Thornburg Equity Funds
Total return performance. . . as of 9/30/98
Thornburg Value Fund - Class A Shares
Inception Date: 10/2/95
Calendar YTD Fiscal Year Ending Since Inception
Net Asset Value 1.90% 3.15% 23.17%*
Max. Offering Price -2.71% -1.48% 21.31%*
Thornburg Value Fund - Class C Shares
Inception Date: 10/2/95
Calendar YTD Fiscal Year Ending Since Inception
Net Asset Value 1.25% 2.34% 22.23%*
Max. Offering Price 0.25%** 2.34% 22.23%*
Thornburg Global Value Fund - Class A Shares
Inception Date: 5/28/98
Calendar YTD Fiscal Year Ending Since Inception
Net Asset Value N/A N/A -17.80%
Max. Offering Price N/A N/A -21.48%
Thornburg Global Value Fund - Class C Shares
Inception Date: 5/28/98
Calendar YTD Fiscal Year Ending Since Inception
Net Asset Value N/A N/A -18.12%
Max. Offering Price N/A N/A -18.94% **
* Annualized.
** Assumes redemption during the period.
The data quoted represent past performance and may not be construed as a
guarantee of future results.
Letter to shareholders
November 6, 1998
William V. Fries, CFA
Portfolio Manager
Dear Fellow Shareholder,
We recently received notification that the Chairman and majority shareholder of
Liechtenstein Global Trust, a private bank we own in the Value Fund, will buy
all outstanding shares at 1700 Swiss Francs per share. The stock had traded down
from over 1800 Swiss Francs to a low of 1050 Swiss Francs in early October. With
a highly profitable business franchise growing at 20% and nearly $1billion in
excess cash on the balance sheet, only investor panic could explain the sharp
stock price drop. In retrospect, that is what happened to many of our solid
holdings during this period. The fact that both the Value Fund and Global Value
Fund bounced back as quickly as they have attests to the substance and value in
our portfolios. September 30 ended the third fiscal year for the Thornburg Value
Fund. It has been both a challenging and rewarding three years. The Fund has
enjoyed excellent performance, consistent asset growth, and has been favorably
recognized by the financial press and mutual fund ranking services. For the
three year period, the fund has been awarded a 5 star ranking by Morningstar*,
one of the industry's most widely recognized rating services. Performance
results for the Thornburg Value Fund and our new fund, the Thornburg Global
Value Fund, for periods ended September 30, are shown in the Table on the
previous page. Both Funds are solidly structured with promising portfolios,
including widely recognized companies, such as Intel, Hewlett Packard and Rolls
Royce, as well as holdings that are smaller and less well known, such as Advent
Software, Dallas Semiconductor, and Swisslog. The latter is a Swiss logistics
support engineering company. I believe all these companies have considerable
promise to generate capital appreciation. In previous reports I have commented
in some depth on individual stocks. I will not do that in this letter, because
you can read my comments on every stock in our portfolios on our internet
website. (Go to thornburg.comE. look under "Funds"). If you do not have access
to the internet, call us at 800 847-0200 during working hours and we will send
you a copy. While both our equity funds are managed with the same objective and
philosophy, each is unique. The Value Fund is largely U. S. oriented, while the
Global Fund is largely international. I will comment upon each separately.
Thornburg Value Fund As you know, one of our beliefs is that stock selection is
a fundamental form of risk management. With this in mind, as the world
collectively hit the panic button in August we took a number of measures
intended to improve the portfolio's posture should markets continue to unwind.
Most of these portfolio changes centered on reducing exposure to a potential
economic downturn in the U. S. and realignment of financial service industry
holdings. As the market declined, we also had an opportunity to add to a number
of positions at what turned out to be very attractive prices. The volatility
also provided an opportunity to establish new positions in promising companies
as well. Recent additions include Annaly Mortgage, Dallas Semiconductor, Julius
Baer, Banc One, El Paso Energy, Charles Schwab, Tidewater Inc. and Union
Pacific. Banking and financial services remain an important part of the Value
Fund's portfolio. Combined, these two sectors account for over 25% of portfolio
holdings. Obviously, we have not lost our enthusiasm for selected companies in
these industries. While banks and financial stocks led the market decline, most
of our holdings have recovered nicely, especially holdings in our European
private bankers, including both Verwaltungs und Privat-Bank and Liechtenstein
Global Trust. Schwab has also been a stellar performer. Technology holdings
remain the other area of material weighting, at about 18% of the portfolio.
