The First page of this financial depicts a chart called:
"What Double Tax-Free Income Means to You":
A hard copy of this chart is on file with the S.E.C.
letter to shareholders
119 East Marcy Street Suite 201, Santa Fe, New Mexico 87501
August 1, 1996
Dear Fellow Shareholder:
I am pleased to present the Annual Report for the California Portfolio of
Thornburg Limited Term Municipal Fund for the fiscal year ending June 30, 1996.
The net asset value of the A shares increased 3 cents per share to $12.64 during
the year. If you were with us for the entire period, you received dividends of
58.3 cents per share. If you reinvested your dividends, you received 59.6 cents
per share. Investors who owned C Shares received dividends of 52.5 and 53.5
cents per share, respectively. For a longer perspective on investment returns
and share price fluctuations, please read the exhibits included in this report.
It would not surprise me to see interest rates increase a bit over the next
year. The U.S. economy is generally firm, the economies of other developed
countries are strengthening, and many lesser developed countries are growing as
well. Investors here in the U.S. are exhibiting peculiar tendencies. With
respect to stocks, investors shoveled almost $150 billion into equity mutual
funds during the first 7 months of 1996, focusing in particular on the riskiest
funds. As risk prone as investors have become with stocks, bond funds have had
net investment of approximately zero this year.
Americans have been net sellers of individual municipal and U.S. government
bonds, while simultaneously increasing investments in foreign bonds. Meanwhile,
foreign investors seem to like bond investments here. They have been supporting
the U.S. bond market for about two years. I suppose the grass is always greener
on the other side of the ocean. We like it here at home, but we have positioned
your bond portfolio conservatively so as to be able to react quickly to change
and take advantage of any opportunities that arise.
Your Limited Term Municipal Fund California Portfolio currently holds
approximately 130 municipal obligations from California municipal borrowers.
Approximately 84% of the bonds are rated A or better by one of the major rating
agencies. As you know, we "ladder" the maturities of the bonds in your portfolio
so that some bonds are scheduled to mature at par during each of the next 10
years. Today, your fund's weighted average maturity is approximately 3.7 years,
and we always keep it below 5 years. Percentages of the portfolio maturing
within each of the next 10 years are summarized below:
% of portfolio maturing within Cumulative % maturing by end of
1 year = 11% year 1 = 11%
1 to 2 years = 13% year 2 = 24%
2 to 3 years = 15% year 3 = 39%
3 to 4 years = 15% year 4 = 54%
4 to 5 years = 17% year 5 = 71%
5 to 6 years = 14% year 6 = 85%
6 to 7 years = 7% year 7 = 92%
7 to 8 years = 3% year 8 = 95%
8 to 9 years = 3% year 9 = 98%
9 to 10 years = 1% year 10 = 99%
Over the years, our practice of laddering a diversified portfolio of short and
intermediate maturity municipal bonds has allowed your fund to consistently
perform well in varying interest rate environments. For instance, the A shares
of Limited Term Municipal Fund-California Portfolio received "A" letter grades
for one, three, and five year performance relative to other short term municipal
bond funds through June 30, 1996.* These rankings, which were published in The
Wall Street Journal, reflect total returns in the top 20% of all short term
municipal bond funds for those periods.
Many municipal bonds issued between 1985 and 1990 are being paid off early.
Money to pay off these bonds prior to maturity already has been raised. You may
own municipal bonds or unit trusts which are being redeemed. Your investment in
Thornburg Limited Term Municipal Fund will not be redeemed until you sell it.
Please remember that you can easily add to your investment each month by
authorizing a simple, automatic transfer from your checking account.
Currently, Limited Term Municipal Fund California Portfolio is ranked 5 stars by
Morningstar. Over the seventy-seven month time frame that it has been ranked by
Morningstar, the fund has an average rating of 4.9 stars, making it the highest
ranked California tax-free fund during that time period. I would like to
attribute this to capable execution of a thoroughly sensible investment strategy
over time. Thank you for investing in Thornburg Limited Term Municipal
Fund-California Portfolio.
Sincerely,
/s/ Brian J. McMahon
Brian J. McMahon
Managing Director
(footnotes)
Morningstar proprietary ratings reflects historical risk adjusted performance as
of 6/30/96. Ratings are subject to change every month. Funds with at least three
years of performance history are assigned ratings from one star (lowest) to five
star (highest). Morningstar ratings are calculated from the funds' three-,
five-, and ten year average annual returns and a risk factor that reflects fund
performance relative to three month Treasury bill returns. 10% of the funds in
an investment category receive five stars 22.5% receive four stars. LTCAX is
ranked 5-Stars for the 3 year and 5 year periods ending 6/30/96. The number of
funds within the Municipal, California category tracked by Morningstar as of
6/30/96 is 97and 60 on a 3-and 5-year basis.
