THORNBURG LIMITED TERM MUNICIPAL FUND INC, 485BPOS, 1999-01-22

THORNBURG LIMITED TERM MUNICIPAL FUND INC
485BPOS, 1999-01-22

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As Filed with the Securities and Exchange Commission
January 22, 1999

Registration No. 2-89526

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

Pre-Effective Amendment No. ____

Post-Effective Amendment No. 31
----
and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 33
----
(Check appropriate box or boxes)

THORNBURG LIMITED TERM MUNICIPAL FUND, INC.
- --------------------------------------------------
(Exact Name of Registrant as Specified in Charter)

119 East Marcy Street, Suite 202, Santa Fe, NM 87501
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (505) 984-0200
--------------
H. Garrett Thornburg, Jr.
119 East Marcy Street, Suite 202
Santa Fe, New Mexico 87501
---------------------------------------
(Name and Address of Agent for Service)

copy to:
Charles W. N. Thompson, Jr.
White, Koch, Kelly & McCarthy, P. A.
Post Office Box 787
Santa Fe, New Mexico 87504-0787

Approximate date of Proposed Public Offering: February 1, 1999
----------------
It is proposed that this filing will become effective
(check appropriate box):

[ ] immediately upon filing pursuant to paragraph (b)
[x] on (February 1, 1999) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)
[ ] On [date] pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] On (date) pursuant to paragraph (a)(2)

If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
<PAGE>
THORNBURG LIMITED TERM MUNICIPAL FUND, INC.

(i) Thornburg Limited Term Municipal Fund National Portfolio

(ii) Thornburg Limited Term Municipal Fund California Portfolio

CONTENTS

Facing Sheet
Contents
Cross Reference Sheets (Thornburg Limited Term Municipal Fund
National Portfolio [Class A and Class C
shares];
Thornburg Limited Term Municipal Fund
California Portfolio [Class A and Class C
shares]);
(Thornburg Limited Term Municipal Fund
National Portfolio [Institutional Class
shares]);
(Thornburg Limited Term Municipal Fund
California Portfolio [Institutional Class
shares])

Prospectus (Thornburg Limited Term Municipal Fund
National Portfolio [Class A and Class C
shares];
Thornburg Limited Term Municipal Fund
California Portfolio [Class A and Class C
shares])

Prospectus (Thornburg Limited Term Municipal Fund
National Portfolio [Institutional Class
shares]);
Thornburg Limited Term Municipal Fund
California Portfolio [Institutional Class
shares])

Statement of (Thornburg Limited Term Municipal Fund
Additional Information National Portfolio [Class A and Class C
shares];
Thornburg Limited Term Municipal Fund
California Portfolio [Class A and Class C
shares])

Statement of (Thornburg Limited Term Municipal Fund
Additional Information National Portfolio [Institutional Class
shares])
Thornburg Limited Term Municipal Fund
California Portfolio [Institutional Class
shares])

Part C

Signature Page

Exhibits

CROSS REFERENCE SHEET

(i) Thornburg Limited Term Municipal Fund National Portfolio
[Class A and Class C shares]
(ii) Thornburg Limited Term Municipal Fund California Portfolio
[Class A and Class C shares]

Form N-1A Item Number
- ---------------------
Part A Prospectus Caption
- ------ ------------------

1(a). . . . . . . . . . . . . . . . . .Front Cover Page
(b). . . . . . . . . . . . . . . . . . Back Cover Page
2(a). . . . . . . . . . . . . . . . . . . . . THE FUNDS
(b). . . . . . . . . . . . . . . . . . . . . THE FUNDS
3 . . . . . . . . . . . . . . . . . . . . . . THE FUNDS
4 . . . . . . . . . . . . . . . . . . . . . . THE FUNDS
5 . . . . . . . .FUND PERFORMANCE AND INDEX COMPARISONS
6(a) . . . . . . . . . . . . . . . . INVESTMENT ADVISER
(b) . . . . . . . . . . . . . . . . . .(Not Applicable)
7(a) . . . . . . . . .YOUR ACCOUNT - BUYING FUND SHARES
(b) . .YOUR ACCOUNT - BUYING FUND SHARES; Buying Class
A Shares; Buying Class C Shares
(c) . . . . . . . . . . . . . . . .SELLING FUND SHARES
(d) . . . . . . . . . . . .DIVIDENDS AND DISTRIBUTIONS
(e) . . . . . . . . . . . . . . . . . . . . . . .TAXES
(f) . . . . . . . . . . . . . . . . . .(Not Applicable)
8(a) . . . . . . . . .YOUR ACCOUNT - BUYING FUND SHARES
(b) . . . . . . . . .YOUR ACCOUNT - BUYING FUND SHARES
9 . . . . . . . . . . . . . . . . .FINANCIAL HIGHLIGHTS

Part B Statement of Additional Information
- ------ -----------------------------------
10(a) . . . . . . . . . . . . . . . . .Front Cover Page
10(b) . . . . . . . . . . . . . . . . TABLE OF CONTENTS
11(a) . . . . . . . . . . . . ORGANIZATION OF THE FUNDS
(b) . . . . . . . . . . . . . . . . . (Not Applicable)
12(a) . . . . . . . . . . . . ORGANIZATION OF THE FUNDS
(b) . . . . . . . .INVESTMENT OBJECTIVES AND POLICIES
(c) . . . . . . . INVESTMENT OBJECTIVES AND POLICIES;
INVESTMENT LIMITATIONS
(d) . . . . . . . . . . . . . . . . . . . .Prospectus
(e) . . . . . . . . . . . . . .PORTFOLIO TRANSACTIONS
13(a) . . . . . . ORGANIZATION OF THE FUNDS; MANAGEMENT
(b) . . . . . . .MANAGEMENT AND HOLDERS OF SECURITIES
(c) . . . . . . .MANAGEMENT AND HOLDERS OF SECURITIES
(d) . . . . . . .MANAGEMENT AND HOLDERS OF SECURITIES
14(a) . . . . . . . . . . . . . . . . . (Not Applicable)
(b) . . . . . . .MANAGEMENT AND HOLDERS OF SECURITIES
(c) . . . . . . .MANAGEMENT AND HOLDERS OF SECURITIES
15(a) . . . . . . . . . . . . . INVESTMENT ADVISORY AND
ADMINISTRATIVE SERVICES AGREEMENTS
(b) . . . . . . . . . . . . . . . . . . . DISTRIBUTOR
(c) . . . . . . . . . . . . . INVESTMENT ADVISORY AND
ADMINISTRATIVE SERVICES AGREEMENTS
(d) . . . . . . . . . . . . . INVESTMENT ADVISORY AND
ADMINISTRATIVE SERVICES AGREEMENTS
(e) . . . . . . . . . . . . . . . . . (Not Applicable)
(f) . . . . . . . . . . . . . Prospectus; DISTRIBUTOR
(g) . . . . . . . . . .SERVICE AND DISTRIBUTION PLANS
(h) . . . . . . . . . . . . . . . . . (Not Applicable)
16(a) . . . . . . . . . . . . . .PORTFOLIO TRANSACTIONS
(b) . . . . . . . . . . . . . . . . . (Not Applicable)
(c) . . . . . . . . . . . . . .PORTFOLIO TRANSACTIONS
(d) . . . . . . . . . . . . . . . . . (Not Applicable)
(e) . . . . . . . . . . . . . . . . . (Not Applicable)
17(a) . . . . . . Prospectus; ORGANIZATION OF THE FUNDS
(b) . . . . . . . . . . . . . . . . . (Not Applicable)
18(a) . . . . . . . Prospectus; PURCHASE OF FUND SHARES
(b) . . . . . . . . . . . . . PURCHASE OF FUND SHARES
(c) . . .Prospectus; DETERMINATION OF NET ASSET VALUE
(d) . . . . . . . . . . . . . . . . . . . .Prospectus
19(a) . . DISTRIBUTIONS, TAXES AND SHAREHOLDER ACCOUNTS
(b) . . DISTRIBUTIONS, TAXES AND SHAREHOLDER ACCOUNTS
20(a) . . . . . . . . . . . . . . . . . . . DISTRIBUTOR
(b) . . . . . . . . . . . . . . . . . . . DISTRIBUTOR
(C) . . . . . . . . . . . . . . . . . . . DISTRIBUTOR
21(a) . . . . . . . . . . . . . . . . . (Not Applicable)
(b) . . . . . . . . . . YIELD AND RETURN COMPUTATION;
REPRESENTATIVE PERFORMANCE INFORMATION
22(a) . Financial Statements (incorporated by reference)
(b) . Financial Statements (incorporated by reference)

CROSS REFERENCE SHEET

(i) Thornburg Limited Term Municipal Fund National Portfolio
[Institutional Class shares]

(ii) Thornburg Limited Term Municipal Fund California Portfolio
[Institutional Class shares]

Form N-1A Item Number
- ---------------------
Part A Prospectus Caption
- ------ ------------------

1(a). . . . . . . . . . . . . . . . . .Front Cover Page
(b). . . . . . . . . . . . . . . . . . Back Cover Page
2(a). . . . . . . . . . . . . . . . . . . . . THE FUNDS
(b). . . . . . . . . . . . . . . . . . . . . THE FUNDS
3 . . . . . . . . . . . . . . . . . . . . . . THE FUNDS
4 . . . . . . . . . . . . . . . . . . . . . . THE FUNDS
5 . . . . . . . .FUND PERFORMANCE AND INDEX COMPARISONS
6(a) . . . . . . INVESTMENT ADVISER AND MANAGEMENT FEES
(b) . . . . . . . . . . . . . . . . . .(Not Applicable)
7(a) . . . . . . . . YOUR ACCOUNT - BUYING FUND SHARES;
TRANSACTION DETAILS
(b) . .YOUR ACCOUNT - BUYING FUND SHARES; Buying Class
A Shares; Buying Class C Shares
(c) . . . . . . . . . . . . . . . .SELLING FUND SHARES
(d) . . . . . . . . . . . .DIVIDENDS AND DISTRIBUTIONS
(e) . . . . . . . . . . . . . . . . . . . . . . .TAXES
(f) . . . . . . . . . . . . . . . . . .(Not Applicable)
8(a) . . . . . . . . .YOUR ACCOUNT - BUYING FUND SHARES
(b) . . . . . . . . .YOUR ACCOUNT - BUYING FUND SHARES
9 . . . . . . . . . . . . . . . . .FINANCIAL HIGHLIGHTS

Part B Statement of Additional Information

10(a) . . . . . . . . . . . . . . . . .Front Cover Page
10(b) . . . . . . . . . . . . . . . . TABLE OF CONTENTS
11(a) . . . . . . . . . . . . .DESCRIPTION OF THE TRUST
(b) . . . . . . . . . . . . . . . . . (Not Applicable)
12(a) . . . . . . . . . . . . .DESCRIPTION OF THE TRUST
(b) . . . . . . . INVESTMENT POLICIES AND LIMITATIONS
(c) . . . . . . . INVESTMENT POLICIES AND LIMITATIONS
(d) . . . . . . . . . . . . . . . . . . . .Prospectus
(e) . . . . . . . . . . . . . .PORTFOLIO TRANSACTIONS
13(a) . . . . . . . . . . . . .DESCRIPTION OF THE TRUST
(b) . . . . . . . . . . . . . . TRUSTEES AND OFFICERS
(c) . . . . . . . . . . . . . . TRUSTEES AND OFFICERS
(d) . . . . . . . . . . . . . . TRUSTEES AND OFFICERS
14(a) . . . . . . . . . . . . . . . . . (Not Applicable)
(b) . . . . . . . . . PRINCIPAL HOLDERS OF SECURITIES
(c) . . . . . . . . . PRINCIPAL HOLDERS OF SECURITIES
15(a) . . . . . . . . . . . . . INVESTMENT ADVISORY AND
ADMINISTRATIVE SERVICES AGREEMENTS
(b) . . . . . . . . . . . . . . . . . . . DISTRIBUTOR
(c) . . . . . . . . . . . . . INVESTMENT ADVISORY AND
ADMINISTRATIVE SERVICES AGREEMENTS
(d) . . . . . . . . . . . . . INVESTMENT ADVISORY AND
ADMINISTRATIVE SERVICES AGREEMENTS
(e) . . . . . . . . . . . . . . . . . (Not Applicable)
(f) . . . . . . . . . . . . . Prospectus; DISTRIBUTOR
(g) . . . . . . . . . .SERVICE AND DISTRIBUTION PLANS
(h) . . . . . . . . . . . . . . . . . (Not Applicable)
16(a) . . . . . . . . . . . . . .PORTFOLIO TRANSACTIONS
(b) . . . . . . . . . . . . . . . . . (Not Applicable)
(c) . . . . . . . . . . . . . .PORTFOLIO TRANSACTIONS
(d) . . . . . . . . . . . . . . . . . (Not Applicable)
(e) . . . . . . . . . . . . . . . . . (Not Applicable)
17(a) . . . . . . .Prospectus; DESCRIPTION OF THE TRUST
(b) . . . . . . . . . . . . . . . . . (Not Applicable)
18(a) . . . . . . . Prospectus; ADDITIONAL PURCHASE AND
REDEMPTION INFORMATION
(b) . .ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
(c) . . . . . . . . . . . . . . . . . . . .Prospectus
(d) . . . . . . . . . . . . . . . . . . . .Prospectus
19(a) . . . . . . . . . . . . . DISTRIBUTIONS AND TAXES
(b) . . . . . . . . . . . . . DISTRIBUTIONS AND TAXES
20(a) . . . . . . . . . . . . . . . . . . . DISTRIBUTOR
(b) . . . . . . . . . . . . . . . . . . . DISTRIBUTOR
(C) . . . . . . . . . . . . . . . . . . . DISTRIBUTOR
21(a) . . . . . . . . . . . . . . . . . (Not Applicable)
(b) . . . . . . . . . . . PERFORMANCE; REPRESENTATIVE
PERFORMANCE INFORMATION
22(a) . Financial Statements (incorporated by reference)
(b) . Financial Statements (incorporated by reference)

THORNBURG MUNICIPAL FUNDS
Prospectus
February 1, 1999

The Thornburg Municipal Funds are separate investment portfolios ("Funds")
offered through this combined prospectus by Thornburg Limited Term
Municipal
Fund, Inc. and Thornburg Investment Trust.

LIMITED TERM MUNICIPAL FUNDS

(series of Thornburg Limited Term Municipal Fund, Inc.):
Thornburg Limited Term Municipal Fund National Portfolio
("Limited Term National Fund")
Thornburg Limited Term Municipal Fund California Portfolio
("Limited Term California Fund")

INTERMEDIATE TERM MUNICIPAL FUNDS

(series of Thornburg Investment Trust):
Thornburg Intermediate Municipal Fund ("Intermediate National Fund")
Thornburg Florida Intermediate Municipal Fund
("Intermediate Florida Fund")
Thornburg New Mexico Intermediate Municipal Fund
("Intermediate New Mexico Fund")
Thornburg New York Intermediate Municipal Fund
("Intermediate New York Fund")

These Securities have not been approved or disapproved by the Securities
and Exchange Commission or any state securities commission nor has the
Securities and Exchange Commission or any state securities commission
passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.

Fund shares involve investment risks (including possible loss of
principal), and are not deposits or obligations of, or guaranteed or
endorsed by, and are not insured by, any bank, the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any government agency.

NOT FDIC-INSURED MAY LOSE VALUE
NO BANK GUARANTEE
</R

<PAGE>

TABLE OF CONTENTS

__ Limited Term National Fund
Investment Goals
Principal Investment Strategies
Principal Risks of Investing in the Fund
Past Performance of Fund
Fees and Expenses

__ Limited Term California Fund
Investment Goals
Principal Investment Strategies
Principal Risks of Investing in the Fund
Past Performance of Fund
Fees and Expenses

__ Intermediate National Fund
Investment Goals
Principal Investment Strategies
Principal Risks of Investing in the Fund
Past Performance of Fund
Fees and Expenses

__ Intermediate New Mexico Fund
Investment Goals
Principal Investment Strategies
Principal Risks of Investing in the Fund
Past Performance of Fund
Fees and Expenses

__ Intermediate Florida Fund
Investment Goals
Principal Investment Strategies
Principal Risks of Investing in the Fund
Past Performance of Fund
Fees and Expenses

__ Intermediate New York Fund
Investment Goals
Principal Investment Strategies
Principal Risks of Investing in the Fund
Past Performance of Fund
Fees and Expenses

__ Management Discussion of Fund Performance and Index Comparisons

__ Additional Information About Fund Investments

__ Your Account - Buying Fund Shares

__ Selling Fund Shares

__ Investor Services, Transaction Services

__ Dividends and Distributions

__ Taxes

__ Transaction Details

__ Exchange Restrictions

__ Organization of the Funds

__ Investment Adviser

__ Financial Highlights

__ Additional Information

<PAGE>

Limited Term National Fund

Investment Goals
- ----------------

The primary investment goal of Limited Term National Fund is to obtain as
high a level of current income exempt from federal income tax as is
consistent, in the view of the Fund's investment adviser, with preservation
of capital. The secondary goal of the Fund is to reduce expected changes
in its share price compared to longer intermediate and long-term bond
portfolios. The Fund's primary and secondary goals are fundamental
policies, and may not be changed without a majority vote of the Fund's
shareholders.

Principal Investment Strategies
- ------------------------------

The Fund pursues its primary goal by investing in investment grade or
equivalent municipal obligations issued by states and state agencies, local
governments and their agencies and by certain United States territories and
possessions. Thornburg Management Company, Inc. (TMC) actively manages the
Fund's portfolio, and investment decisions are based upon general economic
and financial trends, outlooks for interest rates and securities markets,
the supply of debt securities, and analysis of specific securities.

The Fund seeks to enhance its income by taking advantage of yield
disparities, trends or other factors in the fixed income markets. Although
the Fund ordinarily will acquire securities for investment rather than for
realization of gains on market fluctuations, it may dispose of any security
prior to its scheduled maturity to enhance income or reduce loss, to change
the portfolio's average maturity, or to otherwise respond to current market
conditions. The objective of preserving capital may prevent the Fund from
obtaining the highest yields available.

The Fund normally invests 100% of its net assets in municipal obligations.
As a fundamental policy, the Fund normally invests at least 80% of its
assets in municipal obligations. The Fund may invest up to 20% of its net
assets in taxable securities which produce income not exempt from federal
income tax. These investments may be made due to market conditions,
pending investment of idle funds or to afford liquidity. The Fund's
temporary taxable investments may exceed 20% of its net assets when made
for defensive purposes during periods of abnormal market conditions.

Because the magnitude of changes in value of interest bearing obligations
is greater for obligations with longer terms, the Fund seeks to reduce
changes in its share value by maintaining a portfolio of investments with a
dollar-weighed average maturity normally less than five years. There is no
limitation on the maturity of any specific security the Fund may purchase.
The Fund may dispose of any security before it matures. The Fund also
attempts to reduce changes in it share value through credit analysis,
selection and diversification.

Principal Risks of Investing in the Fund
- ---------------------------------------

The value of the Fund's shares and its dividends will fluctuate in response
to changes in interest rates. When interest rates increase, the value of
the Fund's investments declines and the Fund's share value is reduced.
When interest rates decline, the value of the Fund's investments increases.
During periods of declining interest rates the Fund's dividends decline.
The value of Fund shares also could be reduced if municipal obligations
held by the Fund were downgraded by rating agencies, or went into default,
or if legislation or other government action reduces the ability of issuers
to pay principal and interest when due or changes the tax treatment of
interest on municipal obligations. The loss of money is a risk of
investing in the Fund, and when you sell your shares they may be worth more
or less than what you paid for them.

An investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

Past Performance of the Fund
- ---------------------------

The sales charge for Class A shares is not reflected in the returns shown
in the bar charts, and the returns would be less if the charge was taken
into account. The figures shown in the average annual total return table
do reflect maximum sales charges imposed, assuming a redemption at the end
of each period shown. Performance in the past is not necessarily an
indication of how the Fund will perform in the future.

<The following are presented as bar graphs in the Prospectus>
Limited Term National Fund Annual Total Returns Class A Shares
- ------------------------------------------------------------

15%

10% 9.97% 8.81 8.61
7.74 7.79
5% 5.47 6.48
3.97
0%
(1.48)
- -5
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989

Highest quarterly results for time period shown: 4.57% (quarter ended
3/31/86).
Lowest quarterly results for time period shown: (2.10)% (quarter ended
3/31/94).

Limited Term National Fund Average Annual Total Returns
- -----------------------------------------------------
(periods ended 12/31/98)

Inception
Class C
One Year (7/6/94) Five Years Ten Years
-------- -------- -------- ---------
Class A Shares 2.16% N/A 3.96% 5.90%
Class C Shares 3.86% 6.04% N/A N/A
Lehman Index 5.85% 6.28% 5.36% 6.99%

</R

<PAGE>

FEES AND EXPENSES OF THE FUND

Class A Class C
------- -------
Maximum Sales Charge (Load) imposed on 2.50% none
purchases (as a percentage of offering price)
Maximum Deferred Sales Charge on Redemptions 0.50%* 0.50%**
(as a percentage of redemption proceeds or
original purchase price, whichever is lower)
* Imposed only on redemptions of purchases greater than $1 million in
the event of a redemption within 12 months of purchase.
** Imposed only on redemptions of Class C shares within 12 months
of purchase.

Annual Fund Operating Expenses (expenses that are deducted
- ------------------------------ from Fund assets)

Thornburg Limited Term Municipal Fund-National Portfolio
Class A Class C
Management Fee .45% .45%
Distribution and Service (12b-1) Fees .25% 1.00%
Other Expenses .27% .38%
---- -----
Total Annual Operating Expenses .97% 1.83%

Thornburg Management Company, Inc. (TMC) intends to reimburse a portion of
the Class C other expenses, and Thornburg Securities Corporation intends to
waive a portion of the Class C 12b-1 fees, so that actual Class C other
expenses are .30%, actual Class C 12b-1 fees are .63%, and so that actual
total Fund operating expenses are 1.38% for Class C shares. TMC's and
TSC's reimbursement of expenses and waiver of these fees may be terminated
at any time.

Example. This Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Fund for the time
periods indicated and redeem all of your shares at the end of these
periods. The Example also assumes that your investment has a 5% return
each year and that the Fund's operating expenses remain the same. Although
your actual costs may be higher or lower, based on these assumptions your
costs would be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A Shares $347 $553 $776 $1,421
Class C Shares 238 581 1,001 2,175

You would pay the following expenses if you did not redeem your shares:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A Shares $347 $553 $776 $1,421
Class C Shares 188 581 1,002 2,175

<PAGE>

Limited Term California Fund

Investment Goals
- ----------------

The primary investment goal of Limited Term California Fund is to obtain as
high a level of current income exempt from federal and California state
individual income taxes as is consistent, in the view of the Fund's
investment adviser, with preservation of capital. The secondary goal of
the Fund is to reduce expected changes in its share price compared to
longer intermediate and long-term bond portfolios. The Fund's primary and
secondary goals are fundamental policies, and may not be changed without a
majority vote of the Fund's shareholders.

Principal Investment Strategies
- ------------------------------

The Fund pursues its primary goal by investing in investment grade or
equivalent municipal obligations issued by California state and California
state agencies, local governments and their agencies and by certain United
States territories and possessions. Thornburg Management Company, Inc.
(TMC) actively manages the Fund's portfolio, and investment decisions are
based upon general economic and financial trends, outlooks for interest
rates and securities markets, the supply of debt securities, and analysis
of specific securities.

The Fund normally invests 100% of its net assets in municipal obligations.
As a fundamental policy, the Fund normally invests at least 80% of its
assets in municipal obligations. Under normal conditions the Fund invests
100% of its assets in obligations originating in California or issued by
United States territories and possessions, and as a matter of fundamental
policy, invests at least 65% of its total assets in Municipal obligations
originating in California. The Fund may invest up to 20% of its net assets
in taxable securities which would produce income not exempt from federal
California income tax. These investments may be made due to market
conditions, pending investment of idle funds or to afford liquidity. The
Fund's temporary taxable investments may exceed 20% of its net assets when
made for defensive purposes during periods of abnormal market conditions.

Principal Risks of Investing in the Fund
- ---------------------------------------

The value of the Fund's shares and its dividends will fluctuate in response
to changes in interest rates. When interest rates increase, the value of
the Fund's investments declines and the Fund's share value is reduced.
When interest rates decline, the value of the Fund's investments increases.
During periods of declining interest rates the Fund's dividends decline.
The value of Fund shares also could be reduced if municipal obligations
held by the Fund were downgraded by rating agencies, or went into default,
or if legislation or other government action reduces the ability of issuers
to pay principal and interest when due or changes the tax treatment of
interest on municipal obligations. Because the Fund invests primarily in
obligations originating in California, the Fund's share value may be more
sensitive to adverse economic or political developments in that state. A
portion of the Fund's dividends could be subject to the federal alternative
minimum tax. The loss of money is a risk of investing in a Fund, and when
you sell your shares they may be worth more or less than what you paid for
them.

An investment in a Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

Past Performance of the Fund
- ---------------------------

The sales charge for Class A shares is not reflected in the returns shown
in the bar charts, and the returns would be less if the charge was taken
into account. The figures shown in the average annual total return table
reflect maximum sales charges imposed, assuming a redemption at the end of
each period shown. Performance in the past is not necessarily an
indication of how the Fund will perform in the future.

<The following are presented as bar graphs in the Prospectus>
Limited Term California Fund Annual Total Returns Class A Shares
- --------------------------------------------------------------

15%

10% 10.27% 8.21 7.52
7.53 7.52
5% 5.84 6.77
4.97 4.81
0%
(2.13)
- -5
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989

Highest quarterly results for time period shown: 3.77% (quarter ended
3/31/95).
Lowest quarterly results for time period shown: (2.08)% (quarter ended
3/31/94).

Limited Term California Fund Average Annual Total Returns
- -------------------------------------------------------
(periods ended 12/31/98)
Since
Inception
One Year 4/1/97 Five Years Ten Years
-------- --------- ---------- ---------
Class A Shares 2.35% N/A 4.15% 5.76%
Class C Shares 3.96% 4.92% N/A N/A
Lehman Index 5.85% 6.28% 5.36% 6.99%

<PAGE>

FEES AND EXPENSES OF THE FUND

SHAREHOLDER FEES (Fees paid directly from your investment)

Limited Term Municipal Funds
Class A Class C
------- -------
Maximum Sales Charge on Purchases 2.50% none
(as a percentage of offering price)
Maximum Deferred Sales Charge on Redemptions 0.50%* 0.50%**
(as a percentage of redemption proceeds or
original purchase price, whichever is lower)
* Imposed only on redemptions of purchases greater than $1 million in
the event of a redemption within 12 months of purchase.
** Imposed only on redemptions of Class C shares within 12 months
of purchase.

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)

Thornburg Limited Term Municipal Fund-California Portfolio
Class A Class C
Management Fee .50% .50%
Distribution and Service (12b-1) Fees .25% 1.00%
Other Expenses .29% .47%
---- -----
Total Annual Operating Expenses 1.04% 1.97%

Expenses reflect rounding. Thornburg Management Company, Inc. (TMC)
intends to reimburse a portion of the Class A other expenses, so that
actual Class A other expenses are .25%, and actual total fund operating
expenses are 1.00%. TMC and Thornburg Securities Corporation (TSC) intend
to waive a portion of the Class C 12b-1 fees, and TMC intends to reimburse
a portion of the Class C other expenses, so that actual Class C 12b-1
expenses are .63%, actual Class C other expenses are .27%, and actual total
fund operating expenses for Class C are 1.40%. TMC's and TSC's waiver of
fees and TMC's reimbursement of expenses may be terminated at any time.

Example. This Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A Shares $354 $575 $814 $1,501
Class C Shares 252 625 1,075 2,326

You would pay the following expenses if you did not redeem your shares:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A Shares $354 $575 $814 $1,501
Class C Shares 202 625 1,075 2,326

<PAGE>

Intermediate National Fund

Investment Goals
- ----------------

The primary investment goal of Intermediate National Fund is to obtain as
high a level of current income exempt from federal income tax as is
consistent, in the view of the Fund's investment adviser, with preservation
of capital. The secondary goal of the Fund is to reduce expected changes
in its share price compared to long-term bond portfolios. The Fund's
primary and secondary goals are fundamental policies, and may not be
changed without a majority vote of the Fund's shareholders.

Principal Investment Strategies
- ------------------------------

The Fund normally invests 100% of its net assets in municipal obligations.
As a fundamental policy, the Fund normally invests at least 80% of its
assets in municipal obligations. The Fund may invest up to 20% of its net
assets in taxable securities which would produce income not exempt from
federal income tax. These investments may be made due to market
conditions, pending investment of idle funds or to afford liquidity. The
Fund's temporary taxable investments may exceed 20% of its net assets when
made for defensive purposes during periods of abnormal market conditions.

Because the magnitude of changes in value of interest bearing obligations
is greater for obligations with longer terms, the Fund seeks to reduce
changes in its share value by maintaining a portfolio of investments with a
dollar-weighed average maturity of normally three to ten years. During
temporary periods the Fund's portfolio maturity may be reduced for
defensive purposes. There is no limitation on the maturity of any specific
security the Fund may purchase. The Fund may dispose of any security
before it matures. The Fund also attempts to reduce changes in it share
value through credit analysis, selection and diversification.

Principal Risks of Investing in the Fund
- ---------------------------------------

The value of the Fund's shares and its dividends will fluctuate in response
to changes in interest rates. When interest rates increase, the value of
the Fund's investments declines and the Fund's share value is reduced.
When interest rates decline, the value of the Fund's investments increases.
Dividends also will vary over time. During periods of declining interest
rates the Fund's dividends similarly decline. The value of Fund shares
also could be reduced if municipal obligations held by the Fund were
downgraded by rating agencies, or went into default, or if legislation or
other government action reduces the ability of issuers to pay principal and
interest when due or changes the tax treatment of interest on municipal
obligations. A portion of the Fund's dividends could be subject to the
federal alternative minimum tax. The loss of money is a risk of investing
in a Fund, and when you sell your shares they may be worth more or less
than what you paid for them.

