Dear Shareholder:
The fiscal year ending September 30, 1995 continued a period of change in the
bond market. After rising to their highest levels in several years last
November, interest rates fell steadily throughout 1995. The net asset value
of the A shares of Thornburg Florida Intermediate Municipal Fund increased 29
cents per share to $11.83 over the year. If you were with us for the entire
period, you received dividends of 63 cents per share. If you reinvest your
dividends, you received 64.4 cents per share. Investors who owned C shares
received dividends of 54.9 and 56.1 cents per share, respectively, for the year
ended September 30.
Your fund is a managed bond portfolio. Its performance over the last year is a
total of all the stories of the individual bonds in your portfolio plus a few
that we traded during the period. One typical story pertains to our invest-
ment in the MBIA insured Lee County Capital Improvement Revenue 5.10% bonds due
10/1/2004.
The graph on this page compares the price change of Thornburg Florida
Intermediate Municipal Fund with the price change in the Lee County bond.
Recall from my last letter to you that on February 1, 1994 this bond was worth
104.171% of its maturity amount at a then market yield of 4.60%. By September
30, 1994 an increase in its market yield to 5.74% decreased the price of the
bond to 95.22% of its maturity value. On September 30, 1995, the Lee County
bond was valued at 101.587% of its maturity amount at a market yield of 4.88%.
In general, the price volatility of your Fund was less than that of the single
Lee County bond.
(Note to S.E.C. officials) Graph has been submitted as exhibit under Form SE.
Nothing has happened in the last several years of fluctuating interest rates to
change the ultimate maturity value of this bond or other bonds you own through
your investment in this fund. What has changed? The interim market prices of
these bonds moved lower through most of 1994, before recovering this year. As
you evaluate your investment in Thornburg Florida Intermediate Municipal Fund,
you must consider the future prospects of the kinds of bonds you own in this
portfolio.
Today, your portfolio includes approximately 40 bonds from around the state
approximately 78% of which are rated A or better by one of the major rating
agencies. Your bond portfolio in Thornburg Florida Intermediate Municipal Fund
is laddered to give a dollar weighted average maturity of approximately 7.5
years. This is shorter than the 10 year maximum average maturity permitted for
your fund.
On September 22, The Wall Street Journal reported that the public prefers a
graduated income tax to a flat tax by 57% to 38% according to recent research
polls. I'm not surprised, since the top 10% of income earning households in
the U.S. pay around 60% of all individual income taxes collected. If you
belong to the fortunate minority of high bracket taxpayers, ask yourself: Are
taxes on my investment income likely to go down?
Many municipal bonds issued between 1983 and 1988 are being paid off early.
Money to pay off these bonds prior to maturity has already been raised. You
may own municipal bonds or unit trusts which are being redeemed. Please re-
member that you can easily maintain your municipal portfolio by authorizing a
simple, automatic transfer from your checking account to Thornburg Florida
Intermediate Municipal Fund.
We believe the investment program of your fund is a thoroughly sensible one
over time. At today's market prices and yields to maturity, the kinds of bond
you own in this fund look attractive to me. Thank you for investing in
Thornburg Florida Intermediate Municipal Fund.
Sincerely,
/s/ Brian J. McMahon
Brian J. McMahon
Managing Director
Thornburg Florida Intermediate Municipal Fund
September 30, 1995
ASSETS
Investments, at value (cost $ 14,515,387) $ 14,820,460
Cash 40,618
Interest receivable 248,944
Receivable for fund shares sold 31,020
Prepaid expenses and other assets 606
Receivable from investment adviser 14,017
TOTAL ASSETS 15,155,665
LIABILITIES
Dividends payable 32,766
Accounts payable and accrued expenses 41,280
TOTAL LIABILITIES 74,046
NET ASSETS $ 15,081,619
NET ASSET VALUE:
Class A Shares:
Net asset value and redemption price per share
($ 14,822,209 applicable to 1,252,774 shares of beneficial
interest outstanding) $ 11.83
Maximum sales charge, 3.50% of offering .43
price (3.63% of net asset value per share)
Maximum Offering Price Per Share $ 12.26
Class C Shares:
Net asset value, offering, and redemption price per share
($ 259,410 applicable to 21,869 shares of beneficial
interest outstanding) $ 11.86
See notes to financial statements.
