William V. Fries, CFA
Portfolio Manager
Dear Fellow Shareholder,
Performance results for the periods ended March 31 are shown in the table below.
The strong recovery from the October market low reflects both improved market
conditions and the fundamental soundness of the companies in the portfolio.
<TABLE>
<CAPTION>
Total return performance as of 3/31/99
Inception: 5/28/98
A Shares C Shares
Cal. Qtr. 6 Months Since Incept. Cal. Qtr. 6 Months Since Incept.
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value 4.24% 14.99% (5.47)%** 3.90% 14.53% (6.22)%**
Max.Offering Price (0.46)% 9.83% (9.71)%** 2.90% 13.53% (6.22)%**
<FN>
Past performance cannot guarantee future results.
* Assumes redemption during the period.
** Annualized.
</FN>
</TABLE>
The Global Value Fund remains largely invested in western Europe with country
diversification shown in the table below. Recent positive results have come from
a significant recovery in a number of cyclical issues, such as Billiton
(aluminum and other metals), Michelin (tires) and Dykerhoff (cement), and
financial service issues (Annaly Mortgage, Edinburgh Fund Managers, Bank
Austria). Our patience with these inexpensive and out of favor issues is now
being rewarded. New names added to the portfolio include: Tesco (largest
supermarket chain in UK), Nortel Networks (Canadian telecommunications equipment
manufacturer), United International Holdings (cable systems--Europe etc.), Banca
Popolare Di Brescia (fastest growing Italian financial services oriented bank).
Holdings by Country*
Germany 21.3% Sweden 4.3% Netherlands 3.1%
United States 13.8% Austria 3.5% Italy 2.9%
UK 11.3% Bermuda 3.4% Poland 2.2%
Switzerland 10.8% France 3.2% New Zealand 2.1%
Japan 5.9% Finland 3.1% Brazil 1.7%
Signs of a reemergence of Asian economies is positive not only for those markets
but also for the global economy. Prior to the collapse of currencies and
economic contraction, Asian markets accounted for an important part of world
incremental growth. Their return to economic expansion will stimulate European
export demand as well as contribute to a better pricing environment for
industrial commodities. The Global Fund is well positioned to benefit as
prosperity returns. The overall attributes of the Fund remain conservative. At
this writing, the portfolio's weighted average yield is 2.4% and price/earnings
ratio is 17x. With under 40 issues, in fewer than 20 industries, the Fund is
focused for performance, but prudently diversified, we believe. Banking is the
single largest industry segment at roughly 15% of assets. Five separate
countries are represented by these leading bankers. On March 31, 1999 we made an
income distribution of $0.048 per share on the Class A shares and $0.02 per
share on Class C shares. Global investors have had a challenging environment in
the past 12 months. Long -Term Capital Management's liquidity crisis, currency
collapses, and the lingering recession in the world's second largest economy
(Japan) have roiled markets around the globe. Despite it all, the outlook for
equity investors is as promising as ever. Many markets are at record levels.
There is no shortage of demand for goods and services in the important U. S.
economy, and global commodity and industrial capacity is sufficient to
accommodate incremental demand without inflationary price pressure. The Global
Value Fund is structured to benefit from this improving environment. For more
detailed descriptive information on portfolio holdings, including links to the
home pages of companies held in your portfolio, please visit our Website at
www.thornburg.com. If you do not have internet access, call us at (800) 847-0200
and we will send this information to you. All of us at Thornburg appreciate your
investing with us. Thank you for your trust and confidence. Respectfully,
William V. Fries, CFA
Portfolio Manager
<PAGE>
ASSETS
Investments, at value (cost $10,047,220) $ 9,877,815
Cash 276,083
Receivable for securities sold 100,191
Receivable for fund shares sold 10,156
Unrealized gain on forward exchange contracts (Note 6) 585,634
Dividend receivable 47,310
Prepaid expenses and other assets 9,326
Total Assets 10,906,515
LIABILITIES
Payable for securities purchased 46,000
Payable for fund shares redeemed 23,115
Unrealized loss on forward exchange contracts (note 6) 51,217
Payable to investment advisor 5,890
Accounts payable and accrued expenses 56,444
Total Liabilities 182,666
NET ASSETS $ 10,723,849
NET ASSETS CONSIST OF:
Undistributed net investment income $ (1,564)
Net unrealized appreciation on investments 343,111
Distributions paid in excess of net realized gain (761,577)
Net capital paid in on shares of beneficial interest 11,143,879
$ 10,723,849
NET ASSET VALUE:
Class A Shares:
Net asset value and redemption price per share
($9,221,020 applicable to 822,797 shares
of beneficial interest outstanding - Note 4) $ 11.21
Maximum sales charge, 4.50% of offering
price (4.70% of net asset value per share) 0.53
Maximum Offering Price Per Share $ 11.74
Class C Shares:
Net asset value and offering price per share* ($1,502,829
applicable to and 134,491 shares of beneficial
interest outstanding - Note 4) $ 11.17
* Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge. See notes to financial statements.
