Finance, Wilcox Memorial Hospital Ser 1998........................................ 5.50 07/01/28 1,472,025 500 Indiana Health Facility Financing Authority, Riverview Hospital Ser 2002........................................ 6.125 08/01/31 511,625 Massachusetts Health & Educational Facilities Authority, 1,000 Dana Farber Cancer Institute Ser G-1..................... 6.25 12/01/14 1,059,220 1,000 Dana Farber Cancer Institute Ser G-1..................... 6.25 12/01/22 1,051,740 1,000 Nevada, Missouri, Nevada Regional Medical Center Ser 2001..................................................... 6.75 10/01/31 1,022,980 1,000 Henderson, Nevada, Catholic Health Care West Ser 1998 A.... 5.125 07/01/28 889,000 1,000 New Hampshire Higher Educational & Health Facilities Authority, Littleton Hospital Association Ser 1998 A..... 6.00 05/01/28 808,750 1,000 New Jersey Health Care Facilities Financing Authority, Raritan Bay Medical Center Ser 1994...................... 7.25 07/01/27 1,030,830 1,000 New York City Industrial Development Agency, New York, Staten Island University Hospital Ser B.................. 6.375 07/01/31 1,052,940 1,500 Oklahoma Development Finance Authority, Comanche County Hospital 2000 Ser B...................................... 6.60 07/01/31 1,477,845 1,000 Lehigh County General Purpose Authority, Pennsylvania, St Lukes Hospital Ser 2003.................................. 5.25 08/15/23 974,660 1,000 South Carolina Jobs- Economic Development Authority, Palmetto Health, Refg Ser 2003 C......................... 6.875 08/01/27 1,053,930 1,500 Knox County Health Educational & Housing Facility Board, Tennessee, Baptist Health of East Tennessee Ser 2002..... 6.50 04/15/31 1,531,995 1,500 Teton County Hospital District, Wyoming, St Johns Medical Center Ser 2002.......................................... 6.75 12/01/27 1,464,915 ----------- ------- 17,389,505 17,500 ----------- ------- Industrial Development/Pollution Control Revenue (17.4%) 1,000 Los Angeles Regional Airports Improvement Corporation, California, American Airlines Inc Terminal 4 Ser 2002 C (AMT).................................................... 7.50 12/01/24 897,890
5 See Notes to Financial Statements Morgan Stanley Municipal Income Opportunities Trust III PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 2003 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - --------------------------------------------------------------------------------------------------------- $ 1,305 Metropolitan Washington Airports Authority, District of Columbia & Virginia, CaterAir International Corp Ser 1991 (AMT)+................................................... 10.125% 09/01/11 $ 1,285,660 600 Chicago, Illinois, United Airlines Inc Refg Ser 2001 C (a)...................................................... 6.30 05/01/16 132,600 1,000 Iowa Finance Authority, IPSCO Inc Ser 1997 (AMT)........... 6.00 06/01/27 928,660 3,000 Perry County, Kentucky, TJ International Inc Ser 1994 (AMT).................................................... 7.00 06/01/24 3,113,190 1,285 Maryland Industrial Development Financing Authority, Medical Waste Associates LP 1989 Ser (AMT)............... 8.75 11/15/10 1,123,206 1,000 New Jersey Economic Development Authority, Continental Airlines Inc Ser 1999 (AMT)#............................. 6.625 09/15/12 913,790 1,000 Beaver County Industrial Development Authority, Pennsylvania, Toledo Edison Co Collateralized Ser 1995 B........................................................ 7.75 05/01/20 1,081,250 880 Carbon County Industrial Development Authority, Pennsylvania, Panther Creek Partners Refg 2000 Ser (AMT).................................................... 6.65 05/01/10 940,738 755 Lexington County, South Carolina, Ellett Brothers Inc Refg Ser 1988................................................. 