*Source: The Wall Street Journal, July 3, 1996. Performance data are supplied by
Lipper Analytical Services, Inc., and reflect performance for the 1, 3, and 5
year periods ending June 30, 1996. An "A" ranking reflects total returns in the
top 20% of all funds within the short term municipal objective, as defined by
The Wall Street Journal. The average maturity and average quality of the funds
within the short municipal objective may differ. At June 30, 1996 44, 30 and 14
short municipal funds reported 1-year, 3-year, and 5-year total returns,
respectively. Performance calculations used to obtain these rankings assume
deduction of all expenses and reinvestment of all distributions, but do not
include the effect of any sales charge on total return.
statement of assets and liabilities
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
June 30, 1996
ASSETS
Investments, at value (cost $93,458,998) $94,887,493
Cash 168,499
Receivable for fund shares sold 297,046
Interest receivable 1,761,216
Prepaid expenses and other assets 3,198
TOTAL ASSETS 97,117,452
LIABILITIES
Dividends payable 134,542
Payable for fund shares redeemed 31,779
Accounts payable and accrued expenses 75,015
Accounts payable investment adviser (Note 3) 53,115
TOTAL LIABILITIES 294,451
NET ASSETS $96,823,001
NET ASSET VALUE:
Class A Shares:
Net asset value and redemption price per share
($94,379,465 applicable to 7,467,163 shares of
beneficial interest outstanding - Note 4) $12.64
Maximum sales charge, 2.50% of offering
price (2.57% of net asset value per share) .32
Maximum Offering Price Per Share $12.96
Class C Shares:
Net asset value and offering price per share*
($2,443,536 applicable to 193,164 shares of
beneficial interest outstanding - Note 4) $12.65
* Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See notes to financial statements.
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
Year Ended June 30, 1996
statement of operations
INVESTMENT INCOME
Interest income (net of premium amortized
of $257,990) $5,579,968
EXPENSES
Investment advisory fees (Note 3) 748,077
Distribution and service fees (Note 3):
Class A Shares 122,572
Class B Shares 1,170
Class C Shares 8,162
Transfer agent fees 76,379
Custodian fees 66,165
Professional fees 23,725
Accounting fees 10,980
Other expenses 23,010
TOTAL EXPENSES 1,080,240
Less:
Expenses reimbursed by investment adviser (Note 3) (75,198)
NET EXPENSES 1,005,042
NET INVESTMENT INCOME 4,574,926
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS - NOTE 5
Net realized gain on investments sold 13,209
Increase in unrealized appreciation of investments 196,447
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS 209,656
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $4,784,582
See notes to financial statements.
statements of changes in net assets
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
Year Ended Year Ended
June 30, 1996 June 30, 1995
INCREASE (DECREASE) IN
NET ASSETS FROM:
OPERATIONS:
Net investment income $4,574,926 $4,907,357
Net realized gain (loss) on investments sold 13,209 (481,286)
Increase in
unrealized
appreciation of investments 196,447 406,462
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 4,784,582 4,832,533
DIVIDENDS TO SHAREHOLDERS:
From net investment income
Class A Shares (4,504,908) (4,870,883)
Class B Shares (6,799) (13,254)
Class C Shares (63,219) (23,220)
FUND SHARE TRANSACTIONS -- (Note 4)
Class A Shares (4,674,335) (12,810,506)
Class B Shares (594,362) 582,859
Class C Shares 1,661,567 799,527
NET DECREASE IN NET ASSETS (3,397,474) (11,502,944)
NET ASSETS:
Beginning of year 100,220,475 111,723,419
End of year $ 96,823,001 $ 100,220,475
See notes to financial statements.
notes to financial statements
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
Note 1 - ORGANIZATION
Thornburg Limited Term Municipal Fund, Inc. (the "Fund") was incorporated in
Maryland on February 14, 1984. The Fund was reorganized in 1986 as a series
investment company with separate investment portfolios. The current portfolios
are the National Portfolio and California Portfolio (the "Portfolio"). The Fund
is an open-end diversified management investment company, registered under the
Investment Company Act of 1940, as amended. The primary investment objective of
the Fund is to obtain as high a level of current income exempt from federal
income tax as is consistent with preservation of capital. In addition, the
California Portfolio will invest primarily in Municipal Obligations originating
in California with the object of obtaining exemption of interest dividends from
any income taxes imposed by California on individuals.
On September 1, 1994 the Portfolio began offering three classes of shares of
beneficial interest, Class A, Class B and Class C shares. All shares outstanding
prior to September 1, 1994 are considered Class A shares. On September 28, 1995,
all existing Class B shares were converted at net asset value, without the
imposition of a deferred sales charge, into Class A shares of an equivalent
value. The Fund no longer offers Class B shares. Each class of shares of a
Portfolio represents an interest in the same portfolio of investments of the
Fund, except that (i) Class A shares are sold subject to a front-end sales
charge collected at the time the shares are purchased and bear a service fee,
(ii) Class C shares are sold at net asset value without a sales charge at the
time of purchase, but are subject to a contingent deferred sales charge upon
redemption within one year, and bear both a service fee and a distribution fee,
and (iii) the respective classes have different reinvestment privileges.
Additionally, each Portfolio may allocate among its classes certain expenses, to
the extent allowable to specific classes, including transfer agent fees,
government registration fees, certain printing and postage costs, and
administrative and legal expenses. Currently, class specific expenses of the
Portfolio are limited to distribution fees and certain custody and transfer
agent expenses.
Note 2 - SIGNIFICANT ACCOUNTING POLICIES Significant accounting policies of the
Fund are as follows:
Valuation of Investments: In determining net asset value, the Portfolio utilizes
an independent pricing service approved by the Board of Directors. Debt
investment securities have a primary market over the counter and are valued on
the basis of valuations furnished by the pricing service. The pricing service
values portfolio securities at quoted bid prices or the yield equivalents when
quotations are not readily available. Securities for which quotations are not
readily available are valued at fair value as determined by the pricing service
using methods which include consideration of yields or prices of municipal
obligations of comparable quality, type of issue, coupon, maturity and rating;
indications as to value from dealers and general market conditions. The
valuation procedures used by the pricing service and the portfolio valuations
received by the Portfolio are reviewed by the officers of the Fund under the
general supervision of the Board of Directors. Short-term obligations having
remaining maturities of 60 days or less are valued at amortized cost, which
approximates market value.