An investment in a Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

Past Performance of the Fund
- ---------------------------

The sales charge for Class A shares is not reflected in the returns shown
in the bar charts, and the returns would be less if the charge was taken
into account. The figures shown in the average annual total return table
does reflect maximum sales charges imposed, assuming a redemption at the
end of each period shown. Performance in the past is not necessarily an
indication of how the Fund will perform in the future.

<The following are presented as bar graphs in the Prospectus>
Intermediate National Fund Annual Total Returns Class A Shares
- ------------------------------------------------------------

15%
13.22 12.29
10%
5.47 9.81
5%
4.45
0% 0.72
(2.48)
- -5
1998 1997 1996 1995 1994 1993 1992

Highest quarterly results for time period shown: 4.91% (quarter ended
3/31/95)
Lowest quarterly results for time period shown: (3.33)% (quarter ended
3/31/94).

Intermediate National Fund Average Annual Total Returns
- -----------------------------------------------------
(periods ended 12/31/98)

Class C Class A
Inception Inception
One Year (7/6/96) Five Years (7/23/91)
-------- ---------- ---------- ---------

Class A Shares 1.79% N/A 4.70% 6.73%
Class C Shares 4.44% 6.04% N/A N/A
M-L Bond Index 6.83% 7.63% 6.27% 7.48%

<PAGE>

FEES AND EXPENSES OF THE FUND

SHAREHOLDER FEES (Fees paid directly from your investment)

Class A Class C
------- -------
Maximum Sales Charge on Purchases 3.50% none
(as a percentage of offering price)
Maximum Deferred Sales Charge on Redemptions 0.50%* 0.60%**
(as a percentage of redemption proceeds or
original purchase price, whichever is lower)
* Imposed only on redemptions of purchases greater than $1 million in
the event of a redemption within 12 months of purchase.
** Imposed only on redemptions of Class C shares within 12 months
of purchase.

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)

Thornburg Intermediate Municipal Fund
Class A Class C
------- -------
Management Fee .50% .50%
Distribution and Service (12b-1) Fees .25% 1.00%
Other Expenses .29% .43%
----- -----
Total Annual Fund Operating Expenses 1.04% 1.93%

Expenses reflect rounding. Thornburg Management Company, Inc. (TMC)
intends to reimburse a portion of the Class A other expenses, so that
actual Class A other expenses are .25%, and actual total fund operating
expenses are 1.00%. TMC and Thornburg Securities Corporation (TSC) intend
to waive a portion of the Class C 12b-1 fees, and TMC intends to reimburse
a portion of the Class C other expenses, so that actual Class C 12b-1
expenses are .60%, actual Class C other expenses are .30%, and actual total
fund operating expenses for Class C are 1.40%. TMC's and TSC's waiver of
fees and TMC's reimbursement of expenses may be terminated at any time.

Example. This Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A Shares $453 $671 $908 $1,589
Class C Shares 258 613 1,054 2,283

You would pay the following expenses if you did not redeem your shares:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A Shares $453 $671 $908 $1,589
Class C Shares 198 613 1,054 2,283

<PAGE>

Intermediate New Mexico Fund

Investment Goals
- ----------------

The primary investment goal of Intermediate New Mexico Fund is to obtain as
high a level of current income exempt from federal and New Mexico state
individual income taxes as is consistent, in the view of the Fund's
investment adviser, with preservation of capital. The secondary goal of
the Fund is to reduce expected changes in its share price compared to
long-term bond portfolios. The Fund's primary and secondary goals are
fundamental policies, and may not be changed without a majority vote of the
Fund's shareholders.

Principal Investment Strategies
- --------------------------------

The Fund pursues its primary goal by investing in investment grade or
equivalent municipal obligations issued by the State of New Mexico and by
New Mexico state agencies, local governments and their agencies and by
certain United States territories and possessions. Investment decisions
are based upon general economic and financial trends, outlooks for interest
rates and securities markets, the supply of debt securities, and analysis
of specific securities.

The Fund normally invests 100% of its net assets in municipal obligations.
As a fundamental policy, the Fund normally invests at least 80% of its
assets in municipal obligations. Under normal conditions the Fund invests
100% of its assets in obligations originating in New Mexico or issued by
United States territories or possessions, and as a matter of fundamental
policy, invests at least 65% of its total assets in municipal obligations
originating in New Mexico. The Fund may invest up to 20% of its net assets
in taxable securities which produce income not exempt from federal or New
Mexico income tax. These investments may be made due to market conditions,
pending investment of idle funds or to afford liquidity. The Fund's
temporary taxable investments may exceed 20% of its net assets when made
for defensive purposes during periods of abnormal market conditions.

Because the magnitude of changes in value of interest bearing obligations
is greater for obligations with longer terms, the Fund seeks to reduce
changes in its share value by maintaining a portfolio of investments with a
dollar-weighed average maturity of normally three to ten years. During
temporary periods the Fund's portfolio maturity may be reduced for
defensive purposes. There is no limitation on the maturity of any specific
security the Fund may purchase. The Fund may dispose of any security
before it matures. The Fund also attempts to reduce changes in it share
value through credit analysis, selection and diversification.

Principal Risks of Investing in the Fund
- ---------------------------------------

The value of the Fund's shares and its dividends will fluctuate in response
to changes in interest rates. When interest rates increase, the value of
the Fund's investments declines and the Fund's share value is reduced.
When interest rates decline, the value of the Fund's investments increases.
During periods of declining interest rates the Fund's dividends decline.
The value of Fund shares also could be reduced if municipal obligations
held by the Fund were downgraded by rating agencies, or went into default,
or if legislation or other government action reduces the ability of issuers
to pay principal and interest when due or changes the tax treatment of
interest on municipal obligations. Because the Fund invests primarily in
obligations originating in New Mexico, the Fund's share value may be more
sensitive to adverse economic or political developments in that state. A
portion of the Fund's dividends could be subject to the federal alternative
minimum tax. The loss of money is a risk of investing in the Fund, and
when you sell your shares they may be worth more or less than what you paid
for them.

An investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

The Fund is a nondiversified investment company, and means that it may
invest a greater proportion of its assets in the securities of a single
issuer. This may be riskier, because a default or other adverse condition
affecting such an issuer could cause the Fund's share price to decline to a
greater degree.

Past Performance of the Fund
- ---------------------------

<The following are presented as bar graphs in the Prospectus>
Intermediate New Mexico Fund Annual Total Returns Class A Shares
- --------------------------------------------------------------

15%
11.15
10% 10.31
6.49 8.63
5%
4.89 0.42
0%
(1.19)
- -5
1998 1997 1996 1995 1994 1993 1992

Highest quarterly results for time period shown: 4.43% (quarter ended
3/31/95).
Lowest quarterly results for time period shown: (2.91)% (quarter ended
3/31/94).

Intermediate New Mexico Fund Average Annual Total Returns
- -------------------------------------------------------
(periods ending 12/31/98)

One Year Five Years Since Inception
(6/21/91)
-------- ---------- --------------
Class A Shares 1.25% 4.14% 6.07%
M-L Bond Index 6.83% 6.27% 7.32%

<PAGE>

FEES AND EXPENSES OF THE FUND

SHAREHOLDER FEES (Fees paid directly from your investment)

Class A
-------
Maximum Sales Charge on Purchases 3.50%
(as a percentage of offering price)
Maximum Deferred Sales Charge on Redemptions 0.50%*
(as a percentage of redemption proceeds or
original purchase price, whichever is lower)
* Imposed only on redemptions of purchases greater than $1 million in
the event of a redemption within 12 months of purchase.

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)

Thornburg New Mexico Intermediate Municipal Fund
Class A
-------
Management Fee .50%
Distribution and Service (12b-1) Fees .25%
Other Expenses .26%
-----
Total Annual Fund Operating Expenses 1.01%

Expenses reflect rounding and are restated to reflect current expenses.
Thornburg Management Company, Inc. (TMC) intends to reimburse a portion of
the Class A other expenses, so that actual Class A other expenses are .25%,
and actual total fund operating expenses are 1.00%. TMC's reimbursement of
expenses may be terminated at any time.

Example. This Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A Shares $451 $665 $898 $1,566

You would pay the following expenses if you did not redeem your shares:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A Shares $451 $665 $898 $1,566

<PAGE>

Intermediate Florida Fund

Investment Goals
- ----------------

The primary investment goal of Intermediate Florida Fund is to obtain as
high a level of current income exempt from federal income tax as is
consistent, in the view of the Fund's investment adviser, with preservation
of capital. The Fund also seeks exemption of its shares from the Florida
"intangibles" tax on securities owned by individuals. The secondary goal
of the Fund is to reduce expected changes in its share price compared to
long-term bond portfolios. The Fund's primary and secondary goals are
fundamental policies, and may not be changed without a majority vote of the
Fund's shareholders.

Principal Investment Strategies
- ------------------------------

The Fund pursues its primary goal by investing in investment grade or
equivalent municipal obligations issued by the State of Florida and Florida
State agencies, local governments and their agencies and by certain United
States territories and possessions. Thornburg Management Company, Inc.
(TMC) actively manages the Fund's portfolio, and investment decisions are
based upon general economic and financial trends, outlooks for interest
rates and securities markets, the supply of debt securities, and analysis
of specific securities.

The Fund seeks to enhance its income by taking advantage of yield
disparities, trends or other factors in the fixed income markets. Although
the Fund ordinarily will acquire securities for investment rather than for
realization of gains on market fluctuations, it may dispose of any security
prior to its scheduled maturity to enhance income or reduce loss, to change
the portfolio's average maturity, or to otherwise respond to current market
conditions. The objective of preserving capital may preclude the Fund from
obtaining the highest yields available.

The Fund normally invests 100% of its net assets in municipal obligations.
As a fundamental policy, the Fund normally invests at least 80% of its
assets in municipal obligations. Under normal conditions the Fund invests
100% of its total assets in municipal obligations originating in Florida or
issued by United States territories and possessions. As a matter of
fundamental policy, invests at least 65% of its total assets in municipal
obligations originating in Florida. The Fund may invest up to 20% of its
net assets in taxable securities which would produce income not exempt from
federal income tax. These investments may be made due to market
conditions, pending investment of idle funds or to afford liquidity. The
Fund's temporary taxable investments may exceed 20% of its net assets when
made for defensive purposes during periods of abnormal market conditions.

Because the magnitude of changes in value of interest bearing obligations
is greater for obligations with longer terms, the Fund seeks to reduce
changes in its share value by maintaining a portfolio of investments with a
dollar-weighed average maturity of normally three to ten years. During
temporary periods the Fund's portfolio maturity may be reduced for
defensive purposes. There is no limitation on the maturity of any specific
security the Fund may purchase. The Fund may dispose of any security
before it matures. The Fund also attempts to reduce changes in it share
value through credit analysis, selection and diversification.

Principal Risks of Investing in the Fund
- ---------------------------------------

The value of the Fund's shares and its dividends will fluctuate in response
to changes in interest rates. When interest rates increase, the value of
the Fund's investments declines and the Fund's share value is reduced.
When interest rates decline, the value of the Fund's investments increases.
During periods of declining interest rates the Fund's dividends decline.
The value of Fund shares also could be reduced if municipal obligations
held by the Fund were downgraded by rating agencies, or went into default,
or if legislation or other government action reduces the ability of issuers
to pay principal and interest when due or changes the tax treatment of
interest on municipal obligations. Because the Fund invests primarily in
obligations originating in Florida, the Fund's share value may be more
sensitive to adverse political or economic developments in that state. A
portion of the Fund's dividends may be subject to the federal alternative
minimum tax. The loss of money is a risk of investing in the Fund, and
when you sell your shares they may be worth more or less than what you paid
for them.

An investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

Past Performance of the Fund
- ---------------------------

The sales charge for Class A shares is not reflected in the returns shown
in the bar chart, and the returns would be less if the charge was taken
into account. The figures shown in the average annual total return table
does reflect maximum sales charges imposed, assuming a redemption at the
end of each period shown. Performance in the past is not necessarily an
indication of how the Fund will perform in the future.

<The following are presented as bar graphs in the Prospectus>
Intermediate Florida Fund Annual Total Returns Class A Shares
- -----------------------------------------------------------

15%

10% 12.19
7.28
5% 5.81
4.67
0%

- -5
1998 1997 1996 1995

Highest quarterly results for time period shown: 4.68% (quarter ended
3/31/95).
Lowest quarterly results for time period shown: (3.09)% (quarter ended
3/31/94).

Intermediate Florida Fund Average Annual Total Returns
- ----------------------------------------------------
(periods ended 12/31/98)

One Year Since Inception
(2/1/94)
-------- --------------
Class A Shares 1.53% 4.67%
M-L Bond Index 6.83% 6.18%

<PAGE>

SHAREHOLDER FEES (Fees paid directly from your investment)

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)

Thornburg Florida Intermediate Municipal Fund
Class A
-------
Management Fee .50%
Distribution and Service (12b-1) Fees .25%
Other Expenses .36%
-----
Total Annual Fund Operating Expenses 1.11%

Expenses reflect rounding and are restated to reflect current expenses.
Thornburg Management Company, Inc. (TMC) intends to reimburse a portion of
the Class A other expenses, so that actual Class A other expenses are .23%,
and actual total fund operating expenses are .98%. TMC's reimbursement of
expenses may be terminated at any time.

Example. This Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A Shares $460 $693 $945 $1,668

You would pay the following expenses if you did not redeem your shares:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A Shares $460 $693 $945 $1,668

<PAGE>

Intermediate New York Fund

Investment Goals
- ----------------

The primary investment goal of Intermediate New York Fund is to obtain as
high a level of current income exempt from federal, New York State and New
York City individual income taxes as is consistent, in the view of the
Fund's investment adviser, with preservation of capital. The secondary
goal of the Fund is to reduce expected changes in its share price compared
to long-term bond portfolios. The Fund's primary and secondary goals are
fundamental policies, and may not be changed without a majority vote of the
Fund's shareholders.

Principal Investment Strategies
- -------------------------------

The Fund pursues its primary goal by investing in investment grade or
equivalent municipal obligations issued by New York State and by New York
State agencies, local governments and their agencies and by certain United
States territories and possessions. Thornburg Management Company, Inc.
(TMC) actively manages the Fund's portfolio, and investment decisions are
based upon general economic and financial trends, outlooks for interest
rates and securities markets, the supply of debt securities, and analysis
of specific securities.

The Fund normally invests 100% of its net assets in municipal obligations.
As a fundamental policy, the Fund normally invests at least 80% of its
assets in municipal obligations. Under normal conditions the Fund invests
100% of its total assets in Municipal obligations originating in New York
or issued by United States territories and possessions, and as a matter of
fundamental policy, invests at least 65% of its total assets in municipal
obligations originating in New York. The Fund may invest up to 20% of its
net assets in taxable securities which would produce income not exempt from
federal or New York income tax. These investments may be made due to
market conditions, pending investment of idle funds or to afford liquidity.
The Fund's temporary taxable investments may exceed 20% of its net assets
when made for defensive purposes during periods of abnormal market
conditions.

Because the magnitude of changes in value of interest bearing obligations
is greater for obligations with longer terms, the Fund seeks to reduce
changes in its share value by maintaining a portfolio of investments with a
dollar-weighed average maturity of normally three to ten years. During
temporary periods the Fund's portfolio maturity may be reduced for
defensive purposes. There is no limitation on the maturity of any specific
security the Fund may purchase. The Fund may dispose of any security
before it matures. The Fund also attempts to reduce changes in it share
value through credit analysis, selection and diversification.

Principal Risks of Investing in the Fund
- ----------------------------------------

The value of the Fund's shares and its dividends will fluctuate in response
to changes in interest rates. When interest rates increase, the value of
the Fund's investments declines and the Fund's share value is reduced.
When interest rates decline, the value of the Fund's investments increases.
During periods of declining interest rates the Fund's dividends decline.
The value of Fund shares also could be reduced if municipal obligations
held by the Fund were downgraded by rating agencies, or went into default,
or if legislation or other government action reduces the ability of issuers
to pay principal and interest when due or changes the tax treatment of
interest on municipal obligations. Because the Fund invests primarily in
obligations originating in New York, the Fund's share value may be more
sensitive to adverse economic or political developments in that state. A
portion of the Fund's dividends could be subject to the federal alternative
minimum tax. The loss of money is a risk of investing in a Fund, and when
you sell your shares they may be worth more or less than what you paid for
them.

An investment in a Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

Past Performance of the Fund
- ----------------------------

<The following are presented as bar graphs in the Prospectus>
Intermediate New York Fund Annual Total Returns Class A Shares
- -------------------------------------------------------------

15%

10%

5% 5.88

- -5
1998

Highest quarterly results for time period shown: 2.61% (quarter ended
9/30/98).
Lowest quarterly results for time period shown: 0.42% (quarter ended
12/31/98).

Intermediate New York Fund Average Annual Total Returns
- ------------------------------------------------------
(periods ended 12/31/98)

One Year Since Inception
(9/4/97)
-------- --------------
Class A Shares 2.17% 4.12%
M-L Bond Index 6.83% 8.21%

<PAGE>

FEES AND EXPENSES OF THE FUND

The following tables describe the fees and expenses that you may pay if you
buy and hold shares of the Fund.

SHAREHOLDER FEES (Fees paid directly from your investment)

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund
assets)

Thornburg New York Intermediate Municipal Fund
Class A
-------
Management Fee .50%
Distribution and Service (12b-1) Fees .25%
Other Expenses .44%
-----
Total Annual Fund Operating Expenses 1.19%

Expenses reflect rounding and are restated to reflect current expenses.
Thornburg Management Company, Inc. (TMC) intends to reimburse the Class A
other expenses, so that actual Class A other expenses are 0%, and actual
total fund operating expenses are .75%. TMC's reimbursement of expenses
may be terminated at any time.

Example. This Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A Shares $468 $717 $987 $1,757

You would pay the following expenses if you did not redeem your shares:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A Shares $468 $717 $987 $1,757

MANAGEMENT DISCUSSION OF FUND PERFORMANCE AND INDEX COMPARISONS

The graphs on the next page compare how $10,000 would have appreciated if
invested in shares of the named Fund, a broad based securities market
index, and the Consumer Price Index, a general measure of inflation. The
table accompanying each graph shows average annual total return for the
Fund for the designated period. Class A total return figures assume an
investment of $10,000 at the public offering price for purchases up to
$10,000; Class C total return figures assume an investment of $10,000.

Comparison of Fund performance to widely used indices is imperfect, because
the indices do not reflect the laddered maturity strategy each Fund uses.
Each index shown attempts to model the total return of a constant maturity
bond portfolio, including bonds from throughout the United States. Each
index also assumes no trading costs for buying and selling bonds, no
custodial or accounting costs, and coupons are immediately reinvested at no
transactional cost. Consequently, the reader should remain aware of the
inherent limitations in comparing a theoretical index to actual results of
a Fund portfolio.

Each Fund "ladders" or arrays the maturities of its bonds. The Limited Term
Municipal Funds maintain a weighted average maturity using this technique
which is normally no more than five years, while the Intermediate Municipal
Funds' weighted average maturity is normally three to ten years.

In general, interest rates have continued, with some fluctuations,
to decline over the one-year period ended September 30, 1998. Interest
rates have dropped more for intermediate-term bonds than for short-term
bonds or long-term bonds, leading to a flatter yield curve. For instance,
30-year treasury bond yields fell 1.43% to 4.97% while five-year bond
yields fell 1.76% to 4.21% and one-year bond yields dropped 1.03% to 4.39%.

The municipal bond market, facing the largest volume of supply in several
years, has underperformed the treasury bond market. Thirty-year AA-rated
municipal bond yields declined by 0.38% to 4.89% over the one-year period
ended September 30, 1998. Meanwhile, five-year AA-rated municipal yields
declined by 0.44% to 3.88% and ten-year AA-rated municipal bond yields
declined by 0.45% to 4.25%. These yield declines have caused price
increases of 1.61% and 3.34% for the five-year and ten-year bonds,
respectively. Over the same one-year period, the net asset values of
Limited Term National and California Portfolios have increased 0.97% and
1.68%, respectively. The net asset values of the Intermediate National
Fund has similarly increased by 2.30%. While the net asset values of all
the Funds rose over the period described, the dividend yields of all
declined slightly. If interest rates continue to fall, the net asset
values of all the Funds should continue to rise, but the dividend yields
would be expected to decrease.

LIMITED TERM NATIONAL FUND

Index Comparison

Compares performance of the Limited Term National Fund, the Lehman
5-Year General Obligation Bond Index and the Consumer Price Index for the
periods ending June 30, 1998. On June 30, 1998, 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 5.0 years and 4.1 years, respectively. Past performance of the Index
and the Fund may not be indicative of future performance.

<TABLE> <The following tables appear as side-by-side graphs in the
prospectus.>
Class A Shares
<CAPTION>
FUND Lehman CPI
A Shares Government
-------- ---------- ---------
<S> <C> <C> <C>
9/84 $ 9,746 $10,000 $10,000
12/84 9,928 10,448 10,151
3/85 10,232 10,852 10,283
6/85 10,677 11,400 10,355
9/85 10,747 11,355 10,417
12/85 11,226 11,741 10,564
3/86 11,739 12,628 10,522
6/86 11,842 12,636 10,553
9/86 12,177 13,103 10,616
12/86 12,471 13,447 10,702
3/87 12,741 13,755 10,852
6/87 12,656 13,629 10,983
9/87 12,683 13,347 11,104
12/87 12,988 13,857 11,204
3/88 13,402 14,289 11,294
6/88 13,589 14,350 11,430
9/88 13,838 14,514 11,545
12/88 14,013 14,601 11,649
3/89 14,168 14,559 11,789
6/89 14,580 15,244 11,955
9/89 14,783 15,421 12,027
12/89 15,105 15,881 12,172
3/90 15,239 15,959 12,404
6/90 15,524 16,316 12,529
9/90 15,715 16,488 12,781
12/90 16,085 17,034 12,948
3/91 16,400 17,402 13,026
6/91 16,704 17,706 13,117
9/91 17,073 18,336 13,222
12/91 17,470 18,952 13,355
3/92 17,628 18,904 13,435
6/92 18,107 19,519 13,543
9/92 18,509 20,010 13,624
12/92 18,822 20,328 13,747
3/93 19,341 20,808 13,858
6/93 19,780 21,298 13,941
9/93 20,264 21,761 14,011
12/93 20,481 22,028 14,123
3/94 20,050 21,332 14,208
6/94 20,225 21,619 14,293
9/94 30,324 21,784 14,408
12/94 20,178 21,713 14,466
3/95 20,896 22,677 14,582
6/95 21,390 23,254 14,713
9/95 21,755 23,890 14,772
12/95 22,190 24,327 14,861
3/96 22,232 24,403 15,010
6/96 22,374 24,510 15,116
9/96 22,703 24,909 15,237
12/96 23,070 25,452 15,374
3/97 23,150 25,411 15,451
6/97 23,595 26,044 15,498
9/97 24,007 26,612 15,591
12/97 24,332 27,102 15,653
3/98 24,552 27,420 15,669
6/98 24,787 27,698 15,763
</TABLE>

Average Annual Total Returns (at max. offering price)
A Shares One Year (12 mos. ended 6/30/98): 2.46%
Five Years: 4.09%
Ten Years: 5.92%
From Inception (9/28/84): 6.82%

<TABLE>
<CAPTION>
FUND Lehman CPI
C Shares Government
-------- ---------- ---------
<S> <C> <C> <C>
8/94 $10,000 $10,000 $10,000
9/94 9,952 9,925 10,020
10/94 9,894 9,869 10,030
11/94 9,792 9,806 10,040
12/94 9,858 9,893 10,060
1/95 9,969 9,988 10,090
2/95 10,120 10,132 10,110
3/95 10,193 10,293 10,141
4/95 10,245 10,321 10,171
5/95 10,405 10,547 10,202
6/95 10,425 10,556 10,232
7/95 10,483 10,703 10,243
8/95 10,550 10,812 10,263
9/95 10,586 10,844 10,273
10/95 10,663 10,890 10,304
11/95 10,740 10,982 10,314
12/95 10,786 11,043 10,335
1/96 10,848 11,174 10,376
2/96 10,838 11,136 10,408
3/96 10,788 11,077 10,439
4/96 10,786 11,060 10,470
5/96 10,808 11,047 10,501
6/96 10,847 11,125 10,512
7/96 10,910 11,199 10,544
8/96 10,932 11,222 10,565
9/96 11,004 11,307 10,596
10/96 11,067 11,412 10,628
11/96 11,163 11,570 10,660
12/96 11,161 11,553 10,692
1/97 11,192 11,584 10,703
2/97 11,257 11,667 10,735
3/97 11,197 11,535 10,746
4/97 11,228 11,592 10,756
5/97 11,309 11,719 10,767
6/97 11,391 11,822 10,778
. . .
9/97 11,578 12,080 10,843
12/97 11,723 12,302 10,886
3/98 11,817 12,446 10,897
6/98 11,927 12,573 11,229
</TABLE>

Average Annual Total Returns
C Shares One Year (12 mos. ended 6/30/98): 4.70%
From Inception (9/1/94): 4.71%

LIMITED TERM CALIFORNIA FUND

Index Comparison

Compares performance of the Limited Term California Fund, the Lehman
5-Year General Obligation Bond Index and the Consumer Price Index for
periods ending June 30, 1998. On June 30, 1998, 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 5.0 years and 4.8 years, respectively. Past performance of the Index
and the Fund may not be indicative of future performance.

Class A Shares Class C Shares
<CAPTION>
FUND Lehman CPI FUND Lehman CPI
A Shares Government C Shares Government
-------- ---------- ------- -------- ---------- -------
<S> <C> <C> <C> <S> <C> <C> <C>
1/87 $ 9,750 $10,000 $10,000 8/94 $10,000 $10,000 $10,000
3/87 9,786 10,034 10,080 9/94 9,950 9,925 10,020
6/87 9,857 9,942 10,202 10/94 9,887 9,869 10,030
9/87 9,924 9,737 10,314 11/94 9,792 9,806 10,040
12/87 10,100 10,108 10,407 12/94 9,818 9,893 10,060
3/88 10,375 10,424 10,491 1/95 9,926 9,988 10,090
6/88 10,557 10,469 10,617 2/95 10,099 10,132 10,110
9/88 10,733 10,588 10,724 3/95 10,164 10,293 10,141
12/88 10,885 10,651 10,820 4/95 10,231 10,321 10,171
3/89 10,994 10,620 10,951 5/95 10,380 10,547 10,202
6/89 11,313 11,121 11,105 6/95 10,398 10,556 10,232
9/89 11,469 11,249 11,172 7/95 10,441 10,703 10,243
12/89 11,704 11,585 11,306 8/95 10,509 10,812 10,263
3/90 11,814 11,642 11,522 9/95 10,561 10,844 10,273
6/90 12,009 11,902 11,638 10/95 10,640 10,890 10,304
9/90 12,140 12,028 11,872 11/95 10,719 10,982 10,314
12/90 12,496 12,426 12,027 12/95 10,756 11,043 10,335
3/91 12,707 12,694 12,099 1/96 10,833 11,174 10,376
6/91 12,904 12,916 12,184 2/96 10,828 11,136 10,408
9/91 13,121 13,376 12,282 3/96 10,781 11,076 10,439
12/91 13,436 13,825 13,405 4/96 10,793 11,060 10,470
3/92 13,566 17,790 12,480 5/96 10,805 11,047 10,502
6/92 13,950 14,239 12,580 6/96 10,861 11,125 10,512
9/92 14,261 14,597 12,655 7/96 10,925 11,199 10,544
12/92 14,448 14,829 12,770 8/96 10,953 11,222 10,565
3/93 14,813 15,179 12,872 9/96 11,017 11,307 10,596
6/93 15,116 15,537 12,949 10/96 11,089 11,412 10,628
9/93 15,437 15,874 13,014 11/96 11,189 11,570 10,660
12/93 15,634 16,069 13,119 12/96 11,174 11,553 10,692
3/94 15,308 15,562 13,197 1/97 11,195 11,584 10,703
6/94 15,474 15,771 13,277 2/97 11,260 11,667 10,735
9/94 15,495 15,891 13,383 3/97 11,200 11,535 10,746
12/94 15,300 15,839 13,437 4/97 11,228 11,592 10,756
3/95 15,877 16,542 13,545 5/97 11,328 11,719 10,767
6/95 16,266 16,964 13,667 6/97 11,410 11,822 10,778
9/95 16,549 17,427 13,722 7/97 11,564 12,036 10,799
12/95 16,871 17,746 13,804 8/97 11,521 11,972 10,821
3/96 16,927 17,802 13,943 9/97 11,613 12,080 10,843
6/96 17,670 17,880 14,040 10/97 11,641 12,154 10,864
9/96 17,332 18,171 14,153 11/97 11,679 12,192 10,875
12/96 17,597 18,567 14,281 12/97 11,789 12,302 10,886
3/97 17,655 18,537 14,352 1/98 11,854 12,410 10,886
6/97 18,004 18,999 14,395 2/98 11,883 12,425 10,897
9/97 18,342 19,413 14,482 3/98 11,893 12,446 10,897
12/97 18,625 19,771 14,540 4/98 11,857 12,387 10,919
3/98 18,808 20,002 14,555 5/98 11,959 12,534 10,951
6/98 19,006 20,206 14,642 6/98 11,997 12,573 10,962

Average Annual Total Returns Average Annual Total Returns
(at max. offering price)
A Shares One Year (12 mos. ended C Shares One Year (12 mos. ended
6/30/98): 2.90% 6/30/98): 5.14%
Five Years: 4.16% From Inception (9/1/94): 4.87%
Ten Years: 5.79%
From Inception (2/19/87): 5.81%
</TABLE>

INTERMEDIATE NATIONAL FUND

Index Comparison

Compares performance of the Intermediate National Fund, the Merrill
Lynch Municipal Bond (7-12 year) Index and the Consumer Price Index, for
periods ending September 30, 1998. On September 30, 1998, the weighted
average securities ratings of the Index and the Fund were AA and A+,
respectively, and the weighted average portfolio maturities of the Index
and the Fund were 9.5 years and 8.4 years, respectively. Class C shares
became available on September 1, 1994. Past performance of the Index and
the Fund may not be indicative of future performance.

