Semi Annual Report
Thornburg Limited Term Municipal Fund California Portfolio
December 31, 1998
Fund facts. . . as of 12/31/98
Thornburg Thornburg Thornburg
Limited Term Limited Term Limited Term
Municipal Fund CA Municipal Fund CA Municipal Fund CA
A Shares C Share I Shares
SEC Yield 3.06% 2.72% 3.49%
Taxable Equiv. Yields 5.59% 4.97% 6.37%
NAV $13.00 $13.01 $13.00
Max. Offering Price $13.33 $13.01 $13.00
Total returns. . . as of 12/31/98
(Annual Average - After Subtracting Maximum Sales Charge)
One Year 2.35% 4.46% 5.25%
Three Year 4.15% 4.62% N/A
Five Year 4.05% N/A N/A
Ten Year 5.76% N/A N/A
Since Inception 5.81% 4.92% 6.37%
Inception Date (2/19/87) (9/1/94) (4/1/97)
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 fund may be
subject to the alternative minimum tax. The investment return and principal
value of an investment in the fund will fluctuate so that, when redeemed, an
investor's shares may be worth more or less than their original cost. Maximum
sales charge of the Fund's Class A Shares is 2.50%. The data quoted represent
past performance and may not be construed as a guarantee of future results. Dear
Shareholder, I am pleased to present the Semiannual Report for the California
Portfolio of Thornburg Limited Term Municipal Fund for the period ending
December 31, 1998. The net asset value of the A shares increased 10 cents per
share to $13.00 during the period. If you were with us for the entire period,
you received dividends of 26.7 cents per share. If you reinvested your
dividends, you received 26.9 cents per share. Investors who owned C Shares
received dividends of 24.1 and 24.2 cents per share, respectively. Your Limited
Term California Fund portfolio currently holds over 570 municipal obligations
from 49 states and 3 U.S. Territories. 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 coming years. Today, your fund's weighted
average maturity is approximately 4.6 years, and we always keep it below 5
years. Percentages of the portfolio maturing in the coming years are summarized
below:
Over the last 6 months your average portfolio maturity has decreased slightly.
The passage of time shortened the maturities of the bonds we owned at the
beginning of the period. We directed portfolio cash flow and new money primarily
into the middle maturity range of your bond ladder, taking advantage of the
plentiful supply and good selection of new municipal bonds that came to market
in California last year. Today, we are managing the portfolio to keep the
average maturity approximately where it is. The supply of new municipals in the
first 2 months of 1999 has been very low, but we believe this will change very
soon. Voters approved a record number of bond issues in November, 1998, and
budget cutting appears to have gone out of fashion at every level of government.
We currently intend to keep your average portfolio maturity where it is if
interest rates remain stable. If bond yields increase, we will likely extend the
average portfolio maturity. This would permit us to increase our dividend yields
if higher yields are available. You may or may not be aware of how the
Alternative Minimum Tax (AMT) affects certain taxpayers who may receive
significant proportions of their overall income from sources other than ordinary
wages. The AMT assures that all taxpayers pay at least a minimum rate,
regardless of exemptions, tax-credits, or the character of certain income
components. The interest paid on certain so-called "private-purpose" municipal
bonds is subject to the AMT, and this has been the case since 1986. Your
Thornburg Limited Term California portfolio includes about 7% of its holdings in
municipal bonds which are subject to the AMT. We would like to quickly be able
to take your portfolio to 0% AMT bonds if it appears to be important to a
significant percentage of our shareholders. In the past, investors seem to have
drawn no distinction between municiapl bond funds (like your Thornburg Limited
Term Municipal Fund) that own a small percentage of AMT bonds, and those that
are full of them. We believe this will soon change. In the next few years the
AMT will catch ever increasing numbers of taxpayers who qualify for tax breaks
or derive income from capital gains, employee benefits or other "non-ordinary"
sources. The tables below illustrate how application of present tax law can be
expected to increase the number of taxpayers subject to the AMT in 2008 verses
1998.
Summary: Current and Projected Impact of AMT on Various Income Groups
1998 2008
AMT Payers as a % of All AMT Payers as a % of All
Taxpayers in Category Taxpayers in Category
Income Category
$30,000 to less than $40,000 0.1% 0.9%
$40,000 to less than $50,000 0.1% 1.8%
$50,000 to less than $75,000 0.3% 5.8%
$75,000 to less than $100,000 1.0% 19.7%
$100,000 to less than $200,000 3.2% 26.6%
$200,000 and over 17.9% 42.7%
(Source: Joint Tax Committee U.S. Congress, Merrill Lynch)
If present tax laws are not changed, the AMT status of their municipal bond
holdings will become a matter of greater importance to a significant percentage
of upper and middle income taxpayers between now and 2008. The table above
clearly shows that. Unless the tax provisions governing AMT change, we will
probably reduce our already small percentage holding of municipal bonds which
are subject to the AMT on individuals. Stay tuned for further developments. 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. Your fund has earned Morningstar's 4 star
overall rating* for risk adjusted performance. In addition, your fund recently
received a Performance Achievement Certificate from Lipper** for having the
number 1 ranked performance among 6 short-intermediate municipal debt funds for
the 5 year period ending December 31, 1998. I would like to attribute this to
capable execution of a sensible investment strategy over time. Thank you for
investing in the California Portfolio of Thornburg Limited Term Municipal Fund.
