A Laddered Portfolio of Limited-Term Municipal Bonds from across California

Thornburg California Limited Term Municipal Fund is a laddered portfolio of investment-grade municipal bonds from the Golden State, with maturities of one to 10 years, and with an average duration around 3.5 years. Actively laddering portfolios helps mitigate the risks of bond investing and can generate attractive returns over time.

Working Photo"California Limited Term Fund is distinguished from many other California single-state funds in that it has a relatively short duration in the range of 3.5 years, which protects against the risk of rising interest rates. From a credit perspective, given the volatile history of California real estate, the fund is focused on regions of California where real estate is developed and mature. The fund is a 10-year, actively managed ladder and seeks to generate attractive income without excessive shifts in principal valuations."

— Josh Gonze

An Actively Managed, Laddered Portfolio

We build a portfolio of staggered maturities so that a portion will mature each year. Money from maturing bonds provides an organic source of cash flow, and is typically reinvested in longer-maturity bonds at the top range of the ladder.

Laddering tends to perform well against other strategies because it captures price appreciation as bonds age and their remaining life shortens, and it reinvests principal from shorter, lower-yielding bonds into longer, higher-yielding bonds.

The fund’s laddered portfolio structure is one of many important contributors (credit research also among them) to the total return an investor receives over an appropriate holding period.

Fundamental, Bottom-Up Credit Research

In bond investing, nothing is more important than determining whether the party to whom you propose to lend money has the ability and willingness to pay you back in full and on schedule.

We conduct thorough, bottom-up credit research on every bond we purchase, both to understand the ability of the issuer to repay obligations, and to ensure that investors are adequately compensated for the risk assumed.

Diversification

The portfolio is composed of roughly 300 separate positions, in part to ensure that a potential default or price decline of any one issuer has a minimal impact upon the net asset value of the portfolio.

In adjusting position sizes within the portfolio, we take into account the credit quality of the issuer (with higher-quality credits typically being afforded larger position sizes), the extent to which each issue contributes to the duration of the portfolio, and of course, prospectus limitations.

Keep in mind that the California Limited Term Fund is not as diversified as our national funds, and macroeconomic trends within the state may impact all securities within the fund.

It’s important for investors to match their investment horizon to the duration of the strategy in which they’re invested, and to diversify tax-exempt assets across the yield curve.

This is why Thornburg offers a range of strategies — from the Low Duration Municipal Fund on the short end to the Strategic Municipal Income Fund on the long end — to provide a home to match every time horizon.

Remember to Diversify Tax-Free Assets Across the Yield Curve

2014 Estimated Yield MSCI Country Indices

Best Fixed Income Fund Family

2012 Lipper Fund Award2012 – The firm ranked #1 out of 41 eligible firms in Lipper Inc.'s fixed income large firm universe for the three-year period ended 11/30/11.

2008 – The firm ranked #1 out of 41 eligible firms in Lipper Inc.'s fixed income large firm universe for the three-year period ended 12/31/07.

The Lipper Fund Awards program honors funds that have excelled in delivering consistently strong risk-adjusted performance, relative to peers. The Lipper Fund Awards program recognizes fund families with high average scores for all funds within a particular asset class or overall. Fund family awards are issued for the three-year period only. Thornburg did not win the awards for any years other than those listed above. Lipper’s Large Company universe was comprised of fund families with more than $40 billion in total net assets for the 2012 award and more than $28 billion for the 2008 award. Only fund families with at least five bond funds were eligible for the Fund Family Award.
Important Information
Before investing, carefully consider the Fund’s investment goals, risks, charges, and expenses. For a prospectus or summary prospectus containing this and other information, contact your financial advisor or visit our literature center. Read them carefully before investing.

Investments in the Fund carry risks, including possible loss of principal. Funds investing in bonds have the same interest rate, inflation, and credit risks that are associated with the underlying bonds. The principal value of bonds will fluctuate relative to changes in interest rates, decreasing when interest rates rise. Unlike bonds, bond funds have ongoing fees and expenses. Investments in the Fund are not FDIC insured, nor are they deposits of or guaranteed by a bank or any other entity.

Credit quality ratings for Thornburg’s municipal portfolios used the highest rating available from either Standard & Poor’s or Moody’s Investors Service.

A bond credit rating assesses the financial ability of a debt issuer to make timely payments of principal and interest. Ratings of AAA (the highest), AA, A, and BBB are investment-grade quality. Ratings of BB, B, CCC, CC, C and D (the lowest) are considered below investment grade, speculative grade, or junk bonds.

Diversification does not assure or guarantee better performance and cannot eliminate the risk of investment losses.

Income earned from municipal bonds is exempt from regular federal and in some cases, state and local income tax. Income may be subject to the alternative minimum tax (AMT).

The laddering strategy does not assure or guarantee better performance than a non-laddered portfolio and cannot eliminate the risk of investment losses.

Class I shares may not be available to all investors. Minimum investments for the I share class may be higher than those for other classes.

There is no guarantee that the Fund will meet its investment objectives.

Please see our glossary for a definition of terms.

Thornburg mutual funds are distributed by Thornburg Securities Corporation.

Thornburg Investment Management, Inc. mutual funds are sold through investment professionals including investment advisors, brokerage firms, bank trust departments, trust companies and certain other financial intermediaries. Thornburg Securities Corporation (TSC) does not act as broker of record for investors.