As Filed with the Securities and Exchange Commission
February 26, 2004
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 1 Post-Effective Amendment No. ___
THORNBURG INVESTMENT TRUST
- ---------------------------
(Exact Name of Registrant as Specified in Charter)
119 East Marcy Street, Suite 202, Santa Fe, NM 87501
- ---------------------------------------------- ---------
(Address of Principal Executive Office) (Zip Code)
Area Code and Telephone Number: (505) 984-0200
--------------
Garrett Thornburg
119 East Marcy Street, Suite 202
Santa Fe, New Mexico 87501
- --------------------------------
(Name and Address of Agent for Service)
Charles W.N. Thompson, Jr.
White, Koch, Kelly & McCarthy, P.A.
Post Office Box 787
Santa Fe, New Mexico 87504-0787
- --------------------------------
(Copies of all Correspondence)
Approximate date of proposed public offering: As soon as possible
after this Registration Statement becomes effective.
The Registrant has registered an indefinite amount of securities under
the Securities Act of 1933 pursuant to Rule 24f under the Investment
Company Act of 1940. Accordingly, no fee is payable herewith. Registrant
filed the notice required by Rule 24f-2 with respect to its most recent
fiscal year on December 12, 2003.
- ---------------------------------------------------------------------------
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrant files a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement becomes effective on such date as the Commission, acting pursuant
to Section 8(a), may determine.
EXPLANATORY NOTE
The Registrant is filing as portions of this Registration Statement four
combined Prospectus/Proxy Statements, which relate respectively to
different share classes of two of its newly formed, separate series,
THORNBURG LIMITED TERM MUNICIPAL FUND and THORNBURG LIMITED TERM CALIFORNIA
MUNICIPAL FUND. Each of these series was organized to acquire in a
reorganization all of the assets, respectively, of the two existing series
of Thornburg Limited Term Municipal Fund, Inc., THORNBURG LIMITED TERM
MUNICIPAL FUND NATIONAL PORTFOLIO and THORNBURG LIMITED TERM MUNICIPAL FUND
CALIFORNIA PORTFOLIO. Accordingly, this Registration Statement is
organized as follows:
- Letter to Shareholders of Thornburg Limited Term Municipal Fund
National Portfolio.
- Letter to Shareholders of Thornburg Limited Term Municipal Fund
California Portfolio.
- Supplemental Letter to Shareholders of Thornburg Limited Term
Municipal Fund National Portfolio.
- Supplementsl Letter to Shareholders of Thornburg Limited Term
Municipal Fund California Portfolio.
- Notice of Special Meeting of Shareholders of Thornburg Limited Term
Municipal Fund National Portfolio.
- Notice of Special Meeting of Shareholders of Thornburg Limited Term
Municipal Fund California Portfolio.
- Form of Proxy Card (Thornburg Limited Term Municipal Fund National
Portfolio)
- Form of Proxy Card (Thornburg Limited Term Municipal Fund
California Portfolio)
- Prospectus/Proxy Statement (Class A and Class C Shares) respecting
the proposed acquisition of substantially all of the assets of
Thornburg Limited Term Municipal Fund National Portfolio by
Thornburg Limited Term Municipal Fund.
- Prospectus/Proxy Statement (Institutional Class Shares) respecting
the proposed acquisition of substantially all of the assets of
Thornburg Limited Term Municipal Fund National Portfolio by
Thornburg Limited Term Municipal Fund.
- Prospectus/Proxy Statement (Class A and Class C Shares) respecting
the proposed acquisition of substantially all of the assets of
Thornburg Limited Term Municipal Fund California Portfolio by
Thornburg California Limited Term Municipal Fund.
- Prospectus/Proxy Statement (Institutional Class Shares) respecting
the proposed acquisition of substantially all of the assets of
Thornburg Limited Term Municipal Fund California Portfolio by
Thornburg California Limited Term Municipal Fund.
- Statement of Additional Information (Class A and Class C Shares)
relating to the acquisition of the assets of Thornburg Limited Term
Municipal Fund National Portfolio.
- Statement of Additional Information (Institutional Class Shares)
relating to the acquisition of the assets of Thornburg Limited Term
Municipal Fund National Portfolio.
- Statement of Additional Information (Class A and Class C Shares)
relating to the acquisition of the assets of Thornburg Limited Term
Municipal Fund California Portfolio.
- Statement of Additional Information (Institutional Class Shares)
relating to the acquisition of the assets of Thornburg Limited Term
Municipal Fund California Portfolio.
- Part C Information.
- Exhibits
THORNBURG LIMITED TERM MUNICIPAL FUND, INC.
(Thornburg Limited Term Municipal Fund National Portfolio)
119 East Marcy Street
Santa Fe, New Mexico 87501
Date: _______________
Dear Shareholder:
A special meeting of shareholders of Thornburg Limited Term Municipal
Fund National Portfolio (the "Fund"), a series of Thornburg Limited Term
Municipal Fund, Inc. has been called for April __, 2004, at which time the
shareholders of the Fund will be asked to consider a proposal for
reorganizing the Fund into Thornburg Limited Term Municipal Fund (the "New
Fund"), a newly organized Fund series of Thornburg Investment Trust which
has investment objectives and policies identical to those of the Fund. The
proposal was reviewed and unanimously approved by the Board of Directors of
Thornburg Limited Term Municipal Fund, Inc., on behalf of the Fund as being
in the best interests of the Fund and its shareholders.
As a result of the proposed transaction, the New Fund will acquire all
of the assets of the Fund, and you will become a shareholder of the New
Fund. As a shareholder of the Fund, you will receive shares of the same
class of the New Fund as the class of the Fund you own at the time of the
reorganization. The net asset value of the shares of the New Fund you
receive will be the same as the net asset value of your shares in the Fund.
No sales charge will be imposed on the transaction, and the closing of the
transaction will be conditioned upon receiving an opinion of counsel that
the reorganization will qualify as a tax-free reorganization for federal
income tax purposes. WE STRONGLY URGE YOU TO REVIEW, COMPLETE AND RETURN
YOUR PROXY AS SOON AS POSSIBLE.
In considering these matters, you should note:
- The investment adviser and the individuals who currently manage
the Fund will not change as a result of the reorganization.
- The investment goals and strategies of the New Fund will be
identical to the investment goals and strategies of the Fund.
- You will receive shares in the New Fund of the same value and
class as your shares in the Fund.
- Expenses of the New Fund will not increase as a result of the
reorganization.
- The Board of Directors of the Fund believe the reorganization is
in the best interests of the Fund's shareholders.
Detailed information about the proposed transaction and the reasons
for it are contained in the enclosed materials. Please exercise your right
to vote. IT IS VERY IMPORTANT THAT YOU VOTE AND THAT YOUR VOTING
INSTRUCTIONS BE RECEIVED BY NO LATER THAN _____________, 2004.
Remember, your vote is very important. To vote, you may use any one
of the following methods:
- By Mail. Please complete, date and sign the enclosed proxy card
and mail it in the enclosed, postage-paid envelope.
- By Telephone. Have your proxy card available. Call the toll-free
number listed on the proxy card. Follow the recorded instructions
and have your control number from the proxy card available.
- By Internet. Have your proxy card available. Go to the website
listed on the proxy card. Follow the instructions on the website
and have your control number from the proxy card available.
NOTE: You may receive more than one proxy package if you hold shares
of the Fund in more than one account. You must return separate proxy cards
for separate holdings.
Sincerely,
__________________________________
Chairman of the Board of Directors
Thornburg Limited Term Municipal
Fund, Inc.
THORNBURG LIMITED TERM MUNICIPAL FUND, INC.
(Thornburg Limited Term Municipal Fund California Portfolio)
119 East Marcy Street
Santa Fe, New Mexico 87501
Date: _________________
Dear Shareholder:
A special meeting of shareholders of Thornburg Limited Term Municipal
Fund California Portfolio (the "Fund"), a series of Thornburg Limited Term
Municipal Fund, Inc. has been called for April ___, 2004, at which time the
shareholders of the Fund will be asked to consider a proposal for
reorganizing the Fund into Thornburg California Limited Term Municipal Fund
(the "New Fund"), a newly organized Fund series of Thornburg Investment
Trust which has investment objectives and policies identical to those of
the Fund. The proposal was reviewed and unanimously approved by the Board
of Directors of Thornburg Limited Term Municipal Fund, Inc., on behalf of
the Fund as being in the best interests of the Fund and its shareholders.
As a result of the proposed transaction, the New Fund will acquire all
of the assets of the Fund, and you will become a shareholder of the New
Fund. As a shareholder of the Fund, you will receive shares of the same
class of the New Fund as the class of the Fund you own at the time of the
reorganization. The net asset value of the shares of the New Fund you
receive will be the same as the net asset value of your shares in the Fund.
No sales charge will be imposed on the transaction, and the closing of the
transaction will be conditioned upon receiving an opinion of counsel that
the reorganization will qualify as a tax-free reorganization for federal
income tax purposes. WE STRONGLY URGE YOU TO REVIEW, COMPLETE AND RETURN
YOUR PROXY AS SOON AS POSSIBLE.
In considering these matters, you should note:
- The investment adviser and the individuals who currently manage the
Fund will not change as a result of the reorganization.
- The investment goals and strategies of the New Fund will be
identical to the investment goals and strategies of the Fund.
- You will receive shares in the New Fund of the same value and class
as your shares in the Fund.
- Expenses of the New Fund will not increase as a result of the
reorganization.
- The Board of Directors of the Fund believe the reorganization is in
the best interests of the Fund's shareholders.
Detailed information about the proposed transaction and the reasons
for it are contained in the enclosed materials. Please exercise your right
to vote. IT IS VERY IMPORTANT THAT YOU VOTE AND THAT YOUR VOTING
INSTRUCTIONS BE RECEIVED BY NO LATER THAN _________________, 2004.
Remember, your vote is very important, no matter how large or small
your Fund holdings. To vote, you may use any one of the following methods:
- By Mail. Please complete, date and sign the enclosed proxy card
and mail it in the enclosed, postage-paid envelope.
- By Telephone. Have your proxy card available. Call the toll-free
number listed on the proxy card. Follow the recorded instructions
and have your control number from the proxy card available.
- By Internet. Have your proxy card available. Go to the website
listed on the proxy card. Follow the instructions on the website
and have your control number from the proxy card available.
NOTE: You may receive more than one proxy package if you hold shares
of the Fund in more than one account. You must return separate proxy cards
for separate holdings.
Sincerely,
----------------------------------
Chairman of the Board of Directors
Thornburg Limited Term Municipal
Fund, Inc.
<THORNBURG LTMF LETTERHEAD>
THE FOLLOWING IS IMPORTANT INFORMATION TO HELP YOU UNDERSTAND THE
PROPOSAL ON WHICH YOU ARE ASKED TO VOTE. PLEASE READ THE ENTIRE
PROSPECTUS/PROXY STATEMENT PROVIDED TO YOU.
WHY IS A SHAREHOLDER MEETING BEING HELD?
Shareholders are being asked to vote on a reorganization in which all
of the assets of your Fund will be acquired by Thornburg Limited Term
Municipal Fund (the "New Fund"), a newly organized fund series with
identical investment goals and strategies.
HOW WILL THIS REORGANIZATION AFFECT CURRENT SHAREHOLDERS?
If the reorganization is approved by shareholders, shareholders of
your Fund will receive shares of the New Fund having the same value as
their Fund shares. You will automatically be a shareholder in the New
Fund.
WHY IS THE REORGANIZATION BEING RECOMMENDED?
The reorganization is intended to simplify legal and regulatory
compliance functions, and to reduce the costs of performing those
functions. Currently, there are 12 Thornburg mutual funds, two of which
are funds of Thornburg Limited Term Municipal Fund, Inc., and ten of which
are funds of Thornburg Investment Trust, a separate investment company.
The reorganization will combine the two funds of Thornburg Limited Term
Municipal Fund, Inc. with the ten funds of Thornburg Investment Trust, so
that all 12 funds are combined within only one investment company. There
will be no change in the investment objective or polices of your Fund as a
result of the reorganization, and your investment manager and the
individuals managing your Fund's investments will not change because of the
reorganization.
WILL SHAREHOLDERS HAVE TO PAY ANY SALES LOAD, COMMISSION OR OTHER
TRANSACTION FEE IN CONNECTION WITH THE REORGANIZATION?
No, there are no sales loads, commissions or other fees in connection
with the transaction.
WHO WILL PROVIDE INVESTMENT MANAGEMENT AND OTHER SERVICES TO MY FUND
AFTER THE REORGANIZATION?
Thornburg Investment Management, Inc. ("TIMI") , which currently
manages your Fund, will continue to provide those services after the
reorganization, under a contract which is substantially identical to the
current contract. Similarly, transfer agent and custodial services will
continue to be provided by the same firms.
WILL THE ADVISORY FEES AND OTHER FEES CHANGE?
No, the investment advisory fee rate rates, the fee rates for
administrative services provided by TIMI, and any Rule 12b-1 fees charged
to your class of shares will not change as a result of the reorganization.
WHICH CLASS OF SHARES WILL I RECEIVE?
You will receive the same class of shares you hold at the time of the
reorganization.
WHAT WILL EXISTING SHAREHOLDERS DO TO OPEN A NEW THORNBURG INVESTMENT
TRUST ACCOUNT?
At the time the reorganization is completed, a shareholder's interest
in the Fund will automatically be transferred to the New Fund and a written
confirmation will be sent to the shareholder.
WILL ALL OF MY CURRENT ACCOUNT PRIVILEGES, SUCH AS TELEPHONE
REDEMPTION, SYSTEMATIC PURCHASES, AND LETTERS OF INTENT, TRANSFER WITH MY
ACCOUNT IN THE NEW FUND?
Yes. All of the features you have selected for your current account
will be available with your new account.
WILL SHAREHOLDERS HAVE TO PAY ANY FEDERAL INCOME TAXES AS A RESULT OF
THIS REORGANIZATION?
The reorganization is intended to qualify as a tax free
"reorganization" within the meeting of the Internal Revenue Code. If the
reorganization so qualifies, in general, a shareholder will recognize no
gain or loss upon the receipt of the shares of the New Fund in connection
with the reorganization.
WHAT IF A SHAREHOLDER REDEEMS SHARES OF THE FUND BEFORE THE
REORGANIZATION TAKES PLACE?
A shareholder may choose to redeem or exchange shares of the Fund
before the reorganization takes place. If so, the redemption or exchange
will be treated as a normal redemption or exchange of shares and generally
will be a taxable transaction unless the account is not subject to taxes.
HOW DO I VOTE?
Shareholders of the Fund are asked to vote at the Fund's Special
Meeting of Shareholders which is scheduled for _________, 2004. Your vote
is very important. You have the flexibility of voting by mailing in your
proxy card, by telephone, or by Internet.
WHERE SHOULD SHAREHOLDERS CALL FOR INFORMATION?
Shareholders who want to learn more about Thornburg Funds should call
800-847-0200 or visit Thornburg's website at www.thornburg.com.
<THORNBURG LTMF LETTERHEAD>
THE FOLLOWING IS IMPORTANT INFORMATION TO HELP YOU UNDERSTAND THE
PROPOSAL ON WHICH YOU ARE ASKED TO VOTE. PLEASE READ THE ENTIRE
PROSPECTUS/PROXY STATEMENT PROVIDED TO YOU.
WHY IS A SHAREHOLDER MEETING BEING HELD?
Shareholders are being asked to vote on a reorganization in which all
of the assets of your Fund will be acquired by Thornburg California Limited
Term Municipal Fund (the "New Fund"), a newly organized fund series with
identical investment goals and strategies.
HOW WILL THIS REORGANIZATION AFFECT CURRENT SHAREHOLDERS?
If the reorganization is approved by shareholders, shareholders of
your Fund will receive shares of the New Fund having the same value as
their Fund shares. You will automatically be a shareholder in the New
Fund.
WHY IS THE REORGANIZATION BEING RECOMMENDED?
The reorganization is intended to simplify legal and regulatory
compliance functions, and to reduce the costs of performing those
functions. Currently, there are 12 Thornburg mutual funds, two of which
are funds of Thornburg Limited Term Municipal Fund, Inc., and ten of which
are funds of Thornburg Investment Trust, a separate investment company.
The reorganization will combine the two funds of Thornburg Limited Term
Municipal Fund, Inc. with the ten funds of Thornburg Investment Trust, so
that all 12 funds are combined within only one investment company. There
will be no change in the investment objective or polices of your Fund as a
result of the reorganization, and your investment manager and the
individuals managing your Fund's investments will not change because of the
reorganization.
WILL SHAREHOLDERS HAVE TO PAY ANY SALES LOAD, COMMISSION OR OTHER
TRANSACTION FEE IN CONNECTION WITH THE REORGANIZATION?
No, there are no sales loads, commissions or other fees in connection
with the transaction.
WHO WILL PROVIDE INVESTMENT MANAGEMENT AND OTHER SERVICES TO MY FUND
AFTER THE REORGANIZATION?
Thornburg Investment Management, Inc. ("TIMI) , which currently manages
your Fund, will continue to provide those services after the
reorganization, under a contract which is substantially identical to the
current contract. Similarly, transfer agent and custodial services will
continue to be provided by the same firms.
WILL THE ADVISORY FEES AND OTHER FEES CHANGE?
No, the investment advisory fee rate rates, the fee rates for
administrative services provided by TIMI and any Rule 12b-1 fees charged to
your class of shares will not change as a result of the reorganization.
WHICH CLASS OF SHARES WILL I RECEIVE?
You will receive the same class of shares you hold at the time of the
reorganization.
WHAT WILL EXISTING SHAREHOLDERS DO TO OPEN A NEW THORNBURG INVESTMENT
TRUST ACCOUNT?
At the time the reorganization is completed, a shareholder's interest
in the Fund will automatically be transferred to the New Fund and a written
confirmation will be sent to the shareholder.
WILL ALL OF MY CURRENT ACCOUNT PRIVILEGES, SUCH AS TELEPHONE
REDEMPTION, SYSTEMATIC PURCHASES, AND LETTERS OF INTENT, TRANSFER WITH MY
ACCOUNT IN THE NEW FUND?
Yes. All of the features you have selected for your current account
will be available with your new account.
WILL SHAREHOLDERS HAVE TO PAY ANY FEDERAL INCOME TAXES AS A RESULT OF
THIS REORGANIZATION?
The reorganization is intended to qualify as a tax free
"reorganization" within the meeting of the Internal Revenue Code. If the
reorganization so qualifies, in general, a shareholder will recognize no
gain or loss upon the receipt of the shares of the New Fund in connection
with the reorganization.
WHAT IF A SHAREHOLDER REDEEMS SHARES OF THE FUND BEFORE THE
REORGANIZATION TAKES PLACE?
A shareholder may choose to redeem or exchange shares of the Fund
before the reorganization takes place. If so, the redemption or exchange
will be treated as a normal redemption or exchange of shares and generally
will be a taxable transaction unless the account is not subject to taxes.
HOW DO I VOTE?
Shareholders of the Fund are asked to vote at the Fund's Special
Meeting of Shareholders which is scheduled for _________, 2004. Your vote
is very important. You have the flexibility of voting by mailing in your
proxy card, by telephone, or by Internet.
WHERE SHOULD SHAREHOLDERS CALL FOR INFORMATION?
Shareholders who want to learn more about Thornburg Funds should call
800-847-0200 or visit Thornburg's website at www.thornburg.com.
THORNBURG LIMITED TERM MUNICIPAL FUND, INC.
Thornburg Limited Term Municipal Fund National Portfolio
119 East Marcy Street
Santa Fe, New Mexico 87501
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL ___, 2004
To the Shareholders of
Thornburg Limited Term Municipal Fund National Portfolio
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of Thornburg Limited Term Municipal Fund National Portfolio (the
"Fund"), a series of Thornburg Limited Term Municipal Fund, Inc., a
Maryland corporation ("Thornburg LTMF") will be held at the offices of the
Fund, 119 East Marcy Street, Santa Fe, New Mexico 87501 in April ___, 2004,
at 10:00 a.m. Mountain Time, for the following purposes:
1. To consider and act upon an Agreement and Plan of
Reorganization providing for: the transfer of all of the assets of the Fund
to Thornburg Limited Term Municipal Fund (the "New Fund"), a separate
series of Thornburg Investment Trust, in exchange solely for voting shares
of the New Fund, and for the distribution of those shares to the
shareholders of the Fund and the subsequent dissolution of the Fund; and
2. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on
_____________, 2004 as the record date for shareholders entitled to notice
of and to vote at the meeting.
A complete list of the shareholders of the Fund entitled to vote at
the Meeting will be available and open to the examination of any
shareholder of the Fund for any purpose germane to the Meeting during
ordinary business hours at the Fund's offices, 119 East Marcy Street, Santa
Fe, New Mexico 87501.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE
REQUESTED TO DATE AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT
PROMPTLY IN THE ENVELOPE PROVIDED FOR THAT PURPOSE.
By Order of the Board of Directors
Dawn B. Fischer
-----------------------------------
Secretary
YOUR PROMPT ATTENTION TO THE ENCLOSED FORM OF PROXY WILL HELP TO AVOID
THE EXPENSE OF FURTHER SOLICITATION.
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of
assistance to you and may help avoid the time and expense involved in
validating your vote if you fail to sign your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Sign your name exactly as it appears in
the registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the
party signing should conform exactly to a name shown in the registration on
the proxy card.
3. ALL OTHER ACCOUNTS: The capacity of the individual signing the
proxy card should be indicated unless it is reflected in the form of
registration.
THORNBURG LIMITED TERM MUNICIPAL FUND, INC.
Thornburg Limited Term Municipal Fund California Portfolio
119 East Marcy Street
Santa Fe, New Mexico 87501
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL ___, 2004
To the Shareholders of
Thornburg Limited Term Municipal Fund California Portfolio
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of Thornburg Limited Term Municipal Fund California Portfolio
(the "Fund"), a series of Thornburg Limited Term Municipal Fund, Inc., a
Maryland corporation ("Thornburg LTMF") will be held at the offices of the
Fund, 119 East Marcy Street, Santa Fe, New Mexico 87501 in April ___, 2004,
at 10:00 a.m. Mountain Time, for the following purposes:
1. To consider and act upon an Agreement and Plan of
Reorganization providing for: the transfer of all of the assets of the Fund
to Thornburg California Limited Term Municipal Fund (the "New Fund"), a
separate series of Thornburg Investment Trust, in exchange solely for
voting shares of the New Fund, and for the distribution of those shares to
the shareholders of the Fund and the subsequent dissolution of the Fund;
and
2. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on
_____________, 2004 as the record date for shareholders entitled to notice
of and to vote at the meeting.
A complete list of the shareholders of the Fund entitled to vote at
the Meeting will be available and open to the examination of any
shareholder of the Fund for any purpose germane to the Meeting during
ordinary business hours at the Fund's offices, 119 East Marcy Street, Santa
Fe, New Mexico 87501.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE
REQUESTED TO DATE AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT
PROMPTLY IN THE ENVELOPE PROVIDED FOR THAT PURPOSE.
By Order of the Board of Directors
Dawn B. Fischer
-----------------------------------
Secretary
YOUR PROMPT ATTENTION TO THE ENCLOSED FORM OF PROXY WILL HELP TO AVOID
THE EXPENSE OF FURTHER SOLICITATION.
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of
assistance to you and may help avoid the time and expense involved in
validating your vote if you fail to sign your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Sign your name exactly as it appears in
the registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the
party signing should conform exactly to a name shown in the registration on
the proxy card.
3. ALL OTHER ACCOUNTS: The capacity of the individual signing the
proxy card should be indicated unless it is reflected in the form of
registration.
Control Number: _____________
THORNBURG LIMITED TERM MUNICIPAL FUND, INC.
(Thornburg Limited Term Municipal Fund National Portfolio)
PROXY FOR
SPECIAL MEETING OF SHAREHOLDERS THIS PROXY IS SOLICITED
April __, 2004 BY THE BOARD OF DIRECTORS
The undersigned shareholder of THORNBURG LIMITED TERM MUNICIPAL FUND
NATIONAL PORTFOLIO (the "Fund"), a series of Thornburg Limited Term
Municipal Fund, Inc., a Maryland corporation, hereby appoints Dawn B.
Fischer, George T. Strickland and Leigh Moiola and each of them, each with
full power of substitution, as proxies to represent the undersigned at the
Special Meeting of Shareholders of the Fund, which shall be held on April
__, 2004 at 10:00 a.m. prevailing Mountain Time at the offices of Thornburg
Investment Management, Inc., 119 East Marcy Street, Santa Fe, New Mexico
87501, and at any and all adjournments thereof, and at the meeting to vote
all shares of the Fund which the undersigned would be entitled to vote,
with all powers the undersigned would possess if personally present, in
accordance with the instructions below:
Your vote is important, no matter how many shares you own please vote
today.
1. FOR ____ AGAINST _____ ABSTAIN _____ as to the proposal to approve
the Agreement and Plan of Reorganization dated December ___, 2003 between
Thornburg Limited Term Municipal Fund, Inc., on behalf of the Fund, and
Thornburg Investment Trust, on behalf of Thornburg Limited Term Municipal
Fund (the "New Fund"), and the proposed transaction whereby substantially
all of the assets of the Fund will be transferred to the New Fund, in
exchange for shares of the New Fund; immediately thereafter, the shares of
the New Fund will be distributed to the shareholders of the Fund in
complete liquidation of the Fund; which will thereafter be dissolved;
2. In their discretion, upon such other business as may properly come
before the Meeting or any adjournment thereof.
If more than one of the proxies, or their substitutes, are present at the
meeting or at any adjournment thereof, they jointly (or, if only one in
present and voting, then that one) shall have authority and may exercise
all of the powers granted hereby. This proxy, when properly executed, will
be voted in accordance with the instructions marked hereon by the
undersigned; in the absence of instructions, this proxy will be voted for
the proposal.
If you plan to attend the Meeting, please call 1-800-847-0200.
IMPORTANT: Please insert the date of signing.
Date: ___________________ 2004
_______________________________________
Signature of Shareholder
________________________________________
Signature of Shareholder (if held jointly)
This proxy card should be signed exactly as your name(s) appear hereon. If
an attorney, executor, guardian or in some representative capacity or as an
officer of a corporation or other entity, please add title as such. By
signing this proxy card, receipt of the Notice of Special Meeting of
Shareholders and Prospectus/Proxy Statement is acknowledged.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES.
Control Number: _____________
THORNBURG LIMITED TERM MUNICIPAL FUND, INC.
(Thornburg Limited Term Municipal Fund California Portfolio)
PROXY FOR SPECIAL
MEETING OF SHAREHOLDERS THIS PROXY IS SOLICITED BY THE
BOARD OF DIRECTORS
April ___, 2004
The undersigned shareholder of THORNBURG LIMITED TERM MUNICIPAL FUND
CALIFORNIA PORTFOLIO (the "Fund"), a series of Thornburg Limited Term
Municipal Fund, Inc., a Maryland corporation, hereby appoints Dawn B.
Fischer, George T. Strickland and Leigh Moiola and each of them, each with
full power of substitution, as proxies to represent the undersigned at the
Special Meeting of Shareholders of the Fund, which shall be held on April
___, 2004 at 11:00 a.m. prevailing Mountain Time at the offices of
Thornburg Investment Management, Inc., 119 East Marcy Street, Santa Fe, New
Mexico 87501, and at any and all adjournments thereof, and at the meeting
to vote all shares of the Fund which the undersigned would be entitled to
vote, with all powers the undersigned would possess if personally present,
in accordance with the instructions below:
Your vote is important, no matter how many shares you own. Please
vote todya.
1. FOR ___ AGAINST ___ ABSTAIN ___ as to the proposal to approve the
Agreement and Plan of Reorganization dated December __, 2003 between
Thornburg Limited Term Municipal Fund, Inc., on behalf of the Fund, and
Thornburg Investment Trust, on behalf of Thornburg California Limited Term
Municipal Fund (the "New Fund"), and the proposed transaction whereby
substantially all of the assets of the Fund will be transferred to the New
Fund, in exchange for shares of the New Fund; immediately thereafter, the
shares of the New Fund will be distributed to the shareholders of the Fund
in complete liquidation of the Fund; which will thereafter be dissolved;
2. In their discretion, upon such other business as may properly come
before the Meeting or any adjournment thereof.
If more than one of the proxies, or their substitutes, are present at the
meeting or at any adjournment thereof, they jointly (or, if only one is
present and voting, then that one) shall have authority and may exercise
all of the powers granted hereby. This proxy, when properly executed, will
be voted in accordance with the instructions marked hereon by the
undersigned; in the absence of instructions, this proxy will be voted for
the proposal.
If you plan to attend the meeting, please call 1-800-847-0200.
IMPORTANT: Please insert the date of signing.
Date: ____________, 2004
__________________________________________
Signature of Shareholder
__________________________________________
Signature of Shareholder (if held jointly)
This proxy card should be signed exactly as your name(s) appear hereon. If
an attorney, executor, guardian or in some representative capacity or as an
officer of a corporation or other entity, please add title as such. By
signing this proxy card, receipt of the Notice of Special Meeting of
Shareholders and Prospectus/Proxy Statement is acknowledged.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES.
PROSPECTUS AND PROXY STATEMENT
(for Holders of Class A and Class C Shares)
RELATING TO THE ACQUISITION OF THE ASSETS OF
THORNBURG LIMITED TERM MUNICIPAL FUND NATIONAL PORTFOLIO
a separate series of
THORNBURG LIMITED TERM MUNICIPAL FUND, INC.
119 East Marcy Street
Santa Fe, New Mexico 87501
(800) 847-0200
BY AND IN EXCHANGE FOR SHARES OF
THORNBURG LIMITED TERM MUNICIPAL FUND
a separate series of
THORNBURG INVESTMENT TRUST
119 East Marcy Street
Santa Fe, New Mexico 87501
(800) 847-0200
This Prospectus/Proxy Statement relates to the proposed transfer of
substantially all of the assets of Thornburg Limited Term Municipal Fund
National Portfolio (the "Fund") in exchange solely for shares of Thornburg
Limited Term Municipal Fund (the "New Fund"). The Fund and the New Fund
each have the same investment objective, which is to seek as high a level
of interest income which is exempt from federal income taxes as is
consistent, in the view of the Funds' investment adviser, with the
preservation of capital. As a result of the proposed transaction, each
shareholder of the Fund will receive shares of the New Fund equal in value
at the date of the exchange to the value of the shareholder's shares of the
Fund. The terms and conditions of these transactions are more fully
described in this Prospectus/Proxy Statement and in the Agreement and Plan
of Reorganization attached hereto as Exhibit A.
This Prospectus/Proxy Statement, which should be retained for future
reference, sets forth concisely the information about the New Fund that a
prospective investor should know before investing. This Prospectus/Proxy
Statement is accompanied by the New Fund's "Thornburg Limited Term
Municipal Funds" Prospectus for Class A and C shares dated __________, 2004
(the "New Fund Prospectus"), which contains information about the New Fund
and which is incorporated by reference into this Prospectus/Proxy
Statement. A Statement of Additional Information dated ________________,
2004 (the "Statement of Additional Information") containing additional
information about the New Fund has been filed with the Securities and
Exchange Commission and is incorporated by reference into this
Prospectus/Proxy Statement. A copy of the New Fund Prospectus and the
Statement of Additional Information may be obtained without charge by
writing to Thornburg at its address noted above or by calling 1-800-847-
0200. Copies of the Fund's current "Thornburg Funds" prospectus for Class
A and Class C shares dated February 1, 2004, and its Statement of
Additional Information for Class A and Class C shares dated February 1,
2004 are incorporated by reference into this Prospectus/Proxy statement,
and may be obtained without charge by writing to Thornburg at the address
shown above or by calling 1-800-847-0200.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROSPECTUS AND
PROXY STATEMENT AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY
REFERENCE AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THORNBURG INVESTMENT
TRUST OR THORNBURG LIMITED TERM MUNICIPAL FUND, INC.
INVESTMENTS IN THORNBURG LIMITED TERM MUNICIPAL FUND (THE "NEW FUND")
ARE SUBJECT TO RISK, INCLUDING POSSIBLE RISK OF PRINCIPAL, AND WILL
FLUCTUATE IN VALUE. SHARES OF THE NEW FUND ARE NOT BANK DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, AND ARE NOT INSURED BY, ANY
BANK, FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR
ANY GOVERNMENTAL AGENCY.
The date of this Prospectus/Proxy Statement is __________, 2004.
TABLE OF CONTENTS
Summary of the Proposed Reorganization
Investment Adviser and Distributor of the Fund and the New Fund
Investment Goals, Policies and Restrictions of the Fund and the New Fund
Principal Risk Factors
Fees and Expenses of the Fund and the New Fund
Purchase, Redemption and Exchange Procedures for the Fund and the New Fund
Dividend Policies of the Fund and the New Fund
Comparative Information on Shareholder Rights
Additional Information About Shareholder Accounts
Information About the Reorganization
Capitalization
Additional Information About the Fund and the New Fund
Voting Information
Exhibit A: Agreement and Plan of Reorganization
For detailed information about the New Fund, see the Thornburg Limited Term
Municipal Funds Prospectus dated __________ 2004 (the "New Fund
Prospectus"), which may be obtained without charge by writing Thornburg at
the address above or by calling 1-800-847-0200.
SUMMARY OF THE PROPOSED REORGANIZATION
The Board of Directors of Thornburg Limited Term Municipal Fund, Inc.
("Thornburg LTMF"), including the Directors who are not "interested
persons" of Thornburg LTMF (the "Independent Directors"), as defined in the
Investment Company Act of 1940, have reviewed and unanimously approved an
agreement and plan of reorganization (the "Agreement") between Thornburg
LTMF on behalf of Thornburg Limited Term Municipal Fund National Portfolio
(the "Fund") and Thornburg Investment Trust ("Thornburg Trust") on behalf
of Thornburg Limited Term Municipal Fund (the "New Fund") providing for the
acquisition of substantially all of the assets of the Fund, a separate fund
(sometimes referred to as a "series") of Thornburg LTMF, by the New Fund, a
separate series of Thornburg Trust, in exchange solely for voting shares of
the New Fund. The aggregate net asset value of the shares of the acquiring
New Fund issued in the exchange will equal the aggregate net asset value of
the shares outstanding for the acquired Fund. In connection with the
transaction, shares of the New Fund will then be distributed to the Fund's
shareholders pro rata by class so that holders of each Class of shares of
the Fund will receive shares of the corresponding Class of shares of the
New Fund. The Fund thereafter will be terminated. These transactions are
referred to as the "reorganization."
As a result of the reorganization, each owner of Class A and Class C
shares of the Fund will become an owner of the corresponding class of
shares of the New Fund, having an aggregate net asset value equal to the
net asset value of that shareholder's shares in the Fund. No sales charge
will be imposed on the transaction. As a condition to the closing,
Thornburg Trust and Thornburg LTMF will obtain a legal opinion to the
effect that, based upon certain facts, assumptions and representations, the
reorganization will qualify as a tax-free reorganization for federal income
tax purposes. See "Information About the Reorganization." Persons
receiving shares of the New Fund in the reorganization will remain free to
redeem their shares after the reorganization.
The Fund and the New Fund have identical investment objectives and
policies. The New Fund will commence operations upon the completion of the
reorganization with the same portfolio of investments owned by the Fund.
The New Fund will have the same investment manager as the Fund, Thornburg
Investment Management, Inc. ("TIMI"), which will perform investment
management services under an investment management agreement having
substantially identical terms and providing for the same fees as the Fund's
current investment advisory agreement.
Expenses of the New Fund are expected to be substantially the same as
the expenses of the Fund before the reorganization, as follows:
Fund Annual Operating Expenses
Before the Reorganization
- --------------------------------------------
Class A .93%
Class C 1.68%
Expected New Fund Annual Operating Expenses
After the Reorganization
- ---------------------------------------------
Class A .93%
Class C 1.68%
Expenses of the reorganization will be paid by the Fund and are not
expected to have a material effect on the expenses of the Fund. The
reorganization is expected to result in cost savings to the shareholders of
the New Fund after the reorganization.
For the reasons set forth below, the Board of Directors of LTMF,
including all of the Independent Directors, have unanimously concluded that
the reorganization is in the best interests of the shareholders of the
Fund. The Board of Directors of Thornburg LTMF therefore have submitted
the Agreement for approval by the shareholders of the Fund at a special
meeting of shareholders to be held on April __, 2003 (the "Meeting").
Approval of the reorganization with respect to the Fund requires an
affirmative vote of a majority of the outstanding shares of the Fund
entitled to vote at the Meeting. This Prospectus/Proxy Statement pertains
to and is directed to holders of the Fund's Class A and Class C Shares.
At or about the same time that substantially all of the assets of the
Fund are acquired by the New Fund, Thornburg California Limited Term
Municipal Fund will acquire substantially all of the assets of Thornburg
LTMF's other series, Thornburg Limited Term Municipal Fund California
Portfolio. Each of these transactions has been approved by Thornburg
LTMF's Board of Directors. The acquisition of substantially all of the
assets of the Fund and Thornburg Limited Term Municipal Fund California
Portfolio are referred to collectively herein as the "Related
Transactions." Completion of the reorganization is contingent upon proper
shareholder approval being received for each of the Related Transactions,
and the satisfaction of all other conditions to closing the Related
Transactions. There can be no assurance shareholder approval can be
obtained for each Related Transaction or that the conditions of the other
Related Transaction will be satisfied. If shareholders of the Fund approve
the reorganization and the other Related Transaction is not approved, the
Board of Directors of Thornburg LTMF will consider the alternatives
available to it with respect to the Fund, including completion of the
reorganization respecting the Fund. See "Voting Information."
The Board of Directors has approved the reorganization because they
believe it would benefit the Fund. The reorganization is intended to
simplify legal and regulatory compliance functions, and to reduce the costs
of performing these functions. The Board of Directors considered these
objectives of the reorganization, together with other factors, which are
discussed below under the caption "Information About the Reorganization."
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMEND APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION.
INVESTMENT ADVISER AND DISTRIBUTOR
The investment adviser to both the Fund and to the New Fund is
Thornburg Investment Management, Inc. ("TIMI"), 119 East Marcy Street,
Santa Fe, New Mexico 87501. TIMI has been the investment adviser for the
Fund since its inception in 1984. TIMI is also the investment adviser for
all of the 12 Funds offered by Thornburg Trust, including the New Fund and
Thornburg California Limited Term Municipal Fund (the two Funds organized
to consummate the Related Transactions), four other Funds which invest
principally in municipal obligations for tax exempt current income, two
Funds which invest in U.S. Government and other fixed income obligations
for current income, three Funds which invest primarily for capital
appreciation, and one Fund which invests for current income and capital
appreciation. TIMI also provides to each Thornburg mutual fund under its
management supervision, administration and performance of certain
administrative services. Fees charged to the Fund and the New Fund for
these services are described below under "Fees and Expenses of the Fund and
the New Fund."
The distributor of shares to both the Fund and to the New Fund is
Thornburg Securities Corporation ("TSC"), 119 East Marcy Street, Santa Fe,
New Mexico 87501. TSC has been the distributor for the Fund since its
inception in 1984. TSC is also distributor for each other Thornburg mutual
fund.
INVESTMENT GOALS, POLICIES
AND RESTRICTIONS OF THE FUND AND THE NEW FUND
Investment Goals and Strategies of the Funds
- --------------------------------------------
The investment goals and strategies of the Fund and the New Fund are
identical. The primary investment goal of each Fund is to obtain as high a
level of current income exempt from federal individual income tax as is
consistent, in the view of the investment adviser, with preservation of
capital. The secondary goal of each Fund is to reduce expected changes in
its share price compared to longer intermediate and long-term bond
portfolios. Each Fund's primary and secondary goals are fundamental
policies, and may not be changed without a majority vote of the Fund's
shareholders.
Each Fund pursues its primary goal by investing principally in a
laddered maturity portfolio of municipal obligations issued by states and
state agencies, local governments and their agencies and by certain United
States territories and possessions. The investment adviser, Thornburg
Investment Management, Inc. ("TIMI"), actively manages each Fund's
portfolio. Investment decisions are based upon outlooks for interest rates
and securities markets, the supply of municipal debt securities, and
analysis of specific securities. Each Fund invests in obligations and
participations in obligations which are rated at the time of purchase as
investment grade or, if unrated, which are issued by obligors which have
comparable investment grade obligations outstanding or which are deemed by
TIMI to be comparable to obligors with outstanding investment grade
obligations. Each Fund's portfolio is "laddered" by investing in
obligations of different maturities so that some obligations mature during
each of the coming years.
Because the magnitude of changes in value of interest bearing
obligations is greater for obligations with longer terms, each Fund seeks
to reduce changes in its share value by maintaining a portfolio of
investments with a dollar-weighed average maturity normally less than five
years. There is no limitation on the maturity of any specific security
each Fund may purchase. Each Fund may dispose of any security before it
matures. Each Fund also attempts to reduce changes in its share value
through credit analysis, selection and diversification.
Each Fund ordinarily acquires and holds securities for investment
rather than for realization of gains by short term trading on market
fluctuations. However, it may dispose of any security prior to its
scheduled maturity to enhance income or reduce loss, to change the
portfolio's average maturity, or to otherwise respond to current market
conditions. The objective of preserving capital may prevent the Fund from
obtaining the highest yields available.
Each Fund normally invests 100% of its assets in municipal
obligations. Each Fund may invest up to 20% of its assets in taxable
securities which produce income not exempt from federal income tax because
of market conditions, pending investment of idle funds or to afford
liquidity. A Fund's temporary taxable investments may exceed 20% of its
assets when made for defensive purposes during periods of abnormal market
conditions. If a Fund found it necessary to own taxable investments, some
of its income would be subject to federal income tax.
PRINCIPAL RISK FACTORS
Because the Funds' investment goals and policies are identical, the
risks of investing in the New Fund are expected to be the same as the risks
of investing in the Fund.
The value of each Fund's shares and its dividends will fluctuate in
response to changes in interest rates. When interest rates increase, the
value of the Fund's investments declines and the Fund's share value is
reduced. This effect is more pronounced for intermediate and longer term
obligations owned by a Fund. During periods of declining interest rates
the Fund's dividends decline. The value of Fund shares also could be
reduced if municipal obligations held by the Fund were downgraded by rating
agencies, or went into default, or if legislation or other government
action reduces the ability of issuers to pay principal and interest when
due or changes the tax treatment of interest on municipal obligations.
Nonrated obligations may have, or may be perceived to have, greater risk of
default. The loss of money is a risk of investing in the Fund, and when
you sell your shares they may be worth less than what you paid for them.
An investment in either Fund is not a deposit of any bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.
For a further discussion of the investment objectives, policies and
restrictions applicable to the New Fund, please see the New Fund
Prospectus, which is available without charge by calling 1-800-847-0200.
FEES AND EXPENSES OF THE FUND AND THE NEW FUND
Advisory and Administration Fees and Fund Expenses
- --------------------------------------------------
The Fund and the New Fund each have contractual arrangements to obtain
investment management, administrative and distribution services which are
substantially identical.
The Fund and The New Fund are each contractually obligated to pay an
investment management fee to TIMI based upon the Fund's assets. The fee is
computed on average daily net assets at an annual rate as follows:
Net Assets Annual Rate
---------- -----------
0 to $500 million .50%
$500 million to $1 billion .40%
$1 billion to $1.5 billion .30%
$1.5 billion to $2.0 billion .25%
more than $2.0 billion .225%
TIMI also has entered into agreements with the Fund and the New Fund to
provide administrative services at an annual rate of .125% of average daily
net assets for Class A and Class C shares of each Fund.
Investment advisory fees, and the other expenses currently paid by the
Fund and expected to be paid by the New Fund are set out below. The
Shareholder Transaction Expense table shows the transaction fees paid by a
shareholder in each Fund upon a purchase or redemption of shares. The
Annual Operating Expenses table shows the annual Fund operating expense for
the Fund for its fiscal year ended June 30, 2003 and compares those fee and
expense percentages to the expected annual fund operating expenses for the
New Fund for its current fiscal year.
Shareholder Transaction Expenses
Fees Paid Directly From Your Investment
New New
Fund Fund Fund Fund
Class A Class A Class C Class C
------- ------- ------- -------
Maximum Sales Charge (Load) on 1.50% 1.50% none none
Purchases (as a percentage of
offering price)
Maximum Deferred Sales Charge 0.50%(1) 0.50% (1) 0.50% (2) 0.50% (2)
(Load) on Redemptions (as a
percentage of redemption
proceeds on original purchase
price, whichever is lower)
Redemption Fees (as a none none none none
percentage of amount redeemed)
Annual Operating Expenses
Expenses That Are Deducted From Fund Assets
(as a percentage of average net assets)
New New
Fund Fund Fund Fund
Class A Class A(3) Class C Class C(3)
------- ------- ------- -------
Investment Advisory Fee .43% .43% .43% .43%
Distribution and Service
(12b-1) Fees .25 .25% 1.00% 1.00%
Other Expenses .25% .25% .25% .25%
----- ----- ----- -----
Total Annual Operating
Expenses .93% .93% 1.68%(4) 1.68%(4)
(1) Imposed only on redemptions of any part or all of a purchase of
$1 million or more within 12 months of purchase.
(2) Imposed only on redemptions of Class C shares within 12 months of
purchase.
(3) The New Fund is a newly organized Fund which has not conducted any
business except incident to the reorganization. The fees and expenses
shown for the New Fund are estimated fees and expenses expected to be
incurred for the fiscal year ending June 30, 2004.
(4) For the fiscal year ending June 30, 2004, Thornburg Investment
Management, Inc. and Thornburg Securities Corporation are waiving fees
and reimbursing expenses so that actual Class C expenses do not
exceed 1.24%. Thornburg Investment Management, Inc. and Thornburg
Securities Corporation intend to waive fees and reimburse expenses for
Class C shares of the New Fund after the reorganization so that actual
Class C expenses do not exceed 1.24%. Waivers of fees and
reimbursements of expenses may be terminated at any time.
EXAMPLE:
The following Example is intended to help you compare the cost of
investing in the New Fund with the cost of investing in the Fund. The
Example assumes that you invest $10,000 in each respective Fund for the
time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5%
return each year, that dividends and distributions are reinvested, and that
each Fund's operating expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
New Fund New Fund
Fund Pro Forma Fund Pro Forma
Class A Class A Class C Class C
------- ------- ------- -------
1 Year $243 $243 $221 $221
3 Years $442 $442 $530 $530
5 Years $657 $657 $913 $913
10 Years $1,276 $1,276 $1,987 $1,987
You would pay the following expenses if you did not redeem your Class C
shares:
Fund New Fund Pro Forma
Class C Class C
------- -------
1 Year $171 $171
3 Years $530 $530
5 Years $913 $913
10 Years $1,987 $1,987
PURCHASE, REDEMPTION AND EXCHANGE PROCEDURES
FOR THE FUND AND THE NEW FUND
Sales Charges
- -------------
Share purchase, redemption and exchange procedures for the Class A and
Class C shares of the Fund are identical with the purchase, redemption and
exchange procedures for the corresponding share classes of the New Fund.
Purchasing Class A Shares
- -------------------------
Class A shares of the Fund and the New Fund are sold at net asset
value plus a sales charge at the rates shown in the table below. Class A
shares are also subject to a Rule 12b-1 Service Plan, which provides for
the Fund's payment of up to 1/4 of 1% of the class's net assets each year
for shareholder and distribution services.
As a Percentage As a Percentage
Of Offering Price Of Net Asset Value
----------------- ------------------
Less than $250,000.00 1.50% 1.52%
$250,000 to 499,999.99 1.25% 1.27%
$500,000 to 999,999.99 1.00% 1.01%
$1,000,000 and over 0.00%* 0.00%*
* No sales charge is payable at the time of purchase on investments of $1
million of more made by a purchaser. A contingent deferred sales charge
will be imposed on any portions of such investments redeemed within one
year of purchase, at a rate of .5% of the amount redeemed.
Class A shares also are sold to specified classes of investors at reduced
or no sales charges. For example, a shareholder who redeems Class A shares
may reinvest with no sales charge within 2 years of the redemption.
Additionally, each time the value of a shareholder's account plus the
amount of a new investment passes one of the breakpoints in the table
above, the portion of new investments in excess of the breakpoint will be
subject to the reduced sales charge. These privileges, and other
opportunities for purchase at reduced or no sales charge are described in
the New Fund Prospectus, which is available without charge by calling 1-
800-847-0200.
Purchasing Class C Shares
- -------------------------
Class C shares of the Fund and the New Fund are sold at net asset
value without a sales charge at the time of purchase. Class C shares are
subject to a contingent deferred sales charge of 1/2 of 1% of the shares
are redeemed within one year of purchase. Class C shares are also subject
to Rule 12b-1 Service and Distribution Plans, which provide for the Fund's
payment of up to 1% of the class's net assets each year for shareholder and
distribution services. Other information respecting the purchase of Class
C shares is provided in the New Fund Prospectus.
Exchange Privileges
- -------------------
Class A shares of the Fund may be exchanged for Class A shares of
other Thornburg funds, subject to certain conditions described in the
Fund's prospectus. Similarly, Class A shares of the New Fund may be
exchanged for Class A shares of other Thornburg mutual funds under the same
conditions, including the requirement that if you exchange into a fund with
a higher sales charge, you must pay the difference between that fund's
sales charge and the sales charge you paid on the shares you are
exchanging. This charge remains applicable to exchanges of shares received
in the reorganization. Each of the Funds permits exchanges by telephone if
the telephone exchange privilege has been elected by the shareholder.
Shareholders of the Fund who previously elected the telephone exchange
privilege will be deemed to have elected the exchange privilege of the New
Fund if the reorganization is completed.
Redemptions
- ------------
Shares of the Fund and the New Fund properly presented for redemption
may be redeemed at the next determined net asset value per share, subject
to a contingent deferred sales charge (CDSC) in specific circumstances.
The Fund and the New Fund impose a CDSC of 1/2 of 1% on redemptions of part
or all of any purchase of $1 million or more of Class A shares in the event
of a redemption within 12 months of purchase. The Fund and the New Fund
Class C shares are subject to a CDSC of 1/2 of 1% if redeemed within one
year of purchase. Shareholders' holding periods for Class A and Class C
shares of the Fund will be added to the period they hold New Fund Class A
or Class C shares received in the reorganization to determine if the CDSC
is applicable to any redemption of those shares. Shareholders of the Fund
who previously elected the telephone redemption privilege will be deemed to
have elected the New Fund's telephone redemption privilege if the
reorganization is completed.
DIVIDEND POLICIES OF FUNDS
The Fund distributes substantially all of its net investment income
and realized capital gains to its shareholders. The Fund declares net
income dividends daily and distributes those dividends monthly, and any net
realized capital gains are distributed at least annually, usually in
December. Distributions are reinvested in Fund shares unless the
shareholder elects to receive them in cash. The New Fund intends to follow
the same policies.
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS
The Fund is a diversified series of Thornburg Limited Term Municipal
Fund, Inc. ("Thornburg LTMF"), a Maryland corporation organized in 1984.
As a Maryland corporation, Thornburg LTMF is governed by applicable
Maryland and federal law, its articles of incorporation and its bylaws.
The business of Thornburg LTMF is supervised by its Board of Directors.
The New Fund is a diversified series of Thornburg Trust, a
Massachusetts business trust organized in 1987. As a Massachusetts
business trust, Thornburg Trust is governed by applicable Massachusetts and
federal law, its declaration of trust, as amended, and its bylaws. The
business of Thornburg Trust is supervised by Thornburg Trust's Trustees.
Thornburg LTMF is currently authorized under its articles of
incorporation, as amended, to issue 300,000,000 Class A shares of the Fund,
150,000,000 Class C shares of the Fund, and 250,000,000 Institutional Class
shares. Each share has a par value of $.001. The Board of Directors is
permitted to increase this authorization from time to time under Maryland
law. The Board of Directors is also permitted to create additional funds
or "series," and to divide each such series into two or more classes of
shares. Thornburg Trust is authorized to create an unlimited number of
series, and with respect to each series, to issue an unlimited number of
full and fractional shares of one or more classes and to divide or combine
the shares into a greater or lesser number of shares without thereby
changing the proportionate beneficial interests in the series. All of the
shares of Thornburg LTMF and of Thornburg Trust, respectively, have equal
voting rights with each other, except that only shares of the respective
series or separate classes within a series are entitled to vote on matters
concerning only that series or class. Neither Thornburg LTMF nor Thornburg
Trust permits cumulative voting.
Neither Thornburg LTMF nor Thornburg Trust holds annual shareholder
meetings. There normally will not be any meetings of shareholders of
Thornburg LTMF, Thornburg Trust or either of the Funds to elect directors
or trustees unless fewer than a majority of the directors or trustees then
holding office have been elected by shareholders. However, the Board of
Directors of Thornburg LTMF or the Trustees of Thornburg Trust may call
special meetings from time to time to seek shareholder approval of certain
matters, and meetings of shareholders of either Thornburg LTMF or Thornburg
Trust will be called upon written request of shareholders holding in the
aggregate not less than 10% of the outstanding shares of any affected
series or class having voting rights.
Under Maryland law, shareholders of Thornburg LTMF are not liable for
the obligations of Thornburg LTMF. However, under Massachusetts law, there
is a remote possibility that shareholders of a Thornburg Trust could, under
certain circumstances, be held personally liable for the obligations of
such a trust. The declaration of trust for Thornburg Trust contains
provisions intended to limit any such liability and to provide
indemnification out of Fund property for any shareholder charged or held
personally liable for obligations or liabilities of the shareholder's fund
solely by reason of being or having been a shareholder of that Fund and not
because of the shareholder's acts or omissions or for some other reason.
Consequently, the risk of a shareholder of the New Fund incurring financial
loss on account of shareholder liability is limited to circumstances in
which the New Fund itself would be unable to meet its obligations.
ADDITIONAL INFORMATION ABOUT SHAREHOLDER ACCOUNTS
If the reorganization is approved, the New Fund will establish an
account for each Fund shareholder.
No further purchases of the shares of the Fund may be made after the
date on which the shareholders of the Fund approve the reorganization, and
the share transfer books of the Fund will be permanently closed as of the
date of Closing. Only redemption requests and transfer instructions
received in proper form by the close of business on the day before the date
of Closing will be fulfilled by the Fund. Redemption requests or transfer
instructions received by the Fund after that date will be treated as
requests for the redemption or instructions for transfer of shares of the
New Fund credited to the accounts of shareholders of the New Fund.
Accordingly, those redemption requests or transfer instructions after the
close of business on the day before Closing will be forwarded to the New
Fund. For a complete description of redemption procedures for the New
Fund, see the sections of the New Fund Prospectus under the caption
"Selling Fund Shares."
INFORMATION ABOUT THE REORGANIZATION
Agreement and Plan of Reorganization
- ------------------------------------
The following summary of the proposed Agreement and Plan of
Reorganization (the "Agreement") is qualified in its entirety by reference
to the Agreement attached to this Prospectus/Proxy Statement as Exhibit A.
The Agreement provides that the New Fund will acquire substantially
all of the assets of the Fund in exchange solely for shares of the New Fund
on the earliest practicable date following shareholder approval of the
reorganization (the "Closing Date"). The number of full and fractional
shares of the New Fund to be issued to shareholders of the Fund will be
determined on the basis of the relative net asset values per share and
aggregate net assets of the New Fund and the Fund computed immediately
after the closing of business on the New York Stock Exchange (currently
4:00 p.m., Eastern time) on the last business day before the Closing Date
(the "Valuation Date"). The net asset value per share for the Fund will be
determined by dividing each class's respective assets, less its respective
share of liabilities, by the total number of the class's outstanding
shares. Portfolio securities of the Fund will be valued in accordance with
the valuation practices of the Fund as described in its prospectus, which
is incorporated by reference herein. Valuation procedures of the New Fund
are the same as the valuation procedures of the Fund.
Immediately after the transfer of the Fund's assets to the New Fund on
the Closing Date, the Fund will distribute pro rata to its shareholders of
record as of the close of business on the Valuation Date the full and
fractional shares of the New Fund received by the Fund and will be
dissolved as soon thereafter as reasonably practicable. The distribution
will be accomplished by the establishment of accounts on the share records
of the New Fund in the name of each shareholder of the Fund, each
representing the respective pro rata number of full and fractional shares
of the New Fund due each of those shareholders. Following the
reorganization, shareholders will own shares of the New Fund of the same
class as the Fund shares owned before the reorganization. No certificates
for shares of the New Fund will be issued.
The consummation of the reorganization is subject to the conditions
set forth in the Agreement. The reorganization is also subject to approval
by the Fund's shareholders. Approval requires the affirmative vote of the
holders of a majority of each class of shares of the Fund. Further,
completion of the reorganization is subject to shareholder approval of the
"Related Transaction", which is the proposed transaction in which Thornburg
California Limited Term Municipal Fund will acquire substantially all of
the assets of Thornburg Limited Term Municipal Fund California Portfolio.
If shareholders of the Fund approve the reorganization, but the Related
Transaction is not approved, the Board of Directors of the Fund will
consider the available alternatives. The Agreement may be terminated and
the reorganization abandoned prior to the Closing Date, before or after
approval by shareholders of the Fund, by resolution of the Board of
Directors of the Fund or the Trustees of Thornburg Trust, under
circumstances specified in the Agreement.
The Fund will pay the costs of the reorganization, which include fees
and costs associated with preparing, filing, printing and distributing
proxy materials, proxy solicitation costs, costs associated with qualifying
shares for sale in various states, and the deregistration and dissolution
of Thornburg LTMF.
The Board of Directors of Thornburg LTMF has determined that the
reorganization will not result in any dilution of the interests of the
Fund's shareholders, and that participation in the reorganization is in the
best interests of the Fund's shareholders.
Full and fractional shares of beneficial interest of the New Fund will
be issued to shareholders of the Fund in accordance with the procedures
under the Agreement described above. Each share will be fully paid and
non-assessable by the New Fund when issued, and will have no preemptive or
conversion rights. See comparative information on shareholder rights,
below, for additional information with respect to the shares of the New
Fund.
Considerations of the Fund's Board of Directors
- -----------------------------------------------
Thornburg Investment Management, Inc. ("TIMI"), the investment adviser
to both the Fund and the New Fund, proposed and recommended the
reorganization to the Board of Directors of Thornburg (the "Board") to
simplify certain compliance and administrative functions and to reduce the
costs associated with the performance of those functions. Based upon
TIMI's recommendation, and after consideration of the rationale for the
reorganization and certain additional factors described below, the Board,
including all of the directors who are not "interested persons"
("Independent Directors") as that term is used in the Investment Company
Act of 1940 (the "1940 Act"), has determined that the reorganization is in
the best interest of the shareholders of the Fund and that the terms of the
agreement and plan of reorganization are fair and reasonable.
The Board considered the recent increases in compliance and related
functions performed for the Fund, and the likely further increase in those
functions in the future due to regulatory and rulemaking initiatives by the
Congress and the Securities and Exchange Commission. The Board noted
specifically in this connection the following factors:
. increased duties for the Board assuring compliance with
revised regulations applicable to mutual funds
generally;
. increased audit committee functions and additional time
devoted to audit committee functions by the independent
accountants;
. increased number of filings by Thornburg LTMF of
documents required under state and federal law and
increased time for review and discussion of those
filings by the Board;
and,
. increased Board fees and associated travel expenses and
other expenses occasioned by these increased
activities.
The Board further noted in this regard that these functions are
generally duplicative of comparable functions performed for and by
Thornburg Investment Trust and its Trustees and audit committee.
The Board concluded that the general complexity of compliance, and
administration of compliance could be reduced significantly if the two
funds currently offered by Thornburg LTMF were combined with the ten
existing funds offered by Thornburg Investment Trust. This combination
would, in the Board's view, eliminate the current duplication and reduce
complexity by substituting one investment company in the place of two.
Moreover, the Board concluded that the reorganization would result in
significant cost savings, because the two funds of Thornburg Trust which
will acquire Thornburg LTMF's two current funds will share with Thornburg
Trust's other funds a number of costs which are currently duplicated (and
thus not shared) by Thornburg LTMF and Thornburg Trust.
In this latter regard the Board considered:
. legal fees and costs associated with advice on
compliance matters, preparation of documents related
to compliance, preparation of documents for Board of
Directors and audit committee meetings;
. legal counsel preparation for and attendance at Board
of Directors and audit committee meetings;
. fees and costs associated with preparation and filing
of registration statements and other periodic filings,
and general corporate work associated with the
maintenance of an additional corporate entity;
. costs, including Directors' fees and travel and other
expenses associated with the Board's and the audit
committee's fees and meetings; and
. expenses and fees of the independent accountants.
The Board also considered the likelihood of future increases in these costs
because of increased rulemaking and regulatory complexity, increasing
duties placed on investment company directors and audit committees, the
possible need to hire additional legal counsel and other persons for audit
committees, and possible increases in the frequency of shareholder meetings
to elect investment company directors. Based upon estimates by TIMI and
legal counsel, the Board determined that it was reasonable to conclude that
the costs of the reorganization could be recovered in less than two years.
The Board also considered other factors in evaluating the proposed
reorganization, including the following:
(1) There would be no change in investment objectives, investment
policies, or investment risks as a result of the reorganization;
(2) After the reorganization, investment management, administrative
services, and other functions would be performed under contracts having
substantially the same terms as the existing contracts;
(3) Fees and expenses for the New Fund are expected to be virtually
the same as fees and expenses for the Fund, except for the costs of the
reorganization (which are expected to be offset, and exceeded over time by
cost savings);
(4) The reorganization will result in no dilution of shareholders'
interests;
(5) Shareholders of the Fund will receive shares in the New Fund of
the class corresponding to the same class of shares in the Fund;
(6) The reorganization will be accomplished without recognition of
gain or loss for federal income tax purposes by shareholders of Thornburg
LTMF; and
(7) No sales charges or transaction fees will be assessed against
shareholders in connection with the reorganization.
Federal Income Tax Consequences
- -------------------------------
The reorganization is intended to qualify for federal income tax
purposes as a tax-free reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended, with no taxable gain or loss recognized
by the Fund, the New Fund, or shareholders of the Fund as a consequence of
the reorganization. As a condition to the closing of the reorganization,
the Fund and the New Fund will receive an opinion of legal counsel to that
effect based on certain assumptions and representations made by the Fund
and the New Fund.
Shareholders of the Fund should consult their tax advisers regarding
the effect, if any, of the proposed reorganization in light of their
individual circumstances. In particular, shareholders of the Fund should
also consult their tax advisers as to the state, local and other tax
consequences, if any, of the reorganization.
CAPITALIZATION
The following table sets forth the capitalization of the Fund and the
New Fund as of December 31, 2003 and the pro forma capitalization of the
combined New Fund as if the reorganization occurred on that date. These
numbers will be different at the time of closing because the Fund's net
assets for each class will increase or decrease.
CAPITALIZATION OF FUNDS AS OF DECEMBER 31, 2003
FUND NEW FUND PRO FORMA
---- -------- ---------
NET ASSETS
- -----------
Class A shares $1,044,399,875. -0- $1,044,399,875.
Class C shares $ 155,996.351. -0- $ 155,996.351.
Class I shares $ 211,440.262. -0- $ 211,440,262.
TOTAL $1,411,836.488. -0- $1,411,836,488.
NET ASSETS PER SHARE
- --------------------
Class A shares $13.93 -0- $13.93
Class C shares $13.96 -0- $13.96
Class I shares $13.93 -0- $13.93
SHARES OUTSTANDING
- ------------------
Class A shares 74,580,174.625 -0- 74,580,174.625
Class C shares 11,171,853.884 -0- 11,171,853.884
Class I shares 15,235,727.402 -0- 15,235,727.402
TOTAL 100,987,755.911 -0- (1) 100,987,755.911
SHARES AUTHORIZED
- -----------------
Class A shares 300,000,000 unlimited unlimited
Class C shares 150,000,000 unlimited unlimited
Class I shares 250,000,000 unlimited unlimited
TOTAL 700,000,000 unlimited unlimited
(1) It is anticipated that a nominal number of shares of each class
will be issued to an officer of TIMI in order to permit the consummation of
corporate actions before the reorganization.
ADDITIONAL INFORMATION ABOUT THE FUNDS
Additional information respecting the New Fund is included in the
Thornburg Limited Term Municipal Funds prospectus dated _______________,
2004 (the "New Fund Prospectus"), which accompanies this Prospectus/Proxy
Statement, and in the Thornburg Limited Term Municipal Funds Statement of
Additional Information dated ___________________, 2004, which has been
filed with the Securities and Exchange Commission. Additional information
is also included in the Statement of Additional Information dated
________________, 2004 related to the reorganization which has been filed
with the Securities and Exchange Commission. The described New Fund
Prospectus and statements of additional information are incorporated by
reference herein. Copies of the statements of additional information are
available upon request and without charge by calling 1-800-847-0200.
Information about the Fund is included in the Thornburg Funds
prospectus dated February 1, 2004, and in the Thornburg Funds Statement of
Additional Information dated February 1, 2004. The described prospectus
and statement of additional information may been filed with the Securities
and Exchange Commission and are incorporated by reference herein. Copies
of the prospectus and the statement of additional information are available
upon request and without charge by calling 1-800-847-0200.
Reports and other information filed by Thornburg LTMF and Thornburg
Trust can be inspected and copied at the Securities and Exchange
Commission's Public Reference Room at 450 Fifth Street, NW, Washington,
D.C. 20549. Information about the Public Reference Room may be obtained by
calling the Commission at 1-202-942-8090. Reports and other information
about the Funds are also available on the Commission's Internet site at
http://www.sec.gov and copies of information may be obtained, upon payment
of a duplicating fee, by writing the Commission's Public Reference Section,
Washington, D.C. 20549-0102, or contacting the Commission by e-mail at
publicinfo@sec.gov.
Thornburg LTMF files its registration statements and certain other
information with the Commission under Investment Company Act of 1940 file
number 811-4302. Thornburg Investment Trust files its registration
statements and certain other information with the Commission under
Investment Company Act of 1940 file number 811-05201.
VOTING INFORMATION
Proxies for the meeting are being solicited from the Fund's
shareholders by the Board of Directors of Thornburg LTMF. A proxy may be
revoked at any time at or before the meeting by oral or written notice to
the secretary of Thornburg LTMF, 119 East Marcy Street, Santa Fe, New
Mexico 87501, (800) 847-0200. Unless revoked, all valid proxies will be
voted in accordance with the specifications therein or, in the absence of
specifications, for approval of the reorganization.
Additional solicitations may be made by telephone, telegraph,
facsimile or personal contact by officers or employees of TIMI and its
affiliates or by a professional proxy solicitation firm or firms. Expenses
of proxy solicitation will be borne by the Fund. Thornburg LTMF has
engaged the proxy solicitation firm of D.F. King & Co., Inc. to assist in
soliciting proxies for the meeting at an estimated cost of $75,000.
Shares of the Fund of record at the close of business on _____________
(the "Record Date") will be entitled to vote at the meeting or any
adjournment thereof. The presence in person or by proxy of one-third of
the Fund's outstanding shares of the meeting will constitute a quorum.
Shareholders are entitled to one vote for each share held, and each
fractional share will be entitled to a proportionate fractional vote.
Approval of the reorganization requires the affirmative vote of a majority
of the outstanding shares of the Fund entitled to vote at the meeting. As
of _____________,2004, there were issued and outstanding ______ Class A
shares, _________ Class C shares and ________ Class I shares of the Fund.
As of the same date, the following persons were known to own of record or
beneficially 5% or more of the issued and outstanding shares of any Class
of the Funds:
[to be inserted]
As of the same date, there were issued and outstanding ____ Class A
shares, ______ Class C shares, and ______ Class I shares of beneficial
interest of the New Fund. All of these shares were held by ________, 119
East Marcy Street, Santa Fe, New Mexico 87501. Ms. _______ was issued
these shares in order to permit certain actions in connection with the
initial organization of the New Fund.
In the event that a quorum is not present at the meeting, or a quorum
is present at the meeting but sufficient votes to approve the
reorganization are not received, the persons named as proxies may propose
one or more adjournments of the meeting to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of a
majority of those shares represented at the meeting in person or by proxy.
If a quorum is not present, the persons named as proxies will vote those
proxies which they are entitled to vote for the reorganization in favor of
such an adjournment and will vote those proxies required to be voted
against the reorganization against any such adjournment.
"Broker non-votes" are shares held in a broker's street name for which
the broker indicates that instructions have not been received from the
beneficial owners or other persons entitled to vote, and the broker does
not have discretionary voting authority. Abstentions in broker non-votes
will be counted as shares present for purposes of determining whether a
quorum is present but will not be voted for or against any adjournment or a
proposal. Accordingly, abstentions in broker non-votes effectively will be
a vote against adjournment and against the proposal because the required
vote is a percentage of the shares outstanding.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS,
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE REORGANIZATION.
Submission of Shareholder Proposals
- -----------------------------------
The Fund does not hold regular shareholder meetings. Shareholders
wishing to submit proposals for inclusion in a proxy statement for a
subsequent shareholder meeting should send their written proposals to the
secretary of Thornburg LTMF, 119 East Marcy Street, Santa Fe, New Mexico
87501.
Other Matters to Come Before the Meeting
- ----------------------------------------
The Board of Directors of Thornburg LTMF knows of no other business to
be brought before the meeting. However, if any other matters properly come
before the meeting, proxies will be voted in accordance with the judgment
of the Directors.
EXHIBIT A
to
PROSPECTUS/PROXY STATEMENT
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of the ____ day of December 2003, by and between THORNBURG INVESTMENT
TRUST, a Massachusetts business trust ("Thornburg Trust"), in respect of
Thornburg National Limited Term Municipal Fund (the "New Fund"), a separate
series of Thornburg Trust, and THORNBURG LIMITED TERM MUNICIPAL FUND, INC.
a Maryland corporation ("Thornburg LTMF"), in respect of Thornburg Limited
Term Municipal Fund National Portfolio (the "Fund"), a separate series of
Thornburg LTMF.
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1) of
the United States Internal Revenue Code of 1986, as amended (the "Code").
The reorganization will consist of (i) the transfer of substantially all of
the Assets (hereinafter defined) of the Fund to the New Fund in exchange
solely for Class A, Class C and Class I voting shares of beneficial
interest of the New Fund having no par value (the "New Fund Class A
Shares," "New Fund Class C Shares," and "New Fund Class I Shares,"
respectively, and collectively the "New Fund Shares") and (ii) the
distribution on the Closing Date (hereinafter defined) of the New Fund
Shares to the shareholders of the New Fund in complete liquidation of the
Fund as provided herein, all upon the terms and conditions hereinafter set
forth in this Agreement. All actions required to be taken by Thornburg
Trust pursuant to this Agreement, and all representations, warranties and
covenants of Thornburg Trust hereunder, are taken and made on behalf of the
New Fund. All actions required to be taken by Thornburg LTMF pursuant to
this Agreement, and all representations, warranties and covenants of
Thornburg LTMF hereunder, are taken and made on behalf of the New Fund.
THEREFORE, in consideration of the premises and of the covenants and
agreements hereafter described, the parties hereto covenant and agree as
follows.
1. Procedure for Reorganization.
(a) Subject to the terms and conditions herein set forth and
on the basis of the representations and warranties contained herein,
Thornburg LTMF agrees to transfer the Assets of the New Fund as set forth
in paragraph (b) to the New Fund, and Thornburg Trust agrees to deliver to
the New Fund in exchange therefor the number of the New Fund Shares
determined by dividing the value of the Assets computed in the manner and
as of the time and date set forth in paragraph 2(a), by the net asset value
of the New Fund Shares computed in the manner and as of the time and date
set forth in paragraph 2(b). These transactions shall take place at the
closing provided for in paragraph 3(a) (the "Closing").
(b) The Assets to be acquired by the New Fund shall consist of
all cash, portfolio securities and due bills for dividends, interest, or
other receivables or rights to receive any of the foregoing, receivables
for shares sold, and any claims or rights with respect to portfolio
securities, whether or not arising from contract, which are owned by the
New Fund on the closing date provided in paragraph 3(a) (the "Closing
Date"). The New Fund will retain cash and cash equivalents in an amount
reasonably estimated by it to be sufficient to discharge: (i) obligations
incurred in the ordinary course of its business, which could not reasonably
be paid before Closing and are not otherwise borne by any other person; and
(ii) costs resulting from the liquidation and deregistration of the Fund
and Thornburg LTMF. The Assets will not include any rights in and to the
"Thornburg" name or any variant thereof. The Fund has provided the New
Fund with a list of the current securities holdings of National Portfolio
as of the date of execution of this Agreement. Thornburg LTMF and the Fund
reserve the right to sell any of these securities in the ordinary course of
business but will not, without prior notification to Thornburg Trust,
acquire any additional securities for the Fund other than securities of the
type in which the New Fund is permitted to invest.
(c) On the Closing Date, Thornburg LTMF will cause the Fund to
be liquidated and to distribute pro rata to the Fund's shareholders of
record (the "Fund Shareholders"), determined on and as of the close of
business on the Valuation Date specified in paragraph 2(a), the New Fund
Shares received by Thornburg LTMF pursuant to paragraph (a). Specifically,
Thornburg LTMF shall (i) distribute the New Fund Class A Shares received in
the exchange, pro rata, to the Fund Shareholders holding Class A shares of
the Fund, (ii) distribute the New Fund Class C shares received in the
exchange, pro rata, to the Fund Shareholders holding Class C shares of the
Fund, and (iii) distribute the New Fund Class I Shares received in the
exchange, pro rata, to the Fund Shareholders holding Class I shares of the
Fund. The liquidation and distribution will be accomplished by the
transfer of the New Fund Shares then credited to the account of the Fund on
the books of New Fund, to open accounts on the share records of the Fund in
the names of the Fund Shareholders and representing the respective pro rata
number of New Fund due the Fund Shareholders.
(d) As of the Closing Date, any physically-issued share
certificates held by former Fund Shareholders and relating to Fund shares
exchanged for New Fund Shares in accordance with the preceding paragraph
(c) will represent only the right to receive the appropriate number of New
Fund Shares. As of the Closing Date, persons holding those certificates
will be requested to surrender their certificates. No redemption or
repurchase of any New Fund Shares credited to former Fund Shareholders in
place of Fund shares represented by unsurrendered certificates will be
permitted until those certificates have been surrendered for cancellation
or the certificates are cancelled upon the delivery of lost certificate
affidavits.
(e) Any transfer taxes payable upon issuance of New Fund
Shares in a name other than that of the registered holder of the New Fund
Shares on the books of the Fund as of the Closing Date shall, as a
condition of such issuance and transfer, be paid by the person to whom the
New Fund Shares are to be issued and transferred.
(f) The Fund shall be dissolved as soon as reasonably
practicable following the Closing Date. Thornburg LTMF will deregister
with the Securities and Exchange Commission (the "Commission") in
accordance with the Investment Company Act of 1940, as amended (the "1940
Act").
(g) Thornburg Trust will not assume any liability of Thornburg
LTMF, or acquire any Asset subject to any liability, in connection with the
transactions contemplated by this Agreement, except that the New Fund will
assume the obligation to pay for any portfolio securities purchased by the
Portfolio before the Closing Date in the ordinary course of its business
and the purchase of which was disclosed to the New Fund by the New Fund
Portfolio when the commitment to purchase arose.
2. Valuation.
(a) The value of the Fund's Assets to be acquired by the New
Fund hereunder shall be the value of those assets computed as of the close
of business on the New York Stock Exchange and after the declaration of any
dividends on the business day next preceding the Closing Date (the time and
date being hereinafter called the "Valuation Date"). The value of the
portion of the Fund's Assets consisting of portfolio securities will be
computed by Kenny Information Systems, subject to adjustment by the amount,
if any, agreed to by the New Fund and the Fund. In determining the value
of the Assets, each portfolio security and other portfolio asset shall be
priced by Kenny Information Systems in accordance with the policies and
procedures of the New Fund (subject to the third sentence hereafter) as set
forth in the then current prospectuses and statement of additional
information applicable to the New Fund, subject to adjustments agreed to by
the Fund and the New Fund. All computations shall be made by Kenny
Information Systems. In the event of a dispute with respect to the
valuation of any portfolio security or other portfolio asset of the Fund,
the New Fund and the Fund shall, by mutual consent, select an independent
third party to resolve the matter, and the determination of the independent
party will bind the Funds.
(b) The value of the Assets of each class of the Fund shall be
divided, as of the close of business on the New York Stock Exchange and
after the declaration of any dividends on the Valuation Date, among the
Class A, Class C and Class I shares of National Portfolio (the "Class A
Assets," "Class C Assets," and "Class I Assets"), respectively, in
accordance with the Fund's customary method of accounting.
(c) The net asset value of each New Fund Share shall be the
net asset value per share computed as of the close of business on the New
York Stock Exchange and after the declaration of any dividends on the
Valuation Date, using the valuation procedures set forth in the New Fund's
then current prospectuses, and in accordance with the New Fund's customary
method of accounting.
(d) On the Closing Date, the New Fund shall issue to the Fund
full and fractional New Fund Class A, Class C and Class I shares in the
respective numbers determined in accordance with this paragraph 2(d). The
number of New Fund Class A shares shall be determined by dividing the value
of the Class A Assets by the net asset value of a New Fund Class A share
determined in accordance with paragraph 2(c). The number of New Fund Class
C shares shall be determined by dividing the value of the Class C Assets by
the net asset value of a New Fund Class C share determined in accordance
with paragraph 2(c). The number of New Fund Class I shares shall be
determined by dividing the value of the Class I Assets by the net asset
value of a New Fund Class I share determined in accordance with paragraph
2(c).
3. Closing and Closing Date.
(a) The Closing Date shall be as soon as practicable after
approval of the transactions contemplated in this Agreement by the Fund's
Shareholders has been obtained. The Closing will be held at 119 East Marcy
Street, Suite 202, Santa Fe, New Mexico 87501, in the offices of Thornburg
Management Company, Inc., or at such other place as the parties may agree.
The time of Closing will be 8:00 a.m. New York time on the Closing Date.
All acts taking place at the Closing will be deemed to occur simultaneously
as of the time of the Closing on the Closing Date.
(b) The Fund's portfolio securities shall be available for
inspection by the New Fund, its custodian bank or such other agents of
Thornburg Trust as Thornburg Trust shall reasonably designate, at the
offices of the Fund's custodian, no later than five business days preceding
the Valuation Date, and the Fund will immediately notify the New Fund's
investment adviser of any portfolio security thereafter acquired or sold by
the Fund. The Fund's securities and cash shall be delivered by Thornburg
LTMF to State Street Bank & Trust Company, Boston, MA 02205-9087, as
custodian for the New Fund for the account of the New Fund on the Closing
Date, duly endorsed in proper form for transfer in such condition as to
constitute good delivery thereof in accordance with the custom of brokers.
The cash delivered shall be in the form of currency or certified or
official bank checks, or completed federal funds wire, payable to the order
of "State Street Bank & Trust Co., Custodian for Thornburg Limited Term
Municipal Fund." The Fund will cause its custodian to deliver at Closing a
certificate of an authorized officer of the Custodian stating that the
Fund's have been delivered in proper form to the New Fund's custodian on or
before the Closing Date.
(c) In the event that on the Valuation Date (i) the New York
Stock Exchange is closed to trading, or (ii) trading or the reporting of
trading in securities generally is disrupted so that accurate appraisal of
the value of the net assets of the New Fund or the Fund is impracticable,
the Closing Date shall be postponed until the first business day after the
day when trading is fully resumed and reporting is restored.
(d) Thornburg LTMF shall deliver to Thornburg Trust
shareholder and shareholder account information as of the close of business
on the Valuation Date as reasonably requested by Thornburg Trust. The New
Fund shall issue and deliver a confirmation to the Fund at the Closing
stating the number of New Fund Shares to be credited on the Closing Date to
the Fund, and stating the number of New Fund Shares credited to the Fund's
account on the books of the New Fund. Thornburg Trust shall issue and
deliver to each former Fund Shareholder, after the Closing, a confirmation
stating the number of New Fund Shares credited to the shareholder's
account. At the Closing, each party shall deliver to the other such bills
of sale, checks, assignments, stock certificates, receipts or other
documents as such other party may reasonably request.
4. Representations and Warranties.
(a) Thornburg LTMF represents and warrants to Thornburg Trust
as follows:
(i) The Fund is a series of Thornburg LTMF, which is a
corporation duly formed and validly existing under
the laws of the State of Maryland;
(ii) Thornburg LTMF is a duly registered open-end
management investment company, and its
registration with the Commission as an investment
company undr the 1940 Act is in full force and
effect;
(iii) The current prospectuses and statements of
additional information of the Fund, each dated
November 1, 2003, conform in all material respects
to the applicable requirements of the Securities
Act of 1933 (the "1933 Act") and the rules and
regulations of the Commission thereunder and do
not include any untrue statement of a material
fact or omit to state any material fact required
to be stated therein or necessary to make the
statements therein, in light of the circumstances
under which they were made, not misleading;
(iv) To the knowledge of Thornburg LTMF, no consent,
approval, authorization or order of any court or
governmental authority is required for the
consummation by the Fund of the transactions
contemplated by this Agreement, except as may be
required under the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"),
the 1940 Act, or the rules and regulations under
those Acts, all of which shall have been received
prior to the Closing Date, except for such
consents, approvals, authorizations or orders as
may be required subsequent to the Closing Date;
(v) The execution, delivery and performance of this
Agreement will not result in a material violation
of Thornburg LTMF's Articles of Incorporation or
By-Laws or of any agreement, indenture,
instrument, contract, lease or other undertaking
to which the Fund or Thornburg LTMF is a party or
by which it is bound;
(vi) The Fund has valued, and will continue to value
its portfolio securities and other assets in
accordance with applicable legal requirements;
(vii) All material contracts or other commitments (other
than this Agreement) to which the Fund is a party
will be terminated without liability to the Fund
or the New Fund on or before the Closing Date;
(viii) No litigation or administrative proceeding or
investigation of or before any court or
governmental body or self regulatory organization
is presently pending or threatened against the
Fund or any of its properties or assets.
Thornburg LTMF knows of no facts which might form
the basis for the institution of such proceedings,
and neither Thornburg LTMF nor the Fund is a party
to or subject to the provisions of any order,
decree or judgment of any court or governmental
body or self regulatory organization which
materially and adversely affects their business or
their ability to consummate the transactions
herein contemplated;
(ix) The statement of assets and liabilities, the
statement of operations, and the statement of
changes in net assets of the Fund at June 30, 2003
have been audited by PricewaterhouseCoopers, LLP,
independent certified public accountants, and
those statements, together with the statements of
assets and liabilities, the statements of
operations, and the statements of changes in net
assets at December 31, 2003, when issued, fairly
reflect, or in the case of the December 31, 2003
statements will fairly reflect, in all material
respects the assets, financial condition, results
of operations, and changes in net assets of the
Fund as of and for the periods ended on those
dates and have, or in the case of the December 31,
2003 statements, shall have been prepared, in
accordance with generally accepted accounting
principles consistently applied; and there are as
of the dates thereof no known liabilities of the
Fund other than liabilities disclosed or provided
for in the foregoing statements;
(x) Since June 30, 2003, there has been no material
adverse change in the Fund's financial condition,
assets, liabilities or business other than changes
occurring in the ordinary course of business; and
the Fund has not incurred any indebtedness
maturing more than one year from the date such
indebtedness was incurred except as disclosed in
Exhibit A. For the purposes of this subparagraph
(x), a decline in net asset value per share of the
Fund's Shares is not a material adverse change;
(xi) At the Closing Date, all material federal and
other tax returns and reports of the Fund required
by law then to be filed (including any extensions)
shall have been filed, and all federal and other
taxes shall have been paid so far as due, or
provision shall have been made for the payment
thereof, and to the best of Thornburg LTMF's
knowledge no such return of or relating to the
Fund is currently under audit, and no assessment
has been asserted with respect to the Fund;
(xii) The Fund has met the requirements of Subchapter M
of the Code and has elected to be treated as a
regulated investment company for each taxable year
of its operations since its inception, and will so
qualify for the taxable year ending on the Closing
Date;
(xiii) The Fund is authorized to issue 300,000,000,
150,000,000 and 125,000,000 Class A, Class C and
Class I shares, respectively, of the Fund, at the
date hereof. All issued and outstanding shares of
the Fund have been offered and sold in compliance
in all material respects with applicable
registration requirements of the 1933 Act and
state securities laws. All issued and outstanding
shares of the Fund are, and at the Closing Date
will be, duly and validly issued and outstanding,
fully paid and non-assessable by Thornburg LTMF.
All of the issued and outstanding Shares of the
Fund will, at the time of Closing, be held by
shareholder accounts in the amounts set forth in
the list of shareholder's accounts submitted to
Thornburg Trust pursuant to paragraph 3(d). The
Fund does not have outstanding any options,
warrants or other rights to subscribe for or
purchase any securities issuable by the Fund;
(xiv) At the Closing Date, the Fund will have good and
marketable title to the Assets to be transferred
to the New Fund pursuant to paragraph 1(b),
subject to no lien, encumbrance or competing
interest in any person, and full right, power, and
authority to sell, assign, transfer and deliver
the Assets hereunder, and upon delivery and
payment for those Assets, the New Fund will
acquire good and marketable title thereto, subject
to no restriction on the full transfer thereof,
including such restrictions as might arise under
the 1933 Act other than as disclosed in writing to
the New Fund;
(xv) The execution, delivery and performance of this
Agreement will have been duly authorized prior to
the Closing Date by all necessary actions on the
part of Thornburg LTMF's Board of Directors, and
this Agreement constitutes a valid and binding
obligation of Thornburg LTMF, enforceable in
accordance with its terms, subject to the approval
of the shareholders of the Fund, and further
subject as to enforcement to bankruptcy,
insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' rights
and subject to general equity principles;
(xvi) The information furnished by the New New Fund LTMF
for use in applications for orders, registration
statements, proxy materials and other documents
which may be necessary in connection with the
transactions contemplated hereby is and shall be
accurate and complete in all material respects and
shall comply in all material respects with federal
securities and other laws and regulations
thereunder applicable thereto;
(xvii) The registration statement filed by the New Fund
on Form N-14 relating to the New Fund Shares that
will be registered with the Commission pursuant to
this Agreement, which shall include the proxy
statement of Thornburg LTMF in respect of the Fund
with respect to the transactions contemplated by
this Agreement, and any supplement or amendment
thereto or to the documents contained or
incorporated therein by reference (the "N-14
Registration Statement"), and the proxy materials
of Thornburg LTMF in respect of the Fund included
in the N-14 Registration Statement and filed with
the Commission pursuant to Section 14 of the 1934
Act with respect to the transactions
contemplated by this Agreement, and any supplement
or amendment thereto or the documents appended
thereto (the "Reorganization Proxy Materials"),
from their effective dates with the Commission,
through the time of the meeting of shareholders of
the Fund contemplated therein (the "Shareholders
Meeting") and at the Closing Date: (a) shall
comply in all material respects with the
provisions of the 1933 Act, 1934 Act and the 1940
Act, the rules and regulations thereunder, and
applicable state securities laws, and (b) shall
not contain any untrue statement of a material
fact or omit to state a material fact required to
be stated therein or necessary to make the
statements therein not misleading; provided, that
the representations and warranties in this
subparagraph shall only apply to statements in or
omissions from the N-14 Registration Statement or
Reorganization Proxy Materials made by, or in
reliance upon and in conformity with information
furnished by or on behalf of Thornburg LTMF.
(b) Thornburg Trust represents and warrants to Thornburg LTMF
as follows:
(i) The New Fund is a series of Thornburg Trust, which
is a business trust duly formed and validly
existing under the laws of the Commonwealth of
Massachusetts;
(ii) Thornburg Trust is a duly registered open-end
management investment company and its registration
with the Commission as an investment company under
the 1940 Act is in full force and effect;
(iii) The prospectuses and statements of additional
information for shares of the New Fund, when
effective, shall conform in all material respects
to the applicable requirements of the 1933 Act and
the rules and regulations of the Commission
thereunder and will not include any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or
necessary to make the statements therein, in light
of the circumstances under which they were made,
not misleading;
(iv) To the knowledge of Thornburg Trust, no consent,
approval, authorization or order of any court or
governmental authority is required for the
consummation by the New Fund of the transactions
contemplated by this Agreement, except as may be
required under the 1933 Act, the 1934 Act, the
1940 Act, or the rules and regulations under those
Acts, all of which shall have been received prior
to the Closing Date, except for such consents,
approvals, authorizations or orders as may be
required subsequent to the Closing Date;
(v) The execution, delivery and performance of this
Agreement will not result in a material violation
of Thornburg Trust's Declaration of Trust or By-
Laws or of any agreement, indenture, instrument,
contract, lease or other undertaking to which the
New Fund or Thornburg Trust is a party or by which
it is bound;
(vi) The New Fund has valued, and will continue to
value, its portfolio securities and other assets
in accordance with applicable legal requirements;
(vii) No litigation or administrative proceeding or
investigation of or before any court or
governmental body or self regulatory organization
is presently pending or threatened against the New
Fund or any of its properties or assets.
Thornburg Trust knows of no facts which might form
the basis for the institution of such proceedings,
and neither Thornburg Trust nor the New Fund is a
party to or subject to the provisions of any
order, decree or judgment of any court or
governmental body or self regulatory organization
which materially and adversely affects their
business or their ability to consummate the
transactions herein contemplated;
(viii) At the Closing Date, all federal and other tax
returns and reports of the New Fund required by
law then to be filed shall have been filed, and
all federal and other taxes shall have been paid
for as due or provision shall have been made for
the payment thereof and, to the best of Thornburg
Trust's knowledge, no such return of or relating
to the New Fund is currently under audit, and no
assessment has been asserted with respect to the
New Fund;
(ix) The New Fund intends to meet the requirements of
Subchapter M of the Code, and intends to be
treated as a regulated investment company for the
first taxable fiscal year of its operation
including the Closing Date;
(x) Thornburg Trust is authorized to issue an
unlimited number of shares of beneficial interest
having no par value. All issued and outstanding
New Fund Shares at the Closing Date will be duly
and validly issued and outstanding, fully paid and
non-assessable. The New Fund does not have
outstanding any options, warrants or other rights
to subscribe for or purchase any securities
issuable by the New Fund, nor is there outstanding
any security convertible into New Fund Shares
(except as the trustees of Thornburg Trust may
convert classes of shares in accordance with
Thornburg Trust's Declaration of Trust, as
amended);
(xi) The execution, delivery and performance of this
Agreement will have been duly authorized prior to
the Closing Date by all necessary actions on the
part of Thornburg Trust's trustees, and this
Agreement constitutes a valid and binding
obligation of Thornburg Trust enforceable in
accordance with its terms, subject as to
enforcement to bankruptcy, insolvency,
reorganization, moratorium and other laws relating
to or affecting creditors' rights and subject to
general equity principles;
(xii) New Fund Shares to be issued and delivered to the
Fund pursuant to the terms of this Agreement will
at the Closing Date have been duly authorized and,
when so issued and delivered, will be duly and
validly issued New Fund Shares, and will be fully
paid and non-assessable by Thornburg Trust, except
to the extent that shareholders of Thornburg Trust
may be held personally liable for obligations of
Thornburg Trust;
(xiii) The N-14 Registration Statement and the
Reorganization Proxy Materials, from their
effective dates with the Commission, through the
time of the Shareholders Meeting and at the
Closing Date:
(a) shall comply in all material respects with
the provisions of the 1933 Act, 1934 Act and
the 1940 Act, the rules and regulations
thereunder, and applicable state securities
laws, and
(b) shall not contain any untrue statement of a
material fact or omit to state a material
fact required to be stated therein or
necessary to make the statements made therein
not misleading; provided, that the
representations and warranties in this
subparagraph shall only apply to statements
in or omissions from the N-14 Registration
Statement or the Reorganization Proxy
Materials made in reliance upon and in
conformity with information furnished by or
on behalf of Thornburg Trust;
(xiv) At the Closing Date, the New Fund will have good
and marketable title to its assets, subject to no
lien, encumbrance or competing interest in any
person, and full right, power and authority to
sell, assign, transfer and deliver those assets
other than as disclosed in writing to Thornburg
LTMF; and
(xv) The information furnished by Thornburg Trust for
use in applications for orders, registration
statements, proxy materials and other documents
which may be necessary in connection with the
transactions contemplated hereby is and shall be
accurate and complete in all material respects and
shall comply in all material respects with federal
securities and other laws and regulations
thereunder applicable thereto.
5. Covenants of the Parties.
(a) The New Fund and the Fund each will operate its business
in the ordinary course between the date hereof and the Closing Date, it
being understood that the ordinary course of business will include
customary dividends and distributions and any other distribution that may
be advisable.
(b) Thornburg LTMF will call a meeting of the shareholders of
the Fund to be held as promptly as practicable to consider and act upon
this Agreement and to take all other action necessary to obtain approval of
the transactions contemplated herein.
(c) Thornburg LTMF covenants that the New Fund Shares to be
issued hereunder will not be sold or distributed other than in accordance
with the terms of this Agreement.
(d) Thornburg LTMF will furnish to Thornburg Trust all
information reasonably requested and that is within its control for the
preparation of the N-14 Registration Statement, the preparation and
distribution of the Reorganization Proxy Materials, and for effectuating
the transactions contemplated herein. Thornburg LTMF will furnish, or
cause its transfer agent to furnish, to Thornburg Trust all information
reasonably requested respecting the beneficial ownership of Thornburg LTMF
shares, shareholders and shareholder accounts for the mailing of the
Reorganization Proxy Materials and for the establishment of New Fund
accounts for shareholders of the Fund in accordance with paragraph 1(c).
Thornburg LTMF will furnish, or cause its custodian or other agents to
furnish, all portfolio asset information reasonably requested by Thornburg
Trust in connection with, and to facilitate, the transactions contemplated
by this Agreement.
(e) Subject to the provisions of this Agreement, Thornburg
Trust and Thornburg LTMF will each take, or cause to be taken, all actions,
and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by
this Agreement.
(f) Thornburg LTMF shall furnish to Thornburg Trust within 30
days after the Closing Date a detailed trial balance of the Fund's assets
and liabilities and computations showing amortization of premium on
portfolio securities. Thornburg Funds shall furnish to Thornburg Trust
when available the final federal income tax return for the Fund.