7.50 09/01/08 734,200 650 Brazos River Authority, Texas, TXU Electric Refg Ser 1999 A (AMT).................................................... 7.70 04/01/33 717,444 3,000 Pittsylvania County Industrial Development Authority, Virginia, Multi-Trade LP Ser 1994 A (AMT)................ 7.45 01/01/09 2,963,010 ----------- ------- 14,831,638 15,475 ----------- ------- Mortgage Revenue - Multi-Family (4.8%) Alexandria Redevelopment & Housing Authority, Virginia, 1,760 Courthouse Commons Apts Ser 1990 A (AMT)................. 10.00 01/01/21 1,671,260 9,259 Courthouse Commons Apts Ser 1990 B (AMT)................. 0.00 01/01/21 1,006,900 1,435 Washington Housing Finance Commission, FNMA Collateralized Refg Ser 1990 A.......................................... 7.50 07/01/23 1,437,253 ----------- ------- 4,115,413 12,454 ----------- ------- Mortgage Revenue - Single Family (2.0%) 445 Colorado Housing Finance Authority, 1998 Ser B-2 (AMT)..... 7.25 10/01/31 464,954 1,235 Chicago, Illinois, GNMA-Collateralized Ser 1998 A-1 (AMT).................................................... 6.45 09/01/29 1,278,435 ----------- ------- 1,743,389 1,680 ----------- ------- Nursing & Health Related Facilities Revenue (9.2%) 2,000 Orange County Health Facilities Authority, Florida, Westminister Community Care Ser 1999..................... 6.75 04/01/34 1,541,400 985 Iowa Health Facilities Development Financing Authority, Care Initiatives Ser 1996................................ 9.25 07/01/25 1,148,392 1,300 Westside Habilitation Center, Louisiana, Intermediate Care Facility for the Mentally Retarded Refg Ser 1993......... 8.375 10/01/13 1,339,026 1,905 Massachusetts Development Finance Agency, Kennedy-Donovan Center Inc 1990 Issue.................................... 7.50 06/01/10 1,975,294 1,000 Mount Vernon Industrial Development Agency, New York, Meadowview at the Wartburg Ser 1999...................... 6.20 06/01/29 927,500 1,790 Hurricane, Utah, Mission Health Service Ser 1990 (b)....... 10.50 07/01/20 896,897 ----------- ------- 7,828,509 8,980 ----------- -------
6 See Notes to Financial Statements Morgan Stanley Municipal Income Opportunities Trust III PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 2003 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - --------------------------------------------------------------------------------------------------------- Recreational Facilities Revenue (14.1%) $ 1,000 Sacramento Financing Authority, California, Convention Center Hotel 1999 Ser A.................................. 6.25% 01/01/30 $ 997,700 1,300 San Diego County, California, San Diego Natural History Museum COPs.............................................. 5.60 02/01/18 1,199,796 3,250 Metropolitan Football Stadium District, Colorado, Sales Tax Ser 1999 A (MBIA)........................................ 0.00 01/01/10 2,619,370 500 Mashantucket (Western) Pequot Tribe, Connecticut, 1996 Ser A (c).................................................... 6.40 09/01/11 541,975 1,500 Mohegan Tribe of Indians of Connecticut Gaming Authority, Ser 2001................................................. 6.25 01/01/31 1,570,635 1,000 Overland Park Development Corporation, Kansas, Convention Center Hotel Ser 2000 A.................................. 7.375 01/01/32 1,003,930 3,000 St Louis Industrial Development Authority, Missouri, Kiel Center Refg Ser 1992 (AMT)............................... 7.75 12/01/13 3,026,040 1,000 Austin Convention Enterprises Inc, Texas, Convention Center Hotel Ser 2000 A......................................... 6.70 01/01/32 1,025,380 ----------- ------- 11,984,826 12,550 ----------- ------- Retirement & Life Care Facilities Revenue (15.8%) 2,000 St Johns County Industrial Development Authority, Florida, Glenmoor Ser 1999 A...................................... 8.00 01/01/30 1,997,220 500 Hawaii Department of Budget and Finance, Kahala Nui 2003 Ser A.................................................... 8.00 11/15/33 497,110 1,425 Massachusetts Development Finance Agency, Loomis Communities Ser 1999 A................................... 5.625 07/01/15 1,344,687 New Jersey Economic Development Authority, 1,000 Cedar Crest Village Inc Ser 2001 A....................... 7.25 11/15/31 1,021,260 1,000 Franciscan Oaks Ser 1997................................. 