Dear fellow shareholders,
We are pleased to report the Fund's total return for the quarter ended
March 31 in the chart below. Most gratifying , the performance was achieved
without exposure to the risks of gold stocks, emerging markets or the flow
of hot new issue IPOs, areas of unusual strength during the quarter (we did
participate in one initial public offering (IPO), which we are holding for its
long term potential). The major contributors to our fund performance were:
Softkey, EMC Corp., Sears, ADT Ltd., Ford and Rhone-Poulenc.
The portfolio at the end of the quarter consisted of 32 issues, with
diversification across 16 industries. Seventeen issues are 3% plus positions.
While this is a more focused portfolio than many diversified mutual funds,
our primary risk control measure is fundamental investment analysis. We
attempt to minimize risk by buying stocks with what we regard as a
compelling risk/reward trade-off. A few examples of our risk control
reasoning is instructive.
One of our strategies is to actively invest in mutual savings and loan
companies that are converting to publicly traded ownership. When a mutual
savings and loan (or mutual savings bank) changes ownership to a publicly
traded stock company, the process of stock subscription typically results
in the new public entity selling at a 20% to 30% discount to book value.
Since most publicly traded similar institutions sell above book value, the
stocks of many conversions move swiftly to book value or higher. Our
strategies capture this discount. While this requires significant
administrative effort for us, the investment itself entails generally low
downside risk. Three such conversions contributed to our good quarter.
Another risk control measure we employ involves dividends. Stocks with
relatively high, reliable, and growing dividends offer more downside
protection than those without, in our judgement. Where above average yields
are overlooked or misunderstood, we see an opportunity for price
appreciation. While this is pretty much an apple pie and motherhood type
assertion, we think we have found a few such stocks; specifically Oppenheimer
Capital L. P. and a couple of specialty finance companies in the form of
mortgage REITS. Oppenhiemer L. P. is a fine investment management company
in a publicly traded limited partnership format. The stock currently
yields 8.5% while the earnings and assets continue to grow. As this occurs,
the dividend should also grow. As a holder of a 66% interest in the operating
investment advisor partnership of Oppenheimer Capital, the Limited
Partnership would also benefit if the advisor is acquired. We regard the
R.E.I.T.s, Capstead Mortgage and Resource Mortgage as nontraditional bankers
whose earnings are dependent upon interest rate spreads but most
importantly without the overhead of a traditional deposit institution. They
are beneficiaries of a steepening yield curve and are currently
experiencing earnings improvements as spreads widen, existing ARM mortgages
adjust upward and the prerefunding of higher rate mortgages decline. Both
of these issues offer current yields in the 10-11% level.
In the aggregate, the Thornburg Value Fund portfolio attributes are
conservative. Overall portfolio yield at March 31 was 2.8%, weighted average
price to earnings ratio on estimated 1996 earnings was 11.9 times, the price
to book ratio was 2.4 times and the market price to estimated cash flow is a
modest 7.9 times.
During the quarter International Business Machines, Softkey International,
Capstead Mortgage and Party City along with 3 savings bank conversions were
added to the portfolio. Each of these we believe is a compelling value. IBM
is recovering its prestige, market position and profitability. The market
is slowly recognizing the improvement but the valuation of the stock still
reflects a legacy of negatives which we believe are no longer valid. Softkey
International stock was depressed because of concerns about the companys
ability to absorb several acquisitions made last year. These acquisitions
have given the company the leading market share in the edutainment segment
of the CD-ROM business. We believe the potential is very large and that the
stock offers a compelling risk reward trade off. Capstead Mortgage's
improving earnings and dividends reflect the steepening yield curve. Party
City was a new issue of a specialty retailer offered at a valuation below
similar retailers with comparable growth potential. The company offers
complete party supplies from invitations and decorations to costumes and
favors for just about every party theme imaginable. With same-store sales
running at double-digit levels, this franchise seems to have great potential.
As we mentioned in our first quarterly report, one of the desired benefits
of investing using a strict value criteria that focuses on the downside risk of
an investment compared to its upside potential is that portfolio volatility
should be less than the overall market. As indicated in the table below, the
range of volatility experienced by the fund this quarter was less than either
the Dow Industrial Average or the NASDAQ Average, and in line with the broadly
diversified S & P 500 index.