(g) Thornburg LTMF will, as promptly as practicable after the
Closing, wind up the business of the Fund, deregister the Fund under
applicable federal securities laws, file final reports with the state
securities regulators requiring any such reports, prepare and distribute
final account statements and tax statements to persons who were formerly
shareholders of the Fund, and file any necessary federal and state tax
returns.
(h) Thornburg Trust will prepare and file the N-14
Registration Statement, will file the Reorganization Proxy Materials with
applicable regulatory authorities, and will use all reasonable efforts to
obtain clearance or effectiveness of the N-14 Registration Statement and
the Reorganization Proxy Materials, all in accordance with the 1933 Act,
the 1934 Act, and the 1940 Act, and applicable regulations and rulings
thereunder, and in accordance with any applicable state statutes and
regulations.
(i) Thornburg Trust agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act, the 1934
Act, the 1940 Act and such of the state securities laws as are necessary or
appropriate in order to continue its operations after the Closing Date.
6. Conditions Precedent to Obligations of Thornburg LTMF.
The obligations of Thornburg LTMF to consummate the
transactions provided for herein shall be subject, at its election, to the
performance by Thornburg Trust of all the obligations to be performed by it
hereunder on or before the Closing Date, and, in addition thereto, the
following further conditions:
(a) All representations and warranties of Thornburg Trust
contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date; and
(b) Thornburg Trust shall have delivered to Thornburg LTMF a
certificate executed in its name by its President or Vice President and its
Treasurer or Assistant Treasurer, in form and substance satisfactory to
Thornburg LTMF and dated as of the Closing Date, certifying that the
representations and warranties of Thornburg Trust made in this Agreement
are true and correct at and as of the Closing Date.
7. Conditions Precedent to Obligations of Thornburg Trust.
The obligations of Thornburg Trust to complete the transactions
provided for herein shall be subject, at its election, to the performance
by Thornburg LTMF of all the obligations to be performed by it hereunder on
or before the Closing Date and, in addition thereto, the following
conditions:
(a) All representations and warranties of Thornburg LTMF
contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date;
(b) Thornburg LTMF shall have delivered to Thornburg Trust the
following information prepared as of the Closing Date: (i) net asset value
pricing sheet of the Fund, with a portfolio listing of each portfolio
security including the principal amount, identification of issue, cost, tax
lot cost, market price per unit and market value; (ii) trial balance of the
Fund's general ledger; (iii) supporting schedules with the details for
accounts receivable and accounts payable; (iv) certification from the
Fund's custodian that it has delivered to the New Fund's custodian the
Assets acquired by the New Fund; and (v) confirmation from the New Fund's
transfer agent of the aggregate number of the Fund's shares outstanding and
a reconciliation of that number to the number of shares shown in the
pricing sheet referred to in (i) above;
(c) Thornburg LTMF shall have delivered to Thornburg Trust a
certificate executed in its name by its President or Vice President and its
Treasurer or Assistant Treasurer, in form and substance satisfactory to
Thornburg Trust and dated as of the Closing Date, certifying that the
representations and warranties of Thornburg LTMF made in this Agreement are
true and correct at and as of the Closing Date;
(d) This Agreement and the transactions contemplated herein
shall have been approved by the requisite vote of the holders of the
outstanding shares of the Fund in accordance with applicable law and
evidence of the approval shall have been delivered to Thornburg Trust; and
(e) The parties shall have received a favorable opinion of
White, Koch, Kelly & McCarthy, P.A. satisfactory to Thornburg LTMF and
Thornburg Trust, substantially to the effect that, based upon certain
facts, assumptions and representations, the transactions contemplated by
this Agreement constitute a tax-free reorganization described in Section
368(a)(1) of the Internal Revenue Code of 1986, as amended, for federal
income tax purposes. The delivery of such opinion is conditioned upon
receipt by White, Koch, Kelly & McCarthy, P.A. of representations it shall
request of Thornburg Trust and Thornburg LTMF.
8. Further Conditions Precedent to Obligations of Thornburg Trust
and Thornburg LTMF.
Each party's obligations hereunder are, at its election,
subject to the further conditions that:
(a) On the Closing Date, no action, suit or other proceeding
shall be pending before any court or governmental agency in which it is
sought to restrain or prohibit, or obtain damages or other relief in
connection with, this Agreement or the transactions contemplated herein;
(b) On or before the Closing Date, all consents of other
parties and all other consents, orders and permits of federal, state and
local regulatory authorities (including those of the Commission and of
state securities authorities, including "no-action" positions of such
federal or state authorities) deemed necessary by Thornburg Trust or
Thornburg LTMF to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except where
failure to obtain any such consent, order or permit would not involve a
risk of a material adverse effect on the business assets or properties of
Thornburg Trust or Thornburg LTMF; and
(c) On or before the Closing Date, the N-14 Registration
Statement shall have become effective under the 1933 Act and no stop orders
suspending the effectiveness thereof shall have been issued and, to the
best knowledge of the parties hereto, no investigation or proceeding for
that purpose shall have been instituted or be pending, threatened or
contemplated under the 1933 Act.
9. Responsibility for Fees and Expenses.
Thornburg LTMF will pay the costs of the transactions
contemplated hereby, including the expenses of preparing and filing the N-
14 Registration Statement, the costs of distributing the prospectuses and
proxy materials, proxy solicitation costs, and other costs.
10. Massachusetts Business Trust.
Thornburg Trust is organized as a Massachusetts business trust,
and references in this Agreement to Thornburg Trust mean and refer to the
trustees of Thornburg Trust from time to time serving under its Declaration
of Trust on file with the Secretary of State of the Commonwealth of
Massachusetts, as the same may be amended from time to time, pursuant to
which Thornburg Trust conducts its business. It is expressly agreed that
the obligations of Thornburg Trust hereunder shall not be binding upon any
of Thornburg Trust's trustees, shareholders, nominees, officers, agents, or
employees of Thornburg Trust, or New Fund personally, but bind only the
property of the New Fund, as provided in Thornburg Trust's Declaration of
Trust. Moreover, no series of Thornburg Trust other than the New Fund
shall be responsible for the obligations of Thornburg Trust hereunder, and
all persons shall look only to the respective assets of the New Fund to
satisfy the obligations of Thornburg Trust hereunder. The execution and
delivery of this Agreement have been authorized by Thornburg Trust's
trustees, on behalf of the New Fund, and this Agreement has been signed by
authorized officers of Thornburg Fund acting as such, and neither such
authorization by such trustees, nor such execution and delivery by such
officers, shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the
respective property of the New Fund, as provided in Thornburg Trust's
Declaration of Trust.
11. Indemnification.
(a) The New Fund agrees to indemnify and hold harmless the
Fund and each of the Fund's directors and officers from and against any and
all losses, claims, damages, liabilities or expenses (including without
limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which jointly and severally, the Fund or any of its
directors or officers may become subject, insofar as any such loss, claim,
damage, liability or expense (or actions with respect thereto) arises out
of or is based on any breach by the New Fund of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
(b) The Fund agrees to indemnify and hold harmless the New
Fund and each of the New Fund's trustees and officers from and against any
and all losses, claims, damages, liabilities or expenses (including without
limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which jointly and severally, the New Fund or any of its
trustees or officers may become subject insofar as any such loss, claim,
damage, liability or expense (or actions with respect thereto) arises out
of or is based on any breach by the Fund of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
12. Entire Agreement; Survival of Warranties.
(a) Thornburg Trust and Thornburg LTMF agree that neither
party has made any representation, warranty or covenant not set forth
herein and that this Agreement constitutes the entire agreement between the
parties.
(b) The representations, warranties and covenants contained in
this Agreement or in any document delivered pursuant hereto or in
connection herewith shall survive the consummation of the transactions
contemplated hereunder.
13. Termination.
(a) This Agreement may be terminated by the mutual agreement
of Thornburg Trust and Thornburg LTMF. In addition, either Thornburg Trust
or Thornburg LTMF may at its option terminate this Agreement at or before
the Closing Date because:
(i) of a material breach by the other of any
representation, warranty or agreement contained
herein to be performed at or before the Closing Date;
or
(ii) a condition herein expressed to be precedent to the
obligations of the terminating party has not been met
and it reasonably appears that it will not or cannot
be met.
(b) In the event of any such termination, there shall be no
liability for damages on the part of either Thornburg Trust or Thornburg
LTMF, or their respective trustees, directors or officers, to the other
party or its trustees, directors or officers, but each shall bear, except
as otherwise provided in section 9, the expenses incurred by them
incidental to the preparation and carrying out of this Agreement.
14. Amendments.
This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized officers
of Thornburg LTMF and Thornburg Trust; provided, however, that following
the shareholders' meeting called by the Fund pursuant to this Agreement, no
such amendment may have the effect of changing the provisions for
determining the number of New Fund Shares to be issued to the Fund's
shareholders under this Agreement to the detriment of those shareholders
without their further approval.
15. Notices.
Any notice, report, statement or demand required or permitted
by any provisions of this Agreement shall be in writing and shall be given
by prepaid telegraph, telecopy or certified mail addressed to Thornburg
Trust, 119 East Marcy Street, Santa Fe, New Mexico 87501, Attention:
Brian J. McMahon, and to Thornburg LTMF, 119 East Marcy Street, Santa Fe,
New Mexico 87501, Attention: George T. Strickland.
16. Headings; Counterparts; Governing Law; Assignment.
(a) The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
(b) This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
(c) This Agreement shall be governed by and construed in
accordance with the substantive laws of the Commonwealth of Massachusetts,
provided that nothing herein shall be construed in a manner inconsistent
with the 1940 Act or the Advisers Act (as the same Acts shall have been or
will be amended) or rules, orders or regulations of such governmental
bodies or authorities having authority with respect to such Acts.
(d) This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations hereunder
shall be made by any party without the written consent of the other party.
Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm or corporation, other than the parties
hereto and their respective administrators, executors, legal
representatives, heirs, successors and permitted assigns, any rights or
remedies under or by reason of this Agreement.
(e) In the event of any litigation respecting this Agreement
or its subject matter, the prevailing party will be entitled to
reimbursement from the losing party for the prevailing party's cost of
suit, including reasonable attorneys' fees.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its President or Vice President and attested to
by its Secretary or Assistant Secretary.
THORNBURG INVESTMENT TRUST on behalf of
THORNBURG NATIONAL LIMITED TERM
MUNICIPAL FUND
By:
-------------------------------------
------------------, ----------------
THORNBURG LIMITED TERM MUNICIPAL FUND,
INC., on behalf of THORNBURG LIMITED TERM
MUNICIPAL FUND NATIONAL PORTFOLIO
By:
-------------------------------------
------------------, ----------------
EXHIBIT A
to
Agreement and Plan of Reorganization
Dated December ___, 2003
Thornburg Investment Trust
(on behalf of Thornburg National Limited Term Municipal Fund)
and
Thornburg Limited Term Municipal Fund, Inc.
(on behalf of Thornburg Limited Term Municipal Fund National Portfolio)
Subparagraph 4(a)(x): None.
PROSPECTUS AND PROXY STATEMENT
(For Holders of Institutional Class Shares)
RELATING TO THE ACQUISITION OF THE ASSETS OF
THORNBURG LIMITED TERM MUNICIPAL FUND NATIONAL PORTFOLIO
a separate series of
THORNBURG LIMITED TERM MUNICIPAL FUND, INC.
119 East Marcy Street
Santa Fe, New Mexico 87501
(800) 847-0200
BY AND IN EXCHANGE FOR SHARES OF
THORNBURG LIMITED TERM MUNICIPAL FUND
a separate series of
THORNBURG INVESTMENT TRUST
119 East Marcy Street
Santa Fe, New Mexico 87501
(800) 847-0200
This Prospectus/Proxy Statement relates to the proposed transfer of
substantially all of the assets of Thornburg Limited Term Municipal Fund
National Portfolio (the "Fund") in exchange solely for shares of Thornburg
Limited Term Municipal Fund (the "New Fund"). The Fund and the New Fund
each have the same investment objective, which is to seek as high a level
of interest income which is exempt from federal income taxes as is
consistent, in the view of the Funds' investment adviser, with the
preservation of capital. As a result of the proposed transaction, each
shareholder of the Fund will receive shares of the New Fund equal in value
at the date of the exchange to the value of the shareholder's shares of the
Fund. The terms and conditions of these transactions are more fully
described in this Prospectus/Proxy Statement and in the Agreement and Plan
of Reorganization attached hereto as Exhibit A.
This Prospectus/Proxy Statement, which should be retained for future
reference, sets forth concisely the information about the New Fund that a
prospective investor should know before investing. This Prospectus/Proxy
Statement is accompanied by the New Fund's "Thornburg Limited Term
Municipal Funds Institutional Class Shares Prospectus" dated _________,
2004 (the "New Fund Prospectus"), which contains information about the New
Fund and which is incorporated by reference into this Prospectus/Proxy
Statement. A Statement of Additional Information dated ________________,
2004 (the "Statement of Additional Information") containing additional
information about the New Fund has been filed with the Securities and
Exchange Commission and is incorporated by reference into this
Prospectus/Proxy Statement. A copy of the New Fund Prospectus and the
Statement of Additional Information may be obtained without charge by
writing to Thornburg at its address noted above or by calling 1-800-847-
0200. Copies of the Fund's current "Thornburg Institutional Class Shares"
Prospectus for Class I shares dated February 1, 2004, and its Statement of
Additional Information for Institutional Class Shares dated February 1,
2004 are incorporated by reference into this Prospectus/Proxy Statement,
and may be obtained without charge by writing to Thornburg at the address
shown above or by calling 1-800-847-0200.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROSPECTUS AND
PROXY STATEMENT AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY
REFERENCE AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THORNBURG INVESTMENT
TRUST OR THORNBURG LIMITED TERM MUNICIPAL FUND, INC.
INVESTMENTS IN THORNBURG LIMITED TERM MUNICIPAL FUND (THE "NEW FUND")
ARE SUBJECT TO RISK, INCLUDING POSSIBLE RISK OF PRINCIPAL, AND WILL
FLUCTUATE IN VALUE. SHARES OF THE NEW FUND ARE NOT BANK DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, AND ARE NOT INSURED BY, ANY
BANK, FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR
ANY GOVERNMENTAL AGENCY.
The date of this Prospectus/Proxy Statement is __________, 2004.
TABLE OF CONTENTS
Summary of the Proposed Reorganization
Investment Adviser and Distributor of the Fund and the New Fund
Investment Goals, Policies and Restrictions of the Fund and the New Fund
Principal Risk Factors
Fees and Expenses of the Fund and the New Fund
Performance Information
Purchase, Redemption and Exchange Procedures for the Fund and the New Fund
Dividend Policies of the Fund and the New Fund
Comparative Information on Shareholder Rights
Additional Information About Shareholder Accounts
Information About the Reorganization
Capitalization
Additional Information About the Fund and the New Fund
Voting Information
Exhibit A: Agreement and Plan of Reorganization
For detailed information about the New Fund, see the Thornburg Limited Term
Municipal Funds Institutional Class Shares Prospectus dated __________
2004, (the "New Fund Prospectus"), which may be obtained without charge by
writing Thornburg at the address noted above or by calling 1-800-847-0200.
SUMMARY OF THE PROPOSED REORGANIZATION
The Board of Directors of Thornburg Limited Term Municipal Fund, Inc.
("Thornburg LTMF"), including the Directors who are not "interested
persons" of Thornburg LTMF (the "Independent Directors"), as defined in the
Investment Company Act of 1940, have reviewed and unanimously approved an
agreement and plan of reorganization (the "Agreement") between Thornburg
LTMF on behalf of Thornburg Limited Term Municipal Fund National Portfolio
(the "Fund") and Thornburg Investment Trust ("Thornburg Trust") on behalf
of Thornburg Limited Term Municipal Fund (the "New Fund") providing for the
acquisition of substantially all of the assets of the Fund, a separate fund
(sometimes referred to as a "series") of Thornburg LTMF, by the New Fund, a
separate series of Thornburg Trust in exchange solely for voting shares of
the New Fund. The aggregate net asset value of the shares of the acquiring
New Fund issued in the exchange will equal the aggregate net asset value of
the shares outstanding for the acquired Fund. In connection with the
transaction, shares of the New Fund will then be distributed to the Fund's
shareholders pro rata by class so that holders of each Class of Shares of
the Fund will receive shares of the corresponding class of shares of the
New Fund. The Fund thereafter will be terminated. These transactions are
referred to as the "reorganization."
As a result of the reorganization, each owner of Institutional Class
(Class I) shares of the Fund will become an owner of the corresponding
class of shares of the New Fund, having an aggregate net asset value equal
to the net asset value of that shareholder's shares in the Fund. No sales
charge will be imposed on the transaction. As a condition to the closing,
Thornburg Trust and Thornburg LTMF will obtain a legal opinion to the
effect that, based upon certain facts, assumptions and representations, the
reorganization will qualify as a tax-free reorganization for federal income
tax purposes. See "Information About the Reorganization." Persons
receiving shares of the New Fund in the reorganization will remain free to
redeem their shares after the reorganization.
The Fund and the New Fund have identical investment objectives and
policies. The New Fund will commence operations upon the completion of the
reorganization with the same portfolio of investments owned by the Fund.
The New Fund will have the same investment manager as the Fund, Thornburg
Investment Management, Inc. ("TIMI") which will perform investment
management services under an investment management agreement having
substantially identical terms and providing for the same fees as the Fund's
current investment advisory agreement.
Expenses of the New Fund are expected to be substantially the same as
the expenses of the Fund before the reorganization, as follows:
Fund Annual Operating Expenses
Before the Reorganization
- --------------------------------------------
Class I .58%
Expected New Fund Annual Operating Expenses
After the Reorganization
- ---------------------------------------------
Class I .58%
Expenses of the reorganization will be paid by the Fund, and are not
expected to have a material effect on the expenses of the Fund. The
reorganization is expected to result in cost savings to the shareholders of
the New Fund after the reorganization.
For the reasons set forth below, the Board of Directors of LTMF,
including all of the Independent Directors, have unanimously concluded that
the reorganization is in the best interests of the shareholders of the
Fund. The Board of Directors of Thornburg LTMF therefore have submitted
the Agreement for approval by the shareholders of the Fund at a special
meeting of shareholders to be held on April __, 2003 (the "Meeting").
Approval of the reorganization with respect to the Fund requires an
affirmative vote of a majority of the outstanding shares of the Fund
entitled to vote at the meeting. This Prospectus/Proxy Statement pertains
to and is directed to holders of the Fund's Institutional Class ("Class I")
shares.
At or about the same time that substantially all of the assets of the
Fund are acquired by the New Fund, Thornburg California Limited Term
Municipal Fund will acquire substantially all of the assets of Thornburg
LTMF's other series, Thornburg Limited Term Municipal Fund California
Portfolio. Each of these transactions has been approved by Thornburg
LTMF's Board of Directors. The acquisition of substantially all of the
assets of the Fund and Thornburg Limited Term Municipal Fund California
Portfolio are referred to collectively herein as the "Related
Transactions." Completion of the reorganization is contingent upon proper
shareholder approval being received for each of the Related Transactions,
and the satisfaction of all other conditions to closing the Related
Transactions. There can be no assurance shareholder approval can be
obtained for each Related Transaction or that the conditions of the other
Related Acquisition will be satisfied. If shareholders of the Fund approve
the reorganization and the other Related Transaction is not approved, the
Board of Directors of Thornburg LTMF will consider the alternatives
available to it with respect to the Fund, including completion of the
reorganization respecting the Fund. See "Voting Information."
The Board of Directors has approved the reorganization because they
believe it would benefit the Fund. The reorganization is intended to
simplify legal and regulatory compliance functions, and to reduce the costs
of performing these functions. The Board of Directors considered these
objectives of the reorganization, together with other factors, which are
discussed below under the caption "Information About the Reorganization."
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMEND APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION.
INVESTMENT ADVISER AND DISTRIBUTOR
The investment adviser to both the Fund and to the New Fund is
Thornburg Investment Management, Inc. ("TIMI"), 119 East Marcy Street,
Santa Fe, New Mexico 87501. TIMI has been the investment adviser for the
Fund since its inception in 1984. TIMI is also the investment adviser for
all of the 12 Funds offered by Thornburg Trust, including the New Fund and
Thornburg California Limited Term Municipal Fund (the two Funds organized
to consummate the Related Transactions), four other Funds which invest
principally in municipal obligations for tax exempt current income, two
Funds which invest in U.S. Government and other fixed income obligations
for current income, three Funds which invest primarily for capital
appreciation, and one Fund which invests for current income and capital
appreciation. TIMI also provides to each Thornburg mutual fund under its
management supervision, administration and performance of certain
administrative services. Fees charged to the Fund and the New Fund for
these services are described below under "Fees and Expenses of the Fund and
the New Fund."
The distributor of shares to both the Fund and to the New Fund is
Thornburg Securities Corporation ("TSC"), 119 East Marcy Street, Santa Fe,
New Mexico 87501. TSC has been the distributor for the Fund since its
inception in 1984. TSC is also distributor for each other Thornburg mutual
fund.
INVESTMENT GOALS, POLICIES
AND RESTRICTIONS OF THE FUND AND THE NEW FUND
Investment Goals and Strategies of the Funds
- --------------------------------------------
The investment goals and strategies of the Fund and the New Fund are
identical. The primary investment goal of each Fund is to obtain as high a
level of current income exempt from federal individual income tax as is
consistent, in the view of the investment adviser, with preservation of
capital. The secondary goal of each Fund is to reduce expected changes in
its share price compared to longer intermediate and long-term bond
portfolios. Each Fund's primary and secondary goals are fundamental
policies, and may not be changed without a majority vote of the Fund's
shareholders.
Each Fund pursues its primary goal by investing principally in a
laddered maturity portfolio of municipal obligations issued by states and
state agencies, local governments and their agencies and by certain United
States territories and possessions. The investment adviser, Thornburg
Investment Management, Inc. ("TIMI") actively manages each Fund's
portfolio. Investment decisions are based upon outlooks for interest rates
and securities markets, the supply of municipal debt securities, and
analysis of specific securities. Each Fund invests in obligations and
participations in obligations which are rated at the time of purchase as
investment grade or, if unrated, which are issued by obligors which have
comparable investment grade obligations outstanding or which are deemed by
TIMI to be comparable to obligors with outstanding investment grade
obligations. Each Fund's portfolio is "laddered" by investing in
obligations of different maturities so that some obligations mature during
each of the coming years.
Because the magnitude of changes in value of interest bearing
obligations is greater for obligations with longer terms, each Fund seeks
to reduce changes in its share value by maintaining a portfolio of
investments with a dollar-weighed average maturity normally less than five
years. There is no limitation on the maturity of any specific security
each Fund may purchase. Each Fund may dispose of any security before it
matures. Each Fund also attempts to reduce changes in its share value
through credit analysis, selection and diversification.
Each Fund ordinarily acquires and holds securities for investment
rather than for realization of gains by short term trading on market
fluctuations. However, it may dispose of any security prior to its
scheduled maturity to enhance income or reduce loss, to change the
portfolio's average maturity, or to otherwise respond to current market
conditions. The objective of preserving capital may prevent the Fund from
obtaining the highest yields available.
Each Fund normally invests 100% of its assets in municipal
obligations. Each Fund may invest up to 20% of its assets in taxable
securities which produce income not exempt from federal income tax because
of market conditions, pending investment of idle funds or to afford
liquidity. A Fund's temporary taxable investments may exceed 20% of its
assets when made for defensive purposes during periods of abnormal market
conditions. If a Fund found it necessary to own taxable investments, some
of its income would be subject to federal income tax.
PRINCIPAL RISK FACTORS
Because the Funds' investment goals and policies are identical, the
risks of investing in the New Fund are expected to be the same as the risks
of investing in the Fund.
The value of each Fund's shares and its dividends will fluctuate in
response to changes in interest rates. When interest rates increase, the
value of the Fund's investments declines and the Fund's share value is
reduced. This effect is more pronounced for intermediate and longer term
obligations owned by a Fund. During periods of declining interest rates
the Fund's dividends decline. The value of Fund shares also could be
reduced if municipal obligations held by the Fund were downgraded by rating
agencies, or went into default, or if legislation or other government
action reduces the ability of issuers to pay principal and interest when
due or changes the tax treatment of interest on municipal obligations.
Nonrated obligations may have, or may be perceived to have, greater risk of
default. The loss of money is a risk of investing in the Fund, and when
you sell your shares they may be worth less than what you paid for them.
An investment in either Fund is not a deposit of any bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.
For a further discussion of the investment objectives, policies and
restrictions applicable to the New Fund, please see the New Fund
Prospectus, which is available without charge by calling 1-800-847-0200.
FEES AND EXPENSES OF THE FUND AND THE NEW FUND
Advisory and Administration Fees and Fund Expenses
- --------------------------------------------------
The Fund and the New Fund each have contractual arrangements to obtain
investment management, administrative and distribution services which are
substantially identical.
The Fund and The New Fund are each contractually obligated to pay an
investment management fee to TIMI based upon the Fund's assets. The fee is
computed on average daily net assets of an annual rate as follows:
Net Assets Annual Rate
0 to $500 million .50%
$500 million to $1 billion .40%
$1 billion to $1.5 billion .30%
$1.5 billion to $2.0 billion .25%
more than $2.0 billion .225%
TIMI also has entered into agreements with the Fund and the New Fund to
provide administrative services at an annual rate of .05% of average daily
net assets for Institutional Class shares of each Fund.
Investment advisory fees, and the other expenses currently paid by the
Fund and expected to be paid by the New Fund are set out below. The
Shareholder Transaction Expense table shows the transaction fees paid by a
shareholder in each Fund upon a purchase or redemption of shares. The
Annual Operating Expenses table shows the annual Fund operating expense for
the Fund for its fiscal year ended June 30, 2003 and compares those fee and
expense percentages to the expected annual fund operating expenses for the
New Fund for its current fiscal year.
Shareholder Transaction Expenses
Fees Paid Directly From Your Investment
Fund New Fund
Class I Class I
------- --------
Maximum Sales Charge (Load) on none none
Purchases (as a percentage of
offering price)
Maximum Deferred Sales Charge none none
(Load) on Redemptions (as a
percentage of redemption
proceeds on original purchase
price, whichever is lower)
Redemption Fees (as a none none
percentage of amount redeemed)
Annual Operating Expenses
Expenses That Are Deducted From Fund Assets
(as a percentage of average net assets)
Fund New Fund (1)
Class I Class I
------- --------
Investment Advisory Fee .43% .43%
Distribution and Service
(12b-1) Fees .00% .00%
Other Expenses .15% .15%
----- -----
Total Annual Operating Expenses .58% .58%
(1) The New Fund is a newly organized Fund which has not conducted
any business except incident to the reorganization. The fees and expenses
shown for The New Fund are estimated fees and expenses expected to be
incurred for the fiscal year ending June 30, 2004.
EXAMPLE:
The following Example is intended to help you compare the cost of
investing in the New Fund with the cost of investing in the Fund Portfolio.
The Example assumes that you invest $10,000 in each respective Fund for the
time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5%
return each year, that dividends and distributions are reinvested, and that
each Fund's operating expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
Fund New Fund Pro Forma
Class A Class I
-------- --------
1 Year $59 $59
3 Years $166 $166
5 Years $324 $324
10 Years $726 $726
PURCHASE, REDEMPTION AND EXCHANGE PROCEDURES
FOR THE FUND AND THE NEW FUND
Sales Charges
- --------------
Share purchase, redemption and exchange procedures for the
Institutional shares of the Fund are identical with the purchase,
redemption and exchange procedures for the corresponding share class of the
New Fund.
Purchasing Institutional Class Shares
- -------------------------------------
The Fund's Institutional Class ("Class I") shares are sold with no
initial sales charge or contingent deferred sales charge at the net asset
value per share.
Qualified individual investors and qualified institutions purchasing
shares for their own account are eligible to purchase Institutional Class
shares provided they invest a minimum of $2,500,000. The minimum amount
for subsequent purchases is $5,000. Qualified institutions include
corporations, banks and insurance companies purchasing for their own
account and other institutions such as trusts, endowments and foundations.
Qualified employee benefit or retirement plans other than an
individual retirement account ("IRA") or SEP-IRA are also eligible to
purchase Institutional Class shares, provided they either invest a minimum
of $1,000,000 in the funds or have 100 or more eligible participants
enrolled in the plan. There is no minimum amount for subsequent purchases.
Investment dealers, financial advisers or other investment
professionals, including bank trust departments and companies with trust
powers, purchasing for the accounts of others within a clearly defined
"wrap" or other fee based investment advisory program are eligible to
purchase Institutional Class shares. The Fund's distributor will establish
a minimum amount per program or per account to qualify for purchase of
Institutional Class shares. The minimum amount per program is currently
$100,000.
Exchange Privileges
- --------------------
Class I shares of the Fund may be exchanged for Class I shares of
other Thornburg funds, subject to certain conditions described in the
Fund's prospectus. Similarly, Class I shares of the New Fund may be
exchanged for Class I shares of other Thornburg mutual funds subject to the
same conditions. Each of the Funds permits exchanges by telephone if the
telephone exchange privilege has been elected by the shareholder.
Shareholders of the Fund who previously elected the telephone exchange
privilege will be deemed to have elected the exchange privilege of the New
Fund if the reorganization is completed.
Redemptions
- -----------
Shares of the Fund and the New Fund properly presented for redemption
may be redeemed at the next determined net asset value per share.
Shareholders of the Fund who previously elected the telephone redemption
privilege will be deemed to have elected the New Fund's telephone
redemption privilege if the reorganization is completed.
DIVIDEND POLICIES OF FUNDS
The Fund distributes substantially all of its net investment income
and realized capital gains to its shareholders. The Fund declares net
income dividends daily and distributes those dividends monthly, and any net
realized capital gains are distributed at least annually, usually in
December. Distributions are reinvested in Fund shares unless the
shareholder elects to receive them in cash. The New Fund intends to follow
the same policies.
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS
The Fund is a diversified series of Thornburg Limited Term Municipal
Fund, Inc. ("Thornburg LTMF"), a Maryland corporation organized in 1984.
As a Maryland corporation, Thornburg LTMF is governed by applicable
Maryland and federal law, its articles of incorporation and its bylaws.
The business of Thornburg LTMF is supervised by its Board of Directors.
The New Fund is a diversified series of Thornburg Trust, a
Massachusetts business trust organized in 1987. As a Massachusetts
business trust, Thornburg Trust is governed by applicable Massachusetts and
federal law, its declaration of trust, as amended, and its bylaws. The
business of Thornburg Trust is supervised by Thornburg Trust's Trustees.
Thornburg LTMF is currently authorized under its articles of
incorporation, as amended, to issue 300,000,000 Class A shares of the Fund,
150,000,000 Class C shares of the Fund, and 250,000,000 Institutional Class
shares. Each share has a par value of $.001. The Board of Directors is
permitted to increase this authorization from time to time under Maryland
law. The Board of Directors is also permitted to create additional funds
or "series," and to divide each such series into two or more classes of
shares. Thornburg Trust is authorized to create an unlimited number of
series, and with respect to each series, to issue an unlimited number of
full and fractional shares of one or more classes and to divide or combine
the shares into a greater or lesser number of shares without thereby
changing the proportionate beneficial interests in the series. All of the
shares of Thornburg LTMF and of Thornburg Trust, respectively, have equal
voting rights with each other, except that only shares of the respective
series or separate classes within a series are entitled to vote on matters
concerning only that series or class. Neither Thornburg LTMF nor Thornburg
Trust permits cumulative voting.
Neither Thornburg LTMF nor Thornburg Trust holds annual shareholder
meetings. There normally will not be any meetings of shareholders of
Thornburg LTMF, Thornburg Trust or either of the Funds to elect directors
or trustees unless fewer than a majority of the directors or trustees then
holding office have been elected by shareholders. However, the Board of
Directors of Thornburg LTMF or the trustees of Thornburg Trust may call
special meetings from time to time to seek shareholder approval of certain
matters, and meetings of shareholders of either Thornburg LTMF or Thornburg
Trust will be called upon written request of shareholders holding in the
aggregate not less than 10% of the outstanding shares of any affected
series or class having voting rights.
Under Maryland law, shareholders of Thornburg LTMF are not liable for
the obligations of Thornburg LTMF. However, under Massachusetts law, there
is a remote possibility that shareholders of a Thornburg Trust could, under
certain circumstances, be held personally liable for the obligations of
such a trust. The declaration of trust for Thornburg Trust contains
provisions intended to limit any such liability and to provide
indemnification out of Fund property for any shareholder charged or held
personally liable for obligations or liabilities of the shareholder's fund
solely by reason of being or having been a shareholder of that Fund and not
because of the shareholder's acts or omissions or for some other reason.
Consequently, the risk of a shareholder of the New Fund incurring financial
loss on account of shareholder liability is limited to circumstances in
which the New Fund itself would be unable to meet its obligations.
ADDITIONAL INFORMATION ABOUT SHAREHOLDER ACCOUNTS
If the reorganization is approved, the New Fund will establish an
account for each Fund shareholder.
No further purchases of the shares of the Fund may be made after the
date on which the shareholders of the Fund approve the reorganization, and
the share transfer books of the Fund will be permanently closed as of the
date of Closing. Only redemption requests and transfer instructions
received in proper form by the close of business on the day before the date
of Closing will be fulfilled by the Fund. Redemption requests or transfer
instructions received by the Fund after that date will be treated as
requests for the redemption or instructions for transfer of shares of the
New Fund credited to the accounts of shareholders of the Fund.
Accordingly, those redemption requests or transfer instructions after the
close of business on the day before Closing will be forwarded to the New
Fund. For a complete description of redemption procedures for the New
Fund, see the sections of the New Fund Prospectus under the caption
"Selling Fund Shares."
INFORMATION ABOUT THE REORGANIZATION
Agreement and Plan of Reorganization
- ------------------------------------
The following summary of the proposed Agreement and Plan of
Reorganization (the "Agreement") is qualified in its entirety by reference
to the Agreement attached to this Prospectus/Proxy Statement as Exhibit A.
The Agreement provides that the New Fund will acquire substantially
all of the assets of the Fund in exchange solely for shares of the New Fund
on the earliest practicable date following shareholder approval of the
reorganization (the "Closing Date"). The number of full and fractional
shares of the New Fund to be issued to shareholders of the Fund will be
determined on the basis of the relative net asset values per share and
aggregate net assets of the New Fund and the Fund computed immediately
after the closing of business on the New York Stock Exchange (currently
4:00 p.m., Eastern time) on the last business day before the Closing Date
(the "Valuation Date"). The net asset value per share for the Fund will be
determined by dividing each class's respective assets, less its respective
share of liabilities, by the total number of the class's outstanding
shares. Portfolio securities of the Fund will be valued in accordance with
the valuation practices of the Fund as described in its prospectus, which
is incorporated by reference herein. Valuation procedures of the New Fund
are the same as the valuation procedures of the Fund.
Immediately after the transfer of the Fund's assets to the New Fund on
the Closing Date, the Fund will distribute pro rata to its shareholders of
record as of the close of business on the Valuation Date the full and
fractional shares of the New Fund received by the Fund and will be
dissolved as soon thereafter as reasonably practicable. The distribution
will be accomplished by the establishment of accounts on the share records
of the New Fund in the name of each shareholder of the Fund, each
representing the respective pro rata number of full and fractional shares
of the New Fund due each of those shareholders. Following the
reorganization, shareholders will own shares of the New Fund of the same
class as the Fund shares owned before the reorganization. No certificates
for shares of the New Fund will be issued.
The consummation of the reorganization is subject to the conditions
set forth in the Agreement. The reorganization is also subject to approval
by the Fund's shareholders. Approval requires the affirmative vote of the
holders of a majority of each class of shares of the Fund. Further,
completion of the reorganization is subject to shareholder approval of the
"Related Transaction", which is the proposed transaction in which Thornburg
California Limited Term Municipal Fund will acquire substantially all of
the assets of Thornburg Limited Term Municipal Fund California Portfolio.
If shareholders of the Fund approve the reorganization, but the Related
Transaction is not approved, the Board of Directors of the Fund will
consider the available alternatives. The Agreement may be terminated and
the reorganization abandoned prior to the Closing Date, before or after
approval by shareholders of the Fund, by resolution of the Board of
Directors of the Fund or the Trustees of Thornburg Trust, under
circumstances specified in the Agreement.
The Fund will pay the costs of the reorganization, which include fees
and costs associated with preparing, filing, printing and distributing
proxy materials, proxy solicitation costs, costs associated with qualifying
shares for sale in various states, and the deregistration and dissolution
of Thornburg LTMF.
The Board of Directors of Thornburg LTMF has determined that the
reorganization will not result in any dilution to the interests of the
Fund's shareholders, and that participation in the reorganization is in the
best interests of the Fund's shareholders.
Full and fractional shares of beneficial interest of the New Fund will
be issued to shareholders of the Fund in accordance with the procedures
under the Agreement described above. Each share will be fully paid and
non-assessable by the New Fund when issued, and will have no preemptive or
conversion rights. See comparative information on shareholder rights,
below, for additional information with respect to the shares of the New
Fund.
Considerations of the Fund's Board of Directors
- -----------------------------------------------
Thornburg Investment Management, Inc. ("TIMI"), the investment adviser
to both the Fund and the New Fund, proposed and recommended the
reorganization to the Board of Directors of Thornburg (the "Board") to
simplify certain compliance and administrative functions and to reduce the
costs associated with the performance of those functions. Based upon
TIMI's recommendation, and after consideration of the rationale for the
reorganization and certain additional factors described below, the Board,
including all of the directors who are not "interested persons"
("Independent Directors") as that term is used in the Investment Company
Act of 1940 (the "1940 Act"), has determined that the reorganization is in
the best interest of the shareholders of the Fund and that the terms of the
agreement and plan of reorganization are fair and reasonable.
The Board considered the recent increases in compliance and related
functions performed for the Fund, and the likely further increase in those
functions in the future due to regulatory and rulemaking initiatives by the
Congress and the Securities and Exchange Commission. The Board noted
specifically in this connection the following factors:
. increased duties for the Board assuring compliance with
revised regulations applicable to mutual funds
generally;
. increased audit committee functions and additional time
devoted to audit committee functions by the independent
accountants;
. increased number of filings by Thornburg LTMF of
documents required under state and federal law and
increased time for review and discussion of those
filings by the Board;
and,
. increased Board fees and associated travel expenses and
other expenses occasioned by these increased
activities.
The Board further noted in this regard that these functions are
generally duplicative of comparable functions performed for and by
Thornburg Investment Trust and its Trustees and audit committee.
The Board concluded that the general complexity of compliance, and
administration of compliance could be reduced significantly if the two
funds currently offered by Thornburg LTMF were combined with the ten
existing funds offered by Thornburg Investment Trust. This combination
would, in the Board's view, eliminate the current duplication and reduce
complexity by substituting one investment company in the place of two.
Moreover, the Board concluded that the reorganization would result in
significant cost savings, because the two funds of Thornburg Trust which
will acquire Thornburg LTMF's two current funds will share with Thornburg
Trust's other funds a number of costs which are currently duplicated (and
thus not shared) by Thornburg LTMF and Thornburg Trust.
In this latter regard the Board considered:
. legal fees and costs associated with advice on
compliance matters, preparation of documents related
to compliance, preparation of documents for Board of
Directors and audit committee meetings;
. legal counsel preparation for and attendance at Board
of Directors and audit committee meetings;
. fees and costs associated with preparation and filing
of registration statements and other periodic filings,
and general corporate work associated with the
maintenance of an additional corporate entity;
. costs, including Directors' fees and travel and other
expenses associated with the Board's and the audit
committee's fees and meetings; and
. expenses and fees of the independent accountants.
The Board also considered the likelihood of future increases in these costs
because of increased rulemaking and regulatory complexity, increasing
duties placed on investment company directors and audit committees, the
possible need to hire additional legal counsel and other persons for audit
committees, and possible increases in the frequency of shareholder meetings
to elect investment company directors. Based upon estimates by TIMI and
legal counsel, the Board determined that it was reasonable to conclude that
the costs of the reorganization could be recovered in less than two years.
The Board also considered other factors in evaluating the proposed
reorganization, including the following:
(1) There would be no change in investment objectives, investment
policies, or investment risks as a result of the reorganization;
(2) After the reorganization, investment management, administrative
services, and other functions would be performed under contracts having
substantially the same terms as the existing contracts;
(3) Fees and expenses for the New Fund are expected to be virtually
the same as fees and expenses for the Fund, except for the costs of the
reorganization (which are expected to be offset, and exceeded over time by
cost savings);
(4) The reorganization will result in no dilution of shareholders'
interests;
(5) Shareholders of the Fund will receive shares in the New Fund of
the class corresponding to the same class of shares in the Fund;
(6) The reorganization will be accomplished without recognition of
gain or loss for federal income tax purposes by shareholders of Thornburg
LTMF; and
(7) No sales charges or transaction fees will be assessed against
shareholders in connection with the reorganization.
Federal Income Tax Consequences
- -------------------------------
The reorganization is intended to qualify for federal income tax
purposes as a tax-free reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended, with no taxable gain or loss recognized
by the Fund, the New Fund, or shareholders of the Fund as a consequence of
the reorganization. As a condition to the closing of the reorganization,
the Fund and the New Fund will receive an opinion of legal counsel to that
effect based on certain assumptions and representations made by the Fund
and the New Fund.
Shareholders of the Fund should consult their tax advisers regarding
the effect, if any, of the proposed reorganization in light of their
individual circumstances. In particular, shareholders of the Fund should
also consult their tax advisers as to the state, local and other tax
consequences, if any, of the reorganization.
CAPITALIZATION
The following table sets forth the capitalization of the Fund and the
New Fund as of December 31, 2003 and the pro forma capitalization of the
combined New Fund as if the reorganization occurred on that date. These
numbers will be different at the time of closing because the Fund's net
assets for each class will increase or decrease.
CAPITALIZATION OF FUNDS AS OF DECEMBER 31, 2003
FUND NEW FUND PRO FORMA
---- -------- ---------
NET ASSETS
- ----------
Class A shares $1,044,399,875. -0- $1,044,399,875.
Class C shares $ 155,996,351. -0- $ 155,996,351.
Class I shares $ 211,440,262. -0- $ 211,440,262.
TOTAL $1,411,836,488. -0- $1,411,836,488.
NET ASSETS PER SHARE
Class A shares $13.93 -0- $13.93
Class C shares $13.96 -0- $13.96
Class I shares $13.93 -0- $13.93
SHARES OUTSTANDING
Class A shares 75,580,174.625 -0- 74,580,174.625
Class C shares 11,171,853.884 -0- 11,171,853.884
Class I shares 15,235,727.402 -0- 15,235,727.402
TOTAL 100,987,755.911 -0- (1) 200,987,755.911
SHARES AUTHORIZED
Class A shares 300,000,000 unlimited unlimited
Class C shares 150,000,000 unlimited unlimited
Class I shares 250,000,000 unlimited unlimited
TOTAL 700,000,000 unlimited unlimited
(1) It is anticipated that a nominal number of shares of each class
will be issued to an officer of TIMI in order to permit the consummation of
corporate actions before the reorganization.
ADDITIONAL INFORMATION ABOUT THE FUNDS
Additional information respecting the New Fund is included in the
Thornburg Limited Term Municipal Funds Institutional Class Shares
prospectus dated _______________, 2004 (the "New Fund Prospectus"), which
accompanies this Prospectus/Proxy Statement, and in the Thornburg Limited
Term Municipal Funds Institutional Class Shares Statement of Additional
Information dated ___________________, 2004, which has been filed with the
Securities and Exchange Commission. Additional information is also
included in the Statement of Additional Information dated ________________,
2004 related to the reorganization which has been filed with the Securities
and Exchange Commission. The described New Fund Prospectus and statements
of additional information are incorporated by reference herein. Copies of
the statements of additional information are available upon request and
without charge by calling 1-800-847-0200.
Information about the Fund is included in the Thornburg Institutional
Class Shares dated February 1, 2004, and in the Thornburg Funds
Institutional Class Shares Statement of Additional Information dated
February 1, 2004. The described prospectus and statement of additional
information have been filed with the Securities and Exchange Commission and
are incorporated by reference herein. Copies of the prospectus and the
statement of additional information are available upon request and without
charge by calling 1-800-847-0200.
Reports and other information filed by Thornburg LTMF and Thornburg
Trust can be inspected and copied at the Securities and Exchange
Commission's Public Reference Room at 450 Fifth Street, NW, Washington,
D.C. 20549. Information about the Public Reference Room may be obtained by
calling the Commission at 1-202-942-8090. Reports and other information
about the Funds are also available on the Commission's Internet site at
http://www.sec.gov and copies of information may be obtained, upon payment
of a duplicating fee, by writing the Commission's Public Reference Section,
Washington, D.C. 20549-0102, or contacting the Commission by e-mail at
publicinfo@sec.gov.
Thornburg LTMF files its registration statements and certain other
information with the Commission under Investment Company Act of 1940 file
number 811-4302. Thornburg Investment Trust files its registration
statements and certain other information with the Commission under
Investment Company Act of 1940 file number 811-05201.
VOTING INFORMATION
Proxies for the meeting are being solicited from the Fund's
shareholders by the Board of Directors of Thornburg LTMF. A proxy may be
revoked at any time at or before the meeting by oral or written notice to
the secretary of Thornburg LTMF, 119 East Marcy Street, Santa Fe, New
Mexico 87501, (800) 847-0200. Unless revoked, all valid proxies will be
voted in accordance with the specifications therein or, in the absence of
specifications, for approval of the reorganization.
Additional solicitations may be made by telephone, telegraph,
facsimile or personal contact by officers or employees of TIMI and its
affiliates or by a professional proxy solicitation firm or firms. Expenses
of proxy solicitation will be borne by the Fund. Thornburg LTMF has
engaged the proxy solicitation firm of D.F. King & Co., Inc. to assist in
soliciting proxies for the meeting at an estimated cost of $75,000.
Shares of the Fund of record at the close of business on _____________
(the "Record Date") will be entitled to vote at the meeting or any
adjournment thereof. The presence in person or by proxy of one-third of
the Fund's outstanding shares at the meeting will constitute a quorum.
Shareholders are entitled to one vote for each share held, and each
fractional share will be entitled to a proportionate fractional vote.
Approval of the reorganization requires the affirmative vote of a majority
of the outstanding shares of the Fund entitled to vote at the meeting. As
of _____________,2004, there were issued and outstanding ______ Class A
shares, and ______ Class C shares and ________ Class I shares of the Fund.
As of the same date, the following persons were known to own of record or
beneficially 5% or more of the issued and outstanding shares of any Class
of the Fund:
[to be inserted]
As of the same date, there were issued and outstanding ____ Class A
shares, ______ Class C shares, and ______ Class I shares of beneficial
interest of the New Fund. All of these shares were held by ________, 119
East Marcy Street, Santa Fe, New Mexico 87501. Ms. _______ was issued
these shares in order to permit certain actions in connection with the
initial organization of the New Fund.
In the event that a quorum is not present at the meeting, or a quorum
is present at the meeting but sufficient votes to approve the
reorganization are not received, the persons named as proxies may propose
one or more adjournments of the meeting to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of a
majority of those shares represented at the meeting in person or by proxy.
If a quorum is not present, the persons named as proxies will vote those
proxies which they are entitled to vote for the reorganization in favor of
such an adjournment and will vote those proxies required to be voted
against the reorganization against any such adjournment.
"Broker non-votes" are shares held in a broker's street name for which
the broker indicates that instructions have not been received from the
beneficial owners or other persons entitled to vote, and the broker does
not have discretionary voting authority. Abstentions in broker non-votes
will be counted as shares present for purposes of determining whether a
quorum is present but will not be voted for or against any adjournment or a
proposal. Accordingly, abstentions in broker non-votes effectively will be
a vote against adjournment and against the proposal because the required
vote is a percentage of the shares outstanding.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS,
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE REORGANIZATION.
Submission of Shareholder Proposals
- -----------------------------------
The Fund does not hold regular shareholder meetings. Shareholders
wishing to submit proposals for inclusion in a proxy statement for a
subsequent shareholder meeting should send their written proposals to the
secretary of Thornburg LTMF, 119 East Marcy Street, Santa Fe, New Mexico
87501.
Other Matters to Come Before the Meeting
- ----------------------------------------
The Board of Directors of Thornburg LTMF knows of no other business to
be brought before the meeting. However, if any other matters properly come
before the meeting, proxies will be voted in accordance with the judgment
of the Directors.
EXHIBIT A
to
PROSPECTUS/PROXY STATEMENT
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of the ____ day of December 2003, by and between THORNBURG INVESTMENT
TRUST, a Massachusetts business trust ("Thornburg Trust"), in respect of
Thornburg National Limited Term Municipal Fund (the "New Fund"), a separate
series of Thornburg Trust, and THORNBURG LIMITED TERM MUNICIPAL FUND, INC.
a Maryland corporation ("Thornburg LTMF"), in respect of Thornburg Limited
Term Municipal Fund National Portfolio (the "Fund"), a separate series of
Thornburg LTMF.
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1) of
the United States Internal Revenue Code of 1986, as amended (the "Code").
The reorganization will consist of (i) the transfer of substantially all of
the Assets (hereinafter defined) of the Fund to the New Fund in exchange
solely for Class A, Class C and Class I voting shares of beneficial
interest of the New Fund having no par value (the "New Fund Class A
Shares," "New Fund Class C Shares," and "New Fund Class I Shares,"
respectively, and collectively the "New Fund Shares") and (ii) the
distribution on the Closing Date (hereinafter defined) of the New Fund
Shares to the shareholders of the New Fund in complete liquidation of the
Fund as provided herein, all upon the terms and conditions hereinafter set
forth in this Agreement. All actions required to be taken by Thornburg
Trust pursuant to this Agreement, and all representations, warranties and
covenants of Thornburg Trust hereunder, are taken and made on behalf of the
New Fund. All actions required to be taken by Thornburg LTMF pursuant to
this Agreement, and all representations, warranties and covenants of
Thornburg LTMF hereunder, are taken and made on behalf of the New Fund.
THEREFORE, in consideration of the premises and of the covenants and
agreements hereafter described, the parties hereto covenant and agree as
follows.
1. Procedure for Reorganization.
(a) Subject to the terms and conditions herein set forth and
on the basis of the representations and warranties contained herein,
Thornburg LTMF agrees to transfer the Assets of the New Fund as set forth
in paragraph (b) to the New Fund, and Thornburg Trust agrees to deliver to
the New Fund in exchange therefor the number of the New Fund Shares
determined by dividing the value of the Assets computed in the manner and
as of the time and date set forth in paragraph 2(a), by the net asset value
of the New Fund Shares computed in the manner and as of the time and date
set forth in paragraph 2(b). These transactions shall take place at the
closing provided for in paragraph 3(a) (the "Closing").
(b) The Assets to be acquired by the New Fund shall consist of
all cash, portfolio securities and due bills for dividends, interest, or
other receivables or rights to receive any of the foregoing, receivables
for shares sold, and any claims or rights with respect to portfolio
securities, whether or not arising from contract, which are owned by the
New Fund on the closing date provided in paragraph 3(a) (the "Closing
Date"). The New Fund will retain cash and cash equivalents in an amount
reasonably estimated by it to be sufficient to discharge: (i) obligations
incurred in the ordinary course of its business, which could not reasonably
be paid before Closing and are not otherwise borne by any other person; and
(ii) costs resulting from the liquidation and deregistration of the Fund
and Thornburg LTMF. The Assets will not include any rights in and to the
"Thornburg" name or any variant thereof. The Fund has provided the New
Fund with a list of the current securities holdings of National Portfolio
as of the date of execution of this Agreement. Thornburg LTMF and the Fund
reserve the right to sell any of these securities in the ordinary course of
business but will not, without prior notification to Thornburg Trust,
acquire any additional securities for the Fund other than securities of the
type in which the New Fund is permitted to invest.
(c) On the Closing Date, Thornburg LTMF will cause the Fund to
be liquidated and to distribute pro rata to the Fund's shareholders of
record (the "Fund Shareholders"), determined on and as of the close of
business on the Valuation Date specified in paragraph 2(a), the New Fund
Shares received by Thornburg LTMF pursuant to paragraph (a). Specifically,
Thornburg LTMF shall (i) distribute the New Fund Class A Shares received in
the exchange, pro rata, to the Fund Shareholders holding Class A shares of
the Fund, (ii) distribute the New Fund Class C shares received in the
exchange, pro rata, to the Fund Shareholders holding Class C shares of the
Fund, and (iii) distribute the New Fund Class I Shares received in the
exchange, pro rata, to the Fund Shareholders holding Class I shares of the
Fund. The liquidation and distribution will be accomplished by the
transfer of the New Fund Shares then credited to the account of the Fund on
the books of New Fund, to open accounts on the share records of the Fund in
the names of the Fund Shareholders and representing the respective pro rata
number of New Fund due the Fund Shareholders.
(d) As of the Closing Date, any physically-issued share
certificates held by former Fund Shareholders and relating to Fund shares
exchanged for New Fund Shares in accordance with the preceding paragraph
(c) will represent only the right to receive the appropriate number of New
Fund Shares. As of the Closing Date, persons holding those certificates
will be requested to surrender their certificates. No redemption or
repurchase of any New Fund Shares credited to former Fund Shareholders in
place of Fund shares represented by unsurrendered certificates will be
permitted until those certificates have been surrendered for cancellation
or the certificates are cancelled upon the delivery of lost certificate
affidavits.
(e) Any transfer taxes payable upon issuance of New Fund
Shares in a name other than that of the registered holder of the New Fund
Shares on the books of the Fund as of the Closing Date shall, as a
condition of such issuance and transfer, be paid by the person to whom the
New Fund Shares are to be issued and transferred.
(f) The Fund shall be dissolved as soon as reasonably
practicable following the Closing Date. Thornburg LTMF will deregister
with the Securities and Exchange Commission (the "Commission") in
accordance with the Investment Company Act of 1940, as amended (the "1940
Act").
(g) Thornburg Trust will not assume any liability of Thornburg
LTMF, or acquire any Asset subject to any liability, in connection with the
transactions contemplated by this Agreement, except that the New Fund will
assume the obligation to pay for any portfolio securities purchased by the
Portfolio before the Closing Date in the ordinary course of its business
and the purchase of which was disclosed to the New Fund by the New Fund
Portfolio when the commitment to purchase arose.
2. Valuation.
(a) The value of the Fund's Assets to be acquired by the New
Fund hereunder shall be the value of those assets computed as of the close
of business on the New York Stock Exchange and after the declaration of any
dividends on the business day next preceding the Closing Date (the time and
date being hereinafter called the "Valuation Date"). The value of the
portion of the Fund's Assets consisting of portfolio securities will be
computed by Kenny Information Systems, subject to adjustment by the amount,
if any, agreed to by the New Fund and the Fund. In determining the value
of the Assets, each portfolio security and other portfolio asset shall be
priced by Kenny Information Systems in accordance with the policies and
procedures of the New Fund (subject to the third sentence hereafter) as set
forth in the then current prospectuses and statement of additional
information applicable to the New Fund, subject to adjustments agreed to by
the Fund and the New Fund. All computations shall be made by Kenny
Information Systems. In the event of a dispute with respect to the
valuation of any portfolio security or other portfolio asset of the Fund,
the New Fund and the Fund shall, by mutual consent, select an independent
third party to resolve the matter, and the determination of the independent
party will bind the Funds.
(b) The value of the Assets of each class of the Fund shall be
divided, as of the close of business on the New York Stock Exchange and
after the declaration of any dividends on the Valuation Date, among the
Class A, Class C and Class I shares of National Portfolio (the "Class A
Assets," "Class C Assets," and "Class I Assets"), respectively, in
accordance with the Fund's customary method of accounting.
(c) The net asset value of each New Fund Share shall be the
net asset value per share computed as of the close of business on the New
York Stock Exchange and after the declaration of any dividends on the
Valuation Date, using the valuation procedures set forth in the New Fund's
then current prospectuses, and in accordance with the New Fund's customary
method of accounting.
(d) On the Closing Date, the New Fund shall issue to the Fund
full and fractional New Fund Class A, Class C and Class I shares in the
respective numbers determined in accordance with this paragraph 2(d). The
number of New Fund Class A shares shall be determined by dividing the value
of the Class A Assets by the net asset value of a New Fund Class A share
determined in accordance with paragraph 2(c). The number of New Fund Class
C shares shall be determined by dividing the value of the Class C Assets by
the net asset value of a New Fund Class C share determined in accordance
with paragraph 2(c). The number of New Fund Class I shares shall be
determined by dividing the value of the Class I Assets by the net asset
value of a New Fund Class I share determined in accordance with paragraph
2(c).
3. Closing and Closing Date.
(a) The Closing Date shall be as soon as practicable after
approval of the transactions contemplated in this Agreement by the Fund's
Shareholders has been obtained. The Closing will be held at 119 East Marcy
Street, Suite 202, Santa Fe, New Mexico 87501, in the offices of Thornburg
Management Company, Inc., or at such other place as the parties may agree.
The time of Closing will be 8:00 a.m. New York time on the Closing Date.
All acts taking place at the Closing will be deemed to occur simultaneously
as of the time of the Closing on the Closing Date.
(b) The Fund's portfolio securities shall be available for
inspection by the New Fund, its custodian bank or such other agents of
Thornburg Trust as Thornburg Trust shall reasonably designate, at the
offices of the Fund's custodian, no later than five business days preceding
the Valuation Date, and the Fund will immediately notify the New Fund's
investment adviser of any portfolio security thereafter acquired or sold by
the Fund. The Fund's securities and cash shall be delivered by Thornburg
LTMF to State Street Bank & Trust Company, Boston, MA 02205-9087, as
custodian for the New Fund for the account of the New Fund on the Closing
Date, duly endorsed in proper form for transfer in such condition as to
constitute good delivery thereof in accordance with the custom of brokers.
The cash delivered shall be in the form of currency or certified or
official bank checks, or completed federal funds wire, payable to the order
of "State Street Bank & Trust Co., Custodian for Thornburg Limited Term
Municipal Fund." The Fund will cause its custodian to deliver at Closing a
certificate of an authorized officer of the Custodian stating that the
Fund's have been delivered in proper form to the New Fund's custodian on or
before the Closing Date.
(c) In the event that on the Valuation Date (i) the New York
Stock Exchange is closed to trading, or (ii) trading or the reporting of
trading in securities generally is disrupted so that accurate appraisal of
the value of the net assets of the New Fund or the Fund is impracticable,
the Closing Date shall be postponed until the first business day after the
day when trading is fully resumed and reporting is restored.
(d) Thornburg LTMF shall deliver to Thornburg Trust
shareholder and shareholder account information as of the close of business
on the Valuation Date as reasonably requested by Thornburg Trust. The New
Fund shall issue and deliver a confirmation to the Fund at the Closing
stating the number of New Fund Shares to be credited on the Closing Date to
the Fund, and stating the number of New Fund Shares credited to the Fund's
account on the books of the New Fund. Thornburg Trust shall issue and
deliver to each former Fund Shareholder, after the Closing, a confirmation
stating the number of New Fund Shares credited to the shareholder's
account. At the Closing, each party shall deliver to the other such bills
of sale, checks, assignments, stock certificates, receipts or other
documents as such other party may reasonably request.
4. Representations and Warranties.
(a) Thornburg LTMF represents and warrants to Thornburg Trust
as follows:
(i) The Fund is a series of Thornburg LTMF, which is a
corporation duly formed and validly existing under
the laws of the State of Maryland;
(ii) Thornburg LTMF is a duly registered open-end
management investment company, and its
registration with the Commission as an investment
company undr the 1940 Act is in full force and
effect;
(iii) The current prospectuses and statements of
additional information of the Fund, each dated
November 1, 2003, conform in all material respects
to the applicable requirements of the Securities
Act of 1933 (the "1933 Act") and the rules and
regulations of the Commission thereunder and do
not include any untrue statement of a material
fact or omit to state any material fact required
to be stated therein or necessary to make the
statements therein, in light of the circumstances
under which they were made, not misleading;
(iv) To the knowledge of Thornburg LTMF, no consent,
approval, authorization or order of any court or
governmental authority is required for the
consummation by the Fund of the transactions
contemplated by this Agreement, except as may be
required under the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"),
the 1940 Act, or the rules and regulations under
those Acts, all of which shall have been received
prior to the Closing Date, except for such
consents, approvals, authorizations or orders as
may be required subsequent to the Closing Date;
(v) The execution, delivery and performance of this
Agreement will not result in a material violation
of Thornburg LTMF's Articles of Incorporation or
By-Laws or of any agreement, indenture,
instrument, contract, lease or other undertaking
to which the Fund or Thornburg LTMF is a party or
by which it is bound;
(vi) The Fund has valued, and will continue to value
its portfolio securities and other assets in
accordance with applicable legal requirements;
(vii) All material contracts or other commitments (other
than this Agreement) to which the Fund is a party
will be terminated without liability to the Fund
or the New Fund on or before the Closing Date;
(viii) No litigation or administrative proceeding or
investigation of or before any court or
governmental body or self regulatory organization
is presently pending or threatened against the
Fund or any of its properties or assets.
Thornburg LTMF knows of no facts which might form
the basis for the institution of such proceedings,
and neither Thornburg LTMF nor the Fund is a party
to or subject to the provisions of any order,
decree or judgment of any court or governmental
body or self regulatory organization which
materially and adversely affects their business or
their ability to consummate the transactions
herein contemplated;
(ix) The statement of assets and liabilities, the
statement of operations, and the statement of
changes in net assets of the Fund at June 30, 2003
have been audited by PricewaterhouseCoopers, LLP,
independent certified public accountants, and
those statements, together with the statements of
assets and liabilities, the statements of
operations, and the statements of changes in net
assets at December 31, 2003, when issued, fairly
reflect, or in the case of the December 31, 2003
statements will fairly reflect, in all material
respects the assets, financial condition, results
of operations, and changes in net assets of the
Fund as of and for the periods ended on those
dates and have, or in the case of the December 31,
2003 statements, shall have been prepared, in
accordance with generally accepted accounting
principles consistently applied; and there are as
of the dates thereof no known liabilities of the
Fund other than liabilities disclosed or provided
for in the foregoing statements;
(x) Since June 30, 2003, there has been no material
adverse change in the Fund's financial condition,
assets, liabilities or business other than changes
occurring in the ordinary course of business; and
the Fund has not incurred any indebtedness
maturing more than one year from the date such
indebtedness was incurred except as disclosed in
Exhibit A. For the purposes of this subparagraph
(x), a decline in net asset value per share of the
Fund's Shares is not a material adverse change;
(xi) At the Closing Date, all material federal and
other tax returns and reports of the Fund required
by law then to be filed (including any extensions)
shall have been filed, and all federal and other
taxes shall have been paid so far as due, or
provision shall have been made for the payment
thereof, and to the best of Thornburg LTMF's
knowledge no such return of or relating to the
Fund is currently under audit, and no assessment
has been asserted with respect to the Fund;
(xii) The Fund has met the requirements of Subchapter M
of the Code and has elected to be treated as a
regulated investment company for each taxable year
of its operations since its inception, and will so
qualify for the taxable year ending on the Closing
Date;
(xiii) The Fund is authorized to issue 300,000,000,
150,000,000 and 125,000,000 Class A, Class C and
Class I shares, respectively, of the Fund, at the
date hereof. All issued and outstanding shares of
the Fund have been offered and sold in compliance
in all material respects with applicable
registration requirements of the 1933 Act and
state securities laws. All issued and outstanding
shares of the Fund are, and at the Closing Date
will be, duly and validly issued and outstanding,
fully paid and non-assessable by Thornburg LTMF.
All of the issued and outstanding Shares of the
Fund will, at the time of Closing, be held by
shareholder accounts in the amounts set forth in
the list of shareholder's accounts submitted to
Thornburg Trust pursuant to paragraph 3(d). The
Fund does not have outstanding any options,
warrants or other rights to subscribe for or
purchase any securities issuable by the Fund;
(xiv) At the Closing Date, the Fund will have good and
marketable title to the Assets to be transferred
to the New Fund pursuant to paragraph 1(b),
subject to no lien, encumbrance or competing
interest in any person, and full right, power, and
authority to sell, assign, transfer and deliver
the Assets hereunder, and upon delivery and
payment for those Assets, the New Fund will
acquire good and marketable title thereto, subject
to no restriction on the full transfer thereof,
including such restrictions as might arise under
the 1933 Act other than as disclosed in writing to
the New Fund;
(xv) The execution, delivery and performance of this
Agreement will have been duly authorized prior to
the Closing Date by all necessary actions on the
part of Thornburg LTMF's Board of Directors, and
this Agreement constitutes a valid and binding
obligation of Thornburg LTMF, enforceable in
accordance with its terms, subject to the approval
of the shareholders of the Fund, and further
subject as to enforcement to bankruptcy,
insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' rights
and subject to general equity principles;
(xvi) The information furnished by the New New Fund LTMF
for use in applications for orders, registration
statements, proxy materials and other documents
which may be necessary in connection with the
transactions contemplated hereby is and shall be
accurate and complete in all material respects and
shall comply in all material respects with federal
securities and other laws and regulations
thereunder applicable thereto;
(xvii) The registration statement filed by the New Fund
on Form N-14 relating to the New Fund Shares that
will be registered with the Commission pursuant to
this Agreement, which shall include the proxy
statement of Thornburg LTMF in respect of the Fund
with respect to the transactions contemplated by
this Agreement, and any supplement or amendment
thereto or to the documents contained or
incorporated therein by reference (the "N-14
Registration Statement"), and the proxy materials
of Thornburg LTMF in respect of the Fund included
in the N-14 Registration Statement and filed with
the Commission pursuant to Section 14 of the 1934
Act with respect to the transactions
contemplated by this Agreement, and any supplement
or amendment thereto or the documents appended
thereto (the "Reorganization Proxy Materials"),
from their effective dates with the Commission,
through the time of the meeting of shareholders of
the Fund contemplated therein (the "Shareholders
Meeting") and at the Closing Date: (a) shall
comply in all material respects with the
provisions of the 1933 Act, 1934 Act and the 1940
Act, the rules and regulations thereunder, and
applicable state securities laws, and (b) shall
not contain any untrue statement of a material
fact or omit to state a material fact required to
be stated therein or necessary to make the
statements therein not misleading; provided, that
the representations and warranties in this
subparagraph shall only apply to statements in or
omissions from the N-14 Registration Statement or
Reorganization Proxy Materials made by, or in
reliance upon and in conformity with information
furnished by or on behalf of Thornburg LTMF.
(b) Thornburg Trust represents and warrants to Thornburg LTMF
as follows:
(i) The New Fund is a series of Thornburg Trust, which
is a business trust duly formed and validly
existing under the laws of the Commonwealth of
Massachusetts;
(ii) Thornburg Trust is a duly registered open-end
management investment company and its registration
with the Commission as an investment company under
the 1940 Act is in full force and effect;
(iii) The prospectuses and statements of additional
information for shares of the New Fund, when
effective, shall conform in all material respects
to the applicable requirements of the 1933 Act and
the rules and regulations of the Commission
thereunder and will not include any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or
necessary to make the statements therein, in light
of the circumstances under which they were made,
not misleading;
(iv) To the knowledge of Thornburg Trust, no consent,
approval, authorization or order of any court or
governmental authority is required for the
consummation by the New Fund of the transactions
contemplated by this Agreement, except as may be
required under the 1933 Act, the 1934 Act, the
1940 Act, or the rules and regulations under those
Acts, all of which shall have been received prior
to the Closing Date, except for such consents,
approvals, authorizations or orders as may be
required subsequent to the Closing Date;
(v) The execution, delivery and performance of this
Agreement will not result in a material violation
of Thornburg Trust's Declaration of Trust or By-
Laws or of any agreement, indenture, instrument,
contract, lease or other undertaking to which the
New Fund or Thornburg Trust is a party or by which
it is bound;
(vi) The New Fund has valued, and will continue to
value, its portfolio securities and other assets
in accordance with applicable legal requirements;
(vii) No litigation or administrative proceeding or
investigation of or before any court or
governmental body or self regulatory organization
is presently pending or threatened against the New
Fund or any of its properties or assets.
Thornburg Trust knows of no facts which might form
the basis for the institution of such proceedings,
and neither Thornburg Trust nor the New Fund is a
party to or subject to the provisions of any
order, decree or judgment of any court or
governmental body or self regulatory organization
which materially and adversely affects their
business or their ability to consummate the
transactions herein contemplated;
(viii) At the Closing Date, all federal and other tax
returns and reports of the New Fund required by
law then to be filed shall have been filed, and
all federal and other taxes shall have been paid
for as due or provision shall have been made for
the payment thereof and, to the best of Thornburg
Trust's knowledge, no such return of or relating
to the New Fund is currently under audit, and no
assessment has been asserted with respect to the
New Fund;
(ix) The New Fund intends to meet the requirements of
Subchapter M of the Code, and intends to be
treated as a regulated investment company for the
first taxable fiscal year of its operation
including the Closing Date;
(x) Thornburg Trust is authorized to issue an
unlimited number of shares of beneficial interest
having no par value. All issued and outstanding
New Fund Shares at the Closing Date will be duly
and validly issued and outstanding, fully paid and
non-assessable. The New Fund does not have
outstanding any options, warrants or other rights
to subscribe for or purchase any securities
issuable by the New Fund, nor is there outstanding
any security convertible into New Fund Shares
(except as the trustees of Thornburg Trust may
convert classes of shares in accordance with
Thornburg Trust's Declaration of Trust, as
amended);
(xi) The execution, delivery and performance of this
Agreement will have been duly authorized prior to
the Closing Date by all necessary actions on the
part of Thornburg Trust's trustees, and this
Agreement constitutes a valid and binding
obligation of Thornburg Trust enforceable in
accordance with its terms, subject as to
enforcement to bankruptcy, insolvency,
reorganization, moratorium and other laws relating
to or affecting creditors' rights and subject to
general equity principles;
(xii) New Fund Shares to be issued and delivered to the
Fund pursuant to the terms of this Agreement will
at the Closing Date have been duly authorized and,
when so issued and delivered, will be duly and
validly issued New Fund Shares, and will be fully
paid and non-assessable by Thornburg Trust, except
to the extent that shareholders of Thornburg Trust
may be held personally liable for obligations of
Thornburg Trust;
(xiii) The N-14 Registration Statement and the
Reorganization Proxy Materials, from their
effective dates with the Commission, through the
time of the Shareholders Meeting and at the
Closing Date:
(a) shall comply in all material respects with
the provisions of the 1933 Act, 1934 Act and
the 1940 Act, the rules and regulations
thereunder, and applicable state securities
laws, and
(b) shall not contain any untrue statement of a
material fact or omit to state a material
fact required to be stated therein or
necessary to make the statements made therein
not misleading; provided, that the
representations and warranties in this
subparagraph shall only apply to statements
in or omissions from the N-14 Registration
Statement or the Reorganization Proxy
Materials made in reliance upon and in
conformity with information furnished by or
on behalf of Thornburg Trust;
(xiv) At the Closing Date, the New Fund will have good
and marketable title to its assets, subject to no
lien, encumbrance or competing interest in any
person, and full right, power and authority to
sell, assign, transfer and deliver those assets
other than as disclosed in writing to Thornburg
LTMF; and
(xv) The information furnished by Thornburg Trust for
use in applications for orders, registration
statements, proxy materials and other documents
which may be necessary in connection with the
transactions contemplated hereby is and shall be
accurate and complete in all material respects and
shall comply in all material respects with federal
securities and other laws and regulations
thereunder applicable thereto.
5. Covenants of the Parties.
(a) The New Fund and the Fund each will operate its business
in the ordinary course between the date hereof and the Closing Date, it
being understood that the ordinary course of business will include
customary dividends and distributions and any other distribution that may
be advisable.
(b) Thornburg LTMF will call a meeting of the shareholders of
the Fund to be held as promptly as practicable to consider and act upon
this Agreement and to take all other action necessary to obtain approval of
the transactions contemplated herein.
(c) Thornburg LTMF covenants that the New Fund Shares to be
issued hereunder will not be sold or distributed other than in accordance
with the terms of this Agreement.
(d) Thornburg LTMF will furnish to Thornburg Trust all
information reasonably requested and that is within its control for the
preparation of the N-14 Registration Statement, the preparation and
distribution of the Reorganization Proxy Materials, and for effectuating
the transactions contemplated herein. Thornburg LTMF will furnish, or
cause its transfer agent to furnish, to Thornburg Trust all information
reasonably requested respecting the beneficial ownership of Thornburg LTMF
shares, shareholders and shareholder accounts for the mailing of the
Reorganization Proxy Materials and for the establishment of New Fund
accounts for shareholders of the Fund in accordance with paragraph 1(c).
Thornburg LTMF will furnish, or cause its custodian or other agents to
furnish, all portfolio asset information reasonably requested by Thornburg
Trust in connection with, and to facilitate, the transactions contemplated
by this Agreement.
(e) Subject to the provisions of this Agreement, Thornburg
Trust and Thornburg LTMF will each take, or cause to be taken, all actions,
and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by
this Agreement.
(f) Thornburg LTMF shall furnish to Thornburg Trust within 30
days after the Closing Date a detailed trial balance of the Fund's assets
and liabilities and computations showing amortization of premium on
portfolio securities. Thornburg Funds shall furnish to Thornburg Trust
when available the final federal income tax return for the Fund.
(g) Thornburg LTMF will, as promptly as practicable after the
Closing, wind up the business of the Fund, deregister the Fund under
applicable federal securities laws, file final reports with the state
securities regulators requiring any such reports, prepare and distribute
final account statements and tax statements to persons who were formerly
shareholders of the Fund, and file any necessary federal and state tax
returns.
(h) Thornburg Trust will prepare and file the N-14
Registration Statement, will file the Reorganization Proxy Materials with
applicable regulatory authorities, and will use all reasonable efforts to
obtain clearance or effectiveness of the N-14 Registration Statement and
the Reorganization Proxy Materials, all in accordance with the 1933 Act,
the 1934 Act, and the 1940 Act, and applicable regulations and rulings
thereunder, and in accordance with any applicable state statutes and
regulations.
(i) Thornburg Trust agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act, the 1934
Act, the 1940 Act and such of the state securities laws as are necessary or
appropriate in order to continue its operations after the Closing Date.
6. Conditions Precedent to Obligations of Thornburg LTMF.
The obligations of Thornburg LTMF to consummate the
transactions provided for herein shall be subject, at its election, to the
performance by Thornburg Trust of all the obligations to be performed by it
hereunder on or before the Closing Date, and, in addition thereto, the
following further conditions:
(a) All representations and warranties of Thornburg Trust
contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date; and
(b) Thornburg Trust shall have delivered to Thornburg LTMF a
certificate executed in its name by its President or Vice President and its
Treasurer or Assistant Treasurer, in form and substance satisfactory to
Thornburg LTMF and dated as of the Closing Date, certifying that the
representations and warranties of Thornburg Trust made in this Agreement
are true and correct at and as of the Closing Date.
7. Conditions Precedent to Obligations of Thornburg Trust.
The obligations of Thornburg Trust to complete the transactions
provided for herein shall be subject, at its election, to the performance
by Thornburg LTMF of all the obligations to be performed by it hereunder on
or before the Closing Date and, in addition thereto, the following
conditions:
(a) All representations and warranties of Thornburg LTMF
contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date;
(b) Thornburg LTMF shall have delivered to Thornburg Trust the
following information prepared as of the Closing Date: (i) net asset value
pricing sheet of the Fund, with a portfolio listing of each portfolio
security including the principal amount, identification of issue, cost, tax
lot cost, market price per unit and market value; (ii) trial balance of the
Fund's general ledger; (iii) supporting schedules with the details for
accounts receivable and accounts payable; (iv) certification from the
Fund's custodian that it has delivered to the New Fund's custodian the
Assets acquired by the New Fund; and (v) confirmation from the New Fund's
transfer agent of the aggregate number of the Fund's shares outstanding and
a reconciliation of that number to the number of shares shown in the
pricing sheet referred to in (i) above;
(c) Thornburg LTMF shall have delivered to Thornburg Trust a
certificate executed in its name by its President or Vice President and its
Treasurer or Assistant Treasurer, in form and substance satisfactory to
Thornburg Trust and dated as of the Closing Date, certifying that the
representations and warranties of Thornburg LTMF made in this Agreement are
true and correct at and as of the Closing Date;
(d) This Agreement and the transactions contemplated herein
shall have been approved by the requisite vote of the holders of the
outstanding shares of the Fund in accordance with applicable law and
evidence of the approval shall have been delivered to Thornburg Trust; and
(e) The parties shall have received a favorable opinion of
White, Koch, Kelly & McCarthy, P.A. satisfactory to Thornburg LTMF and
Thornburg Trust, substantially to the effect that, based upon certain
facts, assumptions and representations, the transactions contemplated by
this Agreement constitute a tax-free reorganization described in Section
368(a)(1) of the Internal Revenue Code of 1986, as amended, for federal
income tax purposes. The delivery of such opinion is conditioned upon
receipt by White, Koch, Kelly & McCarthy, P.A. of representations it shall
request of Thornburg Trust and Thornburg LTMF.
8. Further Conditions Precedent to Obligations of Thornburg Trust
and Thornburg LTMF.
Each party's obligations hereunder are, at its election,
subject to the further conditions that:
(a) On the Closing Date, no action, suit or other proceeding
shall be pending before any court or governmental agency in which it is
sought to restrain or prohibit, or obtain damages or other relief in
connection with, this Agreement or the transactions contemplated herein;
(b) On or before the Closing Date, all consents of other
parties and all other consents, orders and permits of federal, state and
local regulatory authorities (including those of the Commission and of
state securities authorities, including "no-action" positions of such
federal or state authorities) deemed necessary by Thornburg Trust or
Thornburg LTMF to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except where
failure to obtain any such consent, order or permit would not involve a
risk of a material adverse effect on the business assets or properties of
Thornburg Trust or Thornburg LTMF; and
(c) On or before the Closing Date, the N-14 Registration
Statement shall have become effective under the 1933 Act and no stop orders
suspending the effectiveness thereof shall have been issued and, to the
best knowledge of the parties hereto, no investigation or proceeding for
that purpose shall have been instituted or be pending, threatened or
contemplated under the 1933 Act.
9. Responsibility for Fees and Expenses.
Thornburg LTMF will pay the costs of the transactions
contemplated hereby, including the expenses of preparing and filing the N-
14 Registration Statement, the costs of distributing the prospectuses and
proxy materials, proxy solicitation costs, and other costs.
10. Massachusetts Business Trust.
Thornburg Trust is organized as a Massachusetts business trust,
and references in this Agreement to Thornburg Trust mean and refer to the
trustees of Thornburg Trust from time to time serving under its Declaration
of Trust on file with the Secretary of State of the Commonwealth of
Massachusetts, as the same may be amended from time to time, pursuant to
which Thornburg Trust conducts its business. It is expressly agreed that
the obligations of Thornburg Trust hereunder shall not be binding upon any
of Thornburg Trust's trustees, shareholders, nominees, officers, agents, or
employees of Thornburg Trust, or New Fund personally, but bind only the
property of the New Fund, as provided in Thornburg Trust's Declaration of
Trust. Moreover, no series of Thornburg Trust other than the New Fund
shall be responsible for the obligations of Thornburg Trust hereunder, and
all persons shall look only to the respective assets of the New Fund to
satisfy the obligations of Thornburg Trust hereunder. The execution and
delivery of this Agreement have been authorized by Thornburg Trust's
trustees, on behalf of the New Fund, and this Agreement has been signed by
authorized officers of Thornburg Fund acting as such, and neither such
authorization by such trustees, nor such execution and delivery by such
officers, shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the
respective property of the New Fund, as provided in Thornburg Trust's
Declaration of Trust.
11. Indemnification.
(a) The New Fund agrees to indemnify and hold harmless the
Fund and each of the Fund's directors and officers from and against any and
all losses, claims, damages, liabilities or expenses (including without
limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which jointly and severally, the Fund or any of its
directors or officers may become subject, insofar as any such loss, claim,
damage, liability or expense (or actions with respect thereto) arises out
of or is based on any breach by the New Fund of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
(b) The Fund agrees to indemnify and hold harmless the New
Fund and each of the New Fund's trustees and officers from and against any
and all losses, claims, damages, liabilities or expenses (including without
limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which jointly and severally, the New Fund or any of its
trustees or officers may become subject insofar as any such loss, claim,
damage, liability or expense (or actions with respect thereto) arises out
of or is based on any breach by the Fund of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
12. Entire Agreement; Survival of Warranties.
(a) Thornburg Trust and Thornburg LTMF agree that neither
party has made any representation, warranty or covenant not set forth
herein and that this Agreement constitutes the entire agreement between the
parties.
(b) The representations, warranties and covenants contained in
this Agreement or in any document delivered pursuant hereto or in
connection herewith shall survive the consummation of the transactions
contemplated hereunder.
13. Termination.
(a) This Agreement may be terminated by the mutual agreement
of Thornburg Trust and Thornburg LTMF. In addition, either Thornburg Trust
or Thornburg LTMF may at its option terminate this Agreement at or before
the Closing Date because:
(i) of a material breach by the other of any
representation, warranty or agreement contained
herein to be performed at or before the Closing Date;
or
(ii) a condition herein expressed to be precedent to the
obligations of the terminating party has not been met
and it reasonably appears that it will not or cannot
be met.
(b) In the event of any such termination, there shall be no
liability for damages on the part of either Thornburg Trust or Thornburg
LTMF, or their respective trustees, directors or officers, to the other
party or its trustees, directors or officers, but each shall bear, except
as otherwise provided in section 9, the expenses incurred by them
incidental to the preparation and carrying out of this Agreement.
14. Amendments.
This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized officers
of Thornburg LTMF and Thornburg Trust; provided, however, that following
the shareholders' meeting called by the Fund pursuant to this Agreement, no
such amendment may have the effect of changing the provisions for
determining the number of New Fund Shares to be issued to the Fund's
shareholders under this Agreement to the detriment of those shareholders
without their further approval.
15. Notices.
Any notice, report, statement or demand required or permitted
by any provisions of this Agreement shall be in writing and shall be given
by prepaid telegraph, telecopy or certified mail addressed to Thornburg
Trust, 119 East Marcy Street, Santa Fe, New Mexico 87501, Attention:
Brian J. McMahon, and to Thornburg LTMF, 119 East Marcy Street, Santa Fe,
New Mexico 87501, Attention: George T. Strickland.
16. Headings; Counterparts; Governing Law; Assignment.
(a) The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
(b) This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
(c) This Agreement shall be governed by and construed in
accordance with the substantive laws of the Commonwealth of Massachusetts,
provided that nothing herein shall be construed in a manner inconsistent
with the 1940 Act or the Advisers Act (as the same Acts shall have been or
will be amended) or rules, orders or regulations of such governmental
bodies or authorities having authority with respect to such Acts.
(d) This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations hereunder
shall be made by any party without the written consent of the other party.
Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm or corporation, other than the parties
hereto and their respective administrators, executors, legal
representatives, heirs, successors and permitted assigns, any rights or
remedies under or by reason of this Agreement.
(e) In the event of any litigation respecting this Agreement
or its subject matter, the prevailing party will be entitled to
reimbursement from the losing party for the prevailing party's cost of
suit, including reasonable attorneys' fees.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its President or Vice President and attested to
by its Secretary or Assistant Secretary.
THORNBURG INVESTMENT TRUST on behalf of
THORNBURG NATIONAL LIMITED TERM
MUNICIPAL FUND
By:
-------------------------------------
------------------, ----------------
THORNBURG LIMITED TERM MUNICIPAL FUND,
INC., on behalf of THORNBURG LIMITED TERM
MUNICIPAL FUND NATIONAL PORTFOLIO
By:
-------------------------------------
------------------, ----------------
EXHIBIT A
to
Agreement and Plan of Reorganization
Dated December ___, 2003
Thornburg Investment Trust
(on behalf of Thornburg National Limited Term Municipal Fund)
and
Thornburg Limited Term Municipal Fund, Inc.
(on behalf of Thornburg Limited Term Municipal Fund National Portfolio)
Subparagraph 4(a)(x): None.
PROSPECTUS AND PROXY STATEMENT
(For Holders of Class A and Class C Shares)
RELATING TO THE ACQUISITION OF THE ASSETS OF
THORNBURG LIMITED TERM MUNICIPAL FUND CALIFORNIA PORTFOLIO
a separate series of
THORNBURG LIMITED TERM MUNICIPAL FUND, INC.
119 East Marcy Street
Santa Fe, New Mexico 87501
(800) 847-0200
BY AND IN EXCHANGE FOR SHARES OF
THORNBURG CALIFORNIA LIMITED TERM MUNICIPAL FUND
a separate series of
THORNBURG INVESTMENT TRUST
119 East Marcy Street
Santa Fe, New Mexico 87501
(800) 847-0200
This Prospectus/Proxy Statement relates to the proposed transfer of
substantially all of the assets of Thornburg Limited Term Municipal Fund
California Portfolio (the 'Fund') in exchange solely for shares of
Thornburg Limited Term Municipal Fund (the 'New Fund'). The Fund and the
New Fund each have the same investment objective, which is to seek as high
a level of interest income which is exempt from federal and California
state individual income taxes as is consistent, in the view of the Funds'
investment adviser, with the preservation of capital. As a result of the
proposed transaction, each shareholder of the Fund Portfolio will receive
shares of the New Fund equal in value at the date of the exchange to the
value of that shareholder's shares of the Fund. The terms and conditions
of these transactions are more fully described in this Prospectus/Proxy
Statement and in the Agreement and Plan of Reorganization attached hereto
as Exhibit A.
This Prospectus/Proxy Statement, which should be retained for future
reference, sets forth concisely the information about the New Fund that a
prospective investor should know before investing. This Prospectus/Proxy
Statement is accompanied by the New Fund's "Thornburg Limited Term
Municipal Funds" Prospectus for Class A and Class C shares dated _______,
2004 (the "New Fund Prospectus"), which contains information about the New
Fund and which is incorporated by reference into this Prospectus/Proxy
Statement. A Statement of Additional Information dated ________________,
2004 (the 'Statement of Additional Information') containing additional
information about the New Fund has been filed with the Securities and
Exchange Commission and is incorporated by reference into this
prospectus/proxy statement. A copy of the New Prospectus and the Statement
of Additional Information may be obtained without charge by writing to
Thornburg at its address noted above or by calling 1-800-847-0200. Copies
of the Fund's current 'Thornburg Funds' prospectus for Class A and Class C
shares dated February 1, 2004, and its Statement of Additional Information
for Class A and Class C shares dated February 1, 2004 are incorporated by
reference into Prospectus/Proxy Statement, and may be obtained without
charge by writing to Thornburg at the address shown above or by calling 1-
800-847-0200.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROSPECTUS AND
PROXY STATEMENT AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY
REFERENCE AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THORNBURG INVESTMENT
TRUST OR THORNBURG LIMITED TERM MUNICIPAL FUND, INC.
INVESTMENTS IN THORNBURG CALIFORNIA LIMITED TERM MUNICIPAL FUND (THE
'NEW FUND') ARE SUBJECT TO RISK, INCLUDING POSSIBLE RISK OF PRINCIPAL, AND
WILL FLUCTUATE IN VALUE. SHARES OF THE NEW FUND ARE NOT BANK DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, AND ARE NOT INSURED BY, ANY
BANK, FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR
ANY GOVERNMENTAL AGENCY.
The date of this Prospectus/Proxy Statement is __________, 2004.
TABLE OF CONTENTS
Summary of the Proposed Reorganization
Investment Adviser and Distributor of the Fund and the New Fund
Investment Goals, Policies and Restrictions of the Fund and the New Fund
Principal Risk Factors
Fees and Expenses of the Fund and the New Fund
Purchase, Redemption and Exchange Procedures for the Fund and the New Fund
Dividend Policies of the Fund and the New Fund
Comparative Information on Shareholder Rights
Additional Information About Shareholder Accounts
Information About the Reorganization
Capitalization
Additional Information About the Fund and the New Fund
Voting Information
Exhibit A: Agreement and Plan of Reorganization
For detailed information about the New Fund, see the Thornburg Limited Term
Municipal Funds Prospectus dated __________ 2004 (the "New Fund
Prospectus"), which may be obtained without charge by writing Thornburg at
the address above or by calling 1-800-847-0200.
SUMMARY OF THE PROPOSED REORGANIZATION
The Board of Directors of Thornburg Limited Term Municipal Fund, Inc.
('Thornburg LTMF'), including the Directors who are not 'interested
persons' of Thornburg LTMF (the 'Independent Directors'), as defined in the
Investment Company Act of 1940, have reviewed and unanimously approved an
agreement and plan of reorganization (the 'Agreement') between Thornburg
LTMF on behalf of Thornburg Limited Term Municipal Fund California
Portfolio (the 'Fund') and Thornburg Investment Trust ('Thornburg Trust')
on behalf of Thornburg California Limited Term Municipal Fund (the 'New
Fund') providing for the acquisition of substantially all of the assets of
the Fund, a separate fund (sometimes referred to as a 'series') of
Thornburg LTMF, by the New Fund, a separate series of Thornburg Trust in
exchange solely for voting shares of the New Fund. The aggregate net asset
value of the shares of the acquiring the New Fund issued in the exchange
will equal the aggregate net asset value of the shares outstanding for the
acquired Fund. In connection with the transaction, shares of the New Fund
will then be distributed to the Fund's shareholders pro rata by class so
that holders of each class of shares of the fund will receive shares of the
corresponding class of shares of the New Fund. The Fund thereafter will be
terminated. These transactions are referred to as the 'reorganization.'
As a result of the reorganization, each owner of Class A and Class C
shares of the Fund will become an owner of the corresponding class of
shares of the New Fund, having an aggregate net asset value equal to the
net asset value of that shareholder's shares in the Fund. No sales charge
will be imposed on the transaction. As a condition to the closing,
Thornburg Trust and Thornburg LTMF will obtain a legal opinion to the
effect that, based upon certain facts, assumptions and representations, the
reorganization will qualify as a tax-free reorganization for federal income
tax purposes. See 'Information About the Reorganization.' Persons
receiving shares of the New Fund in the reorganization will remain free to
redeem their shares after the reorganization.
The Fund and the New Fund have identical investment objectives and
policies. The New Fund will commence operations upon the completion of the
reorganization with the same portfolio of investments owned by the Fund.
The New Fund will have the same investment manager as the Fund, Thornburg
Investment Management, Inc. ("TIMI") which will perform investment
management services under an investment management agreement having
substantially identical terms and providing for the same fees as the Fund's
current investment advisory agreement.
Expenses of the New Fund are expected to be substantially the same as
the expenses of the Fund before the reorganization, as follows:
Fund Annual Operating Expenses
Before the Reorganization
- --------------------------------------------
Class A 1.02%
Class C 1.80 %
Expected New Fund Annual Operating Expenses
After the Reorganization
- ---------------------------------------------
Class A 1.02%
Class C 1.80%
Expenses of the reorganization will be paid by the Fund and are not
expected to have a material effect on the expenses of the Fund. The
reorganization is expected to result in cost savings to the shareholders of
the New Fund after the reorganization.
For the reasons set forth below, the Board of Directors of LTMF,
including all of the Independent Directors, have unanimously concluded that
the reorganization is in the best interests of the shareholders of the
Fund. The Board of Directors of Thornburg LTMF therefore have submitted
the Agreement for approval by the shareholders of the Fund at a special
meeting of shareholders to be held on April __, 2003 (the 'Meeting').
Approval of the reorganization with respect to the Fund requires a vote of
a majority of the outstanding shares of each of the three classes of the
Fund's shares. This Prospectus/Proxy Statement pertains to and is directed
to holders of the Fund's Class A and Class C shares.
At or about the same time that substantially all of the assets of the
Fund are acquired by the New Fund, Thornburg Limited Term Municipal Fund
will acquire substantially all of the assets of Thornburg LTMF's other
series, Thornburg Limited Term Municipal Fund National Portfolio. Each of
these transactions has been approved by Thornburg LTMF's Board of
Directors. The acquisition of substantially all of the assets of the Fund
and Thornburg Limited Term Municipal Fund National Portfolio are referred
to collectively herein as the 'Related Transactions.' Completion of the
reorganization is contingent upon proper shareholder approval being
received for each of the Related Transactions, and the satisfaction of all
other conditions to closing the Related Acquisitions. There can be no
assurance shareholder approval can be obtained for each Related Transaction
or that the conditions of the other Related Transaction will be satisfied.
If shareholders of the Fund approve the reorganization and the other
Related Transaction is not approved, the Board of Directors of Thornburg
LTMF will consider the alternatives available to it with respect to the
Fund, including completion of the reorganization respecting the Fund. See
'Voting Information.'
The Board of Directors has approved the reorganization because they
believe it would benefit the Fund. The reorganization is intended to
simplify legal and regulatory compliance functions, and to reduce the costs
of performing these functions. The Board of Directors considered these
objectives of the reorganization, together with other factors, which are
discussed below under the caption 'Information About the Reorganization.'
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMEND APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION.
INVESTMENT ADVISER AND DISTRIBUTOR
The investment adviser to both the Fund and to the New Fund is
Thornburg Investment Management, Inc. ('TIMI'), 119 East Marcy Street,
Santa Fe, New Mexico 87501. TIMI has been the investment adviser for the
Fund since its inception in 1984. TIMI is also the investment adviser for
all of the 12 Funds offered by Thornburg Trust, including the New Fund and
Thornburg Limited Term Municipal Fund (the two Funds organized to
consummate the Related Transaction), four other Funds which invest
principally in municipal obligations for tax exempt current income, two
Funds which invest in U.S. Government and other fixed income obligations
for current income, three Funds which invest primarily for capital
appreciation, and one Fund which invests for current income and capital
appreciation. TIMI also provides to each Thornburg mutual fund under its
management supervision, administration and performance of certain
administrative services. Fees charged to the Fund and the New Fund for
these services are described below under 'Fees and Expenses of the Fund and
the New Fund.'
The distributor of shares to both the Fund and to the New Fund is
Thornburg Securities Corporation ('TSC'), 119 East Marcy Street, Santa Fe,
New Mexico 87501. TSC has been the distributor for the Fund since its
inception in 1987. TSC is also distributor for each other Thornburg mutual
fund.
