Thornburg Value Fund
Semi-Annual Report
March 31, 1997
Dear Fellow Shareholders:
The total returns for the Thornburg Value Fund for periods ended
March 31, 1997 is shown in the table below.
Results since inception and thus far in the fiscal year have been good, but
returns in the quarter just ended were slightly negative. Positive returns from
stocks such as Walmart, Allstate, and Haven Bancorp were offset by the poor
performance of Chrysler, AT&T and Telecom Corp of New Zealand, for example.
While the latter issues have been weak recently, each, we believe, is a strong
company and will continue to prosper. Current valuations reflect modest
expectations of future success.
During the quarter, the following new stocks were added to the portfolio:
Schering-Plough Occidental Petroleum
DSM Marsh & McLennan
Abraxas Petroleum Novell
Office Max Owens Corning
Spectrum Holobyte VP Banks
Chrysler AT&T
While the number of new names in the portfolio is significant, they are
replacements for successful investments which reached target price levels and
were therefore sold. In addition, two stocks (Terra Industries and Kaufel Group)
did not develop fundamentally as expected and were therefore eliminated from the
portfolio.
The attributes of the Fund remain conservative with a weighted average price to
earnings ratio of under 14 times, price to book of 3.2 times and a portfolio
yield of 2.8%*
Several stocks added to the portfolio may be unfamiliar, so a brief description
and our investment thesis is summarized below:
DSM N.V. (3.61%) is a Netherlands based commodity chemical producer. It is a
low cost
producer of ethylene and derivative products. Almost half of revenues are
plastics related (polyethylene, polypropylene, ABS, MTBE) with fiber chemicals
(caprolactam for nylon and acrylonitrile for acyrlics) and coatings making up
the bulk of the rest of revenues. Chemicals for the pharmaceutical industry is
intended to grow in importance. Over 10% of operating profits are generated from
local energy investments. Because of slow economic activity in Europe, there is
little expectation of earnings progress for DSM currently. At some point, the
economies in Europe will rebound and when they do, DSM will be a leveraged
beneficiary. At current prices, the stock is selling at only a 30% premium to
book value, 3.2 times cash flow and 7.2 times earnings. Comparable valuation of
U.S. and German companies in the same businesses are considerably higher. The
stock yields 4.5% and we judge the wait for the turnaround in Europe will not be
long.
ABRAXAS PETROLEUM (1.44%) is a small oil and gas producer (65% gas) with a
creditable
record of growth through acquisition. This young company's philosophy centers on
using financial leverage to acquire known producing properties with exploitable
potential, being the field operator so costs can be controlled, and reducing
leverage as acquisitions prove their worth. Four acquisitions in late 1996 have
dramatically increased total assets as well as financial leverage. Increased
production and reserves from 1993 and 1994 acquisitions and exploitation of the
recent acquisitions are altering the potential for Abraxas. Given the high
leverage and sensitivity to gas prices, man agement is using contract prices and
hedges on production sufficient to cover interest costs and capital
expenditures. Production will rise again in 1997 and could exceed the 14,000
barrels of oil equivalent (BOE) per day exit rate of 1996. This would be up from
10,000 BOE in the fourth quarter and a 4,880 BOE average for full year 1996. At
current prices, Abraxas is selling at less than 1 times next years expected
revenues, less than 6 times 1996 cash flow and less than 3 times expected 1997
cash flow.
MARSH & MCLENNAN COMPANIES (4.43%) is known as a major insurance broker with
opera
tions worldwide. Subsidiaries include Mercer Consulting, a billion dollar in
revenue human resource consultant and Putnam Mutual Funds. This later operation
has been the prime source of recent earnings growth and now accounts for almost
50% of operating income. Acquired by Marsh McLennan in 1970 when it had $2
billion in assets under management, Putnam has become an industry leader with
almost $200 billion in assets under management and accounted for 10% of industry
net sales of mutual funds in 1996. Top quality mutual fund managers are being
acquired at over 3% of assets under management and, on this basis, Putnam would
be worth $6 billion. At the time of this writing, Marsh & McLennan's total
capitalization of $9.9 billion, would imply a value for the the rest of the
company of only $3.9 billion, about 1.4 times its insurance and consulting
revenue. This is well below industry norms.
