Thornburg
Limited Term
Municipal Fund--
California Portfolio
Annual Report
June 30, 1997
INVESTMENT MANAGER
Thornburg Management Company, Inc.
119 East Marcy Street
Santa Fe, NM 87501
(800) 847-0200
PRINCIPAL UNDERWRITER
Thornburg Securities Corporation
119 East Marcy Street
Santa Fe, NM 87501
(800) 847-0200
This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors in the Fund
unless preceded or accompanied by an effective prospectus, which includes
information regarding the Fund's objectives and policies, experience of its
management, marketability of shares, and other information. Performance data
quoted represent past performance and are not indicative of future results.
THORNBURG LIMITED TERM MUNICIPAL FUND-
CALIFORNIA PORTFOLIO CLASS SHARES
Thornburg Thornburg
Limited Term Municipal Limited Term Municipal
Fund-California Fund-California
A Shares C Shares
SEC Yield 3.92% 3.62%
Taxable Equiv. Yields 7.16% 6.61%
NAV $12.75 $12.76
Max. Offering Price $13.08 $12.76
1 Year Ending 2.87% 5.06%
5 Years Ending 4.70% NA
Since Inception 5.84% 4.77%
Inception Date (2/19/87) (9/1/94)
(a) Taxable equivalent yields assume a 39.6% marginal federal tax rate, and an
9.30% state of California marginal tax rate. Portions of the income of the
municipal funds may be subject to the alternative minimum tax. (b) The data
quoted represents past performance, and the investment return and principal
value of an investment in the fund will fluctuate. An investor's shares, when
redeemed, may be worth more or less than their original cost. (c) The total
return data reflects the deduction of the maximum sales charge of the Class A
Shares of 2.50%.
What Double Tax - Free Income Means to You:
Net Taxable Income
<TABLE>
<CAPTION>
Single Return Joint Return A Taxable Investment Must Earn
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$24,000 - 25,484 $40,100 - 50,968 32.32% 5.54% 5.91% 6.28% 6.65% 7.02% 7.39%
$25,484 - 32,207 $50,968 - 64,414 33.76% 5.66% 6.04% 6.42% 6.79% 7.17% 7.55%
$32,207 - 58,150 $64,414 - 96,900 34.70% 5.74% 6.13% 6.51% 6.89% 7.27% 7.66%
$58,150 - 121,300 $96,900 - 147,700 37.42% 5.99% 6.39% 6.79% 7.19% 7.59% 7.99%
$121,300 - 263,750 $147,700 - 263,75 41.95% 6.46% 6.89% 7.32% 7.75% 8.18% 8.61%
$263,750 - and up** $263,750 - and up** 45.22% 6.85% 7.30% 7.76% 8.21% 8.67% 9.13%
<FN>
*The yields listed are for illustration only and not necessarily representative
of any class of shares of the Limited Term Municipal Fund - California
Portfolio. **1996 maximum Federal tax bracket of 39.6%. Maximum California tax
bracket of 9.30%. Taxable equivalent yields do not take the federal alternative
minimum tax, to which investors may or may not be subject, into account.
</FN>
</TABLE>
l e t t e r t o s h a r e h o l d e r s
Dear 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, 1997.
The net asset value of the A shares increased 11 cents per share to $12.75
during the year. If you were with us for the entire period, you received
dividends of 56.8 cents per share. If you reinvested your dividends, you
received 58 cents per share. Investors who owned C Shares received dividends of
51.8 and 52.8 cents per share, respectively.
American investors continue to be net sellers of individual municipal and U.S.
government bonds, while simultaneously pouring money into stocks and money
market investments. For example, investments in municipal bonds and bond funds
by individual investors have declined by $30 billion in the last 18 months. The
rewards to many equity investors, including those in our own Thornburg Value
Fund, have been impressive. Most investors who migrated from bonds to money
market investments in recent years have received lower returns thus far, yet
money market fund investments have increased approximately $300 billion in the
last two years. Assets of these money market funds now total over $1 trillion!
Table Here
Please see the exhibit at the back of this report for a simple comparison of
your fund to one money market return benchmark. While past performance cannot
guarantee future results, judge for yourself whether the historic returns and
your expected future return from Limited Term Municipal Fund represents a
favorable tradeoff against the variability of your fund's share price.
Your California Portfolio currently holds approximately 130 municipal
obligations from California municipal borrowers. Approximately 90% 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 3.9 years, and we always keep it
below 5 years. Percentages of the portfolio maturing within each of the next 10
years are summarized on the following page: .