<TABLE> <appears as two graphs side-by-side in the prospectus>
Class A Shares Class C Shares
<CAPTION>
FUND ML Muni CPI FUND ML Muni CPI
A Shares 7-12 Yrs. C Shares 7-12 Yrs.
-------- --------- ------- -------- --------- --------
<S> <C> <C> <C> <S> <C> <C> <C>
6/91 $ 9,648 $10,000 $10,000
9/91 9,819 10,428 10,080
12/91 10,099 10,647 10,181
3/92 10,207 10,593 10,243
6/92 10,586 10,982 10,325
9/92 10,876 11,220 10,387
12/92 11,090 11,440 10,480
3/93 11,496 11,834 10,565
6/93 11,847 12,164 10,628
9/93 12,291 12,456 10,681
12/93 12,453 12,682 10,767
3/94 12,039 12,114 10,832
6/94 12,160 12,187 10,897 8/94 $10,000 $10,000 $10,000
9/94 12,244 12,306 10,984 9/94 9,903 9,848 10,020
12/94 12,145 12,227 11,028 12/94 9,813 9,785 10,060
3/95 12,742 12,860 11,117 3/95 10,286 10,291 10,141
6/95 13,066 13,334 11,217 6/95 10,530 10,671 10,232
9/95 13,365 13,573 11,262 9/95 10,754 10,862 10,273
12/95 13,751 14,054 11,330 12/95 11,052 11,247 10,335
3/96 13,699 14,059 11,443 3/96 11,000 11,251 10,439
6/96 13,814 14,107 11,524 6/96 11,082 11,290 10,512
9/96 14,120 14,398 11,616 9/96 11,307 11,523 10,596
12/96 14,363 14,762 11,721 12/96 11,499 11,814 10,692
3/97 14,413 14,729 11,779 3/97 11,528 11,787 10,746
6/97 14,772 15,218 11,815 6/97 11,803 12,179 10,778
9/97 15,094 15,682 11,886 9/97 12,048 12,550 10,843
12/97 15,397 16,087 11,933 12/97 12,227 12,874 10,886
3/98 15,567 16,276 11,945 3/98 12,391 13,025 10,897
6/98 15,759 16,508 12,017 6/98 12,541 13,211 10,962
9/98 16,162 17,104 12,065 9/98 12,839 13,688 11,006

Average Annual Total Returns Average Annual Total Returns
(at max. offering price)
A Shares One Year (12 mos. ended C Shares One Year (12 mos. Ended
9/30/98): 3.32% 9/30/98): 6.57%
5 Years: 4.88% From Inception (9/1/94): 6.31%
From Inception (7/23/91): 6.90% </TABLE

INTERMEDIATE NEW MEXICO FUND

Index Comparison

Compares performance of the Intermediate New Mexico Fund, the Merrill
Lynch Municipal Bond (7-12 year) Index and the Consumer Price Index, June
18, 1991 to September 30, 1998. On March 31, 1998, 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 7.0 years, respectively. Past performance of the Index
and the Fund may not be indicative of future performance.

</TABLE>
<TABLE> <This appears as a graph in the prospectus.>
FUND ML Muni CPI
A Shares 7-12 Yrs.
-------- --------- ---------
<S> <C> <C> <C>
5/91 $ 9,650 $10,000 $10,000
9/91 9,957 10,375 10,100
12/91 10,260 10,593 10,202
3/92 10,329 10,539 10,263
6/92 10,686 10,926 10,345
9/92 10,950 11,162 10,408
12/92 11,145 11,381 10,501
3/93 11,490 11,773 10,586
6/93 11,789 12,102 10,649
9/93 12,150 12,392 10,703
12/93 12,294 12,617 10,788
3/94 11,936 12,052 10,853
6/94 12,012 12,125 10,919
9/94 12,119 12,243 11,006
12/94 12,059 12,164 11,050
3/95 12,593 12,794 11,139
6/95 12,859 13,266 11,239
9/95 13,100 13,504 11,284
12/95 13,404 13,982 11,352
3/96 13,358 13,987 11,466
6/96 13,450 14,035 11,547
9/96 13,713 14,325 11,639
12/96 13,967 14,687 11,744
3/97 14,012 14,653 11,803
6/97 14,305 15,141 11,838
9/97 14,606 15,602 11,910
12/97 14,874 16,005 11,957
3/98 15,012 16,193 11,969
6/98 15,203 16,424 12,041
9/98 15,494 17,016 12,089
</TABLE>

Average Annual Total Returns (at max. offering price)
A Shares One Year (12 mos. ended 9/30/98): 1.25%
5 Years: 4.14%
From Inception (6/21/91): 6.07%

<PAGE>
INTERMEDIATE FLORIDA FUND

Index Comparison

Compares performance of Intermediate Florida Fund, the Merrill Lynch
Municipal Bond (7-12 year) Index and the Consumer Price Index, February 1,
1994 to September 30, 1998. On September 30, 1998, 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 8.5 years, respectively. Past performance of the Index
and the Fund may not be indicative of future performance.

<TABLE> <This appears as a graph in the prospectus.>
FUND ML Muni CPI
A Shares 7-12 Yrs.
-------- --------- ---------
<S> <C> <C> <C>
1/94 $ 9,648 $10,000 $10,000
2/94 9,568 9,726 10,030
3/94 9,350 9,466 10,060
6/94 9,481 9,524 10,121
9/94 9,557 9,617 10,202
12/94 9,492 9,555 10,243
3/95 9,936 10,049 10,325
6/95 10,148 10,420 10,418
9/95 10,342 10,607 10,460
12/95 10,595 10,982 10,523
3/96 10,607 10,987 10,628
6/96 10,716 11,024 10,703
9/96 10,897 11,252 10,789
12/96 11,090 11,536 10,886
3/97 11,153 11,510 10,940
6/97 11,387 11,892 10,973
9/97 11,665 12,255 11,039
12/97 11,897 12,572 11,083
3/98 12,011 12,719 11,095
6/98 12,168 12,901 11,161
9/98 12,437 13,366 11,206
</TABLE>

Average Annual Total Returns (at max. offering price)
A Shares One Year (12 mos. ended 9/30/98): 2.89%
From Inception (2/01/94): 4.79%

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, 1998. On June 30, 1998, 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 10 years, respectively. Past performance of the Index and the
Fund may not be indicative of future performance.

<TABLE> <This appears as a graph in the prospectus.>
FUND ML Muni CPI
A Shares 7-12 Yrs.
-------- --------- ---------
<S> <C> <C> <C>
9/4/97 10,000 10,000 10,000
9/97 11,153 11,510 10,940
10/97 11,387 11,892 10,973
11/97 11,665 12,255 11,039
12/97 11,897 12,572 11,083
. . .
3/98 12,011 12,719 11,095
6/98 12,168 12,901 11,161
</TABLE>

Average Annual Total Returns (at max. offering price)
From Inception (9/04/97): 1.03%

<PAGE>
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS

Municipal Obligations

Municipal obligations are obligations bearing interest exempt from federal
income taxes, which are issued by or on behalf of states, territories and
possessions of the United States and the District of Columbia, and their
political subdivisions, agencies and instrumentalities. Municipal
obligations include notes (including tax-exempt commercial paper), bonds,
municipal leases and participation interests in these obligations.
Interest on Municipal Obligations may be subject to the alternative minimum
tax or state income taxes.

The yields on municipal obligations are dependent on a variety of
factors, including the condition of the general money market and the
municipal obligation market, the size of a particular offering, the
maturity of the obligation and the rating of the issue. The market value
of outstanding municipal obligations will vary with changes in prevailing
interest rate levels and as a result of changing evaluations of the
ability of their issuers to meet interest and principal payments.
Variations in market value of municipal obligations held in a Fund's
portfolio arising from these or other factors will cause changes in the net
asset value of that Fund's shares. Municipal obligations often grant the
issuer the option to pay off the obligation prior to its final maturity.
Prepayment of municipal obligations may reduce the expected yield on
invested funds, the net asset value of a Fund, or both if interest rates
have declined below the level prevailing when the obligation was
purchased. If interest rates have declined, reinvestment of the proceeds
from the prepayment of municipal obligations may result in a lower yield to
a Fund. In addition, the federal income tax treatment of gains from market
discount as ordinary income may increase the price volatility of municipal
obligations.

Obligations of issuers of municipal obligations are subject to the
provisions of bankruptcy, insolvency and other laws affecting the rights
and remedies of creditors, such as the United States Bankruptcy Code. In
addition, the obligations of such issuers may become subject to the laws
enacted in the future by Congress, state legislatures or referenda
extending the time for payment of principal or interest, or imposing other
constraints upon enforcement of such obligations or upon municipalities to
levy taxes. There is also the possibility that, as a result of legislation
or other conditions, the power or ability of any issuer to pay, when due,
the principal of and interest on its municipal obligations may be
materially and adversely affected.

Variable Rate Securities; Inverse Floaters; And Demand Instruments

The Funds may purchase variable rate municipal obligations. These variable
rate securities bear rates of interest that are adjusted periodically
according to formulas intended to reflect market rates of interest, and
these may include "inverse floaters," whose rates vary inversely with
changes in market rates of interest. The values of inverse floaters will
tend to be more volatile than fixed rate municipal securities having
similar credit quality, redemption provisions, and maturity. Each Fund
also may purchase variable rate demand instruments and also may purchase
fixed rate municipal demand instruments either in the public market or
privately from banks, insurance companies and other financial institutions.
These instruments provide for periodic adjustment of the interest rate paid
to the holder. The "demand" feature permits the holder to demand payment of
principal and interest prior to the final stated maturity, either from the
issuer or by drawing on a bank letter of credit, a guarantee or insurance
issued with respect to the instrument.

Municipal Leases

Each Fund may invest in municipal leases. These obligations are used by
state and local governments to acquire a wide variety of equipment and
facilities. Many such obligations include "non-appropriation" clauses
which provide that the governmental issuer has no obligation to make
payments unless money is appropriated for that purpose. If an issuer
stopped making payment on a municipal lease held by a Fund, the lease would
lose some or all of its value. Often, a Fund will not hold the obligation
directly, but will purchase a "participation interest" in the obligation,
which gives the Fund an undivided interest in the underlying municipal
lease.

Securities Ratings And Credit Quality

Each Fund's assets will normally consist of (1) municipal obligations
(including municipal leases) or participation interests therein that are
rated at the time of purchase within the four highest grades by Moody's
Investors Service ("Moody's"), Fitch Investors Service ("Fitch"), or
Standard & Poor's Corporation ("S&P"), (2) municipal obligations (including
municipal leases) or participation interests therein that are not rated by
a rating agency, but are issued by obligors that either have other
comparable debt obligations that are rated within the four highest grades
(Baa or BBB or better) by Moody's or S&P or Fitch or, in the case of
obligors whose obligations are unrated, are deemed by TMC to be comparable
with issuers having such debt ratings, and (3) cash. Securities rated in
the described categories are described as "investment grade," and are
regarded as having a capacity to pay interest and repay principal that
varies from "extremely strong" to "adequate." According to S&P, for
example, BBB bonds normally exhibit adequate protection parameters,
although adverse economic conditions or other changes are more likely to
lead to a weakened capacity compared to higher rated categories, and AAA
bonds exhibit extremely strong capacity. Securities rated Baa are regarded
by Moody's as having some speculative characteristics. Securities rated BBB
by Fitch are considered to have adequate capacity, although adverse
changes in economic conditions and circumstances are more likely to have an
adverse impact than for higher rated categories. Please see the Statement
of Additional Information for Thornburg Investment Trust - Intermediate
Municipal Funds or the Statement of Additional Information for Thornburg
Limited Term Municipal Fund, Inc. for detailed descriptions of these
ratings.

Investments in municipal obligations may also include (i) variable rate
demand instruments that are rated within the two highest grades of either
rating agency or, if unrated, are deemed by TMC to be of high quality and
minimal credit risk, (ii) tax-exempt commercial paper that is rated within
the two highest grades of a rating agency, and (iii) municipal notes that
are rated within the two highest grades of a rating agency or, if unrated,
are deemed by TMC to be of comparable quality to such rated municipal
notes. To the extent that unrated municipal obligations may be less
liquid, there may be somewhat greater risk in purchasing unrated Municipal
Obligations than in purchasing comparable, rated Municipal Obligations. If
a Fund experienced unexpected net redemptions, it could be forced to sell
such unrated municipal obligations at disadvantageous prices without regard
to the obligations' investment merits, depressing the Fund's net asset
value and possibly reducing the Fund's overall investment performance.

Credit ratings do not reflect the risk that market values of municipal
obligations will fluctuate with changes in interest rates, and credit
rating firms may fail to change credit ratings in a timely fashion to
reflect events subsequent to initial ratings. Accordingly, in addition to
using credit rating information, TMC subjects each issue under
consideration for investment to its own credit analysis in an effort to
assess the issuer's financial soundness. This analysis is performed on a
continuing basis for all issues held by the Funds, and TMC may determine to
dispose of portfolio securities upon a change in ratings or adverse events
or market conditions not reflected in ratings. TMC evaluates the credit
quality of unrated municipal obligations purchased by each Fund under the
general supervision of its Directors or Trustees, and determines the
equivalency of unrated obligations to rated obligations.

When-Issued Transactions

Each Fund may purchase municipal obligations on a "when-issued" or delayed
delivery basis, which means that the securities are not delivered until a
future date that may be as many as 45 days after the Fund has agreed to the
purchase. These transactions may involve an element of risk because the
value of the securities is subject to market fluctuation, no interest
accrues to the purchaser before delivery of the securities, and at the time
of delivery the market value may be less than cost. When a Fund agrees to
purchase municipal obligations on a "when-issued" basis, it will maintain
high grade liquid debt assets equal in value to the purchase price of the
"when-issued" securities in a segregated account with its custodian bank.

YEAR 2000 RISK

The inability of some computer systems to recognize dates after December
31, 1999 could cause some disruptions in the securities industry.

Thornburg Fund's Transfer Agent and Custody Bank National Financial Data
Services/DST (Transfer Agent) and State Street Bank (Custodian) have been
preparing for year 2000 conversion since 1988. Beta testing has been done
using 1999/2000 conversions all the way out to 2009/2010 conversions
(including leap year calculations). Firewalls have been built to isolate
non-complaint third party transmissions and testing has begun with all
third party electronic communicators. Detailed Y2K information is
available over the Internet at www.dstsystems.com. DST's stated goal is to
be Y2K Ready by the end of 1998.

The Funds' internal systems take no electronic downloads other than from
DST Systems. We do, however, purchase information and research delivered
electronically. We also use analytical programs provided by such vendors,
e.g. bond analytics. Failure of such externally supplied services would
impair our efficiency, and that of our entire industry. It would not,
however, preclude our ability to analyze securities or monitor and adjust
portfolios.

In addition, although we don't expect it to be the case, issuers of
securities owned by the Funds might have difficulties that would delay or
disrupt their payments of interest or dividends to the Funds.

PORTFOLIO TURNOVER

Each Fund anticipates that is annual portfolio turnover rate will be
less than 100%. TMC does not consider portfolio turnover rate a limiting
factor in making investment decisions. High rates of turnover may result
in increased transaction costs, and could result in increased capital gains
distributions to shareholders.

BUYING FUND SHARES IN GENERAL

Each Fund offers Class A shares, and Limited Term National Fund,
Limited California Fund and Intermediate National Fund offer Class C
shares. Each of a Fund's shares represents an equal undivided interest in
the Fund's assets, and each Fund has common investment objectives and a
common investment portfolio. Each class may have varying annual expenses
and sales charge structures, which may affect performance. If you do not
specify a class of shares in your order, your money will be invested in
Class A shares of the Fund you purchase.

Financial advisors and others who sell shares of the Fund receive different
compensation for selling different classes of the Funds' shares. Shares of
the Funds may be purchased through investment dealers, brokers or agents
"financial advisors") who have agreements with the Funds' distributor,
Thornburg Securities Corporation (TSC), or through TSC in those states
where TSC is registered. Although shares of the National Funds generally
are available in most states, shares of the single state Funds are or will
be available only in their respective states and certain other states where
those Funds are qualified for sale. All orders are subject to acceptance by
the Funds, and the Funds and TSC reserve the right to refuse any order in
whole or in part.

Each Fund also may issue one or more other classes of shares not offered
through this Prospectus. Different classes may have different sales
charges and other expenses which may affect performance. Investors may
telephone the Funds' distributor, TSC, at (800) 847-0200 to obtain more
information concerning the various classes of shares which may be available
to them through their sales representatives. Investors may also obtain
information respecting the different classes of shares through their sales
representative or other person who is offering or making available shares
of the Funds.

NET ASSET VALUE

When you purchase shares, the price is based on the net asset value (NAV)
next determined after receipt of your order. The net asset value is the
value of a share, and is computed for each class of a Fund by adding the
value of investments, cash and other assets for the class, subtracting
liabilities, and then dividing by the number of shares outstanding. Share
price is normally calculated at 4:00 p.m. Eastern time on each day the New
York Stock Exchange is open for business.

BUYING CLASS A SHARES

Class A shares are sold subject to a front-end sales charge. The sales
charge is deducted from the offering price when you purchase shares, and
the balance is invested at net asset value (NAV). The sales charge is not
imposed on shares that are purchased with reinvested dividends or other
distributions. Class A shares are also subject to a Rule 12b-1 Service
Plan, which provides for the Fund's payment to TMC of up to 1/4 of 1% of
the class's net assets each year, to obtain various shareholder related
services. Because this service fee is paid out of the class's assets on an
ongoing basis, over time these fees will increase the cost of your
investment and may cost more than paying other types of sales charges.

Because the fees for Class A shares of each Fund are lower than the fees
for Class C shares of the same Fund, Class A shares of each Fund pay higher
dividends than Class C shares of the same Fund. The deduction of the
initial sales charge, however, means that you purchase fewer Class A shares
than Class C shares of each Fund for a given amount invested.

If you are in any of the special classes of investors who can buy Class A
shares at net asset value or at a reduced sales charge, you should consider
buying Class A shares. If you are planning a large purchase or purchases
under the Right of Accumulation or Letter of Intent you should consider if
your overall costs will be lower by buying Class A shares, particularly if
you plan to hold your shares for an extended period of time.

<TABLE>
Class A Shares
Total Sales Charge
As Percentage As Percentage
of Offering Price of Net Asset
Value
<S> <C> <C>
Limited Term Municipal Funds
- ----------------------------
Less than $50,000.00 2.50% 2.56%
$50,000 to 99,999.99 2.25% 2.30%
$100,000 to 249,999.99 1.75% 1.78%
$250,000 to 499,999.99 1.50% 1.52%
$500,000 to 999,999.99 1.00% 1.01%
$1,000,000 and up 0.00% 0.00%

Intermediate Municipal Funds
- ----------------------------
Less than $50,000.00 3.50% 3.63%
$50,000 to 99,999.99 3.00% 3.09%
$100,000 to 249,999.99 2.50% 2.56%
$250,000 to 499,999.99 2.00% 2.04%
$500,000 to 999,999.99 1.50% 1.52%
$1,000,000 and up 0.00% 0.00%
</TABLE>

* No sales charge will be payable at the time of purchase on
investments of $1 million of more made by a purchaser. A contingent
deferred sales charge will be imposed on these investments in the
event of a share redemption within one year following the share
purchase at the rate of 1/2 of 1%. In determining whether such a
sales charge is payable and the amount of any charge, it is assumed
that shares not subject to the charge are the first redeemed followed
by other shares held for the longest period of time. The
applicability of these charges will be unaffected by transfers of
registration. TSC or TMC intend to pay a commission of up to 1/2 of
1% to dealers who place orders of $1 million or more for a single
purchaser.

At certain times, for specific periods, TSC may reallow up to the
full sales charge to all dealers who sell Fund shares. These "full
reallowances" may be based upon the dealer reaching specified minimum
sales goals. TSC will reallow the full sales charge only after
notifying all dealers who sell Fund shares. During such periods,
dealers may be considered underwriters under securities laws. TMC or
TSC also may pay additional cash or non-cash compensation to dealer
firms which have selling agreements with TSC. Those firms may pay
additional compensation to financial advisors who sell Fund shares.
Non-cash compensation may include travel and lodging in connection
with seminars or other educational programs.

LETTERS OF INTENT. If you intend to invest, over the course of 13 or fewer
months, an amount of money that would qualify for a reduced sales charge if
it were made in one investment, you can qualify for the reduced sales
charge on the entire amount of your investment by signing a "Letter of
Intent" (LOI). Each investment you make during the 13 months will be
charged the reduced sales commission applicable to the amount stated in
your LOI. You do not have to reach the goal you set. If you don't, you
will have to pay the difference between the sales charge you would have
paid and the sales charge you did pay. You may pay this amount directly to
TSC, or TSC will redeem a sufficient number of your shares in the Fund to
obtain the difference.

RIGHTS OF ACCUMULATION. Each time the value of your account plus the amount
of any new investment passes one of the breakpoints illustrated in the
table above, the amount of your new investment in excess of the breakpoint
will be charged the reduced sales charge applicable to that range.

WAIVERS. You may purchase Class A shares of each Fund with no sales charge
if you notify TSC or the Funds' transfer agent, NFDS, at the time you
purchase shares that you belong to one of the categories below. If you do
not provide such notification at the time of purchase, your purchase will
not qualify for the waiver of sales charge.

A SHAREHOLDER WHO REDEEMED CLASS A SHARES OF A THORNBURG FUND. For two
years after such a redemption you will pay no sales charge on amounts
that you reinvest in Class A shares of one of the Funds covered by this
prospectus, up to the amount you previously redeemed.

AN OFFICER, TRUSTEE, DIRECTOR, OR EMPLOYEE OF TMC (or any investment
company managed by TMC), TSC, any affiliated Thornburg Company, the
Funds' Custodian bank or Transfer Agent and members of their families
including trusts established for the benefit of the foregoing.

EMPLOYEES OF BROKERAGE FIRMS who are members in good standing with the
National Association of Securities Dealers, Inc. (NASD); employees of
financial planning firms who p lace orders for the Fund through a member
in good standing with NASD; the families of both types of employees.
Orders must be placed through an NASD member firm who has signed an
agreement with TSC to sell Fund shares.

CUSTOMERS of bank trust departments, companies with trust powers,
investment dealers and investment advisors who charge fees for service,
including investment dealers who utilize wrap fee or similar
arrangements. Accounts established through these persons are subject to
conditions, fees and restrictions imposed by these persons.

INVESTORS PURCHASING $1 MILLION OR MORE. However, a contingent deferred
sales charge of 1/2 of 1% applies to shares redeemed within one year of
purchase.

THOSE PERSONS WHO ARE DETERMINED BY THE DIRECTORS OR TRUSTEES OF THE FUND
to have acquired their shares under special circumstances not involving
any sales expenses to the Funds or Distributor.

PURCHASES PLACED THROUGH A BROKER THAT MAINTAINS ONE OR MORE OMNIBUS
ACCOUNTS WITH THE FUNDS provided that such purchases are made by: (i)
investment advisors or financial planners who place trades for their own
accounts or the accounts of their clients and who charge a management,
consulting or other fee for their services; (ii) clients of such investment
advisors or financial planners who place trades for their own accounts if
the accounts are linked to the master account of such investment advisor or
financial planner on the books and records of the broker or agent; and
(iii) retirement and deferred compensation plans and trusts used to fund
those plans, including, but not limited to, those defined in Sections
401(a), 403(b) or 457 of the Internal Revenue Code and "rabbi trusts."
Investors may be charged a fee if they effect transactions in Fund shares
through a broker or agent.

PROCEEDS FROM A LOAD FUND REDEMPTION. You may purchase shares of any Fund at
net asset value without a sales charge to the extent that the purchase
represents proceeds from a redemption (within the previous 60 days) of
shares of another mutual fund which has a sales charge. When making a
direct purchase at net asset value under this provision, the Fund must
receive one of the following with your direct purchase order: (i) the
redemption check representing the proceeds of the shares redeemed, endorsed
to the order of the Fund, or (ii) a copy of the confirmation from the other
fund, showing the redemption transaction. Standard back office procedures
should be followed for wire order purchases made through broker dealers.
Purchases with redemptions from money market funds are not eligible for this
privilege. This provision may be terminated anytime by TSC or the Funds
without notice.

BUYING CLASS C SHARES

Class C shares are sold at the NAV next determined after your order is
received. Class C shares are subject to a 1% contingent deferred sales
charge (CDSC) if the shares are redeemed within one year of purchase. The
percentage is calculated on the amount of the redemption proceeds for each
share, or the original purchase price, whichever is lower. Shares not
subject to the CDSC are considered redeemed first. The CDSC is not imposed
on shares purchased with reinvested dividends or other distributions. Class
C shares are subject to a Rule 12b-1 Service Plan providing for payment of a
service fee of up to 1/4 of 1% of the class's net assets each year, to obtain
shareholder related services. Class C shares are also subject to a Rule 12b-
1 Distribution Plan providing for payment of a distribution fee of up to 3/4
of 1% of the class's net assets each year, to pay for commissions and other
distribution expenses. Because these service and distribution fees are paid
out of the class's assets on an ongoing basis, over time these fees will
increase the cost of your investment and may cost more than paying other
types of sales charges. Purchases of $1,000,000 or more of Class C shares
will not be accepted.

If your investment horizon is relatively short and you do not qualify to
purchase Class A shares at a reduced sales charge, you should consider
purchasing Class C shares.

OPENING AN ACCOUNT
___________________________________________________________________________
Buying Shares To Open an Account To Add to an Account
- ---------------------------------------------------------------------------
In Minimum Minimum
- -- ------- -------
Regular Accounts $5,000 $ 100
Automatic Investment
Plans $ 100 $ 100

Through Your Financial Consult with your Consult with your
Advisor financial advisor. financial advisor

By Telephone Exchange from another Exchange from another
1-800-847-0200 Thornburg Fund account Thornburg Fund account
with the same registra- with the same registra-
tion, including name, tion, including name,
address, and taxpayer address, and taxpayer
ID number. ID number.

By Mail Complete and sign the Make your check payable
application. Make your to the applicable
check payable to the Thornburg Fund. Indicate
applicable Thornburg your Fund account number
Fund. Mail to the on your check and mail to
address indicated on the the address printed on
application. your account statement.

Automatic Investment Use one of the above Use Automated Clearing
Plan procedures to open your House funds. Sign up for
account. Obtain an this service when opening
Automatic Investment your account, or call
Plan form to sign up 1-800-847-0200 to add
for this service. to it.

Complete and sign an account application and give it, along with your check,
to your financial advisor. You may also open your account by wire or mail as
described above. If there is no application accompanying this prospectus,
call 1-800-847-0200.

If you buy shares by check and then redeem those shares, the payment may be
delayed for up to 15 business days to ensure that your previous investment
has cleared.

STREET NAME OWNERSHIP OF SHARES

Some securities dealers offer to act as owner of record of Fund shares as a
convenience to investors who are clients of those firms and shareholders of
an individual Fund. Neither the Fund nor the Transfer Agent can be
responsible for failures or delays in crediting shareholders for dividends or
redemption proceeds, or for delays in reports to shareholders if a
shareholder elect s to hold Fund shares in street-name through a brokerage
firm account rather than directly in the shareholder's own name. Further,
neither the Fund nor the Transfer Agent will be responsible to the investor
for any loss to the investor due to the brokerage firm's failure, its loss of
property or funds, or its acts or omissions. Prospective investors are urged
to confer with their financial advisor to learn about the different options
available for owning mutual fund shares. You may receive share certificates
or hold shares in your name with the Transfer Agent upon request.

SELLING FUND SHARES

You can withdraw money from your Fund account at any time by redeeming some
or all of your shares (by selling them back to the Fund or by selling the
shares through you r financial advisor). Your shares will be purchased by the
Fund at the next share price (NAV) calculated after your order is received in
proper form. The amount of the CDSC, if any, will be deducted and the
remaining proceeds sent to you. No CDSC is imposed on the amount by which the
value of a share may have appreciated. Similarly, no CDSC is imposed on
shares obtained through reinvestment of dividends or capital gains. Shares
not subject to a CDSC will be redeemed first. Share price is normally
calculated at 4 p.m. Eastern time.

To sell shares in an account, you may use any of the methods described on the
following page.

If you are selling some but not all of your shares, leave at least $1,000
worth of shares in the account to keep it open.

CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and your Fund from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:

* You wish to redeem more than $10,000 worth of shares,
* Your account registration has changed within the last 30 days,
* The check is being mailed to a different address than the one on your
account (record address),
* The check is being made payable to someone other than the account owner,
or
* The redemption proceeds are being transferred to a Thornburg account with
a different registration.

You should be able to obtain a signature guarantee from a bank, broker
dealer, credit union (if authorized under state law), securities exchange or
association, clearing agency, savings association or participant in the
Securities Transfer Agent Medallion Program (STAMP). A notary public cannot
provide a signature guarantee.