During the year investor reservations about computer inventories and pricing
along with modest earnings reversals we judged to be temporary provided an
opportunity to add top quality issues such as Intel and Hewlett Packard to the
portfolio. Contrary to what might be expected, only during the final phase of
the market sell off did these issues perform poorly. Recovery since has been
robust and I expect it to continue as industry fundamentals improve. We do not
hold any stocks directly related to the internet phenomenon. But we do hold a
number of issues that are beneficiaries such as Intel, Schwab, EMC , U. S. West
, Bell Atlantic and Seagate. All have been doing particularly well recently and
are well positioned going forward. Global Value Fund This newest addition to the
Thornburg family of funds was launched on May 28. It is intended for equity
investors familiar with the Thornburg risk averse philosophy but interested in
holding a portfolio with an overseas orientation. The stock selection criteria
and portfolio attributes are similar to the Value Fund. The initial portfolio is
focused on the developed markets of Europe. The start date of the Fund put the
portfolio in place prior to the financial distress experienced in Europe this
summer, so performance for this short period of the funds existence reflects a
mostly hostile environment for equities. The Table below summarizes investments
by country as of September 30.
Holdings by Country*
Germany 28.67% Netherlands 7.62% Liechtenstein 3.67%
Switzerland 13.23% France 6.71% Austria 3.33%
United States 10.86% Finland 4.61% Sweden 3.30%
UK 10.63% Bermuda 3.90% New Zealand 2.15%
Brazil 1.31%
The Global Value Fund is diversified among more than 15 industries with
pharmaceuticals and banking institutions each accounting for approximately 12%
as of September 30. Other exposure is fairly evenly spread with industry
holdings reflecting a single issue, typically an industry leader. Be assured,
the stocks were selected for their individual merits, not because of industry
exposure. While a number of holdings are in cyclical industries, Europe has
endured slow economic growth for a number of years and these low valued issues
reflect modest expectations. Benefits of a unified currency, a more consumer
friendly environment in Germany, and growth in Eastern Europe may well result in
more economic vigor in western Europe than currently forecast. We are well
positioned for this potential. With a portfolio yield approaching 3% (weighted
average yield of the portfolio not distribution to shareholders) and a weighted
average portfolio price to earnings ratio of 16x estimated 1998 earnings, we
judge risks to be well contained. At the present time we are evaluating issues
in a number of markets that have experienced dramatic declines over the past
year, especially in dollar terms. Investing in these markets entails high
volatility and risk so our investments in these markets, if made, will be very
modest. To help control the inherent currency risk to dollar based investors, as
a matter of policy, we hedge currency risk where practical. We remain confident
that both the Thornburg Value and Thornburg Global Value are exceptional
portfolios, representing both good value and solid opportunity. Thank you for
your trust and confidence. Respectfully,
William V. Fries, CFA
Portfolio Manager
For a description of the holdings for each Fund please visit our Website at
www.thornburg.com
Percentages can and do vary over time. Past performance cannot
guarantee future results.
Statement of assets and liabilities
Thornburg Investment Trust
September 30, 1998
Value Fund Global Value Fund
ASSETS
Investments, at value (cost $189,004,825 and
9,163,784 respectively) $ 195,027,305 $ 7,996,095
Cash 312,399 442,074
Receivable for fund shares sold 725,400 0
Unrealized gain on forward exchange contracts(Note 6) 473,011 85,988
Dividend receivable 499,996 19,233
Prepaid expenses and other assets 50,932 38,733
Total Assets 197,089,043 8,582,123
LIABILITIES
Payable for securities purchased 2,656,102 247,150
Payable for fund shares redeemed 141,913 0
Unrealized loss on forward exchange contracts(Note 6) 1,937,226 283,926
Accounts payable and accrued expenses 347,741 34,144
Total Liabilities 5,082,982 565,220
NET ASSETS $ 192,006,061 $ 8,016,903
NET ASSETS CONSIST OF:
Undistributed net investment income $ 0 $ 6,267
Net unrealized appreciation(depreciation) 4,556,463 (1,365,627)
Distributions paid in excess of net realized gain (908,875) (334,402)
Net capital paid in on shares of
beneficial interest 188,358,473 9,710,665
$ 192,006,061 $ 8,016,903
NET ASSET VALUE:
Class A Shares:
Net asset value and redemption price per share
($150,492,291 and $7,439,514 applicable to 7,727,057
and 759,624 shares of beneficial interest
outstanding - Note 4) $ 19.48 $ 9.79
Maximum sales charge, 4.50% of offering
price (4.70% of net asssset value per share) 0.92 0.46
Maximum Offering Price Per Share $ 20.40 $ 10.25
Class C Shares:
Net asset value and offering price per share*
($41,513,770 and $577,389 applicable to 2,134,876
and 59,070 shares of beneficial interest
outstanding - Note 4) $ 19.45 $ 9.77
* Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge. See notes to financial statements.