Sincerely,
Brian J. McMahon George Strickland
Portfolio Manager Co-Portfolio Manager
*Morningstar proprietary rating reflects historical risk adjusted performances
as of 12/31/98. 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 stars (highest). Morningstar overall 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 and 22.5% receive four
stars. LTCAX is ranked 4 stars for the 3-year period, 4 stars for the 5-year
period, and 4 stars for the 10-year period ending 12/31/98. At 12/31/98, there
were 1577 bond funds with 3-year ratings, 1040 with 5-year ratings, and 370 with
10-year ratings in Morningstar's Municipal Bond category. Ratings are for Class
A shares only.
**Lipper Analytical Services, Inc., a division of Reuters, collects mutual fund
data from investment advisors and provides rankings of mutual funds.
Past performance cannot guarantee future results.
% of portfolio Cumulative %
maturing within maturing by end of
1 years = 10% year 1 = 10%
1 to 2 years = 16% year 2 = 26%
2 to 3 years = 10% year 3 = 36%
3 to 4 years = 16% year 4 = 52%
4 to 5 years = 11% year 5 = 63%
5 to 6 years = 7% year 6 = 70%
6 to 7 years = 7% year 7 = 77%
7 to 8 years = 7% year 8 = 84%
8 to 9 years = 9% year 9 = 93%
9 to 10 years = 6% year 10 = 99%
ASSETS
Investments at value (cost $128,934,352) $ 134,803,005
Cash 128,302
Receivable for fund shares sold 1,041,734
Interest receivable 2,130,269
Prepaid expenses and other assets 4,428
Total Assets 138,107,738
LIABILITIES
Payable for investments purchased 1,001,574
Payable for fund shares redeemed 594,229
Accounts payable investment advisor (Note 4) 68,288
Accounts payable and accrued expenses 159,727
Dividends Payable 457,881
Total Liabilities 2,281,699
NET ASSETS $ 135,826,039
NET ASSET VALUE:
Class A Shares:
Net asset value and redemption price per share ($116,395,106
applicable to 8,955,930 shares of beneficial interest
outstanding - Note 5) $ 13.00
Maximum sales charge, 2.50 % of offering
price (2.57% of net asset value per share) 0.33
Maximum Offering Price Per Share $ 13.33
Class C Shares:
Net asset value and offering price per share * ($8,155,909
applicable to 626,935 shares of beneficial interest
outstanding - Note 5) $ 13.01
Class I Shares:
Net asset value, offering and redemption price per share
($11,275,024 applicable to 867,397 shares of beneficial
interest outstanding - Note 5) $ 13.00
*Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge. See notes to unaudited financial statements.
INVESTMENT INCOME:
Interest income (net of premium amortized of $325,139 ) $ 3,501,936
EXPENSES:
Investment advisory fees (Note 4) 345,133
Administration fees (Note 4)
Class A Shares 75,597
Class C Shares 5,023
Class I Shares 2,265
Distribution and service fees (Note 4)
Class A Shares 151,195
Class C Shares 39,860
Transfer agent fees 38,206
Custodian fees 44,068
Registration and filing fees 2,511
Professional fees 9,200
Accounting fees 7,327
Director fees 2,484
Other expenses 7,742
Total Expenses 730,611
Less:
Expenses reimbursed by investment advisor (Note 4) (29,012)
Distribution and service fees waived (Note 4) (14,744)
Net Expenses 686,855
Net Investment Income 2,815,081
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 6)
Net realized gain on investments sold 14,511
Increase in unrealized appreciation of investments 1,010,410
Net Realized and Unrealized Gain (Loss)
on Investments 1,024,921
Net Increase in Net Assets Resulting from Operations $ 3,840,002
See notes to unaudited financial statements.
Six Months Ended Year Ended
December 31, 1998 June 30, 1998
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income $ 2,815,081 $ 5,523,039
Net realized gain on investments sold 14,511 29,681
Increase in unrealized appreciation of investment 1,010,410 1,431,181
Net Increase in Assets Resulting from Operations 3,840,002 6,983,901
DIVIDENDS TO SHAREHOLDERS:
From net investment income
Class A Shares (2,467,204) (4,926,639)
Class C Shares (147,613) (281,691)
Class I Shares (200,264) (314,709)
FUND SHARE TRANSACTIONS (Note 5):
Class A Shares (6,736,987) 26,770,636
Class C Shares 252,559 1,821,049
Class I Shares 2,927,572 4,220,631
Net Increase (Decrease) in Net Assets (2,531,935) 34,273,178
NET ASSETS:
Beginning of period 138,357,974 104,084,796
End of period $ 135,826,039 $ 138,357,974
See notes to unaudited financial statements.
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
Portfolio currently offers three classes of shares of beneficial interest, 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, 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, and certain
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 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 six months ended December 31, 1998 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 Fund 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, the Portfolio 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 - Merger of MacKenzie National Municipal Fund
On September 4, 1997, the Fund acquired all of the net assets of the Mackenzie
California Municipal Fund ("MacKenzie") pursuant to a plan of reorganization
approved by Mackenzie's shareholders. The merger was accomplished by a tax free
exchange of Class A shares of the Portfolio (valued at $24,725,383) for the net
assets of MacKenzie which aggregrated $24,725,383, including $1,214,035 of
unrealized appreciation. The combined net assets of the Portfolio immediately
after merger were $134,431,534.