Federal Income Taxes: It is the policy of the Fund to comply with the provisions
of the Internal Revenue Code applicable to "regulated investment companies" and
to distribute all of its taxable (if any) and tax exempt income to its
shareholders. Therefore, no provision for Federal income tax is required.
Dividends paid by the Portfolio for the year ended June 30, 1996 represent
exempt interest dividends which are excludable by shareholders from gross income
for Federal income tax purposes.
When-Issued and Delayed Delivery Transactions: The Portfolio may engage in
when-issued or delayed delivery transactions. To the extent the Portfolio
engages in such transactions, it will do so for the purpose of acquiring
portfolio securities consistent with its investment objectives and not for the
purpose of investment leverage or to speculate on interest rate changes. At the
time the Portfolio makes a commitment to purchase a security on a when-issued
basis, it will record the transaction and reflect the value in determining its
net asset value. When effecting such transactions, assets of the Portfolio of an
amount sufficient to make payment for the portfolio securities to be purchased
will be segregated on the Portfolio's records on the trade date. Securities
purchased on a when-issued or delayed delivery basis do not earn interest until
the settlement date.
Dividends: Net investment income of the Portfolio is declared daily as a
dividend on shares for which the Portfolio has received payment. Dividends are
paid monthly and are reinvested in additional shares of the Portfolio at net
asset value per share at the close of business on the dividend payment date, or
at the shareholder's option, paid in cash. Net capital gains, to the extent
available, will be distributed annually.
General: Securities transactions are accounted for on a trade date basis.
Interest income is accrued as earned. Premiums and original issue discounts on
securities purchased are amortized to call dates or maturity dates of the
respective securities. Realized gains and losses from the sale of securities are
recorded on an identified cost basis.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results could differ from
those estimates.
Note 3 - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Pursuant to an investment advisory agreement, Thornburg Management Company, Inc.
(the "Adviser") serves as the investment adviser and performs services for which
the fees are payable at the end of each month. For the year ending June 30,
1996, these fees were payable at annual rates ranging from 3/4 of 1% to 4/10 of
1% of the average daily net assets of the Portfolio. Beginning July 1, 1996,
these fees will be payable at annual rates ranging from 1/2 of 1% to 9/40 of 1%
of the average daily net assets of the Portfolio. Also, effective July 1, 1996,
the Portfolio entered into an Administrative Services Agreement with the
Adviser, whereby the Adviser will perform certain administrative services for
the shareholders of each class of the Portfolio's shares, and for which fees
will be payable at an annual rate of up to 1/8 of 1% of the average daily net
assets attributable to each class of shares.
In the event normal operating expenses of the Portfolio, exclusive of brokerage
commissions, taxes, interest, and extraordinary expenses, exceed the limits
prescribed by any state in which the Fund's shares are qualified for sale, the
Adviser will reimburse the Portfolio for such excess. No such reimbursement was
required as a result of this limitation. For the year ended June 30, 1996, the
Adviser reimbursed certain operating expenses amounting to $75,198.
The Fund has an underwriting agreement with Thornburg Securities Corporation
(the "Distributor"), which acts as the Distributor of Portfolio shares. For the
year ended June 30, 1996, the Distributor earned commissions aggregating $16,639
from the sale of Class A shares, and collected contingent deferred sales charges
aggregating $1,115 from redemptions of Class C shares of the Fund.
Pursuant to a Service Plan under Rule 12b-1 of the Investment Company Act of
1940, the Portfolio may reimburse to the Adviser amounts not to exceed .25 of 1%
per annum of the average net assets attributable to each class of shares of the
Fund for payments made by the Adviser to securities dealers and other financial
institutions to obtain various shareholder related services. The Adviser may pay
out of its own funds additional expenses for distribution of the Portfolio's
shares.
The Portfolio also has adopted a Distribution Plan pursuant to Rule 12b-1,
applicable only to the Portfolio's Class B and Class C shares, under which the
Portfolio can (i) reimburse the Distributor for certain distribution expenses on
a monthly basis at an annual rate of up to .75% of the average daily net assets
attributable to Class B shares, and (ii) compensate the Distributor for services
in promoting the sale of Class C shares of the Fund at an annual rate of up to
.75% of the average daily net assets attributable to Class C shares. Total fees
incurred by each class of shares of the Portfolio under their respective service
and distribution plans for the year ended June 30, 1996 are set forth in the
statement of operations.
Certain officers and directors of the Fund are also officers and /or directors
of the Adviser and the Distributor. The compensation of unaffiliated directors
of the Fund is borne by the Fund.