Statement of operations
Year Ended September 30, 1998
Value Fund Global Value Fund (a)
INVESTMENT INCOME
Dividend income (net of foreign taxes
withheld of $104,156 and $4,989) $ 2,892,311 $ 52,329
Interest income 406,348 17,026
Limited partnership income 154,951 0
Total Income 3,453,610 69,355
EXPENSES
Investment advisory fees (Note 3) 1,214,207 22,883
Administration fees (Note 3)
Class A Shares 143,043 3,075
Class C Shares 30,415 194
Distribution and service fees (Note 3)
Class A Shares 286,087 6,151
Class C Shares 243,319 1,549
Transfer agent fees 154,148 17,855
Registration & filing fees 102,377 19,391
Custodian fees 93,740 10,380
Professional fees 29,996 6,305
Accounting fees 13,425 474
Trustee fees 3,548 126
Other expenses 24,472 978
Total Expenses 2,338,777 89,361
Less:
Expenses reimbursed by investment
advisor (Note 4) (4,128) (45,571)
Net Expenses 2,334,649 43,790
Net Investment Income 1,118,961 25,565
REALIZED AND UNREALIZED GAIN - (NOTE 5)
Net realized gain (loss) on:
Investments (608,249) (195,767)
Foreign currency transactions 439,413 (138,635)
(168,836) (334,402)
Net unrealized appreciation (depreciation)
Investments (8,464,951) (1,167,689)
Foreign currency translation (1,575,463) (197,938)
(10,040,414) (1,365,627)
Net Realized and Unrealized
Gain on Investments (10,209,250) (1,700,029)
Net Increase (Decrease) in
Net Assets Resulting From
Operations $ (9,090,289) $ (1,674,464)
(a) Commencement of operations, May 28, 1998 to September 30, 1998. See
notes to financial statements.
Statement of changes in net assets
Thornburg Value Fund
Year Ended Year Ended
September 30, 1998 September 30, 1997
INCREASE (DECREASE) IN
NET ASSETS FROM:
OPERATIONS:
Net investment income $ 1,118,96$ 542,780
Net realized gain (loss) on investments and foreign
cuurency transactions (168,836) 4,516,474
Increase (Decrease) in unrealized appreciation
on investments and foreign
currency transactions (10,040,414) 12,549,755
Net Increase (Decrease) in Net Assets
Resulting from Operations (9,090,289) 17,609,009
DIVIDENDS TO SHAREHOLDERS:
From net investment income
Class A Shares (938,716) (504,495)
Class C Shares (27,348) (21,502)
From realized gains
Class A Shares (4,677,701) (467,203)
Class C Shares (746,009) (34,748)
From return of capital
Class A Shares (165,589) 0
Class C Shares (4,824) 0
FUND SHARE TRANSACTIONS - (Note 4)
Class A Shares 95,534,687 36,738,729
Class C Shares 35,229,776 6,867,432
Net Increase in Net Assets 115,113,987 60,187,222
NET ASSETS:
Beginning of year 76,892,074 16,704,852
End of year $ 192,006,061 $ 76,892,074
See notes to financial statements.
Thornburg Global Value Fund
For the period from May 28, 1998 (a)
to September 30, 1998
INCREASE (DECREASE) IN
NET ASSETS FROM:
OPERATIONS:
Net investment income $ 25,565
Net realized gain (loss) on investments and foreign
currency transactions (334,402)
Increase in unrealized depreciation on investments
and foreign currency translation (1,365,627)
Net (Decrease) in Net Assets Resulting from Operations (1,674,464)
DIVIDENDS TO SHAREHOLDERS:
From net investment income
Class A Shares (18,944)
Class C Shares (354)
FUND SHARE TRANSACTIONS - (Note 4)
Class A Shares 8,997,696
Class C Shares 712,969
Net Increase in Net Assets 8,016,903
NET ASSETS:
Beginning of period 0
End of period $ 8,016,903
(a) Commencement of operations See notes to financial statements.
