Thornburg New York Intermediate Municipal Fund
Fund facts. . . as of 6/30/98
Thornburg New York Intermediate Municipal Fund
A Shares
SEC Yield 3.84%
Taxable Equiv. Yield 7.17%
NAV $12.71
Max. Offering Price $13.17
Total returns. . . as of 6/30/98
(Annual Average - After Subtracting Maximum Sales Charge)
Since Inception 2.32%
Inception Date
(9/4/97)
Taxable equivalent yield assumes a 39.6% marginal federal tax rate, a 6.85% New
York State tax rate, and a 4.46% New York City tax rate.
The investment return and principal value of an investment in the fund 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 Fund's Class A Shares is 3.50%.
The date quoted represent past performance and may not be construed as a
guarantee of future results.
Letter to shareholders
Dear Shareholder,
I am pleased to present the Annual Report for the Thornburg New York
Intermediate Municipal Fund for the period from September 9, 1997 to June 30,
1998. The net asset value of the A shares increased 21 cents per share to
$12.71. If you were with us from the September 5, 1997 merger of the Mackenzie
New York Municipal Fund into your fund, you received dividends of 51.8 cents per
share. If you reinvested your dividends, you received 52.8 cents per share. Your
Thornburg New York Intermediate Municipal Fund currently holds over 50 municipal
obligations from municipal obligators throughout New York and tax exempt
borrowers in 3 U.S. Territories. Approximately 80% of the bonds are rated A or
better by one of the major rating agencies. We expect this percentage to rise in
the coming months as some of your portfolio holdings are pre-rerfunded. We
"ladder" the maturities of the bonds in your portfolio so that some bonds are
scheduled to mature at par during each of the coming years. Today, your fund's
weighted average maturity is approximately 9.3 years, and we always keep it
below 10 years. Percentages of the portfolio maturing in the coming years are
summarized below: % of portfolio Cumulative % maturing within maturing by end of
2 years = 6% year 2 = 6%
2 to 4 years = 10% year 4 = 16%
4 to 6 years = 13% year 6 = 29%
6 to 8 years = 16% year 8 = 45%
8 to 10 years = 19% year 10 = 64%
10 to 12 years = 10% year 12 = 74%
12 to 14 years = 9% year 14 = 83%
14 to 16 years = 12% year 16 = 95%
We expect pre-refunding and the passage of time to shorten the average portfolio
maturity in the coming months. We currently plan to direct portfolio cash flow
and new money into the middle maturity range of your bond ladder. Today there is
a great deal of discussion about the Federal Reserve and the future direction of
the U.S. economy and interest rates. The U.S. economy is extremely strong, and
tax receipts are off the charts. The federal budget will show a surplus in 1998
of between $50 and $100 billion, the first surplus since 1969! Most states will
also have budget surpluses, and New York City's large 1998 surplus is
remarkable! In the midst of all this economic strength, I am impressed by the
degree to which bond investments have outperformed money market investments in
the last 5 years. Look at these average return numbers for various categories of
bond mutual funds and money market funds for the 5 year period ending June 30,
1998:
Recall that in the spring of 1993 the fed funds rate was 3%. Today it is 5.43%.
Assets in money market funds* and bank CDs* have increased by almost $1 trillion
since then, while American investors' holdings of bonds and bond funds have
actually decreased. While all savers would prefer to have the interest rates of
the 1980's, it is noteworthy that (1) bond fund performance has been very good
relative to money market and CD performance even in an environment of generally
rising short term interest rates, (2) many economists are calling for generally
lower interest rates in the years ahead, even if Mr. Greenspan happens to raise
short interest rates temporarily to cool the economy later this year, and (3)
the average annual (federal tax free) return to an intermediate municipal fund
between June 1993 and June 1998 was very close to that of the average
intermediate U.S. government bond fund. The U.S. government fund returns are
shown before taxes. I believe investors should seriously consider moving assets
from money market investments to bonds if higher short term interest rates and
lower bond prices materialize in the coming months. High tax bracket investors
should focus on municipal investments. Over the years, our practice of laddering
a diversified portfolio of short and intermediate maturity municipal bonds has
allowed your fund to perform well above average in varying interest rate
environments. I would like to attribute this to capable execution of a sensible
investment strategy over time. Thank you for investing in Thornburg New York
Intermediate Municipal Fund. Sincerely,
Brian J. McMahon
Portfolio Manager
*Money market funds strive to keep a stable net asset value. The net asset
value of the fund can and does fluctuate. CD's usually pay a fixed rate of
interest and are insured by FDIC. Past performance cannot guarantee future
results.