INVESTMENT GOALS, POLICIES
AND RESTRICTIONS OF THE FUND AND THE NEW FUND
Investment Goals and Strategies of the Funds
- --------------------------------------------
The investment goals and strategies of the Fund and the New Fund are
identical. The primary investment goal of each Fund is to obtain as high a
level of current income exempt from federal and California state individual
income tax as is consistent, in the view of the investment adviser, with
preservation of capital. The secondary goal of each Fund is to reduce
expected changes in its share price compared to longer intermediate and
long-term bond portfolios. Each Fund's primary and secondary goals are
fundamental policies, and may not be changed without a majority vote of the
Fund's shareholders.
Each Fund pursues its primary goal by investing principally in a
laddered maturity portfolio of municipal obligations issued by the State of
California and its agencies, and by California local governments and their
agencies. The investment adviser, Thornburg Investment Management, Inc.
('TIMI') actively manages each Fund's portfolio. Investment decisions are
based upon outlooks for interest rates and securities markets, the supply
of municipal debt securities, and analysis of specific securities. Each
Fund invests in obligations and participations in obligations which are
rated at the time of purchase as investment grade or, if unrated, which are
issued by obligors which have comparable investment grade obligations
outstanding or which are deemed by TIMI to be comparable to obligors with
outstanding investment grade obligations. The Fund may invest in
obligations issued by certain United States territories and possessions.
Each Fund's portfolio is 'laddered' by investing in obligations of
different maturities so that some obligations mature during each of the
coming years.
Because the magnitude of changes in value of interest bearing
obligations is greater for obligations with longer terms, each Fund seeks
to reduce changes in its share value by maintaining a portfolio of
investments with a dollar-weighed average maturity normally less than five
years. There is no limitation on the maturity of any specific security
each Fund may purchase. Each Fund may dispose of any security before it
matures. Each Fund also attempts to reduce changes in its share value
through credit analysis, selection and diversification.
Each Fund ordinarily acquires and holds securities for investment
rather than for realization of gains by short term trading on market
fluctuations. However, it may dispose of any security prior to its
scheduled maturity to enhance income or reduce loss, to change the
portfolio's average maturity, or to otherwise respond to current market
conditions. The objective of preserving capital may prevent the Fund from
obtaining the highest yields available.
Under normal conditions each Fund invests at least 80% of its assets
in municipal obligations originating in California which are exempt from
California and regular federal income taxes, and normally invests 100% of
its assets in municipal obligations originating in California or issued by
United States territories and possessions. Each Fund may invest up to 20%
of its assets in taxable securities which would produce income not exempt
from federal or California income tax. These investments may be made due
to market conditions, pending investment of idle funds or to afford
liquidity. Each Fund's temporary taxable investments may exceed 20% of its
assets when made for defensive purposes during periods s of abnormal market
conditions. If the Fund found it necessary to own taxable investments,
some of its income would be subject to federal and California income taxes.
PRINCIPAL RISK FACTORS
Because the Funds' investment goals and policies are identical, the
risks of investing in the New Fund are expected to be the same as the risks
of investing in the Fund.
The value of each Fund's shares and its dividends will fluctuate in
response to changes in interest rates. When interest rates increase, the
value of the Fund's investments declines and the Fund's share value is
reduced. This effect is more pronounced for intermediate and longer term
obligations owned by a Fund. During periods of declining interest rates
the Fund's dividends decline. The value of Fund shares also could be
reduced if municipal obligations held by the Fund were downgraded by rating
agencies, or went into default, or if legislation or other government
action reduces the ability of issuers to pay principal and interest when
due or changes the tax treatment of interest on municipal obligations.
Nonrated obligations may have, or may be perceived to have, greater risk of
default. The loss of money is a risk of investing in the Fund, and when
you sell your shares they may be worth less than what you paid for them.
An investment in either Fund is not a deposit of any bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.
For a further discussion of the investment objectives, policies and
restrictions applicable to the New Fund, please see the New Fund
Prospectus, which is available without charge by calling 1-800-847-0200.
FEES AND EXPENSES OF THE FUND AND THE NEW FUND
Advisory and Administration Fees and Fund Expenses
- --------------------------------------------------
The Fund and the New Fund each have contractual arrangements to obtain
investment management, administrative and distribution services which are
substantially identical.
The Fund and The New Fund are each contractually obligated to pay an
investment management fee to TIMI based upon the Fund's assets. The fee is
computed on average daily net assets at an annual rate as follows:
Net Assets Annual Rate
---------- -----------
0 to $500 million .50%
$500 million to $1 billion .40%
$1 billion to $1.5 billion .30%
$1.5 billion to $2.0 billion .25%
more than $2.0 billion .225%
TIMI also has entered into agreements with National Portfolio and Thornburg
Fund to provide administrative services at an annual rate of .125% of
average daily net assets for Class A and Class C shares of each Fund.
Investment advisory fees, and the other expenses currently paid by the
Fund and expected to be paid by the New Fund are set out below. The
Shareholder Transaction Expense table shows the transaction fees paid by a
shareholder in each Fund upon a purchase or redemption of shares. The
Annual Operating Expenses table shows the annual Fund operating expense for
the Fund for its fiscal year ended June 30, 2003 and compares those fee and
expense percentages to the expected annual fund operating expenses for the
New Fund for its current fiscal year.
Shareholder Transaction Expenses
Fees Paid Directly From Your Investment
New New
Fund Fund Fund Fund
Class A Class A Class C Class C
------- ------- ------- -------
Maximum Sales Charge (Load) 1.50% 1.50% none none
on Purchases (as a percentage
of offering price)
Maximum Deferred Sales Charge 0.50%(1) 0.50%(1) 0.50%(2) 0.50%(2)
(Load) on Redemptions (as a
percentage of redemption
proceeds on original purchase
price, whichever is lower)
Redemption Fees (as a none none none none
percentage of amount redeemed)
Annual Operating Expenses
Expenses That Are Deducted From Fund Assets
(as a percentage of average net assets)
New New
Fund Fund Fund Fund
Class A Class A(3) Class C Class C(3)
------- ------- ------- -------
Investment Advisory Fee .50% .50% .50% .50%
Distribution and Service
(126-1) Fees .25% .25% 1.00% 1.00%
Other Expenses .27% .27% .30% .30%
----- ----- ----- -----
Total Annual Operating
Expenses 1.02% 1.02%(4) 1.80%(4) 1.80%(4)
(1) Imposed only on redemptions of any part or all of a purchase of
$1 million or more within 12 months of purchase.
(2) Imposed only on redemptions of Class C shares within 12 months of
purchase.
(3) The New Fund is a newly organized Fund which has not conducted
any business except incident to the reorganization. The fees and expenses
shown for The New Fund are estimated fees and expenses expected to be
incurred for the fiscal year ending June 30, 2004.
(4) For the fiscal year ending June 30, 2004, Thornburg Investment
Management, Inc. and Thornburg Securities Corporation are waiving fees and
reimbursing expenses so that actual Class A expenses do not exceed .99% and
actual Class C expenses do not exceed 1.24%. Thornburg Investment
Management, Inc. and Thornburg Securities Corporation intend to waive fees
and reimburse expenses for Class A and Class C shares of the New Fund after
the reorganization so that actual Class A expenses do not exceed .99% and
actual Class C expenses do not exceed 1.24%. Waivers of fees and
reimbursements of expenses may be terminated at any time.
EXAMPLE:
The following Example is intended to help you compare the cost of
investing in the New Fund with the cost of investing in the Fund. The
Example assumes that you invest $10,000 in each respective Fund for the
time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5%
return each year, that dividends and distributions are reinvested, and that
each Fund's operating expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
New Fund New Fund
Fund Pro Forma Fund Pro Forma
Class A Class A Class C Class C
------- ------- ------- -------
1 Year $252 $252 $221 $221
3 Years $470 $450 $566 $566
5 Years $705 $705 $975 $975
10 Years $1,379 $1,379 $2,116 $2,116
You would pay the following expenses if you did not redeem your Class C
shares:
Fund New Fund Pro Forma
Class C Class C
------- -------
1 Year $171 $171
3 Years $566 $566
5 Years $975 $975
10 Years $2,116 $2,116
PURCHASE, REDEMPTION AND EXCHANGE PROCEDURES
FOR THE FUND AND THE NEW FUND
Sales Charges
- -------------
Share purchase, redemption and exchange procedures for the Class A and
Class C shares of the Fund are identical with the purchase, redemption and
exchange procedures for the corresponding share classes of the New Fund.
Purchasing Class A Shares
- -------------------------
Class A shares of the Fund and the New Fund are sold at net asset
value plus a sales charge at the rates shown in the table below. Class A
shares are also subject to a Rule 12b-1 Service Plan, which provides for
the Fund's payment of up to 1/4 of 1% of the class's net assets each year
for shareholder and distribution services.
As a Percentage As a Percentage
Of Offering Price Of Net Asset Value
----------------- ------------------
Less than $250,000.00 1.50% 1.52%
$250,000 to 499,999.99 1.25% 1.27%
$500,000 to 999,999.99 1.00% 1.01%
$1,000,000 and over 0.00%* 0.00%*
* No sales charge is payable at the time of purchase on investments of $1
million of more made by a purchaser. A contingent deferred sales charge
will be imposed on any portions of such investments redeemed within one
year of purchase, at a rate of .50% of the amount redeemed.
Class A shares also are sold to specified classes of investors at
reduced or no sales charges. For example, a shareholder who redeems Class
A shares may reinvest with no sales charge within 2 years of the
redemption. Additionally, each time the value of a shareholder's account
plus the amount of a new investment passes one of the breakpoints in the
table above, the portion of new investments in excess of the breakpoint
will be subject to the reduced sales charge. These privileges, and other
opportunities for purchase at reduced or no sales charge are described in
the New Fund Prospectus, which is available without charge by calling 1-
800-847-0200.
Purchasing Class C Shares
- -------------------------
Class C shares of the Fund and the New Fund are sold at net asset
value without a sales charge at the time of purchase. Class C shares are
subject to a contingent deferred sales charge of 1/2 of 1% of the shares
are redeemed within one year of purchase. Class C shares are also subject
to Rule 12b-1 Service and Distribution Plans, which provide for the Fund's
payment of up to 1% of the class's net assets each year for shareholder and
distribution services. Other information respecting the purchase of Class
C shares is provided in the New Fund Prospectus.
Exchange Privileges
- --------------------
Class A shares of the Fund may be exchanged for Class A shares of
other Thornburg funds, subject to certain conditions described in the
Fund's prospectus. Similarly, Class A shares of the New Fund may be
exchanged for Class A shares of other Thornburg mutual funds under the same
conditions, including the requirement that if you exchange into a fund with
a higher sales charge, you must pay the difference between that fund's
sales charge and the sales charge you paid on the shares you are
exchanging. This charge remains applicable to exchanges of shares received
in the reorganization. Each of the Funds permits exchanges by telephone if
the telephone exchange privilege has been elected by the shareholder.
Shareholders of the Fund who previously elected the telephone exchange
privilege will be deemed to have elected the exchange privilege of the New
Fund if the reorganization is completed.
Redemptions
- -----------
Shares of the Fund and the New Fund properly presented for redemption
may be redeemed at the next determined net asset value per share, subject
to a contingent deferred sales charge (CDSC) in specific circumstances.
The Fund and the New Fund impose a CDSC of 1/2 of 1% on redemptions of part
or all of any purchase of $1 million or more of Class A shares in the event
of a redemption within 12 months of purchase. The Fund and the New Fund
Class C shares are subject to a CDSC is 1/2 of 1% if redeemed within one
year of purchase. Shareholders' holding periods for Class A and Class C
shares of the Fund will be added to the period they hold New Fund Class A
or Class C shares received in the reorganization to determine if the CDSC
is applicable to any redemption of those shares. Shareholders of the Fund
who previously elected the telephone redemption privilege will be deemed to
have elected the New Fund's telephone redemption privilege if the
reorganization is completed.
DIVIDEND POLICIES OF FUNDS
The Fund distributes substantially all of its net investment income
and realized capital gains to its shareholders. The Fund declares net
income dividends daily and distributes those dividends monthly, and any net
realized capital gains are distributed at least annually, usually in
December. Distributions are reinvested in Fund shares unless the
shareholder elects to receive them in cash. The New Fund intends to follow
the same policies.
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS
The Fund is a diversified series of Thornburg Limited Term Municipal
Fund, Inc. ('Thornburg LTMF'), a Maryland corporation organized in 1984.
As a Maryland corporation, Thornburg LTMF is governed by applicable
Maryland and federal law, its articles of incorporation and its bylaws.
The business of Thornburg LTMF is supervised by its Board of Directors.
The New Fund is a diversified series of Thornburg Trust, a
Massachusetts business trust organized in 1987. As a Massachusetts
business trust, Thornburg Trust is governed by applicable Massachusetts and
federal law, its declaration of trust, as amended, and its bylaws. The
business of Thornburg Trust is supervised by Thornburg Trust's Trustees.
Thornburg LTMF is currently authorized under its articles of
incorporation, as amended, to issue 300,000,000 Class A shares of the Fund,
150,000,00 Class C shares of the Fund, and 250,000,000 Institutional Class
shares. Each share has a par value of $.001. The Board of Directors is
permitted to increase this authorization from time to time under Maryland
law. The Board of Directors is also permitted to create additional funds
or 'series,' and to divide each such series into two or more classes of
shares. Thornburg Trust is authorized to create an unlimited number of
series, and with respect to each series, to issue an unlimited number of
full and fractional shares of one or more classes and to divide or combine
the shares into a greater or lesser number of shares without thereby
changing the proportionate beneficial interests in the series. All of the
shares of Thornburg LTMF and of Thornburg Trust, respectively, have equal
voting rights with each other, except that only shares of the respective
series or separate classes within a series are entitled to vote on matters
concerning only that series or class. Neither Thornburg LTMF nor Thornburg
Trust permits cumulative voting.
Neither Thornburg LTMF nor Thornburg Trust holds annual shareholder
meetings. There normally will not be any meetings of shareholders of
Thornburg LTMF, Thornburg Trust or either of the Funds to elect directors
or trustees unless fewer than a majority of the directors or trustees then
holding office have been elected by shareholders. However, the Board of
Directors of Thornburg LTMF or the trustees of Thornburg Trust may call
special meetings from time to time to seek shareholder approval of certain
matters, and meetings of shareholders of either Thornburg LTMF or Thornburg
Trust will be called upon written request of shareholders holding in the
aggregate not less than 10% of the outstanding shares of any affected
series or class having voting rights.
Under Maryland law, shareholders of Thornburg LTMF are not liable for
the obligations of Thornburg LTMF. However, under Massachusetts law, there
is a remote possibility that shareholders of a Thornburg Trust could, under
certain circumstances, be held personally liable for the obligations of
such a trust. The declaration of trust for Thornburg Trust contains
provisions intended to limit any such liability and to provide
indemnification out of Fund property for any shareholder charged or held
personally liable for obligations or liabilities of the shareholder's fund
solely by reason of being or having been a shareholder of that fund and not
because of the shareholder's acts or omissions or for some other reason.
Consequently, the risk of a shareholder of the New Fund incurring financial
loss on account of shareholder liability is limited to circumstances in
which the New Fund itself would be unable to meet its obligations.
ADDITIONAL INFORMATION ABOUT SHAREHOLDER ACCOUNTS
If the reorganization is approved, the New Fund will establish an
account for each Fund shareholder.
No further purchases of the shares of the Fund may be made after the
date on which the shareholders of the Fund approve the reorganization, and
the share transfer books of the Fund will be permanently closed as of the
date of Closing. Only redemption requests and transfer instructions
received in proper form by the close of business on the day before the date
of Closing will be fulfilled by the Fund. Redemption requests or transfer
instructions received by the Fund after that date will be treated as
requests for the redemption or instructions for transfer of shares of the
New Fund credited to the accounts of shareholders of the Fund.
Accordingly, those redemption requests or transfer instructions after the
close of business on the day before Closing will be forwarded to the New
Fund. For a complete description of redemption procedures for the New
Fund, see the sections of the New Fund Prospectus under the caption
'Selling Fund Shares.'
INFORMATION ABOUT THE REORGANIZATION
Agreement and Plan of Reorganization
- ------------------------------------
The following summary of the proposed Agreement and Plan of
Reorganization (the 'Agreement') is qualified in its entirety by reference
to the Agreement attached to this Prospectus/Proxy Statement as Exhibit A.
The Agreement provides that the New Fund will acquire substantially
all of the assets of the Fund in exchange solely for shares of the New Fund
on the earliest practicable date following shareholder approval of the
reorganization (the 'Closing Date'). The number of full and fractional
shares of the New Fund to be issued to shareholders of the Fund will be
determined on the basis of the relative net asset values per share and
aggregate net assets of the New Fund and the Fund computed immediately
after the closing of business on the New York Stock Exchange (currently
4:00 p.m., Eastern time) on the last business day before the Closing Date
(the 'Valuation Date'). The net asset value per share for the Fund will be
determined by dividing each class's respective assets, less its respective
share of liabilities, by the total number of the class's outstanding
shares. Portfolio securities of the Fund will be valued in accordance with
the valuation practices of the Fund as described in its prospectus, which
is incorporated by reference herein. Valuation procedures of the New Fund
are the same as the valuation procedures of the Fund.
Immediately after the transfer of the Fund's assets to the New Fund on
the Closing Date, the Fund will distribute pro rata to its shareholders of
record as of the close of business on the Valuation Date the full and
fractional shares of the New Fund received by the Fund and will be
dissolved as soon thereafter as reasonably practicable. The distribution
will be accomplished by the establishment of accounts on the share records
of the New Fund in the name of each shareholder of the Fund, each
representing the respective pro rata number of full and fractional shares
of the New Fund due each of those shareholders. Following the
reorganization, shareholders will own shares of the New Fund of the same
class as the Fund shares owned before the reorganization. No certificates
for shares of the New Fund will be issued.
The consummation of the reorganization is subject to the conditions
set forth in the Agreement. The reorganization is also subject to approval
by the Fund's shareholders. Approval requires the affirmative vote of the
holders of a majority of each class of shares of the Fund. Further,
completion of the reorganization is subject to shareholder approval of the
'Related Transaction', which is the proposed transaction in which Thornburg
Limited Term Municipal Fund will acquire substantially all of the assets of
Thornburg Limited Term Municipal Fund National Portfolio. If shareholders
of the Fund approve the reorganization, but the Related Transaction is not
approved, the Board of Directors of the Fund will consider the available
alternatives. The Agreement may be terminated and the reorganization
abandoned prior to the Closing Date, before or after approval by
shareholders of the Fund, by resolution of the Board of Directors of the
Fund or the Trustees of Thornburg Trust, under circumstances specified in
the Agreement.
The Fund will pay the costs of the reorganization, which include fees
and costs associated with preparing, filing, printing and distributing
proxy materials, proxy solicitation costs, costs associated with qualifying
shares for sale in various states, and the deregistration and dissolution
of Thornburg LTMF.
The Board of Directors of Thornburg LTMF has determined that the
reorganization will not result in any dilution to the interests of the
Fund's shareholders, and that participation in the reorganization is in the
best interests of the Fund's shareholders.
Full and fractional shares of beneficial interest of the New Fund will
be issued to shareholders of the Fund in accordance with the procedures
under the Agreement described above. Each share will be fully paid and
non-assessable by the New Fund when issued, and will have no preemptive or
conversion rights. See comparative information on shareholder rights,
below, for additional information with respect to the shares of the New
Fund.
Considerations of the Fund's Board of Directors
- -----------------------------------------------
Thornburg Investment Management, Inc. ("TIMI"), the investment adviser
to both the Fund and the New Fund, proposed and recommended the
reorganization to the Board of Directors of Thornburg (the "Board") to
simplify certain compliance and administrative functions and to reduce the
costs associated with the performance of those functions. Based upon
TIMI's recommendation, and after consideration of the rationale for the
reorganization and certain additional factors described below, the Board,
including all of the directors who are not "interested persons"
("Independent Directors") as that term is used in the Investment Company
Act of 1940 (the "1940 Act"), has determined that the reorganization is in
the best interest of the shareholders of the Fund and that the terms of the
agreement and plan of reorganization are fair and reasonable.
The Board considered the recent increases in compliance and related
functions performed for the Fund, and the likely further increase in those
functions in the future due to regulatory and rulemaking initiatives by the
Congress and the Securities and Exchange Commission. The Board noted
specifically in this connection the following factors:
. increased duties for the Board assuring compliance with
revised regulations applicable to mutual funds
generally;
. increased audit committee functions and additional time
devoted to audit committee functions by the independent
accountants;
. increased number of filings by Thornburg LTMF of
documents required under state and federal law and
increased time for review and discussion of those
filings by the Board;
and,
. increased Board fees and associated travel expenses and
other expenses occasioned by these increased
activities.
The Board further noted in this regard that these functions are
generally duplicative of comparable functions performed for and by
Thornburg Investment Trust and its Trustees and audit committee.
The Board concluded that the general complexity of compliance, and
administration of compliance could be reduced significantly if the two
funds currently offered by Thornburg LTMF were combined with the ten
existing funds offered by Thornburg Investment Trust. This combination
would, in the Board's view, eliminate the current duplication and reduce
complexity by substituting one investment company in the place of two.
Moreover, the Board concluded that the reorganization would result in
significant cost savings, because the two funds of Thornburg Trust which
will acquire Thornburg LTMF's two current funds will share with Thornburg
Trust's other funds a number of costs which are currently duplicated (and
thus not shared) by Thornburg LTMF and Thornburg Trust.
In this latter regard the Board considered:
. legal fees and costs associated with advice on
compliance matters, preparation of documents related
to compliance, preparation of documents for Board of
Directors and audit committee meetings;
. legal counsel preparation for and attendance at Board
of Directors and audit committee meetings;
. fees and costs associated with preparation and filing
of registration statements and other periodic filings,
and general corporate work associated with the
maintenance of an additional corporate entity;
. costs, including Directors' fees and travel and other
expenses associated with the Board's and the audit
committee's fees and meetings; and
. expenses and fees of the independent accountants.
The Board also considered the likelihood of future increases in these costs
because of increased rulemaking and regulatory complexity, increasing
duties placed on investment company directors and audit committees, the
possible need to hire additional legal counsel and other persons for audit
committees, and possible increases in the frequency of shareholder meetings
to elect investment company directors. Based upon estimates by TIMI and
legal counsel, the Board determined that it was reasonable to conclude that
the costs of the reorganization could be recovered in less than two years.
The Board also considered other factors in evaluating the proposed
reorganization, including the following:
(1) There would be no change in investment objectives, investment
policies, or investment risks as a result of the reorganization;
(2) After the reorganization, investment management, administrative
services, and other functions would be performed under contracts having
substantially the same terms as the existing contracts;
(3) Fees and expenses for the New Fund are expected to be virtually
the same as fees and expenses for the Fund, except for the costs of the
reorganization (which are expected to be offset, and exceeded over time by
cost savings);
(4) The reorganization will result in no dilution of shareholders'
interests;
(5) Shareholders of the Fund will receive shares in the New Fund of
the class corresponding to the same class of shares in the Fund;
(6) The reorganization will be accomplished without recognition of
gain or loss for federal income tax purposes by shareholders of Thornburg
LTMF; and
(7) No sales charges or transaction fees will be assessed against
shareholders in connection with the reorganization.
Federal Income Tax Consequences
- -------------------------------
The reorganization is intended to qualify for federal income tax
purposes as a tax-free reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended, with no taxable gain or loss recognized
by the Fund, the New Fund, or shareholders of the Fund as a consequence of
the reorganization. As a condition to the closing of the reorganization,
the Fund and the New Fund will receive an opinion of legal counsel to that
effect based on certain assumptions and representations made by the Fund
and the New Fund.
Shareholders of the Fund should consult their tax advisers regarding
the effect, if any, of the proposed reorganization in light of their
individual circumstances. In particular, shareholders of the Fund should
also consult their tax advisers as to the state, local and other tax
consequences, if any, of the reorganization.
CAPITALIZATION
The following table sets forth the capitalization of the Fund and the
New Fund as of December 31, 2003 and the pro forma capitalization of the
combined New Fund as if the reorganization occurred on that date. These
numbers will be different at the time of closing because the Fund's net
assets for each class will increase or decrease.
CAPITALIZATION OF FUNDS AS OF DECEMBER 31, 2003
FUND NEW FUND PRO FORMA
---- -------- ---------
NET ASSETS
- ----------
Class A shares $139,962,728 -0- $139,962,728
Class C shares $ 22,801,556 -0- $ 22,801,556
Class I shares $ 20,905,203 -0- $ 20,905,203
TOTAL $183,669,487 -0- $183,669,487
NET ASSETS PER SHARE
- --------------------
Class A shares $13.14 -0- $13.14
Class C shares $13.15 -0- $13.15
Class I shares $13.15 -0- $13.15
SHARES OUTSTANDING
- -------------------
Class A shares 10,653,251.431 -0- 10,653,251.431
Class C shares 1,734,313.442 -0- 1,734,313.442
Class I shares 1,593,051.762 -0- 1,593,051.762
TOTAL 13,980,616.635 -0- (1) 13,980,616.635
SHARES AUTHORIZED
- ------------------
Class A shares 300,000,000 unlimited unlimited
Class C shares 150,000,000 unlimited unlimited
Class I shares 250,000,000 unlimited unlimited
TOTAL 700,000,000 unlimited unlimited
(1) It is anticipated that a nominal number of shares of each class
will be issued to an officer of TIMI in order to permit the consummation of
corporate actions before the reorganization.
ADDITIONAL INFORMATION ABOUT THE FUNDS
Additional information respecting the New Fund is included in the
Thornburg Limited Term Municipal Funds prospectus dated _______________,
2004 (the "New Fund Prospectus"), which accompanies this Prospectus/Proxy
Statement, and in the Thornburg Limited Term Municipal Funds Statement of
Additional Information dated ___________________, 2004, which has been
filed with the Securities and Exchange Commission. Additional information
is also included in the Statement of Additional Information dated
________________, 2004 related to the reorganization which has been filed
with the Securities and Exchange Commission. The described New Fund
Prospectus and statements of additional information are incorporated by
reference herein. Copies of the statements of additional information are
available upon request and without charge by calling 1-800-847-0200.
Information about the Fund is included in the Thornburg Funds
prospectus dated February 1, 2004, and in the Thornburg Funds Statement of
Additional Information dated February 1, 2004. The described prospectus
and statement of additional information may been filed with the Securities
and Exchange Commission and are incorporated by reference herein. Copies
of the prospectus and the statement of additional information are available
upon request and without charge by calling 1-800-847-0200.
Reports and other information filed by Thornburg LTMF and Thornburg
Trust can be inspected and copied at the Securities and Exchange
Commission's Public Reference Room at 450 Fifth Street, NW, Washington,
D.C. 20549. Information about the Public Reference Room may be obtained by
calling the Commission at 1-202-942-8090. Reports and other information
about the Funds are also available on the Commission's Internet site at
http://ww,sec.gov and copies of information may be obtained, upon payment
of a duplicating fee, by writing the Commission's Public Reference Section,
Washington, D.C. 20549-0102, or contacting the Commission by e-mail at
publicinfo@sec.gov.
Thornburg LTMF files its registration statements and certain other
information with the Commission under Investment Company Act of 1940 file
number 811-4302. Thornburg Investment Trust files its registration
statements and certain other information with the Commission under
Investment Company Act of 1940 file number 811-05201.
VOTING INFORMATION
Proxies for the meeting are being solicited from the Fund's
shareholders by the Board of Directors of Thornburg LTMF. A proxy may be
revoked at any time at or before the meeting by oral or written notice to
the secretary of Thornburg LTMF, 119 East Marcy Street, Santa Fe, New
Mexico 87501, (800) 847-0200. Unless revoked, all valid proxies will be
voted in accordance with the specifications therein or, in the absence of
specifications, for approval of the reorganization.
Additional solicitations may be made by telephone, telegraph,
facsimile or personal contact by officers or employees of TIMI and its
affiliates or by a professional proxy solicitation firm or firms. Expenses
of proxy solicitation will be borne by the Fund. TIMI has engaged the
proxy solicitation firm of D.F. King & Co., Inc. to assist in soliciting
proxies for the meeting at an estimated cost of $9,000.
Shares of the Fund of record at the close of business on _____________
(the 'Record Date') will be entitled to vote at the meeting or any
adjournment thereof. The presence in person or by proxy of one-third of
the Fund's outstanding shares at the meeting will constitute a quorum.
Shareholders are entitled to one vote for each share held, and each
fractional share will be entitled to a proportionate fractional vote.
Approval of the reorganization requires the affirmative vote of a majority
of the outstanding shares of the Fund entitled to vote at the meeting. As
of _____________,2004, there were issued and outstanding ______ Class A
shares, __________ Class C shares and ________ Class I shares of the Fund.
As of the same date, persons were known to own of record or beneficially 5%
or more of the issued and outstanding shares of any Class of the Fund:
[to be inserted]
As of the same date, there were issued and outstanding ____ Class A
shares, ______ Class C shares, and ______ Class I shares of beneficial
interest of the New Fund. All of these shares were held by ________, 119
East Marcy Street, Santa Fe, New Mexico 87501. Ms. _______ was issued
these shares in order to permit certain actions in connection with the
initial organization of the New Fund.
In the event that a quorum of all classes of shares is not present at
the meeting, or a quorum is present at the meeting but sufficient votes to
approve the reorganization are not received, the persons named as proxies
may propose one or more adjournments of the meeting to permit further
solicitation of proxies. Any such adjournment will require the affirmative
vote of a majority of those shares represented at the meeting in person or
by proxy. If a quorum is not present, the persons named as proxies will
vote those proxies which they are entitled to vote for the reorganization
in favor of such an adjournment and will vote those proxies required to be
voted against the reorganization against any such adjournment.
'Broker non-votes' are shares held in a broker's street name for which
the broker indicates that instructions have not been received from the
beneficial owners or other persons entitled to vote, and the broker does
not have discretionary voting authority. Abstentions in broker non-votes
will be counted as shares present for purposes of determining whether a
quorum is present but will not be voted for or against any adjournment or a
proposal. Accordingly, abstentions in broker non-votes effectively will be
a vote against adjournment and against the proposal because the required
vote is a percentage of the shares outstanding.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS,
RECOMMENDS THAT SHAREHOLDERS VOTE 'FOR' THE REORGANIZATION.
Submission of Shareholder Proposals
- -----------------------------------
The Fund does not hold regular shareholder meetings. Shareholders
wishing to submit proposals for inclusion in a proxy statement for a
subsequent shareholder meeting should send their written proposals to the
secretary of Thornburg LTMF, 119 East Marcy Street, Santa Fe, New Mexico
87501.
Other Matters to Come Before the Meeting
- ----------------------------------------
The Board of Directors of Thornburg LTMF knows of no other business to
be brought before the meeting. However, if any other matters properly come
before the meeting, proxies will be voted in accordance with the judgment
of the Directors.
EXHIBIT A
to
PROSPECTUS/PROXY STATEMENT
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of the ____ day of December 2003, by and between THORNBURG INVESTMENT
TRUST, a Massachusetts business trust ("Thornburg Trust"), in respect of
Thornburg California Limited Term Municipal Fund (the "New Fund"), a
separate series of Thornburg Trust, and THORNBURG LIMITED TERM MUNICIPAL
FUND, INC. a Maryland corporation ("Thornburg LTMF"), in respect of
Thornburg Limited Term Municipal Fund California Portfolio (the "Fund"), a
separate series of Thornburg LTMF.
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1) of
the United States Internal Revenue Code of 1986, as amended (the "Code").
The reorganization will consist of (i) the transfer of substantially all of
the Assets (hereinafter defined) of the Fund to the New Fund in exchange
solely for Class A, Class C and Class I voting shares of beneficial
interest of the New Fund having no par value (the "New Fund Class A
Shares," "New Fund Class C Shares," and "New Fund Class I Shares,"
respectively, and collectively the "New Fund Shares") and (ii) the
distribution on the Closing Date (hereinafter defined) of the New Fund
Shares to the shareholders of the New Fund in complete liquidation of the
Fund as provided herein, all upon the terms and conditions hereinafter set
forth in this Agreement. All actions required to be taken by Thornburg
Trust pursuant to this Agreement, and all representations, warranties and
covenants of Thornburg Trust hereunder, are taken and made on behalf of the
New Fund. All actions required to be taken by Thornburg LTMF pursuant to
this Agreement, and all representations, warranties and covenants of
Thornburg LTMF hereunder, are taken and made on behalf of the New Fund.
THEREFORE, in consideration of the premises and of the covenants and
agreements hereafter described, the parties hereto covenant and agree as
follows.
1. Procedure for Reorganization.
(a) Subject to the terms and conditions herein set forth and
on the basis of the representations and warranties contained herein,
Thornburg LTMF agrees to transfer the Assets of the New Fund as set forth
in paragraph (b) to the New Fund, and Thornburg Trust agrees to deliver to
the New Fund in exchange therefor the number of the New Fund Shares
determined by dividing the value of the Assets computed in the manner and
as of the time and date set forth in paragraph 2(a), by the net asset value
of the New Fund Shares computed in the manner and as of the time and date
set forth in paragraph 2(b). These transactions shall take place at the
closing provided for in paragraph 3(a) (the "Closing").
(b) The Assets to be acquired by the New Fund shall consist of
all cash, portfolio securities and due bills for dividends, interest, or
other receivables or rights to receive any of the foregoing, receivables
for shares sold, and any claims or rights with respect to portfolio
securities, whether or not arising from contract, which are owned by the
New Fund on the closing date provided in paragraph 3(a) (the "Closing
Date"). The New Fund will retain cash and cash equivalents in an amount
reasonably estimated by it to be sufficient to discharge: (i) obligations
incurred in the ordinary course of its business, which could not reasonably
be paid before Closing and are not otherwise borne by any other person; and
(ii) costs resulting from the liquidation and deregistration of the Fund
and Thornburg LTMF. The Assets will not include any rights in and to the
"Thornburg" name or any variant thereof. The Fund has provided the New
Fund with a list of the current securities holdings of National Portfolio
as of the date of execution of this Agreement. Thornburg LTMF and the Fund
reserve the right to sell any of these securities in the ordinary course of
business but will not, without prior notification to Thornburg Trust,
acquire any additional securities for the Fund other than securities of the
type in which the New Fund is permitted to invest.
(c) On the Closing Date, Thornburg LTMF will cause the Fund to
be liquidated and to distribute pro rata to the Fund's shareholders of
record (the "Fund Shareholders"), determined on and as of the close of
business on the Valuation Date specified in paragraph 2(a), the New Fund
Shares received by Thornburg LTMF pursuant to paragraph (a). Specifically,
Thornburg LTMF shall (i) distribute the New Fund Class A Shares received in
the exchange, pro rata, to the Fund Shareholders holding Class A shares of
the Fund, (ii) distribute the New Fund Class C shares received in the
exchange, pro rata, to the Fund Shareholders holding Class C shares of the
Fund, and (iii) distribute the New Fund Class I Shares received in the
exchange, pro rata, to the Fund Shareholders holding Class I shares of the
Fund. The liquidation and distribution will be accomplished by the
transfer of the New Fund Shares then credited to the account of the Fund on
the books of New Fund, to open accounts on the share records of the Fund in
the names of the Fund Shareholders and representing the respective pro rata
number of New Fund due the Fund Shareholders.
(d) As of the Closing Date, any physically-issued share
certificates held by former Fund Shareholders and relating to Fund shares
exchanged for New Fund Shares in accordance with the preceding paragraph
(c) will represent only the right to receive the appropriate number of New
Fund Shares. As of the Closing Date, persons holding those certificates
will be requested to surrender their certificates. No redemption or
repurchase of any New Fund Shares credited to former Fund Shareholders in
place of Fund shares represented by unsurrendered certificates will be
permitted until those certificates have been surrendered for cancellation
or the certificates are cancelled upon the delivery of lost certificate
affidavits.
(e) Any transfer taxes payable upon issuance of New Fund
Shares in a name other than that of the registered holder of the New Fund
Shares on the books of the Fund as of the Closing Date shall, as a
condition of such issuance and transfer, be paid by the person to whom the
New Fund Shares are to be issued and transferred.
(f) The Fund shall be dissolved as soon as reasonably
practicable following the Closing Date. Thornburg LTMF will deregister
with the Securities and Exchange Commission (the "Commission") in
accordance with the Investment Company Act of 1940, as amended (the "1940
Act").
(g) Thornburg Trust will not assume any liability of Thornburg
LTMF, or acquire any Asset subject to any liability, in connection with the
transactions contemplated by this Agreement, except that the New Fund will
assume the obligation to pay for any portfolio securities purchased by the
Portfolio before the Closing Date in the ordinary course of its business
and the purchase of which was disclosed to the New Fund by the New Fund
Portfolio when the commitment to purchase arose.
2. Valuation.
(a) The value of the Fund's Assets to be acquired by the New
Fund hereunder shall be the value of those assets computed as of the close
of business on the New York Stock Exchange and after the declaration of any
dividends on the business day next preceding the Closing Date (the time and
date being hereinafter called the "Valuation Date"). The value of the
portion of the Fund's Assets consisting of portfolio securities will be
computed by Kenny Information Systems, subject to adjustment by the amount,
if any, agreed to by the New Fund and the Fund. In determining the value
of the Assets, each portfolio security and other portfolio asset shall be
priced by Kenny Information Systems in accordance with the policies and
procedures of the New Fund (subject to the third sentence hereafter) as set
forth in the then current prospectuses and statement of additional
information applicable to the New Fund, subject to adjustments agreed to by
the Fund and the New Fund. All computations shall be made by Kenny
Information Systems. In the event of a dispute with respect to the
valuation of any portfolio security or other portfolio asset of the Fund,
the New Fund and the Fund shall, by mutual consent, select an independent
third party to resolve the matter, and the determination of the independent
party will bind the Funds.
(b) The value of the Assets of each class of the Fund shall be
divided, as of the close of business on the New York Stock Exchange and
after the declaration of any dividends on the Valuation Date, among the
Class A, Class C and Class I shares of National Portfolio (the "Class A
Assets," "Class C Assets," and "Class I Assets"), respectively, in
accordance with the Fund's customary method of accounting.
(c) The net asset value of each New Fund Share shall be the
net asset value per share computed as of the close of business on the New
York Stock Exchange and after the declaration of any dividends on the
Valuation Date, using the valuation procedures set forth in the New Fund's
then current prospectuses, and in accordance with the New Fund's customary
method of accounting.
(d) On the Closing Date, the New Fund shall issue to the Fund
full and fractional New Fund Class A, Class C and Class I shares in the
respective numbers determined in accordance with this paragraph 2(d). The
number of New Fund Class A shares shall be determined by dividing the value
of the Class A Assets by the net asset value of a New Fund Class A share
determined in accordance with paragraph 2(c). The number of New Fund Class
C shares shall be determined by dividing the value of the Class C Assets by
the net asset value of a New Fund Class C share determined in accordance
with paragraph 2(c). The number of New Fund Class I shares shall be
determined by dividing the value of the Class I Assets by the net asset
value of a New Fund Class I share determined in accordance with paragraph
2(c).
3. Closing and Closing Date.
(a) The Closing Date shall be as soon as practicable after
approval of the transactions contemplated in this Agreement by the Fund's
Shareholders has been obtained. The Closing will be held at 119 East Marcy
Street, Suite 202, Santa Fe, New Mexico 87501, in the offices of Thornburg
Management Company, Inc., or at such other place as the parties may agree.
The time of Closing will be 8:00 a.m. New York time on the Closing Date.
All acts taking place at the Closing will be deemed to occur simultaneously
as of the time of the Closing on the Closing Date.
(b) The Fund's portfolio securities shall be available for
inspection by the New Fund, its custodian bank or such other agents of
Thornburg Trust as Thornburg Trust shall reasonably designate, at the
offices of the Fund's custodian, no later than five business days preceding
the Valuation Date, and the Fund will immediately notify the New Fund's
investment adviser of any portfolio security thereafter acquired or sold by
the Fund. The Fund's securities and cash shall be delivered by Thornburg
LTMF to State Street Bank & Trust Company, Boston, MA 02205-9087, as
custodian for the New Fund for the account of the New Fund on the Closing
Date, duly endorsed in proper form for transfer in such condition as to
constitute good delivery thereof in accordance with the custom of brokers.
The cash delivered shall be in the form of currency or certified or
official bank checks, or completed federal funds wire, payable to the order
of "State Street Bank & Trust Co., Custodian for Thornburg Limited Term
Municipal Fund." The Fund will cause its custodian to deliver at Closing a
certificate of an authorized officer of the Custodian stating that the
Fund's have been delivered in proper form to the New Fund's custodian on or
before the Closing Date.
(c) In the event that on the Valuation Date (i) the New York
Stock Exchange is closed to trading, or (ii) trading or the reporting of
trading in securities generally is disrupted so that accurate appraisal of
the value of the net assets of the New Fund or the Fund is impracticable,
the Closing Date shall be postponed until the first business day after the
day when trading is fully resumed and reporting is restored.
(d) Thornburg LTMF shall deliver to Thornburg Trust
shareholder and shareholder account information as of the close of business
on the Valuation Date as reasonably requested by Thornburg Trust. The New
Fund shall issue and deliver a confirmation to the Fund at the Closing
stating the number of New Fund Shares to be credited on the Closing Date to
the Fund, and stating the number of New Fund Shares credited to the Fund's
account on the books of the New Fund. Thornburg Trust shall issue and
deliver to each former Fund Shareholder, after the Closing, a confirmation
stating the number of New Fund Shares credited to the shareholder's
account. At the Closing, each party shall deliver to the other such bills
of sale, checks, assignments, stock certificates, receipts or other
documents as such other party may reasonably request.
4. Representations and Warranties.
(a) Thornburg LTMF represents and warrants to Thornburg Trust
as follows:
(i) The Fund is a series of Thornburg LTMF, which is a
corporation duly formed and validly existing under
the laws of the State of Maryland;
(ii) Thornburg LTMF is a duly registered open-end
management investment company, and its
registration with the Commission as an investment
company undr the 1940 Act is in full force and
effect;
(iii) The current prospectuses and statements of
additional information of the Fund, each dated
November 1, 2003, conform in all material respects
to the applicable requirements of the Securities
Act of 1933 (the "1933 Act") and the rules and
regulations of the Commission thereunder and do
not include any untrue statement of a material
fact or omit to state any material fact required
to be stated therein or necessary to make the
statements therein, in light of the circumstances
under which they were made, not misleading;
(iv) To the knowledge of Thornburg LTMF, no consent,
approval, authorization or order of any court or
governmental authority is required for the
consummation by the Fund of the transactions
contemplated by this Agreement, except as may be
required under the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"),
the 1940 Act, or the rules and regulations under
those Acts, all of which shall have been received
prior to the Closing Date, except for such
consents, approvals, authorizations or orders as
may be required subsequent to the Closing Date;
(v) The execution, delivery and performance of this
Agreement will not result in a material violation
of Thornburg LTMF's Articles of Incorporation or
By-Laws or of any agreement, indenture,
instrument, contract, lease or other undertaking
to which the Fund or Thornburg LTMF is a party or
by which it is bound;
(vi) The Fund has valued, and will continue to value
its portfolio securities and other assets in
accordance with applicable legal requirements;
(vii) All material contracts or other commitments (other
than this Agreement) to which the Fund is a party
will be terminated without liability to the Fund
or the New Fund on or before the Closing Date;
(viii) No litigation or administrative proceeding or
investigation of or before any court or
governmental body or self regulatory organization
is presently pending or threatened against the
Fund or any of its properties or assets.
Thornburg LTMF knows of no facts which might form
the basis for the institution of such proceedings,
and neither Thornburg LTMF nor the Fund is a party
to or subject to the provisions of any order,
decree or judgment of any court or governmental
body or self regulatory organization which
materially and adversely affects their business or
their ability to consummate the transactions
herein contemplated;
(ix) The statement of assets and liabilities, the
statement of operations, and the statement of
changes in net assets of the Fund at June 30, 2003
have been audited by PricewaterhouseCoopers, LLP,
independent certified public accountants, and
those statements, together with the statements of
assets and liabilities, the statements of
operations, and the statements of changes in net
assets at December 31, 2003, when issued, fairly
reflect, or in the case of the December 31, 2003
statements will fairly reflect, in all material
respects the assets, financial condition, results
of operations, and changes in net assets of the
Fund as of and for the periods ended on those
dates and have, or in the case of the December 31,
2003 statements, shall have been prepared, in
accordance with generally accepted accounting
principles consistently applied; and there are as
of the dates thereof no known liabilities of the
Fund other than liabilities disclosed or provided
for in the foregoing statements;
(x) Since June 30, 2003, there has been no material
adverse change in the Fund's financial condition,
assets, liabilities or business other than changes
occurring in the ordinary course of business; and
the Fund has not incurred any indebtedness
maturing more than one year from the date such
indebtedness was incurred except as disclosed in
Exhibit A. For the purposes of this subparagraph
(x), a decline in net asset value per share of the
Fund's Shares is not a material adverse change;
(xi) At the Closing Date, all material federal and
other tax returns and reports of the Fund required
by law then to be filed (including any extensions)
shall have been filed, and all federal and other
taxes shall have been paid so far as due, or
provision shall have been made for the payment
thereof, and to the best of Thornburg LTMF's
knowledge no such return of or relating to the
Fund is currently under audit, and no assessment
has been asserted with respect to the Fund;
(xii) The Fund has met the requirements of Subchapter M
of the Code and has elected to be treated as a
regulated investment company for each taxable year
of its operations since its inception, and will so
qualify for the taxable year ending on the Closing
Date;
(xiii) The Fund is authorized to issue 300,000,000,
150,000,000 and 125,000,000 Class A, Class C and
Class I shares, respectively, of the Fund, at the
date hereof. All issued and outstanding shares of
the Fund have been offered and sold in compliance
in all material respects with applicable
registration requirements of the 1933 Act and
state securities laws. All issued and outstanding
shares of the Fund are, and at the Closing Date
will be, duly and validly issued and outstanding,
fully paid and non-assessable by Thornburg LTMF.
All of the issued and outstanding Shares of the
Fund will, at the time of Closing, be held by
shareholder accounts in the amounts set forth in
the list of shareholder's accounts submitted to
Thornburg Trust pursuant to paragraph 3(d). The
Fund does not have outstanding any options,
warrants or other rights to subscribe for or
purchase any securities issuable by the Fund;
(xiv) At the Closing Date, the Fund will have good and
marketable title to the Assets to be transferred
to the New Fund pursuant to paragraph 1(b),
subject to no lien, encumbrance or competing
interest in any person, and full right, power, and
authority to sell, assign, transfer and deliver
the Assets hereunder, and upon delivery and
payment for those Assets, the New Fund will
acquire good and marketable title thereto, subject
to no restriction on the full transfer thereof,
including such restrictions as might arise under
the 1933 Act other than as disclosed in writing to
the New Fund;
(xv) The execution, delivery and performance of this
Agreement will have been duly authorized prior to
the Closing Date by all necessary actions on the
part of Thornburg LTMF's Board of Directors, and
this Agreement constitutes a valid and binding
obligation of Thornburg LTMF, enforceable in
accordance with its terms, subject to the approval
of the shareholders of the Fund, and further
subject as to enforcement to bankruptcy,
insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' rights
and subject to general equity principles;
(xvi) The information furnished by the New New Fund LTMF
for use in applications for orders, registration
statements, proxy materials and other documents
which may be necessary in connection with the
transactions contemplated hereby is and shall be
accurate and complete in all material respects and
shall comply in all material respects with federal
securities and other laws and regulations
thereunder applicable thereto;
(xvii) The registration statement filed by the New Fund
on Form N-14 relating to the New Fund Shares that
will be registered with the Commission pursuant to
this Agreement, which shall include the proxy
statement of Thornburg LTMF in respect of the Fund
with respect to the transactions contemplated by
this Agreement, and any supplement or amendment
thereto or to the documents contained or
incorporated therein by reference (the "N-14
Registration Statement"), and the proxy materials
of Thornburg LTMF in respect of the Fund included
in the N-14 Registration Statement and filed with
the Commission pursuant to Section 14 of the 1934
Act with respect to the transactions
contemplated by this Agreement, and any supplement
or amendment thereto or the documents appended
thereto (the "Reorganization Proxy Materials"),
from their effective dates with the Commission,
through the time of the meeting of shareholders of
the Fund contemplated therein (the "Shareholders
Meeting") and at the Closing Date: (a) shall
comply in all material respects with the
provisions of the 1933 Act, 1934 Act and the 1940
Act, the rules and regulations thereunder, and
applicable state securities laws, and (b) shall
not contain any untrue statement of a material
fact or omit to state a material fact required to
be stated therein or necessary to make the
statements therein not misleading; provided, that
the representations and warranties in this
subparagraph shall only apply to statements in or
omissions from the N-14 Registration Statement or
Reorganization Proxy Materials made by, or in
reliance upon and in conformity with information
furnished by or on behalf of Thornburg LTMF.
(b) Thornburg Trust represents and warrants to Thornburg LTMF
as follows:
(i) The New Fund is a series of Thornburg Trust, which
is a business trust duly formed and validly
existing under the laws of the Commonwealth of
Massachusetts;
(ii) Thornburg Trust is a duly registered open-end
management investment company and its registration
with the Commission as an investment company under
the 1940 Act is in full force and effect;
(iii) The prospectuses and statements of additional
information for shares of the New Fund, when
effective, shall conform in all material respects
to the applicable requirements of the 1933 Act and
the rules and regulations of the Commission
thereunder and will not include any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or
necessary to make the statements therein, in light
of the circumstances under which they were made,
not misleading;
(iv) To the knowledge of Thornburg Trust, no consent,
approval, authorization or order of any court or
governmental authority is required for the
consummation by the New Fund of the transactions
contemplated by this Agreement, except as may be
required under the 1933 Act, the 1934 Act, the
1940 Act, or the rules and regulations under those
Acts, all of which shall have been received prior
to the Closing Date, except for such consents,
approvals, authorizations or orders as may be
required subsequent to the Closing Date;
(v) The execution, delivery and performance of this
Agreement will not result in a material violation
of Thornburg Trust's Declaration of Trust or By-
Laws or of any agreement, indenture, instrument,
contract, lease or other undertaking to which the
New Fund or Thornburg Trust is a party or by which
it is bound;
(vi) The New Fund has valued, and will continue to
value, its portfolio securities and other assets
in accordance with applicable legal requirements;
(vii) No litigation or administrative proceeding or
investigation of or before any court or
governmental body or self regulatory organization
is presently pending or threatened against the New
Fund or any of its properties or assets.
Thornburg Trust knows of no facts which might form
the basis for the institution of such proceedings,
and neither Thornburg Trust nor the New Fund is a
party to or subject to the provisions of any
order, decree or judgment of any court or
governmental body or self regulatory organization
which materially and adversely affects their
business or their ability to consummate the
transactions herein contemplated;
(viii) At the Closing Date, all federal and other tax
returns and reports of the New Fund required by
law then to be filed shall have been filed, and
all federal and other taxes shall have been paid
for as due or provision shall have been made for
the payment thereof and, to the best of Thornburg
Trust's knowledge, no such return of or relating
to the New Fund is currently under audit, and no
assessment has been asserted with respect to the
New Fund;
(ix) The New Fund intends to meet the requirements of
Subchapter M of the Code, and intends to be
treated as a regulated investment company for the
first taxable fiscal year of its operation
including the Closing Date;
(x) Thornburg Trust is authorized to issue an
unlimited number of shares of beneficial interest
having no par value. All issued and outstanding
New Fund Shares at the Closing Date will be duly
and validly issued and outstanding, fully paid and
non-assessable. The New Fund does not have
outstanding any options, warrants or other rights
to subscribe for or purchase any securities
issuable by the New Fund, nor is there outstanding
any security convertible into New Fund Shares
(except as the trustees of Thornburg Trust may
convert classes of shares in accordance with
Thornburg Trust's Declaration of Trust, as
amended);
(xi) The execution, delivery and performance of this
Agreement will have been duly authorized prior to
the Closing Date by all necessary actions on the
part of Thornburg Trust's trustees, and this
Agreement constitutes a valid and binding
obligation of Thornburg Trust enforceable in
accordance with its terms, subject as to
enforcement to bankruptcy, insolvency,
reorganization, moratorium and other laws relating
to or affecting creditors' rights and subject to
general equity principles;
(xii) New Fund Shares to be issued and delivered to the
Fund pursuant to the terms of this Agreement will
at the Closing Date have been duly authorized and,
when so issued and delivered, will be duly and
validly issued New Fund Shares, and will be fully
paid and non-assessable by Thornburg Trust, except
to the extent that shareholders of Thornburg Trust
may be held personally liable for obligations of
Thornburg Trust;
(xiii) The N-14 Registration Statement and the
Reorganization Proxy Materials, from their
effective dates with the Commission, through the
time of the Shareholders Meeting and at the
Closing Date:
(a) shall comply in all material respects with
the provisions of the 1933 Act, 1934 Act and
the 1940 Act, the rules and regulations
thereunder, and applicable state securities
laws, and
(b) shall not contain any untrue statement of a
material fact or omit to state a material
fact required to be stated therein or
necessary to make the statements made therein
not misleading; provided, that the
representations and warranties in this
subparagraph shall only apply to statements
in or omissions from the N-14 Registration
Statement or the Reorganization Proxy
Materials made in reliance upon and in
conformity with information furnished by or
on behalf of Thornburg Trust;
(xiv) At the Closing Date, the New Fund will have good
and marketable title to its assets, subject to no
lien, encumbrance or competing interest in any
person, and full right, power and authority to
sell, assign, transfer and deliver those assets
other than as disclosed in writing to Thornburg
LTMF; and
(xv) The information furnished by Thornburg Trust for
use in applications for orders, registration
statements, proxy materials and other documents
which may be necessary in connection with the
transactions contemplated hereby is and shall be
accurate and complete in all material respects and
shall comply in all material respects with federal
securities and other laws and regulations
thereunder applicable thereto.
5. Covenants of the Parties.
(a) The New Fund and the Fund each will operate its business
in the ordinary course between the date hereof and the Closing Date, it
being understood that the ordinary course of business will include
customary dividends and distributions and any other distribution that may
be advisable.
(b) Thornburg LTMF will call a meeting of the shareholders of
the Fund to be held as promptly as practicable to consider and act upon
this Agreement and to take all other action necessary to obtain approval of
the transactions contemplated herein.
(c) Thornburg LTMF covenants that the New Fund Shares to be
issued hereunder will not be sold or distributed other than in accordance
with the terms of this Agreement.
(d) Thornburg LTMF will furnish to Thornburg Trust all
information reasonably requested and that is within its control for the
preparation of the N-14 Registration Statement, the preparation and
distribution of the Reorganization Proxy Materials, and for effectuating
the transactions contemplated herein. Thornburg LTMF will furnish, or
cause its transfer agent to furnish, to Thornburg Trust all information
reasonably requested respecting the beneficial ownership of Thornburg LTMF
shares, shareholders and shareholder accounts for the mailing of the
Reorganization Proxy Materials and for the establishment of New Fund
accounts for shareholders of the Fund in accordance with paragraph 1(c).
Thornburg LTMF will furnish, or cause its custodian or other agents to
furnish, all portfolio asset information reasonably requested by Thornburg
Trust in connection with, and to facilitate, the transactions contemplated
by this Agreement.
(e) Subject to the provisions of this Agreement, Thornburg
Trust and Thornburg LTMF will each take, or cause to be taken, all actions,
and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by
this Agreement.
(f) Thornburg LTMF shall furnish to Thornburg Trust within 30
days after the Closing Date a detailed trial balance of the Fund's assets
and liabilities and computations showing amortization of premium on
portfolio securities. Thornburg Funds shall furnish to Thornburg Trust
when available the final federal income tax return for the Fund.
(g) Thornburg LTMF will, as promptly as practicable after the
Closing, wind up the business of the Fund, deregister the Fund under
applicable federal securities laws, file final reports with the state
securities regulators requiring any such reports, prepare and distribute
final account statements and tax statements to persons who were formerly
shareholders of the Fund, and file any necessary federal and state tax
returns.
(h) Thornburg Trust will prepare and file the N-14
Registration Statement, will file the Reorganization Proxy Materials with
applicable regulatory authorities, and will use all reasonable efforts to
obtain clearance or effectiveness of the N-14 Registration Statement and
the Reorganization Proxy Materials, all in accordance with the 1933 Act,
the 1934 Act, and the 1940 Act, and applicable regulations and rulings
thereunder, and in accordance with any applicable state statutes and
regulations.
(i) Thornburg Trust agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act, the 1934
Act, the 1940 Act and such of the state securities laws as are necessary or
appropriate in order to continue its operations after the Closing Date.
6. Conditions Precedent to Obligations of Thornburg LTMF.
The obligations of Thornburg LTMF to consummate the
transactions provided for herein shall be subject, at its election, to the
performance by Thornburg Trust of all the obligations to be performed by it
hereunder on or before the Closing Date, and, in addition thereto, the
following further conditions:
(a) All representations and warranties of Thornburg Trust
contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date; and
(b) Thornburg Trust shall have delivered to Thornburg LTMF a
certificate executed in its name by its President or Vice President and its
Treasurer or Assistant Treasurer, in form and substance satisfactory to
Thornburg LTMF and dated as of the Closing Date, certifying that the
representations and warranties of Thornburg Trust made in this Agreement
are true and correct at and as of the Closing Date.
7. Conditions Precedent to Obligations of Thornburg Trust.
The obligations of Thornburg Trust to complete the transactions
provided for herein shall be subject, at its election, to the performance
by Thornburg LTMF of all the obligations to be performed by it hereunder on
or before the Closing Date and, in addition thereto, the following
conditions:
(a) All representations and warranties of Thornburg LTMF
contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date;
(b) Thornburg LTMF shall have delivered to Thornburg Trust the
following information prepared as of the Closing Date: (i) net asset value
pricing sheet of the Fund, with a portfolio listing of each portfolio
security including the principal amount, identification of issue, cost, tax
lot cost, market price per unit and market value; (ii) trial balance of the
Fund's general ledger; (iii) supporting schedules with the details for
accounts receivable and accounts payable; (iv) certification from the
Fund's custodian that it has delivered to the New Fund's custodian the
Assets acquired by the New Fund; and (v) confirmation from the New Fund's
transfer agent of the aggregate number of the Fund's shares outstanding and
a reconciliation of that number to the number of shares shown in the
pricing sheet referred to in (i) above;
(c) Thornburg LTMF shall have delivered to Thornburg Trust a
certificate executed in its name by its President or Vice President and its
Treasurer or Assistant Treasurer, in form and substance satisfactory to
Thornburg Trust and dated as of the Closing Date, certifying that the
representations and warranties of Thornburg LTMF made in this Agreement are
true and correct at and as of the Closing Date;
(d) This Agreement and the transactions contemplated herein
shall have been approved by the requisite vote of the holders of the
outstanding shares of the Fund in accordance with applicable law and
evidence of the approval shall have been delivered to Thornburg Trust; and
(e) The parties shall have received a favorable opinion of
White, Koch, Kelly & McCarthy, P.A. satisfactory to Thornburg LTMF and
Thornburg Trust, substantially to the effect that, based upon certain
facts, assumptions and representations, the transactions contemplated by
this Agreement constitute a tax-free reorganization described in Section
368(a)(1) of the Internal Revenue Code of 1986, as amended, for federal
income tax purposes. The delivery of such opinion is conditioned upon
receipt by White, Koch, Kelly & McCarthy, P.A. of representations it shall
request of Thornburg Trust and Thornburg LTMF.
8. Further Conditions Precedent to Obligations of Thornburg Trust
and Thornburg LTMF.
Each party's obligations hereunder are, at its election,
subject to the further conditions that:
(a) On the Closing Date, no action, suit or other proceeding
shall be pending before any court or governmental agency in which it is
sought to restrain or prohibit, or obtain damages or other relief in
connection with, this Agreement or the transactions contemplated herein;
(b) On or before the Closing Date, all consents of other
parties and all other consents, orders and permits of federal, state and
local regulatory authorities (including those of the Commission and of
state securities authorities, including "no-action" positions of such
federal or state authorities) deemed necessary by Thornburg Trust or
Thornburg LTMF to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except where
failure to obtain any such consent, order or permit would not involve a
risk of a material adverse effect on the business assets or properties of
Thornburg Trust or Thornburg LTMF; and
(c) On or before the Closing Date, the N-14 Registration
Statement shall have become effective under the 1933 Act and no stop orders
suspending the effectiveness thereof shall have been issued and, to the
best knowledge of the parties hereto, no investigation or proceeding for
that purpose shall have been instituted or be pending, threatened or
contemplated under the 1933 Act.
9. Responsibility for Fees and Expenses.
Thornburg LTMF will pay the costs of the transactions
contemplated hereby, including the expenses of preparing and filing the N-
14 Registration Statement, the costs of distributing the prospectuses and
proxy materials, proxy solicitation costs, and other costs.
10. Massachusetts Business Trust.
Thornburg Trust is organized as a Massachusetts business trust,
and references in this Agreement to Thornburg Trust mean and refer to the
trustees of Thornburg Trust from time to time serving under its Declaration
of Trust on file with the Secretary of State of the Commonwealth of
Massachusetts, as the same may be amended from time to time, pursuant to
which Thornburg Trust conducts its business. It is expressly agreed that
the obligations of Thornburg Trust hereunder shall not be binding upon any
of Thornburg Trust's trustees, shareholders, nominees, officers, agents, or
employees of Thornburg Trust, or New Fund personally, but bind only the
property of the New Fund, as provided in Thornburg Trust's Declaration of
Trust. Moreover, no series of Thornburg Trust other than the New Fund
shall be responsible for the obligations of Thornburg Trust hereunder, and
all persons shall look only to the respective assets of the New Fund to
satisfy the obligations of Thornburg Trust hereunder. The execution and
delivery of this Agreement have been authorized by Thornburg Trust's
trustees, on behalf of the New Fund, and this Agreement has been signed by
authorized officers of Thornburg Fund acting as such, and neither such
authorization by such trustees, nor such execution and delivery by such
officers, shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the
respective property of the New Fund, as provided in Thornburg Trust's
Declaration of Trust.
11. Indemnification.
(a) The New Fund agrees to indemnify and hold harmless the
Fund and each of the Fund's directors and officers from and against any and
all losses, claims, damages, liabilities or expenses (including without
limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which jointly and severally, the Fund or any of its
directors or officers may become subject, insofar as any such loss, claim,
damage, liability or expense (or actions with respect thereto) arises out
of or is based on any breach by the New Fund of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
(b) The Fund agrees to indemnify and hold harmless the New
Fund and each of the New Fund's trustees and officers from and against any
and all losses, claims, damages, liabilities or expenses (including without
limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which jointly and severally, the New Fund or any of its
trustees or officers may become subject insofar as any such loss, claim,
damage, liability or expense (or actions with respect thereto) arises out
of or is based on any breach by the Fund of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
12. Entire Agreement; Survival of Warranties.
(a) Thornburg Trust and Thornburg LTMF agree that neither
party has made any representation, warranty or covenant not set forth
herein and that this Agreement constitutes the entire agreement between the
parties.
(b) The representations, warranties and covenants contained in
this Agreement or in any document delivered pursuant hereto or in
connection herewith shall survive the consummation of the transactions
contemplated hereunder.
13. Termination.
(a) This Agreement may be terminated by the mutual agreement
of Thornburg Trust and Thornburg LTMF. In addition, either Thornburg Trust
or Thornburg LTMF may at its option terminate this Agreement at or before
the Closing Date because:
(i) of a material breach by the other of any
representation, warranty or agreement contained
herein to be performed at or before the Closing Date;
or
(ii) a condition herein expressed to be precedent to the
obligations of the terminating party has not been met
and it reasonably appears that it will not or cannot
be met.
(b) In the event of any such termination, there shall be no
liability for damages on the part of either Thornburg Trust or Thornburg
LTMF, or their respective trustees, directors or officers, to the other
party or its trustees, directors or officers, but each shall bear, except
as otherwise provided in section 9, the expenses incurred by them
incidental to the preparation and carrying out of this Agreement.
14. Amendments.
This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized officers
of Thornburg LTMF and Thornburg Trust; provided, however, that following
the shareholders' meeting called by the Fund pursuant to this Agreement, no
such amendment may have the effect of changing the provisions for
determining the number of New Fund Shares to be issued to the Fund's
shareholders under this Agreement to the detriment of those shareholders
without their further approval.
15. Notices.
Any notice, report, statement or demand required or permitted
by any provisions of this Agreement shall be in writing and shall be given
by prepaid telegraph, telecopy or certified mail addressed to Thornburg
Trust, 119 East Marcy Street, Santa Fe, New Mexico 87501, Attention:
Brian J. McMahon, and to Thornburg LTMF, 119 East Marcy Street, Santa Fe,
New Mexico 87501, Attention: George T. Strickland.
16. Headings; Counterparts; Governing Law; Assignment.
(a) The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
(b) This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
(c) This Agreement shall be governed by and construed in
accordance with the substantive laws of the Commonwealth of Massachusetts,
provided that nothing herein shall be construed in a manner inconsistent
with the 1940 Act or the Advisers Act (as the same Acts shall have been or
will be amended) or rules, orders or regulations of such governmental
bodies or authorities having authority with respect to such Acts.
(d) This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations hereunder
shall be made by any party without the written consent of the other party.
Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm or corporation, other than the parties
hereto and their respective administrators, executors, legal
representatives, heirs, successors and permitted assigns, any rights or
remedies under or by reason of this Agreement.
(e) In the event of any litigation respecting this Agreement
or its subject matter, the prevailing party will be entitled to
reimbursement from the losing party for the prevailing party's cost of
suit, including reasonable attorneys' fees.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its President or Vice President and attested to
by its Secretary or Assistant Secretary.
THORNBURG INVESTMENT TRUST on behalf of
THORNBURG CALIFORNIA LIMITED TERM
MUNICIPAL FUND
By:
-------------------------------------
------------------, ----------------
THORNBURG LIMITED TERM MUNICIPAL FUND,
INC., on behalf of THORNBURG LIMITED TERM
MUNICIPAL FUND CALIFORNIA PORTFOLIO
By:
-------------------------------------
------------------, ----------------
EXHIBIT A
to
Agreement and Plan of Reorganization
Dated December ___, 2003
Thornburg Investment Trust
(on behalf of Thornburg California Limited Term Municipal Fund)
and
Thornburg Limited Term Municipal Fund, Inc.
(on behalf of Thornburg Limited Term Municipal Fund California Portfolio)
Subparagraph 4(a)(x): None.
PROSPECTUS AND PROXY STATEMENT
(For Holders of Institutional Class Shares)
RELATING TO THE ACQUISITION OF THE ASSETS OF
THORNBURG LIMITED TERM MUNICIPAL FUND CALIFORNIA PORTFOLIO
a separate series of
THORNBURG LIMITED TERM MUNICIPAL FUND, INC.
119 East Marcy Street
Santa Fe, New Mexico 87501
(800) 847-0200
BY AND IN EXCHANGE FOR SHARES OF
THORNBURG CALIFORNIA LIMITED TERM MUNICIPAL FUND
a separate series of
THORNBURG INVESTMENT TRUST
119 East Marcy Street
Santa Fe, New Mexico 87501
(800) 847-0200
This Prospectus/Proxy Statement relates to the proposed transfer of
substantially all of the assets of Thornburg Limited Term Municipal Fund
California Portfolio (the "Fund") in exchange solely for shares of
Thornburg Limited Term Municipal Fund (the "New Fund"). The Fund and the
New Fund each have the same investment objective, which is to seek as high
a level of interest income which is exempt from federal and California
state individual income taxes as is consistent, in the view of the Funds'
investment adviser, with the preservation of shareholders' capital. As a
result of the proposed transaction, each shareholder of the Fund Portfolio
will receive shares of the New Fund equal in value at the date of the
exchange to the value of the shareholder's shares of the Fund. The terms
and conditions of these transactions are more fully described in this
Prospectus/Proxy Statement and in the Agreement and Plan of Reorganization
attached hereto as Exhibit A.
This Prospectus/Proxy Statement, which should be retained for future
reference, sets forth concisely the information about the New Fund that a
prospective investor should know before investing. This Prospectus/Proxy
Statement is accompanied by the New Fund's "Thornburg Limited Term
Municipal Funds Institutional Class Shares Prospectus" dated ___________,
2004 (the "New Fund Prospectus"), which contains information about the New
Fund and which is incorporated by reference into this Prospectus/Proxy
Statement. A Statement of Additional Information dated February 1, 2004
(the "Statement of Additional Information") containing additional
information about the New Fund has been filed with the Securities and
Exchange Commission and is incorporated by reference into this
prospectus/proxy statement. A copy of the New Fund Prospectus and the
Statement of Additional Information may be obtained without charge by
writing to Thornburg at its address noted above or by calling 1-800-847-
0200. Copies of the Fund's current "Thornburg Funds" prospectus for Class
I shares dated February 1, 2004, and its Statement of Additional
Information for Institutional Class Shares dated ______________________,
2004 are incorporated by reference into this Prospectus/Proxy Statement,
and may be obtained without charge by writing to Thornburg at the address
shown above or by calling 1-800-847-0200.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROSPECTUS AND
PROXY STATEMENT AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY
REFERENCE AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THORNBURG INVESTMENT
TRUST OR THORNBURG LIMITED TERM MUNICIPAL FUND, INC.
INVESTMENTS IN THORNBURG CALIFORNIA LIMITED TERM MUNICIPAL FUND (THE
"NEW FUND") ARE SUBJECT TO RISK, INCLUDING POSSIBLE RISK OF PRINCIPAL, AND
WILL FLUCTUATE IN VALUE. SHARES OF THE NEW FUND ARE NOT BANK DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, AND ARE NOT INSURED BY, ANY
BANK, FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR
ANY GOVERNMENTAL AGENCY.
The date of this Prospectus/Proxy Statement is __________, 2004.
TABLE OF CONTENTS
Summary of the Proposed Reorganization
Investment Adviser and Distributor of the Fund and the New Fund
Investment Goals, Policies and Restrictions of the Fund and the New Fund
Principal Risk Factors
Fees and Expenses of the Fund and the New Fund
Purchase, Redemption and Exchange Procedures for the Fund and the New Fund
Dividend Policies of the Fund and the New Fund
Comparative Information on Shareholder Rights
Additional Information About Shareholder Accounts
Information About the Reorganization
Capitalization
Additional Information About the Fund and the New Fund
Voting Information
Exhibit A: Agreement and Plan of Reorganization
For detailed information about the New Fund, see the Thornburg Limited Term
Municipal Funds Institutional Class Shares Prospectus dated __________
2004, (the "New Fund Prospectus"), which may be obtained without charge by
writing Thornburg at the address noted above or by calling 1-800-847-0200.
SUMMARY OF THE PROPOSED REORGANIZATION
The Board of Directors of Thornburg Limited Term Municipal Fund, Inc.
("Thornburg LTMF"), including the Directors who are not "interested
persons" of Thornburg LTMF (the "Independent Directors"), as defined in the
Investment Company Act of 1940, have reviewed and unanimously approved an
agreement and plan of reorganization (the "Agreement") between Thornburg
LTMF on behalf of Thornburg Limited Term Municipal Fund California
Portfolio (the "Fund") and Thornburg Investment Trust ("Thornburg Trust")
on behalf of Thornburg California Limited Term Municipal Fund (the "New
Fund") providing for the acquisition of substantially all of the assets of
the Fund, a separate fund (sometimes referred to as a "series") of
Thornburg LTMF, by the New Fund, a separate series of Thornburg Trust in
exchange solely for voting shares of the New Fund. The aggregate net asset
value of the shares of the acquiring the New Fund issued in the exchange
will equal the aggregate net asset value of the shares outstanding for the
acquired Fund. In connection with the transaction, shares of the New Fund
will then be distributed to the Fund's shareholders pro rata by class so
that holders of each class of shares of the Fund will receive shares of the
corresponding class of shares of the New Fund. The Fund thereafter will be
terminated. These transactions are referred to as the "reorganization."
As a result of the reorganization, each owner of Institutional Class
("Class I") shares of the Fund will become an owner of the corresponding
class of shares of the New Fund, having an aggregate net asset value equal
to the net asset value of that shareholder's shares in the Fund. No sales
charge will be imposed on the transaction. As a condition to the closing,
Thornburg Trust and Thornburg LTMF will obtain a legal opinion to the
effect that, based upon certain facts, assumptions and representations, the
reorganization will qualify as a tax-free reorganization for federal income
tax purposes. See "Information About the Reorganization." Persons
receiving shares of the New Fund in the reorganization will remain free to
redeem their shares after the reorganization.
The Fund and the New Fund have identical investment objectives and
policies. The New Fund will commence operations upon the completion of the
reorganization with the same portfolio of investments owned by the Fund.
The New Fund will have the same investment manager as the Fund, Thornburg
Investment Management, Inc. ("TIMI"), which will perform investment
management services under an investment management agreement having
substantially identical terms and providing for the same fees as the Fund's
current investment advisory agreement.
Expenses of the New Fund are expected to be substantially the same as
the expenses of the Fund before the reorganization, as follows:
Fund Annual Operating Expenses
Before the Reorganization
- -------------------------
Class I .75%
Expected New Fund Annual Operating Expenses
After the Reorganization
- -------------------------
Class I .75%
Expenses of the reorganization will be paid by the Fund, and are not
expected to have a material effect on the expenses of the Fund. The
reorganization is expected to result in cost savings to the shareholders of
the New Fund after the reorganization.
For the reasons set forth below, the Board of Directors of LTMF,
including all of the Independent Directors, have unanimously concluded that
the reorganization is in the best interests of the shareholders of the
Fund. The Board of Directors of Thornburg LTMF therefore have submitted
the Agreement for approval by the shareholders of the Fund at a special
meeting of shareholders to be held on April __, 2003 (the "Meeting").
Approval of the reorganization with respect to the Fund requires the
affirmative vote of a majority of the outstanding shares of the Fund
entitled to vote at the Meeting. This Prospectus/Proxy Statement pertains
to and is directed to holders of the Fund's Institutional Class ("Class I")
shares.
At or about the same time that substantially all of the assets of the
Fund are acquired by the New Fund, Thornburg California Limited Term
Municipal Fund will acquire substantially all of the assets of Thornburg
LTMF's other series, Thornburg Limited Term Municipal Fund California
Portfolio. Each of these transactions has been approved by Thornburg
LTMF's Board of Directors. The acquisition of substantially all of the
assets of the Fund and Thornburg Limited Term Municipal Fund California
Portfolio are referred to collectively herein as the "Related
Transactions." Completion of the reorganization is contingent upon proper
shareholder approval being received for each of the Related Transactions,
and the satisfaction of all other conditions to closing the Related
Transactions. There can be no assurance shareholder approval can be
obtained for each Related Transactions or that the conditions of the other
Related Transactions will be satisfied. If shareholders of the Fund
approve the reorganization and the other Related Transactions is not
approved, the Board of Directors of Thornburg LTMF will consider the
alternatives available to it with respect to the Fund, including completion
of the reorganization respecting the Fund. See "Voting Information."
The Board of Directors has approved the reorganization because they
believe it would benefit the Fund. The reorganization is intended to
simplify legal and regulatory compliance functions, and to reduce the costs
of performing these functions. The Board of Directors considered these
objectives of the reorganization, together with other factors, which are
discussed below under the caption "Information About the Reorganization."
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMEND APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION.
INVESTMENT ADVISER AND DISTRIBUTOR
The investment adviser to both the Fund and to the New Fund is
Thornburg Investment Management, Inc. ("TIMI"), 119 East Marcy Street,
Santa Fe, New Mexico 87501. TIMI has been the investment adviser for the
Fund since its inception in 1987. TIMI is also the investment adviser for
all of the 12 Funds offered by Thornburg Trust, including the New Fund and
Thornburg Limited Term Municipal Fund (the two Funds organized to
consummate the Related Transaction), four other Funds which invest
principally in municipal obligations for tax exempt current income, two
Funds which invest in U.S. Government and other fixed income obligations
for current income, three Funds which invest primarily for capital
appreciation, and one Fund which invests for current income and capital
appreciation. TIMI also provides to each Thornburg mutual fund under its
management supervision, administration and performance of certain
administrative services. Fees charged to the Fund and the New Fund for
these services are described below under "Fees and Expenses of the Fund and
the New Fund."
The distributor of shares to both the Fund and to the New Fund is
Thornburg Securities Corporation ("TSC"), 119 East Marcy Street, Santa Fe,
New Mexico 87501. TSC has been the distributor for the Fund since its
inception in 1987. TSC is also distributor for each other Thornburg mutual
fund.
INVESTMENT GOALS, POLICIES
AND RESTRICTIONS OF THE FUND AND THE NEW FUND
Investment Goals and Strategies of the Funds
- --------------------------------------------
The investment goals and strategies of the Fund and the New Fund are
identical. The primary investment goal of each Fund is to obtain as high a
level of current income exempt from federal and California state individual
income tax as is consistent, in the view of the investment adviser, with
preservation of capital. The secondary goal of each Fund is to reduce
expected changes in its share price compared to longer intermediate and
long-term bond portfolios. Each Fund's primary and secondary goals are
fundamental policies, and may not be changed without a majority vote of the
Fund's shareholders.
Each Fund pursues its primary goal by investing principally in a
laddered maturity portfolio of municipal obligations issued by the State of
California and its agencies, and by California local governments and their
agencies. The investment adviser, Thornburg Investment Management, Inc.
("TIMI") actively manages each Fund's portfolio. Investment decisions are
based upon outlooks for interest rates and securities markets, the supply
of municipal debt securities, and analysis of specific securities. Each
Fund invests in obligations and participations in obligations which are
rated at the time of purchase as investment grade or, if unrated, which are
issued by obligors which have comparable investment grade obligations
outstanding or which are deemed by TIMI to be comparable to obligors with
outstanding investment grade obligations. The Fund may invest in
obligations issued by certain United States territories and possessions.
Each Fund's portfolio is "laddered" by investing in obligations of
different maturities so that some obligations mature during each of the
coming years.
Because the magnitude of changes in value of interest bearing
obligations is greater for obligations with longer terms, each Fund seeks
to reduce changes in its share value by maintaining a portfolio of
investments with a dollar-weighed average maturity normally less than five
years. There is no limitation on the maturity of any specific security
each Fund may purchase. Each Fund may dispose of any security before it
matures. Each Fund also attempts to reduce changes in its share value
through credit analysis, selection and diversification.
Each Fund ordinarily acquires and holds securities for investment
rather than for realization of gains by short term trading on market
fluctuations. However, it may dispose of any security prior to its
scheduled maturity to enhance income or reduce loss, to change the
portfolio's average maturity, or to otherwise respond to current market
conditions. The objective of preserving capital may prevent the Fund from
obtaining the highest yields available.
Under normal conditions each Fund invests at least 80% of its assets
in municipal obligations originating in California which are exempt from
California and regular federal income taxes, and normally invests 100% of
its assets in municipal obligations originating in California or issued by
United States territories and possessions. Each Fund may invest up to 20%
of its assets in taxable securities which would produce income not exempt
from federal or California income tax. These investments may be made due
to market conditions, pending investment of idle funds or to afford
liquidity. Each Fund's temporary taxable investments may exceed 20% of its
assets when made for defensive purposes during periods s of abnormal market
conditions. If the Fund found it necessary to own taxable investments,
some of its income would be subject to federal and California income taxes.
PRINCIPAL RISK FACTORS
Because the Funds' investment goals and policies are identical, the
risks of investing in the New Fund are expected to be the same as the risks
of investing in the Fund.
The value of each Fund's shares and its dividends will fluctuate in
response to changes in interest rates. When interest rates increase, the
value of the Fund's investments declines and the Fund's share value is
reduced. This effect is more pronounced for intermediate and longer term
obligations owned by a Fund. During periods of declining interest rates
the Fund's dividends decline. The value of Fund shares also could be
reduced if municipal obligations held by the Fund were downgraded by rating
agencies, or went into default, or if legislation or other government
action reduces the ability of issuers to pay principal and interest when
due or changes the tax treatment of interest on municipal obligations.
Nonrated obligations may have, or may be perceived to have, greater risk of
default. The loss of money is a risk of investing in the Fund, and when
you sell your shares they may be worth less than what you paid for them.
An investment in either Fund is not a deposit of any bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.
For a further discussion of the investment objectives, policies and
restrictions applicable to the New Fund, please see the New Fund
Prospectus, which is available without charge by calling 1-800-847-0200.
FEES AND EXPENSES OF THE FUND AND THE NEW FUND
Advisory and Administration Fees and Fund Expenses
- --------------------------------------------------
The Fund and the New Fund each have contractual arrangements to obtain
investment management, administrative and distribution services which are
substantially identical.
The Fund and The New Fund are each contractually obligated to pay an
investment management fee to TIMI based upon the Fund's assets. The fee is
computed on average daily net assets of an annual rate as follows:
Net Assets Annual Rate
---------- -----------
0 to $500 million .50%
$500 million to $1 billion .40%
$1 billion to $1.5 billion .30%
$1.5 billion to $2.0 billion .25%
more than $2.0 billion .225%
TIMI also has entered into agreements with the Fund and the New Fund to
provide administrative services at an annual rate of .05% of average daily
net assets for Institutional Class shares of each Fund.
Investment advisory fees, and the other expenses currently paid by the
Fund and expected to be paid by the New Fund are set out below. The
Shareholder Transaction Expense table shows the transaction fees paid by a
shareholder in each Fund upon a purchase or redemption of shares. The
Annual Operating Expenses table shows the annual Fund operating expense for
the Fund for its fiscal year ended June 30, 2003 and compares those fee and
expense percentages to the expected annual fund operating expenses for the
New Fund for its current fiscal year.
Shareholder Transaction Expenses
Fees Paid Directly From Your Investment
Fund New Fund
Class I Class I
------- --------
Maximum Sales Charge (Load) on none none
Purchases (as a percentage of
offering price)
Maximum Deferred Sales Charge none none
(Load) on Redemptions (as a
percentage of redemption
proceeds on original purchase
price, whichever is lower)
Redemption Fees (as a none none
percentage of amount redeemed)
Annual Operating Expenses
Expenses That Are Deducted From Fund Assets
(as a percentage of average net assets)
Fund New Fund (1)
Class I Class I
------- --------
Investment Advisory Fee .50% .50%
Distribution and Service
(12b-1) Fees .00% .00%
Other Expenses .25% .25%
----- -----
Total Annual Operating Expenses .75% (2) .75%(2)
(1) The New Fund is a newly organized Fund which has not conducted
any business except incident to the reorganization. The fees and expenses
shown for The New Fund are estimated fees and expenses expected to be
incurred for the fiscal year ending June 30, 2004.
(2) For the fiscal year ending June 30, 2004, Thornburg Investment
Management, Inc. is waiving fees and reimbursing expenses so that actual
Class I expenses do not exceed .65%. Thornburg Investment Management, Inc.
intends to waive fees and reimburse expenses for Class I shares of the New
Fund after the reorganization so that actual Class I expenses do not exceed
..65%. Waivers of fees and reimbursements of expenses may be terminated at
any time.
EXAMPLE:
The following Example is intended to help you compare the cost of
investing in the New Fund with the cost of investing in the Fund Portfolio.
The Example assumes that you invest $10,000 in each respective Fund for the
time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5%
return each year, that dividends and distributions are reinvested, and that
each Fund's operating expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
Fund New Fund Pro Forma
Class I Class I
------- --------
1 Year $77 $77
3 Years $240 $240
5 Years $417 $417
10 Years $930 $930
PURCHASE, REDEMPTION AND EXCHANGE PROCEDURES
FOR THE FUND AND THE NEW FUND
Sales Charges
- --------------
Share purchase, redemption and exchange procedures for the
Institutional Class shares of the Fund are identical with the purchase,
redemption and exchange procedures for the corresponding share class of the
New Fund.
Purchasing Institutional Class Shares
- -------------------------------------
The Fund's Institutional Class ("Class I") shares are sold with no
initial sales charge or contingent deferred sales charge at the net asset
value per share.
Qualified individual investors and qualified institutions purchasing
shares for their own account are eligible to purchase Institutional Class
shares provided they invest a minimum of $2,500,000. The minimum amount
for subsequent purchases is $5,000. Qualified institutions include
corporations, banks and insurance companies purchasing for their own
account and other institutions such as trusts, endowments and foundations.
Qualified employee benefit or retirement plans other than an
individual retirement account ("IRA") or SEP-IRA are also eligible to
purchase Institutional Class shares, provided they either invest a minimum
of $1,000,000 in the funds or have 100 or more eligible participants
enrolled in the plan. There is no minimum amount for subsequent purchases.
Investment dealers, financial advisers or other investment
professionals, including bank trust departments and companies with trust
powers, purchasing for the accounts of others within a clearly defined
"wrap" or other fee based investment advisory program are eligible to
purchase Institutional Class shares. The Fund's distributor will establish
a minimum amount per program or per account to qualify for purchase of
Institutional Class shares. The minimum amount per program is currently
$100,000.
Exchange Privileges
- -------------------
Class I shares of the Fund may be exchanged for Class I shares of
other Thornburg funds, subject to certain conditions described in the
Fund's prospectus. Similarly, Class I shares of the New Fund may be
exchanged for Class I shares of other Thornburg mutual funds subject to the
same conditions. Each of the Funds permits exchanges by telephone if the
telephone exchange privilege has been elected by the shareholder.
Shareholders of the Fund who previously elected the telephone exchange
privilege will be deemed to have elected the exchange privilege of the New
Fund if the reorganization is completed.
Redemptions
- -----------
Shares of the Fund and the New Fund properly presented for redemption
may be redeemed at the next determined net asset value per share.
Shareholders of the Fund who previously elected the telephone redemption
privilege will be deemed to have elected the New Fund's telephone
redemption privilege if the reorganization is completed.
DIVIDEND POLICIES OF FUNDS
The Fund distributes substantially all of its net investment income
and realized capital gains to its shareholders. The Fund declares net
income dividends daily and distributes those dividends monthly, and any net
realized capital gains are distributed at least annually, usually in
December. Distributions are reinvested in Fund shares unless the
shareholder elects to receive them in cash. The New Fund intends to follow
the same policies.
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS
The Fund is a diversified series of Thornburg Limited Term Municipal
Fund, Inc. ("Thornburg LTMF"), a Maryland corporation organized in 1984.
As a Maryland corporation, Thornburg LTMF is governed by applicable
Maryland and federal law, its articles of incorporation and its bylaws.
The business of Thornburg LTMF is supervised by its Board of Directors.
The New Fund is a diversified series of Thornburg Trust, a
Massachusetts business trust organized in 1987. As a Massachusetts
business trust, Thornburg Trust is governed by applicable Massachusetts and
federal law, its declaration of trust, as amended, and its bylaws. The
business of Thornburg Trust is supervised by Thornburg Trust's Trustees.
Thornburg LTMF is currently authorized under its articles of
incorporation, as amended, to issue 300,000,000 Class A shares of the Fund,
150,000,000 Class C shares of the Fund, and 250,000,000 Institutional Class
shares. Each share has a par value of $.001. The Board of Directors is
permitted to increase this authorization from time to time under Maryland
law. The Board of Directors is also permitted to create additional funds
or "series," and to divide each such series into two or more classes of
shares. Thornburg Trust is authorized to create an unlimited number of
series, and with respect to each series, to issue an unlimited number of
full and fractional shares of one or more classes and to divide or combine
the shares into a greater or lesser number of shares without thereby
changing the proportionate beneficial interests in the series. All of the
shares of Thornburg LTMF and of Thornburg Trust, respectively, have equal
voting rights with each other, except that only shares of the respective
series or separate classes within a series are entitled to vote on matters
concerning only that series or class. Neither Thornburg LTMF nor Thornburg
Trust permits cumulative voting.
Neither Thornburg LTMF nor Thornburg Trust holds annual shareholder
meetings. There normally will not be any meetings of shareholders of
Thornburg LTMF, Thornburg Trust or either of the Funds to elect directors
or trustees unless fewer than a majority of the directors or trustees then
holding office have been elected by shareholders. However, the Board of
Directors of Thornburg LTMF or the trustees of Thornburg Trust may call
special meetings from time to time to seek shareholder approval of certain
matters, and meetings of shareholders of either Thornburg LTMF or Thornburg
Trust will be called upon written request of shareholders holding in the
aggregate not less than 10% of the outstanding shares of any affected
series or class having voting rights.
Under Maryland law, shareholders of Thornburg LTMF are not liable for
the obligations of Thornburg LTMF. However, under Massachusetts law, there
is a remote possibility that shareholders of a Thornburg Trust could, under
certain circumstances, be held personally liable for the obligations of
such a trust. The declaration of trust for Thornburg Trust contains
provisions intended to limit any such liability and to provide
indemnification out of Fund property for any shareholder charged or held
personally liable for obligations or liabilities of the shareholder's fund
solely by reason of being or having been a shareholder of that Fund and not
because of the shareholder's acts or omissions or for some other reason.
Consequently, the risk of a shareholder of the New Fund incurring financial
loss on account of shareholder liability is limited to circumstances in
which the New Fund itself would be unable to meet its obligations.
ADDITIONAL INFORMATION ABOUT SHAREHOLDER ACCOUNTS
If the reorganization is approved, the New Fund will establish an
account for each Fund shareholder.
No further purchases of the shares of the Fund may be made after the
date on which the shareholders of the Fund approve the reorganization, and
the share transfer books of the Fund will be permanently closed as of the
date of Closing. Only redemption requests and transfer instructions
received in proper form by the close of business on the day before the date
of Closing will be fulfilled by the Fund. Redemption requests or transfer
instructions received by the Fund after that date will be treated as
requests for the redemption or instructions for transfer of shares of the
New Fund credited to the accounts of shareholders of the Fund.
Accordingly, those redemption requests or transfer instructions after the
close of business on the day before Closing will be forwarded to the New
Fund. For a complete description of redemption procedures for the New
Fund, see the sections of the New Fund Prospectus under the caption
"Selling Fund Shares."
INFORMATION ABOUT THE REORGANIZATION
Agreement and Plan of Reorganization
- ------------------------------------
The following summary of the proposed Agreement and Plan of
Reorganization (the "Agreement") is qualified in its entirety by reference
to the Agreement attached to this Prospectus/Proxy Statement as Exhibit A.
The Agreement provides that the New Fund will acquire substantially
all of the assets of the Fund in exchange solely for shares of the New Fund
on the earliest practicable date following shareholder approval of the
reorganization (the "Closing Date"). The number of full and fractional
shares of the New Fund to be issued to shareholders of the Fund will be
determined on the basis of the relative net asset values per share and
aggregate net assets of the New Fund and the Fund computed immediately
after the closing of business on the New York Stock Exchange (currently
4:00 p.m., Eastern time) on the last business day before the Closing Date
(the "Valuation Date"). The net asset value per share for the Fund will be
determined by dividing each class's respective assets, less its respective
share of liabilities, by the total number of the class's outstanding
shares. Portfolio securities of the Fund will be valued in accordance with
the valuation practices of the Fund as described in its prospectus, which
is incorporated by reference herein. Valuation procedures of the New Fund
are the same as the valuation procedures of the Fund.
Immediately after the transfer of the Fund's assets to the New Fund on
the Closing Date, the Fund will distribute pro rata to its shareholders of
record as of the close of business on the Valuation Date the full and
fractional shares of the New Fund received by the Fund and will be
dissolved as soon thereafter as reasonably practicable. The distribution
will be accomplished by the establishment of accounts on the share records
of the New Fund in the name of each shareholder of the Fund, each
representing the respective pro rata number of full and fractional shares
of the New Fund due each of those shareholders. Following the
reorganization, shareholders will own shares of the New Fund of the same
class as the Fund shares owned before the reorganization. No certificates
for shares of the New Fund will be issued.
The consummation of the reorganization is subject to the conditions
set forth in the Agreement. The reorganization is also subject to approval
by the Fund's shareholders. Approval requires the affirmative vote of the
holders of a majority of each class of shares of the Fund. Further,
completion of the reorganization is subject to shareholder approval of the
"Related Transaction", which is the proposed transaction in which Thornburg
Limited Term Municipal Fund will acquire substantially all of the assets of
Thornburg Limited Term Municipal Fund National Portfolio. If shareholders
of the Fund approve the reorganization, but the Related Transaction is not
approved, the Board of Directors of the Fund will consider the available
alternatives. The Agreement may be terminated and the reorganization
abandoned prior to the Closing Date, before or after approval by
shareholders of the Fund, by resolution of the Board of Directors of the
Fund or the Trustees of Thornburg Trust, under circumstances specified in
the Agreement.
The Fund will pay the costs of the reorganization, which include fees
and costs associated with preparing, filing, printing and distributing
proxy materials, proxy solicitation costs, costs associated with qualifying
shares for sale in various states, and the deregistration and dissolution
of Thornburg LTMF.
The Board of Directors of Thornburg LTMF has determined that the
reorganization will not result in any dilution to the interests of the
Fund's shareholders, and that participation in the reorganization is in the
best interests of the Fund's shareholders.
Full and fractional shares of beneficial interest of the New Fund will
be issued to shareholders of the Fund in accordance with the procedures
under the Agreement described above. Each share will be fully paid and
non-assessable by the New Fund when issued, and will have no preemptive or
conversion rights. See comparative information on shareholder rights,
below, for additional information with respect to the shares of the New
Fund.
Considerations of the Fund's Board of Directors
- -----------------------------------------------
Thornburg Investment Management, Inc. ("TIMI"), the investment adviser
to both the Fund and the New Fund, proposed and recommended the
reorganization to the Board of Directors of Thornburg (the "Board") to
simplify certain compliance and administrative functions and to reduce the
costs associated with the performance of those functions. Based upon
TIMI's recommendation, and after consideration of the rationale for the
reorganization and certain additional factors described below, the Board,
including all of the directors who are not "interested persons"
("Independent Directors") as that term is used in the Investment Company
Act of 1940 (the "1940 Act"), has determined that the reorganization is in
the best interest of the shareholders of the Fund and that the terms of the
agreement and plan of reorganization are fair and reasonable.
The Board considered the recent increases in compliance and related
functions performed for the Fund, and the likely further increase in those
functions in the future due to regulatory and rulemaking initiatives by the
Congress and the Securities and Exchange Commission. The Board noted
specifically in this connection the following factors:
. increased duties for the Board assuring compliance with
revised regulations applicable to mutual funds
generally;
. increased audit committee functions and additional time
devoted to audit committee functions by the independent
accountants;
. increased number of filings by Thornburg LTMF of
documents required under state and federal law and
increased time for review and discussion of those
filings by the Board;
and,
. increased Board fees and associated travel expenses and
other expenses occasioned by these increased
activities.