Note 4 - 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 six months ended December
31, 1998, 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. The Fund also has
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. For the six months ended December 31, 1998, the Adviser
voluntarily reimbursed certain operating expenses amounting to $29,012. The Fund
has an underwriting agreement with Thornburg Securities Corporation (the
"Distributor"), which acts as the Distributor of Portfolio shares. For the six
months ended December 31, 1998, the Distributor earned commissions aggregating
$8,517 from the sale of Class A shares, and collected contingent deferred sales
charges aggregating $179 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 six months ended
December 31, 1998 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 is borne by the
Fund.
Note 5 - Shares of Beneficial Interest
At December 31, 1998, there were an unlimited number of shares of beneficial
interest authorized and capital paid-in aggregated $130,766,307. Transactions in
shares of beneficial interest were as follows:
Six Months Ended Year Ended
December 31, 1998 June 30, 1998
Class A Shares Shares Amount Shares Amount
Shares sold 609,927 $ 7,907,064 1,321,780 $ 17,129,362
Shares issued to shareholders in
reinvestment of distributions 155,195 2,014,738 249,838 3,217,407
Shares issued in merger 0 0 1,933,181 24,725,383
Shares repurchased (1,286,774) (16,658,789) (1,421,995) (18,301,516)
Net Increase (Decrease) (521,652) $(6,736,987) 2,082,804 $ 26,770,636
Class C Shares
Shares sold 73,090 $ 951,845 255,731 $ 3,228,901
Shares issued to shareholders in
reinvestment of distributions 9,885 128,452 16,952 218,500
Net Increase 19,369 $ 252,559 146,505 $ 1,821,049
Class I Shares
Shares sold 298,772 $ 3,880,437 358,013 $ 4,536,004
Shares issued to shareholders in
reinvestment of distributions 17,185 223,177 22,572 302,376
Shares repurchased (90,815) (1,176.042) (48,092) (617,749)
Net Increase 225,142 $ 2,927,572 332,493 $ 4,220,631
Note 6 - Securities Transactions
For the six months ended December 31, 1998, the Portfolio had purchase and sale
transactions (excluding short-term securities) of $12,855,640 and $15,258,800,
respectively. The cost of investments is the same for financial reporting and
Federal income tax purposes. At December 31, 1998, the net unrealized
appreciation was $5,868,653, resulting from gross unrealized appreciation of
$5,875,459 and $6,806 gross unrealized depreciation. Accumulated net realized
losses from security transactions included in net assets at December 31, 1998
aggregated $808,921. For Federal income tax purposes, the Portfolio has realized
capital loss carryforwards of $811,688 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, 1999 - $14,395, June 30, 2000 - $410, June 30, 2002 -
$315,597, and June 30, 2003 - $481,286.
<TABLE>
<CAPTION>
Per share operating performance
(for a share outstanding throughout the year)
Six Months Ended Year Ended June 30,
<S> <C> <C> <C> <C> <C>
December 31,1998 1998 1997 1996 1995
CLASS A SHARES:
Net asset value, beginning of period $ 12.90 $ 12.75 $ 12.64 $ 12.61 $ 12.57
Income from investment operations:
Net investment income 0.27 0.55 0.57 0.58 0.58
Net realized and unrealized
gain (loss) on investments 0.10 0.15 0.11 0.03 0.04
Total from investment operations 0.37 0.70 0.68 0.61 0.62
Less dividends from:
Net investment income (0.27) (0.55) (0.57) (0.58) (0.58)
Change in net asset value 0.10 0.15 0.11 0.03 0.04
Net asset value, end of period $ 13.00 $ 12.90 $ 12.75 $ 12.64 $ 12.61
TOTAL RETURN (a) 4.97% 5.57% 5.47% 4.94% 5.12%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net asset:
Net investment income 4.08% 4.25% 4.47% 4.59% 4.69%
Expenses, after expense reductions 0.99%(b) 1.00% 1.00% 1.00% 1.00%
Expenses, before expense reductions 1.02%(b) 1.04% 1.03% 1.05% 1.04%
Portfolio turnover rate 9.52% 21.21% 20.44% 22.68% 18.54%
Net assets at end of period (000) $ 116,395 $ 122,231 $ 94,253 $ 94,379 $ 98,841
<FN>
(a) Sales loads are not reflected in computing total return, which is not
annualized for periods less than one year.
(b) Annualized
</FN>
</TABLE>
<TABLE>
<CAPTION>
Per share operating performance
(for a share outstanding throughout the year)
Six Months Ended Year Ended June 30,
<S> <C> <C> <C> <C> <C>
December 31,1998 1998 1997 1996 1995
CLASS C SHARES:
Net asset value, beginning of period $ 12.91 $ 12.76 $ 12.65 $ 12.62 $ 12.55
Income from investment operations:
Net investment income 0.24 0.50 0.52 0.53 0.42
Net realized and unrealized
gain (loss) on investments 0.10 0.15 0.11 0.03 0.07
Total from investment operations 0.34 0.65 0.63 0.56 0.49
Less dividends from:
Net investment income (0.24) (0.50) (0.52) (0.53) (0.42)
Change in net asset value 0.10 0.15 0.11 0.03 0.07
Net asset value, end of period $ 13.01 $ 12.91 $ 12.76 $ 12.65 $ 12.62
TOTAL RETURN (b) 4.46% 5.14% 5.06% 4.46% 3.98%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net asset:
Net investment income 3.67%(c) 3.85% 4.06% 4.16% 4.07%(c)
Expenses, after expense reductions 1.40%(c) 1.40% 1.40% 1.43% 1.63%(c)
Expenses, before expense reductions 1.92%(c) 1.97% 2.15% 2.92% 3.21%(c)
Portfolio turnover rate 9.52% 21.21% 20.44% 22.68% 18.54%
Net assets at end of period (000) $ 8,156 $ 7,843 $ 5,882 $ 2,444 $ 790
<FN>
(a) Commencement of sales of Class C shares.