INVESTMENT INCOME
Dividend income (net of foreign taxes withheld of $6,435) $ 117,289
Interest income 7,437
Total Income 124,726
EXPENSES
Investment advisory fees (Note 3) 41,568
Administration fees (Note 3)
Class A Shares 5,227
Class C Shares 712
Distribution and service fees (Note 3)
Class A Shares 10,453
Class C Shares 5,692
Transfer agent fees 12,186
Registration & filing fees 24,167
Custodian fees 16,933
Professional fees 3,174
Accounting fees 861
Trustee fees 122
Other expenses 874
Total Expenses 121,969
Less:
Expenses waived by investment advisor (Note 3) (40,265)
Net Expenses 81,704
Net Investment Income 43,022
REALIZED AND UNREALIZED GAIN - NOTE 5 Net realized gain (loss) on:
Investments (320,775)
Foreign currency transactions (115,238)
(436,013)
Net unrealized appreciation (depreciation)
Investments 977,513
Foreign currency translation 731,225
1,708,738
Net Realized and Unrealized Gain on Investments 1,272,725
Net Increase (Decrease) in Net Assets Resulting
From Operations $ 1,315,747
See notes to financial statements.
Six For the Period From
Months Ended May 28, 1999 (a)
March 31,1999 to Sept 30,1999
INCREASE (DECREASE) IN
NET ASSETS FROM:
OPERATIONS:
Net investment income $ 43,022 $ 25,565
Net realized gain (loss) on investments and
foreign currency transactions (436,013) (334,402)
Increase in unrealized depreciation on
investments and foreign currency transactions 1,708,738 (1,365,627)
Net Increase (Decrease) in Net Assets
Resulting from Operations 1,315,747 (1,674,464)
DIVIDENDS TO SHAREHOLDERS:
From net investment income
Class A Shares (39,329) (18,944)
Class C Shares (2,687) (354)
FUND SHARE TRANSACTIONS - (Note 4)
Class A Shares 648,402 8,997,696
Class C Shares 784,813 712,969
Net Increase in Net Assets 2,706,946 8,016,903
NET ASSETS:
Beginning of period 8,016,903 0
End of period $ 10,723,849 $ 8,016,903
(a) Commencement of operations See notes to financial statements.
<PAGE>
Note 1 - Organization
Thornburg Global Value Fund, hereinafter referred to as the "Fund," is a 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 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 their taxable income to its
shareholders. Therefore, no provision for Federal income tax is required.