Statement of assets and liabilities
ASSETS
Investments at value (cost $22,906,859) $ 24,997,928
Cash 77,474
Interest receivable 411,863
Receivable for fund shares sold 48,840
Prepaid expenses and other assets 2,026
Total Assets 25,538,131
LIABILITIES
Accounts payable and accrued expenses 21,393
Payable to investment advisor (Note 4) 1,537
Dividends payable 42,944
Total Liabilities 65,874
NET ASSETS $ 25,472,257
NET ASSET VALUE:
Class A Shares:
Net asset value and redemption price per share ($25,472,257
applicable to 2,004,888 shares of beneficial interest
outstanding - Note 5) $ 12.71
Maximum sales charge, 3.50 % of offering
price (3.63% of net asset value per share) 0.46
Maximum Offering Price Per Share $ 13.17
See notes to financial statements.
Statement of operations
INVESTMENT INCOME:
Interest income (net of premium amortized of $63,923 ) $ 1,259,384
EXPENSES:
Investment advisory fees (Note 4) 109,060
Administration fees (Note 4) 27,265
Service fees (Note 4) 52,748
Transfer agent fees 27,019
Custodian fees 17,580
Registration and filing fees 10,978
Professional fees 5,669
Accounting fees 2,482
Trustee fees 598
Other expenses 6,575
Total Expenses 259,974
Less:
Expenses reimbursed by investment advisor (Note 4) (89,227)
Net Expenses 170,747
Net Investment Income 1,088,637
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (Note 6)
Net realized gain on investments sold 38,983
Increase in unrealized appreciation of investments 404,926
Net Realized and Unrealized
Gain (Loss) on Investments 443,909
Net Increase in Net Assets Resulting
From Operations $ 1,532,546
(a) commencement of operations See notes to financial statements.
Statement of changes in net assets
For the period from Sept. 4, 1997(a) -
June 30, 1998
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income $ 1,088,637
Net realized gain on investments sold 38,983
Increase in unrealized appreciation of investments 404,926
Net Increase in Assets Resulting from Operations 1,532,546
DIVIDENDS TO SHAREHOLDERS:
From net investment income
Class A Shares (1,088,637)
FUND SHARE TRANSACTIONS (Note 5):
Class A Shares 25,028,348
Net Increase (Decrease) in Net Assets 25,472,257
NET ASSETS:
Beginning of period 0
End of period $ 25,472,257
(a) commencement of operations See notes to financial statements.
Notes to financial statements
Note 1 - Organization
Thornburg New York Intermediate Municipal Fund (the "Fund"), is a series of
Thornburg Investment Trust (the "Trust", formerly known as Thornburg Income
Trust). The Trust is organized as a Massachusetts business trust under a
Declaration of Trust dated June 3, 1987 and is registered as a diversified,
open-end management investment company under the Investment Company Act of 1940,
as amended. The Trust is currently issuing seven series of shares of beneficial
interest in addition to those of the Fund: Thornburg Florida Intermediate
Municipal Fund, Thornburg New Mexico Intermediate Municipal Fund, Thornburg
Intermediate Municipal Fund, Thornburg Limited Term U.S. Government Fund,
Thornburg Limited Term Income Fund, Thornburg Value Fund and Thornburg Global
Value Fund. Each series is considered to be a separate entity for financial
reporting and tax purposes. The Fund's investment objective is to obtain as high
a level of current income exempt from Federal income tax as is consistent with
the preservation of capital. The Fund will also invest primarily in Municipal
Obligations within the state of New York, with the objective of having interest
dividends paid to its shareholders exempt from any individual income taxes.
Additionally, the fund will seek to have dividends paid to its individual
shareholders exempt form New York City income taxes.
Note 2 - Significant Accounting Policies Significant accounting policies of the
Fund are as follows:
Valuation of Investments: In determining net asset value, the Trust utilizes 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 municipal 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 Trust are reviewed
by the officers of the Trust under the general supervision of the Trustees.
