Thornburg Limited Term Municipal Fund California Portfolio
Fund facts. . . as of 6/30/99
Thornburg Thornburg
Limited Term Limited Term
Municipal Fund CA
Municipal Fund CA A Shares C Shares
SEC Yield ...................... 3.30% 2.94%
Taxable Equiv. Yields .......... 6.02% 5.37%
NAV ............................ $ 12.75 $ 12.76
Max. Offering Price ............ $ 12.94 $ 12.76
Total returns. . . as of 6/30/99
(Annual Average - After Subtracting Maximum Sales Charge)
One Year ....................... 1.40% 2.56%
Three Year ..................... 4.14% 4.24%
Five Year ...................... 4.50% N/A
Ten Year ....................... 5.47% N/A
Since Inception 5.67% 4.39%
Inception Date ..................... (2/19/87) (9/1/94)
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 1.50%. The data quoted represent
past performance and may not be construed as a guarantee of future results.
Dear Shareholder,
What a difference six months makes! Last autumn the world's leading economists
and investment strategist predicted that the Russian financial crisis, coming on
the heels of the Asian financial crisis, would send the world economy into a
tailspin. Yields on 30-year U.S. government bonds dropped below 4.75% for the
first time in 4 decades. Bond buyers at that time no doubt expected an economic
slowdown that would be severe and long lasting. The gloomy experts were wrong.
The U.S. economy delivered its strongest economic growth in a generation during
the October 1 to April 1 period. Asian economies are gathering momentum, as are
many other developing economies around the world. As we write this letter, the
experts are trying to decide if better economic growth worldwide will pave the
way for more inflation and higher interest rates. As they examine their crystal
balls, interest rates are rising. The municipal bond market is reacting to the
changing scene with higher yields and increasing participation by individual
investors. Whatever happens, we believe your laddered maturity municipal bond
portfolio is well structured to adapt to changing circumstances and benefit from
higher yields, if they should become available. On June 30, 1998 the net asset
value per share of Thornburg Limited Term Municipal Fund - California Portfolio
was $12.90. The price increased to $13.00 on December 31, before settling at
$12.75 on June 30, 1999, the conclusion of your fund's 1999 fiscal year. If you
were with us for the entire year, you received dividends of 53.2 cents per
share. If you reinvested your dividends you received 54.3 cents per share.
Investors who owned C shares received dividends of 48 and 48.9, respectively.
Your Thornburg Limited Term Municipal Fund portfolio currently holds 170
municipal obligations from municipal obligors in California. Approximately 95%
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:
% of portfolio Cumulative %
maturing within maturing by end of
1 years = 12% year 1 = 12%
1 to 2 years = 15% year 2 = 27%
2 to 3 years = 16% year 3 = 43%
3 to 4 years = 9% year 4 = 52%
4 to 5 years = 7% year 5 = 59%
5 to 6 years = 6% year 6 = 65%
6 to 7 years = 7% year 7 = 72%
7 to 8 years = 9% year 8 = 81%
8 to 9 years = 6% year 9 = 87%
9 to 10 years = 9% year 10 = 96%
Over the last three months your average portfolio maturity has increased
slightly. The passage of time always shortens the maturities of the bonds we
own. We directed portfolio cash flow and new money into the middle and rear of
your bond ladder, taking advantage of the good selection of new municipal bonds
coming to market recently. Today, we are managing the portfolio to keep the
average maturity approximately where it is. We will stick with this approach if
interest rates remain stable or decrease. If bond yields increase, we will
extend the average portfolio maturity. You can see from the chart on the
previous page that 43% of our $130 million bond portfolio will mature in the
next 3 years! We would like to increase our dividend yields if higher yields are
available. Any observer must be impressed by the fundamental strength of both
the broad U.S. economy and the California economy. More people than ever before
are working. Wages are firm. But government spending is accelerating. Taken as a
whole, California cities continue to increase their financial reserves for the
fifth consecutive year. The state of California reports similar favorable news.
If the current strength of the U.S. economy persists, we expect long maturity
interest rates to increase slightly in the coming months. The supply of
municipal bonds will continue to be plentiful. No politician gets elected as a
budget cutter these days. Two recent surveys of American voters indicate that
tax cuts are NOT favored by a majority of voters. The public prefers to see
additional spending on education, health and the environment. 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. We would like to attribute this to
capable execution of a sensible investment strategy over time. Thank you for
investing in Thornburg Limited Term Municipal Fund. Sincerely,
Brian J. McMahon George T. Strickland
Portfolio Manager Portfolio Manager
*Morningstar proprietary rating reflects historical risk adjusted performances
as of 6/30/99. 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 6/30/99. At 6/30/99, there
were 1,591bond funds with 3-year ratings, 1,191 with 5-year ratings, and 366
with 10-year ratings in Morningstar's Municipal Bond category. Ratings are for
Class A shares only.
Past performance cannot guarantee future results.
