Thornburg Limited Term Income Funds
Fund facts. . . as of 3/31/98
Thornburg Limited Term Income Fund
A Shares C Shares I Shares
SEC Yield 5.36% 5.09% 5.82%
NAV $12.34 $12.32 $12.34
Max. Offering Price $12.66 $12.32 $12.34
Total returns. . . as of 3/31/98
(Annual Average - After Subtracting Maximum
Sales Charge)
One Year 5.13% 7.48% 8.16%
Five Year 7.63% 8.13% N/A
Since Inception 6.06% 6.96% 8.60%
Inception Date (10/1/92) (9/1/94) (7/5/96)
Thornburg Limited Term U.S. Government Fund*
Fund facts. . . as of 3/31/98
A Shares C Shares I Shares
SEC Yield 5.62% 5.28% 6.15%
NAV $12.36 $12.41 $12.36
Max. Offering Price $12.68 $12.41 $12.36
Total returns. . . as of 3/31/98
(Annual Average - After Subtracting Maximum
Sales Charge)
One Year 5.34% 7.56% 8.43%
Five Year 4.65% N/A N/A
Since Inception 6.96% 6.28% 7.68%
Inception Date (11/16/87) (9/1/94) (7/5/96)
*Shares are not guaranteed by the U.S. Government.
The investment return and principal value of an investment in the funds will
fluctuate so that, when redeemed, an investor's shares may be worth more or less
than their original cost.
Maximum sales charge of the Funds' Class A Shares is 2.50%.
The date quoted represent past performance and may not be construed as a
guarantee of future results.
Dear Fellow Shareholder,
I am pleased to present the Semi-Annual Report for the Thornburg Limited Term
Income Fund and the Thornburg Limited Term U.S. Government Fund for the six
month period ending March 31, 1998. The net asset value of the A shares of the
Thornburg Limited Term Income Fund ended the period at $12.34. If you were
invested for the entire period, you received dividends of 36.3 cents per share.
If you reinvested your dividends, you received 36.7 cents per share. Investors
who owned C shares received 33.7 and 34.1 cents per share, respectively. The net
asset value of the A shares of the Thornburg Limited Term U.S. Government Fund
ended the period at $12.36. If you were invested for the entire period, you
received dividends of 35.3 cents per share. If you reinvested your dividends,
you received 35.7 cents per share. Investors who owned C shares received 32.7
and 33.0 cents per share, respectively.
Please read the accompanying exhibits for more detailed information and history.
The last six months have seen changes in the public perception of the direction
of interest rates. As the Asian economies slowed after a decade of strong
growth, people were concerned that the Asian economies would drag the US economy
down and they were expecting interest rates to continue to go lower. While there
have been pockets of weakness in the export sector of the economy, the US
economy has continued to grow strongly through the first quarter of 1998. And
while interest rates are lower now than they were six months ago, it would not
surprise me to see interest rates rise a little over the next year. The economic
reports, while mixed, are generally showing a US economy that is moving along
steadily, especially in the service sector, and the economies of other developed
countries, save Southeast Asia, are growing as well. The Dow Jones Industrial
Average has recently reached another record level. Investors are still pouring
money into the stock market as our economy continues to grow. It might be a good
time to see whether the outsized gains over the last couple of years have
unbalanced the asset allocation of your investment portfolio. It might be a
little more heavily weighted in stocks than you intended. It could be time to
look at adding more intermediate bonds to your portfolio to balance its asset
allocation. The current yield level of intermediate bonds is about 3 times the
dividend yield of the S&P 500, which is currently less than 2%. Intermediate
bonds can provide a stabilizing presence to the principal value of an investment
portfolio. The Thornburg Limited Term Income Fund and the Thornburg Limited Term
U.S. Government Fund are laddered portfolios of short-to-intermediate bonds. We
do not speculate on the direction of interest rates. We keep the portfolios
laddered over a time period ranging from one day to approximately ten years,
with the average maturity of the portfolios always no more than five years. Some
of the bonds are always coming close to maturity, but never too many at one
time. We feel a laddered maturity portfolio of short-to-intermediate bonds is a
sensible strategy over time. Intermediate bonds have proven to be a sensible
part of a portfolio. They can provide stability to the underlying principal,
they can provide income for the portfolio, and, over the years, they have
provided an attractive return versus money market instruments.* Take a look at
the charts which show the return on an investment in the Thornburg Limited Term
Income Fund and the Thornburg Limited Term U.S. Government Fund versus the
Donoghue's Money Market Fund average. Thank you for investing in our funds. We
feel the Thornburg Limited Term U.S. Government Fund and the Thornburg Limited
Term Income Fund are appropriate investments for investors who want a
short-to-intermediate bond portfolio. While future performance cannot be
guaranteed, we feel that we are well positioned, and we will maintain a steady
course.
Steven J. Bohlin
Managing Director
Limited Term U.S. Limited Term
Government Fund Income Fund
ASSETS
Investments at value (cost $139,737,051
and $44,762,091, respectively) $142,561,900 $46,067,825
Cash 24,044 36,328
Receivable for fund shares sold 145,515 450,730
Interest receivable 1,804,960 663,435
Principal receivable 119,040 28,714
Prepaid expenses and other assets 25,011 67,622
Total Assets 144,680,470 47,314,654
LIABILITIES
Payable for fund shares redeemed 910,569 188,266
Accounts payable and accrued expenses 70,971 21,585
Payable to Investment Advisor 74,358 58,653
Dividends payable 193,420 81,459
Total Liabilities 1,249,318 349,963
NET ASSETS $143,431,152 $46,964,691
NET ASSET VALUE:
Class A Shares:
Net asset value and redemption price per share ($133,039,478 and $34,006,878
applicable to 10,764,573 and 2,755,003 shares of
beneficial interest outstanding - Note 4) $12.36 $12.34
Maximum sales charge, 2.50 % of offering
price (2.57% of net asset value per share) 0.32 0.32
Maximum Offering Price Per Share $12.68 $12.66
Class C Shares:
Net asset value and offering price per share * ($4,737,515
and $7,152,891 applicable to 381,666 and 580,720 shares of beneficial
interest outstanding - Note 4) $12.41 $12.32
Class I Shares:
Net asset value and offering price per share ($5,654,159 and
$5,804,922 applicable to 457,631 and 470,352 shares of beneficial
interest outstanding - Note 4) $12.36 $12.34
* Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charges.
See notes to unaudited financial statements.
