MUNICIPAL INCOME TRUST III
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
===============================================================================
Long-term revenue bond yields, as measured by The Bond Buyer, reached a
record low of 5.41 percent in mid October. However, strong economic growth and
fears of renewed inflationary pressures subsequently caused yields to rise.
This reversed the trend toward lower yields that had been in place for more
than three years. Municipal bond yields lagged the rise in U.S. Treasury bond
yields through January. During February, municipal bond prices deteriorated
substantially after the Federal Reserve Board increased the fed funds rate
which banks charge each other for overnight borrowing. By the end of the period
under review, The Bond Buyer Revenue Bond Index had climbed to 5.88 percent,
its highest level in almost a year.
New-issue underwriting totaled a record $290 billion in 1993, a 23
percent increase over the previous high of $235 billion set in 1992. Refunding
issues, which are used by state and local governments to refinance higher-
coupon debt, represented 66 percent of total volume last year. New issues
backed by insurance had a 37 percent market share. This year's new-issue volume
is expected to decline by approximately 30 percent to the $200 billion range.
An estimated $260 billion in bonds will either mature or be called in 1994,
resulting in a decrease in outstanding municipal debt. For the first two months
of 1994, new-issue volume declined by 20 percent and totaled $30 billion.
Refunding activity, the catalyst of last year's record underwriting, dropped
even more sharply.
PERFORMANCE
Municipal Income Trust III's (NYSE Symbol: TFC) total return for the
six months ended February 28, 1994 was -5.58 percent. This return was based on
the change in New York Stock Exchange (NYSE) market price from $10.25 to $9.375
per share and reinvestment of dividends and distributions. The net asset value
of TFC increased slightly from $10.05 to $10.07 per share.
For the six-month period the Fund paid shareholders income dividends
totaling $0.30 per share and a capital gains distribution of $0.026. Beginning
with the February 25, 1994 distribution, the Fund's monthly dividend level was
reduced from $0.05 per share to $0.045 per share. This decrease was prompted by
the prospect of continued redemptions of older, high-coupon bonds.
PORTFOLIO STRUCTURE
The Fund was fully invested throughout most of the six-month period in
long-term tax-exempt bonds. Short-term municipals were temporarily held for
cash flow purposes. Prerefunded bond holdings represented 28 percent of net
assets. The average credit rating was "A1" by Moody's Investors Service, Inc.
or "A+" by Standard & Poor's Corp. Non-performing loans represented 2.3 percent
of the Fund's assets at the end of the period. The Fund's average maturity and
call protection were 20 years and 9 years, respectively. Housing, hospital and
electric revenue bonds, the three largest portfolio sectors comprised 45
percent of net assets. Bonds subject to the alternative minimum tax (AMT)
accounted for 35 percent of net assets.
We would like to remind you that the Trustees have approved a procedure
whereby the Fund, when appropriate, may attempt to reduce or eliminate a market
value discount from net asset by repurchasing shares in the open market or in
privately negotiated transactions at a price not above market value, if any, or
net asset value, whichever is lower at the time of purchase.
We appreciate your support of Municipal Income Trust III and look
forward to continuing to serve your investment needs and objectives.