ASSETS
Investments at value (cost $131,897,563) ................... $135,168,155
Cash ....................................................... 192,982
Receivable for fund shares sold ............................ 60,838
Interest receivable ........................................ 2,096,762
Prepaid expenses and other assets .......................... 849
Total Assets .................... 137,519,586
LIABILITIES
Payable for investments purchased .......................... 2,562,637
Payable for fund shares redeemed ........................... 178,545
Accounts payable investment advisor (Note 4) ............... 64,499
Accounts payable and accrued expenses ...................... 148,869
Dividends Payable .......................................... 114,001
Total Liabilities ............... 3,068,551
NET ASSETS ................................................. $134,451,035
NET ASSET VALUE:
Class A Shares:
Net asset value and redemption price per share ($113,835,067
applicable to 8,929,754 shares of beneficial interest
outstanding - Note 5) ...................................... $ 12.75
Maximum sales charge, 1.50 % of offering
price (1.52% of net asset value per share) ................. 0.19
Maximum Offering Price Per Share ........................... $ 12.94
Class C Shares:
Net asset value and offering price per share ($7,891,877
applicable to 618,462 shares of beneficial interest
outstanding - Note 5) ...................................... $ 12.76
Class I Shares:
Net asset value, offering and redemption price per share
($12,724,091 applicable to 997,952 shares of beneficial
interest outstanding - Note 5) ............................. $ 12.75
See notes to financial statements ..........................
INVESTMENT INCOME:
Interest income (net of premium amortized of $651,181)
$6,963,247
EXPENSES:
Investment advisory fees (Note 4) 682,539
Administration fees (Note 4)
Class A Shares 147,428
Class C Shares 10,030
Class I Shares 5,271
Distribution and service fees (Note 4)
Class A Shares 294,856
Class C Shares 80,245
Transfer agent fees 79,512
Custodian fees 90,322
Registration and filing fees 2,945
Professional fees 12,465
Accounting fees 13,207
Director fees 3,919
Other expenses 12,937
Total Expenses 1,435,676
Less:
Expenses reimbursed and fees waived by investment adviso (52,378)
Distribution and service fees waived (Note 4) (30,095)
Net Expenses 1,353,203
Net Investment Income 5,610,044
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 6)
Net realized (loss) on investments sold (9,464)
(Decrease) in unrealized appreciation of investments (1,587,651)
Net Realized and Unrealized Gain
(Loss) on Investments (1,597,115)
Net Increase in Net Assets
Resulting from Operations $ 4,012,929
See notes to financial statements.
Year Ended Year Ended
June 30, 1999 June 30, 1998
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income $ 5,610,044 $ 5,523,039
Net realized gain (loss) on investments sold (9,464) 29,681
Increase (Decrease) in unrealized appreciatio (1,587,651) 1,431,181
Net Increase in Net Assets Resulting from Ope 4,012,929 6,983,901
DIVIDENDS TO SHAREHOLDERS:
From net investment income
Class A Shares (4,843,588) (4,926,639)
Class C Shares (296,971) (281,691)
Class I Shares (469,485) (314,709)
FUND SHARE TRANSACTIONS (Note 5):
Class A Shares (7,072,424) 26,770,636
Class C Shares 141,905 1,821,049
Class I Shares 4,620,695 4,220,631
Net Increase (Decrease) in Net Assets (3,906,939) 34,273,178
NET ASSETS:
Beginning of year 138,357,974 104,084,796
End of year $134,451,035 $138,357,974
See notes to 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 year ended June 30, 1999 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 year ended June 30, 1999,
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 year ended June 30, 1999, the Adviser voluntarily reimbursed
certain operating expenses amounting to $52,378. 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, 1999 the
Distributor earned commissions aggregating $14,004 from the sale of Class A
shares, and collected contingent deferred sales charges aggregating $782 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, 1999 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 June 30, 1999, there were an unlimited number of shares of beneficial
interest authorized and capital paid-in aggregated $132,013,338. Transactions in
shares of beneficial interest were as follows:
Year Ended June 30, 1999 Year Ended June 30, 1998
Class A Shares Shares Amount Shares Amount
Shares sold 1,431,325 $ 18,540,509 1,321,780 $ 17,129,362
Shares issued to shareholders in
reinvestment of distributions
266,444 3,454,191 249,838 3,217,407
Shares issued in merg 0 0 1,933,181 24,725,383
Shares repurchased (2,245,597) (29,067,124) (1,421,995) (18,301,516)
Net Increase (Decreas (547,828) ($ 7,072,424) 2,082,804 $ 26,770,636
Class C Shares
Shares sold 159,413 $ 2,071,491 255,731 $ 3,228,901
Shares issued to shareholder
in reinvestment of distributions
17,406 225,869 16,952 218,500
Shares repurchased (165,924) (2,155,455) (126,178) (1,626,352)
Net Increase 10,895 $ 141,905 146,505 $ 1,821,049
Class I Shares
Shares sold 571,518 $ 7,407,462 358,013 $ 4,536,004
Shares issued to shareholders in
reinvestment of distributions
34,993 453,510 22,572 302,376
Shares repurchased (250,814) (3,240,277) (48,092) (617,749)
Net Increase 355,697 $ 4,620,695 332,493 $ 4,220,631
Note 6 - Securities Transactions
For the year ended June 30, 1999, the Portfolio had purchase and sale
transactions (excluding short-term securities) of $29,033,775 and $29,468,141,
respectively. The cost of investments is the same for financial reporting and
Federal income tax purposes. At June 30, 1999 the net unrealized appreciation
was $3,270,592, resulting from gross unrealized appreciation of $3,541,153 and
$270,561 gross unrealized depreciation. Accumulated net realized losses from
security transactions included in net assets at June 30, 1999 aggregated
$832,895. For Federal income tax purposes, the Portfolio has realized capital
loss carryforwards of approximately $900,000 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
in varying amounts through June 30, 2007.
