(Exact name of registrant as specified in charter)

522 Fifth Avenue, New York, New York 10036 (Address of principal executive offices)				(Zip code)

Ronald E. Robison
522 Fifth Avenue, New York, New York 10036

(Name and address of agent for service)

Registrant’s telephone number, including area code: 212-296-6990

Date of fiscal year end: March 31, 2009

Date of reporting period: June 30, 2008

The Fund’s schedule of investments as of the close of the reporting period prepared pursuant to Rule 12-12 of Regulation S-X is as follows:

 

 

PRINCIPAL
AMOUNT IN						COUPON				MATURITY
THOUSANDS						RATE				DATE				VALUE
				Tax-Exempt Municipal Bonds (108.7%)
				Alabama (0.6%)
$	500			Colbert County — Northwest Health Care Authority, Helen Keller Hospital Ser 2003			5.75	%			06/01/27			$	478,865
				Arizona (5.3%)
	650			Pima County Industrial Development Authority, Constellation Schools Ser 2008			7.00				01/01/38				617,123
	400			Pima County Industrial Development Authority, Water and Wastewater Global Water Resources LLC Ser 2007 (AMT)			6.55				12/01/37				363,100
	1,000			Pima County Industrial Development Authority, Noah Webster Basic School Ser 2004 A			6.125				12/15/34				973,180
	250			Pinal County Arizona Electrical, District #4			6.00				12/01/38				249,465
	1,500			Salt Verde Financial Corp Ser 2007 (c)			5.25				12/01/24				1,439,377
	325			Scottdale Arizona Industrial Development Authority Hospital			5.25				09/01/30				318,718
															3,960,963
				California (10.4%)
	970			California County Tobacco Securitization Agency, Gold County Settlement Funding Corp Ser 2006			0.00				06/01/33				142,726
	1,750			California Housing Finance Agency Ser 2006 K (AMT)			4.75				08/01/36				1,542,852
	200			California Municipal Finance Authority Education Facility Revenue			5.875				07/01/28				196,312
	325			California Statewide Communities Development Authority			5.00				07/01/39				284,843
	500			California Statewide Communities Development Authority, Lancer Educational Student Housing LLC Ser 2007			5.625				06/01/33				442,970
	475			Carlsbad Community Facilities District #3 Ser 2006			5.30				09/01/36				403,076
	2,000			Golden State Tobacco Securitization Corporation, Asset Backed Set 2007 A-1 (c)			5.125				06/01/47				1,526,203
	450			Quechan Indian Tribe FT Yuma Indian Reservation Ser 2008			7.00				12/01/27				436,428
	500			Sacramento Financing Authority, Convention Center Hotel 1999 Ser A			6.25				01/01/30				532,540
	1,300			San Diego County, San Diego Natural History Museum COPs			5.60				02/01/18				1,238,315
	1,000			San Marcos Community Facilities District # 2002-01, University Commons Ser 2004			5.90				09/01/28				966,190
	5,000			Silicon Valley Tobacco Securitization Authority, Santa Clara Tobacco Securitization Corp Ser 2007 C			0.00				06/01/56				93,900
															7,806,355
				Colorado (2.4%)
	1,000			Copperleaf Metropolitan District # 2 Ser 2006			5.95				12/01/36				790,170
	500			Elk Valley Public Improvement Corporation Ser 2001 A			7.30				09/01/22				508,310
	500			Elk Valley Public Improvement Corporation Ser 2001 A			7.35				09/01/31				500,370
															1,798,850
				Connecticut (2.9%)
	1,000			Georgetown Special Taxing District Ser 2006 A			5.125				10/01/36				761,940
	1,500			Mohegan Tribe of Indians, Gaming Authority Ser 2001 (e)			6.25				01/01/31				1,393,425
															2,155,365
				District of Columbia (1.1%)
	805			Metropolitan Washington Airports Authority, District of Columbia & Virginia, CaterAir International Corp Ser 1991 (AMT) (a)			10.125				09/01/11				805,403
				Florida (19.8%)
	500			Alachua County Industrial Development, North Florida Retirement Village Ser 2007			5.875				11/15/36				443,165
	480			Bellalago Educational Facilities Benefits District, Bellalago Charter School Ser 2004 B			5.80				05/01/34				458,645
	300			Brevard County Health Facilities authority, Buena Vida Estates, Inc Ser 2007			6.75				01/01/37				292,053
	1550			Broward County Proffessional Sports Facilities, Civic Arena Refg Ser 2006A (FSA CR AMBAC) (c)			5.00				09/01/23				1,586,378
	500			Fiddlers Creek Community Development District #1 Ser 2005			6.00				05/01/38				422,175
	250			Fountainbleau Lakes Community Development District Ser 2007 B			6.00				05/01/15				228,883
	1,000			Grand Bay at Doral Community Development District Ser 2007 A			6.00				05/01/39				769,830
	1,000			Midtown Miami Community Development District, Parking Garage Ser 2004 A			6.25				05/01/37				904,630
	1,100			Orange County Health Facilities Authority, Orlando Lutheran Towers Inc Ser 2005			5.375				07/01/20				999,669
	2,000			Orange County Health Facilities Authority, Westminister Community Care Services Inc Ser 1999			6.75				04/01/34				2,018,900
	1,000			Pinellas County Health Facilities Authority, Oaks of Clearwater Ser 2004			6.25				06/01/34				1,005,859
	1,500			South Miami Health Facilities Authority, Baptist Health South Florida Obligated Group Ser 2007 (c)			5.00				08/15/32				1,444,987
	2,000			St Johns County Industrial Development Authority, Glenmoor Ser 1999 A			8.00				01/01/10	(b)			2,192,720
	1,760			Texas Department of Housing and Community Affairs Sr 2007 B (AMT) (c)			5.15				09/01/27				1,711,838
	300			Tolomato Community Development District, Special Assessment Ser 2007			6.55				05/01/27				293,778
															14,773,510
				Illinois (5.8%)
	500			Bolingbrook, Sales Tax Ser 2005			6.25				01/01/24				488,950
	500			Chicago Lake Shore East Ser 2002			6.75				12/01/32				503,189
	260			Hampshire Special Service Area #18 Ser 2007 A			6.00				03/01/44				216,271
	500			Illinois Finance Authority, Revenue			5.625				01/01/37				485,160
	1,000			Illinois Finance Authority, Friendship Village of Schaumburg Ser 2005 A			5.625				02/15/37				806,170
	500			Illinois Finance Authority, Landing at Plymouth Ser 2005A			6.00				05/15/37				444,785
	750			Illinois Health Facilities Authority, Villa St Benedict Ser 2003 A-1			6.90				11/15/33				644,475
	500			Pingree Grove Special Service Area # 7, Cambridge Lakes Ser 2006-1			6.00				03/01/36				445,550
	300			Will-Kankakee Regional Development Authority, Senior Estates Supportive Living Ser 2007 ( AMT)			7.00				12/01/42				288,147
															4,322,697
				Indiana (2.5%)
	275			Saint Joseph County, Holy Cross Village at Notre Dame Ser 2006 A			6.00				05/15/26				257,122
	1,500			Upland, Taylor University Ser 2002			6.25				09/01/28				1,594,545
															1,851,667