Very truly yours,
Charles A. Fiumefreddo
Chairman of the Board
<PAGE>
<TABLE>
MUNICIPAL INCOME TRUST III
PORTFOLIO OF INVESTMENTS February 28, 1994 (unaudited)
==================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- --------- ---- ---- -----
<C> <S> <C> <C> <C>
MUNICIPAL BONDS (98.9%)
GENERAL OBLIGATION (5.0%)
$ 2,400 District of Columbia, Ser 1990 B (Prerefunded) ....................... 7.50 % 6/ 1/10 $ 2,809,200
500 New York City, New York, Ser 1989 C................................... 6.50 8/15/08 516,035
- ------- -----------
2,900 3,325,235
- ------- -----------
EDUCATIONAL FACILITIES REVENUE (4.7%)
1,440 California Public Works Board, University of California
1993 Ser A........................................................... 5.50 6/ 1/21 1,356,653
1,000 Massachusetts Health & Educational Facilities Authority,
Boston College Ser K................................................. 5.25 6/ 1/18 939,900
750 West Virginia School Building Authority, Cap Impr Ser 1991 A.......... 6.75 7/ 1/15 806,355
- ------- -----------
3,190 3,102,908
- ------- -----------
ELECTRIC REVENUE (10.0%)
1,155 Municipal Electric Authority of Georgia, Power Ser 1991 U
(MBIA Insured) (Prerefunded)......................................... 7.00 1/ 1/16 1,325,594
2,000 San Antonio, Texas, Electric & Gas Refg Ser 1994 INFLOS............... 6.37 + 2/ 1/06 1,787,500
3,000 Washington Public Power Supply System, Proj #2 Refg
Ser 1990 C (Prerefunded)............................................. 7.625 7/ 1/10 3,538,170
- ------- -----------
6,155 6,651,264
- ------- -----------
HOSPITAL REVENUE (10.8%)
925 Illinois Health Facilities Authority, Glen Oaks Medical Center Inc
Refg 1990 Ser D...................................................... 9.50 11/15/15 1,122,663
1,625 Minneapolis & St Paul Housing & Redevelopment Authority,
Health One Oblig Grp 1990 Ser B (Prerefunded)........................ 8.00 8/15/14 1,949,009
2,000 Comanche County Hospital Authority, Oklahoma, Ser 1989
(Prerefunded)........................................................ 8.05 7/ 1/16 2,362,000
1,100 Montgomery County Higher E Health Authority, Pennsylvania,
Frankford Hospital Ser 1986.......................................... 7.875 1/ 1/19 1,185,371
500 Washington County Municipal Authority, Pennsylvania,
Shadyside Hospital Ser 1985 C-1 D (AMBAC Insured)
(Prerefunded)........................................................ 7.45 12/15/18 588,055
- ------- -----------
6,150 7,207,098
- ------- -----------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL
REVENUE (7.8%)
3,000 Cleveland, Ohio, Continental Airlines Inc Ser 1990 (AMT).............. 9.00 12/ 1/19 3,096,930
2,005 Alliance Airport Authority, Texas, American Airlines Inc
Ser 1990 (AMT)....................................................... 7.50 12/ 1/29 2,143,886
- ------- -----------
5,005 5,240,816
- ------- -----------
MORTGAGE REVENUE--SINGLE FAMILY (24.0%)
2,000 Alaska Housing Finance Corporation, 1993 1st Ser...................... 5.90 12/ 1/33 1,960,700
645 Colorado Housing Finance Authority, Ser A-2 (AMT)..................... 8.25 8/ 1/20 681,410
385 Hawaii Housing Finance & Development Corporation, Purchase
Ser 1989 A (AMT)..................................................... 7.80 7/ 1/29 387,922
2,495 Idaho Housing Agency, Ser 1988 D-2 (AMT).............................. 8.25 1/ 1/20 2,925,388
4,530 Saint Tammany Public Trust Financing Authority, Louisiana,
Refg Ser 1990 B...................................................... 0.00 7/25/11 4,416,303
1,000 Maine Housing Authority, Purchase Ser 1990 A-4 (AMT).................. 6.40 11/15/23 1,010,650
Massachusetts Housing Finance Agency,
1,500 Ser 1989 A (AMT)..................................................... 8.10 8/ 1/09 1,596,150
500 Ser 1989 A (AMT)..................................................... 8.20 8/ 1/27 532,645
Utah Housing Finance Agency,