5.70 10/01/17 912,600 1,000 Franciscan Oaks Ser 1997................................. 5.75 10/01/23 874,280 990 Glen Cove Housing Authority, New York, Mayfair at Glen Cove Ser 1996 (AMT)........................................... 8.25 10/01/26 1,049,915 1,000 Bexar County Health Facilities Development Corporation, Texas, Army Retirement Residence Ser 2002................ 6.30 07/01/32 1,030,280 2,925 Chesterfield County Industrial Development Authority, Virginia, Brandermill Woods Ser 1998..................... 6.50 01/01/28 2,748,564 500 Peninsula Ports Authority of Virginia , Virginia Baptist Homes Ser 2003 A......................................... 7.375 12/01/32 507,205 1,750 Wisconsin Health & Educational Facilities Authority, Oakwood Ser 1998......................................... 5.90 08/15/28 1,441,352 ----------- ------- 13,424,473 14,090 ----------- ------- Tax Allocation Revenue (4.1%) 1,000 Capistrano Unified School District, California, Community Facilities District #98-2 Ladera Ser 1999 Special Tax.... 5.75 09/01/29 995,940 Elk Valley Public Improvement Corporation, Colorado 500 Ser 2001 A............................................... 7.30 09/01/22 513,070 500 Ser 2001 A............................................... 7.35 09/01/31 513,040 500 Chicago, Illinois, Lake Shore East Ser 2002................ 6.75 12/01/32 496,155
7 See Notes to Financial Statements Morgan Stanley Municipal Income Opportunities Trust III PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 2003 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - --------------------------------------------------------------------------------------------------------- $ 1,000 Des Peres, Missouri, West County Center Ser 2002........... 5.75% 04/15/20 $ 1,001,300 ----------- ------- 3,519,505 3,500 ----------- ------- Transportation Facilities Revenue (1.1%) 1,000 Nevada Department of Business & Industry, Las Vegas Monorail 2nd Tier Ser 2000............................... 7.375 01/01/40 935,130 ----------- ------- 92,729 Total Tax-Exempt Municipal Bonds (Cost $82,898,760)........................... 81,206,717 ----------- ------- Short-Term Tax-Exempt Municipal Obligation (2.7%) 2,300 Atlanta, Georgia, Water & Wastewater Ser 2002 C (FSA) ------- (Demand 10/01/03) (Cost $2,300,000)...................... 1.20* 11/01/41 2,300,000 -----------
$95,029 Total Investments (Cost $85,198,760) (d)(e)........................ 98.0% 83,506,717 ======= Other Assets in Excess of Liabilities.............................. 2.0 1,742,373 ----- ----------- Net Assets......................................................... 100.0% $85,249,090 ===== ===========
- --------------------- AMT Alternative Minimum Tax. COPs Certificates of Participation. * Current coupon of variable rate demand obligation. + Joint exemption in locations shown. # This security has been physically segregated in connection with open futures contracts. (a) Non-income producing security; issuer in bankruptcy. (b) Non-income producing security; issuer in default. (c) Resale is restricted to qualified institutional investors. (d) Securities have been designated as collateral in an amount equal to $1,318,891 in connection with open futures contracts. (e) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $2,111,413 and the aggregate gross unrealized depreciation is $3,803,456, resulting in net unrealized depreciation of $1,692,043. Bond Insurance: - --------------- MBIA Municipal Bond Investors Assurance Corporation. FSA Financial Security Assurance Inc.