PRINCIPAL
AMOUNT IN						COUPON				MATURITY
THOUSANDS						RATE				DATE				VALUE
				Iowa (1.5%)
	935			Iowa Health Facilities Development Financing Authority, Care Initiatives Ser 1996			9.25				07/01/11	(b)			1,110,471
				Kansas (2.1%)
	500			Olathe, Catholic Care Ser 2006 A			6.00				11/15/38				458,085
	1,000			Overland Park Development Corporation, Convention Center Hotel Ser 2000 A			7.375				01/01/32	(b)			1,110,220
															1,568,305
				Louisiana (0.5%)
	450			Lakeshore Villages Master Community Development District, Special Assessment Ser 2007			5.25				07/01/17				404,334
	300			Louisiana Public Facilities Authority Hospital			6.375				12/01/34				286,197
															690,531
				Maryland (2.0%)
	500			Maryland Health & Higher Educational Facilities Authority, King Farm Presbyterian Community Ser 2007 A			5.30				01/01/37				405,200
	1,235			Maryland Industrial Development Financing Authority, Medical Waste Associates LP 1989 Ser (AMT)			8.75				11/15/10				1,054,690
															1,459,890
				Massachusetts (3.4%)
	645			Massachusetts Development Finance Agency, Kennedy-Donovan Center Inc 1990 Issue			7.50				06/01/10				655,346
	1,425			Massachusetts Development Finance Agency, Loomis Communities Ser 1999 A			5.625				07/01/15				1,444,793
	500			Massachusetts Development Finance Authority, Evergreen Center Ser 2005			5.50				01/01/35				434,370
															2,534,509
				Michigan (2.0%)
	630			Detroit Sewage Disposal, Senior Lien Refg. Ser 2001 C-2 (BHA FGIC) (c)			5.75				07/01/29				652,823
	1,000			Michigan Tobacco Settlement Finance Authority Ser 2007 A			6.00				06/01/48				859,200
															1,512,023
				Minnesota (2.4%)
	1,250			Aitkin, Riverwood Healthcare Center Ser 2006			5.60				02/01/32				1,121,912
	500			Buffalo, Central Minnesota Senior Housing Ser 2006 A			5.50				09/01/33				445,465
	250			North Oaks, Presbyterian Homes of North Oaks Ser 2007			6.125				10/01/39				237,500
															1,804,877
				Missouri (4.4%)
	250			Branson Regional Airport Transportation Development District Ser 2007 B (AMT)			6.00				07/01/37				209,353
	1,000			Des Peres, West County Center Ser 2002			5.75				04/15/20				957,410
	1,000			Kansas City Industrial Development Authority, Bishop Spencer 2004 Ser I			6.25				01/01/24				967,760
	1,000			Kansas City Industrial Development Authority, Plaza Library Ser 2004			5.90				03/01/24				936,430
	250			St Louis County Industrial Development Authority, St Andrews Resources for Seniors Ser 2007 A			6.375				12/01/41				231,863
															3,302,816
				Nevada (1.9%)
	495			Clark County Special Improvement District #142, Mountain’s Edge Ser 2003			6.375				08/01/23				466,859
	500			Henderson, Local Improvement District #T-18, Ser 2006			5.30				09/01/35				339,050
	1,000			Nevada Department of Business & Industry, Las Vegas Monorail 2nd Tier Ser 2000			7.375				01/01/40				299,220
	300			Sparks Nevada Local Improvement District (WI)			6.50				09/01/20				291,027
															1,396,156
				New Jersey (5.3%)
	500			New Jersey Economic Development Authority, Cedar Crest Village Inc Ser 2001 A			7.25				11/15/11	(b)			566,870
	1,000			New Jersey Economic Development Authority, Franciscan Oaks Ser 1997			5.70				10/01/17				983,350
	1,000			New Jersey Economic Development Authority, Franciscan Oaks Ser 1997			5.75				10/01/23				952,600
	500			New Jersey Economic Development Authority, Lions Gate Ser 2005 A			5.875				01/01/37				447,725
	1,000			New Jersey Health Care Facilities Financing Authority, Raritan Bay Medical Center Ser 1994			7.25				07/01/27				988,330
															3,938,875
				New York (2.6%)
	1,000			Mount Vernon Industrial Development Agency, Meadowview at the Wartburg Ser 1999			6.20				06/01/29				958,730
	1,000			New York City Industrial Development Agency, 7 World Trade Center LLC Ser 2005 A			6.50				03/01/35				1,000,430
															1,959,160
				North Carolina (0.3%)
	200			North Carolina Medical Care Commission Healthcare Facilities, South Minster Ser 2007 A			6.13				10/01/35				179,922
	250			North Carolina Medical Care Commission Healthcare Facilities, South Minster Ser 2007 A			5.75				10/01/37				238,103
															418,025
				North Dakota (0.3%)
	250			Ward County, Health Care Facilities Trinity Obligated Group Ser 2006			5.125				07/01/29				230,945
				Ohio (3.3%)
	1,800			Buckeye Tobacco Settlement Financing Authority, Asset-Backed Ser 2007 A-2 (c)			5.875				06/01/30				1,604,070
	300			Centerville Ohio Health Care Revenue			6.00				11/01/38				264,291
	450			Cuyahoga County, Health Care & Independent Living Facilities, Eliza Jennings Senior Care Ser 2007 A			5.75				05/15/27				405,212

