THORNBURG
VALUE FUND
Prospectus
October 23, 1995
as revised
October 1, 1996
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THORNBURG VALUE FUND
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Prospectus October 23, 1995 as revised October 1, 1996
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Please read this prospectus before investing, and keep it on file for future
reference. It contains important information, including how the fund invests
and the services available to shareholders.
To learn more about the Fund and its investments, you can obtain a copy
of the Fund's Statement of Additional Information (SAI) dated October 1,
1996. The SAI has been filed with the Securities and Exchange Commission
(SEC) and is incorporated herein by reference (legally forms a part of the
prospectus). For a free copy of either document, call your financial advisor
or Thornburg Securities Corporation at 1-800-847-0200.
___________________________________________________________________________
MUTUAL 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.
LIKE ALL MUTUAL FUNDS, 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.
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SUPPLEMENTAL INFORMATION FOR MISSOURI INVESTORS
The Missouri Securities Division requires investors to be advised as
follows:
Although Thornburg Value Fund typically will invest in equity securities of
domestic companies, the Fund also may invest in equity and debt securities
of foreign issuers domiciled in countries whose currencies are freely
convertible into U.S. dollars, in low rated debt securities ("junk bonds") up
to 35% of its total assets, in securities of small unseasoned issuers, and in
companies which are candidates for takeovers or restructuring. Please see
INVESTMENT PRINCIPLES and SECURITIES AND INVESTMENT PRACTICES AND RISKS in
the Prospectus at pages 5 to 8.
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CONTENTS
Key Facts
1 The Fund at a Glance
The Fund in Detail
4 Organization of the Fund
4 TMC and TSC
5 Investment Principles
6 Securities and Investment Practices and Risks
9 Fundamental Investment Policies and Restrictions
9 Breakdown of Expenses
Your Account
10 Buying Fund Shares
11 Description of Classes of Shares
13 Opening an Account
14 Selling Fund Shares
15 Investor Services
Shareholder and Account Policies
17 Dividends, Capital Gains, and Taxes
18 Service and Distribution Plans
19 Transaction Details
20 Exchange Restrictions
21 Calculation of Performance
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KEY FACTS
THE FUND AT A GLANCE
Goal: Long-term capital appreciation. As with any mutual fund, there is no
assurance that the Fund will achieve its goal.
Strategy: Invest mainly in domestic equity securities selected on a value
basis using traditional and additional fundamental research and valuation
methods. To a lesser extent, the Fund may also invest in preferred stocks,
domestic debt securities and foreign equity and debt securities.
Management: The business and affairs of the Fund are managed by
Thornburg Management Company, Inc. (TMC) under the direction of the Fund's
Trustees. TMC was established in 1982 and currently manages $1.6 billion in
mutual fund assets.
Who May Want to Invest. The Fund may be appropriate for investors who are
willing to ride out stock market fluctuations in pursuit of potentially high
long-term returns. The Fund is designed for those who seek capital
appreciation from a conservative style of investing in equities and, when
appropriate, some bonds. The Fund is not in itself a balanced investment
plan.
The value of the Fund's investments and the income they generate varies from
day to day, generally reflecting changes in market conditions, political and
economic news, interest rates, dividends, and specific corporate
developments. Stocks, although more volatile, have historically shown greater
growth potential than other types of securities. In the shorter term,
however, stock prices can fluctuate dramatically in response to these
factors.
When you sell your Fund shares, they may be worth more or less than what you
paid for them.
Operating expenses. Operating a mutual fund involves a variety of expenses
for portfolio management, shareholder statements, tax reporting, and other
services. These expenses are paid from the Fund's assets; their effect is
factored into any quoted share price or return.
Shareholder transaction expenses are charges you pay when you buy or sell
shares of the Fund; for example, the 4.5% maximum sales charge on purchases
of the Fund's Class A shares. Lower sales charges are available for
purchases over $50,000. Sales charges may be waived or reduced for certain
purchasers.
Buying and Selling Fund Shares. Information on buying Fund shares begins on
page 10 and information on selling Fund shares begins on page 14.
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THE ROLE OF FINANCIAL ADVISORS
The Fund is generally available for purchase through professional financial
advisors who are either registered and licensed with the National Association
of Securities Dealers, Inc. or are registered with the Securities and
Exchange Commission as Investment Advisers, or both. Professional financial
advisors are often employed by full service investment firms, financial
planning firms, banks, insurance companies, or trust companies, and offer
their services to both individual and institutional investors. Professional
financial advisors may assist you in developing an understanding of your
financial needs and in formulating long-term investment goals and objectives.
In addition, financial advisors customarily may offer individual investors
help in developing realistic expectations, providing assistance in creating
customized financial plans, selecting investments, and monitoring and
reviewing portfolios on an ongoing basis to assure proper positioning of
investments within the context of an overall investment strategy.