(b) Sales loads are not reflected in computing total return, which is not
annualized for periods less than one year.
(c) Annualized.
</FN>
</TABLE>
Per share operating performance
(for a share outstanding throughout the year)
Period from
Six Months Ended Year Ended April 1, 1997(a)
December 31, 1998 1998 June 30, 1997
CLASS I SHARES:
Net asset value, beginning of period $ 12.90 $ 12.75 $ 12.64
Income from investment operations:
Net investment income 0.29 0.59 0.15
Net realized and unrealized
gain (loss) on investments 0.10 0.15 0.11
Total from investment operations .39 0.74 0.26
Less dividends from:
Net investment income (0.29) (0.59) (0.15)
Change in net asset value 0.10 0.15 0.11
Net asset value, end of period $ 13.00 $ 12.90 $ 12.75
TOTAL RETURN (b) 5.25% 5.93% 2.07%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net asset:
Net investment income 4.42% 4.60% 4.77%(c)
Expenses, after expense reductions 0.65% 0.65% 0.63%(c)
Expenses, before expense reductions 0.81% 0.92% 1.32%(c)
Portfolio turnover rate 9.52% 21.21% 20.44%
Net assets at end of period (000) $ 11,275 $ 8,284 $ 3,949
(a) Commencement of sales of class I shares
(b) Sales loads are not reflected in computing total return, which is not
annualized for periods less than one year
(c) Annualized.
<TABLE>
<CAPTION>
Schedule of Investments
Thornburg Limited Term Municipal - California Portfolio
December 31, 1998 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>
1,000,000 Alameda County Certificates Participation, 6.25% due A2/A $ 1,101,910
6/1/06, pre-refunded 6/1/99 @ 102
615,000 Alameda-Contra Costa Transit District Refunding Baa/BBB- 640,006
Ceritificate of Participation Series 1989, 7.20% due 8/1/00
255,000 Albany Public Facilities Financing Authority Lease Baa1/NR 268,451
Revenue, 6.60% due 9/1/00 (Library Community Center
Project) (ETM)
295,000 Alum Rock Union Elementary School District General Aaa/AAA 369,499
Obligation Refunding Bonds, 8.00% due 9/1/06 (Insured:
FGIC)
380,000 Alum Rock Union Elementary School District General Aaa/AAA 484,504
Obligation Refunding Bonds, 8.00% due 9/1/07 (Insured:
FGIC)
1,020,000 Antelope Valley Hospital Revenue, 5.25% due 1/1/06 Aaa/AAA 1,088,197
(Insured: FSA)
1,000,000 Berkeley Health Facility Revenue, 6.55% due 12/1/22, A2/A+ 1,123,830
pre-refunded 12/1/02 @ 102 (Alta Bates Medical Center
Project)
380,000 Big Bear Regional Wastewater Agency Refunding Revenue Aaa/AAA 395,724
Bonds, 4.70% due 4/1/06 (Insured: AMBAC)
3,000,000 California Cities Home Owner, Lease Purchase Program Aaa/AAA 3,044,730
Series A, 4.15% due 12/1/03 (Insured: MBIA)
835,000 California Educational Facilities Authority Revenue, 5.60% Aa2/AA 868,868
due 10/1/00 (U.S.C. Project)
1,805,000 California Educational Facilities Authority Revenue, 5.60% Aa2/AA 1,931,783
due 10/1/02 (U.S.C. Project)
500,000 California Educational Facilities Authority Revenue Series A1/NR 528,965
1993, 5.15% due 9/1/03 (Santa Clara University Project)
500,000 California Health Facilities Financing Authority Revenue, NR/A- 526,180
5.30% due 5/15/04 (Downey Community Hospital Project)
250,000 California Health Facilities Financing Authority Revenue, NR/NR 259,007
7.00% due 6/1/08, pre-refunded 6/1/99 @ 102
1,500,000 California Health Facilities Financing Authority Revenue, A3/A 1,585,875
Series B, 5.00% due 10/1/08
500,000 California Health Facilities Financing Revenue, 5.75% due NR/A- 520,490
5/15/15 (Downey Community Hospital Project)
505,000 California HFA, 5.25% due 8/1/00 (Marin General Hospital Aaa/AAA 520,670
Project; Insured: FSA)
1,000,000 California HFA Secured Revenue Series 1991, 6.65% due Baa2/BBB+ 1,061,570
9/1/01 (Good Samaritan Hospital Project)
20,000 California HFA Single Family Mortgage Revene Series Aa/AA- 20,016
1982-A, 10.00% due 2/1/02
500,000 California Housing Finance Agency Revenue, 5.40% due 8/1/00 Aa/AA- 510,605
145,000 California Housing Finance Agency Revenue, 0% due 8/1/01 Aa/AA- 121,266
670,000 California Housing Finance Authority Revenue Series Aa/AA- 701,349
1985-B, 9.875% due 2/1/17
500,000 California Pollution Control Financing Authority Revenue, A1/A+ 519,995
6.85% due 12/1/08(So. Cal Edison Co. Project)
5,000 California Pollution Control Financing Authority Revenue, A1/A+ 5,015