8 See Notes to Financial Statements Morgan Stanley Municipal Income Opportunities Trust III PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 2003 (UNAUDITED) continued Futures Contracts Open at September 30, 2003:
NUMBER OF DESCRIPTION, DELIVERY UNDERLYING FACE UNREALIZED CONTRACTS LONG/SHORT MONTH, AND YEAR AMOUNT AT VALUE DEPRECIATION - --------- ---------- ---------------------- ------------------------ -------------- 10 Short U.S. Treasury Notes 5 $(1,134,688) $(19,246) Yr December/2003 10 Short U.S. Treasury Notes 10 (1,146,250) (29,066) Yr December/2003 -------- Total Unrealized Depreciation................... $(48,312) ========
Geographic Summary of Investments Based on Market Value as a Percent of Net Assets Alabama................. 1.1% Arizona................. 1.2 California.............. 7.3 Colorado................ 4.8 Connecticut............. 2.5 District of Columbia.... 1.5 Florida................. 4.2 Georgia................. 2.7 Hawaii.................. 2.3 Illinois................ 2.2 Indiana................. 2.5 Iowa.................... 2.4 Kansas.................. 1.2 Kentucky................ 3.7 Louisiana............... 1.6 Maryland................ 1.3 Massachusetts........... 6.4 Missouri................ 5.9 Nevada.................. 2.1 New Hampshire........... 0.9 New Jersey.............. 5.6 New York................ 5.6 Oklahoma................ 1.7 Pennsylvania............ 3.5 South Carolina.......... 2.1 Tennessee............... 1.8 Texas................... 3.3 Utah.................... 1.1 Virginia................ 11.9 Washington.............. 1.7 Wisconsin............... 1.7 Wyoming................. 1.7 Joint Exemption*........ (1.5) ---- Total................... 98.0% ====
- --------------------- * Joint exemptions have been included in each geographic location. 9 See Notes to Financial Statements Morgan Stanley Municipal Income Opportunities Trust III FINANCIAL STATEMENTS Statement of Assets and Liabilities September 30, 2003 (unaudited) Assets: Investments in securities, at value (cost $85,198,760)........................................ $83,506,717 Cash........................................................ 32,607 Receivable for: Interest................................................ 1,577,810 Investments sold........................................ 325,000 Prepaid expenses............................................ 4,916 ----------- Total Assets............................................ 85,447,050 ----------- Liabilities: Payable for: Investment advisory fee................................. 37,305 Shares of beneficial interest repurchased............... 31,549 Administration fee...................................... 22,383 Variation margin........................................ 19,062 Accrued expenses............................................ 87,661 ----------- Total Liabilities....................................... 197,960 ----------- Net Assets.............................................. $85,249,090 =========== Composition of Net Assets: Paid-in-capital............................................. $87,245,643 Net unrealized depreciation................................. (1,740,355) Accumulated undistributed net investment income............. 923,319 Accumulated net realized loss............................... (1,179,517) ----------- Net Assets.............................................. $85,249,090 =========== Net Asset Value Per Share, 9,193,273 shares outstanding (unlimited shares authorized of $.01 par value)........................................ $9.27 ===========
10 See Notes to Financial Statements Morgan Stanley Municipal Income Opportunities Trust III FINANCIAL STATEMENTS continued Statement of Operations For the six months ended September 30, 2003 (unaudited) Net Investment Income: Interest Income............................................. $2,865,035 ---------- Expenses Investment advisory fee..................................... 216,713 Administration fee.......................................... 130,028 Professional fees........................................... 24,257 Transfer agent fees and expenses............................ 20,375 Shareholder reports and notices............................. 15,846 Trustees' fees and expenses................................. 10,256 Registration fees........................................... 7,019 Custodian fees.............................................. 3,793 Other....................................................... 5,756 ---------- Total Expenses.......................................... 434,043 Less: expense offset........................................ (3,742) ---------- Net Expenses............................................ 430,301 ---------- Net Investment Income................................... 2,434,734 ---------- Net Realized and Unrealized Gain (Loss): Net realized gain......................................... 403,975 ---------- Net Change in Unrealized Depreciation on: Investments............................................... (725,595) Futures contracts......................................... (48,312) ---------- Net Depreciation........................................ (773,907) ---------- Net Loss................................................ (369,932) ---------- Net Increase................................................ $2,064,802 ==========
11 See Notes to Financial Statements Morgan Stanley Municipal Income Opportunities Trust III FINANCIAL STATEMENTS continued Statement of Changes in Net Assets