The Board further noted in this regard that these functions are
generally duplicative of comparable functions performed for and by
Thornburg Investment Trust and its Trustees and audit committee.
The Board concluded that the general complexity of compliance, and
administration of compliance could be reduced significantly if the two
funds currently offered by Thornburg LTMF were combined with the ten
existing funds offered by Thornburg Investment Trust. This combination
would, in the Board's view, eliminate the current duplication and reduce
complexity by substituting one investment company in the place of two.
Moreover, the Board concluded that the reorganization would result in
significant cost savings, because the two funds of Thornburg Trust which
will acquire Thornburg LTMF's two current funds will share with Thornburg
Trust's other funds a number of costs which are currently duplicated (and
thus not shared) by Thornburg LTMF and Thornburg Trust.
In this latter regard the Board considered:
. legal fees and costs associated with advice on
compliance matters, preparation of documents related
to compliance, preparation of documents for Board of
Directors and audit committee meetings;
. legal counsel preparation for and attendance at Board
of Directors and audit committee meetings;
. fees and costs associated with preparation and filing
of registration statements and other periodic filings,
and general corporate work associated with the
maintenance of an additional corporate entity;
. costs, including Directors' fees and travel and other
expenses associated with the Board's and the audit
committee's fees and meetings; and
. expenses and fees of the independent accountants.
The Board also considered the likelihood of future increases in these costs
because of increased rulemaking and regulatory complexity, increasing
duties placed on investment company directors and audit committees, the
possible need to hire additional legal counsel and other persons for audit
committees, and possible increases in the frequency of shareholder meetings
to elect investment company directors. Based upon estimates by TIMI and
legal counsel, the Board determined that it was reasonable to conclude that
the costs of the reorganization could be recovered in less than two years.
The Board also considered other factors in evaluating the proposed
reorganization, including the following:
(1) There would be no change in investment objectives, investment
policies, or investment risks as a result of the reorganization;
(2) After the reorganization, investment management, administrative
services, and other functions would be performed under contracts having
substantially the same terms as the existing contracts;
(3) Fees and expenses for the New Fund are expected to be virtually
the same as fees and expenses for the Fund, except for the costs of the
reorganization (which are expected to be offset, and exceeded over time by
cost savings);
(4) The reorganization will result in no dilution of shareholders'
interests;
(5) Shareholders of the Fund will receive shares in the New Fund of
the class corresponding to the same class of shares in the Fund;
(6) The reorganization will be accomplished without recognition of
gain or loss for federal income tax purposes by shareholders of Thornburg
LTMF; and
(7) No sales charges or transaction fees will be assessed against
shareholders in connection with the reorganization.
Federal Income Tax Consequences
- -------------------------------
The reorganization is intended to qualify for federal income tax
purposes as a tax-free reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended, with no taxable gain or loss recognized
by the Fund, the New Fund, or shareholders of the Fund as a consequence of
the reorganization. As a condition to the closing of the reorganization,
the Fund and the New Fund will receive an opinion of legal counsel to that
effect based on certain assumptions and representations made by the Fund
and the New Fund.
Shareholders of the Fund should consult their tax advisers regarding
the effect, if any, of the proposed reorganization in light of their
individual circumstances. In particular, shareholders of the Fund should
also consult their tax advisers as to the state, local and other tax
consequences, if any, of the reorganization.
CAPITALIZATION
The following table sets forth the capitalization of the Fund and the
New Fund as of December 31, 2003 and the pro forma capitalization of the
combined New Fund as if the reorganization occurred on that date. These
numbers will be different at the time of closing because the Fund's net
assets for each class will increase or decrease.
CAPITALIZATION OF FUNDS AS OF DECEMBER 31, 2003
FUND NEW FUND PRO FORMA
---- -------- ---------
NET ASSETS
- -----------
Class A shares $139,962,728 -0- $139,962,728
Class C shares $ 22,801,556 -0- $ 22,801,556
Class I shares $ 20,905,203 -0- $ 20,905,203
TOTAL $183,669,487 -0- $183,669,487
NET ASSETS PER SHARE
- --------------------
Class A shares $13.14 -0- $13.14
Class C shares $13.15 -0- $13.15
Class I shares $13.15 -0- $13.15
SHARES OUTSTANDING
- -------------------
Class A shares 10,653,251.431 -0- 10,653,251.431
Class C shares 1,734,313.442 -0- 1,734,313.442
Class I shares 1,593,051.763 -0- 1,593,051.762
TOTAL 13,980,616.635 -0- (1) 13,980,616.635
SHARES AUTHORIZED
- ------------------
Class A shares 300,000,000 unlimited unlimited
Class C shares 150,000,000 unlimited unlimited
Class A shares 250,000,000 unlimited unlimited
TOTAL 700,000,000 unlimited unlimited
(1) It is anticipated that a nominal number of shares of each class
will be issued to an officer of TIMI in order to permit the consummation of
corporate actions before the reorganization.
ADDITIONAL INFORMATION ABOUT THE FUNDS
Additional information respecting the New Fund is included in the
Thornburg Limited Term Municipal Funds Institutional Class Shares
prospectus dated _______________, 2004 (the "New Fund Prospectus") which
accompanies this Prospectus and Proxy Statement and in the Thornburg
Limited Term Municipal Funds Institutional Class Shares Statement of
Additional Information dated ___________________, 2004, which has been
filed with the Securities and Exchange Commission. Additional information
is also included in the Statement of Additional Information dated
________________, 2004 related to the reorganization which has been filed
with the Securities and Exchange Commission. The described New Fund
Prospectus and statements of additional information are incorporated by
reference herein. Copies of the New Fund Prospectus and the statements of
additional information are available upon request and without charge by
calling 1-800-847-0200.
Information about the Fund is included in the Thornburg Institutional
Class Shares prospectus dated February 1, 2004, and in the Thornburg Funds
Institutional Class Statement of Additional Information dated February 1,
2004. The described prospectus and statement of additional information
have been filed with the Securities and Exchange Commission and are
incorporated by reference herein. Copies of the prospectus and the
statement of additional information are available upon request and without
charge by calling 1-800-847-0200.
Reports and other information filed by Thornburg LTMF and Thornburg
Trust can be inspected and copied at the Securities and Exchange
Commission's Public Reference Room at 450 Fifth Street, NW, Washington,
D.C. 20549. Information about the Public Reference Room may be obtained by
calling the Commission at 1-202-942-8090. Reports and other information
about the Funds are also available on the Commission's Internet site at
http://www.sec.gov and copies of information may be obtained, upon payment
of a duplicating fee, by writing the Commission's Public Reference Section,
Washington, D.C. 20549-0102, or contacting the Commission by e-mail at
publicinfo@sec.gov.
Thornburg LTMF files its registration statements and certain other
information with the Commission under Investment Company Act of 1940 file
number 811-4302. Thornburg Investment Trust files its registration
statements and certain other information with the Commission under
Investment Company Act of 1940 file number 811-05201.
VOTING INFORMATION
Proxies for the meeting are being solicited from the Fund's
shareholders by the Board of Directors of Thornburg LTMF. A proxy may be
revoked at any time at or before the meeting by oral or written notice to
the secretary of Thornburg LTMF, 119 East Marcy Street, Santa Fe, New
Mexico 87501, (800) 847-0200. Unless revoked, all valid proxies will be
voted in accordance with the specifications therein or, in the absence of
specifications, for approval of the reorganization.
Additional solicitations may be made by telephone, telegraph,
facsimile or personal contact by officers or employees of TIMI and its
affiliates or by a professional proxy solicitation firm or firms. Expenses
of proxy solicitation will be borne by the Fund. TIMI has engaged the
proxy solicitation firm of D.F. King & Co., Inc. to assist in soliciting
proxies for the meeting at an estimated cost of $9,000.
Shares of the Fund of record at the close of business on _____________
(the "Record Date") will be entitled to vote at the meeting or any
adjournment thereof. The presence in person or by proxy of one-third of
the Fund's outstanding shares at the meeting will constitute a quorum.
Shareholders are entitled to one vote for each share held, and each
fractional share will be entitled to a proportionate fractional vote.
Approval of the reorganization requires the affirmative vote of a majority
of the outstanding shares of the Fund entitled to vote at the meeting. As
of _____________,2004, there were issued and outstanding ______ Class A
shares, ________ Class C shares and ________ Class I shares of the Fund.
As of the same date, the following persons known to own of record or
beneficially 5% or more of the issued and outstanding shares of any Class
of the Fund:
[to be inserted]
As of the same date, there were issued and outstanding ____ Class A
shares, ______ Class C shares, and ______ Class I shares of beneficial
interest of the New Fund. All of these shares were held by ________, 119
East Marcy Street, Santa Fe, New Mexico 87501. Ms. _______ was issued
these shares in order to permit certain actions in connection with the
initial organization of the New Fund.
In the event that a quorum is not present at the meeting, or a quorum
is present at the meeting but sufficient votes to approve the
reorganization are not received, the persons named as proxies may propose
one or more adjournments of the meeting to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of a
majority of those shares represented at the meeting in person or by proxy.
If a quorum is not present, the persons named as proxies will vote those
proxies which they are entitled to vote for the reorganization in favor of
such an adjournment and will vote those proxies required to be voted
against the reorganization against any such adjournment.
"Broker non-votes" are shares held in a broker's street name for which
the broker indicates that instructions have not been received from the
beneficial owners or other persons entitled to vote, and the broker does
not have discretionary voting authority. Abstentions in broker non-votes
will be counted as shares present for purposes of determining whether a
quorum is present but will not be voted for or against any adjournment or a
proposal. Accordingly, abstentions in broker non-votes effectively will be
a vote against adjournment and against the proposal because the required
vote is a percentage of the shares outstanding.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS,
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE REORGANIZATION.
Submission of Shareholder Proposals
- -----------------------------------
The Fund does not hold regular shareholder meetings. Shareholders
wishing to submit proposals for inclusion in a proxy statement for a
subsequent shareholder meeting should send their written proposals to the
secretary of Thornburg LTMF, 119 East Marcy Street, Santa Fe, New Mexico
87501.
Other Matters to Come Before the Meeting
- ----------------------------------------
The Board of Directors of Thornburg LTMF knows of no other business to
be brought before the meeting. However, if any other matters properly come
before the meeting, proxies will be voted in accordance with the judgment
of the Directors.
EXHIBIT A
to
PROSPECTUS/PROXY STATEMENT
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of the ____ day of December 2003, by and between THORNBURG INVESTMENT
TRUST, a Massachusetts business trust ("Thornburg Trust"), in respect of
Thornburg California Limited Term Municipal Fund (the "New Fund"), a
separate series of Thornburg Trust, and THORNBURG LIMITED TERM MUNICIPAL
FUND, INC. a Maryland corporation ("Thornburg LTMF"), in respect of
Thornburg Limited Term Municipal Fund California Portfolio (the "Fund"), a
separate series of Thornburg LTMF.
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1) of
the United States Internal Revenue Code of 1986, as amended (the "Code").
The reorganization will consist of (i) the transfer of substantially all of
the Assets (hereinafter defined) of the Fund to the New Fund in exchange
solely for Class A, Class C and Class I voting shares of beneficial
interest of the New Fund having no par value (the "New Fund Class A
Shares," "New Fund Class C Shares," and "New Fund Class I Shares,"
respectively, and collectively the "New Fund Shares") and (ii) the
distribution on the Closing Date (hereinafter defined) of the New Fund
Shares to the shareholders of the New Fund in complete liquidation of the
Fund as provided herein, all upon the terms and conditions hereinafter set
forth in this Agreement. All actions required to be taken by Thornburg
Trust pursuant to this Agreement, and all representations, warranties and
covenants of Thornburg Trust hereunder, are taken and made on behalf of the
New Fund. All actions required to be taken by Thornburg LTMF pursuant to
this Agreement, and all representations, warranties and covenants of
Thornburg LTMF hereunder, are taken and made on behalf of the New Fund.
THEREFORE, in consideration of the premises and of the covenants and
agreements hereafter described, the parties hereto covenant and agree as
follows.
1. Procedure for Reorganization.
(a) Subject to the terms and conditions herein set forth and
on the basis of the representations and warranties contained herein,
Thornburg LTMF agrees to transfer the Assets of the New Fund as set forth
in paragraph (b) to the New Fund, and Thornburg Trust agrees to deliver to
the New Fund in exchange therefor the number of the New Fund Shares
determined by dividing the value of the Assets computed in the manner and
as of the time and date set forth in paragraph 2(a), by the net asset value
of the New Fund Shares computed in the manner and as of the time and date
set forth in paragraph 2(b). These transactions shall take place at the
closing provided for in paragraph 3(a) (the "Closing").
(b) The Assets to be acquired by the New Fund shall consist of
all cash, portfolio securities and due bills for dividends, interest, or
other receivables or rights to receive any of the foregoing, receivables
for shares sold, and any claims or rights with respect to portfolio
securities, whether or not arising from contract, which are owned by the
New Fund on the closing date provided in paragraph 3(a) (the "Closing
Date"). The New Fund will retain cash and cash equivalents in an amount
reasonably estimated by it to be sufficient to discharge: (i) obligations
incurred in the ordinary course of its business, which could not reasonably
be paid before Closing and are not otherwise borne by any other person; and
(ii) costs resulting from the liquidation and deregistration of the Fund
and Thornburg LTMF. The Assets will not include any rights in and to the
"Thornburg" name or any variant thereof. The Fund has provided the New
Fund with a list of the current securities holdings of National Portfolio
as of the date of execution of this Agreement. Thornburg LTMF and the Fund
reserve the right to sell any of these securities in the ordinary course of
business but will not, without prior notification to Thornburg Trust,
acquire any additional securities for the Fund other than securities of the
type in which the New Fund is permitted to invest.
(c) On the Closing Date, Thornburg LTMF will cause the Fund to
be liquidated and to distribute pro rata to the Fund's shareholders of
record (the "Fund Shareholders"), determined on and as of the close of
business on the Valuation Date specified in paragraph 2(a), the New Fund
Shares received by Thornburg LTMF pursuant to paragraph (a). Specifically,
Thornburg LTMF shall (i) distribute the New Fund Class A Shares received in
the exchange, pro rata, to the Fund Shareholders holding Class A shares of
the Fund, (ii) distribute the New Fund Class C shares received in the
exchange, pro rata, to the Fund Shareholders holding Class C shares of the
Fund, and (iii) distribute the New Fund Class I Shares received in the
exchange, pro rata, to the Fund Shareholders holding Class I shares of the
Fund. The liquidation and distribution will be accomplished by the
transfer of the New Fund Shares then credited to the account of the Fund on
the books of New Fund, to open accounts on the share records of the Fund in
the names of the Fund Shareholders and representing the respective pro rata
number of New Fund due the Fund Shareholders.
(d) As of the Closing Date, any physically-issued share
certificates held by former Fund Shareholders and relating to Fund shares
exchanged for New Fund Shares in accordance with the preceding paragraph
(c) will represent only the right to receive the appropriate number of New
Fund Shares. As of the Closing Date, persons holding those certificates
will be requested to surrender their certificates. No redemption or
repurchase of any New Fund Shares credited to former Fund Shareholders in
place of Fund shares represented by unsurrendered certificates will be
permitted until those certificates have been surrendered for cancellation
or the certificates are cancelled upon the delivery of lost certificate
affidavits.
(e) Any transfer taxes payable upon issuance of New Fund
Shares in a name other than that of the registered holder of the New Fund
Shares on the books of the Fund as of the Closing Date shall, as a
condition of such issuance and transfer, be paid by the person to whom the
New Fund Shares are to be issued and transferred.
(f) The Fund shall be dissolved as soon as reasonably
practicable following the Closing Date. Thornburg LTMF will deregister
with the Securities and Exchange Commission (the "Commission") in
accordance with the Investment Company Act of 1940, as amended (the "1940
Act").
(g) Thornburg Trust will not assume any liability of Thornburg
LTMF, or acquire any Asset subject to any liability, in connection with the
transactions contemplated by this Agreement, except that the New Fund will
assume the obligation to pay for any portfolio securities purchased by the
Portfolio before the Closing Date in the ordinary course of its business
and the purchase of which was disclosed to the New Fund by the New Fund
Portfolio when the commitment to purchase arose.
2. Valuation.
(a) The value of the Fund's Assets to be acquired by the New
Fund hereunder shall be the value of those assets computed as of the close
of business on the New York Stock Exchange and after the declaration of any
dividends on the business day next preceding the Closing Date (the time and
date being hereinafter called the "Valuation Date"). The value of the
portion of the Fund's Assets consisting of portfolio securities will be
computed by Kenny Information Systems, subject to adjustment by the amount,
if any, agreed to by the New Fund and the Fund. In determining the value
of the Assets, each portfolio security and other portfolio asset shall be
priced by Kenny Information Systems in accordance with the policies and
procedures of the New Fund (subject to the third sentence hereafter) as set
forth in the then current prospectuses and statement of additional
information applicable to the New Fund, subject to adjustments agreed to by
the Fund and the New Fund. All computations shall be made by Kenny
Information Systems. In the event of a dispute with respect to the
valuation of any portfolio security or other portfolio asset of the Fund,
the New Fund and the Fund shall, by mutual consent, select an independent
third party to resolve the matter, and the determination of the independent
party will bind the Funds.
(b) The value of the Assets of each class of the Fund shall be
divided, as of the close of business on the New York Stock Exchange and
after the declaration of any dividends on the Valuation Date, among the
Class A, Class C and Class I shares of National Portfolio (the "Class A
Assets," "Class C Assets," and "Class I Assets"), respectively, in
accordance with the Fund's customary method of accounting.
(c) The net asset value of each New Fund Share shall be the
net asset value per share computed as of the close of business on the New
York Stock Exchange and after the declaration of any dividends on the
Valuation Date, using the valuation procedures set forth in the New Fund's
then current prospectuses, and in accordance with the New Fund's customary
method of accounting.
(d) On the Closing Date, the New Fund shall issue to the Fund
full and fractional New Fund Class A, Class C and Class I shares in the
respective numbers determined in accordance with this paragraph 2(d). The
number of New Fund Class A shares shall be determined by dividing the value
of the Class A Assets by the net asset value of a New Fund Class A share
determined in accordance with paragraph 2(c). The number of New Fund Class
C shares shall be determined by dividing the value of the Class C Assets by
the net asset value of a New Fund Class C share determined in accordance
with paragraph 2(c). The number of New Fund Class I shares shall be
determined by dividing the value of the Class I Assets by the net asset
value of a New Fund Class I share determined in accordance with paragraph
2(c).
3. Closing and Closing Date.
(a) The Closing Date shall be as soon as practicable after
approval of the transactions contemplated in this Agreement by the Fund's
Shareholders has been obtained. The Closing will be held at 119 East Marcy
Street, Suite 202, Santa Fe, New Mexico 87501, in the offices of Thornburg
Management Company, Inc., or at such other place as the parties may agree.
The time of Closing will be 8:00 a.m. New York time on the Closing Date.
All acts taking place at the Closing will be deemed to occur simultaneously
as of the time of the Closing on the Closing Date.
(b) The Fund's portfolio securities shall be available for
inspection by the New Fund, its custodian bank or such other agents of
Thornburg Trust as Thornburg Trust shall reasonably designate, at the
offices of the Fund's custodian, no later than five business days preceding
the Valuation Date, and the Fund will immediately notify the New Fund's
investment adviser of any portfolio security thereafter acquired or sold by
the Fund. The Fund's securities and cash shall be delivered by Thornburg
LTMF to State Street Bank & Trust Company, Boston, MA 02205-9087, as
custodian for the New Fund for the account of the New Fund on the Closing
Date, duly endorsed in proper form for transfer in such condition as to
constitute good delivery thereof in accordance with the custom of brokers.
The cash delivered shall be in the form of currency or certified or
official bank checks, or completed federal funds wire, payable to the order
of "State Street Bank & Trust Co., Custodian for Thornburg Limited Term
Municipal Fund." The Fund will cause its custodian to deliver at Closing a
certificate of an authorized officer of the Custodian stating that the
Fund's have been delivered in proper form to the New Fund's custodian on or
before the Closing Date.
(c) In the event that on the Valuation Date (i) the New York
Stock Exchange is closed to trading, or (ii) trading or the reporting of
trading in securities generally is disrupted so that accurate appraisal of
the value of the net assets of the New Fund or the Fund is impracticable,
the Closing Date shall be postponed until the first business day after the
day when trading is fully resumed and reporting is restored.
(d) Thornburg LTMF shall deliver to Thornburg Trust
shareholder and shareholder account information as of the close of business
on the Valuation Date as reasonably requested by Thornburg Trust. The New
Fund shall issue and deliver a confirmation to the Fund at the Closing
stating the number of New Fund Shares to be credited on the Closing Date to
the Fund, and stating the number of New Fund Shares credited to the Fund's
account on the books of the New Fund. Thornburg Trust shall issue and
deliver to each former Fund Shareholder, after the Closing, a confirmation
stating the number of New Fund Shares credited to the shareholder's
account. At the Closing, each party shall deliver to the other such bills
of sale, checks, assignments, stock certificates, receipts or other
documents as such other party may reasonably request.
4. Representations and Warranties.
(a) Thornburg LTMF represents and warrants to Thornburg Trust
as follows:
(i) The Fund is a series of Thornburg LTMF, which is a
corporation duly formed and validly existing under
the laws of the State of Maryland;
(ii) Thornburg LTMF is a duly registered open-end
management investment company, and its
registration with the Commission as an investment
company undr the 1940 Act is in full force and
effect;
(iii) The current prospectuses and statements of
additional information of the Fund, each dated
November 1, 2003, conform in all material respects
to the applicable requirements of the Securities
Act of 1933 (the "1933 Act") and the rules and
regulations of the Commission thereunder and do
not include any untrue statement of a material
fact or omit to state any material fact required
to be stated therein or necessary to make the
statements therein, in light of the circumstances
under which they were made, not misleading;
(iv) To the knowledge of Thornburg LTMF, no consent,
approval, authorization or order of any court or
governmental authority is required for the
consummation by the Fund of the transactions
contemplated by this Agreement, except as may be
required under the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"),
the 1940 Act, or the rules and regulations under
those Acts, all of which shall have been received
prior to the Closing Date, except for such
consents, approvals, authorizations or orders as
may be required subsequent to the Closing Date;
(v) The execution, delivery and performance of this
Agreement will not result in a material violation
of Thornburg LTMF's Articles of Incorporation or
By-Laws or of any agreement, indenture,
instrument, contract, lease or other undertaking
to which the Fund or Thornburg LTMF is a party or
by which it is bound;
(vi) The Fund has valued, and will continue to value
its portfolio securities and other assets in
accordance with applicable legal requirements;
(vii) All material contracts or other commitments (other
than this Agreement) to which the Fund is a party
will be terminated without liability to the Fund
or the New Fund on or before the Closing Date;
(viii) No litigation or administrative proceeding or
investigation of or before any court or
governmental body or self regulatory organization
is presently pending or threatened against the
Fund or any of its properties or assets.
Thornburg LTMF knows of no facts which might form
the basis for the institution of such proceedings,
and neither Thornburg LTMF nor the Fund is a party
to or subject to the provisions of any order,
decree or judgment of any court or governmental
body or self regulatory organization which
materially and adversely affects their business or
their ability to consummate the transactions
herein contemplated;
(ix) The statement of assets and liabilities, the
statement of operations, and the statement of
changes in net assets of the Fund at June 30, 2003
have been audited by PricewaterhouseCoopers, LLP,
independent certified public accountants, and
those statements, together with the statements of
assets and liabilities, the statements of
operations, and the statements of changes in net
assets at December 31, 2003, when issued, fairly
reflect, or in the case of the December 31, 2003
statements will fairly reflect, in all material
respects the assets, financial condition, results
of operations, and changes in net assets of the
Fund as of and for the periods ended on those
dates and have, or in the case of the December 31,
2003 statements, shall have been prepared, in
accordance with generally accepted accounting
principles consistently applied; and there are as
of the dates thereof no known liabilities of the
Fund other than liabilities disclosed or provided
for in the foregoing statements;
(x) Since June 30, 2003, there has been no material
adverse change in the Fund's financial condition,
assets, liabilities or business other than changes
occurring in the ordinary course of business; and
the Fund has not incurred any indebtedness
maturing more than one year from the date such
indebtedness was incurred except as disclosed in
Exhibit A. For the purposes of this subparagraph
(x), a decline in net asset value per share of the
Fund's Shares is not a material adverse change;
(xi) At the Closing Date, all material federal and
other tax returns and reports of the Fund required
by law then to be filed (including any extensions)
shall have been filed, and all federal and other
taxes shall have been paid so far as due, or
provision shall have been made for the payment
thereof, and to the best of Thornburg LTMF's
knowledge no such return of or relating to the
Fund is currently under audit, and no assessment
has been asserted with respect to the Fund;
(xii) The Fund has met the requirements of Subchapter M
of the Code and has elected to be treated as a
regulated investment company for each taxable year
of its operations since its inception, and will so
qualify for the taxable year ending on the Closing
Date;
(xiii) The Fund is authorized to issue 300,000,000,
150,000,000 and 125,000,000 Class A, Class C and
Class I shares, respectively, of the Fund, at the
date hereof. All issued and outstanding shares of
the Fund have been offered and sold in compliance
in all material respects with applicable
registration requirements of the 1933 Act and
state securities laws. All issued and outstanding
shares of the Fund are, and at the Closing Date
will be, duly and validly issued and outstanding,
fully paid and non-assessable by Thornburg LTMF.
All of the issued and outstanding Shares of the
Fund will, at the time of Closing, be held by
shareholder accounts in the amounts set forth in
the list of shareholder's accounts submitted to
Thornburg Trust pursuant to paragraph 3(d). The
Fund does not have outstanding any options,
warrants or other rights to subscribe for or
purchase any securities issuable by the Fund;
(xiv) At the Closing Date, the Fund will have good and
marketable title to the Assets to be transferred
to the New Fund pursuant to paragraph 1(b),
subject to no lien, encumbrance or competing
interest in any person, and full right, power, and
authority to sell, assign, transfer and deliver
the Assets hereunder, and upon delivery and
payment for those Assets, the New Fund will
acquire good and marketable title thereto, subject
to no restriction on the full transfer thereof,
including such restrictions as might arise under
the 1933 Act other than as disclosed in writing to
the New Fund;
(xv) The execution, delivery and performance of this
Agreement will have been duly authorized prior to
the Closing Date by all necessary actions on the
part of Thornburg LTMF's Board of Directors, and
this Agreement constitutes a valid and binding
obligation of Thornburg LTMF, enforceable in
accordance with its terms, subject to the approval
of the shareholders of the Fund, and further
subject as to enforcement to bankruptcy,
insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' rights
and subject to general equity principles;
(xvi) The information furnished by the New New Fund LTMF
for use in applications for orders, registration
statements, proxy materials and other documents
which may be necessary in connection with the
transactions contemplated hereby is and shall be
accurate and complete in all material respects and
shall comply in all material respects with federal
securities and other laws and regulations
thereunder applicable thereto;
(xvii) The registration statement filed by the New Fund
on Form N-14 relating to the New Fund Shares that
will be registered with the Commission pursuant to
this Agreement, which shall include the proxy
statement of Thornburg LTMF in respect of the Fund
with respect to the transactions contemplated by
this Agreement, and any supplement or amendment
thereto or to the documents contained or
incorporated therein by reference (the "N-14
Registration Statement"), and the proxy materials
of Thornburg LTMF in respect of the Fund included
in the N-14 Registration Statement and filed with
the Commission pursuant to Section 14 of the 1934
Act with respect to the transactions
contemplated by this Agreement, and any supplement
or amendment thereto or the documents appended
thereto (the "Reorganization Proxy Materials"),
from their effective dates with the Commission,
through the time of the meeting of shareholders of
the Fund contemplated therein (the "Shareholders
Meeting") and at the Closing Date: (a) shall
comply in all material respects with the
provisions of the 1933 Act, 1934 Act and the 1940
Act, the rules and regulations thereunder, and
applicable state securities laws, and (b) shall
not contain any untrue statement of a material
fact or omit to state a material fact required to
be stated therein or necessary to make the
statements therein not misleading; provided, that
the representations and warranties in this
subparagraph shall only apply to statements in or
omissions from the N-14 Registration Statement or
Reorganization Proxy Materials made by, or in
reliance upon and in conformity with information
furnished by or on behalf of Thornburg LTMF.
(b) Thornburg Trust represents and warrants to Thornburg LTMF
as follows:
(i) The New Fund is a series of Thornburg Trust, which
is a business trust duly formed and validly
existing under the laws of the Commonwealth of
Massachusetts;
(ii) Thornburg Trust is a duly registered open-end
management investment company and its registration
with the Commission as an investment company under
the 1940 Act is in full force and effect;
(iii) The prospectuses and statements of additional
information for shares of the New Fund, when
effective, shall conform in all material respects
to the applicable requirements of the 1933 Act and
the rules and regulations of the Commission
thereunder and will not include any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or
necessary to make the statements therein, in light
of the circumstances under which they were made,
not misleading;
(iv) To the knowledge of Thornburg Trust, no consent,
approval, authorization or order of any court or
governmental authority is required for the
consummation by the New Fund of the transactions
contemplated by this Agreement, except as may be
required under the 1933 Act, the 1934 Act, the
1940 Act, or the rules and regulations under those
Acts, all of which shall have been received prior
to the Closing Date, except for such consents,
approvals, authorizations or orders as may be
required subsequent to the Closing Date;
(v) The execution, delivery and performance of this
Agreement will not result in a material violation
of Thornburg Trust's Declaration of Trust or By-
Laws or of any agreement, indenture, instrument,
contract, lease or other undertaking to which the
New Fund or Thornburg Trust is a party or by which
it is bound;
(vi) The New Fund has valued, and will continue to
value, its portfolio securities and other assets
in accordance with applicable legal requirements;
(vii) No litigation or administrative proceeding or
investigation of or before any court or
governmental body or self regulatory organization
is presently pending or threatened against the New
Fund or any of its properties or assets.
Thornburg Trust knows of no facts which might form
the basis for the institution of such proceedings,
and neither Thornburg Trust nor the New Fund is a
party to or subject to the provisions of any
order, decree or judgment of any court or
governmental body or self regulatory organization
which materially and adversely affects their
business or their ability to consummate the
transactions herein contemplated;
(viii) At the Closing Date, all federal and other tax
returns and reports of the New Fund required by
law then to be filed shall have been filed, and
all federal and other taxes shall have been paid
for as due or provision shall have been made for
the payment thereof and, to the best of Thornburg
Trust's knowledge, no such return of or relating
to the New Fund is currently under audit, and no
assessment has been asserted with respect to the
New Fund;
(ix) The New Fund intends to meet the requirements of
Subchapter M of the Code, and intends to be
treated as a regulated investment company for the
first taxable fiscal year of its operation
including the Closing Date;
(x) Thornburg Trust is authorized to issue an
unlimited number of shares of beneficial interest
having no par value. All issued and outstanding
New Fund Shares at the Closing Date will be duly
and validly issued and outstanding, fully paid and
non-assessable. The New Fund does not have
outstanding any options, warrants or other rights
to subscribe for or purchase any securities
issuable by the New Fund, nor is there outstanding
any security convertible into New Fund Shares
(except as the trustees of Thornburg Trust may
convert classes of shares in accordance with
Thornburg Trust's Declaration of Trust, as
amended);
(xi) The execution, delivery and performance of this
Agreement will have been duly authorized prior to
the Closing Date by all necessary actions on the
part of Thornburg Trust's trustees, and this
Agreement constitutes a valid and binding
obligation of Thornburg Trust enforceable in
accordance with its terms, subject as to
enforcement to bankruptcy, insolvency,
reorganization, moratorium and other laws relating
to or affecting creditors' rights and subject to
general equity principles;
(xii) New Fund Shares to be issued and delivered to the
Fund pursuant to the terms of this Agreement will
at the Closing Date have been duly authorized and,
when so issued and delivered, will be duly and
validly issued New Fund Shares, and will be fully
paid and non-assessable by Thornburg Trust, except
to the extent that shareholders of Thornburg Trust
may be held personally liable for obligations of
Thornburg Trust;
(xiii) The N-14 Registration Statement and the
Reorganization Proxy Materials, from their
effective dates with the Commission, through the
time of the Shareholders Meeting and at the
Closing Date:
(a) shall comply in all material respects with
the provisions of the 1933 Act, 1934 Act and
the 1940 Act, the rules and regulations
thereunder, and applicable state securities
laws, and
(b) shall not contain any untrue statement of a
material fact or omit to state a material
fact required to be stated therein or
necessary to make the statements made therein
not misleading; provided, that the
representations and warranties in this
subparagraph shall only apply to statements
in or omissions from the N-14 Registration
Statement or the Reorganization Proxy
Materials made in reliance upon and in
conformity with information furnished by or
on behalf of Thornburg Trust;
(xiv) At the Closing Date, the New Fund will have good
and marketable title to its assets, subject to no
lien, encumbrance or competing interest in any
person, and full right, power and authority to
sell, assign, transfer and deliver those assets
other than as disclosed in writing to Thornburg
LTMF; and
(xv) The information furnished by Thornburg Trust for
use in applications for orders, registration
statements, proxy materials and other documents
which may be necessary in connection with the
transactions contemplated hereby is and shall be
accurate and complete in all material respects and
shall comply in all material respects with federal
securities and other laws and regulations
thereunder applicable thereto.
5. Covenants of the Parties.
(a) The New Fund and the Fund each will operate its business
in the ordinary course between the date hereof and the Closing Date, it
being understood that the ordinary course of business will include
customary dividends and distributions and any other distribution that may
be advisable.
(b) Thornburg LTMF will call a meeting of the shareholders of
the Fund to be held as promptly as practicable to consider and act upon
this Agreement and to take all other action necessary to obtain approval of
the transactions contemplated herein.
(c) Thornburg LTMF covenants that the New Fund Shares to be
issued hereunder will not be sold or distributed other than in accordance
with the terms of this Agreement.
(d) Thornburg LTMF will furnish to Thornburg Trust all
information reasonably requested and that is within its control for the
preparation of the N-14 Registration Statement, the preparation and
distribution of the Reorganization Proxy Materials, and for effectuating
the transactions contemplated herein. Thornburg LTMF will furnish, or
cause its transfer agent to furnish, to Thornburg Trust all information
reasonably requested respecting the beneficial ownership of Thornburg LTMF
shares, shareholders and shareholder accounts for the mailing of the
Reorganization Proxy Materials and for the establishment of New Fund
accounts for shareholders of the Fund in accordance with paragraph 1(c).
Thornburg LTMF will furnish, or cause its custodian or other agents to
furnish, all portfolio asset information reasonably requested by Thornburg
Trust in connection with, and to facilitate, the transactions contemplated
by this Agreement.
(e) Subject to the provisions of this Agreement, Thornburg
Trust and Thornburg LTMF will each take, or cause to be taken, all actions,
and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by
this Agreement.
(f) Thornburg LTMF shall furnish to Thornburg Trust within 30
days after the Closing Date a detailed trial balance of the Fund's assets
and liabilities and computations showing amortization of premium on
portfolio securities. Thornburg Funds shall furnish to Thornburg Trust
when available the final federal income tax return for the Fund.
(g) Thornburg LTMF will, as promptly as practicable after the
Closing, wind up the business of the Fund, deregister the Fund under
applicable federal securities laws, file final reports with the state
securities regulators requiring any such reports, prepare and distribute
final account statements and tax statements to persons who were formerly
shareholders of the Fund, and file any necessary federal and state tax
returns.
(h) Thornburg Trust will prepare and file the N-14
Registration Statement, will file the Reorganization Proxy Materials with
applicable regulatory authorities, and will use all reasonable efforts to
obtain clearance or effectiveness of the N-14 Registration Statement and
the Reorganization Proxy Materials, all in accordance with the 1933 Act,
the 1934 Act, and the 1940 Act, and applicable regulations and rulings
thereunder, and in accordance with any applicable state statutes and
regulations.
(i) Thornburg Trust agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act, the 1934
Act, the 1940 Act and such of the state securities laws as are necessary or
appropriate in order to continue its operations after the Closing Date.
6. Conditions Precedent to Obligations of Thornburg LTMF.
The obligations of Thornburg LTMF to consummate the
transactions provided for herein shall be subject, at its election, to the
performance by Thornburg Trust of all the obligations to be performed by it
hereunder on or before the Closing Date, and, in addition thereto, the
following further conditions:
(a) All representations and warranties of Thornburg Trust
contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date; and
(b) Thornburg Trust shall have delivered to Thornburg LTMF a
certificate executed in its name by its President or Vice President and its
Treasurer or Assistant Treasurer, in form and substance satisfactory to
Thornburg LTMF and dated as of the Closing Date, certifying that the
representations and warranties of Thornburg Trust made in this Agreement
are true and correct at and as of the Closing Date.
7. Conditions Precedent to Obligations of Thornburg Trust.
The obligations of Thornburg Trust to complete the transactions
provided for herein shall be subject, at its election, to the performance
by Thornburg LTMF of all the obligations to be performed by it hereunder on
or before the Closing Date and, in addition thereto, the following
conditions:
(a) All representations and warranties of Thornburg LTMF
contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date;
(b) Thornburg LTMF shall have delivered to Thornburg Trust the
following information prepared as of the Closing Date: (i) net asset value
pricing sheet of the Fund, with a portfolio listing of each portfolio
security including the principal amount, identification of issue, cost, tax
lot cost, market price per unit and market value; (ii) trial balance of the
Fund's general ledger; (iii) supporting schedules with the details for
accounts receivable and accounts payable; (iv) certification from the
Fund's custodian that it has delivered to the New Fund's custodian the
Assets acquired by the New Fund; and (v) confirmation from the New Fund's
transfer agent of the aggregate number of the Fund's shares outstanding and
a reconciliation of that number to the number of shares shown in the
pricing sheet referred to in (i) above;
(c) Thornburg LTMF shall have delivered to Thornburg Trust a
certificate executed in its name by its President or Vice President and its
Treasurer or Assistant Treasurer, in form and substance satisfactory to
Thornburg Trust and dated as of the Closing Date, certifying that the
representations and warranties of Thornburg LTMF made in this Agreement are
true and correct at and as of the Closing Date;
(d) This Agreement and the transactions contemplated herein
shall have been approved by the requisite vote of the holders of the
outstanding shares of the Fund in accordance with applicable law and
evidence of the approval shall have been delivered to Thornburg Trust; and
(e) The parties shall have received a favorable opinion of
White, Koch, Kelly & McCarthy, P.A. satisfactory to Thornburg LTMF and
Thornburg Trust, substantially to the effect that, based upon certain
facts, assumptions and representations, the transactions contemplated by
this Agreement constitute a tax-free reorganization described in Section
368(a)(1) of the Internal Revenue Code of 1986, as amended, for federal
income tax purposes. The delivery of such opinion is conditioned upon
receipt by White, Koch, Kelly & McCarthy, P.A. of representations it shall
request of Thornburg Trust and Thornburg LTMF.
8. Further Conditions Precedent to Obligations of Thornburg Trust
and Thornburg LTMF.
Each party's obligations hereunder are, at its election,
subject to the further conditions that:
(a) On the Closing Date, no action, suit or other proceeding
shall be pending before any court or governmental agency in which it is
sought to restrain or prohibit, or obtain damages or other relief in
connection with, this Agreement or the transactions contemplated herein;
(b) On or before the Closing Date, all consents of other
parties and all other consents, orders and permits of federal, state and
local regulatory authorities (including those of the Commission and of
state securities authorities, including "no-action" positions of such
federal or state authorities) deemed necessary by Thornburg Trust or
Thornburg LTMF to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except where
failure to obtain any such consent, order or permit would not involve a
risk of a material adverse effect on the business assets or properties of
Thornburg Trust or Thornburg LTMF; and
(c) On or before the Closing Date, the N-14 Registration
Statement shall have become effective under the 1933 Act and no stop orders
suspending the effectiveness thereof shall have been issued and, to the
best knowledge of the parties hereto, no investigation or proceeding for
that purpose shall have been instituted or be pending, threatened or
contemplated under the 1933 Act.
9. Responsibility for Fees and Expenses.
Thornburg LTMF will pay the costs of the transactions
contemplated hereby, including the expenses of preparing and filing the N-
14 Registration Statement, the costs of distributing the prospectuses and
proxy materials, proxy solicitation costs, and other costs.
10. Massachusetts Business Trust.
Thornburg Trust is organized as a Massachusetts business trust,
and references in this Agreement to Thornburg Trust mean and refer to the
trustees of Thornburg Trust from time to time serving under its Declaration
of Trust on file with the Secretary of State of the Commonwealth of
Massachusetts, as the same may be amended from time to time, pursuant to
which Thornburg Trust conducts its business. It is expressly agreed that
the obligations of Thornburg Trust hereunder shall not be binding upon any
of Thornburg Trust's trustees, shareholders, nominees, officers, agents, or
employees of Thornburg Trust, or New Fund personally, but bind only the
property of the New Fund, as provided in Thornburg Trust's Declaration of
Trust. Moreover, no series of Thornburg Trust other than the New Fund
shall be responsible for the obligations of Thornburg Trust hereunder, and
all persons shall look only to the respective assets of the New Fund to
satisfy the obligations of Thornburg Trust hereunder. The execution and
delivery of this Agreement have been authorized by Thornburg Trust's
trustees, on behalf of the New Fund, and this Agreement has been signed by
authorized officers of Thornburg Fund acting as such, and neither such
authorization by such trustees, nor such execution and delivery by such
officers, shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the
respective property of the New Fund, as provided in Thornburg Trust's
Declaration of Trust.
11. Indemnification.
(a) The New Fund agrees to indemnify and hold harmless the
Fund and each of the Fund's directors and officers from and against any and
all losses, claims, damages, liabilities or expenses (including without
limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which jointly and severally, the Fund or any of its
directors or officers may become subject, insofar as any such loss, claim,
damage, liability or expense (or actions with respect thereto) arises out
of or is based on any breach by the New Fund of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
(b) The Fund agrees to indemnify and hold harmless the New
Fund and each of the New Fund's trustees and officers from and against any
and all losses, claims, damages, liabilities or expenses (including without
limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which jointly and severally, the New Fund or any of its
trustees or officers may become subject insofar as any such loss, claim,
damage, liability or expense (or actions with respect thereto) arises out
of or is based on any breach by the Fund of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
12. Entire Agreement; Survival of Warranties.
(a) Thornburg Trust and Thornburg LTMF agree that neither
party has made any representation, warranty or covenant not set forth
herein and that this Agreement constitutes the entire agreement between the
parties.
(b) The representations, warranties and covenants contained in
this Agreement or in any document delivered pursuant hereto or in
connection herewith shall survive the consummation of the transactions
contemplated hereunder.
13. Termination.
(a) This Agreement may be terminated by the mutual agreement
of Thornburg Trust and Thornburg LTMF. In addition, either Thornburg Trust
or Thornburg LTMF may at its option terminate this Agreement at or before
the Closing Date because:
(i) of a material breach by the other of any
representation, warranty or agreement contained
herein to be performed at or before the Closing Date;
or
(ii) a condition herein expressed to be precedent to the
obligations of the terminating party has not been met
and it reasonably appears that it will not or cannot
be met.
(b) In the event of any such termination, there shall be no
liability for damages on the part of either Thornburg Trust or Thornburg
LTMF, or their respective trustees, directors or officers, to the other
party or its trustees, directors or officers, but each shall bear, except
as otherwise provided in section 9, the expenses incurred by them
incidental to the preparation and carrying out of this Agreement.
14. Amendments.
This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized officers
of Thornburg LTMF and Thornburg Trust; provided, however, that following
the shareholders' meeting called by the Fund pursuant to this Agreement, no
such amendment may have the effect of changing the provisions for
determining the number of New Fund Shares to be issued to the Fund's
shareholders under this Agreement to the detriment of those shareholders
without their further approval.
15. Notices.
Any notice, report, statement or demand required or permitted
by any provisions of this Agreement shall be in writing and shall be given
by prepaid telegraph, telecopy or certified mail addressed to Thornburg
Trust, 119 East Marcy Street, Santa Fe, New Mexico 87501, Attention:
Brian J. McMahon, and to Thornburg LTMF, 119 East Marcy Street, Santa Fe,
New Mexico 87501, Attention: George T. Strickland.
16. Headings; Counterparts; Governing Law; Assignment.
(a) The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
(b) This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
(c) This Agreement shall be governed by and construed in
accordance with the substantive laws of the Commonwealth of Massachusetts,
provided that nothing herein shall be construed in a manner inconsistent
with the 1940 Act or the Advisers Act (as the same Acts shall have been or
will be amended) or rules, orders or regulations of such governmental
bodies or authorities having authority with respect to such Acts.
(d) This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations hereunder
shall be made by any party without the written consent of the other party.
Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm or corporation, other than the parties
hereto and their respective administrators, executors, legal
representatives, heirs, successors and permitted assigns, any rights or
remedies under or by reason of this Agreement.
(e) In the event of any litigation respecting this Agreement
or its subject matter, the prevailing party will be entitled to
reimbursement from the losing party for the prevailing party's cost of
suit, including reasonable attorneys' fees.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its President or Vice President and attested to
by its Secretary or Assistant Secretary.
THORNBURG INVESTMENT TRUST on behalf of
THORNBURG CALIFORNIA LIMITED TERM
MUNICIPAL FUND
By:
-------------------------------------
------------------, ----------------
THORNBURG LIMITED TERM MUNICIPAL FUND,
INC., on behalf of THORNBURG LIMITED TERM
MUNICIPAL FUND CALIFORNIA PORTFOLIO
By:
-------------------------------------
------------------, ----------------
EXHIBIT A
to
Agreement and Plan of Reorganization
Dated December ___, 2003
Thornburg Investment Trust
(on behalf of Thornburg California Limited Term Municipal Fund)
and
Thornburg Limited Term Municipal Fund, Inc.
(on behalf of Thornburg Limited Term Municipal Fund California Portfolio)
Subparagraph 4(a)(x): None.
STATEMENT OF ADDITIONAL INFORMATION
(For Holders of Class A and Class C Shares)
Relating to the Acquisition of the Assets of
THORNBURG LIMITED TERM MUNICIPAL FUND NATIONAL PORTFOLIO
a series of THORNBURG LIMITED TERM MUNICIPAL FUND, INC.
119 East Marcy Street
Santa Fe, New Mexico 87501
(800) 847-0200
by and in exchange solely for shares of
THORNBURG LIMITED TERM MUNICIPAL FUND, INC
a series of THORNBURG INVESTMENT TRUST
119 East Marcy Street
Santa Fe, New Mexico 87501
(800) 847-0200
This Statement of Additional Information, relating specifically to
the proposed acquisition of substantially all of the assets of Thornburg
Limited Term Municipal Fund National Portfolio (the "Fund"), a series of
Thornburg Limited Term Municipal Fund, Inc., by Thornburg Limited Term
Municipal Fund (the "New Fund"), a series of Thornburg Investment Trust, in
exchange solely for voting shares of the New Fund, consists of this cover
page and the following documents, each of which is attached hereto and
incorporated by reference herein:
1. Thornburg Limited Term Municipal Funds Statement of Additional
Information _____________, 2004, [to be added by amendment];
2. Thornburg Funds Statement of Additional Information dated
February 1, 2004, 2004, and
3. Thornburg Limited Term Municipal Fund National Portfolio
Annual Report, June 30, 2003; and
4. Thornburg Limited Term Municipal Fund National Portfolio
Semiannual Report, December 31, 2003.
This Statement of Additional information is not a prospectus. A
Prospectus/Proxy Statement dated _________________, 2004 relating to the
above referenced acquisition may be obtained from Thornburg Investment
Trust at the number and address shown above. This Statement of Additional
Information relates to, and should be read with, the Prospectus/Proxy
Statement.
The financial statements of Thornburg Limited Term Municipal Fund
National Portfolio contained in its Annual Report to shareholders for the
fiscal year ended June 30, 2003 have been audited by
PricewaterhouseCoopers, LLP, that Fund's independent auditors.
The date of this Statement of Additional Information is _________,
2004.
Thornburg Limited Term Municipal Fund National Portfolio
Annual Report
June 30, 2003
Thornburg Limited Term Municipal Fund - National Portfolio
ALL DATA AS OF 06/30/03.
Fund facts: Thornburg Limited Term Municipal Fund - National
Portfolio
A Shares C Shares
Annualized Distribution Rate (at NAV) 2.99% 2.70%
SEC Yield 1.63% 1.36%
NAV $14.01 $14.04
Maximum Offering Price $14.22 $14.04
Total returns: (Annual Average - After Subtracting Maximum Sales Charge)
One Year 4.38% 5.78%
Three Years 5.80% 5.99%
Five Years 4.58% 4.51%
Ten Years 4.60% N/A
Fifteen Years 5.66% N/A
Since Inception 6.36% 4.59%
Inception Date 9/28/84 9/1/94
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.
The SEC Yield is computed in accordance with SEC standards measuring the
net investment income per share over a specified 30-day period expressed as
a percentage of the maximum offering price of the Fund's shares at the end
of the period.
The distribution rate is calculated by taking the sum of the month's total
distribution factors and dividing this sum by a 30-day period and
annualizing to 360-day year. The value is then divided by the ending NAV to
arrive at the annualized distribution yield. The yield is calculated on a
periodic basis and is subject to change depending on the Fund's NAV and
current distributions.
Letter to shareholders
Thornburg Limited Term Municipal Fund, Inc. - National Portfolio July 14,
2003
Dear Fellow Shareholder:
I am pleased to present the annual report for the National Portfolio of
Thornburg Limited Term Municipal Fund. The net asset value of the Class A
shares increased by 36 cents to $14.01 during the year ending June 30,
2003. If you were with us for the entire period, you received dividends of
44.6 cents per share. If you reinvested dividends, you received 45.3 cents
per share. Investors who owned Class C shares received dividends of 41.1
and 41.6 cents per share, respectively.
Over the last year, interest rates on high-quality municipal bonds have
fallen substantially. Falling interest rates drive up the price of most of
the bonds owned by the Fund and this has resulted in an increasing share
price.
Your Fund is a laddered portfolio of over 640 municipal obligations from 49
states. Approximately 93% of the bonds are rated A or better by one of the
major rating agencies. Today, your Fund's weighted average maturity is 4.3
years; we always keep it below 5 years. As you know, we ladder the maturity
dates of the bonds in your portfolio so that some of the bonds are
scheduled to mature during each of the coming years. The chart below
portrays the percentages of your Fund's bond portfolio maturing in each of
the coming years:
% of portfolio Cumulative %
maturing within maturing by end of
1 years = 13% year 1 = 13%
1 to 2 years = 10% year 2 = 23%
2 to 3 years = 14% year 3 = 37%
3 to 4 years = 9% year 4 = 46%
4 to 5 years = 11% year 5 = 57%
5 to 6 years = 10% year 6 = 67%
6 to 7 years = 9% year 7 = 76%
7 to 8 years = 11% year 8 = 87%
8 to 9 years = 7% year 9 = 94%
9 to 10 years = 6% year 10 = 100%
Percentages can and do vary. Data as of 6/30/03.
Three powerful trends seem to be driving recent performance of the
municipal market. The first is persistent economic weakness. The U.S.
unemployment rate, at 6.4%, just hit a nine-year high. GDP growth is
sputtering along at about 2%. Our European and Japanese trading partners
are, by and large, worse off than are we, and the Federal Reserve Board
seems to be at least as worried about deflation as it is about inflation.
We continue to believe that low interest rates, tax cuts, and rising
corporate profits will eventually lead to steady economic and employment
growth, and probably give rise to somewhat higher interest rates. However,
that process is taking longer than we formerly thought and may not
materialize until next year.
The second trend is financial stress in many of our cities and states. A
combination of flat (or in some cases down) tax revenues and rising
expenses for items such as Medicaid and pension systems has led to large
budget deficits for more than half of the 50 states. The states have dealt
with the problem in a variety of ways. According to the Fiscal Survey of
the States published by the National Association of State Budget Officers,
28 states have made across-the-board spending cuts, 22 states have used
reserve funds, and 17 have laid off employees. Governors in 29 states
recommended tax and fee increases totaling $17.5 billion. The challenges
have led to a number of high-profile downgrades by the major bond rating
agencies, particularly in California where the deficit has yet to be dealt
with.
Yet in the midst of all these problems, many municipal credits are doing
just fine. Standard & Poor's recently reported that upgrades outpaced
downgrades in the second quarter of 2003 by a ratio of 1.6:1. This is
because the municipal bond market is made up of much more than bond issues
of the 50 states. Many of our cities, counties, school districts, water and
sewer authorities, transportation authorities, and health care providers
have benefited from stable revenues based upon property taxes, sales taxes,
and fees for essential services. The municipal bond market, historically
has a much lower default rate than the corporate bond market, and we
continue to enjoy some success finding good bonds at relatively reasonable
prices.
The third trend exerting pressure on the municipal market is the heavy
supply of bonds. $198 billion of municipal bonds were issued in the first
half of 2003, a 19% increase over the record pace of 2002. The first half
total already exceeds full-year volume for 1994, 1995, and 1996. The heavy
supply has often saturated traditional sources of demand and pushed high-
quality tax-free municipal bond yields to levels approaching taxable
Treasury bond yields. The relative attractiveness of the municipal bond
market should allow full coupon municipals to outperform the Treasury bond
market if the heavy supply abates and the yield ratios revert to historical
norms. So called "market discount" municipal bonds may lag if interest
rates continue to rise.
The Wall Street Journal ran a front-page story on July 7, 2003, about
retirees who are forced to pinch pennies as money market and CD rates
plunge. We believe that laddering short and intermediate bonds -- as we
have done for your account -- is the best way to address this problem.
Laddering bonds simultaneously moderates the income-flow risk of plunging
short-term yields and the principal risk that affects all bonds when
interest rates rise. To see how your Fund has performed over time relative
to the money market fund averages, turn to the back of this report.
Over the years, our practice of laddering a diversified portfolio of short-
and intermediate-maturity municipal bonds has allowed your Fund to perform
consistently well in varying interest rate environments. Thank you for
investing in the National Portfolio of the Thornburg Limited Term Municipal
Fund.
Sincerely,
George Strickland
Portfolio Manager
Past performance cannot guarantee future results.
Statement of assets and liabilities
Thornburg Limited Term Municipal Fund, Inc. - National Portfolio June 30,
2003
ASSETS
Investments at value (cost $1,249,257,949) ................ $ 1,316,577,099
Cash ...................................................... 86,898
Receivable for investments sold ........................... 10,634,303
Receivable for fund shares sold ........................... 6,222,041
Interest receivable ....................................... 15,938,113
Prepaid expenses and other assets ......................... 40,035
Total Assets ............................ 1,349,498,489
LIABILITIES
Payable for investments purchased ......................... 8,873,424
Payable for fund shares redeemed .......................... 4,770,682
Accounts payable and accrued expenses ..................... 417,977
Payable to investment advisor (Note 3) .................... 575,346
Dividends payable ......................................... 1,056,444
Total Liabilities ....................... 15,693,873
NET ASSETS ................................................ $ 1,333,804,616
NET ASSETS CONSIST OF:
Net unrealized appreciation (depreciation) on investments $ 67,319,150
Accumulated net realized gain (loss) .................. (7,189,234)
Net capital paid in on shares of beneficial interest .. 1,273,674,700
$ 1,333,804,616
NET ASSET VALUE:
Class A Shares:
Net asset value and redemption price per share
($998,877,676 applicable to 71,283,604 shares of beneficial
interest outstanding - Note 4) ............................. $ 14.01
Maximum sales charge, 1.50% of offering price ................ 0.21
Maximum Offering Price Per Share ............................. $ 14.22
Class C Shares:
Net asset value and offering price per share*
($137,559,448 applicable to 9,798,791 shares of beneficial
interest outstanding - Note 4) ............................. $ 14.04
Class I Shares:
Net asset value, offering and redemption price per share
($197,367,492 applicable to 14,082,631 shares of beneficial
interest outstanding - Note 4) ............................. $ 14.01
* Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge. See notes to financial statements.
Statement of operations
Thornburg Limited Term Municipal Fund, Inc. - National Portfolio
Year Ended June 30, 2003
INVESTMENT INCOME:
Interest income (net of premium amortized of $8,977,858) ..... $ 47,291,162
EXPENSES:
Investment advisory fees (Note 3) ............................ 4,938,499
Administration fees (Note 3)
Class A Shares ...................................... 1,123,154
Class C Shares ...................................... 114,096
Class I Shares ...................................... 78,492
Distribution and service fees (Note 3)
Class A Shares ...................................... 2,246,309
Class C Shares ...................................... 912,771
Transfer agent fees
Class A Shares ...................................... 424,411
Class C Shares ...................................... 56,092
Class I Shares ...................................... 32,637
Registration and filing fees
Class A Shares ...................................... 32,193
Class C Shares ...................................... 21,653
Class I Shares ...................................... 12,683
Custodian fees (Note 3) ...................................... 421,940
Professional fees ............................................ 78,761
Accounting fees .............................................. 67,695
Director fees ................................................ 48,080
Other expenses ............................................... 175,747
Total Expenses ............................. 10,785,213
Less:
Distribution and service fees waived (Note 3) ....... (456,385)
Fees paid indirectly (Note 3) ....................... (9,253)
Net Expenses ............................... 10,319,575
Net Investment Income ...................... 36,971,587
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) on investments sold ................. 877,102
Increase (Decrease) in unrealized appreciation of investments 28,100,206
Net Realized and Unrealized
Gain (Loss) on Investments ................. 28,977,308
Net Increase (Decrease) in Net Assets Resulting
From Operations ............................ $ 65,948,895
See notes to financial statements.
Statements of changes in net assets
Thornburg Limited Term Municipal Fund, Inc. - National Portfolio
Year Ended
Year Ended
June 30, 2003
June 30, 2002
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income ....................................... $ 36,971,587
$ 32,763,519
Net realized gain (loss) on investments sold ................ 877,102
(90,520)
Increase (Decrease) in unrealized appreciation of investments 28,100,206
13,508,557
Net Increase (Decrease) in Net Assets
Resulting from Operations ................. 65,948,895
46,181,556
DIVIDENDS TO SHAREHOLDERS:
>From net investment income
Class A Shares ..................................... (28,771,058)
(27,197,050)
Class C Shares ..................................... (2,645,994)
(1,278,738)
Class I Shares ..................................... (5,554,535)
(4,287,731)
FUND SHARE TRANSACTIONS (NOTE 4):
Class A Shares ..................................... 190,903,532
119,814,146
Class C Shares ..................................... 78,064,848
31,840,288
Class I Shares ..................................... 69,803,156
35,893,452
Net Increase (Decrease) in Net Assets ..... 367,748,844
200,965,923
NET ASSETS:
Beginning of year .................................. 966,055,772
765,089,849
End of year ........................................ $ 1,333,804,616
$ 966,055,772
See notes to financial statements.
Notes to financial statements
Thornburg Limited Term Municipal Fund, Inc. - National Portfolio June 30,
2003
NOTE 1 - ORGANIZATION
Thornburg Limited Term Municipal Fund, Inc. (the "Company") was
incorporated in Maryland on February 14, 1984. The Company was reorganized
in 1986 as a series investment company with separate investment portfolios.
The current portfolios are as follows: National Portfolio (the "Fund") and
California Portfolio. The Company 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.
The Fund 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 Fund 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 Fund may allocate among its classes certain expenses, to
the extent applicable 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 Fund are limited to service and distribution fees, administrative fees,
and certain registration and transfer agent expenses.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies of the Company are as follows:
Valuation of Investments: In determining the net asset value of the Fund,
the Company 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, normally at 4:00 p.m. EST 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 Fund are reviewed by the officers of the Company
under the general supervision of the Board of Directors. Short-term
obligations having remaining maturities of 60 days or less are valued at
amortized cost, which approximates market value.
Federal Income Taxes: It is the policy of the Company 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.
When-Issued and Delayed Delivery Transactions: The Company may engage in
when-issued or delayed delivery transactions. To the extent the Company
engages in such transactions, it will do so for the purpose of acquiring
portfolio securities consistent with the investment objectives of the Fund
and not for the purpose of investment leverage or to speculate on interest
rate changes. At the time the Company makes a commitment to purchase a
security for the Fund, on a when-issued basis, the Fund will record the
transaction and reflect the value in determining its net asset value. When
effecting such transactions, assets of the Fund of an amount sufficient to
make payment for the portfolio securities to be purchased will be
segregated on the Fund'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 Fund is declared daily as a
dividend on shares for which the Company has received payment. Dividends
are paid monthly and are reinvested in additional shares of the Fund at net
asset value per share at the close of business on the dividend payment
date, or at the shareholder's option, paid by check. Net capital gains, to
the extent available, will be distributed at least annually.
General: Securities transactions are accounted for on a trade date basis.
Interest income is accrued as earned. Premiums and 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. Net investment income, other than
class specific expenses, and realized and unrealized gains and losses, are
allocated daily to each class of shares based upon the relative net asset
value of outstanding shares (or the value of the dividend-eligible shares,
as appropriate) of each class of shares at the beginning of the day (after
adjusting for the current capital shares activity of the respective class).
Expenses common to all funds are allocated among the funds based upon their
relative net asset values or other appropriate allocation methods.
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.
Guarantees and Indemnifications: Under the Company's organizational
documents, its officers and directors are indemnified against certain
liability arising out of the performance of their duties to the Fund.
Additionally, in the normal course of business the Company enters into
contracts with service providers that contain general indemnification
clauses. The Company's maximum exposure under these arrangements is
unknown. However, based on experience, the Company expects the risk of loss
to be remote.
NOTE 3 - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Pursuant to an Investment Advisory Agreement, Thornburg Investment
Management, Inc. (the "Advisor") serves as the investment advisor and
performs services for which the fees are payable at the end of each month.
For the year ended June 30, 2003, these fees were payable at annual rates
ranging from .50 of 1% to .225 of 1% of the average daily net assets of the
Fund. The Company also has an Administrative Services Agreement with the
Advisor, whereby the Advisor will perform certain administrative services
for the shareholders of each class of the Fund's shares, and for which fees
will be payable at an annual rate of up to .125 of 1% of the average daily
net assets attributable to each class of shares.
The Company has an underwriting agreement with Thornburg Securities
Corporation (the "Distributor"), which acts as the Distributor of Fund
shares. For the year ended June 30, 2003, the Distributor has advised the
Fund that it earned commissions aggregating $13,412 from the sale of Class
A shares, and collected contingent deferred sales charges aggregating
$50,181 from redemptions of Class C shares of the Fund.
Pursuant to a Service Plan under Rule 12b-1 of the Investment Company Act
of 1940, the Company may reimburse to the Advisor amounts not to exceed .25
of 1% per annum of the average net assets attributable to each class of
shares of the Fund for payments made by the Advisor to securities dealers
and other financial institutions to obtain various shareholder related
services. The Advisor may pay out of its own resources additional expenses
for distribution of the Fund's shares.
The Company has also adopted a Distribution Plan pursuant to Rule 12b-1,
applicable only to the Fund's Class C shares under which the Company
compensates the Distributor for services in promoting the sale of Class C
shares of the Fund at an annual rate of up to .75% of the average daily net
assets attributable to Class C shares. Total fees incurred by each class of
shares of the Fund under their respective Service and Distribution plans
and Class C distribution fees waived by the Distributor for the year ended
June 30, 2003, are set forth in the statement of operations.
The Company has an agreement with the custodian bank to indirectly pay a
portion of the custodian's fees through credits earned by the Fund's cash
on deposit with the bank. This deposit agreement is an alternative to
overnight investments. Custodial fees have been adjusted to reflect amounts
that would have been paid without this agreement, with a corresponding
adjustment reflected as fees paid indirectly in the statement of
operations. For the year ended June 30, 2003 fees paid indirectly were
$9,253.
Certain officers and directors of the Company are also officers and/or
directors of the Advisor and Distributor. The compensation of unaffiliated
directors is borne by the Company.
NOTE 4 - SHARES OF BENEFICIAL INTEREST
At June 30, 2003, there were an unlimited number of shares of beneficial
interest authorized. Transactions in shares of beneficial interest were as
follows:
Year Ended
Year Ended
June 30, 2003 June
30, 2002
Shares Amount Shares
Amount
Class A Shares
Shares sold .................... 24,734,784 $ 343,160,230
14,793,127 $ 200,278,818
Shares issued to shareholders in
reinvestment of dividends ... 1,359,442 18,874,006
1,279,137 17,324,540
Shares repurchased ............. (12,329,726) (171,130,704)
(7,235,058) (97,789,212)
Net Increase (Decrease) ........ 13,764,500 $ 190,903,532
8,837,206 $ 119,814,146
Class C Shares
Shares sold .................... 7,145,702 $ 99,350,605
2,673,390 $ 36,269,094
Shares issued to shareholders in
reinvestment of dividends ... 135,892 1,892,308
67,839 920,499
Shares repurchased ............. (1,670,144) (23,178,065)
(394,190) (5,349,305)
Net Increase (Decrease) ........ 5,611,450 $ 78,064,848
2,347,039 $ 31,840,288
Class I Shares
Shares sold .................... 7,667,976 $ 106,488,989
4,212,256 $ 57,113,329
Shares issued to shareholders in
reinvestment of dividends ... 309,747 4,303,264
250,826 3,398,094
Shares repurchased ............. (2,952,400) (40,989,097)
(1,816,802) (24,617,971)
Net Increase (Decrease) ........ 5,025,323 $ 69,803,156
2,646,280 $ 35,893,452
NOTE 5 - SECURITIES TRANSACTIONS
For the year ended June 30, 2003, the Fund had purchase and sale transactions
(excluding short-term securities) of $464,940,831 and $169,087,060,
respectively.
NOTE 6 - INCOME TAXES
At June 30, 2003, information on the tax components of capital is as follows:
Cost of investments for tax purposes $ 1,249,264,407
Gross tax unrealized appreciation $ 67,526,116
Gross tax unrealized depreciation (213,424)
Net tax unrealized appreciation
(depreciation) on investments $ 67,312,692
Undistributed tax-exempt income $ 1,056,444
At June 30, 2003, the Fund had tax basis capital losses, which may be carried
over to offset future capital gains. Such losses expire as follows: Capital loss
carryovers expiring in:
2004 $ 2,669,769
2008 1,088,098
2009 3,565,103
$ 7,322,970
The Fund utilized $738,463 of capital loss carry forwards during the year ended
June 30, 2003. Unutilized tax basis capital losses may be carried forward to
offset realized gains in future years. To the extent such carry forwards are
used, capital gain distributions may be reduced to the extent provided by
regulations.
Dividends paid by the Fund for the years ended June 30, 2003 and June 30, 2002,
represent exempt interest dividends, which are excludable by shareholders from
gross income for Federal income tax purposes.
Financial highlights
Thornburg Limited Term Municipal Fund, Inc. - National Portfolio
Year Ended June 30,
2003
2002 2001 2000 1999
Class A Shares:
Per Share Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year ................... $ 13.65 $
13.44 $ 13.06 $ 13.26 $ 13.50
Income from investment operations:
Net investment income ....................... 0.45
0.52 0.58 0.59 0.59
Net realized and unrealized
gain (loss) on investments ......... 0.36
0.21 0.38 (0.20) (0.24)
Total from investment operations ..................... 0.81
0.73 0.96 0.39 0.35
Less dividends from:
Net investment income ....................... (0.45)
(0.52) (0.58) (0.59) (0.59)
Change in net asset value ............................ 0.36
0.21 0.38 (0.20) (0.24)
Net asset value, end of year ......................... $ 14.01 $
13.65 $ 13.44 $ 13.06 $ 13.26
Total return (a) ..................................... 5.99%
5.54% 7.49% 3.00% 2.58%
Ratios/Supplemental Data Ratios to average net assets:
Net investment income ....................... 3.20%
3.83% 4.36% 4.48% 4.35%
Expenses, after expense reductions .......... 0.93%
0.95% 0.99% 0.96% 0.96%
Expenses, after expense reductions
and net of custody credits ......... 0.93%
0.95% -- -- --
Expenses, before expense reductions ......... 0.93%
0.96% 0.99% 0.96% 0.96%
Portfolio turnover rate .............................. 15.81%
19.59% 25.37% 33.65% 22.16%
Net assets at end of year (000) ..................... $ 998,878 $
785,145 $ 654,157 $ 672,775 $ 807,232
<FN>
(a) Sales loads are not reflected in computing total return.
</FN>
Year Ended June 30,
2003
2002 2001 2000 1999
Class C Shares:
Per Share Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year ................... $ 13.67 $
13.46 $ 13.08 $ 13.28 $ 13.53
Income from investment operations:
Net investment income ....................... 0.41
0.47 0.53 0.53 0.53
Net realized and unrealized
gain (loss) on investments ......... 0.37
0.21 0.38 (0.20) (0.25)
Total from investment operations ..................... 0.78
0.68 0.91 0.33 0.28
Less dividends from:
Net investment income ............................ (0.41)
(0.47) (0.53) (0.53) (0.53)
Change in net asset value ............................ 0.37
0.21 0.38 (0.20) (0.25)
Net asset value, end of year ......................... $ 14.04 $
13.67 $ 13.46 $ 13.08 $ 13.28
Total return ......................................... 5.78%
5.13% 7.07% 2.57% 2.08%
Ratios/Supplemental Data Ratios to average net assets:
Net investment income ....................... 2.89%
3.42% 3.96% 4.06% 3.93%
Expenses, after expense reductions .......... 1.18%
1.33% 1.38% 1.38% 1.38%
Expenses, after expense reductions
and net of custody credits ......... 1.18%
1.33% -- -- --
Expenses, before expense reductions ......... 1.68%
1.80% 1.85% 1.82% 1.78%
Portfolio turnover rate .............................. 15.81%
19.59% 25.37% 33.65% 22.16%
Net assets at end of year (000) ..................... $ 137,559 $
57,258 $ 24,773 $ 21,322 $ 28,048
Year Ended June 30,
2003
2002 2001 2000 1999
Class I Shares:
Per Share Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year ................... $ 13.65 $
13.44 $ 13.06 $ 13.26 $ 13.51
Income from investment operations:
Net investment income ....................... 0.49
0.57 0.63 0.63 0.64
Net realized and unrealized
gain (loss) on investments ......... 0.36
0.21 0.38 (0.20) (0.25)
Total from investment operations ..................... 0.85
0.78 1.01 0.43 0.39
Less dividends from:
Net investment income ............................ (0.49)
(0.57) (0.63) (0.63) (0.64)
Change in net asset value ............................ 0.36
0.21 0.38 (0.20) (0.25)
Net asset value, end of year ......................... $ 14.01 $
13.65 $ 13.44 $ 13.06 $ 13.26
Total return ......................................... 6.36%
5.91% 7.91% 3.37% 2.87%
Ratios/Supplemental Data Ratios to average net assets:
Net investment income ....................... 3.54%
4.18% 4.75% 4.84% 4.71%
Expenses, after expense reductions .......... 0.58%
0.60% 0.60% 0.60% 0.60%
Expenses, after expense reductions
and net of custody credits ......... 0.58%
0.60% -- -- --
Expenses, before expense reductions ......... 0.58%
0.62% 0.65% 0.62% 0.61%
Portfolio turnover rate .............................. 15.81%
19.59% 25.37% 33.65% 22.16%
Net assets at end of year (000) ..................... $ 197,367 $
123,652 $ 86,160 $ 76,470 $ 81,326
Schedule of Investments
Thornburg Limited Term Municipal Fund, Inc. - National Portfolio
CUSIPS: CLASS A - 532-723-103, CLASS C - 532-723-509, CLASS I - 532-723-806
NASDAQ SYMBOLS: CLASS A - LTMFX, CLASS C - LTMCX, CLASS I - LTMIX
Alabama (1.00%)
980,000 Birmingham General Obligation, 7.25% due 7/1/2004 (ETM)*
NR/NR $1,041,368
2,935,000 Huntsville Health Care Series A, 4.65% due 6/1/2024 put
6/1/2005 (Insured: MBIA) Aaa/AAA 3,080,693
1,000,000 Morgan County Decatur Health Care Authority Hospital
Revenue, 6.10% due 3/1/2007 NR/AAA 1,044,900
(Insured: Connie Lee)
1,920,000 Scottsboro Industrial Development Board Refunding, 5.25%
due 5/1/2009 (LOC: PNC NR/NR 1,980,288
Bank)
500,000 Shelby County Series A, 7.20% due 8/1/2005 (Insured:
MBIA) (ETM)* Aaa/AAA 502,505
5,000,000 Wilsonville Industrial Development Board Pollution
Control Revenue Refunding, Aaa/AAA 5,335,300
4.20% due 6/1/2019 put 6/1/2006 (Southern Electric Gaston
Project; Insured:
AMBAC)
Alaska (0.10%)
2,070,000 North Slope Borough Alaska, 0% due 6/30/2006 (Insured:
MBIA) Aaa/AAA 1,961,077
Arizona (0.90%)
1,000,000 Arizona State Transportation Board Grant Anticipation
Notes, 4.80% due 1/1/2004 Aa3/AA- 1,003,180
2,250,000 Arizona State Transportation Board Highway Revenue
Subordinated Series A Aa2/AA 2,372,670
Refunding, 4.875% due 7/1/2007
235,000 Glendale Water & Sewer Revenue, 9.00% due 7/1/2003 (ETM)*
Aaa/AAA 235,052
650,000 Maricopa County Arizona School District 97, 5.50% due
7/1/2008 (Insured: FGIC) Aaa/NR 748,098
3,200,000 Maricopa County Industrial Development Authority Multi
Family Housing Revenue NR/AAA 3,629,536
Series A, 6.50% due 10/1/2025 pre-refunded 10/1/2005 @
102
1,000,000 Maricopa County School District 008, 7.50% due 7/1/2008
(Insured: MBIA) Aaa/AAA 1,242,540
500,000 Maricopa County Unified School District 40 General
Obligation, 5.60% due A3/A- 500,060
7/1/2003
1,000,000 Pima County Industrial Development Authority Education
Revenue Series C, 6.40% Baa3/NR 1,021,940
due 7/1/2013 (Arizona Charter Schools Project)
760,000 Pima County Industrial Development Authority Industrial
Revenue Refunding Lease Aaa/AAA 804,726
Obligation A, 7.25% due 7/15/2010 (Insured: FSA)
500,000 Tucson Water Revenue Series D, 9.75% due 7/1/2008
Aa3/A+ 672,550
Arkansas (0.80%)
2,000,000 Conway Electric Revenue Refunding, 5.00% due 8/1/2007
A2/NR 2,203,080
1,000,000 Fayetteville Arkansas Sales & Use Tax Capital
Improvement, 4.00% due 6/1/2005 NR/AA- 1,045,570
1,000,000 Jefferson County Hospital Revenue Refunding &
Improvement, 5.50% due 6/1/2010 NR/A 1,117,120
(Regional Medical Center Project)
1,075,000 Jefferson County Hospital Revenue Refunding &
Improvement, 5.50% due 6/1/2011 NR/A 1,193,895
(Regional Medical Center Project)
2,645,000 Little Rock Hotel & Restaurant Gross Receipts Tax
Refunding, 7.125% due 8/1/2009 A3/NR 3,179,634
1,735,000 Rogers Sales & Use Tax Revenue, 6.00% due 11/1/2007
A1/AA 1,788,768
California (3.70%)
1,350,000 Bay Area Government Association Rapid Transit, 5.00% due
6/15/2008 (Insured: Aaa/AAA 1,354,144
AMBAC)
2,600,000 California State Department Water Resources Power Supply
Series A, 5.50% due A3/BBB+ 2,943,564
5/1/2012
2,550,000 California State Department Water Resources Power Supply
Series A, 6.00% due A3/BBB+ 2,970,597
5/1/2013
4,120,000 Irvine Improvement Bond Act 1915 Adjusted Assessment
District, 1.20% due VMIG1/A-1 4,120,000
9/2/2024 put 7/1/2003 (daily demand notes)
400,000 Irvine Improvement Bond Act 1915 Assessment District
Number 00-18 Series A, VMIG1/NR 400,000
1.20% due 9/2/2026 put 7/1/2003 (LOC: Bank of New York)
(daily demand notes)
2,000,000 Irvine Improvement Bond Act 1915 Limited Obligation
Assessment District, 1.20% VMIG1/A1+ 2,000,000
due 9/2/2025 put 7/1/2003 (daily demand notes)
900,000 Irvine Ranch California Water District, 0.85% due
4/1/2033 put 7/1/2003 (daily VMIG1/A1+ 900,000
demand notes)
40,000 Los Angeles Department Water & Power Electric Plant
Revenue Crossover Refunding, Aaa/AA- 41,338
9.00% due 9/1/2004 pre-refunded 9/1/2003
420,000 Los Angeles Department Water & Power Electric Plant
Revenue Crossover Refunding, Aa3/AA- 433,856
9.00% due 9/1/2004
40,000 Los Angeles Department Water & Power Electric Plant
Revenue Crossover Refunding, Aa3/AA- 41,334
9.00% due 9/1/2004 (ETM)*
7,050,000 Metropolitan Water District Southern California
Waterworks Revenue, 0.90% due VMIG1/A1+ 7,050,000
7/1/2035 put 7/1/2003 (daily demand notes)
1,275,000 Metropolitan Water District Southern California
Waterworks Revenue Series C-1, VMIG1/A1+ 1,275,000
1.00% due 7/1/2036 put 7/1/2003 (daily demand notes)
7,600,000 Orange County Refunding Recovery, 6.50% due 6/1/2004
(Insured: MBIA) Aaa/AAA 7,981,064
5,200,000 Orange County Refunding Recovery, 6.50% due 6/1/2005
(Insured: MBIA) Aaa/AAA 5,709,860
1,440,000 Orange County Special Financing Authority Teeler Pan
Revenue, 1.10% due Aaa/A-1 1,440,000
11/1/2014 put 7/8/2003 (weekly demand notes)
300,000 Orange County Special Financing Authority Teeter Plan
Revenue Series D, 1.20% Aaa/A-1 300,000
due 11/1/2014 put 7/8/2003 (Insured: AMBAC) (weekly
demand notes)
1,000,000 San Francisco Port Community Revenue, 9.00% due 7/1/2003
A1/A- 1,000,210
3,000,000 San Jose Financing Authority Lease Revenue Series D,
5.00% due 6/1/2039 Aaa/AAA 3,291,570
mandatory put 6/1/2006 (Civic Center Project; Insured:
AMBAC)
4,180,000 Santa Margarita & Dana Point Authority Revenue
Improvement District Series A, Aaa/AAA 4,210,180
9.50% due 8/1/2003 (Insured: MBIA)
800,000 Stockton Multi Family Housing Revenue Series A, 1.25% due
9/1/2018 put 7/1/2003 NR/A1+ 800,000
(Mariners Pointe Associates Project; LOC: Credit Suisse)
(daily demand notes)
Colorado (2.60%)
1,500,000 Adams County Communication Center Series A, 4.75% due
12/1/2006 Baa1/NR 1,597,890
1,000,000 Adams County School District Number 012 Series A, 4.375%
due 12/15/2007 Aa3/AA- 1,100,990
6,000,000 Central Platte Valley Metropolitan District Co. Refunding
Series A, 5.00% due NR/A-1 6,531,960
12/1/2031 put 12/1/2009 (LOC: US Bank)
1,950,000 Colorado Department Transport Revenue Anticipation Notes,
6.00% due 6/15/2008 Aaa/AAA 2,284,464
(Insured: AMBAC)
1,000,000 Colorado Educational & Cultural Facilities, 4.90% due
4/1/2008 (Nashville Public NR/BBB+ 1,074,810
Radio Project)
5,705,000 Colorado Health Facilities Authority Revenue Catholic
Health Initiatives, 5.00% Aa2/A1+ 6,279,779
due 9/1/2007
515,000 Colorado Health Facilities Authority Revenue Catholic
Health Initiatives A, Aa2/A1+ 572,515
5.375% due 12/1/2009
475,000 Colorado Housing Finance Authority, 5.25% due 10/1/2007
A1/AA+ 478,634
500,000 Denver City & County Certificates Participation Series A,
5.50% due 5/1/2006 Aaa/AAA 554,625
(Insured: MBIA)
2,650,000 Denver City & County Certificates Participation Series B,
5.00% due 12/1/2010 Aa2/AA 2,941,129
500,000 Denver Colorado Health & Hospital Authority Healthcare
Revenue Series A, 1.30% VMIG1/A-1 500,000
due 12/1/2032 put 7/1/2003 (LOC: Bank One) (daily demand
notes)
1,820,000 Dove Valley Metropolitan District Colorado Arapahoe
County, Series B, 3.30% due NR/A1+ 1,876,493
11/1/2025 Put 11/1/2005 @100 (LOC: BNP Paribas)
500,000 El Paso County School District General Obligation 20
Series B, 8.25% due Aa3/NR 550,990
12/15/2004 (State Aid Withholding)
2,175,000 Highlands Ranch Metro District 2 General Obligation,
6.00% due 6/15/2004 Aaa/AAA 2,278,269
(Insured: FSA)
1,000,000 Lakewood Colorado Certificates Participation, 4.40% due
12/1/2008 (Insured: Aaa/AAA 1,102,120
MBIA)
1,000,000 Section 14 Metropolitan District Jefferson Refunding
Series A, 6.20% due NR/A+ 1,069,020
12/1/2013 (LOC: US Bank Trust)
1,150,000 Superior Metropolitan District 1 Variable Refunding &
Improvement Series A, NR/AA- 1,199,208
5.45% due 12/1/2020 put 12/1/2004 (LOC: BNP)
2,725,000 Westminister Multi Family Housing Revenue Series 1995,
5.95% due 9/1/2015 put NR/AA 2,767,401
9/1/2006 (Semper Village Apartments Project; Insured:
AXA)
Connecticut (0.80%)
1,685,000 Bridgeport General Obligation, 6.00% due 3/1/2005
(Insured: AMBAC) Aaa/AAA 1,813,498
1,325,000 Bridgeport General Obligation, 6.00% due 3/1/2006
(Insured: AMBAC) Aaa/AAA 1,474,884
1,045,000 Capitol Region Education Council, 6.375% due 10/15/2005
NR/BBB 1,134,275
1,100,000 Connecticut State Health & Educational Yale University
Series V-1, 1.00% due VMIG1/A1+ 1,100,000
7/1/2036 put 7/1/2003 (daily demand notes)
2,425,000 Connecticut State Health And Educational Facilities
Authority Revenue Yale VMIG1/A1+ 2,425,000
University Series V-2, 1.00% due 7/1/2036 put 7/1/2003
(daily demand notes)
2,010,000 New Haven Connecticut, 3.00% due 11/1/2004 (Insured:
FGIC) Aaa/AAA 2,062,481
500,000 New Haven General Obligation, 9.50% due 11/15/2003
A3/A- 514,825
Delaware (0.40%)
2,000,000 Delaware State Health Facilities Authority Revenue, 6.25%
due 10/1/2006 Aaa/AAA 2,156,800
(Insured: MBIA) (ETM)*
1,370,000 Delaware State Health Facilities Authority Revenue
Nanticoke Series A, 5.25% due NR/AA 1,507,795
5/1/2012 (Memorial Hospital Project; Insured: Radian)
1,445,000 Delaware State Health Facilities Authority Revenue
Nanticoke Series A, 5.25% due NR/AA 1,574,096
5/1/2013 (Memorial Hospital Project; Insured: Radian)
District of Columbia (3.00%)
2,825,000 District of Columbia Refunding Series B-1, 5.20% due
6/1/2004 (Insured: AMBAC) Aaa/AAA 2,932,858
745,000 District of Columbia, 5.50% due 6/1/2004 (Insured: FSA)
Aaa/AAA 775,478
605,000 District of Columbia, 5.50% due 6/1/2008 (Insured: AMBAC)
Aaa/AAA 692,217
5,950,000 District of Columbia Certificates Participation, 5.25%
due 1/1/2013 (Insured: Aaa/AAA 6,693,393
AMBAC)
4,430,000 District of Columbia Hospital Revenue, 5.70% due
8/15/2008 (Medlantic Healthcare Aaa/AAA 5,048,074
Project; Insured: MBIA) (ETM)*
1,500,000 District of Columbia Hospital Revenue Refunding, 5.10%
due 8/15/2008 (Medlantic Aaa/AAA 1,688,010
Healthcare Group A Project; Insured: MBIA) (ETM)*
1,250,000 District of Columbia Refunding Series C, 5.00% due
6/1/2007 (Insured: XLCA) Aaa/AAA 1,380,575
1,330,000 District of Columbia Revenue, 6.00% due 8/15/2005
(Medlantic Healthcare Project; Aaa/AAA 1,459,688
Insured: MBIA) (ETM)*
500,000 District of Columbia Revenue, 5.50% due 10/1/2005
Aaa/AAA 545,060
500,000 District of Columbia Revenue, 6.00% due 1/1/2007
(American Assoc. Advancement Aaa/AAA 565,160
Science Project; Insured: AMBAC)
2,000,000 District of Columbia Tax Capital Appreciation, 0% due
7/1/2009 (Mandarin Aaa/AAA 1,637,440
Oriental Project; Insured: FSA)
1,480,000 District of Columbia Tax Capital Appreciation, 0% due
7/1/2012 (Mandarin Aaa/AAA 1,032,478
Oriental Project; Insured: FSA)
1,990,000 District of Columbia Tax Revenue Capital Appreciation, 0%
due 7/1/2011 (Mandarin Aaa/AAA 1,462,013
Oriental Project; Insured: FSA)
5,000,000 District of Columbia Unrefunded Balance Series B, 5.75%
due 6/1/2009 (Insured: Aaa/AAA 5,842,400
MBIA)
6,010,000 Washington DC Convention Center Senior Lien, 5.00% due
10/1/2007 Aaa/AAA 6,717,978
750,000 Washington District of Columbia Convention Center
Authority Dedicated Tax Aaa/AAA 828,232
Revenue, 5.00% due 10/1/2006 (Insured: AMBAC)
Florida (5.40%)
5,500,000 Broward County Resource Recovery Revenue Refunding,
5.375% due 12/1/2009 A3/AA- 6,099,610
4,150,000 Capital Projects Finance Authority, 1.00% due 6/1/2012
put 7/1/2003 (LOC: Bank VMIG1/NR 4,150,000
of Scotland) (daily demand notes)
1,000,000 Capital Projects Finance Authority Student Housing, 5.50%
due 10/1/2012 (Capital Aaa/AAA 1,134,020
Projects Student Housing; Insured: MBIA)
2,996,000 Crossings at Fleming Island Community Development
Refunding Series B, 5.45% due Aaa/AAA 3,463,316
5/1/2010 (Insured: MBIA)
6,000,000 Dade County Solid Waste Systems Special Obligation
Revenue Refunding, 6.00% due Aaa/AAA 6,968,280
10/1/2007 (Insured: AMBAC)
5,000,000 Dade County Water & Sewer Systems Revenue, 1.30% due
10/5/2022 put 7/8/2003 VMIG1/A1+ 5,000,000
(Insured: FGIC) (weekly demand notes)
200,000 East County Water Control District Lee County Drain,
5.50% due 11/1/2003 NR/AA 202,852
(Insured: Radian)
800,000 Florida Housing Finance Agency Multi Family Housing Kings
D, 1.30% due 8/1/2006 NR/A1+ 800,000
put 7/8/2003 (LOC: Credit Suisse First Boston) (weekly
demand notes)
1,375,000 Florida State, 8.25% due 7/1/2003 (Pollution Control
Project) Aa2/AA+ 1,375,275
2,450,000 Hillsborough County Industrial Development Authority
Pollution Control Revenue Baa1/BBB- 2,474,892
Refunding, 4.00% due 5/15/2018 put 8/1/2007 (Tampa
Electric Co. Project)
40,000 Hillsborough County Utility Revenue Refunding, 9.75% due
12/1/2003 (ETM)* Aaa/AAA 41,464
1,000,000 Jacksonville Electric Authority Revenue Refunding Series
10, 6.50% due 10/1/2003 Aa2/AA 1,013,590
5,000,000 Jacksonville Electric St. John's River Park Systems
Revenue Refunding Issue-2 Aa2/AA 5,708,800
17th Series, 5.25% due 10/1/2012
1,910,000 Miami Dade County School Board Certificates Participation
Series A, 5.00% due Aaa/AAA 2,096,588
5/1/2006 (Insured: MBIA)
3,390,000 Miami Dade County School Board Certificates Participation
Series C, 5.00% due Aaa/AAA 3,796,969
8/1/2007 (Insured: MBIA)
3,850,000 Miami Dade County Special Housing Revenue Refunding,
5.80% due 10/1/2012 A3/NR 3,908,520
1,395,000 Orange County Health Facilities Authority, 5.80% due
11/15/2009 (Hospital A3/A 1,579,572
Adventist Health System Project)
3,120,000 Orange County Health Facilities Authority Revenue
Refunding, 6.25% due Aaa/AAA 3,523,104
11/15/2008 (Hospital Adventist Health Systems Project;
Insured: AMBAC)
925,000 Orange County Health Facilities Authority Revenue
Unrefunded Balance Series A, Aaa/AAA 1,082,824
6.25% due 10/1/2007 (Orlando Regional Hospital Project;
Insured: MBIA)
800,000 Orange County School Board Certificates Participation
Series B, 1.20% due VMIG1/AAA 800,000
8/1/2027 put 7/1/2003 (Insured: MBIA) (daily demand
notes)
8,080,000 Orange County School District Series B, 0.90% due
8/1/2025 put 7/1/2003 Aaa/NR 8,080,000
(Insured: AMBAC) (daily demand notes)
940,000 Palm Beach County Industrial Development Revenue Series
1996, 6.00% due NR/A 1,072,230
12/1/2006 (Lourdes-Noreen McKeen Residence Project; LOC:
Allied Irish Bank)
(ETM)*
3,940,000 Pelican Marsh Community Development District Refunding
Series A, 5.00% due NR/NR 4,178,212
5/1/2011 (Insured: Radian)
2,000,000 University Athletic Association Inc. Florida Athletic
Program Revenue Refunding, VMIG1/NR 2,020,400
2.20% due 10/1/2031 put 10/1/2005 (LOC: Suntrust Bank)
Georgia (1.40%)
1,700,000 Burke County Development Authority Pollution, 6.35% due
1/1/2004 (Oglethorpe Aaa/AAA 1,744,795
Power Corp. Project; Insured: MBIA)
500,000 Cobb County School District, 4.75% due 2/1/2005
Aa1/AA+ 511,400
1,000,000 Dekalb County, 5.50% due 1/1/2004
Aaa/AA+ 1,022,260
1,000,000 Georgia Municipal Association Inc. Certificates of
Participation City Court Aaa/AAA 1,111,270
Atlanta Project, 5.00% due 12/1/2006 (Insured: AMBAC)
1,550,000 Georgia Municipal Electric Power Authority Revenue, 7.00%
due 1/1/2008 (Insured: Aaa/AAA 1,856,993
MBIA)
730,000 Georgia Municipal Electric Power Authority Revenue Series
Y, 6.30% due 1/1/2006 A2/A+ 807,957
1,000,000 Georgia Municipal Gas Authority, 6.30% due 7/1/2009
(Southern Storage Gas NR/A 1,046,800
Project)
5,000,000 Milledgeville Baldwin County Development Authority
Student Housing Revenue, VMIG1/NR 5,187,900
5.00% due 9/1/2032 put 9/1/2004 (Ga. College & State
University Foundation
Project; LOC: First Union Natl Bank)
2,000,000 Monroe County Development Authority Pollution Control,
6.75% due 1/1/2010 Aaa/AAA 2,449,360
(Oglethorpe Power Scherer A Refunding; Insured: MBIA)
1,000,000 Monroe County Development Authority Pollution Control
Revenue Oglethorpe Power Aaa/AAA 1,259,350
Scherer A, 6.80% due 1/1/2012 (Insured: MBIA)
910,000 Municipal Electric Authority Georgia Unrefunded Balance
Subordinated A, 6.00% Aaa/AAA 1,008,562
due 1/1/2006 (Project One; Insured: AMBAC)
Hawaii (0.50%)
2,000,000 Hawaii State Department Budget & Finance Special Purpose
Hawaiian Electric Co., Aaa/AAA 2,228,880
4.95% due 4/1/2012 (Insured: MBIA)
1,500,000 Hawaii State Department Budget & Finance Special Purpose
Mortgage Revenue, 5.70% Baa1/BBB+ 1,500,165
due 7/1/2003 (Kapiolani Health Care System Project)
1,565,000 Hawaii State Series Cn, 6.25% due 3/1/2006 (Insured:
FGIC) Aaa/AAA 1,755,695
1,000,000 Honolulu City & County Refunding Series A, 7.35% due
7/1/2006 Aa3/AA- 1,163,530
Illinois (11.50%)
3,345,000 Champaign County Community Unit Series C, 0% due 1/1/2009
(Insured: FGIC) Aaa/AAA 2,847,164
2,000,000 Chicago Board of Education, 6.00% due 12/1/2009 (Insured:
FGIC) Aaa/AAA 2,391,120
750,000 Chicago Board of Education School Reform, 6.25% due
12/1/2012 (Insured: MBIA) Aaa/AAA 927,300
2,300,000 Chicago Housing Authority Capital Program Revenue, 5.25%
due 7/1/2010 Aa3/AA 2,515,349
2,000,000 Chicago Metropolitan Water Reclamation District, 6.90%
due 1/1/2007 Aaa/AA+ 2,330,220
1,340,000 Chicago Midway Airport Revenue Series A, 5.40% due
1/1/2009 (Insured: MBIA) Aaa/AAA 1,501,617
900,000 Chicago Midway Airport Revenue Series C, 5.50% due
1/1/2013 (Insured: MBIA) Aaa/AAA 1,038,159
3,420,000 Chicago O'Hare International Airport Refunding General
Airport Series A, 6.375% Aaa/AAA 3,727,766
due 1/1/2012 (Insured: MBIA)
1,000,000 Chicago O'Hare International Airport Revenue, 5.375% due
1/1/2007 (Insured: Aaa/AAA 1,101,280
AMBAC)
1,105,000 Chicago O'Hare International Airport Revenue, 5.00% due
1/1/2012 (Insured: MBIA) Aaa/AAA 1,222,561
1,000,000 Chicago O'Hare International Airport Revenue 2nd Lien
Series C-1, 5.00% due Aaa/AAA 1,121,120
1/1/2010 (Insured: MBIA)
3,000,000 Chicago O'Hare International Airport Revenue Passenger
Facility Change Series A, Aaa/AAA 3,320,220
6.00% due 1/1/2006 (Insured: AMBAC)
5,000,000 Chicago O'Hare International Airport Revenue Refunding,
4.80% due 1/1/2005 Aaa/AAA 5,186,250
(Insured: AMBAC)
5,000,000 Chicago O'Hare International Airport Revenue Refunding
Series A, 4.90% due Aaa/AAA 5,187,900
1/1/2006 (Insured: MBIA)
1,000,000 Chicago O'Hare International Airport Revenue Series C-1,
5.00% due 1/1/2008 Aaa/AAA 1,113,050
(Insured: MBIA)
1,700,000 Chicago Park District, 6.60% due 11/15/2014 partially
pre-refunded 5/15/2005 Aa3/AA 1,885,980
1,000,000 Chicago Park District Parking Facility Revenue, 5.25% due
1/1/2004 (ETM)* Baa1/A 1,021,620
1,000,000 Chicago Park District Parking Facility Revenue, 5.75% due
1/1/2010 (ETM)* Baa1/A 1,176,220
750,000 Chicago Public Building Commerce Building Revenue, 5.00%
due 3/1/2005 (Insured: Aaa/AAA 795,630
AMBAC)
2,000,000 Chicago Public Building Commerce Building Revenue Series
C, 5.50% due 2/1/2006 Aaa/AAA 2,198,400
(Insured: FGIC)
2,000,000 Chicago Refunding Series A, 5.375% due 1/1/2013 (Insured:
MBIA) Aaa/AAA 2,282,440
1,000,000 Chicago Refunding Series A-2, 6.125% due 1/1/2012
(Insured: AMBAC) Aaa/AAA 1,208,790
5,000,000 Chicago Tax Increment Allocation Capital Appreciation
Central Series A, 0% due Aaa/AAA 4,812,050
12/1/2005 (Insured: AMBAC)
1,000,000 Collinsville Leased Facilities Revenue Refunding, 5.15%
due 11/1/2004 (Insured: Aaa/AAA 1,023,240
MBIA)
2,545,000 Cook & Will Counties Township High School District 206
Series C, 0% due Aaa/AAA 2,449,333
12/1/2005 (Insured: FSA)
995,000 Cook County Capital Improvement, 5.50% due 11/15/2008
pre-refunded 11/15/2006 Aaa/AAA 1,134,061
3,350,000 Cook County Community Unified School District 401 Series
1996, 0% due 12/1/2003 Aaa/AAA 3,335,997
(Insured: FSA)
2,650,000 Cook County Series C Refunding, 5.80% due 11/15/2004
(Insured: FGIC) Aaa/AAA 2,820,210
5,000,000 Du Page County Forest Preservation District, 0% due
11/1/2009 Aaa/AAA 4,156,600
1,500,000 Glenview Multi Family Revenue Refunding, 5.20% due
12/1/2027 put 12/1/2007 NR/AAA 1,622,955
(Collateralized: FNMA)
1,015,000 Hoffman Estates Illinois Tax Increment Revenue, 0% due
5/15/2005 A3/NR 946,610
3,075,000 Hoffman Estates Illinois Tax Increment Revenue, 0% due
5/15/2006 (Hoffman A3/NR 2,750,249
Estates Economic Dev. Project; Guarantee: Sears)
5,000,000 Hoffman Estates Illinois Tax Increment Revenue Refunding,
5.25% due 11/15/2009 Aaa/AAA 5,264,350
(Economic Development Project; Insured: AMBAC)
1,500,000 Hoffman Estates Tax Increment Revenue, 0% due 5/15/2004
A3/NR 1,456,650
3,000,000 Illinois Development Finance Authority Pollution Control
Revenue Refunding, Aaa/AAA 3,420,360
5.70% due 1/15/2009 (Commonwealth Edison Company Project;
Insured: MBIA)
860,000 Illinois Development Finance Authority Revenue, 4.00% due
11/15/2005 (Insured: Aaa/AAA 908,521
XLCA)
915,000 Illinois Development Finance Authority Revenue, 4.00% due
11/15/2006 (Insured: Aaa/AAA 979,526
XLCA)
3,635,000 Illinois Development Finance Authority Revenue, 6.00% due
11/15/2009 (Adventist Aaa/AAA 4,231,940
Health Project; Insured: MBIA)
3,860,000 Illinois Development Finance Authority Revenue, 6.00% due
11/15/2010 (Adventist Aaa/AAA 4,491,843
Health Project; Insured: MBIA)
785,000 Illinois Development Finance Authority Revenue, 5.25% due
2/15/2011 (Insured: NR/AAA 830,452
AMBAC)
400,000 Illinois Development Finance Authority Revenue Refunding
Community Rehab NR/BBB 407,928
Providers A, 5.60% due 7/1/2004
1,000,000 Illinois Development Finance Authority Revenue Refunding
Community Rehab NR/BBB 1,032,600
Providers A, 5.60% due 7/1/2005
1,000,000 Illinois Development Finance Authority Revenue Refunding
Community Rehab NR/BBB 1,038,600
Providers A, 5.60% due 7/1/2006
500,000 Illinois Health Facilities Authority Revenue, 5.20% due
10/1/2003 (Illinois A3/NR 505,305
Masonic Medical Center Project) (ETM)*
2,100,000 Illinois Health Facilities Authority Revenue, 5.50% due
11/15/2003 (Advocate Aa3/AA 2,131,962
Network Health Care Project)
915,000 Illinois Health Facilities Authority Revenue, 5.50% due
11/15/2007 (OSF A2/A 1,010,590
Healthcare System Project)
1,000,000 Illinois Health Facilities Authority Revenue, 5.75% due
11/15/2007 (OSF A2/A 1,030,210
Healthcare System Project)
1,290,000 Illinois Health Facilities Authority Revenue, 6.50% due
2/15/2008 (Iowa Health A1/NR 1,478,172
System Project)
1,375,000 Illinois Health Facilities Authority Revenue, 6.50% due
2/15/2009 (Iowa Health A1/NR 1,589,899
System Project)
1,465,000 Illinois Health Facilities Authority Revenue, 6.50% due
2/15/2010 (Iowa Health A1/NR 1,701,744
System Project)
1,560,000 Illinois Health Facilities Authority Revenue, 6.00% due
2/15/2011 (Iowa Health Aaa/AAA 1,801,753
System Project; Insured: AMBAC)
3,000,000 Illinois Health Facilities Authority Revenue Refunding,
5.50% due 11/15/2011 Aaa/AAA 3,351,360
(Methodist Medical Center Project; Insured: MBIA)
395,000 Illinois Health Facilities Authority Revenue Series 1993-
A, 7.875% due 8/15/2005 NR/NR 402,248
(Community Provider Pooled Loan Program Project)
1,885,000 Illinois Health Facilities Authority Revenue Series A,
9.25% due 7/1/2024 Aaa/NR 2,057,195
pre-refunded 7/1/2004 (Edgewater Medical Center Project)
1,040,000 Illinois Hospital District, 5.50% due 1/1/2010 (Insured:
FGIC) Aaa/AAA 1,176,822
500,000 Illinois State COPS Central Management Department, 5.00%
due 7/1/2007 (Insured: Aaa/AAA 557,425
AMBAC)
1,000,000 Illinois State Partners Series A, 6.00% due 7/1/2006
(Insured: AMBAC) Aaa/AAA 1,125,990
2,000,000 Illinois State Refunding, 5.125% due 12/1/2006 (Insured:
FGIC) Aaa/AAA 2,202,580
5,000,000 Illinois State Sales Tax Revenue First Series, 5.00% due
6/15/2006 Aa3/AAA 5,491,400
1,150,000 Kane, Mc Henry, Cook & De Kalb Counties Community Unit
School District 300, 0% Aaa/NR 896,345
due 12/1/2010 (Insured: AMBAC)
2,000,000 Lake County Community High School District 117 Series B,
0% due 12/1/2006 Aaa/NR 1,873,240
(Insured: FGIC)
3,235,000 Lake County Community High School District 117 Series B,
0% due 12/1/2011 Aaa/NR 2,397,556
(Insured: FGIC)
1,000,000 McHenry & Kane Counties Community Consolidated School
District Number 158, 0% Aaa/AAA 803,130
due 1/1/2010 (Insured: FGIC)
3,900,000 Metropolitan Pier & Exposition Authority, 0% due
6/15/2004 (Insured: AMBAC) Aaa/AAA 3,863,808
1,250,000 Metropolitan Pier & Exposition Authority Dedicated State
Tax Revenue Refunding Aaa/AAA 1,437,075
Series A-2002, 6.00% due 6/15/2007 (McCormick Place
Exposition Project; Insured:
AMBAC)
3,750,000 Metropolitan Pier & Exposition Authority Dedicated State
Tax Revenue Refunding Aaa/AAA 4,247,587
Series A-2002, 6.00% due 6/15/2007 pre-refunded 6/15/2006
@102 (McCormick Place
Exposition Project; Insured: AMBAC)
2,445,000 Naperville City, Du Page & Will Counties Economic
Development Revenue, 6.10% due NR/A+ 2,618,888
5/1/2008 (Hospital & Health System Association Project;
LOC: American National
Bank)
1,100,000 Peoria Public Building Commission School District
Facilities Revenue, 0% due Aaa/NR 993,256
12/1/2007 (Insured: FGIC)
6,300,000 University of Illinois Revenues, 0% due 10/1/2006
(Insured: MBIA) Aaa/AAA 5,933,718
5,000,000 Will County Community School 365-U Capital Appreciation,
0% due 11/1/2011 Aaa/AAA 3,716,650
(Insured: FSA)
Indiana (4.60%)
1,370,000 Allen County Economic Development Revenue, 5.00% due
12/30/2012 (Indiana NR/NR 1,462,872
Institute of Technology Project)
965,000 Allen County Economic Development Revenue First Mortgage,
5.20% due 12/30/2005 NR/NR 1,034,557
(Indiana Institute of Technology Project)
690,000 Allen County Economic Development Revenue First Mortgage,
5.30% due 12/30/2006 NR/NR 754,846
(Indiana Institute of Technology Project)
1,110,000 Allen County Economic Development Revenue First Mortgage,
5.60% due 12/30/2009 NR/NR 1,226,173
(Indiana Institute of Technology Project)
1,115,000 Allen County Jail Building Corp. First Mortgage, 5.75%
due 10/1/2010 Aa3/NR 1,313,470
1,000,000 Ball State University Revenues Student Fee Series K,
5.75% due 7/1/2012 Aaa/AAA 1,181,170
(Insured: FGIC)
1,085,000 Boone County Hospital Association Lease Revenue, 5.00%
due 1/15/2007 (Insured: Aaa/AAA 1,198,686
FGIC) (ETM)*
850,000 Boonville Junior High School Building Corp. Revenue, 0%
due 7/1/2010 (State Aid) NR/A 657,084
850,000 Boonville Junior High School Building Corp. Revenue, 0%
due 1/1/2011 (State Aid) NR/A 634,755
950,000 Boonville Junior High School Building Corp. Revenue
Refunding, 0% due 7/1/2011 NR/A 695,761
(State Aid)
1,175,000 Center Grove 2000 Building First Mortgage, 5.00% due
7/15/2009 (Insured: AMBAC) Aaa/AAA 1,330,170
1,135,000 Center Grove 2000 Building First Mortgage, 5.00% due
7/15/2010 (Insured: AMBAC) Aaa/AAA 1,283,424
910,000 Eagle Union Middle School Building Corp., 5.50% due
7/15/2009 (Insured: AMBAC) Aaa/AAA 1,066,875
(ETM)*
1,860,000 Elberfeld J. H. Castle School Building Corp. Indiana
First Mortgage (State Aid), NR/A 1,757,049
0% due 1/15/2006
1,860,000 Elberfeld J. H. Castle School Building Corp. Indiana
First Mortgage Refunding, Aaa/AAA 1,621,083
0% due 7/5/2008 (Insured: MBIA)
500,000 Fort Wayne Economic Development Income Tax Revenue, 3.90%
due 12/1/2003 Aaa/NR 505,840
(Insured: FSA)
965,000 Goshen Multi School Building Corp. 1st Mortgage, 5.20%
due 7/15/2007 (Insured: Aaa/AAA 1,084,110
MBIA)
2,305,000 Hammond Multi-School Building Corp. First Mortgage
Refunding Bond Series 1997, NR/A 2,588,446
6.00% due 7/15/2008 (Lake County Project)
1,805,000 Hobart Building Corp. First Mortgage, 5.30% due 8/1/2005
(Insured: AMBAC) Aaa/AAA 1,829,747
390,000 Huntington Economic Development Revenue, 6.00% due
11/1/2006 (United Methodist NR/NR 414,547
Membership Project)
700,000 Huntington Economic Development Revenue, 6.15% due
11/1/2008 (United Methodist NR/NR 758,268
Membership Project)
790,000 Huntington Economic Development Revenue, 6.20% due
11/1/2010 (United Methodist NR/NR 845,592
Membership Project)
285,000 Indiana Health Facility Financing Authority Hospital
Revenue, 5.75% due Aaa/NR 299,943
11/1/2005 (Daughter's Charity Project) (ETM)*
1,295,000 Indiana Health Facility Financing Authority Hospital
Revenue Series D, 5.00% due Aaa/NR 1,426,766
11/1/2026 pre-refunded 11/1/2007
1,335,000 Indiana Health Facility Financing Authority Revenue A,
1.05% due 10/1/2032 put NR/A-1 1,335,000
7/1/2003 (Fayette Memorial Hospital Association Project;
LOC: U.S. Bank & Trust)
(daily demand notes)
670,000 Indiana State Educational Facilities Authority Revenue,
5.75% due 10/1/2009 NR/A- 753,683
(University Indianapolis Project)
1,000,000 Indiana State Office Building Commission Capital Complex
Revenue, 5.00% due Aaa/AAA 1,022,740
7/1/2005 (Insured: AMBAC)
2,500,000 Indiana University Revenues Refunding, 0% due 8/1/2007
(Insured: AMBAC) Aaa/AAA 2,275,125
1,100,000 Indianapolis Airport Authority Revenue Refunding Series
A, 5.35% due 7/1/2007 Aaa/AAA 1,225,202
(Insured: FGIC)
1,220,000 Indianapolis Local Public Improvement Bond Bank
Transportation Revenue, 0% due Aa2/AA- 1,187,328
7/1/2005 (ETM)*
1,240,000 Indianapolis Local Public Improvement Bond Bank
Transportation Revenue, 0% due Aa2/AA- 1,178,893
7/1/2006 (ETM)*
2,200,000 Indianapolis Resource Recovery Revenue Refunding, 6.75%
due 12/1/2004 (Ogden Aaa/AAA 2,359,082
Martin Systems, Inc. Project; Insured: AMBAC)
2,000,000 Indianapolis Resource Recovery Revenue Refunding, 6.75%
due 12/1/2006 (Ogden Aaa/AAA 2,292,440
Martin Systems, Inc. Project; Insured: AMBAC)
855,000 Knox Middle School Building Corp. First Mortgage, 6.00%
due 7/15/2008 (Insured: Aaa/AAA 1,000,239
FGIC)
455,000 Knox Middle School Building Corp. First Mortgage, 6.00%
due 7/15/2009 (Insured: Aaa/AAA 539,239
FGIC)
890,000 Merrillville Multi School Building Corp. Refunding First
Mortgage, 6.55% due Aaa/AAA 980,362
7/1/2005 (Insured: MBIA)
625,000 Monroe County Community School Building Corp. Revenue
Refunding, 5.00% due Aaa/AAA 689,356
1/15/2007 (Insured: AMBAC)
535,000 New Albany Floyd County School Building Corp., 6.20% due
7/1/2003 (ETM)* NR/NR 535,075
800,000 North Adams Community Schools, 3.50% due 7/15/2004
(Insured: FSA) Aaa/AAA 820,352
940,000 North Adams Community Schools, 4.00% due 7/15/2005
(Insured: FSA) Aaa/AAA 989,876
1,070,000 North Central Campus School Building Corp. Indiana, 4.50%
due 7/10/2005 Aaa/AAA 1,137,763
(Insured: AMBAC)
1,000,000 Northwest Allen Building Corp. First Mortgage, 5.30% due
12/1/2005 (Insured: Aaa/AAA 1,058,450
MBIA)
835,000 Peru Community School Corp. Capital Appreciation
Refunding First Mortgage, 0% NR/A 645,488
due 7/1/2010
1,450,000 Tri Creek School Building Corp. Inc. First Mortgage,
5.00% due 1/15/2004 NR/AA- 1,481,305
1,540,000 Vigo County Elementary School Building Corp. Refunding &
Improvement First Aaa/AAA 1,632,261
Mortgage, 4.00% due 1/10/2006 (Insured: FSA)
1,635,000 Vigo County Elementary School Building Corp. Refunding &
Improvement First Aaa/AAA 1,752,181
Mortgage, 4.00% due 1/10/2008 (Insured: FSA)
995,000 Wawasee Community School Corp. First Mortgage, 5.50% due
7/15/2010 (State Aid) NR/AA- 1,132,797
1,095,000 Wawasee Community School Corp. First Mortgage, 5.50% due
7/15/2011 (State Aid) NR/AA- 1,250,129
2,080,000 West Clark School Building Corp. First Mortgage, 5.75%
due 7/15/2011 (Insured: Aaa/AAA 2,459,725
FGIC)
1,820,000 Westfield Elem. School Building Corp. First Mortgage
Series 1997, 6.80% due Aaa/AAA 2,150,785
7/15/2007 (Insured: AMBAC) (ETM)*
Iowa (2.90%)
4,320,000 Ames Hospital Revenue, 6.25% due 8/15/2006 (Insured:
AMBAC) Aaa/AAA 4,391,453
2,900,000 Ankeny Community School District Sales & Services Tax
Revenue, 5.00% due NR/A+ 3,178,458
7/1/2010
3,660,000 Des Moines Limited Obligation Revenue, 6.25% due
12/1/2015 put 12/1/2005 (Des NR/NR 3,666,881
Moines Parking Associates Project; LOC: Wells Fargo Bank)
6,650,000 Iowa Finance Authority Commercial Development Revenue
Refunding, 5.75% due NR/AA 7,180,537
4/1/2014 put 4/1/2010 (Governor Square Project; Insured:
AXA)
435,000 Iowa Finance Authority Hospital Facility Revenue, 6.50%
due 2/15/2007 (Iowa A1/NR 491,058
Health Services Project)
1,765,000 Iowa Finance Authority Hospital Facility Revenue, 6.50%
due 2/15/2009 (Iowa A1/NR 2,041,823
Health Services Project)
1,955,000 Iowa Finance Authority Hospital Facility Revenue, 6.50%
due 2/15/2010 (Iowa A1/NR 2,273,411
Health Services Project)
3,145,000 Iowa Finance Authority Hospital Facility Revenue, 6.00%
due 2/15/2011 (Iowa Aaa/AAA 3,638,450
Health Services Project; Insured: AMBAC)
1,000,000 Iowa Finance Authority Revenue Trinity Health Series B,
5.50% due 12/1/2003 Aa3/AA- 1,017,500
1,000,000 Iowa Finance Authority Revenue Trinity Health Series B,
5.50% due 12/1/2004 Aa3/AA- 1,056,870
1,430,000 Iowa Finance Authority Revenue Trinity Health Series B,
5.75% due 12/1/2007 Aa3/AA- 1,621,734
3,295,000 Iowa Finance Authority Revenue Trinity Health Series B,
5.75% due 12/1/2010 Aa3/AA- 3,790,041
1,000,000 Iowa Higher Education Loan Authority Revenue Variable,
1.20% due 4/1/2033 put NR/A1+ 1,000,000
7/1/2003 (St. Ambrose Project; LOC: Northern Trust)
(daily demand notes)
1,000,000 Iowa State University Revenues, 6.20% due 9/1/2003
Aa2/AA 1,008,690
1,170,000 Iowa University Science & Technology Revenue Refunding
Series B, 5.20% due Aa3/A+ 1,260,406
7/1/2005 (Academic Building Project)
115,000 Muscatine Electric Revenue, 9.50% due 1/1/2004 (ETM)*
Aaa/AAA 119,903
530,000 University of Iowa Facilities Corp. Revenue Series A,
4.875% due 6/1/2005 Aa2/AA- 565,796
Kansas (0.70%)
500,000 Dodge Unified School District 443 Ford County, 8.25% due
9/1/2006 (Insured: FSA) Aaa/AAA 601,100
2,000,000 Kansas City Hospital Revenue Refunding, 5.80% due
8/1/2004 (Sisters Charity Aa2/AA 2,047,340
Health Services Project)
1,000,000 Kansas City Hospital Revenue Refunding, 5.90% due
8/1/2005 (Sisters Charity Aa2/AA 1,023,350
Health Services Project)
6,000,000 La Cygne Environmental Improvement Refunding, 3.90% due
3/1/2015 put 8/31/2004 VMIG1/A-2 6,111,000
(Kansas City Power & Light Co. Project)
Kentucky (1.30%)
315,000 Campbell & Kenton Counties Sanitation District 1 Revenue,
6.50% due 8/1/2005 Aaa/AAA 319,590
(ETM)*
7,400,000 Kentucky Economic Development Finance Authority Series C,
0% due 10/1/2009 Aaa/AAA 7,592,548
converts to 5.35% 10/1/2005 (Norton Healthcare Project;
Insured: MBIA)
7,830,000 Kentucky Economic Development Finance Authority Series C,
0% due 10/1/2010 Aaa/AAA 8,062,473
converts to 5.40% 10/1/2005 (Norton Healthcare Project;
Insured: MBIA)
505,000 Kentucky State Turnpike Authority Resources Recovery
Revenue, 0% due 7/1/2006 Aaa/AAA 428,891
(Insured: FGIC)
150,000 Louisville Water Revenue Refunding, 6.00% due 11/15/2006
(ETM)* Aaa/AAA 170,880
420,000 Paintsville First Mortgage Revenue Series 1991, 8.50% due
9/1/2003 (Paul B. Hall NR/NR 420,882
Medical Center Project; Guarantee: Health Management
Associates)
Louisiana (3.20%)
4,000,000 Jefferson Parish Hospital District 2, 5.25% due 12/1/2015
crossover-refunded Aaa/AAA 4,223,760
12/1/2005 (Insured: FGIC)
1,440,000 Jefferson Sales Tax District Special Sales Tax Revenue
Refunding, 5.25% due Aaa/AAA 1,613,174
12/1/2006 (Insured: AMBAC)
1,515,000 Jefferson Sales Tax District Special Sales Tax Revenue
Refunding, 5.25% due Aaa/AAA 1,722,722
12/1/2007 (Insured: AMBAC)
1,000,000 Lake Charles Harbor & Terminal District Revenue, 5.50%
due 5/1/2006 (Reynolds A3/A- 1,012,340
Metal Project; LOC: Canadian Imperial Bank)
1,000,000 Louisiana Local Govt. Environmental Facilities &
Community Dev. Auth. Multi Baa1/NR 1,004,310
Family Revenue Series A, 5.00% due 9/1/2012 (Bellemont
Apartments Project)
1,000,000 Louisiana Offshore Authority Deepwater Port Revenue
Series B, 6.25% due 9/1/2004 A3/A 1,056,510
2,620,000 Louisiana PFA Revenue, 5.375% due 12/1/2008 (Wynhoven
Health Care Center NR/NR 2,736,616
Project; Guaranteed: Archdiocese of New Orleans)
1,000,000 Louisiana Public Facilities Authority Revenue, 5.75% due
10/1/2008 (Loyola A1/A+ 1,146,810
University Project)
1,280,000 Louisiana Public Facilities Authority Revenue Refunding,
5.50% due 10/1/2006 A1/A+ 1,420,365
(Loyola University Project)
4,635,000 Louisiana State Correctional Facility Lease, 5.00% due
12/15/2008 (Insured: NR/AA 5,082,324
Radian)
5,000,000 Louisiana State Offshore Term Refunding Series D, 4.00%
due 9/1/2023 put A3/A 5,223,000
9/1/2008 (Loop LLC Project)
2,350,000 Louisiana State Offshore Terminal Authority Deepwater
Port Revenue, 4.375% due A3/A 2,481,342
10/1/2020 put 6/1/2007
1,000,000 Louisiana State Offshore Terminal Authority Deepwater
Port Revenue Series B, A3/A 1,008,340
6.20% due 9/1/2003
1,000,000 New Orleans Refunding, 0% due 9/1/2006 (Insured: AMBAC)
Aaa/AAA 944,190
5,000,000 Orleans Parish School Board, 0% due 2/1/2008 (ETM)*
Aaa/AAA 4,183,050
1,000,000 Plaquemines Port Harbor & Terminal Refunding Electro Coal
D Convertible, 5.00% Ba1/BB+ 989,390
due 9/1/2007 (Teco Energy Inc. Project)
2,590,000 Shreveport Louisiana Water & Sewer Revenue Refunding
Series A, 4.00% due Aaa/AAA 2,697,614
12/1/2004 (Insured: FSA)
3,000,000 St. Charles Parish Pollution Control Revenue Variable
Refunding Series A, 4.90% Baa3/BBB- 3,152,580
due 6/1/2030 put 6/1/2005 (Entergy Louisiana Inc.