NOVELL, INC (2.27%) is the leading provider of computer software used to enable
different size
and types of computers to operate with each other in a network. Revenue growth
has stalled as Microsoft's success with "Windows" and "Windows NT supplanted
much of Novell's local area network proprietary functionality. Novell is still
the leader in complex networks, however, and possesses valuable experience and
expertise in providing the software necessary to manage networks on a global
basis. New management will attempt to parlay Novell's expertise into a
resumption of revenue and earnings growth by offering software solutions that
complement Microsoft "NT" as much as compete with it. Implementation will take
some time. Few view Novell's chances optimistically, but with the stock modestly
valued at 1.7 times book value and with over $1.1 billion in cash and little
debt, improvement or no, Novell's expertise is valuable.
VERVALTUNGS-UND PRIVAT-BANK (0.58%) is an international bank specializing in
private
banking for high net worth individuals. Based in Liechtenstein, earnings are
driven by the growth in custodian trust assets, which in 1996 rose 27%. Although
discretionary investment responsibili ties apply to only a small portion of the
Sfr 19 billion under management, fee income averages over 50 basis points.
Lending, less than 25% of assets, focuses on inter-bank loans and cus tomer
accommodation and is highly reserved. Currently valued at less than 10 times
earnings and offering a 2% plus yield on a low payout dividend that has grown at
9% over the past 5 years, the stock appears to offer minimal risk. VP Bank is a
beneficiary of continued demand for tax advantaged, politically and currency
secure, private money management services.
We expect these holdings to produce excellent returns going forward. In
addition, recent market volatility
has provided a excellent opportunity to add to some of our favorite existing
holdings at very attractive prices. While the market in general may appear
richly valued near new highs (at this writing), we believe the risk in our
portfolio is well controlled and the possibility for appreciation remains
substantial.
On March
24, 1997 the Fund distributed an income dividend for the quarter of $0.037 per
Class A share and
$0.012 per class C share.
Thank you for your continuing trust and confidence.
Respectfully,
William V. Fries, CFA
Portfolio Manager
Past performance is no guarantee of future results and your shares, when
redeemed, may be worth more or less than their original cost. Maximum sales
charge for the Thornburg Value Fund- Class A Shares is 4.50%.
oThe holdings listed are only current as of 3-31-97. They can and do vary over
time.
oThe holdings are listed according to their dollar-weighted market value.
oThe report above does not purport to be a complete description of the
securities, markets or developments referred to herein. All expressions of
opinion reflect the judgement of the firm at this date and are subject to
change. Information has been obtained from sources considered reliable but we do
not guarantee that the foregoing report is accurate or complete. Thornburg
Management Company, its affiliates , officers, directors, employees and/or
agents may have or may in the future execute transactions in the securities
mentioned in this report, which tranasactions may not be consistent with this
report's conclusions.