Notes to financial statements
Thornburg Investment Trust
September 30, 1998
Note 1 - Organization
Thornburg Value Fund (the " Value Fund") and Thornburg Global Value Fund (the
"Global Value Fund"), hereinafter referred to collectively as the "Funds," are
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 six
series of shares of beneficial interest in addition to those of the Funds:
Thornburg Limited Term U.S. Government Fund, Thornburg New Mexico Intermediate
Municipal Fund, Thornburg Intermediate Municipal Fund, Thornburg Limited Term
Income Fund, Thornburg Florida Intermediate Municipal Fund and Thornburg New
York Intermediate Municipal Fund. Each series is considered to be a separate
entity for financial reporting and tax purposes. The Value Fund seeks long-term
capital appreciation by investing primarily in domestic equity securities
selected on a value basis. The Global Value Fund seeks long-term capital
appreciation by investing in both foreign and domestic equity securities
selected on a value basis. The Funds 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 Funds are limited to distribution
fees, administration fees and certain transfer agent expenses.
Note 2 - Significant Accounting Policies Significant accounting policies of the
Funds 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. Foreign Currency Translation:
Porfolio securities securities and other assets and liabilities denominated in
foreign currencies are translated into U.S. dollars based on the exchange rate
of such currencies against the U.S. dollar on the date of valuation. Purchases
and sales of securities and income items denominated in foreign currencies are
translated into U.S. dollars at the exchange rate in effect on the translation
date. When a Fund purchases or sells foreign securities it will customarily
enter into a foreign exchange contract to minimize foreign exchange risk from
the trade date to the settlement date of such transactions. The Funds do not
separately report the effect of changes in foreign exchange rates from changes
in market prices on securities held. Such changes are included in net realized
and unrealized gain or loss from investments. Federal Income Taxes: It is the
policy of the Funds to comply with the provisions of the Internal Revenue Code
applicable to "regulated investment companies" and to distribute all of their
taxable income to its shareholders. Therefore, no provision for Federal income
tax is required. When-Issued and Delayed Delivery Transactions: The Funds may
engage in when-issued or delayed delivery transactions. To the extent a 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 market changes. At the time a
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. Dividends: Dividends to the shareholders
are paid quarterly and are reinvested in additional shares of each 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. 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 to the
Funds for which the fees are payable at the end of each month. For the year
ended September 30, 1998, 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 Value Fund and
Global Value Fund depending on each Fund's asset size. The Funds also have an
Administrative Services Agreement with the Adviser, whereby the Adviser will
perform certain administrative services for the shareholders of each class of
each 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. For the year ended September 30, 1998, the Adviser voluntarily waived
certain operating expenses amounting to $4,128 and $45,571 for the Value Fund
and Global Value Fund, respectively. The Funds have underwriting agreements with
Thornburg Securities Corporation (the "Distributor"), which acts as the
Distributor of the Funds' shares. For the year ended September 30, 1998, the
Distributor earned commissions aggregating $225,929 and $0 from the sale of
Class A shares of the Value Fund and Global Value Fund, respectively, and
collected contingent deferred sales charges aggregating $4,630 and $0 from
redemptions of Class C shares of the Value Fund and Global Value Fund,
respectively. Pursuant to a Service Plan under Rule 12b-1 of the Investment
Company Act of 1940, each Fund may reimburse to the Adviser an amount not to