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 Management Company, 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 six months
ended March 31, 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 six months ended March
31, 1999, the Adviser voluntarily waived certain operating expenses amounting to
$40,265 for the Fund. The Fund has underwriting agreements with Thornburg
Securities Corporation (the "Distributor"), which acts as the Distributor of the
Fund's shares. For the six months ended March 31, 1999, the Distributor earned
commissions aggregating $3,488 from the sale of Class A shares of the Fund, and
collected contingent deferred sales charges aggregating $790 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% 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
six months ended March 31, 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 March 31, 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>
Six Months Ended March 31, 1999 Year Ended September 30, 1998
Share Amount Share Amount
Class A Shares
<S> <C> <C> <C> <C>
Shares sold 92,102 $ 962,770 763,955 $ 9,049,328
Shares issued to shareholders
in reinvestment of dividends 5,316 56,918 1,886 18,467
Shares repurchased (34,246) (371,286) (6,217) (70,099)
Net Increase 63,172 $ 648,402 759,624 $ 8,997,696
Class C Shares
Shares sold 85,834 $ 897,701 85,018 $ 1,022,683
Shares issued to shareholders
in reinvestment of distrib 201 2,203 34 334
Shares repurchased (10,614) (115,091) (25,982) (310,048)
Net Increase 75,421 $ 784,813 59,070 $ 712,969
</TABLE>
Note 5 - Securities Transactions
For the six months ended March 31, 1999 the Fund had purchase and sale
transactions of investment securities of $4,879,081 and $3,760,853,
respectively. The cost of investments for Federal income tax purpose is
$10,047,220 for the Fund. As of March 31, 1999, the Fund had deferred capital
losses and currency losses occuring subsequent to October 31, 1997 of $112,863
and $340,170, respectively. At March 31, 1999, net unrealized depreciation of
investments was $169,405 resulting from $809,268 gross unrealized appreciation
and $978,673 gross unrealized depreciation.
Note 6 - Financial Investments With Off-Balance Sheet Risk
During the six months ended March 31, 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
Statements of Assets and Liabilities. Such risks would arise from the possible
inability of counterparties to meet the terms of their contracts, future
movement in currency value and interest rates and contract positions that are
not exact offsets. The contract amounts indicate the extent of the Fund's
involvement in such contracts. At March 31, 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.
Contracts to sell:
560,300 Brazilian Real for 45,338 U.S. Dollars, June 11, 1999 $11,462
142,200 Brazilian Real for 103,796, U.S. Dollars, June 17, 1999 24,132
1,848,400 Swiss Francs for 1,403,280, U.S. Dollars, June 16, 1999 141,215
607,198 Euros for 663,850, U.S. Dollars, June 16, 1999 4,473
733,585 British Pound Sterling for 1,355,361, U.S. Dollars,
June 16, 1999 42,524
3,744,000 Swedish Krona for 468,820, U.S. Dollars, June 11, 1999 11,159
3,347,140 European Currency Unit for 3,985,440 U.S. Dollars,
June 16, 1999 350,669
Unrealized gain from forward exchange contracts $585,634
109,584 British Pound Sterling for 180,901 U.S. Dollars,
June 16, 1999 ($4,072)
76,531,741 Japanese Yen for 648,234, U.S. Dollars, June 16,1999 (4,669)
428,742 New Zealand Dollar for 227,027, U.S. Dollars, June 16,1999 (2,474)
379,647 European Currency Unit for 452,273 U.S. Dollars,
June 16, 1999 (40,002)
Unrealized loss from forward exchange contracts ($51,217)
<PAGE>
Thornburg Global Value Fund Per share operating performance (for a
share outstanding throughout the period)
Six Months Ended Period Ended
March 31, 1999 September 30,1998(a)
Class A Shares:
Net asset value, beginning of period $ 9.79 $ 11.94
Income from investment operations:
Net investment income 0.05 0.03
Net realized and unrealized
gain on investments 1.42 (2.15)
Total from investment operations 1.47 (2.12)
Less dividends from:
Net investment income (0.05) (0.03)
Change in net asset value 1.42 (2.15)
Net asset value, end of period $ 11.21 $ 9.79
Total Return (b) 14.99% (17.80)%
Ratios/Supplemental Data
Ratios to average net asset:
Net investment income 1.01% (c) 1.04%(c)
Expenses, after expense reductions 1.63% (c) 1.63%(c)
Expenses, before expense reductions 2.34% (c) 2.88%(c)
Portfolio turnover rate 23.04% 44.66%
Net assets at end of period (000) $ 9,221 $ 7,440
(a) Fund commenced operations on May 28, 1998.
(b) Sales loads are not reflected in computing total return, which is not
annualized in periods less than a year.