INVESTMENT INCOME:
Interest income (net of premium amortized
of $244,267 and $42,580, respectively) $4,759,261 $1,495,735
EXPENSES:
Investment advisory fees (Note 3) 267,422 108,638
Administration fees (Note 3)
Class A Shares 83,139 20,225
Class C Shares 2,616 3,782
Class I Shares 1,354 1,261
Distribution and service fees (Note 3)
Class A Shares 161,296 38,023
Class C Shares 10,466 15,127
Transfer agent fees 68,718 32,902
Custodian fees 47,270 21,617
Registration and filing fees 22,480 23,414
Professional fees 10,643 6,155
Accounting fees 8,422 2,720
Trustee Fees 2,824 637
Other expenses 15,061 7,188
Total Expenses 701,711 281,689
Less:
Expenses waived by investment advisor (Note 3) (18,632) (60,619)
Net Expenses 683,079 221,070
Net Investment Income 4,076,182 1,274,665
REALIZED AND UNREALIZED GAIN (LOSS) (Note5) Net realized gain (loss) on:
Investments 58,661 261,722
Foreign currency transactions 0 (579,045)
58,661 (317,323)
Net unrealized appreciation on:
Investments 411,864 227,498
Foreign currency translation 0 4,457
411,864 231,955
Net Realized And Unrealized Gain (Loss) On
Investments 470,525 (85,368)
Net Increase In Net Assets Resulting From
Operations $4,546,707 $1,189,297
See notes to unaudited financial statements.
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income $4,076,182 $8,569,663
Net realized gain on investments sold 58,661 280,414
Increase in unrealized appreciation of investments 411,864 581,827
Net Increase In Net Assets Resulting From
Operations 4,546,707 9,431,904
DIVIDENDS TO SHAREHOLDERS:
From net investment income
Class A Shares (3,801,906) (8,318,540)
Class C Shares (110,407) (222,001)
Class I Shares (164,499) (29,122)
FUND SHARE TRANSACTIONS - (Note 4):
Class A Shares (1,111,212) (6,637,521)
Class C Shares 426,397 1,499,116
Class I Shares 373,213 5,249,982
Net Increase In Net Assets 158,293 973,818
NET ASSETS:
Beginning of period 143,272,859 142,299,041
End of period $143,431,152 $143,272,859
See notes to unaudited financial statements.
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income $1,274,665 $2,085,349
Net realized gain (loss) on investments sold (317,323) 8,055
Increase in unrealized appreciation of
investments 231,955 364,017
Net Increase In Assets Resulting
From Operations 1,189,297 2,457,421
DIVIDENDS TO SHAREHOLDERS:
From net investment income
Class A Shares (952,580) 166,492
Class C Shares (165,827) (262,811)
Class I Shares (156,258) (156,046)
FUND SHARE TRANSACTIONS - (Note 4):
Class A Shares 2,789,193 7,539,812
Class C Shares 1,781,800 2,655,403
Class I Shares 1,321,161 3,665,427
Net Increase In Net Assets 5,806,786 14,232,714
NET ASSETS:
Beginning of period 41,157,905 26,925,191
End of period $46,964,691 $41,157,905
See notes to unaudited financial statements.
Note 1 - Organization
Thornburg Limited Term U.S. Government Fund (the "Government Fund") and
Thornburg Limited Term Income Fund (the "Income Fund"), hereafter referred to
collectively as the "Funds", are series of Thornburg Investment Trust (the
"Trust"). The Trust is organized as a Massachusetts business trust under a
Declaration of Trust dated June 3, 1987 and is registered as a diversified,
open-end management investment company under the Investment Company Act of 1940,
as amended. The Trust is currently issuing five series of shares of beneficial
interest in addition to those of the Funds: Thornburg Florida Intermediate
Municipal Fund, Thornburg New York Intermediate Municipal Fund, Thornburg New
Mexico Intermediate Municipal Fund, Thornburg Intermediate Municipal Fund and
Thornburg Value Fund. Each series is considered to be a separate entity for
financial reporting and tax purposes. The Funds' objectives are to obtain as
high a level of current income as is consistent with the preservation of
capital. The Funds currently offer three classes of shares of beneficial
interest, Class A, Class C and Institutional Class (Class I) 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 service fee and a distribution fee,
(iii) Class I shares are sold at net asset value without a sales charge at the
time of purchase, and (iv) the respective classes have different reinvestment
privileges. Additionally, each Fund may allocate among its classes certain
expenses, to the extent allowable to specific classes, including transfer agent
fees, government registration fees, certain printing and postage costs, and
administrative and legal expenses. Currently, class specific expenses of the
Funds are limited to distribution fees, administrative fees and certain transfer
agent expenses.
Note 2 - Significant Accounting Policies Significant accounting policies of the
Fund are as follows:
Valuation of Investments: Valuation of Investments: In determining net asset
value, the Funds utilize an independent pricing service approved by the
Trustees. Debt investment securities have a primary market over the counter and
are valued on the basis of valuations furnished by the pricing service. The
pricing service values portfolio securities at quoted bid prices or the yield
equivalents when quotations are not readily available. Securities for which
quotations are not readily available are valued at fair value as determined by
the pricing service using methods which include consideration of yields or
prices of obligations of comparable quality, type of issue, coupon, maturity,
and rating; indications as to value from dealers and general market conditions.
The valuation procedures used by the pricing service and the portfolio
valuations received by the Funds are reviewed by the officers of the Trust under
the general supervision of the Trustees. Short-term instruments having a
maturity of 60 days or less are valued at amortized cost, which approximate
market value. 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, including any net
realized gain on investments to its shareholders. Therefore no provision for
federal income taxes is required. When-Issued and Delayed Delivery Transactions:
The Funds may engage in when-issued or delayed delivery transactions. To the
extent the Funds engage in such transactions, they will do so for the purpose of
acquiring portfolio securities consistent with their investment objectives and
not for the purpose of investment leverage or to speculate on interest rate
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 the Fund's net asset value. When effecting such transactions, assets
of the Fund of an amount sufficient to make payment for the portfolio securities
to be purchased will be segregated on the Fund's records at the trade date.
