Letter to shareholders
William V. Fries, CFA
Portfolio Manager
November 15, 1999
Dear Fellow Shareholder,
At this time last year, confidence was growing that world financial markets had
seen the worst. Markets had bottomed and financial repair was underway.
Nonetheless, few would have predicted the excellent performance investors have
enjoyed since then. Reflecting this good environment, performance results for
the Thornburg Global Value Fund for the fiscal year, calendar year to date and
since
inception are shown in the table below.
Total return performance as of 9/30/99
Inception: 5/28/98
<TABLE>
<CAPTION>
A Shares C Shares
Cal. YTD Fiscal Year Since Incept. Cal. YTD Fiscal Year Since Incept.
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value 21.28% 33.79% 7.34% 20.28% 32.59% 6.31%
Max Offering Price 15.81% 27.79% 3.74% 19.28% 32.59% 6.31%
<FN>
* Annualized Past performance cannot guarantee future results.
</FN>
</TABLE>
The resulting investment performance was quite broadly based. Japanese holdings,
Softbank (portfolio of Internet related equities) and Sony were standout
performers as were telecom related companies such as Nortel, United Global
Telecom and Telesp Cellular. A number of financial service holdings did well
(BRE Bank in Poland, BIPOP in Italy, and VP Bank in Liechtenstein). Also
contributing was a sharp recovery in several European industrial holdings and
the purchase of selected initial public stock offerings (IPO's), when available.
Portfolio composition remains heavily weighted in well-established European
companies. Even though we have spread the portfolio holdings to include
opportunities in the Far East, Eastern Europe and Brazil, companies in the
world's largest economies dominate the portfolio. US holdings were 9.2% at
fiscal year end. The table on the following page shows holdings by country
compared with a year ago. You will note broader diversification.
Between banking institutions at almost 10% and investment management and
brokerage services at 12%, exposure to the positive developments in the
financial services industry around the world remains significant. Holdings are
well diversified both geographically and functionally to include aspects ranging
from stock trading to personal banking. Technology holdings have increased in
importance, in part through appreciation but also reflecting portfolio additions
such as ASM Lithography (Semiconductor capital equipment), Nokia
(telecommunications equipment) and Computacenter (computer distribution and
consulting services). Including telecommunications equipment, technology in the
aggregate accounts for over 25% of portfolio value. The remainder of the
portfolio is broadly diversified.
Holdings by Country*
1999 1998
Germany .............................. 14.1% 28.7%
United States ........................ 9.2% 10.9%
UK ................................... 8.8% 10.6%
Japan ................................ 8.8% 0.0%
Netherlands .......................... 8.1% 7.6%
Switzerland .......................... 5.7% 13.2%
Canada ............................... 5.6% 0.0%
Austria .............................. 3.6% 3.3%
Korea ................................ 3.2% 0.0%
Finland .............................. 3.0% 4.6%
Brazil ............................... 2.6% 1.3%
Bermuda .............................. 2.3% 3.9%
Italy ................................ 2.1% 0.0%
Australia ............................ 1.9% 0.0%
Taiwan ............................... 1.9% 0.0%
Ireland .............................. 1.9% 0.0%
Greece ............................... 1.8% 0.0%
Sweden ............................... 1.8% 3.3%
Poland ............................... 1.42% 0.0%
Spain ................................ 1.0% 0.0%
France ............................... 0.0% 6.7%
Liechtenstein ........................ 0.0% 3.7%
New Zealand .......................... 0.0% 2.2%
Other ................................ 11.2% 0.0%
Both European and Asian economies are showing signs of renewed expansion. This
is very good for our portfolio and underscores our optimism for the coming year.
We remain confident in the business merits of the portfolio holdings and are
satisfied that current valuations offer significant capital appreciation
potential for shareholders. Thank you for your trust and confidence.
For a description and links to Websites of companies mentioned in this letter
and the other stocks we hold in the portfolio, please visit our Website at
www.thornburg.com.