On March 29, 1996, the Fund distributed an income dividend for the quarter of
$0.060 per Class A share and $0.039 per Class C share.
Respectfully,
William V. Fries, CFA
The S&P 500 is an unmanged index of common stocks that's generally considered
representative of the U.S. market.
Dow Jones Industrial Average (DJIA)- Composite of the price movement of 30
actively traded industrial stocks believed to reflect the overall stock market
movement.
National Association of Securities Dealers Automated Quotation Indexes (NASDAQ)
Seven indexes that act as gauges and which averagethe trading prices of more
than 3,000 American over-the-counter companies. The seven indexes cover banks,
the industrials, insurance companies, other financial institutions,
transportations, utilities and a composite.
The performance of any index is not indicative of the performance of any
particular investment. Keep in mind that indices do not take into account any
fees and expenses of the individual investments that they track.
s t a t e m e n t o f a s s e t s a n d l i a b i l i t i e s
Thornburg Value Fund
March 31, 1996
(unaudited)
ASSETS
Investments, at value (cost $9,591,665) ...........................$ 10,498,703
Cash ...................................................................587,489
Receivable for fund shares sold .........................................19,996
Dividend receivable .....................................................24,700
Prepaid expenses and other assets .......................................53,319
TOTAL ASSETS ........... 11,184,207
LIABILITIES
Payable for securities purchased 32,813
Accounts payable and accrued expenses ...................................30,015
TOTAL LIABILITIES ......................62,828
NET ASSETS ........................................................$ 11,121,379
NET ASSETS CONSIST OF:
Distribution in excess of net investment income ($1,190)
Net unrealized appreciation ................... 907,037
Accumulated net realized gain ................. 68,158
Net capital paid in on shares of beneficial interest ............10,147,374
NET ASSET VALUE ...................................................$ 11,121,379
Class A Shares:
Net asset value and redemption price per share
($10,257,225 applicable to 789,066 shares of beneficial
interest outstanding - Note 4) ..........................................$13.00
Maximum sales charge, 4.50% of offering
price (4.68% of net asset value per share) ..................................61
Maximum Offering Price Per Share .......$13.61
Class C Shares:
Net asset value and offering price per share*
($864,154 applicable to 66,530 shares of beneficial
interest outstanding - Note 4) ..........................................$12.99
*Redemption price per share is equal to net asset value less
any applicable contingent deferred sales charge ................................
See notes to financial statements ..............................................
s t a t e m e n t o f o p e r a t i o n s
Thornburg Value Fund
Period from October 2, 1995 (a)
to March 31, 1996 (unaudited)
INVESTMENT INCOME
Dividend income .................................. $125,889
Interest income .................................. 14,451
TOTAL INCOME ............................ 140,340
EXPENSES
Investment advisory fees (Note 3) ................ 37,970
Distribution and service fees (Note 3)
Class A Shares ................................ 8,818
Class C Shares ................................ 2,700
Registration & filing fees ....................... 19,799
Custodian fees ................................... 17,380
Transfer agent fees .............................. 15,352
Professional fees ................................ 4,239
Other expenses ................................... 2,561
TOTAL EXPENSES ......................... 108,819
Less:
Investment advisory fees deferred by
investment adviser (Note 3) ............... (34,593)
Expenses assumed by investment adviser (Note 3) . (13,354)
NET EXPENSES ........................... 60,872
NET INVESTMENT INCOME .................. 79,468
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS - NOTE 5
Net realized gain on investments sold ............ 68,158
Increase in unrealized appreciation of investments 907,037
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS ................ 975,195
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS .................... $ 1,054,663
(a) commencement of operations
See notes to financial statements ...........
s t a t e m e n t s o f c h a n g e s i n n e t a s s e t s
Thornburg Value Fund
(unaudited)
Period from October 2, 1995 (a)
to March 31, 1996
INCREASE (DECREASE) IN
NET ASSETS FROM:
OPERATIONS:
Net investment income ..................................................$79,468
Net realized gain on investments sold .......................... 68,158
Increase in unrealized
appreciation of investments 907,037
NET INCREASE IN NET ASSETS .....................................