Note 4 - SHARES OF BENEFICIAL INTEREST:
At June 30, 1996, there were 600,000,000 shares of the Fund (including
115,000,000 for the Portfolio) of $.001 par value common stock authorized and
capital paid-in aggregated $96,311,516. Transactions in shares of beneficial
interest were as follows:
Year Ended Year Ended
June 30, 1996 June 30, 1995
Class A Shares Shares Amount Shares Amount
Shares sold 1,028,241 $ 13,063,252 1,016,756 $ 12,634,104
Shares issued to shareholders
in reinvestment of
distributions 227,171 2,885,798 224,628 2,785,930
Shares repurchased (1,626,759) (20,623,385) (2,292,000) (28,230,540)
Net Decrease (371,347) ($ 4,674,335) (1,050,616) ($12,810,506)
Class B Shares
Shares sold 17,477 $ 220,496 45,930 $ 572,142
Shares issued to shareholders
in reinvestment of
distributions 352 4,458 864 10,717
Shares repurchased (64,623) (819,316) -- --
Net Increase (Decrease) (46,794) ($ 594,362) 46,794 $ 582,859
Class C Shares
Shares sold 164,199 $ 2,090,620 149,655 $ 1,864,152
Shares issued to shareholders
in reinvestment of
distributions 4,010 50,090 1,636 20,266
Shares repurchased (37,612) (479,143) (88,724) (1,084,891)
Net Increase 130,597 $ 1,661,567 62,567 $ 799,527
Note 5 - SECURITIES TRANSACTIONS
Purchases and proceeds from maturities or sales of investment securities of the
Portfolio, other than short-term securities, aggregated $22,208,441 and
$26,949,231, respectively. The cost of investments is the same for financial
reporting and Federal income tax purposes. At June 30, 1996, the aggregate gross
unrealized appreciation and depreciation, based on cost for Federal income tax
purposes, were $1,901,541 and $473,045, respectively.
Accumulated net realized losses from security transactions included in net
assets at June 30, 1996 aggregated $917,010.
For Federal income tax purposes, the Portfolio has realized capital loss
carryforwards of $917,010 from prior fiscal years available to offset future
realized capital gains. To the extent that such carryforwards are used, no
capital gains distributions will be made. The carryforwards expire as follows:
June 30, 1997 - $45,141, June 30, 1998 - $60,181, June 30, 1999 - $14,395, June
30, 2000 - $410, June 30, 2002 - $315,597, and June 30, 2003 -$481,286.
financial highlights
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
Per share operating performance
(for a share outstanding
throughout the year)
Year Ended June 30,
1996 1995 1994 1993 1992
Class of Shares: A A A A A
Net asset value, beginning of year $12.61 $12.57 $12.85 $12.48 $12.24
Income from investment operations:
Net investment income .58 .58 .58 .65 .72
Net realized and unrealized
gain (loss) on investments .03 .04 (.28) .37 .24
Total from investment operations .61 .62 .30 1.02 .96
Less dividends from:
Net investment income (.58) (.58) (.58) (.65) (.72)
Change in net asset value .03 .04 (.28) .37 .24
Net asset value, end of year $12.64 $12.61 $12.57 $12.85 $12.48
Total return (a) 4.94% 5.12% 2.37% 8.36% 8.10%
Ratios/Supplemental Data Ratios
to average net assets:
Net investment income 4.59% 4.69% 4.51% 5.07% 5.80%
Expenses, after expense reductions 1.00% 1.00% 1.00% 1.00% 1.00%
Expenses, before expense reductions 1.05% 1.04% 1.03% 1.06% 1.10%
Portfolio turnover rate 22.68% 18.54% 15.26% 20.81% 30.56%
Net assets
at end of year (000) $94,379 $98,841 $111,723 $81,874 $53,130
(a) Sales loads are not reflected in computing total return, which is not
annualized for periods less than one year.
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
Per share operating performance
(for a share outstanding
throughout the period) Period from
Year Ended Sept. 1, 1994 (a)
June 30, 1996 to June 30, 1995
- --------------------------------------------------------------------------------
Class of Shares: B* C B C
Net asset value, beginning of period $12.62 $12.62 $12.55 $12.55
Income from investment operations:
Net investment income .13 .53 .43 .42
Net realized and unrealized
gain (loss) on investments .06 .03 .07 .07
Total from investment operations .19 .56 .50 .49
Less dividends from:
Net investment income (.13) (.53) (.43) (.42)
Change in net asset value .06 .03 .07 .07
Net asset value, end of period $12.68 $12.65 $12.62 $12.62
Total Return (b) 1.59% 4.46% 3.99% 3.98%
Ratios/Supplemental Data Ratios to average net assets:
Net investment income 4.15% (c) 4.16% 4.10%(c) 4.07%(c)
Expenses, after expense reductions 1.63% (c) 1.43% 1.60%(c) 1.63%(c)
Expenses, before expense reductions 3.67% (c) 2.92% 4.51%(c) 3.21%(c)
Portfolio turnover rate 22.68% 22.68% 18.54% 18.54%
Net assets
at end of period (000) $0 $2,444 $590 $790
(a) Commencement of sales of Class B and Class C shares.
(b) Sales loads are not reflected in computing total return, which is not
annualized for periods less than one year.
The total return for Class B shares reflects a period of 90 days.
(c) Annualized.
* Period from July 1, 1995 to September 28, 1995, on which date all Class B
shares were converted into Class A shares.