% of portfolio maturing within Cumulative % maturing by end of
1 year = 13% year 1 = 13%
1 to 2 years = 13% year 2 = 26%
2 to 3 years = 14% year 3 = 40%
3 to 4 years = 17% year 4 = 57%
4 to 5 years = 13% year 5 = 70%
5 to 6 years = 13% year 6 = 83%
6 to 7 years = 5% year 7 = 88%
7 to 8 years = 4% year 8 = 92%
8 to 9 years = 5% year 9 = 97%
9 to 10 years = 2% year 10 = 99%
Over the years, our practice of laddering a diversified portfolio of short and
intermediate maturity bonds has allowed your fund to consistently perform well
in varying interest rate environments. For instance, the A shares of your
California Portfolio received "A" letter grades for one, three, and five year
performance relative to other short term municipal bond funds through June 30,
1997.* 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. I would like to attribute this to capable execution of a thoroughly
sensible investment strategy over time.
The strong economy has been good for municipal America. In its recent annual
survey of city fiscal conditions, the National League of Cities reported that
two-thirds of U.S. cities say they are better able to meet their financial needs
this year than last. Also, cities continued to increase their financial reserves
for the fifth consecutive year. Most states report similar favorable news, and
both operating and capital budget spending levels are increasing. There is one
possible cloud: as Washington hands increasing responsibility for implementing
mandated programs to state and local governments, I expect a few entities to
have significant problems managing through the transition.
Thank you for investing in Thornburg Limited Term Municipal Fund.
Sincerely,
Brian J. McMahon
Portfolio Manager
s t a t e m e n t o f a s s e t s a n d l i a b i l i t i e s
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
June 30, 1997
ASSETS
Investments, at value (cost $102,803,484) $ 105,016,511
Cash 271,306
Receivable for fund shares sold 219,743
Interest receivable 1,656,446
Prepaid expenses and othe 3,795
TOTAL ASSETS 107,167,801
LIABILITIES
Payable for securities purchased 2,719,666
Dividends payable 123,846
Pay for fund shares redeemed 92,656
Accounts payable and accrued expenses 96,251
Accounts payable investmen advisor (Note 3) 50,586
TOTAL LIABILITIES 3,083,005
NET ASSETS $ 104,084,796
NET ASSET VALUE:
Class A Shares:
Net asset value and redemption price per share
($94,253,180 applicable to 7,394,778 shares
of beneficial interest outstanding - Note 4) $12.75
Maximum sales charge, 2.50% of offering
price (2.57% of net asset value per share) .33
Maximum Offering Price Per Share $13.08
Class C Shares:
Net asset value and offering price per share*
($5,882,408 applicable to 461,062 shares
of beneficial interest outstanding - Note 4) $12.76
Class I Shares:
Net asset value and offering price per share
($3,949,208 applicable to 309,762 shares
of beneficial interest outstanding - Note 4) $12.75
* Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge. See notes to financial statements.
s t a t e m e n t o f o p e r a t i o n s
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
Year Ended June 30, 1997
INVESTMENT INCOME
Interest income (net of premium amortized $ 5,438,215
of $264,605)
EXPENSES
Investment advisory fees (Note 3) 496,821
Administration Fees (Note 3)
Class A Shares 118,570
Class C Shares 4,972
Class I Shares 265
Distribution and service fees (Note 3):
Class A Shares 237,140
Class C Shares 39,833
Transfer agent fees 65,851
Custodian fees 64,706
Professional fees 14,154
Accounting Fees 10,565
Other expenses 14,663
TOTAL EXPENSES 1,067,540
Less:
Expenses reimbursed by investment adviser (Note 3) (44,991)
Distribution fees waived (Note 3) (14,974)
NET EXPENSES 1,007,575
NET INVESTMENT INCOME 4,430,640
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS - NOTE 5
Net realized gain on investments sold 63,898
Increase in unrealized appreciation of investments 784,532
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS 848,430
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 5,279,070
See notes to financial statements.
s t a t e m e n t s o f c h a n g e s i n n e t a s s e t s
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
Year Ended Year Ended
June 30, 1997 June 30, 1996
INCREASE (DECREASE) IN
NET ASSETS FROM:
OPERATIONS:
Net investment income $4,430,640 $4,574,926
Net realized gain on investments sold 63,898 13,209
Increase in unrealized
appreciation of investments 784,532 196,447
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 5,279,070 4,784,582
DIVIDENDS TO SHAREHOLDERS:
From net investment income
Class A Shares (4,243,665) (4,504,908)
Class B Shares -- (6,799)
Class C Shares (161,619) (63,219)
Class I Shares (25,356) --
FUND SHARE TRANSACTIONS-- (Note 4)
Class A Shares (908,565) (4,674,335)
Class B Shares -- (594,362)
Class C Shares 3,397,813 1,661,567
Class I Shares 3,924,117 --
NET INCREASE (DECREASE) IN NET ASSETS 7,261,795 (3,397,474)
NET ASSETS:
Beginning of year 96,823,001 100,220,475
End of year $104,084,796 $96,823,001
See notes to financial statements.
n o t e s t o f i n a n c i a l s t a t e m e n t s
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 as follows: 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.