FOR THE SIX FOR THE YEAR MONTHS ENDED ENDED SEPTEMBER 30, 2003 MARCH 31, 2003 ------------------ -------------- (unaudited) Increase (Decrease) in Net Assets: Operations: Net investment income....................................... $ 2,434,734 $ 5,236,607 Net realized gain (loss).................................... 403,975 (744,766) Net change in unrealized depreciation....................... (773,907) 786,162 ----------- ----------- Net Increase............................................ 2,064,802 5,278,003 Dividends to shareholders from net investment income........ (2,635,078) (5,346,225) Decrease from transactions in shares of beneficial interest.................................................. (747,964) (1,635,237) ----------- ----------- Net Decrease............................................ (1,318,240) (1,703,459) Net Assets: Beginning of period......................................... 86,567,330 88,270,789 ----------- ----------- End of Period (Including accumulated undistributed net investment income of $923,319 and $1,123,663, respectively)................... $85,249,090 $86,567,330 =========== ===========
12 See Notes to Financial Statements Morgan Stanley Municipal Income Opportunities Trust III NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2003 (UNAUDITED) 1. Organization and Accounting Policies Morgan Stanley Municipal Income Opportunities Trust III (the "Fund") is registered under the Investment Company Act of 1940, as amended, as a diversified, closed-end management investment company. The Fund's investment objective is to provide a high level of current income which is exempt from federal income tax. The Fund was organized as a Massachusetts business trust on February 20, 1990 and commenced operations on April 30, 1990. The following is a summary of significant accounting policies: A. Valuation of Investments -- (1) portfolio securities are valued by an outside independent pricing service approved by the Trustees. The pricing service uses both a computerized grid matrix of tax-exempt securities and evaluations by its staff, in each case based on information concerning market transactions and quotations from dealers which reflect the bid side of the market each day. The portfolio securities are thus valued by reference to a combination of transactions and quotations for the same or other securities believed to be comparable in quality, coupon, maturity, type of issue, call provisions, trading characteristics and other features deemed to be relevant; (2) futures are valued at the latest sale price on the commodities exchange on which they trade unless it is determined that such price does not reflect their market value, in which case they will be valued at their fair value as determined in good faith under procedures established by and under the supervision of the Trustees; and (3) short-term debt securities having a maturity date of more than sixty days at time of purchase are valued on a mark-to-market basis until sixty days prior to maturity and thereafter at amortized cost based on their value on the 61st day. Short-term debt securities having a maturity date of sixty days or less at the time of purchase are valued at amortized cost. B. Accounting for Investments -- Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on security transactions are determined by the identified cost method. Discounts are accreted and premiums are amortized over the life of the respective securities. Interest income is accrued daily except where collection is not expected. C. Futures Contracts -- A futures contract is an agreement between two parties to buy and sell financial instruments or contracts based on financial indices at a set price on a future date. Upon entering into such a contract, the Fund is required to pledge to the broker cash, U.S. Government securities or other liquid portfolio securities equal to the minimum initial margin requirements of the applicable futures exchange. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments known as variation margin are recorded by the Fund as unrealized gains and losses. Upon 13 Morgan Stanley Municipal Income Opportunities Trust III NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2003 (UNAUDITED) continued closing of the contract, the Fund realizes a gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. D. Federal Income Tax Policy -- It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable and nontaxable income to its shareholders. Accordingly, no federal income tax provision is required. E. Dividends and Distributions to Shareholders -- Dividends and distributions to shareholders are recorded on the ex-dividend date. F. Use of Estimates -- The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. 2. Investment Advisory/Administration Agreements Pursuant to an Investment Advisory Agreement with Morgan Stanley Investment Advisors Inc. (the "Investment Advisor") the Fund pays the Investment Advisor an advisory fee, calculated weekly and payable monthly, by applying the annual rate of 0.50% to the Fund's weekly net assets. Pursuant to an Administration Agreement with Morgan Stanley Services Company Inc. (the "Administrator"), an affiliate of the Investment Advisor, the Fund pays an administration fee, calculated weekly and payable monthly, by applying the annual rate of 0.30% to the Fund's weekly net assets. 3. Security Transactions and Transactions with Affiliates The cost of purchases and proceeds from sales of portfolio securities, excluding short-term investments, for the six months ended September 30, 2003 aggregated $2,976,920 and $5,938,318, respectively. Morgan Stanley Trust, an affiliate of the Investment Advisor and Administrator, is the Fund's transfer agent. At September 30, 2003, the Fund had transfer agent fees and expenses payable of approximately $5,400. The Fund has an unfunded noncontributory defined benefit pension plan covering all independent Trustees of the Fund who will have served as independent Trustees for at least five years at the time of retirement. Benefits under this plan are based on years of service and compensation during the last five years of service. Aggregate pension costs for the six months ended September 30, 2003, included in Trustees' fees and expenses in the Statement of Operations amounted to $3,590. At 14 Morgan Stanley Municipal Income Opportunities Trust III NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2003 (UNAUDITED) continued September 30, 2003, the Fund had an accrued pension liability of $57,298 which is included in accrued expenses in the Statement of Assets and Liabilities. 4. Shares of Beneficial Interest Transactions in shares of beneficial interest were as follows:
CAPITAL PAID IN PAR VALUE EXCESS OF SHARES OF SHARES PAR VALUE --------- --------- ----------- Balance, March 31, 2002..................................... 9,467,173 $94,672 $89,534,129 Treasury shares purchased and retired (weighted average discount 6.71%)*.......................................... (187,600) (1,876) (1,633,361) Reclassification due to permanent book/tax differences...... -- -- 43 --------- ------- ----------- Balance, March 31, 2003..................................... 9,279,573 92,796 87,900,811 Treasury shares purchased and retired (weighted average discount 6.43%)*.......................................... (86,300) (863) (747,101) --------- ------- ----------- Balance, September 30, 2003................................. 9,193,273 $91,933 $87,153,710 ========= ======= ===========
- --------------------- * The Trustees have voted to retire the shares purchased. 5. Dividends On September 23, 2003, the Fund declared the following dividends from net investment income:
AMOUNT RECORD PAYABLE PER SHARE DATE DATE - --------- ---------------- ----------------- $0.045 October 3, 2003 October 17, 2003 $0.045 November 7, 2003 November 21, 2003 $0.045 December 5, 2003 December 19, 2003
6. Expense Offset The expense offset represents a reduction of the custodian fees for earnings on cash balances maintained by the Fund. 7. Risks Relating to Certain Financial Instruments The Fund may invest a portion of its assets in residual interest bonds, which are inverse floating rate municipal obligations. The prices of these securities are subject to greater market fluctuations during periods of changing prevailing interest rates than are comparable fixed rate obligations. At September 30, 2003, the Fund did not hold positions in residual interest bonds. 15 Morgan Stanley Municipal Income Opportunities Trust III NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2003 (UNAUDITED) continued To hedge against adverse interest rate changes, the Fund may invest in financial futures contracts or municipal bond index futures contracts ("futures contracts"). These futures contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. The Fund bears the risk of an unfavorable change in the value of the underlying securities. At September 30, 2003, the Fund had outstanding futures contracts. 8. Federal Income Tax Status 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 either considered 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 tax-basis treatment; temporary differences do not require reclassification. Dividends and distributions which exceed net investment income and net realized capital gains for tax purposes are reported as distributions of paid-in-capital. As of March 31, 2003, the Fund had a net capital loss carryforward of $1,386,312 which will expire on March 31, 2011 to offset future capital gains to the extent provided by regulations. As of March 31, 2003, the Fund had temporary book/tax differences primarily attributable to post-October losses (capital losses incurred after October 31 within the taxable year which are deemed to arise on the first business day of the Fund's next taxable year), a non-deductible expense and book amortization of discounts on debt securities. 16 Morgan Stanley Municipal Income Opportunities Trust III FINANCIAL HIGHLIGHTS Selected ratios and per share data for a share of beneficial interest outstanding throughout each period:
FOR THE SIX FOR THE YEAR ENDED MARCH 31 MONTHS ENDED ------------------------------------------------------------ SEPTEMBER 30, 2003 2003 2002 2001 2000 1999 ------------------ ------- ------- ------- ------- -------- (unaudited) Selected Per Share Data: Net asset value, beginning of period..... $9.33 $9.32 $9.48 $9.34 $ 9.99 $10.02 ----- ----- ----- ----- ------ ------ Income (loss) from investment operations: Net investment income*............... 0.26 0.56 0.57 0.57 0.57 0.58 Net realized and unrealized gain (loss)............................... (0.04) 0.01 (0.12) 0.11 (0.75) (0.02) ----- ----- ----- ----- ------ ------ Total income (loss) from investment operations.............................. 0.22 0.57 0.45 0.68 (0.18) 0.56 ----- ----- ----- ----- ------ ------ Less dividends and distributions from: Net investment income................ (0.29) (0.57) (0.57) (0.56) (0.54) (0.59) Net realized gain.................... -- -- (0.05) (0.01) (0.01) -- ----- ----- ----- ----- ------ ------ Total dividends and distributions........ (0.29) (0.57) (0.62) (0.57) (0.55) (0.59) ----- ----- ----- ----- ------ ------ Anti-dilutive effect of acquiring treasury shares*........................ 0.01 0.01 0.01 0.03 0.08 -- ----- ----- ----- ----- ------ ------ Net asset value, end of period........... $9.27 $9.33 $9.32 $9.48 $ 9.34 $ 9.99 ===== ===== ===== ===== ====== ====== Market value, end of period.............. $8.90 $8.63 $8.72 $8.85 $7.688 $9.313 ===== ===== ===== ===== ====== ====== Total Return+............................ 6.48%(1) 5.58% 5.56% 23.09% (11.87)% 0.11% Ratios to Average Net Assets: Expenses................................. 1.00%(2)(3) 0.98%(3) 0.99%(3) 0.97%(3) 0.99%(3) 1.02%(3) Net investment income.................... 5.62%(2) 5.96% 6.02% 6.05% 5.89% 5.83% Supplemental Data: Net assets, end of period, in thousands............................... $85,249 $86,567 $88,271 $91,424 $92,672 $105,068 Portfolio turnover rate.................. 4%(1) 8% 18% 14% 20% 20%
- --------------------- * The per share amounts were computed using an average number of shares outstanding during the period. + Total return is based upon the current market value on the last day of each period reported. Dividends and distributions are assumed to be reinvested at the prices obtained under the Fund's dividend reinvestment plan. Total return does not reflect brokerage commissions. (1) Not annualized. (2) Annualized. (3) Does not reflect the effect of expense offset of 0.01%.