7.20% due 9/1/15(So. Cal Edison Co. Project)
1,000,000 California State General Obligation, 6.50% due 10/1/99 Aa3/A+ 1,026,500
300,000 California State General Obligation, 6.75% due 5/1/02 Aa3/A+ 328,950
500,000 California State General Obligation, 9.50% due 5/1/03 Aa3/A+ 612,790
1,000,000 California State General Obligation, 9.50% due 2/1/10 Aa3/A+ 1,446,150
5,000 California State Public Works High Technology, 7.375% due Aa3/A+ 5,587
4/1/06
500,000 California State Public Works Lease Revenue, 8.35% due A1/A 524,155
12/1/99
500,000 California State Public Works Lease Revenue, 5.50% due Aaa/AAA 547,585
9/1/06 (Insured: AMBAC)
850,000 California State University Revenue, 6.40% due 11/1/02 A1/A 909,891
crossover refunded 11/1/00 @102
128,839 California State Veterans General Obligation Amortizing NR/NR 137,446
Coupon M-COATES, 7.30% due 10/1/01
1,190,000 California Statewide Community Development Authority Aaa/AAA 1,278,738
Certificate of Participation, 5.25% due 4/1/08 (Insured:
MBIA)
1,000,000 California Statewide Community Development Authority NR/A+ 1,085,900
Certificate of Participation, 5.90% due 4/1/09
1,000,000 California Statewide Community Development Authority Aaa/AAA 1,004,710
Certificates of Participation, 2.90% due 1/1/00 (Motion
Picture and Televison Fund Project; (Insured: AMBAC)
1,000,000 California Statewide Community Development Authority Aaa/AAA 1,005,920
Certificates of Participation, 3.19% due 1/1/01 (Motion
Picture and Televison Fund Project; Insured: AMBAC)
515,000 California Statewide Community Development Authority NR/A+ 532,690
Insured Health Facilities Revenue, Certificate of
Participation Series 1992, 6.40% due 5/1/02 (Eskaton
Properties Incorporated Phase II Project)
1,000,000 California Statewide Community Development Authority NR/A+ 1,097,630
Insured Health Facility Revenue Series 1996-A, 6.00% due
9/1/04 (San Gabriel Medical Center Project;
1,390,000 California Veteran Affairs Home Purchases Revenue Series Aa2/A+ 1,491,303
A, 6.55% due 8/1/01 (ETM)
1,000,000 Clovis Unified School District, 0% due 8/1/02 A1/AA- 873,200
700,000 Coachella Valley Water District 71 Certificate of A/NR 729,379
Participation, 5.75% due 10/1/00 (Storm Water District
Project)
660,000 Cupertino Public Facilities Corp. Certificates of A1/A+ 681,061
Participation Series 1992-B, 5.60% due 7/1/00
1,000,000 Duarte California Certificates of Participation, 6.25% due Baa1/NR 1,056,970
4/1/23(Hope National Medical Center Project)
2,025,000 Escondido Multi Family Housing Revenue Refunding Bond NR/AAA 2,144,758
Series 1997-A, 5.40% due 1/1/27put 7/1/07 (Terrace Gardens
Project; Collateralized: FNMA)
350,000 Foothill De Anza Community College District Certificates NR/A- 385,623
of Participation, 7.35% due 3/1/07
600,000 Fresno Multi Family Housing Revenue Refunding, 5.10% due NR/A- 602,976
10/1/05 put 4/1/99 (Maple Leaf Project; Insured:
Continental Insurance)
995,000 Fresno Multi Family Housing Revenue Refunding, 4.875% due NR/AAA 1,025,338
1/1/28 put 1/1/08 (Jackson Park Place Project; Insured:
FNMA)
560,000 Fruitvale School District Certificate of Participation, Baa/NR 570,590
7.60% due 6/1/99
1,840,000 Glendale Hospital Revenue Series 1994, 7.625% due NR/A+ 2,049,447
1/1/05(Verdugo Hills Project; Guarantee: Industrial
Indemnity)
1,000,000 Hawaiian Gardens Redevelopment Agency Project Tax NR/BBB 325,310
Allocation, 0% due 12/1/16
135,000 Hayward Unified School District Certificate of Baa/NR 138,206
Participation, 7.60% due 10/1/00
60,000 Hermosa Beach Lynwood and Vernon Certificate of NR/BBB 60,985
Participation, 7.10% due 9/1/99
605,000 Inglewood Certificates Participation, 6.70% due 8/1/00 Baa3/BBB- 634,899
635,000 Inglewood Certificates Participation, 6.80% due 8/1/01 Baa3/BBB- 683,082
690,000 Inglewood Certificates Participation, 6.90% due 8/1/02 Baa3/BBB- 753,508
1,000,000 Irwindale Community Redevelopment Agency, 6.60% due Baa3/NR 1,151,850
8/1/18, pre-refunded 8/1/05
340,000 Kern County Board Education Certificates Participation, Aaa/AAA 368,812
Refunding Series A, 5.50% due 5/1/06 (Insured: MBIA)
260,000 Kern County Board Education Certificates Participation, Aaa/AAA 283,410