The Fund currently offers three classes of shares of beneficial interest in the
portfolio, Class A, Class C and Institutional Class (Class I) shares. Each class
of shares of the 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, (iii) Class I shares are sold at net asset value without a
sales charge at the time of purchase, and (iv) the respective classes have
different reinvestment privileges. Additionally, the 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,
administrative fees, registration fees and transfer agent expenses.
Note 2 - SIGNIFICANT ACCOUNTING POLICIES Significant accounting policies of the
Fund are as follows:
Valuation of Investments: In determining the net asset value of the portfolio,
the Fund 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, 1997 represent
exempt interest dividends which are excludable by shareholders from gross income
for Federal income tax purposes.
When-Issued and Delayed Delivery Transactions: The Fund 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 Fund makes a commitment to purchase a security for the portfolio 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 Fund 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,
1997, these fees were 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, the Portfolio entered
into an Administrative Service 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 Portfolio'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, 1997,
the Adviser voluntarily reimbursed certain operating expenses amounting to
$44,991.
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, 1997, the Distributor earned commissions aggregating $22,159
from the sale of Class A shares, and collected contingent deferred sales charges
aggregating $1,991 from redemptions of Class C shares of the Portfolio.
Pursuant to a Service Plan under Rule 12b-1 of the Investment Company Act of
1940, the Fund 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
Portfolio 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 Fund also has adopted a Distribution Plan pursuant to Rule 12b-1, applicable
only to the Portfolio's Class C shares, under which the Fund can compensate the
Distributor for services in promoting the sale of Class C shares of the
Portfolio 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 and Class C
distribution fees waived by the Distributor for the year ended June 30, 1997 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, 1997, there were 1,000,000,000 shares of the Fund (including
300,000,000 for the Portfolio) of $.001 par value common stock authorized and
capital paid-in aggregated $102,724,881. Transactions in shares of beneficial
interest were as follows:
Year Ended Year Ended
June 30, 1997 June 30, 1996
------------ ------------
Class A Shares Shares Amount Shares Amount
Shares sold 1,127,372 $ 14,318,232 1,028,241 $ 13,063,252
Shares issued to shareholders
in reinvestment of
distributions 217,589 2,764,826 227,171 2,885,798
Shares repurchased (1,417,346) (17,991,623) (1,626,759) (20,623,385)
Net Decrease (72,385) ($908,565) (371,347) ($4,674,335)
Class B Shares
Shares sold -- -- -- 17,477 $ 220,496
Shares issued to shareholders
in reinvestment of
distributions -- -- 352 4,458
Shares repurchased -- -- (64,623) (819,316)
Net Decrease -- -- (46,794) ($ 594,362)
Class C Shares
Shares sold 360,237 $ 4,574,006 164,199 $ 2,090,620
Shares issued to shareholders
in reinvestment of
distributions 9,592 121,990 4,010 50,090
Shares repurchased (101,931) (1,298,183) (37,612) (479,143)
Net Increase 267,898 $ 3,397,813 130,597 $ 1,661,567
Class I Shares
Shares sold 309,314 $3,929,541 -- --
Shares issued to shareholders
in reinvestment of
distributions 1,831 23,299 -- --
Shares repurchased (1,383) (28,723) -- --
Net Increase 309,762 $ 3,924,117 -- --
Note 5 - SECURITIES TRANSACTIONS
Purchases and proceeds from maturities or sales of investment securities of the
Portfolio, other than short-term securities, aggregated $29,223,423 and
$19,947,605, respectively. The cost of investments is the same for financial
reporting and Federal income tax purposes. At June 30, 1997, the aggregate gross
unrealized appreciation and depreciation, based on cost for Federal income tax
purposes, were $2,380,340 and $167,313, respectively.
Accumulated net realized losses from security transactions included in net
assets at June 30, 1997 aggregated $853,112.