Securities purchased on a when-issued or delayed delivery basis do not earn
interest until the settlement date. Dividends: Net investment income of the
Funds are declared daily as a dividend on shares for which the Funds have
received payment. Dividends are paid monthly and are reinvested in additional
shares of the Funds at net asset value per share at the close of business on the
dividend payment date, or at the shareholder's option, paid in cash. Net capital
gains, to the extent available, will be distributed annually. General:
Securities transactions are accounted for on a trade date basis. Interest income
is accrued as earned. Premiums and original issue discounts on securities
purchased are amortized over the life of the respective securities. Realized
gains and losses from the sale of securities are recorded on an identified cost
basis. The Funds invest in various mortgage backed securities. Such securities
pay interest and a portion of principal each month which is then available for
investment in securities at prevailing prices. Foreign Currency Transactions:
With respect to the Income Fund, portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollars
based on the rate of exchange of such currencies against U.S. dollars on the
date of valuation. Purchases and sales of portfolio securities and interest
denominated in foreign currencies are translated into U.S. dollar amounts on the
respective dates of such transactions. The Fund does not isolate that portion of
the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments. Reported net realized foreign exchange
gains or losses arise from sales of foreign currencies, currency gains or losses
realized between the trade and settlement dates on securities transactions and
the difference between the amount of interest recorded on the Fund's books, and
the U.S. dollar equivalent of the amounts actually received or paid. 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 six months ended March 31, 1998, these fees were payable at annual rates
ranging from three-eighths of 1% to 11/40 of 1% of the average daily net assets
of the Government Fund and one-half of 1% to 11/40 of 1% of the average daily
net assets of the Income 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 six months ended March 31, 1998, the Adviser
voluntarily waived certain operating expenses amounting to $18,632 and $60,619
for the Government Fund and Income Fund, respectively. The Funds have
underwriting agreements with Thornburg Securities Corporation (the
"Distributor"), which acts as the Distributor of the Funds' shares. For the six
months ended March 31, 1998, the Distributor earned commissions aggregating
$11,091 and $9,525 from the sale of Class A shares of the Government Fund and
Income Fund, respectively, and collected contingent deferred sales charges
aggregating $2,577 and $1,032 from redemptions of Class C shares of the
Government Fund and Income 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 .75% 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 six months ended March 31, 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 March 31, 1998 there were an unlimited number of shares of beneficial
interest authorized, and capital paid in aggregated $147,748,983 and $49,842,587
for the Government Fund and Income Fund, respectively. Sales of Class I shares
commenced on July 5, 1996. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
GOVERNMENT FUND
Six Months Ended Year Ended
March 31, 1998 September 30, 1997
<S> <C> <C> <C> <C>
Class A Shares Shares Amount Shares Amount
Shares sold 1,265,341 $15,709,188 1,686,941 $20,681,021
Shares issued to shareholders in
reinvestment of distributions 177,681 2,196,034 452,793 5,555,737
Shares repurchased (1,536,963) (19,016,434) (2,683,645) (32,874,279)
Net Decrease (93,941) ($1,111,212) (543,911) ($6,637,521)
Class C Shares
Shares sold 113,218 $1,409,012 177,985 $2,194,987
Shares issued to shareholders
in reinvestment of distributions 6,617 82,102 16,438 202,464
Shares repurchased (85,777) (1,064,717) (73,028) (898,335)
Net Increase 34,058 $426,397 121,395 $1,499,116
Class I Shares
Shares sold 22,912 $283,951 497,639 $6,117,666
Shares issued to shareholders in
reinvestment of distributions 9,243 114,399 2,385 28,883
Shares repurchased (2,024) (25,137) (73,254) (896,567)
Net Increase 30,131 $373,213 426,770 $5,249,982
INCOME FUND
Six Months Ended March 31, 1998 Year Ended September 30, 1997
Class A Shares Shares Amount Shares Amount
Shares sold 500,364 $6,191,778 1,040,156 $12,786,894
Shares issued to shareholders in
reinvestment of distributions 38,627 476,585 77,562 955,709
Shares repurchased (313,485) (3,879,170) (504,413) (6,202,791)
Net Increase 225,506 $2,789,193 613,305 $7,539,812
Class C Shares
Shares sold 191,928 $2,366,074 352,475 $4,339,320
Shares issued to shareholders
in reinvestment of distributions 9,686 119,248 19,669 241,703
Shares repurchased (57,062) (703,522) (156,885) (1,925,620)
Net Increase 144,552 $1,781,800 215,259 $2,655,403
Class I Shares*
Shares sold 128,215 $1,585,884 301,982 $3,708,659
Shares issued to shareholders in
reinvestment of distributions 6,972 86,001 9,788 121,176
Shares repurchased (28,371) (350,724) (13,405) (164,408)
Net Increase 106,816 $1,321,161 298,365 $3,665,427
</TABLE>
Note 5 - Securities Transactions
For the six months ended March 31, 1998, portfolio purchase and sale
transactions (excluding short-term securities) were $28,018,113 and $21,488,836
for the Government Fund and $19,552,944 and $8,263,192 for the Income Fund,
respectively. The cost of investments for Federal income tax purposes is
$139,737,051 and $44,762,091 for the Government Fund and Income Fund,
respectively. At March 31, 1998, gross unrealized appreciation and depreciation
of investments, based on cost for Federal income taxes were as follows:
Accumulated net realized losses from securities transactions included in net
assets at March 31, 1998 aggregated $7,142,681 and $1,184,298 for the Government
Fund and Income Fund, respectively. For Federal income tax purposes, the
Government Fund has capital loss carryforwards of $6,905,046 from prior fiscal
years available to offset future realized capital gains. To the extent that such
carryforwards are used, no capital gains distributions will be made. The
carryforwards expire as follows: September 30, 2001 - $11,013, September 30,
2002 - $4,867,978 and September 30, 2003 - $2,026,055. For Federal income tax
purposes, the Income Fund has capital loss carryforwards of $883,302 from prior
fiscal years available to offset future realized capital gains. To the extent
that such carryforwards are used, no capital gains distributions will be made.
The carryforwards expire as follows: September 30, 2002 - $657,324 and September
30, 2003 - $225,978.
Government Fund Income Fund
Gross unrealized appreciation $2,866,768 $1,333,398
Gross unrealized depreciation 41,919 27,664
Net unrealized appreciation $2,824,849 $1,305,734
Thornburg Limited Term U.S. Government Fund
Six Months Ended Year Ended September 30
March 31, 1998 1997 1996 1995 1994
Class A Shares:
Net asset value, beginning o$ 12.31 $ 12.24 $ 12.40 $ 12.03 $ 12.92
Income from investment operations:
Net investment income 0.35 0.75 0.76 0.75 0.67
Net realized and unrealized
gain (loss) on investments 0.05 0.07 (0.16) 0.37 (0.89)
Total from investment operat 0.40 0.82 0.60 1.12 (0.22)
Less dividends from:
Net investment income (0.35) (0.75) (0.76) (0.75) (0.67)
Change in net asset value 0.05 0.07 (0.16) 0.37 (0.89)
Net asset value, end of peri$ 12.36 $ 12.31 $ 12.24 $ 12.40 $ 12.03
Total return (a) 3.30% 6.86% 4.92% 9.66% (1.72)%
Ratios/Supplemental Data Ratios to average net asset:
Net investment income 5.71% 6.09% 6.11% 6.23% 5.38%
Expenses, after expense redu 0.96% 0.97% 0.99% 0.99% 0.95%
Expenses, before expense red 0.96% 0.97% 0.99% 0.99% 0.95%
Portfolio turnover rate 15.13% 41.10% 23.27% 28.31% 80.58%
Net assets at end of period (000) $133,039 $133,711 $139,510 $142,849 $177,439
(a) Sales loads are not reflected in computing total return.