(c) Annualized
Class C Shares:
Net asset value, beginning of period $ 9.77 $ 11.94
Income from investment operations:
Net investment income 0.01 0.01
Net realized and unrealized gain
(loss) on investments 1.41 (2.17)
Total from investment operations 1.42 (2.16)
Less dividends from:
Net investment income (0.02) (0.01)
Change in net asset value 1.40 (2.17)
Net asset value, end of period $ 11.17 $ 9.77
Total Return (b) 14.53% (18.12)%
Ratios/Supplemental Data
Ratios to average net asset:
Net investment income 0.16% (c) (0.02)%(c)
Expenses, after expense reductions 2.37% (c) 2.38%(c)
Expenses, before expense reductions 4.23% (c) 11.91%(c)
Portfolio turnover rate 23.04% 44.66%
Net assets at end of period (000) $ 1,503 $ 577
(a) Fund commenced operations on May 28, 1998.
(b) Sales loads are not reflected in computing total return, which is not
annualized in periods less than a year.
(c) Annualized
<PAGE>
Schedule of Investments
Thornburg Global Value Fund March 31, 1999
CUSIPS: Class A - 885-215-657, Class C - 885-215-640
NASDAQ Symbols: Class A - TGVAX, Class C - TGVCX
COMMON STOCKS--100.00%
BANKING INSTITUTIONS (15.40%)
Banco Poplare Di Brescia 10,000 $309,237
Bank Austria AG 6,200 369,376
Bank Rozwoju Eksportu S.A. 12,500 239,362
Bankgesellschaft Berlin AG 16,500 245,309
Julius Baer Holding AG 110 357,540
CONSUMER ELECTRONICS (4.60%)
Sony Corp. 2,400 221,931
Sony Corp. -ADR 2,600 237,413
BATTERIES (2.60%)
Varta AG 1,880 255,110
BUILDING MATERIALS (4.00%)
Dyckerhoff AG 273 72,319
Dyckerhoff AG Preferred 1,197 323,564
CAPITAL EQUIPMENT (7.90%)
Rolls Royce Plc 117,500 497,972
Swisslog AG 2,500 285,313
DRUGS & HEALTH CARE (7.30%)
Merck KGaA 8,700 301,020
Pharmacia & Upjohn Inc. 6,700 417,912
FOOD & BEVERAGES (3.10%)
Hero AG B 600 305,598
FOREST PRODUCTS (3.40%)
UPM Kymmene OYJ 12,100 334,928
HOUSEHOLD PRODUCTS (3.70%)
Henkel KGaA Preferred 5,000 367,625
INSURANCE (3.70%)
Annuity And Life Re Holdings + 15,800 361,425
INVESTMENT MANAGEMENT & BROKERAGE (6.70%)
Edinburgh Fund Managers Group 22,000 143,852
Ing Groep N.V. 4,600 253,910
Investment Technology Group, Inc. + 5,300 268,975
METALS & MINING (2.50%)
Billiton Plc 100,000 242,982
REAL ESTATE INVESTMENT TRUSTS (5.20%)
Annaly Mortgage Management, Inc. 50,000 512,500
RETAIL (3.20%)
Tesco 120,000 318,218
SERVICES (3.20%)
Apcoa Parking AG 4,300 316,622
TECHNOLOGY - COMPUTERS & PERIPHERALS (2.10%)
Also Holding 390 208,676
TELECOMMUNICATION SERVICES (4.10%)
Telecom Corporation Of New Zealand ADR 5,700 222,300
Telesp Celular S.A. + 7,500,000 179,300
TELEPHONE EQUIPMENT (3.60%)
Northern Telecom Limited 4,500 279,563
United- Pan Europe Communications 2,000 76,500
TIRES & RUBBER (3.40%)
Michelin 7,500 336,944
TOBACCO (4.60%)
Swedish Match AB 130,000 455,863
CLOSED END FUNDS (5.70%)
Central European Equity Fund 23,700 285,881
New Germany Fund 8,400 100,275
World Equity Benchmark Shares - Japan 15,000 172,500
TOTAL COMMON STOCKS (Cost $10,047,220) 9,877,815
TOTAL INVESTMENTS (Cost $10,047,220)* $ 9,877,815
+Non-income producing.
See notes to unaudited financial statements.