<TABLE>
<CAPTION>
schedule of investments
Thornburg Limited Term Municipal Fund, California Portfolio
Par Amount Issue Name & Description Credit
Rating Value
<C> <S> <C> <C>
$ 615,000 Alameda-Contra Costa Transit District Refunding Certificate of Participation
Series 1989, 7.20% due 8/1/00 Baa/BBB- $ 657,669
370,000 Albany Public Facilities Financing Authority Lease Revenue, 6.60% due 9/1/00
(Library Community Center Project) Baa1/NR 388,052
165,000 Antioch Unified School District Certificate of Participation, 0% due 7/1/05 (Insured: FSA) Aaa/AAA 91,108
1,300,000 Berkeley Health Facility Revenue Refinancing Series A, 5.70% due 12/1/98
(Alta Bates Medical Center Project) Baa/BBB+ 1,297,322
500,000 California Counties Lease Finance Authority Certificate of Participation, 7.30% due 10/1/98 A/NR 504,035
500,000 California Educational Facilities Authority Revenue Series 1993, 5.15% due 9/1/03
(Santa Clara University Project) A1/NR 506,245
840,000 California HFA Home Ownership and Improvement Series A, 0% due 2/1/04 (Insured: FHA/VA) Aa/AA- 502,269
670,000 California HFA Revenue Series 1985-B, 9.875% due 2/1/17 Aa/AA- 696,204
30,000 California HFA Single Family Mortgage Revenue Series 1982-A, 10.00% due 2/1/02
(LOC: Citibank) Aa/AA- 30,009
145,000 California HFA Revenue Series 1990-A, 0% due 8/1/01 Aa/AA- 100,159
550,000 California HFA, 6.40% due 9/1/98 (San Gabriel Hospital Project; Insured: Cal. Mortgage) NR/A 563,205
Prerefunded 9/1/96 @ 102
500,000 California HFA, 7.80% due 7/1/06 (Episcopal Homes Project; Insured: Cal. Mortgage) NR/A 515,530
1,000,000 California HFA Secured Revenue Series 1991, 6.65% due 9/1/01
(Good Samaritan Hospital Project) Baa/A- 1,051,080
505,000 California HFA Financing Authority, 5.25% due 8/1/00
(Marin General Hospital Project; Insured: FSA) Aaa/AAA 518,796
760,000 California Public Capital Improvement Finance Auth. Rev. Series 1988-E, 8.25% due 3/1/98 Baa/NR 798,380
1,000,000 California State General Obligation, 6.50% due 10/1/99 A1/A+ 1,061,770
216,931 California State Veterans General Obligation Bonds Amortizing Coupon M-COATES,
7.30% due 10/1/01 *Aaa/AAA* 234,478
1,000,000 California Veterans Affairs Home Purchase Revenue Series A, 7.40% due 8/1/97 Aa/A+ 1,030,710
250,000 California Veterans Affairs Home Purchase Revenue Series A, 7.50% due 8/1/98 Aa/A+ 264,388
1,390,000 California Veterans Affairs Home Purchase Revenue Series A, 6.55% due 8/1/01 Aa/A+ 1,444,905
850,000 California State University Revenue, 6.40% due 11/1/02 Crossover Refunded 11/1/00 @ 102 A1/A- 918,238
730,000 California Statewide Community Development Authority Insured Health
Facilities Revenue Certificate of Participation Series 1992, 6.40% due 5/1/02 (Eskaton
Properties Incorporated Phase II Project) NR/A 752,827
1,000,000 California Statewide Community Development Authority Certificate of Participation, 1.837%
(inverse floater) due 1/1/00 (Motion Picture and Television Fund Project; Insured: AMBAC) Aaa/AAA 897,260
1,000,000 California Statewide Community Development Authority Certificate of Participation, 2.127%
(inverse floater) due 1/1/01 (Motion Picture and Television Fund Project; Insured: AMBAC) Aaa/AAA 870,320
1,000,000 California Statewide Community Development Authority Insured Health Facilities Revenue
Series 1996 A, 6.00% due 9/1/04 (San Gabriel Medical Center Project; Insured: Cal Health) NR/A 1,025,860
130,000 Cerritos-Compton Glendale College District General Obligation
Certificate of Participation, 8.00% due 2/1/98 NR/NR 136,517
1,915,000 Chula Vista Variable Rate Multifamily Housing Refunding Revenue Series 1985,
5.75% due 11/1/07, put 11/1/97 (Eucalyptus Grove Project; Continental Casualty Surety Bond) NR/A+ 1,925,992
250,000 Clovis & Fresno Unified School District Certificate of Participation Series A, 6.70% due 5/1/97 NR/A 253,138
700,000 Coachella Valley Water District No. 71 Certificate of Participation, 5.75% due 10/1/00
(Storm Water District Project) A/NR 724,192
660,000 Cupertino Public Facilities Corporation Certificate of Participation Series 1992-B, 5.60%
due 7/1/00 A1/A+ 678,559
60,000 El Paso de Robles Newark Water District Certificate of Participation
Association of Bay Area Governments Finance Corporation, 7.40% due 6/1/98 NR/NR 61,631
350,000 Foothill-De Anza Community College District Certificate of Participation, 7.35% due 3/1/07 NR/A- 384,898
600,000 Fresno Multifamily Housing Revenue Refunding, 5.10% due 10/1/05, put 4/1/99
(Maple Leaf Project; Insured: Continental Insurance) NR/A- 595,092
560,000 Fruitvale School District Certificate of Participation, 7.60% due 6/1/99 Baa/NR 599,446