RESULTING FROM OPERATIONS ...................................1,054,663
DIVIDENDS TO SHAREHOLDERS: ....................................................
From net investment income
Class A Shares ...................................................... (76,023)
Class C Shares ............................................... (4,635)
FUND SHARE TRANSACTIONS - (Note 4) .................................
Class A Shares 9,360,332
Class C Shares .........................................................787,042
NET INCREASE IN NET ASSETS ..........................................11,121,379
NET ASSETS:
Beginning of period ............................................... 0
End of period .............................................$11,121,379
See notes to financial statements ....................................
(a)Commencement of operations.
n o t e s t o f i n a n c i a l s t a t e m e n t s
Thornburg Value Fund
Note 1 - ORGANIZATION
Thornburg Value Fund (the Fund), is a series of Thornburg Investment Trust.
The Trust was 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 Limited Term U.S.
Government Fund,Thornburg New Mexico Intermediate Municipal Fund,
Thornburg Intermediate Municipal Fund, Thornburg Limited Term Income Fund
and Thornburg Florida Intermediate Municipal Fund. Each series is considered
to be a separate entity for financial reporting and tax purposes.
The Fund offers two classes of shares of beneficial interest, Class A and
Class C 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 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, and (iii) 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 Fund are limited to
distribution fees and certain custody and transfer agent expenses.
Note 2 - SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies of the Fund are as follows:
Valuation of Securities: In determining net asset value, investments are
stated at value based on latest sales prices reported on national securities
exchanges on the last business day of the period. Investments for which no
sale is reported are valued at the mean between bid and asked prices.
Federal Income Taxes: It is the policy of the Fund to comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. Therefore, no provision for Federal income tax is required
When-Issued and Delayed Delivery Transactions: The Portfolio may engage in
when-issued or delayed delivery transactions. To the extent the Portfolio
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 market changes. At the
time the Portfolio 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 Funds records on the trade date.
Dividends: Dividends are paid quarterly 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 shareholders option, paid in cash. Net
realized 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 and dividend income is recorded on the
ex-dividend date.
Deferred Expenses: Organizational expenses were deferred and will be amortized
beginning April 1, 1996, on a straight-line basis over a 60-month period.
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 - 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 one percent per annum of the average
daily net assets of the Fund. The advisory agreement provides for a sliding
scale fee that declines from 1% to 8/10 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 extraordinary 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 period
ended March 31, 1996, the Adviser voluntarily deferred its advisory fee
amounting to $34,593 and assumed certain operating expenses amounting to
$13,354. These expenses may be repaid to the Adviser by the Fund, however such
repayment will depend upon the overall level of Fund expenses for the entire
fiscal year ending September 30, 1996.
The Fund has an underwriting agreement with Thornburg Securities Corporation
(the "Distributor"), which acts as the Distributor of Portfolio shares. For
the period ended March 31, 1996, the Distributor earned commissions
aggregating $11,546 from the sale of Class A shares, and collected no
contingent deferred sales charges 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 Fund may reimburse to the Adviser an amount of .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 shareholder related
services. The Adviser may pay out of its own funds additional expenses for
distribution of the Fund's shares.
The Portfolio also has adopted a Distribution Plan pursuant to Rule 12b-1,
applicable to the Portfolio's Class C shares, under which the Portfolio 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 Portfolio under their respective service and distribution
plans for the period ended March 31, 1996 are set forth in the statement of
operations.
Certain officers and directors of the Fund are also officers and /or directors
of the Adviser and the Distributor. The compensation of unaffiliated
directors of the Fund is borne by the Fund.
Thornburg Value Fund
Note 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)
Thornburg Value Fund
Note 1 - ORGANIZATION
Thornburg Value Fund (the Fund), is a series of Thornburg Investment Trust.
The Trust was 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 Limited Term U.S.