970 Ser 1991 Issue A-2 (AMT)............................................. 7.75 1/ 1/23 1,057,028
1,335 Ser 1991 Issue B-2 (AMT)............................................. 7.75 1/ 1/23 1,454,776
- ------- -----------
15,360 16,022,972
- ------- -----------
</TABLE>
<PAGE>
<TABLE>
MUNICIPAL INCOME TRUST III
PORTFOLIO OF INVESTMENTS February 28, 1994 (unaudited) (continued)
==================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- --------- ---- ---- -----
<C> <S> <C> <C> <C>
NURSING & LIFE CARE REVENUE (9.5%)
$ 2,573 Vista, California, Long-Term Care Foundation of America
Ser 1989 (a)(b)...................................................... 9.875% 1/ 1/20 $ 1,543,800
1,000 Marion, Iowa, AHF/Kentucky-Iowa Inc Ser 1990.......................... 10.25 1/ 1/20 1,074,940
2,000 Lexington-Fayette Urban County Government, Kentucky,
AHF/Kentucky-Iowa Inc Ser 1990....................................... 10.25 1/ 1/20 2,149,880
1,750 Metropolitan Government of Nashville & Davidson County
Health & Educational Facilities Board, Tennessee, Metro-
politan Nashville Teachers' Nursing Facility Inc Ser 1989............ 10.25 10/ 1/19 1,557,500
- ------- -----------
7,323 6,326,120
- ------- -----------
PUBLIC FACILITIES REVENUE (4.8%)
2,750 Florence County Public Facilities Corporation, South Carolina,
- ------- Law Enforce & Civic Ctr 1990 COPs (AMBAC Insured)
(Prerefunded)........................................................ 7.60 3/ 1/14 3,202,870
-----------
RESOURCE RECOVERY REVENUE (4.0%)
2,500 Cambria County Industrial Development Authority,
Pennsylvania, Cambria Cogen Co Ser 1989 F-2 (AMT).................... 7.75 9/ 1/19 2,692,850
- ------- -----------
TRANSPORTATION REVENUE (9.7%)
2,000 Denver, Colorado, Airport Ser 1990 A (AMT)............................ 8.50 11/15/23 2,287,600
2,480 Southwestern Illinois Development Authority, Tri-City Regional
Port District Ser 1989 (AMT) (b)..................................... 7.90 7/ 1/14 2,820,008
1,500 Puerto Rico Highway & Transportation Authority,
Refg Ser 1993 X...................................................... 5.25 7/ 1/21 1,391,295
- ------- -----------
5,980 6,498,903
- ------- -----------
WATER & SEWER REVENUE (2.4%)
1,090 Erie County Water Authority, New York, 4th Resolution
Refg Ser 1992 (AMBAC Insured)........................................ 0.00 12/ 1/17 196,015
1,500 Massachusetts Water Resources Authority, 1993 Ser C................... 5.25 12/ 1/20 1,388,415
- ------- -----------
2,590 1,584,430
- ------- -----------
OTHER REVENUE (6.2%)
1,000 Pasadena, California, Refg & Cap 1992 COPs............................ 5.75 1/ 1/13 1,001,390
500 Illinois Development Finance Authority, Church Road
Partnership #2 Ser 1989 (AMT)........................................ 7.875 9/ 1/14 547,050
2,250 New York Local Government Assistance Corporation,
Ser 1991 C (Prerefunded)............................................. 7.00 4/ 1/21 2,599,042
- ------- -----------
3,750 4,147,482
- ------- -----------
$63,653 TOTAL INVESTMENTS (IDENTIFIED COST $61,692,689)(C) ................................. 98.9% 66,002,948
======= OTHER ASSETS IN EXCESS OF LIABILITIES............................................... 1.1 761,625
------ -----------
NET ASSETS.......................................................................... 100.0% $66,764,573
====== ===========
<FN>
- ----------
+ Current coupon rate for residual interest bonds. This rate resets periodically as the auction rate on the related short-term
securities fluctuates.
(a) Non-income producing, bond in default.
(b) Resale is restricted to qualified accredited investors.
(c) The aggregate cost for federal income tax purposes is $61,692,689; the aggregate gross unrealized appreciation is $5,836,998
and the aggregate gross unrealized depreciation is $1,526,739, resulting in net unrealized appreciation of $4,310,259.