Respectfully,
William V. Fries, CFA
Portfolio Manager
Tax Efficiency
THORNBURG Global VALUE FUND'S RETURNS SHOW GREAT TAX EFFICIENCY
Federal income taxes have had only a slight impact on your fund's return - an
important consideration for investors who own mutual funds in taxable accounts.
While the pretax return is most often used to tally a fund's performance, the
fund's after-tax return may be a better representation of your net return. The
after tax return accounts for taxes you may pay on distributions of capital
gains and income dividends. If you own the Thornburg Global Value Fund in a
tax-deferred account such as an individual retirement account or a 401(k), this
information does not apply to you. Such accounts are not subject to current
federal income taxes.
The Table below presents the pretax and after-tax returns for your fund (and an
appropriate peer group of mutual funds). Two things to keep in mind:
o The after-tax return calculations use the top federal income tax
rates in effect at the time of each distribution. The tax burden, therefore,
would be somewhat less, and the after-tax return somewhat more, if you are in a
lower tax bracket.
o The peer funds' returns are provided by Morningstar, Inc.
As you can see, the Thornburg Global Value Fund's pretax total returns of 33.79%
and 32.59% (to A and C shares, respectively) for the 12 months ended September
30, 1999 were only slightly reduced by taxes. For investors in the highest tax
bracket, the fund's pretax returns to A and C shares were cut by only 0.60% and
0.30%, respectively. By comparison, the average Foreign Stock fund earned a
pretax return of 19.97% and an after tax return of 18.33%. Morningstar
classifies Thornburg Global Value Fund as a Foreign Stock fund.
Average Annual Returns: Pretax and After-Tax
Periods Ended September 30, 1999
1 Year Pretax After-Tax Tax Efficiency
Thornburg Global Value Fund -A 33.79% 33.19% 98.2%
Thornburg Global Value Fund -C 32.59% 32.29% 99.1%
Average Fund* 31.80% 30.47% 95.8%
*Based on data from Morningstar, Inc. for 628 Foreign Stock Funds.
The Thornburg Global Value Fund results, before and after taxes, compare
favorably with those of its average peer. Your fund lost less to taxes (one year
tax efficiency of 98.2%, A shares) than its peer group average (one year tax
efficiency of 95.8%). Your fund also earned a higher pretax return (33.79% vs.
31.80%) than its peer group average.
It is very difficult to predict tax efficiency. A fund's tax efficiency can be
influenced by its turnover rate, the types of securities it holds, the
accounting practices it uses when selling shares, and the net cash flow it
receives. The tax efficiency of Thornburg Global Value Fund thus far is no
accident. We have worked to manage our investment activities in a tax efficient
manner, and we will continue to do so. Our calculations do not reflect the tax
effect of your own investment activities. You may incur additional capital gains
taxes if you decide to sell all or some of your shares.
A Note About Our Calculations: Pretax total returns assume that all
distributions received (income dividends, short-term capital gains, and
long-term capital gains) are reinvested in new shares, while our after-tax
returns assume that highest individual federal income tax rates at the time of
the distributions. Those rates are currently 39.6% for dividends and short-term
capital gains and 20% for long-term capital gains. The calculation does not
account for state and local income taxes, nor does it take into consideration
any tax adjustments that a shareholder may claim for foreign taxes paid by the
fund. The competitive group returns provided by Morningstar are calculated in a
manner consistent with that used for Thornburg Global Value Fund . All A share
calculations assume purchase at net asset value and no redemption. Return
calculations reflecting the maximum sales charge applicable to A shares are
shown on page 1 of this report.