(b) Annualized.
Note: From September 1, 1994 to September 28, 1995 the Fund issued Class B
shares, which at the time of their conversion to Class A shares on
September 28, 1995 represented less than 1% of the Fund's net assets.
<TABLE>
<CAPTION>
Six Months Ended Year Ended September 30,
March 31, 1998 1997 1996 1995 1994
Class C Shares:
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of perio$ 12.37 $ 12.29 $ 12.45 $ 12.08 $ 12.21
Income from investment operations:
Net investment income 0.32 0.70 0.71 0.69 0.06
Net realized and unrealized
gain (loss) on investments 0.04 0.08 (0.16) 0.37 (0.13)
Total from investment operations 0.37 0.78 0.55 1.06 (0.07)
Less dividends from:
Net investment income (0.32) (0.70) (0.71) (0.69) (0.06)
Change in net asset value 0.04 0.08 (0.16) 0.37 (0.13)
Net asset value, end of period $ 12.41 $ 12.37 $ 12.29 $ 12.45 $ 12.08
Total return (b) 2.99% 6.49% 4.51% 9.07% (0.50)%
Ratios/Supplemental Data Ratios to average net asset:
Net investment income 5.27% 5.65% 5.72% 5.68% 5.45%(c)
Expenses, after expense reductions 1.40% 1.40% 1.39% 1.52% 1.63%(c)
Expenses, before expense reductions 1.76% 2.24% 2.35% 2.30% 1.63%(c)
Portfolio turnover rate 15.13% 41.10% 23.27% 28.31% 80.58%
Net assets at end of period (000) $ 4,738 $ 4,299 $ 2,780 $ 2,217 $ 1,005
<FN>
(a) Commencement of operations.
(b) Sales loads are not reflected in computing total return, which is not
annualized for periods less than one year.
(c) Annualized.
</FN>
</TABLE>
Six Months Ended Year Ended September 30
March 31, 1998 1997 1996 *
Class I Shares:
Net asset value, beginning of period $12.31 $12.24 $12.14
Income from investment operations:
Net investment income 0.37 0.79 0.20
Net realized and unrealized
gain on investments 0.05 0.07 0.10
Total from investment operations 0.42 0.86 0.30
Less dividends from:
Net investment income (0.37) (0.79) (0.20)
Change in net asset value 0.05 0.07 0.10
Net asset value, end of period $12.36 $12.31 $12.24
Total return (a) 3.49% 7.26% 2.45%
Ratios/Supplemental Data Ratios to average net asset:
Net investment income 6.07%(b) 6.35% 6.64%(b)
Expenses, after expense reductions 0.60%(b) 0.60% 0.58%(b)
Expenses, before expense reductions 1.01%(b) 6.57% 305.74%(b)
Portfolio turnover rate 15.13% 41.10% 23.27%
Net assets at end of period (000) $5,654 $5,263 $ 9
(a) Not annualized for periods less than one year.
(b) Annualized.
* Sales of Class I shares commenced on July 5, 1996.
<TABLE>
<CAPTION>
Thornburg Limited Term Income Fund
Six Months Ended Year Ended September 30
March 31, 1998 1997 1996 1995 1994
Class A Shares:
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of perio$ 12.37 $ 12.23 $ 12.11 $ 11.83 $ 12.55
Income from investment operations:
Net investment income 0.36 0.76 0.76 0.76 0.67
Net realized and unrealized
gain (loss) on investments (0.03) 0.14 0.12 0.28 (0.69)
Total from investment operations 0.33 0.90 0.88 1.04 (0.02)
Less dividends from:
Net investment income (0.36) (0.76) (0.76) (0.76) (0.67)
Realized capital gains 0.00 0.00 0.00 0.00 (0.03)
Change in net asset value (0.03) 0.14 0.12 0.28 (0.72)
Net asset value, end of period $ 12.34 $ 12.37 $ 12.23 $ 12.11 $ 11.83
Total return (a) 2.73% 7.56% 7.54% 9.22% (0.14)%
Ratios/Supplemental Data Ratios to average net asset:
Net investment income 5.89% 6.16% 6.31% 6.50% 5.51%
Expenses, after expense reductions 1.00% 1.00% 0.95% 0.83% 0.66%
Expenses, before expense reductions 1.21% 1.27% 1.37% 1.48% 1.47%
Portfolio turnover rate 19.17% 13.87% 44.35% 43.12% 84.35%
Net assets at end of period (000) $ 34,007 $ 31,281 $ 23,433 $ 23,222 $ 21,683
<FN>
(a) Sales loads are not refelcted in computing total return.
(b) Annualized.
Note:From September 1, 1994 to September 28, 1995 the Fund issued class B
shares, which at the time of their conversion to class A shares on September 28,
1995 represented less than 1% of the Fund's net assets
</FN>
</TABLE>
<TABLE>
<CAPTION>
Period from Sept. 1 (a) -
Six Months Ended Year Ended September 30, September 30,
March 31, 1998 1997 1996 1995 1994
Class C Shares:
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of perio$ 12.34 $ 12.20 $ 12.08 $ 11.78 $ 11.92
Income from investment operations:
Net investment income 0.34 0.71 0.71 0.70 0.06
Net realized and unrealized
gain (loss) on investments (0.02) 0.14 0.12 0.30 (0.14)
Total from investment operations 0.32 0.85 0.83 1.00 (0.08)
Less dividends from:
Net investment income (0.34) (0.71) (0.71) (0.70) (0.06)
Change in net asset value (0.02) 0.14 0.12 0.30 (0.14)
Net asset value, end of period $ 12.32 $ 12.34 $ 12.20 $ 12.08 $ 11.78
Total return (b) 2.60% 7.13% 7.12% 8.87% (0.72)%
Ratios/Supplemental Data Ratios to average net asset:
Net investment income 5.48% 5.76% 5.91% 6.03% 5.14%(c)
Expenses, after expense reductions 1.40% 1.40% 1.36% 1.36% 1.20%(c)
Expenses, before expense reductions 1.80% 2.44% 3.20% 4.75% 1.20%(c)
Portfolio turnover rate 19.17% 13.87% 44.35% 43.12% 84.35%
Net assets at end of period (000) $ 7,153 $ 5,382 $ 2,695 $ 1,032 $ 53
<FN>
(a) Commencement of operations.