Project)
Maine (0.10%)
1,000,000 Regional Waste Systems Inc. Solid Waste Resources
Recovery Revenue Series P, Aaa/AAA 1,112,570
6.25% due 7/1/2010 (Insured: FSA)
Maryland (0.50%)
580,000 Baltimore Maryland, 7.00% due 10/15/2009 (Insured: MBIA)
Aaa/AAA 728,857
2,050,000 Baltimore Public Improvement Series A, 7.00% due
10/15/2006 (Insured: MBIA) Aaa/AAA 2,401,719
2,750,000 Howard County Multi Family Housing Revenue, 7.00% due
7/1/2024 put 7/1/2004 Baa2/NR 2,803,405
(Chase Glen Project; Guarantee: Avalon Prop.)
500,000 Maryland State Department Transportation Consolidated,
4.375% due 6/15/2004 Aa2/AA 506,365
Massachusetts (1.60%)
2,000,000 Boston Economic Development & Industrial Corp., 5.15% due
7/1/2025 put 7/1/2005 Aa3/NR 2,087,720
(LOC: Fleet National Bank)
1,060,000 Lynn General Obligation, 7.00% due 1/15/2004
Baa1/NR 1,091,132
3,470,000 Massachusetts Development Finance Agency Resource
Recovery Revenue Series A, Aaa/AAA 3,958,854
5.50% due 1/1/2011 (Insured: MBIA)
1,000,000 Massachusetts Industrial Finance Agency Pollution Control
Revenue Refunding, A2/A 1,022,680
5.875% due 8/1/2008 (Eastern Edison Co. Project)
1,000,000 Massachusetts Industrial Finance Agency Revenue, 8.375%
due 2/15/2018 NR/NR 1,185,290
pre-refunded 2/15/2006 @ 102 (Glenmeadow Retirement
Project)
900,000 Massachusetts Municipal Wholesale Electric Co. Power
Supply Systems Revenue, Aaa/AAA 963,954
5.00% due 7/1/2005 (Stony Brook Intermediate Project A;
Insured: MBIA)
1,000,000 Massachusetts Municipal Wholesale Electric Co. Power
Supply Systems Revenue Aaa/AAA 1,071,060
Series A, 5.00% due 7/1/2005 (Stony Brook Peaking
Project; Insured: MBIA)
515,000 Massachusetts State Health & Education Facility,
Daughters Of Charity, Series D, Aaa/AA+ 534,879
5.50% due 7/1/2004 (ETM)*
3,415,000 Massachusetts State Health & Educational Series H, 5.375%
due 5/15/2012 (New Aaa/AAA 3,903,379
England Medical Center Hospital Project; Insured: FGIC)
3,800,000 Massachusetts State Water Resources Authority, Series A,
1.25% due 8/1/2023 put VMIG1/A1+ 3,800,000
7/8/2003 (Insured: FGIC) (weekly demand notes)
1,500,000 Taunton General Obligation, 8.00% due 2/1/2006 (Insured:
MBIA) Aaa/AAA 1,744,425
Michigan (2.50%)
2,500,000 Detroit Michigan Capital Improvement Series A, 5.00% due
4/1/2005 (Insured: Aaa/AAA 2,660,625
MBIA)
1,405,000 Detroit Michigan Series A, 6.00% due 4/1/2007 (Insured:
FGIC) (ETM)* Aaa/AAA 1,619,277
1,670,000 Jackson County Hospital Finance Authority Hospital
Revenue Series A, 5.00% due Aaa/NR 1,816,476
6/1/2006 (W.A. Foote Memorial Hospital Project; Insured:
AMBAC)
1,000,000 Kalamazoo Hospital Finance Authority Facility Revenue,
5.50% due 5/15/2005 Aaa/NR 1,071,250
(Bronson Methodist Hospital Project; Insured: MBIA)
2,000,000 Michigan Hospital Finance Authority Revenue, 5.375% due
7/1/2012 (Insured: FSA) Aaa/AAA 2,139,900
2,370,000 Michigan Hospital Finance Authority Revenue, 4.80% due
11/1/2017 pre-refunded Aaa/NR 2,469,279
7/1/2004 @100
10,000,000 Michigan Hospital Finance Authority Revenue Series A,
5.375% due 11/15/2033 put Aa2/AA 11,189,000
11/15/2007 (Ascension Health Project)
655,000 Michigan Housing Development Authority Single Family
Insured Mortgage Revenue Aa1/AA+ 655,714
Series A, 5.00% due 4/1/2010 (Insured: FHA/VA Mtgs)
1,000,000 Michigan State Job Development Authority Pollution
Control Revenue, 5.55% due Baa1/BBB 1,001,490
4/1/2009 (General Motors Corp. Project; Guarantee: GM)
2,500,000 Michigan Strategic Fund Refunding Detroit, 4.85% due
9/1/2030 put 9/1/2011 Aaa/NR 2,773,500
(Edison Co. Project; Insured: AMBAC)
1,000,000 Missouri State Health & Educational Facilities Authority
Revenue Series A, 5.00% NR/AA- 1,092,960
due 6/1/2011
1,000,000 Oakland County Economic Development Corp. Limited, 5.50%
due 6/1/2014 (LOC: A1/NR 1,065,740
First of America Bank-Central)
800,000 Oxford Area Community School District, 5.00% due 5/1/2012
(Guaranteed: School Aaa/AAA 902,912
Bond Loan Fund)
2,550,000 Wayne State University Revenues, 5.00% due 11/15/2004
(Insured: FGIC) Aaa/AAA 2,687,113
Minnesota (0.60%)
1,000,000 Breckenridge Health Facilities Revenue Catholic Health
Corp., 5.25% due Aaa/AAA 1,030,470
11/15/2013 (Insured: MBIA)
1,915,000 Osseo Independent School District 279 Crossover Refunding
Series B, 5.00% due Aa2/NR 2,084,363
2/1/2006
3,000,000 Southern Minnesota Municipal Power Agency Revenue
Refunding Series A, 5.00% due Aaa/AAA 3,256,980
1/1/2006 (Insured: AMBAC)
1,450,000 University of Minnesota Refunding Series A, 5.50% due
7/1/2006 Aa2/AA 1,617,866
500,000 Waconia Housing & Redevelopment Authority Public Project,
5.70% due 1/1/2012 Baa3/A- 500,730
Mississippi (0.30%)
1,020,000 Gautier Utility District Systems Revenue Refunding, 5.50%
due 3/1/2012 (Insured: Aaa/NR 1,190,207
FGIC)
700,000 Hattiesburg Water & Sewer Revenue Refunding Systems,
5.20% due 8/1/2006 Aaa/AAA 764,988
(Insured: AMBAC)
1,000,000 Mississippi Hospital Equipment & Facilities Authority
Revenue, 6.50% due Aaa/AAA 1,101,460
5/1/2006 (Refunding Mississippi Baptist Medical Center;
Insured: MBIA)
955,000 Ridgeland Multi Family Housing Revenue, 4.95% due
10/1/2007 (FNMA: NR/A1+ 1,000,401
Collateralized)
Missouri (0.20%)
825,000 Jackson County Public Building Corp. Leasehold Revenue
Series 1996, 6.00% due Aaa/AAA 881,686
12/1/2004 (Capital Improvement Project; Insured: MBIA)
1,275,000 Missouri Development Finance Board Healthcare Facilities
Revenue Series A, 4.80% A2/NR 1,334,657
due 11/1/2012 (Lutheran Home Aged Project; LOC: Commerce
Bank)
105,000 Missouri Environmental Improvement & Energy Resources
Authority Water Pollution Aaa/NR 106,524
Control Revenue, 6.60% due 12/1/2003
Montana (1.10%)
10,440,000 Forsyth Pollution Control Revenue Refunding, 5.00% due
10/1/2032 put 12/30/2008 Aaa/AAA 11,563,970
(Insured: AMBAC)
2,500,000 Forsyth Pollution Control Revenue Refunding, 5.20% due
5/1/2033 put 5/1/2009 Baa2/BBB+ 2,558,500
(Portland General Project)
Nebraska (1.40%)
1,995,000 Lancaster County School District 1, 4.00% due 7/15/2007
(Lincoln Public School Aa2/AAA 2,154,400
Project)
1,455,000 Madison County Hospital Authority Revenue Number 1, 5.25%
due 7/1/2010 (Faith NR/AA 1,611,922
Regional Health Services Project; Insured: Radian)
1,625,000 Madison County Hospital Authority Revenue Number 1, 5.50%
due 7/1/2012 (Faith NR/AA 1,819,740
Regional Health Services Project; Insured: Radian)
2,705,000 Nebraska IFA Tax Exempt Multi Family Housing Revenue
Refunding 1995-A, 5.50% due NR/AAA 2,794,589
12/1/2025 put 12/1/2005 (Willow Park Apartments Project;
Collateralized: FNMA)
5,000,000 Omaha Public Power District Nebraska Electric Revenue
Refunding Systems B, 5.00% Aa2/AA 5,638,550
due 2/1/2013
3,005,000 Omaha Public Power District Nebraska Electric Revenue
Series A, 7.50% due NR/AA 3,265,624
2/1/2006 (ETM)*
1,300,000 University of Nebraska Facilities Corp., 5.00% due
7/15/2008 Aa2/AA- 1,468,025
Nevada (1.70%)
5,000,000 Humboldt County Pollution Control Revenue Refunding,
6.55% due 10/1/2013 (Sierra Aaa/AAA 5,207,500
Pacific Project; Insured: AMBAC)
1,830,000 Las Vegas Special Refunding Local Improvement District
707 Series A, 5.125% due Aaa/AAA 1,991,516
6/1/2011 (Insured: FSA)
840,000 Nevada Colorado River Commission Power Delivery A, 7.00%
due 9/15/2008 Aa2/AA 994,190
1,510,000 Nevada Housing Division FNMA Multi Family Certificate A,
4.80% due 4/1/2008 NR/AAA 1,572,272
(Collateralized: FNMA)
1,000,000 Sparks Redevelopment Agency Tax Allocation Revenue
Refunding Series A, 5.70% due NR/AA 1,125,960
1/15/2009 (Insured: Radian)
1,000,000 Sparks Redevelopment Agency Tax Allocation Revenue
Refunding Series A, 5.70% due NR/AA 1,126,870
1/15/2010 (Insured: Radian)
1,285,000 Sparks Redevelopment Agency Tax Allocation Revenue
Refunding Series A, 5.70% due NR/AA 1,442,927
1/15/2011 (Insured: Radian)
5,000,000 Washoe County Hospital Facility Revenue Series 1993 A,
6.00% due 6/1/2015 A2/A+ 5,105,650
(Washoe Medical Center Project)
3,500,000 Washoe County School District, 5.50% due 6/1/2008
(Insured: FSA) Aaa/AAA 4,016,845
New Hampshire (0.60%)
500,000 New Hampshire Capital Appreciation General Obligation, 0%
due 7/1/2004 Aa2/AA+ 495,025
300,000 New Hampshire Health & Education Facilities Authority
Revenue, 1.00% due Aaa/NR 300,000
7/1/2032 put 7/1/2003 (St. Anselm College project; LOC:
Fleet Bank) (daily
demand notes)
1,500,000 New Hampshire Health & Education Facilities Authority
Revenue Anticipation Notes NR/SP-1 1,524,375
D, 3.50% due 4/30/2004
2,485,000 New Hampshire Industrial Development Authority Revenue,
5.50% due 12/1/2009 put NR/AA- 2,578,834
12/1/2004 (Central Vermont Public Services Project; LOC:
Citizens Bank)
2,600,000 New Hampshire Municipal Bond Bank Refunding Series A-2,
4.60% due 7/15/2004 Aaa/AAA 2,697,344
(Insured: MBIA)
New Jersey (0.20%)
1,000,000 New Jersey Health Care Facilities Financing Authority
Revenue, 7.00% due NR/AAA 1,000,160
7/1/2003 (Christ Hospital Project; Insured: Connie Lee)
1,920,000 Pequannock River Basin Regional Sewage Authority
Refunding Series M, 5.00% due Aaa/NR 2,054,438
12/1/2006 (Sewer Revenue Project; Insured: MBIA)
New Mexico (2.00%)
1,600,000 Albuquerque Educational Facilities Revenue Refunding,
1.20% due 10/15/2016 put VMIG1/AA 1,600,000
7/8/2003 (Albuquerque Academy Project; Insured: Bank of
America) (weekly demand
notes)
750,000 Farmington Pollution Control Revenue, 1.05% due 5/1/2024
put 7/1/2003 (LOC: Bank P1/A1+ 750,000
of America) (daily demand notes)
800,000 Farmington Pollution Control Revenue, 1.00% due 9/1/2024
put 7/1/2003 (LOC: P1/A1+ 800,000
Barclays Bank) (daily demand notes)
4,865,000 New Mexico Highway Commission Revenue Subordinated Lien
Tax Series B, 5.00% due Aaa/AAA 5,509,126
6/15/2011 (Insured: AMBAC)
9,625,000 New Mexico Housing Authority, Multi Family Housing
Revenue, 1.25% due 1/15/2033 NR/A1+ 9,625,000
put 7/8/2003 (Arbors/Courtyard Apartments Project)
(weekly demand notes)
8,000,000 New Mexico State, 4.00% due 9/1/2005
Aa1/AA+ 8,455,680
New York (7.10%)
1,000,000 Brookhaven Industrial Development Agency Civic Facility
Revenue, 4.375% due A2/BBB+ 1,047,530
11/1/2031 put 11/1/2006 (Methodist Retirement Community
Project; LOC: Northfork
Bank)
1,000,000 Hempstead Town Industrial Development Agency Refunding,
5.00% due 12/1/2008 Aaa/AAA 1,103,460
(American Fuel Co. Project; Insured: MBIA)
1,500,000 Long Island Power Authority Electric Systems Revenue
General Series A, 6.00% due Aaa/AAA 1,746,675
12/1/2007 (Insured: AMBAC)
2,350,000 Long Island Power Authority Electric Systems Revenue
Subordinated Series 8 Aaa/AAA 2,407,904
Subseries 8-D, 4.50% due 4/1/2010 put 4/1/2004 (Insured:
AMBAC)
7,000,000 Long Island Power Authority General Series B, 5.00% due
12/1/2006 Baa1/A- 7,625,170
4,535,000 Metro Transportation Authority New York Service Series B,
5.25% due 7/1/2007 A3/AA- 5,091,807
1,050,000 Monroe County Industrial Development Agency, 5.375% due
6/1/2007 (St. John NR/AA 1,175,769
Fisher College Project; Insured: Radian)
2,800,000 New York Adjusted Subseries E-3, 0.85% due 8/1/2023 put
7/1/2003 (daily demand VMIG1/A1+ 2,800,000
notes)
2,300,000 New York City Adjusted Series H, 1.40% due 8/1/2014 put
7/1/2003 (Insured: MBIA) VMIG1/A-2 2,300,000
(daily demand notes)
2,000,000 New York City General Obligation, 0.95% due 8/1/2020 put
7/1/2003 (daily demand VMIG1/A1+ 2,000,000
notes)
700,000 New York City General Obligation, 0.85% due 8/1/2021 put
7/1/2003 (daily demand VMIG1/A1+ 700,000
notes)
500,000 New York City General Obligation Series A, 7.00% due
8/1/2003 A2/A 502,415
710,000 New York City Housing Development Corp. Multi Family
Housing Revenue Refunding Aa2/AA 722,943
Series A, 5.50% due 11/1/2009
2,215,000 New York City Industrial Development Agency Civic
Facility, 5.25% due 6/1/2011 NR/A 2,434,706
(Lycee Francais De New York Project Series A; Insured:
ACA)
2,330,000 New York City Industrial Development Agency Civic
Facility, 5.25% due 6/1/2012 NR/A 2,563,140
(Lycee Francais De New York Project Series A; Insured:
ACA)
8,600,000 New York City Municipal Water Finance Authority Water &
Sewer Systems Revenue VMIG1/A1+ 8,600,000
2003 Sub Series A, 1.15% due 6/15/2018 put 7/1/2003 (LOC:
Bank of New York)
(daily demand notes)
10,450,000 New York City Transitional Finance Authority, 1.00% due
11/1/2022 put 7/1/2003 VMIG1/A1+ 10,450,000
(daily demand notes)
1,500,000 New York City Transitional Refunding Future Tax Secured
Series A, 4.50% due Aa2/AA+ 1,566,270
11/1/2004
1,040,000 New York Dormitory Authority, 6.00% due 7/1/2007
(Champlain Valley Physicians NR/AAA 1,196,666
Project; Insured: Connie Lee)
1,895,000 New York Dormitory Authority Revenues, 6.00% due 9/1/2008
pre-refunded 9/1/2005 NR/AA 1,992,498
(Norton Healthcare Project)
1,600,000 New York Dormitory Authority Revenues Mental Health
Services Facilities Aaa/AAA 1,810,208
Improvement B, 5.00% due 8/15/2010 (Insured: MBIA)
4,000,000 New York Dormitory Authority Revenues Series B, 5.25% due
11/15/2026 put Aaa/AAA 4,514,600
5/15/2012 (Insured: AMBAC)
560,000 New York Medical Care Facilities Finance Agency Revenue,
6.40% due 11/1/2014 Aaa/AAA 567,739
(Insured: FSA)
1,000,000 New York Series B, 5.50% due 8/1/2011 (Insured: MBIA)
Aaa/AAA 1,157,530
2,200,000 New York Series B, 0.95% due 10/1/2021 put 7/1/2003
(daily demand notes) VMIG1/A1+ 2,200,000
12,000,000 New York State Dormitory Authority Revenues, 4.00% due
12/15/2005 NR/AA 12,746,760
2,500,000 New York State Urban Development Corp. Revenue Refunding
Facilities A, 6.50% due Aaa/AAA 3,044,550
1/1/2011 (Correctional Capital Project; Insured: FSA)
1,320,000 New York Thruway Authority General Revenue Special
Obligation, 0% due 1/1/2006 NR/BBB 1,251,202
255,000 New York Urban Development Corp. Revenue University
Facilities Grants, 6.00% due A3/AA- 280,502
1/1/2006
3,425,000 New York Urban Development Corp. Series 7, 6.00% due
1/1/2006 A3/AA- 3,767,534
710,000 Oneida County Industrial Development Agency Series C,
6.00% due 1/1/2009 (Civic NR/AA 822,379
Facility Faxton Hospital Project; Insured: Radian)
2,000,000 Tobacco Settlement Financing Corp. New York Revenue Asset
Backed Series A-1C, NR/AA- 2,091,680
5.00% due 6/1/2012
1,000,000 Tobacco Settlement Financing Corp. New York Revenue Asset
Backed Series A-1C, NR/AA- 1,049,270
5.25% due 6/1/2012
170,000 Westchester County IDA Civic Facility Revenue, 6.25% due
4/1/2005 (Julia Dykman NR/NR 172,502
Project)
North Carolina (2.10%)
1,000,000 Charlotte Certificates Participation Series B, 5.00% due
6/1/2006 (FY Project) Aa1/AA+ 1,098,000
135,000 Gastonia Housing Corp. First Lien Rev Series A, 5.75% due
7/1/2004 (Golfview NR/A- 135,612
Village Square Apartment Project)
925,000 North Carolina Capital Facilities Finance Agency
Educational Facilities Revenue Aaa/AAA 1,026,944
Series A, 5.00% due 4/1/2007 (Johnson & Wales University
Project; Insured: XL
Capital)
2,860,000 North Carolina Eastern Municipal Power Agency Power
Systems Revenue, 6.125% due Aaa/AAA 3,367,393
1/1/2009 (Insured: MBIA)
3,000,000 North Carolina Eastern Municipal Power Agency Power
Systems Revenue Refunding Baa3/BBB 3,238,860
Series D, 5.375% due 1/1/2011
650,000 North Carolina Eastern Municipal Power Agency Power
Systems Revenue Series C, Baa3/BBB 696,455
5.25% due 1/1/2012
1,000,000 North Carolina Eastern Municipal Power Agency Power
Systems Series A, 5.50% due Baa3/BBB 1,089,160
1/1/2012
1,055,000 North Carolina Eastern Municipal Power Agency Power
Systems Series C, 5.25% due Baa3/BBB 1,125,727
1/1/2013
2,400,000 North Carolina Municipal Power Agency Number 1 Catawba
Electric Revenue, 6.00% Aaa/AAA 2,839,608
due 1/1/2010 (Insured: MBIA)
2,505,000 North Carolina Municipal Power Agency Number 1 Catawba
Electric Revenue Series Baa1/BBB+ 2,808,030
A, 5.50% due 1/1/2013
1,000,000 North Carolina Municipal Power Agency Number 1 Catawba
Electric Revenue Series Baa1/BBB+ 1,145,010
B, 6.375% due 1/1/2013
3,400,000 North Carolina Municipal Power Agency Series A, 6.00% due
1/1/2007 (Insured: Aaa/AAA 3,862,808
MBIA)
3,700,000 North Carolina Municipal Power Agency Series A, 6.00% due
1/1/2008 (Insured: Aaa/AAA 4,280,678
MBIA)
1,030,000 University of North Carolina Systems Pool Revenue
Refunding Series B, 5.00% due Aaa/AAA 1,170,935
4/1/2012 (Insured: AMBAC)
North Dakota (0.10%)
910,000 Grand Forks Health Care Systems Revenue Bond Series 1997,
6.25% due 8/15/2005 Aaa/AAA 996,031
(Altru Health System Project; Insured: MBIA)
Ohio (3.50%)
2,510,000 Bellefontaine Hospital Revenue Refunding, 6.00% due
12/1/2013 (Mary Rutan Health NR/BBB 2,595,516
Associates Project)
4,415,000 Cleveland Cuyahoga County Port Authority Revenue, 6.00%
due 11/15/2010 NR/NR 4,762,019
2,255,000 Cuyahoga County Hospital Revenue Refunding Series B,
6.00% due 1/15/2006 A2/A 2,476,193
(University Hospital Health Systems Project)
1,400,000 Hudson City Library Improvement, 6.35% due 12/1/2011
Aa2/NR 1,704,206
585,000 Lake County Sewer & Water District Improvement, 5.30% due
12/1/2011 Aa2/NR 649,572
1,680,000 Lorain County Hospital Revenue Refunding & Improvement
Catholic Healthcare A, A1/AA- 1,694,549
5.00% due 10/1/2003
1,200,000 Lorain County Hospital Revenue Refunding Catholic
Healthcare Partners B, 6.00% Aaa/AAA 1,394,352
due 9/1/2008 (Insured: MBIA)
1,300,000 Mahoning Valley District Water Refunding, 5.85% due
11/15/2008 (Insured: FSA) Aaa/AAA 1,528,228
770,000 Mahoning Valley District Water Refunding, 5.90% due
11/15/2009 (Insured: FSA) Aaa/AAA 918,063
2,250,000 Montgomery County Revenue, 6.00% due 12/1/2008 (Catholic
Health Initiatives Aa2/AA 2,587,320
Project)
2,385,000 Montgomery County Revenue, 6.00% due 12/1/2009 (Catholic
Health Initiatives Aa2/AA 2,762,498
Project)
1,530,000 Montgomery County Revenue, 6.00% due 12/1/2010 (Catholic
Health Initiatives Aa2/AA 1,767,380
Project)
1,000,000 Montgomery County Solid Waste Revenue, 6.00% due
11/1/2005 (Insured: MBIA) Aaa/AAA 1,105,650
2,000,000 Ohio State Building Authority Refunding Adult Corrections
Facilities, 5.00% due Aaa/AAA 2,214,640
10/1/2006 (Insured: FSA)
4,000,000 Ohio State Building Authority Refunding State
Correctional Facilities A, 4.60% Aa2/AA 4,036,720
due 10/1/2003
4,000,000 Ohio State Building Authority State Facilities, 6.125%
due 10/1/2011 Aa2/AA 4,132,280
pre-refunded 10/1/2003 @ 102 (Adult Control Building A
Project)
1,000,000 Ohio State Highway Capital Improvement Series C, 5.00%
due 5/1/2006 Aa1/AAA 1,096,600
5,000,000 Ohio State Unlimited Tax General Obligation Series A,
5.75% due 6/15/2010 Aa1/AA+ 5,804,800
680,000 Plain Local School District Capital Appreciation, 0% due
12/1/2006 (Insured: Aaa/NR 639,064
FGIC)
845,000 Plain Local School District Capital Appreciation, 0% due
12/1/2007 (Insured: Aaa/NR 766,550
FGIC)
975,000 Reading Revenue Development, 6.00% due 2/1/2009 (St.
Mary's Educational NR/AA 1,123,190
Institute Project; Insured: Radian)
Oklahoma (1.60%)
675,000 Broken Arrow, 4.40% due 12/1/2005
Aa3/AA- 676,607
1,235,000 Claremore Public Works Authority Revenue Refunding, 6.00%
due 6/1/2006 (Insured: Aaa/NR 1,389,634
FSA)
1,340,000 Claremore Public Works Authority Revenue Refunding, 6.00%
due 6/1/2007 (Insured: Aaa/NR 1,541,992
FSA)
740,000 Jenks Aquarium Authority Revenue First Mortgage, 5.50%
due 7/1/2010 (Insured: Aaa/NR 836,119
MBIA)
740,000 Oklahoma Development Finance Authority Health Facilities
Revenue, 5.75% due Aaa/AAA 856,187
6/1/2011 (Insured: AMBAC)
2,380,000 Oklahoma Authority Revenue Refunding Health Systems
Obligation Group Series A, Aaa/AAA 2,708,345
5.75% due 8/15/2007 (Insured: MBIA)
2,340,000 Oklahoma Authority Revenue Refunding Health Systems
Obligation Group Series A, Aaa/AAA 2,716,014
6.00% due 8/15/2010 (Insured: MBIA)
5,000,000 Oklahoma Housing Development Authority Revenue Lease
Purchase Program Series A, Aa3/NR 5,377,250
5.10% due 11/1/2005
2,650,000 Tulsa County Independent School District, 4.50% due
8/1/2006 Aa3/A+ 2,881,053
1,000,000 Tulsa Metropolitan Utility Authority Water Series A,
5.60% due 11/1/2004 NR/AA- 1,057,300
750,000 Tulsa Public Facilities Authority Solid Waste Steam &
Electric Revenue Refunding Aaa/AAA 790,035
Series 1994, 5.45% due 11/1/2004 (Ogden Martin Systems of
Tulsa Project;
Insured: AMBAC)
Oregon (0.40%)
1,070,000 Clackamas County Hospital Facility Authority Revenue
Refunding Series A, 5.50% NR/NR 1,070,385
due 9/15/2008 (Odd Fellows Home Project)
1,325,000 Emerald People's Utility District Revenue, 7.20% due
11/1/2003 (Insured: FGIC) Aaa/AAA 1,352,362
1,000,000 Medford Hospital Facilities Authority Revenue Series A,
5.25% due 8/15/2006 Aaa/AAA 1,102,300
(Asante Health Systems Project; Insured: MBIA)
640,000 Portland Oregon, 4.40% due 3/1/2004
Aa2/NR 654,867
750,000 Salem Oregon Water & Sewer Revenue, 6.00% due 6/1/2005
(Insured: MBIA) Aaa/AAA 816,150
Pennsylvania (2.90%)
1,505,000 Allegheny County Hospital Development Health Series B,
6.30% due 5/1/2009 (South Baa1/NR 1,564,583
Hills Health System Project)
1,000,000 Allegheny County Hospital Development Refunding, 4.40%
due 11/1/2005 (Health Aaa/AAA 1,064,480
Center UPMC Health Systems Project; Insured: MBIA)
395,000 Coatesville Area School District Series A Refunding,
5.00% due 10/1/2003 Aaa/AAA 399,041
(Insured: AMBAC)
305,000 Delaware County Authority Health Care Revenue, 6.00% due
11/15/2007 pre-refunded Aaa/NR 316,410
11/15/2005 (Mercy Health Corp. Project)
1,000,000 Delaware County Pennsylvania Authority Revenue, 5.50% due
11/15/2007 (Insured: Aaa/AAA 1,129,770
AMBAC)
4,250,000 Delaware County Pollution Control Refunding Series A,
5.20% due 4/1/2021 put A3/BBB+ 4,405,677
10/1/2004 (Peco Energy Co. Project)
1,000,000 Frazier Pennsylvania School District, 4.80% due 8/15/2003
NR/SP1+ 1,003,240
1,000,000 Geisinger Authority Health Systems Revenue, 5.50% due
8/15/2009 Aa2/AA- 1,121,630
1,605,000 Manheim Township School Authority School Revenue Series
1978, 6.625% due NR/AAA 1,797,793
12/1/2007 pre-refunded 12/1/2005
730,000 Montgomery County Higher Education & Health Authority,
6.25% due 7/1/2006 Baa3/NR 757,930
550,000 Montgomery County Higher Education & Health Authority,
6.375% due 7/1/2007 Baa3/NR 572,577
2,000,000 Montgomery County Industrial Development Authority
Pollution Control Revenue A2/BBB+ 2,073,260
Series A, 5.20% due 10/1/2030 put 10/1/2004 (Peco Energy
Co. Project)
150,000 Pennsylvania Higher Education Facilities Authority
Revenue, 6.15% due 4/1/2004 Baa3/NR 155,858
(ETM)*
1,500,000 Pennsylvania Higher Educational Facilities Authority
Health Services Revenue, A3/A 1,596,195
5.50% due 1/1/2009 (University Pennsylvania Health
Systems Project)
750,000 Pennsylvania Higher Educational Facility Series A, 6.00%
due 1/1/2005 A3/A 795,803
(University Pennsylvania Health Systems Project)
4,500,000 Pennsylvania State Higher Educational Facilities
Authority, 7.00% due 1/1/2009 A3/A 4,698,045
1,500,000 Pennsylvania State Higher Educational Facilities
Authority Revenue, 4.00% due VMIG1/NR 1,571,820
11/1/2032 put 11/1/2005 (LOC: Allied Irish Banks P.L.C.)
5,255,000 Pennsylvania State Unrefunded First Series, 5.00% due
4/15/2005 Aa2/AA 5,349,905
1,520,000 Philadelphia Authority For Industrial Development
Revenues, 8.00% due 1/1/2014 Aaa/NR 1,610,774
pre-refunded 7/1/2004
1,000,000 Philadelphia Hospital & Higher Education Facilities
Authority Revenue, 5.50% due A1/AA- 1,089,230
5/15/2006 (Jefferson Health Systems Project)
1,255,000 Sayre Pennsylvania Health Care Facilities Authority
Series A, 5.00% due 7/1/2008 Aaa/AAA 1,397,304
(Latrobe Area Hospital Project; Insured: AMBAC)
1,320,000 Sayre Pennsylvania Health Care Facilities Authority
Series A, 5.00% due 7/1/2009 Aaa/AAA 1,474,031
(Latrobe Area Hospital Project; Insured: AMBAC)
1,400,000 Sayre Pennsylvania Health Care Facilities Authority
Series A, 5.25% due 7/1/2011 Aaa/AAA 1,581,706
(Latrobe Area Hospital Project; Insured: AMBAC)
1,000,000 Sayre Pennsylvania Health Care Facilities Authority
Series A, 5.25% due 7/1/2012 Aaa/AAA 1,132,910
(Latrobe Area Hospital Project; Insured: AMBAC)
Rhode Island (2.10%)
860,000 Providence Public Building Authority Refunding Series B,
5.50% due 12/15/2003 Aaa/AAA 877,811
(Insured: FSA)
1,075,000 Providence Public Building Authority Refunding Series B,
5.75% due 12/15/2007 Aaa/AAA 1,244,828
(Insured: FSA)
1,000,000 Providence Public Building Authority School Project
Series B, 5.00% due Aaa/AAA 1,087,810
12/15/2005 (Insured: MBIA)
1,000,000 Providence Public Building Authority School Project
Series B, 4.00% due Aaa/AAA 1,079,550
12/15/2006 (Insured: MBIA)
1,000,000 Providence Public Building Authority School Project
Series B, 4.00% due Aaa/AAA 1,085,070
12/15/2007 (Insured: MBIA)
1,880,000 Providence Series C, 5.50% due 1/15/2012 (Insured: FSA)
Aaa/AAA 2,197,701
4,455,000 Rhode Island Bond Authority Revenue Refunding Series A,
5.00% due 10/1/2005 Aaa/AAA 4,814,519
(State Public Projects; Insured: AMBAC)
10,085,000 Rhode Island Bond Authority Revenue Refunding Series A,
5.00% due 10/1/2006 Aaa/AAA 11,160,565
(State Public Projects; Insured: AMBAC)
2,075,000 Rhode Island Economic Development Corp. Revenue, 5.75%
due 7/1/2010 (Providence NR/AA 2,358,611
Place Mall Project; Insured: Radian)
1,960,000 Rhode Island State Health & Education Building, 4.50% due
9/1/2009 (Butler NR/A+ 2,111,449
Hospital Project; LOC: Fleet National Bank)
South Carolina (1.40%)
2,050,000 Charleston County Certificates of Participation, 6.00%
due 12/1/2007 (Insured: Aaa/AAA 2,389,193
MBIA)
1,000,000 Medical University South Carolina Hospital Facilities
Revenue, 5.50% due Baa2/BBB+ 1,082,560
7/1/2005 (ETM)*
945,000 Piedmont Municipal Power Agency Electric Revenue, 6.375%
due 1/1/2006 (Insured: Aaa/AAA 1,052,059
FGIC)
400,000 Piedmont Municipal Power Agency Electric Revenue Variable
Refunding Series C, VMIG1/A1+ 400,000
1.20% due 1/1/2022 put 7/8/2003 (Insured: MBIA) (weekly
demand notes)
5,000,000 Richland County Environmental Improvement Revenue
Refunding Series A, 4.25% due Baa2/BBB 5,222,800
10/1/2007 (International Paper Co. Project)
2,000,000 South Carolina State Public Service Authority Revenue
Refunding Series D, 5.00% Aa2/AA- 2,166,180
due 1/1/2006
2,315,000 South Carolina State Public Service Authority Revenue
Refunding Series D, 5.00% Aa2/AA- 2,548,815
due 1/1/2007
1,000,000 South Carolina State Refunding, 4.50% due 4/1/2005
(Capital Improvement Project) Aaa/AAA 1,022,540
1,720,000 York County Refunding, 5.00% due 6/1/2006 (Insured: FSA)
Aaa/AAA 1,889,076
South Dakota (0.50%)
1,160,000 South Dakota Health & Educational Facilities Authority
Revenue, 5.00% due Aaa/AAA 1,286,730
9/1/2010 (Rapid City Regional Hospital Project; Insured:
MBIA)
1,100,000 South Dakota Health & Educational Facilities Authority
Revenue, 5.50% due Aaa/AAA 1,259,291
9/1/2011 (Rapid City Regional Hospital Project; Insured:
MBIA)
1,250,000 South Dakota Lease Revenue Series 93-B, 8.00% due
9/1/2003 (Insured: FSA) Aaa/AAA 1,264,400
2,235,000 South Dakota State Building Authority Lease Revenue,
6.625% due 9/1/2012 Aaa/AAA 2,300,620
pre-refunded 9/1/2004 @100 (Insured: AMBAC)
Tennessee (0.50%)
2,420,000 Clarksville Natural Gas Refunding, 5.00% due 11/1/2004
NR/BBB+ 2,510,726
870,000 Franklin Industrial Development Multi Family Refunding
Housing Series A, 5.75% Aaa/AAA 930,221
due 4/1/2010 (Insured: FSA)
1,000,000 Hamilton County Industrial Development Board, 5.75% due
9/1/2005 (Insured: FGIC) Aaa/AAA 1,093,810
1,050,000 Shelby County Tennessee Series A, 0% due 5/1/2011 pre-
refunded 5/1/2005 @ 69.561 Aa2/AA+ 713,580
985,000 Tennessee Housing Development Agency Mortgage Finance
Series A, 5.70% due A1/AA 1,006,611
7/1/2008
Texas (11.60%)
1,000,000 Amarillo Health Facilities Corp. Hospital Revenue, 5.50%
due 1/1/2011 (Baptist Aaa/NR 1,127,460
St. Anthony's Hospital Corp. Project; Insured: FSA)
1,000,000 Austin Texas Refunding, 5.00% due 3/1/2011
Aa2/AA+ 1,126,370
1,000,000 Austin Utility Systems Revenue Refunding Comb Series A,
5.60% due 5/15/2007 Aaa/AAA 1,023,510
(Insured: MBIA)
1,000,000 Bell County Health Facilities Development Corp. Revenue
Series A, 6.25% due Aaa/AAA 1,180,630
8/15/2010 (Scott & White Memorial Hospital Project;
Insured: MBIA)
1,800,000 Bexar County Housing Finance Corp. Multi Family Housing
Revenue, 5.00% due Aaa/NR 1,926,522
1/1/2011 (Insured: MBIA)
1,250,000 Cedar Hill Independent School District Capital
Appreciation Refunding, 0% due NR/AAA 950,713
8/15/2010 (Guarantee: PSF)
1,700,000 Clint Independent School District Refunding, 5.50% due
2/15/2011 (Guarantee: Aaa/AAA 1,967,359
PSF)
1,425,000 Clint Independent School District Refunding, 5.50% due
2/15/2012 (Guarantee: Aaa/AAA 1,637,667
PSF)
3,300,000 Coppell Independent School District Capital Appreciation
Refunding, 0% due NR/AAA 3,004,782
8/15/2007 (Guarantee: PSF)
1,025,000 Corpus Christi Business & Job Development Corp. Sales Tax
Revenue, 5.00% due Aaa/AAA 1,162,463
9/1/2012 (Refunding & Improvement Arena Project; Insured:
AMBAC)
2,200,000 Corpus Christi Independent School Refunding, 5.45% due
8/15/2003 (PSF Guarantee) Aaa/AA 2,208,184
2,000,000 Corpus Christi Utility Systems Revenue Refunding, 5.50%
due 7/15/2005 (Insured: Aaa/AAA 2,168,440
FSA)
4,070,000 Corpus Christi Utility Systems Revenue Refunding, 5.50%
due 7/15/2006 (Insured: Aaa/AAA 4,541,184
FSA)
2,000,000 Corpus Christi Utility Systems Revenue Refunding, 5.50%
due 7/15/2008 (Insured: Aaa/AAA 2,299,700
FSA)
4,780,000 Corpus Christi Utility Systems Revenue Refunding, 5.50%
due 7/15/2009 (Insured: Aaa/AAA 5,546,855
FSA)
1,735,000 Cypress Fairbanks Independent School District Unrefunded
Balance Series A, Aaa/AAA 1,742,686
6.125% due 8/1/2011 (PSF Guarantee)
1,080,000 Dallas Independent School District Unrefunded Balance,
5.60% due 8/15/2004 (PSF Aaa/AAA 1,086,124
Guarantee)
450,000 Dallas Tax Increment Financing Reinvestment Zone 2, 5.75%
due 8/15/2006 NR/AA 497,777
(Insured: Radian)
1,200,000 Dallas/Fort Worth Regional Airport Revenue Refunding
Joint Series A, 7.375% due Aaa/AAA 1,283,112
11/1/2011 (Insured: FGIC)
1,245,000 Duncanville Independent School District Capital
Appreciation Refunding Series B, Aaa/AAA 899,077
0% due 2/15/2012 (Guarantee: PSF)
4,945,000 Duncanville Independent School District Refunding Series
B, 0% due 2/15/2011 Aaa/AAA 3,761,513
(Guarantee: PSF)
4,500,000 Ector County Hospital District Hospital Revenue
Refunding, 5.50% due 4/15/2004 Aaa/AAA 4,652,010
(Insured: MBIA)
3,800,000 Fort Worth Water & Sewer Revenue Refunding & Improvement,
5.25% due 2/15/2011 Aa2/AA 4,256,266
1,390,000 Fort Worth Water & Sewer Revenue Series 2001, 5.25% due
2/15/2011 (Tarrant & Aa2/AA 1,585,226
Denton County Project)
2,005,000 Grapevine Texas, 5.25% due 2/15/2012 (Insured: FGIC)
Aaa/AAA 2,184,768
4,000,000 Gulf Coast Waste Disposal Authority Environmental
Facilities Revenue Refunding, Baa2/BBB+ 4,206,800
4.20% due 11/1/2006 (Occidental Project)
1,000,000 Gulf Coast Waste Disposal Authority Texas Revenue
Refunding, 5.00% due 10/1/2010 Aaa/AAA 1,134,330
(Bayport Area Systems Project; Insured: AMBAC)
1,000,000 Gulf Coast Waste Disposal Authority Texas Revenue
Refunding, 5.00% due 10/1/2011 Aaa/AAA 1,131,540
(Bayport Area Systems Project; Insured: AMBAC)
750,000 Harlingen Consolidated Independent School, 7.50% due
8/15/2009 (Guarantee: PSF) Aaa/AAA 952,335
500,000 Harris County Health Facilities Development Corp.
Hospital Revenue Refunding Aaa/AAA 604,075
Series A, 6.00% due 6/1/2012 (Memorial Hospital Systems
Project; Insured: MBIA)
4,410,000 Harris County Health Facilities Development Corp. Thermal
Utility Revenue, 5.45% Aaa/AAA 5,063,606
due 2/15/2011 (Insured: AMBAC)
600,000 Harris County Health Facilities Hospital Series A, 6.00%
due 6/1/2010 (Memorial Aaa/AAA 698,784
Hospital Systems Project; Insured: MBIA)
755,000 Harris County Hospital District Mortgage Revenue, 7.40%
due 2/15/2010 (Insured: Aaa/AAA 864,422
AMBAC) (ETM)*
1,045,000 Harris County Hospital District Mortgage Revenue
Unrefunded Balance Refunding, Aaa/AAA 1,236,277
7.40% due 2/15/2010 (Insured: AMBAC)
10,000,000 Harris County Hospital District Revenue Refunding, 5.75%
due 2/15/2011 (Insured: Aaa/AAA 11,452,300
MBIA)
2,000,000 Harris County Hospital District Revenue Refunding, 5.75%
due 2/15/2012 (Insured: Aaa/AAA 2,258,640
MBIA)
3,260,000 Harris County Sports Authority Revenue Capital
Appreciation Senior Lien Series Aaa/AAA 2,548,798
G, 0% due 11/15/2010 (Insured: MBIA)
3,000,000 Hays Consolidated Independent School District Capital
Appreciation, 0% due Aaa/AAA 2,241,450
8/15/2011 (Guarantee: PSF)
500,000 Irving Independent School District Capital Appreciation,
0% due 2/15/2004 Aaa/AAA 496,985
(Guarantee: PSF)
1,000,000 Lewisville Combination Contract Revenue, 4.125% due
5/1/2031 put 11/1/2006 NR/AA- 1,061,370
(Special Assessment Castle Hills Project Number 3; LOC:
Wells Fargo Bank)
500,000 Lower Colorado River Authority Revenue Refunding &
Improvement, 8.00% due Aaa/AAA 654,785
5/15/2010 (Insured: FSA)
3,065,000 Mesquite Independent School District Capital Appreciation
Refunding, 0% due NR/AAA 2,210,662
8/15/2011 (Guarantee: PSF)
1,415,000 Midlothian Independent School District Capital
Appreciation Refunding, 0% due Aaa/NR 1,253,365
2/15/2008 (Guarantee: PSF)
1,200,000 Midlothian Independent School District Capital
Appreciation Refunding, 0% due Aaa/NR 1,016,340
2/15/2009 (Guarantee: PSF)
700,000 Midtown Redevelopment Authority Texas Tax, 6.00% due
1/1/2010 (Insured: Radian) NR/AA 799,680
740,000 Midtown Redevelopment Authority Texas Tax, 6.00% due
1/1/2011 (Insured: Radian) NR/AA 849,572
2,275,000 New Caney Independent School District Capital
Appreciation Refunding, 0% due Aaa/AAA 2,222,379
2/15/2005 (Guarantee: PSF)
710,000 Northside Independent School District Series A, 2.25% due
8/1/2031 put 8/1/2004 VMIG1/A1+ 710,717
6,000,000 Sam Rayburn Municipal Power Agency Refunding, 5.50% due
10/1/2012 Baa2/BBB- 6,530,100
1,970,000 Socorro Independent School District Series A, 5.75% due
2/15/2011 (Guarantee: NR/AAA 2,250,252
PSF)
965,000 Southlake Tax Increment Certificates Obligation Series B,
0% due 2/15/2007 Aaa/AAA 852,886
(Insured: AMBAC)
1,120,000 Southlake Tax Increment Certificates Obligation Series B,
0% due 2/15/2008 Aaa/AAA 941,002
(Insured: AMBAC)
1,275,000 Southlake Tax Increment Certificates Obligation Series B,
0% due 2/15/2009 Aaa/AAA 1,009,583
(Insured: AMBAC)
1,440,000 Southlake Tax Increment Certificates Obligation Series B,
0% due 2/15/2010 Aaa/AAA 1,069,056
(Insured: AMBAC)
500,000 Spring Branch Independent School District, 7.50% due
2/1/2011 (Guarantee: PSF) Aaa/AAA 643,310
580,000 Tarrant County Health Facilities, 5.875% due 11/15/2007
(Adventist/Sunbelt A3/A 650,221
Health System Project)
650,000 Tarrant County Health Facilities, 6.00% due 11/15/2009
(Adventist/Sunbelt Health A3/A 741,065
System Project)
730,000 Tarrant County Health Facilities, 6.10% due 11/15/2011
(Adventist/Sunbelt Health A3/A 828,878
System Project)
1,400,000 Tarrant County Health Facilities Development Corp., 5.75%
due 2/15/2011 (Texas Aaa/AAA 1,574,258
Health Resources Project; Insured: MBIA)
1,000,000 Texarkana Health Facilities Development Corp. Hospital
Revenue, 5.75% due Aaa/AAA 1,145,230
10/1/2008 (Insured: MBIA)
1,945,000 Texas Affordable Housing Corp. M Series A, 4.85% due
9/1/2012 (Insured: MBIA) Aaa/AAA 2,096,768
2,000,000 Texas Affordable Housing Corp. Portfolio A, 4.85% due
9/1/2012 (Insured: MBIA) Aaa/AAA 2,156,060
1,000,000 Texas Public Finance Authority Building Revenue State
Preservation Project Aaa/AAA 1,184,530
Series B, 6.00% due 8/1/2011 (Insured: FSA)
6,700,000 Texas State Public Finance Authority Building Revenue
Capital Appreciation Aaa/AAA 6,554,744
Refunding, 0% due 2/1/2005 (Insured: MBIA)
7,000,000 Texas State Turnpike Authority Central Texas Turnpike
Systems Rev. Bond Aa3/AA 7,850,990
Anticipation Note 2nd Tier, 5.00% due 6/1/2008
1,000,000 Travis County, 5.00% due 3/1/2007
Aaa/AAA 1,108,230
500,000 Travis County, 5.00% due 3/1/2010
Aaa/AAA 554,820
2,300,000 Travis County Health Development Corp. Series A, 5.75%
due 11/15/2008 (Insured: Aaa/AAA 2,643,735
MBIA)
1,000,000 Travis County Health Facilities Development Corp. Revenue
Ascension Health Aaa/AAA 1,140,100
Credit Series A, 5.75% due 11/15/2007 (Insured: MBIA)
3,750,000 Travis County Health Facilities Development Corp. Revenue
Series A, 5.75% due Aaa/AAA 4,342,537
11/15/2009 (Insured: MBIA)
2,000,000 Travis County Health Facilities Development Series A,
5.75% due 11/15/2010 Aaa/AAA 2,293,920
(Ascension Health Project; Insured: MBIA)
1,000,000 University of Texas Permanent University Fund, 8.00% due
7/1/2003 (ETM)* Aaa/AAA 1,000,190
2,020,000 Washington County Health Facilities Development Corp.
Revenue, 5.35% due NR/A 2,227,939
6/1/2009 (Insured: ACA)
Utah (1.30%)
370,000 Intermountain Power Agency Power Supply Revenue Capital
Appreciation B, 0% due A1/A+ 364,605
7/1/2004
630,000 Intermountain Power Agency Power Supply Revenue Capital
Appreciation Series B, A1/A+ 624,229
0% due 7/1/2004 (ETM)*
385,000 Intermountain Power Agency Power Supply Revenue Series A,
5.20% due 7/1/2006 A1/A+ 392,742
(ETM)*
355,000 Intermountain Power Agency Power Supply Revenue Series A,
5.00% due 7/1/2012 Aaa/AAA 355,032
(Insured: MBIA) (ETM)*
4,000,000 Intermountain Power Agency Power Supply Revenue Series A,
5.50% due 7/1/2013 A1/A+ 4,080,440
(ETM)*
500,000 Intermountain Power Agency Utah Power Supply Series E,
6.25% due 7/1/2009 Aaa/AAA 600,515
(Insured: FSA)
2,500,000 Salt Lake County Housing Authority MFHR Refunding Series
1993, 5.40% due Aaa/NR 2,544,925
12/15/2018 put 12/15/2003 (Summertree Project; LOC: FNMA)
1,500,000 Salt Lake County Municipal Building, 5.50% due 10/1/2009
Aa1/AA+ 1,750,890
840,000 Snyderville Basin Sewer Improvement, 5.00% due 11/1/2006
(Insured: AMBAC) Aaa/AAA 934,811
510,000 Utah Board Regents Auxiliary Systems & Student Fee
Revenue Refunding Series A, NR/AA 573,169
5.00% due 5/1/2010
1,570,000 Utah County Municipal Building Authority Lease Revenue,
5.00% due 11/1/2010 Aaa/NR 1,781,636
(Insured: AMBAC)
265,000 Utah Housing Finance Agency Refunding Single Family
Mortgage, 5.35% due 7/1/2003 Aaa/AA 265,024
(Insured: FHA/VA)
500,000 Utah State University Hospital Board of Regents Revenue,
5.50% due 8/1/2005 Aaa/AAA 542,180
(Insured: AMBAC)
1,000,000 Utah State University Hospital Board of Regents Revenue,
5.25% due 8/1/2008 Aaa/AAA 1,117,530
(Insured: MBIA)
890,000 Utah Water Finance Agency Revenue Pooled Loan Financing
Program Series A, 5.00% Aaa/NR 1,009,144
due 10/1/2011 (Insured: FHA/VA)
Vermont (0.10%)
880,000 Vermont Educational & Health Buildings Financing Agency
Revenue, 6.00% due NR/BBB 940,183
9/1/2006 (Northwestern Medical Center Project)
Virginia (1.90%)
1,010,000 Alexandria Industrial Development Authority Revenue,
5.75% due 10/1/2007 Aaa/AAA 1,164,530
(Insured: AMBAC)
1,070,000 Alexandria Industrial Development Authority Revenue,
5.75% due 10/1/2008 Aaa/AAA 1,251,622
(Insured: AMBAC)
1,130,000 Alexandria Industrial Development Authority Revenue,
5.75% due 10/1/2009 Aaa/AAA 1,335,931
(Insured: AMBAC)
1,195,000 Alexandria Industrial Development Authority Revenue,
5.75% due 10/1/2010 Aaa/AAA 1,418,847
(Insured: AMBAC)
4,000,000 Capital Region Airport Commission Virginia Refunding
Series B, 8.125% due Aaa/AAA 4,339,040
7/1/2014 (Insured: AMBAC)
1,500,000 Chesterfield County Industrial Development, 5.50% due
10/1/2009 (Vepco Project) A3/BBB+ 1,605,270
2,075,000 Fairfax County Economic Development Authority Lease
Revenue, 5.30% due 5/15/2004 Aa1/AA+ 2,152,626
(Government Center Project)
530,000 Hampton General Obligation Refunding Bond, 5.85% due
3/1/2007 Aa2/AA 534,145
500,000 Hampton Hospital Facilities Revenue Series A, 5.00% due
11/1/2005 Aa2/AA 537,420
3,000,000 Hampton Redevelopment Housing Authority Multi Family
Housing Refunding Series Baa1/A1+ 3,072,900
1994, 7.00% due 7/1/2024 put 7/1/2004 (Chase Hampton
Apartments Project; LOC:
Credit Suisse)
1,460,000 Norton Industrial Development Authority Hospital Revenue
Refunding Improvement, NR/A 1,651,523
5.75% due 12/1/2012 (Norton Community Hospital Project;
Insured: ACA)
3,000,000 Suffolk Redevelopment Housing Authority MFHR, 7.00% due
7/1/2024 put 7/1/2004 Baa2/NR 3,048,870
(Chase Heritage @ Dulles Project)
3,000,000 Suffolk Redevelopment Housing Authority Refunding, 4.85%
due 7/1/2031 put Aaa/NR 3,256,350
7/1/2011 (Windsor at Potomac Project; Collateralized:
FNMA)
Washington (3.40%)
1,760,000 Energy Northwest Washington Wind Project Revenue Series
A, 4.95% due 7/1/2008 A3/A- 1,872,869
705,000 Energy Northwest Washington Wind Project Revenue Series
B, 4.95% due 7/1/2008 A3/A- 750,212
785,000 Energy Northwest Washington Wind Project Revenue Series
B, 5.20% due 7/1/2010 A3/A- 832,940
950,000 Grant County Priest Rapids Hydroelectric, 6.00% due
1/1/2006 (Insured: AMBAC) Aaa/AAA 1,052,144
1,885,000 King County School District Number 414 Lake Washington
Refunding, 3.00% due Aa1/AA 1,936,837
12/1/2004
1,880,000 Lewis County Washington Public Utility District
Refunding, 5.00% due 10/1/2007 Aa1/AA- 2,088,492
575,000 Seattle Municipal Light & Power Revenue, 5.45% due
11/1/2010 pre-refunded Aa3/A+ 595,194
11/1/03 @ 102
1,425,000 Seattle Municipal Light & Power Revenue, 5.45% due
11/1/2010 Aa3/A+ 1,472,994
1,000,000 Seattle Municipal Light & Power Revenue Refunding, 4.75%
due 7/1/2007 (Insured: Aaa/AAA 1,098,810
FSA)
2,655,000 Seattle Municipal Light & Power Revenue Refunding, 5.30%
due 11/1/2007 Aa3/A+ 2,746,916
pre-refunded 11/1/2003 @ 102
1,000,000 Spokane Regional Solid Waste Refunding, 5.00% due
12/1/2005 (Insured: AMBAC) Aaa/AAA 1,080,040
1,000,000 Spokane Regional Solid Waste Refunding, 5.00% due
12/1/2006 (Insured: AMBAC) Aaa/AAA 1,102,850
1,000,000 Spokane Regional Solid Waste Refunding, 5.25% due
12/1/2007 (Insured: AMBAC) Aaa/AAA 1,125,380
550,000 Tacoma Conservation Systems Project Revenue, 6.20% due
1/1/2006 (Tacoma Public Aa1/AA- 591,090
Utilities Project)
800,000 University of Washington Alumni Association Lease Revenue
Refunding, 4.50% due Aaa/AAA 829,088
8/15/2004 (University of Washington Medical Center
Project; Insured: MBIA)
900,000 University of Washington Alumni Association Lease Revenue
Refunding, 4.50% due Aaa/AAA 953,136
8/15/2005 (University of Washington Medical Center
Project; Insured: MBIA)
1,000,000 University of Washington Alumni Association Lease Revenue
Refunding, 5.00% due Aaa/AAA 1,091,880
8/15/2006 (University of Washington Medical Center
Project; Insured: MBIA)
1,100,000 University of Washington Alumni Association Lease Revenue
Refunding, 5.00% due Aaa/AAA 1,215,753
8/15/2007 (University of Washington Medical Center
Project; Insured: MBIA)
1,500,000 Washington Health Care Facilities, 5.50% due 12/1/2009
(Providence Services Aaa/AAA 1,716,705
Project; Insured: MBIA)
2,500,000 Washington Public Power Supply Refunding Series A, 5.00%
due 7/1/2011 (Insured: Aaa/AAA 2,783,750
FSA)
1,140,000 Washington Public Power Supply System Refunding Revenue,
0% due 7/1/2008 Aa1/AA- 986,590
(Nuclear Project Number 3)
1,655,000 Washington Public Power Supply System Series 96-A, 6.00%
due 7/1/2006 (Insured: Aaa/AAA 1,864,540
MBIA)
1,000,000 Washington Public Power Supply Systems, 6.00% due
7/1/2008 (Nuclear Project Aaa/AAA 1,168,760
Number 1; Insured: AMBAC)
3,445,000 Washington Public Power Supply Systems Refunding Series
B, 0% due 7/1/2004 Aa1/AA- 3,399,836
(Nuclear Project Number 3)
1,000,000 Washington Public Power Supply Systems Revenue Refunding
Series A, 5.10% due Aaa/AAA 1,128,790
7/1/2010 (Nuclear Project Number 2; Insured: FSA)
830,000 Washington Public Power Supply Systems Revenue Refunding
Series B, 0% due Aa1/AA- 718,307
7/1/2008 (Nuclear Project Number 3)
1,000,000 Washington State Health Care Facilities Authority
Revenue, 4.00% due 7/1/2005 Aaa/AAA 1,046,310
(Overlake Hospital Medical Center Project; Insured: MBIA)
985,000 Washington State Higher Education Facilities Authority
Revenue Series A, 5.70% Aaa/AAA 999,568
due 11/1/2011 (Insured: MBIA)
900,000 Washington State Public Power Supply, 5.40% due 7/1/2012
(Insured: FSA) Aaa/AAA 1,037,835
5,000,000 Washington State Public Power Supply Systems Revenue
Refunding Series A, 6.00% Aaa/AAA 5,653,800
due 7/1/2007 (Nuclear Project Number 1; Insured: AMBAC)
West Virginia (0.20%)
585,000 Harrison County Nursing Facility Revenue Refunding,
5.625% due 9/1/2010 (Salem NR/NR 593,898
Health Care Corp. Project; LOC: Fleet Bank)
193,938 Marion County SFMR Series 1992, 7.75% due 7/10/2011
NR/NR 199,418
2,000,000 West Virginia Statewide Commission Lottery Revenue Series
1997-A, 5.50% due Aaa/AAA 2,165,120
7/1/2005 (Insured: MBIA)
Wisconsin (0.70%)
1,500,000 Bradley Pollution Control Revenue, 6.75% due 7/1/2009
(Owens Illinois Waste B1/BB+ 1,851,885
Project) (ETM)*
3,325,000 Milwaukee Wisconsin, 5.00% due 3/15/2005
Aa2/AA 3,533,511
800,000 Wisconsin State Health & Educational Facilities
Authority, 5.90% due 8/15/2005 Aaa/AAA 869,960
(Wheaton Franciscan Services Inc. Project; Insured: MBIA)
2,000,000 Wisconsin State Health & Educational Facilities Authority
Revenue, 6.00% due Aaa/AAA 2,288,360
8/15/2008 (Aurora Health Care Inc. Project; Insured:
MBIA)
500,000 Wisconsin Transportation Revenue Series A, 5.50% due
7/1/2012 pre-refunded Aa3/AA- 587,915
7/1/2010 @ 100
Wyoming (0.30%)
1,615,000 West Park Hospital District Revenue, 5.90% due 7/1/2010
(Insured: ACA) NR/A 1,745,750
2,500,000 Wyoming Farm Loan Board Revenue, 0% due 4/1/2009
NR/AA- 2,093,100
Municipal Trust Certs. (0.70%)
2,778,427 Clipper Caraval Tax Exempt Certificate Series 1998, 4.50%
due 10/6/2005 Aaa/NR 2,825,632
(Insured: AMBAC)
5,600,000 Municipal Tax Exempt Trust Certificate Class A1 to A5,
4.60% due 8/6/2008 NR/AAA 5,922,896
(Insured: AMBAC)
TOTAL INVESTMENTS (100%) (Cost $1,249,257,949)
$ 1,316,577,099
<FN>
+ Credit ratings are unaudited.
* Escrowed to maturity
See notes to financial statements.
</FN>
Report of independent auditors
Thornburg Limited Term Municipal Fund, Inc. - National Portfolio June 30,
2003
To the Board of Directors and Shareholders of
Thornburg Limited Term Municipal Fund, Inc. - National 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.- National Portfolio (the
"Fund") at June 30, 2003, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the four years
in the period then ended, in conformity with accounting principles
generally accepted in the United States of America. 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 audits. We conducted our audits of these financial statements in
accordance with auditing standards generally accepted in the United States
of America, 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 audits, which included
confirmation of securities at June 30, 2003 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion. The
financial highlights for the year ended June 30, 1999 were audited by other
independent accountants whose report dated July 27, 1999 expressed an
unqualified opinion on those financial highlights.
PricewaterhouseCoopers LLP
New York, New York
July 30, 2003
Index Comparisons
Thornburg Limited Term Municipal Fund, Inc. - National Portfolio June 30,
2003
LIMITED TERM MUNICIPAL FUND - NATIONAL PORTFOLIO
Index Comparison
Compares performance of Limited Term Municipal Fund - National Portfolio,
the Lehman 5-Year General Obligation Bond Index and the Consumer Price
Index for the periods ended June 30, 2003. On June 30, 2003, 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 4.9
years and 4.3 years, respectively. Class C shares became available on
September 1, 1994. Past performance of the Index and the Fund may not be
indicative of future performance. The performance data and graph do not
reflect the deduction of taxes that a shareholder would pay on
distributions or the redemption of fund shares.
Thornburg Limited Term Municipal Fund - National Portfolio Class A Total
Returns, Since September 30, 1984, versus Lehman 5 Year GO Index and
Consumer Price Index (C.P.I.)
Lehman 5 yr. GO Index
Fund A Shares
CPI
Class A Shares Average Annual Total Returns
(at max. offering price) (year ended 6/30/03)
One year: 4.38%
Five years: 4.58%
Ten years: 4.60%
Fifteen years: 5.66%
>From inception (9/28/84): 6.36%
Thornburg Limited Term Municipal Fund - National Portfolio Class C Total
Returns, Since Inception, versus Lehman 5 Year GO Index and Consumer Price
Index
(C.P.I.)
Lehman 5 yr. GO Index
Fund C Shares
CPI
Class C Shares Average Annual Total Returns
(year ended 6/30/03)
One year: 5.78%
Five years: 4.51%
>From inception (9/1/94): 4.59%
Investors sometimes ask us to compare Limited Term Municipal Fund -
National Portfolio to money market fund returns. These investments have
certain differences, and investors in Limited Term Municipal Fund -
National Portfolio took more risk than money market fund investors to earn
their higher returns.
*Prior to 7/5/96 the illustrations include actual returns of the Class A
shares adjusted for the lower Institutional expenses. Note 1: Future
increases, if any, of any of these investments may bear no relationship to
prior increases. Quotations for the money fund averages are based upon 30-
day yield quotations for tax-exempt money funds as quoted in "Lipper Tax-
exempt Money Market Index" for the months covered by this analysis. The
increase for the Class I shares of Thornburg Limited Term Municipal Fund -
National Portfolio is based upon the dividends paid for the months covered
by this analysis, the beginning NAV price at $13.59 per share and the
ending NAV at $14.01 per share. These investments returned the $10,000
initial investment in addition to the amounts shown above. Note 2: This
analysis does not take into account the effect, if any, caused by state and
local income taxes. The portion of the increase, if any, of Thornburg
Limited Term Municipal Fund - National Portfolio representing appreciation
of the share price is assumed to be taxed at a 15% federal tax rate. The
average money market fund increases shown above may differ from the return
of a particular money market fund. It is not possible to invest in these
money fund averages.
Note 3: Generally, money market funds seek to maintain an investment
portfolio with an average maturity of 90 days or less. Thornburg Limited
Term Municipal Fund - National Portfolio invests in short-to-intermediate
maturity municipal obligations. The net asset value of the money funds did
not fluctuate. The net asset value of the Class I shares of LTMIX did vary
from time to time, and will continue to vary in the future due to the
effect of changes in interest rates on the value of the investments the
Fund holds. The analysis assumes that the investor received the net asset
value of the shares owned, plus accrued income, at time of sale.
Redemptions are made at the then current net asset value, which
may give you a gain or loss when you sell your shares.
Note 4: This analysis assumes that the dividends from each of these
investment vehicles were reinvested and compounded monthly. Most money
funds declare dividends daily and pay them monthly. Thornburg Limited Term
Municipal Fund - National Portfolio also declares dividends daily and pays
them monthly.
Note 5: An investment in a money market fund is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government
agency. Although a money market fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in
such funds.
Directors and Officers
Thornburg Limited Term Municipal Fund - National Portfolio
Name, Address (1) Position(s) Term of Principal
Member of Other
And Age Held with Office Occupation(s)
Portfolios Directorships
Fund (2) and During Past
in Fund Held by
Length of 5 Years
Complex Director or
Time
Overseen Nominee for
Served
by Director Director
or Nominee
for Director (2)
Interested Directors
Garrett Thornburg, Chairman Director CEO, Chairman and
Controlling Twelve None
57 of the Since Shareholder of Thornburg
Board of 1984; Investment Management, Inc.
Directors, (4) (investment adviser) and
Thornburg
Treasurer (3) Securities Corporation
(securities
dealer); Chairman of
Trustees of Thornburg
Investment Trust
(registered investment
company); CEO and Chairman
of Thornburg Mortgage, Inc.
(real estate investment
trust); Chairman of
Thornburg Mortgage Advisory
Corporation (investment
manager to Thornburg
Mortgage, Inc.).
Independent Directors
David D. Chase, Director Director Chairman, President and CEO
Twelve Trustee,
62 since 2001 of general partner of
Vestor Thornburg
(4) Partners, LP, Santa Fe, NM
Investment Trust
(private equity fund);
Chairman
and CEO of Vestor Holdings,
Inc., Santa Fe, NM
(merchant
bank).
Eliot R. Cutler, Director Director Partner, Akin, Gump,
Strauss, Two Director of
56 since 1984 Hauer & Feld, LLP,
Washington Skanska, AB
(4) D.C. (law firm) since
November (construction services)
2000; partner, Cutler &
Stanfield,
Washington, D.C. (law firm)
until November 2000.
James E. Monaghan, Jr., Director Director President, Monaghan &
Two None
56 since 1984 Associates, Inc. and
(4) Strategies West, Inc.
Denver,
Colorado (business
consultants).
A.G. Newmyer III, Director Director Private investor and
management Two None
53 since 1984 consultant.
(4)
Advisory Director
Richard M. Curry, Advisory Advisory Managing Director, McDonald
Not applicable None
60 Director (6) Director (5) & Co., Cincinnati, Ohio
Since (securities dealer) and
District
2002 (6) President, Key Bank,
Cincinnati,
Ohio, since March 2000.
Officers of the Fund (who are not Directors) (7)
Brian J. McMahon, President President President and Managing
Director Not applicable Not applicable
47 since 1997 of Thornburg Investment
(4) Management, Inc.; President
of Thornburg Investment
Trust
Dawn B. Fischer, Secretary Secretary Vice President, Secretary
and Not applicable Not applicable
56 Since 1984 Managing Director of
Thornburg
(4) Investment Management,
Inc.;
Secretary and Assistant
Treasurer
of Thornburg Investment
Trust; Secretary of
Thornburg
Securities Corporation;
Vice
President, Daily Tax Free
Income Fund, Inc.
(registered
investment company).
Steven J. Bohlin, Vice President Vice Vice President and
Managing Not applicable Not applicable
44 President Director of Thornburg
Investment
Since 1991 Management, Inc.; Vice
President
(4) and Treasurer of Thornburg
Investment Trust.
George T. Strickland, Vice President Vice Vice President and
Managing Not applicable Not applicable
40 Treasureer President Director of Thornburg
Investment
Since 1999; Management, Inc.; Vice
President
Treasurer of Thornburg Investment
Trust.
since 2003
Leigh Moiola, Vice President Vice Vice President, and
Managing Not applicable Not applicable
36 President Director since 1998, of
Since 1999 Thornburg Investment
Management,
(4) Inc.; Vice President of
Thornburg
Investment Trust since
2001.
Kenneth Ziesenheim, Vice President Vice Managing Director of
Thornburg Not applicable Not applicable
49 President Investment Management,
Inc.;
Since 1995 President of Thornburg
Securities
(4) Corporation; Vice
President of
Thornburg Investment
Trust.
Kerry D. Lee, Vice President Vice Associate of Thornburg
Investment Not applicable Not applicable
36 President Management, Inc.; Vice
President
Since 1999 of Thornburg Investment
Trust
(4) since 1999.
Dale Van Scoyk, Vice President Vice Account Manager for
Thornburg Not applicable Not applicable
56 President Investment Management,
Inc.
Since 1999 1997-1999, and Managing
Director
(4) and Vice President since
1999;
Vice President of
Thornburg
Investment Trust since
1998; National Account
Manager for Heartland
Funds
1993-1997.
Joshua Gonze, Vice President Vice Associate and Vice
President of Not applicable Not applicable
40 President Thornburg Investment
Management,
Since 2001 Inc. since 1999; Vice
President of
(4) Thornburg Investment Trust
since
2001
Christopher Ihlefeld, Vice President Vice Associate and Vice
President of Not applicable Not applicable
32 President Thornburg Investment Mgt,
Inc.;
Since 1999 Assistant Vice President
of
(4) Thornburg Investment Trust
since 1999.