Statement of assets and liabilities
ASSETS
Investments, at value (cost $23,689,830) ................... ..... $25,650,632
Cash ....................................................... ..... 903,758
Receivable for securities sold ............................. .... 496,389
Receivable for fund shares sold ............................. .... 185,896
Dividends receivable ........................................ .... 36,273
Prepaid expenses and other assets ........................... .... 11,480
Total Assets ....................... .. 27,284,428
LIABILITIES
Payable for securities purchased ........................... ..... 481,740
Unrealized loss on forward exchange contracts (Note 6) ..... .. . 314,072
Payable to investment advisor ............................... .... 17,744
Accounts payable and accrued expenses ........................ ... 33,845
Total Liabilities ................. ... 847,401
NET ASSETS .................................................... .. $26,437,027
NET ASSETS CONSIST OF:
Net investment income ...................................... $ 48,281
Net unrealized appreciation (depreciation) on investments .. 1,651,959
Accumulated net realized gain .............................. 116,705
Net capital paid in on shares of beneficial interest ....... 24,620,082
$26,437,027
NET ASSET VALUE:
Class A Shares:
Net asset value and redemption price per share
($23,202,344 applicable to 1,791,918 shares of beneficial
interest outstanding - Note 4) ................................... $ 12.95
Maximum sales charge, 4.50% of offering
price (4.70% of net asset value per share) ....................... 0.61
Maximum Offering Price Per Share ...... $ 13.56
Class C Shares:
Net asset value and offering price per share*
($3,234,683 applicable to 251,212 shares of beneficial
interest outstanding - Note 4) ................................... $ 12.88
* Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge
See notes to financial statements
Statement of operations
INVESTMENT INCOME
Dividend income (net of foreign taxes withheld of $32,108) .........$ 352,740
Interest income ..................................................... 33,450
Total Income ............................. 386,190
EXPENSES
Investment advisory fees (Note 3) ................................... 126,367
Administration fees (Note 3)
Class A Shares ............................................. 15,950
Class C Shares ............................................. 2,103
Distribution and service fees (Note 3)
Class A Shares ............................................. 31,899
Class C Shares ............................................. 16,821
Transfer agent fees ................................................. 28,279
Registration & filing fees .......................................... 39,059
Custodian fees ...................................................... 39,498
Professional fees ................................................... 3,831
Accounting fees ..................................................... 2,061
Trustee fees ........................................................ 237
Other expenses ...................................................... 1,410
Total Expenses ........................... 307,515
Less:
Expenses reimbursed by investment advisor (Note 3) .. (59,495)
Net Expenses ............................. 248,020
Net Investment Income .................... 138,170
REALIZED AND UNREALIZED GAIN (LOSS)- NOTE 5 Net realized gain (loss) on:
Investments ............................................ (6,145)
Foreign currency transactions ................................ 532,630
526,485
Net unrealized appreciation (depreciation)
Investments ............................................ 3,128,491
Foreign currency translation ................................. (110,905)
3,017,586
Net Realized and Unrealized
Gain (Loss) on Investments ........... 3,544,071
Net Increase (Decrease) in Net Assets Resulting
From Operations ... $ 3,682,241
See notes to financial statements
<TABLE>
<CAPTION>
StatementS of changes in net assets
Year Ending For the Period From May 28, 1998 (a)
September 30, 1999 to September 30, 1998
INCREASE (DECREASE) IN
NET ASSETS FROM:
OPERATIONS:
<S> <C> <C>
Net investment income .......................................... $ 138,170 $ 25,565
Net realized gain (loss) on investments and foreign currency
transactions ................................................... 526,485 (334,402)
Increase in unrealized appreciation (depreciation) on
investments and foreign currency translations .................. 3,017,586 (1,365,627)
Net Increase (Decrease) in Net Assets
Resulting from Operations ........... 3,682,241 (1,674,464)
DIVIDENDS TO SHAREHOLDERS:
From net investment income
Class A Shares ........................................ (160,511) (18,944)
Class C Shares ........................................ (11,023) (354)
FUND SHARE TRANSACTIONS - (Note 4)
Class A Shares ........................................ 12,617,589 8,997,696
Class C Shares 2,291,828 712,969
Net Increase in Net Assets .......... 18,420,124 8,016,903
NET ASSETS:
Beginning of year ..................................... 8,016,903 0
End of year ........................................... $ 26,437,027 $ 8,016,903
<FN>
(a) Commencement of operations See notes to financial statements.