TELEPHONE REDEMPTION. If you completed the telephone redemption section of
your application when you first purchased your shares, you may easily redeem
any class of shares of any Fund by telephone simply by calling a Fund
Customer Service Representative. Money can be wired directly to the bank
account designated by you on the application or sent to you in a check. The
Funds' Transfer Agent may charge a fee for a bank wire. This fee will be
deducted from the amount wired.

If you did not complete the telephone redemption section of your application,
you may add this feature to your account by calling the Fund for a telephone
redemption application. Once you receive it, please fill it out, have it
signature guaranteed and send it to: NFDS
c/o Thornburg Funds
P.O. Box 419017
Kansas City, MO 64141-6017

Internet redemption. You may redeem shares of any Fund by contacting
Thornburg at its Website, www.thornburg.com and following the instructions.

The Funds, TSC, TMC and the Funds' Transfer Agent are not responsible for,
and will not be liable for, the authenticity of withdrawal instructions
received by telephone or the delivery or transmittal of the redemption
proceeds if they follow instructions communicated by telephone that they
reasonably believe to be genuine. By electing telephone redemption you are
giving up a measure of security you otherwise may have by redeeming shares
only with written instructions, and you may bear the risk of any losses
resulting from telephone redemption. The Funds' Transfer Agent will attempt
to implement reasonable procedures to prevent unauthorized transactions and
the Funds or their Transfer Agent could be liable if these procedures are not
employed. These procedures will include recording of telephone transactions,
providing written confirmation of such transactions within 5 days, and
requesting certain information to better confirm the identity of the caller
at the time of the transaction.

____________________________________________________________________________
Redeeming Shares Account Type Special Requirements
- ----------------------------------------------------------------------------
Through Your Financial All Account Types Consult with your financial
Advisor advisor. Your financial
advisor may charge a fee.

By Mail Individual, Joint The letter of instruction
Tenant, Sole Pro- must be signed by all
prietorship, UGMA, persons required to sign
UTMA for transactions, exactly as
Send to: NFDS their names appear on the
c/o Thornburg Funds account, and must include:
P.O. Box 419017 * Your name,
Kansas City, MO * The Fund's name,
64141-6017 * Your Fund account
number,

* The dollar amount or
number of shares to be
redeemed,
* Any other applicable
requirements listed
above,
* Signature guarantee, if
required.

Trust In addition to the above
requirements, the trustee
must sign the letter
indicating capacity as
trustee. If the trustee's
name is not in the account
registration, provide a
copy of the trust document
certified within the last
60 days.

Business or In addition to the above
Organization requirements, at least one
person authorized by
corporate resolution to act
on the account must sign
the letter which must be
signature guaranteed.
Include a corporate
resolution with corporate
seal.

Executor, Call 1-800-847-0200 for
Administrator, instructions.
Conservator, Guardian

By Telephone All Account Types You must sign up for the
1-800-847-0200 except Street-Name telephone redemption
Accounts feature before using it.
* Minimum Wire $1,000
* Minimum Check $50.00

By Systematic Withdrawal All Account Types You must sign up for this
Plan feature to use it.
* Minimum Account Balance
$10,000
* Minimum Check $50.00

Internet All Account Types www.thornburg.com
____________________________________________________________________________

INVESTOR SERVICES

Thornburg Funds provides a variety of services to help you manage your
account.

Information Services

Thornburg Funds' telephone representatives are available Monday through
Friday from 9:30 a.m. to 6:30 p.m. Eastern time. Whenever you call, you can
speak with someone equipped to provide the information or service you need.

Thornburg Funds' Audio Response system is available 24 hours a day, 365 days
a year. This computerized system gives you instant access to your account
information and up-to-date figures on all of the Thornburg Funds.

Thornburg Website. Thornburg's Website on the Internet provides you with
helpful information 24 hours a day, at: www.thornburg.com

Statements and reports that Thornburg Funds send to you include the
following:
* Account statements after every transaction affecting your account
* Monthly account statements
* Financial reports (every six months)
* Cost basis statement (at the end of any year in which you redeem shares)

TRANSACTION SERVICES

Automatic Investment Plan. One easy way to pursue your financial goals is to
invest money regularly. Thornburg Funds let you transfer as little as $100
from your bank account into your Fund account on a weekly, monthly or
quarterly basis, automatically. Because the Fund's Automatic Investment Plan
has a lower minimum than a regular purchase, it is an ideal way for beginning
investors to invest in a Fund.

While regular investment plans do not guarantee a profit and will not protect
you against loss in a declining market, they can be an excellent way to
invest for retirement, a home, educational expenses, and other long-term
financial goals. Call 1-800-847-0200 and speak to a Fund Customer Service
Representative for more information.

Exchange Privilege. You may exchange Class A shares of any other Thornburg
Fund for Class A shares of one of the Thornburg Municipal Funds.

If you are exchanging from one of the Funds covered by this prospectus into
another Thornburg Fund, you may (i) have to pay the difference between the
front end sales charge you paid on the Fund out of which you are exchanging
and the front end sales charge applicable to the Fund into which you are
exchanging; or (ii) you may qualify for a reduced sales charge or no sales
charge on that Fund. Please consult the exchange an d reinvestment privilege
information in the Prospectus of the other Thornburg Fund.

Note that exchanges out of a Fund may have tax consequences for you. For
details on policies and restrictions governing exchanges, including
circumstances under which a shareholder's exchange privilege may be suspended
or revoked, see page 28.

Systematic withdrawal plans let you set up periodic redemptions from your
account. Because of the sales charge on Class A shares of each Fund, you may
not want to set up a systematic withdrawal plan during a period when you are
buying Class A shares on a regular basis.

DIVIDENDS AND DISTRIBUTIONS

The Funds distribute substantially all of their net income and realized
capital gains, if any, to shareholders each year. Each Fund declares its net
investment income daily and distributes it monthly. Each Fund will distribute
net realized capital gains, if any, at least annually. Capital gain
distributions normally will be declared and payable in December.

Distribution Options
Each Fund earns interest from bond, money market, and other investments.
These are passed along as dividend distributions. Each Fund realizes capital
gains whenever it sells securities for a higher price than it paid for them.
These are passed along as capital gain distributions.

When you open an account, specify on your application how you want to receive
your distributions. Each Fund offers four options, (which you can change at
any time).

Dividends
1. Reinvestment Option. Your dividend distributions will be automatically
invested in additional shares of your Fund. If you do not indicate a
choice on your application, you will be assigned this option. You may
also instruct the Fund to invest your dividends in the shares of any
other Thornburg Fund.

2. Cash Option. You will be sent a check for your dividend distributions.
Cash distribution checks are normally mailed on the third business day
after the month-end.

Capital Gains
1. Reinvestment Option. Your capital gain distributions, if any, will be
automatically reinvested in additional shares of the Fund. If you do not
indicate a choice on your application, you will be assigned this option.
You may also instruct the Fund to re invest your capital gain
distributions in shares of any other Thornburg Fund.

2. Cash Option. You will be sent a check for any capital gain distributions.

Shares of any Thornburg Fund purchased through reinvestment of dividend and
capital gain distributions are not subject to sales charges or contingent
deferred sales charges. No interest is accrued or paid on amounts
represented by uncashed distribution checks.

Turnover and Capital Gains

The Funds do not intend to engage in short-term trading for profits.
Nevertheless, when a Fund believes that a security will no longer contribute
towards its reaching its goal, it will normally sell that security.

When a Fund sells a security at a profit it realizes a capital gain. When it
sells a security at a loss it realizes a capital loss. A fund must, by law,
distribute capital gains, net of any losses, to its shareholders. Whether you
reinvest your capital gain distributions or take them in cash, the
distribution is taxable.

To minimize taxable capital gain distributions, each Fund will realize
capital losses, if available, when, in the judgment of the portfolio manager,
the integrity and income generating aspects of the portfolio would be
unaffected by doing so.

TAXES

Federal Taxes

Each Fund intends to satisfy conditions that will enable it to designate
distributions from the interest income generated by its investments in
Municipal Obligations, which are exempt from the individual federal income
tax when received by the Fund, as Exempt Interest Dividends. Shareholders
receiving Exempt Interest Dividends will not be subject to federal income
tax on the amount of such dividends, except to the extent the alternative
minimum tax may be imposed.

The Funds' counsel, White, Koch, Kelly & McCarthy, Professional Association,
has not made and normally will not make any review of the proceedings
relating to the issuance of the Municipal Obligations or the basis for any
opinions issued in connection therewith. In the case of certain Municipal
Obligations, federal tax exemption is dependent upon the issuer (and other
users) complying with certain ongoing requirements. There can be no assurance
that the issuer (and other users) will comply with these requirements, in
which event the interest on such Municipal Obligations could be determined to
be taxable, in most cases retroactively from the date of issuance. Certain
matters under the Code, including certain exceptions to the foregoing, are
discussed more specifically below.

Distributions by each Fund of net interest income received from certain
temporary investments (such as certificates of deposit, corporate commercial
paper and obligations of the United States government, its agencies and
instrumentalities) and net short-term capital gains realized by each Fund, if
any, will be taxable to shareholders as ordinary income whether received in
cash or additional shares. Distributions to shareholders will not qualify for
the dividends received deduction for corporations. Any net long-term capital
gains realized by a Fund, whether or not distributed, will be taxable to
shareholders as long-term capital gains regardless of the length of time
investors have held their shares, although gains attributable to market
discount on portfolio securities will be characterized as ordinary income.
Each year each Fund will, where applicable, mail to shareholders information
on the tax status of dividends and distributions, including the respective
percentages of tax-exempt and taxable income and an allocation of tax-exempt
income on a state-by-state basis. The exemption of interest income for
federal income tax purposes does not necessarily result in an exemption under
the income or other tax laws of any state or local taxing authorities. (See
"State Taxes"). Shareholders are advised to consult their own tax advisers
for more detailed information concerning the federal, state and local
taxation of each Fund and the income tax consequences to its
shareholders.

The Code treats interest on certain Municipal Obligations which are private
activity bonds under the Code as a preference item for purposes of the
alternative minimum tax on individuals and corporations. The Funds may
purchase without limitation private activity bonds the interest on which is
subject to treatment under the Code as a preference item for purposes of the
alternative minimum tax on individuals and corporations, although the
frequency and amounts of these purchases are presently uncertain. Some
portion of Exempt Interest Dividends may, as a result of these purchases, be
treated as a preference item for purposes of the alternative minimum tax on
individuals and corporations. Shareholders are advised to consult their own
tax advisers as to the extent and effect of this treatment.

State Taxes

Distributions of interest income from Municipal Obligations will not
necessarily be exempt from taxes under the income or other tax laws of any
state or local taxing authority. Distributions to individuals attributable to
interest on Municipal Obligations originating in California, New Mexico and
New York will not be subject to personal income taxes imposed by the state of
the same name as the Fund. For example, an individual resident in New Mexico,
who owns shares in the Intermediate New Mexico Fund, will not be required by
New Mexico to pay income taxes on interest dividends attributable to
obligations originating in that state. Individual shareholders of the
Intermediate New York Fund, who are residents of New York City, will not be
required to pay New York State income taxes on interest dividends
attributable to obligations originating in New York State. Capital gain
distributions are taxable by these states, irrespective of the origins of the
obligations from which the gains arise.

Florida and Texas do not currently impose an income tax on individuals
or do not impose an income tax on distributions to individuals attributable
to Municipal Obligations. Florida imposes a personal property or
"intangibles" tax which is generally applicable to securities owned by
individual residents in Florida, but the intangibles tax will not apply to
Florida Fund shares if the Funds' assets as of the close of the preceding
taxable year consist only of obligations of Florida and its political
subdivisions and obligations of the United States, Puerto Rico, Guam or the
United States Virgin Islands.

With respect to distributions of interest income from the Limited Term
National Fund and the Intermediate National Fund, the laws of the several
states and local taxing authorities vary with respect to the taxation of such
distributions, and shareholders of these Funds are advised to consult their
own tax advisers in that regard. The Limited Term National Fund and the
Intermediate National Fund will advise shareholders approximately 60 days
after the end of each calendar year as to the percentage of income derived
from each state as to which it has any Municipal Obligations in order to
assist shareholders in the preparation of their state and local tax returns.
Prospective investors are urged to confer with their own tax advisers for
more detailed information concerning state tax consequences. In particular,
corporations should note that the preceding outline of state taxes pertains
principally to individuals, and tax treatment of corporations may be
different.

TRANSACTION DETAILS

The Funds are open for business each day the New York Stock Exchange (NYSE)
is open. Each class of shares of the Fund normally calculates its NAV (and
offering price for Class A shares) as of the close of business of the NYSE,
normally 4 p.m. Eastern time. Each Fund's assets are valued on the basis of
valuations obtained from independent pricing services.

When you sign your account application, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require the Fund to
withhold 31% of your taxable distributions and redemptions.

You may initiate many transactions by telephone. Note that a Fund will not be
responsible for any losses resulting from unauthorized transactions if it
follows reasonable procedures designed to verify the identity of the caller.
The Fund will request personalized security codes or other information, and
may also record calls. You should verify the accuracy of your confirmation
statements immediately after you receive them. If you want the ability to
redeem and exchange by telephone, fill in the appropriate section of the
application. If you have an existing account to which you wish to add this
feature, call the Fund for a telephone redemption application. If you are
unable to reach the Fund by phone (for example, during periods of unusual
market activity), consider placing your order by mail or by using your
financial advisor.

The Funds reserve the right to suspend the offering of shares for a period of
time. Each Fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions "
on page 28. Purchase orders may be refused if, in TMC's opinion, they would
disrupt management of a Fund.

When you place an order to buy shares, your order will be processed at the
next share price calculated after your order is received. If you open or
add to your account yourself rather than through your financial advisor
please note the following:

* All of your purchases must be made in U.S. dollars and checks must be
drawn on U.S. banks.
* The Funds do not accept cash.
* If your check does not clear, your purchase will be cancelled and you
could be liable for any losses or fees the Fund or its Transfer Agent has
incurred.

When you buy shares of a Fund or sell them through your financial advisor,
you may be charged a fee for this service. Please read your financial
advisor's program materials for any additional procedures, service features
or fees that may apply.

Certain financial institutions that have entered sales agreements with TSC
may enter confirmed purchase orders on behalf of customers by phone, with
payment to follow no later than the time when the Fund is priced on the
following business day. If payment is not received by that time, the
financial institution could be held liable for resulting fees or losses.

Each Fund may authorize certain securities brokers to accept on its behalf
purchase and redemption orders received in good form, and some of those
brokers may be authorized to designate other intermediaries to accept
purchase and redemption orders on the Fund's behalf. Provided the order is
promptly transmitted to the Fund, the Fund will be deemed to have received a
purchase or redemption order at the time it is accepted by such an
authorized broker or its designee, and customer orders will be priced based
upon the Fund's net asset value next computed after the order is accepted by
the authorized broker or its designee.

The minimum account size is $1,000. Each Fund reserves the right to redeem
the shares of any shareholder whose shares have a net asset value of less
than $1,000. The Fund will notify the shareholder before performing the
redemption.

When you place an order to sell shares, your shares will be sold at the next
NAV calculated after your request is received in proper form. (Except that a
CDSC will be deducted from Class C shares within one year of purchase and a
CDSC of 1/2 of 1% will be deducted from redemptions of Class A shares within
one year of purchase where no sales charge was imposed on the purchase
because it exceeded $1,000,000). Note the following:

* Consult your financial advisor for procedures governing redemption
through his or her firm.
* If you redeem by mail the proceeds will normally be mailed to you on the
next business day, but if making immediate payment could adversely affect
your Fund, it may take up to 7 days to pay you.
* Telephone redemptions over the wire generally will be credited to your
bank account on the business day after your phone call.
* Each Fund may hold payment on redemptions until it is reasonably
satisfied that investments previously made by check have been collected,
which can take up to 15 business days.
* Redemptions may be suspended or payment dates postponed when the NYSE is
closed (other than weekends or holidays), when trading on the NYSE is
restricted, or as permitted by the SEC.
* No interest or earnings will accrue or be paid on amounts represented by
uncashed distribution or redemption checks.
* To the extent consistent with state and federal law, a Fund may make
payments of the redemption price either in cash or in kind. The Funds
have elected to pay in cash all requests for redemption by any
shareholder. They may, however, limit such cash in respect to each
shareholder during any 90 day period to the lesser of $250,000 or 1% of
the net asset value of a Fund at the beginning of such period. This
election has been made pursuant to Rule 18f-1 under the Investment
Company Act of 1940 and is irrevocable while the Rule is in effect unless
the Securities and Exchange Commission, by order, permits its withdrawal.
In the case of a redemption in kind, securities delivered in payment for
shares would be valued at the same value assigned to them in computing
the net asset value per share of the Fund. A shareholder receiving such
securities would incur brokerage costs when selling the securities.

EXCHANGE RESTRICTIONS

As a shareholder you have the privilege of exchanging Class A shares of the
Funds for Class A shares of other Thornburg Funds. However, you should note
the following:

* The Fund you are exchanging into must be registered for sale in your
state.
* You may only exchange between accounts that are registered in the same
name, address, and taxpayer identification number.
* Before exchanging into a Fund, read its prospectus.
* If you exchange Class A shares into a Fund with a higher sales charge,
you may have to pay the percentage-point difference between that Fund's
sales charge and any sales charge you have previously paid in connection
with the shares you are exchanging. For example, if you had already paid
a sales charge of 2.5% on your shares and you exchange them into a Fund
with a 4.5% sales charge, you would pay an additional 2% sales charge.
* Exchanges may have tax consequences for you.
* Because excessive trading can hurt performance and shareholders, each
Fund reserves the right to temporarily or permanently terminate the
exchange privilege of any investor who makes more than four exchanges out
of a Fund in any calendar year. Accounts under common ownership or
control, including accounts with the same taxpayer identification number,
will be counted together for purposes of the four exchange limit.
* Each Fund reserves the right to refuse exchange purchases by any person
or group if, in TMC's judgement, the Fund would be unable to invest the
money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
* Your exchanges may be restricted or refused if a Fund receives or
anticipates simultaneous orders affecting significant portions of the
Fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to a Fund.

Although a Fund will attempt to give prior notice whenever it is reasonably
able to do so, it may impose these restrictions at any time. The Funds
reserve the right to terminate or modify the exchange privilege in the
future.

ORGANIZATION OF THE FUNDS

Each of the Limited Term Municipal Funds are diversified series of Thornburg
Limited Term Municipal Fund, Inc., a Maryland corporation organized as a
diversified, open-end management investment company. The Limited Term
Municipal Funds are managed by their investment adviser, Thornburg Management
Company, Inc., under the supervision of the Board of Directors of Thornburg
Limited Term Municipal Fund, Inc. (the "Company" ). The Company currently
offers two series of stock, referred to in this Prospectus as Limited Term
National Fund and Limited Term California Fund, each in multiple classes, and
the Board of Directors is authorized to divide authorized but unissued shares
into additional series and classes.

Each of the Intermediate Municipal Funds are series of Thornburg Investment
Trust, a Massachusetts business trust (the "Trust") organized as a
diversified, open-end management investment company under a Declaration of
Trust (the "Declaration" ). Each of the single-state Intermediate Funds is a
non-diversified series of the Trust, and the Intermediate Municipal Funds are
managed by their investment adviser, Thornburg Management Company, Inc. under
the supervision of the Trust's Trustees. The Trust currently has 13
authorized Funds, ten of which are described in this Prospectus. The Trustees
are authorized to divide the Trust's shares into additional series and
classes.

No Fund is liable for the liabilities of any other Fund. However, because the
Company and the Trust share this Prospectus with respect to the Funds, there
is a possibility that one of these companies could be liable for any
misstatements, inaccuracies or incomplete disclosure in the Prospectus
respecting Funds offered by the other company. The Company and the Trust do
not concede, and specifically disclaim, any such liability.

INVESTMENT ADVISER AND MANAGEMENT FEES

The Funds are managed by Thornburg Management Company, Inc. (TMC). TMC
performs investment management services for each Fund under the terms of an
Investment Advisory Agreement which specifies that TMC will select
investments for the Fund, monitor those investments and the markets
generally, and perform related services. TMC also performs administrative
services specific to each class of shares of each Fund under an
Administrative Services Agreement which requires that TMC will supervise,
administer and perform certain administrative services necessary for the
maintenance of each class' shareholders. TMC's services to the Limited Term
Municipal Funds are supervised by the Directors of Thornburg Limited Term
Municipal Fund, Inc., and TMC's services to the Intermediate Municipal Funds
are supervised by the Trustees of Thornburg Investment Trust.

For each of the Funds, TMC receives a management fee and an administrative
services fee, computed according to the following scales and paid monthly as
a percentage of each Fund's average daily net assets.

<TABLE>
Limited Term Intermediate Term All Funds
Municipal Funds Municipal Funds Annual
Net Assets Annual Investment Annual Investment Administrative
Management Fee Management Fee Fee
- ---------- ----------------- ----------------- --------------
<S> <C> <C> <C>
0 to $500 million .50% .50% .125%
$500 million to $1 billion .40% .45% .125%
$1 billion to $1.5 billion .30% .40% .125%
$1.5 billion to $2 billion .25% .35% .125%
Over $2 billion .225% .275% .125%
</TABLE>

For the most recent fiscal year of Limited Term National Fund, Limited
Term California Fund and Intermediate New York Fund, ended June 30, 1998, the
investment management fee percentage was .45%, .50% and .50%, respectively.
For the most recent fiscal year of Intermediate National fund, Intermediate
New Mexico Fund and Intermediate Florida Fund, ended September 30, 1998, the
investment management fee percentage was .50% for each Fund.

TMC was established in 1982. Today, the Thornburg Funds include Thornburg
Value Fund, Thornburg Limited Term U.S. Government Fund and Thornburg Limited
Term Income Fund in addition to the Funds covered by this Prospectus. The
Thornburg Funds total over $1.8 billion in assets. Thornburg Management
Company Inc. is known as a provider of conservative investment products. For
more than a decade the Thornburg Funds have been committed to preserving and
increasing the real wealth of their shareholders. The key to growing real
wealth is increasing buying power after taxes, inflation, and investment
related expenses.

Brian J. McMahon and George Strickland, both of whom are managing
directors of TMC, are the portfolio managers for each of the Fund portfolios.
Mr. McMahon has managed municipal bond portfolios for TMC since 1984 and Mr.
Strickland has performed municipal bond credit analysis and management since
joining TMC in 1991. Mr. McMahon and Mr. Strickland are assisted by other
employees of TMC in managing the Funds.

TMC may, from time to time, agree to waive its fees or to reimburse any Fund
for expenses above a specified percentage of average daily net assets. TMC
retains the ability to be repaid by the Fund receiving these reimbursements
if expenses fall below the limit prior to the end of the fiscal year. Fee
waivers and expense reimbursements will increase a Fund's yield, and
repayment of waivers or reimbursements will lower the Fund's yield.

In addition to TMC's fees, each Fund will pay all other costs and
expenses of its operations. Funds will not bear any costs of sales or
promotion incurred in connection with the distribution of their shares,
except as provided for under the service and distribution plans applicable to
each Fund class, as described above under "Your Account - Buying Fund
Shares."

Thornburg Securities Corporation (TSC) distributes and markets the Thornburg
Funds.

H. Garrett Thornburg, Jr. a Trustee and President of the Trust and a Director
and Chairman of the Company, is the controlling stockholder of both TMC and
TSC.

FINANCIAL HIGHLIGHTS

The financial highlights tables are intended to help you understand each
Fund's financial performance for the past five years (or if shorter, the
period of the Fund's operations). Certain information reflects financial
results for a single Fund share. The total returns in the table represent
the rate that an investor would have earned (or lost) on an investment in the
Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by McGladrey & Pullen, LLP, independent
auditors, whose report, along with each Fund's financial statements, are
included in the Fund's Annual Report, which is available upon request.

<TABLE>
- ------------------------------------
THORNBURG LIMITED TERM NATIONAL FUND
- ------------------------------------
---------------------------------------------------------------------------------------
CLASS A CLASS C
------------------------------------------ ------------------------------------------
Period
from
9/1/94 <F(a)>
Year Ended June 30: Year Ended June 30: to
1998 1997 1996 1995 1994 1998 1997 1996 6/30/95
------ ------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $13.44 $13.35 $13.37 $13.27 $13.59 $13.46 $13.37 $13.40 $13.29

Income from Investment Operations:
Net Investment Income .61 .62 .63 .64 .63 .55 .57 .57 .46
Net Gains (or Losses) on Securities .06 .09 (.02) .10 (.32) .07 .09 (.03) .11
(Realized and Unrealized) ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment Operations .67 .71 .61 .74 .31 .62 .66 .54 .57

Less Distributions:
Dividends (from Net Investment Income) (.61) (.62) (.63) (.64) (.63) (.55) (.57) (.57) (.46)
Distributions (from Capital Gains) - - - - - - - - -
Total Distributions (.61) (.62) (.63) (.64) (.63) (.55) (.57) (.57) (.46)

Net Asset Value, End of Period $13.50 $13.44 $13.35 $13.37 $13.27 $13.53 $13.46 $13.37 $13.40

Total Return <FN(b)> 5.05% 5.46% 4.60% 5.76% 2.25% 4.70% 5.02% 4.05% 4.25%

Ratios/Supplemental Data:
Net Assets, End of Period (000's omitted) $836,947 837,621 917,831 931,987 1,030,293 $22,729 19,475 15,948 6,469
Ratio of Expenses to Average Net Assets (0.97)% (0.96)% (0.97)% (0.97)% (0.95)% (1.38)% (1.38)% (1.41)% (1.60)%<F(c)>
(After Expense Reimbursements)
Ratio of Net Income to Average Net Assets 4.50% 4.65% 4.66% 4.86% 4.60% 4.08% 4.24% 4.22% 4.22%<F(c)>
(After Expense Reimbursements)
Ratio of Expenses to Average Net Assets (0.97)% (0.96)% (0.97)% (0.97)% (0.95)% (1.45)% (1.86)% (1.63)% (1.84)%<F(c)>
(Before Expense Reimbursements)

Portfolio Turnover Rate 24.95% 23.39% 20.60% 23.02% 15.63% 24.95% 23.39% 20.60& 23.02%

- --------------------------------------
THORNBURG LIMITED TERM CALIFORNIA FUND
- --------------------------------------
---------------------------------------------------------------------------------------
CLASS A CLASS C
------------------------------------------ ------------------------------------------
Period
from
9/1/94 <F(a)>
Year Ended June 30: Year Ended June 30: to
1998 1997 1996 1995 1994 1998 1997 1996 6/30/95
------ ------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.75 $12.64 $12.61 $12.57 $12.85 $12.76 $12.65 $12.62 $12.55

Income from Investment Operations:
Net Investment Income .55 .57 .58 .58 .58 .50 .52 .53 .42
Net Gains (or Losses) on Securities .15 .11 .03 .04 (.28) .15 .11 .03 .07
(Realized and Unrealized) ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment Operations .70 .68 .61 .62 .30 .65 .63 .56 .49

Less Distributions:
Dividends (from Net Investment Income) (.55) (.57) (.58) (.58) (.58) (.50) (.52) (.53) (.42)
Distributions (from Capital Gains) - - - - - - - - -
Total Distributions (.55) (.57) (.58) (.58) (.58) (.50) (.52) (.53) (.42)

Net Asset Value, End of Period $12.90 $12.75 $12.64 $12.61 $12.57 $12.91 $12.76 $12.65 $12.62

Total Return <FN(b)> 5.57% 5.47% 4.94% 5.12% 2.37% 5.14 5.06% 4.46% 3.98%

Ratios/Supplemental Data:
Net Assets, End of Period (000's omitted) $122,231 94,253 94,379 98,841 111,723 $7,843 5,882 2,444 790
Ratio of Expenses to Average Net Assets (1.00)% (1.00)% (1.00)% (1.00)% (1.00)% (1.40)% (1.40)% (1.43)% (1.63)%<F(c)>
(After Expense Reimbursements)
Ratio of Net Income to Average Net Assets 4.25% 4.47% 4.59% 4.69% 4.51% 3.85% 4.06% 4.16% 4.07%<F(c)>
(After Expense Reimbursements)
Ratio of Expenses to Average Net Assets (1.04)% (1.03)% (1.05)% (1.04)% (1.03)% (1.60)% (2.15)% (2.92)% (3.21)%<F(c)>
(Before Expense Reimbursements)

Portfolio Turnover Rate 21.21% 20.44% 22.68% 18.54% 15.26% 22.21% 20.44% 22.68& 18.54%

- ------------------------------------
THORNBURG INTERMEDIATE NATIONAL FUND
- ------------------------------------
---------------------------------------------------------------------------------------
CLASS A CLASS C
------------------------------------------ ------------------------------------------
Period
from
9/1/94
<F(a)>
Year Ended September 30: Year Ended September 30: to
1998 1997 1996 1995 1994 1998 1997 1996 1995 9/30/94
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $13.46 $13.23 $13.18 $12.73 $13.47 $13.48 $13.24 $13.20 $12.73 $12.91

Income from Investment Operations:
Net Investment Income .63 .66 .68 .68 .67 .58 .61 .63 .60 .05
Net Gains (or Losses) on Securities .30 .23 .05 .45 (.72) .29 .24 .04 .47 (.18)
(Realized and Unrealized) ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment Operations .93 .89 .73 1.13 (.05) .87 .85 .67 1.07 (.13)

Less Distributions:
Dividends (from Net Investment Income) (.63) (.66) (.68) (.68) (.67) (.58) (.61) (.63) (.60) (.05)
Distributions (from Capital Gains) - - - - (.02) - - - - -
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions (.63) (.66) (.68) (.68) (.69) (.58) (.61) (.63) (.60) (.05)

Net Asset Value, End of Period $13.76 $13.46 $13.23 $13.18 $12.73 $13.77 $13.48 $13.24 $13.20 $12.73