(b) Sales loads are not reflected in computing total return, which is not annualized for periods less than one year.
(c) Annualized.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended September 30
March 31, 1998 1997 1996 *
Class I Shares:
<S> <C> <C> <C>
Net asset value, beginning of period $12.36 $12.23 $11.95
Income from investment operations:
Net investment income 0.38 0.80 0.19
Net realized and unrealized
gain (loss) on investments (0.02) 0.13 0.28
Total from investment operations 0.36 0.93 0.47
Less dividends from:
Net investment income (0.38) (0.80) (0.19)
Change in net asset value (0.02) 0.13 0.28
Net asset value, end of period $12.34 $12.36 $12.23
Total return (a) 2.96% 7.80% 3.97%
Ratios/Supplemental Data Ratios to average net asset:
Net investment income 6.19%(b) 6.44% 6.67%(b)
Expenses, after expense reductions 0.69%(b) 0.69% 0.69%(b)
Expenses, before expense reductions 1.25%(b) 1.98% 4.26%(b)
Portfolio turnover rate 19.17% 13.87% 44.35%
Net assets at end of period (000) $5,805 $4,495 $797
<FN>
(a) Not annualized for periods less than one year.
(b) Annualized.
* Sales of Class I shares commenced on July 5, 1996.
</FN>
</TABLE>
<TABLE>
<CAPTION>
CUSIPS: Class A - 885-215-103, Class C - 885-215-830, Class I - 885-215-699
NASDAQ Symbols: Class A - LTUSX, Class C -LTUCX (proposed), Class I - LTUIX (proposed)
U.S. Government Agencies (51.70%)
<S> <C> <C> <C>
2,100,000 Federal Home Loan Bank Board, 7.11% due 8/19/99 $2,126,901
2,265,000 Federal Home Loan Bank Board, 6.50% due 11/29/05 2,332,248
500,000 Federal Home Loan Mortgage Corporation, Collateralized Mortgage Obligation Series 1476,
Class J, 6.00% due 2/15/08 488,905
1,178,704 Federal Home Loan Mortgage Corporation, Collateralized Mortgage Obligation Series 1330,
Class E, 7.00% due 9/15/99 1,180,177
4,100,000 Federal Home Loan Mortgage Corporation, Collateralized Mortgage Obligation Series 1143,
Class VC, 7.50% due 9/15/00 4,143,542
5,000,000 Federal Home Loan Mortgage Corporation, Collateralized Mortgage Obligation Series 1216,
Class E, 7.00% due 3/15/05 5,054,650
167,345 Federal Home Loan Mortgage Corporation, Collateralized Mortgage Obligation Series 150,
Class E, 9.00% due 1/15/06 168,494
1,000,000 Federal Home Loan Mortgage Corporation, Collateralized Mortgage Obligation Series 1586,
Class FA, 5.05% (adjustable rate) due 8/15/07 995,000
747,884 Federal Home Loan Mortgage Corporation, Pool# 141016, 9.25% due 11/1/16 800,468
248,060 Federal Home Loan Mortgage Corporation, Pool# 160043, 8.75% due 4/1/02 60,393
123,551 Federal Home Loan Mortgage Corporation, Pool# 180367, 10.00% due 11/1/10 133,547
405,432 Federal Home Loan Mortgage Corporation, Pool# 181730, 8.50% due 5/1/08 421,982
437,380 Federal Home Loan Mortgage Corporation, Pool# 200075, 9.00% due 9/1/04 453,423
248,677 Federal Home Loan Mortgage Corporation, Pool# 213924, 9.00% due 10/1/01 257,799
469,421 Federal Home Loan Mortgage Corporation, Pool# 216502, 8.00% due 4/1/024 74,233
7,588 Federal Home Loan Mortgage Corporation, Pool# 220001, 10.75% due 7/1/00 8,036
171,243 Federal Home Loan Mortgage Corporation, Pool# 220010, 8.75% due 8/1/01 180,714
146,698 Federal Home Loan Mortgage Corporation, Pool# 250714, 9.75% due 5/1/10 156,422
5,664 Federal Home Loan Mortgage Corporation, Pool# 250936, 10.50% due 8/1/99 6,036
147,510 Federal Home Loan Mortgage Corporation, Pool# 252986, 10.75% due 4/1/10 163,366
49,634 Federal Home Loan Mortgage Corporation, Pool# 256111, 10.75% due 8/1/00 52,970
270,583 Federal Home Loan Mortgage Corporation, Pool# 256764, 8.75% due 10/1/14 283,027
279,241 Federal Home Loan Mortgage Corporation, Pool# 260486, 9.00% due 1/1/10 295,599
201,900 Federal Home Loan Mortgage Corporation, Pool# 276638, 9.25% due 8/1/16 216,095
246,701 Federal Home Loan Mortgage Corporation, Pool# 279611, 9.25% due 10/1/16 262,547
858,655 Federal Home Loan Mortgage Corporation, Pool# 291880, 8.25% due 5/1/17 904,155
203,180 Federal Home Loan Mortgage Corporation, Pool# 294817, 9.75% due 1/1/17 219,583
121,643 Federal Home Loan Mortgage Corporation, Pool# 298107, 10.25% due 8/1/17 134,175
83,169 Federal Home Loan Mortgage Corporation, Pool# 431035, 11.50% due 7/1/10 91,838
75,941 Federal Home Loan Mortgage Corporation, Pool# 500166, 12.00% due 9/1/00 81,304
238,848 Federal Home Loan Mortgage Corporation, Pool# 770297, 6.50% (adjustable rate) due 6/1/18 239,844
306,032 Federal Home Loan Mortgage Corporation, Pool# D06907, 9.00% due 4/1/17 322,723
171,286 Federal Home Loan Mortgage Corporation, Pool# D06908, 9.50% due 9/1/17 184,383
1,245,912 Federal Home Loan Mortgage Corporation, Pool# E00107, 8.00% due 7/1/07 1,279,900
580,672 Federal Home Loan Mortgage Corporation, Pool# E49074, 6.50% due 7/1/08 584,133
994,655 Federal Home Loan Mortgage Corporation, Pool# E65962, 7.00% due 5/1/08 1,011,176
38,970 Federal Home Loan Mortgage Corporation, Pool# M30002, 9.00% due 11/1/05 40,457
3,497,974 Federal Home Loan Mortgage Corporation, Pool# M80406, 7.00% due 1/1/03 3,543,132
1,278,079 Federal National Mortgage Association, Collateralized Mortgage Obligation Series 92-60,
Class C, 7.50% due 4/25/99 1,287,255
505,929 Federal National Mortgage Association, Collateralized Mortgage Obligation Series 1992-62,
Class E, 7.00% due 5/25/99 506,242
1,900,000 Federal National Mortgage Association, Collateralized Mortgage Obligation Series 1993-12,
Class EC, 7.50% due 9/25/01 1,933,839
1,150,000 Federal National Mortgage Association, Collateralized Mortgage Obligation Series 1992-145,
Class L, 7.50% due 1/25/06 1,180,900
1,500,000 Federal National Mortgage Association, 6.50% due 11/25/06 1,510,770
850,000 Federal National Mortgage Association, Collateralized Mortgage Obligation Series 1992-22,
Class HC, 7.00% due 3/25/07 874,166
2,000,000 Federal National Mortgage Association, Collateralized Mortgage Obligation Series 1991-134,