PRINCIPAL
AMOUNT IN						COUPON				MATURITY
THOUSANDS						RATE				DATE				VALUE
	300			Tuscarawas County Hospital Facilities, The Twin City Hospital Ser 2007			6.35				11/01/37				185,718
															2,459,291
				Oklahoma (1.8%)
	300			Chickasaw Nation Health Systems Ser 2007			6.25				12/01/32				296,100
	1,000			Oklahoma Development Finance Authority, Comanche County Hospital 2000 Ser B			6.60				07/01/31				1,023,959
															1,320,059
				Pennsylvania (7.4%)
	1,100			Allegheny County Hospital Development Authority, West Penn Ser 2007 A			5.375				11/15/40				912,494
	500			Allegheny County Redevelopment Authority, Pittsburgh Mills Ser 2004			5.60				07/01/23				480,160
	750			Bucks County Industrial Development Authority, Ann’s Choice Ser 2005 A			6.25				01/01/35				725,070
	1500			Pennsylvania Housing Finance Agency Ser 2007-100A(AMT) (c)			5.10				10/01/22				1,490,880
	1,000			Harrisburg Authority, Harrisburg University of Science & Technology Ser 2007 B			6.00				09/01/36				941,180
	500			Montgomery County Industrial Development Authority, Whitemarsh Community Ser 2005			6.25				02/01/35				456,950
	500			Pennsylvania Economic Development Financing Authority, Reliant Energy Inc Ser 2001 A (AMT)			6.75				12/01/36				505,660
															5,512,394
				South Carolina (2.5%)
	1,100			South Carolina Jobs-Economic Development Authority, Lutheran Homes Ser 2007			5.50				05/01/28				951,313
	750			South Carolina Jobs-Economic Development Authority, Wesley Commons Ser 2006			5.30				10/01/36				606,705
	325			South Carolina Jobs-Economic Development Authority, Woodlands at Furman Ser 2007 A			6.00				11/15/37				288,912
															1,846,930
				Tennessee (1.6%)
	500			Shelby County Health, Educational & Housing Facilities Board, Trezevant Manor Ser 2006 A			5.75				09/01/37				462,820
	750			Shelby County Health, Educational & Housing Facilities Board, Village at Germantown Ser 2003 A			7.25				12/01/34				738,158
															1,200,978
				Texas (3.1%)
	500			Austin Convention Enterprises Inc, Convention Center Hotel Ser 2006 B			5.75				01/01/34				446,265
	500			Decatur Hospital Authority, Wise Regional Health Ser 2004 A			7.125				09/01/34				509,900
	500			HFDC Central Texas Inc, Legacy at Willow Bend, Ser 2006 A			5.75				11/01/36				422,295
	1,000			Lubbock Health Facilities Development Corporation, Carillon Ser 2005 A			6.50				07/01/26				968,610
															2,347,070
				Virginia (4.9%)
	2,527			Chesterfield County Industrial Development Authority, Brandermill Woods Ser 1998			6.50				01/01/28				2,533,117
	1,000			Peninsula Ports Authority of Virginia, Baptist Homes Ser 2006 C			5.40				12/01/33				833,670
	300			Peninsula Town Center Community Development Authority Ser 2007			6.45				09/01/37				272,850
															3,639,637
				Washington (1.5%)
	290			Washington Housing Finance Commission, FNMA Collateralized Refg Ser 1990 A			7.50				07/01/23				290,493
	1,000			Washington Housing Finance Commission, Skyline at First Hill Ser 2007 A			5.625				01/01/38				868,460
															1,158,953
				West Virginia (0.6%)
	425			West Virginia State Hospital Financial Authority			6.50				10/01/38				418,043
				Wyoming (2.0%)
	1,500			Teton County Hospital District, St John’s Medical Center Ser 2002			6.75				12/01/27				1,506,405
				Total Tax-Exempt Municipal Bonds (Cost $85,829,941)											81,290,018

