Thornburg Limited Term Municipal Fund California Portfolio
All data as of 6.30.00
Fund facts Thornburg Limited Term Municipal Fund California Portfolio
Thornburg Thornburg
Limited Term Limited Term
Municipal Fund CA Municipal Fund CA
A Shares C Shares
SEC Yield 3.68% 3.32%
Taxable Equiv. Yields 6.72% 6.06%
NAV $12.59 $12.61
Max. Offering Price $12.78 $12.61
Total returns (Annual Average - After Subtracting Maximum Sales Charge)
One Year 1.55% 2.73%
Three Year 3.35% 3.47%
Five Year 4.09% 3.98%
Ten Year 5.17% N/A
Since Inception 5.47% 4.10%
Inception Date 2.19.87 9.1.94
Taxable equivalent yields assume a 39.6% marginal federal tax rate and a 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.
Letter to shareholders
Dear Fellow Shareholder,
We are pleased to present the annual report for the California Portfolio of
Thornburg Limited Term Municipal Fund for the fiscal year ending June 30, 2000.
The net asset value of the A shares decreased by 16 cents to $12.59 during the
year, although it has risen in recent months. If you were with us for the entire
period, you received dividends of 54 cents per share. If you reinvested your
dividends, you received 55.1 cents per share. Investors who owned C shares
received dividends of 48.9 and 49.8 cents per share, respectively.
In the last year, we have witnessed a proliferation of "dot.com" stocks and a
tight supply of municipal bonds. You probably know people who have sold
perfectly good bonds (or bond funds) to get in on the action. On average, the
ever-more-scarce bonds have outperformed the "dot.coms" this year. This
outperformance by bonds will continue if the growth rate of our economy begins
to lose momentum. Deficit spending by governments around the world, a hallmark
of the prior 30 years, has turned into surplus accumulation since 1998. The U.S.
government, which will pay off more than $200 billion of treasury bonds this
year, leads the way. But it is not alone. Municipal bond issuance is down over
30% from last year due to swelling tax receipts at most state and local
government entities. California bonds are clearly more scarce. We believe the
surpluses have crested. Voters favor various tax cuts and demand more
governmental services. California budgets a 17% increase in general fund
expenditures and large tax rebates for the fiscal year beginning July 1, 2000.
Stay tuned as the political drama unfolds.
Your Thornburg Limited Term California Fund is a laddered bond portfolio,
consisting of over 140 municipal obligations from various California municipal
borrowers. Approximately 94% of the bonds are rated A or better by one of the
major rating agencies. As you know, we "ladder" the maturity dates of the bonds
in your portfolio so that some of the bonds are scheduled to mature at par
during each of the coming years. As these bonds mature, we would look forward to
the chance to reinvest the proceeds at higher yields, should they become
available! The following chart describes the percentages of your fund's bond
portfolio maturing in each of the coming years:
Today, your fund's weighted average maturity is 4.4 years, and we always keep it
below 5 years. When bond yields were higher last winter and spring, we extended
your average portfolio maturity slightly and improved the structure of your bond
ladder. Unless bond yields increase dramatically in the coming months, we intend
to keep your average portfolio maturity about where it is. Before the next
fiscal year ends, Burch Ault will step down as a director of Limited Term
Municipal Fund. Mr. Ault has served capably as a director since 1984, and has
acted as Chairman of the Audit Committee during a portion of that time. We thank
him. 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
5-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 - California Portfolio.
