Thornburg New York Intermediate Municipal Fund
Fund facts. . . as of 6/30/99
Thornburg New York Intermediate Municipal Fund A Shares
SEC Yield 3.85%
Taxable Equiv. Yield 7.19%
NAV $12.36
Max. Offering Price $12.61
Total returns. . . as of 6/30/99 (Annual Average - After Subtracting
Maximum Sales Charge)
One Year 0.16%
Since Inception 3.29%
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 2.00%. The data
quoted represent past performance and may not be construed as a guarantee of
future results.
Dear Shareholder,
What a difference six months makes! Last autumn the world's leading economists
and investment strategist predicted that the Russian financial crisis, coming on
the heels of the Asian financial crisis, would send the world economy into a
tailspin. Yields on 30-year U.S. government bonds dropped below 4.75% for the
first time in 4 decades. Bond buyers at that time no doubt expected an economic
slowdown that would be severe and long lasting. The gloomy experts were wrong.
The U.S. economy delivered its strongest economic growth in a generation during
the October 1 to April 1 period. Asian economies are gathering momentum, as are
many other developing economies around the world. As we write this letter, the
experts are trying to decide if better economic growth worldwide will pave the
way for more inflation and higher interest rates. As they examine their crystal
balls, interest rates are rising. The municipal bond market is reacting to the
changing scene with higher yields and increasing participation by individual
investors. Whatever happens, we believe your laddered maturity New York
municipal bond portfolio is well structured to adapt to changing circumstances
and benefit from higher yields, if they should become available. On June 30,
1998 the net asset value per share of Thornburg New York Intermediate Municipal
Fund was $12.71. The price increased to $12.78 on December 31, before settling
at $12.36 on June 30, 1999, the conclusion of your fund's 1999 fiscal year. If
you were with us for the entire year, you received dividends of 63.6 cents per
share. If you reinvested your dividends, you received 64.8 cents per share. Your
Thornburg New York Intermediate Municipal Fund portfolio currently holds 47
municipal bonds from municipal obligors in New York. Approximately 80% of the
bonds are rated A or better by one of the major rating agencies. As you know, 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 8.3 years, and we always keep it
below 10 years. Percentages of the portfolio maturing in the coming years are
summarized below:
2 years = 6% year 2 = 6%
2 to 4 years = 12% year 4 = 18%
4 to 6 years = 20% year 6 = 38%
6 to 8 years = 15% year 8 = 53%
8 to 10 years = 12% year 10 = 65%
10 to 12 years = 7% year 12 = 72%
12 to 14 years = 18% year 14 = 90%
14 to 16 years = 6% year 16 = 96%
16 to 18 years = 4% year 18 = 100%
Over the last three months your average portfolio maturity has increased
slightly. The passage of time always shortens the maturities of the bonds we
own. We directed portfolio cash flow and new money into the middle and rear of
your bond ladder, taking advantage of the good selection of new municipal bonds
coming to market recently. Today, we are managing the portfolio to keep the
average maturity approximately where it is. We will stick with this approach if
interest rates remain stable or decrease. If bond yields increase, we will
extend the average portfolio maturity. You can see from the chart on the
previous page that 53% of our portfolio will mature in the next 8 years! We
would like to increase our dividend yields if higher yields are available. Any
observer must be impressed by the fundamental strength of the broad U.S.
