Semi Annual Report
Thornburg New York Intermediate Municipal Fund
December 31, 1998
Fund facts. . . as of 12/31/98
Thornburg New York Intermediate Municipal Fund
A Shares
SEC Yield 3.56%
Taxable Equiv. Yield 6.65%
NAV $12.78
Max. Offering Price $13.24
Total returns. . . as of 12/31/98
(Annual Average - After Subtracting Maximum Sales Charge)
One Year 2.17
Since Inception 4.12%
Inception Date (9/4/97)
Taxable equivalent yield assumes a 39.6% marginal federal tax rate, a 6.85% New
York State tax rate, and a 4.46% New York City tax rate.
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 3.50%.
The data quoted represent past performance and may not be construed as a
guarantee of future results.
Dear Shareholder,
I am pleased to present the Semiannual Report for the Thornburg New York
Intermediate Municipal Fund for the period ending December 31, 1998. The net
asset value of the A shares increased 7 cents per share to $12.78 during the 6
month period. If you were with us for the entire period, you received dividends
of 32.1 cents per share. If you reinvested your dividends, you received 32.2
cents per share. In addition, your fund paid a capital gain of 2 cents per
share. Your Thornburg New York Intermediate Fund portfolio currently holds over
50 municipal obligations from municipal borrowers around the state of New York
and 3 territories that pay interest exempt from regular New York income taxes.
Approximately 80% of the bonds are rated A or better by one of the major rating
agencies. As you know, we "ladder" the maturities of the bonds in your portfolio
so that some bonds are scheduled to mature at par during each of the coming
years. Today, your fund's weighted average maturity is approximately 8.6 years,
and we always keep it below 10 years. Percentages of the portfolio maturing in
the coming years are summarized below:
Over the last 6 months your average portfolio maturity has decreased slightly.
The passage of time shortened the maturities of the bonds we owned at the
beginning of the period. We directed portfolio cash flow and new money primarily
into the middle maturity range of your bond ladder, taking advantage of the
plentiful supply and good selection of new municipal bonds that came to market
last year. Today we are managing the portfolio to keep the average maturity
approximately where it is. The supply of new municipals in the first 2 months of
1999 has been low, but we believe this will change very soon. We currently
intend to keep your average portfolio maturity where it is if interest rates
remain stable, or shorten it a bit if rates decrease. If bond yields increase,
we will likely extend the average portfolio maturity. This would permit us to
increase our dividend yields if higher yields are available. You may or may not
be aware of how the Alternative Minimum Tax (AMT) affects certain taxpayers who
may receive significant proportions of their overall income from sources other
than ordinary wages. The AMT assures that all taxpayers pay at least a minimum
rate, regardless of exemptions, tax-credits, or the character of certain income
components. The interest paid on certain so-called "private-purpose" municipal
bonds is subject to the AMT, and this has been the case since 1986. Your
Thornburg New York Intermediate Municipal Fund does not own any municipal bonds
which are subject to the AMT. In the past, we have owned one AMT bond (less than
1%), but we recently sold that. In the past, investors seem to have drawn no
distinction between municipal bond funds (like your Thornburg New York
Intermediate Municipal Fund) that own few or no AMT bonds, and those that are
full of them. We believe this will soon change. In the next few years the AMT
will catch ever increasing numbers of taxpayers who qualify for tax breaks or
derive income from capital gains, employee benefits or other "non-ordinary"
sources. The tables below illustrate how application of present tax law can be
expected to increase the number of taxpayers subject to the AMT in 2008 verses
1998.