Total Return <FN(b)> 7.08% 6.90% 5.64% 9.16% (0.38)% 6.57 6.55% 5.14% 8.60% (0.97)%

Ratios/Supplemental Data:
Net Assets, End of Period (000's omitted) $368,108 309,293 246,128 227,881 207,718 $20,852 11,292 7,586 4,001 139
Ratio of Expenses to Average Net Assets (1.00)% (1.00)% (1.00)% (1.00)% (.95)% (1.40)% (1.40)% (1.40)% (1.66)% (1.76)%
(After Expense Reimbursements) <F(c)>
Ratio of Net Income to Average Net Assets 4.65% 4.96% 5.12% 5.31% 5.23% 4.23% 4.55% 4.73% 4.62% 4.51%
(After Expense Reimbursements) <F(c)>
Ratio of Expenses to Average Net Assets (1.04)% (1.05)% (1.09)% (1.08)% (1.05)% (1.53)% (1.99)% (1.97)% (2.35)% (1.76)%
(Before Expense Reimbursements) <F(c)>

Portfolio Turnover Rate 16.28% 15.36% 12.64% 32.20% 27.37% 16.28% 15.36% 12.64% 32.20% 27.37%

- --------------------------------------
THORNBURG INTERMEDIATE NEW MEXICO FUND
- --------------------------------------
------------------------------------------
CLASS A
------------------------------------------
Year Ended September 30:
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $13.28 $13.09 $13.12 $12.72 $13.36

Income from Investment Operations:
Net Investment Income .62 .64 .63 .60 .60
Net Gains (or Losses) on Securities .17 .19 (.03) .40 (.63)
(Realized and Unrealized) ------ ------ ------ ------ ------
Total from Investment Operations .79 .83 .60 1.00 (.03)

Less Distributions:
Dividends (from Net Investment Income) (.62) (.64) (.63) (.60) (.60)
Distributions (from Capital Gains) - - - - -
------ ------ ------ ------ ------
Total Distributions (.62) (.64) (.63) (.60) (.60)

Net Asset Value, End of Period $13.45 $13.28 $13.09 $13.12 $12.72

Total Return <FN(b)> 6.08% 6.51% 4.68% 8.10% (0.26)%

Ratios/Supplemental Data:
Net Assets, End of Period (000's omitted) $153,118 145,850 131,307 136,742 143,910
Ratio of Expenses to Average Net Assets (1.00)% (1.00)% (1.00)% (1.00)% (.90)%
(After Expense Reimbursements)
Ratio of Net Income to Average Net Assets 4.64% 4.88% 4.81% 4.71% 4.85%
(After Expense Reimbursements)
Ratio of Expenses to Average Net Assets (1.02)% (1.05)% (1.07)% (1.06)% (1.04)%
(Before Expense Reimbursements)

Portfolio Turnover Rate 13.74% 10.06% 10.88% 17.06% 6.87%

- -----------------------------------
THORNBURG INTERMEDIATE FLORIDA FUND
- -----------------------------------
------------------------------------------
CLASS A
------------------------------------------
Period
from
2/01/94
<F(a)>
Year Ended September 30: to
1998 1997 1996 1995 9/30/94
------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.14 $11.88 $11.83 $11.54 $12.06

Income from Investment Operations:
Net Investment Income .56 .56 .57 .63 .40
Net Gains (or Losses) on Securities .23 .26 .05 .29 (.52)
(Realized and Unrealized) ------ ------ ------ ------ ------
Total from Investment Operations .79 .82 .62 .92 (.12)

Less Distributions:
Dividends (from Net Investment Income) (.56) (.56) (.57) (.63) (.40)
Distributions (from Capital Gains) - - - - -
------ ------ ------ ------ ------
Total Distributions (.56) (.56) (.57) (.63) (.40)

Net Asset Value, End of Period $12.37 $12.14 $11.88 $11.83 $11.54

Total Return <FN(b)> 6.62% 7.04% 5.37% 8.22% (0.95)%

Ratios/Supplemental Data:
Net Assets, End of Period (000's omitted) $28,091 24,663 19,501 14,822 8,076
Ratio of Expenses to Average Net Assets (.98)% (.83)% (.61)% (.38)% (.25)%
(After Expense Reimbursements) <F(c)>
Ratio of Net Income to Average Net Assets 4.54% 4.65% 4.80% 5.41% 5.09%
(After Expense Reimbursements) <F(c)>
Ratio of Expenses to Average Net Assets (1.11)% (1.13)% (1.34)% (1.44)% (1.95)%
(Before Expense Reimbursements) <F(c)>

Portfolio Turnover Rate 70.91% 51.48% 77.12% 89.60% 19.94%
- -----------------------------------
THORNBURG INTERMEDIATE NEW YORK FUND
- -----------------------------------
--------
CLASS A
--------
Period
from
9/04/97
<F(a)>
to
6/30/98
-------
<S> <C>
Net Asset Value, Beginning of Period $12.50

Income from Investment Operations:
Net Investment Income .52
Net Gains (or Losses) on Securities .21
(Realized and Unrealized) ------
Total from Investment Operations .73

Less Distributions:
Dividends (from Net Investment Income) (.52)
Distributions (from Capital Gains) -
------
Total Distributions (.52)

Net Asset Value, End of Period $12.71

Total Return <FN(b)> 5.92%

Ratios/Supplemental Data:
Net Assets, End of Period (000's omitted) $25,472
Ratio of Expenses to Average Net Assets (.78)%<F(c)>
(After Expense Reimbursements)
Ratio of Net Income to Average Net Assets 4.90%<F(c)>
(After Expense Reimbursements)
Ratio of Expenses to Average Net Assets (1.19)%<F(c)>
(Before Expense Reimbursements)

Portfolio Turnover Rate 42.27%

<FN>
<F(a)> Commencement of operations.
<F(b)> Sales charges are not reflected in computing total return,
which is not annualized for periods less than one year.
<F(c)> Annualized.

ADDITIONAL INFORMATION

Reports to Shareholders
Shareholders will receive annual reports of their Fund containing financial
statements audited by the Funds' independent auditors, and also will
receive unaudited semi-annual reports. In addition, each shareholder will
receive an account statement no less often than quarterly.

Custodian and Transfer Agent
The custodian of each Fund's assets is State Street Bank & Trust Co.
National Financial Data Services is the transfer agent for the Funds and
performs bookkeeping, data processing and administrative services incident
to the maintenance of shareholder accounts.

General Counsel
Legal matters in connection with the issuance of shares of the Funds are
passed upon by White, Koch, Kelly & McCarthy, Professional Association,
Post Office Box 787, Santa Fe, New Mexico 87504-0787.

INVESTMENT ADVISER
Thornburg Management Company, Inc.
119 East Marcy Street, Suite 202
Santa Fe, New Mexico 87501

DISTRIBUTOR
Thornburg Securities Corporation
119 East Marcy Street, Suite 202
Santa Fe, New Mexico 87501

AUDITOR
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, New York 10017

CUSTODIAN
State Street Bank & Trust Co.
Boston, Massachusetts

TRANSFER AGENT
State Street Bank & Trust Co.
c/o NFDS Servicing Agent
Post Office Box 419017
Kansas City, Missouri 64141-6017

<OUTSIDE BACK COVER>
The current Statement of Additional Information (SAI) for each of the
Funds includes additional information about the Funds, and additional
information about each Fund's investments is available in the Fund's annual
and semiannual reports to shareholders.

Shareholder inquiries and requests for copies of the Funds' SAI, annual and
semiannual reports, and other Fund information may be made to Thornburg
Securities Corporation at 119 East Marcy Street, Suite 202, Santa Fe, New
Mexico 87501 (800) 847-0200. SAIs and annual and semiannual reports are
furnished at no charge.

Information about the Funds (including the SAI) may be reviewed and copied
at the Securities and Exchange Commission's Public Reference Room in
Washington, D.C. Information about the Public Reference Room may be
obtained by calling the Commission at 1-800-SEC-0330. Reports and other
information about the Funds are also available on the Commission's Internet
site at http://www.sec.gov and copies of information may be obtained, upon
payment of a duplicating fee, by writing the Commission's Public Reference
Section, Washington, D.C. 20549-6009.

No dealer, sales representative or any other person has been authorized to
give any information or to make any representation not contained in this
Prospectus and, if given or made, the information or representation must
not be relied upon as having been authorized by any Fund or Thornburg
Securities Corporation. This Prospectus constitutes an offer to sell
securities of a Fund only in those states where the Fund's shares have been
registered or otherwise qualified for sale. A Fund will not accept
applications from persons residing in states where the Fund's shares are
not registered.

<logo>
Thornburg Funds
Investing With Integrity
Thornburg Securities Corporation, Distributor
119 East Marcy Street, Santa Fe, New Mexico 87501
(800) 847-0200
www.thornburg.com email: [email protected]

Securities and Exchange Commission Investment Company Act of 1940 file
numbers:
Thornburg Investment Trust: 811-05201
Thornburg Limited Term Municipal Fund, Inc.: 811-4302

<PAGE>

THORNBURG FUNDS
Institutional Class Shares

Prospectus
February 1, 1999

Limited Term National Fund and Limited Term California Fund are separate
investment portfolios of Thornburg Limited Term Municipal Fund, Inc. and
Intermediate National Fund, Government Fund and Income Fund are separate
investment portfolios of Thornburg Investment Trust. Value Fund is also a
separate investment portfolio of Thornburg Investment Trust.

MUNICIPAL FUNDS
Thornburg Limited Term Municipal Fund National Portfolio
("Limited Term National Fund")
Thornburg Limited Term Municipal Fund California Portfolio
("Limited Term California Fund")
Thornburg Intermediate Municipal Fund
("Intermediate National Fund")

TAXABLE INCOME FUNDS
Thornburg Limited Term U. S. Government Fund ("Government Fund")
Thornburg Limited Term Income Fund ("Income Fund")

THORNBURG VALUE FUND
Thornburg Value Fund ("Value Fund")

These securities have not been approved or disapproved by the securities and
exchange commission or any state securities commission nor has the securities
and exchange commission or any state securities commission passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary
is a criminal offense.

Fund shares involve investment risks (including possible loss of principal),
and are not deposits or obligations of, or guaranteed or endorsed by, and are
not insured by, any bank, the federal deposit insurance corporation, the
federal reserve board, or any government agency.

NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE

<PAGE>
TABLE OF CONTENTS

__ Limited Term National Fund
Investment Goals
Principal Investment Strategies
Principal Risks of Investing of the Fund
Past Performance of the Fund
Fees and Expenses
__ Limited Term California Fund
Investment Goals
Principal Investment Strategies
Principal Risks of Investing of the Fund
Past Performance of the Fund
Fees and Expenses
__ Intermediate National Fund
Investment Goals
Principal Investment Strategies
Principal Risks of Investing of the Fund
Past Performance of the Fund
Fees and Expenses
__ Government Fund
Investment Goals
Principal Investment Strategies
Principal Risks of Investing of the Fund
Past Performance of the Fund
Fees and Expenses
__ Income Fund
Investment Goals
Principal Investment Strategies
Principal Risks of Investing of the Fund
Past Performance of the Fund
Fees and Expenses
__ Value Fund
Investment Goals
Principal Investment Strategies
Principal Risks of Investing of the Fund
Past Performance of the Fund
Fees and Expenses
__ Fund Performance and Index Comparisons
__ Additional Information About Fund Investments
__ Your Account - Buying Fund Shares
__ Selling Fund Shares
__ Investor Services
__ Dividends and Distributions
__ Taxes
__ Organization of the Funds
__ Investment Adviser
__ Financial Highlights
__ Additional Information

<PAGE>

Limited Term National Fund

Investment Goals
- ----------------

Principal Investment Strategies
- ------------------------------

The Fund normally invests 100% of its net assets in municipal obligations.
As a fundamental policy, the Fund normally invests at least 80% of its
assets in municipal obligations. The Fund may invest up to 20% of its net
assets in taxable securities which produce income not exempt from federal
income tax. These investments may be made due to market conditions,
pending investment of idle funds or to afford liquidity. The Fund's
temporary taxable investments may exceed 20% of its net assets when made
for defensive purposes during periods of abnormal market conditions.

Principal Risks of Investing in the Fund
- ---------------------------------------

An investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

Past Performance of the Fund
- -----------------------------

The following information shows how the Fund's investment results vary. The
bar chart shows how the annual total returns for Class I shares have been
different in each full year shown, and the average annual total return
figures compare Class I share performance to the Lehman Five-Year General
Obligation Bond Index, a broad measure of market performance.

<The following are presented as bar graphs in the Prospectus>
Limited Term National Fund Annual Total Returns Class I Shares
- ----------------------------------------------------------------
15%

10%

5% 5.81 5.86

- -5
1998 1997

Highest quarterly results for time period shown: 2.20% (quarter ended
9/30/96).
Lowest quarterly results for time period shown: 0.51% (quarter ended
3/31/97).

Limited Term National Fund Average Annual Total Returns
Class I Shares (periods ending 12/31/98)
- -----------------------------------------------------
Inception
One Year (7/5/96)
-------- ---------
Class I Shares 5.85% 6.49%
Lehman Bond Index ____% ____%

FEES AND EXPENSES OF THE FUND

The following tables describe the fees and expenses that you may pay if you
buy and hold shares of the Fund.

SHAREHOLDER FEES (fees paid directly from your investment)

Maximum Sales Charge (Load) imposed on purchases none
(as a percentage of offering price)

Maximum Deferred Sales Charge (Load) (as a none
percentage of the lesser of redemption
proceeds or original offering price)

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)

Thornburg Limited Term National Fund
- ------------------------------------
Management Fee .45%
Distribution and Service (12b-1) Fees .00%
Other Expenses .21%
----
Total Annual Operating Expenses .66%

Expenses reflect rounding, and amounts are restated to reflect current
expenses. Thornburg Management Company, Inc. (TMC) intends to reimburse a
portion of the other expenses, so that actual other expenses are .15% and the
actual total Fund operating expenses for Class I shares are .60%. TMC's
reimbursement of expenses may be terminated at any time.

Example. This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and redeem all of your shares at the end of these periods. The
Example also assumes that your investment has a 5% return each year and that
the Fund's operating expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class I Shares $68 $212 $370 $829

You would pay the following expenses if you did not redeem your shares:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class I Shares $68 $212 $370 $829

Limited Term California Fund

Investment Goals
- -----------------

Principal Investment Strategies
- --------------------------------

The Fund normally invests 100% of its net assets in municipal obligations.
As a fundamental policy, the Fund normally invests at least 80% of its
assets in municipal obligations. Under normal conditions the Fund invests
100% of its assets in obligations originating in California or issued by
United States territories and possessions, and as a matter of fundamental
policy, invests at least 65% of its total assets in Municipal obligations
originating in California. The Fund may invest up to 20% of its net assets
in taxable securities which would produce income not exempt from federal
California income tax. These investments may be made due to market
conditions, pending investment of idle funds or to afford liquidity. The
Fund's temporary taxable investments may exceed 20% of its net assets when
made for defensive purposes during periods of abnormal market conditions.

Principal Risks of Investing in the Fund
- -----------------------------------------

The value of the Fund's shares and its dividends will fluctuate in response
to changes in interest rates. When interest rates increase, the value of
the Fund's investments declines and the Fund's share value is reduced.
When interest rates decline, the value of the Fund's investments increases.
During periods of declining interest rates the Fund's dividends decline.
The value of Fund shares also could be reduced if municipal obligations
held by the Fund were downgraded by rating agencies, or went into default,
or if legislation or other government action reduces the ability of issuers
to pay principal and interest when due or changes the tax treatment of
interest on municipal obligations. Because the Fund invests primarily in
obligations originating in California, the Fund's share value may be more
sensitive to adverse economic or political developments in that state. A
portion of the Fund's dividends could be subject to the federal alternative
minimum tax. The loss of money is a risk of investing in a Fund, and when
you sell your shares they may be worth more or less than what you paid for
them.

An investment in a Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

Past Performance of the Fund
- -----------------------------

<The following is presented as a bar graph in the Profile>
Limited Term California Fund Annual Total Returns Class I Shares
- ----------------------------------------------------------------
15%

10%

5% 5.25

- -5%
1998

Highest quarterly results for time period shown: 2.38% (quarter ended
9/30/98).
Lowest quarterly results for time period shown: 0.64% (quarter ended
12/31/98).

Limited Term California Fund Average Annual Total Returns
Class I Shares
- ---------------------------------------------------------
Since Inception
One Year (4/1/97)
-------- --------------
Class I Shares 5.85% 7.16%
Lehman Bond Index ____% ____%

FEES AND EXPENSES OF THE FUND

The following tables describe the fees and expenses that you may pay if you
buy and hold shares of the Fund.

SHAREHOLDER FEES (fees paid directly from your investment)

Maximum Sales Charge (Load) imposed on purchases none
(as a percentage of offering price)

Maximum Deferred Sales Charge (Load) (as a none
percentage of the lesser of redemption
proceeds or original offering price)

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)

Limited Term California Fund
- ------------------------------
Management Fee .50%
Distribution and Service (12b-1) Fees .00%
Other Expenses .42%
----
Total Annual Operating Expenses .92%

Expenses reflect rounding, and amounts are restated to reflect current
expenses. Thornburg Management Company, Inc. (TMC) intends to reimburse a
portion of the other expenses, so that actual other expenses are .15% and the
actual total Fund operating expenses for Class I shares are .65%. TMC's
reimbursement of expenses may be terminated at any time.

Example. This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and redeem all of your shares at the end of these periods. The
Example also assumes that your investment has a 5% return each year and that
the Fund's operating expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class I Shares $94 $295 $513 $1,142

You would pay the following expenses if you did not redeem your shares:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class I Shares $94 $295 $513 $1,142

Intermediate National Fund

Investment Goals
- ----------------

The primary investment goal of Intermediate National Fund is to obtain as
high a level of current income exempt from federal income tax as is
consistent, in the view of the Fund's investment adviser, with preservation
of capital. The secondary goal of the Fund is to reduce expected changes in
its share price compared to long-term bond portfolios. The Fund's primary
and secondary goals are fundamental policies, and may not be changed without
a majority vote of the Fund's shareholders.

Principal Investment Strategies
- ------------------------------

The Fund pursues its primary goal by investing in investment grade or
equivalent municipal obligations issued by states and state agencies, local
governments and their agencies and by certain United States territories and
possessions. Thornburg Management Company, Inc. (TMC) actively manages the
Fund's portfolio, and investment decisions are based upon general economic
and financial trends, outlooks for interest rates and securities markets, the
supply of debt securities, and analysis of specific securities.

The Fund normally invests 100% of its net assets in municipal obligations.
As a fundamental policy, the Fund normally invests at least 80% of its assets
in municipal obligations. The Fund may invest up to 20% of its net assets in
taxable securities which would produce income not exempt from federal income
tax. These investments may be made due to market conditions, pending
investment of idle funds or to afford liquidity. The Fund's temporary
taxable investments may exceed 20% of its net assets when made for defensive
purposes during periods of abnormal market conditions.

Because the magnitude of changes in value of interest bearing obligations is
greater for obligations with longer terms, the Fund seeks to reduce changes
in its share value by maintaining a portfolio of investments with a
dollar-weighed average maturity of normally three to ten years. During
temporary periods the Fund's portfolio maturity may be reduced for defensive
purposes. There is no limitation on the maturity of any specific security
the Fund may purchase. The Fund may dispose of any security before it
matures. The Fund also attempts to reduce changes in it share value through
credit analysis, selection and diversification.

Principal Risks of Investing in the Fund
- ---------------------------------------

The value of the Fund's shares and its dividends will fluctuate in response
to changes in interest rates. When interest rates increase, the value of the
Fund's investments declines and the Fund's share value is reduced. When
interest rates decline, the value of the Fund's investments increases.
Dividends also will vary over time. During periods of declining interest
rates the Fund's dividends similarly decline. The value of Fund shares also
could be reduced if municipal obligations held by the Fund were downgraded by
rating agencies, or went into default, or if legislation or other government
action reduces the ability of issuers to pay principal and interest when due
or changes the tax treatment of interest on municipal obligations. A portion
of the Fund's dividends could be subject to the federal alternative minimum
tax. The loss of money is a risk of investing in a Fund, and when you sell
your shares they may be worth more or less than what you paid for them.

An investment in a Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

Past Performance of the Fund
- -----------------------------

The following information shows how the Fund's investment results vary. The
bar chart shows how the annual total returns for Class I shares have been
different in each full year shown, and the average annual total return
figures compare Class I share performance to the Merrill Lynch Municipal Bond
(7-12 year) Index, a broad measure of market performance.

<The following is presented as a bar graph in the Profile>
Intermediate National Fund Annual Total Returns Class I Shares
- ----------------------------------------------------------------
15%

10%
7.38
5% 5.79

- -5%
1998 1997

Highest quarterly results for time period shown: 3.11% (quarter ended
9/30/96).
Lowest quarterly results for time period shown: 0.28% (quarter ended
3/31/97).

Intermediate National Fund Average Annual Total Returns
Class I Shares (periods ending 12/31/98)
- ---------------------------------------------------------
Since Inception
One Year (7/5/96)
-------- --------------
Class I Shares 6.83% 8.20%
Merrill Index ____% ____%

FEES AND EXPENSES OF THE FUND

The following tables describe the fees and expenses that you may pay if you
buy and hold shares of the Fund.

SHAREHOLDER FEES (fees paid directly from your investment)

Maximum Sales Charge (Load) imposed on purchases none
(as a percentage of offering price)

Maximum Deferred Sales Charge (Load) (as a none
percentage of the lesser of redemption
proceeds or original offering price)

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)

Intermediate National Fund
- ----------------------------
Management Fee .50%
Distribution and Service (12b-1) Fees .00%
Other Expenses .29%
----
Total Annual Operating Expenses .79%

Expenses reflect rounding. Thornburg Management Company, Inc. (TMC) intends
to reimburse a portion of the other expenses, so that actual other expenses
are .25% and the actual total Fund operating expenses for Class I shares are
.75%. TMC's reimbursement of expenses may be terminated at any time.

Example. This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and redeem all of your shares at the end of these periods. The
Example also assumes that your investment has a 5% return each year and that
the Fund's operating expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class I Shares $81 $254 $442 $987

You would pay the following expenses if you did not redeem your shares:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class I Shares $81 $254 $442 $987

Limited Term U.S. Government Fund

Investment Goals
- -----------------

The primary goal of Government Fund is to provide as high a level of
current income as is consistent, in the view of The Fund's investment
adviser, with safety of capital. As a secondary goal, the Fund seeks to
reduce changes in its share price compared to longer term portfolios. The
Fund's primary and secondary goals are fundamental Fund policies, and may
not be changed without a majority vote of the Fund's shareholders.

Principal Investment Strategies
- ---------------------------------

Thornburg Management Company, Inc. (TMC) actively manages the Fund's
investments in pursuing the Fund's primary investment goal. Investment
decisions are based upon general economic and financial trends such as
domestic and international economic developments, outlooks for securities
markets, interest rates and inflation, the supply and demand for debt
securities, and other factors. The Fund's investments are determined by
individual security analyses.

Government Fund will invest at least 65% of its total assets in obligations
issued or guaranteed by the United States Government or its agencies or
instrumentalities, and will invest at least 80% of its total assets in such
obligations and in readily marketable participations in such obligations or
in repurchase agreements secured by such obligations. Although the Fund
will acquire obligations issued or guaranteed by the U.S. Government and
its agencies and instrumentalities, neither the Fund's net asset value nor
its dividends are so guaranteed.

Government Fund may under certain market conditions invest up to 20% of its
assets in (i) time certificates of deposit maturing in one year or less
after the date of acquisition which are issued by United States banks
having assets of one billion dollars or more, or (ii) time certificates of
deposit insured as to principal by the Federal Deposit Insurance
Corporation.

Because the magnitude of changes in the value of interest bearing
obligations is greater for obligations with longer terms, the Fund seeks to
reduce changes in its share value by maintaining a portfolio of investments
with a dollar-weighed average maturity or expected life normally less than
five years. There is no limitation on the maturity of any specific
security the Fund may purchase, and the Fund may sell any security before
it matures. The Fund also attempts to reduce changes in share value
through credit analysis, selection and diversification.

Principal Risks of Investing in the Fund
- ---------------------------------------

The value of the Fund's shares and its dividends will change in response to
changes in market interest rates. When interest rates increase, the value
of the Fund's investments declines and the Fund's share value is reduced.
When interest rates decline, the value of the Fund's investments increases.
Dividends also will vary over time. Value changes in response to interest
rate changes may be more pronounced for mortgage backed securities owned by
the Fund. Additionally, decreases in market interest rates may result in
prepayments of certain obligations the Fund will acquire. These
prepayments may require the Fund to reinvest at a lower rate of return, and
may reduce the Fund's share price because the value of those securities may
depreciate or may not appreciate as rapidly as debt securities which cannot
be prepaid.

An investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. If your sole objective is preservation of capital, then
the Fund may not be suitable for you because the Fund's share value will
move up and down as interest rates change. Investors whose sole objective
is preservation of capital may wish to consider a high quality money market
fund.

Past Performance of the Fund
- -----------------------------

The following information shows how the Fund's investment results vary.
The bar chart shows how the annual total returns for Class I shares have
been different in each full year shown, and the average annual total return
figures compare Class I share performance to the Lehman Intermediate
Government Bond Index, a broad measure of market performance.

<The following are presented as bar graphs in the Prospectus>
Limited Term U.S. Government Fund Annual Total Returns Class I Shares
- ----------------------------------------------------------------------
15%

10%
7.29 6.97
5%

- -5
1998 1997

Highest quarterly results for time period shown: 3.84% (quarter ended
9/30/98).
Lowest quarterly results for time period shown: 0.21% (quarter ended
12/31/98).

Government Fund Average Annual Total Returns
Class I Shares (periods ending 12/31/98)
- ---------------------------------------------

Inception
One Year (7/5/96)
-------- ---------
Class I Shares 7.29% 7.63%
Lehman Bond Index 8.49% 8.26%

FEES AND EXPENSES OF THE FUND

The following tables describe the fees and expenses that you may pay if you
buy and hold shares of the Fund.

SHAREHOLDER FEES (fees paid directly from your investment)

Maximum Sales Charge (Load) imposed on purchases none
(as a percentage of offering price)

Maximum Deferred Sales Charge (Load) (as a none
percentage of the lesser of redemption
proceeds or original offering price)

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)

Government Fund
- ----------------
Management Fee .38%
Distribution and Service (12b-1) Fees .00%
Other Expenses .80%
----
Total Annual Operating Expenses 1.18%

Expenses reflect rounding. Thornburg Management Company, Inc. (TMC) intends
to reimburse a portion of the other expenses, so that actual other expenses
are .22% and the actual total Fund operating expenses for Class I shares
are .60%. TMC's reimbursement of expenses may be terminated at any time.

Example. This Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class I Shares $121 $377 $654 $1,446

You would pay the following expenses if you did not redeem your shares:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class I Shares $121 $377 $654 $1,446

Limited Term Income Fund

Investment Goals
- ----------------

The primary goal of Income Fund is to provide as high a level of current
income as is consistent, in the view of the Fund's investment adviser, with
safety of capital. As a secondary goal, the Fund seeks to reduce changes
in its share prices compared to longer term portfolios. The Fund's primary
and secondary goals are fundamental Fund policies, and may not be changed
without a majority of the Fund's shareholders.

Principal Investment Strategies
- ------------------------------

Thornburg Management Company, Inc. (TMC) actively manages the Fund's
portfolio in attempting to meet the Fund's primary investment goal.
Investment decisions are based upon general economic and financial trends
such as domestic and international economic development, outlooks for
securities markets, interest rates and inflation, the supply and demand for
debt securities, and other factors. The Fund's investments are determined
by individual security analyses. The Fund seeks to enhance its income by
taking advantage of yield disparities, trends or other factors in the fixed
income markets. Although the Fund ordinarily will acquire securities for
investment rather than for realization of gains on market fluctuations, it
may dispose of any security prior to its scheduled maturity to enhance
income or reduce loss, to change the portfolio's average maturity, or to
otherwise respond to current market conditions.

The Fund will invest at least 65% of its net assets in (i) obligations of
the U.S. Government, and its agencies and instrumentalities, and (ii) debt
securities rated investment grade, or if not rated, judged to be of
comparable quality by TMC. Debt securities the Fund may purchase include
corporate debt obligations, mortgage backed securities, other asset-backed
securities, municipal securities, and commercial paper and bankers'
acceptances. The Fund emphasizes investments in U.S. Government securities
and other issuers domiciled in the United States, but may purchase foreign
securities of the same types and quality as the domestic securities it
purchases, when TMC anticipates foreign securities offer more investment
potential.

Because the magnitude of changes in the value of interest bearing
obligations is greater for obligations with longer terms, the Fund seeks to
reduce changes in its share value by maintaining a portfolio of investments
with a dollar-weighted average maturity or expected life normally less than
five years. There is no limitation on the maturity of any specific
security the Fund may purchase, and the Fund may sell any security before
it matures. The Fund also attempts to reduce changes in share value
through credit analysis, selection and diversification.

Principal Risks of Investing in the Fund
- ---------------------------------------

The value of the Fund's shares and its dividends will change in response to
changes in market interest rates. When interest rates increase, the value of
the Fund's investments declines and the Fund's share value is reduced. When
interest rates decline, the value of the Fund's investments increases. Value
changes in response to interest rate changes may be more pronounced for
mortgage and asset backed securities owned by the Fund. Additionally,
decreases in market interest rates may result in prepayments of certain
obligations the Fund will acquire. These prepayments may require the Fund to
reinvest at a lower rate of return, and may reduce the Fund's share price
because the value of those securities may depreciate or may not appreciate as
rapidly as debt securities which cannot be prepaid.