For Federal income tax purposes, the Portfolio has realized capital loss
carryforwards of $853,112 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, 1998 - $41,424, June 30, 1999 - $14,395, June 30, 2000 - $410, June 30,
2002 - $315,597, and June 30, 2003 - $481,286.
f i n a n c i a l h i g h l i g h t s
<TABLE>
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
Per share operating performance
(for a share outstanding
throughout the year)
<CAPTION>
Year Ended June 30,
<S> <C> <C> <C> <C> <C>
-------------------
1997 1996 1995 1994 1993
---------------- ---- ---- ----
Class of Shares: A A A A A
Net asset value, beginning of year $12.64 $12.61 $12.57 $12.85 $12.48
Income from investment operations:
Net investment income .57 .58 .58 .58 .65
Net realized and unrealized
gain (loss) on investments .11 .03 .04 (.28) .37
Total from investment operations .68 .61 .62 .30 1.02
Less dividends from:
Net investment income (.57) (.58) (.58) (.58) (.65)
Change in net asset value .11 .03 .04 (.28) .37
Net asset value, end of year $12.75 $12.64 $12.61 $12.57 $12.85
Total return (a) 5.47% 4.94% 5.12% 2.37% 8.36%
Ratios/Supplemental Data Ratios to average net assets:
Net investment income 4.47% 4.59% 4.69% 4.51% 5.07%
Expenses, after expense reductions 1.00% 1.00% 1.00% 1.00% 1.00%
Expenses, before expense reductions 1.03% 1.05% 1.04% 1.03% 1.06%
Portfolio turnover rate 20.44% 22.68% 18.54% 15.26% 20.81%
Net assets
at end of year (000) $94,253 $94,379 $98,841 $111,723 $81,874
<FN>
(a) Sales loads are not reflected in computing total return, which is not
annualized for periods less than one year.
</FN>
</TABLE>
<TABLE>
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
<CAPTION>
Per share operating performance
(for a share outstanding
throughout the period) Period from
Period Ended Period Ended Sept. 1, 1994 (a)
June 30, June 30, to June 30,
1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Class of Shares: C I** B* C B C
----------------------- ------------- -
Net asset value, beginning of period $12.65 $12.64 $12.62 $12.62 $12.55 $12.55
Income from investment operations:
Net investment income .52 .15 .13 .53 .43 .42
Net realized and unrealized
gain on investments .11 .11 .06 .03 .07 .07
Total from investment operations .63 .26 .19 .56 .50 .49
Less dividends from:
Net investment income (.52) (.15) (.13) (.53) (.43) (.42)
Change in net asset value .11 .11 .06 .03 .07 .07
Net asset value, end of period $12.76 $12.75 $12.68 $12.65 $12.62 $12.62
Total return (b) 5.06% 2.07% 1.59% 4.46% 3.99% 3.98%
Ratios/Supplemental Data Ratios to average net assets:
Net investment income 4.06% 4.77%(c) 4.15%(c) 4.16% 4.10% (c) 4.07% (c)
Expenses, after expense reductions 1.40% .63%(c) 1.63%(c) 1.43% 1.60% (c) 1.63% (c)
Expenses, before expense reductions 2.15% 1.32%(c) 3.67%(c) 2.92% 4.51% (c) 3.21% (c)
Portfolio turnover rate 20.44% 20.44% 22.68% 22.68% 18.54% 18.54%
Net assets
at end of period (000) $5,882 $3,949 $0 $2,444 $590 $790
<FN>
(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 for 1996.
(c) Annualized.
* Period from July 1, 1995 to September 28, 1995, on which date all Class B
shares were converted into Class A shares ** Sales of Class I shares commenced
on April 1, 1997.