Thornburg Florida Intermediate Municipal Fund
Year Ended September 30, 1995
INVESTMENT INCOME
Interest income (net of premium amortized
of $ 24,747) $ 679,541
EXPENSES
Investment advisory fees (Note 3) 73,419
Distribution and service fees (Note 3)
Class A Shares 20,103
Class B Shares 3,363
Class C Shares 670
Transfer agent fees 46,038
Custodian fees 35,548
Professional fees 10,515
Registration and filing fees 2,848
Other expenses 4,648
TOTAL EXPENSES 197,152
Less:
Investment advisory fees waived by
investment adviser (Note 3) (73,419)
Expenses assumed by investment adviser (Note 3) (75,605)
NET EXPENSES 48,128
NET INVESTMENT INCOME 631,413
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net realized loss on investments sold (77,300)
Increase in unrealized appreciation
of investments 434,101
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS 356,801
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 988,214
See notes to financial statements.
Thornburg Florida Intermediate Municipal Fund
Year Ended Period from February 1, 1994(a)
September 30, 1995 to September 30, 1994
INCREASE (DECREASE) IN
NET ASSETS FROM:
OPERATIONS:
Net investment income $ 631,413 $ 175,766
Net realized loss on investments sold (77,300) (30,685)
Unrealized appreciation
(depreciation) of investments 434,101 (129,028)
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 988,214 16,053
DIVIDENDS TO SHAREHOLDERS:
From net investment income
Class A Shares (609,538) (175,625)
Class B Shares (18,433) (14)
Class C Shares (3,442) (127)
FUND SHARE TRANSACTIONS - (Note 4)
Class A Shares 6,406,602 8,235,076
Class B Shares (36,459) 20,114
Class C Shares 149,556 109,642
NET INCREASE IN NET ASSETS 6,876,500 8,205,119
NET ASSETS:
Beginning of period 8,205,119 0
End of period $ 15,081,619 $ 8,205,119
(a) Commencement of operations
See notes to financial statements.
Thornburg Florida Intermediate Municipal Fund
Note 1 - ORGANIZATION
Thornburg Florida 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 five series of shares of beneficial
interest in addition to those of the Fund: Thornburg New Mexico Intermediate
Municipal Fund, Thornburg Intermediate Municipal Fund, Thornburg Limited Term
U.S. Government Fund, Thornburg Limited Term Income Fund and Thornburg Value
Fund. Each series is considered to be a separate entity for financial reporting
and tax purposes.
On September 1, 1994 the Funds began offering three classes of shares of
beneficial interest, Class A, Class B and Class C shares. All shares outstand-
ing prior to September 1, 1994 are considered Class A shares. On September 28,
1995, all existing Class B shares were converted at net asset value, without
the imposition of a deferred sales charge, into Class A shares of an equivalent
value. The Fund no longer offers Class B shares. Each class of shares of a
Fund represents an interest in the same portfolio of investments of the Fund,
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 B shares were sold at net asset value without a sales charge at the time
of purchase, but subject to a contingent deferred sales charge upon redemption,
and bore both a service fee and a distribution fee, (iii) Class C shares are
sold at net asset value without a sales charge at the time of purchase, but are
subject to a service fee and a distribution fee, and (iv) the respective
classes have different reinvestment privileges. Additionally each Fund may
allocate among its classes certain expenses, to the extent allowable to specific
classes, including transfer agent fees, government registration fees, certain
printing and postage costs, and administrative and legal expenses. Currently,
class specific expenses of the Funds are limited to distribution fees and minor
custody and transfer agent expenses.
Note 2 - SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies of the Fund are as follows:
Valuation of Investments: In determining net asset value, the Fund utilizes an
independent pricing service approved by the Trustees. Debt investment secur-
ities have a primary market over the counter and are valued on the basis of
valuations furnished by the pricing service. The pricing service values port-
folio 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 proced-
ures used by the pricing service and the portfolio valuations received by the
Fund are reviewed by the officers of the Fund 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 market value.
Federal Income Taxes: It is the policy of the Fund to comply with the pro-
visions 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 year ended September 30, 1995 represent
exempt interest dividends which are excludable by shareholders from gross
income for Federal income tax purposes.