<FN>
(1) Each person's address is 119 East Marcy Street, Suite 202, Santa Fe, New
Mexico 87501.
(2) The Fund is one of two separate investment "funds" or "portfolios" of
Thornburg Limited Term Municipal Fund, Inc. (the "Company"), organized as a
Maryland corporation. The Company currently has two funds, which are
considered for certain regulatory purposes as parts of a "fund complex" with
the nine funds of Thornburg Investment Trust. Thornburg Investment
Management, Inc. is the investment adviser to, and manages, the eleven funds
of the Company and Thornburg Investment Trust.
(3) Mr. Thornburg is considered an "interested" Director under the Investment
Company Act of 1940 because he is a director and controlling shareholder of
the investment adviser, Thornburg Investment Management, Inc., and is the
sole director and controlling shareholder of Thornburg Securities
Corporation, the distributor of shares for the Company.
(4) Thornburg Limited Term Municipal Fund, Inc.'s Amended By-Laws provide that
each Director shall serve in office until the next annual meeting or the
election and qualification of the Director's successor. In accordance with
Maryland law, the Company does not hold an annual meeting each year; it may
hold shareholder meetings as circumstances require. Officers serve at the
pleasure of the Board of Directors.
(5) Mr. Cutler may be considered an "interested" Director of the Company because
he is associated with a partnership which receives a portion of Thornburg
Investment Management, Inc.'s revenues.
(6) As an Advisory Director, Mr. Curry serves at the pleasure of the Board of
Directors.
(7) Assistant vice presidents, assistant secretaries and assistant treasurers
are not shown.
</FN>
The Fund's Statement of Additional Information includes additional
information about the Directors and is available, without charge and upon
request by calling 1-800-847-0200
The Fund's Statement of Additional Information includes additional
information about the Directors and is available, without charge and upon
request by calling 1-800-847-0200
Thornburg limited term municipal fund national portfolio - a shares
Outperformed Tax-Exempt Money Market Funds Investors sometimes ask us to
compare Limited Term Municipal Fund - National Portfolio to money market
fund returns. These investments have certain differences, and investors in
Limited Term Municipal Fund - National Portfolio took more risk than money
market fund investors to earn their higher returns.
Return from a hypothetical $10,000 investment 6/30/93 through 6/30/03
(after sales charges and fund expenses)
Lipper Tax-exempt
Money Market Index
$2,986
Thornburg Limited Term Municipal Fund -
Nat'l Portfolio A Shares
(after capital gains taxes)
$5,596
The chart above is for the Fund's Class A shares only. Class C and Class I
shares have different sales charges and expenses. See the inside front
cover page for the 30-day SEC yield and the total returns at the maximum
offering prices for one year, five years, ten years, fifteen years, and
since inception for Class A and Class C shares of the Fund.
Note 1: Future increases, if any, of any of these investments may bear no
relationship to prior increases. Quotations for the money fund averages are
based upon 30-day yield quotations for tax-exempt money funds as quoted in
"Lipper Tax-exempt Money Market Index" for the months covered by this
analysis. The increase for the Class A shares of Limited Term Municipal
Fund - National Portfolio is based upon the dividends paid for the months
covered by this analysis, the beginning offering price at $13.80 per share
and the ending NAV at $14.01 per share. These investments returned the
$10,000 initial investment in addition to the amounts shown above.
Note 2: This analysis does not take into account the effect, if any, caused
by state and local income taxes. The portion of the increase, if any, of
Limited Term Municipal Fund - National Portfolio representing appreciation
of the share price is assumed to be taxed at a 15% Federal tax rate. The
average money market fund increases shown above may differ from the return
of a particular money market fund. It is not possible to invest in these
money fund averages.
Note 3: Generally, money market funds seek to maintain an investment
portfolio with an average maturity of 90 days or less. Limited Term
Municipal Fund - National Portfolio invests in short-to-intermediate
maturity municipal obligations. The net asset value of the money funds did
not fluctuate. The net asset value of the Class A shares of LTMFX did vary
from time to time, and will continue to vary in the future due to the
effect of changes in interest rates on the value of the investments the
Fund holds. The analysis assumes that the investor received the net asset
value of the shares owned, plus accrued income, at time of sale.
Redemptions are made at the then current net asset value, which may give
you a gain or loss when you sell your shares.
Note 4: This analysis assumes that the dividends from each of these
investment vehicles were reinvested and compounded monthly. Most money
funds declare dividends daily and pay them monthly. Limited Term Municipal
Fund - National Portfolio also declares dividends daily and pays them
monthly.
Note 5: An investment in a Money Market Fund is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government
agency. Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Fund.
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
www.thornburg.com
This report is submitted for the general information of the shareholders of
the Fund. It is not authorized for distribution to prospective investors in
the Fund unless preceded or accompanied by an effective prospectus, which
includes information regarding the Fund's objectives and policies,
experience of its management, marketability of shares, and other
information. Performance data quoted represent past performance and do not
guarantee future results.
STATEMENT OF ADDITIONAL INFORMATION
(For Holders of Institutional Class Shares)
Relating to the Acquisition of the Assets of
THORNBURG LIMITED TERM MUNICIPAL FUND NATIONAL PORTFOLIO
a series of THORNBURG LIMITED TERM MUNICIPAL FUND, INC.
119 East Marcy Street
Santa Fe, New Mexico 87501
(800) 847-0200
by and in exchange solely for shares of
THORNBURG LIMITED TERM MUNICIPAL FUND, INC.
a series of THORNBURG INVESTMENT TRUST
119 East Marcy Street
Santa Fe, New Mexico 87501
(800) 847-0200
This Statement of Additional Information, relating specifically to
the proposed acquisition of substantially all of the assets of Thornburg
Limited Term Municipal Fund National Portfolio (the "Fund"), a series of
Thornburg Limited Term Municipal Fund, Inc., by Thornburg Limited Term
Municipal Fund (the "New Fund"), a series of Thornburg Investment Trust, in
exchange solely for voting shares of the New Fund, consists of this cover
page and the following documents, each of which is attached hereto and
incorporated by reference herein:
1. Thornburg Limited Term Municipal Funds Institutional Class
Shares Statements of Additional Information, [to be added by amendment];
2. Thornburg Institutional Class Shares Statement of Additional
Information dated February 1, 2004, and
3. Thornburg Limited Term Municipal Fund National Portfolio
(Institutional Class shares) Annual Report, June 30, 2003; and
4. Thornburg Limited Term Municipal Fund National Portfolio
(Institutional Class Shares) Semiannual Report, December 31, 2003.
This Statement of Additional information is not a prospectus. A
Prospectus/Proxy Statement dated _________________, 2004 relating to the
above referenced acquisition may be obtained from Thornburg Investment
Trust at the number and address shown above. This Statement of Additional
Information relates to, and should be read with, the Prospectus/Proxy
Statement.
The financial statements of Thornburg Limited Term Municipal Fund
National Portfolio contained in its Annual Report to shareholders for the
fiscal year ended June 30, 2003 have been audited by
PricewaterhouseCoopers, LLP, that Fund's independent auditors.
The date of this Statement of Additional Information is _________,
2004.
Thornburg Limited Term Municipal Fund National Portfolio I Shares
Annual Report
June 30, 2003
Thornburg Limited Term Municipal Fund - National Portfolio ALL DATA AS OF
06/30/03.Fund facts: Thornburg Limited Term Municipal Fund - National
Portfolio
I Shares
Annualized Distribution Rate (at NAV) 3.31%
SEC Yield 1.98%
NAV $14.01
Maximum Offering Price $14.01
Total returns: (Annual Average)
One Year 6.36%
Three Years 6.72%
Five Years 5.27%
Since Inception 5.47%
Inception Date 7/5/96
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.
The data quoted represent past performance and may not be construed as a
guarantee of future results.
The SEC Yield is computed in accordance with SEC standards measuring the
net investment income per share over a specified 30-day period expressed as
a percentage of the maximum offering price of the Fund's shares at the end
of the period.
The distribution rate is calculated by taking the sum of the month's total
distribution factors and dividing this sum by a 30-day period and
annualizing to a 360-day year. The value is then divided by the ending NAV
to arrive at the annualized distribution yield. The yield is calculated on
a periodic basis and is subject to change depending on the Fund's NAV and
current distributions.
Letter to shareholders
Thornburg Limited Term Municipal Fund, Inc. - National Portfolio July 14,
2003
Dear Fellow Shareholder:
I am pleased to present the annual report for the National Portfolio of
Thornburg Limited Term Municipal Fund. The net asset value of the I shares
increased by 36 cents to $14.01 during the year ending June 30, 2003. If
you were with us for the entire period, you received dividends of 49.5
cents per share. If you reinvested dividends, you received 50.3 cents per
share.
Over the last year, interest rates on high-quality municipal bonds have
fallen substantially. Falling interest rates drive up the price of most of
the bonds owned by the Fund and this has resulted in an increasing share
price.
Your Fund is a laddered portfolio of over 640 municipal obligations from 49
states. Approximately 93% of the bonds are rated A or better by one of the
major rating agencies. Today, your Fund's weighted average maturity is 4.3
years; we always keep it below 5 years. As you know, we ladder the maturity
dates of the bonds in your portfolio so that some of the bonds are
scheduled to mature during each of the coming years. The chart below
portrays the percentages of your Fund's bond portfolio maturing in each of
the coming years:
% of portfolio Cumulative %
maturing within maturing by end of
1 years = 13% year 1 = 13%
1 to 2 years = 10% year 2 = 23%
2 to 3 years = 14% year 3 = 37%
3 to 4 years = 9% year 4 = 46%
4 to 5 years = 11% year 5 = 57%
5 to 6 years = 10% year 6 = 67%
6 to 7 years = 9% year 7 = 76%
7 to 8 years = 11% year 8 = 87%
8 to 9 years = 7% year 9 = 94%
9 to 10 years = 6% year 10 = 100%
Percentages can and do vary. Data as of 6/30/03.
Three powerful trends seem to be driving recent performance of the
municipal market. The first is persistent economic weakness. The U.S.
unemployment rate, at 6.4%, just hit a nine-year high. GDP growth is
sputtering along at about 2%. Our European and Japanese trading partners
are, by and large, worse off than are we, and the Federal Reserve Board
seems to be at least as worried about deflation as it is about inflation.
We continue to believe that low interest rates, tax cuts, and rising
corporate profits will eventually lead to steady economic and employment
growth, and probably give rise to somewhat higher interest rates. However,
that process is taking longer than we formerly thought and may not
materialize until next year.
The second trend is financial stress in many of our cities and states. A
combination of flat (or in some cases down) tax revenues and rising
expenses for items such as Medicaid and pension systems has led to large
budget deficits for more than half of the 50 states. The states have dealt
with the problem in a variety of ways. According to the Fiscal Survey of
the States published by the National Association of State Budget Officers,
28 states have made across-the-board spending cuts, 22 states have used
reserve funds, and 17 have laid off employees. Governors in 29 states
recommended tax and fee increases totaling $17.5 billion. The challenges
have led to a number of high-profile downgrades by the major bond rating
agencies, particularly in California where the deficit has yet to be dealt
with.
Yet in the midst of all these problems, many municipal credits are doing
just fine. Standard & Poor's recently reported that upgrades outpaced
downgrades in the second quarter of 2003 by a ratio of 1.6:1. This is
because the municipal bond market is made up of much more than bond issues
of the 50 states. Many of our cities, counties, school districts, water and
sewer authorities, transportation authorities, and health care providers
have benefited from stable revenues based upon property taxes, sales taxes,
and fees for essential services. The municipal bond market, historically
has a much lower default rate than the corporate bond market, and we
continue to enjoy some success finding good bonds at relatively reasonable
prices.
The third trend exerting pressure on the municipal market is the heavy
supply of bonds. $198 billion of municipal bonds were issued in the first
half of 2003, a 19% increase over the record pace of 2002. The first half
total already exceeds full-year volume for 1994, 1995, and 1996. The heavy
supply has often saturated traditional sources of demand and pushed high-
quality tax-free municipal bond yields to levels approaching taxable
Treasury bond yields. The relative attractiveness of the municipal bond
market should allow full coupon municipals to outperform the Treasury bond
market if the heavy supply abates and the yield ratios revert to historical
norms. So called "market discount" municipal bonds may lag if interest
rates continue to rise.
The Wall Street Journal ran a front-page story on July 7, 2003, about
retirees who are forced to pinch pennies as money market and CD rates
plunge. We believe that laddering short and intermediate bonds -- as we
have done for your account -- is the best way to address this problem.
Laddering bonds simultaneously moderates the income-flow risk of plunging
short-term yields and the principal risk that affects all bonds when
interest rates rise. To see how your Fund has performed over time relative
to the money market fund averages, turn to the back of this report.
Over the years, our practice of laddering a diversified portfolio of short-
and intermediate-maturity municipal bonds has allowed your Fund to perform
consistently well in varying interest rate environments. Thank you for
investing in the National Portfolio of the Thornburg Limited Term Municipal
Fund.
Sincerely,
George Strickland
Portfolio Manager
Past performance cannot guarantee future results.
Statement of assets and liabilities
Thornburg Limited Term Municipal Fund, Inc. - National Portfolio June 30, 2003
ASSETS
Investments at value (cost $1,249,257,949) ................ $ 1,316,577,099
Cash ...................................................... 86,898
Receivable for investments sold ........................... 10,634,303
Receivable for fund shares sold ........................... 6,222,041
Interest receivable ....................................... 15,938,113
Prepaid expenses and other assets ......................... 40,035
Total Assets ............................ 1,349,498,489
LIABILITIES
Payable for investments purchased ......................... 8,873,424
Payable for fund shares redeemed .......................... 4,770,682
Accounts payable and accrued expenses ..................... 417,977
Payable to investment advisor (Note 3) .................... 575,346
Dividends payable ......................................... 1,056,444
Total Liabilities ....................... 15,693,873
NET ASSETS ................................................ $ 1,333,804,616
NET ASSETS CONSIST OF:
Net unrealized appreciation (depreciation) on investments $ 67,319,150
Accumulated net realized gain (loss) .................. (7,189,234)
Net capital paid in on shares of beneficial interest .. 1,273,674,700
$ 1,333,804,616
NET ASSET VALUE:
Class A Shares:
Net asset value and redemption price per share
($998,877,676 applicable to 71,283,604 shares of beneficial
interest outstanding - Note 4) ............................. $ 14.01
Maximum sales charge, 1.50% of offering price ................ 0.21
Maximum Offering Price Per Share ............................. $ 14.22
Class C Shares:
Net asset value and offering price per share*
($137,559,448 applicable to 9,798,791 shares of beneficial
interest outstanding - Note 4) ............................. $ 14.04
Class I Shares:
Net asset value, offering and redemption price per share
($197,367,492 applicable to 14,082,631 shares of beneficial
interest outstanding - Note 4) ............................. $ 14.01
* Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge. See notes to financial statements.
Statement of operations
Thornburg Limited Term Municipal Fund, Inc. - National Portfolio
Year Ended June 30, 2003
INVESTMENT INCOME:
Interest income (net of premium amortized of $8,977,858) ..... $ 47,291,162
EXPENSES:
Investment advisory fees (Note 3) ............................ 4,938,499
Administration fees (Note 3)
Class A Shares ...................................... 1,123,154
Class C Shares ...................................... 114,096
Class I Shares ...................................... 78,492
Distribution and service fees (Note 3)
Class A Shares ...................................... 2,246,309
Class C Shares ...................................... 912,771
Transfer agent fees
Class A Shares ...................................... 424,411
Class C Shares ...................................... 56,092
Class I Shares ...................................... 32,637
Registration and filing fees
Class A Shares ...................................... 32,193
Class C Shares ...................................... 21,653
Class I Shares ...................................... 12,683
Custodian fees (Note 3) ...................................... 421,940
Professional fees ............................................ 78,761
Accounting fees .............................................. 67,695
Director fees ................................................ 48,080
Other expenses ............................................... 175,747
Total Expenses ............................. 10,785,213
Less:
Distribution and service fees waived (Note 3) ....... (456,385)
Fees paid indirectly (Note 3) ....................... (9,253)
Net Expenses ............................... 10,319,575
Net Investment Income ...................... 36,971,587
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) on investments sold ................. 877,102
Increase (Decrease) in unrealized appreciation of investments 28,100,206
Net Realized and Unrealized
Gain (Loss) on Investments ................. 28,977,308
Net Increase (Decrease) in Net Assets Resulting
From Operations ............................ $ 65,948,895
See notes to financial statements.
Statements of changes in net assets
Thornburg Limited Term Municipal Fund, Inc. - National Portfolio
Year Ended
Year Ended
June 30, 2003
June 30, 2002
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income ....................................... $ 36,971,587
$ 32,763,519
Net realized gain (loss) on investments sold ................ 877,102
(90,520)
Increase (Decrease) in unrealized appreciation of investments 28,100,206
13,508,557
Net Increase (Decrease) in Net Assets
Resulting from Operations ................. 65,948,895
46,181,556
DIVIDENDS TO SHAREHOLDERS:
>From net investment income
Class A Shares ..................................... (28,771,058)
(27,197,050)
Class C Shares ..................................... (2,645,994)
(1,278,738)
Class I Shares ..................................... (5,554,535)
(4,287,731)
FUND SHARE TRANSACTIONS (NOTE 4):
Class A Shares ..................................... 190,903,532
119,814,146
Class C Shares ..................................... 78,064,848
31,840,288
Class I Shares ..................................... 69,803,156
35,893,452
Net Increase (Decrease) in Net Assets ..... 367,748,844
200,965,923
NET ASSETS:
Beginning of year .................................. 966,055,772
765,089,849
End of year ........................................ $ 1,333,804,616
$ 966,055,772
See notes to financial statements.
Notes to financial statements
Thornburg Limited Term Municipal Fund, Inc. - National Portfolio June 30,
2003
NOTE 1 - ORGANIZATION
Thornburg Limited Term Municipal Fund, Inc. (the "Company") was
incorporated in Maryland on February 14, 1984. The Company was reorganized
in 1986 as a series investment company with separate investment portfolios.
The current portfolios are as follows: National Portfolio (the "Fund") and
California Portfolio. The Company 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.
The Fund 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 Fund 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 Fund may allocate among its classes certain expenses, to
the extent applicable 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 Fund are limited to service and distribution fees, administrative fees,
and certain registration and transfer agent expenses.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies of the Company are as follows:
Valuation of Investments: In determining the net asset value of the Fund,
the Company 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, normally at 4:00 p.m. EST 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 Fund are reviewed by the officers of the Company
under the general supervision of the Board of Directors. Short-term
obligations having remaining maturities of 60 days or less are valued at
amortized cost, which approximates market value.
Federal Income Taxes: It is the policy of the Company 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.
When-Issued and Delayed Delivery Transactions: The Company may engage in
when-issued or delayed delivery transactions. To the extent the Company
engages in such transactions, it will do so for the purpose of acquiring
portfolio securities consistent with the investment objectives of the Fund
and not for the purpose of investment leverage or to speculate on interest
rate changes. At the time the Company makes a commitment to purchase a
security for the Fund, on a when-issued basis, the Fund will record the
transaction and reflect the value in determining its net asset value. When
effecting such transactions, assets of the Fund of an amount sufficient to
make payment for the portfolio securities to be purchased will be
segregated on the Fund'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 Fund is declared daily as a
dividend on shares for which the Company has received payment. Dividends
are paid monthly and are reinvested in additional shares of the Fund at net
asset value per share at the close of business on the dividend payment
date, or at the shareholder's option, paid by check. Net capital gains, to
the extent available, will be distributed at least annually.
General: Securities transactions are accounted for on a trade date basis.
Interest income is accrued as earned. Premiums and 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. Net investment income, other than
class specific expenses, and realized and unrealized gains and losses, are
allocated daily to each class of shares based upon the relative net asset
value of outstanding shares (or the value of the dividend-eligible shares,
as appropriate) of each class of shares at the beginning of the day (after
adjusting for the current capital shares activity of the respective class).
Expenses common to all funds are allocated among the funds based upon their
relative net asset values or other appropriate allocation methods.
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.
Guarantees and Indemnifications: Under the Company's organizational
documents, its officers and directors are indemnified against certain
liability arising out of the performance of their duties to the Fund.
Additionally, in the normal course of business the Company enters into
contracts with service providers that contain general indemnification
clauses. The Company's maximum exposure under these arrangements is
unknown. However, based on experience, the Company expects the risk of loss
to be remote.
NOTE 3 - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Pursuant to an Investment Advisory Agreement, Thornburg Investment
Management, Inc. (the "Advisor") serves as the investment advisor and
performs services for which the fees are payable at the end of each month.
For the year ended June 30, 2003, these fees were payable at annual rates
ranging from .50 of 1% to .225 of 1% of the average daily net assets of the
Fund. The Company also has an Administrative Services Agreement with the
Advisor, whereby the Advisor will perform certain administrative services
for the shareholders of each class of the Fund's shares, and for which fees
will be payable at an annual rate of up to .125 of 1% of the average daily
net assets attributable to each class of shares.
The Company has an underwriting agreement with Thornburg Securities
Corporation (the "Distributor"), which acts as the Distributor of Fund
shares. For the year ended June 30, 2003, the Distributor has advised the
Fund that it earned commissions aggregating $13,412 from the sale of Class
A shares, and collected contingent deferred sales charges aggregating
$50,181 from redemptions of Class C shares of the Fund.
Pursuant to a Service Plan under Rule 12b-1 of the Investment Company Act
of 1940, the Company may reimburse to the Advisor amounts not to exceed .25
of 1% per annum of the average net assets attributable to each class of
shares of the Fund for payments made by the Advisor to securities dealers
and other financial institutions to obtain various shareholder related
services. The Advisor may pay out of its own resources additional expenses
for distribution of the Fund's shares.
The Company has also adopted a Distribution Plan pursuant to Rule 12b-1,
applicable only to the Fund's Class C shares under which the Company
compensates the Distributor for services in promoting the sale of Class C
shares of the Fund at an annual rate of up to .75% of the average daily net
assets attributable to Class C shares. Total fees incurred by each class of
shares of the Fund under their respective Service and Distribution plans
and Class C distribution fees waived by the Distributor for the year ended
June 30, 2003, are set forth in the statement of operations.
The Company has an agreement with the custodian bank to indirectly pay a
portion of the custodian's fees through credits earned by the Fund's cash
on deposit with the bank. This deposit agreement is an alternative to
overnight investments. Custodial fees have been adjusted to reflect amounts
that would have been paid without this agreement, with a corresponding
adjustment reflected as fees paid indirectly in the statement of
operations. For the year ended June 30, 2003 fees paid indirectly were
$9,253.
Certain officers and directors of the Company are also officers and/or
directors of the Advisor and Distributor. The compensation of unaffiliated
directors is borne by the Company.
NOTE 4 - SHARES OF BENEFICIAL INTEREST
At June 30, 2003, there were an unlimited number of shares of beneficial
interest authorized. Transactions in shares of beneficial interest were as
follows:
Year Ended
Year Ended
June 30, 2003 June
30, 2002
Shares Amount Shares
Amount
Class A Shares
Shares sold .................... 24,734,784 $ 343,160,230
14,793,127 $ 200,278,818
Shares issued to shareholders in
reinvestment of dividends ... 1,359,442 18,874,006
1,279,137 17,324,540
Shares repurchased ............. (12,329,726) (171,130,704)
(7,235,058) (97,789,212)
Net Increase (Decrease) ........ 13,764,500 $ 190,903,532
8,837,206 $ 119,814,146
Class C Shares
Shares sold .................... 7,145,702 $ 99,350,605
2,673,390 $ 36,269,094
Shares issued to shareholders in
reinvestment of dividends ... 135,892 1,892,308
67,839 920,499
Shares repurchased ............. (1,670,144) (23,178,065)
(394,190) (5,349,305)
Net Increase (Decrease) ........ 5,611,450 $ 78,064,848
2,347,039 $ 31,840,288
Class I Shares
Shares sold .................... 7,667,976 $ 106,488,989
4,212,256 $ 57,113,329
Shares issued to shareholders in
reinvestment of dividends ... 309,747 4,303,264
250,826 3,398,094
Shares repurchased ............. (2,952,400) (40,989,097)
(1,816,802) (24,617,971)
Net Increase (Decrease) ........ 5,025,323 $ 69,803,156
2,646,280 $ 35,893,452
NOTE 5 - SECURITIES TRANSACTIONS
For the year ended June 30, 2003, the Fund had purchase and sale
transactions (excluding short-term securities) of $464,940,831 and
$169,087,060,
respectively.
NOTE 6 - INCOME TAXES
At June 30, 2003, information on the tax components of capital is as
follows:
Cost of investments for tax purposes $ 1,249,264,407
Gross tax unrealized appreciation $ 67,526,116
Gross tax unrealized depreciation (213,424)
Net tax unrealized appreciation
(depreciation) on investments $ 67,312,692
Undistributed tax-exempt income $ 1,056,444
At June 30, 2003, the Fund had tax basis capital losses, which may be
carried over to offset future capital gains. Such losses expire as follows:
Capital loss carryovers expiring in:
2004 $ 2,669,769
2008 1,088,098
2009 3,565,103
$ 7,322,970
The Fund utilized $738,463 of capital loss carry forwards during the year
ended June 30, 2003. Unutilized tax basis capital losses may be carried
forward to offset realized gains in future years. To the extent such carry
forwards are used, capital gain distributions may be reduced to the extent
provided by regulations.
Dividends paid by the Fund for the years ended June 30, 2003 and June 30,
2002, represent exempt interest dividends, which are excludable by
shareholders from gross income for Federal income tax purposes.
Financial highlights
Year Ended June 30,
2003
2002 2001 2000 1999
Class I Shares:
Per Share Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year ................... $ 13.65 $
13.44 $ 13.06 $ 13.26 $ 13.51
Income from investment operations:
Net investment income ....................... 0.49
0.57 0.63 0.63 0.64
Net realized and unrealized
gain (loss) on investments ......... 0.36
0.21 0.38 (0.20) (0.25)
Total from investment operations ..................... 0.85
0.78 1.01 0.43 0.39
Less dividends from:
Net investment income ............................ (0.49)
(0.57) (0.63) (0.63) (0.64)
Change in net asset value ............................ 0.36
0.21 0.38 (0.20) (0.25)
Net asset value, end of year ......................... $ 14.01 $
13.65 $ 13.44 $ 13.06 $ 13.26
Total return ......................................... 6.36%
5.91% 7.91% 3.37% 2.87%
Ratios/Supplemental Data Ratios to average net assets:
Net investment income ....................... 3.54%
4.18% 4.75% 4.84% 4.71%
Expenses, after expense reductions .......... 0.58%
0.60% 0.60% 0.60% 0.60%
Expenses, after expense reductions
and net of custody credits ......... 0.58%
0.60% -- -- --
Expenses, before expense reductions ......... 0.58%
0.62% 0.65% 0.62% 0.61%
Portfolio turnover rate .............................. 15.81%
19.59% 25.37% 33.65% 22.16%
Net assets at end of year (000) ..................... $ 197,367 $
123,652 $ 86,160 $ 76,470 $ 81,326
Schedule of Investments
Thornburg Limited Term Municipal Fund, Inc. - National Portfolio
CUSIPS: CLASS A - 532-723-103, CLASS C - 532-723-509, CLASS I - 532-723-806
NASDAQ SYMBOLS: CLASS A - LTMFX, CLASS C - LTMCX, CLASS I - LTMIX
Alabama (1.00%)
980,000 Birmingham General Obligation, 7.25% due 7/1/2004 (ETM)*
NR/NR $1,041,368
2,935,000 Huntsville Health Care Series A, 4.65% due 6/1/2024 put
6/1/2005 (Insured: MBIA) Aaa/AAA 3,080,693
1,000,000 Morgan County Decatur Health Care Authority Hospital
Revenue, 6.10% due 3/1/2007 NR/AAA 1,044,900
(Insured: Connie Lee)
1,920,000 Scottsboro Industrial Development Board Refunding, 5.25%
due 5/1/2009 (LOC: PNC NR/NR 1,980,288
Bank)
500,000 Shelby County Series A, 7.20% due 8/1/2005 (Insured:
MBIA) (ETM)* Aaa/AAA 502,505
5,000,000 Wilsonville Industrial Development Board Pollution
Control Revenue Refunding, Aaa/AAA 5,335,300
4.20% due 6/1/2019 put 6/1/2006 (Southern Electric Gaston
Project; Insured:
AMBAC)
Alaska (0.10%)
2,070,000 North Slope Borough Alaska, 0% due 6/30/2006 (Insured:
MBIA) Aaa/AAA 1,961,077
Arizona (0.90%)
1,000,000 Arizona State Transportation Board Grant Anticipation
Notes, 4.80% due 1/1/2004 Aa3/AA- 1,003,180
2,250,000 Arizona State Transportation Board Highway Revenue
Subordinated Series A Aa2/AA 2,372,670
Refunding, 4.875% due 7/1/2007
235,000 Glendale Water & Sewer Revenue, 9.00% due 7/1/2003 (ETM)*
Aaa/AAA 235,052
650,000 Maricopa County Arizona School District 97, 5.50% due
7/1/2008 (Insured: FGIC) Aaa/NR 748,098
3,200,000 Maricopa County Industrial Development Authority Multi
Family Housing Revenue NR/AAA 3,629,536
Series A, 6.50% due 10/1/2025 pre-refunded 10/1/2005 @
102
1,000,000 Maricopa County School District 008, 7.50% due 7/1/2008
(Insured: MBIA) Aaa/AAA 1,242,540
500,000 Maricopa County Unified School District 40 General
Obligation, 5.60% due A3/A- 500,060
7/1/2003
1,000,000 Pima County Industrial Development Authority Education
Revenue Series C, 6.40% Baa3/NR 1,021,940
due 7/1/2013 (Arizona Charter Schools Project)
760,000 Pima County Industrial Development Authority Industrial
Revenue Refunding Lease Aaa/AAA 804,726
Obligation A, 7.25% due 7/15/2010 (Insured: FSA)
500,000 Tucson Water Revenue Series D, 9.75% due 7/1/2008
Aa3/A+ 672,550
Arkansas (0.80%)
2,000,000 Conway Electric Revenue Refunding, 5.00% due 8/1/2007
A2/NR 2,203,080
1,000,000 Fayetteville Arkansas Sales & Use Tax Capital
Improvement, 4.00% due 6/1/2005 NR/AA- 1,045,570
1,000,000 Jefferson County Hospital Revenue Refunding &
Improvement, 5.50% due 6/1/2010 NR/A 1,117,120
(Regional Medical Center Project)
1,075,000 Jefferson County Hospital Revenue Refunding &
Improvement, 5.50% due 6/1/2011 NR/A 1,193,895
(Regional Medical Center Project)
2,645,000 Little Rock Hotel & Restaurant Gross Receipts Tax
Refunding, 7.125% due 8/1/2009 A3/NR 3,179,634
1,735,000 Rogers Sales & Use Tax Revenue, 6.00% due 11/1/2007
A1/AA 1,788,768
California (3.70%)
1,350,000 Bay Area Government Association Rapid Transit, 5.00% due
6/15/2008 (Insured: Aaa/AAA 1,354,144
AMBAC)
2,600,000 California State Department Water Resources Power Supply
Series A, 5.50% due A3/BBB+ 2,943,564
5/1/2012
2,550,000 California State Department Water Resources Power Supply
Series A, 6.00% due A3/BBB+ 2,970,597
5/1/2013
4,120,000 Irvine Improvement Bond Act 1915 Adjusted Assessment
District, 1.20% due VMIG1/A-1 4,120,000
9/2/2024 put 7/1/2003 (daily demand notes)
400,000 Irvine Improvement Bond Act 1915 Assessment District
Number 00-18 Series A, VMIG1/NR 400,000
1.20% due 9/2/2026 put 7/1/2003 (LOC: Bank of New York)
(daily demand notes)
2,000,000 Irvine Improvement Bond Act 1915 Limited Obligation
Assessment District, 1.20% VMIG1/A1+ 2,000,000
due 9/2/2025 put 7/1/2003 (daily demand notes)
900,000 Irvine Ranch California Water District, 0.85% due
4/1/2033 put 7/1/2003 (daily VMIG1/A1+ 900,000
demand notes)
40,000 Los Angeles Department Water & Power Electric Plant
Revenue Crossover Refunding, Aaa/AA- 41,338
9.00% due 9/1/2004 pre-refunded 9/1/2003
420,000 Los Angeles Department Water & Power Electric Plant
Revenue Crossover Refunding, Aa3/AA- 433,856
9.00% due 9/1/2004
40,000 Los Angeles Department Water & Power Electric Plant
Revenue Crossover Refunding, Aa3/AA- 41,334
9.00% due 9/1/2004 (ETM)*
7,050,000 Metropolitan Water District Southern California
Waterworks Revenue, 0.90% due VMIG1/A1+ 7,050,000
7/1/2035 put 7/1/2003 (daily demand notes)
1,275,000 Metropolitan Water District Southern California
Waterworks Revenue Series C-1, VMIG1/A1+ 1,275,000
1.00% due 7/1/2036 put 7/1/2003 (daily demand notes)
7,600,000 Orange County Refunding Recovery, 6.50% due 6/1/2004
(Insured: MBIA) Aaa/AAA 7,981,064
5,200,000 Orange County Refunding Recovery, 6.50% due 6/1/2005
(Insured: MBIA) Aaa/AAA 5,709,860
1,440,000 Orange County Special Financing Authority Teeler Pan
Revenue, 1.10% due Aaa/A-1 1,440,000
11/1/2014 put 7/8/2003 (weekly demand notes)
300,000 Orange County Special Financing Authority Teeter Plan
Revenue Series D, 1.20% Aaa/A-1 300,000
due 11/1/2014 put 7/8/2003 (Insured: AMBAC) (weekly
demand notes)
1,000,000 San Francisco Port Community Revenue, 9.00% due 7/1/2003
A1/A- 1,000,210
3,000,000 San Jose Financing Authority Lease Revenue Series D,
5.00% due 6/1/2039 Aaa/AAA 3,291,570
mandatory put 6/1/2006 (Civic Center Project; Insured:
AMBAC)
4,180,000 Santa Margarita & Dana Point Authority Revenue
Improvement District Series A, Aaa/AAA 4,210,180
9.50% due 8/1/2003 (Insured: MBIA)
800,000 Stockton Multi Family Housing Revenue Series A, 1.25% due
9/1/2018 put 7/1/2003 NR/A1+ 800,000
(Mariners Pointe Associates Project; LOC: Credit Suisse)
(daily demand notes)
Colorado (2.60%)
1,500,000 Adams County Communication Center Series A, 4.75% due
12/1/2006 Baa1/NR 1,597,890
1,000,000 Adams County School District Number 012 Series A, 4.375%
due 12/15/2007 Aa3/AA- 1,100,990
6,000,000 Central Platte Valley Metropolitan District Co. Refunding
Series A, 5.00% due NR/A-1 6,531,960
12/1/2031 put 12/1/2009 (LOC: US Bank)
1,950,000 Colorado Department Transport Revenue Anticipation Notes,
6.00% due 6/15/2008 Aaa/AAA 2,284,464
(Insured: AMBAC)
1,000,000 Colorado Educational & Cultural Facilities, 4.90% due
4/1/2008 (Nashville Public NR/BBB+ 1,074,810
Radio Project)
5,705,000 Colorado Health Facilities Authority Revenue Catholic
Health Initiatives, 5.00% Aa2/A1+ 6,279,779
due 9/1/2007
515,000 Colorado Health Facilities Authority Revenue Catholic
Health Initiatives A, Aa2/A1+ 572,515
5.375% due 12/1/2009
475,000 Colorado Housing Finance Authority, 5.25% due 10/1/2007
A1/AA+ 478,634
500,000 Denver City & County Certificates Participation Series A,
5.50% due 5/1/2006 Aaa/AAA 554,625
(Insured: MBIA)
2,650,000 Denver City & County Certificates Participation Series B,
5.00% due 12/1/2010 Aa2/AA 2,941,129
500,000 Denver Colorado Health & Hospital Authority Healthcare
Revenue Series A, 1.30% VMIG1/A-1 500,000
due 12/1/2032 put 7/1/2003 (LOC: Bank One) (daily demand
notes)
1,820,000 Dove Valley Metropolitan District Colorado Arapahoe
County, Series B, 3.30% due NR/A1+ 1,876,493
11/1/2025 Put 11/1/2005 @100 (LOC: BNP Paribas)
500,000 El Paso County School District General Obligation 20
Series B, 8.25% due Aa3/NR 550,990
12/15/2004 (State Aid Withholding)
2,175,000 Highlands Ranch Metro District 2 General Obligation,
6.00% due 6/15/2004 Aaa/AAA 2,278,269
(Insured: FSA)
1,000,000 Lakewood Colorado Certificates Participation, 4.40% due
12/1/2008 (Insured: Aaa/AAA 1,102,120
MBIA)
1,000,000 Section 14 Metropolitan District Jefferson Refunding
Series A, 6.20% due NR/A+ 1,069,020
12/1/2013 (LOC: US Bank Trust)
1,150,000 Superior Metropolitan District 1 Variable Refunding &
Improvement Series A, NR/AA- 1,199,208
5.45% due 12/1/2020 put 12/1/2004 (LOC: BNP)
2,725,000 Westminister Multi Family Housing Revenue Series 1995,
5.95% due 9/1/2015 put NR/AA 2,767,401
9/1/2006 (Semper Village Apartments Project; Insured:
AXA)
Connecticut (0.80%)
1,685,000 Bridgeport General Obligation, 6.00% due 3/1/2005
(Insured: AMBAC) Aaa/AAA 1,813,498
1,325,000 Bridgeport General Obligation, 6.00% due 3/1/2006
(Insured: AMBAC) Aaa/AAA 1,474,884
1,045,000 Capitol Region Education Council, 6.375% due 10/15/2005
NR/BBB 1,134,275
1,100,000 Connecticut State Health & Educational Yale University
Series V-1, 1.00% due VMIG1/A1+ 1,100,000
7/1/2036 put 7/1/2003 (daily demand notes)
2,425,000 Connecticut State Health And Educational Facilities
Authority Revenue Yale VMIG1/A1+ 2,425,000
University Series V-2, 1.00% due 7/1/2036 put 7/1/2003
(daily demand notes)
2,010,000 New Haven Connecticut, 3.00% due 11/1/2004 (Insured:
FGIC) Aaa/AAA 2,062,481
500,000 New Haven General Obligation, 9.50% due 11/15/2003
A3/A- 514,825
Delaware (0.40%)
2,000,000 Delaware State Health Facilities Authority Revenue, 6.25%
due 10/1/2006 Aaa/AAA 2,156,800
(Insured: MBIA) (ETM)*
1,370,000 Delaware State Health Facilities Authority Revenue
Nanticoke Series A, 5.25% due NR/AA 1,507,795
5/1/2012 (Memorial Hospital Project; Insured: Radian)
1,445,000 Delaware State Health Facilities Authority Revenue
Nanticoke Series A, 5.25% due NR/AA 1,574,096
5/1/2013 (Memorial Hospital Project; Insured: Radian)
District of Columbia (3.00%)
2,825,000 District of Columbia Refunding Series B-1, 5.20% due
6/1/2004 (Insured: AMBAC) Aaa/AAA 2,932,858
745,000 District of Columbia, 5.50% due 6/1/2004 (Insured: FSA)
Aaa/AAA 775,478
605,000 District of Columbia, 5.50% due 6/1/2008 (Insured: AMBAC)
Aaa/AAA 692,217
5,950,000 District of Columbia Certificates Participation, 5.25%
due 1/1/2013 (Insured: Aaa/AAA 6,693,393
AMBAC)
4,430,000 District of Columbia Hospital Revenue, 5.70% due
8/15/2008 (Medlantic Healthcare Aaa/AAA 5,048,074
Project; Insured: MBIA) (ETM)*
1,500,000 District of Columbia Hospital Revenue Refunding, 5.10%
due 8/15/2008 (Medlantic Aaa/AAA 1,688,010
Healthcare Group A Project; Insured: MBIA) (ETM)*
1,250,000 District of Columbia Refunding Series C, 5.00% due
6/1/2007 (Insured: XLCA) Aaa/AAA 1,380,575
1,330,000 District of Columbia Revenue, 6.00% due 8/15/2005
(Medlantic Healthcare Project; Aaa/AAA 1,459,688
Insured: MBIA) (ETM)*
500,000 District of Columbia Revenue, 5.50% due 10/1/2005
Aaa/AAA 545,060
500,000 District of Columbia Revenue, 6.00% due 1/1/2007
(American Assoc. Advancement Aaa/AAA 565,160
Science Project; Insured: AMBAC)
2,000,000 District of Columbia Tax Capital Appreciation, 0% due
7/1/2009 (Mandarin Aaa/AAA 1,637,440
Oriental Project; Insured: FSA)
1,480,000 District of Columbia Tax Capital Appreciation, 0% due
7/1/2012 (Mandarin Aaa/AAA 1,032,478
Oriental Project; Insured: FSA)
1,990,000 District of Columbia Tax Revenue Capital Appreciation, 0%
due 7/1/2011 (Mandarin Aaa/AAA 1,462,013
Oriental Project; Insured: FSA)
5,000,000 District of Columbia Unrefunded Balance Series B, 5.75%
due 6/1/2009 (Insured: Aaa/AAA 5,842,400
MBIA)
6,010,000 Washington DC Convention Center Senior Lien, 5.00% due
10/1/2007 Aaa/AAA 6,717,978
750,000 Washington District of Columbia Convention Center
Authority Dedicated Tax Aaa/AAA 828,232
Revenue, 5.00% due 10/1/2006 (Insured: AMBAC)
Florida (5.40%)
5,500,000 Broward County Resource Recovery Revenue Refunding,
5.375% due 12/1/2009 A3/AA- 6,099,610
4,150,000 Capital Projects Finance Authority, 1.00% due 6/1/2012
put 7/1/2003 (LOC: Bank VMIG1/NR 4,150,000
of Scotland) (daily demand notes)
1,000,000 Capital Projects Finance Authority Student Housing, 5.50%
due 10/1/2012 (Capital Aaa/AAA 1,134,020
Projects Student Housing; Insured: MBIA)
2,996,000 Crossings at Fleming Island Community Development
Refunding Series B, 5.45% due Aaa/AAA 3,463,316
5/1/2010 (Insured: MBIA)
6,000,000 Dade County Solid Waste Systems Special Obligation
Revenue Refunding, 6.00% due Aaa/AAA 6,968,280
10/1/2007 (Insured: AMBAC)
5,000,000 Dade County Water & Sewer Systems Revenue, 1.30% due
10/5/2022 put 7/8/2003 VMIG1/A1+ 5,000,000
(Insured: FGIC) (weekly demand notes)
200,000 East County Water Control District Lee County Drain,
5.50% due 11/1/2003 NR/AA 202,852
(Insured: Radian)
800,000 Florida Housing Finance Agency Multi Family Housing Kings
D, 1.30% due 8/1/2006 NR/A1+ 800,000
put 7/8/2003 (LOC: Credit Suisse First Boston) (weekly
demand notes)
1,375,000 Florida State, 8.25% due 7/1/2003 (Pollution Control
Project) Aa2/AA+ 1,375,275
2,450,000 Hillsborough County Industrial Development Authority
Pollution Control Revenue Baa1/BBB- 2,474,892
Refunding, 4.00% due 5/15/2018 put 8/1/2007 (Tampa
Electric Co. Project)
40,000 Hillsborough County Utility Revenue Refunding, 9.75% due
12/1/2003 (ETM)* Aaa/AAA 41,464
1,000,000 Jacksonville Electric Authority Revenue Refunding Series
10, 6.50% due 10/1/2003 Aa2/AA 1,013,590
5,000,000 Jacksonville Electric St. John's River Park Systems
Revenue Refunding Issue-2 Aa2/AA 5,708,800
17th Series, 5.25% due 10/1/2012
1,910,000 Miami Dade County School Board Certificates Participation
Series A, 5.00% due Aaa/AAA 2,096,588
5/1/2006 (Insured: MBIA)
3,390,000 Miami Dade County School Board Certificates Participation
Series C, 5.00% due Aaa/AAA 3,796,969
8/1/2007 (Insured: MBIA)
3,850,000 Miami Dade County Special Housing Revenue Refunding,
5.80% due 10/1/2012 A3/NR 3,908,520
1,395,000 Orange County Health Facilities Authority, 5.80% due
11/15/2009 (Hospital A3/A 1,579,572
Adventist Health System Project)
3,120,000 Orange County Health Facilities Authority Revenue
Refunding, 6.25% due Aaa/AAA 3,523,104
11/15/2008 (Hospital Adventist Health Systems Project;
Insured: AMBAC)
925,000 Orange County Health Facilities Authority Revenue
Unrefunded Balance Series A, Aaa/AAA 1,082,824
6.25% due 10/1/2007 (Orlando Regional Hospital Project;
Insured: MBIA)
800,000 Orange County School Board Certificates Participation
Series B, 1.20% due VMIG1/AAA 800,000
8/1/2027 put 7/1/2003 (Insured: MBIA) (daily demand
notes)
8,080,000 Orange County School District Series B, 0.90% due
8/1/2025 put 7/1/2003 Aaa/NR 8,080,000
(Insured: AMBAC) (daily demand notes)
940,000 Palm Beach County Industrial Development Revenue Series
1996, 6.00% due NR/A 1,072,230
12/1/2006 (Lourdes-Noreen McKeen Residence Project; LOC:
Allied Irish Bank)
(ETM)*
3,940,000 Pelican Marsh Community Development District Refunding
Series A, 5.00% due NR/NR 4,178,212
5/1/2011 (Insured: Radian)
2,000,000 University Athletic Association Inc. Florida Athletic
Program Revenue Refunding, VMIG1/NR 2,020,400
2.20% due 10/1/2031 put 10/1/2005 (LOC: Suntrust Bank)
Georgia (1.40%)
1,700,000 Burke County Development Authority Pollution, 6.35% due
1/1/2004 (Oglethorpe Aaa/AAA 1,744,795
Power Corp. Project; Insured: MBIA)
500,000 Cobb County School District, 4.75% due 2/1/2005
Aa1/AA+ 511,400
1,000,000 Dekalb County, 5.50% due 1/1/2004
Aaa/AA+ 1,022,260
1,000,000 Georgia Municipal Association Inc. Certificates of
Participation City Court Aaa/AAA 1,111,270
Atlanta Project, 5.00% due 12/1/2006 (Insured: AMBAC)
1,550,000 Georgia Municipal Electric Power Authority Revenue, 7.00%
due 1/1/2008 (Insured: Aaa/AAA 1,856,993
MBIA)
730,000 Georgia Municipal Electric Power Authority Revenue Series
Y, 6.30% due 1/1/2006 A2/A+ 807,957
1,000,000 Georgia Municipal Gas Authority, 6.30% due 7/1/2009
(Southern Storage Gas NR/A 1,046,800
Project)
5,000,000 Milledgeville Baldwin County Development Authority
Student Housing Revenue, VMIG1/NR 5,187,900
5.00% due 9/1/2032 put 9/1/2004 (Ga. College & State
University Foundation
Project; LOC: First Union Natl Bank)
2,000,000 Monroe County Development Authority Pollution Control,
6.75% due 1/1/2010 Aaa/AAA 2,449,360
(Oglethorpe Power Scherer A Refunding; Insured: MBIA)
1,000,000 Monroe County Development Authority Pollution Control
Revenue Oglethorpe Power Aaa/AAA 1,259,350
Scherer A, 6.80% due 1/1/2012 (Insured: MBIA)
910,000 Municipal Electric Authority Georgia Unrefunded Balance
Subordinated A, 6.00% Aaa/AAA 1,008,562
due 1/1/2006 (Project One; Insured: AMBAC)
Hawaii (0.50%)
2,000,000 Hawaii State Department Budget & Finance Special Purpose
Hawaiian Electric Co., Aaa/AAA 2,228,880
4.95% due 4/1/2012 (Insured: MBIA)
1,500,000 Hawaii State Department Budget & Finance Special Purpose
Mortgage Revenue, 5.70% Baa1/BBB+ 1,500,165
due 7/1/2003 (Kapiolani Health Care System Project)
1,565,000 Hawaii State Series Cn, 6.25% due 3/1/2006 (Insured:
FGIC) Aaa/AAA 1,755,695
1,000,000 Honolulu City & County Refunding Series A, 7.35% due
7/1/2006 Aa3/AA- 1,163,530
Illinois (11.50%)
3,345,000 Champaign County Community Unit Series C, 0% due 1/1/2009
(Insured: FGIC) Aaa/AAA 2,847,164
2,000,000 Chicago Board of Education, 6.00% due 12/1/2009 (Insured:
FGIC) Aaa/AAA 2,391,120
750,000 Chicago Board of Education School Reform, 6.25% due
12/1/2012 (Insured: MBIA) Aaa/AAA 927,300
2,300,000 Chicago Housing Authority Capital Program Revenue, 5.25%
due 7/1/2010 Aa3/AA 2,515,349
2,000,000 Chicago Metropolitan Water Reclamation District, 6.90%
due 1/1/2007 Aaa/AA+ 2,330,220
1,340,000 Chicago Midway Airport Revenue Series A, 5.40% due
1/1/2009 (Insured: MBIA) Aaa/AAA 1,501,617
900,000 Chicago Midway Airport Revenue Series C, 5.50% due
1/1/2013 (Insured: MBIA) Aaa/AAA 1,038,159
3,420,000 Chicago O'Hare International Airport Refunding General
Airport Series A, 6.375% Aaa/AAA 3,727,766
due 1/1/2012 (Insured: MBIA)
1,000,000 Chicago O'Hare International Airport Revenue, 5.375% due
1/1/2007 (Insured: Aaa/AAA 1,101,280
AMBAC)
1,105,000 Chicago O'Hare International Airport Revenue, 5.00% due
1/1/2012 (Insured: MBIA) Aaa/AAA 1,222,561
1,000,000 Chicago O'Hare International Airport Revenue 2nd Lien
Series C-1, 5.00% due Aaa/AAA 1,121,120
1/1/2010 (Insured: MBIA)
3,000,000 Chicago O'Hare International Airport Revenue Passenger
Facility Change Series A, Aaa/AAA 3,320,220
6.00% due 1/1/2006 (Insured: AMBAC)
5,000,000 Chicago O'Hare International Airport Revenue Refunding,
4.80% due 1/1/2005 Aaa/AAA 5,186,250
(Insured: AMBAC)
5,000,000 Chicago O'Hare International Airport Revenue Refunding
Series A, 4.90% due Aaa/AAA 5,187,900
1/1/2006 (Insured: MBIA)
1,000,000 Chicago O'Hare International Airport Revenue Series C-1,
5.00% due 1/1/2008 Aaa/AAA 1,113,050
(Insured: MBIA)
1,700,000 Chicago Park District, 6.60% due 11/15/2014 partially
pre-refunded 5/15/2005 Aa3/AA 1,885,980
1,000,000 Chicago Park District Parking Facility Revenue, 5.25% due
1/1/2004 (ETM)* Baa1/A 1,021,620
1,000,000 Chicago Park District Parking Facility Revenue, 5.75% due
1/1/2010 (ETM)* Baa1/A 1,176,220
750,000 Chicago Public Building Commerce Building Revenue, 5.00%
due 3/1/2005 (Insured: Aaa/AAA 795,630
AMBAC)
2,000,000 Chicago Public Building Commerce Building Revenue Series
C, 5.50% due 2/1/2006 Aaa/AAA 2,198,400
(Insured: FGIC)
2,000,000 Chicago Refunding Series A, 5.375% due 1/1/2013 (Insured:
MBIA) Aaa/AAA 2,282,440
1,000,000 Chicago Refunding Series A-2, 6.125% due 1/1/2012
(Insured: AMBAC) Aaa/AAA 1,208,790
5,000,000 Chicago Tax Increment Allocation Capital Appreciation
Central Series A, 0% due Aaa/AAA 4,812,050
12/1/2005 (Insured: AMBAC)
1,000,000 Collinsville Leased Facilities Revenue Refunding, 5.15%
due 11/1/2004 (Insured: Aaa/AAA 1,023,240
MBIA)
2,545,000 Cook & Will Counties Township High School District 206
Series C, 0% due Aaa/AAA 2,449,333
12/1/2005 (Insured: FSA)
995,000 Cook County Capital Improvement, 5.50% due 11/15/2008
pre-refunded 11/15/2006 Aaa/AAA 1,134,061
3,350,000 Cook County Community Unified School District 401 Series
1996, 0% due 12/1/2003 Aaa/AAA 3,335,997
(Insured: FSA)
2,650,000 Cook County Series C Refunding, 5.80% due 11/15/2004
(Insured: FGIC) Aaa/AAA 2,820,210
5,000,000 Du Page County Forest Preservation District, 0% due
11/1/2009 Aaa/AAA 4,156,600
1,500,000 Glenview Multi Family Revenue Refunding, 5.20% due
12/1/2027 put 12/1/2007 NR/AAA 1,622,955
(Collateralized: FNMA)
1,015,000 Hoffman Estates Illinois Tax Increment Revenue, 0% due
5/15/2005 A3/NR 946,610
3,075,000 Hoffman Estates Illinois Tax Increment Revenue, 0% due
5/15/2006 (Hoffman A3/NR 2,750,249
Estates Economic Dev. Project; Guarantee: Sears)
5,000,000 Hoffman Estates Illinois Tax Increment Revenue Refunding,
5.25% due 11/15/2009 Aaa/AAA 5,264,350
(Economic Development Project; Insured: AMBAC)
1,500,000 Hoffman Estates Tax Increment Revenue, 0% due 5/15/2004
A3/NR 1,456,650
3,000,000 Illinois Development Finance Authority Pollution Control
Revenue Refunding, Aaa/AAA 3,420,360
5.70% due 1/15/2009 (Commonwealth Edison Company Project;
Insured: MBIA)
860,000 Illinois Development Finance Authority Revenue, 4.00% due
11/15/2005 (Insured: Aaa/AAA 908,521
XLCA)
915,000 Illinois Development Finance Authority Revenue, 4.00% due
11/15/2006 (Insured: Aaa/AAA 979,526
XLCA)
3,635,000 Illinois Development Finance Authority Revenue, 6.00% due
11/15/2009 (Adventist Aaa/AAA 4,231,940
Health Project; Insured: MBIA)
3,860,000 Illinois Development Finance Authority Revenue, 6.00% due
11/15/2010 (Adventist Aaa/AAA 4,491,843
Health Project; Insured: MBIA)
785,000 Illinois Development Finance Authority Revenue, 5.25% due
2/15/2011 (Insured: NR/AAA 830,452
AMBAC)
400,000 Illinois Development Finance Authority Revenue Refunding
Community Rehab NR/BBB 407,928
Providers A, 5.60% due 7/1/2004
1,000,000 Illinois Development Finance Authority Revenue Refunding
Community Rehab NR/BBB 1,032,600
Providers A, 5.60% due 7/1/2005
1,000,000 Illinois Development Finance Authority Revenue Refunding
Community Rehab NR/BBB 1,038,600
Providers A, 5.60% due 7/1/2006
500,000 Illinois Health Facilities Authority Revenue, 5.20% due
10/1/2003 (Illinois A3/NR 505,305
Masonic Medical Center Project) (ETM)*
2,100,000 Illinois Health Facilities Authority Revenue, 5.50% due
11/15/2003 (Advocate Aa3/AA 2,131,962
Network Health Care Project)
915,000 Illinois Health Facilities Authority Revenue, 5.50% due
11/15/2007 (OSF A2/A 1,010,590
Healthcare System Project)
1,000,000 Illinois Health Facilities Authority Revenue, 5.75% due
11/15/2007 (OSF A2/A 1,030,210
Healthcare System Project)
1,290,000 Illinois Health Facilities Authority Revenue, 6.50% due
2/15/2008 (Iowa Health A1/NR 1,478,172
System Project)
1,375,000 Illinois Health Facilities Authority Revenue, 6.50% due
2/15/2009 (Iowa Health A1/NR 1,589,899
System Project)
1,465,000 Illinois Health Facilities Authority Revenue, 6.50% due
2/15/2010 (Iowa Health A1/NR 1,701,744
System Project)
1,560,000 Illinois Health Facilities Authority Revenue, 6.00% due
2/15/2011 (Iowa Health Aaa/AAA 1,801,753
System Project; Insured: AMBAC)
3,000,000 Illinois Health Facilities Authority Revenue Refunding,
5.50% due 11/15/2011 Aaa/AAA 3,351,360
(Methodist Medical Center Project; Insured: MBIA)
395,000 Illinois Health Facilities Authority Revenue Series 1993-
A, 7.875% due 8/15/2005 NR/NR 402,248
(Community Provider Pooled Loan Program Project)
1,885,000 Illinois Health Facilities Authority Revenue Series A,
9.25% due 7/1/2024 Aaa/NR 2,057,195
pre-refunded 7/1/2004 (Edgewater Medical Center Project)
1,040,000 Illinois Hospital District, 5.50% due 1/1/2010 (Insured:
FGIC) Aaa/AAA 1,176,822
500,000 Illinois State COPS Central Management Department, 5.00%
due 7/1/2007 (Insured: Aaa/AAA 557,425
AMBAC)
1,000,000 Illinois State Partners Series A, 6.00% due 7/1/2006
(Insured: AMBAC) Aaa/AAA 1,125,990
2,000,000 Illinois State Refunding, 5.125% due 12/1/2006 (Insured:
FGIC) Aaa/AAA 2,202,580
5,000,000 Illinois State Sales Tax Revenue First Series, 5.00% due
6/15/2006 Aa3/AAA 5,491,400
1,150,000 Kane, Mc Henry, Cook & De Kalb Counties Community Unit
School District 300, 0% Aaa/NR 896,345
due 12/1/2010 (Insured: AMBAC)
2,000,000 Lake County Community High School District 117 Series B,
0% due 12/1/2006 Aaa/NR 1,873,240
(Insured: FGIC)
3,235,000 Lake County Community High School District 117 Series B,
0% due 12/1/2011 Aaa/NR 2,397,556
(Insured: FGIC)
1,000,000 McHenry & Kane Counties Community Consolidated School
District Number 158, 0% Aaa/AAA 803,130
due 1/1/2010 (Insured: FGIC)
3,900,000 Metropolitan Pier & Exposition Authority, 0% due
6/15/2004 (Insured: AMBAC) Aaa/AAA 3,863,808
1,250,000 Metropolitan Pier & Exposition Authority Dedicated State
Tax Revenue Refunding Aaa/AAA 1,437,075
Series A-2002, 6.00% due 6/15/2007 (McCormick Place
Exposition Project; Insured:
AMBAC)
3,750,000 Metropolitan Pier & Exposition Authority Dedicated State
Tax Revenue Refunding Aaa/AAA 4,247,587
Series A-2002, 6.00% due 6/15/2007 pre-refunded 6/15/2006
@102 (McCormick Place
Exposition Project; Insured: AMBAC)
2,445,000 Naperville City, Du Page & Will Counties Economic
Development Revenue, 6.10% due NR/A+ 2,618,888
5/1/2008 (Hospital & Health System Association Project;
LOC: American National
Bank)
1,100,000 Peoria Public Building Commission School District
Facilities Revenue, 0% due Aaa/NR 993,256
12/1/2007 (Insured: FGIC)
6,300,000 University of Illinois Revenues, 0% due 10/1/2006
(Insured: MBIA) Aaa/AAA 5,933,718
5,000,000 Will County Community School 365-U Capital Appreciation,
0% due 11/1/2011 Aaa/AAA 3,716,650
(Insured: FSA)
Indiana (4.60%)
1,370,000 Allen County Economic Development Revenue, 5.00% due
12/30/2012 (Indiana NR/NR 1,462,872
Institute of Technology Project)
965,000 Allen County Economic Development Revenue First Mortgage,
5.20% due 12/30/2005 NR/NR 1,034,557
(Indiana Institute of Technology Project)
690,000 Allen County Economic Development Revenue First Mortgage,
5.30% due 12/30/2006 NR/NR 754,846
(Indiana Institute of Technology Project)
1,110,000 Allen County Economic Development Revenue First Mortgage,
5.60% due 12/30/2009 NR/NR 1,226,173
(Indiana Institute of Technology Project)
1,115,000 Allen County Jail Building Corp. First Mortgage, 5.75%
due 10/1/2010 Aa3/NR 1,313,470
1,000,000 Ball State University Revenues Student Fee Series K,
5.75% due 7/1/2012 Aaa/AAA 1,181,170
(Insured: FGIC)
1,085,000 Boone County Hospital Association Lease Revenue, 5.00%
due 1/15/2007 (Insured: Aaa/AAA 1,198,686
FGIC) (ETM)*
850,000 Boonville Junior High School Building Corp. Revenue, 0%
due 7/1/2010 (State Aid) NR/A 657,084
850,000 Boonville Junior High School Building Corp. Revenue, 0%
due 1/1/2011 (State Aid) NR/A 634,755
950,000 Boonville Junior High School Building Corp. Revenue
Refunding, 0% due 7/1/2011 NR/A 695,761
(State Aid)
1,175,000 Center Grove 2000 Building First Mortgage, 5.00% due
7/15/2009 (Insured: AMBAC) Aaa/AAA 1,330,170
1,135,000 Center Grove 2000 Building First Mortgage, 5.00% due
7/15/2010 (Insured: AMBAC) Aaa/AAA 1,283,424
910,000 Eagle Union Middle School Building Corp., 5.50% due
7/15/2009 (Insured: AMBAC) Aaa/AAA 1,066,875
(ETM)*
1,860,000 Elberfeld J. H. Castle School Building Corp. Indiana
First Mortgage (State Aid), NR/A 1,757,049
0% due 1/15/2006
1,860,000 Elberfeld J. H. Castle School Building Corp. Indiana
First Mortgage Refunding, Aaa/AAA 1,621,083
0% due 7/5/2008 (Insured: MBIA)
500,000 Fort Wayne Economic Development Income Tax Revenue, 3.90%
due 12/1/2003 Aaa/NR 505,840
(Insured: FSA)
965,000 Goshen Multi School Building Corp. 1st Mortgage, 5.20%
due 7/15/2007 (Insured: Aaa/AAA 1,084,110
MBIA)
2,305,000 Hammond Multi-School Building Corp. First Mortgage
Refunding Bond Series 1997, NR/A 2,588,446
6.00% due 7/15/2008 (Lake County Project)
1,805,000 Hobart Building Corp. First Mortgage, 5.30% due 8/1/2005
(Insured: AMBAC) Aaa/AAA 1,829,747
390,000 Huntington Economic Development Revenue, 6.00% due
11/1/2006 (United Methodist NR/NR 414,547
Membership Project)
700,000 Huntington Economic Development Revenue, 6.15% due
11/1/2008 (United Methodist NR/NR 758,268
Membership Project)
790,000 Huntington Economic Development Revenue, 6.20% due
11/1/2010 (United Methodist NR/NR 845,592
Membership Project)
285,000 Indiana Health Facility Financing Authority Hospital
Revenue, 5.75% due Aaa/NR 299,943
11/1/2005 (Daughter's Charity Project) (ETM)*
1,295,000 Indiana Health Facility Financing Authority Hospital
Revenue Series D, 5.00% due Aaa/NR 1,426,766
11/1/2026 pre-refunded 11/1/2007
1,335,000 Indiana Health Facility Financing Authority Revenue A,
1.05% due 10/1/2032 put NR/A-1 1,335,000
7/1/2003 (Fayette Memorial Hospital Association Project;
LOC: U.S. Bank & Trust)
(daily demand notes)
670,000 Indiana State Educational Facilities Authority Revenue,
5.75% due 10/1/2009 NR/A- 753,683
(University Indianapolis Project)
1,000,000 Indiana State Office Building Commission Capital Complex
Revenue, 5.00% due Aaa/AAA 1,022,740
7/1/2005 (Insured: AMBAC)
2,500,000 Indiana University Revenues Refunding, 0% due 8/1/2007
(Insured: AMBAC) Aaa/AAA 2,275,125
1,100,000 Indianapolis Airport Authority Revenue Refunding Series
A, 5.35% due 7/1/2007 Aaa/AAA 1,225,202
(Insured: FGIC)
1,220,000 Indianapolis Local Public Improvement Bond Bank
Transportation Revenue, 0% due Aa2/AA- 1,187,328
7/1/2005 (ETM)*
1,240,000 Indianapolis Local Public Improvement Bond Bank
Transportation Revenue, 0% due Aa2/AA- 1,178,893
7/1/2006 (ETM)*
2,200,000 Indianapolis Resource Recovery Revenue Refunding, 6.75%
due 12/1/2004 (Ogden Aaa/AAA 2,359,082
Martin Systems, Inc. Project; Insured: AMBAC)
2,000,000 Indianapolis Resource Recovery Revenue Refunding, 6.75%
due 12/1/2006 (Ogden Aaa/AAA 2,292,440
Martin Systems, Inc. Project; Insured: AMBAC)
855,000 Knox Middle School Building Corp. First Mortgage, 6.00%
due 7/15/2008 (Insured: Aaa/AAA 1,000,239
FGIC)
455,000 Knox Middle School Building Corp. First Mortgage, 6.00%
due 7/15/2009 (Insured: Aaa/AAA 539,239
FGIC)
890,000 Merrillville Multi School Building Corp. Refunding First
Mortgage, 6.55% due Aaa/AAA 980,362
7/1/2005 (Insured: MBIA)
625,000 Monroe County Community School Building Corp. Revenue
Refunding, 5.00% due Aaa/AAA 689,356
1/15/2007 (Insured: AMBAC)
535,000 New Albany Floyd County School Building Corp., 6.20% due
7/1/2003 (ETM)* NR/NR 535,075
800,000 North Adams Community Schools, 3.50% due 7/15/2004
(Insured: FSA) Aaa/AAA 820,352
940,000 North Adams Community Schools, 4.00% due 7/15/2005
(Insured: FSA) Aaa/AAA 989,876
1,070,000 North Central Campus School Building Corp. Indiana, 4.50%
due 7/10/2005 Aaa/AAA 1,137,763
(Insured: AMBAC)
1,000,000 Northwest Allen Building Corp. First Mortgage, 5.30% due
12/1/2005 (Insured: Aaa/AAA 1,058,450
MBIA)
835,000 Peru Community School Corp. Capital Appreciation
Refunding First Mortgage, 0% NR/A 645,488
due 7/1/2010
1,450,000 Tri Creek School Building Corp. Inc. First Mortgage,
5.00% due 1/15/2004 NR/AA- 1,481,305
1,540,000 Vigo County Elementary School Building Corp. Refunding &
Improvement First Aaa/AAA 1,632,261
Mortgage, 4.00% due 1/10/2006 (Insured: FSA)
1,635,000 Vigo County Elementary School Building Corp. Refunding &
Improvement First Aaa/AAA 1,752,181
Mortgage, 4.00% due 1/10/2008 (Insured: FSA)
995,000 Wawasee Community School Corp. First Mortgage, 5.50% due
7/15/2010 (State Aid) NR/AA- 1,132,797
1,095,000 Wawasee Community School Corp. First Mortgage, 5.50% due
7/15/2011 (State Aid) NR/AA- 1,250,129
2,080,000 West Clark School Building Corp. First Mortgage, 5.75%
due 7/15/2011 (Insured: Aaa/AAA 2,459,725
FGIC)
1,820,000 Westfield Elem. School Building Corp. First Mortgage
Series 1997, 6.80% due Aaa/AAA 2,150,785
7/15/2007 (Insured: AMBAC) (ETM)*
Iowa (2.90%)
4,320,000 Ames Hospital Revenue, 6.25% due 8/15/2006 (Insured:
AMBAC) Aaa/AAA 4,391,453
2,900,000 Ankeny Community School District Sales & Services Tax
Revenue, 5.00% due NR/A+ 3,178,458
7/1/2010
3,660,000 Des Moines Limited Obligation Revenue, 6.25% due
12/1/2015 put 12/1/2005 (Des NR/NR 3,666,881
Moines Parking Associates Project; LOC: Wells Fargo Bank)
6,650,000 Iowa Finance Authority Commercial Development Revenue
Refunding, 5.75% due NR/AA 7,180,537
4/1/2014 put 4/1/2010 (Governor Square Project; Insured:
AXA)
435,000 Iowa Finance Authority Hospital Facility Revenue, 6.50%
due 2/15/2007 (Iowa A1/NR 491,058
Health Services Project)
1,765,000 Iowa Finance Authority Hospital Facility Revenue, 6.50%
due 2/15/2009 (Iowa A1/NR 2,041,823
Health Services Project)
1,955,000 Iowa Finance Authority Hospital Facility Revenue, 6.50%
due 2/15/2010 (Iowa A1/NR 2,273,411
Health Services Project)
3,145,000 Iowa Finance Authority Hospital Facility Revenue, 6.00%
due 2/15/2011 (Iowa Aaa/AAA 3,638,450
Health Services Project; Insured: AMBAC)
1,000,000 Iowa Finance Authority Revenue Trinity Health Series B,
5.50% due 12/1/2003 Aa3/AA- 1,017,500
1,000,000 Iowa Finance Authority Revenue Trinity Health Series B,
5.50% due 12/1/2004 Aa3/AA- 1,056,870
1,430,000 Iowa Finance Authority Revenue Trinity Health Series B,
5.75% due 12/1/2007 Aa3/AA- 1,621,734
3,295,000 Iowa Finance Authority Revenue Trinity Health Series B,
5.75% due 12/1/2010 Aa3/AA- 3,790,041
1,000,000 Iowa Higher Education Loan Authority Revenue Variable,
1.20% due 4/1/2033 put NR/A1+ 1,000,000
7/1/2003 (St. Ambrose Project; LOC: Northern Trust)
(daily demand notes)
1,000,000 Iowa State University Revenues, 6.20% due 9/1/2003
Aa2/AA 1,008,690
1,170,000 Iowa University Science & Technology Revenue Refunding
Series B, 5.20% due Aa3/A+ 1,260,406
7/1/2005 (Academic Building Project)
115,000 Muscatine Electric Revenue, 9.50% due 1/1/2004 (ETM)*
Aaa/AAA 119,903
530,000 University of Iowa Facilities Corp. Revenue Series A,
4.875% due 6/1/2005 Aa2/AA- 565,796
Kansas (0.70%)
500,000 Dodge Unified School District 443 Ford County, 8.25% due
9/1/2006 (Insured: FSA) Aaa/AAA 601,100
2,000,000 Kansas City Hospital Revenue Refunding, 5.80% due
8/1/2004 (Sisters Charity Aa2/AA 2,047,340
Health Services Project)
1,000,000 Kansas City Hospital Revenue Refunding, 5.90% due
8/1/2005 (Sisters Charity Aa2/AA 1,023,350
Health Services Project)
6,000,000 La Cygne Environmental Improvement Refunding, 3.90% due
3/1/2015 put 8/31/2004 VMIG1/A-2 6,111,000
(Kansas City Power & Light Co. Project)
Kentucky (1.30%)
315,000 Campbell & Kenton Counties Sanitation District 1 Revenue,
6.50% due 8/1/2005 Aaa/AAA 319,590
(ETM)*
7,400,000 Kentucky Economic Development Finance Authority Series C,
0% due 10/1/2009 Aaa/AAA 7,592,548
converts to 5.35% 10/1/2005 (Norton Healthcare Project;
Insured: MBIA)
7,830,000 Kentucky Economic Development Finance Authority Series C,
0% due 10/1/2010 Aaa/AAA 8,062,473
converts to 5.40% 10/1/2005 (Norton Healthcare Project;
Insured: MBIA)
505,000 Kentucky State Turnpike Authority Resources Recovery
Revenue, 0% due 7/1/2006 Aaa/AAA 428,891
(Insured: FGIC)
150,000 Louisville Water Revenue Refunding, 6.00% due 11/15/2006
(ETM)* Aaa/AAA 170,880
420,000 Paintsville First Mortgage Revenue Series 1991, 8.50% due
9/1/2003 (Paul B. Hall NR/NR 420,882
Medical Center Project; Guarantee: Health Management
Associates)
Louisiana (3.20%)
4,000,000 Jefferson Parish Hospital District 2, 5.25% due 12/1/2015
crossover-refunded Aaa/AAA 4,223,760
12/1/2005 (Insured: FGIC)
1,440,000 Jefferson Sales Tax District Special Sales Tax Revenue
Refunding, 5.25% due Aaa/AAA 1,613,174
12/1/2006 (Insured: AMBAC)
1,515,000 Jefferson Sales Tax District Special Sales Tax Revenue
Refunding, 5.25% due Aaa/AAA 1,722,722
12/1/2007 (Insured: AMBAC)
1,000,000 Lake Charles Harbor & Terminal District Revenue, 5.50%
due 5/1/2006 (Reynolds A3/A- 1,012,340
Metal Project; LOC: Canadian Imperial Bank)
1,000,000 Louisiana Local Govt. Environmental Facilities &
Community Dev. Auth. Multi Baa1/NR 1,004,310
Family Revenue Series A, 5.00% due 9/1/2012 (Bellemont
Apartments Project)
1,000,000 Louisiana Offshore Authority Deepwater Port Revenue
Series B, 6.25% due 9/1/2004 A3/A 1,056,510
2,620,000 Louisiana PFA Revenue, 5.375% due 12/1/2008 (Wynhoven
Health Care Center NR/NR 2,736,616
Project; Guaranteed: Archdiocese of New Orleans)
1,000,000 Louisiana Public Facilities Authority Revenue, 5.75% due
10/1/2008 (Loyola A1/A+ 1,146,810
University Project)
1,280,000 Louisiana Public Facilities Authority Revenue Refunding,
5.50% due 10/1/2006 A1/A+ 1,420,365
(Loyola University Project)
4,635,000 Louisiana State Correctional Facility Lease, 5.00% due
12/15/2008 (Insured: NR/AA 5,082,324
Radian)
5,000,000 Louisiana State Offshore Term Refunding Series D, 4.00%
due 9/1/2023 put A3/A 5,223,000
9/1/2008 (Loop LLC Project)
2,350,000 Louisiana State Offshore Terminal Authority Deepwater
Port Revenue, 4.375% due A3/A 2,481,342
10/1/2020 put 6/1/2007
1,000,000 Louisiana State Offshore Terminal Authority Deepwater
Port Revenue Series B, A3/A 1,008,340
6.20% due 9/1/2003
1,000,000 New Orleans Refunding, 0% due 9/1/2006 (Insured: AMBAC)
Aaa/AAA 944,190
5,000,000 Orleans Parish School Board, 0% due 2/1/2008 (ETM)*
Aaa/AAA 4,183,050
1,000,000 Plaquemines Port Harbor & Terminal Refunding Electro Coal
D Convertible, 5.00% Ba1/BB+ 989,390
due 9/1/2007 (Teco Energy Inc. Project)
2,590,000 Shreveport Louisiana Water & Sewer Revenue Refunding
Series A, 4.00% due Aaa/AAA 2,697,614
12/1/2004 (Insured: FSA)
3,000,000 St. Charles Parish Pollution Control Revenue Variable
Refunding Series A, 4.90% Baa3/BBB- 3,152,580
due 6/1/2030 put 6/1/2005 (Entergy Louisiana Inc.
Project)
Maine (0.10%)
1,000,000 Regional Waste Systems Inc. Solid Waste Resources
Recovery Revenue Series P, Aaa/AAA 1,112,570
6.25% due 7/1/2010 (Insured: FSA)
Maryland (0.50%)
580,000 Baltimore Maryland, 7.00% due 10/15/2009 (Insured: MBIA)
Aaa/AAA 728,857
2,050,000 Baltimore Public Improvement Series A, 7.00% due
10/15/2006 (Insured: MBIA) Aaa/AAA 2,401,719
2,750,000 Howard County Multi Family Housing Revenue, 7.00% due
7/1/2024 put 7/1/2004 Baa2/NR 2,803,405
(Chase Glen Project; Guarantee: Avalon Prop.)
500,000 Maryland State Department Transportation Consolidated,
4.375% due 6/15/2004 Aa2/AA 506,365
Massachusetts (1.60%)
2,000,000 Boston Economic Development & Industrial Corp., 5.15% due
7/1/2025 put 7/1/2005 Aa3/NR 2,087,720
(LOC: Fleet National Bank)
1,060,000 Lynn General Obligation, 7.00% due 1/15/2004
Baa1/NR 1,091,132
3,470,000 Massachusetts Development Finance Agency Resource
Recovery Revenue Series A, Aaa/AAA 3,958,854
5.50% due 1/1/2011 (Insured: MBIA)
1,000,000 Massachusetts Industrial Finance Agency Pollution Control
Revenue Refunding, A2/A 1,022,680
5.875% due 8/1/2008 (Eastern Edison Co. Project)
1,000,000 Massachusetts Industrial Finance Agency Revenue, 8.375%
due 2/15/2018 NR/NR 1,185,290
pre-refunded 2/15/2006 @ 102 (Glenmeadow Retirement
Project)
900,000 Massachusetts Municipal Wholesale Electric Co. Power
Supply Systems Revenue, Aaa/AAA 963,954
5.00% due 7/1/2005 (Stony Brook Intermediate Project A;
Insured: MBIA)
1,000,000 Massachusetts Municipal Wholesale Electric Co. Power
Supply Systems Revenue Aaa/AAA 1,071,060
Series A, 5.00% due 7/1/2005 (Stony Brook Peaking
Project; Insured: MBIA)
515,000 Massachusetts State Health & Education Facility,
Daughters Of Charity, Series D, Aaa/AA+ 534,879
5.50% due 7/1/2004 (ETM)*
3,415,000 Massachusetts State Health & Educational Series H, 5.375%
due 5/15/2012 (New Aaa/AAA 3,903,379
England Medical Center Hospital Project; Insured: FGIC)
3,800,000 Massachusetts State Water Resources Authority, Series A,
1.25% due 8/1/2023 put VMIG1/A1+ 3,800,000
7/8/2003 (Insured: FGIC) (weekly demand notes)
1,500,000 Taunton General Obligation, 8.00% due 2/1/2006 (Insured:
MBIA) Aaa/AAA 1,744,425
Michigan (2.50%)
2,500,000 Detroit Michigan Capital Improvement Series A, 5.00% due
4/1/2005 (Insured: Aaa/AAA 2,660,625
MBIA)
1,405,000 Detroit Michigan Series A, 6.00% due 4/1/2007 (Insured:
FGIC) (ETM)* Aaa/AAA 1,619,277
1,670,000 Jackson County Hospital Finance Authority Hospital
Revenue Series A, 5.00% due Aaa/NR 1,816,476
6/1/2006 (W.A. Foote Memorial Hospital Project; Insured:
AMBAC)
1,000,000 Kalamazoo Hospital Finance Authority Facility Revenue,
5.50% due 5/15/2005 Aaa/NR 1,071,250
(Bronson Methodist Hospital Project; Insured: MBIA)
2,000,000 Michigan Hospital Finance Authority Revenue, 5.375% due
7/1/2012 (Insured: FSA) Aaa/AAA 2,139,900
2,370,000 Michigan Hospital Finance Authority Revenue, 4.80% due
11/1/2017 pre-refunded Aaa/NR 2,469,279
7/1/2004 @100
10,000,000 Michigan Hospital Finance Authority Revenue Series A,
5.375% due 11/15/2033 put Aa2/AA 11,189,000
11/15/2007 (Ascension Health Project)
655,000 Michigan Housing Development Authority Single Family
Insured Mortgage Revenue Aa1/AA+ 655,714
Series A, 5.00% due 4/1/2010 (Insured: FHA/VA Mtgs)
1,000,000 Michigan State Job Development Authority Pollution
Control Revenue, 5.55% due Baa1/BBB 1,001,490
4/1/2009 (General Motors Corp. Project; Guarantee: GM)
2,500,000 Michigan Strategic Fund Refunding Detroit, 4.85% due
9/1/2030 put 9/1/2011 Aaa/NR 2,773,500
(Edison Co. Project; Insured: AMBAC)
1,000,000 Missouri State Health & Educational Facilities Authority
Revenue Series A, 5.00% NR/AA- 1,092,960
due 6/1/2011
1,000,000 Oakland County Economic Development Corp. Limited, 5.50%
due 6/1/2014 (LOC: A1/NR 1,065,740
First of America Bank-Central)
800,000 Oxford Area Community School District, 5.00% due 5/1/2012
(Guaranteed: School Aaa/AAA 902,912
Bond Loan Fund)
2,550,000 Wayne State University Revenues, 5.00% due 11/15/2004
(Insured: FGIC) Aaa/AAA 2,687,113
Minnesota (0.60%)
1,000,000 Breckenridge Health Facilities Revenue Catholic Health
Corp., 5.25% due Aaa/AAA 1,030,470
11/15/2013 (Insured: MBIA)
1,915,000 Osseo Independent School District 279 Crossover Refunding
Series B, 5.00% due Aa2/NR 2,084,363
2/1/2006
3,000,000 Southern Minnesota Municipal Power Agency Revenue
Refunding Series A, 5.00% due Aaa/AAA 3,256,980
1/1/2006 (Insured: AMBAC)
1,450,000 University of Minnesota Refunding Series A, 5.50% due
7/1/2006 Aa2/AA 1,617,866
500,000 Waconia Housing & Redevelopment Authority Public Project,
5.70% due 1/1/2012 Baa3/A- 500,730
Mississippi (0.30%)
1,020,000 Gautier Utility District Systems Revenue Refunding, 5.50%
due 3/1/2012 (Insured: Aaa/NR 1,190,207
FGIC)
700,000 Hattiesburg Water & Sewer Revenue Refunding Systems,
5.20% due 8/1/2006 Aaa/AAA 764,988
(Insured: AMBAC)
1,000,000 Mississippi Hospital Equipment & Facilities Authority
Revenue, 6.50% due Aaa/AAA 1,101,460
5/1/2006 (Refunding Mississippi Baptist Medical Center;
Insured: MBIA)
955,000 Ridgeland Multi Family Housing Revenue, 4.95% due
10/1/2007 (FNMA: NR/A1+ 1,000,401
Collateralized)
Missouri (0.20%)
825,000 Jackson County Public Building Corp. Leasehold Revenue
Series 1996, 6.00% due Aaa/AAA 881,686
12/1/2004 (Capital Improvement Project; Insured: MBIA)
1,275,000 Missouri Development Finance Board Healthcare Facilities
Revenue Series A, 4.80% A2/NR 1,334,657
due 11/1/2012 (Lutheran Home Aged Project; LOC: Commerce
Bank)
105,000 Missouri Environmental Improvement & Energy Resources
Authority Water Pollution Aaa/NR 106,524
Control Revenue, 6.60% due 12/1/2003
Montana (1.10%)
10,440,000 Forsyth Pollution Control Revenue Refunding, 5.00% due
10/1/2032 put 12/30/2008 Aaa/AAA 11,563,970
(Insured: AMBAC)
2,500,000 Forsyth Pollution Control Revenue Refunding, 5.20% due
5/1/2033 put 5/1/2009 Baa2/BBB+ 2,558,500
(Portland General Project)
Nebraska (1.40%)
1,995,000 Lancaster County School District 1, 4.00% due 7/15/2007
(Lincoln Public School Aa2/AAA 2,154,400
Project)
1,455,000 Madison County Hospital Authority Revenue Number 1, 5.25%
due 7/1/2010 (Faith NR/AA 1,611,922
Regional Health Services Project; Insured: Radian)
1,625,000 Madison County Hospital Authority Revenue Number 1, 5.50%
due 7/1/2012 (Faith NR/AA 1,819,740
Regional Health Services Project; Insured: Radian)
2,705,000 Nebraska IFA Tax Exempt Multi Family Housing Revenue
Refunding 1995-A, 5.50% due NR/AAA 2,794,589
12/1/2025 put 12/1/2005 (Willow Park Apartments Project;
Collateralized: FNMA)
5,000,000 Omaha Public Power District Nebraska Electric Revenue
Refunding Systems B, 5.00% Aa2/AA 5,638,550
due 2/1/2013
3,005,000 Omaha Public Power District Nebraska Electric Revenue
Series A, 7.50% due NR/AA 3,265,624
2/1/2006 (ETM)*
1,300,000 University of Nebraska Facilities Corp., 5.00% due
7/15/2008 Aa2/AA- 1,468,025
Nevada (1.70%)
5,000,000 Humboldt County Pollution Control Revenue Refunding,
6.55% due 10/1/2013 (Sierra Aaa/AAA 5,207,500
Pacific Project; Insured: AMBAC)
1,830,000 Las Vegas Special Refunding Local Improvement District
707 Series A, 5.125% due Aaa/AAA 1,991,516
6/1/2011 (Insured: FSA)
840,000 Nevada Colorado River Commission Power Delivery A, 7.00%
due 9/15/2008 Aa2/AA 994,190
1,510,000 Nevada Housing Division FNMA Multi Family Certificate A,
4.80% due 4/1/2008 NR/AAA 1,572,272
(Collateralized: FNMA)
1,000,000 Sparks Redevelopment Agency Tax Allocation Revenue
Refunding Series A, 5.70% due NR/AA 1,125,960
1/15/2009 (Insured: Radian)
1,000,000 Sparks Redevelopment Agency Tax Allocation Revenue
Refunding Series A, 5.70% due NR/AA 1,126,870
1/15/2010 (Insured: Radian)
1,285,000 Sparks Redevelopment Agency Tax Allocation Revenue
Refunding Series A, 5.70% due NR/AA 1,442,927
1/15/2011 (Insured: Radian)
5,000,000 Washoe County Hospital Facility Revenue Series 1993 A,
6.00% due 6/1/2015 A2/A+ 5,105,650
(Washoe Medical Center Project)
3,500,000 Washoe County School District, 5.50% due 6/1/2008
(Insured: FSA) Aaa/AAA 4,016,845
New Hampshire (0.60%)
500,000 New Hampshire Capital Appreciation General Obligation, 0%
due 7/1/2004 Aa2/AA+ 495,025
300,000 New Hampshire Health & Education Facilities Authority
Revenue, 1.00% due Aaa/NR 300,000
7/1/2032 put 7/1/2003 (St. Anselm College project; LOC:
Fleet Bank) (daily
demand notes)
1,500,000 New Hampshire Health & Education Facilities Authority
Revenue Anticipation Notes NR/SP-1 1,524,375
D, 3.50% due 4/30/2004
2,485,000 New Hampshire Industrial Development Authority Revenue,
5.50% due 12/1/2009 put NR/AA- 2,578,834
12/1/2004 (Central Vermont Public Services Project; LOC:
Citizens Bank)
2,600,000 New Hampshire Municipal Bond Bank Refunding Series A-2,
4.60% due 7/15/2004 Aaa/AAA 2,697,344
(Insured: MBIA)
New Jersey (0.20%)
1,000,000 New Jersey Health Care Facilities Financing Authority
Revenue, 7.00% due NR/AAA 1,000,160
7/1/2003 (Christ Hospital Project; Insured: Connie Lee)
1,920,000 Pequannock River Basin Regional Sewage Authority
Refunding Series M, 5.00% due Aaa/NR 2,054,438
12/1/2006 (Sewer Revenue Project; Insured: MBIA)
New Mexico (2.00%)
1,600,000 Albuquerque Educational Facilities Revenue Refunding,
1.20% due 10/15/2016 put VMIG1/AA 1,600,000
7/8/2003 (Albuquerque Academy Project; Insured: Bank of
America) (weekly demand
notes)
750,000 Farmington Pollution Control Revenue, 1.05% due 5/1/2024
put 7/1/2003 (LOC: Bank P1/A1+ 750,000
of America) (daily demand notes)
800,000 Farmington Pollution Control Revenue, 1.00% due 9/1/2024
put 7/1/2003 (LOC: P1/A1+ 800,000
Barclays Bank) (daily demand notes)
4,865,000 New Mexico Highway Commission Revenue Subordinated Lien
Tax Series B, 5.00% due Aaa/AAA 5,509,126
6/15/2011 (Insured: AMBAC)
9,625,000 New Mexico Housing Authority, Multi Family Housing
Revenue, 1.25% due 1/15/2033 NR/A1+ 9,625,000
put 7/8/2003 (Arbors/Courtyard Apartments Project)
(weekly demand notes)
8,000,000 New Mexico State, 4.00% due 9/1/2005
Aa1/AA+ 8,455,680
New York (7.10%)
1,000,000 Brookhaven Industrial Development Agency Civic Facility
Revenue, 4.375% due A2/BBB+ 1,047,530
11/1/2031 put 11/1/2006 (Methodist Retirement Community
Project; LOC: Northfork
Bank)
1,000,000 Hempstead Town Industrial Development Agency Refunding,
5.00% due 12/1/2008 Aaa/AAA 1,103,460
(American Fuel Co. Project; Insured: MBIA)
1,500,000 Long Island Power Authority Electric Systems Revenue
General Series A, 6.00% due Aaa/AAA 1,746,675
12/1/2007 (Insured: AMBAC)
2,350,000 Long Island Power Authority Electric Systems Revenue
Subordinated Series 8 Aaa/AAA 2,407,904
Subseries 8-D, 4.50% due 4/1/2010 put 4/1/2004 (Insured:
AMBAC)
7,000,000 Long Island Power Authority General Series B, 5.00% due
12/1/2006 Baa1/A- 7,625,170
4,535,000 Metro Transportation Authority New York Service Series B,
5.25% due 7/1/2007 A3/AA- 5,091,807
1,050,000 Monroe County Industrial Development Agency, 5.375% due
6/1/2007 (St. John NR/AA 1,175,769
Fisher College Project; Insured: Radian)
2,800,000 New York Adjusted Subseries E-3, 0.85% due 8/1/2023 put
7/1/2003 (daily demand VMIG1/A1+ 2,800,000
notes)
2,300,000 New York City Adjusted Series H, 1.40% due 8/1/2014 put
7/1/2003 (Insured: MBIA) VMIG1/A-2 2,300,000
(daily demand notes)
2,000,000 New York City General Obligation, 0.95% due 8/1/2020 put
7/1/2003 (daily demand VMIG1/A1+ 2,000,000
notes)
700,000 New York City General Obligation, 0.85% due 8/1/2021 put
7/1/2003 (daily demand VMIG1/A1+ 700,000
notes)
500,000 New York City General Obligation Series A, 7.00% due
8/1/2003 A2/A 502,415
710,000 New York City Housing Development Corp. Multi Family
Housing Revenue Refunding Aa2/AA 722,943
Series A, 5.50% due 11/1/2009
2,215,000 New York City Industrial Development Agency Civic
Facility, 5.25% due 6/1/2011 NR/A 2,434,706
(Lycee Francais De New York Project Series A; Insured:
ACA)
2,330,000 New York City Industrial Development Agency Civic
Facility, 5.25% due 6/1/2012 NR/A 2,563,140
(Lycee Francais De New York Project Series A; Insured:
ACA)
8,600,000 New York City Municipal Water Finance Authority Water &
Sewer Systems Revenue VMIG1/A1+ 8,600,000
2003 Sub Series A, 1.15% due 6/15/2018 put 7/1/2003 (LOC:
Bank of New York)
(daily demand notes)
10,450,000 New York City Transitional Finance Authority, 1.00% due
11/1/2022 put 7/1/2003 VMIG1/A1+ 10,450,000
(daily demand notes)
1,500,000 New York City Transitional Refunding Future Tax Secured
Series A, 4.50% due Aa2/AA+ 1,566,270
11/1/2004
1,040,000 New York Dormitory Authority, 6.00% due 7/1/2007
(Champlain Valley Physicians NR/AAA 1,196,666
Project; Insured: Connie Lee)
1,895,000 New York Dormitory Authority Revenues, 6.00% due 9/1/2008
pre-refunded 9/1/2005 NR/AA 1,992,498
(Norton Healthcare Project)
1,600,000 New York Dormitory Authority Revenues Mental Health
Services Facilities Aaa/AAA 1,810,208
Improvement B, 5.00% due 8/15/2010 (Insured: MBIA)
4,000,000 New York Dormitory Authority Revenues Series B, 5.25% due
11/15/2026 put Aaa/AAA 4,514,600
5/15/2012 (Insured: AMBAC)
560,000 New York Medical Care Facilities Finance Agency Revenue,
6.40% due 11/1/2014 Aaa/AAA 567,739
(Insured: FSA)
1,000,000 New York Series B, 5.50% due 8/1/2011 (Insured: MBIA)
Aaa/AAA 1,157,530
2,200,000 New York Series B, 0.95% due 10/1/2021 put 7/1/2003
(daily demand notes) VMIG1/A1+ 2,200,000
12,000,000 New York State Dormitory Authority Revenues, 4.00% due
12/15/2005 NR/AA 12,746,760
2,500,000 New York State Urban Development Corp. Revenue Refunding
Facilities A, 6.50% due Aaa/AAA 3,044,550
1/1/2011 (Correctional Capital Project; Insured: FSA)
1,320,000 New York Thruway Authority General Revenue Special
Obligation, 0% due 1/1/2006 NR/BBB 1,251,202
255,000 New York Urban Development Corp. Revenue University
Facilities Grants, 6.00% due A3/AA- 280,502
1/1/2006
3,425,000 New York Urban Development Corp. Series 7, 6.00% due
1/1/2006 A3/AA- 3,767,534
710,000 Oneida County Industrial Development Agency Series C,
6.00% due 1/1/2009 (Civic NR/AA 822,379
Facility Faxton Hospital Project; Insured: Radian)
2,000,000 Tobacco Settlement Financing Corp. New York Revenue Asset
Backed Series A-1C, NR/AA- 2,091,680
5.00% due 6/1/2012
1,000,000 Tobacco Settlement Financing Corp. New York Revenue Asset
Backed Series A-1C, NR/AA- 1,049,270
5.25% due 6/1/2012
170,000 Westchester County IDA Civic Facility Revenue, 6.25% due
4/1/2005 (Julia Dykman NR/NR 172,502
Project)
North Carolina (2.10%)
1,000,000 Charlotte Certificates Participation Series B, 5.00% due
6/1/2006 (FY Project) Aa1/AA+ 1,098,000
135,000 Gastonia Housing Corp. First Lien Rev Series A, 5.75% due
7/1/2004 (Golfview NR/A- 135,612
Village Square Apartment Project)
925,000 North Carolina Capital Facilities Finance Agency
Educational Facilities Revenue Aaa/AAA 1,026,944
Series A, 5.00% due 4/1/2007 (Johnson & Wales University
Project; Insured: XL
Capital)
2,860,000 North Carolina Eastern Municipal Power Agency Power
Systems Revenue, 6.125% due Aaa/AAA 3,367,393
1/1/2009 (Insured: MBIA)
3,000,000 North Carolina Eastern Municipal Power Agency Power
Systems Revenue Refunding Baa3/BBB 3,238,860
Series D, 5.375% due 1/1/2011
650,000 North Carolina Eastern Municipal Power Agency Power
Systems Revenue Series C, Baa3/BBB 696,455
5.25% due 1/1/2012
1,000,000 North Carolina Eastern Municipal Power Agency Power
Systems Series A, 5.50% due Baa3/BBB 1,089,160
1/1/2012
1,055,000 North Carolina Eastern Municipal Power Agency Power
Systems Series C, 5.25% due Baa3/BBB 1,125,727
1/1/2013
2,400,000 North Carolina Municipal Power Agency Number 1 Catawba
Electric Revenue, 6.00% Aaa/AAA 2,839,608
due 1/1/2010 (Insured: MBIA)
2,505,000 North Carolina Municipal Power Agency Number 1 Catawba
Electric Revenue Series Baa1/BBB+ 2,808,030
A, 5.50% due 1/1/2013
1,000,000 North Carolina Municipal Power Agency Number 1 Catawba
Electric Revenue Series Baa1/BBB+ 1,145,010
B, 6.375% due 1/1/2013
3,400,000 North Carolina Municipal Power Agency Series A, 6.00% due
1/1/2007 (Insured: Aaa/AAA 3,862,808
MBIA)
3,700,000 North Carolina Municipal Power Agency Series A, 6.00% due
1/1/2008 (Insured: Aaa/AAA 4,280,678
MBIA)
1,030,000 University of North Carolina Systems Pool Revenue
Refunding Series B, 5.00% due Aaa/AAA 1,170,935
4/1/2012 (Insured: AMBAC)
North Dakota (0.10%)
910,000 Grand Forks Health Care Systems Revenue Bond Series 1997,
6.25% due 8/15/2005 Aaa/AAA 996,031
(Altru Health System Project; Insured: MBIA)
Ohio (3.50%)
2,510,000 Bellefontaine Hospital Revenue Refunding, 6.00% due
12/1/2013 (Mary Rutan Health NR/BBB 2,595,516
Associates Project)
4,415,000 Cleveland Cuyahoga County Port Authority Revenue, 6.00%
due 11/15/2010 NR/NR 4,762,019
2,255,000 Cuyahoga County Hospital Revenue Refunding Series B,
6.00% due 1/15/2006 A2/A 2,476,193
(University Hospital Health Systems Project)
1,400,000 Hudson City Library Improvement, 6.35% due 12/1/2011
Aa2/NR 1,704,206
585,000 Lake County Sewer & Water District Improvement, 5.30% due
12/1/2011 Aa2/NR 649,572
1,680,000 Lorain County Hospital Revenue Refunding & Improvement
Catholic Healthcare A, A1/AA- 1,694,549
5.00% due 10/1/2003
1,200,000 Lorain County Hospital Revenue Refunding Catholic
Healthcare Partners B, 6.00% Aaa/AAA 1,394,352
due 9/1/2008 (Insured: MBIA)
1,300,000 Mahoning Valley District Water Refunding, 5.85% due
11/15/2008 (Insured: FSA) Aaa/AAA 1,528,228
770,000 Mahoning Valley District Water Refunding, 5.90% due
11/15/2009 (Insured: FSA) Aaa/AAA 918,063
2,250,000 Montgomery County Revenue, 6.00% due 12/1/2008 (Catholic
Health Initiatives Aa2/AA 2,587,320
Project)
2,385,000 Montgomery County Revenue, 6.00% due 12/1/2009 (Catholic
Health Initiatives Aa2/AA 2,762,498
Project)
1,530,000 Montgomery County Revenue, 6.00% due 12/1/2010 (Catholic
Health Initiatives Aa2/AA 1,767,380
Project)
1,000,000 Montgomery County Solid Waste Revenue, 6.00% due
11/1/2005 (Insured: MBIA) Aaa/AAA 1,105,650
2,000,000 Ohio State Building Authority Refunding Adult Corrections
Facilities, 5.00% due Aaa/AAA 2,214,640
10/1/2006 (Insured: FSA)
4,000,000 Ohio State Building Authority Refunding State
Correctional Facilities A, 4.60% Aa2/AA 4,036,720
due 10/1/2003
4,000,000 Ohio State Building Authority State Facilities, 6.125%
due 10/1/2011 Aa2/AA 4,132,280
pre-refunded 10/1/2003 @ 102 (Adult Control Building A
Project)
1,000,000 Ohio State Highway Capital Improvement Series C, 5.00%
due 5/1/2006 Aa1/AAA 1,096,600
5,000,000 Ohio State Unlimited Tax General Obligation Series A,
5.75% due 6/15/2010 Aa1/AA+ 5,804,800
680,000 Plain Local School District Capital Appreciation, 0% due
12/1/2006 (Insured: Aaa/NR 639,064
FGIC)
845,000 Plain Local School District Capital Appreciation, 0% due
12/1/2007 (Insured: Aaa/NR 766,550
FGIC)
975,000 Reading Revenue Development, 6.00% due 2/1/2009 (St.