Sincerely,
Brian McMahon George Strickland
Managing Director Managing Director
Statement of assets and liabilities
ASSETS
Investments at value (cost $102,468,541) ................... $104,614,449
Cash ....................................................... 349,861
Receivable for investments sold ............................ 86,200
Receivable for fund shares sold ............................ 128,989
Interest receivable ........................................ 1,769,745
Prepaid expenses and other assets .......................... 1,324
Total Assets ...................................... 106,950,568
LIABILITIES
Payable for investments purchased .......................... 3,227,014
Payable for fund shares redeemed ........................... 213,788
Accounts payable and accrued expenses ...................... 107,430
Accounts payable investment advisor (Note 3) ............... 49,504
Dividends Payable .......................................... 113,862
Total Liabilities ................................. 3,711,598
NET ASSETS ................................................. $103,238,970
NET ASSET VALUE:
Class A Shares:
Net asset value and redemption price per share ($90,034,988
applicable to 7,148,904 shares of beneficial interest
outstanding - Note 4) ..................................... $ 12.59
Maximum sales charge, 1.50 % of offering
price (1.52% of net asset value per share) ................ 0.19
Maximum Offering Price Per Share .......................... $ 12.78
Class C Shares:
Net asset value and offering price per share ($7,411,412
applicable to 587,957 shares of beneficial interest
outstanding - Note 4) ..................................... $ 12.61
Class I Shares:
Net asset value, offering and redemption price per share
($5,792,570 applicable to 459,887 shares of beneficial
interest outstanding - Note 4) ............................ $ 12.60
See notes to financial statements
Statement of operations
INVESTMENT INCOME:
Interest income (net of premium amortized of $647,274)
$ 6,280,329
EXPENSES:
Investment advisory fees (Note 3) ........................... 595,283
Administration fees (Note 3)
Class A Shares ..................................... 127,041
Class C Shares ..................................... 9,559
Class I Shares ..................................... 4,888
Distribution and service fees (Note 3)
Class A Shares ..................................... 254,083
Class C Shares ..................................... 76,408
Transfer agent fees ......................................... 73,303
Custodian fees .............................................. 78,920
Registration and filing fees ................................ 873
Professional fees ........................................... 5,802
Accounting fees ............................................. 14,170
Director fees ............................................... 3,936
Other expenses .............................................. 11,121
Total Expenses ............................ 1,255,387
Less:
Expenses reimbursed by investment advisor (Note 3) . (45,933)
Distribution and service fees waived (Note 3) ...... (28,613)
Net Expenses .............................. 1,180,841
Net Investment Income ..................... 5,099,488
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 5)
Net realized gain (loss) on investments sold ................ (512,176)
Increase (decrease) in unrealized appreciation of investments (1,124,684)
Net Realized and Unrealized
Gain (Loss) on Investments ................ (1,636,860)
Net Increase in Net Assets
Resulting from Operations $ ............... 3,462,628
See notes to financial statements.
Statement of changes in net assets
Year Ended Year Ended
June 30, 2000 June 30, 1999
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income $ 5,099,488 $ 5,610,044
Net realized gain (loss) on investments
sold (512,176) (9,464)
Increase (decrease) in unrealized
appreciation of investments (1,124,684) (1,587,651)
Net Increase in Net Assets Resulting
from Operations 3,462,628 4,012,929
DIVIDENDS TO SHAREHOLDERS:
From net investment income
Class A Shares ............ (4,354,634) (4,843,588)
Class C Shares ............ (296,223) (296,971)
Class I Shares ............ (448,631) (469,485)
FUND SHARE TRANSACTIONS (Note 4):
Class A Shares ............ (22,446,640) (7,072,424)
Class C Shares ............ (382,747) 141,905
Class I Shares ............ (6,745,818) 4,620,695
Net Increase (Decrease) in Net Assets (31,212,065) (3,906,939)
NET ASSETS:
Beginning of year ......... 134,451,035 138,357,974
End of year ............... $ 103,238,970 $ 134,451,035
See notes to financial statements
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, 2000 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 - Investment Advisory Fee and Other Transactions With Affiliates
Pursuant to an investment advisory agreement, Thornburg Investment Management,
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,
2000, 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, 2000, the Adviser voluntarily reimbursed
certain class specific transfer agent fees of $20,185 for Class A, $12,217 for
Class C, and $13,531 for Class I, respectively.
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, 2000 the Distributor earned commissions aggregating $0 from
the sale of Class A shares, and collected contingent deferred sales charges
aggregating $1,640 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, 2000 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.
Notes to financial statements . . . continued Note 4 - Shares of Beneficial
Interest
At June 30, 2000, there were an unlimited number of shares of beneficial
interest authorized and capital paid-in aggregated $102,410,518. Transactions in
shares of beneficial interest were as follows:
Year Ended Year Ended
June 30, 2000 June 30, 1999
Class A Shares Shares Amount Shares Amount
Shares sold 615,512 $ 7,748,226 1,431,325 $ 18,540,509
Shares issued to shareholders in
reinvestment of
dividends 245,252 3,090,680 266,444 3,454,191
Shares repurchased (2,641,614) (33,285,546) (2,245,597) (29,067,124)
Net Increase
(Decrease) (1,780,850) ($22,446,640) (547,828) ($ 7,072,424)
Class C Shares
Shares sold 95,296 $ 1,206,569 159,413 $ 2,071,491
Shares issued to shareholders in
reinvestment dividends 17,330 218,603 17,406 225,869
Shares repurchased (143,131) (1,807,919) (165,924) (2,155,455)
Net Increase (Decrease)(30,505) ($ 382,747) 10,895 $ 141,905
Class I Shares
Shares sold 213,006 $ 2,694,520 571,518 $ 7,407,462
Shares issued to shareholders in
reinvestment dividends 34,055 429,755 34,993 453,510
Shares repurchased (785,126) (9,870,093) (250,814) (3,240,277)
Net Increase (Decrease)(538,065) ($ 6,745,818) 355,697 $ 4,620,695
Note 5 - Securities Transactions
For the year ended June 30, 2000, the Portfolio had purchase and sale
transactions (excluding short-term securities) of $25,010,176 and $53,206,832,
respectively. The cost of investments is the same for financial reporting and
Federal income tax purposes. At June 30, 2000 the net unrealized appreciation
was $2,145,908, resulting from gross unrealized appreciation of $2,328,356 and
$182,448 gross unrealized depreciation.