Short-term obligations having remaining maturities of 60 days or less are valued
at amortized cost, which approximates 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 (if any) and tax exempt income to its shareholders. Therefore no
provision for Federal income tax is required. Dividends paid by the Fund for the
period ended June 30, 1998 represent exempt interest dividends which are
excludable by shareholders from gross income for Federal income tax purposes.
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 the investment objectives and not for the purpose of
investment leverage or to speculate on interest rate changes. At the time the
Trust makes a commitment to purchase a security for the Fund, 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 on the trade date. Securities
purchased on a when-issued or delayed delivery basis do not earn interest until
the settlement date. Dividends: Net investment income of the Fund is declared
daily as a dividend on shares for which the Trust has received payment.
Dividends are paid monthly and are reinvested in additional shares of the Fund
at net asset value per share at the close of business on the dividend payment
date, or at the 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. 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 - Merger of MacKenzie National Municipal Fund
On September 4, 1997, the Trust acquired all of the net assets of the MacKenzie
New York Municipal Fund ("MacKenzie") pursuant to a plan of organization
approved by MacKenzie's shareholders. The merger was accomplished by a tax free
exchange of Class A shares of the Fund (valued at $29,612,415) for the net
assets of MacKenzie which aggregated $29,612,415, including $1,686,143 of
unrealized appreciation.
Note 4 - 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 period ending June 30,
1998, these fees were payable at annual rates ranging from 1/2 of 1% to 11/40 of
1% of the average daily net assets of the Fund. The Trust entered into an
Administrative Services Agreement with the Adviser, whereby the Adviser will
perform certain administrative services for the shareholders and for which fees
will be payable at an annual rate of up to 1/8 of 1% of the average daily net
assets. For the period ended June 30, 1998, the Adviser voluntarily reimbursed
certain operating expenses amounting to $89,227. . The Trust has an underwriting
agreement with Thornburg Securities Corporation (the "Distributor"), which acts
as the Distributor of Fund shares. For the period ended June 30, 1998, the
Distributor earned commissions aggregating $1,380 from the sale of Class A
shares.
Pursuant to a Service Plan, under Rule 12b-1 of the Investment Company Act of
1940, the Trust may reimburse to the Adviser an amount not to exceed .25 of 1%
per annum of the Fund's average net assets for payments made by the Adviser to
securities dealers and other financial institutions to obtain various
shareholder related services. The Adviser may pay out of its own funds
additional expenses for distribution of the Fund's shares. 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 5 - Shares of Beneficial Interest
At June 30, 1998, there were an unlimited number of shares of beneficial
interest authorized, and capital paid-in aggregated $23,342,205. Transactions
in shares of beneficial interest were as follows:
Period from Sept. 4 1997 - June 30, 1998
Shares Amount
Class A Shares
Shares sold 96,928 $1,227,221
Shares issued to shareholders in
reinvestment of distributions 46,479 588,462
Shares issued in merger 2,368,993 29,612,415
Shares repurchased (507,512) (6,399,750)
Net Increase 2,004,888 $25,028,348
Note 6 - Securities Transactions
For the period ended June 30, 1998 the Fund had purchase and sale transactions
(excluding short-term securities) of $32,896,156 and $10,041,036, respectively.
The cost of investments is the same for financial reporting and Federal income
tax purposes. At June 30, 1998, net unrealized appreciation of investments was
$2,091,069, resulting from $2,091,069 gross unrealized appreciation and $-0-
gross unrealized depreciation. Accumulated net realized gain from security
transactions included in net assets at June 30, 1998 aggregated $38,983.
Financial highlights
Period From Sept. 4, 1997(a) -
June 30, 1998
CLASS A SHARES:
Net asset value, beginning of period $ 12.50
Income from investment operations:
Net investment income 0.52
Net realized and unrealized
gain (loss) on investments 0.21
Total from investment operations 0.73 Less dividends from:
Net investment income (0.52)
Change in net asset value 0.21
Net asset value, end of period $ 12.71
TOTAL RETURN (b) 5.92%
RATIOS/SUPPLEMENTAL DATA Ratios to average net asset:
Net investment income 4.99%(c)
Expenses, after expense reductions 0.78%(c)
Expenses, before expense reductions 1.19%(c)
Portfolio turnover rate 42.27%
Net assets at end of period (000) $ 25,472
(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.