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, 1997
(unaudited)
ASSETS
Investments, at value (cost $40,512,058) $42,218,746
Cash 77,159
Receivable for fund shares sold 627,992
Dividend receivable 80,919
Prepaid expenses and other assets 42,029
TOTAL ASSETS 43,046,845
LIABILITIES
Payable for securities purchased 959,426
Payable for fund shares redeemed 6,185
Unrealized loss on forward exchange contracts (Note 6) 19,919
Accounts payable and accrued expenses 61,021
TOTAL LIABILITIES 1,046,551
NET ASSETS $42,000,294
NET ASSETS CONSIST OF:
Undistributed net investment Income $ 4,595
Net unrealized appreciation 1,687,596
Accumulated net realized gain 1,581,217
Net capital paid in on shares of beneficial interest 38,726,886
$42,000,294
NET ASSET VALUE:
Class A Shares:
Net asset value and redemption price per share
($37,996,837 applicable to 2,443,193 shares of beneficial
interest outstanding - Note 4) $ 15.55
Maximum sales charge, 4.50% of offering
price (4.68% of net asset value per share) .73
Maximum Offering Price Per Share $ 16.28
Class C Shares:
Net asset value and offering price per share*
($4,003,457 applicable to 257,509 shares of beneficial
interest outstanding - Note 4) $ 15.55
*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
Six Months Ended March 31, 1997
(unaudited)
INVESTMENT INCOME
Dividend income (net of foreign taxes witheld
of $9,093) $392,708
Interest income 33,044
TOTAL INCOME 425,752
EXPENSES
Investment advisory fees (Note 3) 124,488
Administration fees (Note 3)
Class A Shares 16,238
Class C Shares 1,546
Distribution and service fees (Note 3)
Class A Shares 32,476
Class C Shares 12,366
Transfer agent fees 19,673
Registration & filing fees 14,807
Custodian fees 13,712
Professional fees 8,154
Other expenses 8,990
TOTAL EXPENSES 252,450
Less:
Expenses deferred by investment adviser (5,673)
NET EXPENSES 246,777
NET INVESTMENT INCOME 178,975
REALIZED AND UNREALIZED GAIN - NOTE 5 Net realized gain on:
Investments 1,570,230
Foreign currency transactions 8,473
1,578,703
Net unrealized depreciation on:
Investments (340,433)
Foreign currency translation (19,092)
(359,525)
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS 1,219,178
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $1,398,153
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
SIX MONTHS ENDED MARCH 31, 1997
(UNUADITED)
SIX MONTHS YEAR ENDED
ENDED MARCH 31, 1997 SEPTEMBER 30, 1996
- ------------ --------------- ------------------
INCREASE (DECREASE) IN
NET ASSETS FROM:
OPERATIONS:
NET INVESTMENT INCOME $178,975 $256,572
NET REALIZED GAIN ON
INVESTMENTS SOLD 1,578,703 504,465
INCREASE (DECREASE) IN UNREALIZED
APPRECIATION (359,525) 2,047,121
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 1,398,153 2,808,158
DIVIDENDS TO SHAREHOLDERS:
From net investment
income
Class A Shares (162,213) (248,181)
Class C Shares (7,170) (13,388)
Distributions from capital gains
Class A Shares (467,203) --
Class C Shares (34,748) --
FUND SHARE TRANSACTIONS - (Note 4)
Class A Shares 21,864,478 13,093,231
Class C Shares 2,704,145 1,065,032
NET INCREASE IN NET ASSETS 25,295,442 16,704,852
NET ASSETS:
Beginning of period 16,704,852 --
End of period $42,000,294 $16,704,852
See notes to financial statements.
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). 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 seeks long-term
capital appreciation by investing primarily in domestic equity securities
selected on a value basis.
The Fund currently 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, administration
fees and certain 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. Securities for
which market quotations are not readily available are valued at fair value as
determined by management and approved in good faith by the Board of 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 Trust 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 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 its investment objectives and not for the purpose of
investment leverage or to speculate on market changes. At the time the Trust
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.
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 shareholder's option, paid in cash. Net
realized capital gains, to the extent available, will be distributed annually.
Distributions to shareholders are based on income tax regulations and therefore,
their characteristics may differ for financial statement and tax purposes.
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 are being amortized
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 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 ending March
31, 1997, these fees were payable at annual rates ranging from 7/8 of 1% to
27/40 of 1% of the average daily net assets of the Fund. Also, the Trust entered
into an Administrative Services Agreement with the Adviser, whereby the Adviser
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 1/8 of 1% of the average daily net assets attributable to each class of
shares.
In the event normal operating expenses of the Fund, exclusive of brokerage
commissions, taxes, interest, and extraordinary expenses, exceed the limits
prescribed by any state in which the Fund's shares are qualified for sale, the
Adviser will reimburse the Fund for such excess. No such reimbursement was
required as a result of this limitation. For the six months ended March 31,
1997, the Adviser deferred certain operating expenses amounting to $5,673. These
expenses may be repaid to the Adviser by the Fund, however such repayment will
depend upon the overall level of the Fund's expenses for the entire fiscal year
ending September 30, 1997.