Accumulated net realized losses from security transactions included in net
assets at June 30, 2000 aggregated $1,317,456. At June 30, 2000, the Fund had
tax basis capital losses which may be caried over to offset future capital
gains. Such losses expire as follows:
Capital loss carryovers expiring in:
2001 $2,000
2002 314,000
2003 94,000
2004 374,000
2008 206,000
$990,000
At June 30, 2000, the Fund had deferred capital losses occurring subsequent to
October 31, 1999, of $327,000. For tax purposes, such losses will be reflected
in the year ended June 30, 2001.
Year Ended June 30:
2000 1999 1998 1997 1996
CLASS A SHARES:
Net asset value, beginning of year $ 12.75 $ 12.90 $ 12.75 $ 12.64 $ 12.61
Income from investment operations:
Net investment income 0.54 0.53 0.55 0.57 0.58
Net realized and unrealized
gain (loss) on investments (0.16) (0.15) 0.15 0.11 0.03
Total from investment operations 0.38 0.38 0.70 0.68 0.61
Less dividends from:
Net investment income (0.54) (0.53) (0.55) (0.57) (0.58)
Change in net asset value (0.16) (0.15) 0.15 0.11 0.03
Net asset value, end of year $ 12.59 $ 12.75 $ 12.90 $ 12.75 $ 12.64
TOTAL RETURN (a) 3.10% 2.97% 5.57% 5.47% 4.94%
RATIOS/SUPPLEMENTAL DATA Ratios to average net assets:
Net investment income 4.28% 4.11% 4.25% 4.47% 4.59%
Expenses, after expense reductions 0.99% 0.99% 1.00% 1.00% 1.00%
Expenses, before expense reductions 1.01% 1.02% 1.04% 1.03% 1.05%
Portfolio turnover rate 21.34% 21.71% 21.21% 20.44% 22.68%
Net assets at end of year (000) $ 90,035 $ 113,835 $122,231 $94,253 $94,379
(a) Sales loads are not reflected in computing total return.
CLASS C SHARES:
Net asset value, beginning of year $ 12.76 $ 12.91 $ 12.76 $ 12.65 $ 12.62
Income from investment operations:
Net investment income 0.49 0.48 0.50 0.52 0.53
Net realized and unrealized
gain (loss) on investments (0.15) (0.15) 0.15 0.11 0.03
Total from investment operations 0.34 0.33 0.65 0.63 0.56
Less dividends from:
Net investment income (0.49) (0.48) (0.50) (0.52) (0.53)
Change in net asset value (0.15) (0.15) 0.15 0.11 0.03
Net asset value, end of year $ 12.61 $ 12.76 $ 12.91 $12.76 $ 12.65
TOTAL RETURN (a) 2.73% 2.56% 5.14% 5.06% 4.46%
RATIOS/SUPPLEMENTAL DATA Ratios to average net assets:
Net investment income 3.88% 3.70% 3.85% 4.06% 4.16%
Expenses, after expense reductions 1.40% 1.40% 1.40% 1.40% 1.43%
Expenses, before expense reductions 1.94% 1.92% 1.97% 2.15% 2.92%
Portfolio turnover rate 21.34% 21.71% 21.21% 20.44% 22.68%
Net assets at end of year (000) $ 7,411$ 7,892$ 7,843$ 5,882$ 2,444
(a) Sales loads are not reflected in computing total return.