Mary's Educational NR/AA 1,123,190
Institute Project; Insured: Radian)
Oklahoma (1.60%)
675,000 Broken Arrow, 4.40% due 12/1/2005
Aa3/AA- 676,607
1,235,000 Claremore Public Works Authority Revenue Refunding, 6.00%
due 6/1/2006 (Insured: Aaa/NR 1,389,634
FSA)
1,340,000 Claremore Public Works Authority Revenue Refunding, 6.00%
due 6/1/2007 (Insured: Aaa/NR 1,541,992
FSA)
740,000 Jenks Aquarium Authority Revenue First Mortgage, 5.50%
due 7/1/2010 (Insured: Aaa/NR 836,119
MBIA)
740,000 Oklahoma Development Finance Authority Health Facilities
Revenue, 5.75% due Aaa/AAA 856,187
6/1/2011 (Insured: AMBAC)
2,380,000 Oklahoma Authority Revenue Refunding Health Systems
Obligation Group Series A, Aaa/AAA 2,708,345
5.75% due 8/15/2007 (Insured: MBIA)
2,340,000 Oklahoma Authority Revenue Refunding Health Systems
Obligation Group Series A, Aaa/AAA 2,716,014
6.00% due 8/15/2010 (Insured: MBIA)
5,000,000 Oklahoma Housing Development Authority Revenue Lease
Purchase Program Series A, Aa3/NR 5,377,250
5.10% due 11/1/2005
2,650,000 Tulsa County Independent School District, 4.50% due
8/1/2006 Aa3/A+ 2,881,053
1,000,000 Tulsa Metropolitan Utility Authority Water Series A,
5.60% due 11/1/2004 NR/AA- 1,057,300
750,000 Tulsa Public Facilities Authority Solid Waste Steam &
Electric Revenue Refunding Aaa/AAA 790,035
Series 1994, 5.45% due 11/1/2004 (Ogden Martin Systems of
Tulsa Project;
Insured: AMBAC)
Oregon (0.40%)
1,070,000 Clackamas County Hospital Facility Authority Revenue
Refunding Series A, 5.50% NR/NR 1,070,385
due 9/15/2008 (Odd Fellows Home Project)
1,325,000 Emerald People's Utility District Revenue, 7.20% due
11/1/2003 (Insured: FGIC) Aaa/AAA 1,352,362
1,000,000 Medford Hospital Facilities Authority Revenue Series A,
5.25% due 8/15/2006 Aaa/AAA 1,102,300
(Asante Health Systems Project; Insured: MBIA)
640,000 Portland Oregon, 4.40% due 3/1/2004
Aa2/NR 654,867
750,000 Salem Oregon Water & Sewer Revenue, 6.00% due 6/1/2005
(Insured: MBIA) Aaa/AAA 816,150
Pennsylvania (2.90%)
1,505,000 Allegheny County Hospital Development Health Series B,
6.30% due 5/1/2009 (South Baa1/NR 1,564,583
Hills Health System Project)
1,000,000 Allegheny County Hospital Development Refunding, 4.40%
due 11/1/2005 (Health Aaa/AAA 1,064,480
Center UPMC Health Systems Project; Insured: MBIA)
395,000 Coatesville Area School District Series A Refunding,
5.00% due 10/1/2003 Aaa/AAA 399,041
(Insured: AMBAC)
305,000 Delaware County Authority Health Care Revenue, 6.00% due
11/15/2007 pre-refunded Aaa/NR 316,410
11/15/2005 (Mercy Health Corp. Project)
1,000,000 Delaware County Pennsylvania Authority Revenue, 5.50% due
11/15/2007 (Insured: Aaa/AAA 1,129,770
AMBAC)
4,250,000 Delaware County Pollution Control Refunding Series A,
5.20% due 4/1/2021 put A3/BBB+ 4,405,677
10/1/2004 (Peco Energy Co. Project)
1,000,000 Frazier Pennsylvania School District, 4.80% due 8/15/2003
NR/SP1+ 1,003,240
1,000,000 Geisinger Authority Health Systems Revenue, 5.50% due
8/15/2009 Aa2/AA- 1,121,630
1,605,000 Manheim Township School Authority School Revenue Series
1978, 6.625% due NR/AAA 1,797,793
12/1/2007 pre-refunded 12/1/2005
730,000 Montgomery County Higher Education & Health Authority,
6.25% due 7/1/2006 Baa3/NR 757,930
550,000 Montgomery County Higher Education & Health Authority,
6.375% due 7/1/2007 Baa3/NR 572,577
2,000,000 Montgomery County Industrial Development Authority
Pollution Control Revenue A2/BBB+ 2,073,260
Series A, 5.20% due 10/1/2030 put 10/1/2004 (Peco Energy
Co. Project)
150,000 Pennsylvania Higher Education Facilities Authority
Revenue, 6.15% due 4/1/2004 Baa3/NR 155,858
(ETM)*
1,500,000 Pennsylvania Higher Educational Facilities Authority
Health Services Revenue, A3/A 1,596,195
5.50% due 1/1/2009 (University Pennsylvania Health
Systems Project)
750,000 Pennsylvania Higher Educational Facility Series A, 6.00%
due 1/1/2005 A3/A 795,803
(University Pennsylvania Health Systems Project)
4,500,000 Pennsylvania State Higher Educational Facilities
Authority, 7.00% due 1/1/2009 A3/A 4,698,045
1,500,000 Pennsylvania State Higher Educational Facilities
Authority Revenue, 4.00% due VMIG1/NR 1,571,820
11/1/2032 put 11/1/2005 (LOC: Allied Irish Banks P.L.C.)
5,255,000 Pennsylvania State Unrefunded First Series, 5.00% due
4/15/2005 Aa2/AA 5,349,905
1,520,000 Philadelphia Authority For Industrial Development
Revenues, 8.00% due 1/1/2014 Aaa/NR 1,610,774
pre-refunded 7/1/2004
1,000,000 Philadelphia Hospital & Higher Education Facilities
Authority Revenue, 5.50% due A1/AA- 1,089,230
5/15/2006 (Jefferson Health Systems Project)
1,255,000 Sayre Pennsylvania Health Care Facilities Authority
Series A, 5.00% due 7/1/2008 Aaa/AAA 1,397,304
(Latrobe Area Hospital Project; Insured: AMBAC)
1,320,000 Sayre Pennsylvania Health Care Facilities Authority
Series A, 5.00% due 7/1/2009 Aaa/AAA 1,474,031
(Latrobe Area Hospital Project; Insured: AMBAC)
1,400,000 Sayre Pennsylvania Health Care Facilities Authority
Series A, 5.25% due 7/1/2011 Aaa/AAA 1,581,706
(Latrobe Area Hospital Project; Insured: AMBAC)
1,000,000 Sayre Pennsylvania Health Care Facilities Authority
Series A, 5.25% due 7/1/2012 Aaa/AAA 1,132,910
(Latrobe Area Hospital Project; Insured: AMBAC)
Rhode Island (2.10%)
860,000 Providence Public Building Authority Refunding Series B,
5.50% due 12/15/2003 Aaa/AAA 877,811
(Insured: FSA)
1,075,000 Providence Public Building Authority Refunding Series B,
5.75% due 12/15/2007 Aaa/AAA 1,244,828
(Insured: FSA)
1,000,000 Providence Public Building Authority School Project
Series B, 5.00% due Aaa/AAA 1,087,810
12/15/2005 (Insured: MBIA)
1,000,000 Providence Public Building Authority School Project
Series B, 4.00% due Aaa/AAA 1,079,550
12/15/2006 (Insured: MBIA)
1,000,000 Providence Public Building Authority School Project
Series B, 4.00% due Aaa/AAA 1,085,070
12/15/2007 (Insured: MBIA)
1,880,000 Providence Series C, 5.50% due 1/15/2012 (Insured: FSA)
Aaa/AAA 2,197,701
4,455,000 Rhode Island Bond Authority Revenue Refunding Series A,
5.00% due 10/1/2005 Aaa/AAA 4,814,519
(State Public Projects; Insured: AMBAC)
10,085,000 Rhode Island Bond Authority Revenue Refunding Series A,
5.00% due 10/1/2006 Aaa/AAA 11,160,565
(State Public Projects; Insured: AMBAC)
2,075,000 Rhode Island Economic Development Corp. Revenue, 5.75%
due 7/1/2010 (Providence NR/AA 2,358,611
Place Mall Project; Insured: Radian)
1,960,000 Rhode Island State Health & Education Building, 4.50% due
9/1/2009 (Butler NR/A+ 2,111,449
Hospital Project; LOC: Fleet National Bank)
South Carolina (1.40%)
2,050,000 Charleston County Certificates of Participation, 6.00%
due 12/1/2007 (Insured: Aaa/AAA 2,389,193
MBIA)
1,000,000 Medical University South Carolina Hospital Facilities
Revenue, 5.50% due Baa2/BBB+ 1,082,560
7/1/2005 (ETM)*
945,000 Piedmont Municipal Power Agency Electric Revenue, 6.375%
due 1/1/2006 (Insured: Aaa/AAA 1,052,059
FGIC)
400,000 Piedmont Municipal Power Agency Electric Revenue Variable
Refunding Series C, VMIG1/A1+ 400,000
1.20% due 1/1/2022 put 7/8/2003 (Insured: MBIA) (weekly
demand notes)
5,000,000 Richland County Environmental Improvement Revenue
Refunding Series A, 4.25% due Baa2/BBB 5,222,800
10/1/2007 (International Paper Co. Project)
2,000,000 South Carolina State Public Service Authority Revenue
Refunding Series D, 5.00% Aa2/AA- 2,166,180
due 1/1/2006
2,315,000 South Carolina State Public Service Authority Revenue
Refunding Series D, 5.00% Aa2/AA- 2,548,815
due 1/1/2007
1,000,000 South Carolina State Refunding, 4.50% due 4/1/2005
(Capital Improvement Project) Aaa/AAA 1,022,540
1,720,000 York County Refunding, 5.00% due 6/1/2006 (Insured: FSA)
Aaa/AAA 1,889,076
South Dakota (0.50%)
1,160,000 South Dakota Health & Educational Facilities Authority
Revenue, 5.00% due Aaa/AAA 1,286,730
9/1/2010 (Rapid City Regional Hospital Project; Insured:
MBIA)
1,100,000 South Dakota Health & Educational Facilities Authority
Revenue, 5.50% due Aaa/AAA 1,259,291
9/1/2011 (Rapid City Regional Hospital Project; Insured:
MBIA)
1,250,000 South Dakota Lease Revenue Series 93-B, 8.00% due
9/1/2003 (Insured: FSA) Aaa/AAA 1,264,400
2,235,000 South Dakota State Building Authority Lease Revenue,
6.625% due 9/1/2012 Aaa/AAA 2,300,620
pre-refunded 9/1/2004 @100 (Insured: AMBAC)
Tennessee (0.50%)
2,420,000 Clarksville Natural Gas Refunding, 5.00% due 11/1/2004
NR/BBB+ 2,510,726
870,000 Franklin Industrial Development Multi Family Refunding
Housing Series A, 5.75% Aaa/AAA 930,221
due 4/1/2010 (Insured: FSA)
1,000,000 Hamilton County Industrial Development Board, 5.75% due
9/1/2005 (Insured: FGIC) Aaa/AAA 1,093,810
1,050,000 Shelby County Tennessee Series A, 0% due 5/1/2011 pre-
refunded 5/1/2005 @ 69.561 Aa2/AA+ 713,580
985,000 Tennessee Housing Development Agency Mortgage Finance
Series A, 5.70% due A1/AA 1,006,611
7/1/2008
Texas (11.60%)
1,000,000 Amarillo Health Facilities Corp. Hospital Revenue, 5.50%
due 1/1/2011 (Baptist Aaa/NR 1,127,460
St. Anthony's Hospital Corp. Project; Insured: FSA)
1,000,000 Austin Texas Refunding, 5.00% due 3/1/2011
Aa2/AA+ 1,126,370
1,000,000 Austin Utility Systems Revenue Refunding Comb Series A,
5.60% due 5/15/2007 Aaa/AAA 1,023,510
(Insured: MBIA)
1,000,000 Bell County Health Facilities Development Corp. Revenue
Series A, 6.25% due Aaa/AAA 1,180,630
8/15/2010 (Scott & White Memorial Hospital Project;
Insured: MBIA)
1,800,000 Bexar County Housing Finance Corp. Multi Family Housing
Revenue, 5.00% due Aaa/NR 1,926,522
1/1/2011 (Insured: MBIA)
1,250,000 Cedar Hill Independent School District Capital
Appreciation Refunding, 0% due NR/AAA 950,713
8/15/2010 (Guarantee: PSF)
1,700,000 Clint Independent School District Refunding, 5.50% due
2/15/2011 (Guarantee: Aaa/AAA 1,967,359
PSF)
1,425,000 Clint Independent School District Refunding, 5.50% due
2/15/2012 (Guarantee: Aaa/AAA 1,637,667
PSF)
3,300,000 Coppell Independent School District Capital Appreciation
Refunding, 0% due NR/AAA 3,004,782
8/15/2007 (Guarantee: PSF)
1,025,000 Corpus Christi Business & Job Development Corp. Sales Tax
Revenue, 5.00% due Aaa/AAA 1,162,463
9/1/2012 (Refunding & Improvement Arena Project; Insured:
AMBAC)
2,200,000 Corpus Christi Independent School Refunding, 5.45% due
8/15/2003 (PSF Guarantee) Aaa/AA 2,208,184
2,000,000 Corpus Christi Utility Systems Revenue Refunding, 5.50%
due 7/15/2005 (Insured: Aaa/AAA 2,168,440
FSA)
4,070,000 Corpus Christi Utility Systems Revenue Refunding, 5.50%
due 7/15/2006 (Insured: Aaa/AAA 4,541,184
FSA)
2,000,000 Corpus Christi Utility Systems Revenue Refunding, 5.50%
due 7/15/2008 (Insured: Aaa/AAA 2,299,700
FSA)
4,780,000 Corpus Christi Utility Systems Revenue Refunding, 5.50%
due 7/15/2009 (Insured: Aaa/AAA 5,546,855
FSA)
1,735,000 Cypress Fairbanks Independent School District Unrefunded
Balance Series A, Aaa/AAA 1,742,686
6.125% due 8/1/2011 (PSF Guarantee)
1,080,000 Dallas Independent School District Unrefunded Balance,
5.60% due 8/15/2004 (PSF Aaa/AAA 1,086,124
Guarantee)
450,000 Dallas Tax Increment Financing Reinvestment Zone 2, 5.75%
due 8/15/2006 NR/AA 497,777
(Insured: Radian)
1,200,000 Dallas/Fort Worth Regional Airport Revenue Refunding
Joint Series A, 7.375% due Aaa/AAA 1,283,112
11/1/2011 (Insured: FGIC)
1,245,000 Duncanville Independent School District Capital
Appreciation Refunding Series B, Aaa/AAA 899,077
0% due 2/15/2012 (Guarantee: PSF)
4,945,000 Duncanville Independent School District Refunding Series
B, 0% due 2/15/2011 Aaa/AAA 3,761,513
(Guarantee: PSF)
4,500,000 Ector County Hospital District Hospital Revenue
Refunding, 5.50% due 4/15/2004 Aaa/AAA 4,652,010
(Insured: MBIA)
3,800,000 Fort Worth Water & Sewer Revenue Refunding & Improvement,
5.25% due 2/15/2011 Aa2/AA 4,256,266
1,390,000 Fort Worth Water & Sewer Revenue Series 2001, 5.25% due
2/15/2011 (Tarrant & Aa2/AA 1,585,226
Denton County Project)
2,005,000 Grapevine Texas, 5.25% due 2/15/2012 (Insured: FGIC)
Aaa/AAA 2,184,768
4,000,000 Gulf Coast Waste Disposal Authority Environmental
Facilities Revenue Refunding, Baa2/BBB+ 4,206,800
4.20% due 11/1/2006 (Occidental Project)
1,000,000 Gulf Coast Waste Disposal Authority Texas Revenue
Refunding, 5.00% due 10/1/2010 Aaa/AAA 1,134,330
(Bayport Area Systems Project; Insured: AMBAC)
1,000,000 Gulf Coast Waste Disposal Authority Texas Revenue
Refunding, 5.00% due 10/1/2011 Aaa/AAA 1,131,540
(Bayport Area Systems Project; Insured: AMBAC)
750,000 Harlingen Consolidated Independent School, 7.50% due
8/15/2009 (Guarantee: PSF) Aaa/AAA 952,335
500,000 Harris County Health Facilities Development Corp.
Hospital Revenue Refunding Aaa/AAA 604,075
Series A, 6.00% due 6/1/2012 (Memorial Hospital Systems
Project; Insured: MBIA)
4,410,000 Harris County Health Facilities Development Corp. Thermal
Utility Revenue, 5.45% Aaa/AAA 5,063,606
due 2/15/2011 (Insured: AMBAC)
600,000 Harris County Health Facilities Hospital Series A, 6.00%
due 6/1/2010 (Memorial Aaa/AAA 698,784
Hospital Systems Project; Insured: MBIA)
755,000 Harris County Hospital District Mortgage Revenue, 7.40%
due 2/15/2010 (Insured: Aaa/AAA 864,422
AMBAC) (ETM)*
1,045,000 Harris County Hospital District Mortgage Revenue
Unrefunded Balance Refunding, Aaa/AAA 1,236,277
7.40% due 2/15/2010 (Insured: AMBAC)
10,000,000 Harris County Hospital District Revenue Refunding, 5.75%
due 2/15/2011 (Insured: Aaa/AAA 11,452,300
MBIA)
2,000,000 Harris County Hospital District Revenue Refunding, 5.75%
due 2/15/2012 (Insured: Aaa/AAA 2,258,640
MBIA)
3,260,000 Harris County Sports Authority Revenue Capital
Appreciation Senior Lien Series Aaa/AAA 2,548,798
G, 0% due 11/15/2010 (Insured: MBIA)
3,000,000 Hays Consolidated Independent School District Capital
Appreciation, 0% due Aaa/AAA 2,241,450
8/15/2011 (Guarantee: PSF)
500,000 Irving Independent School District Capital Appreciation,
0% due 2/15/2004 Aaa/AAA 496,985
(Guarantee: PSF)
1,000,000 Lewisville Combination Contract Revenue, 4.125% due
5/1/2031 put 11/1/2006 NR/AA- 1,061,370
(Special Assessment Castle Hills Project Number 3; LOC:
Wells Fargo Bank)
500,000 Lower Colorado River Authority Revenue Refunding &
Improvement, 8.00% due Aaa/AAA 654,785
5/15/2010 (Insured: FSA)
3,065,000 Mesquite Independent School District Capital Appreciation
Refunding, 0% due NR/AAA 2,210,662
8/15/2011 (Guarantee: PSF)
1,415,000 Midlothian Independent School District Capital
Appreciation Refunding, 0% due Aaa/NR 1,253,365
2/15/2008 (Guarantee: PSF)
1,200,000 Midlothian Independent School District Capital
Appreciation Refunding, 0% due Aaa/NR 1,016,340
2/15/2009 (Guarantee: PSF)
700,000 Midtown Redevelopment Authority Texas Tax, 6.00% due
1/1/2010 (Insured: Radian) NR/AA 799,680
740,000 Midtown Redevelopment Authority Texas Tax, 6.00% due
1/1/2011 (Insured: Radian) NR/AA 849,572
2,275,000 New Caney Independent School District Capital
Appreciation Refunding, 0% due Aaa/AAA 2,222,379
2/15/2005 (Guarantee: PSF)
710,000 Northside Independent School District Series A, 2.25% due
8/1/2031 put 8/1/2004 VMIG1/A1+ 710,717
6,000,000 Sam Rayburn Municipal Power Agency Refunding, 5.50% due
10/1/2012 Baa2/BBB- 6,530,100
1,970,000 Socorro Independent School District Series A, 5.75% due
2/15/2011 (Guarantee: NR/AAA 2,250,252
PSF)
965,000 Southlake Tax Increment Certificates Obligation Series B,
0% due 2/15/2007 Aaa/AAA 852,886
(Insured: AMBAC)
1,120,000 Southlake Tax Increment Certificates Obligation Series B,
0% due 2/15/2008 Aaa/AAA 941,002
(Insured: AMBAC)
1,275,000 Southlake Tax Increment Certificates Obligation Series B,
0% due 2/15/2009 Aaa/AAA 1,009,583
(Insured: AMBAC)
1,440,000 Southlake Tax Increment Certificates Obligation Series B,
0% due 2/15/2010 Aaa/AAA 1,069,056
(Insured: AMBAC)
500,000 Spring Branch Independent School District, 7.50% due
2/1/2011 (Guarantee: PSF) Aaa/AAA 643,310
580,000 Tarrant County Health Facilities, 5.875% due 11/15/2007
(Adventist/Sunbelt A3/A 650,221
Health System Project)
650,000 Tarrant County Health Facilities, 6.00% due 11/15/2009
(Adventist/Sunbelt Health A3/A 741,065
System Project)
730,000 Tarrant County Health Facilities, 6.10% due 11/15/2011
(Adventist/Sunbelt Health A3/A 828,878
System Project)
1,400,000 Tarrant County Health Facilities Development Corp., 5.75%
due 2/15/2011 (Texas Aaa/AAA 1,574,258
Health Resources Project; Insured: MBIA)
1,000,000 Texarkana Health Facilities Development Corp. Hospital
Revenue, 5.75% due Aaa/AAA 1,145,230
10/1/2008 (Insured: MBIA)
1,945,000 Texas Affordable Housing Corp. M Series A, 4.85% due
9/1/2012 (Insured: MBIA) Aaa/AAA 2,096,768
2,000,000 Texas Affordable Housing Corp. Portfolio A, 4.85% due
9/1/2012 (Insured: MBIA) Aaa/AAA 2,156,060
1,000,000 Texas Public Finance Authority Building Revenue State
Preservation Project Aaa/AAA 1,184,530
Series B, 6.00% due 8/1/2011 (Insured: FSA)
6,700,000 Texas State Public Finance Authority Building Revenue
Capital Appreciation Aaa/AAA 6,554,744
Refunding, 0% due 2/1/2005 (Insured: MBIA)
7,000,000 Texas State Turnpike Authority Central Texas Turnpike
Systems Rev. Bond Aa3/AA 7,850,990
Anticipation Note 2nd Tier, 5.00% due 6/1/2008
1,000,000 Travis County, 5.00% due 3/1/2007
Aaa/AAA 1,108,230
500,000 Travis County, 5.00% due 3/1/2010
Aaa/AAA 554,820
2,300,000 Travis County Health Development Corp. Series A, 5.75%
due 11/15/2008 (Insured: Aaa/AAA 2,643,735
MBIA)
1,000,000 Travis County Health Facilities Development Corp. Revenue
Ascension Health Aaa/AAA 1,140,100
Credit Series A, 5.75% due 11/15/2007 (Insured: MBIA)
3,750,000 Travis County Health Facilities Development Corp. Revenue
Series A, 5.75% due Aaa/AAA 4,342,537
11/15/2009 (Insured: MBIA)
2,000,000 Travis County Health Facilities Development Series A,
5.75% due 11/15/2010 Aaa/AAA 2,293,920
(Ascension Health Project; Insured: MBIA)
1,000,000 University of Texas Permanent University Fund, 8.00% due
7/1/2003 (ETM)* Aaa/AAA 1,000,190
2,020,000 Washington County Health Facilities Development Corp.
Revenue, 5.35% due NR/A 2,227,939
6/1/2009 (Insured: ACA)
Utah (1.30%)
370,000 Intermountain Power Agency Power Supply Revenue Capital
Appreciation B, 0% due A1/A+ 364,605
7/1/2004
630,000 Intermountain Power Agency Power Supply Revenue Capital
Appreciation Series B, A1/A+ 624,229
0% due 7/1/2004 (ETM)*
385,000 Intermountain Power Agency Power Supply Revenue Series A,
5.20% due 7/1/2006 A1/A+ 392,742
(ETM)*
355,000 Intermountain Power Agency Power Supply Revenue Series A,
5.00% due 7/1/2012 Aaa/AAA 355,032
(Insured: MBIA) (ETM)*
4,000,000 Intermountain Power Agency Power Supply Revenue Series A,
5.50% due 7/1/2013 A1/A+ 4,080,440
(ETM)*
500,000 Intermountain Power Agency Utah Power Supply Series E,
6.25% due 7/1/2009 Aaa/AAA 600,515
(Insured: FSA)
2,500,000 Salt Lake County Housing Authority MFHR Refunding Series
1993, 5.40% due Aaa/NR 2,544,925
12/15/2018 put 12/15/2003 (Summertree Project; LOC: FNMA)
1,500,000 Salt Lake County Municipal Building, 5.50% due 10/1/2009
Aa1/AA+ 1,750,890
840,000 Snyderville Basin Sewer Improvement, 5.00% due 11/1/2006
(Insured: AMBAC) Aaa/AAA 934,811
510,000 Utah Board Regents Auxiliary Systems & Student Fee
Revenue Refunding Series A, NR/AA 573,169
5.00% due 5/1/2010
1,570,000 Utah County Municipal Building Authority Lease Revenue,
5.00% due 11/1/2010 Aaa/NR 1,781,636
(Insured: AMBAC)
265,000 Utah Housing Finance Agency Refunding Single Family
Mortgage, 5.35% due 7/1/2003 Aaa/AA 265,024
(Insured: FHA/VA)
500,000 Utah State University Hospital Board of Regents Revenue,
5.50% due 8/1/2005 Aaa/AAA 542,180
(Insured: AMBAC)
1,000,000 Utah State University Hospital Board of Regents Revenue,
5.25% due 8/1/2008 Aaa/AAA 1,117,530
(Insured: MBIA)
890,000 Utah Water Finance Agency Revenue Pooled Loan Financing
Program Series A, 5.00% Aaa/NR 1,009,144
due 10/1/2011 (Insured: FHA/VA)
Vermont (0.10%)
880,000 Vermont Educational & Health Buildings Financing Agency
Revenue, 6.00% due NR/BBB 940,183
9/1/2006 (Northwestern Medical Center Project)
Virginia (1.90%)
1,010,000 Alexandria Industrial Development Authority Revenue,
5.75% due 10/1/2007 Aaa/AAA 1,164,530
(Insured: AMBAC)
1,070,000 Alexandria Industrial Development Authority Revenue,
5.75% due 10/1/2008 Aaa/AAA 1,251,622
(Insured: AMBAC)
1,130,000 Alexandria Industrial Development Authority Revenue,
5.75% due 10/1/2009 Aaa/AAA 1,335,931
(Insured: AMBAC)
1,195,000 Alexandria Industrial Development Authority Revenue,
5.75% due 10/1/2010 Aaa/AAA 1,418,847
(Insured: AMBAC)
4,000,000 Capital Region Airport Commission Virginia Refunding
Series B, 8.125% due Aaa/AAA 4,339,040
7/1/2014 (Insured: AMBAC)
1,500,000 Chesterfield County Industrial Development, 5.50% due
10/1/2009 (Vepco Project) A3/BBB+ 1,605,270
2,075,000 Fairfax County Economic Development Authority Lease
Revenue, 5.30% due 5/15/2004 Aa1/AA+ 2,152,626
(Government Center Project)
530,000 Hampton General Obligation Refunding Bond, 5.85% due
3/1/2007 Aa2/AA 534,145
500,000 Hampton Hospital Facilities Revenue Series A, 5.00% due
11/1/2005 Aa2/AA 537,420
3,000,000 Hampton Redevelopment Housing Authority Multi Family
Housing Refunding Series Baa1/A1+ 3,072,900
1994, 7.00% due 7/1/2024 put 7/1/2004 (Chase Hampton
Apartments Project; LOC:
Credit Suisse)
1,460,000 Norton Industrial Development Authority Hospital Revenue
Refunding Improvement, NR/A 1,651,523
5.75% due 12/1/2012 (Norton Community Hospital Project;
Insured: ACA)
3,000,000 Suffolk Redevelopment Housing Authority MFHR, 7.00% due
7/1/2024 put 7/1/2004 Baa2/NR 3,048,870
(Chase Heritage @ Dulles Project)
3,000,000 Suffolk Redevelopment Housing Authority Refunding, 4.85%
due 7/1/2031 put Aaa/NR 3,256,350
7/1/2011 (Windsor at Potomac Project; Collateralized:
FNMA)
Washington (3.40%)
1,760,000 Energy Northwest Washington Wind Project Revenue Series
A, 4.95% due 7/1/2008 A3/A- 1,872,869
705,000 Energy Northwest Washington Wind Project Revenue Series
B, 4.95% due 7/1/2008 A3/A- 750,212
785,000 Energy Northwest Washington Wind Project Revenue Series
B, 5.20% due 7/1/2010 A3/A- 832,940
950,000 Grant County Priest Rapids Hydroelectric, 6.00% due
1/1/2006 (Insured: AMBAC) Aaa/AAA 1,052,144
1,885,000 King County School District Number 414 Lake Washington
Refunding, 3.00% due Aa1/AA 1,936,837
12/1/2004
1,880,000 Lewis County Washington Public Utility District
Refunding, 5.00% due 10/1/2007 Aa1/AA- 2,088,492
575,000 Seattle Municipal Light & Power Revenue, 5.45% due
11/1/2010 pre-refunded Aa3/A+ 595,194
11/1/03 @ 102
1,425,000 Seattle Municipal Light & Power Revenue, 5.45% due
11/1/2010 Aa3/A+ 1,472,994
1,000,000 Seattle Municipal Light & Power Revenue Refunding, 4.75%
due 7/1/2007 (Insured: Aaa/AAA 1,098,810
FSA)
2,655,000 Seattle Municipal Light & Power Revenue Refunding, 5.30%
due 11/1/2007 Aa3/A+ 2,746,916
pre-refunded 11/1/2003 @ 102
1,000,000 Spokane Regional Solid Waste Refunding, 5.00% due
12/1/2005 (Insured: AMBAC) Aaa/AAA 1,080,040
1,000,000 Spokane Regional Solid Waste Refunding, 5.00% due
12/1/2006 (Insured: AMBAC) Aaa/AAA 1,102,850
1,000,000 Spokane Regional Solid Waste Refunding, 5.25% due
12/1/2007 (Insured: AMBAC) Aaa/AAA 1,125,380
550,000 Tacoma Conservation Systems Project Revenue, 6.20% due
1/1/2006 (Tacoma Public Aa1/AA- 591,090
Utilities Project)
800,000 University of Washington Alumni Association Lease Revenue
Refunding, 4.50% due Aaa/AAA 829,088
8/15/2004 (University of Washington Medical Center
Project; Insured: MBIA)
900,000 University of Washington Alumni Association Lease Revenue
Refunding, 4.50% due Aaa/AAA 953,136
8/15/2005 (University of Washington Medical Center
Project; Insured: MBIA)
1,000,000 University of Washington Alumni Association Lease Revenue
Refunding, 5.00% due Aaa/AAA 1,091,880
8/15/2006 (University of Washington Medical Center
Project; Insured: MBIA)
1,100,000 University of Washington Alumni Association Lease Revenue
Refunding, 5.00% due Aaa/AAA 1,215,753
8/15/2007 (University of Washington Medical Center
Project; Insured: MBIA)
1,500,000 Washington Health Care Facilities, 5.50% due 12/1/2009
(Providence Services Aaa/AAA 1,716,705
Project; Insured: MBIA)
2,500,000 Washington Public Power Supply Refunding Series A, 5.00%
due 7/1/2011 (Insured: Aaa/AAA 2,783,750
FSA)
1,140,000 Washington Public Power Supply System Refunding Revenue,
0% due 7/1/2008 Aa1/AA- 986,590
(Nuclear Project Number 3)
1,655,000 Washington Public Power Supply System Series 96-A, 6.00%
due 7/1/2006 (Insured: Aaa/AAA 1,864,540
MBIA)
1,000,000 Washington Public Power Supply Systems, 6.00% due
7/1/2008 (Nuclear Project Aaa/AAA 1,168,760
Number 1; Insured: AMBAC)
3,445,000 Washington Public Power Supply Systems Refunding Series
B, 0% due 7/1/2004 Aa1/AA- 3,399,836
(Nuclear Project Number 3)
1,000,000 Washington Public Power Supply Systems Revenue Refunding
Series A, 5.10% due Aaa/AAA 1,128,790
7/1/2010 (Nuclear Project Number 2; Insured: FSA)
830,000 Washington Public Power Supply Systems Revenue Refunding
Series B, 0% due Aa1/AA- 718,307
7/1/2008 (Nuclear Project Number 3)
1,000,000 Washington State Health Care Facilities Authority
Revenue, 4.00% due 7/1/2005 Aaa/AAA 1,046,310
(Overlake Hospital Medical Center Project; Insured: MBIA)
985,000 Washington State Higher Education Facilities Authority
Revenue Series A, 5.70% Aaa/AAA 999,568
due 11/1/2011 (Insured: MBIA)
900,000 Washington State Public Power Supply, 5.40% due 7/1/2012
(Insured: FSA) Aaa/AAA 1,037,835
5,000,000 Washington State Public Power Supply Systems Revenue
Refunding Series A, 6.00% Aaa/AAA 5,653,800
due 7/1/2007 (Nuclear Project Number 1; Insured: AMBAC)
West Virginia (0.20%)
585,000 Harrison County Nursing Facility Revenue Refunding,
5.625% due 9/1/2010 (Salem NR/NR 593,898
Health Care Corp. Project; LOC: Fleet Bank)
193,938 Marion County SFMR Series 1992, 7.75% due 7/10/2011
NR/NR 199,418
2,000,000 West Virginia Statewide Commission Lottery Revenue Series
1997-A, 5.50% due Aaa/AAA 2,165,120
7/1/2005 (Insured: MBIA)
Wisconsin (0.70%)
1,500,000 Bradley Pollution Control Revenue, 6.75% due 7/1/2009
(Owens Illinois Waste B1/BB+ 1,851,885
Project) (ETM)*
3,325,000 Milwaukee Wisconsin, 5.00% due 3/15/2005
Aa2/AA 3,533,511
800,000 Wisconsin State Health & Educational Facilities
Authority, 5.90% due 8/15/2005 Aaa/AAA 869,960
(Wheaton Franciscan Services Inc. Project; Insured: MBIA)
2,000,000 Wisconsin State Health & Educational Facilities Authority
Revenue, 6.00% due Aaa/AAA 2,288,360
8/15/2008 (Aurora Health Care Inc. Project; Insured:
MBIA)
500,000 Wisconsin Transportation Revenue Series A, 5.50% due
7/1/2012 pre-refunded Aa3/AA- 587,915
7/1/2010 @ 100
Wyoming (0.30%)
1,615,000 West Park Hospital District Revenue, 5.90% due 7/1/2010
(Insured: ACA) NR/A 1,745,750
2,500,000 Wyoming Farm Loan Board Revenue, 0% due 4/1/2009
NR/AA- 2,093,100
Municipal Trust Certs. (0.70%)
2,778,427 Clipper Caraval Tax Exempt Certificate Series 1998, 4.50%
due 10/6/2005 Aaa/NR 2,825,632
(Insured: AMBAC)
5,600,000 Municipal Tax Exempt Trust Certificate Class A1 to A5,
4.60% due 8/6/2008 NR/AAA 5,922,896
(Insured: AMBAC)
TOTAL INVESTMENTS (100%) (Cost $1,249,257,949)
$ 1,316,577,099
<FN>
+ Credit ratings are unaudited.
* Escrowed to maturity
See notes to financial statements.
</FN>
Report of independent auditors
Thornburg Limited Term Municipal Fund, Inc. - National Portfolio June 30,
2003
To the Board of Directors and Class I Shareholders of
Thornburg Limited Term Municipal Fund, Inc. - National 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.- National Portfolio (the
"Fund") at June 30, 2003, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for the Class I shares for
each of the four years in the period then ended, in conformity with
accounting principles generally accepted in the United States of America.
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 audits. We conducted our audits of these financial statements
in accordance with auditing standards generally accepted in the United
States of America, 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 audits, which included
confirmation of securities at June 30, 2003 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion. The
financial highlights for the year ended June 30, 1999 were audited by other
independent accountants whose report dated July 27, 1999 expressed an
unqualified opinion on those financial highlights.
PricewaterhouseCoopers LLP
New York, New York
July 30, 2003
Index Comparisons
Thornburg Limited Term Municipal Fund, Inc. - National Portfolio
LIMITED TERM MUNICIPAL FUND - NATIONAL PORTFOLIO
Index Comparison
Compares performance of Limited Term Municipal Fund - National Portfolio,
the Lehman 5-Year General Obligation Bond Index and the Consumer Price
Index for the periods ended June 30, 2003. On June 30, 2003, 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 4.9
years and 4.3 years, respectively. Past performance of the Index and the
Fund may not be indicative of future performance. The performance data and
graph do not reflect the deduction of taxes that a shareholder would pay on
distributions or the redemption of fund shares.
Thornburg Limited Term Municipal Fund - National Portfolio Class I Total
Returns, Since July 5, 1996, versus Lehman 5 Year GO Index and Consumer
Price
Index (C.P.I.)
Lehman 5 yr. GO Index
Fund I Shares
CPI
Class I Shares Average Annual Total Returns
(Period ended 6/30/03)
One year: 6.36%
Three years: 6.72%
Five years: 5.27%
>From inception (7/5/96): 5.47%
Directors and Officers
Thornburg Limited Term Municipal Fund - National Portfolio
Name, Address (1) Position(s) Term of Principal
Member of Other
And Age Held with Office Occupation(s)
Portfolios Directorships
Fund (2) and During Past
in Fund Held by
Length of 5 Years
Complex Director or
Time
Overseen Nominee for
Served
by Director Director
or Nominee
for Director (2)
Interested Directors
Garrett Thornburg, Chairman Director CEO, Chairman and
Controlling Twelve None
57 of the Since Shareholder of Thornburg
Board of 1984; Investment Management, Inc.
Directors, (4) (investment adviser) and
Thornburg
Treasurer (3) Securities Corporation
(securities
dealer); Chairman of
Trustees of Thornburg
Investment Trust
(registered investment
company); CEO and Chairman
of Thornburg Mortgage, Inc.
(real estate investment
trust); Chairman of
Thornburg Mortgage Advisory
Corporation (investment
manager to Thornburg
Mortgage, Inc.).
Independent Directors
David D. Chase, Director Director Chairman, President and CEO
Twelve Trustee,
62 since 2001 of general partner of
Vestor Thornburg
(4) Partners, LP, Santa Fe, NM
Investment Trust
(private equity fund);
Chairman
and CEO of Vestor Holdings,
Inc., Santa Fe, NM
(merchant
bank).
Eliot R. Cutler, Director Director Partner, Akin, Gump,
Strauss, Two Director of
56 since 1984 Hauer & Feld, LLP,
Washington Skanska, AB
(4) D.C. (law firm) since
November (construction services)
2000; partner, Cutler &
Stanfield,
Washington, D.C. (law firm)
until November 2000.
James E. Monaghan, Jr., Director Director President, Monaghan &
Two None
56 since 1984 Associates, Inc. and
(4) Strategies West, Inc.
Denver,
Colorado (business
consultants).
A.G. Newmyer III, Director Director Private investor and
management Two None
53 since 1984 consultant.
(4)
Advisory Director
Richard M. Curry, Advisory Advisory Managing Director, McDonald
Not applicable None
60 Director (6) Director (5) & Co., Cincinnati, Ohio
Since (securities dealer) and
District
2002 (6) President, Key Bank,
Cincinnati,
Ohio, since March 2000.
Officers of the Fund (who are not Directors) (7)
Brian J. McMahon, President President President and Managing
Director Not applicable Not applicable
47 since 1997 of Thornburg Investment
(4) Management, Inc.; President
of Thornburg Investment
Trust
Dawn B. Fischer, Secretary Secretary Vice President, Secretary
and Not applicable Not applicable
56 Since 1984 Managing Director of
Thornburg
(4) Investment Management,
Inc.;
Secretary and Assistant
Treasurer
of Thornburg Investment
Trust; Secretary of
Thornburg
Securities Corporation;
Vice
President, Daily Tax Free
Income Fund, Inc.
(registered
investment company).
Steven J. Bohlin, Vice President Vice Vice President and
Managing Not applicable Not applicable
44 President Director of Thornburg
Investment
Since 1991 Management, Inc.; Vice
President
(4) and Treasurer of Thornburg
Investment Trust.
George T. Strickland, Vice President Vice Vice President and
Managing Not applicable Not applicable
40 Treasureer President Director of Thornburg
Investment
Since 1999; Management, Inc.; Vice
President
Treasurer of Thornburg Investment
Trust.
since 2003
Leigh Moiola, Vice President Vice Vice President, and
Managing Not applicable Not applicable
36 President Director since 1998, of
Since 1999 Thornburg Investment
Management,
(4) Inc.; Vice President of
Thornburg
Investment Trust since
2001.
Kenneth Ziesenheim, Vice President Vice Managing Director of
Thornburg Not applicable Not applicable
49 President Investment Management,
Inc.;
Since 1995 President of Thornburg
Securities
(4) Corporation; Vice
President of
Thornburg Investment
Trust.
Kerry D. Lee, Vice President Vice Associate of Thornburg
Investment Not applicable Not applicable
36 President Management, Inc.; Vice
President
Since 1999 of Thornburg Investment
Trust
(4) since 1999.
Dale Van Scoyk, Vice President Vice Account Manager for
Thornburg Not applicable Not applicable
56 President Investment Management,
Inc.
Since 1999 1997-1999, and Managing
Director
(4) and Vice President since
1999;
Vice President of
Thornburg
Investment Trust since
1998; National Account
Manager for Heartland
Funds
1993-1997.
Joshua Gonze, Vice President Vice Associate and Vice
President of Not applicable Not applicable
40 President Thornburg Investment
Management,
Since 2001 Inc. since 1999; Vice
President of
(4) Thornburg Investment Trust
since
2001
Christopher Ihlefeld, Vice President Vice Associate and Vice
President of Not applicable Not applicable
32 President Thornburg Investment Mgt,
Inc.;
Since 1999 Assistant Vice President
of
(4) Thornburg Investment Trust
since 1999.
<FN>
(1) Each person's address is 119 East Marcy Street, Suite 202, Santa Fe, New
Mexico 87501.
(2) The Fund is one of two separate investment "funds" or "portfolios" of
Thornburg Limited Term Municipal Fund, Inc. (the "Company"), organized as a
Maryland corporation. The Company currently has two funds, which are
considered for certain regulatory purposes as parts of a "fund complex" with
the nine funds of Thornburg Investment Trust. Thornburg Investment
Management, Inc. is the investment adviser to, and manages, the eleven funds
of the Company and Thornburg Investment Trust.
(3) Mr. Thornburg is considered an "interested" Director under the Investment
Company Act of 1940 because he is a director and controlling shareholder of
the investment adviser, Thornburg Investment Management, Inc., and is the
sole director and controlling shareholder of Thornburg Securities
Corporation, the distributor of shares for the Company.
(4) Thornburg Limited Term Municipal Fund, Inc.'s Amended By-Laws provide that
each Director shall serve in office until the next annual meeting or the
election and qualification of the Director's successor. In accordance with
Maryland law, the Company does not hold an annual meeting each year; it may
hold shareholder meetings as circumstances require. Officers serve at the
pleasure of the Board of Directors.
(5) Mr. Cutler may be considered an "interested" Director of the Company because
he is associated with a partnership which receives a portion of Thornburg
Investment Management, Inc.'s revenues.
(6) As an Advisory Director, Mr. Curry serves at the pleasure of the Board of
Directors.
(7) Assistant vice presidents, assistant secretaries and assistant treasurers
are not shown.
</FN>
The Fund's Statement of Additional Information includes additional
information about the Directors and is available, without charge and upon
request by calling 1-800-847-0200.
The Fund's Statement of Additional Information includes additional
information about the Directors and is available, without charge and upon
request by calling 1-800-847-0200.
Thornburg limited term municipal fund national portfolio - I shares
Outperformed Tax-Exempt Money Market Funds
Investors sometimes ask us to compare Limited Term Municipal Fund -
National Portfolio to money market fund returns. These investments have
certain differences, and investors in Limited Term Municipal Fund -
National Portfolio took more risk than money market fund investors to earn
their higher returns.
Return from a hypothetical $10,000 investment
6/30/93* through 6/30/03
Lipper Tax-exempt
Money Market Index
$2,986
Thornburg Limited Term
Municipal Fund - Nat'l Portfolio I Shares
(after capital gains taxes)
$6,421
The chart above is for the Fund's Class I Shares only. Class A and Class C
shares of the Fund have different sales charges and expenses. See the
inside front cover page for the 30-day SEC yield and the total returns for
one year, three years, five years, and since inception for the Class I
shares.
*Prior to 7/5/96 the illustrations include actual returns of the Class A
shares adjusted for the lower Institutional expenses. Note 1: Future
increases, if any, of any of these investments may bear no relationship to
prior increases. Quotations for the money fund averages are based upon 30-
day yield quotations for tax-exempt money funds as quoted in "Lipper Tax-
exempt Money Market Index" for the months covered by this analysis. The
increase for the Class I shares of Thornburg Limited Term Municipal Fund -
National Portfolio is based upon the dividends paid for the months covered
by this analysis, the beginning NAV price at $13.59 per share and the
ending NAV at $14.01 per share. These investments returned the $10,000
initial investment in addition to the amounts shown above.
Note 2: This analysis does not take into account the effect, if any, caused
by state and local income taxes. The portion of the increase, if any, of
Thornburg Limited Term Municipal Fund - National Portfolio representing
appreciation of the share price is assumed to be taxed at a 15% federal tax
rate. The average money market fund increases shown above may differ from
the return of a particular money market fund. It is not possible to invest
in these money fund averages.
Note 3: Generally, money market funds seek to maintain an investment
portfolio with an average maturity of 90 days or less. Thornburg Limited
Term Municipal Fund - National Portfolio invests in short-to-intermediate
maturity municipal obligations. The net asset value of the money funds did
not fluctuate. The net asset value of the Class I shares of LTMIX did vary
from time to time, and will continue to vary in the future due to the
effect of changes in interest rates on the value of the investments the
Fund holds. The analysis assumes that the investor received the net asset
value of the shares owned, plus accrued income, at time of sale.
Redemptions are made at the then current net asset value, which
may give you a gain or loss when you sell your shares. Note 4: This
analysis assumes that the dividends from each of these investment vehicles
were reinvested and compounded monthly. Most money funds declare dividends
daily and pay them monthly. Thornburg Limited Term Municipal Fund -
National Portfolio also declares dividends daily and pays them monthly.
Note 5: An investment in a money market fund is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government
agency. Although a money market fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in
such funds.
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
www.thornburg.com
This report is submitted for the general information of the shareholders of
the Fund. It is not authorized for distribution to prospective investors in
the Fund unless preceded or accompanied by an effective prospectus, which
includes information regarding the Fund's objectives and policies,
experience of its management, marketability of shares, and other
information. Performance data quoted represent past performance and do not
guarantee future results.
STATEMENT OF ADDITIONAL INFORMATION
(For Holders of Class A and Class C Shares)
Relating to the Acquisition of the Assets of
THORNBURG LIMITED TERM MUNICIPAL FUND CALIFORNIA PORTFOLIO
a series of THORNBURG LIMITED TERM MUNICIPAL FUND, INC.
119 East Marcy Street
Santa Fe, New Mexico 87501
(800) 847-0200
by and in exchange solely for shares of
THORNBURG CALIFORNIA LIMITED TERM MUNICIPAL FUND,
a series of THORNBURG INVESTMENT TRUST
119 East Marcy Street
Santa Fe, New Mexico 87501
(800) 847-0200
This Statement of Additional Information, relating specifically to
the proposed acquisition of substantially all of the assets of Thornburg
Limited Term Municipal Fund California Portfolio (the "Fund"), a series of
Thornburg Limited Term Municipal Fund, Inc., by Thornburg Limited Term
California Municipal Fund (the "New Fund"), a series of Thornburg
Investment Trust, in exchange solely for voting shares of the New Fund,
consists of this cover page and the following documents, each of which is
attached hereto and incorporated by reference herein:
1. Thornburg Limited Term Municipal Funds Statement of Additional
Information ___________, 2004, [to be added by amendment];
2. Thornburg Funds Statement of Additional Information dated
February 1, 2004, and
3. Thornburg Limited Term Municipal Fund California Portfolio
Annual Report, June 30, 2003; and
4. Thornburg Limited Term Municipal Fund California Portfolio
Semiannual Report, December 31, 2003.
This Statement of Additional information is not a prospectus. A
Prospectus/Proxy Statement dated _________________, 2004 relating to the
above referenced acquisition may be obtained from Thornburg Investment
Trust at the number and address shown above. This Statement of Additional
Information relates to, and should be read with, the Prospectus/Proxy
Statement.
The financial statements of Thornburg Limited Term Municipal Fund
California Portfolio contained in its Annual Report to shareholders for the
fiscal year ended June 30, 2003 have been audited by
PricewaterhouseCoopers, LLP, that Fund's independent auditors.
The date of this Statement of Additional Information is _________,
2004.
Thornburg Limited Term Municipal Fund California Portfolio
Annual Report June 30, 2003
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
ALL DATA AS OF 6/30/03.
Fund facts: Thornburg Limited Term Municipal Fund, Inc. - California
Portfolio
A Shares C Shares
Annualized Distribution Rate (at NAV) 2.72% 2.36%
SEC Yield 1.54% 1.20%
NAV $13.20 $13.21
Maximum Offering Price $13.40 $13.21
Total returns: (Annual Average - After Subtracting Maximum Sales
Charge)
One Year 3.24% 4.51%
Three Years 4.76% 4.86%
Five Years 4.05% 3.97%
Ten Years 4.37% N/A
Since Inception 5.43% 4.36%
Inception Date 2/19/87 9/1/94
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.
The SEC Yield is computed in accordance with SEC standards measuring the
net investment income per share over a specified 30-day period expressed as
a percentage of the maximum offering price of the Fund's shares at the end
of the period.
The distribution rate is calculated by taking the sum of the month's total
distribution factors and dividing this sum by a 30-day period and
annualizing to 360-day year. The value is then divided by the ending NAV to
arrive at the annualized distribution yield. The yield is calculated on a
periodic basis and is subject to change depending on the Fund's NAV and
current distributions.
Letter to shareholders
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
July 14, 2003
Dear Fellow Shareholder:
I am pleased to present the annual report for the California Portfolio of
Thornburg Limited Term Municipal Fund. The net asset value of the Class A
shares increased by 24 cents to $13.20 during the year ending June 30,
2003. If you were with us for the entire period, you received dividends of
37.9 cents per share. If you reinvested dividends, you received 38.4 cents
per share. Investors who owned Class C shares received dividends of 33.9
and 34.3 cents per share, respectively.
Over the last year, interest rates on high-quality municipal bonds have
fallen substantially. Falling interest rates drive up the price of most of
the bonds owned by the Fund, and this has resulted in an increasing share
price.
Your Thornburg Limited Term Municipal Fund, California Portfolio is a
laddered portfolio of over 170 municipal obligations from all over the
State. Approximately 97% of the bonds are rated A or better by one of the
major rating agencies. Today, your Fund's weighted average maturity is 4.9
years; we always keep it below 5 years. As you know, we ladder the maturity
dates of the bonds in your portfolio so that some of the bonds are
scheduled to mature during each of the coming years. The following chart
describes the percentages of your Fund's bond portfolio maturing in each of
the coming years:
% of portfolio Cumulative %
maturing within maturing by end of
1 year = 9% year 1 = 9%
1 to 2 years = 9% year 2 = 18%
2 to 3 years = 14% year 3 = 32%
3 to 4 years = 8% year 4 = 40%
4 to 5 years = 13% year 5 = 53%
5 to 6 years = 11% year 6 = 64%
6 to 7 years = 6% year 7 = 70%
7 to 8 years = 6% year 8 = 76%
8 to 9 years = 11% year 9 = 87%
9 to 10 years = 10% year 10 = 97
As of 6/30/03. Portfolio holdings can and do vary over time.
Three powerful trends seem to be driving recent performance of the
municipal market. The first trend is persistent economic weakness. The U.S.
unemployment rate, at 6.4%, has just hit a nine-year high. GDP growth is
sputtering along at about 2%. Our European and Japanese trading partners
are, by and large, worse off than are we, and the Federal Reserve Board
appears to be at least as worried about deflation as it is about inflation.
We continue to believe that low interest rates, tax cuts, and rising
corporate profits will eventually lead to steady economic and employment
growth and probably give rise to somewhat higher interest rates. However,
that process is taking longer than we formerly thought and may not
materialize until next year.
The second trend is financial stress in many of our cities and states. A
combination of flat or declining tax revenues and rising expenses for items
such as Medicaid and pension systems has led to large budget deficits for
more than half of the 50 states. The challenges have led to a number of
high-profile credit rating downgrades by the major bond rating agencies.
The deficit problem is particularly pronounced in California because of its
magnitude ($38 billion at last count) and the inability of the government
to reach consensus on how to deal with it. A variety of plans has been
proposed, but none has been implemented as yet. In the meantime, the
deficit continues to grow by an estimated $55 million per day. Thanks to a
large and diverse economy and currently moderate debt levels, we expect
that the State will continue to pay its bills, including principal and
interest on its bonds. Until we see a viable plan implemented, however, we
are maintaining very high credit quality in the California portfolio, with
over 77% of the portfolio rated AAA by Moody's or Standard & Poor's.
It is notable that in the midst of these problems, many municipal credits
are doing just fine. Standard & Poor's recently reported that, nationwide,
upgrades outpaced downgrades in the second quarter of 2003 by a ratio of
1.6:1. This is because the municipal bond market is made up of much more
than bond issues of the 50 states. Many of our cities, counties, school
districts, water and sewer authorities, transportation authorities, and
healthcare providers have benefited from stable revenues based upon
property taxes, sales taxes, and fees for essential services. The municipal
bond market, historically has a much lower default rate than the corporate
bond market, and we continue to enjoy some success finding good bonds at
relatively reasonable prices.
The third trend exerting pressure on the municipal market is the heavy
supply of bonds. $198 billion of municipal bonds were issued in the first
half of 2003, a 19% increase over the record pace of 2002. The first half
total already exceeds full-year volume for 1994, 1995, and 1996. The heavy
supply has often saturated traditional sources of demand and pushed high
quality tax-free municipal bond yields to levels approaching taxable
Treasury bond yields. The relative attractiveness of the municipal bond
market should allow full coupon municipals to outperform the Treasury bond
market if the heavy supply abates and yield ratios revert to historical
norms.
The Wall Street Journal ran a front-page story on July 7, 2003, about
retirees who are forced to pinch pennies as money market and CD rates
plunge. We believe that laddering short and intermediate bonds -- as we
have done for your account -- is the best way to address this problem.
Laddering bonds moderates the income-flow risk of plunging short-term
yields and the principal risk that affects all bonds when interest rates
rise. To see how your Fund has performed over time relative to the money
market fund averages, turn to the back of this report.
Over the years, the practice of laddering a diversified portfolio of short-
and intermediate-maturity municipal bonds has allowed your Fund to perform
consistently well in varying interest rate environments. Thank you for
investing in the California Portfolio of Thornburg Limited Term Municipal
Fund.
Sincerely,
George Strickland
Portfolio Manager
Past performance cannot guarantee future results.
Statement of assets and liabilities
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
June 30, 2003
ASSETS
Investments at value (cost $185,795,442) ........................$ 193,763,769
Cash ............................................................ 31,071
Receivable for investments sold ................................. 510,000
Receivable for fund shares sold ................................. 672,287
Interest receivable ............................................. 2,797,779
Prepaid expenses and other assets ............................... 2,850
Total Assets .................................. 197,777,756
LIABILITIES
Payable for investments purchased ............................... 3,702,692
Payable for fund shares redeemed ................................ 1,422,827
Accounts payable and accrued expenses ........................... 72,326
Payable to investment advisor (Note 3) .......................... 95,916
Dividends payable ............................................... 136,359
Total Liabilities ............................. 5,430,120
NET ASSETS ......................................................$ 192,347,636
NET ASSETS CONSIST OF:
Net unrealized appreciation (depreciation) on investments ..$ 7,968,327
Accumulated net realized gain (loss) ....................... (794,213)
Net capital paid in on shares of beneficial interest ....... 185,173,522
$ 192,347,636
NET ASSET VALUE:
Class A Shares:
Net asset value and redemption price per share
($149,269,028 applicable to 11,304,831 shares of beneficial
interest outstanding - Note 4) ................................$ 13.20
Maximum sales charge, 1.50% of offering price ................... 0.20
Maximum Offering Price Per Share ................................$ 13.40
Class C Shares:
Net asset value and offering price per share*
($22,486,977 applicable to 1,701,640 shares of beneficial
interest outstanding - Note 4) ................................$ 13.21
Class I Shares:
Net asset value, offering and redemption price per share
($20,591,631 applicable to 1,557,952 shares of beneficial
interest outstanding - Note 4) ................................$ 13.22
*Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge. See notes to financial statements.
Statement of operations
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
Year Ended June 30, 2003
INVESTMENT INCOME:
Interest income (net of premium amortized of $1,989,796) ........ $ 6,569,014
EXPENSES:
Investment advisory fees (Note 3) ............................... 850,698
Administration fees (Note 3)
Class A Shares ......................................... 170,338
Class C Shares ......................................... 23,226
Class I Shares ......................................... 7,644
Distribution and service fees (Note 3)
Class A Shares ......................................... 340,675
Class C Shares ......................................... 185,809
Transfer agent fees
Class A Shares ......................................... 57,397
Class C Shares ......................................... 19,589
Class I Shares ......................................... 16,005
Custodian fees (Note 3) ......................................... 105,823
Registration and filing fees .................................... 4,362
Professional fees ............................................... 15,447
Accounting fees ................................................. 9,809
Director fees ................................................... 7,071
Other expenses .................................................. 20,839
Total Expenses ................................ 1,834,732
Less:
Expenses reimbursed by investment advisor (Note 3) ..... (43,579)
Distribution and service fees waived (Note 3) .......... (92,904)
Fees paid indirectly (Note 3) .......................... (2,208)
Net Expenses .................................. 1,696,041
Net Investment Income ......................... 4,872,973
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) on investments sold .................... 57,393
Increase (Decrease) in unrealized appreciation of investments ... 2,933,907
Net Realized and Unrealized
Gain (Loss) on Investments .................... 2,991,300
Net Increase (Decrease) in Net Assets Resulting
From Operations ............................... $ 7,864,273
See notes to financial statements.
Statements of changes in net assets
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
Year Ended
Year Ended
June 30, 2003
June 30, 2002
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income ....................................... $ 4,872,973
$ 4,272,747
Net realized gain (loss) on investments sold ................ 57,393
96,064
Increase (Decrease) in unrealized appreciation of investments 2,933,907
1,489,825
Net Increase (Decrease) in Net Assets
Resulting from Operations ....................... 7,864,273
5,858,636
DIVIDENDS TO SHAREHOLDERS:
>From net investment income
Class A Shares ..................................... (3,907,510)
(3,641,689)
Class C Shares ..................................... (478,583)
(333,629)
Class I Shares ..................................... (489,837)
(294,472)
FUND SHARE TRANSACTIONS (NOTE 4):
Class A Shares ..................................... 31,614,924
24,187,536
Class C Shares ..................................... 6,082,493
9,557,877
Class I Shares ..................................... 10,211,834
4,506,387
Net Increase (Decrease) in Net Assets ..... 50,897,594
39,840,646
NET ASSETS:
Beginning of year .................................. 141,450,042
101,609,396
End of year ........................................ $ 192,347,636
$ 141,450,042
See notes to financial statements.
Notes to financial statements
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
June 30, 2003
NOTE 1 - ORGANIZATION
Thornburg Limited Term Municipal Fund, Inc. (the "Company") was
incorporated in Maryland on February 14, 1984. The Company 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 "Fund"). The Company is an open-end diversified management
investment company, registered under the Investment Company Act of 1940, as
amended. The primary investment objective of the Company 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 Fund
will invest primarily in Municipal Obligations originating in California
with the objective of obtaining exemption of interest dividends from any
income taxes imposed by California on individuals.
The Fund currently offers three classes of shares of beneficial interest,
Class A, Class C and Institutional Class (Class I) shares. Each class of
shares of the Fund 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 Fund may allocate among its classes certain expenses, to
the extent applicable 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 Fund are limited to service and distribution fees, administrative fees,
and certain transfer agent expenses.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES Significant accounting policies of
the
Company are as follows:
Valuation of Investments: In determining the net asset value of the Fund,
the Company 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, normally at 4:00 p.m. EST or at 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 Fund are reviewed by the officers
of the Company under the general supervision of the Board of Directors.
Short-term obligations having remaining maturities of 60 days or less
are valued at amortized cost, which approximates market value.
Federal Income Taxes: It is the policy of the Company 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.
When-Issued and Delayed Delivery Transactions: The Company may engage in
when-issued or delayed delivery transactions. To the extent the Company
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 Company makes a commitment to purchase a security
for the Fund, on a when-issued basis, the Fund will record the transaction
and reflect the value in determining its net asset value. When effecting
such transactions, assets of the Fund of an amount sufficient to make
payment for the portfolio securities to be purchased will be segregated on
the Fund'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 Fund is declared daily as a
dividend on shares for which the Company has received payment. Dividends
are paid monthly and are reinvested in additional shares of the Fund at net
asset value per share at the close of business on the dividend payment
date, or at the shareholder's option, paid by check. Net capital gains, to
the extent available, will be distributed at least annually.
General: Securities transactions are accounted for on a trade date basis.
Interest income is accrued as earned. Premiums and 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. Net investment income, other than
class specific expenses, and realized and unrealized gains and losses, are
allocated daily to each class of shares based upon the relative net asset
value of outstanding shares (or the value of the dividend-eligible shares,
as appropriate) of each class of shares at the beginning of the day (after
adjusting for the current capital shares activity of the respective class).
Expenses common to all Funds are allocated among the Funds based upon their
relative net asset values or other appropriate allocation methods.
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.
Guarantees and Indemnifications: Under the Company's organizational
documents, its officers and directors are indemnified against certain
liability arising out of the performance of their duties to the Fund.
Additionally, in the normal course of business the Company enters into
contracts with service providers that contain general indemnification
clauses. The Company's maximum exposure under these arrangements is
unknown. However, based on experience, the Company expects the risk of loss
to be remote.
NOTE 3 - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Pursuant to an Investment Advisory Agreement, Thornburg Investment
Management, Inc. (the "Advisor") serves as the investment advisor and
performs services for which the fees are payable at the end of each month.
For the year ended June 30, 2003, these fees were payable at annual rates
ranging from .50 of 1% to .225 of 1% of the average daily net assets of the
Fund. The Company also has entered into an Administrative Services
Agreement with the Advisor, whereby the Advisor will perform certain
administrative services for the shareholders of each class of the Fund's
shares, and for which fees will be payable at an annual rate of up to .125
of 1% of the average daily net assets attributable to each class of shares.
For the year ended June 30, 2003, the Advisor voluntarily reimbursed
certain class specific expenses and administrative fees of $28,008 for
Class A shares and $15,571 for Class I shares.
The Company has an underwriting agreement with Thornburg Securities
Corporation (the "Distributor"), which acts as the distributor of Fund
shares. For the year ended June 30, 2003 the Distributor has advised the
Fund that it earned commissions aggregating $4,017 from the sale of Class A
shares, and collected contingent deferred sales charges aggregating $3,156
from redemptions of Class C shares of the Fund.
Pursuant to a Service Plan under Rule 12b-1 of the Investment Company Act
of 1940, the Company may reimburse to the Advisor amounts not to exceed .25
of 1% per annum of the average daily net assets attributable to each class
of shares of the Fund for payments made by the Advisor to securities
dealers and other financial institutions to obtain various shareholder
related services. The Advisor may pay out of its own resources additional
expenses for distribution of the Fund's shares.
The Company also has adopted a Distribution Plan pursuant to Rule 12b-1,
applicable only to the Fund's Class C shares, under which the Company can
compensate the Distributor for services in promoting the sale of Class C
shares of the Fund at an annual rate of up to .75% of the average daily net
assets attributable to Class C shares. Total fees incurred by each class of
shares of the Fund under their respective Service and Distribution plans
and Class C distribution fees waived by the Distributor for the year ended
June 30, 200 are set forth in the statement of operations.
The Company has an agreement with the custodian bank to indirectly pay a
portion of the custodian's fees through credits earned by the Fund's cash
on deposit with the bank. This deposit agreement is an alternative to
overnight investments. Custodial fees have been adjusted to reflect amounts
that would have been paid without this agreement, with a corresponding
adjustment reflected as fees paid indirectly in the statement of
operations. For the year ended June 30, 2003 fees paid indirectly were
$2,208.
Certain officers and directors of the Company are also officers and /or
directors of the Advisor and the Distributor. The compensation of
unaffiliated directors is borne by the Company.
NOTE 4 - SHARES OF BENEFICIAL INTEREST
At June 30, 2003, there were an unlimited number of shares of beneficial
interest authorized. Transactions in shares of beneficial interest were as
follows:
Year Ended Year
Ended
June 30, 2003 June
30, 2002
Shares Amount Shares
Amount
Class A Shares
Shares sold .................... 5,242,685 $ 68,754,114 2,888,793
$ 37,226,901
Shares issued to shareholders in
reinvestment of dividends ... 199,540 2,620,134 195,828
2,523,069
Shares repurchased ............. (3,028,552) (39,759,324) (1,208,763)
(15,562,434)
Net Increase (Decrease) ........ 2,413,673 $ 31,614,924 1,875,858
$ 24,187,536
Class C Shares
Shares sold .................... 606,383 $ 7,970,447 780,669
$ 10,078,776
Shares issued to shareholders in
reinvestment of dividends ... 23,883 313,949 16,362
210,986
Shares repurchased ............. (168,027) (2,201,903) (57,081)
(731,885)
Net Increase (Decrease) ........ 462,239 $ 6,082,493 739,950
$ 9,557,877
Class I Shares
Shares sold .................... 1,157,992 $ 15,228,991 506,711
$ 6,532,257
Shares issued to shareholders in
reinvestment of dividends ... 29,869 392,681 19,974
257,579
Shares repurchased ............. (411,162) (5,409,838) (176,918)
(2,283,449)
Net Increase (Decrease) ........ 776,699 $ 10,211,834 349,767
$ 4,506,387
NOTE 5 - SECURITIES TRANSACTIONS
For the year ended June 30, 2003, the Fund had purchase and sale
transactions(excluding short-term securities) of $91,153,078 and
$40,791,433, respectively.
NOTE 6 - INCOME TAXES
At June 30, 2003, information on the tax components of
capital is as follows:
Cost of investments for tax purpose $ 185,795,442
Gross tax unrealized appreciation $ 8,047,781
Gross tax unrealized depreciation (79,454)
Net tax unrealized appreciation
(depreciation) on investments $ 7,968,327
Undistributed tax exempt income $ 136,359
At June 30, 2003, the Fund had tax basis capital losses, which may be
carried over to offset future capital gains. Such losses expire as follows:
Capital loss carryovers expiring in:
2004 $ 373,652
2008 205,990
2009 214,571
$ 794,213
The Fund utilized $57,393 of capital loss carry forwards during the year
ended June 30, 2003. Unutilized tax basis capital losses may be carried
forward to offset realized gains in future years. To the extent such carry
forwards are used, capital gain distributions may be reduced to the extent
provided by regulations.
Dividends paid by the Fund for the years ended June 30, 2003 and June 30,
2002, represent exempt interest dividends, which are excludable by
shareholders from gross income for Federal income tax purposes.
Financial highlights
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
Year Ended June 30,
2003
2002 2001 2000 1999
Class A Shares:
Per Share Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year ................... $ 12.96 $
12.79 $ 12.59 $ 12.75 $ 12.90
Income from investment operations:
Net investment income ....................... 0.38
0.46 0.54 0.54 0.53
Net realized and unrealized
gain (loss) on investments ......... 0.24
0.17 0.20 (0.16) (0.15)
Total from investment operations ..................... 0.62
0.63 0.74 0.38 0.38
Less dividends from:
Net investment income ....................... (0.38)
(0.46) (0.54) (0.54) (0.53)
Change in net asset value ............................ 0.24
0.17 0.20 (0.16) (0.15)
Net asset value, end of year ......................... $ 13.20 $
12.96 $ 12.79 $ 12.59 $ 12.75
Total return (a) ..................................... 4.83%
5.03% 6.00% 3.10% 2.97%
Ratios/Supplemental Data Ratios to average net assets:
Net investment income ....................... 2.87%
3.58% 4.26% 4.28% 4.11%
Expenses, after expense reductions .......... 0.99%
1.00% 0.99% 0.99% 0.99%
Expenses, after expense reductions
and net of custody credits ......... 0.99%
0.99% -- -- --
Expenses, before expense reductions ......... 1.02%
1.01% 1.05% 1.01% 1.02%
Portfolio turnover rate .............................. 26.03%
25.16% 15.45% 21.34% 21.71%
Net assets at end of year (000) .....................$ 149,269 $
115,237 $ 89,967 $ 90,035 $ 113,835
<FN>
(a) Sales loads are not reflected in computing total return
</FN>
Year Ended June 30,
2003
2002 2001 2000 1999
Class C Shares:
Per Share Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year ................... $ 12.97 $
12.80 $ 12.61 $ 12.76 $ 12.91
Income from investment operations:
Net investment income ....................... 0.34
0.41 0.49 0.49 0.48
Net realized and unrealized
gain (loss) on investments ......... 0.24
0.17 0.19 (0.15) (0.15)
Total from investment operations ..................... 0.58
0.58 0.68 0.34 0.33
Less dividends from:
Net investment income ....................... (0.34)
(0.41) (0.49) (0.49) (0.48)
Change in net asset value ............................ 0.24
0.17 0.19 (0.15) (0.15)
Net asset value, end of year ......................... $ 13.21 $
12.97 $ 12.80 $ 12.61 $ 12.76
Total return ......................................... 4.51%
4.60% 5.49% 2.73% 2.56%
Ratios/Supplemental Data Ratios to average net assets:
Net investment income ....................... 2.56%
3.15% 3.86% 3.88% 3.70%
Expenses, after expense reductions .......... 1.30%
1.38% 1.40% 1.40% 1.40%
Expenses, after expense reductions
and net of custody credits ......... 1.30%
1.37% -- -- --
Expenses, before expense reductions ......... 1.80%
1.86% 2.01% 1.94% 1.92%
Portfolio turnover rate .............................. 26.03%
25.16% 15.45% 21.34% 21.71%
Net assets at end of year (000) ..................... $ 22,487 $
16,081 $ 6,392 $ 7,411 $ 7,892
Year Ended June 30,
2003
2002 2001 2000 1999
Class I Shares:
Per Share Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year ................... $ 12.97 $
12.79 $ 12.60 $ 12.75 $ 12.90
Income from investment operations:
Net investment income ....................... 0.42
0.51 0.59 0.58 0.58
Net realized and unrealized
gain (loss) on investments ......... 0.25
0.18 0.19 (0.15) (0.15)
Total from investment operations ..................... 0.67
0.69 0.78 0.43 0.43
Less dividends from:
Net investment income ....................... (0.42)
(0.51) (0.59) (0.58) (0.58)
Change in net asset value ............................ 0.25
0.18 0.19 (0.15) (0.15)
Net asset value, end of year ......................... $ 13.22 $
12.97 $ 12.79 $ 12.60 $ 12.75
Total return ......................................... 5.27%
5.48% 6.28% 3.50% 3.33%
Ratios/Supplemental Data Ratios to average net assets:
Net investment income ....................... 3.20%
3.92% 4.60% 4.60% 4.45%
Expenses, after expense reductions .......... 0.65%
0.66% 0.65% 0.65% 0.65%
Expenses, after expense reductions
and net of custody credits ......... 0.65%
0.65% -- -- --
Expenses, before expense reductions ......... 0.75%
0.84% 0.98% 0.79% 0.78%
Portfolio turnover rate .............................. 26.03%
25.16% 15.45% 21.34% 21.71%
Net assets at end of year (000) ..................... $ 20,592 $
10,133 $ 5,520 $ 5,793 $ 12,724
Schedule of investments
Schedule of Investments
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
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
435,000 Abag Finance Authority, 4.75% due 10/1/2011 (California School
of Mechanical Arts A3/NR $478,900
Project)
455,000 Abag Finance Authority, 4.75% due 10/1/2012 (California School
of Mechanical Arts A3/NR 499,977
Project)
1,200,000 Abag Finance Authority Variable Taxable Refunding Series C,
1.15% due 10/1/2027 put NR/A1+ 1,200,000
7/1/2003 (LOC: BNP Paribus) (daily demand notes)
425,000 Alameda Certificates Participation, 4.60% due 5/1/2011
NR/A+ 463,165
295,000 Alum Rock Union Elementary School District General Obligation
Refunding Bonds, 8.00% Aaa/AAA 353,487
due 9/1/2006 (Insured: FGIC)
380,000 Alum Rock Union Elementary School District General Obligation
Refunding Bonds, 8.00% Aaa/AAA 470,808
due 9/1/2007 (Insured: FGIC)
550,000 Anaheim City School District, 3.25% due 8/1/2004 (Insured: FGIC)
Aaa/AAA 563,497
750,000 Bay Area Government Associates Lease Series 2002, 5.00% due
7/1/2004 (Insured: AMBAC) Aaa/AAA 779,625
785,000 Bay Area Government Associates Lease Series 2002, 5.00% due
7/1/2005 (Insured: AMBAC) Aaa/AAA 842,077
765,000 Bay Area Government Associates Lease Series 2002, 4.00% due
7/1/2006 (Insured: AMBAC) Aaa/AAA 820,486
315,000 Bay Area Government Association Rapid Transit, 5.00% due
6/15/2008 (Insured: AMBAC) Aaa/AAA 315,967
7,000,000 Bay Area Government Association Rapid Transit, 4.875% due
6/15/2009 (Insured: AMBAC) Aaa/AAA 7,231,000
675,000 Bear Valley California Unified School District Series A, 4.00%
due 8/1/2005 (Insured: NR/AAA 713,057
MBIA)
1,000,000 California Department Water Resources Revenue, 5.25% due
12/1/2005 (Central Valley Aa2/AA 1,030,400
Project)
160,000 California Educational Facilities Authority Revenue, 6.10% due
6/1/2008 (Keck Baa2/NR 181,240
Graduate Institute Project)
170,000 California Educational Facilities Authority Revenue, 6.10% due
6/1/2009 (Keck Baa2/NR 194,086
Graduate Institute Project)
500,000 California Educational Facilities Authority Revenue Series 1993,
5.15% due 9/1/2003 A1/NR 503,390
(Santa Clara University Project)
750,000 California Health Facilities Authority Revenue, 5.45% due
10/1/2013 (Kaiser A3/A 752,700
Permanente Project)
500,000 California Health Facilities Authority Revenue Kaiser Permanente
Med, 5.45% due Aaa/AAA 503,905
10/1/2013 (Insured: AMBAC)
500,000 California Health Facilities Financing Authority Revenue Kaiser
Permanente Series A, Aaa/AAA 558,005
5.25% due 6/1/2012 (Insured: FSA)
700,000 California Health Facilities Financing Revenue, 6.40% due
10/1/2005 (Sisters of Aa3/AA- 716,450
Providence Project)
670,000 California HFA Revenue Series 1985-B, 9.875% due 2/1/2017
Aa2/AA- 672,633
525,000 California Housing Finance Agency Revenue Series H, 7.00% due
8/1/2024 Aa2/AA- 526,932
1,220,000 California Infrastructure & Economic Development, 5.35% due
12/1/2009 (American NR/A 1,375,696
Center For Wine and Food Arts Project; Insured: ACA)
500,000 California Mobile Home Park Financing Series A, 4.75% due
11/15/2010 (Insured: ACA) NR/A 536,230
570,000 California Mobile Home Park Financing Series A, 5.00% due
11/15/2013 (Insured: ACA) NR/A 615,475
300,000 California Pollution Control Financing Authority Series A, 5.90%
due 6/1/2014 (San A2/A 320,538
Diego Gas & Electric Project)
2,650,000 California Pollution Control Solid Waste Authority, 6.75% due
7/1/2011 (ETM)* Aaa/NR 3,046,731
1,000,000 California Pollution Control Solid Waste Authority Series B,
4.45% due 7/1/2027 put NR/BBB 1,023,140
7/1/2005 (Waste Management Inc. Project)
190,000 California Rural HMFA Single Family Mortgage Revenue, 5.25% due
6/1/2010 NR/AAA 205,681
(Collateralized: GNMA/FNMA)
85,000 California Rural HMFA Single Family Mortgage Revenue, 5.65% due
6/1/2010 NR/AAA 92,329
(Collateralized: GNMA/FNMA)
500,000 California State, 7.00% due 8/1/2003
A2/A 502,385
1,500,000 California State, 11.00% due 8/1/2003 (Insured: FGIC)
Aaa/AAA 1,512,630
500,000 California State, 6.40% due 2/1/2006 (Insured: MBIA)
Aaa/AAA 560,650
2,000,000 California State, 7.50% due 10/1/2007 (Insured: MBIA)
Aaa/AAA 2,438,920
560,000 California State, 6.60% due 2/1/2010 (Insured: MBIA)
Aaa/AAA 679,207
1,250,000 California State, 6.50% due 9/1/2010 (Insured: AMBAC)
Aaa/AAA 1,528,200
1,500,000 California State, 5.50% due 3/1/2012 pre-refunded 3/1/2004
Aaa/AAA 1,563,780
2,080,000 California State Department Water Resources Power Supply Series
A, 5.50% due 5/1/2008 A3/BBB+ 2,329,579
800,000 California State Department Water Resources Power Supply Series
A, 5.25% due 5/1/2009 Aaa/AAA 910,504
(Insured: MBIA)
1,000,000 California State Refunding, 5.75% due 10/1/2010 (Insured: FSA)
Aaa/AAA 1,179,070
3,000,000 California State Refunding, 5.25% due 2/1/2011 (Insured: FSA)
Aaa/AAA 3,411,240
3,000,000 California State Veterans - Series Bh, 5.20% due 12/1/2011
(Insured: FSA) Aaa/AAA 3,308,760
1,000,000 California State Veterans Bonds, 9.50% due 2/1/2010 (Insured:
MBIA) Aaa/AAA 1,380,590
320,000 California Statewide Community Development, 4.875% due 12/1/2010
(Sisters of Charity Aaa/AAA 330,992
Project; Insured: MBIA)
1,000,000 California Statewide Community Development Authority, 5.00% due
7/1/2005 (Insured: Aaa/AAA 1,072,710
FSA)
1,000,000 California Statewide Community Development Authority Insured
Health Facility Revenue NR/NR 1,055,680
Series 1996-A, 6.00% due 9/1/2004 (San Gabriel Medical Center
Project) (ETM)*
595,000 California Statewide Community Development Authority Revenue,
5.125% due 6/1/2008 Aaa/AAA 661,967
(Louisiana Orthopedic Hospital Foundation Project; Insured:
AMBAC)
1,000,000 California Statewide Community Development Authority Series
1996-A, 6.00% due NR/NR 1,097,870
9/1/2005 (San Gabriel Medical Center Project; Insured:
California Health) (ETM)*
1,000,000 California Statewide Community Development Authority Solid Waste
Revenue, 4.95% due NR/BBB 1,017,710
4/1/2011 put 4/1/2004 (Waste Management Inc. Project)
2,000,000 California Statewide Community Development Series E, 4.70% due
11/1/2036 put 6/1/2009 NR/A-1 2,150,560
(Kaiser Permanente Project)
355,000 California Statewide Community Development Variable Series A,
1.20% due 1/1/2031 put Aaa/A-1 355,000
7/1/2003 (daily demand notes)
975,000 Capistrano Unified School District Number 92-1 Community
Facilities District Special NR/NR 1,170,175
Tax, 7.10% due 9/1/2021 pre-refunded 9/1/2007
100,000 Castaic Lake Water Agency Refunding Water Systems Improvement
Project Series A, 7.25% Aaa/AAA 125,843
due 8/1/2009 (Insured: MBIA)
780,000 Central Union High School District Imperial County Refunding,
5.00% due 8/1/2011 Aaa/AAA 885,854
(Insured: FGIC)
830,000 Central Union High School District Imperial County Refunding,
5.00% due 8/1/2012 Aaa/AAA 944,863
(Insured: FGIC)
205,000 Central Valley School Districts Financing Authority, 0% due
2/1/2007 (Insured: MBIA) Aaa/AAA 189,531
800,000 Coachella Valley California Unified School District Certificates
Participation Aaa/AAA 908,848
Refunding, 5.00% due 9/1/2012 (Insured: MBIA)
2,320,000 Desert Sands California Unified School District Series F, 4.00%
due 3/1/2006 (Measure Aaa/AAA 2,473,259
O Project; Insured: MBIA)
550,000 East Side Union High School District Santa Clara County Series
B, 6.625% due 8/1/2004 Aaa/AAA 583,187
(Insured: MBIA)
500,000 East Side Union High School District Santa Clara County Series
B, 6.625% due 8/1/2005 Aaa/AAA 554,470
(Insured: MBIA)
700,000 East Side Union High School District Santa Clara County Series
B, 6.625% due 8/1/2006 Aaa/AAA 807,163
(Insured: MBIA)
840,000 East Side Union High School District Santa Clara County Series
B, 6.625% due 8/1/2007 Aaa/AAA 993,392
(Insured: MBIA)
2,730,000 El Monte Certificates of Participation Senior Department Public
Services Facility Aaa/AAA 3,072,861
Phase II, 5.00% due 1/1/2009 (Insured: AMBAC)
500,000 Escondido Joint Powers Financing Authority Lease Revenue
Refunding, 0% due 9/1/2013 Aaa/AAA 289,425
(California Center For The Arts Project; Insured: AMBAC)
3,015,000 Escondido Multi Family Housing Revenue Refunding Bond Series
1997-A, 5.40% due NR/AAA 3,230,241
1/1/2027 put 7/1/2007 (Terrace Gardens Project; Collateralized:
FNMA)
2,000,000 Folsom Cordova Unified School District School Facilities
Improvement District-2 Aaa/AAA 2,086,900
Series A, 4.50% due 10/1/2004 (Insured: MBIA)
200,000 Foothill De Anza Community College District Certificates of
Participation, 7.35% due NR/AA- 202,150
3/1/2007 pre-refunded 9/1/2003
400,000 Fresno County Housing Authority Multi Family Revenue Refunding
Series A, 4.90% due NR/AAA 428,336
11/1/2027 mandatory put 11/1/2007 (Housing Creek Park Apartments
Project;
Collateralized: FNMA)
575,000 Hawaiian Gardens Redevelopment Agency Refunding, 5.50% due
12/1/2008 NR/BBB+ 644,558
1,000,000 Irwindale Community Redevelopment Agency, 6.60% due 8/1/2018
pre-refunded 8/1/2005 Baa3/NR 1,127,270
420,000 Julian Union High School District, 4.875% due 11/1/2005
(Insured: MBIA) Aaa/AAA 447,649
165,000 Kern High School District, 7.00% due 8/1/2010 (ETM)*
A/NR 210,634
500,000 Kern High School District Refunding Series A, 6.30% due 8/1/2011
(Insured: MBIA) Aaa/AAA 608,235
680,000 Kern High School District Series B, 9.00% due 8/1/2006 (ETM)*
Aaa/AAA 835,149
250,000 Los Angeles Certificates of Participation, 0% due 9/1/2003
A2/A 249,382
1,400,000 Los Angeles Certificates of Participation, 5.00% due 2/1/2012
(Insured: MBIA) Aaa/AAA 1,579,998
835,000 Los Angeles Community Redevelopment Agency, 5.00% due 7/1/2009
(Cinerama Dome Public NR/A 897,834
Parking Project; Insured: ACA)
435,000 Los Angeles Community Redevelopment Agency, 5.75% due 7/1/2010
(Cinerama Dome Public NR/A 483,198
Parking Project; Insured: ACA)
2,125,000 Los Angeles Community Redevelopment Agency Series H, 6.50% due
12/1/2014 (Insured: Aaa/AAA 2,209,702
FSA)
5,000 Los Angeles Convention & Exhibition Center, 9.00% due 12/1/2020
pre-refunded Aaa/AAA 5,924
12/1/2005
275,000 Los Angeles Convention & Exhibition Center Authority
Certificates Refunding, 0% due Aaa/AAA 266,041
8/15/2005 (Insured: AMBAC)
2,000,000 Los Angeles County Capital Asset, 5.00% due 4/1/2008 (Insured:
AMBAC) Aaa/AAA 2,246,520
1,700,000 Los Angeles County Metropolitan Transportation Authority Sales
Tax Revenue, 9.00% due Aaa/AAA 2,154,818
7/1/2007 (Insured: MBIA)
700,000 Los Angeles Department Airport Revenue Refunding Series A, 5.50%
due 5/15/2010 Aaa/AAA 763,441
(Insured: FGIC)
40,000 Los Angeles Department Water & Power Electric Plant Revenue
Crossover Refunding, Aaa/AA- 41,338
9.00% due 9/1/2004 pre-refunded 9/1/2003
415,000 Los Angeles Department Water & Power Electric Plant Revenue
Crossover Refunding, Aa3/AA- 428,691
9.00% due 9/1/2004
45,000 Los Angeles Department Water & Power Electric Plant Revenue
Crossover Refunding, Aa3/AA- 46,501
9.00% due 9/1/2004 (ETM)*
3,000,000 Los Angeles Department Water & Power Revenue Series A, 5.25% due
7/1/2011 (Insured: Aaa/AAA 3,456,330
MBIA)
1,940,000 Los Angeles Multi Family Revenue, 5.85% due 12/1/2027 put
12/01/2007 (Collateralized: NR/AAA 2,094,405
FNMA)
585,000 Los Angeles Special Assessment, 3.75% due 3/1/2004 (Insured:
AMBAC) Aaa/AAA 596,016
2,500,000 Los Angeles Unified School District Series E, 5.50% due 7/1/2012
(Insured: MBIA) Aaa/AAA 2,940,275
355,000 Marysville Hospital Revenue, 5.55% due 1/1/2013 (Fremont -
Rideout Health Group Aaa/AAA 368,249
Project; Insured: AMBAC)
2,800,000 Metropolitan Water District Southern California Waterworks
Revenue, 0.95% due VMIG1/A1+ 2,800,000
7/1/2035 put 7/1/2003 (daily demand notes)
1,000,000 Metropolitan Water District Southern California Waterworks
Revenue Series C-1, 1.00% VMIG1/A1+ 1,000,000
due 7/1/2036 put 7/1/2003 (daily demand notes)
3,000,000 Modesto High School District Stanislaus County Series A, 0% due
8/1/2012 (Insured: Aaa/AAA 2,136,690
FGIC)
1,205,000 Moorpark Mobile Home Park Revenue Series A, 5.80% due 5/15/2010
(Villa Delaware NR/A 1,304,003
Arroyo Project; Insured: ACA)
2,500,000 Natomas Unified School District California Certificates, 2.50%
due 2/1/2028 put Aaa/AAA 2,530,600
2/1/2005 (Natomas High School Project)
1,400,000 New Haven Unified School District Refunding, 12.00% due 8/1/2006
(Insured: FSA) Aaa/AAA 1,828,890
1,000,000 New Haven Unified School District Refunding, 12.00% due 8/1/2008
(Insured: FSA) Aaa/AAA 1,452,050
1,000,000 Norco California Special Taxes Refunding Community Facilities
District Number 93-1, NR/NR 1,007,730
5.40% due 7/1/2020
360,000 Northern California Power Agency Public Power Revenue, 5.65% due
7/1/2007 (Geothermal Baa2/A- 415,102
Project 3-A) (ETM)*
340,000 Northern California Power Agency Public Power Revenue, 5.65% due
7/1/2007 Baa2/A- 382,211
65,000 Oakland Redevelopment Agency, 7.40% due 5/1/2007 (Insured:
AMBAC) Aaa/AAA 65,333
1,000,000 Orange County Airport Revenue Bond, 6.00% due 7/1/2007 (Insured:
MBIA) Aaa/AAA 1,142,360
4,200,000 Orange County California Apartment Development Revenue Variable
Rate, 1.00% due VMIG1/NR 4,200,000
11/1/2009 put 7/1/2003 (Laguna Summit Apartments X Project; LOC:
Bank of America)
(daily demand notes)
510,000 Orange County Local Transportation Authority Sales Tax Revenue,
6.00% due 2/15/2006 Aa2/AA+ 568,497
600,000 Orange County Recovery Certificates Participation Series A,
6.00% due 7/1/2006 Aaa/AAA 678,798
(Insured: MBIA)
2,000,000 Orange County Refunding Recovery, 6.50% due 6/1/2004 (Insured:
MBIA) Aaa/AAA 2,100,280
2,000,000 Orange County Refunding Recovery, 6.50% due 6/1/2005 (Insured:
MBIA) Aaa/AAA 2,196,100
1,000,000 Piedmont Unified School District Series B, 0% due 8/1/2013 pre-
refunded 8/1/2007 Aa3/NR 636,970
3,350,000 Pittsburg California Redevelopment Agency Tax Allocation
Refunding, 5.25% due Aaa/AAA 3,867,675
8/1/2012 (Los Medanos Community Development Project A; Insured:
MBIA)
200,000 Pleasant Hill Multi Family Housing Refunding, 5.30% due
10/1/2020 put 10/1/2005 NR/AAA 212,928
(Ellinwood Apartments Project; Collateralized: FNMA)
1,000,000 Pleasanton Unified School District Series B, 0% due 8/1/2016
(Insured: MBIA) Aaa/AAA 497,760
580,000 Pomona Unified School District General Obligation, 5.35% due
2/1/2005 (Insured: MBIA) Aaa/AAA 617,509
340,000 Pomona Unified School District General Obligation, 5.40% due
8/1/2005 (Insured: MBIA) Aaa/AAA 368,791
320,000 Pomona Unified School District Refunding Series A, 6.10% due
2/1/2010 (Insured: MBIA) Aaa/AAA 381,194
295,000 Porterville Certificates Participation, 6.10% due 10/1/2005
(Water Systems Refunding Aaa/AAA 326,149
Project; Insured: AMBAC)
1,000,000 Puerto Rico Commonwealth Highway & Transportation Authority,
5.50% due 7/1/2009 Aaa/AAA 1,163,230
(Insured: FSA)
1,000,000 Puerto Rico Commonwealth Highway & Transportation Authority
Highway Revenue Refunding Aaa/AAA 1,133,480
Series Aa, 5.00% due 7/1/2008 (Insured: FGIC)
600,000 Puerto Rico Municipal Finance Agency Series A, 6.00% due
7/1/2011 (Insured: FSA) Aaa/AAA 727,698
5,000,000 Rancho Santiago Community College District Series A, 4.00% due
9/1/2005 (Insured: Aaa/AAA 5,292,550
MBIA)
500,000 Richmond Joint Powers Financing Authority Revenue Series A,
5.20% due 5/15/2005 NR/A 533,100
500,000 Sacramento County Sanitation District Financing Authority
Revenue, 4.80% due Aaa/AA 517,780
12/1/2004 (ETM)*
560,000 Sacramento County Sanitation District Financing Authority
Revenue Series A, 5.75% due Aa3/AA 663,370
12/1/2009
800,000 Sacramento Municipal Utility District Electric Revenue, 5.30%
due 11/15/2005 Aaa/AAA 829,080
(Insured: FSA)
330,000 Sacramento Municipal Utility District Electric Revenue Refunding
Series C, 5.75% due Aaa/AAA 337,808
11/15/2007 (Insured: MBIA) (ETM)*
2,335,000 Salinas Redevelopment Agency Tax Allocation Series A, 0% due
11/1/2022 (Insured: FSA) Aaa/AAA 835,696
3,000,000 San Bernardino County Multi Family Housing Revenue Refunding
Series A, 4.75% due Aaa/NR 3,235,860
12/15/2031 put 12/15/2011 (Collateralized: FNMA)
190,000 San Bernardino County Special Taxes Community Facilities
District Number 2002-1, NR/NR 200,634
5.10% due 9/1/2011
205,000 San Bernardino County Special Taxes Community Facilities
District Number 2002-1, NR/NR 217,093
5.20% due 9/1/2012
300,000 San Bernardino County Special Taxes Community Facilities
District Number 2002-1, NR/NR 319,092
5.30% due 9/1/2013
175,000 San Bernardino County Transportation Authority Sales Tax Revenue
Series A, 6.00% due Aaa/AAA 186,349
3/1/2010 (Insured: FGIC) (ETM)*
1,250,000 San Bernardino Multi Family Housing Refunding, 4.45% due
5/1/2031 mandatory put NR/AAA 1,331,575
5/1/2011 (Alberta Park Vista Apts A Project; Collateralized:
FNMA)
430,000 San Diego Public Facilities Financing Authority Lease Revenue,
7.00% due 4/1/2005 Aaa/AAA 472,407
(Insured: MBIA)
455,000 San Diego Public Facilities Financing Authority Lease Revenue,
7.00% due 4/1/2006 Aaa/AAA 521,958
(Insured: MBIA)
425,000 San Diego Public Facilities Financing Authority Lease Revenue,
7.00% due 4/1/2007 Aaa/AAA 502,966
(Insured: MBIA)
500,000 San Francisco Bay Area Rapid Transit Refunding Sales Tax
Revenue, 0% due 7/1/2004 Aaa/AAA 494,335
(Insured: AMBAC)
1,000,000 San Francisco Bay Area Transit Bridge Toll Notes, 5.625% due
8/1/2006 (Insured: ACA) NR/A 1,102,350
1,100,000 San Francisco International Airport Revenue Series Issue 13B,
8.00% due 5/1/2007 Aaa/AAA 1,282,215
(Insured: MBIA)
895,000 San Joaquin County Certificates of Participation, 5.90% due
9/1/2003 (General A2/A- 902,464
Hospital Project) (ETM)*
2,200,000 San Jose Evergreen Community College District Series C, 0% due
9/1/2011 (Insured: Aaa/AAA 1,593,592
AMBAC)
2,700,000 San Jose Financing Authority Lease Revenue Series D, 5.00% due
6/1/2039 mandatory put Aaa/AAA 2,962,413
6/1/2006 (Civic Center Project; Insured: AMBAC)
500,000 San Jose Redevelopment Agency Tax Allocation, 5.75% due 8/1/2011
(Merged Area A2/A 511,680
Redevelopment Project Series B)
1,900,000 San Marcos Public Facilities Authority Revenue Community
Facilities District Number Aaa/NR 1,696,339
88-1, 0% due 3/1/2008 (ETM)*
2,000,000 Santa Ana Multi Family Housing Revenue Bonds Series B, 5.65% due
11/1/2021 put NR/AAA 2,043,900
11/1/2006 (Collateralized: FNMA)
1,000,000 Santa Clara County Financing Authority, 5.00% due 8/1/2005
(Measure B Transportation A2/NR 1,065,580
Improvement Program)
2,000,000 Santa Clara County Housing Authority Series B, 3.80% due
8/1/2004 (River Town A1/NR 2,002,540
Apartments Project; LOC: Union Bank Cal.)