2,000,000 Glendale Hospital Revenue Refunding Series 1994, 7.625% due 1/1/05
(Verdugo Hills Project; LOC: Industrial Indemnity) NR/A+ 2,138,540
200,000 Hayward Unified School District Certificate of Participation, 7.60% due 10/1/00 Baa/NR 210,530
200,000 Hermosa Beach Lynwood and Vernon Certificate of Participation,
7.10% due 9/1/99, partially pre-refunded NR/BBB 208,432
2,895,000 Huntington Beach City School District 1995 Capital Certfificates, 6.25% due 4/1/97 NR/NR 2,902,730
800,000 Industry Industrial Revenue Refunding, 7.00% due 12/1/00, put 12/1/99
(Camco Chemical Project; LOC: Provident Bank) *A/A* 796,048
605,000 Inglewood Certificate of Participation, 6.70% due 8/1/00 (Civic Center Improvement Project) A/BBB 638,251
635,000 Inglewood Certificate of Participation, 6.80% due 8/1/01 (Civic Center Improvement Project) A/BBB 673,494
690,000 Inglewood Certificate of Participation, 6.90% due 8/1/02 (Civic Center Improvement Project) A/BBB 723,037
360,000 Irvine Ranch Water District Joint Powers Agency Revenue, 7.00% due 2/15/98 NR/A+ 367,492
480,000 Lake Elsinore Public Financing Authority Tax Allocation Revenue Series 1992-C,
6.15% due 2/1/01 (Insured: FGIC) Aaa/AAA 509,232
2,000,000 Lancaster Redevelopment Agency Lease Revenue Series 1995, 4.90% due 12/1/00
(Public Improvement Project; LOC: Sumitomo - Dai Ichi Kangyo) NR/A 1,958,400
1,500,000 Los Angeles Equipment Acquisition Program L Certificate of Participation, 5.80% due 12/1/98 A/A+ 1,540,110
1,000,000 Los Angeles Municipal Improvement Corporation Lease Revenue, 5.00% due 2/1/00 A/A+ 1,005,110
1,500,000 Los Angeles Unified School District Certificate of Participation, 6.30% due 6/1/02 A/A- 1,586,265
1,000,000 Los Angeles County Certificate of Participation Mobile Digital Comm., 7.70% due 7/15/01 Baa1/BBB+ 1,035,810
350,000 Los Angeles County Housing Authority MFHR, 7.625% due 12/1/29,
mandatory put 12/1/99 (Monrovia Project A; Insured: Continental Casualty) NR/A- 357,150
1,245,000 Los Angeles County Pension Obligation Certificate of Participation,
6.875% due 6/30/07 Baa1/BBB+ 1,270,124
1,000,000 Los Angeles County Transit Finance Corporation Certificate of Participation
Series 1992-B, 5.70% due 7/1/99 A1/NR 1,028,880
100,000 Los Angeles County Compton Civic Center Courthouse Facility Revenue, 7.75% due 10/1/96 Baa1/A 100,573
250,000 Lynwood Unified School District Certificate of Participation, 7.20% due 11/1/98
(Capital Improvement Project) Baa/NR 257,012
2,000,000 MSR Public Power Agency Series 1987 C, 6.70% due 7/1/02 (San Juan Project) A/A 2,057,900
375,000 Marysville Hospital Revenue, 6.00% due 1/1/04 (Fremont-Rideout Health Group
Project; Insured: AMBAC) Aaa/AAA 397,751
200,000 Midpeninsula Regional Open Space District Certificate of Participation, 7.20%
due 9/1/00, refunded 9/1/99 *Aaa/A 219,766
360,000 Midpeninsula Regional Open Space District Certificate of Participation, 4.75% due 9/1/99 NR/A 361,451
460,000 Midpeninsula Regional Open Space District Certificate of Participation, 4.80% due 9/1/00 NR/A 460,658
1,230,000 Morgan Hill Unified School District Certificate of Participation Series 1993, 4.70% due 8/1/98 A1/NR 1,238,967
1,000,000 Morgan Hill Unified School District Certificate of Participation Series 1993, 4.80% due 8/1/99 A1/NR 1,005,090
835,000 Morgan Hill Unified School District Certificate of Participation Series 1993, 5.00% due 8/1/00 A1/NR 841,713
660,000 Mountain View Shoreline Reg. Park Community Tax Allocation Series 1993-A, 4.70% due 8/1/99 A/A 650,734
810,000 National City Community Development Commission Tax Allocation Series
1992-A, 5.70% due 8/1/99 (Downtown Redevelopment Project; Insured: AMBAC) Aaa/AAA 840,326
500,000 National City Community Development Commission Tax Allocation Series
1992-A, 5.90% due 8/1/00 (Downtown Redevelopment Project; Insured: AMBAC) Aaa/AAA 525,680
330,000 New Haven Unified School District Certificate of Participation, 7.30% due 12/1/01 NR/A- 350,203
355,000 New Haven Unified School District Certificate of Participation, 7.30% due 12/1/02 NR/A- 375,402
380,000 New Haven Unified School District Certificate of Participation, 7.40% due 12/1/03 NR/A- 401,489
410,000 New Haven Unified School District Certificate of Participation, 7.40% due 12/1/04 NR/A- 432,230
940,000 Ontario Individual Development Revenue Series 1990-A, 7.75% due 9/1/20,
put 8/31/00 (Great Western Foam Project; LOC: Wells Fargo Bank) NR/A 957,851
1,100,000 Orange County Refunding Recovery, 5.10% due 6/1/02 (Insured: MBIA) Aaa/AAA 1,112,276
1,000,000 Orange County Refunding Recovery, 5.20% due 6/1/03 (Insured: MBIA) Aaa/AAA 1,011,550