<TABLE>
<CAPTION>
Year Ended June 30,
1999 1998 1997 1996 1995
CLASS A SHARES:
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 12.90 $ 12.75 $ 12.64 $ 12.61 $ 12.57
Income from investment operations:
Net investment income 0.53 0.55 0.57 0.58 0.58
Net realized and unrealized
gain (loss) on investments (0.15) 0.15 0.11 0.03 0.04
Total from investment operations 0.38 0.70 0.68 0.61 0.62
Less dividends from:
Net investment income (0.53) (0.55) (0.57) (0.58) (0.58)
Change in net asset value (0.15) 0.15 0.11 0.03 0.04
Net asset value, end of year $ 12.75 $ 12.90 $ 12.75 $ 12.64 $ 12.61
TOTAL RETURN (a) 2.97% 5.57% 5.47% 4.94% 5.12%
RATIOS/SUPPLEMENTAL DATA Ratios to average net asset:
Net investment income 4.11% 4.25% 4.47% 4.59% 4.69%
Expenses, after expense reductions 0.99% 1.00% 1.00% 1.00% 1.00%
Expenses, before expense reductions 1.02% 1.04% 1.03% 1.05% 1.04%
Portfolio turnover rate 21.71% 21.21% 20.44% 22.68% 18.54%
Net assets at end of year (000) $ 113,835 $ 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.
</FN>
</TABLE>
<TABLE>
Period From
<CAPTION>
Year Ended June 30, Sept 1, 1994 (a)
1999 1998 1997 1996 June 30, 1995
CLASS C SHARES:
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 12.91 $ 12.76 $ 12.65 $ 12.62 $ 12.55
Income from investment operations:
Net investment income 0.48 0.50 0.52 0.53 0.42
Net realized and unrealized
gain (loss) on investments (0.15) 0.15 0.11 0.03 0.07
Total from investment operations 0.33 0.65 0.63 0.56 0.49
Less dividends from:
Net investment income (0.48) (0.50) (0.52) (0.53) (0.42)
Change in net asset value (0.15) 0.15 0.11 0.03 0.07
Net asset value, end of year $ 12.76 $ 12.91 $ 12.76 $ 12.65 $ 12.62
TOTAL RETURN (b) 2.56% 5.14% 5.06% 4.46% 3.98%
RATIOS/SUPPLEMENTAL DATA Ratios to average net asset:
Net investment income 3.70% 3.85% 4.06% 4.16% 4.07%(c)
Expenses, after expense reductions 1.40% 1.40% 1.40% 1.43% 1.63%(c)
Expenses, before expense reductions 1.92% 1.97% 2.15% 2.92% 3.21%(c)
Portfolio turnover rate 21.71% 21.21% 20.44% 22.68% 18.54%
Net assets at end of year (000) $ 7,892 $ 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>
<TABLE>
<CAPTION>
Year Ended Period from April 1, 1997 (a) -
1999 1998 June 30, 1997
CLASS I SHARES:
<S> <C> <C> <C>
Net asset value, beginning of year $ 12.90 $ 12.75 $ 12.64
Income from investment operations:
Net investment income 0.58 0.59 0.15
Net realized and unrealized
gain (loss) on investments (0.15) 0.15 0.11
Total from investment operations 0.43 0.74 0.26
Less dividends from:
Net investment income (0.58) (0.59) (0.15)
Change in net asset value (0.15) 0.15 0.11
Net asset value, end of year $ 12.75 $ 12.90 $ 12.75
TOTAL RETURN(b) 3.33% 5.93% 2.07%
RATIOS/SUPPLEMENTAL DATA Ratios to average net asset:
Net investment income 4.45% 4.60% 4.77%(c)
Expenses, after expense reductions 0.65% 0.65% 0.63%(c)
Expenses, before expense reductions 0.78% 0.92% 1.32%(c)
Portfolio turnover rate 21.71% 21.21% 20.44%
Net assets at end of year (000) $ 12,724 $ 8,284 $ 3,949
<FN>
(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
</FN>
</TABLE>
<TABLE>
<CAPTION>
Schedule of Investments
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
June 30, 1999
CUSIPS: Class A - 532-723-202, Class C - 532-723-707, Class I - 532-723-889
NASDAQ Symbols: Class A - LTCAX, Class C - LTCCX, Class I - LTCIX
<C> <C> <C> <C>
1,000,000 Alameda County Certificates Participation, 6.25% due A2/NR $1,072,300
6/1/2006, pre-refunded6/1/99 @ 102
615,000 Alameda-Contra Costa Transit District Refunding Baa/BBB- 629,034
Ceritificate of ParticipationSeries 1989, 7.20% due
8/1/2000
255,000 Albany Public Facilities Financing Authority Lease Revenue, Baa1/NR 264,040
6.60% due 9/1/2000(Library Community Center Project) (ETM)
295,000 Alum Rock Union Elementary School District General Aaa/AAA 356,640
Obligation Refunding Bonds,8.00% due 9/1/2006 (Insured:
FGIC)
380,000 Alum Rock Union Elementary School District General Aaa/AAA 465,379
Obligation Refunding Bonds,8.00% due 9/1/2007 (Insured:
FGIC)
1,020,000 Antelope Valley Hospital Revenue, 5.25% due 1/1/2006 Aaa/AAA 1,062,718
(Insured: FSA)
1,000,000 Berkeley Health Facility Revenue, 6.55% due 12/1/2022, A2/A+ 1,093,450
pre-refunded 12/1/02 @102 (Alta Bates Medical Center
Project)
380,000 Big Bear Regional Wastewater Agency Refunding Revenue Aaa/AAA 385,552
Bonds, 4.70% due 4/1/2006(Insured: AMBAC)
835,000 California Educational Facilities Authority Revenue, 5.60% Aa2/AA 855,683
due 10/1/2000 (U.S.C.Project)