Refunding Series A, 5.50% due 5/1/07 (Insured: MBIA)
165,000 Kern High School District, 7.00% due 8/1/10 (ETM) A/NR 205,201
680,000 Kern High School District Series B, 9.00% due 8/1/06 (ETM) Aaa/AAA 901,578
480,000 Lake Elsinore Public Financing Authority Tax Allocation Aaa/AAA 503,261
Revenue Series 1992-C, 6.15% due 2/1/01 (Insured: FGIC)
3,000,000 Lancaster Redevelopment Agency Lease Revenue, 4.90% due NR/BBB 3,049,920
12/1/00 (Public Improvement Project; LOC: Sumitomo - Dai
ichi Kangyo)
500,000 Los Angeles Certificates of Participation, 6.90% due Baa1/BBB 530,775
3/1/01 , pre-refunded 3/1/00 @ 102
250,000 Los Angeles Certificates of Participation, 0% due 9/1/03 Baa1/BBB 204,608
5,000 Los Angeles Convention & Exhibition Center, 9.00% due Aaa/AAA 6,537
12/1/20, pre-refunded 12/1/05
500,000 Los Angeles County Certificates of Participation, 0% due Baa1/BBB 433,240
10/1/01
245,000 Los Angeles County Certificates of Participation, 0% due Baa1/BBB 201,875
10/1/02
700,000 Los Angeles County Certificates of Participation, 0% due Baa1/BBB 558,607
4/1/03
350,000 Los Angeles County Housing Authority Multi Family Housing NR/A- 350,000
Revenue, 7.625% due 12/1/29 put 12/1/99 (Monrovia Project
A; Insured: Continental Casualty)
1,000,000 Los Angeles Transit Finance Corporation Certificate of A1/NR 1,013,700
Participation Series 1992-B, 5.70% due 7/1/99
1,500,000 Los Angeles Unified School District Certificate of A2/A 1,616,595
Participation, 6.30% due 6/1/02
500,000 Los Angeles Water and Power, 9.00% due 9/1/04 Aa3/A+ 614,380
500,000 Los Angeles Waterwaste Systems Revenue, 8.80% due 6/1/00 Aaa/AAA 538,260
(Insured: MBIA)
375,000 Marysville Hospital Revenue, 6.00% due 1/1/04 (Freemont - Aaa/AAA 414,458
Rideout Health Group Project; Insured: AMBAC)
430,000 Marysville Hospital Revenue, 5.00% due 1/1/09 (Freemont - Aaa/AAA 452,824
Rideout Health Group Project; Insured: AMBAC)
485,000 Mayers California Memorial Hospital District Health NR/A+ 511,428
Facilities Revenue Insured Series A, 5.375% due 6/1/09
360,000 Midpeninsula Regional Open Space District Certificate of NR/A 364,215
Participation, 4.75% due 9/1/99
460,000 Midpeninsula Regional Open Space District Certificate of NR/A 470,502
Participation, 4.80% due 9/1/00
200,000 Midpeninsula Regional Open Space District Certificate of NR/A 209,558
Participation, 7.20% due 9/1/00 refunded 9/1/99
780,000 Morgan Hill Unified School District Certificate of A1/NR 781,716
Parcipitation, 5.80% due 8/1/99
835,000 Morgan Hill Unified School District Certificate of A1/NR 855,625
Participation Series 1993, 5.00% due 8/1/00
660,000 Mountain View Shoreline Reg. Park Community Tax Allocation A3/A 666,626
Series 1993-A, 4.70% due 8/1/99
810,000 National City Community Development Commission Tax Aaa/AAA 823,082
Allocation Series 1992-A, 5.70% due 8/1/99 (Downtown
Redevelopment Project; Insured: AMBAC)
500,000 National City Community Development Commission Tax Aaa/AAA 520,640
Allocation Series 1992-A, 5.90% due 8/1/00 (Downtown
Redevelopment Project; Insured: AMBAC)
330,000 New Haven USD Certificates of Participation, 7.30% due NR/A- 337,610
12/1/01
355,000 New Haven USD Certificates of Participation, 7.30% due NR/A- 363,186
12/1/02
380,000 New Haven USD Certificates of Participation, 7.40% due NR/A- 388,793
12/1/03
410,000 New Haven USD Certificates of Participation, 7.40% due NR/A- 419,488
12/1/04
360,000 Northern California Power Agency Public Power Revenue, Baa3/A- 399,845
5.65% due 7/1/07(Geothermal Project 3 A) (ETM)
340,000 Northern California Power Agency Public Power Revenue, Baa3/A- 370,120
Unrefunded Balance Geothermal 3 A, 5.65% due 7/1/07
100,000 Oakland Redevelopment Agency, 7.40% due 5/1/07 (Insured: Aaa/AAA 102,344
AMBAC)
915,000 Orange County, Refunding Recovery A, 5.20% due 6/1/03 (ETM) Aaa/AAA 971,684
1,085,000 Orange County, Unrefunded Bal Refunding Recovery A, 5.20% Aaa/AAA 1,150,133
due 6/1/03 (Insured: MBIA)
2,000,000 Orange County Airport Revenue Bond, 5.50% due 7/1/02 Aaa/AAA 2,114,480
(Insured: MBIA)
1,000,000 Orange County Airport Revenue Bond, 6.00% due 7/1/07 Aaa/AAA 1,125,280
(Insured: MBIA)
1,550,000 Orange County Local Transportation Authority Sales Tax Aa/AA+ 1,668,668
Rev, 5.70% due 2/15/03