Summary: Current and Projected Impact of AMT on Various Income Groups
1998 2008
AMT Payers as a % of all AMT Payers as a % of all
Taxpayers in Category Taxpayers in Category
Income Category
$30,000 to less than $40,000 0.1% 0.9%
$40,000 to less than $50,000 0.1% 1.8%
$50,000 to less than $75,000 0.3% 5.8%
$75,000 to less than $100,000 1.0% 19.7%
$100,000 to less than $200,000 3.2% 26.6%
$200,000 and over 17.9% 42.7%
(Source: Joint Tax Committee U.S. Congress, Merrill Lynch)
If present tax laws are not changed, the AMT status of their municipal bond
holdings will become a matter of greater importance to a significant percentage
of upper and middle income taxpayers between now and 2008. The table above
clearly shows that. Again, we want to reiterate that your Thornburg New York
Intermediate Municipal Fund does not presently own any municipal bonds which are
subject to the AMT on individuals. Stay tuned for further developments. Over the
years, our practice of laddering a diversified portfolio of short and
intermediate maturity bonds has allowed your fund and others that we manage to
consistently perform well in varying interest rate environments. Your fund has
earned an "A" letter grade for its performance relative to other intermediate
maturity municipal bond funds for the 1 year period ending December 31, 1998.
This ranking, which was published on January 7 in The Wall Street Journal,
reflects a total return in the top 20% out of 186 intermediate municipal funds
for 1998. I would like to attribute this to capable execution of a sensible
investment strategy over time. Thank you for investing in Thornburg New York
Intermediate Municipal Fund.
Sincerely,
Brian J. McMahon George Strickland
Portfolio Manager Co-Portfolio Manager
Past performance cannot guarantee future results.
Thornburg New York Intermediate Municipal Fund December 31, 1998 unaudited
ASSETS
Investments at value (cost $22,970,861) $ 25,231,733
Cash 115,884
Interest receivable 407,326
Prepaid expenses and other assets 412
Total Assets 25,755,355
LIABILITIES
Payable for securities purchased 175,105
Payable for fund shares redeemed 52,802
Accounts payable and accrued expenses 26,122
Payable to investment advisor (Note 4) 4,381
Dividends payable 104,605
Total Liabilities 363,015
NET ASSETS $ 25,392,340
NET ASSET VALUE:
Class A Shares:
Net asset value and redemption price per share ($25,392,340
applicable to 1,987,368 shares of beneficial interest
outstanding - Note 5) $ 12.78
Maximum sales charge, 3.50 % of offering
price (3.63% of net asset value per share) 0.46
Maximum Offering Price Per Share $ 13.24
See notes to unaudited financial statements.
Thornburg New York Intermediate Municipal
Fund Six Months Ended December 31, 1998 unaudited
INVESTMENT INCOME:
Interest income (net of premium amortized
of $29,171) $ 729,547
EXPENSES:
Investment advisory fees (Note 4) 63,910
Administration fees (Note 4) 4,246
Service fees (Note 4) 31,955
Transfer agent fees 12,544
Custodian fees 17,790
Registration and filing fees 3,070
Professional fees 1,242
Accounting fees 1,472
Trustee fees 460
Other expenses 16,753
Total Expenses 153,442
Less:
Expenses reimbursed by investment advisor (Note 4)(57,577)
Net Expenses 95,865
Net Investment Income 633,682
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (Note 6)
Net realized gain on investments sold 11,540
Increase in unrealized appreciation of investments 169,803
Net Realized and Unrealized
Gain on Investments 181,343
Net Increase in Net Assets Resulting
From Operations $ 815,025
See notes to unaudited financial statements.
For the For the Period from
Six Months Ended Sept. 4, 1997(a)
December 31, 1998 June 30, 1998
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income $ 633,682 $ 1,088,637
Net realized gain on investments sold 11,540 38,983
Increase in unrealized appreciation
of investments 169,803 404,926
Net Increase in Assets
Resulting from Operations 815,02 1,532,546
DIVIDENDS TO SHAREHOLDERS:
From net investment income
Class A Shares (633,682) (1,088,637)
From realized gains
Class A Shares (39,569) 0
FUND SHARE TRANSACTIONS (Note 5):
Class A Shares (221,691) 25,028,348
Net Increase (Decrease)
in Net Assets (79,917) 25,472,257
NET ASSETS:
Beginning of period 25,472,257 0
End of period $ 25,392,340 $ 25,472,257
See notes to unaudited financial statements.