1,805,000 California Educational Facilities Authority Revenue, 5.60% Aa2/AA 1,889,348
due 10/1/2002 (U.S.C.Project)
500,000 California Educational Facilities Authority Revenue Series A1/NR 518,160
1993, 5.15% due9/1/2003 (Santa Clara University Project)
500,000 California Health Facilities Financing Authority Revenue, NR/A- 509,460
5.30% due 5/15/2004(Downey Community Hospital Project)
500,000 California Health Facilities Financing Revenue, 5.75% due NR/A- 504,670
5/15/2015 (DowneyCommunity Hospital Project)
505,000 California HFA, 5.25% due 8/1/2000 (Marin General Hospital Aaa/AAA 514,292
Project; Insured:FSA)
1,000,000 California HFA Secured Revenue Series 1991, 6.65% due Baa2/BBB 1,042,770
9/1/2001 (Good SamaritanHospital Project)
15,000 California HFA Single Family Mortgage Revene Series 1982-A, Aa/AA- 15,009
10.00% due 2/1/2002
500,000 California Housing Finance Agency Revenue, 5.40% due Aa/AA- 505,850
8/1/2000
145,000 California Housing Finance Agency Revenue, 0% due 8/1/2001 Aa/AA- 125,537
670,000 California Housing Finance Authority Revenue Series 1985-B, Aa/AA- 695,185
9.875% due 2/1/2017
1,340,000 California Infrastructure & Economic, 5.25% due 12/1/2008 NR/A 1,340,000
(American Center ForWine Food Arts Project)
1,220,000 California Infrastructure & Economic, 5.35% due 12/1/2009 NR/A 1,220,000
(American Center ForWine Food Arts Project)
500,000 California Pollution Control Financing Authority Revenue, A1/A+ 511,670
6.85% due 12/1/2008(So. Cal Edison Co. Project)
5,000 California Pollution Control Financing Authority Revenue, A2/A+ 5,013
7.20% due 9/1/2015(So. Cal Edison Co. Project)
1,000,000 California Pollution Control Solid Waste, Authority, 6.75% Aaa/NR 1,087,410
due 7/1/2011
2,000,000 California State, 7.00% due 10/1/2009 Aa3/A+ 2,347,500
700,000 California State Economic Development Financing Authority VMIG1/A1+ 700,000
Revenue, 3.05% due4/1/2008 put 07/1/99 (California
Independent Systems Project)(daily demandnotes)
1,000,000 California State General Obligation, 6.50% due 10/1/1999 Aa3/A+ 1,007,900
300,000 California State General Obligation, 6.75% due 5/1/2002 Aa3/A+ 320,976
500,000 California State General Obligation, 9.50% due 5/1/2003 Aa3/A+ 591,675
1,000,000 California State General Obligation, 9.50% due 2/1/2010 Aa3/AA- 1,368,840
5,000 California State Public Works High Technology, 7.375% due Aa3/A+ 5,492
4/1/2006
500,000 California State Public Works Lease Revenue, 8.35% due A1/A 510,320
12/1/1999
500,000 California State Public Works Lease Revenue, 5.50% due Aaa/AAA 531,260
9/1/2006 (Insured: AMBAC)
850,000 California State University Revenue, 6.40% due 11/1/2002 A1/A 892,831
crossover refunded11/1/00 @102
109,228 California State Veterans General Obligation Amortizing NR/NR 115,901
Coupon M-COATES, 7.30%due 10/1/2001
1,190,000 California Statewide Community Development Authority Aaa/AAA 1,233,840
Certificate ofParticipation, 5.25% due 4/1/2008 (Insured:
MBIA)
1,000,000 California Statewide Community Development Authority NR/A+ 1,073,320
Certificate ofParticipation, 5.90% due 4/1/2009
1,000,000 California Statewide Community Development Authority Aaa/AAA 998,220
Certificates ofParticipation, 3.76% due 1/1/2000 (Motion
Picture and Televison Fund Project;Insured: AMBAC)
1,000,000 California Statewide Community Development Authority Aaa/AAA 990,350
Certificates ofParticipation, 4.05% due 1/1/2001 (Motion
Picture and Televison Fund Project;Insured: AMBAC)
400,000 California Statewide Community Development Authority NR/A+ 408,452
Insured Health FacilitiesRevenue, Certificate of
Participation Series 1992, 6.40% due 5/1/2002
(EskatonProperties Incorporated Phase II Project)
1,000,000 California Statewide Community Development Authority NR/A+ 1,060,380
Insured Health FacilityRevenue Series 1996-A, 6.00% due
9/1/2004 (San Gabriel Medical Center Project;
1,390,000 California Veteran Affairs Home Purchases Revenue Series A, Aa2/AA- 1,460,487
6.55% due 8/1/2001 (ETM)
1,000,000 Clovis Unified School District, 0% due 8/1/2002 A1/AA- 878,280
700,000 Coachella Valley Water District 71 Certificate of A/NR 718,872
Participation, 5.75% due10/1/2000 (Storm Water District
Project)
660,000 Cupertino Public Facilities Corp. Certificates of A1/A+ 673,015
Participation Series 1992-B,5.60% due 7/1/2000
800,000 Delta County Home Mortgage Finance Authority Single Family Aaa/AAA 804,480
Mortgage Revenue,4.85% due 12/1/2008 (Insured: MBIA)
1,000,000 Duarte Certificates of Participation, 6.25% due 4/1/2023 Baa2/AAA 1,085,340
(Hope National MedicalCenter Project)