</FN>
</TABLE>
s c h e d u l e o f i n v e s t m e n t s
<TABLE>
<CAPTION>
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
June 30, 1997 CUSIPS: Class A - 532-723-202, Class C - 532-723-707, Class I -
532-723-889 NASDAQ Symbols: Class A - LTCAX, Class C - LTCCX (Proposed), Class I
- - LTCIX (Proposed)
<S> <C> <C> <C>
Principal Credit Rating+
Amount Issuer-Description Moody's/S&P Value
615,000 Alameda-Contra Costa Transit District Refunding Certificate of Participation
Series 1989, 7. Baa/BBB $651,414
370,000 Albany Public Facilities Financing Authority Lease Revenue, 6.60% due 9/1/00
(Library Community Center Project) Baa1/NR 389,303
165,000 Antioch Unified School District Certificate of Participation, 0% due 7/1/05 (Insured: FS Aaa/AAA 98,548
1,300,000 Berkeley Health Facility Revenue Refinancing Series A, 5.70% due 12/1/98
(Alta Bates Medical Center Project) Baa/BBB+ 1,306,045
835,000 California Educational Facilities Authority Revenue, 5.60% due 10/1/00 (U.S.C. Project) Aa3/AA 871,172
1,805,000 California Educational Facilities Authority Revenue, 5.60% due 10/1/02 (U.S.C. Project) Aa3/AA 1,908,932
500,000 California Educational Facilities Authority Revenue Series 1993, 5.15% due 9/1/03
(Santa Clara University Project) A1/NR 516,490
670,000 California HFA Revenue Series 1985-B, 9.875% due 2/1/17 Aa/AA- 699,420
25,000 California HFA Single Family Mortgage Revenue Series 1982-A, 10.00% due 2/1/02
(LOC: Citibank) Aa/AA- 25,011
145,000 California HFA Revenue Series 1990-A, 0% due 8/1/01 Aa/AA- 108,732
500,000 California HFA, 7.80% due 7/1/06 (Episcopal Homes Project; Insured: Cal. Mortgage) NR/A 514,390
100,000 California Health Facilities Financing Authority Health Series 1990-A, 3.75%
due 3/1/20, put 7/1/97 (daily demand note)(Morgan guaranty) VMIGI/A-1+ 100,000
1,000,000 California HFA Secured Revenue Series 1991, 6.65% due 9/1/01
(Good Samaritan Hospital Project) Baa/A- 1,061,200
505,000 California HFA Financing Authority, 5.25% due 8/1/00
(Marin General Hospital Project; Insured: FSA) Aaa/AAA 520,771
400,000 California Public Capital Improvement Finance Auth. Rev. Series 1988-E, 8.25% due 3/1/98 Baa/NR 409,396
1,000,000 California State General Obligation, 6.50% due 10/1/99 A1/A+ 1,052,170
183,571 California State Veterans General Obligation Bonds Amortizing Coupon M-COATES,
7.30% due 10/1/01 *Aaa/AAA* 196,981
1,000,000 California Veterans Affairs Home Purchase Revenue Series A, 7.40% due 8/1/97 Aa/A+ 1,002,560
250,000 California Veterans Affairs Home Purchase Revenue Series A, 7.50% due 8/1/98 Aa/A+ 258,145
1,390,000 California Veterans Affairs Home Purchase Revenue Series A, 6.55% due 8/1/01 Aa/A+ 1,455,344
850,000 California State University Revenue, 6.40% due 11/1/02, crossover refunded 11/1/00 @ 102 A1/A- 909,177
625,000 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 646,669
1,000,000 California Statewide Community Development Authority Certificate of Participation, 2.70%
(inverse fl (Motion Picture and Television Fund Project; Insured: AMBAC) Aaa/AAA 950,820
1,000,000 California Statewide Community Development Authority Certificate of Participation, 2.99%
(inverse fl (Motion Picture and Television Fund Project; Insured: AMBAC) Aaa/AAA 931,310
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 1,055,240
130,000 Cerritos-Compton Glendale College District General Obligation
Certificate of Participation, 8.00% due 2/1/98 NR/NR 132,860
3,780,000 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+ 3,785,027
700,000 Coachella Valley Water District # 71 Certificate of Participation, 5.75% due 10/1/00
(Storm Water District Project) A/NR 726,103
660,000 Cupertino Public Facilities Corporation Certificate of Participation Series 1992-B, 5.60%
due 7/1/00 A1/A+ 680,665
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 61,454
1,500,000 Escondido Multifamily Housing Revenue Refunding Bonds Series 1997-A, 5.40% due 1/1/27,
put 7/1/07 (Terrace Gardens Project; Collateralized: FNMA) NR/AAA 1,517,340
350,000 Foothill-De Anza Community College District Certificate of Participation, 7.35% due 3/1/ NR/A- 386,971