(a) commencment of operations
Note 1 - Organization
Thornburg New York Intermediate Municipal Fund (the "Fund"), is a series of
Thornburg Investment Trust (the "Trust", formerly known as Thornburg Income
Trust). The Trust is organized as a Massachusetts business trust under a
Declaration of Trust dated June 3, 1987 and is registered as a diversified,
open-end management investment company under the Investment Company Act of 1940,
as amended. The Trust is currently issuing seven series of shares of beneficial
interest in addition to those of the Fund: Thornburg Florida Intermediate
Municipal Fund, Thornburg New Mexico Intermediate Municipal Fund, Thornburg
Intermediate Municipal Fund, Thornburg Limited Term U.S. Government Fund,
Thornburg Limited Term Income Fund, Thornburg Value Fund and Thornburg Global
Value Fund. Each series is considered to be a separate entity for financial
reporting and tax purposes. The Fund's investment objective is to obtain as high
a level of current income exempt from Federal income tax as is consistent with
the preservation of capital. The Fund will also invest primarily in Municipal
Obligations within the state of New York, with the objective of having interest
dividends paid to its shareholders exempt from any individual income taxes.
Additionally, the fund will seek to have dividends paid to its individual
shareholders exempt form New York City income taxes.
Note 2 - Significant Accounting Policies Significant accounting policies of the
Fund are as follows:
Valuation of Investments: In determining net asset value, the Trust utilizes an
independent pricing service approved by the Trustees. Debt investment securities
have a primary market over the counter and are valued on the basis of valuations
furnished by the pricing service. The pricing service values portfolio
securities at quoted bid prices or the yield equivalents when quotations are not
readily available. Securities for which quotations are not readily available are
valued at fair value as determined by the pricing service using methods which
include consideration of yields or prices of municipal obligations of comparable
quality, type of issue, coupon, maturity, and rating; indications as to value
from dealers and general market conditions. The valuation procedures used by the
pricing service and the portfolio valuations received by the Trust are reviewed
by the officers of the Trust under the general supervision of the Trustees.
Short-term obligations having remaining maturities of 60 days or less are valued
at amortized cost, which approximates value. Federal Income Taxes: It is the
policy of the Trust to comply with the provisions of the Internal Revenue Code
applicable to "regulated investment companies" and to distribute all of its
taxable (if any) and tax exempt income to its shareholders. Therefore no
provision for Federal income tax is required. Dividends paid by the Fund for the
six months ended December 31, 1998 represent exempt interest dividends which are
excludable by shareholders from gross income for Federal income tax purposes.
When-Issued and Delayed Delivery Transactions: The Trust may engage in
when-issued or delayed delivery transactions. To the extent the Trust engages in
such transactions, it will do so for the purpose of acquiring portfolio
securities consistent with the investment objectives and not for the purpose of
investment leverage or to speculate on interest rate changes. At the time the
Trust makes a commitment to purchase a security for the Fund, on a when-issued
basis, it will record the transaction and reflect the value in determining the
Fund's 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 Trust 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 in cash. Net capital gains, to the
extent available, will be distributed annually. General: Securities transactions
are accounted for on a trade date basis. Interest income is accrued as earned.
Premiums and original issue discounts on securities purchased are amortized over
the life of the respective securities. Realized gains and losses from the sale
of securities are recorded on an identified cost basis. Use of Estimates: The
preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increases and decreases in net assets from operations
during the reporting period. Actual results could differ from those estimates.
Note 3 - Merger of MacKenzie National Municipal Fund
On September 4, 1997, the Trust acquired all of the net assets of the MacKenzie
New York Municipal Fund ("MacKenzie") pursuant to a plan of organization
approved by MacKenzie's shareholders. The merger was accomplished by a tax free
exchange of Class A shares of the Fund (valued at $29,612,415) for the net
assets of MacKenzie which aggregated $29,612,415, including $1,686,143 of
unrealized appreciation.
Note 4 - Investment Advisory Fee and Other Transactions With Affiliates
Pursuant to an investment advisory agreement, Thornburg Management Company, Inc.