CLASS I SHARES:
Net asset value, beginning of year $ 12.75 $ 12.90 $ 12.75 $ 12.64
Income from investment operations:
Net investment income 0.58 0.58 0.59 0.15
Net realized and unrealized
gain (loss) on investments (0.15) (0.15) 0.15 0.11
Total from investment operations 0.43 0.43 0.74 0.26
Less dividends from:
Net investment income (0.58) (0.58) (0.59) (0.15)
Change in net asset value (0.15) (0.15) 0.15 0.11
Net asset value, end of year $ 12.60 $ 12.75 $ 12.90 $12.75
TOTAL RETURN (c) 3.50% 3.33% 5.93% 2.07%
RATIOS/SUPPLEMENTAL DATA Ratios to average net assets:
Net investment income 4.60% 4.45% 4.60% 4.77%(b)
Expenses, after expense reductions 0.65% 0.65% 0.65% 0.63%(b)
Expenses, before expense reductions 0.79% 0.78% 0.92% 1.32%(b)
Portfolio turnover rate 21.34% 21.71% 21.21% 20.44%
Net assets at end of year (000) $ 5,793 $ 12,724 $8,284 $ 3,949
(a) Sales of Class I shares commenced on April 1, 1997.
(b) Annualized.
(c) Not annualized for periods less than one year.
<TABLE>
Schedule of Investments
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
<CAPTION>
June 30, 2000 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
<S> <C> <C> <C>
1,000,000 Alameda County Certificates of Participation, 6.25% due 6/1/2006, A2/NR $1,054,710
pre-refunded6/1/99 @ 102
615,000 Alameda-Contra Costa Transit District Refunding Certificate of Baa/BBB- 616,292
ParticipationSeries 1989, 7.20% due 8/1/2000
130,000 Albany Public Facilities Financing Authority Lease Revenue, 6.60% due Baa1/NR 130,514
9/1/2000(Library Community Center Project) (ETM)
295,000 Alum Rock Union Elementary School District General Obligation Aaa/AAA 350,230
Refunding Bonds,8.00% due 9/1/2006 (Insured: FGIC)
380,000 Alum Rock Union Elementary School District General Obligation Aaa/AAA 458,626
Refunding Bonds,8.00% due 9/1/2007 (Insured: FGIC)
1,000,000 Berkeley Health Facility Revenue, 6.55% due 12/1/2022, pre-refunded A2/A+ 1,070,130
12/1/02 @102 (Alta Bates Medical Center Project)
1,805,000 California Educational Facilities Authority Revenue, 5.60% due Aa2/AA+ 1,856,695
10/1/2002 (U.S.C.Project)
160,000 California Educational Facilities Authority Revenue, 6.10% due Baa2/NR 161,790
6/1/2008 (KeckGraduate Institute Project)
170,000 California Educational Facilities Authority Revenue, 6.10% due Baa2/NR 171,619
6/1/2009 (KeckGraduate Institute Project)
500,000 California Educational Facilities Authority Revenue Series 1993, 5.15% A1/NR 510,950
due9/1/2003 (Santa Clara University Project)
500,000 California Health Facilities Financing Authority Revenue, 5.30% due NR/BBB+ 493,065
5/15/2004(Downey Community Hospital Project)
700,000 California Health Facilities Financing Revenue, 6.40% due 10/1/2005 A1/AA- 738,598
505,000 California HFA, 5.25% due 8/1/2000 (Marin General Hospital Project; Aaa/AAA 505,384
Insured:FSA)
670,000 California HFA Revenue Series 1985-B, 9.875% due 2/1/2017 Aa/AA- 706,790
1,000,000 California HFA Secured Revenue Series 1991, 6.65% due 9/1/2001 (Good Ba1/BBB 1,006,980
SamaritanHospital Project)
10,000 California HFA Single Family Mortgage Revenue Series 1982-A, 10.00% Aa/AA- 10,001
due 2/1/2002
1,220,000 California Infrastructure & Economic, 5.35% due 12/1/2009 (American NR/A 1,241,618
Center ForWine Food Arts Project)
2,650,000 California Pollution Control Solid Waste Authority, 6.75% due 7/1/2011 Aaa/NR 2,807,781
200,000 California Rural HMFA Single Family Mortgage Revenue, 5.65% due NR/AAA 200,652
6/1/2010
500,000 California State, 6.40% due 2/1/2006 (Insured: MBIA) Aaa/AAA 547,940
2,000,000 California State, 7.50% due 10/1/2007 (Insured: MBIA) Aaa/AAA 2,357,420
1,500,000 California State, 5.50% due 3/1/2012 Aaa/AAA 1,540,245
300,000 California State General Obligation, 6.75% due 5/1/2002 Aa3/AA- 312,819
500,000 California State General Obligation, 9.50% due 5/1/2003 Aa3/AA- 566,815