Some investments owned by the Fund may be subject to default or delays in
payment, or could be downgraded by rating agencies, reducing the value of the
Fund's shares. A fall in worldwide demand for U.S. Government Securities or
general economic decline could lower the value of these Securities.
Additionally, foreign securities the Fund may purchase are subject to
additional risks, including changes in currency exchange rates which may
adversely affect the Fund's investments, political instability, confiscation,
inability to sell foreign investments and reduced legal protections for
investments.

An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. If your sole objective is preservation of capital, then
the Fund may not be suitable for you because the Fund's share value will move
up and down as interest rates change. Investors whose sole objective is
preservation of capital may wish to consider a high quality money market
fund.

Past Performance of the Fund
- -----------------------------

The following information shows how the Fund's investment results vary.
The bar chart shows how the annual total returns for Class I shares have
been different in each full year shown, and the average annual total return
figures compare Class I share performance to the Lehman Intermediate
Corporate Bond Index, a broad measure of market performance.

<The following are presented as bar graphs in the Prospectus>
Limited Term Income Fund Annual Total Returns Class I Shares
- ----------------------------------------------------------------------
15%

10%
6.72
5% 5.91

- -5
1998 1997

Highest quarterly results for time period shown: 3.97% (quarter ended
9/30/86).
Lowest quarterly results for time period shown: (0.56)% (quarter ended
3/31/97).

Limited Term Income Fund Average Annual Total Returns
Class I Shares (periods ending 12/31/98)
- ------------------------------------------------------

Inception
One Year (7/5/96)
-------- ---------
Class I Shares 6.72% 8.06%
Lehman Bond Index 8.45% 8.26%

FEES AND EXPENSES OF THE FUND

The following tables describe the fees and expenses that you may pay if you
buy and hold shares of the Fund.

SHAREHOLDER FEES (fees paid directly from your investment)

Maximum Sales Charge (Load) imposed on purchases none
(as a percentage of offering price)

Maximum Deferred Sales Charge (Load) (as a none
percentage of the lesser of redemption
proceeds or original offering price)

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)

Government Fund
- ----------------
Management Fee .50%
Distribution and Service (12b-1) Fees .00%
Other Expenses .69%
----
Total Annual Operating Expenses 1.19%

Expenses reflect rounding. Thornburg Management Company, Inc. (TMC) intends
to reimburse a portion of the other expenses, so that actual other expenses
are .19% and the actual total Fund operating expenses for Class I shares
are .69%. TMC's reimbursement of expenses may be terminated at any time.

Example. This Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class I Shares $122 $381 $660 $1,458

You would pay the following expenses if you did not redeem your shares:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class I Shares $122 $381 $660 $1,458

Thornburg Value Fund

Investment Goals of Value Fund
- ------------------------------

The Fund seeks long-term capital appreciation by investing in equity and
debt securities of all types. This goal is a fundamental policy of the
Fund and may be changed only with shareholder approval. The secondary,
nonfundmental goal of the Fund is to seek some current income.

Principal Investment Strategies of Value Fund
- -------------------------------------------

Value Fund expects to invest primarily in domestic equity securities selected
on a value basis. However, the Fund may own a variety of securities,
including foreign equity and debt securities, domestic debt securities and
securities that are not currently paying dividends, which in the opinion of
the Fund's investment adviser offer prospects for capital appreciation or
income.

The Fund's investment adviser, Thornburg Management Company, Inc. (TMC)
intends to invest on an opportunistic basis, where it believes there is
intrinsic value. The Fund's principal focus will be on traditional value
stocks. However, the portfolio may include stocks and other securities that
in TMC's opinion provide value in a broader or different context. The
relative proportions of these different types of securities will vary over
time. The Fund ordinarily reflects a bias towards stocks or industries when
those stocks or industries are depressed, reflecting unfavorable market
perceptions of company or industry fundamentals. TMC believes that
investments in undervalued stocks, in addition to offering potential capital
appreciation, will help limit loss in adverse markets. TMC anticipates that
the Fund ordinarily will have a weighed average dividend yield, before Fund
expense, that is higher than the yield of the Standard & Poor's Composite
Index of 500 Stocks.

TMC primarily uses individual company and industry analysis to make
investment decisions. The Fund typically makes equity investments in the
following three types of companies:

Companies which, in TMC's opinion, are financially sound companies with well
established businesses whose stock is selling at low valuations relative to
the companies' net assets or potential earning power. This type of company
is often cyclical, and generally does well when the economy or its industry
is doing well. TMC's judgment in evaluating these companies will likely be
contrary to the popular perception of the moment.

Consistent growth companies when they are selling at valuations below
historic norms. Stocks in this category generally sell at premium valuations
and show steady earnings and dividend growth. These companies may have less
risk because of their financial strength, high profitability and dominant
industry position.

Rapidly growing companies that in TMC's opinion are in the process of
establishing a leading position in a product, service or market and which TMC
expects will grow, or continue to grow, at an above average rate. Under
normal conditions the proportion of the Fund invested in companies of this
type will be modest.

The Fund selects foreign securities issued by companies domiciled in
countries whose currencies are freely convertible into U.S. dollars, or in
companies in other countries whose business is conducted primarily in U.S.
dollars (which could include developing counties).

Debt securities will be considered for investment when TMC believes them to
be more attractive than equity alternatives. When analyzing debt
securities, TMC will ordinarily consider the issuer's overall financial
strengths as well as prevailing market conditions for debt securities as
opposed to equities.

Principal Investment Risks of Value Fund
- ---------------------------------------

The value of the Fund's investments varies from day to day, generally
reflecting changes in market conditions, political and economic news,
interest rates, dividends and specific corporate developments. The value
of the Fund's investments can be reduced by unsuccessful investment
strategies and risks affecting foreign securities. Principal foreign
investment risks are changes in currency exchange rates which may adversely
affect the Fund's investments, economic and political instability,
confiscation, inability to sell foreign investments, and reduced legal
protections for investments. Debt securities owned by the Fund may
decrease in value because of interest rate increases, defaults, or
downgrades by rating agencies. The loss of money is a risk of investing in
the Fund, and when you sell your shares they may be worth more or less than
what you paid for them.

An investment in the Fund is not a deposit in any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency.

Past Performance of the Fund
- -----------------------------

The following information shows how the Fund's investment results vary.
The bar chart shows how the annual total returns for Class A shares have
been different in each full year shown, and the average annual total return
figures compare Class A share performance to the Standard & Poor's
Composite Index of 500 Stocks, a broad measure of market performance. The
returns reflected in the bar chart and in the table below are for a class
of shares that is not offered in this Prospectus but that would have
substantially similar annual returns because the shares are invested in the
same portfolio of securities. Annual returns would differ only to the
extent Class A shares and Class I shares do not have the same expenses.
Value Fund commenced its offering of Class A shares on October 2, 1995 and
commenced offering Class I shares on November 2, 1998.

<The following are presented as bar graphs in the Prospectus>
Value Fund Annual Total Returns Class A Shares
- -------------------------------------------------
40%
37.82
30% 33.70

20% 22.25

10%

0%
1998 1997 1996

Highest quarterly results for time period shown: 19.98% (quarter ended
12/31/98).
Lowest quarterly results for time period shown: (13.59)% (quarter ended
9/30/98).

Value Fund Average Annual Total Returns
Class A Shares (periods ending 12/31/98)
- -----------------------------------------
Since
Inception
One Year (10/2/95)
-------- ---------
Class A Shares 16.73% 26.39%
Standard & Poor's
500 Index 28.55% 28.03%

FEES AND EXPENSES OF THE FUND

The following tables describe the fees and expenses that you may pay if you
buy and hold shares of the Fund.

SHAREHOLDER FEES (fees paid directly from your investment)

Maximum Sales Charge (Load) imposed on purchases none
(as a percentage of offering price)

Maximum Deferred Sales Charge (Load) (as a none
percentage of the lesser of redemption
proceeds or original offering price)

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)

Value Fund
- -----------
Management Fee .88%
Distribution and Service (12b-1) Fees .00%
Other Expenses .11%
----
Total Annual Operating Expenses .99%

Expenses reflect rounding. Other expenses are estimated.

Example. This Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class I Shares $102 $317 $551 $1,225

You would pay the following expenses if you did not redeem your shares:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class I Shares $102 $317 $551 $1,225

FUND PERFORMANCE AND INDEX COMPARISONS

The following graphs compare how $10,000 would have appreciated if invested
in shares of the named Fund, a broad based securities market index, and the
Consumer Price Index, a general measure of inflation. The figures
accompanying each graph shows average annual total return for the Fund for
the designated periods.

Comparison of Fund performance to widely used indices is imperfect,
because the indices do not reflect the laddered maturity strategy each of the
fixed income Funds uses. Each index shown attempts to model the total return
of a constant maturity bond portfolio, including bonds from throughout the
United States. Each index also assumes no trading costs for buying and
selling bonds, no custodial or accounting costs, and coupons are immediately
reinvested at no transactional cost. Consequently, the reader should remain
aware of the inherent limitations in comparing a theoretical index to actual
results of a Fund portfolio. No data is given for Value Fund, which
commenced its offering of Class I shares on November 2, 1998.

Management Discussion of Fund Performance. Limited Term, National Fund,
Limited Term California Fund, Intermediate National Fund, Government Fund and
Income Fund.

In general, interest rates have continued, with some fluctuations, to
decline over the one-year period ended September 30, 1998. Interest rates
have dropped more for intermediate-term bonds than for short-term bonds or
long-term bonds, leading to a flatter yield curve. For instance, 30-year
treasury bond yields fell 1.43% to 4.97% while five-year bond yields fell
1.76% to 4.21% and one-year bond yields dropped 1.03% to 4.39%.

The municipal bond market, facing the largest volume of supply in several
years, has underperformed the treasury bond market. Thirty-year AA-rated
municipal bond yields declined by 0.38% to 4.89% over the one-year period
ended September 30, 1998. Meanwhile, five-year AA-rated municipal yields
declined by 0.44% to 3.88% and ten-year AA-rated municipal bond yields
declined by 0.45% to 4.25%. These yield declines have caused price increases
of 1.61% and 3.34% for the five-year and ten-year bonds, respectively. Over
the same one-year period, the net asset values of Limited Term National and
California Portfolios have increased 0.97% and 1.68%, respectively. The net
asset values of the Intermediate National Fund has similarly increased by
2.30%. While the net asset values of all the Funds rose over the period
described, the dividend yields of all declined slightly. If interest rates
continue to fall, the net asset values of all the Funds should continue to
rise, but the dividend yields would be expected to decrease.

Limited Term National Fund
- --------------------------
Index Comparison

Compares performance of the Limited Term National Fund Class I shares, the
Lehman 5-year General Obligation Bond Index and the Consumer Price Index for
the period July 5, 1996 to June 30, 1998. On June 30, 1998 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 5.0 years and 4.1 years, respectively. Past performance of the
Index and the Fund may not be indicative of future performance.

</TABLE>
<TABLE> <This appears as a graph in the prospectus.>
FUND Lehman CPI
I Shares 5 Yrs.
-------- --------- ---------
<S> <C> <C> <C>
7/5/96 $10,000 $10,000 $10,000
7/31/96 10,119 10,066 10,030
8/31/96 10,147 10,087 10,050
9/30/96 10,220 10,163 10,080
10/31/96 10,285 10,257 10,110
11/30/96 10,382 10,400 10,141
12/31/96 10,386 10,384 10,171
1/31/97 10,422 10,412 10,181
2/28/97 10,489 10,486 10,212
3/31/97 10,439 10,368 10,222
4/30/97 10,475 10,420 10,232
5/31/97 10,558 10,533 10,243
6/30/97 10,642 10,626 10,253
. . .

9/30/97 10,838 10,858 10,314
12/31/97 10,995 11,058 10,356
3/31/98 11,104 11,187 10,366
6/30/98 11,229 11,301 10,428
</TABLE>

I Shares Average Annual Total Return
One Year (12 mos. Ended 6/30/98): 5.52%
From Inception (7/5/96): 6.01%
6
<PAGE>
Limited Term California Fund
- ----------------------------
Index Comparison

Compares performance of the Limited Term California Fund Class I shares, the
Lehman 5-year General Obligation Bond Index and the Consumer Price Index for
the period April 1, 1997 to June 30, 1998. On June 30, 1998 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 5.0 years and 4.8 years, respectively. Past performance of the
Index and the Fund may not be indicative of future performance.

<TABLE> <This appears as a graph in the prospectus.>
FUND Lehman CPI
A Shares 5 Yrs.
-------- --------- ---------
<S> <C> <C> <C>
4/01/97 $10,000 $10,000 $10,000
4/30/97 10,032 10,050 10,010
5/31/97 10,127 10,160 10,020
6/30/97 10,208 10,249 10,030
7/31/97 10,360 10,434 10,050
8/31/97 10,319 10,379 10,070
9/30/97 10,408 10,473 10,090
10/31/97 10,440 10,536 10,111
11/30/97 10,481 10,570 10,121
12/31/97 10,586 10,665 10,131
1/31/98 10,651 10,759 10,131
2/28/98 10,683 10,772 10,141
3/31/98 10,699 10,790 10,141
4/30/98 10,673 10,739 10,161
5/31/98 10,772 10,866 10,192
6/30/98 10,813 10,900 10,202
</TABLE>

I Shares Average Annual Total Return
One year (12 mos. Ended 6/30/98): 5.93%
From Inception (4/1/97): 6.47%

Intermediate National Fund
- --------------------------
Index Comparison

Compares performance of the Intermediate National Fund Class I shares,
the Merrill Lynch Municipal Bond (7-12 Year) Index and the Consumer Price
Index for the period July 5, 1996 to September 30, 1998. On September 30,
1998, the weighted average securities ratings of the Index and the Fund were
AA and A+, 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.

<TABLE> <This appears as a graph in the prospectus.>
FUND ML Muni
I Shares 7-12 Yrs. CPI
-------- --------- -------
<S> <C> <C> <C>
7/5/96 10,000 10,000 10,000
7/31/96 10,164 10,107 10,030
8/31/96 10,195 10,113 10,050
9/30/96 10,311 10,206 10,080
10/31/96 10,404 10,324 10,110
11/30/96 10,521 10,486 10,141
12/31/96 10,497 10,464 10,171
1/31/97 10,511 10,490 10,181
2/28/97 10,590 10,568 10,212
3/31/97 10,526 10,440 10,222
4/30/97 10,589 10,497 10,232
5/31/97 10,692 10,676 10,243
6/30/97 10,804 10,787 10,253
. . .

9/30/97 11,040 11,116 10,314
12/31/97 11,271 11,403 10,356
3/31/98 11,403 11,537 10,366
6/30/98 11,553 11,702 10,428
9/30/98 11,858 12,124 10,470
</TABLE>

I Shares Average Annual Total Return
One year (12 mos. ended 9/30/98): 7.41%
From Inception (7/5/96): 7.91%

Government Fund
- ---------------
Index Comparison

Compares performance of the Government Fund Class I shares, the Lehman
Brothers Intermediate Government Bond Index, and the Consumer Price Index for
the period July 5, 1996 to September 30, 1998. On September 30, 1998, the
weighted average securities ratings of the Index and the Fund were AAA and
AAA, respectively, and the weighted average portfolio maturities of the Index
and the Fund were 3.9 years and 4.2 years, respectively. Past performance of
the Index and the Fund may not be indicative of future performance.

<TABLE> <This appears as a graph in the prospectus.>
FUND Lehman CPI
I Shares Government
-------- ---------- ---------
<S> <C> <C> <C>
7/5/96 10,000 10,000 10,000
7/31/96 10,116 10,031 10,030
8/31/96 10,131 10,042 10,050
9/30/96 10,245 10,172 10,080
10/31/96 10,385 10,338 10,110
11/30/96 10,501 10,463 10,141
12/31/96 10,464 10,407 10,171
1/31/97 10,504 10,447 10,181
2/28/97 10,525 10,463 10,212
3/31/97 10,488 10,404 10,222
4/30/97 10,588 10,521 10,232
5/31/97 10,654 10,603 10,243
6/30/97 10,755 10,694 10,253
. . .

9/30/97 10,989 10,968 10,314
12/31/97 11,194 11,243 10,356
3/31/98 11,372 11,481 10,366
6/30/98 11,542 11,693 10,428
9/30/98 11,984 12,238 10,470
</TABLE>
I Shares Average Annual Total Return
One year (12 mos. ended 9/30/98): 9.06%
From Inception (07/05/96): 8.42%

Income Fund
- -----------
Index Comparison

Compares performance of the Income Fund Class I shares, the Lehman
Brothers Intermediate Government Corporate Bond Index, and the Consumer Price
Index for the period July 5, 1996 to September 30, 1998. On September 30,
1998, the weighted average securities ratings of the Index and the Fund were
A and AA, respectively, and the weighted average portfolio maturities of the
Index and the Fund were 4.3 years and 4.8 years, respectively. Past
performance of the Index and the Fund may not be indicative of future
performance.

<TABLE> <In the prospectus, this table appears as a graph>
FUND Lehman CPI
I Shares Government
-------- ---------- ---------
<S> <C> <C> <C>
7/5/96 $10,000 $10,000 $10,000
7/31/96 10,123 10,030 10,030
8/31/96 10,230 10,038 10,050
9/30/96 10,397 10,178 10,080
10/31/96 10,624 10,358 10,110
11/30/96 10,801 10,494 10,141
12/31/96 10,730 10,427 10,171
1/31/97 10,720 10,468 10,181
2/28/97 10,742 10,488 10,212
3/31/97 10,670 10,415 10,222
4/30/97 10,737 10,538 10,232
5/31/97 10,857 10,626 10,243
6/30/97 10,969 10,723 10,253
. . .
9/30/97 11,208 11,012 10,314
12/31/97 11,365 11,248 10,356
3/31/98 11,540 11,523 10,366
6/30/98 11,677 11,740 10,428
9/30/98 12,047 12,266 10,470
</TABLE>

I Shares Average Annual Total Return
One year (12 mos. ended 9/30/98): 7.49%
From Inception (07/05/96): 8.68%

ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS

Additional Information About the Municipal Funds' Investments

Municipal Obligations

Municipal Obligations are obligations bearing interest exempt from federal
income taxes, which are issued by or on behalf of states, territories and
possessions of the United States and the District of Columbia, and their
political subdivisions, agencies and instrumentalities. Municipal
Obligations include notes (including tax-exempt commercial paper), bonds,
municipal leases and participation interests in these obligations. Interest
on Municipal Obligations may be subject to the alternative minimum tax or
state income taxes. See "Taxes."

The yields on Municipal Obligations are dependent on a variety of factors,
including the condition of the general money market and the Municipal
Obligation market, the size of a particular offering, the maturity of the
obligation and the rating of the issues. The market value of outstanding
Municipal Obligations will vary with changes in prevailing interest rates and
as a result of changing evaluations of the ability of their issuers to meet
interest and principal payments. Variations in market value of Municipal
Obligations held in a Fund's portfolio arising from these or other factors
will cause changes in the net asset value of its shares. Municipal
Obligations often grant the issuer the option to pay off the obligation prior
to its final maturity. Prepayment of Municipal Obligations may reduce the
expected yield on invested funds, the net asset value of the Fund, or both if
interest rates have declined below the level prevailing when the obligation
was purchased. If interest rates have declined, reinvestment of the proceeds
from the prepayment of Municipal Obligations may result in a lower yield to
the Fund. In addition, the federal income tax treatment of gains from market
discount as ordinary income may increase the price volatility of Municipal
Obligations when interest rates rise.

Obligations of issuers of Municipal Obligations are subject to the provisions
of bankruptcy, insolvency and other laws affecting the rights and remedies of
creditors, such as the United States Bankruptcy Code. In addition, the
obligations of such issuers may become subject to the laws enacted in the
future by Congress, state legislatures or referenda extending the time for
payment of principal or interest, or imposing other constraints upon
enforcement of such obligations or upon municipalities to levy taxes. There
is also the possibility that, as a result of legislation or other conditions,
the power or ability of any issuer to pay, when due, the principal of and
interest on its Municipal Obligations may be materially affected.

Variable Rate Securities; Inverse Floaters; and
Demand Instruments

Any Municipal Fund may purchase variable rate Municipal Obligations. These
variable rate securities bear rates of interest that are adjusted
periodically according to formulas intended to reflect market rates of
interest, and these may include "inverse floaters," whose rates vary
inversely with changes in market rates of interest. The values of inverse
floaters will tend to be more volatile than fixed rate municipal securities
having similar credit quality, redemption provisions, and maturity. None of
the Municipal Funds will invest more than 10% of its total assets in
securities whose rates vary inversely with changes in market rates of
interest. Each Fund also may purchase variable rate demand instruments and
also may purchase fixed rate municipal demand instruments either in the
public market or privately from banks, insurance companies and other
financial institutions. These instruments provide for periodic adjustment of
the interest rate paid to the holder. The "demand" feature permits the
holder to demand payment of principal and interest prior to the final stated
maturity, either from the issuer or by drawing on a bank letter of credit, a
guarantee or insurance issued with respect to the instrument.

Municipal Leases

Any of the Municipal Funds may invest in Municipal Leases. These obligations
are used by state and local governments to acquire a wide variety of
equipment and facilities. Many such obligations include "non-appropriation"
clauses which provide that the governmental issuer has no obligation to make
payments unless money is appropriated for that purpose. If an issuer stopped
making payment on a Municipal Lease held by a Fund, the Lease would lose some
or all of its value. Often, a Fund will not hold the obligation directly,
but will purchase a "participation interest" in the obligation, which gives
the Fund an undivided interest in the underlying Municipal Lease. Some
Municipal Leases may be illiquid under certain circumstances, and TMC will
evaluate the liquidity of each Municipal Lease upon its acquisition by a Fund
and periodically while it is held.

When Issued Transactions

Any of the Municipal Funds may purchase securities on a when-issued or
forward delivery basis, for payment or delivery at a later date. The price
and yield are generally fixed on the date of the purchase commitment. During
the period between purchase and settlement, the market value of the security
may be more or less than its purchase price.

Special Risks Affecting Limited Term California Fund

Because Limited Term California Fund will purchase Municipal Obligations
originating primarily in California, an investment in Limited Term California
Fund may be riskier than an investment in either Limited Term National Fund
or Intermediate National Fund, which purchase Municipal Obligations from
throughout the United States. The California economy, although improving
rapidly, is dependent upon the high technology industry, and somewhat
dependent upon exports to Asia. If the current Asian economic slump
continues or worsens, it could impair the ability of certain California state
and municipal issuers to pay their obligations. Taxpayer initiatives,
competitive forces, particularly in the electric utility industry, and
reallocation of certain revenues previously available to county and local
governments could reduce the revenue available to some California issuers.
The Statement of Additional Information includes a more detailed discussion
of California state fiscal matters.

ADDITIONAL INFORMATION ABOUT THE TAXABLE INCOME FUNDS' INVESTMENTS

U.S. Government Securities. Either Fund may purchase include U.S.
Treasury obligations such as U.S. Treasury Bills, U.S. Treasury Notes, and
U.S. Treasury Bonds, with various interest rates, maturities and dates of
issuance. These U.S. Treasury securities are direct obligations of the U.S.
Treasury, backed by the full faith and credit of the U.S. Government. The
Government Fund also may purchase obligations issued by various U.S.
government agencies when those obligations are more attractive investments.
Some of these "agency obligations" are backed by the full faith and credit of
the U.S. Government, but other agency obligations are supported by the
agency's authority to borrow from the U.S. Government or the discretionary
authority of the Treasury to purchase obligations of the issuing agency.

GNMA Certificates. Either taxable Income Fund may purchase assets in
"GNMA" certificates issued by the Government National Mortgage Association.
These certificates are mortgage-backed securities of the modified
pass-through type, each of which evidences an interest in a specific pool of
mortgage loans insured by the Federal Housing Administration or guaranteed by
the Veterans Administration. The National Housing Act provides that the full
faith and credit of the U.S. Government is pledged to the timely payment of
amounts due for principal and interest by the GNMA on these certificates.
Variations in interest rates and other factors may result in prepayment of
some mortgages underlying these certificates, so that the resulting term of
the certificates will change. During periods of rising interest rates,
mortgage backed securities may have a greater risk of capital depreciation
because of decreased prepayments and increased effective maturity, and during
periods of declining interest rates these securities may have less potential
for capital appreciation because of increased prepayments. The Funds'
investment adviser continually will evaluate any investment in these
certificates in light of market conditions and the Fund's policy of
maintaining a portfolio normally having a dollar-weighted average maturity or
estimated average life of not more than five years.

Participations, CMOs. To facilitate its investment in any of the types
of obligations which the Funds may acquire, a Fund may purchase
"participations" in any of these obligations. Participations are undivided
interests in pools of securities which are assembled by certain banks or
other responsible persons, such as securities broker/dealers and investment
banking houses, where the underlying government credit support passes through
or is otherwise available to the participants or the trustee for all
participants. Similarly, the Fund may acquire collateralized mortgage
obligations ("CMOs"), which are obligations issued by a trust or other entity
organized to hold a pool of U.S. Government insured mortgage-backed
securities (such as GNMA certificates) or, in the case of Income Fund,
mortgage loans. A Fund will acquire a CMO when TMC believes that the CMO is
more attractive than the underlying securities in pursuing the Fund's primary
and secondary investment objectives. Participations and privately issued
CMOs are not considered U.S. Government securities, and are not considered
part of the 65% of the total assets of the Government Fund which will be
invested in obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities.

Repurchase Agreements. When a Fund purchases securities, it may enter
into a repurchase agreement with the seller in which the seller agrees, at
the time of sale, to repurchase the security at a mutually agreed-upon time
and price. The price will include a margin of profit or return for the Fund.
If the seller of the repurchase agreement enters a bankruptcy or other
insolvency proceeding, or the seller fails to repurchase the underlying
security as agreed, the Fund could experience losses, including loss of
rights to the security. The Fund will not enter into a repurchase agreement
if, as a result, more than 10% of the value of its net assets would then be
invested in repurchase agreements maturing in more than seven days and other
securities which are considered illiquid.

Either Fund may enter into reverse repurchase agreements to obtain short-
term liquidity. In such a transaction the Fund sells a security to a
purchaser and agree to repurchase the security in the future. The Fund will
enter into reverse repurchase agreements only with dealers, banks or
recognized financial institutions. These agreements are subject to the risk
that the underlying security will decline in value during the period when the
Fund is obligated to repurchase it. the Fund will not enter into any reverse
repurchase agreement if, as a result, more 5% of its total assets would be
subject to such obligations.

Securities Ratings. Income Fund emphasizes "investment grade"
investments. At least 65% of the Income Fund's net assets will be invested in
(1) obligations of the U.S. Government, its agencies, or instrumentalities
and in (2) debt securities rated at the time of purchase in one of the three
highest categories of Standard & Poor's Corporation (AAA, AA, or A) or
Moody's Investors Service, Inc. (Aaa, Aa, or A) or, if not rated, judged to
be of comparable quality by TMC. In addition, the Fund will not invest in any
debt security rated at the time of purchase lower than BBB by Standard &
Poor's or Baa by Moody's, or of equivalent quality as determined by TMC.
Should the rating of a portfolio security be downgraded TMC will determine
whether it is in the best interest of the Income Fund to retain or dispose of
the security.

See "Securities Ratings and Credit Quality," Below.

Income Fund's securities generally offer less current yield than
securities of lower quality (rated below BBB/Baa) or longer maturity, but
lower-quality securities generally have less liquidity. Both lower quality
securities and longer maturity securities have greater credit and market
risk, and consequently more price volatility than higher quality securities
or shorter maturity securities.

Mortgage and Other Asset-Backed Securities. Income Fund may invest in
mortgage-backed securities which are securities representing interests in
pools of mortgage loans. The securities provide shareholders with payments
consisting of both interest and principal as the mortgages in the underlying
mortgage pools are paid off. See description under "Government Fund -
Investment Strategies and Risks" above. Some mortgage-backed securities which
the Fund may purchase will not be backed by the full faith and credit of the
U.S. Government. The Income Fund may also invest in securities representing
interests in pools of certain consumer loans, such as automobile loans and
credit card receivables. Variations in interest rates and other factors may
result in prepayments of the loans underlying these securities, reducing the
potential for capital appreciation and requiring reinvestment of the
prepayment proceeds by the Fund at lower interest rates. Additionally, in
periods of rising interest rates these securities may suffer capital
depreciation because of decreased prepayments.

Municipal Securities. Income Fund may invest in municipal securities,
which include obligations issued by states, territories and possessions of
the United States, and their political subdivisions, agencies and
instrumentalities. Municipal securities may be "general obligation" bonds or
"revenue bonds." General obligation bonds are backed by the credit of the
issuing political subdivision or agency, and revenue bonds are repaid from
the revenues derived from a specific project such as a waste treatment plant
or stadium. Although investments in municipal obligations will be made
subject to the Fund's emphasis on purchases of investment grade securities (
described below under "Securities Ratings"), municipal obligations are
subject to the provisions of bankruptcy, insolvency and other laws affecting
the rights and remedies of creditors. In addition, these obligations could
become subject to actions by state legislatures or voter referenda extending
the time for repayment of principal or imposing other constraints upon
enforcement of the obligations or upon political subdivisions to levy taxes
to pay the obligations.

Foreign Securities.

In addition to its investments in foreign securities, Income Fund may
invest in instruments offered by brokers which combine forward contracts,
options and securities in order to reduce foreign currency exposure. The
Income Fund may enter into multiple futures, options and foreign currency
transactions or a combination of these transactions, instead of a single
transaction, as part of a hedging strategy.