(the "Adviser") serves as the investment adviser and performs services for which
the fees are payable at the end of each month. For the six months ended December
31, 1998, these fees were payable at annual rates ranging from 1/2 of 1% to
11/40 of 1% of the average daily net assets of the Fund. The Trust entered into
an Administrative Services Agreement with the Adviser, whereby the Adviser will
perform certain administrative services for the shareholders and for which fees
will be payable at an annual rate of up to 1/8 of 1% of the average daily net
assets. For the six months ended December 31, 1998, the Adviser voluntarily
reimbursed certain operating expenses amounting to $57,577. The Trust has an
underwriting agreement with Thornburg Securities Corporation (the
"Distributor"), which acts as the Distributor of Fund shares. For the six months
ended December 31, 1998, the Distributor earned commissions aggregating $1,365
from the sale of Class A shares.
Pursuant to a Service Plan, under Rule 12b-1 of the Investment Company Act of
1940, the Trust may reimburse to the Adviser an amount not to exceed 1/4 of 1%
per annum of the Fund's average net assets for payments made by the Adviser to
securities dealers and other financial institutions to obtain various
shareholder related services. The Adviser may pay out of its own funds
additional expenses for distribution of the Fund's shares. Certain officers and
trustees of the Trust are also officers and/or directors of the Adviser and
Distributor. The compensation of unaffiliated trustees is borne by the Trust.
Note 5 - Shares of Beneficial Interest
At December 31, 1998, there were an unlimited number of shares of beneficial
interest authorized, and capital paid-in aggregated $23,120,515. Transactions
in shares of beneficial interest were as follows:
Period from
Six Months Ended Sept. 4 1997 -
December 31, 1998 June 30, 1998
Shares Amount Shares Amount
Class A Shares
Shares sold 30,524 $525,666 96,928 $1,227,221
Shares issued to shareholders in
reinvestment of distributions 31,747 469,628 46,479 588,462
Shares issued in merger 0 0 2,368,993 29,612,415
Shares repurchased (95,300)(1,216,985) (507,512) (6,399,750)
Net Increase (Decrease) (33,029) ($221,691) 2,004,888 $25,028,348
Note 6 - Securities Transactions
For the six months ended December 31, 1998 the Fund had purchase and sale
transactions (excluding short-term securities) of $796,861 and $761,890,
respectively. The cost of investments is the same for financial reporting and
Federal income tax purposes. At December 31, 1998, net unrealized appreciation
of investments was $2,261,655, resulting from $2,261,655 gross unrealized
appreciation and $-0- gross unrealized depreciation. Accumulated net realized
gain from security transactions included in net assets at December 31, 1998
aggregated $50,523.
Per share operating performance
(for a share outstanding throughout the period)
Period From
Six Months Ended Sept. 4,1997(a)-
December 31,1998 June 30, 1998
CLASS A SHARES:
Net asset value, beginning of period $12.71 $12.50
Income from investment operations:
Net investment income 0.32 0.52
Net realized and unrealized
gain (loss) on investments 0.09 0.21
Total from investment operations 0.41 0.73
Less dividends from:
Net investment income (0.32) (0.52)
Realized Capital Gains (0.02) 0.00
Change in net asset value 0.07 0.21
Net asset value, end of period $12.78 $12.71
TOTAL RETURN (b) 5.88% 5.92%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net asset:
Net investment income 4.96%(c) 4.99%(c)
Expenses, after expense reductions 0.75%(c) 0.78%(c)
Expenses, before expense reductions 1.20%(c) 1.19%(c)
Portfolio turnover rate 3.04% 42.26%
Net assets at end of period (000) $25,392 $25,472
(a) Commencement of operations.
(b) Sales loads are not reflected in computing total return, which is not
annualized for periods less than one year.
(c) Annualized.
Investment Manager
Thornburg Management Company, 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.