</FN>
</TABLE>
Notes to financial statements
Note 1 - Organization
Thornburg Global Value Fund, hereinafter referred to as the "Fund," is a
diversified series of Thornburg Investment Trust (the "Trust"). The Trust was
organized as a Massachusetts business trust under a Declaration of Trust dated
June 3, 1987 and is registered as a diversified, open-end management investment
company under the Investment Company Act of 1940, as amended. The Trust is
currently issuing seven series of shares of beneficial interest in addition to
those of the Fund: Thornburg Limited Term U.S. Government Fund, Thornburg New
Mexico Intermediate Municipal Fund, Thornburg Intermediate Municipal Fund,
Thornburg Limited Term Income Fund, Thornburg Florida Intermediate Municipal
Fund, Thornburg Value Fund and Thornburg New York Intermediate Municipal Fund.
Each series is considered to be a separate entity for financial reporting and
tax purposes. The Fund seeks long-term capital appreciation by investing in both
foreign and domestic equity securities selected on a value basis. The Fund
currently offers two classes of shares of beneficial interest, Class A and Class
C shares. Each class of shares of a Fund represents an interest in the same
portfolio of investments of the Fund, except that (i) Class A shares are sold
subject to a front-end sales charge collected at the time the shares are
purchased and bear a service fee, (ii) Class C shares are sold at net asset
value without a sales charge at the time of purchase, but are subject to a
contingent deferred sales charge upon redemption within one year, and bear both
a service fee and a distribution fee, and (iii) the respective classes have
different reinvestment privileges. Additionally, the Fund may allocate among its
classes certain expenses, to the extent allowable to specific classes, including
transfer agent fees, government registration fees, certain printing and postage
costs, and administrative and legal expenses. Currently, class specific expenses
of the Fund are limited to distribution fees, administration fees and certain
transfer agent expenses.
Note 2 - Significant Accounting Policies Significant accounting policies of the
Funds are as follows:
Valuation of Securities: In determining net asset value, investments are stated
at value based on latest sales at 4:00 pm est prices reported on national
securities exchanges on the last business day of the period. Investments for
which no sale is reported are valued at the mean between bid and asked prices.
Securities for which market quotations are not readily available are valued at
fair value as determined by management and approved in good faith by the Board
of Trustees. Short term obligations having remaining maturities of 60 days or
less are valued at amortized cost which approximates market value. Foreign
Currency Translation: Porfolio securities and other assets and liabilities
denominated in foreign currencies are translated into U.S. dollars based on the
exchange rate of such currencies against the U.S. dollar on the date of
valuation. Purchases and sales of securities and income items denominated in
foreign currencies are translated into U.S. dollars at the exchange rate in
effect on the translation date. When the Fund purchases or sells foreign
securities it will customarily enter into a foreign exchange contract to
minimize foreign exchange risk from the trade date to the settlement date of
such transactions. The Fund does not separately report the effect of changes in
foreign exchange rates from changes in market prices on securities held. Such
changes are included in net realized and unrealized gain or loss from
investments. Federal Income Taxes: It is the policy of the Fund to comply with
the provisions of the Internal Revenue Code applicable to "regulated investment
companies" and to distribute all of its taxable income to its shareholders.
Therefore, no provision for Federal income tax is required. Net realized capital
losses are carried forward to offset realized capital gains in future years. To
the extent such carryforwards are used, no capital distributions will be made.