exceed .25 of 1% annum of its average net assets attributable to each class of
shares of the Funds 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
each Fund's shares. The Funds have also adopted Distribution Plans pursuant to
Rule 12b-1, applicable only to each Fund's Class C shares under which the Funds
compensate the Distributor for services in promoting the sale of Class C shares
of the Funds at an annual rate of up to 1.00% of the average daily net assets
attributable to Class C shares. Total fees incurred by each class of shares of
the Funds under their respective Service and Distribution Plans for the year
ended September 30, 1998 are set forth in the statement of operations. 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 4 - Shares of Beneficial Interest
At September 30, 1998 there were an unlimited number of shares of beneficial
interest authorized. Sales of Class A and C Shares of the Global Value Fund
commenced May 28, 1998. Transactions in shares of beneficial interest were as
follows:
Thornburg Value Fund
Yr Ended Sept 30, 1998 Yr Ended Sept 30, 1997
Share Amount Shares Amount
Class A Shares
Shares sold 5,364,791 $114,402,496 2,414,402 $ 40,168,216
Shares issued to shareholders in
reinvestment of dividends 290,340 5,509,526 57,280 925,077
Shares repurchased (1,204,237) (24,377,335) (260,335) (4,354,564)
Net Increase 4,450,894 $ 95,534,687 2,211,347 $ 36,738,729
Class C Shares
Shares sold 1,712,966 $ 36,707,174 413,412 $ 7,033,375
Shares issued to shareholders
in reinvestment of distrib 37,794 705,580 3,110 48,914
Shares repurchased (106,131) (2,182,978) (13,595) (214,857)
Net Increase 1,644,629 $ 35,229,776 402,927 $ 6,867,432
Note 4 - Shares of Beneficial Interest . . . continued
Thornburg Global Value Fund
Year Ended September 30, 1998
Shares Amount
Class A Shares
Shares sold 763,955 $ 9,049,328
Shares issued to shareholders in
reinvestment of dividends 1,886 18,467
Shares repurchased (6,217) (70,099)
Net Increase 759,624 $ 8,997,696
Class C Shares
Shares sold 85,018 $ 1,022,683
Shares issued to shareholders
in reinvestment of distributions 34 334
Shares repurchased (25,982) (310,048)
Net Increase 59,070 $ 712,969
Note 5 - Securities Transactions
For the year ended September 30, 1998 purchases and sales of investment
securities were $260,673,720 and $128,998,924 for the Thornburg Value Fund and
$11,786,903 and $2,421,899 for the Thornburg Global Value Fund, respectively.
The cost of investments for Federal income tax purpose is $189,734,445 and
$9,246,688 for the Value Fund and Global Value Fund, respectively. As of
September 30, 1998, the Value Fund and the Global Value Fund have deferred
capital losses and currency losses occuring subsequent to October 31, 1997 of
$782,119 and $980,635 and $112,863 and $340,170, respectively. At September 30,
1998, gross unrealized appreciation and depreciation of investments, based on
cost for Federal income taxes were as follows:
Value Fund
Gross unrealized appreciation $17,894,494
Gross unrealized depreciation $12,601,634
Net unrealized appreciation (depreciation) $5,292,860
Global Value
Fund Gross unrealized appreciation $63,324
Gross unrealized depreciation $1,313,917
Net unrealized appreciation (depreciation) $(1,250,593)
Note 6 - Financial Investments With Off-Balance Sheet Risk
During the year ended September 30, 1998, the Funds were parties to financial
instruments with off-balance sheet risks, primarily currency forward exchange
contracts. A forward exchange contract is an agreement between two parties to
exchange different currencies at a specified rate at an agreed upon future date.
These contracts are purchased in order to minimize the risk to each Fund with
respect to it's foreign stock holdings from adverse changes in the relationship
between the U.S. dollar and foreign currencies. In each case these contracts
have been initiated in conjunction with foreign stock holdings. These
instruments may involve market risks in excess of the amount recognized on the
Statements of Assets and Liabilities. Such risks would 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 each Fund's
involvement in such contracts. At September 30, 1998, the Funds had outstanding
forward exchange contracts for the 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.