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 March 31, 1997, the Distributor earned commissions aggregating
$49,251 from the sale of Class A shares, and collected contingent deferred sales
charges aggregating $401 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 Trust may reimburse to the Adviser 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 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 Trust has also adopted a Distribution Plan pursuant to Rule 12b-1,
applicable only to the Fund's Class C shares, under which the Trust can
compensate the Distributor for services in promoting the sale of Class C shares
at an annual rate of up to 1% 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 for the six months ended March
31, 1997 are set forth in the statement of operations.
Certain officers and directors of the Trust are also officers and/or directors
of the Adviser and Distributor. The compensation of unaffiliated directors of
the Trust is borne by
the Trust.
Note 4 - SHARES OF BENEFICIAL INTEREST:
At March 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, and capital paid-in aggregated $38,726,886. Transactions in
shares of beneficial interest were as follows:
Six Months Ended Year Ended
March 31,1997 September 30, 1996
Class A Shares Shares Amount Shares Amount
Shares sold 1,445,099 $ 22,949,840 1,135,471 $ 14,003,507
Shares issued to shareholders
in reinvestment of
distributions 40,432 608,002 17,592 236,260
Shares repurchased (107,154) (1,693,364) (88,247) (1,146,536)
Net Increase 1,378,377 $ 21,864,478 1,064,816 $ 13,093,231
Class C Shares
Shares sold 175,813 $ 2,788,452 91,439 $ 1,120,838
Shares issued to shareholders
in reinvestment of
distributions 2,442 36,790 826 11,016
Shares repurchased (8,067) (121,097) (4,944) (66,822)
Net Increase 170,188 $ 2,704,145 87,321 $ 1,065,032
Note 5 - SECURITIES TRANSACTIONS
Purchases and proceeds from maturities or sales of investment securities of the
Fund, other than short-term securities, aggregated $33,985,553 and $11,323,689,
respectively. The cost of investments is the same for financial reporting and
Federal income tax purposes. At March 31, 1997, the aggregate gross unrealized
appreciation and depreciation, based on cost for Federal income tax purposes,
were $3,120,995 and $1,433,398 respectively.
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 (continued)
Note 6 - Financial Instruments with Off-Balance Sheet Risk:
During the six months ended March 31,1997, the Fund was a party to financial
instruments with off-balance sheet risks, primarily forward exchange contracts.
These contracts are purchased in order to minimize the risk to the Fund with
respect to it's foreign currency holdings from adverse changes in the
relationship between the U.S. dollar, foreign currencies and interest rates.
These contracts are typically initiated in conjunction with a foreign stock
purchase. These instruments involve market risks in excess of the amount
recognized on the Statements of Assets and Liabilities. Risks arise from the
possible inability of counterparties to meet the terms of their contracts,
future movement in currency value and interest rates and contract positions that
are not exact offsets. The contract amounts indicate the extent of the Funds'
involvement in such contracts.
Forwards: A forward exchange contract is an agreement between two parties to
exchange different currencies at a specified rate at an agreed upon future date.
At March 31,1997, the Fund had outstanding forward exchange contracts for the
purchase and sale of currencies as set out below. These contracts are reported
in the financial statements at each Fund's net equity, as measured by the
difference between the forward exchange rates at the reporting date and the
forward exchange rates at the dates of entry into the contract.
Contracts to sell:
1,875,000 Dutch guilders for 1,000,000 U.S. dollars,
December 12, 1997 $14,336
897,000 Dutch guilders for 480,000 U.S. dollars,
December 12,1997 5,583
Unrealizied loss from forward exchange contract $19,919
f i n a n c i a l h i g h l i g h t s
Thornburg Value Fund
Per share operating performance
(for a share outstanding
throughout the period)
Six Months Ended Year Ended
March 31,1997 September 30,1996(a)
Class of Shares: A C A C
Net asset value, beginning of year $14.50 $14.51 $11.94 $11.94
Income from investment operations:
Net investment income .09 .04 .28 .18
Net realized and unrealized
gain on investments 1.42 1.41 2.56 2.57
Total from investment operations 1.51 1.45 2.84 2.75
Less dividends from:
Net investment income (.09) (.04) (.28) (.18)
Capital gains distributions (.37) (.37) -- --
Change in net asset value 1.05 1.04 2.56 2.57
Net asset value, end of period $15.55 $15.55 $14.50 $14.51
Total return (b) 10.51% 10.12% 24.02% 23.20%
Ratios/Supplemental Data Ratios to average net assets:
Net investment income 1.32%(c) .58%(c) 2.48% 1.73%
Expenses, after expense reductions 1.72%(c) 2.52%(c) 1.55% 2.30%
Expenses, before expense reductions 1.72%(c) 3.18%(c) 2.16% 6.51%
Portfolio turnover rate 42.26% 42.26% 59.62% 59.62%
Average Commission Rate Per Share $.046 $.046 $.062 $.062
Net assets
at end of period (000) $37,997 $4,003 $15,438 $1,267
(a) Fund commenced operations on October 1, 1995.