<TABLE>
<CAPTION>
Schedule of Investments
Thornburg New York Intermediate Municipal Fund
December 31, 1998 CUSIPS: Class A - 885-215-665 NASDAQ Symbols: Class A - THNYX
<S> <C> <C> <C>
Principal Issuer-Description Credit Rating* Value
Amount Moody's/S&P
175,000 Albany Housing Authority Housing Revenue, 5.40% due 12/1/18 ( Lark Drive Associates Aa3/NR $175,161
Project; LOC: Keybank)
590,000 Amherst Industrial Development Authority Lease Revenue Bonds Series A, 5.25% due NR/A 607,258
10/1/07 (Pink Complex Project; LOC: Key Bank)
700,000 Bethlehem Central School District General Obligation, 7.10% due 11/1/06 (Insured: Aaa/AAA 837,984
AMBAC)
215,000 Canastota Central School District General Obligation, 7.10% due 6/15/07 Baa2/NR 256,267
205,000 Canastota Central School District General Obligation, 7.10% due 6/15/08 Baa2/NR 247,238
550,000 Guam Power Authority Revenue Series A, 6.625% due 10/1/14 NR/BBB 608,823
880,000 Monroe County Industrial Development Agency Revenue, 6.45% due 2/1/14 (Civic Aa1/NR 979,607
Facility - Depaul Community Facility Project; LOC: Fleet Bank of New York)
500,000 MTA New York Service Contract Rev., 7.00% due 7/1/04 pre-refunded 7/01/01 @ 102 Aaa/BBB+ 548,435
440,000 New York City General Obligation, 7.10% due 2/1/09 pre-refunded 2/01/02 @ 101.5 A3/A- 489,214
480,000 New York City General Obligation, 7.00% due 2/1/19 pre-refunded 7/01/02 @ 101.5 NR/A- 532,363
20,000 New York City General Obligation, 7.00% due 2/1/19 A3/A- 21,933
1,000,000 New York City General Obligation Series B, 7.20% due 8/15/08 pre-refunded 8/15/04 A3/A- 1,172,600
@ 101
250,000 New York City General Obligation Series B-1, 7.30% due 8/15/10 pre-refunded 8/15/04 Aaa/A- 294,788
@ 101
60,000 New York City Unrefunded Balance General Obligation, 7.10% due 2/1/09 A3/A- 66,169
505,000 New York Dormitory Authority, 6.00% due 7/1/08 (Champlain Valley Physicians NR/AAA 573,488
Project;Insured: Connie Lee)
200,000 New York Dormitory Authority Revenue, 7.85% due 2/1/29 (Park Ridge Housing Inc. NR/AAA 204,566
Project; Collateralized: GNMA)
500,000 New York Dormitory Authority Revenue, 7.35% due 8/1/29 (Jewish Geriatric Project; NR/AAA 575,830
Insured: FHA)
425,000 New York Dormitory Authority Revenue Chapel Oaks, 5.20% due 7/1/11 (LOC: Allied Aa3/NR 446,531
Irish Bank)
200,000 New York Dormitory Authority Revenues, Insured 835 Schools Proj., 5.00% due 7/1/07 Aaa/AAA 211,338
(Insured: AMBAC)
400,000 New York Environmental Facilities Corp. PCR St. Water Revolving Fund Series B, 7.50% Aa2/AA- 410,836
due 3/15/11
600,000 New York Environmental Facilities Corp. PCR St. Water Revolving Fund Series E, Aa1/NR 694,908
6.875% due 6/15/14 refunded 6/01/04 @ 101.5
400,000 New York Environmental Facilities Corp. PCR St. Water Revolving Fund Series E, Aa1/AA- 455,536
6.875% due 6/15/14
750,000 New York Housing Finance Agency SVC Contract Obligation Rev. Series A, 6.375% due Baa1/BBB+ 827,437
9/15/15
600,000 New York Medical Care Facilities Finance Agency Rev, Series B, 7.45% due 2/15/29 Aaa/AAA 639,720
pre-refunded 2/15/00 @ 102 (St. Lukes Hospital Project; Insured: FHA)