2,025,000 Escondido Multi Family Housing Revenue Refunding Bond NR/AAA 2,109,037
Series 1997-A, 5.40% due1/1/2027 put 7/1/07 (Terrace
Gardens Project; Collateralized: FNMA)
350,000 Foothill De Anza Community College District Certificates of NR/A- 376,800
Participation, 7.35%due 3/1/2007
990,000 Fresno Multi Family Housing Revenue Refunding, 4.875% due NR/AAA 1,003,414
1/1/2028 put 1/1/08(Jackson Park Place Project; Insured:
FNMA)
1,670,000 Glendale Hospital Revenue Series 1994, 7.625% due 1/1/2005 NR/A+ 1,823,239
(Verdugo HillsProject; Guarantee: Industrial Indemnity)
1,000,000 Hawaiian Gardens Redevelopment Agency Project Tax NR/BBB 329,870
Allocation, 0% due 12/1/2016
135,000 Hayward Unified School District Certificate of Baa/NR 137,406
Participation, 7.60% due10/1/2000
60,000 Hermosa Beach Lynwood and Vernon Certificate of NR/BBB 60,362
Participation, 7.10% due9/1/1999
605,000 Inglewood Certificates Participation, 6.70% due 8/1/2000 Baa3/BBB- 624,172
635,000 Inglewood Certificates Participation, 6.80% due 8/1/2001 Baa3/BBB- 666,528
690,000 Inglewood Certificates Participation, 6.90% due 8/1/2002 Baa3/BBB- 735,333
400,000 Irvine Improvement Bond Act 1915, Assessment District VMIG1/A1+ 400,000
Number 94 13, 2.90% due9/2/2022 put 7/01/99 (daily demand
notes)
1,000,000 Irwindale Community Redevelopment Agency, 6.60% due Baa3/NR 1,113,870
8/1/2018, pre-refunded8/1/05
340,000 Kern County Board Education Certificates Participation, Aaa/AAA 359,591
Refunding Series A,5.50% due 5/1/2006 (Insured: MBIA)
260,000 Kern County Board Education Certificates Participation, Aaa/AAA 274,708
Refunding Series A,5.50% due 5/1/2007 (Insured: MBIA)
165,000 Kern High School District, 7.00% due 8/1/2010 (ETM) A/NR 194,358
680,000 Kern High School District Series B, 9.00% due 8/1/2006 Aaa/AAA 862,920
(ETM)
480,000 Lake Elsinore Public Financing Authority Tax Allocation Aaa/AAA 495,586
Revenue Series 1992-C,6.15% due 2/1/2001 (Insured: FGIC)
3,000,000 Lancaster Redevelopment Agency Lease Revenue, 4.90% due NR/BBB+ 3,034,500
12/1/2000 (PublicImprovement Project; LOC: Sumitomo - Dai
ichi Kangyo)
500,000 Los Angeles Certificates of Participation, 6.90% due Baa1/BBB 521,725
3/1/2001 , pre-refunded3/1/00 @ 102
250,000 Los Angeles Certificates of Participation, 0% due 9/1/2003 A3/BBB 205,390
5,000 Los Angeles Convention & Exhibition Center, 9.00% due Aaa/AAA 6,268
12/1/2020, pre-refunded12/1/05
500,000 Los Angeles County Certificates of Participation, 0% due Baa1/BBB 447,850
10/1/2001
245,000 Los Angeles County Certificates of Participation, 0% due Baa1/BBB 207,652
10/1/2002
700,000 Los Angeles County Certificates of Participation, 0% due Baa1/BBB 576,072
4/1/2003
350,000 Los Angeles County Housing Authority Multi Family Housing NR/A- 351,162
Revenue, 7.625% due12/1/2029 put 12/1/99 (Monrovia Project
A; Insured: Continental Casualty)
1,000,000 Los Angeles Transit Finance Corporation Certificate of A1/NR 1,000,060
Participation Series1992-B, 5.70% due 7/1/1999
1,500,000 Los Angeles Unified School District Certificate of A2/A 1,577,130
Participation, 6.30% due6/1/2002
500,000 Los Angeles Water and Power, 9.00% due 9/1/2004 Aa3/A+ 594,825
500,000 Los Angeles Waterwaste Systems Revenue, 8.80% due 6/1/2000 Aaa/AAA 524,235
(Insured: MBIA)
375,000 Marysville Hospital Revenue, 6.00% due 1/1/2004 (Freemont - Aaa/AAA 403,260
Rideout Health GroupProject; Insured: AMBAC)
430,000 Marysville Hospital Revenue, 5.00% due 1/1/2009 (Freemont Aaa/AAA 435,190
- Rideout HealthGroup Project; Insured: AMBAC)
485,000 Mayers Memorial Hospital District Health Facilities Revenue NR/A+ 490,699
Insured Series A,5.375% due 6/1/2009
360,000 Midpeninsula Regional Open Space District Certificate of NR/A 360,806
Participation, 4.75%due 9/1/1999
460,000 Midpeninsula Regional Open Space District Certificate of NR/A 465,971
Participation, 4.80%due 9/1/2000
200,000 Midpeninsula Regional Open Space District Certificate of NR/NR 205,290
Participation, 7.20%due 9/1/2000 refunded 9/1/99
780,000 Morgan Hill Unified School District Certificate of A1/NR 781,529
Parcipitation, 5.80% due8/1/1999
835,000 Morgan Hill Unified School District Certificate of A1/NR 847,149
Participation Series 1993,5.00% due 8/1/2000
660,000 Mountain View Shoreline Reg. Park Community Tax Allocation A3/A 660,719
Series 1993-A, 4.70%due 8/1/1999
810,000 National City Community Development Commission Tax Aaa/AAA 811,669
Allocation Series 1992-A,5.70% due 8/1/1999 (Downtown
Redevelopment Project; Insured: AMBAC)
500,000 National City Community Development Commission Tax Aaa/AAA 513,345