2,000,000 Orange County Refunding Recovery, 6.50% due 6/1/04 (Insured: MBIA) Aaa/AAA 2,175,140
375,000 Orange County Subordinate Airport Revenue Certificate of Participation,
7.70% due 7/1/98 (1990 Loading Bridge and Baggage Handling Project) NR/NR 382,616
900,000 Orange County Local Transportation Authority Sales Tax Rev., 5.50% due 2/15/01
(Measure M Sales Tax Project) Aa/AA 916,848
510,000 Orange County Local Transportation Authority Sales Tax Rev., 6.00% due 2/15/06
(Measure M Sales Tax Project) Aa/AA 525,754
1,000,000 Orange County Local Transportation Authority Sales Tax Revenue 2nd Series,
1.877% (inverse floater) due 2/15/99 (Insured: FGIC) Aaa/AAA 934,590
2,000,000 Orange County Recovery Certificate of Participation Series A, 5.50% due 7/1/02
(Insured: MBIA) Aaa/AAA 2,063,900
1,425,000 Oxnard Harbor District Refunding Revenue, 6.60% due 8/1/00 (Capital Guaranty) Aaa/AAA 1,528,968
300,000 Oxnard IDA IDRB, 9.50% due 10/1/97 (Green Foods Project; LOC: Mitsubishi Bank Ltd.) Aa2/NR 302,787
750,000 Paramount Unified School District Certificate of Patricipation, 0% due 9/1/14 (Insured: FSA) Aaa/AAA 540,000
100,000 Perris School District Certificate of Participation, 5.10% due 3/1/00 (Insured: FSA) Aaa/AAA 101,971
990,000 Redwood City Multifamily Housing Revenue Series 1985-B, 5.20% due 10/1/08, put 10/1/00
(Redwood Shores Apartments Project; Insured: Continental Casualty) NR/A+ 983,209
150,000 Riverside Certificate of Participation, 8.00% due 10/1/96 Baa1/A- 151,390
100,000 Riverside County Housing Authority Revenue Series A, 7.50% due 10/1/96 Baa/NR 100,377
465,000 Riverside County Housing Authority Revenue Series A, 7.75% due 10/1/00 Baa/NR 474,533
295,000 Sacramento Financing Authority Series 1991, 6.30% due 11/1/02 A1/A+ 315,435
550,000 Sacramento Municipal Utility District Electric Refunding Revenue Series R, 6.60% due 2/1/97 A/A- 558,938
1,000,000 Sacramento Regional Transportation Authority Certificate of Participation, 6.00% due 3/1/99 A1/NR 1,035,550
1,000,000 Sacramento Regional Transportation Authority Certificate of Participation, 6.25% due 3/1/01 A1/NR 1,056,140
200,000 Sacramento Unified School District Certificate of Participation, 4.60% due 2/1/19, Prerefunded NR/NR6 199,978
950,000 Sacramento MFHR, 5.875% due 2/1/08, put 2/1/03 (Fairways I Apartments Project;
Insured: FNMA) NR/AAA 962,787
450,000 San Diego County Regional Trans. Community Sales Tax Rev. Series A,
6.125% due 4/1/98 (Escrowed to Maturity) AAA/AA- 465,813
255,000 San Francisco City & County Agency Redevelopment Agency Lease Revenue, 0% due 7/1/00 A/A- 209,942
240,000 San Francisco City & County Agency Refunding Series Sec 8, 6.125%
due 7/1/02 (Insured: MBIA / FHA) Aaa/AAA 240,379
700,000 San Francisco Unified School District Certificate of Participation, 8.10%
due 7/1/98, pre-refunded 7/1/96 @ 102 (Civic Improvement Project) A/AAA* 714,252
400,000 San Jacinto IDA IDRB Series 1990, 7.20% due 6/1/98 (Edelbrock Foundry
Corporation Project; LOC: Bank of America) NR/AA- 421,648
2,000,000 San Joaquin County Certificate of Participation, 5.25% due 9/1/98 (General Hospital Project) A/A- 2,008,820
1,440,000 San Joaquin County Certificate of Participation, 5.60% due 9/1/00 (General Hospital Project) A/A- 1,433,002
895,000 San Joaquin County Certificate of Participation, 5.90% due 9/1/03 (General Hospital Project) A/A- 876,509
1,310,000 San Marcos Public Facility Authority Capital Improvement Series 1991, 0% due 1/1/99, ETM Aaa/NR 1,167,446
410,000 San Marcos Public Facility Authority Capital Improvement Series 1991, 0% due 1/1/00, ETM Aaa/NR 348,217
500,000 Santa Ana Community Red. Agency Tax Allocation Series 1989-B, 7.10% due 9/1/98 NR/BB+ 516,810
500,000 Santa Cruz County Public Financing Authority Revenue Series C,
7.00% due 8/1/96 (Escrowed to Maturity) NR/AAA 501,400
315,000 Santa Monica Community College District Certificate of Participation, 7.65% due 5/1/01,
put 11/1/97 (Rancho Corrales Project) NR/A 325,152
810,000 Sonoma County Certificate of Participation Public Works Improvement Program,
5.40% due 8/1/00 (Integrated Waste Project) NR/A+ 831,449
950,000 Sonoma County Certificate of Participation Public Works Improvement Program,
5.80% due 8/1/03 (Integrated Waste Project) NR/A+ 982,614
150,000 South Coast Air Quality Management District Building Corporation
Installment Sale Revenue, 9.75% due 8/1/98 (Escrowed to Maturity) Aaa/AAA 166,783
1,500,000 South Coast Local Education Angencies Pooled Tax & Revenue Anticipation Notes
Series 1995-A, 5.00% due 8/14/96 NR/Sp1+ 1,501,755
700,000 Stanislaus Waste to Energy Finance Agency Solid Waste Facility Revenue Certificate,