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- 604,050
560,000 Fruitvale School District Certificate of Participation, 7.60% due 6/1/99 Baa/NR 589,674
2,000,000 Glendale Hospital Revenue Refunding Series 1994, 7.625% due 1/1/05
(Verdugo Hills NR/A+ct; LOC: Industrial Indemnity) NR/A+ 2,185,220
200,000 Hayward UnifiedBaa/NRl District Certificate of Participation, 7.60% due 10/1/00 Baa/NR 205,442
200,000 Hermosa Beach Lynwood and Vernon Certificate of Participation, 7.10% due 9/1/97 NR/BBB 204,710
605,000 Inglewood Certificate of Participation, 6.70% due 8/1/00 (Civic Center Improvement Project) A/BBB 638,323
635,000 Inglewood Certificate of Participation, 6.80% due 8/1/01 (Civic Center Improvement Proje A/BBB 679,056
690,000 Inglewood Certificate of Participation, 6.90% due 8/1/02 (Civic Center Improvement Proje A/BBB 724,210
360,000 Irvine Ranch Water District Joint Powers Agency Revenue, 7.00% due 2/15/98 NR/A+ 366,815
480,000 Lake Elsinore Public Financing Authority Tax Allocation Revenue Series 1992-C,
6.15% due 2/1/01 (Insured: FGIC) Aaa/AAA 509,362
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 1,992,640
1,500,000 Los Angeles Equipment Acquisition Program L Certificate of Participation, 5.80% due 12/1 A/A+ 1,529,295
1,000,000 Los Angeles Municipal Improvement Corporation Lease Revenue, 5.00% due 2/1/00 A/A+ 1,002,420
1,500,000 Los Angeles Unified School District Certificate of Participation, 6.30% due 6/1/02 A/A- 1,600,860
245,000 Los Angeles County Certificate of Participation, 0% due 10/1/02 Baa1/BBB 183,586
700,000 Los Angeles County Certificate of Participation, 0% due 4/1/03 Baa1/BBB 504,637
350,000 Los Angeles County Housing Authority Multifamily Housing Revenue, 7.625% due 12/1/29,
mandatory put 12/1/99 (Monrovia Project A; Insured: Continental Casualty) NR/A- 354,638
1,000,000 Los Angeles County Transit Finance Corporation Certificate of Participation
Series 1992-B, 5.70% due 7/1/99 A1/NR 1,025,240
250,000 Lynwood Unified School District Certificate of Participation, 7.20% due 11/1/98
(Capital Improvement Project) Baa/NR 256,108
375,000 Marysville Hospital Revenue, 6.00% due 1/1/04 (Fremont-Rideout Health Group Project;
Insured: AMBAC) Aaa/AAA 402,911
200,000 Midpeninsula Regional Open Space District Certificate of Participation, 7.20%
due 9/1/00, refunded 9/1/99 *Aaa/A 216,754
360,000 Midpeninsula Regional Open Space District Certificate of Participation, 4.75% due 9/1/99 NR/A 363,301
460,000 Midpeninsula Regional Open Space District Certificate of Participation, 4.80% due 9/1/00 NR/A 465,226
780,000 Morgan Hill Unified School District Certificate of Participation Measure B,
5.80% due 8/1/99, (Capital Projects) A1/NR 780,554
1,230,000 Morgan Hill Unified School District Certificate of Participation Series 1993, 4.70% due A1/NR 1,239,582
1,000,000 Morgan Hill Unified School District Certificate of Participation Series 1993, 4.80% due A1/NR 1,009,440
835,000 Morgan Hill Unified School District Certificate of Participation Series 1993, 5.00% due A1/NR 848,627
660,000 Mountain View Shoreline Reg. Park Community Tax Allocation Series 1993-A, 4.70% due 8/1/ A/A 665,188
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 836,770
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 524,935
330,000 New Haven Unified School District Certificate of Participation, 7.30% due 12/1/01 NR/A- 345,688
355,000 New Haven Unified School District Certificate of Participation, 7.30% due 12/1/02 NR/A- 371,081
380,000 New Haven Unified School District Certificate of Participation, 7.40% due 12/1/03 NR/A- 397,009
410,000 New Haven Unified School District Certificate of Participation, 7.40% due 12/1/04 NR/A- 427,778
930,000 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 934,101
1,000,000 Orange Multifamily Housing Revenue, 5.60% due 10/1/27
(Villa Santiago Rehab Project; Insured: FNMA) NR/AAA 1,019,590
1,100,000 Orange County Refunding Recovery, 5.10% due 6/1/02 (Insured: MBIA) Aaa/AAA 1,131,240
2,000,000 Orange County Refunding Recovery, 5.20% due 6/1/03 (Insured: MBIA) Aaa/AAA 2,066,720