Class KE, 7.00% due 5/25/08 2,011,860
1,000,000 Federal National Mortgage Association, Collateralized Mortgage Obligation Series 1992-64,
Class G, 7.00% due 12/25/18 1,014,680
1,800,000 Federal National Mortgage Association, Collateralized Mortgage Obligation Series 93-187,
Class FC, 4.85% (adjustable rate) due 11/25/21 1,758,924
1,250,000 Federal National Mortgage Association, Collateralized Mortgage Obligation Series 1992-33,
Class F, 5.12% (adjustable rate) due 3/25/22 1,243,750
500,000 Federal National Mortgage Association, Collateralized Mortgage Obligation Series 1993-185,
Class FJ, 4.85% (adjustable rate) due 9/25/22 487,340
978,000 Federal National Mortgage Association, Series 1993 32, Class H, 6.00% due 3/25/23 956,905
36,725 Federal National Mortgage Association, Pool# 002473, 10.50% due 1/1/01 37,549
888,436 Federal National Mortgage Association, Pool# 008307, 8.00% due 5/1/08 920,224
80,260 Federal National Mortgage Association, Pool# 010294, 8.50% due 9/1/07 82,387
5,931 Federal National Mortgage Association, Pool# 016072, 11.50% due 5/1/00 6,094
191,638 Federal National Mortgage Association, Pool# 019535, 10.25% due 7/1/08 206,657
1,367,128 Federal National Mortgage Association, Pool# 033356, 9.25% due 8/1/16 1,472,342
110,974 Federal National Mortgage Association, Pool# 038493, 8.75% due 10/1/08 117,328
186,990 Federal National Mortgage Association, Pool# 040526, 9.25% due 1/1/17 201,380
1,028,657 Federal National Mortgage Association, Pool# 044003, 8.00% due 6/1/17 1,076,551
319,897 Federal National Mortgage Association, Pool# 058816, 9.25% due 12/1/02 331,490
407,423 Federal National Mortgage Association, Pool# 063791, 8.25% due 7/1/02 416,875
760,223 Federal National Mortgage Association, Pool# 064011, 9.25% due 7/1/03 789,074
5,000,000 Federal National Mortgage Association, Pool# 073040, 7.625% due 9/1/01 5,205,230
788,211 Federal National Mortgage Association, Pool# 076388, 9.25% due 9/1/18 849,045
163,443 Federal National Mortgage Association, Pool# 077725, 9.75% due 10/1/18 175,126
523,346 Federal National Mortgage Association, Pool# 112067, 9.50% due 10/1/16 565,067
1,650,392 Federal National Mortgage Association, Pool# 156156, 8.50% due 4/1/21 1,742,121
725,285 Federal National Mortgage Association, Pool# 190703, 7.00% due 3/1/09 741,372
663,897 Federal National Mortgage Association, Pool# 250481, 6.50% due 11/1/15 657,464
1,874,930 Federal National Mortgage Association, Pool# 342947, 7.25% due 4/1/24 1,910,366
824,974 Federal National Mortgage Association, Pool# 345775, 8.50% due 12/1/24 870,827
828,630 Federal National Mortgage Association, Pool# 373942, 6.50% due 12/1/08 833,353
785,852 Federal National Mortgage Association, Pool# 400569, 6.00% due 4/1/09 780,445
375,000 Federal National Mortgage Association Medium Term Note, 6.05% due 6/30/03 377,576
947,878 Government National Mortgage Association, GNMA II, Pool# 000623, 8.00% due 9/20/16 993,404
92,688 Government National Mortgage Association, GNMA II, Pool# 000862, 9.00% due 10/20/02 95,853
17,906 Government National Mortgage Association, GNMA II, Pool# 000956, 10.00% due 3/20/03 19,014
26,047 Government National Mortgage Association, GNMA II, Pool# 001228, 10.00% due 7/20/04 27,659
129,884 Government National Mortgage Association, GNMA II, Pool# 001408, 9.50% due 5/20/05 136,199
1,079,948 Government National Mortgage Association, Pool# 016944, 7.50% due 5/15/07 1,113,102
1,178,949 Government National Mortgage Association, Pool# 019832, 8.25% due 7/15/05 Project Loan 1,220,577
69,770 Government National Mortgage Association, Pool# 035861, 10.875% due 2/15/10 77,778
6,476 Government National Mortgage Association, GNMA II, Pool# 112262, 11.50% due 2/20/99 6,816
29,663 Government National Mortgage Association, Pool# 161848, 9.00% due 8/15/01 30,487
70,822 Government National Mortgage Association, Pool# 276712, 11.00% due 3/15/00 75,387
313,821 Government National Mortgage Association, Pool# 296697, 9.50% due 10/15/05 331,784
432,513 Government National Mortgage Association, Pool# 306636, 8.25% due 12/15/06 447,024
973,067 Government National Mortgage Association, Pool# 362865, 8.00% due 7/15/03 995,087
946,593 Government National Mortgage Association, Pool# 430150, 7.25% due 12/15/26 963,452
994,000 Government National Mortgage Association, Pool# 453928, 7.00% due 7/15/17 1,013,880
535,047 Government National Mortgage Association, Pool# 780063, 7.00% due 9/15/08 544,571
83,326 Small Business Administration Series 1988-10B, 9.80% due 6/1/98 83,764
800,000 Tennessee Valley Authority, 8.375% due 10/1/99 829,128
Total U.S. Government Agencies (Cost $72,126,717) 73,690,917
United States Treasury (48.30%)
1,500,000 United States Treasury Notes, 7.875% due 4/15/98 1,501,170
5,000,000 United States Treasury Notes, 8.25% due 7/15/98 5,039,050
8,050,000 United States Treasury Notes, 6.875% due 8/31/99 8,187,091
5,000,000 United States Treasury Notes, 7.50% due 10/31/99 5,140,600
1,300,000 United States Treasury Notes, 7.75% due 1/31/00 1,348,139
1,000,000 United States Treasury Notes, 6.875% due 3/31/00 1,023,750
4,200,000 United States Treasury Notes, 6.25% due 4/30/01 4,270,854
10,000,000 United States Treasury Notes, 7.50% due 11/15/01 10,592,200
2,000,000 United States Treasury Notes, 6.125% due 12/31/01 2,030,320
5,350,000 United States Treasury Notes, 6.25% due 1/31/02 5,454,486
3,200,000 United States Treasury Notes, 6.25% due 2/15/03 3,278,496
5,000,000 United States Treasury Notes, 5.75% due 8/15/03 5,017,950
9,750,000 United States Treasury Notes, 7.25% due 5/15/04 10,522,395
3,700,000 United States Treasury Notes, 7.25% due 8/15/04 4,002,364
1,400,000 United States Treasury Notes, 6.50% due 5/15/05 1,462,118
Total United States Treasury (Cost $67,610,334) 68,870,983
TOTAL INVESTMENTS (100%) (Cost $139,737,051) $ 142,561,900
See notes to unaudited financial statements.