Allocation Series 1992-A,5.90% due 8/1/2000 (Downtown
Redevelopment Project; Insured: AMBAC)
500,000 Natomas Union School District, Refunding, 5.65% due Aaa/AAA 532,115
3/1/2010 (Insured: MBIA)
330,000 New Haven USD Certificates of Participation, 7.30% due NR/A- 337,481
12/1/2001
355,000 New Haven USD Certificates of Participation, 7.30% due NR/A- 363,048
12/1/2002
380,000 New Haven USD Certificates of Participation, 7.40% due NR/A- 388,645
12/1/2003
410,000 New Haven USD Certificates of Participation, 7.40% due NR/A- 419,327
12/1/2004
360,000 Northern California Power Agency Public Power Revenue, Baa3/A- 384,574
5.65% due 7/1/2007(Geothermal Project 3 A) (ETM)
340,000 Northern California Power Agency Public Power Revenue, Baa3/A- 355,524
5.65% due 7/1/2007
100,000 Oakland Redevelopment Agency, 7.40% due 5/1/2007 (Insured: Aaa/AAA 101,808
AMBAC)
915,000 Orange County, Refunding Recovery A, 5.20% due 6/1/2003 Aaa/AAA 947,382
(ETM)
1,085,000 Orange County, Unrefunded Balance Refunding Recovery A, Aaa/AAA 1,125,785
5.20% due 6/1/2003(Insured: MBIA)
2,000,000 Orange County Airport Revenue Bond, 5.50% due 7/1/2002 Aaa/AAA 2,078,360
(Insured: MBIA)
1,000,000 Orange County Airport Revenue Bond, 6.00% due 7/1/2007 Aaa/AAA 1,087,960
(Insured: MBIA)
1,550,000 Orange County Local Transportation Authority Sales Tax Rev, Aa3/AA+ 1,629,468
5.70% due 2/15/2003
1,050,000 Orange County Local Transportation Authority Sales Tax Rev, Aa3/AA+ 1,106,942
5.75% due 2/15/2004
510,000 Orange County Local Transportation Authority Sales Tax Rev, Aa3/AA+ 553,676
6.00% due 2/15/2006
900,000 Orange County Local Transportation Authority Sales Tax Aa3/AA+ 922,635
Revenue, 5.50% due2/15/2001
1,240,000 Orange County Multi Family Housing Revenue, 5.60% due NR/AAA 1,288,385
10/1/2027, mandatory put10/1/05 (Villa Santiago Rehab
Project; FNMA: Collateralized)
2,000,000 Orange County Recovery Certificates of Participation Series Aaa/AAA 2,080,640
A, 5.50% due7/1/2002 (Insured: MBIA)
1,100,000 Orange County Refunding Recovery, 5.10% due 6/1/2002 Aaa/AAA 1,130,250
(Insured : MBIA)
2,000,000 Orange County Refunding Recovery, 6.50% due 6/1/2004 Aaa/AAA 2,194,080
(Insured: MBIA)
2,000,000 Orange County Refunding Recovery, 6.50% due 6/1/2005 Aaa/AAA 2,217,800
(Insured: MBIA)
1,680,000 Orange County Transportation Authority Certificate of A1/NR 1,715,801
Participation, 5.125% due7/1/2002
410,000 Oroville Hospital Revenue, 4.50% due 12/1/2003 (Insured: NR/A+ 411,615
California Mortgage)
500,000 Oroville Hospital Revenue, 5.50% due 12/1/2007 (Insured: NR/A+ 521,875
California Mortgage)
655,000 Oxnard Harbor District Revenue Refunding, 6.60% due Aaa/AAA 666,377
8/1/2000 (Insured: FSA)
2,000,000 Palomar Pomerado Health Systems California Revenue, Aaa/AAA 2,065,940
Refunding Insured, 5.25% due11/1/2009 (Insured: MBIA)
500,000 Palomar Pomerado Health Systems Revenue, 0% due 11/1/2003 Aaa/AAA 415,240
(Insured: MBIA)
510,000 Paramount Unified School District Certificates of Aaa/AAA 494,981
Participation, 0% due 9/1/2014(Insured: FSA)
100,000 Perris School District Certificates of Participation, 5.10% Aaa/AAA 101,156
due 3/1/2000(Insured: FSA)
1,000,000 Piedmont Unified School District Series B, 0% due 8/1/2013 Aa/NR 453,980
1,000,000 Pleasanton Unified School District Series B, 0% due Aaa/AAA 392,750
8/1/2016 (Insured: MBIA)
580,000 Pomona Unified School District General Obligation, 5.35% Aaa/AAA 607,707
due 2/1/2005 (Insured:MBIA)
340,000 Pomona Unified School District General Obligation, 5.40% Aaa/AAA 358,377
due 8/1/2005 (Insured:MBIA)
935,000 Redwood City Multi Family Housing Revenue Series 1985-B, NR/A+ 937,263
5.20% due 10/1/2008 put10/1/00 (Redwood Shores Apartments
Projects; Insured: Continental Casualty)
500,000 Richmond Joint Powers Financing Authority Revenue Series A, NR/A 511,905
5.20% due 5/15/2005
925,000 Riverside County Multi Family Housing, Series A, 5.40% due NR/AAA 953,906
6/1/2018 (El DoradoApartments Project)
295,000 Sacramento Financing Authority Series 1991, 6.30% due A2/A+ 312,644
11/1/2002
890,000 Sacramento Multi Family Housing Revenue, 5.875% due NR/AAA 890,748
2/1/2008 put 12/1/03(Fairways 1 Apartments Project;
Collateralized: FNMA)
1,000,000 Sacramento Reg. Transportation Authority Certificate of A1/NR 1,033,250
Participation, 6.25% due3/1/2001
2,000,000 Salinas Redevelopment Agency Tax Allocation Series A, 0% Aaa/AAA 498,400
due 11/1/2022 (Insured:FSA)
1,305,000 San Diego County Certificates Participation, 5.25% due Aaa/AAA 1,364,025
8/15/2006 (Insured: MBIA)