When-Issued and Delayed Delivery Transactions: The Fund may engage in
when-issued or delayed delivery transactions. To the extent the Fund engages in
such transactions, it will do so for the purpose of acquiring portfolio
securities consistent with its investment objectives and not for the purpose of
investment leverage or to speculate on market changes. At the time the Fund
makes a commitment to purchase a security on a when-issued basis, it will record
the transaction and reflect the value in determining its net asset value. When
effecting such transactions, assets of the Fund of an amount sufficient to make
payment for the portfolio securities to be purchased will be segregated on the
Fund's records on the trade date. Dividends: Dividends to the shareholders are
paid quarterly and are reinvested in additional shares of the Fund at net asset
value per share at the close of business on the dividend payment date, or at the
shareholder's option, paid in cash. Net realized capital gains, to the extent
available, will be distributed annually. Distributions to shareholders are based
on income tax regulations and therefore, their characteristics may differ for
financial statement and tax purposes. General: Securities transactions are
accounted for on a trade date basis. Interest income is accrued as earned and
dividend income is recorded on the ex-dividend date. 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 Investment Management,
Inc. (the "Adviser") serves as the investment adviser and performs services to
the Fund for which the fees are payable at the end of each month. For the year
ended September 30, 1999, these fees were payable at annual rates ranging from
7/8 of 1% to 27/40 of 1% of the average daily net assets of the Fund depending
on the Fund's asset size. The Fund also has an Administrative Services Agreement
with the Adviser, whereby the Adviser will perform certain administrative
services for the shareholders of each class of the Fund's shares, and for which
fees will be payable at an annual rate of up to 1/8 of 1% of the average daily
net assets attributable to each class of shares. For the year ended September
30, 1999, the Adviser voluntarily reimbursed certain operating expenses
amounting to $59,495 for the Fund. The Fund has an underwriting agreement with
Thornburg Securities Corporation (the "Distributor"), which acts as the
Distributor of the Fund's shares. For the year ended September 30, 1999, the
Distributor earned commissions aggregating $16,643 from the sale of Class A
shares of the Fund, and collected contingent deferred sales charges aggregating
$990 from redemptions of Class C shares of the Fund. Pursuant to a Service Plan
under Rule 12b-1 of the Investment Company Act of 1940, the Fund may reimburse
to the Adviser an amount not to exceed 1/4 of 1% per annum of its average net
assets attributable to each class of shares of the Fund for payments made by the
Adviser to securities dealers and other financial institutions to obtain various
shareholder related services. The Adviser may pay out of its own funds
additional expenses for distribution of the Fund's shares. The Fund has also
adopted Distribution Plans pursuant to Rule 12b-1, applicable only to the Fund's
Class C shares under which the Fund compensates the Distributor for services in
promoting the sale of Class C shares of the Fund at an annual rate of up to 1%
of the average daily net assets attributable to Class C shares. Total fees
incurred by each class of shares of the Fund under their respective Service and
Distribution Plans for the year ended September 30, 1999 are set forth in the
statement of operations. Certain officers and trustees of the Trust are also
officers and/or directors of the Adviser and Distributor. The compensation of
unaffiliated trustees is borne by the Trust. Note 4 - Shares of Beneficial
Interest At September 30, 1999 there were an unlimited number of shares of
beneficial interest authorized. Sales of Class A and C Shares of the Global
Value Fund commenced May 28, 1998. Transactions in shares of beneficial interest
were as follows:
<TABLE>
<CAPTION>
Year Ended September 30, 1999 Period Ended September 30, 1998
Share Amount Share Amount
Class A Shares
<S> <C> <C> <C> <C>
Shares sold ............................. 1,086,840 $ 13,241,784 763,955 $ 9,049,328
Shares issued to shareholders in
reinvestment of dividends ...... 12,858 157,619 1,886 18,467
Shares repurchased ...................... (67,404) (781,814) (6,217) (70,099)
Net Increase ............................ 1,032,294 $ 12,617,589 759,624 $ 8,997,696
Class C Shares
Shares sold ............................. 216,126 $ 2,574,981 85,018 $ 1,022,683
Shares issued to shareholders
in reinvestment of distributions 644 7,870 34 334
Shares repurchased ...................... (24,628) (291,023) (25,982) (310,048)
Net Increase ............................ 192,142 $ 2,291,828 59,070 $ 712,969
</TABLE>
Note 5 - Securities Transactions
For the year ended September 30, 1999 the Fund had purchase and sale
transactions of investment securities of $21,041,561 and $7,714,449,
respectively.