NUMBER OF
SHARES (000)
				Short-Term Investment (f) (0.3%)
				Investment Company
	253			Morgan Stanley Institutional Liquidity Tax-Exempt Portfolio — Institutional Class (Cost $252,507)			252,507
				Total Investments (Cost $86,082,448)			81,542,525

PRINCIPAL
AMOUNT IN
THOUSANDS
				Floating Rate Note Obligations Related to Securities Held (-10.2%)
	(7,608	)		Notes with interest rates ranging from 1.54% to 1.75% at June 30, 2008 and contractual maturities of collateral ranging from 10/01/22 to 06/01/47 (d) (Cost $(7,608,000))							(7,608,000	)
				Total Net Investments (Cost $78,474,448) (g)			98.8	%			73,934,525
				Other Assets in Excess of Liabilites			1.2				865,994
				Net Assets			100.0	%		$	74,800,519

The Fund adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”), effective December 1, 2007. In accordance with FAS 157, fair value is defined as the price that the Fund would receive to sell an investment or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market the most advantageous market for the investment or liability. FAS 157 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund’s investments. The inputs are summarized in the three broad levels listed below.

	•		Level 1 — quoted prices in active markets for identical investments
	•		Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
	•		Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used as of June 30, 2008 in valuing the Fund’s investments carried at value:

Fair Value Measurements at June 30, 2008 Using

Quoted Prices In

Significant

Significant

Active Market for

Other Observable

Unobservable

Identical Assets

Inputs

Inputs

Total

(Level 1)

(Level 2)

(Level 3)

Investments in Securities

$

73,934,525

$

252,507

$

73,682,018

—

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 and evaluations by its staff, in each case based on information concerning market transactions and quotations from dealers which reflect the mean between the last reported bid and asked price. 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. The Trustees believe that timely and reliable market quotations are generally not readily available for purposes of valuing tax-exempt securities and that the valuations supplied by the pricing service are more likely to approximate the fair value of such securities; (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; (3) interest rate swaps are marked- to-market daily based upon quotations from market makers; (4) investments in open-end mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value as of the close of each business day; and (5) 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.

Item 2. 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-Q 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.

(b) There were no changes in the Fund’s internal control over financial reporting that occurred during the registrant’s fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Fund’s internal control over financial reporting.

Item 3. Exhibits.

(a) A separate certification for each principal executive officer and principal financial officer of the registrant are attached hereto.

     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
August 15, 2008

     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
August 15, 2008

/s/ Francis Smith
Francis Smith
Principal Financial Officer
August 15, 2008