economy. More people than ever before are working. Wages are firm. But
government spending is accelerating. Most New York cities continue to increase
their financial reserves for the fifth consecutive year. The state has been
going through a difficult budget battle, but tax receipts are strong. If the
current strength of the U.S. economy persists, we expect long maturity interest
rates to increase slightly in the coming months. The supply of New York
municipal bonds will increase. No politician gets elected as a budget cutter
these days. Two recent surveys of American voters indicate that tax cuts are NOT
favored by a majority of voters. The public prefers to see additional spending
on education, health and the environment. Over the years, our practice of
laddering a diversified portfolio of short and intermediate maturity bonds has
allowed your fund to consistently perform well in varying interest rate
environments. Thank you for investing in Thornburg New York Intermediate
Municipal Fund. Sincerely,
Brian J. McMahon George T. Strickland
Portfolio Manager Portfolio Manager
ASSETS
Investments at value (cost $21,618,014) ......................... $23,072,778
Cash ............................................................ 1,259,420
Interest receivable ............................................. 370,664
Receivable for fund shares sold ................................. 1,000
Prepaid expenses and other assets ............................... 153
Total Assets ......................... 24,704,015
LIABILITIES
Payable for fund shares redeemed ................................ 3,250
Accounts payable and accrued expenses ........................... 22,363
Payable to investment advisor (Note 4) .......................... 5,094
Dividends payable ............................................... 40,286
Total Liabilities .................... 70,993
NET ASSETS ...................................................... $24,633,022
NET ASSET VALUE:
Class A Shares:
Net asset value and redemption price per share ($24,633,022
applicable to 1,992,245 shares of beneficial interest
outstanding - Note 5) ........................................... $ 12.36
Maximum sales charge, 2.00 % of offering
price (2.04% of net asset value per share) ...................... 0.25
Maximum Offering Price Per Share ................................ $ 12.61
See notes to financial statements ...............................
INVESTMENT INCOME:
Interest income (net of premium amortized
of $60,819) ..................................................... $ 1,452,325
EXPENSES:
Investment advisory fees (Note 4) ............................... 126,383
Administration fees (Note 4) .................................... 31,596
Service fees (Note 4) ........................................... 63,192
Transfer agent fees ............................................. 26,224
Custodian fees .................................................. 31,665
Registration and filing fees .................................... 3,225
Professional fees ............................................... 2,034
Accounting fees ................................................. 2,407
Trustee fees .................................................... 672
Other expenses .................................................. 6,295
Total Expenses ....................... 293,693
Less:
Fees waived by investment advisor (Note 4) ............. (104,116)
Net Expenses ......................... 189,577
Net Investment Income ................ 1,262,748
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (Note 6)
Net realized (loss) on investments sold ......................... (5,095)
(Decrease) in unrealized appreciation of investments ............ (636,305)
Net Realized and Unrealized
Gain (Loss) on Investments ........... (641,400)
Net Increase in Net Assets Resulting
from Operations ...................... $ 621,348
See notes to financial statements ...............................
<TABLE>
<CAPTION>
Year Ended
June 30, 1999
For the Period
from Sept. 4, 1997 (a)
June 30, 1998
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
<S> <C> <C>
Net investment income ................................................ $ 1,262,748 $ 1,088,637
Net realized gain (loss) on investments sold ......................... (5,095) 38,983
Increase (Decrease) in unrealized appreciation of investments ........ (636,305) 404,926
Net Increase in Net Assets Resulting from Operations 621,348 1,532,546
DIVIDENDS TO SHAREHOLDERS:
From net investment income
Class A Shares .............................................. (1,262,748) (1,088,637)
From realized gains
Class A Shares .............................................. (39,569) 0
FUND SHARE TRANSACTIONS (Note 5):
Class A Shares .............................................. (158,266) 25,028,348
Net Increase (Decrease) in Net Assets .............. (839,235) 25,472,257
NET ASSETS:
Beginning of year ........................................... 25,472,257 0
End of year ................................................. $ 24,633,022 $ 25,472,257
<FN>
See notes to financial statements.
(a) commencment of operations
</FN>
</TABLE>
Note 1 - Organization
Thornburg New York Intermediate Municipal Fund (the "Fund"), is a 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 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
year ended June 30, 1999 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 year ended June 30, 1999,
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 year ended June 30, 1999 the Adviser voluntarily reimbursed
certain operating expenses amounting to $104,116. The Trust has an underwriting
agreement with Thornburg Securities Corporation (the "Distributor"), which acts
as the Distributor of Fund shares. For the year ended June 30, 1999, the
Distributor earned commissions aggregating $3,405 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 1/4 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, 1999 there were an unlimited number of shares of beneficial interest
authorized, and capital paid-in aggregated $23,183,939. Transactions in shares
of beneficial interest were as follows:
<TABLE>
<CAPTION>
Year Ended June 30, 1999 Period from Sept. 4 1997 - June 30, 1998
Shares Amount Shares Amount
Class A Shares
<S> <C> <C> <C> <C>
Shares sold .......................... 160,953 $ 2,053,855 96,928 $ 1,227,221
Shares issued to shareholders in
reinvestment of distributions 61,983 788,545 46,479 588,462
Shares issued in merger .............. 0 0 2,368,993 29,612,415
Shares repurchased ................... (235,579) (3,000,666) (507,512) (6,399,750)
Net Increase (Decrease) .............. (12,643) ($158,266) 2,004,888 $ 25,028,348
</TABLE>
Note 6 - Securities Transactions
For the year ended June 30, 1999 the Fund had purchase and sale transactions
(excluding short-term securities) of $2,236,283 and $4,253,301, respectively.