Independent auditor's report
To the Board of Trustees and Shareholders
Thornburg
New York Intermediate Municipal Fund
Santa Fe, New Mexico
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Thornburg New York Intermediate Municipal Fund
as of June 30, 1998, the related statement of operations for the period then
ended, the statement of changes in net assets for the period then ended and
financial highlights for the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. We conducted out audit 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 June 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 audit provides a
reasonable basis for our opinion. In our opinion, the financial statements and
financial highlights referred to above present fairly, in all material aspects,
the financial position of Thornburg New York Intermediate Municipal Fund as of
June 30, 1998, the results of its operations, the changes in its net assets and
the financial highlights for the period indicated, in conformity with generally
accepted accounting principles.
New York, New York
July 24,
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
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.
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Schedule of Investments Thornburg New York Intermediate Municipal Fund
June 30, 1998
CUSIPS: Class A - 885-215-665
NASDAQ Symbols: Class A - THNYX
<S> <C> <C> <C>
590,000 Amherst Industrial Development Authority Lease Revenue Bonds Series A, 5.25% due 10/1/07 NR/A $ 594,685
Project; LOC: Key Bank)
700,000 Bethlehem Central School District General Obligation, 7.10% due 11/1/06 (Insured: AMBAC) Aaa/AAA 830,536
215,000 Canastota Central School District General Obligation, 7.10% due 6/15/07 Baa2/NR 254,424
205,000 Canastota Central School District General Obligation, 7.10% due 6/15/08 Baa2/NR 245,010
550,000 Guam Power Authority Revenue Series A, 6.625% due 10/1/14 NR/BBB 609,587
880,000 Monroe County Industrial Development Agency Revenue, 6.45% due 2/1/14 (Civic Facility - Aa1/NR 970,649
Facility Project; LOC: Fleet Bank of New York)
500,000 MTA New York Service Contract Rev., 7.00% due 7/1/04 Aaa/BBB+ 549,875
440,000 New York City General Obligation, 7.00% due 2/1/19 NR/BBB+ 488,198
60,000 New York City General Obligation, 7.00% due 2/1/19 A3/BBB+ 65,451
1,000,000 New York City General Obligation Series B, 7.20% due 8/15/08 pre-refunded 8/15/04 @ 101 A3/BBB+ 1,164,110
250,000 New York City General Obligation Series B-1, 7.30% due 8/15/10 pre-refunded 8/15/04 @ 10 Aaa/BBB+ 293,543
440,000 New York City Unrefunded Balance General Obligation, 7.10% due 2/1/09 A3/BBB+ 489,183
60,000 New York City Unrefunded Balance General Obligation, 7.10% due 2/1/09 A3/BBB+ 66,094
505,000 New York Dormitory Authority, 6.00% due 7/1/08 (Champlain Valley Physicians Project; LOC NR/AAA 564,610
200,000 New York Dormitory Authority Revenue, 7.85% due 2/1/29 (Park Ridge Housing Inc. Project; NR/AAA 207,944
500,000 New York Dormitory Authority Revenue, 7.35% due 8/1/29 (Jewish Geriatric Project; Insure NR/AAA) 578,090
425,000 New York Dormitory Authority Revenue Chapel Oaks, 5.20% due 7/1/11 (LOC: Allied Irish Ba Aa3/NR 434,065
600,000 New York Environmental Facilities Corp. PCR St. Water Revoloving Fund Series E, 6.875% d Aa2/A+ 688,788
refunded 6/01/04 @ 101.5 (LOC: Pollution Control SRF)
400,000 New York Environmental Facilities Corp. PCR St. Water Revolving Fund Series B, 7.50% due Aa2/AA- 417,368
Pollution Control SRF)