Investments in foreign securities involve special risks due to more limited
information, higher brokerage costs, different accounting standards, thinner
trading markets and the likely impact of foreign taxes on the yield from debt
securities. They may also entail other risks, such as the possibility of one
or more of the following: imposition of dividend or interest withholding or
confiscatory taxes; currency blockages or transfer restrictions;
expropriation, nationalization or other adverse political or economic
developments; less government supervision and regulation of securities
exchanges, brokers and listed companies; and the difficulty of enforcing
obligations in other countries. Purchases of foreign securities are usually
made in foreign currencies and, as a result, the Income Fund may incur
currency conversion costs and may be affected favorably or unfavorably by
changes in the value of foreign currencies against the U.S. dollar. Further,
it may be more difficult for the Income Fund's agents to keep currently
informed about corporate actions which may affect the prices of portfolio
securities. Communications between the United States and foreign countries
may be less reliable than within the United States, thus increasing the risk
of delayed settlements of portfolio transactions or loss of certificates for
portfolio securities. The Income Fund's ability and decisions to purchase
and sell portfolio securities may be affected by laws or regulations relating
to the convertibility and repatriation of assets. These risks may be more
acute in the case of developing countries.

Strategic Positions. Income Fund may use futures, options and other
derivative instruments to "hedge" or protect its investments from adverse
movements in securities prices and interest rates. Limited Term Income Fund
may use currency hedging techniques, including forward currency contracts, to
manage exchange rate risk. The Fund also may use these techniques to obtain
potential gains, but no more than 5% of the Fund's assets will be committed
to Strategic Positions entered into for purposes other than bona fide
hedging, risk management or portfolio management. The Fund believes that use
of derivatives will benefit the Fund, but the Fund's performance could be
reduced if TMC's judgment is incorrect. Risks resulting from the use of
derivatives include:

* the risk that interest rates or markets (including currency values)
will not move in the direction the portfolio manager anticipates;
* some futures and options markets may not always be liquid, and the
Fund may not be able to close out a transaction without loss;
* daily margin calls for futures contracts may create a greater risk
of loss;
* imperfect correlations may occur between the price of the derivative
instrument and movement in the price of securities, interest rates or
currencies being hedged;
* inability to close out hedged positions may occur because of illiquidity
or disruption in markets, or exchange-imposed limitations or
restrictions;
* the other party to a transaction may not fulfill its obligations;
* price changes in an instrument may result in a loss greater than the
Fund's actual investment.

Counsel to the Funds has advised that in their view shares of Government Fund
are a legal investment for, among other investors, commercial banks and
credit unions chartered under the laws of the United States. This advice is
based upon a review of this Prospectus and the Statement of Additional
Information, and upon counsel's receipt of undertakings by TMC and Thornburg
Investment Trust respecting investment policies. In addition, Thornburg
Investment Trust believes that the Government Fund is currently a legal
investment for savings and loan associations and commercial banks chartered
under the laws of certain states.

SECURITIES RATINGS
AND CREDIT QUALITY

Each of the Municipal Funds' assets will normally consist of (1) securities,
or participation interests therein, that are rated at the time of purchase
within the four highest grades by Moody's Investors Service ("Moody's"),
Fitch Investors Service ("Fitch"), or Standard & Poor's Corporation ("S&P"),
(2) securities, or participation interests therein, that are not rated by a
rating agency, but are issued by obligors that, at the time of purchase,
either have other comparable debt obligations that are rated within the four
highest grades (Baa or BBB or better) by Moody's or S&P or Fitch or, in the
case of obligors whose obligations are unrated, are deemed by TMC to be
comparable to issuers having such debt ratings, and (3) cash. Government
Fund invests at least 65% of its total assets in obligations issued or
guaranteed by the U. S. Government or its agencies or instrumentalities, and
may invest in participations, repurchase agreements and other obligations
described above beginning on page 14. Such obligations are not typically
rated. At least 65% of Income Fund's net assets will be invested in (1)
obligations of the U. S. Government, its agencies and instrumentalities, and
in (2) debt securities rated at the time of purchase in one of the three
highest categories of Standard & Poor's Corporation (AAA, AA or A) or Moody's
Investor's Service, Inc. (Aaa, Aa or A) or, if not rated, judged to be of
comparable quality by TMC. Income Fund will not invest in any debt security
rated at the time of purchase lower than BBB by Standard & Poor's or Baa by
Moody's or of equivalent quality as determined by TMC.

Securities rated in the described categories are described as "investment
grade," and are regarded as having a capacity to pay interest and repay
principal that varies from "extremely strong" to "adequate." According to
S&P, for example, BBB bonds normally exhibit adequate protection parameters,
although adverse economic conditions or other changes are more likely to lead
to a weakened capacity compared to higher rated categories, and AAA bonds
exhibit extremely strong capacity. Securities rated Baa are regarded by
Moody's as having some speculative characteristics. Securities rated BBB by
Fitch are considered to have adequate capacity, although adverse changes in
economic conditions and circumstances are more likely to have an adverse
impact than for higher rated categories. Please see the Statement of
Additional Information for detailed descriptions of these ratings.

If permitted to do so, the Municipal Funds will only buy (i) variable rate
demand instruments that are rated within the two highest grades of either
rating agency or, if unrated, are deemed by TMC to be of high quality and
minimal credit risk, (ii) commercial paper that is rated within the two
highest grades of a rating agency, and (iii) municipal notes that are rated
within the two highest grades of a rating agency or, if unrated, are deemed
by TMC to be of comparable quality to such rated municipal notes. To the
extent that unrated securities may be less liquid, there may be somewhat
greater risk in purchasing unrated securities, especially Municipal
Obligations, than in purchasing comparable, rated securities. If a Fund
experienced unexpected net redemptions, it could be forced to sell such
unrated securities at disadvantageous prices without regard to the security's
investment merits, depressing the Fund's net asset value and possibly
reducing the Fund's overall investment performance.

Credit ratings do not reflect the risk that market values of fixed income
securities will fluctuate with changes in interest rates, and credit rating
firms may fail to change credit ratings in a timely fashion to reflect events
subsequent to initial ratings. Accordingly, in addition to using credit
rating information, TMC subjects each issue under consideration for
investment to its own credit analysis in an effort to assess the issuer's
financial soundness. This analysis is performed on a continuing basis for
all issues held by a Fund, and TMC may determine to dispose of portfolio
securities upon a change in ratings or adverse events or market conditions
not reflected in ratings. TMC evaluates the credit quality of unrated
securities purchased by a Fund under the general supervision of the Fund's
Directors or Trustees, and determines the equivalency of unrated obligations
to rated obligations.

ADDITIONAL INFORMATION ABOUT VALUE FUND'S INVESTMENTS

The following discussion contains more detailed information about types
of investments Value Fund may make. TMC may not buy all of these instruments
or use all of these techniques to the full extent permitted unless it
believes that doing so will help the Fund achieve its goals. Current holdings
are described in the Fund's financial reports which are sent to shareholders
twice a year. For a free Statement of Additional Information or financial
report, call 800-847-0200.

Equity Securities. Equity Securities may include common stocks,
preferred stocks, convertible securities, warrants, ADRs (American Depository
Receipts or GDR's), partnership interests and publicly traded real estate
investment trusts. Common stocks, the most familiar type, represent an equity
(ownership) interest in a corporation. Although equity securities have a
history of long-term growth in value, their prices fluctuate based on changes
in a company's financial condition and on overall market and economic
conditions.

Investments in smaller companies. The Fund may invest in the stock or debt
securities of smaller or unseasoned issuers. Although investments in these
companies may offer greater prospects for appreciation, they involve
additional risks because of limited product lines, limited access to markets
and financial resources, and greater vulnerability to competition and changes
in markets. Additionally, the value of these securities may fluctuate more,
and they may be more difficult to sell, particularly in declining markets.

Investments in Other Investment Companies. The Fund may invest in securities
of closed end investment companies. Up to 5% of its total assets at the time
of purchase may be invested in any one investment company, provided that
after its purchase no more than 3% of that investment company's outstanding
stock is owned by the Fund, and provided further, that no more than 10% of
the Fund's total assets are invested in investment companies. TMC will
charge an advisory fee on the portion of the Fund's assets that are invested
in securities of other investment companies. Thus shareholders will be paying
a "double fee" on those assets since the advisers of the investment companies
also will be charging fees on the same assets.

Debt Securities. The Fund may buy debt securities of any type. Bonds and
other debt instruments, including convertible debt securities, are used by
issuers to borrow money from investors. The issuer pays the investor a fixed
or variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current interest,
but are purchased at a discount from their face values. Debt securities have
varying degrees of quality and varying levels of sensitivity to changing
interest rates. Longer-term debt securities are generally more sensitive to
interest rate changes than short term debt securities.

Lower-quality debt securities (sometimes called "junk bonds" or "high yield
securities") are rated below investment grade by the primary rating agencies,
and are often considered to be speculative. These securities involve greater
risk of default or price changes due to changes in the issuer's
creditworthiness, or they may already be in default. The market prices of
these securities may fluctuate more than higher-quality securities and may
decline significantly in periods of general economic difficulty or in
response to adverse publicity or changes in investor perceptions.

Foreign Securities and foreign currencies may involve additional risks.
Securities of foreign issuers, even if denominated in U.S. dollars, may be
affected significantly by fluctuations in the value of foreign currencies,
and the value of these securities in U.S. dollars may decline even if the
securities increase in value in their home country. Foreign securities also
are subject to greater political risk, including nationalization of assets,
confiscatory taxation, currency exchange controls, excessive or
discriminatory regulations, and restrictions on repatriation of assets and
earnings to the United States. In some countries, there may be political
instability or insufficient governmental supervision of markets, and the
legal protections for the Fund's investments could be subject to unfavorable
judicial or administrative changes. Further, governmental issuers may be
unwilling or unable to repay principal and interest when due, and may require
that the terms for payment be renegotiated. Markets in some countries may be
more volatile, and subject to less stringent investor protection and
disclosure requirements and it may be difficult to sell securities in those
markets. Moreover, the economies in many countries may be relatively
unstable because of dependence on a few industries or economic sectors.

Adjusting Investment Exposure. Value Fund can use various techniques to
increase or decrease its exposure to changing securities prices, interest
rates, currency exchange rates, commodity prices, or other factors that
affect securities values. These techniques may involve derivative
transactions such as buying and selling options and futures contracts,
entering into currency exchange contracts or swap agreements, purchasing
indexed securities, and selling securities short. TMC can use these practices
to adjust the risk and return characteristics of the Fund's portfolio of
investments. If TMC judges market conditions incorrectly or employs a
strategy that does not correlate well with the Fund's investments, these
techniques could result in a loss, regardless of whether the intent was to
reduce risk or increase return. These techniques may increase the price
volatility of the Fund and may involve a small investment of cash relative to
the magnitude of the risk assumed. In addition, these techniques could result
in a loss if the counterparty to the transaction does not perform as
promised.

Other Securities the Fund may purchase include short-term, highly liquid
securities, such as time certificates of deposit, and investment grade
short-term corporate debt obligations and commercial paper. The Fund may,
under normal conditions, hold a portion of its assets in other securities
pending investment of idle funds or to provide liquidity. During temporary
defensive conditions, the Fund may invest up to 100% of its assets in other
securities.

Repurchase Agreements. In a repurchase agreement, the Fund buys a security at
one price and simultaneously agrees to sell it back at a higher price. Delays
or losses could result if the other party to the agreement defaults or
becomes insolvent. In a reverse repurchase agreement, the Fund sells a
security and agrees to repurchase the security at a higher price. See
"Borrowing," below.

Illiquid and Restricted Securities. Some investments may be determined by
TMC, under the supervision of the Trustees, to be illiquid, which means that
they may be difficult to sell promptly at an acceptable price. The sale of
other securities, including illiquid securities, may be subject to legal
restrictions. Difficulty in selling securities may result in a loss or may be
costly to the Fund.

Borrowing. The Fund may borrow from banks or through reverse repurchase
agreements. If the Fund borrows money, its share price may be subject to
greater fluctuation until the borrowing is paid off. If the Fund makes
additional investments while borrowings are outstanding, this may be
considered a form of leverage.

PORTFOLIO TURNOVER

Each Fund anticipates that its annual turnover rate normally will be less
than 100%. A 100% turnover rate would occur, for example, if all of the
securities held by a Fund were sold and replaced within one year. TMC does
not consider the portfolio turnover rate a limiting factor in making
investment decisions for a Fund which are otherwise consistent with that
Fund's investment objectives and management policies. A higher rate of
turnover, may, however, result in increased transaction costs and taxable
capital gains.

YEAR 2000 RISK

The inability of some computer systems to recognize dates after December 31,
1999 could cause some disruptions in the securities industry.

Thornburg Fund's Transfer Agent and Custody Bank National Financial Data
Services/DST (Transfer Agent) and State Street Bank (Custodian) have been
preparing for year 2000 conversion since 1988. Beta testing has been done
using 1999/2000 conversions all the way out to 2009/2010 conversions
(including leap year calculations). Firewalls have been built to isolate
non-complaint third party transmissions and testing has begun with all third
party electronic communicators. Detailed Y2K information is available over
the Internet at www.dstsystems.com. DST's stated goal is to be Y2K Ready by
the end of 1998.

The funds' internal systems take no electronic downloads other than from DST
Systems. We do, however, purchase information and research delivered
electronically. We also use analytical programs provided by such vendors,
e.g. bond analytics. Failure of such externally supplied services would
impact our efficiency, and that of our entire industry. It would not,
however, preclude our ability to analyze securities or monitor and adjust
portfolios.

YOUR ACCOUNT

Buying Fund Shares

The Institutional Class shares of the Funds are sold on a continuous basis
with no initial sales charge or contingent deferred sales charge at the net
asset value (NAV) per share next determined after a purchase order is
received by the Funds' transfer agent and accepted. The NAV of each Fund is
computed at least once each day the Funds conduct business, by adding the
value of the Fund's assets, subtracting its liabilities and dividing the
result by the number of shares outstanding. NAV is normally calculated at
four o'clock p. m. Eastern time on each day the New York Stock Exchange is
open. See the table below for instructions on how to place your order.

Institutional Class shares of each Fund are subject to a Rule 12b-1
Service Plan, which permits each Fund to reimburse the investment adviser
(TMC) for costs to obtain various shareholder services from persons who sell
shares. The maximum annual reimbursement under the plan is 1/4 of 1% of the
class's net assets, but TMC has never sought a reimbursement of any expenses
under the plan for Class I shares. TMC has advised that it has no current
intention to do so. Because this fee is paid out of the class's assets,
payment of the fee on an ongoing basis would increase the cost of your
investment and might cost more than paying other types of sales charges.

Each Fund reserves the right to suspend the offering of shares for a period
of time. Each Fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page 47.

Qualified individual investors and qualified institutions purchasing shares
for their own account are eligible to purchase Institutional Class shares
provided they invest a minimum of $2,500,000. The minimum amount for
subsequent purchases is $5,000. Qualified institutions include corporations,
banks and insurance companies purchasing for their own account and other
institutions such as trusts, endowments and foundations. TMC or TSC may make
payments from their own resources to assist in the sales or promotion of the
Funds.

Opening An Account
- ----------------------------------------------------------------------------
Buying Shares To Open an Account To Add To An Account
- ----------------------------------------------------------------------------

Qualified Individual Minimum Minimum
or Institutional $2,500,000 $5,000

Qualified Plans Consult your Plan Consult your Plan
Administrator Administrator

Within Wrap or Fee Based Consult your Program Consult your Program
Program Sponsor Sponsor

By Telephone Exchange from another Exchange from another
1-888-598-0400 Thornburg Fund Thornburg Fund
account with the same account with the same
registration, registration
including name, including name,
address, and address, and
taxpayer ID number. taxpayer ID number.

By Mail Complete and sign Make your check
the application. payable to the
Make your check applicable
payable to the Thornburg Fund.
applicable Indicate your
Thornburg Fund. Fund account number
Mail to the address on your check and
indicated on the mail to the address
application. printed on your
account statement.
Automatic Investment Plan Use one of the above Use Automated Clearing
procedures to open House funds. Sign up
your account. Obtain for this service when
an Automatic you open your account,
Investment Plan form or call 1-888-598-0400
to sign up for this to add it.
service.
- ----------------------------------------------------------------------------

Qualified employee benefit or retirement plans other than an individual
retirement account ("IRA") or SEP-IRA are also eligible to purchase
Institutional Class shares, provided they either invest a minimum of
$1,000,000 in the Funds or have 100 or more eligible participants enrolled in
the plan. There is no minimum amount for subsequent purchases.

Investment dealers, financial advisers or other investment professionals,
including bank trust departments and companies with trust powers, purchasing
for the accounts of others within a clearly defined "wrap" or other fee based
investment advisory program are eligible to purchase Institutional Class
shares. TSC will establish a minimum amount per program or per account to
qualify for purchase of Institutional Class shares. The minimum amount per
program is currently $250,000. Consult your applicable professional for
their minimum.

The minimum account size is $1,000. Each Fund reserves the right to
redeem the shares of any shareholder whose shares have a net asset value of
less than $1,000. The Fund will notify the shareholder before performing
such a redemption.

Employees, officers, trustees, directors of any Thornburg Fund or Thornburg
company, and their families or trusts established for the benefit of any of
the foregoing, may also purchase Institutional Class shares.

Opening an Account

Complete and sign an account application and give it, along with your check,
to the Fund in which you are investing or to your financial intermediary.
You may also open your account by wire or mail. If there is no application
accompanying this prospectus, please call 1-888-598-0400. If you buy shares
by check and then redeem those shares, the payment may be delayed for up to
15 business days to ensure that your previous investment has cleared.

When you sign your account application, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income to
the IRS. If you violate IRS regulations, the IRS can require the Fund to
withhold 31% of your taxable distributions and redemptions.

If you open or add to your account yourself rather than through your
financial advisor please note the following:

* All of your purchases must be made in U. S. dollars.
* Checks must be drawn on U. S. banks; the Funds do not accept cash.
* If your check does not clear, your purchase will be canceled and you
could be liable for any losses or fees the Fund or its Transfer Agent
have incurred.

Certain financial institutions that have entered into sales agreements with
TSC may enter confirmed purchase orders on behalf of customers by phone, with
payment to follow no later than the time when the Fund is priced on the
following business day. If payment is not received by that time, the
financial institution could be held liable for resulting fees or losses.

Each Fund may authorize certain securities brokers to accept on its
behalf purchase and redemption orders received in good form, and some of
those brokers may be authorized to designate other intermediaries to accept
purchase and redemption orders on the Fund's behalf. Provided the order is
promptly transmitted to the Fund, the Fund will be deemed to have received a
purchase or redemption order at the time it is accepted by such an authorized
broker or its designee, and customer orders will be priced based upon the
Fund's net asset value next computed after the order is accepted by the
authorized broker or its designee.

Investors may be charged a fee if they effect transactions in Fund shares
through a broker or agent.

Street Name Accounts

Some financial intermediaries offer to act as owner of record of Fund shares
as a convenience to investors who are clients of those firms and shareholders
of an individual Fund. Neither the Funds nor their Transfer Agent can be
responsible for failures or delays in crediting shareholders for dividends or
redemption proceeds, or for delays in reports to shareholders if a
shareholder elects to hold Fund shares in street-name through an account with
a financial intermediary rather than directly in the shareholder's own name.
Further, neither the Funds nor their Transfer Agent will be responsible to
the investor for any loss to the investor due to the failure of a financial
intermediary, its loss of property or funds, or its acts or omissions.
Prospective investors are urged to confer with their financial intermediaries
to learn about the different options available for owning mutual fund shares.
You may receive share certificates or hold shares in your name with the
Transfer Agent upon request.

SELLING FUND SHARES

Shareholders of record (the person or entity in whose name the shares are
registered) can withdraw money from their Fund at any time by redeeming some
or all of the shares in the account, either by selling them back to the Fund
or by selling the shares through their financial advisor. The shares will be
purchased by the Fund at the next share price (NAV) calculated after the
redemption order is received in proper form. Share price is normally
calculated at 4 p.m. Eastern time. Please note the following:

* Consult your financial advisor for procedures governing redemption
through the advisor's firm.

* Telephone redemptions over the wire generally will be credited to your
bank account on the business day after your phone call (see Telephone
Redemption, page 29).

- ---------------------------------------------------------------------------
Redeeming Shares Account Type Special Requirements
- ---------------------------------------------------------------------------
Through a Financial All Account Types Consult with your
Intermediary financial advisor.
They may charge a fee.

By Mail Individual, Joint The letter of
Send to: NFDS Tenant, Sole instruction must be
c/o Thornburg Funds Proprietorship, signed by all persons
PO Box 419017 UGMA, UTMA required to sign for
Kansas City, MO transactions, exactly
64141-6017 as their names appear
on the account and
must include:
* Your name,
* The Fund's name,
* Your Fund account no.
* The dollar amount or
number of shares to be
redeemed,
* Any other applicable
requirements listed above
* Signature guarantee,
if required.

Trust In addition to the
above requirements,
the trustee must sign
the letter indicating
capacity as trustee.
If the trustee's name
is not in the account
registration, provide
a copy of the trust
document certified
w/in the last 60 days.

Business or In addition to the
Organization above requirements,
at least one person
authorized by
corporate resolution
to act on the account
must sign the letter
which must be
signature guaranteed.
Include a corporate
resolution with a
corporate seal.

Executor, Call 888-598-0400
Administrator,
Conservator,
Guardian

By Telephone All Account Types You must sign up for
except Street Name the telephone
Accounts redemption feature
before using it.
Minimum Wire $1,000
Minimum Check $500

Internet All Account Types www.Thornburg.com
- ---------------------------------------------------------------------------

* Your Fund may hold payment on redemptions until it is reasonably
satisfied that investments previously made by check have been
collected, which can take up to 15 business days.

* Payment for shares redeemed normally will be made by mail the next
business day, and in most cases within seven days, after receipt by the
Transfer Agent of a properly executed request for redemption
accompanied by any outstanding certificates in proper form for
transfer. The Funds may suspend the right of redemption and may
postpone payment when the New York Stock Exchange is closed for other
than weekends or holidays, or if permitted by rules of the Securities
and Exchange Commission during an emergency which makes it impractical
for the Funds to dispose of their securities or fairly to determine net
asset value, or during any other period specified by the Securities and
Exchange Commission in a rule or order for the protection of investors.

* No interest is accrued or paid on amounts represented by uncashed
distribution or redemption checks.

* To the extent consistent with state and federal law, your Fund may make
payments of the redemption price either in cash or in kind. The Funds
have elected to pay in cash all requests for redemption by any
shareholder. They may, however, limit such cash in respect to each
shareholder during any 90 day period to the lesser of $250,000 or 1% of
the net asset value of a Fund at the beginning of such period. This
election has been made pursuant to Rule 18f-1 under the Investment
Company Act of 1940 and is irrevocable while the Rule is in effect
unless the Securities and Exchange Commission, by order, permits its
withdrawal. In the case of a redemption in kind, securities delivered
in payment for shares would be valued at the same value assigned to
them in computing the net asset value per share of the Fund. A
shareholder receiving such securities would incur brokerage costs when
selling the securities.

To sell shares in an account, you may use any of the methods described below.

If you are a qualified individual or qualified institution selling some but
not all of your shares, leave at least $25,000 worth of shares in the account
to keep it open. If you own shares through a "wrap" or fee based program,
you must leave at least $1,000 worth of shares in the account to keep it
open. Accounts below these minimums may be closed by the Fund, and the
proceeds returned to the investor. There is no minimum balance requirement
for Qualified Plans.

Certain requests must include a signature guarantee. It is designed to
protect you and your Fund from fraud. If you are redeeming directly rather
than through a financial adviser and you have not signed up for telephone
redemption, your request must be made in writing and include a signature
guarantee if any of the following situations apply:

* You wish to redeem more than $10,000 worth of shares,

* Your account registration has changed within the last 30 days,

* The redemption check is being mailed to a different address than the
one on your account,

* The check is being made payable to someone other than the person in
whose name the account is registered, or

* The redemption proceeds are being transferred to a Thornburg account
with a different registration.

Telephone Redemption

If you completed the telephone redemption section of your application when
you first purchased your shares, you may easily redeem shares of your Fund by
telephone. Simply call a Fund Customer Service Representative at
888-598-0400. Money can be wired directly to the bank account designated by
you on the application or sent to you in a check. The Fund's Transfer Agent
may charge a fee for a bank wire. This fee will be deducted from the amount
wired.

NFDS
c/o Thornburg Funds
P.O. Box 419017, Kansas City, MO 64141-6017.

Considerations With Respect to Telephone Redemption

The Funds, TSC, TMC and the Funds' Transfer Agent are not responsible for,
and will not be liable for, the authenticity of withdrawal instruction
received by telephone or the delivery or transmittal of the redemption
proceeds if they follow instructions communicated by telephone that they
reasonably believe to be genuine. By electing telephone redemption you are
giving up a measure of security you otherwise may have by redeeming shares
only with written instructions, and you may bear the risk of any losses
resulting from telephone redemption. The Funds and their Transfer Agent will
attempt to implement reasonable procedures to prevent unauthorized
transactions and the Funds or their Transfer Agent could be liable if these
procedures are not employed. These procedures will include recording of
telephone transactions, providing written confirmation of such transactions
within 5 days, and requesting certain information to better confirm the
identity of the caller at the time of the transaction. You should verify the
accuracy of your confirmation statements immediately after you receive them.

Internet Redemption

You may redeem shares of any Fund by contacting Thornburg at its Website,
www.thornburg.com and following the instructions.

INVESTOR SERVICES

Thornburg Funds provides a variety of services to help you manage your
account.

Investor Services

Thornburg Funds' telephone representatives are available Monday through
Friday from 8:30 am to 6:30 p.m. Eastern time. Whenever you call, you can
speak with someone equipped to provide the information or service you need.

Statements and reports that Thornburg Funds send to you include the
following:

* Account statements after every transaction affecting your account

* Monthly account statements (except the Value Fund which sends
quarterly account statements)

* Financial reports (every six months)

* Cost basis statement (at the end of any year in which you redeem
shares)

Thornburg's Website on the Internet provides you with helpful information 24
hours a day, at www.thornburg.com

Exchange Privilege

You may exchange Institutional Class shares of any Thornburg Fund for
Institutional Class shares of any other Thornburg Fund that offers
Institutional Class shares, subject to the restrictions described below.
Please consult the exchange and reinvestment privilege information in the
Prospectus of the other Thornburg Fund. Note that exchanges out of a Fund
may have tax consequences for you.

Exchange Restrictions

As a shareholder, you have the privilege of exchanging Institutional Class
shares of a Fund for Institutional Class shares of other Thornburg Funds
which offer Institutional Class shares. However, you should note the
following:

* The Fund you are exchanging into must be registered for sale in your
state.

* You may only exchange between accounts that are registered in the same
name address, and taxpayer identification number.

* Before exchanging into a Fund, read its prospectus.

* Exchanges may have tax consequences for you.

* Because excessive trading can hurt fund performance and shareholders,
each Fund reserves the right to temporarily or permanently terminate
the exchange privilege of any investor who makes more than four
exchanges out of a Fund in any calendar year. Accounts under common
ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the
four exchange limit.

* Each Fund reserves the right to refuse exchange purchases by any person
or group if, in TMC's judgment, the Fund would be unable to invest the
money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.

* Your exchanges may be restricted or refused if a Fund receives or
anticipates simultaneous orders affecting significant portions of the
Fund's assets. In particular, a pattern of exchanges that coincide
with a "market timing" strategy may be disruptive to a Fund. Although
a Fund will attempt to give prior notice whenever it is reasonably able
to do so, it may impose these restrictions at any time. The Funds
reserve the right to terminate or modify the exchange privilege in the
future.

Systematic Withdrawal Plans

Systematic withdrawal plans let you set up periodic redemptions from your
account. Consult your financial intermediary or call a Fund Customer Service
Representative at 888-598-0400 for information.

DIVIDENDS AND DISTRIBUTIONS

Each Fund distributes substantially all of its net income and realized
capital gains, if any, to shareholders each year. Each of the Municipal
Funds and the Taxable Income Funds declares its net investment income daily
and distributes it monthly. Value Fund distributes net investment income
quarterly. Each Fund will distribute net realized capital gains, if any, at
least annually. Capital gain distributions, if any, normally will be
declared and payable in December. You will be notified annually by your Fund
as to the amount and characterization of distributions paid to or reinvested
by you for the preceding tax year.

Distribution Options

The Funds earn interest from bond, money market, and other investments.
These are passed along as dividend distributions. Each Fund realizes capital
gains whenever it sells securities for a higher price than it paid for them.
These are passed along as capital gain distributions. When you open an
account, specify on your application how you want to receive your
distributions. Each Fund offers four options, which you can change at
anytime. Shares of any Thornburg Fund purchased through reinvestment of
dividend and capital gain distributions are not subject to sales charges or
contingent deferred sales charges. No interest or earnings are accrued or
paid on amounts represented by uncashed distribution checks.

Dividends

1. Reinvestment Option. Your dividend distributions will be automatically
invested in additional shares of your Fund. If you do not indicate a
choice on your application, you will be assigned this option. You may
also instruct the Fund to invest your dividends in the shares of another
Thornburg Fund.

2. Cash Option. You will be sent a check for your dividend distributions.
Cash distribution checks are normally mailed on the third business day
after the month-end for the Municipal Funds and for the Taxable Income
Funds.

Capital Gain

1. Reinvestment Option. Your capital gain distributions, if any, will be
automatically reinvested in additional shares of your Fund. If you do
not indicate a choice on your application, you will be assigned this
option. You may also instruct the Fund to reinvest your capital gain
distributions in shares of another Thornburg Fund.

2. Cash Option. You will be sent a check for any capital gain distributions.

Turnover and Capital Gains

The Funds do not normally engage in short-term trading for profits. However,
when a Fund believes that a security will no longer contribute towards its
reaching its goal or that another security will better contribute to its
goal, it will normally sell that security.