965,000 San Diego County Multi Family Housing Revenue, 5.50% due NR/AAA 994,722
7/1/2025 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- 1,897,128
Participation, 6.125% due5/1/2003
955,000 San Francisco City and County, Educational Facilities 97 Aa3/AA- 989,447
Community CollateralSeries A, 5.25% due 6/15/2009
1,000,000 San Francisco City and County, Educational Facilities 97 Aa3/AA- 1,032,070
Unified School DistrictSeries B, 5.25% due 6/15/2009
790,000 San Francisco City and County, Educational Facilities 97 Aa3/AA- 818,495
Zoo Facilities SeriesC, 5.25% due 6/15/2009
255,000 San Francisco City and County Redevelopment Lease Revenue, A1/A- 245,794
0% due 7/1/2000
3,500,000 San Francisco City and County Redevelopment Lease Revenue, A1/A- 2,366,595
0% due 7/1/2007
80,000 San Francisco City and County Refunding Series Sec. 8, Aaa/AAA 80,152
6.125% due 7/1/2002(Insured: MBIA/FHA)
1,440,000 San Joaquin County Certificates of Participation, 5.60% due A2/A- 1,473,192
9/1/2000 (GeneralHospital Project)
895,000 San Joaquin County Certificates of Participation, 5.90% due A2/A- 946,964
9/1/2003 (GeneralHospital Project)
410,000 San Marcos Public Facilities Authority Capital Impr., 0% Aaa/NR 403,247
due 1/1/2000 (ETM)
410,000 Santa Ana Community Dev. Agency Series D, 6.50% due NR/AAA 430,119
12/15/2014 , pre-refunded12/15/00 @ 102
1,595,000 Santa Ana Community Dev. Agency Tax Allocation Series B, NR/AAA 1,687,063
6.50% due 12/15/2014 ,pre-refunded 12/15/00 @ 102
2,000,000 Santa Ana Multi Family Housing Revenue Bonds Series B, NR/AAA 2,096,740
5.65% due 11/1/2021 put11/1/06 (FNMA Collateralized)
500,000 Santa Clara Certificates of Participation, 7.75% due Aaa/AAA 543,745
2/1/2002 (Insured: MBIA)
315,000 Santa Monica Community College District Certificates of NR/A 326,160
Participation, 7.65% due5/1/2001 (Rancho Corrales Project)
200,000 Santa Monica Redevelopment Agency Tax, Allocation, 6.50% Baa1/A 216,500
due 7/1/2003 ( OceanPark Redevelopment Projects)
1,455,000 Sierra View Local Health Care Refunding, 5.00% due 7/1/2007 NR/A 1,446,474
(Insured: ACA)
750,000 Snowline Joint Unified School District Certificates of NR/BBB 823,020
Participation, 7.25% due4/1/2018 , pre-refunded 4/01/02 @
102
810,000 Sonoma County Certificates of Participation Public Works NR/A+ 825,641
Improvement Program,5.40% due 8/1/2000 (Integrated Waste
Project)
950,000 Sonoma County Certificates of Participation Public Works NR/A+ 967,604
Improvement Program,5.80% due 8/1/2003 (Integrated Waste
Project)
1,435,000 South Orange County Public Finance Authority Special Tax Aaa/AAA 1,630,404
Revenue, 7.00% due9/1/2005 (Insured: MBIA)
250,000 Southern California Public Power Authority Rev., 6.75% due A2/A 261,093
7/1/2001 (PowerProject)
1,000,000 Stanton Multi Family Housing Revenue Bond Series 1997, NR/AAA 1,047,380
5.625% due 8/1/2029, put8/1/09 (Continental Gardens
Project; Collateralized: FNMA)
340,000 Suisun City Redevelopment Agency 1990 Tax Allocation, 7.20% NR/AAA 356,558
due 10/1/2001,pre-refunded 4/1/00
500,000 Sulphur Springs Union School District General Obligation, NR/A 513,995
5.70% due 3/1/2001
450,000 Sunline Transit Agency Certificate of Participation A/NR 463,145
Californa Transit FinanceCorporation Series A, 5.50% due
7/1/2002
900,000 Sweetwater Union High School District COP, 6.40% due Baa1/BBB+ 915,309
11/1/2001
200,000 Temecula Community Services District Certificates of NR/A 201,270
Participation Series 1992,6.00% due 10/1/1999 (Community
Recreation Center Project)
210,000 Temecula Community Services District Certificates of NR/A 215,584
Participation Series 1992,6.00% due 10/1/2000 (Community
Recreation Center Project)
255,000 Torrence USD Certificates of Participation, 6.10% due A3/NR 258,267
10/1/2000
1,000,000 Tracy Certificates of Participation, 7.00% due 10/1/2027, NR/NR 1,083,580
pre-refunded 10/1/01
1,600,000 University of California Regents Certificates of Aaa/AAA 1,665,872
Participation Series 1996,5.45% due 6/1/2003 (Various
Capital Projects; Insured: MBIA)
500,000 University of California Research Facilities Revenue, 8.00% Aaa/AAA 527,925
due 11/1/2000(Insured: MBIA)
870,000 University of California Research Facilities Revenue, 5.25% NR/A+ 892,637
due 9/1/2002
10,000 University of California Revenue Series A, 11.00% due NR/A+ 10,124
9/1/1999
500,000 Upland Certificates Participation Water, 5.75% due 1/1/2007 NR/A 526,415
800,000 Walnut Valley Unified School District, 9.00% due 8/1/2006 Aaa/AAA 1,015,200
(ETM)