Government Fund,Thornburg New Mexico Intermediate Municipal Fund,Thornburg
Intermediate Municipal Fund, Thornburg Limited Term Income Fund and Thornburg
Florida Intermediate Municipal Fund. Each series is considered to be a
separate entity for financial reporting and tax purposes.
The Fund offers two classes of shares of beneficial interest, Class A and
Class C 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 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, and (iii) 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 Fund are limited to
distribution fees and certain custody and transfer agent expenses.
Note 2 - SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies of the Fund are as follows:
Valuation of Securities: In determining net asset value, investments are
stated at value based on latest sales prices reported on national securities
exchanges on the last business day of the period. Investments for which no
sale is reported are valued at the mean between bid and asked prices.
Federal Income Taxes: It is the policy of the Fund to comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. Therefore, no provision for Federal income tax is required
When-Issued and Delayed Delivery Transactions: The Portfolio may engage in
when-issued or delayed delivery transactions. To the extent the Portfolio
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 market changes. At the
time the Portfolio 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 Funds records on the trade date.
Dividends: Dividends are paid quarterly 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 shareholders option, paid in cash. Net
realized 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 and dividend income is recorded on the
ex-dividend date.
Deferred Expenses: Organizational expenses were deferred and will be amortized
beginning April 1, 1996, on a straight-line basis over a 60-month period.
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 - 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 one percent per annum of the average
daily net assets of the Fund. The advisory agreement provides for a sliding
scale fee that declines from 1% to 8/10 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 extraordinary 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 period
ended March 31, 1996, the Adviser voluntarily deferred its advisory fee
amounting to $34,593 and assumed certain operating expenses amounting to
$13,354. These expenses may be repaid to the Adviser by the Fund, however such
repayment will depend upon the overall level of Fund expenses for the entire
fiscal year ending September 30, 1996.
The Fund has an underwriting agreement with Thornburg Securities Corporation
(the "Distributor"), which acts as the Distributor of Portfolio shares. For
the period ended March 31, 1996, the Distributor earned commissions
aggregating $11,546 from the sale of Class A shares, and collected no
contingent deferred sales charges 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 Fund may reimburse to the Adviser an amount of .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 shareholder
related services. The Adviser may pay out of its own funds additional
expenses for distribution of the Fund's shares.
The Portfolio also has adopted a Distribution Plan pursuant to Rule 12b-1,
applicable to the Portfolio's Class C shares, under which the Portfolio 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 Portfolio under their respective service and distribution
plans for the period ended March 31, 1996 are set forth in the statement of
operations.
Certain officers and directors of the Fund are also officers and /or directors
of the Adviser and the Distributor. The compensation of unaffiliated
directors of the Fund is borne by the Fund.
Thornburg Value Fund
Note 4 - SHARES OF BENEFICIAL INTEREST:
At March 31, 1996, there were an unlimited number of shares of beneficial
interest stock authorized, and capital paid-in aggregated $10,147,374.
Transactions in shares of beneficial interest were as follows:
Period from October 2, 1995 (a)
to March 31, 1996
Class A Shares Shares Amount
Shares sold 811,353 $9,634,912
Shares issued to shareholders
in reinvestment of
distributions 5,913 74,073
Shares repurchased (28,200) (348,653)
Net Increase 789,066 $9,360,332
Class C Shares
Shares sold 66,250 $783,559
Shares issued to shareholders
in reinvestment of
distributions 308 3,831
Shares repurchased (28) (348)
Net Increase 66,530 $787,042
Note 5 - SECURITIES TRANSACTIONS
Purchases and proceeds from maturities or sales of investment securities
of the Portfolio, other than short-term securities, aggregated $11,351,937
and $1,950,116, respectively. The cost of investments is the same for
financial reporting and Federal income tax purposes. At March 31, 1996, the
aggregate gross unrealized appreciation and depreciation, based on cost for
Federal income tax purposes, were $921,706 and $14,669, respectively.
Accumulated net realized gains from security transactions included in net assets
at March 31, 1996 aggregated $68,158.