<TABLE>
<CAPTION>
Contracts to sell:
Value Fund
<C> <C> <C>
12,880,001 Deutschemarks for 7,346,188 U.S. Dollars, December 16, 1998 $396,532
6,446,362 New Zealand Dollars for 3,298,454 U.S. Dollars, December 16, 1998 70,837
2,526,762 Deutschemarks for 1,513,302 U.S. Dollars, December 16, 1998 5,642
Unrealized gain from forward exchange contracts $473,011
15,015,240 Swiss Francs for 10,961,714 U.S. Dollars, December 16, 1998 ($7,123)
15,000,000 Deutschemarks for 8,357,477 U.S. Dollars, December 16, 1998 (659,666)
27,148,713 Deutschemarks for 15,118,538 U.S. Dollars, December 16, 1998 (1,201,717)
3,809,800 Dutch Guilders for 2,007,165 U.S. Dollars, December 18, 1998 (24,622)
3,387,437 New Zealand Dollars for 1,651,951 U.S. Dollars, December 16, 1998 (44,098)
Unrealized loss from forward exchange contracts ($1,937,226)
Global Value Fund
277,200 Brazilian Real for 226,286, December 30, 1998 $12,891
413,260 Swiss Francs for 300,103, December 16, 1998 1,789
1,468,572 Deutschemarks for 845,554, December 16, 1988 37,253
22,968,906 Spanish Peseta for 153, 541, December 15, 1998 8,689
709,520 French Francs for 122,659, December 16, 1998 4,534
92,681 British Pound Sterling for 154,175, December 16, 1998 2,742
260,083,492 Italian Lira for 149,212, December 15, 1998 8,518
329,721 New Zealand Dollar for 170,763, December 16, 1998 5,675
1,961,584 Swedish Krona for 252,598, December 15, 1998 3,897
Unrealized gain from forward exchange contracts $85,988
2,320,910 Swiss Francs for 1,693,062, December 16, 1998 ($2,394)
5,178,469 Deutschemarks for 2,942,255, December 16, 1998 (170,339)
22,968,906 Spanish Peseta for 152,557, December 15, 1998 (9,673)
1,883,700 Finnish Markka for 368,234, December 15, 1998 (3,675)
3,922,650 French Franc for 660,148, December 16, 1998 (43,049)
565,037 British Pound Sterling for 920,351, December 16, 1998 (36,308)
260,083,492 Italian Lira for 148,666, December 15, 1998 (9,064)
1,131,700 Netherlands Guilder for 596,228, December 18, 1998 (7,314)
681, 056 Swedish Krona for 84, 982, December 15, 1998 (2,110)
Unrealized loss from forward exchange contracts ($283,926)
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
Thornburg Value Fund
Per share operating performance (for a share outstanding throughout the year)
Year Ended September 30,
<S> <C> <C> <C>
1998 1997 1996(a)
Class A Shares:
Net asset value, beginning of year $ 20.42 $ 14.50 $ 11.94
Income from investment operations:
Net investment income 0.20 0.21 0.28
Net realized and unrealized
gain on investments 0.40 6.28 2.56
Total from investment operations 0.60 6.49 2.84
Less dividends from:
Net investment income (0.18) (0.20) (0.28)
Realized capital gains (1.35) (0.37) 0.00
Return of capital (0.02) 0.00 0.00
Change in net asset value (0.95) 5.92 2.56
Net asset value, end of year $ 19.47 $ 20.42 $ 14.50
Total Return (b) 3.15% 46.01% 24.02%
Ratios/Supplemental Data Ratios to average net asset:
Net investment income 0.96% 1.35% 2.48%
Expenses, after expense reductions 1.61% 1.61% 1.55%
Expenses, before expense reductions 1.62% 1.61% 2.16%
Portfolio turnover rate 99.55% 78.83% 59.62%
Net assets at end of year (000) $ 150,492 $ 66,893 $ 15,438
<FN>
(a) Fund commenced operations on October 2, 1995. (b) Sales loads are not
reflected in computing total return.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Year Ended September 30,
<S> <C> <C> <C>
1998 1997 1996(a)
Class C Shares:
Net asset value, beginning of year $ 20.40 $ 14.51 $ 11.94
Income from investment operations:
Net investment income 0.03 0.07 0.18
Net realized and unrealized
gain on investments 0.39 6.27 2.57
Total from investment operations 0.42 6.34 2.75
Less dividends from:
Net investment income (0.01) (0.08) (0.18)
Capital gains distribution (1.35) (.37) 0.00
Return of capital (0.02) 0.00 0.00
Change in net asset value (0.96) 5.89 2.57
Net asset value, end of year $ 19.44 $ 20.40 $ 14.51
Total Return (b) 2.34% 44.77% 23.20%
Ratios/Supplemental Data Ratios to average net asset:
Net investment income 0.14% 0.48% 1.73%
Expenses, after expense reductions 2.44% 2.49% 2.30%
Expenses, before expense reductions 2.44% 2.73% 6.51%
Portfolio turnover rate 99.55% 78.83% 59.62%
Net assets at end of year (000) $ 41,514 $ 9,999 $ 1,267
<FN>
(a) Fund commenced operations on October 2, 1995. (b) Sales loads are not
reflected in computing total return.