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
MUNICIPAL INCOME TRUST III
FINANCIAL STATEMENTS
===============================================================================
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1994 (unaudited)
===============================================================================
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $61,692,689) (Note 1) .................... $66,002,948
Interest receivable......................................... 1,018,092
Deferred organizational expenses (Note 1)................... 5,372
Prepaid expenses and other assets........................... 31,087
----------
TOTAL ASSETS........................................... 67,057,499
----------
LIABILITIES:
Payable to bank............................................. 179,279
Payable for shares of beneficial interest
repurchased (Note 5)....................................... 37,620
Investment advisory fee payable (Note 2).................... 23,097
Administration fee payable (Note 3)......................... 14,436
Accrued expenses (Note 4)................................... 38,494
-----------
TOTAL LIABILITIES...................................... 292,926
-----------
NET ASSETS:
Paid-in-capital............................................. 61,397,812
Accumulated undistributed net realized
gain on investments........................................ 658,109
Net unrealized appreciation on investments.................. 4,310,259
Accumulated undistributed net investment
income..................................................... 398,393
-----------
NET ASSETS............................................. $66,764,573
===========
NET ASSET VALUE PER SHARE, 6,628,086
shares outstanding (unlimited shares
authorized of $.01 par value).............................. $10.07
======
===============================================================================
<CAPTION>
STATEMENT OF OPERATIONS For the six months
ended February 28, 1994 (unaudited)
===============================================================================
<S> <C>
INVESTMENT INCOME:
INTEREST INCOME ........................................... $2,337,326
----------
EXPENSES
Investment advisory fee (Note 2).......................... 133,873
Administration fee (Note 3)............................... 83,670
Professional fees......................................... 32,945
Transfer agent fees and expenses
(Note 4)................................................. 16,290
Trustees' fees and expenses............................... 11,083
Shareholder reports and notices .......................... 10,860
Registration fees......................................... 8,048
Organizational expenses (Note 1).......................... 4,459
Custodian fees............................................ 1,810
Other..................................................... 5,112
---------
TOTAL EXPENSES......................................... 308,150
---------
NET INVESTMENT INCOME................................ 2,029,176
---------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (Note 1):
Net realized gain on investments.......................... 657,847
Net change in unrealized appreciation on
investments.............................................. (406,757)
----------
NET GAIN ON INVESTMENTS................................ 251,090
----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS............................. $2,280,266
==========
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
==================================================================================================================================
<CAPTION>
For the six months
ended For the year
February 28, 1994 ended
(unaudited) August 31, 1993
------------------ ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income.................................................... $ 2,029,176 $ 4,158,772
Net realized gain on investments......................................... 657,847 172,880
Net change in unrealized appreciation.................................... (406,757) 1,548,682
----------- -----------
Net increase in net assets resulting from operations.................... 2,280,266 5,880,334
----------- -----------
Dividends and distributions to shareholders from:
Net investment income.................................................... (1,956,465) (3,979,228)
Net realized gain on investments......................................... (172,434) (273,905)
----------- -----------
Total dividends and distributions....................................... (2,128,899) (4,253,133)
----------- -----------
Net decrease from transactions in shares of beneficial interest (Note 5).. (37,620) -0-
----------- -----------
Total increase.......................................................... 113,747 1,627,201
NET ASSETS:
Beginning of period....................................................... 66,650,826 65,023,625
----------- -----------
END OF PERIOD (including undistributed net investment income
of $398,393 and $325,682, respectively).................................. $66,764,573 $66,650,826
=========== ===========
See Notes to Financial Statements
</TABLE>
<PAGE>
MUNICIPAL INCOME TRUST III
NOTES TO FINANCIAL STATEMENTS (unaudited)
===============================================================================
1. ORGANIZATION AND ACCOUNTING POLICIES--Municipal Income Trust III (the
"Fund") is registered under the Investment Company Act of 1940, as amended (the
"Act"), as a diversified, closed-end management investment company. It was
organized on June 26, 1989 as a Massachusetts business trust and commenced
operations on October 5, 1989.
The following is a summary of significant accounting policies:
A. Valuation of Investments--Portfolio securities are valued for the
Fund by an outside independent pricing service approved by the Fund's
Trustees. The pricing service has informed the Fund that in valuing the
Fund's portfolio securities, it 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 Fund's
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.
B. Accounting for Investments--Security transactions are accounted for
on the trade date (date the order to buy or sell is executed). In
computing net investment income, the Fund amortizes premiums and
original issue discounts on fixed income securities. Additionally, with
respect to market discount on bonds purchased after April 30, 1993, a
portion of any capital gain realized upon disposition is
recharacterized as taxable investment income. Realized gains and losses
on security transactions are determined on the identified cost method.
Interest income is accrued daily except where collection is not
expected.
C. Federal Income Tax Status--It is the Fund's policy to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable and
nontaxable income to its shareholders. Accordingly, no federal income
tax provision is required.
D. Dividends and Distributions to Shareholders--The Fund records
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 either
considered temporary or permanent in nature. To the extent that 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 reclassifications. Dividends and
distributions which exceed net investment income and net realized
capital gains for financial reporting purposes but not for tax purposes
are reported as dividends in excess of net investment income or
distributions in excess of net realized capital gains. To the extent
that they exceed net investment income and net realized capital gains
for tax purposes, they are reported as distributions of paid-in-
capital.