When-Issued and Delayed Delivery Transactions: The Fund may engage in when-
issued or delayed delivery transactions. To the extent the Fund engages in such
transactions, it will do so for the purpose of acquiring portfolio securities
consistent with its investment objectives and not for the purpose of investment
leverage or to speculate on interest rate changes. At the time the Fund makes a
commitment to purchase a security on a when-issued basis, it 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 Fund 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 share-
holder'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.
Thornburg Florida Intermediate Municipal Fund
Note 3 - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Pursuant to the investment advisory agreement, Thornburg Management Company,
Inc. (the "Adviser") provides investment management and advisory services for
which fees are computed at the rate of five eighths of one percent per annum of
the average daily net assets of the Fund. As of September 1, 1994, the
advisory agreement was modified to provide for a sliding scale fee that declines
from 5/8 of 1% to 4/10 of 1% when the Fund's average net assets exceed $500
million. The investment advisory agreement provides that if, with respect to
any fiscal year of the Fund, its total operating expenses (including investment
advisory fees, but excluding interest, taxes, brokerage commissions and extra-
ordinary expenses) exceed the most restrictive of the expense limitations
imposed by state securities commissions of the states in which the Fund
currently has registered its securities for sale, the investment advisory fees
for that fiscal year will be reduced or the Adviser will assume certain Fund
expenses by the amount of such excess. For the year ended September 30, 1995,
the Adviser voluntarily waived its advisory fee amounting to $73,419 and
assuned certain operating expenses amounting to $75,605.
The Fund has an underwriting agreement with Thornburg Securities Corporation
(the "Distributor"), which acts as the Distributor of Fund shares. For the year
ended September 30, 1995, the Distributor earned commissions aggregating
$8,533 from the sale of Class A shares, and collected contingent deferred sales
charges aggregating $1,733 from redemptions of Class B shares of the Fund.
Pursuant to a Service Plan, under Rule 12b-1 of the Investment Company Act of
1940, the Fund may reimburse to the Adviser an amount not to exceed .25 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 share-
holder related services. The Adviser may pay out of its own funds additional
expenses for distribution of the Fund's shares.
The Fund has also adopted a Distribution Plan pursuant to Rule 12b-1, applic-
able only to the Fund's Class B and Class C shares under which the Fund can
reimburse the Distributor for certain distribution expenses on a monthly basis
at an annual rate of up to .75% of the average daily net assets attributable to
Class B shares and 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 & Distribution
Plans for the year ended September 30, 1995, are set forth in the statement of
operations.
Certain officers and trustees of the Fund are also officers and/or directors of
the Adviser and Distributor.
Note 4 - SHARES OF BENEFICIAL INTEREST:
At September 30, 1995, there were an unlimited number of shares of beneficial
interest authorized, and capital paid-in agregated $ 14,884,531. Transactions
in shares of beneficial interest were as follows:
Year Ended Period from February 1, 1994 (a
September 30, 1995 to September 30, 1994
Shares Amount Shares Amount
Class A Shares
Shares sold 2,280,027 $ 25,983,353 723,159 $ 8,508,029
Shares issued to
shareholders in
reinvestment of
distributions 21,530 250,357 6,607 76,983
Shares repurchased (1,748,521) (19,827,108) (30,028) (349,936)
Net Increase 553,036 $ 6,406,602 699,738 $8,235,076
Class B Shares
Shares sold 53,482 $ 616,141 1,731 $20,114
Shares issued to
shareholdersin
reinvestment of
distributions 702 8,186 0 0
Shares repurchased (55,915) (660,786) 0 0
Net Increase (Decrease) (1,731) ($ 36,459) 1,731 $ 20,114
Class C Shares
Shares sold 23,893 $ 280,218 9,422 $109,642
Shares issued to
shareholdersin
reinvestment of
distributions 250 2,946 0 0
Shares repurchased (11,696) (133,608) 0 0
Net Increase 12,447 $ 149,556 9,422 $ 109,642
(a) Commencement of operations.
Note 5 - SECURITIES TRANSACTIONS
For the year ended September 30, 1995, the Fund had purchase and sale transact-
ions (excluding short-term securities) of $ 15,956,083 and $ 9,897,963,
respectively. The cost of investments for Federal income tax purposes is
$14,521,205. At September 30, 1995, net unrealized appreciation of investments
was $299,255, resulting from $330,529 gross unrealized appreciation and $ 31,274
gross unrealized depreciation.