The cost of investments is the same for financial reporting and Federal income
tax purposes. At June 30, 1999, net unrealized appreciation of investments was
$1,454,764, resulting from $1,470,895 gross unrealized appreciation and $16,131
gross unrealized depreciation. Accumulated net realized loss from security
transactions included in net assets at June 30, 1999 aggregated $5,681.
Year Ended
June 30, 1999
Period From Sept.
4, 1997 (a)
June 30, 1998
CLASS A SHARES:
Net asset value, beginning of year ........... $ 12.71 $ 12.50
Income from investment operations:
Net investment income ............... 0.64 0.52
Net realized and unrealized
gain (loss) on investments .......... (0.33) 0.21
Total from investment operations ............. 0.31 0.73
Less dividends from:
Net investment income ............... (0.64) (0.52)
Realized capital gains .............. (0.02) 0.00
Change in net asset value .................... (0.35) 0.21
Net asset value, end of year ................. $ 12.36 $ 12.71
TOTAL RETURN (b) ............................. 2.38% 5.92%
RATIOS/SUPPLEMENTAL DATA Ratios to average net asset:
Net investment income ............... 5.00% 4.99%(c)
Expenses, after expense reductions .. 0.75% 0.78%(c)
Expenses, before expense reductions . 1.16% 1.19%(c)
Portfolio turnover rate ...................... 9.06% 42.26%
Net assets at end of year (000) .............. $ 24,633 $ 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.
CUSIPS: Class A - 885-215-665
NASDAQ Symbols: Class A - THNYX
<TABLE>
<CAPTION>
Schedule of Investments
Thornburg New York Intermediate Municipa Fund
June 30, 1999
CUSIPS: Class A - 885-215-665
NASDAQ Symbols: Class A - THNYX
<S> <C> <C> <C>
590,000 Amherst Industrial Development Authority Lease Revenue Bonds NR/A $578,353
Series A, 5.25% due10/1/2007 (Pink Complex Project; LOC: Key Bank)
700,000 Bethlehem Central School District General Obligation, 7.10% due Aaa/AAA 801,724
11/1/2006(Insured: AMBAC)
215,000 Canastota Central School District General Obligation, 7.10% due Baa2/NR 244,612
6/15/2007
205,000 Canastota Central School District General Obligation, 7.10% due Baa2/NR 235,104
6/15/2008
250,000 Dutchess County Industrial Development Agency, 5.55% due 7/1/2014 NR/AA- 250,775
550,000 Guam Power Authority Revenue Series A, 6.625% due 10/1/2014 NR/BBB 610,880
880,000 Monroe County Industrial Development Agency Revenue, 6.45% due Aa1/NR 945,358
2/1/2014 (CivicFacility - Depaul Community Facility Project; LOC:
Fleet Bank of New York)
500,000 MTA New York Service Contract Rev., 7.00% due 7/1/2004 Aaa/BBB+ 536,525
pre-refunded 7/01/01 @102
155,000 New York Dormitory Authority, 5.05% due 2/1/2005 NR/AAA 158,089
700,000 New York City, 3.35% due 8/1/2022put 07/1/99 (daily demand notes) VMIG1/A1+ 700,000
440,000 New York City General Obligation, 7.10% due 2/1/2009 pre-refunded A3/A- 476,291
2/01/02 @101.5
480,000 New York City General Obligation, 7.00% due 2/1/2019 pre-refunded NR/A- 518,525
7/01/02 @101.5
20,000 New York City General Obligation, 7.00% due 2/1/2019 A3/A- 21,378
1,000,000 New York City General Obligation Series B, 7.20% due 8/15/2008 A3/A- 1,129,950
pre-refunded8/15/04 @ 101
250,000 New York City General Obligation Series B-1, 7.30% due 8/15/2010 Aaa/A- 284,185
pre-refunded8/15/04 @ 101
60,000 New York City Unrefunded Balance General Obligation, 7.10% due A3/A- 64,476
2/1/2009
505,000 New York Dormitory Authority, 6.00% due 7/1/2008 (Champlain Valley NR/AAA 542,764
PhysiciansProject;Insured: Connie Lee)