The cost of investments for Federal income tax purpose is $23,772,734 for the
Fund.
At September 30, 1999, net unrealized depreciation of investments was $1,877,898
resulting from $2,996,161 gross unrealized appreciation and $1,118,263 gross
unrealized depreciation.
Note 6 - Financial Investments With Off-Balance Sheet Risk
During the year ended September 30, 1999, the Fund was a party to financial
instruments with off-balance sheet risks, primarily currency forward exchange
contracts. A forward exchange contract is an agreement between two parties to
exchange different currencies at a specified rate at an agreed upon future date.
These contracts are purchased in order to minimize the risk to the Fund with
respect to it's foreign stock holdings from adverse changes in the relationship
between the U.S. dollar and foreign currencies. In each case these contracts
have been initiated in conjunction with foreign stock holdings. These
instruments may involve market risks in excess of the amount recognized on the
Statement of Assets and Liabilities. Such risks would arise from the possible
inability of counterparties to meet the terms of their contracts, future
movement in currency value and interest rates and contract positions that are
not exact offsets. The contract amounts indicate the extent of the Fund's
involvement in such contracts. At September 30, 1999, the Fund had outstanding
forward exchange contracts for the sale of currencies as set out below. These
contracts are reported in the financial statements at the Fund's net equity, as
measured by the difference between the forward exchange rates at the reporting
date and the forward exchange rates at the dates of entry into the contract.
<TABLE>
<CAPTION>
Contracts to sell:
<S> <C> <C>
906,400 Australian Dollars for 607,646 U.S. Dollars, December 15, 1999 $14,496
1,221,301,781 South Korean Won for 1,036,267 U.S. Dollars, December 10, 1999 32,979
2,115,000 Polish Zloty for 514,989 U.S. Dollars, December 15, 1999 9,055
1,202,250 Brazilian Real for 609,476, U.S. Dollars, December 10, 1999 (3,760)
1,677,085 Swiss Francs for 1,123,299 U.S. Dollars, December 15, 1999 (2,822)
8,724,581 Euros for 9,240,969 U.S. Dollars, December 15, 1999 (99,614)
1,293,579 British Pound Sterling for 2,077,591 U.S. Dollars, December 15, 1999 (52,770)
138,390,000 Greek Drachma for 430,514 U.S. Dollars, December 15, 1999 (14,071)
228,718,381 Japanese Yen for 536,067 U.S. Dollars, December 15, 1999 (186,172)
4,056,000 Swedish Krona for 479,796 U.S. Dollars, December 15, 1999 (17,776)
17,250,000 New Taiwan Dollars for 1,987,060 U.S. Dollars, June 30, 2000 (1,882)
Unrealized loss from forward exchange contracts (322,337)
Unrealized gain on offsetting contracts 8,265
Net unrealized loss from forward contracts ($314,072)
Financial highlights
</TABLE>
<TABLE>
<CAPTION>
Year Ended Period Ended
September 30, 1999 September 30,1998 (a)
Class A Shares:
<S> <C> <C>
Net asset value, beginning of year ................................. $ 9.79 $ 11.94
Income from investment operations:
Net investment income 0.12 0.03
Net realized and unrealized gain (loss) on investments 3.18 (2.15)
Total from investment operations 3.30 (2.12) Less dividends from:
Net investment income (0.14) (0.03)
Change in net asset value .......................................... 3.16 (2.15)
Net asset value, end of year ....................................... $ 12.95 $ 9.79
Total Return (b) ................................................... 33.79% (17.80)%
Ratios/Supplemental Data Ratios to average net assets:
Net investment income 1.07% 1.04%(c)
Expenses, after expense reductions ................... 1.63% 1.63%(c)
Expenses, before expense reductions .......................... 1.93% 2.88%(c)
Portfolio turnover rate ............................................ 58.09% 44.66%
Net assets at end of year (000) .................................... $ 23,202 $ 7,440
<FN>
(a) Fund commenced operations on May 28, 1998.
(b) Sales loads are not reflected in computing total return.