1,000,000 New York Medical Care Facilities Finance Agency Rev. Secured Hospital Rev. Series Baa/AAA 1,111,190
1991-A, 7.35% due 8/15/11 pre-refunded 8/15/01 @ 102
475,000 New York Medical Care Facilities Finance Agency Rev. Series A, 6.00% due 11/15/03 Aa1/NR 517,750
(Sec Mtg Prog - Adult Day Care Project; Guaranteed: SONYMA)
500,000 New York Medical Care Facilities Finance Agency Rev. Series A, 6.85% due 2/15/17 Aaa/AAA 585,355
pre-refunded 2/15/05 @ 102 (Brookdale Hospital Medical Center Project)
650,000 New York Medical Care Facilities Finance Agency Rev. Series A, 6.50% due Aaa/AAA 703,202
11/1/19Insured: FSA) pre-refunded 11/01/01 @ 102 (Aurelia Osborn Fox Memorial
Hospital Project)
500,000 New York Medical Care Facilities Finance Agency Rev. Series A, 6.80% due 2/15/20 Aaa/AAA 584,010
pre-refunded 2/15/05 @ 102 (New York Downtown Hospital Project)
160,000 New York Medical Care Facilities Finance Agency Revenue, 6.125% due 2/15/14 NR/AA 169,995
1,000,000 New York Mortgage Agency Rev. Series 29-B, 6.45% due 4/1/15 Aa2/NR 1,070,910
500,000 New York State Dormitory Authority Revenue Series B, 6.25% due 5/15/14 pre-refunded A3/AAA 565,935
5/15/04 @ 102
1,000,000 New York State Dormitory Authority Revenue Refunding, 5.20% due 2/15/13 (North Baa1/BBB+ 1,030,890
General Hospital Project)
155,000 New York State Dormitory Authority Revenues, City Univ. Series C, 6.00% due 7/1/16 Baa1/BBB+ 160,983
pre-refunded 7/01/00 @ 100
345,000 New York State Dormitory Authority Revenues, City Univ. Series C, 6.00% due 7/1/16 Baa1/BBB+ 351,524
1,000,000 New York State General Obligation, 9.875% due 11/15/05 A2/A 1,338,820
2,000,000 New York Urban Dev. Corp Correctional Facilities Rev., 0% due 1/1/08 Baa1/BBB+ 1,325,880
400,000 Onondaga County Industrial Development Civic Facilities Revenue, 7.90% due 1/1/17 NR/A+ 444,164
pre-refunded 1/1/03 @ 103 (LOC: Fleet Trust Company)
400,000 Puerto Rico Commonwealth Capital Appreciation, 0% due 7/1/04 Baa1/A 321,532
300,000 Puerto Rico Industrial Tourist Educational Medical and Environmental Control NR/BBB- 309,438
Facilities Series A, 5.70% due 8/1/13 (Polytechnic University Puerto Rico Project)
300,000 Puerto Rico Public Buildings Authority Revenue Series J, 6.60% due 7/1/04 Baa1/A 328,539
650,000 Schenectady Municipal Housing Authority, 6.40% due 5/1/14 (Annie Schaffer Senior Aa/NR 692,302
Center Project; Guarantee: SONYMA)
100,000 Southampton Village General Obligation Series B, 7.60% due 9/1/03 (Insured: MBIA) Aaa/AAA 116,265
500,000 Triborough Bridge and Tunnel Authority Special Obligation Series B, 6.875% due 1/1/15 A1/A- 538,165
625,000 Valley Central School District Montgomery, 7.15% due 6/15/07 (Insured: AMBAC) Aaa/AAA 756,506
165,000 Watkins Glen Central School District, 7.25% due 6/15/04 (Insured: MBIA) Aaa/AAA 192,329
110,000 Waverly General Obligation, 9.05% due 6/15/04ETM (Insured: MBIA) Aaa/AAA 138,019
TOTAL INVESTMENTS (Cost $22,970,861) $25,231,733
<FN>
*Credit ratings are unaudited
See notes to financial statements.
</FN>
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