E. Organizational Expenses--The Fund's Former Administrator paid the
organizational expenses of the Fund in the amount of $45,000. The Fund
reimbursed the Former Administrator for such expenses which are being
amortized by the straight-line method over a period not to exceed five
years from the commencement of operations.
2. INVESTMENT ADVISORY AGREEMENT--Pursuant to an Investment Advisory Agreement
(the "Advisory Agreement") with Dean Witter InterCapital Inc. (the "Investment
Adviser"), the Fund pays its Investment Adviser an advisory fee, calculated
weekly and payable monthly, by applying the following annual rates to the
Fund's average weekly net assets: 0.40% of the portion of the Fund's average
weekly net assets not exceeding $250 million and 0.30% of the portion of
average weekly net assets exceeding $250 million.
<PAGE>
MUNICIPAL INCOME TRUST III
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
===============================================================================
Under the terms of the Advisory Agreement, the Investment Adviser
manages the Fund's assets. Also, the Investment Adviser pays the salaries of
all personnel, including officers of the Fund, who are employees of the
Investment Adviser.
3. ADMINISTRATION AGREEMENT-- Through December 31, 1993, pursuant to an
Administration Agreement with Dean Witter InterCapital Inc. (the "Former
Administrator"), the Fund paid an administration fee, calculated weekly and
payable monthly, by applying the following annual rates to the Fund's average
weekly net assets: 0.25% of the portion of the Fund's average weekly net assets
not exceeding $250 million; 0.20% of the portion of average weekly net assets
exceeding $250 million but not exceeding $500 million; 0.167% of the portion of
average weekly net assets exceeding $500 million but not exceeding $750
million; and 0.133% of the portion of average weekly net assets exceeding $750
million. On January 1, 1994, the Administration Agreement between the Former
Administrator and the Fund had been terminated and a new Administration
Agreement had been entered into between Dean Witter Services Company Inc. (the
"Administrator"), a wholly-owned subsidiary of the Former Administrator, and
the Fund. The nature and scope of the services being provided to the Fund or
any fees being paid by the Fund under the new Agreement are identical to those
of the previous Agreement.
Under the terms of the Administration Agreement, the Administrator
maintains certain of the Fund's books and records and furnishes, at its own
expense, such office space, facilities, equipment, clerical help, bookkeeping
and certain legal services as the Fund may reasonably require in the conduct of
its business. In addition, the Administrator pays the salaries of all
personnel, including officers of the Fund who are employees of the
Administrator.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES--The cost of
purchases and the proceeds from sales of portfolio securities for the six
months ended February 28, 1994, excluding short-term investments, aggregated
$7,723,044 and $6,170,667, respectively.
Dean Witter Trust Company, an affiliate of the Investment Adviser and
Administrator, is the Fund's transfer agent. At February 28, 1994, the Fund had
transfer agent fees and expenses payable of $7,204.
<TABLE>
5. SHARES OF BENEFICIAL INTEREST--Transactions in shares of beneficial interest were as follows:
<CAPTION>
Capital
Par Value Paid In
of Excess of
Shares Shares Par Value
------ ------ --------
<S> <C> <C> <C>
Balance, August 31, 1992 and August 31, 1993..................... 6,632,086 $66,321 $61,369,111
Treasury shares purchased and retired (weighted
average discount 6.60%)*........................................ (4,000) (40) (37,580)
--------- ------- -----------
Balance, February 28, 1994....................................... 6,628,086 $66,281 $61,331,531
========= ======= ===========
<FN>
- ------------
* The Trustees have voted to retire the shares repurchased.