(c) Annualized
</FN>
</TABLE>
<TABLE>
<CAPTION>
Class C Shares:
<S> <C> <C>
Net asset value, beginning of year ....................................... $ 9.77 $ 11.94
Income from investment operations:
Net investment income ........................................ 0.04 0.01
Net realized and unrealized gain (loss) on investments ....... 3.14 (2.17)
Total from investment operations 3.18 (2.16) Less dividends from:
Net investment income .................................. (0.07) (0.01)
Change in net asset value ................................................. 3.11 (2.17)
Net asset value, end of year ......................................... $ 12.88 $ 9.77
Total Return (b) .......................................................... 32.59% (18.12)%
Ratios/Supplemental Data Ratios to average net assets:
Net investment income ...................................... 0.11% (0.02)%(c)
Expenses, after expense reductions 2.38% 2.38% (c)
Expenses, before expense reductions 3.63% 11.91% (c)
Portfolio turnover rate ................................................... 58.09% 44.66%
Net assets at end of year (000) ........................................ $ 3,235 $ 577
<FN>
(a) Fund commenced operations on May 28, 1998
(b) Sales loads are not reflected in computing total return.
(c) Annualized
</FN>
</TABLE>
<TABLE>
<CAPTION>
Schedule of Investments
Thornburg Global Value Fund
September 30, 1999 CUSIPS: Class A - 885-215-657, Class C - 885-215-640
NASDAQ Symbols: Class A - TGVAX, Class C - TGVCX
COMMON STOCKS--70.20%
<S> <C> <C>
AIRPORTS (1.40%)
Flughafen Wien AG 12,000 $478,439
BANKING INSTITUTIONS (7.20%)
Australia and New Zealand Bank 80,000 535,255
Banco Poplare Di Brescia 13,900 594,570
Bank Austria AG 10,000 497,443
Bank Rozwoju Eksportu S.A. 15,000 389,615
Bankgesellschaft Berlin AG 27,570 488,442
CONSUMER ELECTRONICS (3.20%)
Sony Corp. 2,400 357,595
Sony Corp. - ADR 5,000 750,313
BATTERIES (1.40%)
Varta AG 3,880 499,550
BUILDING MATERIALS (2.10%)
Dyckerhoff AG Preferred 23,970 737,102
CAPITAL EQUIPMENT (2.90%)
Embraer + 160,000 450,000
Rolls Royce Plc 162,500 562,468
CHEMICALS (3.40%)
DSM NV 30,000 1,189,075
PHARMACEUTICALS (4.70%)
Merck KGaA 20,200 730,789
Pharmacia & Upjohn Inc. 18,000 893,250
ENTERTAINMENT (0.60%)
Soge Cable, S.A. + 8,000 218,173
FOREST PRODUCTS (2.40%)
UPM Kymmene OYJ 24,000 817,190
HOUSEHOLD PRODUCTS (1.40%)
Henkel KGaA Preferred 8,000 502,231
INSURANCE (1.90%)
Annuity And Life Re Holdings 25,800 641,775
INVESTMENT MANAGEMENT & BROKERAGE (9.20%)
Edinburgh Fund Managers Group 52,000 372,393
Goldman Sachs Group Inc. 12,500 762,500
Ing Groep N.V. 11,126 603,769
Investment Technology Group 15,200 349,600
Julius Baer Holding AG 380 1,125,458
METALS & MINING (1.70%)
Billiton Plc 139,000 583,531
RETAIL (2.60%)
Tesco Plc 289,000 903,983
SERVICES (1.70%)
Apcoa Parking AG 8,100 603,316
TECHNOLOGY - SEMI CONDUCTORS & EQUIPMENT (4.00%)
ASM Lithography Holding + 7,000 469,437
Samsung Electronics 5,000 397,000
Taiwan Semiconductor 125,000 525,591
TECHNOLOGY - SOFTWARE & SERVICES (3.20%)
Softbank Corp. 2,900 1,099,925
TECHNOLOGY - CONSULTING (1.70%)
Also Holding 747 437,511
Computacenter Plc 16,000 168,435
TELECOMMUNICATION SERVICES (4.80%)
Hellenic Telecom 21,000 489,574
Telecom Eireann + 30,000 515,625
Telesp Celular S.A. + 7,500,000 269,531
United Global Com + 5,700 408,263
TELECOMMUNICATION EQUIPMENT (4.50%)
Foundry Networks Inc. + 400 50,400
Newbridge Networks Corp. + 22,000 573,375
Nortel Networks Corp. 18,600 948,600
TOBACCO (1.40%)
Swedish Match AB 130,000 482,363
CLOSED END FUNDS (2.20%)
Central European Equity Fund 23,700 291,806
Korea Fund Inc. + 38,000 477,375
WORLD EQUITY BENCHMARK SHARES (0.60%)