500,000 New York Dormitory Authority Revenue Series B, 6.25% due 5/15/2014 Aaa/AAA 548,245
pre-refunded5/15/04 @ 102
200,000 New York Dormitory Authority Revenue, 7.85% due 2/1/2029 (Park NR/AAA 204,490
Ridge HousingInc. Project; Collateralized: GNMA)
500,000 New York Dormitory Authority Revenue, 7.35% due 8/1/2029 (Jewish NR/AAA 560,185
GeriatricProject; Insured: FHA)
425,000 New York Dormitory Authority Revenue Chapel Oaks, 5.20% due Aa3/NR 420,516
7/1/2011 (LOC:Allied Irish Bank)
155,000 New York Dormitory Authority Revenues, City University Series C, Baa1/BBB+ 158,785
6.00% due7/1/2016 pre-refunded 7/01/00 @ 100
345,000 New York Dormitory Authority Revenues, City University Series C, Baa1/BBB+ 347,929
6.00% due7/1/2016
400,000 New York Environmental Facilities Corp. PCR St. Water Revolving Aa2/AA- 409,192
Fund Series B,7.50% due 3/15/2011
600,000 New York Environmental Facilities Corp. PCR St. Water Revolving Aa1/NR 671,322
Fund Series E,6.875% due 6/15/2014 refunded 6/01/04 @ 101.5
400,000 New York Environmental Facilities Corp. PCR St. Water Revolving Aa1/AA- 439,296
Fund Series E,6.875% due 6/15/2014
1,000,000 New York General Obligation, 9.875% due 11/15/2005 A2/A 1,277,810
750,000 New York Housing Finance Agency SVC Contract Obligation Rev. Baa1/BBB+ 813,750
Series A, 6.375%due 9/15/2015
600,000 New York Medical Care Facilities Finance Agency Rev, Series B, Aaa/AAA 626,754
7.45% due2/15/2029 pre-refunded 2/15/00 @ 102 (St. Lukes Hospital
Project; Insured: FHA)
1,000,000 New York Medical Care Facilities Finance Agency Rev. Secured Baa/AAA 1,084,850
Hospital Rev.Series 1991-A, 7.35% due 8/15/2011 pre-refunded
8/15/01 @ 102
475,000 New York Medical Care Facilities Finance Agency Rev. Series A, Aa1/AA 502,265
6.00% due11/15/2003 (Sec Mtg Prog - Adult Day Care Project;
Guaranteed: SONYMA)
500,000 New York Medical Care Facilities Finance Agency Rev. Series A, Aaa/AAA 562,910
6.85% due2/15/2017 pre-refunded 2/15/05 @ 102 (Brookdale Hospital
Medical Center Project)
650,000 New York Medical Care Facilities Finance Agency Rev. Series A, Aaa/AAA 698,009
6.50% due11/1/2019Insured: FSA) pre-refunded 11/01/01 @ 102
(Aurelia Osborn Fox MemorialHospital Project)
500,000 New York Medical Care Facilities Finance Agency Rev. Series A, Aaa/AAA 561,685
6.80% due2/15/2020 pre-refunded 2/15/05 @ 102 (New York Downtown
Hospital Project)
1,000,000 New York Mortgage Agency Rev. Series 29-B, 6.45% due 4/1/2015 Aa2/NR 1,057,750
2,000,000 New York Urban Dev. Corp Correctional Facilities Rev., 0% due Baa1/BBB+ 1,297,960
1/1/2008
400,000 Onondaga County Industrial Development Civic Facilities Revenue, NR/A+ 433,004
7.90% due1/1/2017pre-refunded 1/1/03 @ 103 (LOC: Fleet Trust
Company)
400,000 Puerto Rico Commonwealth Capital Appreciation, 0% due 7/1/2004 Baa1/A 317,980
300,000 Puerto Rico Industrial Tourist Educational Medical and NR/BBB- 301,359
Environmental ControlFacilities Series A, 5.70% due 8/1/2013
(Polytechnic University Puerto RicoProject)
100,000 Southampton Village General Obligation Series B, 7.60% due Aaa/AAA 112,295
9/1/2003 (Insured:MBIA)
500,000 Triborough Bridge and Tunnel Authority Special Obligation Series A1/A- 527,850
B, 6.875% due1/1/2015
625,000 Valley Central School District Montgomery, 7.15% due 6/15/2007 Aaa/AAA 719,762
(Insured: AMBAC)
165,000 Watkins Glen Central School District, 7.25% due 6/15/2004 Aaa/AAA 185,389
(Insured: MBIA)
110,000 Waverly General Obligation, 9.05% due 6/15/2004 (Insured: MBIA) Aaa/AAA 132,447
(ETM)
TOTAL INVESTMENTS (Cost $21,618,014) $23,072,778
<FN>
+ Credit ratings are unaudited.