CUSIPS: Class A - 885-215-509, Class C - 885-215-764, Class I - 885-215-681
NASDAQ Symbols: Class A - THIFX, Class C -THICX (proposed), Class I - THIIX (proposed)
U. S. GOVERNMENT SECURITIES - 8.50%
600,000 United States Treasury Notes, 4.75% due 10/31/98 Aaa/AAA $597,186
350,000 United States Treasury Notes, 6.875% due 8/31/99 Aaa/AAA 355,961
750,000 United States Treasury Notes, 8.00% due 5/15/01 Aaa/AAA 799,567
500,000 United States Treasury Notes, 6.375% due 8/15/02 Aaa/AAA 513,515
500,000 United States Treasury Notes, 6.25% due 2/15/03 Aaa/AAA 512,265
1,100,000 United States Treasury Notes, 6.50% due 5/15/05 Aaa/AAA 1,148,807
Total U. S. Government Securities (Cost $3,773,642) 3,927,301
U. S. GOVERNMENT AGENCIES - 17.50%
900,000 Federal Home Loan Bank Board, 7.11% due 8/19/99 Aaa/AAA 911,529
500,000 Federal Home Loan Mortgage Corp., CMO Series 1208 D, 5.30% due 4/15/98 Aaa/AAA 502,185
250,000 Federal Home Loan Mortgage Corp., CMO Series 1537 B, 5.60% due 6/15/00 Aaa/AAA 248,292
23,775 Federal Home Loan Mortgage Corp., CMO Series 1060 F, 7.25% due 2/15/01 Aaa/AAA 23,731
474,214 Federal Home Loan Mortgage Corp., CMO Series 1327 E, 7.50% due 7/15/07 Aaa/AAA 481,474
500,000 Federal Home Loan Mortgage Corp., 7.00% due 12/15/11 Aaa/AAA 503,435
31,275 Federal Home Loan Mortgage Corp., 9.00% due 4/15/20 Aaa/AAA 31,334
247,341 Federal Home Loan Mortgage Corp., CMO Series 1019 E, 8.75% due 7/15/20 Aaa/AAA 254,373
76,540 Federal Home Loan Mortgage Corp., Pool# 141540, 9.00% due 5/1/09 Aaa/AAA 81,024
265,604 Federal Home Loan Mortgage Corp., Pool# 214180, 9.75% due 11/1/01 Aaa/AAA 278,749
62,847 Federal Home Loan Mortgage Corp., Pool# 216639, 8.25% due 4/1/02 Aaa/AAA 63,586
14,479 Federal Home Loan Mortgage Corp., Pool# 220005, 8.75% due 4/1/01 Aaa/AAA 15,280
5,866 Federal Home Loan Mortgage Corp., Pool# 296006, 8.00% due 6/1/17 Aaa/AAA 6,151
107,491 Federal Home Loan Mortgage Corp., Pool# 503253, 9.50% due 7/1/05 Aaa/AAA 114,344
375,746 Federal Home Loan Mortgage Corp., Pool# 850082, 9.00% due 10/1/05 Aaa/AAA 394,180
302,788 Federal Home Loan Mortgage Corp., Pool# N93035, 7.00% due 1/1/00 Aaa/AAA 304,998
673,896 Federal National Mortgage Association, CMO Series 92-60, Class C, 7.50% due 4/25/99 Aaa/AAA 678,735
685,000 Federal National Mortgage Association, 7.00% due 8/18/06 Aaa/AAA 710,043
200,000 Federal National Mortgage Association, CMO Series 1993-140, Class J, 6.65% due 6/25/13 Aaa/AAA 202,686
600,000 Federal National Mortgage Association, CMO Series G94-7 B, 7.50% due 5/17/24 Aaa/AAA 636,750
56,738 Federal National Mortgage Association, Pool# 001768, 8.00% due 10/1/06 Aaa/AAA 58,448
718,346 Federal National Mortgage Association, Pool# 020155, 7.76% due 4/1/98 Aaa/AAA 730,019
541,613 Federal National Mortgage Association, Pool# 297033, 8.00% due 12/1/09 Aaa/AAA 559,806
59,678 Government National Mortgage Association, Pool# 305541, 9.00% due 5/15/03 Aaa/AAA 61,799
217,564 Government National Mortgage Association, Pool# 827148, 6.50% due 2/20/24 Aaa/AAA 221,304
Total U. S. Government Agencies (Cost $7,920,947)
8,074,255
MORTGAGE BACKED SECURITIES - 1.20%
40,660 Collateralized Mortgage Obligation Trust, Series 56-B, 9.985% due 1/1/19 Aaa/AAA 44,650
500,000 GE Capital Mortgage Services, Series 92-13 G2, 7.00% due 1/1/08 Aaa/AAA 494,495
Total Mortgage Backed Securities (Cost $534,420) 539,145
ASSET BACKED SECURITIES - 0.50%
250,000 California Infrastructure, Series 1997 1 Certificate Class A2, 6.04% due 3/25/02 Aaa/AAA 250,580
Total Asset Backed Securities (Cost $249,967) 250,580
CORPORATE BONDS - 13.20%
FINANCE
500,000 Transamerica Financal Corporation Series MTNC SUB, 6.06% due 6/15/98 Baa1/A 500,080
INDUSTRIALS
1,000,000 Ingersoll Rand Company, 6.46% due 11/19/03 A3/A- 1,010,900
700,000 Raytheon Company, 6.30% due 3/15/05 Baa1/BBB 695,261
879,000 Wheeling Pittsburgh Corporation, 9.375% due 11/15/03 Aaa/AAA 966,900
UTILITIES
1,000,000 Carolina Power & Light Company, 6.80% due 8/15/07 A2/A 1,033,720
YANKEE
2,150,000 Dao Heng Bank Group, 7.75% due 1/24/07 (U.S. Dollar) Baa1/BBB+ 1,863,792
Total Corporate Bonds (Cost $6,041,871) 6,070,653
TAXABLE MUNICIPAL BONDS - 48.40%
1,500,000 Austin Texas General Obligation, 6.90% due 3/1/02 Aa2/AA 1,545,345
2,500,000 Austin Texas General Obligation, 6.95% due 3/1/04 Aa2/AA 2,594,075
285,000 Baltimore Economic Development Authority, 8.50% due 8/1/02 (Arcade LP Project) A3/BBB+ 303,428