1,000,000 California State General Obligation, 9.50% due 2/1/2010 Aa3/AA- 1,341,150
5,000 California State Public Works High Technology, 7.375% due 4/1/2006 Aa3/A+ 5,389
850,000 California State University Revenue, 6.40% due 11/1/2002 crossover A1/A+ 872,559
refunded11/1/00 @102
67,881 California State Veterans General Obligation Amortizing Coupon NR/NR 70,659
M-COATES, 7.30%due 10/1/2001
1,000,000 California Statewide Community Development Authority Certificate NR/NR 1,056,960
ofParticipation, 5.90% due 4/1/2009
1,000,000 California Statewide Community Development Authority Certificates Aaa/AAA 988,680
ofParticipation, 1.35% due 1/1/2001 (Motion Picture and Televison Fund
Project;Insured: AMBAC)
275,000 California Statewide Community Development Authority Insured Health NR/AAA 279,612
FacilitiesRevenue Series 1992, Certificate of Participation, 6.40% due
5/1/2002 (EskatonProperties Incorporated Phase II Project) (ETM)
1,000,000 California Statewide Community Development Authority Insured Health NR/NR 1,046,320
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, 6.55% due Aa2/AA- 1,423,569
8/1/2001 (ETM)
1,000,000 Capistrano Unified School District Number 92-1 Community Facilities NR/NR 1,152,930
DistrictSpecial Tax, 7.10% due 9/1/2021
205,000 Central Valley School Districts Financing Authority, 0% due 2/1/2007 Aaa/AAA 149,900
(Insured:MBIA)
1,000,000 Coalinga Certificates Participation, 7.00% due 4/1/2010 NR/A- 1,024,920
660,000 Cupertino Public Facilities Corp. Certificates of Participation A1/A+ 660,020
Series 1992-B,5.60% due 7/1/2000
1,000,000 Duarte Certificates of Participation, 6.25% due 4/1/2023 (Hope Baa1/AAA 1,067,290
National MedicalCenter Project)
2,020,000 Escondido Multi Family Housing Revenue Refunding Bond Series 1997-A, NR/AAA 2,031,696
5.40% due1/1/2027 put 7/1/07 (Terrace Gardens Project; Collateralized:
FNMA)
315,000 Foothill De Anza Community College District Certificates of NR/A- 335,062
Participation, 7.35%due 3/1/2007
1,490,000 Glendale Hospital Revenue Series 1994, 7.625% due 1/1/2005 (Verdugo NR/A+ 1,587,714
HillsProject; Guarantee: Industrial Indemnity)
575,000 Hawaiian Gardens California Redevelopment Agency Refunding, 5.50% due NR/BBB+ 571,912
12/1/2008
1,000,000 Hawaiian Gardens Redevelopment Agency Project Tax Allocation, 0% due NR/BBB- 347,270
12/1/2016
70,000 Hayward Unified School District Certificate of Participation, 7.60% Baa/NR 70,508
due10/1/2000
605,000 Inglewood Certificates Participation, 6.70% due 8/1/2000 Baa3/BBB- 606,222
635,000 Inglewood Certificates Participation, 6.80% due 8/1/2001 Baa3/BBB- 651,999
690,000 Inglewood Certificates Participation, 6.90% due 8/1/2002 Baa3/BBB- 722,368
1,000,000 Irwindale Community Redevelopment Agency, 6.60% due 8/1/2018, Baa3/NR 1,096,420
pre-refunded8/1/05
165,000 Kern High School District, 7.00% due 8/1/2010 (ETM) A/NR 194,469
680,000 Kern High School District Series B, 9.00% due 8/1/2006 (ETM) Aaa/AAA 843,744
250,000 Los Angeles Certificates of Participation, 0% due 9/1/2003 A3/BBB+ 213,845
5,000 Los Angeles Convention & Exhibition Center, 9.00% due 12/1/2020, Aaa/AAA 6,101
pre-refunded12/1/05
500,000 Los Angeles County Certificates of Participation, 0% due 10/1/2001 Baa1/BBB+ 469,145
245,000 Los Angeles County Certificates of Participation, 0% due 10/1/2002 Baa1/BBB+ 217,239
700,000 Los Angeles County Certificates of Participation, 0% due 4/1/2003 Baa1/BBB+ 602,721
1,500,000 Los Angeles Unified School District Certificate of Participation, A2/A 1,547,655
6.30% due6/1/2002
500,000 Los Angeles Water and Power, 9.00% due 9/1/2004 Aa3/A+ 573,600
375,000 Marysville Hospital Revenue, 6.00% due 1/1/2004 (Freemont - Rideout Aaa/AAA 396,810
Health GroupProject; Insured: AMBAC)
485,000 Mayers Memorial Hospital District Health Facilities Revenue Insured NR/AA- 491,470
Series A,5.375% due 6/1/2009