610,000 Santa Cruz County Certificates Refunding, 4.00% due 8/1/2005
A2/NR 640,518
1,000,000 Santa Margarita/Dana Point Authority Revenue Refunding
Improvement Districts 1&2 Aaa/AAA 1,047,100
Series A, 5.375% due 8/1/2004 (Insured: MBIA)
575,000 Seal Beach Redevelopment Agency Mobile Home Park Revenue Series
A, 5.20% due NR/A 634,070
12/15/2013 (Insured: ACA)
1,435,000 South Orange County Public Finance Authority Special Tax
Revenue, 7.00% due 9/1/2005 Aaa/AAA 1,607,171
(Insured: MBIA)
1,500,000 South Orange County Public Financing Authority Special Tax
Revenue Series C, 8.00% Aaa/AAA 1,908,150
due 8/15/2008 (Foothill Area Project; Insured: FGIC)
3,250,000 Southern California Public Power Authority Revenue Refunding
Series A, 5.50% due Aaa/AAA 3,315,390
7/1/2012 (Power Project; Insured: AMBAC) (ETM)*
350,000 Southern California Revenue, 5.15% due 7/1/2015 (Public Power
Project; Insured: Aaa/AAA 393,764
AMBAC)
250,000 Southern California Revenue, 5.15% due 7/1/2015 (Public Power
Project; Insured: Aaa/AAA 281,260
AMBAC)
2,315,000 Stanton Multi Family Housing Revenue Bond Series 1997, 5.625%
due 8/1/2029 put NR/AAA 2,498,093
8/1/2009 (Continental Gardens Project; Collateralized: FNMA)
500,000 Turlock Irrigation District Revenue Refunding Series A, 5.75%
due 1/1/2018 (Insured: Aaa/AAA 501,665
MBIA)
2,380,000 Ukiah Unified School District Certificates Participation, 4.00%
due 9/1/2006 Aaa/AAA 2,563,998
(Insured: MBIA)
1,000,000 Ukiah Unified School District Certificates Participation, 5.00%
due 9/1/2008 Aaa/AAA 1,134,670
(Insured: MBIA)
500,000 University California Revenues Refunding, 5.00% due 12/1/2006
Aaa/AAA 518,190
625,000 Upland Unified School District Convertible Capital Appreciation,
0% due 8/1/2007 Aaa/AAA 681,544
(Insured: FSA)
500,000 Ventura County Community College Series A, 5.00% due 8/1/2012
(Insured: MBIA) Aaa/AAA 569,195
160,000 Ventura Unified School District Series F, 6.75% due 8/1/2004
(Insured: FSA) Aaa/AAA 169,870
115,000 Ventura Unified School District Series F, 6.75% due 8/1/2005
(Insured: FSA) Aaa/AAA 127,824
455,000 Victorville Redevelopment Agency Tax Allocation Bear Valley Road
Special Escrow Fund Aaa/AAA 484,516
A, 5.00% due 12/1/2014 (Insured: FSA)
800,000 Walnut Valley Unified School District, 9.00% due 8/1/2006 (ETM)*
Aaa/AAA 982,528
1,000,000 Walnut Valley Unified School District, 8.75% due 8/1/2010 (ETM)*
Aaa/AAA 1,389,970
245,000 Walnut Valley Unified School District Series A, 6.70% due
8/1/2005 (Insured: MBIA) Aaa/AAA 272,068
250,000 Walnut Valley Unified School District Series A, 6.80% due
2/1/2007 (Insured: MBIA) Aaa/AAA 292,458
250,000 Walnut Valley Unified School District Series A, 6.90% due
2/1/2008 (Insured: MBIA) Aaa/AAA 300,632
100,000 Walnut Valley Unified School District Series A, 7.00% due
8/1/2008 (Insured: MBIA) Aaa/AAA 122,635
450,000 Washington Township Health Care District Revenue, 5.00% due
7/1/2009 A2/NR 496,247
570,000 West Contra Costa Unified School District Series A, 6.50% due
8/1/2005 (Insured: Aaa/AAA 630,511
MBIA)
595,000 West Contra Costa Unified School District Series A, 7.00% due
8/1/2006 (Insured: Aaa/AAA 692,592
MBIA)
655,000 West Contra Costa Unified School District Series A, 7.00% due
8/1/2008 (Insured: Aaa/AAA 803,259
MBIA)
1,000,000 Whittier Solid Waste Revenue Refunding Series A, 5.375% due
8/1/2014 (Insured: AMBAC) Aaa/AAA 1,022,860
TOTAL INVESTMENTS (Cost $185,795,442)
$ 193,763,769
<FN>
+Credit ratings are unaudited.
*Escrowed to maturity See notes to financial statements.
</FN>
Report of independent auditors
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
June 30, 2003
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, 2003, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the four years
in the period then ended, in conformity with accounting principles
generally accepted in the United States of America. 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 audits. We conducted our audits of these financial statements in
accordance with auditing standards generally accepted in the United States
of America, 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 audits, which included
confirmation of securities at June 30, 2003 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion. The
financial highlights for the year ended June 30, 1999 were audited by other
independent accountants whose report dated July 27, 1999 expressed an
unqualified opinion on those financial highlights.
PricewaterhouseCoopers LLP
New York, New York
July 30, 2003
Index Comparisons
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
June 30, 2003
Index Comparison
Compares performance of Thornburg Limited Term Municipal Fund - California
Portfolio, the Lehman 5-Year General Obligation Bond Index and the Consumer
Price Index for the periods ended June 30, 2003. On June 30, 2003, 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 4.9 years and 4.9 years, respectively. Class C shares became available
on September 1, 1994. Past performance of the Index and the Fund may not be
indicative of future performance. Performance data and graph do not reflect
the deduction of taxes that a shareholder would pay on distributions or the
redemption of fund shares.
Thornburg Limited Term Municipal Fund California Class A Total Returns,
Since February 28, 1987, versus Lehman 5-Year General Obligation Bond Index
and Consumer Price Index (C.P.I.)
Lehman 5-year GO index
Fund A Shares
CPI
Class A Shares
Average Annual Total Returns
(periods ending 6/30/03) (at max. offering price)
One year: 3.24%
Five years: 4.05%
Ten years: 4.37%
Since inception: (2/19/87): 5.43%
Thornburg Limited Term Municipal Fund California Class C Total Returns,
Since September 1, 1994, versus Lehman 5-Year General Obligation Bond Index
and Consumer Price Index (C.P.I.)
Lehman 5-year GO index
Fund C Shares
CPI
Class C Shares
Average Annual Total Returns
(periods ending 6/30/03)
One year: 4.51%
Five years: 3.97%
Since inception: (9/1/94): 4.36%
Directors and Officers
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
Name, Address (1) Position(s) Term of Principal
Member of Other
And Age Held with Office Occupation(s)
Portfolios Directorships
Fund (2) and During Past
in Fund Held by
Length of 5 Years
Complex Director or
Time
Overseen Nominee for
Served
by Director Director
or Nominee
for Director (2)
Interested Directors
Garrett Thornburg, Chairman Director CEO, Chairman and
Controlling Twelve None
57 of the Since Shareholder of Thornburg
Board of 1984; Investment Management, Inc.
Directors, (4) (investment adviser) and
Thornburg
Treasurer (3) Securities Corporation
(securities
dealer); Chairman of
Trustees of Thornburg
Investment Trust
(registered investment
company); CEO and Chairman
of Thornburg Mortgage, Inc.
(real estate investment
trust); Chairman of
Thornburg Mortgage Advisory
Corporation (investment
manager to Thornburg
Mortgage, Inc.).
Independent Directors
David D. Chase, Director Director Chairman, President and CEO
Twelve Trustee,
62 since 2001 of general partner of
Vestor Thornburg
(4) Partners, LP, Santa Fe, NM
Investment Trust
(private equity fund);
Chairman
and CEO of Vestor Holdings,
Inc., Santa Fe, NM
(merchant
bank).
Eliot R. Cutler, Director Director Partner, Akin, Gump,
Strauss, Two Director of
56 since 1984 Hauer & Feld, LLP,
Washington Skanska, AB
(4) D.C. (law firm) since
November (construction services)
2000; partner, Cutler &
Stanfield,
Washington, D.C. (law firm)
until November 2000.
James E. Monaghan, Jr., Director Director President, Monaghan &
Two None
56 since 1984 Associates, Inc. and
(4) Strategies West, Inc.
Denver,
Colorado (business
consultants).
A.G. Newmyer III, Director Director Private investor and
management Two None
53 since 1984 consultant.
(4)
Advisory Director
Richard M. Curry, Advisory Advisory Managing Director, McDonald
Not applicable None
60 Director (6) Director (5) & Co., Cincinnati, Ohio
Since (securities dealer) and
District
2002 (6) President, Key Bank,
Cincinnati,
Ohio, since March 2000.
Officers of the Fund (who are not Directors) (7)
Brian J. McMahon, President President President and Managing
Director Not applicable Not applicable
47 since 1997 of Thornburg Investment
(4) Management, Inc.; President
of Thornburg Investment
Trust
Dawn B. Fischer, Secretary Secretary Vice President, Secretary
and Not applicable Not applicable
56 Since 1984 Managing Director of
Thornburg
(4) Investment Management,
Inc.;
Secretary and Assistant
Treasurer
of Thornburg Investment
Trust; Secretary of
Thornburg
Securities Corporation;
Vice
President, Daily Tax Free
Income Fund, Inc.
(registered
investment company).
Steven J. Bohlin, Vice President Vice Vice President and
Managing Not applicable Not applicable
44 President Director of Thornburg
Investment
Since 1991 Management, Inc.; Vice
President
(4) and Treasurer of Thornburg
Investment Trust.
George T. Strickland, Vice President Vice Vice President and
Managing Not applicable Not applicable
40 Treasureer President Director of Thornburg
Investment
Since 1999; Management, Inc.; Vice
President
Treasurer of Thornburg Investment
Trust.
since 2003
Leigh Moiola, Vice President Vice Vice President, and
Managing Not applicable Not applicable
36 President Director since 1998, of
Since 1999 Thornburg Investment
Management,
(4) Inc.; Vice President of
Thornburg
Investment Trust since
2001.
Kenneth Ziesenheim, Vice President Vice Managing Director of
Thornburg Not applicable Not applicable
49 President Investment Management,
Inc.;
Since 1995 President of Thornburg
Securities
(4) Corporation; Vice
President of
Thornburg Investment
Trust.
Kerry D. Lee, Vice President Vice Associate of Thornburg
Investment Not applicable Not applicable
36 President Management, Inc.; Vice
President
Since 1999 of Thornburg Investment
Trust
(4) since 1999.
Dale Van Scoyk, Vice President Vice Account Manager for
Thornburg Not applicable Not applicable
56 President Investment Management,
Inc.
Since 1999 1997-1999, and Managing
Director
(4) and Vice President since
1999;
Vice President of
Thornburg
Investment Trust since
1998; National Account
Manager for Heartland
Funds
1993-1997.
Joshua Gonze, Vice President Vice Associate and Vice
President of Not applicable Not applicable
40 President Thornburg Investment
Management,
Since 2001 Inc. since 1999; Vice
President of
(4) Thornburg Investment Trust
since
2001
Christopher Ihlefeld, Vice President Vice Associate and Vice
President of Not applicable Not applicable
32 President Thornburg Investment Mgt,
Inc.;
Since 1999 Assistant Vice President
of
(4) Thornburg Investment Trust
since 1999.
<FN>
(1) Each person's address is 119 East Marcy Street, Suite 202, Santa Fe, New
Mexico 87501.
(2) The Fund is one of two separate investment "funds" or "portfolios" of
Thornburg Limited Term Municipal Fund, Inc. (the "Company"), organized as a
Maryland corporation. The Company currently has two funds, which are
considered for certain regulatory purposes as parts of a "fund complex" with
the nine funds of Thornburg Investment Trust. Thornburg Investment
Management, Inc. is the investment adviser to, and manages, the eleven funds
of the Company and Thornburg Investment Trust.
(3) Mr. Thornburg is considered an "interested" Director under the Investment
Company Act of 1940 because he is a director and controlling shareholder of
the investment adviser, Thornburg Investment Management, Inc., and is the
sole director and controlling shareholder of Thornburg Securities
Corporation, the distributor of shares for the Company.
(4) Thornburg Limited Term Municipal Fund, Inc.'s Amended By-Laws provide that
each Director shall serve in office until the next annual meeting or the
election and qualification of the Director's successor. In accordance with
Maryland law, the Company does not hold an annual meeting each year; it may
hold shareholder meetings as circumstances require. Officers serve at the
pleasure of the Board of Directors.
(5) Mr. Cutler may be considered an "interested" Director of the Company because
he is associated with a partnership which receives a portion of Thornburg
Investment Management, Inc.'s revenues.
(6) As an Advisory Director, Mr. Curry serves at the pleasure of the Board of
Directors.
(7) Assistant vice presidents, assistant secretaries and assistant treasurers
are not shown.
</FN>
The Fund's Statement of Additional Information includes additional
information about the Directors and is available, without charge and upon
request by calling 1-800-847-0200
Thornburg limited term municipal fund CALIFORNIA portfolio - a shares
Outperformed Tax-Exempt Money Market Funds
Investors sometimes ask us to compare Limited Term Municipal Fund -
California Portfolio to money market fund returns. These investments have
certain differences, and investors in Limited Term Municipal Fund -
California Portfolio took more risk than money market fund investors to
earn their higher returns.
Return from a hypothetical $10,000 investment 6/30/93 through 6/30/03
(after sales charges and fund expenses)
Lipper California Tax-exempt
Money Market Index
$2,702
Thornburg Limited Term Municipal Fund -
California Portfolio
(after capital gains taxes)
$5,269
The chart above is for the Fund's Class A Shares only. Class C and Class I
Shares have different sales charges and expenses. See the inside front
cover page for the 30-day SEC yield and the total returns at the maximum
offering prices for one year, three years, five years, ten years, and since
inception for Class A and one year, three years, five years, and since
inception for Class C shares of the Fund.
Note 1: Future increases, if any, of any of these investments may bear no
relationship to prior increases. Quotations for the money fund averages are
based upon 30-day yield quotations for tax-exempt money funds as quoted in
"Lipper California Tax-exempt Money Market Index" for the months covered by
this analysis. The increase for the Class A Shares of Limited Term
Municipal Fund - California Portfolio is based upon the dividends paid for
the months covered by this analysis, the beginning offering price at $13.05
per share and the ending NAV at $13.20 per share. These investments
returned the $10,000 initial investment in addition to the amounts shown
above.
Note 2: This analysis does
not take into account the effect, if any, caused by state and local income
taxes. The portion of the increase, if any, of Limited Term Municipal Fund
- - California Portfolio representing appreciation of the share price is
assumed to be taxed at a 15% federal tax rate. The average money market
fund increases shown above may differ from the return of a particular money
market fund. It is not possible to invest in these money fund averages.
Note 3: Generally, money market funds seek to maintain an investment
portfolio with an average maturity of 90 days or less. Limited Term
Municipal Fund - California Portfolio invests in short-to-intermediate
maturity municipal obligations. The net asset value of the money funds did
not fluctuate. The net asset value of the Class A Shares of LTCAX did vary
from time to time, and will continue to vary in the future due to the
effect of changes in interest rates on the value of the investments the
Fund holds. The analysis assumes that the investor received the net asset
value of the shares owned, plus accrued income, at time of sale.
Redemptions are made at the then current net asset value, which
may give you a gain or loss when you sell your shares.
Note 4: This analysis assumes that the dividends from each of these
investment vehicles were reinvested and compounded monthly. Most money
funds declare dividends daily and pay them monthly. Limited Term Municipal
Fund - California Portfolio also declares dividends daily and pays them
monthly.
Note 5: An investment in a Money Market Fund is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government
agency. Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Fund.
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
www.thornburg.com
This report is submitted for the general information of the shareholders of
the Fund. It is not authorized for distribution to prospective investors in
the Fund unless preceded or accompanied by an effective prospectus, which
includes information regarding the Fund's objectives and policies,
experience of its management, marketability of shares, and other
information. Performance data quoted represent past performance and do not
guarantee future results.
STATEMENT OF ADDITIONAL INFORMATION
(For Holders of Institutional Class Shares)
Relating to the Acquisition of the Assets of
THORNBURG LIMITED TERM MUNICIPAL FUND CALIFORNIA PORTFOLIO
a series of THORNBURG LIMITED TERM MUNICIPAL FUND, INC.
119 East Marcy Street
Santa Fe, New Mexico 87501
(800) 847-0200
by and in exchange solely for voting shares of
THORNBURG CALIFORNIA LIMITED TERM MUNICIPAL FUND,
a series of THORNBURG INVESTMENT TRUST
119 East Marcy Street
Santa Fe, New Mexico 87501
(800) 847-0200
This Statement of Additional Information, relating specifically to
the proposed acquisition of substantially all of the assets of Thornburg
Limited Term Municipal Fund California Portfolio (the "Fund"), a series of
Thornburg Limited Term Municipal Fund, Inc., by Thornburg California
Limited Term Municipal Fund (the "New Fund"), a series of Thornburg
Investment Trust, in exchange solely for voting shares of the New Fund,
consists of this cover page and the following documents, each of which is
attached hereto and incorporated by reference herein:
1. Thornburg Limited Term Municipal Funds Institutional Class
Shares Statement of Additional Information _________________, 2004, [to be
added by amendment];
2. Thornburg Funds Institutional Class Statement of Additional
Information dated February 1, 2004;
3. Thornburg Limited Term Municipal Fund California Portfolio
Annual Report (Institutional Class Shares), June 30, 2003; and
4. Thornburg Limited Term Municipal Fund California Portfolio
Semiannual Report (Institutional Class Shares), December 31, 2003.
This Statement of Additional information is not a prospectus. A
Prospectus/Proxy Statement dated _________________, 2004 relating to the
above referenced acquisition may be obtained from Thornburg Investment
Trust at the number and address shown above. This Statement of Additional
Information relates to, and should be read with, the Prospectus/Proxy
Statement.
The financial statements of Thornburg Limited Term Municipal Fund
California Portfolio contained in its Annual Report to shareholders for the
fiscal year ended June 30, 2003 have been audited by
PricewaterhouseCoopers, LLP, that Fund's independent auditors.
The date of this Statement of Additional Information is _________,
2004.
Thornburg Limited Term Municipal Fund California Portfolio I Shares
Annual Report
June 30, 2003
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
ALL DATA AS OF 06/30/03.
Fund facts: Thornburg Limited Term Municipal Fund, Inc. - California
Portfolio
I Shares
Annualized Distribution Rate (at NAV) 3.06%
SEC Yield 1.90%
NAV $13.22
Maximum Offering Price $13.22
Total returns: (Annual Average)
One Year 5.27%
Three Years 5.67%
Five Years 4.76%
Since Inception 5.10%
Inception Date 4/1/97
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.
The data quoted represent past performance and may not be construed as a
guarantee of future results.
The SEC Yield is computed in accordance with SEC standards measuring the
net investment income per share over a specified 30-day period expressed as
a percentage of the maximum offering price of the Fund's shares at the end
of the period.
The distribution rate is calculated by taking the sum of the month's total
distribution factors and dividing this sum by a 30-day period and
annualizing to a 360-day year. The value is then divided by the ending NAV
to arrive at the annualized distribution yield. The yield is calculated on
a periodic basis and is subject to change depending on the Fund's NAV and
current distributions.
Letter to shareholders
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
July 14, 2003
Dear Fellow Shareholder:
I am pleased to present the annual report for the California Portfolio of
Thornburg Limited Term Municipal Fund. The net asset value of the I shares
increased by 25 cents to $13.22 during the year ending June 30, 2003. If
you were with us for the entire period, you received dividends of 42.5
cents per share. If you reinvested dividends, you received 43.1 cents per
share.
Over the last year, interest rates on high-quality municipal bonds have
fallen substantially. Falling interest rates drive up the price of most of
the bonds owned by the Fund, and this has resulted in an increasing share
price.
Your Thornburg Limited Term Municipal Fund, California Portfolio is a
laddered portfolio of over 170 municipal obligations from all over the
State. Approximately 97% of the bonds are rated A or better by one of the
major rating agencies. Today, your Fund's weighted average maturity is 4.9
years; we always keep it below 5 years. As you know, we ladder the maturity
dates of the bonds in your portfolio so that some of the bonds are
scheduled to mature during each of the coming years. The following chart
describes the percentages of your Fund's bond portfolio maturing in each of
the coming years:
% of portfolio Cumulative %
maturing within maturing by end of
1 year = 9% year 1 = 9%
1 to 2 years = 9% year 2 = 18%
2 to 3 years = 14% year 3 = 32%
3 to 4 years = 8% year 4 = 40%
4 to 5 years = 13% year 5 = 53%
5 to 6 years = 11% year 6 = 64%
6 to 7 years = 6% year 7 = 70%
7 to 8 years = 6% year 8 = 76%
8 to 9 years = 11% year 9 = 87%
9 to 10 years = 10% year 10 = 97
As of 6/30/03. Portfolio holdings can and do vary over time.
Three powerful trends seem to be driving recent performance of the
municipal market. The first trend is persistent economic weakness. The U.S.
unemployment rate, at 6.4%, has just hit a nine-year high. GDP growth is
sputtering along at about 2%. Our European and Japanese trading partners
are, by and large, worse off than are we, and the Federal Reserve Board
appears to be at least as worried about deflation as it is about inflation.
We continue to believe that low interest rates, tax cuts, and rising
corporate profits will eventually lead to steady economic and employment
growth and probably give rise to somewhat higher interest rates. However,
that process is taking longer than we formerly thought and may not
materialize until next year.
The second trend is financial stress in many of our cities and states. A
combination of flat or declining tax revenues and rising expenses for items
such as Medicaid and pension systems has led to large budget deficits for
more than half of the 50 states. The challenges have led to a number of
high-profile credit rating downgrades by the major bond rating agencies.
The deficit problem is particularly pronounced in California because of its
magnitude ($38 billion at last count) and the inability of the government
to reach consensus on how to deal with it. A variety of plans has been
proposed, but none has been implemented as yet. In the meantime, the
deficit continues to grow by an estimated $55 million per day. Thanks to a
large and diverse economy and currently moderate debt levels, we expect
that the State will continue to pay its bills, including principal and
interest on its bonds. Until we see a viable plan implemented, however, we
are maintaining very high credit quality in the California portfolio, with
over 77% of the portfolio rated AAA by Moody's or Standard & Poor's.
It is notable that in the midst of these problems, many municipal credits
are doing just fine. Standard & Poor's recently reported that, nationwide,
upgrades outpaced downgrades in the second quarter of 2003 by a ratio of
1.6:1. This is because the municipal bond market is made up of much more
than bond issues of the 50 states. Many of our cities, counties, school
districts, water and sewer authorities, transportation authorities, and
healthcare providers have benefited from stable revenues based upon
property taxes, sales taxes, and fee s for essential services. The
municipal bond market, historically has a much lower default rate than the
corporate bond market, and we continue to enjoy some success finding good
bonds at relatively reasonable prices.
The third trend exerting pressure on the municipal market is the heavy
supply of bonds. $198 billion of municipal bonds were issued in the first
half of 2003, a 19% increase over the record pace of 2002. The first half
total already exceeds full-year volume for 1994, 1995, and 1996. The heavy
supply has often saturated traditional sources of demand and pushed high
quality tax-free municipal bond yields to levels approaching taxable
Treasury bond yields. The relative attractiveness of the municipal bond
market should allow full coupon municipals to outperform the Treasury bond
market if the heavy supply abates and yield ratios revert to historical
norms.
The Wall Street Journal ran a front-page story on July 7, 2003, about
retirees who are forced to pinch pennies as money market and CD rates
plunge. We believe that laddering short and intermediate bonds -- as we
have done for your account -- is the best way to address this problem.
Laddering bonds moderates the income-flow risk of plunging short-term
yields and the principal risk that affects all bonds when interest rates
rise. To see how your Fund has performed over time relative to the money
market fund averages, turn to the back of this report.
Over the years, the practice of laddering a diversified portfolio of short-
and intermediate-maturity municipal bonds has allowed your Fund to perform
consistently well in varying interest rate environments. Thank you for
investing in the California Portfolio of Thornburg Limited Term Municipal
Fund.
Sincerely,
George Strickland
Portfolio Manager
Past performance cannot guarantee future results.
Statement of assets and liabilities
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
June 30, 2003
ASSETS
Investments at value (cost $185,795,442) ...............$ 193,763,769
Cash ................................................... 31,071
Receivable for investments sold ........................ 510,000
Receivable for fund shares sold ........................ 672,287
Interest receivable ..................................... 2,797,779
Prepaid expenses and other assets ....................... 2,850
Total Assets ...........................197,777,756
LIABILITIES
Payable for investments purchased ........................ 3,702,692
Payable for fund shares redeemed ......................... 1,422,827
Accounts payable and accrued expenses .................... 72,326
Payable to investment advisor (Note 3) ................... 95,916
Dividends payable ........................................ 136,359
Total Liabilities ...................... 5,430,120
NET ASSETS .............................................$ 192,347,636
NET ASSETS CONSIST OF:
Net unrealized appreciation (depreciation) on investments
...................................................$ 7,968,327
Accumulated net realized gain (loss) .............. (794,213)
Net capital paid in on shares of beneficial interest 185,173,522
$ 192,347,636
NET ASSET VALUE:
Class A Shares:
Net asset value and redemption price per share
($149,269,028 applicable to 11,304,831 shares of beneficial
interest outstanding - Note 4) .......................$ 13.20
Maximum sales charge, 1.50% of offering price .......... 0.20
Maximum Offering Price Per Share .......................$ 13.40
Class C Shares:
Net asset value and offering price per share*
($22,486,977 applicable to 1,701,640 shares of beneficial
interest outstanding - Note 4) .......................$ 13.21
Class I Shares:
Net asset value, offering and redemption price per share
($20,591,631 applicable to 1,557,952 shares of beneficial
interest outstanding - Note 4) .......................$ 13.22
*Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge. See notes to financial statements.
Statement of operations
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
Year Ended June 30,
2003
INVESTMENT INCOME:
Interest income (net of premium amortized of $1,989,796) $ 6,569,014
EXPENSES:
Investment advisory fees (Note 3) ...................... 850,698
Administration fees (Note 3)
Class A Shares ................................. 170,338
Class C Shares ................................. 23,226
Class I Shares ................................. 7,644
Distribution and service fees (Note 3)
Class A Shares ................................. 340,675
Class C Shares ................................. 185,809
Transfer agent fees
Class A Shares .................................. 57,397
Class C Shares .................................. 19,589
Class I Shares .................................. 16,005
Custodian fees (Note 3) .................................. 105,823
Registration and filing fees ............................. 4,362
Professional fees ......................................... 15,447
Accounting fees ........................................... 9,809
Director fees ............................................... 7,071
Other expenses .............................................. 20,839
Total Expenses ..........................1,834,732
Less:
Expenses reimbursed by investment advisor (Note 3) (43,579)
Distribution and service fees waived (Note 3) .... (92,904)
Fees paid indirectly (Note 3) .................... (2,208)
Net Expenses ............................1,696,041
Net Investment Income ...................4,872,973
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) on investments sold .............. 57,393
Increase (Decrease) in unrealized appreciation
of investments ..........................................2,933,907
Net Realized and Unrealized
Gain (Loss) on Investments ..............2,991,300
Net Increase (Decrease) in Net Assets Resulting
From Operations .......................$ 7,864,273
See notes to financial statements.
Statements of changes in net assets
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
Year Ended Year Ended
June 30, 2003 June 30,
2002
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income ........................... $ 4,872,973 $
4,272,747
Net realized gain (loss) on investments sold .... 57,393
96,064
Increase (Decrease) in unrealized appreciation
of investments.................................. 2,933,907
1,489,825
Net Increase (Decrease) in Net Assets
Resulting from Operations .......... 7,864,273
5,858,636
DIVIDENDS TO SHAREHOLDERS:
From net investment income
Class A Shares ............................. (3,907,510)
(3,641,689)
Class C Shares ............................. (478,583)
(333,629)
Class I Shares ............................... (489,837)
(294,472)
FUND SHARE TRANSACTIONS (NOTE 4):
Class A Shares ............................. 31,614,924
24,187,536
Class C Shares .............................. 6,082,493
9,557,877
Class I Shares ..............................10,211,834
4,506,387
Net Increase (Decrease) in Net Assets......50,897,594
39,840,646
NET ASSETS:
Beginning of year ..........................141,450,042
101,609,396
End of year ...............................$192,347,636 $
141,450,042
See notes to financial statements.
Notes to financial statements
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
June 30, 2003
NOTE 1 - ORGANIZATION
Thornburg Limited Term Municipal Fund, Inc. (the "Company") was
incorporated in Maryland on February 14, 1984. The Company 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 "Fund"). The Company is an open-end diversified management
investment company, registered under the Investment Company Act of 1940, as
amended. The primary investment objective of the Company 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 Fund
will invest primarily in Municipal Obligations originating in California
with the objective of obtaining exemption of interest dividends from any
income taxes imposed by California on individuals.
The Fund currently offers three classes of shares of beneficial interest,
Class A, Class C and Institutional Class (Class I) shares. Each class of
shares of the Fund 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 Fund may allocate among its classes certain expenses, to
the extent applicable 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 Fund are limited to service and distribution fees, administrative fees,
and certain transfer agent expenses.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES Significant accounting policies of
the Company are as follows:
Valuation of Investments: In determining the net asset value of the Fund,
the Company 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, normally at 4:00 p.m. EST or at 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 Fund are reviewed by the officers
of the Company under the general supervision of the Board of Directors.
Short-term obligations having remaining maturities of 60 days or less
are valued at amortized cost, which approximates market value.
Federal Income Taxes: It is the policy of the Company 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.
When-Issued and Delayed Delivery Transactions: The Company may engage in
when-issued or delayed delivery transactions. To the extent the Company
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 Company makes a commitment to purchase a security
for the Fund, on a when-issued basis, the Fund will record the transaction
and reflect the value in determining its net asset value. When effecting
such transactions, assets of the Fund of an amount sufficient to make
payment for the portfolio securities to be purchased will be segregated on
the Fund'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 Fund is declared daily as a
dividend on shares for which the Company has received payment. Dividends
are paid monthly and are reinvested in additional shares of the Fund at net
asset value per share at the close of business on the dividend payment
date, or at the shareholder's option, paid by check. Net capital gains, to
the extent available, will be distributed at least annually.
General: Securities transactions are accounted for on a trade date basis.
Interest income is accrued as earned. Premiums and 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. Net investment income, other than
class specific expenses, and realized and unrealized gains and losses, are
allocated daily to each class of shares based upon the relative net asset
value of outstanding shares (or the value of the dividend-eligible shares,
as appropriate) of each class of shares at the beginning of the day (after
adjusting for the current capital shares activity of the respective class).
Expenses common to all Funds are allocated among the Funds based upon their
relative net asset values or other appropriate allocation methods.
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.
Guarantees and Indemnifications: Under the Company's organizational
documents, its officers and directors are indemnified against certain
liability arising out of the performance of their duties to the Fund.
Additionally, in the normal course of business the Company enters into
contracts with service providers that contain general indemnification
clauses. The Company's maximum exposure under these arrangements is
unknown. However, based on experience, the Company expects the risk of loss
to be remote.
NOTE 3 - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Pursuant to an Investment Advisory Agreement, Thornburg Investment
Management, Inc. (the "Advisor") serves as the investment advisor and
performs services for which the fees are payable at the end of each month.
For the year ended June 30, 2003, these fees were payable at annual rates
ranging from .50 of 1% to .225 of 1% of the average daily net assets of the
Fund. The Company also has entered into an Administrative Services
Agreement with the Advisor, whereby the Advisor will perform certain
administrative services for the shareholders of each class of the Fund's
shares, and for which fees will be payable at an annual rate of up
to .125 of 1% of the average daily net assets attributable to each class of
shares. For the year ended June 30, 2003, the Advisor voluntarily
reimbursed certain class specific expenses and administrative fees of
$28,008 for Class A shares and $15,571 for Class I shares.
The Company has an underwriting agreement with Thornburg Securities
Corporation (the "Distributor"), which acts as the distributor of Fund
shares. For the year ended June 30, 2003 the Distributor has advised the
Fund that it earned commissions aggregating $4,017 from the sale of Class A
shares, and collected contingent deferred sales charges aggregating $3,156
from redemptions of Class C shares of the Fund.
Pursuant to a Service Plan under Rule 12b-1 of the Investment Company Act
of 1940, the Company may reimburse to the Advisor amounts not to exceed .25
of 1% per annum of the average daily net assets attributable to each class
of shares of the Fund for payments made by the Advisor to securities
dealers and other financial institutions to obtain various shareholder
related services. The Advisor may pay out of its own resources additional
expenses for distribution of the Fund's shares.
The Company also has adopted a Distribution Plan pursuant to Rule 12b-1,
applicable only to the Fund's Class C shares, under which the Company can
compensate the Distributor for services in promoting the sale of Class C
shares of the Fund at an annual rate of up to .75% of the average daily net
assets attributable to Class C shares. Total fees incurred by each class of
shares of the Fund under their respective Service and Distribution plans
and Class C distribution fees waived by the Distributor for the year ended
June 30, 2003 are set forth in the statement of operations.
The Company has an agreement with the custodian bank to indirectly pay a
portion of the custodian's fees through credits earned by the Fund's cash
on deposit with the bank. This deposit agreement is an alternative to
overnight investments. Custodial fees have been adjusted to reflect amounts
that would have been paid without this agreement, with a corresponding
adjustment reflected as fees paid indirectly in the statement of
operations. For the year ended June 30, 2003 fees paid indirectly were
$2,208.
Certain officers and directors of the Company are also officers and /or
directors of the Advisor and the Distributor. The compensation of
unaffiliated directors is borne by the Company.
NOTE 4 - SHARES OF BENEFICIAL INTEREST
At June 30, 2003, there were an unlimited number of shares of beneficial
interest authorized. Transactions in shares of beneficial interest were as
follows:
Year Ended Year
Ended
June 30, 2003 June
30, 2002
Shares Amount Shares
Amount
Class A Shares
Shares sold .................... 5,242,685 $ 68,754,114 2,888,793
$ 37,226,901
Shares issued to shareholders in
reinvestment of dividends ... 199,540 2,620,134 195,828
2,523,069
Shares repurchased ............. (3,028,552) (39,759,324) (1,208,763)
(15,562,434)
Net Increase (Decrease) ........ 2,413,673 $ 31,614,924 1,875,858
$ 24,187,536
Class C Shares
Shares sold .................... 606,383 $ 7,970,447 780,669
$ 10,078,776
Shares issued to shareholders in
reinvestment of dividends ... 23,883 313,949 16,362
210,986
Shares repurchased ............. (168,027) (2,201,903) (57,081)
(731,885)
Net Increase (Decrease) ........ 462,239 $ 6,082,493 739,950
$ 9,557,877
Class I Shares
Shares sold .................... 1,157,992 $ 15,228,991 506,711
$ 6,532,257
Shares issued to shareholders in
reinvestment of dividends ... 29,869 392,681 19,974
257,579
Shares repurchased ............. (411,162) (5,409,838) (176,918)
(2,283,449)
Net Increase (Decrease) ........ 776,699 $ 10,211,834 349,767
$ 4,506,387
NOTE 5 - SECURITIES TRANSACTIONS
For the year ended June 30, 2003, the Fund had purchase and sale
transactions (excluding short-term securities) of $91,153,078 and
$40,791,433, respectively.
NOTE 6 - INCOME TAXES
At June 30, 2003, information on the tax components of
capital is as follows:
Cost of investments for tax purpose $ 185,795,442
Gross tax unrealized appreciation $ 8,047,781
Gross tax unrealized depreciation (79,454)
Net tax unrealized appreciation
(depreciation) on investments $ 7,968,327
Undistributed tax exempt income $ 136,359
At June 30, 2003, the Fund had tax basis capital losses, which may be
carried over to offset future capital gains. Such losses expire as follows:
Capital loss carryovers expiring in:
2004 $ 373,652
2008 205,990
2009 214,571
$ 794,213
The Fund utilized $57,393 of capital loss carry forwards during the year
ended June 30, 2003. Unutilized tax basis capital losses may be carried
forward to offset realized gains in future years. To the extent such carry
forwards are used, capital gain distributions may be reduced to the extent
provided by regulations.
Dividends paid by the Fund for the years ended June 30, 2003 and June 30,
2002, represent exempt interest dividends, which are excludable by
shareholders from gross income for Federal income tax purposes.
Year Ended June 30,
2003
2002 2001 2000 1999
Class I Shares:
Per Share Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year ................... $ 12.97 $
12.79 $ 12.60 $ 12.75 $ 12.90
Income from investment operations:
Net investment income ....................... 0.42
0.51 0.59 0.58 0.58
Net realized and unrealized
gain (loss) on investments ......... 0.25
0.18 0.19 (0.15) (0.15)
Total from investment operations ..................... 0.67
0.69 0.78 0.43 0.43
Less dividends from:
Net investment income ....................... (0.42)
(0.51) (0.59) (0.58) (0.58)
Change in net asset value ............................ 0.25
0.18 0.19 (0.15) (0.15)
Net asset value, end of year ......................... $ 13.22 $
12.97 $ 12.79 $ 12.60 $ 12.75
Total return ......................................... 5.27%
5.48% 6.28% 3.50% 3.33%
Ratios/Supplemental Data Ratios to average net assets:
Net investment income ....................... 3.20%
3.92% 4.60% 4.60% 4.45%
Expenses, after expense reductions .......... 0.65%
0.66% 0.65% 0.65% 0.65%
Expenses, after expense reductions
and net of custody credits ......... 0.65%
0.65% -- -- --
Expenses, before expense reductions ......... 0.75%
0.84% 0.98% 0.79% 0.78%
Portfolio turnover rate .............................. 26.03%
25.16% 15.45% 21.34% 21.71%
Net assets at end of year (000) ..................... $ 20,592 $
10,133 $ 5,520 $ 5,793 $ 12,724
Schedule of investments
Schedule of Investments
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
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
435,000 Abag Finance Authority, 4.75% due 10/1/2011 (California School
of Mechanical Arts A3/NR $478,900
Project)
455,000 Abag Finance Authority, 4.75% due 10/1/2012 (California School
of Mechanical Arts A3/NR 499,977
Project)
1,200,000 Abag Finance Authority Variable Taxable Refunding Series C,
1.15% due 10/1/2027 put NR/A1+ 1,200,000
7/1/2003 (LOC: BNP Paribus) (daily demand notes)
425,000 Alameda Certificates Participation, 4.60% due 5/1/2011
NR/A+ 463,165
295,000 Alum Rock Union Elementary School District General Obligation
Refunding Bonds, 8.00% Aaa/AAA 353,487
due 9/1/2006 (Insured: FGIC)
380,000 Alum Rock Union Elementary School District General Obligation
Refunding Bonds, 8.00% Aaa/AAA 470,808
due 9/1/2007 (Insured: FGIC)
550,000 Anaheim City School District, 3.25% due 8/1/2004 (Insured: FGIC)
Aaa/AAA 563,497
750,000 Bay Area Government Associates Lease Series 2002, 5.00% due
7/1/2004 (Insured: AMBAC) Aaa/AAA 779,625
785,000 Bay Area Government Associates Lease Series 2002, 5.00% due
7/1/2005 (Insured: AMBAC) Aaa/AAA 842,077
765,000 Bay Area Government Associates Lease Series 2002, 4.00% due
7/1/2006 (Insured: AMBAC) Aaa/AAA 820,486
315,000 Bay Area Government Association Rapid Transit, 5.00% due
6/15/2008 (Insured: AMBAC) Aaa/AAA 315,967
7,000,000 Bay Area Government Association Rapid Transit, 4.875% due
6/15/2009 (Insured: AMBAC) Aaa/AAA 7,231,000
675,000 Bear Valley California Unified School District Series A, 4.00%
due 8/1/2005 (Insured: NR/AAA 713,057
MBIA)
1,000,000 California Department Water Resources Revenue, 5.25% due
12/1/2005 (Central Valley Aa2/AA 1,030,400
Project)
160,000 California Educational Facilities Authority Revenue, 6.10% due
6/1/2008 (Keck Baa2/NR 181,240
Graduate Institute Project)
170,000 California Educational Facilities Authority Revenue, 6.10% due
6/1/2009 (Keck Baa2/NR 194,086
Graduate Institute Project)
500,000 California Educational Facilities Authority Revenue Series 1993,
5.15% due 9/1/2003 A1/NR 503,390
(Santa Clara University Project)
750,000 California Health Facilities Authority Revenue, 5.45% due
10/1/2013 (Kaiser A3/A 752,700
Permanente Project)
500,000 California Health Facilities Authority Revenue Kaiser Permanente
Med, 5.45% due Aaa/AAA 503,905
10/1/2013 (Insured: AMBAC)
500,000 California Health Facilities Financing Authority Revenue Kaiser
Permanente Series A, Aaa/AAA 558,005
5.25% due 6/1/2012 (Insured: FSA)
700,000 California Health Facilities Financing Revenue, 6.40% due
10/1/2005 (Sisters of Aa3/AA- 716,450
Providence Project)
670,000 California HFA Revenue Series 1985-B, 9.875% due 2/1/2017
Aa2/AA- 672,633
525,000 California Housing Finance Agency Revenue Series H, 7.00% due
8/1/2024 Aa2/AA- 526,932
1,220,000 California Infrastructure & Economic Development, 5.35% due
12/1/2009 (American NR/A 1,375,696
Center For Wine and Food Arts Project; Insured: ACA)
500,000 California Mobile Home Park Financing Series A, 4.75% due
11/15/2010 (Insured: ACA) NR/A 536,230
570,000 California Mobile Home Park Financing Series A, 5.00% due
11/15/2013 (Insured: ACA) NR/A 615,475
300,000 California Pollution Control Financing Authority Series A, 5.90%
due 6/1/2014 (San A2/A 320,538
Diego Gas & Electric Project)
2,650,000 California Pollution Control Solid Waste Authority, 6.75% due
7/1/2011 (ETM)* Aaa/NR 3,046,731
1,000,000 California Pollution Control Solid Waste Authority Series B,
4.45% due 7/1/2027 put NR/BBB 1,023,140
7/1/2005 (Waste Management Inc. Project)
190,000 California Rural HMFA Single Family Mortgage Revenue, 5.25% due
6/1/2010 NR/AAA 205,681
(Collateralized: GNMA/FNMA)
85,000 California Rural HMFA Single Family Mortgage Revenue, 5.65% due
6/1/2010 NR/AAA 92,329
(Collateralized: GNMA/FNMA)
500,000 California State, 7.00% due 8/1/2003
A2/A 502,385
1,500,000 California State, 11.00% due 8/1/2003 (Insured: FGIC)
Aaa/AAA 1,512,630
500,000 California State, 6.40% due 2/1/2006 (Insured: MBIA)
Aaa/AAA 560,650
2,000,000 California State, 7.50% due 10/1/2007 (Insured: MBIA)
Aaa/AAA 2,438,920
560,000 California State, 6.60% due 2/1/2010 (Insured: MBIA)
Aaa/AAA 679,207
1,250,000 California State, 6.50% due 9/1/2010 (Insured: AMBAC)
Aaa/AAA 1,528,200
1,500,000 California State, 5.50% due 3/1/2012 pre-refunded 3/1/2004
Aaa/AAA 1,563,780
2,080,000 California State Department Water Resources Power Supply Series
A, 5.50% due 5/1/2008 A3/BBB+ 2,329,579
800,000 California State Department Water Resources Power Supply Series
A, 5.25% due 5/1/2009 Aaa/AAA 910,504
(Insured: MBIA)
1,000,000 California State Refunding, 5.75% due 10/1/2010 (Insured: FSA)
Aaa/AAA 1,179,070
3,000,000 California State Refunding, 5.25% due 2/1/2011 (Insured: FSA)
Aaa/AAA 3,411,240
3,000,000 California State Veterans - Series Bh, 5.20% due 12/1/2011
(Insured: FSA) Aaa/AAA 3,308,760
1,000,000 California State Veterans Bonds, 9.50% due 2/1/2010 (Insured:
MBIA) Aaa/AAA 1,380,590
320,000 California Statewide Community Development, 4.875% due 12/1/2010
(Sisters of Charity Aaa/AAA 330,992
Project; Insured: MBIA)
1,000,000 California Statewide Community Development Authority, 5.00% due
7/1/2005 (Insured: Aaa/AAA 1,072,710
FSA)
1,000,000 California Statewide Community Development Authority Insured
Health Facility Revenue NR/NR 1,055,680
Series 1996-A, 6.00% due 9/1/2004 (San Gabriel Medical Center
Project) (ETM)*
595,000 California Statewide Community Development Authority Revenue,
5.125% due 6/1/2008 Aaa/AAA 661,967
(Louisiana Orthopedic Hospital Foundation Project; Insured:
AMBAC)
1,000,000 California Statewide Community Development Authority Series
1996-A, 6.00% due NR/NR 1,097,870
9/1/2005 (San Gabriel Medical Center Project; Insured:
California Health) (ETM)*
1,000,000 California Statewide Community Development Authority Solid Waste
Revenue, 4.95% due NR/BBB 1,017,710
4/1/2011 put 4/1/2004 (Waste Management Inc. Project)
2,000,000 California Statewide Community Development Series E, 4.70% due
11/1/2036 put 6/1/2009 NR/A-1 2,150,560
(Kaiser Permanente Project)
355,000 California Statewide Community Development Variable Series A,
1.20% due 1/1/2031 put Aaa/A-1 355,000
7/1/2003 (daily demand notes)
975,000 Capistrano Unified School District Number 92-1 Community
Facilities District Special NR/NR 1,170,175
Tax, 7.10% due 9/1/2021 pre-refunded 9/1/2007
100,000 Castaic Lake Water Agency Refunding Water Systems Improvement
Project Series A, 7.25% Aaa/AAA 125,843
due 8/1/2009 (Insured: MBIA)
780,000 Central Union High School District Imperial County Refunding,
5.00% due 8/1/2011 Aaa/AAA 885,854
(Insured: FGIC)
830,000 Central Union High School District Imperial County Refunding,
5.00% due 8/1/2012 Aaa/AAA 944,863
(Insured: FGIC)
205,000 Central Valley School Districts Financing Authority, 0% due
2/1/2007 (Insured: MBIA) Aaa/AAA 189,531
800,000 Coachella Valley California Unified School District Certificates
Participation Aaa/AAA 908,848
Refunding, 5.00% due 9/1/2012 (Insured: MBIA)
2,320,000 Desert Sands California Unified School District Series F, 4.00%
due 3/1/2006 (Measure Aaa/AAA 2,473,259
O Project; Insured: MBIA)
550,000 East Side Union High School District Santa Clara County Series
B, 6.625% due 8/1/2004 Aaa/AAA 583,187
(Insured: MBIA)
500,000 East Side Union High School District Santa Clara County Series
B, 6.625% due 8/1/2005 Aaa/AAA 554,470
(Insured: MBIA)
700,000 East Side Union High School District Santa Clara County Series
B, 6.625% due 8/1/2006 Aaa/AAA 807,163
(Insured: MBIA)
840,000 East Side Union High School District Santa Clara County Series
B, 6.625% due 8/1/2007 Aaa/AAA 993,392
(Insured: MBIA)
2,730,000 El Monte Certificates of Participation Senior Department Public
Services Facility Aaa/AAA 3,072,861
Phase II, 5.00% due 1/1/2009 (Insured: AMBAC)
500,000 Escondido Joint Powers Financing Authority Lease Revenue
Refunding, 0% due 9/1/2013 Aaa/AAA 289,425
(California Center For The Arts Project; Insured: AMBAC)
3,015,000 Escondido Multi Family Housing Revenue Refunding Bond Series
1997-A, 5.40% due NR/AAA 3,230,241
1/1/2027 put 7/1/2007 (Terrace Gardens Project; Collateralized:
FNMA)
2,000,000 Folsom Cordova Unified School District School Facilities
Improvement District-2 Aaa/AAA 2,086,900
Series A, 4.50% due 10/1/2004 (Insured: MBIA)
200,000 Foothill De Anza Community College District Certificates of
Participation, 7.35% due NR/AA- 202,150
3/1/2007 pre-refunded 9/1/2003
400,000 Fresno County Housing Authority Multi Family Revenue Refunding
Series A, 4.90% due NR/AAA 428,336
11/1/2027 mandatory put 11/1/2007 (Housing Creek Park Apartments
Project;
Collateralized: FNMA)
575,000 Hawaiian Gardens Redevelopment Agency Refunding, 5.50% due
12/1/2008 NR/BBB+ 644,558
1,000,000 Irwindale Community Redevelopment Agency, 6.60% due 8/1/2018
pre-refunded 8/1/2005 Baa3/NR 1,127,270
420,000 Julian Union High School District, 4.875% due 11/1/2005
(Insured: MBIA) Aaa/AAA 447,649
165,000 Kern High School District, 7.00% due 8/1/2010 (ETM)*
A/NR 210,634
500,000 Kern High School District Refunding Series A, 6.30% due 8/1/2011
(Insured: MBIA) Aaa/AAA 608,235
680,000 Kern High School District Series B, 9.00% due 8/1/2006 (ETM)*
Aaa/AAA 835,149
250,000 Los Angeles Certificates of Participation, 0% due 9/1/2003
A2/A 249,382
1,400,000 Los Angeles Certificates of Participation, 5.00% due 2/1/2012
(Insured: MBIA) Aaa/AAA 1,579,998
835,000 Los Angeles Community Redevelopment Agency, 5.00% due 7/1/2009
(Cinerama Dome Public NR/A 897,834
Parking Project; Insured: ACA)
435,000 Los Angeles Community Redevelopment Agency, 5.75% due 7/1/2010
(Cinerama Dome Public NR/A 483,198
Parking Project; Insured: ACA)
2,125,000 Los Angeles Community Redevelopment Agency Series H, 6.50% due
12/1/2014 (Insured: Aaa/AAA 2,209,702
FSA)
5,000 Los Angeles Convention & Exhibition Center, 9.00% due 12/1/2020
pre-refunded Aaa/AAA 5,924
12/1/2005
275,000 Los Angeles Convention & Exhibition Center Authority
Certificates Refunding, 0% due Aaa/AAA 266,041
8/15/2005 (Insured: AMBAC)
2,000,000 Los Angeles County Capital Asset, 5.00% due 4/1/2008 (Insured:
AMBAC) Aaa/AAA 2,246,520
1,700,000 Los Angeles County Metropolitan Transportation Authority Sales
Tax Revenue, 9.00% due Aaa/AAA 2,154,818
7/1/2007 (Insured: MBIA)
700,000 Los Angeles Department Airport Revenue Refunding Series A, 5.50%
due 5/15/2010 Aaa/AAA 763,441
(Insured: FGIC)
40,000 Los Angeles Department Water & Power Electric Plant Revenue
Crossover Refunding, Aaa/AA- 41,338
9.00% due 9/1/2004 pre-refunded 9/1/2003
415,000 Los Angeles Department Water & Power Electric Plant Revenue
Crossover Refunding, Aa3/AA- 428,691
9.00% due 9/1/2004
45,000 Los Angeles Department Water & Power Electric Plant Revenue
Crossover Refunding, Aa3/AA- 46,501
9.00% due 9/1/2004 (ETM)*
3,000,000 Los Angeles Department Water & Power Revenue Series A, 5.25% due
7/1/2011 (Insured: Aaa/AAA 3,456,330
MBIA)
1,940,000 Los Angeles Multi Family Revenue, 5.85% due 12/1/2027 put
12/01/2007 (Collateralized: NR/AAA 2,094,405
FNMA)
585,000 Los Angeles Special Assessment, 3.75% due 3/1/2004 (Insured:
AMBAC) Aaa/AAA 596,016
2,500,000 Los Angeles Unified School District Series E, 5.50% due 7/1/2012
(Insured: MBIA) Aaa/AAA 2,940,275
355,000 Marysville Hospital Revenue, 5.55% due 1/1/2013 (Fremont -
Rideout Health Group Aaa/AAA 368,249
Project; Insured: AMBAC)
2,800,000 Metropolitan Water District Southern California Waterworks
Revenue, 0.95% due VMIG1/A1+ 2,800,000
7/1/2035 put 7/1/2003 (daily demand notes)
1,000,000 Metropolitan Water District Southern California Waterworks
Revenue Series C-1, 1.00% VMIG1/A1+ 1,000,000
due 7/1/2036 put 7/1/2003 (daily demand notes)
3,000,000 Modesto High School District Stanislaus County Series A, 0% due
8/1/2012 (Insured: Aaa/AAA 2,136,690
FGIC)
1,205,000 Moorpark Mobile Home Park Revenue Series A, 5.80% due 5/15/2010
(Villa Delaware NR/A 1,304,003
Arroyo Project; Insured: ACA)
2,500,000 Natomas Unified School District California Certificates, 2.50%
due 2/1/2028 put Aaa/AAA 2,530,600
2/1/2005 (Natomas High School Project)
1,400,000 New Haven Unified School District Refunding, 12.00% due 8/1/2006
(Insured: FSA) Aaa/AAA 1,828,890
1,000,000 New Haven Unified School District Refunding, 12.00% due 8/1/2008
(Insured: FSA) Aaa/AAA 1,452,050
1,000,000 Norco California Special Taxes Refunding Community Facilities
District Number 93-1, NR/NR 1,007,730
5.40% due 7/1/2020
360,000 Northern California Power Agency Public Power Revenue, 5.65% due
7/1/2007 (Geothermal Baa2/A- 415,102
Project 3-A) (ETM)*
340,000 Northern California Power Agency Public Power Revenue, 5.65% due
7/1/2007 Baa2/A- 382,211
65,000 Oakland Redevelopment Agency, 7.40% due 5/1/2007 (Insured:
AMBAC) Aaa/AAA 65,333
1,000,000 Orange County Airport Revenue Bond, 6.00% due 7/1/2007 (Insured:
MBIA) Aaa/AAA 1,142,360
4,200,000 Orange County California Apartment Development Revenue Variable
Rate, 1.00% due VMIG1/NR 4,200,000
11/1/2009 put 7/1/2003 (Laguna Summit Apartments X Project; LOC:
Bank of America)
(daily demand notes)
510,000 Orange County Local Transportation Authority Sales Tax Revenue,
6.00% due 2/15/2006 Aa2/AA+ 568,497
600,000 Orange County Recovery Certificates Participation Series A,
6.00% due 7/1/2006 Aaa/AAA 678,798
(Insured: MBIA)
2,000,000 Orange County Refunding Recovery, 6.50% due 6/1/2004 (Insured:
MBIA) Aaa/AAA 2,100,280
2,000,000 Orange County Refunding Recovery, 6.50% due 6/1/2005 (Insured:
MBIA) Aaa/AAA 2,196,100
1,000,000 Piedmont Unified School District Series B, 0% due 8/1/2013 pre-
refunded 8/1/2007 Aa3/NR 636,970
3,350,000 Pittsburg California Redevelopment Agency Tax Allocation
Refunding, 5.25% due Aaa/AAA 3,867,675
8/1/2012 (Los Medanos Community Development Project A; Insured:
MBIA)
200,000 Pleasant Hill Multi Family Housing Refunding, 5.30% due
10/1/2020 put 10/1/2005 NR/AAA 212,928
(Ellinwood Apartments Project; Collateralized: FNMA)
1,000,000 Pleasanton Unified School District Series B, 0% due 8/1/2016
(Insured: MBIA) Aaa/AAA 497,760
580,000 Pomona Unified School District General Obligation, 5.35% due
2/1/2005 (Insured: MBIA) Aaa/AAA 617,509
340,000 Pomona Unified School District General Obligation, 5.40% due
8/1/2005 (Insured: MBIA) Aaa/AAA 368,791
320,000 Pomona Unified School District Refunding Series A, 6.10% due
2/1/2010 (Insured: MBIA) Aaa/AAA 381,194
295,000 Porterville Certificates Participation, 6.10% due 10/1/2005
(Water Systems Refunding Aaa/AAA 326,149
Project; Insured: AMBAC)
1,000,000 Puerto Rico Commonwealth Highway & Transportation Authority,
5.50% due 7/1/2009 Aaa/AAA 1,163,230
(Insured: FSA)
1,000,000 Puerto Rico Commonwealth Highway & Transportation Authority
Highway Revenue Refunding Aaa/AAA 1,133,480
Series Aa, 5.00% due 7/1/2008 (Insured: FGIC)
600,000 Puerto Rico Municipal Finance Agency Series A, 6.00% due
7/1/2011 (Insured: FSA) Aaa/AAA 727,698
5,000,000 Rancho Santiago Community College District Series A, 4.00% due
9/1/2005 (Insured: Aaa/AAA 5,292,550
MBIA)
500,000 Richmond Joint Powers Financing Authority Revenue Series A,
5.20% due 5/15/2005 NR/A 533,100
500,000 Sacramento County Sanitation District Financing Authority
Revenue, 4.80% due Aaa/AA 517,780
12/1/2004 (ETM)*
560,000 Sacramento County Sanitation District Financing Authority
Revenue Series A, 5.75% due Aa3/AA 663,370
12/1/2009
800,000 Sacramento Municipal Utility District Electric Revenue, 5.30%
due 11/15/2005 Aaa/AAA 829,080
(Insured: FSA)
330,000 Sacramento Municipal Utility District Electric Revenue Refunding
Series C, 5.75% due Aaa/AAA 337,808
11/15/2007 (Insured: MBIA) (ETM)*
2,335,000 Salinas Redevelopment Agency Tax Allocation Series A, 0% due
11/1/2022 (Insured: FSA) Aaa/AAA 835,696
3,000,000 San Bernardino County Multi Family Housing Revenue Refunding
Series A, 4.75% due Aaa/NR 3,235,860
12/15/2031 put 12/15/2011 (Collateralized: FNMA)
190,000 San Bernardino County Special Taxes Community Facilities
District Number 2002-1, NR/NR 200,634
5.10% due 9/1/2011
205,000 San Bernardino County Special Taxes Community Facilities
District Number 2002-1, NR/NR 217,093
5.20% due 9/1/2012
300,000 San Bernardino County Special Taxes Community Facilities
District Number 2002-1, NR/NR 319,092
5.30% due 9/1/2013
175,000 San Bernardino County Transportation Authority Sales Tax Revenue
Series A, 6.00% due Aaa/AAA 186,349
3/1/2010 (Insured: FGIC) (ETM)*
1,250,000 San Bernardino Multi Family Housing Refunding, 4.45% due
5/1/2031 mandatory put NR/AAA 1,331,575
5/1/2011 (Alberta Park Vista Apts A Project; Collateralized:
FNMA)
430,000 San Diego Public Facilities Financing Authority Lease Revenue,
7.00% due 4/1/2005 Aaa/AAA 472,407
(Insured: MBIA)
455,000 San Diego Public Facilities Financing Authority Lease Revenue,
7.00% due 4/1/2006 Aaa/AAA 521,958
(Insured: MBIA)
425,000 San Diego Public Facilities Financing Authority Lease Revenue,
7.00% due 4/1/2007 Aaa/AAA 502,966
(Insured: MBIA)
500,000 San Francisco Bay Area Rapid Transit Refunding Sales Tax
Revenue, 0% due 7/1/2004 Aaa/AAA 494,335
(Insured: AMBAC)
1,000,000 San Francisco Bay Area Transit Bridge Toll Notes, 5.625% due
8/1/2006 (Insured: ACA) NR/A 1,102,350
1,100,000 San Francisco International Airport Revenue Series Issue 13B,
8.00% due 5/1/2007 Aaa/AAA 1,282,215
(Insured: MBIA)
895,000 San Joaquin County Certificates of Participation, 5.90% due
9/1/2003 (General A2/A- 902,464
Hospital Project) (ETM)*
2,200,000 San Jose Evergreen Community College District Series C, 0% due
9/1/2011 (Insured: Aaa/AAA 1,593,592
AMBAC)
2,700,000 San Jose Financing Authority Lease Revenue Series D, 5.00% due
6/1/2039 mandatory put Aaa/AAA 2,962,413
6/1/2006 (Civic Center Project; Insured: AMBAC)
500,000 San Jose Redevelopment Agency Tax Allocation, 5.75% due 8/1/2011
(Merged Area A2/A 511,680
Redevelopment Project Series B)
1,900,000 San Marcos Public Facilities Authority Revenue Community
Facilities District Number Aaa/NR 1,696,339
88-1, 0% due 3/1/2008 (ETM)*
2,000,000 Santa Ana Multi Family Housing Revenue Bonds Series B, 5.65% due
11/1/2021 put NR/AAA 2,043,900
11/1/2006 (Collateralized: FNMA)
1,000,000 Santa Clara County Financing Authority, 5.00% due 8/1/2005
(Measure B Transportation A2/NR 1,065,580
Improvement Program)
2,000,000 Santa Clara County Housing Authority Series B, 3.80% due
8/1/2004 (River Town A1/NR 2,002,540
Apartments Project; LOC: Union Bank Cal.)
610,000 Santa Cruz County Certificates Refunding, 4.00% due 8/1/2005
A2/NR 640,518
1,000,000 Santa Margarita/Dana Point Authority Revenue Refunding
Improvement Districts 1&2 Aaa/AAA 1,047,100
Series A, 5.375% due 8/1/2004 (Insured: MBIA)
575,000 Seal Beach Redevelopment Agency Mobile Home Park Revenue Series
A, 5.20% due NR/A 634,070
12/15/2013 (Insured: ACA)
1,435,000 South Orange County Public Finance Authority Special Tax
Revenue, 7.00% due 9/1/2005 Aaa/AAA 1,607,171
(Insured: MBIA)
1,500,000 South Orange County Public Financing Authority Special Tax
Revenue Series C, 8.00% Aaa/AAA 1,908,150
due 8/15/2008 (Foothill Area Project; Insured: FGIC)
3,250,000 Southern California Public Power Authority Revenue Refunding
Series A, 5.50% due Aaa/AAA 3,315,390
7/1/2012 (Power Project; Insured: AMBAC) (ETM)*
350,000 Southern California Revenue, 5.15% due 7/1/2015 (Public Power
Project; Insured: Aaa/AAA 393,764
AMBAC)
250,000 Southern California Revenue, 5.15% due 7/1/2015 (Public Power
Project; Insured: Aaa/AAA 281,260
AMBAC)
2,315,000 Stanton Multi Family Housing Revenue Bond Series 1997, 5.625%
due 8/1/2029 put NR/AAA 2,498,093
8/1/2009 (Continental Gardens Project; Collateralized: FNMA)
500,000 Turlock Irrigation District Revenue Refunding Series A, 5.75%
due 1/1/2018 (Insured: Aaa/AAA 501,665
MBIA)
2,380,000 Ukiah Unified School District Certificates Participation, 4.00%
due 9/1/2006 Aaa/AAA 2,563,998
(Insured: MBIA)
1,000,000 Ukiah Unified School District Certificates Participation, 5.00%
due 9/1/2008 Aaa/AAA 1,134,670
(Insured: MBIA)
500,000 University California Revenues Refunding, 5.00% due 12/1/2006
Aaa/AAA 518,190
625,000 Upland Unified School District Convertible Capital Appreciation,
0% due 8/1/2007 Aaa/AAA 681,544
(Insured: FSA)
500,000 Ventura County Community College Series A, 5.00% due 8/1/2012
(Insured: MBIA) Aaa/AAA 569,195
160,000 Ventura Unified School District Series F, 6.75% due 8/1/2004
(Insured: FSA) Aaa/AAA 169,870
115,000 Ventura Unified School District Series F, 6.75% due 8/1/2005
(Insured: FSA) Aaa/AAA 127,824
455,000 Victorville Redevelopment Agency Tax Allocation Bear Valley Road
Special Escrow Fund Aaa/AAA 484,516
A, 5.00% due 12/1/2014 (Insured: FSA)
800,000 Walnut Valley Unified School District, 9.00% due 8/1/2006 (ETM)*
Aaa/AAA 982,528
1,000,000 Walnut Valley Unified School District, 8.75% due 8/1/2010 (ETM)*
Aaa/AAA 1,389,970
245,000 Walnut Valley Unified School District Series A, 6.70% due
8/1/2005 (Insured: MBIA) Aaa/AAA 272,068
250,000 Walnut Valley Unified School District Series A, 6.80% due
2/1/2007 (Insured: MBIA) Aaa/AAA 292,458
250,000 Walnut Valley Unified School District Series A, 6.90% due
2/1/2008 (Insured: MBIA) Aaa/AAA 300,632
100,000 Walnut Valley Unified School District Series A, 7.00% due
8/1/2008 (Insured: MBIA) Aaa/AAA 122,635
450,000 Washington Township Health Care District Revenue, 5.00% due
7/1/2009 A2/NR 496,247
570,000 West Contra Costa Unified School District Series A, 6.50% due
8/1/2005 (Insured: Aaa/AAA 630,511
MBIA)
595,000 West Contra Costa Unified School District Series A, 7.00% due
8/1/2006 (Insured: Aaa/AAA 692,592
MBIA)
655,000 West Contra Costa Unified School District Series A, 7.00% due
8/1/2008 (Insured: Aaa/AAA 803,259
MBIA)
1,000,000 Whittier Solid Waste Revenue Refunding Series A, 5.375% due
8/1/2014 (Insured: AMBAC) Aaa/AAA 1,022,860
TOTAL INVESTMENTS (Cost $185,795,442)
$ 193,763,769
<FN>
+Credit ratings are unaudited.
*Escrowed to maturity See notes to financial statements.
</FN>
Report of independent auditors
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
June 30, 2003
To the Board of Directors and Class I 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, 2003, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for the Class I shares for
each of the four years in the period then ended, in conformity with
accounting principles generally accepted in the United States of America.
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 audits. We conducted our audits of these financial statements
in accordance with auditing standards generally accepted in the United
States of America, 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 audits, which included
confirmation of securities at June 30, 2003 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion. The
financial highlights for the year ended June 30, 1999 were audited by other
independent accountants whose report dated July 27, 1999 expressed an
unqualified opinion on those financial highlights.
PricewaterhouseCoopers LLP
New York, New York
July 30, 2003
Index Comparisons
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
June 30, 2003
Index Comparison
Compares performance of Limited Term Municipal Fund - California Portfolio,
the Lehman 5-Year General Obligation Bond Index and the Consumer Price
Index for the periods ended June 30, 2003. On June 30, 2003, 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 4.9
years and 4.9 years, respectively. Past performance of the Index and the
Fund may not be indicative of future performance. Performance data and
graph do not reflect the deduction of taxes that a shareholder would pay on
distributions or the redemption of fund shares.
Thornburg Limited Term Municipal Fund California Class I Total Returns,
Since April 1, 1997, versus Lehman 5-Year General Obligation Bond Index and
Consumer Price Index (C.P.I.)
Lehman 5 yr. GO Index
Fund I Shares
CPI
Class I Shares
Average Annual Total Returns
(Period ending 6/30/03)
One year: 5.27%
Five years: 4.76%
Since inception (4/1/97) 5.10%
Directors and Officers
Thornburg Limited Term Municipal Fund, Inc. - California Portfolio
Name, Address (1) Position(s) Term of Principal
Member of Other
And Age Held with Office Occupation(s)
Portfolios Directorships
Fund (2) and During Past
in Fund Held by
Length of 5 Years
Complex Director or
Time
Overseen Nominee for
Served
by Director Director
or Nominee
for Director (2)
Interested Directors
Garrett Thornburg, Chairman Director CEO, Chairman and
Controlling Twelve None
57 of the Since Shareholder of Thornburg
Board of 1984; Investment Management, Inc.
Directors, (4) (investment adviser) and
Thornburg
Treasurer (3) Securities Corporation
(securities
dealer); Chairman of
Trustees of Thornburg
Investment Trust
(registered investment
company); CEO and Chairman
of Thornburg Mortgage, Inc.
(real estate investment
trust); Chairman of
Thornburg Mortgage Advisory
Corporation (investment
manager to Thornburg
Mortgage, Inc.).
Independent Directors
David D. Chase, Director Director Chairman, President and CEO
Twelve Trustee,
62 since 2001 of general partner of
Vestor Thornburg
(4) Partners, LP, Santa Fe, NM
Investment Trust
(private equity fund);
Chairman
and CEO of Vestor Holdings,
Inc., Santa Fe, NM
(merchant
bank).
Eliot R. Cutler, Director Director Partner, Akin, Gump,
Strauss, Two Director of
56 since 1984 Hauer & Feld, LLP,
Washington Skanska, AB
(4) D.C. (law firm) since
November (construction services)
2000; partner, Cutler &
Stanfield,
Washington, D.C. (law firm)
until November 2000.
James E. Monaghan, Jr., Director Director President, Monaghan &
Two None
56 since 1984 Associates, Inc. and
(4) Strategies West, Inc.
Denver,
Colorado (business
consultants).
A.G. Newmyer III, Director Director Private investor and
management Two None
53 since 1984 consultant.
(4)
Advisory Director
Richard M. Curry, Advisory Advisory Managing Director, McDonald
Not applicable None
60 Director (6) Director (5) & Co., Cincinnati, Ohio
Since (securities dealer) and
District
2002 (6) President, Key Bank,
Cincinnati,
Ohio, since March 2000.
Officers of the Fund (who are not Directors) (7)
Brian J. McMahon, President President President and Managing
Director Not applicable Not applicable
47 since 1997 of Thornburg Investment
(4) Management, Inc.; President
of Thornburg Investment
Trust
Dawn B. Fischer, Secretary Secretary Vice President, Secretary
and Not applicable Not applicable
56 Since 1984 Managing Director of
Thornburg
(4) Investment Management,
Inc.;
Secretary and Assistant
Treasurer
of Thornburg Investment
Trust; Secretary of
Thornburg
Securities Corporation;
Vice
President, Daily Tax Free
Income Fund, Inc.
(registered
investment company).
Steven J. Bohlin, Vice President Vice Vice President and
Managing Not applicable Not applicable
44 President Director of Thornburg
Investment
Since 1991 Management, Inc.; Vice
President
(4) and Treasurer of Thornburg
Investment Trust.
George T. Strickland, Vice President Vice Vice President and
Managing Not applicable Not applicable
40 Treasureer President Director of Thornburg
Investment
Since 1999; Management, Inc.; Vice
President
Treasurer of Thornburg Investment
Trust.
since 2003
Leigh Moiola, Vice President Vice Vice President, and
Managing Not applicable Not applicable
36 President Director since 1998, of
Since 1999 Thornburg Investment
Management,
(4) Inc.; Vice President of
Thornburg
Investment Trust since
2001.
Kenneth Ziesenheim, Vice President Vice Managing Director of
Thornburg Not applicable Not applicable
49 President Investment Management,
Inc.;
Since 1995 President of Thornburg
Securities
(4) Corporation; Vice
President of
Thornburg Investment
Trust.
Kerry D. Lee, Vice President Vice Associate of Thornburg
Investment Not applicable Not applicable
36 President Management, Inc.; Vice
President
Since 1999 of Thornburg Investment
Trust
(4) since 1999.
Dale Van Scoyk, Vice President Vice Account Manager for
Thornburg Not applicable Not applicable
56 President Investment Management,
Inc.
Since 1999 1997-1999, and Managing
Director
(4) and Vice President since
1999;
Vice President of
Thornburg
Investment Trust since
1998; National Account
Manager for Heartland
Funds
1993-1997.
Joshua Gonze, Vice President Vice Associate and Vice
President of Not applicable Not applicable
40 President Thornburg Investment
Management,
Since 2001 Inc. since 1999; Vice
President of
(4) Thornburg Investment Trust
since
2001
Christopher Ihlefeld, Vice President Vice Associate and Vice
President of Not applicable Not applicable
32 President Thornburg Investment Mgt,
Inc.;
Since 1999 Assistant Vice President
of
(4) Thornburg Investment Trust
since 1999.
<FN>
(1) Each person's address is 119 East Marcy Street, Suite 202, Santa Fe, New
Mexico 87501.
(2) The Fund is one of two separate investment "funds" or "portfolios" of
Thornburg Limited Term Municipal Fund, Inc. (the "Company"), organized as a
Maryland corporation. The Company currently has two funds, which are
considered for certain regulatory purposes as parts of a "fund complex" with
the nine funds of Thornburg Investment Trust. Thornburg Investment
Management, Inc. is the investment adviser to, and manages, the eleven funds
of the Company and Thornburg Investment Trust.
(3) Mr. Thornburg is considered an "interested" Director under the Investment
Company Act of 1940 because he is a director and controlling shareholder of
the investment adviser, Thornburg Investment Management, Inc., and is the
sole director and controlling shareholder of Thornburg Securities
Corporation, the distributor of shares for the Company.
(4) Thornburg Limited Term Municipal Fund, Inc.'s Amended By-Laws provide that
each Director shall serve in office until the next annual meeting or the
election and qualification of the Director's successor. In accordance with
Maryland law, the Company does not hold an annual meeting each year; it may
hold shareholder meetings as circumstances require. Officers serve at the
pleasure of the Board of Directors.
(5) Mr. Cutler may be considered an "interested" Director of the Company because
he is associated with a partnership which receives a portion of Thornburg
Investment Management, Inc.'s revenues.
(6) As an Advisory Director, Mr. Curry serves at the pleasure of the Board of
Directors.
(7) Assistant vice presidents, assistant secretaries and assistant treasurers
are not shown.
</FN>
The Fund's Statement of Additional Information includes additional
information about the Directors and is available, without charge and upon
request by calling 1-800-847-0200
Thornburg limited term municipal fund CALIFORNIA portfolio - I shares
Outperformed Tax-Exempt Money Market Funds
Investors sometimes ask us to compare Limited Term Municipal Fund -
California Portfolio to money market fund returns. These investments have
certain differences, and investors in Limited Term Municipal Fund -
California Portfolio took more risk than money market fund investors to
earn their higher returns.
Return from a $10,000 investment
6/30/93* through 6/30/03
Lipper California Tax-exempt
Money Market Index
$2,702
Thornburg Limited Term Municipal Fund
- - California Portfolio
(after capital gains taxes)
$6,074
The chart above is for the Fund's Class I shares only. Class A and Class C
Shares have different sales charges and expenses. See the inside front
cover page for the 30-day SEC yield and the total returns for one year,
three years, five years, and since inception for Class I shares of the
Fund.
*Prior to 4/1/97 the illustration includes actual returns of the Class A
shares adjusted for the lower Institutional expenses. Note 1: Future
increases, if any, of any of these investments may bear no relationship to
prior increases. Quotations for the money fund averages are based upon 30-
day yield quotations for tax-exempt money funds as quoted in "Lipper
California Tax-exempt Money Market Index" for the months covered by this
analysis. The increase for the Class I shares of Thornburg Limited Term
Municipal Fund - California Portfolio is based upon the dividends paid for
the months covered by this analysis, the beginning NAV price at $12.85 per
share and the ending NAV at $13.22 per share. These investments returned
the $10,000 initial investment in addition to the amounts shown above.
Note 2: This analysis does not take into account the effect, if any, caused
by state and local income taxes. The portion of the increase, if any, of
Thornburg Limited Term Municipal Fund - California Portfolio representing
appreciation of the share price is assumed to be taxed at a 15% federal tax
rate. The average money market fund increases shown above may differ from
the return of a particular money market fund. It is not possible to invest
in these money fund averages.
Note 3: Generally, money market funds seek to maintain an investment
portfolio with an average maturity of 90 days or less. Thornburg Limited
Term Municipal Fund - California Portfolio invests in short-to-intermediate
maturity municipal obligations. The net asset value of the money funds did
not fluctuate. The net asset value of the Class I Shares of LTCIX did vary
from time to time, and will continue to vary in the future due to the
effect of changes in interest rates on the value of the investments the
Fund holds. The analysis assumes that the investor received the net asset
value of the shares owned, plus accrued income, at time of sale.
Redemptions are made at the then current net asset value, which may give
you a gain or loss when you sell your shares.
Note 4: This analysis assumes that the dividends from each of these
investment vehicles were reinvested and compounded monthly. Most money
funds declare dividends daily and pay them monthly. Thornburg Limited Term
Municipal Fund - California Portfolio
also declares dividends daily and pays them monthly.
Note 5: An investment in a money market fund is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government
agency. Although a money market fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in
such funds.
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
ww.thornburg.com
This report is submitted for the general information of the shareholders of
the Fund. It is not authorized for distribution to prospective investors in
the Fund unless preceded or accompanied by an effective prospectus, which
includes information regarding the Fund's objectives and policies,
experience of its management, marketability of shares, and other
information. Performance data quoted represent past performance and do not
guarantee future results.
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION
(1) Section 10.2 of Thornburg Investment Trust's Agreement and
Declaration of Trust generally provides that each of the Trust's officers
and Trustees will be indemnified by the Trust against liability and
expenses in connection with his having been a Trustee or officer unless it
is determined that the individual is liable by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office, or if the individual did not
act in good faith in the reasonable belief that the action was in the
Trust's best interest.
(2) Section 8 of the Trust's Amended Distribution Agreement generally
provides that the Trust will indemnify Thornburg Securities Corporation
(TSC), its officers and directors, and its controlling persons against
liabilities and expenses incurred because of any alleged untrue statement
of material fact contained in the Registration Statement, Prospectus or
annual or interim reports to shareholders, or any alleged omission to state
a material fact required to be stated therein, or necessary to make the
statements therein, not misleading, except where (i) the untrue statement
or omission arises from information furnished by TSC, or (ii) to the extent
the prospective, indemnitee is an officer, trustee or controlling person of
the Trust, the indemnification is against public policy as expressed in the
1933 Act, or (iii) the liability or expense arises from TSC's willful
misfeasance, bad faith, gross negligence, reckless performance of duties,
or reckless disregard of its obligations and duties under the Distribution
Agreement. Further, TSC agrees to indemnify the Trust, its officers and
trustees, and its controlling persons in certain circumstances.
(3) The directors and officers of Thornburg Investment Management,
Inc. (Thornburg) are insured, and the Trustees and officers of the Trust
are also insured, under a joint directors and officers liability policy.
The described individuals are referred to as the "insureds." The policy
covers amounts which the insureds become legally obligated to pay by reason
of the act, error, omission, misstatement, misleading statement or neglect
or breach of duty in the performance of their duties as directors, trustees
and officers. In addition, the policy covers Thornburg, and is proposed to
cover the Registrant, to the extent that they have legally indemnified the
insureds for amounts incurred by the insureds as described in the preceding
sentence. The coverage excludes amounts that the insureds become obligated
to pay by reason of conduct which constitutes willful misfeasance, bad
faith, gross negligence or reckless disregard of the insured's duties. The
application of the foregoing provisions is limited by the following
undertakings set forth in the rules promulgated by the Securities and
Exchange Commission:
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to Trustees,
officers and controlling persons of the Registrant pursuant
to the foregoing provisions, or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policies
expressed in such Act and that if a claim for indemnification
against such liabilities other than the payment by the Registrant
or expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such Trustee, officer or
controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in such Act and will be governed by the final
jurisdiction of such issue.
ITEM 16. EXHIBITS
(1) (a) Limited Term Trust, Agreement and Declaration of Trust, June
3, 1987, incorporated by reference from Registrant's
Registration Statement on Form N-1A, filed June 12, 1987.
(b) First Amendment and Supplement to Agreement and Declaration
of Trust, August 11, 1987, incorporated by reference from
Registrant's pre-effective amendment no. 1 to its
Registration Statement on Form N-1A, filed October 28, 1987.
(c) Second Amendment and Supplement to Agreement and Declaration
of Trust, October 28, 1987, incorporated by reference from
Registrant's post-effective amendment no. 1 to its
Registration Statement on Form N-1A, filed March 3, 1988.
(d) Third, Fourth, Fifth, Sixth and Seventh Amendments to
Agreement and Declaration of Trust, incorporated by
reference from Registrant's post-effective amendment no. 13
to its Registration Statement on Form N-1A, filed December
3, 1993.
(e) Amended and Restated Designation of Series, incorporated by
reference from Registrant's post-effective amendment no. 17
to its Registration Statement on Form N-1A, filed July 27,
1994.
(f) Ninth Amendment and Supplement to Agreement and Declaration
of Trust, incorporated by reference from Registrant's post-
effective amendment no. 20 to its Registration Statement on
Form N-1A, filed on July 5, 1995.
(g) Corrected Tenth Amendment and Supplement to Agreement and
Declaration of Trust, incorporated by reference from
Registrant's post-effective amendment no. 22 to its
Registration Statement on Form N-1A, filed October 2, 1995.
(h) First Supplement to Amended and Restated Designation of
Series, incorporated by reference from Registrant's post-
effective amendment no. 26 to its Registration Statement on
Form N-1A, filed May 6, 1996.
(i) Eleventh and Twelfth Amendments and Supplements to Agreement
and Declaration of Trust, incorporated by reference from
Registrant's post-effective amendment no. 29 to its
Registration Statement on Form N-1A, filed March 14, 1997.
(j) Thirteenth Amendment and Supplement to Agreement and
Declaration of Trust, incorporated by reference from
Registrant's post-effective amendment no. 33 to its
Registration Statement on Form N-1A, filed March 10, 1998.
(k) Fourteenth Amendment and Supplement to Agreement and
Declaration of Trust, incorporated by reference from
Registrant's post-effective amendment no. 43 to its
Registration Statement on Form N-1A, filed October 13, 2000.
(l) Fifteenth Amendment and Supplement to Agreement and
Declaration of Trust, incorporated by reference from
Registrant's post-effective amendment no. 44 to its
Registration Statement on Form N-1A, filed January 29, 2001.
(m) Sixteenth and Seventeenth Amendments and Supplements to
Agreement and Declaration of Trust, incorporated by
reference from Registrant's post-effective amendment no. 51
to its Registration Statement in Form N-1A, filed October
17, 2002.
(n) Second Supplement to Amended and Restated Designation of
Series, incorporated by reference from Registrant's post-
effective amendment no. 54 to its Registration Statement on
Form N-1A, filed on June 27, 2003.
(o) Eighteenth Amendment to Supplement to Agreement and
Declaration of Trust, incorporated by reference from
Registrant's Statement on Form N-14, filed on January 30,
2004.
(2) Amended By-laws (May 20, 2003), incorporated by reference from
Registrant's post-effective amendment no. 54 to its Registration
Statement on Form N-1A, filed June 27, 2003.
(4) Copies of Agreements and Plans of Reorganization are attached as
Exhibit A to each Prospectus/Proxy Statement included in this
Registration Statement.
(6) Amended and Restated Investment Advisory Agreement, incorporated
by reference from Registrant's post-effective amendment no. 32 to
its Registration Statement on Form N-1A, filed February 17, 1998.
(7) Amended Distribution Agreement, incorporated by reference from
Registrant's post-effective amendment no. 42 to its Registration
Statement on Form N-1A, filed August 31, 2000.
(9) Form of Custodian Agreement, incorporated by reference from
Registrant's post-effective amendment no. 1 to its Registration
Statement on Form N-1A, filed October 28, 1987.
(10) (a) Plan and Agreement of Distribution Pursuant to Rule 12b-1
(Service Plan - Classes A, C and I); incorporated by
reference from Registrant's post-effective amendment no. 32
to its Registration Statement on Form N-1A, filed February
17, 1998.
(b) Plan and Agreement of Distribution Pursuant to Rule 12b-1
(Distribution Plan - Class C), incorporated by reference
from Registrant's post-effective amendment no. 32 to its
Registration Statement on Form N-1A, filed February 17,
1998.
(c) Plan for Multiple Class Distribution (as revised to May 20,
2003), incorporated by reference from Registrant's post-
effective amendment no. 55 to its Registration Statement on
Form N-1A, filed July 20, 2003.
(11) Form of opinion of counsel filed herewith.
(12) Opinion of counsel (tax) [to be filed by amendment].
(14) Consent of independent accountants, [to be filed by amendment].
(16) (a) Power of Attorney of David A. Ater, incorporated by
reference from Registrant's post-effective amendment no. 20
to its Registration Statement on Form N-1A, filed July 5,
1995.
(b) Powers of Attorney of James W. Weyhrauch and Brian J.
McMahon, incorporated by reference from the Registrant's
post-effective amendment no. 29 to its Registration
Statement on Form N-1A, filed on March 14, 1997.
(c) Powers of Attorney of Forrest S. Smith and Garrett
Thornburg, incorporated by reference from the Registrant's
post-effective amendment no. 7 to its Registration Statement
on Form N-1A, filed April 19, 1991.
(d) Power of Attorney of David D. Chase, incorporated by
reference from the Registrant's post-effective amendment no.
44 to its Registration Statement on Form N-1A, filed January
29, 2001.
(e) Power of Attorney of Steven J. Bohlin, incorporated by
reference from the Registrant's post-effective amendment no.
53 to its Registration Statement on Form N-1A, filed May 1,
2003.
ITEM 17. UNDERTAKINGS
(1) The registrant shall obtain opinions of counsel that (i) the
securities registered hereby, when sold, shall be legally issued,
fully paid and non-assessable, and (ii) the reorganization
described in each Agreement and Plan of Reorganization shall
constitute a tax-free "reorganization" described in Section 368
of the Internal Revenue Code of 1986 as amended.
(2) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a
prospectus which is a part of this registration statement by any
person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) of the Securities Act, the reoffering
prospectus will contain the information called for by the
applicable registration form for reofferings by persons who may
be deemed underwriters, in addition to the information called for
by the other items of the applicable form.
(3) The undersigned Registrant agrees that every prospectus that is
filed as a part of an amendment to the registration statement and
will not be used until the amendment is effective, and that, in
determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for
the securities offered therein, and the offering of the
securities all that time shall be deemed to be the initial bon
fide offering of them.
SIGNATURES
As required by the Securities Act of 1933, this registration statement has
been signed on behalf of the registrant in Santa Fe, New Mexico on February
26, 2004.
THORNBURG INVESTMENT TRUST
By: *
---------------------------------
Brian J. McMahon, President
and principal executive officer
As required by the Securities Act of 1933, this registration statement has
been signed below by the following persons in the capacities and on the
date indicated.
*
- ---------------------------------
Brian J. McMahon, Trustee, President
and principal executive officer
*
- ---------------------------------
Steven J. Bohlin, Vice President,
Treasurer and principal financial
and accounting officer
- ---------------------------------
Garrett Thornburg, Trustee
- ---------------------------------
David D. Chase, Trustee
- ---------------------------------
David A. Ater, Trustee
- ---------------------------------
Forrest S. Smith, Trustee
- ---------------------------------
James W. Weyhrauch, Trustee
* By: /s/ Charles W.N. Thompson, Jr.
-------------------------------
Charles W.N. Thompson, Jr.
Dated: February 26, 2004
E X H I B I T S
(11) Form of opinion and consent of counsel
WHITE Attorneys and Counselors at Law
KOCH, KELLY John F. McCarthy, Jr.
& Benjamin Phillips
McCARTHY Albert V. Gonzales
A Professional Association C.W.N. Thompson, Jr.
M. Karen Kilgore Suzanne Odom
Sandra J. Brinck
Aaron J. Wolf
Mary E. Walta
Rebecca Dempsey Special Counsel
John M. Hickey Paul L. Bloom
Julia Wittenberger-Wagner
Julia B. Rose
February __, 2004
Trustees of Thornburg Investment Trust
119 East Marcy Street
Santa Fe, New Mexico 87501
Re: Thornburg Investment Trust Registration Statement on
Form N-14, pre-effective amendment no. __ as filed on
__________, 2004
Gentlemen:
The Class A, Class C and Class I shares proposed to be issued by each of
Thornburg Limited Term Municipal Fund and Thornburg California Limited Term
Municipal Fund, when issued in accordance with (i) the Trustees' resolutions
adopted December 8, 2003, (ii) the prospectuses of the described Funds
included as compoennts of the Trust's post-effective amendment no. 58 to its
Registration Statement on Form N-1A as filed with the Securities and Exchange
Commission on December 31, 2003, and (iii) the above-referenced Registration
Statement on Form N-14, will be legally issued, fully paid and non-
assessable.
We hereby consent to the reference made to this firm in the described
Registration Statement of Thornburg Investment Trust and the prospectuses
which are part of that Registration Statement. In giving this consent, we do
not admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act of 1933.
/s/ White, Koch, Kelly & McCarthy, P.A.
WHITE, KOCH, KELLY & McCARTHY, P.A.
433 Paseo de Peralta Post Office Box 787 Telephone (505) 982-4374
Santa Fe, NM 87501 Santa Fe, NM 87504-0787 Fax (505) 984-8631
e-mail cwnt@wkkm.com