80,000 Beaumont Housing Multifamily Mortgage Series 1995-B, 7.50% due 6/15/00
(Insured: FHA) Aaa/NR 81,822
1,025,000 Connecticut St. Development Authority, 8.55% due 8/15/05 NR/A+ 1,152,438
610,000 Coppell Texas Independent School District, Capital Appreciation Refunding Taxable,
0% due 8/15/03 Aaa/AAA 443,555
510,000 Dauphin County Pennsylvania General Authority Health Center, 7.25% due 9/1/98 Baa*/BBB+* 510,311
1,000,000 Denver Company City County School District 1, Taxable Pension School
Facilities Lease, 6.79% due 12/15/08 Aaa/AAA 1,031,330
115,000 Duquesne Pennsylvania General Obligation, 6.75% due 12/15/01 (Insured: MBIA) Aaa/AAA 116,733
125,000 Duquesne Pennsylvania General Obligation, 6.75% due 12/15/02 (Insured: MBIA) Aaa/AAA 127,142
130,000 Duquesne Pennsylvania General Obligation, 6.95% due 12/15/03 (Insured: MBIA) Aaa/AAA 133,232
1,145,000 East Baton Rouge Louisiana Mortgage Finance, Series C2 Tax Refunding
Mortgage, 6.75% due 4/1/05 Aaa/NR 1,153,233
175,000 Gardena Financing Agency Lease, 6.50% due 7/1/98 (Municipal Mutual
Insurance Project) NR/BBB 175,394
320,000 Georgia Municipal Electric Authority Power Revenue, Taxable Series One,
7.00% due 1/1/06 A3/A 327,360
2,000,000 Greater Valley Medical Building Partnership, Series 1996, 6.95% due 3/1/21
put 3/1/01 (LOC: Krediet Bank) Aa2/NR 2,079,400
1,120,000 Halifax Hospital MedIcal Center Florida Health, 6.50% due 4/1/02 NR/A 1,109,562
845,000 Idaho Housing Multifamily Housing Revenue Series 94-B, 8.15% due 7/1/04 A/NR 919,250
405,000 King County Washington General Obligation, 7.55% due 12/1/05 Aa1/AA+ 431,058
100,000 Kiryas Joel Village, New York General Obligation Series B, 8.50% due 1/1/00 Baa/NR 103,459
1,000,000 Los Angeles County Pension Obligation, 8.30% due 6/30/02 (Insured: FSA) Aaa/AAA 1,076,490
1,275,000 Maine Health & Higher Ed Fac Series A, 7.35% due 7/1/12 put 7/1/99
(Nursing Home Project; LOC: Sumitumo Bank) NR/A- 1,290,364
300,000 Massachusetts Industrial Financing Authority Resource Recovery
Revenue Refunding, 6.95% due 7/1/99 (Insured: FSA) Aaa/AAA 303,633
385,000 Miami Beach Housing Authority Revenue, 6.75% due 3/1/03 A3/NR 387,040
285,000 New Jersey Economic Development Authority Series B, 7.10% due 9/15/02 A1/A+ 294,619
50,000 New Jersey State Housing & Mortgage Financing Agency Series E, 7.40% due 11/1/98 NR/A+ 50,293
95,000 New Jersey State Housing & Mortgage Financing Agency Series E, 7.95% due 11/1/00 NR/A+ 97,834
5,555,000 New Orleans Home Mortgage Authority Single Family Mortgage Revenue
Refunding Series 1994-A, 0% due 10/1/15 (Insured: MBIA) Aaa/AAA 1,203,768
200,000 New York City Series 1991, 10.50% due 11/15/13 prerefunded 11/15/01 Aaa/AAA 231,760
20,000 New York New York, Taxable Prerefunded Series D, 10.00% due 8/1/05 A3/BBB+ 22,874
80,000 New York New York, Taxable Unrefunded Balance D, 10.00% due 8/1/05 A3/BBB+ 90,840
500,000 New York St Mortgage Agency Revenue, Taxable Mortgage 20th Series,
6.70% due 10/1/04 Aaa/NR 510,000
1,000,000 Oklahoma City Oklahoma Airport Trust, Taxable Senior Lien 19th Series,
6.15% due 7/1/00 Aa2/AA 1,005,610
1,000,000 Pennsylvania Housing Finance Agency, 8.40% due 4/1/10 Aa/AA+ 1,075,900
35,000 Tucson & Pima County IDA SFMR Series A, 7.00% due 12/1/03 A1/NR 35,660
300,000 Virginia State Housing Development Authority Series C, 6.65% due 11/1/03 Aa1/AA+ 303,174
Total Taxable Municipal Bonds (Cost $21,752,976) 22,317,986
FOREIGN SECURITIES - 8.50%
2,000,000 British Columbia Province, 9.00% due 6/21/04 (Canadian Dollars) Aa2/AA 1,676,706
1,000,000 Manitoba Province, 7.875% due 4/7/03 (Canadian Dollars) NA/NA 783,957
1,800,000 Toronto Metropolitan, 7.75% due 12/1/05 (Canadian Dollars) NA/AA+ 1,438,107
Total Foreign Securities (Cost $3,499,133) 3,898,770
COMMERCIAL PAPER - 2.20%
490,000 Merrill Lynch & Company, Inc., 5.70% due 4/6/98 P1/A1+ 489,612
500,000 Merrill Lynch & Company, Inc., 5.72% due 4/7/98 P1/A1+ 499,523
Total Commercial Paper (Cost $989,135) 989,135
TOTAL INVESTMENTS (100%) (Cost $44,762,091) $ 46,067,825
<FN>
See notes to unaudited financial statements.
* Indicates rating on other debt issued by the same issuer, rather than on the
security held by the Fund. These securities are deemed by the Advosor to
be comparable with those of issuers having debt ratings in
the 4 highest grades by Moody's or S&P.
t Credit ratings are unaudited
</FN>
</TABLE>