1,050,000 Orange County Local Transportation Authority Sales Tax Aa/AA+ 1,127,658
Rev, 5.75% due 2/15/04
510,000 Orange County Local Transportation Authority Sales Tax Aa/AA+ 571,572
Rev, 6.00% due 2/15/06
2,900,000 Orange County Local Transportation Authority Sales Tax Aaa/AAA 2,903,190
Revenue, 2.94% (inverse floater) due 2/15/99 (Insured:
FGIC)
900,000 Orange County Local Transportation Authority Sales Tax Aa/AA+ 938,439
Revenue, 5.50% due 2/15/01
995,000 Orange County Multi Family Housing Revenue, 5.60% due NR/AAA 1,043,665
10/1/27, mandatory put 10/1/05 (Villa Santiago Rehab
Project; FNMA: Collateralized)
2,000,000 Orange County Recovery Certificates of Participation Aaa/AAA 2,123,240
Series A, 5.50% due 7/1/02 (Insured: MBIA)
1,100,000 Orange County Refunding Recovery, 5.10% due 6/1/02 Aaa/AAA 1,153,394
(Insured : MBIA)
2,000,000 Orange County Refunding Recovery, 6.50% due 6/1/04 Aaa/AAA 2,257,040
(Insured: MBIA)
2,000,000 Orange County Refunding Recovery, 6.50% due 6/1/05 Aaa/AAA 2,284,320
(Insured: MBIA)
1,680,000 Orange County Transportation Authority Certificate of A1/NR 1,751,198
Participation, 5.125% due 7/1/02
410,000 Oroville Hospital Revenue, 4.50% due 12/1/03 (Insured: NR/A+ 422,751
California Mortgage)
500,000 Oroville Hospital Revenue, 5.50% due 12/1/07 (Insured: NR/A+ 544,950
California Mortgage)
655,000 Oxnard Harbor District Revenue Refunding, 6.60% due 8/1/00 Aaa/AAA 676,353
(Insured: FSA)
1,000,000 Palm Springs Housing Authority Revenue, Tahquitz Crt Apts NR/AAA 1,027,610
A, 4.90% due 9/1/23 put 9/1/03 (LOC: FHLB)
500,000 Palomar Pomerado Health Systems Revenue, 0% due 11/1/03 Aaa/AAA 414,265
(Insured: MBIA)
510,000 Paramount Unified School District Certificates of Aaa/AAA 490,921
Participation, 0% due 9/1/14 (Insured: FSA)
100,000 Perris School Dist. Certificates of Participation, 5.10% Aaa/AAA 102,202
due 3/1/00 (Insured: FSA)
1,000,000 Piedmont Unified School District Series B, 0% due 8/1/13 Aa/NR 458,880
1,000,000 Pleasanton Unified School District Series B, 0% due 8/1/16 Aaa/AAA 389,700
(Insured: MBIA)
580,000 Pomona Unified School District General Obligation, 5.35% Aaa/AAA 623,767
due 2/1/05 (Insured: MBIA)
340,000 Pomona Unified School District General Obligation, 5.40% Aaa/AAA 368,281
due 8/1/05 (Insured: MBIA)
945,000 Redwood City Multi Family Housing Revenue Series 1985-B, NR/A+ 953,656
5.20% due 10/1/08 put 10/1/00 (Redwood Shores Apartments
Projects; Insured: Continental Casualty)
500,000 Richmond Joint Powers Financing Authority Revenue Series NR/A 529,195
A, 5.20% due 5/15/05
295,000 Sacramento Financing Authority Series 1991, 6.30% due A2/A+ 319,901
11/1/02
900,000 Sacramento Multi Family Housing Revenue, 5.875% due 2/1/08 NR/AAA 900,936
put 12/1/03 (Fairways 1 Apartments Project;
Collateralized: FNMA)
1,000,000 Sacramento Reg. Trans. Auth. Certificate of Participation, A1/NR 1,004,960
6.00% due 3/1/99
1,000,000 Sacramento Reg. Trans. Auth. Certificate of Participation, A1/NR 1,054,570
6.25% due 3/1/01
2,000,000 Salinas Redevelopment Agency Tax Allocation Series A, 0% Aaa/AAA 522,980
due 11/1/22 (Insured: FSA)
1,305,000 San Diego County Certificates Participation, 5.25% due Aaa/AAA 1,397,746
8/15/06 (Insured: MBIA)
975,000 San Diego County Multi Family Housing Revenue, 5.50% due NR/AAA 1,013,854
7/1/25 put 7/1/05 (Del Mar Turf Club Apts - A Project;
Collateralized: FNMA)
1,800,000 San Diego County Water Authority Certificate of Aa3/AA- 1,933,992
Participation, 6.125% due 5/1/03
255,000 San Francisco City & County Redevelopment Lease Revenue, A1/A- 241,462
0% due 7/1/00
3,500,000 San Francisco City & County Redevelopment Lease Revenue, A1/A- 2,419,725
0% due 7/1/07
155,000 San Francisco City & County Refunding Series Sec. 8, Aaa/AAA 155,327
6.125% due 7/1/02 (Insured: MBIA/FHA)
1,440,000 San Joaquin County Certificates of Participation, 5.60% A3/A- 1,482,566
due 9/1/00 (General Hospital Project)
895,000 San Joaquin County Certificates of Participation, 5.90% A3/A- 958,966
due 9/1/03 (General Hospital Project)
410,000 San Marcos Public Facilities Authority Capital Impr., 0% Aaa/NR 395,630
due 1/1/00 (ETM)
410,000 Santa Ana Community Dev. Agency Series D, 6.50% due NR/AAA 438,548
12/15/14 , pre-refunded 12/15/00 @ 102