World Equity Benchmark Shares - Japan 15,000 209,062
TOTAL COMMON STOCKS (Cost $22,490,896) 24,451,698
COMMERCIAL PAPER--3.40%
American Telephone & Telegraph Co., 5.33% due 10/7/1999 1,200,000 1,198,934
TOTAL COMMERCIAL PAPER (Cost $1,198,934) 1,198,934
TOTAL INVESTMENTS (Cost $23,689,830)* $ 25,650,632
<FN>
+ Non-income producing.
See notes to financial statements.
</FN>
</TABLE>
Independent Auditor's Report
To the Board of Trustees and Shareholders of Thornburg Investment Trust In our
opinion, the accompanying statement of assets and liabilities, including the
schedule of investments, and the related statements of operations and of changes
in net assets and the financial highlights present fairly, in all material
respects, the financial position of Thornburg Global Value Fund series of
Thornburg Investment Trust (hereafter referred to as the "Fund") at September
30, 1999, the results of its operations, the changes in its net assets, and the
financial highlights for the year then ended, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these financial statements in accordance with generally accepted auditing
standards, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of securities at September 30, 1999 by
correspondence with the custodian and brokers, provides a reasonable basis for
the opinion expressed above. The financial statements for the year ended
September 30, 1998, including the financial highlights for the period then
ended, were audited by other independent accountants whose report dated October
23, 1998 expressed an unqualified opinion on those financial statements.
PricewaterhouseCoopers LLP New York, New York October 29, 1999
change in Independent accountants
Thornburg Investment Trust
On August 13, 1999, McGladrey & Pullen, LLP (McGladrey) resigned as independent
auditors of the Fund pursuant to an agreement by PricewaterhouseCoopers LLP
(PwC) to acquire McGladrey's investment company practice. The McGladrey partners
and professionals serving the Fund at the time of the acquisition joined PwC.
The reports of McGladrey on the financial statements of the Fund during the past
two fiscal years contained no adverse opinion or disclaimer of opinion, and were
not qualified or modified as to uncertainty, audit scope or accounting
principles. In connection with its audits for the two most recent fiscal years
and through August 13, 1999, there were no disagreements with McGladrey on any
matter of accounting principle or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of McGladrey would have caused it to make reference to the subject
matter of disagreement in connection with its report. On September 22, 1999, the
Fund, with the approval of its Board of Directors and its Audit Committee,
engaged PwC as its independent auditor.
Index Comparison
Thornburg Global Value Fund
Index Comparison
Compares performance of Thornburg Global Value Fund and Morgan Stanley Capital
International Europe, Australia and Far East Index for the period May 28, 1998
to September 30, 1999. Past performance of the Index and the Fund may not be
indicative of future performance.
Class A Shares
Average Annual Total Returns (at max. offering price) (periods ending 9/30/99)
Since inception (5/28/98) 3.74%
One year 27.79%
Class C Shares
Average Annual Total Returns (periods ending 9/30/99)
Since inception (5/28/98) 6.31%
One year 32.59%
Y2k Update
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
State 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.
Brian McMahon
President, Thornburg Investment Management
Investment Manager
Thornburg Investment Management, 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.