7.20% due 1/1/97 (Ogden Martin Systems Project) NR/BBB+ 707,350
250,000 Stanislaus Waste to Energy Finance Agency Solid Waste Facility Revenue Certificate,
7.30% due 1/1/98 (Ogden Martin Systems Project) NR/BBB+ 257,595
340,000 Suisun City Redevelopment Agency 1990 Tax Allocation,
7.20% due 10/1/01, pre-refunded 4/1/00 *Aaa/A- 376,887
500,000 Sulphur Springs Union School District General Obligation Series B, 5.70% due 3/1/01 NR/A 520,305
450,000 Sunline Transit Agency Certificate of Participation California Transit Finance Corporation
Series A, 5.50% due 7/1/02 A/NR 459,913
900,000 Sweetwater Union High School District Certificate of Participation, 6.40% due 11/1/01 Baa1/BBB+ 948,447
190,000 Temecula Community Services Certificate of Participation Series 1992,
6.00% due 10/1/98 (Community Recreation Center Project) NR/A 196,452
200,000 Temecula Community Services Certificate of Participation Series 1992,
6.00% due 10/1/99 (Community Recreation Center Project) NR/A 207,938
210,000 Temecula Community Services Certificate of Participation Series 1992,
6.00% due 10/1/00 (Community Recreation Center Project) NR/A 219,091
255,000 Torrance Unified School District Certificate of Participation, 6.10% due 10/1/00 Baa1/NR 257,741
275,000 Trinity County Public Utilities District Certificate of Participation, 5.25% due 4/1/98 NR/BBB- 272,797
290,000 Trinity County Public Utilities District Certificate of Participation, 5.50% due 4/1/99 NR/BBB- 285,253
750,000 Turlock Irrigation District Certificate of Participation, 6.80% due 1/1/00, Prerefunded 1/1/98 @102
(1991 Capital Improvements Project) Baa1/A- 796,658
365,000 Turlock Irrigation District Certificate of Participation, 7.00% due 1/1/01, Prerefunded 1/1/98 @ 102
(1991 Capital Improvements Project) Baa1/A- 388,765
420,000 Turlock Irrigation District Certificate of Participation, 7.15% due 1/1/03, Prerefunded 1/1/98 @ 102
(1991 Capital Improvements Project) Baa1/A- 448,262
1,600,000 University of California Regents Certificate of Participation Series 1996,
5.45% due 6/1/03 (Various Capital Projects; Insured: MBIA) Aaa/AAA 1,647,296
635,000 University of California Research Facilities Revenue, 11.00% due 9/1/98 NR/A- 720,661
870,000 University of California Research Facilities Revenue, 5.25% due 9/1/02 NR/A- 874,028
625,000 Vallejo Public Financing Authority Local Agency Revenue Series A, 5.00% due 9/2/98 NR/A- 630,344
500,000 West Covina Certificate of Participation, 5.90% due 9/1/96 (Civic Center Complex Project) NR/A 501,910
495,000 Yorba Linda Public Financing Authority Certificate of Participation,
7.00% due 11/1/00 (Recycling Equipment Project) A/NR 512,097
1,000,000 Yuba City Public Financing Authority Series 1991, 7.25% due 12/1/96 NR/NR 1,006,260
TOTAL INVESTMENTS (Cost $93,458,998) $94,887,493
* Indicates rating on other debt issued by the same issuer,
rather than on the security held by the Fund. These
securities are deemed by the Adviser to be comparable with
those of issuers having debt ratings in the 4 highest grades
by Moody's or S&P. +Credit ratings are unaudited. See notes
to financial statements.
</TABLE>
To the Board of Directors and Shareholders
Thornburg Limited Term Municipal Fund, Inc. California Portfolio
Santa Fe, New Mexico
independent auditor's report
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Thornburg Limited Term Municipal Fund, Inc. -
California Portfolio as of June 30, 1996 the related statement of operations for
the year ended, the statement of changes in net assets for each of the two years
in the period then ended, and financial highlights for each of the five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatements. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1996 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principals used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statement and financial highlights referred to
above present fairly, in all material aspects, the financial position of
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio as of June
30, 1996, and the results of its operations, the changes in its net assets and
the financial highlights for the periods indicated, in conformity with generally
accepted accounting principals.
/S/ McGladrey & Pullen, L.L.P.
New York, New York
July 26, 1996
The last page of this report shows the Thornburg Limited Term Municipal
Fund - California Portfolio - A shares total return in dollars vs.
Donoghue's Taxable Money Market Fund Avg. and California Tax Free Money Market
Fund Average on a $100,000. investment on 7/1/91 through 6/30/96.
A hard copy of the graph is on file with the S.E.C.