1,595,000 Santa Ana Community Dev. Agency Tax Allocation Series B, NR/AAA 1,713,110
6.50% due 12/15/14 , pre-refunded 12/15/00 @ 102
2,000,000 Santa Ana Multi Family Housing Revenue Bonds Series B, NR/AAA 2,130,300
5.65% due 11/1/21 put 11/1/06 (FNMA Collateralized)
500,000 Santa Clara Certificates of Participation, 7.75% due Aaa/AAA 559,730
2/1/02 (Insured: MBIA)
35,000 Santa Clara Electric Revenue Series B, 7.80% due 7/1/10 NR/A 35,364
200,000 Santa Monica California Redevelopment Agency Tax, Baa1/A 221,466
Allocation, 6.50% due 7/1/03 ( Ocean Park Redevelopment
Projects)
315,000 Santa Monica Community College District Certificates of NR/A 322,525
Participation, 7.65% due 5/1/01 (Rancho Corrales Project)
1,455,000 Sierra View Local Health Care Refunding, 5.00% due 7/1/07 NR/A 1,506,958
(Insured: ACA)
750,000 Snowline Joint Unified School District Certificates of NR/BBB 844,328
Participation, 7.25% due 4/1/18 , pre-refunded 4/01/02 @
102
810,000 Sonoma County Certificates of Participation Public Works NR/A+ 835,547
Improvement Program, 5.40% due 8/1/00 (Integrated Waste
Project)
950,000 Sonoma County Certificates of Participation Public Works NR/A+ 978,842
Improvement Program, 5.80% due 8/1/03 (Integrated Waste
Project)
1,435,000 South Orange County Public Finance Authority Special Tax Aaa/AAA 1,675,219
Revenue, 7.00% due 9/1/05 (Insured: MBIA)
250,000 Southern California Public Power Authority Rev., 6.75% due A/A 265,988
7/1/01 (Power Project)
1,000,000 Stanton Multi Family Housing Revenue Bond Series 1997, NR/AAA 1,067,790
5.625% due 8/1/29, put 8/1/09 (Continental Gardens
Project; Collateralized: FNMA)
340,000 Suisun City Redevelopment Agency 1990 Tax Allocation, NR/AAA 363,361
7.20% due 10/1/01, pre-refunded 4/1/00
500,000 Sulphur Springs Union School District General Obligation, NR/A 522,710
5.70% due 3/1/01
450,000 Sunline Transit Agency Certificate of Participation A/NR 473,495
Californa Transit Finance Corporation Series A, 5.50% due
7/1/02
900,000 Sweetwater Union High School District COP, 6.40% due Baa1/BBB+ 928,683
11/1/01
200,000 Temecula Community Services District Certificates of NR/A 204,428
Participation Series 1992, 6.00% due 10/1/99 (Community
Recreation Center Project)
210,000 Temecula Community Services District Certificates of NR/A 219,078
Participation Series 1992, 6.00% due 10/1/00 (Community
Recreation Center Project)
255,000 Torrence USD Certificates of Participation, 6.10% due Baa1/NR 258,861
10/1/00
1,000,000 Tracy Certificates of Participation, 7.00% due 10/1/27, NR/NR 1,107,160
pre-refunded 10/1/01
290,000 Trinity County PUD Certificates of Participation, 5.50% NR/BBB- 291,578
due 4/1/99
1,600,000 University of California Regents Certificates of Aaa/AAA 1,689,072
Participation Series 1996, 5.45% due 6/1/03 (Various
Capital Projects; Insured: MBIA)
500,000 University of California Research Facilities Revenue, Aaa/AAA 541,655
8.00% due 11/1/00 (Insured: MBIA)
870,000 University of California Research Facilities Revenue, NR/A+ 912,143
5.25% due 9/1/02
510,000 University of California Revenue Series A, 11.00% due NR/A+ 536,438
9/1/99
500,000 Upland California Certificates Participation Water, 5.75% NR/A 548,285
due 1/1/07
800,000 Walnut Valley Unified School District, 9.00% due 8/1/06 Aaa/AAA 1,060,680
(ETM)
1,000,000 Walnut Valley Unified School District, 8.75% due 8/1/10 Aaa/AAA 1,399,120
(ETM)
245,000 Walnut Valley Unified School District Series A, 6.70% due Aaa/AAA 283,007
8/1/05 (Insured: MBIA)
250,000 Walnut Valley Unified School District Series A, 6.80% due Aaa/AAA 295,692
2/1/07 (Insured: MBIA)
250,000 Walnut Valley Unified School District Series A, 6.90% due Aaa/AAA 301,240
2/1/08 (Insured: MBIA)
100,000 Walnut Valley Unified School District Series A, 7.00% due Aaa/AAA 121,970
8/1/08 (Insured: MBIA)
495,000 Yorba Linda Public Financing Authority Certificates of A/NR 520,755
Participation, 7.00% due 11/1/00 (Recycling Equipment
Project)
650,000 Yuba City Unified School District Certificates of Baa1/NR 704,321
Participation, 6.70% due 2/1/13, pre-refunded 2/1/01 @ 102
TOTAL INVESTMENTS (Cost $128,934,352) $ 134,803,005
<FN>
See notes to unaudited financial statements.
</FN>
</TABLE>