460,000 Midpeninsula Regional Open Space District Certificate of NR/A 460,202
Participation, 4.80%due 9/1/2000
1,205,000 Moorpark Mobile Home Park Revenue Series A, 5.80% due 5/15/2010(Villa NR/A 1,218,448
DelawareArroyo Project)
835,000 Morgan Hill Unified School District Certificate of Participation A1/NR 835,292
Series 1993,5.00% due 8/1/2000
330,000 New Haven USD Certificates of Participation, 7.30% due 12/1/2001 NR/A- 333,587
355,000 New Haven USD Certificates of Participation, 7.30% due 12/1/2002 NR/A- 358,859
380,000 New Haven USD Certificates of Participation, 7.40% due 12/1/2003 NR/A- 384,286
410,000 New Haven USD Certificates of Participation, 7.40% due 12/1/2004 NR/A- 414,625
360,000 Northern California Power Agency Public Power Revenue, 5.65% due Baa2/A- 383,965
7/1/2007(Geothermal Project 3 A) (ETM)
340,000 Northern California Power Agency Public Power Revenue, 5.65% due Baa2/A- 350,292
7/1/2007
100,000 Oakland Redevelopment Agency, 7.40% due 5/1/2007 (Insured: AMBAC) Aaa/AAA 101,245
1,000,000 Orange County Airport Revenue Bond, 6.00% due 7/1/2007 (Insured: MBIA) Aaa/AAA 1,073,110
1,550,000 Orange County Local Transportation Authority Sales Tax Rev, 5.70% due Aa3/AA+ 1,602,452
2/15/2003
1,050,000 Orange County Local Transportation Authority Sales Tax Rev, 5.75% due Aa3/AA+ 1,092,010
2/15/2004
510,000 Orange County Local Transportation Authority Sales Tax Rev, 6.00% due Aa3/AA+ 548,138
2/15/2006
900,000 Orange County Local Transportation Authority Sales Tax Revenue, 5.50% Aa3/AA+ 906,984
due2/15/2001
1,445,000 Orange County Multi Family Housing Revenue, 5.60% due 10/1/2027, NR/AAA 1,449,191
mandatory put10/1/05 (Villa Santiago Rehab Project; FNMA:
Collateralized)
2,000,000 Orange County Recovery Certificates of Participation Series A, 5.50% Aaa/AAA 2,047,120
due7/1/2002 (Insured: MBIA)
1,100,000 Orange County Refunding Recovery, 5.10% due 6/1/2002 (Insured : MBIA) Aaa/AAA 1,117,424
2,000,000 Orange County Refunding Recovery, 6.50% due 6/1/2004 (Insured: MBIA) Aaa/AAA 2,151,840
2,000,000 Orange County Refunding Recovery, 6.50% due 6/1/2005 (Insured: MBIA) Aaa/AAA 2,182,040
915,000 Orange County Refunding Recovery A, 5.20% due 6/1/2003 (ETM) Aaa/AAA 937,838
1,085,000 Orange County Unrefunded Balance Refunding Recovery A, 5.20% due Aaa/AAA 1,111,181
6/1/2003(Insured: MBIA)
500,000 Oroville Hospital Revenue, 5.50% due 12/1/2007 Aaa/AAA 527,030
510,000 Paramount Unified School District Certificates of Participation, 0% Aaa/AAA 505,981
due 9/1/2014(Insured: FSA)
1,000,000 Piedmont Unified School District Series B, 0% due 8/1/2013 Aa3/NR 474,510
1,000,000 Pleasanton Unified School District Series B, 0% due 8/1/2016 (Insured: Aaa/AAA 395,530
MBIA)
580,000 Pomona Unified School District General Obligation, 5.35% due 2/1/2005 Aaa/AAA 602,637
(Insured:MBIA)
340,000 Pomona Unified School District General Obligation, 5.40% due 8/1/2005 Aaa/AAA 355,331
(Insured:MBIA)
320,000 Pomona Unified School District Refunding Series A, 6.10% due 2/1/2010 Aaa/AAA 353,200
(Insured:MBIA)
915,000 Redwood City Multi Family Housing Revenue Series 1985-B, 5.20% due NR/A 914,991
10/1/2008 put10/1/00 (Redwood Shores Apartments Projects; Insured:
Continental Casualty)
500,000 Richmond Joint Powers Financing Authority Revenue Series A, 5.20% due NR/A 509,660
5/15/2005
560,000 Sacramento County Sanitation District Financing Authority Revenue Aa3/AA 603,870
Series A,5.75% due 12/1/2009
2,000,000 Sacramento County Tax And Revenue Anticipation Notes, 5.00% due MIG1/SP1+ 2,014,900
10/4/2001
295,000 Sacramento Financing Authority Series 1991, 6.30% due 11/1/2002 A2/A+ 306,296
860,000 Sacramento Multi Family Housing Revenue, 5.875% due 2/1/2008 put NR/AAA 860,447
12/1/03(Fairways 1 Apartments Project; Collateralized: FNMA)
1,000,000 Sacramento Reg. Transportation Authority Certificate of Participation, A1/NR 1,011,270