1,000,000 Walnut Valley Unified School District, 8.75% due 8/1/2010 Aaa/AAA 1,328,480
(ETM)
245,000 Walnut Valley Unified School District Series A, 6.70% due Aaa/AAA 274,596
8/1/2005 (Insured:MBIA)
250,000 Walnut Valley Unified School District Series A, 6.80% due Aaa/AAA 284,393
2/1/2007 (Insured:MBIA)
250,000 Walnut Valley Unified School District Series A, 6.90% due Aaa/AAA 287,867
2/1/2008 (Insured:MBIA)
100,000 Walnut Valley Unified School District Series A, 7.00% due Aaa/AAA 116,523
8/1/2008 (Insured:MBIA)
500,000 Washington Township California Health Care District, A2/NR 488,850
Revenue, 5.00% due 7/1/2009
495,000 Yorba Linda Public Financing Authority Certificates of A/NR 511,711
Participation, 7.00% due11/1/2000 (Recycling Equipment
Project)
650,000 Yuba City Unified School District Certificates of Baa1/NR 689,689
Participation, 6.70% due2/1/2013, pre-refunded 2/1/01 @ 102
TOTAL INVESTMENTS (Cost $131,897,562) $ 135,168,155
<FN>
+ Credit ratings are unaudited.
See notes to financial statements.
</FN>
</TABLE>
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, 1999, 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, 1999, 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, 1999, 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 27, 1999
LIMITED TERM CALIFORNIA FUND
Index Comparison
Compares performance of Limited Term California Fund, the Lehman 5-Year General
Obligation Bond Index and the Consumer Price Index for periods ending June 30,
1999. On June 30, 1999, the weighted average securities ratings of the Index and
the Fund were AA and AA, respectively, and the weighted average portfolio
maturities of the Index and the Fund were 5.0 years and 4.8 years, respectively.
Past performance of the Index and the Fund may not be indicative of future
performance.
Class A Shares
Average Annual Total Returns (at max. offering price) (periods ending 6/30/99)
One year: 1.40%
Five years: 4.50%
Ten years: 5.47%
Since inception (2/19/87) 5.67%
Class C Shares
Average Annual Total Returns (periods ending 6/30/99)
One Year: 2.56%
From Inception (9/1/94): 4.39%
We Are Ready for the Year 2000
I wish to inform you about our success with respect to being Year 2000 compliant
in the computer systems used to manage your Thornburg Funds investment. Your
shareholder records are kept on a large computer system belonging to our
transfer agent, DST Systems. Accounting data pertaining to your investment
portfolio reside on large systems belonging to State Street Bank and its
affiliates. We have smaller computer networks at Thornburg Investment Management
to help us organize and manage our investment activities. I will describe
briefly the Year 2000 status of each area.
Shareholder records for Thornburg Funds are kept on computers that use a DST
software system called "TA 2000." DST is one of the largest mutual fund record
processors in the world, keeping shareholder records for many large mutual fund
families. The TA 2000 system, as is name implies, was built with 4-digit year
description fields in order to be Year 2000 compliant. To quote from DST's
February 1999 newsletter, "Internal 2000 readiness testing of TA 2000 and TRA
2000 is complete. Several retests of critical TA 2000 (and TRAC 2000) functions
were also completed successfully in 1998. With the completion of these internal
tests, the TA 2000 (and TRAC 2000) systems are considered to be Y2K ready."
There are no hedge words in the preceeding 3 sentences! I am not surprised. I
first heard DST talk about taking concrete measures to deal with Y2K issues
about 8 years ago. If you worry about electric power continuity, I can inform
you that DST maintains its own diesel powered backup generating station adjacent
to its computer facility.
Both are located in geologically stable limestone caves east of Kansas City.
Asset custody and fund accounting records of the Thornburg Funds are stored on
Sate Street Bank computers. We use a variety of software systems to carry out
all activities relating to running the funds. We are informed that this software
infrastructure has been 100% tested and corrected to be Year 2000 compliant. You
can monitor State Street Bank's disclosure yourself on the internet website,
statestreet.com.
Thornburg Investment Management has a computer network to help us carry out our
daily business of managing the assets in our mutual funds. Our information
technology director, Stewart Kane, has made a great effort to be certain that
our software platforms are Year 2000 compliant.
We look forward to the new year.