Thornburg Value Fund
Per share operating performance
(for a share outstanding
throughout the period)
Period from October 2, 1995*
to March 31,1996
Class of Shares: ....................................... A C
Net asset value, beginning of period .........................$11.94 $11.94
Income from investment operations:
Net investment income ........................................ .11 .08
Net realized and unrealized
gain on investments ................................ 1.06 1.05
Total from investment operations ............... 1.17 1.13
Less dividends from:
Net investment income ........................ (.11) (.08)
Change in net asset value ............................... 1.06 1.05
Net asset value, end of period ............................. $13.00 $12.99
Total return (a) ..............................................9.81% 9.47%
Ratios/Supplemental Data
Ratios to average net assets:
Net investment income ................................. 2.14%(b) 1.33%(b)
Expenses, after expense reductions ........... 1.55%(b) 2.30%(b)
Expenses, before expense reductions ................ 2.45%(b) 8.23%(b)
Portfolio turnover rate .................................. 25.54% 25.54%
Net assets
at end of period (000) ................................$10,257 $864
(a) Sales loads are not reflected in computing total return, which is not
annualized for periods less than one year .........................
(b) Annualized .............................................................
Commencement of operations ............................................
Thornburg Value Fund
March 31, 1996 CUSIPS: Class A - 885-215-731, Class C - 885-215-715
NASDAQ Symbols: Class A - TVAFX
STOCKS - 98.6% ................................... SHARES VALUE
AUTOS
Ford Motor Company ............................... 13,000 $ 446,875
Volvo AB - ADR ................................... 16,000 370,000
CAPITAL EQUIPMENT
Cummins Engine, Inc. ............................. 8,000 323,000
CHEMICALS
Rhone-Poulenc ADR ................................ 20,000 520,000
DRUGS
Mylan Laboratories, Inc. ......................... 13,000 273,000
ENERGY
Atlantic Richfield Company ....................... 3,500 416,500
Gulf Canada Resources, Ltd. ...................... 60,000 285,000
FINANCIAL SERVICES
Charter Financial, Inc. .......................... 10,000 118,750
First Colorado Bancorp, Inc. ..................... 20,000 247,500
North Central Bancshares, Inc. ................... 10,000 107,500
INVESTMENT MANAGEMENT
Eaton Vance Corporation .......................... 10,000 325,000
John Nuveen & Company - Class A .................. 13,000 316,875
Oppenheimer Capital, L.P. ........................ 15,000 438,750
INSURANCE
Allstate Corporation ............................. 7,000 294,875
American National Insurance Corporation .......... 2,000 135,000
PHOTOGRAPHY
Eastman Kodak Company ............................ 5,000 355,000
REAL ESTATE
Host Marriott Corporation ........................ 19,000 256,500
Security Capital Industrial Trust (R.E.I.T.) .... 12,000 210,000
Sun Communities, Inc. (R.E.I.T.) ................ 10,000 272,500
RETAIL
Party City Corporation ........................... 5,000 72,500
Sears, Roebuck & Company ......................... 10,000 487,500
Wal-Mart Stores, Inc. ............................ 20,000 462,500
SERVICES
ADT Limited ...................................... 25,000 440,625
Host Marriott Services Corporation ............... 3,300 23,100
SPECIAL PURPOSE FINANCE
Capstead Mortgage (R.E.I.T.) .................... 20,000 500,000
Resource Mortgage Capital (R.E.I.T.) ............ 28,000 570,500
STEELS
AK Steel Holding Corporation ..................... 10,000 398,750
TECHNOLOGY
EMC Corporation .................................. 16,000 350,000
International Business Machines, Inc. ............ 5,000 555,625
Softkey International, Inc. ...................... 20,000 402,500
UTILITIES - ELECTRIC
Public Service Company of New Mexico ............. 20,000 372,500
TOTAL COMMON STOCKS (Cost $9,441,687) ............ 10,348,725
COMMERCIAL PAPER - 1.4% (Cost $149,978)
AT&T Corporation, 5.30% due 4/2/96 ............... 150,000 149,978
TOTAL INVESTMENTS (Cost $9,591,665)* ............. $10,498,703
(R.E.I.T.) Real Estate Investment Trust
*Cost is the same for Federal income tax purposes