6.25% due3/1/2001
2,000,000 Salinas Redevelopment Agency Tax Allocation Series A, 0% due 11/1/2022 Aaa/AAA 537,460
(Insured:FSA)
1,305,000 San Diego County Certificates Participation, 5.25% due 8/15/2006 Aaa/AAA 1,359,653
(Insured: MBIA)
500,000 San Diego County Certificates Participation Refunding, 6.50% A1/A+ 518,930
due8/1/2007(Interim Justice Facilities Project)
1,800,000 San Diego County Water Authority Certificate of Participation, 6.125% Aa3/AA- 1,862,478
due5/1/2003
1,000,000 San Francisco Bay Area Transit Bridge Toll Notes, 5.625% due 8/1/2006 NR/A 1,035,580
255,000 San Francisco City and County Redevelopment Lease Revenue, 0% due A1/A+ 254,967
7/1/2000
40,000 San Francisco City and County Refunding Series Sec. 8, 6.125% due Aaa/AAA 40,058
7/1/2002(Insured: MBIA/FHA)
1,440,000 San Joaquin County Certificates of Participation, 5.60% due 9/1/2000 A2/A- 1,443,125
(GeneralHospital Project)
895,000 San Joaquin County Certificates of Participation, 5.90% due 9/1/2003 A2/A- 933,977
(GeneralHospital Project)
2,200,000 San Jose Evergreen Community College District Series C, 0% due Aaa/AAA 1,214,466
9/1/2011(Insured: AMBAC)
2,000,000 Santa Ana Multi Family Housing Revenue Bonds Series B, 5.65% due NR/AAA 2,025,580
11/1/2021 put11/1/06 (FNMA Collateralized)
500,000 Santa Clara Certificates of Participation, 7.75% due 2/1/2002 Aaa/AAA 526,140
(Insured: MBIA)
315,000 Santa Monica Community College District Certificates of Participation, NR/A 322,963
7.65% due5/1/2001 (Rancho Corrales Project)
750,000 Snowline Joint Unified School District Certificates of Participation, NR/BBB 801,218
7.25% due4/1/2018, pre-refunded 4/01/02 @ 102
810,000 Sonoma County Certificates of Participation Public Works Improvement NR/A+ 810,640
Program,5.40% due 8/1/2000 (Integrated Waste Project)
950,000 Sonoma County Certificates of Participation Public Works Improvement NR/A+ 960,440
Program,5.80% due 8/1/2003 (Integrated Waste Project)
1,435,000 South Orange County Public Finance Authority Special Tax Revenue, Aaa/AAA 1,602,909
7.00% due9/1/2005 (Insured: MBIA)
190,000 Southern California Public Power Authority Power Project Revenue A2/A 194,108
UnrefundedBalance, 6.75% due 7/1/2001
995,000 Stanton Multi Family Housing Revenue Bond Series 1997, 5.625% due NR/AAA 996,702
8/1/2029 put8/1/09 (Continental Gardens Project; Collateralized: FNMA)
500,000 Sulphur Springs Union School District General Obligation, 5.70% due NR/A 504,505
3/1/2001
450,000 Sunline Transit Agency Certificate of Participation California Transit A/NR 458,613
FinanceCorporation Series A, 5.50% due 7/1/2002
900,000 Sweetwater Union High School District COP, 6.40% due 11/1/2001 Baa1/BBB+ 910,116
210,000 Temecula Community Services District Certificates of Participation NR/A 210,737
Series 1992,6.00% due 10/1/2000 (Community Recreation Center Project)
255,000 Torrence USD Certificates of Participation, 6.10% due 10/1/2000 A3/NR 256,035
1,000,000 Tracy Certificates of Participation, 7.00% due 10/1/2027, NR/NR 1,053,100
pre-refunded 10/1/01
1,600,000 University of California Regents Certificates of Participation Series Aaa/AAA 1,647,120
1996,5.45% due 6/1/2003 (Various Capital Projects; Insured: MBIA)
500,000 University of California Research Facilities Revenue, 8.00% due Aaa/AAA 506,120
11/1/2000(Insured: MBIA)
870,000 University of California Research Facilities Revenue, 5.25% due NR/A+ 881,310
9/1/2002
1,200,000 Upland Certificates Participation Water, 5.75% due 1/1/2007(San NR/A 1,229,376
AntonioCommunity Hospital Project)
800,000 Walnut Valley Unified School District, 9.00% due 8/1/2006 (ETM) Aaa/AAA 992,640
1,000,000 Walnut Valley Unified School District, 8.75% due 8/1/2010 (ETM) Aaa/AAA 1,322,480
245,000 Walnut Valley Unified School District Series A, 6.70% due 8/1/2005 Aaa/AAA 270,208
(Insured:MBIA)