2,000,000 Orange County Refunding Recovery, 6.50% due 6/1/04 (Insured: MBIA) Aaa/AAA 2,216,680
2,000,000 Orange County Refunding Recovery, 6.50% due 6/1/05 (Insured: MBIA) Aaa/AAA 2,232,880
2,000,000 Orange County Airport Revenue Bond, 5.50% due 7/1/02 (Insured:MBIA) Aaa/AAA 2,080,540
1,000,000 Orange County Airport Revenue Bond, 6.00% due 7/1/07 (Insured MBIA) Aaa/AAA 1,076,330
900,000 Orange County Local Transportation Authority Sales Tax Rev., 5.50% due 2/15/01
(Measure M Sales Tax Project) Aa/AA 934,317
1,550,000 Orange County Local Transportation Authority Sales Tax Rev., 5.70% due 2/15/03
(Measure M Sales Tax Project) Aa/AA 1,637,498
1,050,000 Orange County Local Transportation Authority Sales Tax Rev., 5.75% due 2/15/04
(Measure M Sales Tax Project) Aa/AA 1,114,481
510,000 Orange County Local Transportation Authority Sales Tax Rev., 6.00% due 2/15/06
(Measure M Sales Tax Project) Aa/AA 553,151
1,000,000 Orange County Local Transportation Authority Sales Tax Revenue 2nd Series,
2.60% (inverse floater) due 2/15/99 (Insured: FGIC) Aaa/AAA 974,280
2,000,000 Orange County Recovery Certificate of Participation Series A, 5.50% due 7/1/02
(Insured: MBIA) Aaa/AAA 2,092,340
1,175,000 Oxnard Harbor District Refunding Revenue, 6.60% due 8/1/00 (Capital Guaranty) Aaa/AAA 1,230,848
300,000 Oxnard IDA IDRB, 9.50% due 10/1/97 (Green Foods Project; LOC: Mitsubishi Bank Ltd.) Aa2/NR 303,123
510,000 Paramount Unified School District Certificate of Patricipation, 0% due 9/1/14 (Insured: FSA)Aaa/AAA 425,967
100,000 Perris School District Certificate of Participation, 5.10% due 3/1/00 (Insured: FSA) Aaa/AAA 102,346
440,000 Pomona Unified School District General Obligation, 5.05% due 2/1/00
(Insured: MBIA) Aaa/AAA 449,165
435,000 Pomona Unified School District General Obligation, 5.10% due 8/1/00
(Insured: MBIA) Aaa/AAA 446,332
580,000 Pomona Unified School District General Obligation, 5.35% due 2/1/05
(Insured: MBIA) Aaa/AAA 604,551
340,000 Pomona Unified School District Gerneral Obligation, 5.40% due 8/1/05
(Insured: MBIA) Aaa/AAA 356,310
970,000 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+ 976,470
465,000 Riverside County Housing Authority Revenue Series A, 7.75% due 10/1/00 Baa/NR 477,392
295,000 Sacramento Financing Authority Series 1991, 6.30% due 11/1/02 A1/A+ 318,178
1,000,000 Sacramento Regional Transportation Authority Certificate of Participation, 6.00% due 3/1 A1/NR 1,025,430
1,000,000 Sacramento Regional Transportation Authority Certificate of Participation, 6.25% due 3/1 A1/NR 1,057,820
930,000 Sacramento MFHR, 5.875% due 2/1/08, put 2/1/03 (Fairways I Apartments Project;
Insured: FNMA) NR/AAA 940,797
450,000 San Diego County Regional Trans. Community Sales Tax Rev. Series A,
6.125% due 4/1/98 (Escrowed to Maturity) AAA/AA- 457,843
1,800,000 San Diego County Water Authority Certificate of Participation, 6.125% due 5/1/03 Aa/AA- 1,930,248
255,000 San Francisco City & County Agency Redevelopment Agency Lease Revenue, 0% due 7/1/00 A/A- 222,319
210,000 San Francisco City & County Agency Refunding Series Sec 8, 6.125%
due 7/1/02 (Insured: MBIA / FHA) Aaa/AAA 210,359
200,000 San Jacinto IDA IDRB Series 1990, 7.20% due 6/1/98 (Edelbrock Foundry
Corporation Project; LOC: Bank of America) NR/AA- 206,140
2,000,000 San Joaquin County Certificate of Participation, 5.25% due 9/1/98 (General Hospital Proj A/A- 2,017,600
1,440,000 San Joaquin County Certificate of Participation, 5.60% due 9/1/00 (General Hospital Proj A/A- 1,469,707
895,000 San Joaquin County Certificate of Participation, 5.90% due 9/1/03 (General Hospital Proj A/A- 927,632
1,310,000 San Marcos Public Facility Authority Capital Improvement Series 1991, 0% due 1/1/99, ETM Aaa/NR 1,227,601
410,000 San Marcos Public Facility Authority Capital Improvement Series 1991, 0% due 1/1/00, Aaa/NR 366,606
1,690,000 Santa Ana Community Development Agency Series D, 6.50% due 12/15/14, pre-refunded
12/15/00 @ 102 NR/AAA 1,805,951
440,000 Santa Ana Community Development Agency Series D, 6.50% due 12/15/14, pre-refunded
12/15/00 @ 102 Aaa/AAA 462,546