See notes to financial statements.
</FN>
</TABLE>
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, 1999, the related statement of operations for the year then
ended, the statement of changes in net assets and financial highlights for the
year ended June 30, 1999 and for the period from September 4, 1997 (commencement
of operations) to June 30, 1998. 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 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 June 30, 1999, 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 aspects, the
financial position of Thornburg New York Intermediate Municipal Fund as of June
30, 1999, the results of its operations, the changes in its net assets and the
financial highlights for the periods indicated, in conformity with generally
accepted accounting principles.
New York, New York
July 27, 1999
INTERMEDIATE NEW YORK FUND
Index Comparison
Compares performance of Intermediate New York Fund, the Merrill Lynch Municipal
Bond (7-12 year) Index and the Consumer Price Index, September 4, 1997 to June
30, 1999. On June 30, 1999, the weighted average securities ratings of the Index
and the Fund were AA and AA-, respectively, and the weighted average portfolio
maturities of the Index and the Fund were 9.5 years and 8.4 years, respectively.
Past performance of the Index and the Fund may not be indicative of future
performance.
Class A
Average Annual Total Returns (at max. offering price) (periods ending 6/30/99)
One year 0.16%
From Inception (9/04/97): 3.29%
ML Muni 7-12 yrs
Fund A Shares
CPI
We Are Ready for the Year 2000
I wish to inform you about our success with respect to being Year 2000 compliant
in the computer systems used to manage your Thornburg Funds investment. Your
shareholder records are kept on a large computer system belonging to our
transfer agent, DST Systems. Accounting data pertaining to your investment
portfolio reside on large systems belonging to State Street Bank and its
affiliates. We have smaller computer networks at Thornburg Investment Management
to help us organize and manage our investment activities. I will describe
briefly the Year 2000 status of each area.
Shareholder records for Thornburg Funds are kept on computers that use a DST
software system called "TA 2000." DST is one of the largest mutual fund record
processors in the world, keeping shareholder records for many large mutual fund
families. The TA 2000 system, as is name implies, was built with 4-digit year
description fields in order to be Year 2000 compliant. To quote from DST's
February 1999 newsletter, "Internal 2000 readiness testing of TA 2000 and TRA
2000 is complete. Several retests of critical TA 2000 (and TRAC 2000) functions
were also completed successfully in 1998. With the completion of these internal
tests, the TA 2000 (and TRAC 2000) systems are considered to be Y2K ready."
There are no hedge words in the preceeding 3 sentences! I am not surprised. I
first heard DST talk about taking concrete measures to deal with Y2K issues
about 8 years ago. If you worry about electric power continuity, I can inform
you that DST maintains its own diesel powered backup generating station adjacent
to its computer facility.
Both are located in geologically stable limestone caves east of Kansas City.
Asset custody and fund accounting records of the Thornburg Funds are stored on
Sate Street Bank computers. We use a variety of software systems to carry out
all activities relating to running the funds. We are informed that this software
infrastructure has been 100% tested and corrected to be Year 2000 compliant. You
can monitor State Street Bank's disclosure yourself on the internet website,
statestreet.com.
Thornburg Investment Management has a computer network to help us carry out our
daily business of managing the assets in our mutual funds. Our information
technology director, Stewart Kane, has made a great effort to be certain that
our software platforms are Year 2000 compliant.
We look forward to the new year.