17 See Notes to Financial Statements (This Page Intentionally Left Blank) (This Page Intentionally Left Blank) TRUSTEES Michael Bozic Charles A. Fiumefreddo Edwin J. Garn Wayne E. Hedien James F. Higgins Dr. Manuel H. Johnson Joseph J. Kearns Michael E. Nugent Philip J. Purcell Fergus Reid OFFICERS Charles A. Fiumefreddo Chairman of the Board Mitchell M. Merin President Ronald E. Robison Executive Vice President and Principal Executive Officer Barry Fink Vice President and General Counsel Joseph J. McAlinden Vice President Stefanie V. Chang Vice President Francis J. Smith Treasurer and Chief Financial Officer Thomas F. Caloia Vice President Mary E. Mullin Secretary TRANSFER AGENT Morgan Stanley Trust Harborside Financial Center, Plaza Two Jersey City, New Jersey 07311 INDEPENDENT AUDITORS Deloitte & Touche LLP Two World Financial Center New York, New York 10281 INVESTMENT MANAGER Morgan Stanley Investment Advisors Inc. 1221 Avenue of the Americas New York, New York 10020 The financial statements included herein have been taken from the records of the Fund without examination by the independent auditors and accordingly they do not express an opinion thereon. Investments and services offered through Morgan Stanley DW Inc., member SIPC. Morgan Stanley Distributors Inc., member NASD. (c) 2003 Morgan Stanley [MORGAN STANLEY LOGO] MORGAN STANLEY FUNDS Morgan Stanley Municipal Income Opportunities Trust III Semiannual Report September 30, 2003 [MORGAN STANLEY LOGO] 38513RPT-00-12849K03-0S-11/03 Item 2. Code of Ethics. Not applicable for semiannual reports. Item 3. Audit Committee Financial Expert. Not applicable for semiannual reports. Item 4. Principal Accountant Fees and Services Not applicable for semiannual reports. Item 5. Audit Committee of Listed Registrants. Not applicable for semiannual reports. Item 6. [Reserved.] Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable for semiannual reports. Item 8. [Reserved.] Item 9 - Controls and Procedures (a) The Fund's principal executive officer and principal financial officer have concluded that the Fund's disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Fund in this Form N-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, based upon such officers' evaluation of these controls and procedures as of a date within 90 days of the filing date of the report. There were no significant changes or corrective actions with regard to significant deficiencies or material weaknesses in the Fund's internal controls or in other factors that could significantly affect the Fund's internal controls subsequent to the date of their evaluation. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 10 Exhibits (a) Code of Ethics - Not applicable for semiannual reports. (b) A separate certification for each principal executive officer and principal financial officer of the registrant are attached hereto as part of EX-99.CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Morgan Stanley Municipal Income Opportunities Trust III /s/ Ronald E. Robison Ronald E. Robison Principal Executive Officer November 19, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ Ronald E. Robison Ronald E. Robison Principal Executive Officer November 19, 2003 /s/ Francis Smith Francis Smith Principal Financial Officer November 19, 2003 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Morgan Stanley Municipal Income Opportunities Trust III /s/ Ronald E. Robison Ronald E. Robison Principal Executive Officer December 8, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ Ronald E. Robison Ronald E. Robison Principal Executive Officer December 8, 2003 /s/ Francis Smith Francis Smith Principal Financial Officer December 8, 2003 3 EX-99.CERT 3 y92358exv99wcert.txt CERTIFICATION EXHIBIT 10 B1 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER CERTIFICATIONS -------------- I, Ronald E. Robison, certify that: 1. I have reviewed this report on Form N-CSR of Morgan Stanley Municipal Income Opportunities Trust III; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; [b) Omitted.] c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and 3 b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: November 19, 2003 /s/ Ronald E. Robison Ronald E. Robison Principal Executive Officer 4 EXHIBIT 10 B2 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER CERTIFICATIONS -------------- I, Francis Smith, certify that: 6. I have reviewed this report on Form N-CSR of Morgan Stanley Municipal Income Opportunities Trust III; 7. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 8. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 9. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: b) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; [b) Omitted.] e) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and f) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 10. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): c) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and 5 d) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: November 19, 2003 /s/ Francis Smith Francis Smith Principal Financial Officer 6 EXHIBIT 10 B3 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER CERTIFICATIONS -------------- I, Ronald E. Robison, certify that: 1. I have reviewed this report on Form N-CSR of Morgan Stanley Municipal Income Opportunities Trust III; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; [b) Omitted.] c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and 7 b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: December 8, 2003 /s/ Ronald E. Robison Ronald E. Robison Principal Executive Officer 8 EXHIBIT 10 B4 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER CERTIFICATIONS -------------- I, Francis Smith, certify that: 6. I have reviewed this report on Form N-CSR of Morgan Stanley Municipal Income Opportunities Trust III; 7. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 8. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 9. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: b) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; [b) Omitted.] e) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and f) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 10. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): c) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and 9 d) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: December 8, 2003 /s/ Francis Smith Francis Smith Principal Financial Officer 10 EX-99.906CERT 4 y92358exv99w906cert.txt CERTIFICATION SECTION 906 CERTIFICATION Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Morgan Stanley Municipal Income Opportunities Trust III In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended September 30, 2003 that is accompanied by this certification, the undersigned hereby certifies that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. Date: November 19, 2003 /s/ Ronald E. Robison --------------------------- Ronald E. Robison Principal Executive Officer A signed original of this written statement required by Section 906 has been provided to Morgan Stanley Municipal Income Opportunities Trust III and will be retained by Morgan Stanley Municipal Income Opportunities Trust III and furnished to the Securities and Exchange Commission or its staff upon request. 7 SECTION 906 CERTIFICATION Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Morgan Stanley Municipal Income Opportunities Trust III In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended September 30, 2003 that is accompanied by this certification, the undersigned hereby certifies that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. Date: November 19, 2003 /s/ Francis Smith ---------------------- Francis Smith Principal Financial Officer A signed original of this written statement required by Section 906 has been provided to Morgan Stanley Municipal Income Opportunities Trust III and will be retained by Morgan Stanley Municipal Income Opportunities Trust III and furnished to the Securities and Exchange Commission or its staff upon request. 8 SECTION 906 CERTIFICATION Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Morgan Stanley Municipal Income Opportunities Trust III In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended September 30, 2003 that is accompanied by this certification, the undersigned hereby certifies that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. Date: December 8, 2003 /s/ Ronald E. Robison --------------------------- Ronald E. Robison Principal Executive Officer A signed original of this written statement required by Section 906 has been provided to Morgan Stanley Municipal Income Opportunities Trust III and will be retained by Morgan Stanley Municipal Income Opportunities Trust III and furnished to the Securities and Exchange Commission or its staff upon request. 9 SECTION 906 CERTIFICATION Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Morgan Stanley Municipal Income Opportunities Trust III In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended September 30, 2003 that is accompanied by this certification, the undersigned hereby certifies that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. Date: December 8, 2003 /s/ Francis Smith ---------------------- Francis Smith Principal Financial Officer A signed original of this written statement required by Section 906 has been provided to Morgan Stanley Municipal Income Opportunities Trust III and will be retained by Morgan Stanley Municipal Income Opportunities Trust III and furnished to the Securities and Exchange Commission or its staff upon request. 10 -----END PRIVACY-ENHANCED MESSAGE-----