250,000 Walnut Valley Unified School District Series A, 6.80% due 2/1/2007 Aaa/AAA 281,630
(Insured:MBIA)
250,000 Walnut Valley Unified School District Series A, 6.90% due 2/1/2008 Aaa/AAA 285,738
(Insured:MBIA)
100,000 Walnut Valley Unified School District Series A, 7.00% due 8/1/2008 Aaa/AAA 115,683
(Insured:MBIA)
450,000 Washington Township Health Care District Revenue, 5.00% due 7/1/2009 A2/NR 445,824
495,000 Yorba Linda Public Financing Authority Certificates of Participation, A3/NR 498,326
7.00% due11/1/2000 (Recycling Equipment Project)
650,000 Yuba City Unified School District Certificates of Participation, 6.70% Baa1/NR 672,120
due2/1/2013, pre-refunded 2/1/01 @ 102
TOTAL INVESTMENTS (Cost $102,468,541) $ 104,614,449
<FN>
+ Credit ratings are unaudited.
See notes to financial statements.
</FN>
</TABLE>
+Credit ratings are unaudited.
See notes to financial statements.
report OF Independent ACCOUNTANTS
To the Board of Directors and Shareholders of
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Thornburg Limited Term Municipal
Fund, Inc. - California Portfolio ("the Fund") at June 30, 2000, the results of
its operations, the changes in its net assets, and the financial highlights for
the year then ended, in conformity with accounting principles generally accepted
in the United States. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
financial statements in accordance with auditing standards generally accepted in
the United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of securities at June 30, 2000 by
correspondence with the custodian and brokers, provides a reasonable basis for
the opinion expressed above. The financial statements for the year ended June
30, 1999, including the financial highlights for each of the periods ended prior
to July 1, 1999, were audited by other independent accountants whose report
dated July 27, 1999 expressed an unqualified opinion on those financial
statements.
PricewaterhouseCoopers LLP
New York, New York
July 28, 2000
CHANGE IN Independent accountants
On August 13, 1999, McGladrey & Pullen, LLP (McGladrey) resigned as independent
auditors of the Fund pursuant to an agreement by PricewaterhouseCoopers LLP
(PwC) to acquire McGladrey's investment company practice. The McGladrey partners
and professionals serving the Fund at the time of the acquisition joined PwC.
The reports of McGladrey on the financial statements of the Fund during the past
two fiscal years contained no adverse opinion or disclaimer of opinion, and were
not qualified or modified as to uncertainty, audit scope or accounting
principles. In connection with its audits for the two most recent fiscal years
and through August 13, 1999, there were no disagreements with McGladrey on any
matter of accounting principle or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of McGladrey would have caused it to make reference to the subject
matter of disagreement in connection with its report. On December 6, 1999, the
Fund, with the approval of its Board of Directors and its Audit Committee,
engaged PwC as its independent auditor.
Index Comparisons
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,
2000. On June 30, 2000, the weighted average securities ratings of both the
Index and the Fund were AA and the weighted average portfolio maturities of the
Index and the Fund were 5.0 years and 4.4 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 6.30.00)
One year: 1.55%
Five years: 4.09%
Ten years: 5.17%
Since inception (2.19.87) 5.47%
Class C Shares
Average Annual Total Returns (periods ending 6.30.00)
One year: 2.73%
Five years: 3.98%
From inception (9.1.94): 4.10%
Investment Manager
Thornburg Investment Management, Inc.
119 East Marcy Street
Santa Fe, New Mexico 87501
800.847.0200
Principal Underwriter
Thornburg Securities Corporation
119 East Marcy Street
Santa Fe, New Mexico 87501
800.847.0200