(b) Sales loads are not reflected in computing total return, which is not
annualized for periods less than one year.
(c) Annualized
s c h e d u l e o f i n v e s t m e n t s
Thornburg Value Fund
March 31, 1997 CUSIPS: Class A - 885-215-731, 885-215-715 NASDAQ
Symbols: Class A - TVAFX, Class C - TVCFX (Proposed)
STOCKS - 94.43%
Shares Value
AUTOS (2.34%)
Chrysler Corpora 33,000 $990,000
BIOTECHNOLOGY (2.13%)
Genzyme Corporat 40,000 900,000
BUILDING MATERIALS (2.38%)
Owens Corning 25,000 1,006,250
CAPITAL EQUIPMENT (2.55%)
Cummins Engine, 21,000 1,076,250
CHEMICALS (3.59%)
DSM N.V. 15,000 1,514,796
PHARMACEUTICALS (3.45%)
Schering Plough 20,000 1,455,000
ENERGY (12.64%)
Abraxas Petroleu 55,000 604,141
Atlantic Richfie 10,000 1,350,000
Elf Aquitiane SA 25,000 1,231,250
Gulf Canada Reso 125,000 921,875
Occidental Petro 50,000 1,231,250
FINANCIAL INSTITUTIONS (10.94%)
Commonwealth Ban 30,000 453,750
First Colorado B 30,000 502,500
Haven Bancorp, I 50,000 1,606,250
J.P. Morgan and Company, Inc. ................ 10,000 982,500
Ocean Financial 30,000 830,625
Verwaltungs und 180 241,418
INVESTMENT MANAGEMENT (11.77%)
John Nuveen & Co 40,000 1,185,000
Marsh McLennan C 16,400 1,857,300
Oppenheimer Capi 20,000 660,000
Raymond James Fi 40,000 1,265,000
MAINTENANCE PRODUCTS (2.79%)
RPM, Inc. 71,000 1,180,375
Shares Value
REAL ESTATE INVESTMENT TRUSTS (8.61%)
Capstead Mortgag 51,450 1,048,294
JDN Realty Corpo 60,000 1,627,500
Sun Communities 30,000 960,000
RETAIL (9.15%)
Office Max, Inc. 90,000 1,170,000
Sears, Roebuck & 30,000 1,507,500
Wal-Mart Stores, 42,500 1,184,687
SERVICES (3.15%)
Host Marriott Se 150,000 1,331,250
TECHNOLOGY (11.44%)
Compaq Computer 20,000 1,532,500
EMC Corporation+ 20,000 710,000
International Bu 6,000 824,250
Novell Inc.+ 100,000 950,000
Premenos Technol 30,000 187,500
Spectrum Holobyt 100,000 625,000
TELEPHONE UTILITIES (7.50%)
American Telegra 40,000 1,390,000
Telecom Corporat 25,000 1,775,000
TOTAL COMMON STO 39,869,011
Principal
Amount
COMMERCIAL PAPER - 5.57%
AIG Funding, 5.7 1,000,000 1,000,000
American Telegra 1,000,000 999,848
Ford Motor Credi 350,000 349,887
TOTAL COMMERCIAL 2,349,735
TOTAL INVESTMENT$ 42,218,746
*Cost is the same for Federal income tax purposes.
See notes to financial statements.