400,000 New York Environmental Facilities Corp. PCR St. Water Revolving Fund Series E, 6.875% du Aa2/A+ 451,744
Pollution Control SRF)
30,000 New York Housing Finance Agency Ref St. University Construction Series A, 8.00% due 11/1 Aaa/AAA 31,034
11/1/98 @ 102 (Collateralized: Govt Securities)
750,000 New York Housing Finance Agency SVC Contract Obligation Rev., Series A, 6.375% due 9/15/ Baa1/BBB+ 826,050
600,000 New York Medical Care Facilities Finance Agency Rev, Series B, 7.45% due 2/15/29 pre-ref Aaa/AAA 645,000
102 (St. Lukes Hospital Project; Insured: FHA)
85,000 New York Medical Care Facilities Finance Agency Rev. Hospital and Nursing Home Series C, NR/AAA 87,117
pre-refunded 8/15/99 @ 102 (Insured: FHA)
1,000,000 New York Medical Care Facilities Finance Agency Rev. Secured Hospital Rev. Series 1991-A Baa/AAA 1,114,790
8/15/11 pre-refunded 8/15/01 @ 102
485,000 New York Medical Care Facilities Finance Agency Rev. Series A, 6.00% due 11/15/03 (Sec M Aa1/AA 524,406
Day Care Project; Guaranteed: SONYMA)
500,000 New York Medical Care Facilities Finance Agency Rev. Series A, 6.85% due 2/15/17 pre-ref Aaa/AAA 581,345
102 (Brookdale Hospital Medical Center Project)
650,000 New York Medical Care Facilities Finance Agency Rev. Series A, 6.50% due 11/1/19 (Aureli Aaa/AAA 701,857
Memorial Hospital Project; Insured: FSA)
500,000 New York Medical Care Facilities Finance Agency Rev. Series A, 6.80% due 2/15/20 pre-ref Aaa/AAA 580,045
102 (New York Downtown Hospital Project)
1,000,000 New York Mortgage Agency Rev. Series 29-B, 6.45% due 4/1/15 Aa2/NR 1,069,460
500,000 New York State Dormitory Authority Revenue, Series B, 6.25% due 5/15/14 pre-refunded 5/1 A3/A- 559,290
1,000,000 New York State Dormitory Authority Revenue Refunding, 5.20% due 2/15/13 (North General H Baa1/BBB+ 1,006,010
155,000 New York State Dormitory Authority Revenues, Series C, 6.00% due 7/1/16 pre-refunded 7/0 Baa1/BBB+ 161,183
345,000 New York State Dormitory Authority Revenues, Series C, 6.00% due 7/1/16 Baa1/BBB+ 350,972
1,000,000 New York State General Obligation, 9.875% due 11/15/05 A2/A 1,336,680
2,000,000 New York Urban Dev. Corp Correctional Facilities Rev., 0% due 1/1/08 Baa1/BBB+ 1,261,360
400,000 Onondaga County Industrial Development Civic Facilities Revenue, 7.90% due 1/1/17 (LOC: NR/A+ 447,056
Company)
400,000 Puerto Rico Commonwealth Capital Appreciation, 0% due 7/1/04 Baa1/A 308,212
300,000 Puerto Rico Industrial, Tourist, Educational, Medical, and Environmental Control Facilit NR/BBB- 307,530
5.70% due 8/1/13 (Polytechnic University Puerto Rico Project)
300,000 Puerto Rico Public Buildings Authority Rev, Series J, 6.60% due 7/1/04 Baa1/A 327,576
650,000 Schenectady Municipal Housing Authority, 6.40% due 5/1/14 (Annie Schaffer Senior Center Aa/NR 688,044
Guarantee: SONYMA)
100,000 Southampton Village General Obligation Series B, 7.60% due 9/1/03 (Insured: MBIA) Aaa/AAA 115,784
375,000 Syracuse Industrial Development Authority Pilot Revenue Refunding Series, 5.125% due 10/ NR/AA 385,650
AMRO)
500,000 Triborough Bridge and Tunnel Authority Special Obligation Series B, 6.875% due 1/1/15 A1/A- 540,100
625,000 Valley Central School District Montgomery, 7.15% due 6/15/07 (Insured: AMBAC) Aaa/AAA 748,387
165,000 Watkins Glen Central School District, 7.25% due 6/15/04 (Insured: MBIA) Aaa/AAA 190,857
110,000 Waverly General Obligation, 9.05% due 6/15/04 (Insured: MBIA) Aaa/AAA 138,179
TOTAL INVESTMENT (Cost $22,906,859) $ 24,997,928
<FN>
See notes to financial statements.
</FN>
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