<CAPTION>
6. DIVIDENDS--The Fund has declared the following dividends from net investment income--
Declaration Amount Record Payable
Date Per Share Date Date
--------- --------- --------- ---------
<S> <C> <C> <C>
March 1, 1994 $0.045 March 11, 1994 March 25, 1994
March 29, 1994 $0.045 April 8, 1994 April 22, 1994
</TABLE>
<PAGE>
<TABLE>
MUNICIPAL INCOME TRUST III
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
==================================================================================================================================
<CAPTION>
7. SELECTED QUARTERLY FINANCIAL DATA--
Quarters Ended*
-----------------------------------
2/28/94 11/30/93
--------------- ---------------
Per Per
Total Share Total Share
----- ----- ----- -----
<S> <C> <C> <C> <C>
Total investment income ............................................................. $1,137 $0.17 $1,200 $0.18
Net investment income................................................................ 994 0.15 1,035 0.16
Net realized and unrealized gain (loss) on investments............................... (300) (0.05) 551 0.08
<CAPTION> Quarters Ended*
------------------------------------------------------------------------------
8/31/93 5/31/93 2/29/93 11/30/92
--------------- --------------- --------------- ---------------
Per Per Per Per
Total Share Total Share Total Share Total Share
----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income .......................... $1,232 $0.19 $1,170 $0.17 $1,196 $0.18 $1,201 $0.18
Net investment income ............................ 1,074 0.16 1,019 0.16 1,031 0.15 1,035 0.16
Net realized and unrealized gain (loss) on
investments...................................... (160) (0.03) 268 0.04 1,119 0.17 495 0.08
<FN>
- ------------
* Totals expressed in thousands of dollars.
<CAPTION>
FINANCIAL HIGHLIGHTS (unaudited)
==================================================================================================================================
Selected data and ratios for a share of beneficial interest outstanding throughout each period:
For the years For the period
For the six ended August 31, October 5, 1989*
months ended ------------------------ through
February 28, 1994 1993 1992 1991 August 31, 1990
----------------- ---- ---- ---- ---------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period....................... $10.05 $ 9.80 $ 9.60 $9.32 $9.30
------- ------ ------ ------ ------
Net investment income..................................... 0.31 0.63 0.62 0.68 0.57
Net realized and unrealized gain on
investments.............................................. 0.04 0.26 0.28 0.30 0.05
------- ------ ------ ------ ------
Total from investment operations........................... 0.35 0.89 0.90 0.98 0.62
------- ------ ------ ------ ------
Less dividends, distributions and other
charges:
Dividends from net investment income...................... (0.30) (0.60) (0.64) (0.66) (0.55)
Distributions from net realized gain
on investments........................................... (0.03) (0.04) (0.06) (0.04) -0-
Offering costs charged against capital.................... -0- -0- -0- -0- (0.05)
------- ------ ------ ------ ------
Total dividends, distributions and other
charges................................................... (0.33) (0.64) (0.70) (0.70) (0.60)
------- ------ ------ ------ ------
Net asset value, end of period............................. $10.07 $10.05 $9.80 $9.60 $9.32
======= ====== ====== ====== ======
Market value, end of period................................ $ 9.375 $10.25 $9.75 $9.625 $8.625
======= ====== ====== ====== ======
TOTAL INVESTMENT RETURN+.................................... (5.58%)(1) 12.27% 8.73% 20.38% (8.37%)(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)................... $66,765 $66,651 $65,024 $63,565 $62,147
Ratio of expenses to average net assets.................... 0.92%(2) 0.98% 1.00% 1.02% 1.10%(2)
Ratio of net investment income to average
net assets................................................ 6.06%(2) 6.37% 6.38% 7.20% 6.76%(2)
Portfolio turnover rate.................................... 9% 2% 8% 40% 150%
<FN>
- ------------
* Commencement of operations.
+ Total investment return is based upon the current market value on the first and 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
investment return does not reflect sales charges or brokerage commissions.
(1) Not annualized.
(2) Annualized.
See Notes to Financial Statements
- ----------------------------------------------------------------------------------------------------------------------------------
The financial statements included herein have been taken from the records of the Fund without examination by the independent
accountants and accordingly they do not express an opinion thereon.
</TABLE>
<PAGE>
TRUSTEES
- -----------------------------------
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. John E. Jeuck
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
Edward R. Telling
OFFICERS
- -----------------------------------
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
James F. Willison
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
- -----------------------------------
Dean Witter Trust Company
Harborside Financial Center--Plaza Two
Jersey City, New Jersey 07311
LEGAL COUNSEL
- -----------------------------------
Sheldon Curtis
Two World Trade Center
New York, New York 10048
INDEPENDENT ACCOUNTANTS
- -----------------------------------
Price Waterhouse
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT ADVISER
- -----------------------------------
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
MUNICIPAL
INCOME
TRUST III
SEMIANNUAL REPORT
FEBRUARY 28, 1994