</FN>
</TABLE>
Thornburg Global Value Fund
Per share operating performance (for a share outstanding throughout the period)
Period Ended
September 30,1998 (a)
Class A Shares:
Net asset value, beginning of period $ 11.94
Income from investment operations:
Net investment income 0.03
Net realized and unrealized gain on investments (2.15)
Total from investment operations (2.12) Less dividends from:
Net investment income (0.03)
Change in net asset value (2.15)
Net asset value, end of period $ 9.79
Total Return (b) (17.80)%
Ratios/Supplemental Data Ratios to average net asset:
Net investment income 1.04%(c)
Expenses, after expense reductions 1.63%(c)
Expenses, before expense reductions 2.88%(c)
Portfolio turnover rate 44.66%
Net assets at end of period (000) $ 7,440
(a) Fund commenced operations on May 28, 1998.
(b) Sales loads are not reflected in computing total return, which is not
annualized in periods less than a year. (c) Annualized
Period Ended
September 30, 1998 (a)
Class C Shares:
Net asset value, beginning of period $ 11.94
Income from investment operations:
Net investment income 0.01
Net realized and unrealized gain on investments (2.17)
Total from investment operations (2.16) Less dividends from:
Net investment income (0.01)
Change in net asset value (2.17)
Net asset value, end of period $ 9.77
Total Return (b) (18.12)%
Ratios/Supplemental Data Ratios to average net asset:
Net investment income (0.02)%(c)
Expenses, after expense reductions 2.38%(c)
Expenses, before expense reductions 11.91%(c)
Portfolio turnover rate 44.66%
Net assets at end of period (000) $ 577
(a) Fund commenced operations on May 28, 1998.
(b) Sales loads are not reflected in computing total return, which is not
annualized in periods less than a year. (c) Annualized
Schedule of Investments
Thornburg Value Fund
September 30, 1998 CUSIPS: Class A - 885-215-731, Class C - 885-215-715
NASDAQ Symbols: Class A - TVAFX, Class C - TVCFX
COMMON STOCKS--83.70%
BANKING INSTITUTIONS (15.20%)
Banc One Corporation 184,400 $7,860,050
Bank Austria AG 94,590 4,057,480
First Chicago NBD Corporation 47,100 3,226,350
FirstSpartan Financial Corporation 26,000 780,000
Hudson River Bancorp, Inc. + 40,000 405,000
Julius Baer Holding AG 850 2,001,232
Liechtenstein Global Trust 4,630 4,595,117
Ocean Financial Corporation 89,000 1,335,000
Republic New York Corporation 100,000 3,950,000
Richmond County Financial Corporation 52,500 787,500
Verwaltungs und Privat-Bank AG 2,000 5,867,864
BIOTECHNOLOGY (3.40%)
Genzyme Corporation + 217,000 7,839,125
DRUGS & HEALTH CARE (2.30%)
American Home Products Corporation 100,000 5,237,500
ENERGY (3.40%)
Occidental Petroleum Corporation 357,200 7,679,800
FINANCIAL SERVICES (3.80%)
SLM Holding Corporation 267,000 8,660,813
FOOD & BEVERAGES (2.40%)
Pepsico, Inc. 190,000 5,593,125
GAS EXPLORATION (1.90%)
El Paso Energy Corporation 135,000 4,379,063
HOUSEHOLD PRODUCTS (2.60%)
Henkel KGaA Preferred 77,600 5,880,583
INVESTMENT MANAGEMENT & BROKERAGE (10.20%)
Charles Schwab and Co. 200,000 7,875,000
Federated Investors, Inc. 150,000 2,156,250
Kansas City Industries, Inc. 195,000 6,825,000
Pimco Advisors Holdings L. P. 222,300 6,530,062
PETROLEUM SERVICES (0.90%)
Royal Dutch Petroleum Company 43,000 2,134,760
RAILROADS & EQUIPMENT (3.50%)
Union Pacific Corporation 190,000 8,098,750
REAL ESTATE INVESTMENT TRUSTS (6.50%)
Annaly Mortgage Management, Inc. 87,000 706,875
JDN Realty Corporation 346,150 7,961,450
Sun Communities, Inc. 187,000 6,276,187
RETAIL (1.10%)
Pier 1 Imports Inc. 326,250 2,446,875
TECHNOLOGY (15.60%)
Advent Software, Inc. + 100,000 3,418,750
EMC Corporation + 90,000 5,146,875
Hewlett Packard Company 158,000 8,364,125
Intel Corporation 100,000 8,575,000
Seagate Technology, Inc. 170,000 4,260,625
The Learning Company, Inc. + 302,000 5,983,375
TELECOMMUNICATION SERVICES (8.40%)
Bell Atlantic Corporation 173,800 8,418,437
Telecom Corporation Of New Zealand ADR 170,000 5,121,250
U. S. West Inc. 110,000 5,768,125
CLOSED END FUNDS (2.50%)
Germany Fund 141,700 2,054,650
New Germany Fund 265,800 3,771,038
TOTAL COMMON STOCKS (Cost $186,004,844) 192,029,061
SHORT TERM INVESTMENTS--1.30%
COMMERCIAL PAPER (1.30%)
Ford Motor Credit Company, 5.27% due 10/5/98 3,000,000 2,998,244
TOTAL SHORT TERM INVESTMENTS (Cost $2,998,243) 2,998,244
TOTAL INVESTMENTS (Cost $189,003,087)* $ 195,027,305
+ Non-income producing.