Accumulated net realized losses from securities transactions included in net
assets at September 30, 1995 aggregated $ 107,985.
For Federal income tax purposes, the Fund has realized capital loss carry-
forwards of $ 102,167 as of September 30, 1995 available to offset future
realized capital gains. To the extent that such carryforwards are used, no
capital gains distributions will be made. The carryforwards expire as follows:
September 30, 2002 - $30,685 and September 30, 2003 - $ 71,482.
Thornburg Florida Intermediate Municipal Fund
Per share operating performance
(for a share outstanding
throughout the period)
Year Ended Period from February 1, 1994 (a)
September 30, 1995 to September 30, 1994
Class of Shares: A B** C A B* C*
Net asset value, beginning of period $11.54 $11.55 $11.54 $12.06 $11.72 $11.72
Income from investment operations:
Net investment income .63 .55 .55 .40 .05 .05
Net realized and unrealized
gain (loss) on investments .29 .28 .32 (.52) (.17) (.18)
Total from investment operations .92 .83 .87 (.12) (.12) (.13)
Less distributions from:
Net investment income (.63) (.55) (.55) (.40) (.05) (.05)
Change in net asset value .29 .28 .32 (.52) (.17 ) (.18)
Net asset value, end of period $11.83 $11.83 $11.86 $11.54 $11.55 $11.54
Total Return (b) 8.22% 7.55% 7.74% (.95%) (1.02%) (1.10%)
Ratios/Supplemental Data
Ratios to average net assets:
Net investment income 5.41% 4.69% 4.65% 5.09%(c)4.80%(c)4.89%(c)
Expenses, after expense reductions .38% 1.08% 1.08% .25%(c)1.05%(c)1.10%(c)
Expenses, before expense reductions 1.44% 5.35%19.08% 1.95%(c)7.80%(c)40.31%(c)
Portfolio turnover rate 89.60% 89.60% 89.60% 19.94% 19.94% 19.94%
Net assets at end of period (000) $14,822 $0 $259 $8,076 $20 $109
(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.
* Sales of Class B and Class C shares commenced on September 1, 1994.
** On September 28, 1995, all Class B shares were converted into Class A
shares.
Thornburg Florida Intermediate Municipal Fund
September 30, 1995 CUSIPS: Class A - 885-215-707, Class C - 885-215-749
NASDAQ Symbols: Class A -THFLX
PRINCIPAL ISSUE RATING VALUE
$1,035,000 Brevard County Tourist Development Tax Revenue
Series 1993, 6.325% due 3/1/03 (Florida Marlins'
Training Facility Project) NR/NR $1,067,954
300,000 Broward County Education Facilities Authority
Series 1994, 5.60% due 4/1/04 (Nova Southeastern
University Project; Insured: Connie Lee) NR/AAA 312,552
570,000 Broward County Health Facilities Authority,
7.00% due 8/15/11 (North Beach Hospital Project;
Insured: MBIA) Aaa/AAA 633,452
950,000 Broward County Housing Finance Authority Home
Mortgage Revenue, 0% due 4/1/14 A1/BBB 147,830
250,000 Cape Coral Special Obligation Revenue, 5.75%
due 7/1/01 Aaa/AAA 265,540
50,000 Collier County Capital Improvement Revenue Series
BMTF Subseries 3, 7.70% due 7/1/16
(Insured: FGIC) Aaa/AAA 51,938
134,000 Duval County Single Family Housing Revenue, 0%
due 5/15/16, put 11/15/97 Aaa/AAA 104,370
275,000 Escambia County Housing Finance Authority Single
Family Mortgage Series C, 7.50% due 10/1/12 Aaa/NR 290,637
1,000,000 Florida Housing Finance Authority Series 94-B,
5.70% due 10/1/24, mandatory put 10/1/04 (Plantation
Colony Project; FNMA Guarantee) NR/AAA 1,016,890
1,000,000 Florida Housing Finance Agency Multifamily Housing
Revenue Series 1983 F, 5.35% due 6/1/00 (Insured:
Connecticut General) NR/AA 1,015,560
300,000 Florida Housing Finance Authority, 4.05% due 12/1/05,
put 10/7/95, weekly demand note (Insured: Connecticut
General) A-1/AA 300,000
305,000 Florida Housing Finance Authority Capital Appreciation