When a Fund sells a security at a profit it realizes a capital gain. When it
sells a security at a loss it realizes a capital loss. A fund must, by law,
distribute capital gains, net of any losses, to its shareholders. Whether
you reinvest your capital gain distributions or take them in cash, the
distribution is taxable.

TAXES

Federal Taxes - In General

Certain general aspects of federal income taxation of individual
shareholders are discussed below. Aspects of investment by shareholders who
are not individuals are addressed in a limited manner. Prospective
investors, and in particular persons who are not individuals, should consult
their own tax advisers concerning federal, state and local tax consequences
respecting investments in the Funds.

Federal Tax Treatment of Distributions - Municipal Funds

The Municipal Funds intend to satisfy conditions that will enable them to
designate distributions from the interest income generated by investments in
Municipal Obligations, which are exempt from federal income tax when received
by a Fund, as Exempt Interest Dividends. Shareholders receiving Exempt
Interest Dividends will not be subject to federal income tax on the amount of
such dividends, except to the extent the alternative minimum tax may be
imposed.

Distributions by the Municipal Funds of net interest income received from
certain temporary investments (such as certificates of deposit, corporate
commercial paper and obligations of the U. S. government, its agencies and
instrumentalities) and net short-term capital gains realized by the Fund, if
any, will be taxable to shareholders as ordinary income whether received in
cash or additional shares. Distributions to shareholders will not qualify
for the dividends received deduction for corporations. Any net long-term
capital gains realized by the Fund, whether or not distributed, will be
taxable to shareholders as long-term capital gains regardless of the length
of time investors have held their shares, although gains attributable to
market discount on portfolio securities will be characterized as ordinary
income. Each year the Fund will, where applicable, mail to shareholders
information on the tax status of dividends and distributions, including the
respective percentages of tax-exempt and taxable, if any, income and an
allocation of tax-exempt income on a state-by-state basis. The exemption of
interest income for federal income tax purposes does not necessarily result
in an exemption under the income or other tax laws of any state or local
taxing authorities. (See "State Taxes"). Shareholders are advised to
consult their own tax advisers for more detailed information concerning the
federal, state and local taxation of the Fund and the income tax consequences
to its shareholders.

The Code treats interest on certain Municipal Obligations which are private
activity bonds under the Code as a preference item for purposes of the
alternative minimum tax on individuals and corporations. The Municipal Funds
may purchase without limitation private activity bonds the interest on which
is subject to treatment under the Code as a preference item for purposes of
the alternative minimum tax on individuals and corporations, although the
frequency and amounts of these purchases are uncertain. Some portion of
Exempt Interest Dividends could, as a result of such purchases, be treated as
a preference item for purposes of the alternative minimum tax on individuals
and corporations. Shareholders are advised to consult their own tax advisers
as to the extent and effect of this treatment.

Federal Tax Treatment of Distributions - Taxable Income Funds

Distributions to shareholders representing net investment income and net
short term capital gains will be taxable to the recipient shareholders as
ordinary income, whether the distributions are actually taken in cash or are
reinvested in additional shares. Fund distributions will not be eligible for
the dividends received deduction for corporations. Distributions of net
long-term capital gains, if any, will be treated as long-term capital gains
by shareholders regardless of the length of time the shareholder has owned
the shares, and whether received as cash or in additional shares.

Federal Taxes - Value Fund

Federal Tax Treatment of Sales or Redemptions of Shares - All Funds

Redemption or resale of shares by a shareholder will be a taxable transaction
for federal income tax purposes, and the shareholder will recognize gain or
loss in an amount equal to the difference between the shareholder's basis in
the shares and the amount received on the redemption or resale. If the
shares sold or redeemed are a capital asset, the gain or loss will be a
capital gain or loss and will be long-term if the shares were held for more
than one year.

State Taxes

With respect to distributions of interest income and capital gains from the
Funds, the laws of the several states and local taxing authorities vary with
respect to the taxation of such distributions, and shareholders of the Funds
are advised to consult their own tax advisers in that regard. The Municipal
Funds will advise shareholders approximately 60 days after the end of each
calendar year as to the percentage of income derived from each state as to
which it has any Municipal Obligations in order to assist shareholders in the
preparation of their state and local tax returns. Distributions of interest
income by Limited Term California Fund to individuals resident in California,
to the extent the interest income is attributable to Municipal Obligations
originating in California, will not be subject to California personal income
tax under current law. The Taxable Income Funds will advise shareholders
approximately 60 days after the end of each calendar year as to the
percentage of income derived from Treasury securities in order to assist
shareholders in the preparation of their state and local tax returns.
Prospective investors are urged to confer with their own tax advisers for
more detailed information concerning state tax consequences.

ORGANIZATION OF THE FUNDS

Limited Term National Fund and Limited Term California Fund are diversified
series of Thornburg Limited Term Municipal Fund, Inc., a Maryland corporation
organized as a diversified, open-end management investment company (the
"Company"). The Company currently offers two series of stock, Limited Term
National Fund and Limited Term California Fund, each in multiple classes, and
the Board of Directors is authorized to divide authorized but unissued shares
into additional series and classes.

Intermediate Municipal Fund, Government Fund, Income Fund and Value Fund are
diversified series of Thornburg Investment Trust, a Massachusetts business
trust (the "Trust") organized as a diversified, open-end management
investment company under a Declaration of Trust (the "Declaration"). The
Trust currently has 14 authorized Funds, four of which are described in this
Prospectus. The Trustees are authorized to divide the Trust's shares into
additional series and classes.

No Fund is liable for the liabilities of any other Fund. However, because
the Company and the Trust share this Prospectus with respect to the Funds,
there is a possibility that one of these companies could be liable for any
misstatements, inaccuracies or incomplete disclosure in the Prospectus
respecting Funds offered by the other company. The Company and the Trust do
not concede, and specifically disclaim, any such liability.

INVESTMENT ADVISER

The Funds are managed by Thornburg Management Company, Inc., (TMC). TMC
performs investment management services for each Fund under the terms of an
Investment Advisory Agreement which specifies that TMC will select
investments for the Fund, monitor those investments and the markets
generally, and perform related services. TMC also performs administrative
services specific to the Institutional Class under an Administrative Services
Agreement which requires that TMC will supervise, administer and perform
certain administrative services necessary for the maintenance of
Institutional Class shareholders. TMC's services to Limited Term National
Fund and Limited Term California Fund are supervised by the Directors of
Thornburg Limited Term Municipal Fund, Inc.; its services to the other Funds
are supervised by the Trustees of Thornburg Investment Trust.

TMC was established in 1982. Today, the Thornburg Funds include other mutual
funds in addition to the Funds covered by this Prospectus. The Thornburg
Funds total over $1.8 billion in assets. Thornburg Management Company Inc.
is known as a provider of conservative investment products. For more than a
decade the Thornburg Funds have been committed to preserving and increasing
the real wealth of their shareholders. The key to growing real wealth is
increasing buying power after taxes, inflation, and investment related
expenses. TMC receives fees for managing each Fund computed in accordance
with the following tables. These annual rates are calculated on average
daily net assets and are paid monthly.

For the most recent fiscal year of each of the Funds, the investment
advisory and administrative services fee rates for each of the Funds were:

Advisory Fee Rate Administrative Services
Rate
----------------- -------------------------
- ---
Year Ended June 30, 1998
------------------------
Limited Term National Fund .45% .05%

Limited Term California Fund .50% .05%

Year Ended September 30, 1998
-----------------------------
Intermediate National Fund .50% .05%

Limited Term Government Fund .375% .05%

Limited Term Income Fund .50% .05%

Value Fund Class I shares became available on November 2, 1998.

Brian J. McMahon and George Strickland, both of whom are Managing
Directors of TMC, are the portfolio managers for the Municipal Funds. Mr.
McMahon has managed municipal bond portfolios for TMC since 1984 and Mr.
Strickland ahs performed municipal bond credit analyses and management since
joining TMC in 1991. Mr. McMahon and Mr. Strickland are assisted by other
employees of TMC in managing the Municipal Funds.

Steven J. Bohlin, a Managing Director of TMC, is the portfolio manager of the
Taxable Income Funds. He has held this responsibility for Government Fund
since 1988 and for Income Fund since its inception in 1992. Mr. Bohlin is
assisted by other employees of TMC in managing the Taxable Income Funds.

William Fries, a Managing Director of TMC, is the portfolio manager of Value
Fund, which he has managed since its inception in 1995. Before joining TMC
in May 1995, Mr. Fries managed equity mutual funds for 16 years with another
mutual fund management company. Mr. Fries is assisted by other employees of
TMC.

TMC may, from time to time, agree to waive its fees or to reimburse a Fund
for expenses above a specified percentage of average daily net assets. TMC
retains the ability to be repaid by the Fund for these expense reimbursements
if expenses fall below the limit prior to the end of the fiscal year. Fee
waivers or expenses by a Fund will boost its performance, and repayment of
waivers or reimbursements will reduce its performance.

In addition to TMC's fees, each Fund will pay all other costs and expenses of
its operations. No Fund will bear any costs of sales or promotion incurred
in connection with the distribution of Institutional Class shares, except as
described above under "Service Plan".

Thornburg Securities Corporation (TSC) distributes and markets the Thornburg
Funds. TMC or TSC may make payments from their own resources to assist in
the sales or promotion of the Funds.

H. Garrett Thornburg, Jr., a Director and Chairman of the Fund, is the
controlling stockholder of both TMC and TSC.

FINANCIAL HIGHLIGHTS

The Financial Highlights table for each Fund is intended to help you
understand the Funds' financial performance for the periods shown. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate an investor would have earned or lost
on an investment in the Fund, assuming reinvestment of all dividends and
distributions. The information has been audited by McGladrey & Pullen, LLP,
independent auditors, whose report, along with the Funds' financial
statements, are included in the Funds' Annual Reports, which are available on
request. No figures are available for Value Fund, which commenced its
offering of Institutional Class shares on November 2, 1998.

<TABLE>
- --------------------------
LIMITED TERM NATIONAL FUND
- -------------------------- FISCAL YEAR OR PERIOD
---------------------
CLASS I
---------------------
Year Period
Ended from
June 30, 7/5/96(a)
1998 to 6/30/97
-------- ----------
<S> <C> <C>
Net Asset Value, Beginning of Period $13.44 $13.27

Income from Investment Operations:
Net Investment Income .66 .66
Net Gains (or Losses) on Securities .07 .17
(Realized and Unrealized) ------ ------
Total from Investment Operations .73 .83

Less Distributions:
Dividends (from Net Investment Income) (.66) (.66)
Distributions (from Capital Gains) - -
Total Distributions (.66) (.66)

Net Asset Value, End of Period $13.51 $13.44

Total Return(b) 5.52% 6.42%

Ratios/Supplemental Data:
Net Assets, End of Period (000's omitted) $77,605 35,476
Ratio of Expenses to Average Net Assets (0.60)% (0.60)%(c)
(After Expense Reimbursements)
Ratio of Net Income to Average Net Assets 4.85% 5.01%(c)
(After Expense Reimbursements)
Ratio of Expenses to Average Net Assets (0.66)% (0.79)%(c)
(Before Expense Reimbursements)

Portfolio Turnover Rate 24.95% 23.39%

- ----------------------------
LIMITED TERM CALIFORNIA FUND
- ---------------------------- FISCAL YEAR OR PERIOD
---------------------
CLASS I
---------------------
Year Period
Ended from
June 30, 4/1/97(a)
1998 to 6/30/97
-------- ----------
<S> <C> <C>
Net Asset Value, Beginning of Period $12.75 $12.64

Income from Investment Operations:
Net Investment Income .59 .15
Net Gains (or Losses) on Securities .15 .11
(Realized and Unrealized) ------ ------
Total from Investment Operations .74 .26

Less Distributions:
Dividends (from Net Investment Income) (.59) (.15)
Distributions (from Capital Gains) - -
Total Distributions (.59) (.15)

Net Asset Value, End of Period $12.90 $12.75

Total Return(b) 5.93% 2.07%

Ratios/Supplemental Data:
Net Assets, End of Period (000's omitted) $8,284 3,949
Ratio of Expenses to Average Net Assets (0.65)% (0.63)%(c)
(After Expense Reimbursements)
Ratio of Net Income to Average Net Assets 4.60% 4.77%(c)
(After Expense Reimbursements)
Ratio of Expenses to Average Net Assets (0.92)% (1.32)%(c)
(Before Expense Reimbursements)

Portfolio Turnover Rate 21.21% 20.44%

- --------------------------
INTERMEDIATE NATIONAL FUND
- -------------------------- FISCAL YEAR OR PERIOD
-------------------------------
CLASS I
-------------------------------
Year Period
Year Ended from
September 30, 7/5/96(a)
1998 1997 to 6/30/97
-------- -------- ----------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $13.44 $13.23 $13.00

Income from Investment Operations:
Net Investment Income .67 .70 .17
Net Gains (or Losses) on Securities .30 .21 .23
(Realized and Unrealized) ------ ------ ------
Total from Investment Operations .97 .91 .40

Less Distributions:
Dividends (from Net Investment Income) (.67) (.70) (.17)
Distributions (from Capital Gains) - - -
Total Distributions (.67) (.70) (.17)

Net Asset Value, End of Period $13.74 $13.44 $13.23

Total Return(b) 7.41% 7.07% 3.11

Ratios/Supplemental Data:
Net Assets, End of Period (000's omitted) $20,461 16,615 689
Ratio of Expenses to Average Net Assets (0.69)% (0.69)% (.70)(c)
(After Expense Reimbursements)
Ratio of Net Income to Average Net Assets 4.95% 5.16% 5.49(c)
(After Expense Reimbursements)
Ratio of Expenses to Average Net Assets (0.79)% (1.24)% (6.10)(c)
(Before Expense Reimbursements)

Portfolio Turnover Rate 16.29% 15.36% 12.64%

- ---------------------------------
LIMITED TERM U.S. GOVERNMENT FUND
- --------------------------------- FISCAL YEAR OR PERIOD
-------------------------------
CLASS I
-------------------------------
Year Period
Year Ended from
September 30, 7/5/96(a)
1998 1997 to 6/30/97
-------- -------- ----------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $12.31 $12.24 $12.14

Income from Investment Operations:
Net Investment Income .74 .79 .20
Net Gains (or Losses) on Securities .34 .07 .10
(Realized and Unrealized) ------ ------ ------
Total from Investment Operations 1.08 .86 .30

Less Distributions:
Dividends (from Net Investment Income) (.74) (.79) (.20)
Distributions (from Capital Gains) - - -
Total Distributions (.74) (.79) (.20)

Net Asset Value, End of Period $12.65 $12.31 $12.24

Total Return(b) 9.06% 7.26% 2.45%

Ratios/Supplemental Data:
Net Assets, End of Period (000's omitted) $2,250 5,263 9
Ratio of Expenses to Average Net Assets (0.60)% (0.60)% (.58)(c)
(After Expense Reimbursements)
Ratio of Net Income to Average Net Assets 6.01% 6.35% 6.64(c)
(After Expense Reimbursements)
Ratio of Expenses to Average Net Assets (1.18)% (6.57)% (305.74)(c)
(Before Expense Reimbursements)

Portfolio Turnover Rate 29.77% 41.10% 23.27%

- ------------------------
LIMITED TERM INCOME FUND
- ------------------------ FISCAL YEAR OR PERIOD
-------------------------------
CLASS I
-------------------------------
Year Period
Year Ended from
September 30, 7/5/96(a)
1998 1997 to 6/30/97
-------- -------- ----------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $12.36 $12.23 $11.95

Income from Investment Operations:
Net Investment Income .75 .80 .19
Net Gains (or Losses) on Securities .14 .13 .28
(Realized and Unrealized) ------ ------ ------
Total from Investment Operations .89 .93 .47

Less Distributions:
Dividends (from Net Investment Income) (.75) (.80) (.19)
Distributions (from Capital Gains) - - -
Total Distributions (.75) (.80) (.19)

Net Asset Value, End of Period $12.50 $12.36 $12.23

Total Return(b) 7.49% 7.80% 3.97%

Ratios/Supplemental Data:
Net Assets, End of Period (000's omitted) $7,768 4,495 797
Ratio of Expenses to Average Net Assets (0.69)% (0.69)% (.69)(c)
(After Expense Reimbursements)
Ratio of Net Income to Average Net Assets 6.10% 6.44% 6.67(c)
(After Expense Reimbursements)
Ratio of Expenses to Average Net Assets (1.19)% (1.98)% (4.26)(c)
(Before Expense Reimbursements)

Portfolio Turnover Rate 41.01% 13.87% 44.35%

(a) Commencement of operations.
(b) Total return is not annualized for periods less than one year.
(c) Annualized.
</TABLE>

ADDITIONAL
INFORMATION

Reports to Shareholders
Shareholders will receive annual reports of their Fund containing financial
statements audited by the Funds' independent auditors, and also will receive
unaudited semi-annual reports. In addition, each shareholder will receive an
account statement no less often than quarterly.

Custodian and Transfer Agent
The custodian of each Fund's assets is State Street Bank & Trust Co. National
Financial Data Services is the transfer agent for the Funds and performs
bookkeeping, data processing and administrative services incident to the
maintenance of shareholder accounts.

General Counsel
Legal matters in connection with the issuance of shares of the Funds are
passed upon by White, Koch, Kelly & McCarthy, Professional Association, Post
Office Box 787, Santa Fe, New Mexico 87504-0787.

INVESTMENT ADVISER
Thornburg Management Company, Inc.
119 East Marcy Street, Suite 202
Santa Fe, New Mexico 87501

DISTRIBUTOR
Thornburg Securities Corporation
119 East Marcy Street, Suite 202
Santa Fe, New Mexico 87501

AUDITOR
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, New York 10017

CUSTODIAN
State Street Bank & Trust Co.
Boston, Massachusetts

TRANSFER AGENT
State Street Bank & Trust Co.
c/o NFDS Servicing Agent
Post Office Box 419017
Kansas City, Missouri 64141-6017

The current Statement of Additional Information (SAI) for each of the
Funds includes additional information about the Funds, and additional
information about each Fund's investments is available in the Fund's annual
and semiannual reports to shareholders.

Information about the Funds (including the SAI) may be reviewed and copied at
the Securities and Exchange Commission's Public Reference Room in Washington,
D.C. Information about the Public Reference Room may be obtained by calling
the Commission at 1-800-SEC-0330. Reports and other information about the
Funds are also available on the Commission's Internet site at
http://www.sec.gov and copies of information may be obtained, upon payment of
a duplicating fee, by writing the Commission's Public Reference Section,
Washington, D.C. 20549-6009.

No dealer, sales representative or any other person has been authorized to
give any information or to make any representation not contained in this
Prospectus and, if given or made, the information or representation must not
be relied upon as having been authorized by any Fund or Thornburg Securities
Corporation. This Prospectus constitutes an offer to sell securities of a
Fund only in those states where the Fund's shares have been registered or
otherwise qualified for sale. A Fund will not accept applications from
persons residing in states where the Fund's shares are not registered.

<Thornburg Funds logo>
Investing With Integrity
Thornburg Securities Corporation, Distributor
119 East Marcy Street, Santa Fe, New Mexico 87501
(800) 847-0200
www.thornburg.com email: [email protected]

Limited Term National Fund and Limited Term California Fund are separate
series of Thornburg Limited Term Municipal Fund, Inc., which files its
registration statements and certain other information with the Securities and
Exchange Commission under Investment Company Act of 1940 file number 811-
4302.

Intermediate National Fund, Government Fund, Income Fund and Value Fund are
separate series of Thornburg Investment Trust, which files its registration
statements and certain other information with the Commission under Investment
Company Act of 1940 file number 811-05201.

<PAGE>
PART C

OTHER INFORMATION

Item 23 & 24. Financial Statements and Exhibits

(a) Financial Statements.

Statements of Assets and Liabilities as of June 30, 1998; Schedules
of Investments as of June 30, 1998; Statements of Operations for the year
ended June 30, 1998; Statements of Changes in Net Assets for the years ended
June 30, 1997 and June 30, 1998; Notes to Financial Statements; Financial
Highlights; Reports of Independent Accountants dated July 24, 1998:
incorporated by reference from the Registrant's Annual Reports for the fiscal
year ended June 30, 1998.

(b) The following Exhibits are filed herewith:

(j.1) Consent of Counsel to Registrant

(j.2) Consent of Independent Auditor

(j.3) Letter of Counsel under Rule 485(b)

Item 24. Persons Controlled By or Under Common Control With Registrant

Not applicable.

Item 25. Indemnification

Reference is made to Article EIGHTH and paragraphs (e) and (f) of
Article SEVENTH of the Registrant's Articles of Incorporation previously
filed as Exhibit 1, to Article X of the Registrant`s By-Laws previously filed
as Exhibit 2 and to section 2-418 of the Maryland General Corporation Law.

Reference is also made to Section 7 of the Distribution Agreement
previously filed as Exhibit 6(a).

The directors and officers (the "insureds") of both the Registrant
and the Adviser are insured under a joint directors and officers liability
policy. The policy covers amounts which the insureds become legally
obligated to pay by reason of any act, error, omission, misstatement,
misleading statement or neglect or breach of duty in the performance of their
duties as directors, trustees and officers. In addition, the policy covers
the Registrant and the Adviser to the extent that they have legally
indemnified the insureds for amounts incurred by the insureds as described in
the preceding sentence. The coverage excludes amounts that the insureds
become obligated to pay by reason of conduct which constitutes willful
misfeasance, bad faith, gross negligence or reckless disregard of the
insured's duty.

The application of the foregoing provisions is limited by the
following undertaking set forth in the rules promulgated by the Securities
and Exchange Commission:

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policies
expressed in such Act and that if a claim for indemnification
against such liabilities other than the payment by the
Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in such Act and will be
governed by the final adjudication of such issue.

Item 26. Business and Other Connections of the Investment Adviser

See "Management" in the Statement of Additional Information and
"Management of the Fund" in the Prospectus.

Item 27. Principal Underwriters

(a) The principal underwriter for the Registrant is Thornburg
Securities Corporation (the "Distributor"). The Distributor is registered as
a broker-dealer under the Securities Exchange Act of 1934 and is a member of
the National Association of Securities Dealers, Inc. The Distributor has
been formed for the purpose of distributing the shares of the Fund and other
registered investment companies sponsored by its affiliates, and does not
currently engage in the general securities business.

(b) The address of each of the directors and officers of the
Distributor is 119 East Marcy Street, Suite 202, Santa Fe, New Mexico 87501.

Positions and Offices Positions and Offices
Name with Distributor with Registrant
- ------------------------- --------------------- ---------------------
H. Garrett Thornburg, Jr. Director Chairman, Director
and Treasurer

Kenneth Ziesenheim President

Dawn B. Fischer Secretary Secretary

Item 28. Location of Accounts and Records

All accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the rules
thereunder are maintained at the offices of State Street Bank and Trust
Company, 470 Atlantic Avenue, Fifth Floor, Boston, Massachusetts 02210.

Item 29. Management Services

The Registrant and Thornburg Management Company, Inc. ("TMC")
have agreed that TMC will perform for the Registrant certain
telephone answering services previously performed by the
Registrant's transfer agent, National Financial Data Services,
Inc. ("NFDS"). These telephone services include answering
telephone calls placed to the Registrant or its transfer agent
by shareholders, securities dealers and others through the
Registrant's toll free number, and responding to those
telephone calls by answering questions, effecting certain
shareholder transactions described in the Registrant's current
prospectuses, and performing such other, similar functions as
the Registrant may reasonably prescribe from time to time.
The Registrant will pay one dollar for each telephone call,
which was the charge previously impose by the Registrant's
transfer agent for this service. The Registrant's transfer
agent will no longer charge for this service. The Registrant
understands that (i) the telephone answering service provided
by TMC will be superior to that previously provided by the
transfer agent because TMC will devote greater attention to
training the telephone personnel, and those personnel will
have immediate access to the Registrant's and TMC's
management, (ii) the per-call charge imposed upon the
Registrant for this service will be no greater than that
charged by the Registrant's transfer agent, and (iii) TMC will
not receive any profit from providing this service. It is not
believed that this arrangement constitutes a management-
related services agreement.

Item 30. Undertakings

Not applicable.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Post-
Effective Amendment No. 31 to the Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Santa Fe,
and State of New Mexico on the 21st day of January, 1999. The Registrant
certifies, pursuant to Rule 485(b)(4) under the Securities Act of 1933, that
this Post-Effective Amendment meets all the requirements for effectiveness
under paragraph (b) of Rule 485.

THORNBURG LIMITED TERM MUNICIPAL FUND, INC.
Registrant

By *
---------------------------------------
Brian J. McMahon, President

Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 31 to the Registration Statement has been signed
below by the following persons in the capacities and on the date indicated.

* *
- -------------------------------- ------------------------------------
Brian J. McMahon, President H. Garrett Thornburg, Jr., Chairman,
and Principal Executive Officer Director, Treasurer and Principal
Financial and Accounting Officer

*
- --------------------------------
J. Burchenal Ault, Director

*
- --------------------------------
Eliot R. Cutler, Director

*
- --------------------------------
James E. Monaghan, Jr., Director

*
- --------------------------------
A. G. Newmyer III, Director

* By: /s/
____________________________
Charles W. N. Thompson, Jr. January 21, 1999
As Attorney-In-Fact (Date)

INDEX TO EXHIBITS

Exhibit
Number Exhibit
- ------- -----------------------------------------------------------

j.1 Consent of Counsel to be named in registration statement

j.2 Consent of Independent Auditors to be named in registration
statement

j.3 Consent of Counsel under Rule 485(b)

<PAGE>
EXHIBIT j.1

WHITE Attorneys and Counselors at Law
KOCH, KELLY William Booker Kelly Julie A. Wittenberger
& John F. McCarthy, Jr. Benjamin C. Iseman
McCARTHY Benjamin Phillips
A Professional Association David F. Cunningham
Albert V. Gonzales Special Counsel
Janet Clow Paul L. Bloom
Kevin V. Reilly
C.W.N. Thompson, Jr.
M. Karen Kilgore
Sandra J. Brinck
Aaron J. Wolf
Mary E. Walta
Rebecca Dempsey

January 22, 1999

Thornburg Limited Term Municipal Fund, Inc.
Thornburg Management Company, Inc.
119 East Marcy Street, Suite 202
Santa Fe, New Mexico 87501

VIA EDGAR FILING

Re: Thornburg Limited Term Municipal Fund, Inc.
Thornburg Limited Term Municipal Fund National Portfolio
Thornburg Limited Term Municipal Fund California Portfolio
Registration Number Under the Securities Act of 1933: 2-89526
Registration Number Under the Investment Company Act of 1940: 811-4302

Ladies and Gentlemen:

We hereby consent to the references made to this firm in the
post-effective amendment no. 31 to the registration statement of Thornburg
Limited Term Municipal Fund, Inc. and the prospectus which is a part of that
registration statement. In giving this consent, we do not admit that we are
in the category of persons whose consent is required under Section 7 of the
Securities Act of 1933.

/s/ White, Koch, Kelly & McCarthy, P. A.

WHITE, KOCH, KELLY & McCARTHY, P. A.

433 Paseo de Peralta P.O. Box 787 Santa Fe, New Mexico 87504-0787
(505) 982-4374 Fax No. (505) 984-8631 e-mail:[email protected]

<PAGE>

EXHIBIT j.2

McGLADREY & PULLEN, LLP
--------------------------------------------
Certified Public Accountants and Consultants

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the incorporation by reference of our reports
dated October 23, 1998 on the financial statements of Thornburg Limited
Term Income Fund, Thornburg Limited Term U.S. Government Fund, Thornburg
Intermediate Municipal Fund, Thornburg Florida Intermediate Municipal Fund,
Thornburg New Mexico Intermediate Municipal Fund, Thornburg Value Fund and
Thornburg Global Value Fund, series of Thornburg Investment Trust, and our
reports dated July 24, 1998 on the financial statements of the National
Portfolio and California Portfolio of Thornburg Limited Term Municipal
Fund, Inc. and the financial statements of Thornburg New York Intermediate
Municipal Fund series of Thornburg Investment Trust, referred to therein in
Post-Effective Amendment No. 36 to the Registration Statement of Thornburg
Income Trust on Form N-1A, File No. 33-14905 and Post-Effective Amendment
No. 30 to the Registration Statement of Thornburg Limited Term Municipal
Fund, Inc. on Form N-1A, File No. 2-89526 as filed with the Securities and
Exchange Commission.

We also consent to the reference to our firm in the Prospectuses under
the captions "Financial Highlights" and "Additional Information" and in the
Statements of Additional Information under the caption "Independent
Auditors."

/s/ McGladrey & Pullen, LLP

McGLADREY & PULLEN, LLP

New York, New York
December 1, 1998

<PAGE>

EXHIBIT J.3

January 22, 1999

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549 VIA EDGAR FILING

Re: Thornburg Limited Term Municipal Fund, Inc.
Registration Number Under the Securities Act of 1933: 2-89526
Registration Number Under the Investment Company Act of 1940: 811-4302

Ladies and Gentlemen:

The above named registrant is filing this date its post-effective
amendment number 31 to its registration statement on Form N-1A. The
post-effective amendment is filed in accordance with Rule 485(b) under the
Securities Act of 1933.

This letter is our representation to the Securities and Exchange
Commission in accordance with paragraph (b)(4) of Rule 485 that the
post-effective amendment does not contain disclosures that would render it
ineligible to become effective under Rule 485(b).

Very truly yours,

/S/ Charles W.N. Thompson, Jr.

CHARLES W. N. THOMPSON, JR.
CWNT/as

433 Paseo de Peralta Post Office Box 787 Santa Fe, NM 87504-0787
Phone (505) 982-4374 Fax (505) 983-0350; 984-8631 e-mail [email protected]