See notes to financial statements.
Schedule of Investments
Thornburg Global Value Fund
September 30, 1998
COMMON STOCKS--89.70%
BANKING INSTITUTIONS (10.60%)
Bank Austria AG 6,200 $265,952
Julius Baer Holding AG 110 258,983
Republic New York Corporation 3,200 126,400
Verwaltungs und Privat-Bank AG 100 293,393
BATTERIES (3.70%)
Varta AG 1,880 329,854
BUILDING MATERIALS (3.20%)
Dyckerhoff AG 895 286,730
CAPITAL EQUIPMENT (7.20%)
Rolls Royce Plc 117,500 405,516
Swisslog AG 2,500 235,439
CHEMICALS (2.90%)
DSM Chemical 3,100 261,715
DRUGS & HEALTH CARE (10.90%)
Merck KGaA 8,700 351,657
Pharmacia & Upjohn Inc. 6,700 336,256
Rhone Poulenc S.A. 6,700 281,171
FINANCIAL SERVICES (4.00%)
SLM Holding Corporation 11,000 356,812
FOOD & BEVERAGES (3.80%)
Hero AG B 600 339,032
FOREST PRODUCTS (4.10%)
UPM Kymmene OYJ 16,100 368,896
HOUSEHOLD PRODUCTS (4.20%)
Henkel KGaA Preferred 5,000 378,904
HOTELS & RESTAURANTS (2.50%)
Movenpick Holding AG 500 224,573
INSURANCE (3.50%)
Annuity And Life Re Holdings + 15,800 312,050
MINING (5.00%)
Billiton Plc 200,000 444,576
PETROLEUM SERVICES (3.90%)
Royal Dutch Petroleum Company 7,000 347,519
REAL ESTATE INVESTMENT TRUSTS (4.60%)
Annaly Mortgage Management, Inc. 50,000 406,250
RETAIL (2.20%)
Karstadt AG 400 195,934
TELECOMMUNICATION SERVICES (3.10%)
Telecom Corporation Of New Zealand ADR 5,700 171,713
Telesp Celular S.A. + 4,200,000 104,588
TIRES & RUBBER (2.90%)
Michelin 6,500 255,366
TOBACCO (3.00%)
Swedish Match AB 84,700 263,691
CLOSED END FUNDS (4.40%)
Central European Equity Fund 13,700 150,700
Germany Fund 8,500 123,250
New Germany Fund 8,400 119,175
TOTAL COMMON STOCKS (Cost $9,163,784) 7,996,095
TOTAL INVESTMENTS (Cost $9,163,784)* $ 7,996,095
See notes to financial statements.
Independent Auditor's Report
To the Board of Trustees and Shareholders
Thornburg Equity Funds
Santa Fe, New Mexico
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Thornburg Value Fund and Thornburg Global Value
Fund, series of Thornburg Investment Trust as of September 30, 1998, and the
related statement of operations, the statement of changes in net assets, and the
financial highlights for the periods indicated. These financial statements and
financial highlights are the responsibility of the Funds' 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, 1998, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made 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 Value Fund and Thornburg Global Value Fund
as of September 30, 1998, the results of their operations, the changes in their
net assets and the financial highlights for the periods indicated, in conformity
with generally accepted accounting principles.
New York, New York
October 23, 1998
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.
Annual Report
September 30, 1998
Thornburg Value Fund &
Thornburg Global Value Fund