Residential Mortgage Revenue, 0% due 7/15/01
(LOC: Citibank) NR/AA 165,350
1,000,000 Florida Housing Development Authority, 6.25% due
12/1/06 (Hammock's Place Project) NR/AAA 1,037,920
255,000 Florida Housing Finance Authority, 7.65% due 6/1/99
(GNMA Backed) Aaa/NR 268,648
755,000 Florida Liability Insurance Commission Pooled
Liability, 5.50% due 1/1/96 NR/NR 756,223
1,000,000 Florida State General Obligation Highway Revenue,
5.80% due 10/1/00 Aa/AA 1,021,940
255,000 Florida State Certificate of Partcipation, 6.05% due
11/15/97 (Consolidated Equipment Financing
Program Project) A/A+ 263,282
720,000 Florida State Certificate of Partcipation, 6.05% due
5/15/97 (Consolidated Equipment Financing
Program Project) A/A+ 740,923
345,000 Florida State Certificate of Partcipation, 6.10%
due 5/15/98 (Consolidated Equipment Financing
Program Project) A/A+ 356,785
300,000 Hernando County Industrial Development Revenue,
8.50% due 12/1/14 (Florida Crushed Stone Project NR/NR 316,224
1,000,000 Hillsborough County Industrial Development Authority,
5.50% due 8/15/06 (University Community Hospital Inc.
Project; Insured: MBIA) Aaa/AAA 1,030,480
600,000 Jacksonville Health Facilities Authority Revenue,
8.00% due 12/1/15 (National Benevolent
Association Project) Baa1/BBB+ 654,510
375,000 Jacksonville Housing Revenue Refunding, 5.125%
due 9/20/04 (Windmere Manor Apartments
Project; Insured: GNMA) NR/AAA 377,272
250,000 Jacksonville Loan Obligation Water & Sewer
Revenue, 5.30% due 4/1/99 (Insured: MBIA) Aaa/AAA 249,975
100,000 Jacksonville Loan Obligation Custody Receipts, 6.10%
due 4/1/01 (Insured: MBIA) Aaa/AAA 100,154
100,000 Lee County Capital Improvement Refunding Revenue,
5.10% due 10/1/04 (Insured: MBIA) Aaa/AAA 101,587
250,000 Miramar Wastewater Improvement Assessment Revenue,
6.00% due 10/1/02 (Insured: FGIC) Aaa/AAA 267,512
50,000 Okaloosa County Custody Receipts, 6.10% due 4/1/02
(Insured: MBIA) Aaa/AAA 50,138
115,000 Osceola County Health Facilities Revenue Series 1994,
5.75% due 4/1/04 (Evangelical Good Samaritan Project;
Insured: AMBAC) Aaa/AAA 121,039
195,000 Palm Bay Lease Revenue Refunding, 6.40% due 9/1/04
(Florida Education and Research Foundation
Project) Baa/NR 200,994
205,000 Palm Bay Lease Revenue Refunding, 6.50% due 9/1/05
(Florida Education and Research Foundation
Project) Baa/NR 211,792
100,000 Pensacola Health Facility Authority, 5.10% due 1/1/06
(Daughters of Charity Project) Aa/NR 98,813
1,200,000 Pinellas County Housing Finance Authority Series 1994-A,
5.75% due 8/1/01
(LOC: GNMA / FNMA Collateral) Aaa/NR 1,222,176
TOTAL INVESTMENTS (Cost $14,515,387) $ 14,820,460
To the Board of Trustees and Shareholders
Thornburg Florida Intermediate Municipal Fund
Santa Fe, New Mexico
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Thornburg Florida Intermediate
Municipal Fund, series of Thornburg Investment Trust as of September 30,
1995, the related statement of operations, the statements of changes in net
assets, and the financial highlights for the periods indicated. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of September 30, 1995 by correspondence with the
custodian. An audit also includes assessing the accounting principles used
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Thornburg Florida Intermediate Municipal Fund as of September 30, 1995, the
results of its operations, the changes in its net assets and the financial
highlights for the periods indicated, in conformity with generally accepted
accounting principles.
New York, New York
October 27, 1995