500,000 Santa Ana Community Red. Agency Tax Allocation Series 1989-B, 7.10% due 9/1/98 NR/BB+ 511,945
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 324,179
465,000 Simi Valley Community Development Agency Certificate of Participation, 6.05% due 10/1/18,
put 10/1/99 NR/AA- 475,537
810,000 Sonoma County Certificate of Participation Public Works Improvement Program,
5.40% due 8/1/00 (Integrated Waste Project) NR/A+ 836,171
950,000 Sonoma County Certificate of Participation Public Works Improvement Program,
5.80% due 8/1/0NR/A+tegrated Waste Project) NR/A+ 986,841
150,000 South Coast Air Quality Management District Building Corporation
Installment Sale Revenue, 9.75% due 8/1/98 (Escrowed to Maturity) Aaa/AAA 159,351
1,435,000 South Orange County Public Finance Authority Special Tax Revenue, 7.00% due 9/1/05
(Insured: MBIA) Aaa/AAA 1,656,636
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+ 253,217
1,000,000 Stanton Multifamily Housing Revenue Bond Series 1997, 5.625% due 8/1/29, put 8/1/08
(Continental Gardens Project; Insured: FNMA) NR/AAA 1,006,490
340,000 Suisun City Redevelopment Agency 1990 Tax Allocation,
7.20% due 10/1/01, pre-refunded 4/1/00 *Aaa/A- 372,851
500,000 Sulphur Springs Union School District General Obligation Series B, 5.70% due 3/1/01 NR/A522,975
450,000 Sunline Transit Agency Certificate of Participation California Transit Finance Corporation
Series A, 5.50% due 7/1/02 A/NR 466,290
900,000 Sweetwater Union High School District Certificate of Participation, 6.40% due 11/1/01 Baa1/BBB+ 944,541
190,000 Temecula Community Services Certificate of Participation Series 1992,
6.00% due 10/1/98 (Community Recreation Center Project) NR/A 194,250
200,000 Temecula Community Services Certificate of Participation Series 1992,
6.00% due 10/1/99 (Community Recreation Center Project) NR/A 206,732
210,000 Temecula Community Services Certificate of Participation Series 1992,
6.00% due 10/1/00 (Community Recreation Center Project) NR/A 219,274
255,000 Torrance Unified School District Certificate of Participation, 6.10% due 10/1/00 Baa1/NR260,023
275,000 Trinity County Public Utilities District Certificate of Participation, 5.25% due 4/1/98 276,809
290,000 Trinity County Public Utilities District Certificate of Participation, 5.50% due 4/1/99 292,332
750,000 Turlock Irrigation District Certificate of Participation, 6.80% due 1/1/00,
pre-refunded 1/1/98 @ 102 (1991 Capital Improvements Project) Baa1/A- 776,047
365,000 Turlock Irrigation District Certificate of Participation, 7.00% due 1/1/01,
pre-refunded 1/1/98 @ 102 (1991 Capital Improvements Project) Baa1/A- 378,038
420,000 Turlock Irrigation District Certificate of Participation, 7.15% due 1/1/03,
pre-refunded 1/1/98 @ 102 (1991 Capital Improvements Project) Baa1/A- 435,313
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 1,675,616
635,000 University of California Research Facilities Revenue, 11.00% due 9/1/98 NR/A- 684,047
870,000 University of California Research Facilities Revenue, 5.25% due 9/1/02 NR/A- 889,671
625,000 Vallejo Public Financing Authority Local Agency Revenue Series A, 5.00% due 9/2/98 NR/A- 630,306
495,000 Yorba Linda Public Financing Authority Certificate of Participation,
7.00% due 11/1/00 (Recycling Equipment Project) A/NR 516,810
TOTAL INVESTMENTS $ 105,016,511
</TABLE>
* 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.
i n d e p e n d e n t a u d i t o r ' s r e p o r t
To the Board of Trustees and Shareholders
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
Santa Fe, New Mexico
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, 1997, the related statement of operations
for the year then ended, the statements 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 misstatement. 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, 1997 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles 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 statements 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, 1997, 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 principles.
New York, New York
July 25, 1997