They are also available to answer questions as well as helping investors
"stay the course" of their long-term investment programs. These professionals
are often paid either by sales charges on the initial purchase of mutual
funds or by charging a fee for ongoing investment advice and services. (See
pages 10-13 and page 19 for a full discussion of sales charges and exceptions
for the Fund.)
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SHAREHOLDER TRANSACTION EXPENSES
Class A Class C
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Maximum sales charge 4.5% None
on purchases (as a % of
offering price)
Maximum sales charge on None None
reinvested distributions
Maximum contingent 1.0%* 1.0%**
deferred sales charge
(CDSC) on redemptions
(as a % of the lesser of
redemption proceeds
or original purchase price)
* Imposed only on redemption of purchases of $1 million
or more if redeemed within one year of purchase.
** Imposed only on redemptions within one year of purchase.
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Annual fund operating expenses are paid out of the Fund's assets. The Fund
pays a management fee to TMC. It also incurs other expenses for services such
as maintaining shareholder records and furnishing shareholder statements and
financial reports. The Fund's expenses are factored into its share price or
dividends and are not charged directly to shareholder accounts. The following
are projections based on estimated future expenses, and are calculated as a
percentage of average net assets.
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ESTIMATED ANNUAL OPERATING EXPENSES
Class A Class C
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Management fee .88% .88%
12b-1 fee .25% 1.00%
Other expenses .42% .42%
Total fund
operating expenses 1.55% 2.30%
Expenses reflect rounding and are estimates for the current fiscal year.
Long-term Class C shareholders may pay more than the economic equivalent of
the maximum front-end sales charge permitted by regulations of the National
Association of Securities Dealers, Inc. Broker-dealers performing portfolio
transactions for the Fund may use a portion of the commissions paid by the
Fund to reduce the Fund's custodian and transfer agent fees.
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CLASS FEATURES
Class A No sales charge $1 million and over
(Subject to 1% contingent deferred sales charge
if redeemed within one year).
Class C 1% contingent deferred sales charge for one
year. Maximum purchase amount is less than
$1 million.
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Examples: Let's say, hypothetically, that the Fund's annual return is 5% and
that its operating expenses are exactly as just described. For every $1,000
you invested, the table below shows how much you would pay in total expenses
after the number of years indicated. These examples illustrate the effect of
the estimated expenses over the time periods shown. Actual costs or returns
may vary.
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EXAMPLES OF EXPENSES
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $60 $92 $126 $221
Class C* $33 $72 $123 $264
Class C** $23 $72 $123 $264
* With redemption at the end of the period
** With no redemption at the end of the period
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THE FUND IN DETAIL
ORGANIZATION OF THE FUND
Thornburg Value Fund is a mutual fund: an investment that pools shareholders'
money and invests it toward a specified goal. The Fund is a diversified
series of Thornburg Investment Trust, a Massachusetts business trust
organized as a diversified, open-end investment company.
The Fund is governed by its Trustees, who are responsible for supervising the
business and affairs of the Fund. The Trustees are individuals experienced in
business who meet throughout the year to oversee the Fund's activities,
review contractual arrangements with companies that provide services to the
Fund, and review performance. The majority of Trustees are not otherwise
affiliated with Thornburg Management Company, Inc. (TMC) or Thornburg
Securities Corporation (TSC).
The Fund may hold special shareholder meetings and mail proxy materials.
These meetings may be called to elect or remove trustees, change fundamental
investment policies, or for other purposes. Shareholders not attending these
meetings are encouraged to vote by proxy. The Fund will mail proxy materials
in advance, including a voting card and information about the proposals to be
voted on. The number of votes you are entitled to is based upon the number of
shares you own.
TMC and TSC
The Fund is managed by TMC, which chooses the Fund's investments and
handles its business affairs. TMC performs investment management services
for the 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 Class A and Class C
shareholders under an Administrative Services Agreement which requires TMC to
supervise, administer and perform certain services necessary for the
maintenance of those shareholders. See "Breakdown of Expenses" on page 9 for
a discussion of the fees paid to TMC.
TMC was established in 1982. Today, the Thornburg Funds include seven fixed
income mutual funds, in addition to Thornburg Value Fund, with over $1.6
billion in assets. TMC 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.
Thornburg Funds provides shareholders account inquiry service 24 hours a day,
365 days a year, through its Audio Response telephone service. To reach
Thornburg Funds for general information, please call 800-847-0200 [and
follow the simple instructions you will receive.] If you would prefer to
speak with a Thornburg Funds representative, please call during business
hours.
William Fries, a Managing Director of TMC and a Vice President of Thornburg
Investment Trust, is the portfolio manager of Thornburg Value Fund, which he
has managed since its inception. 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.
Thornburg Securities Corporation (TSC) distributes and markets the Thornburg
funds.
H. Garrett Thornburg, Jr., a Trustee and President of the Trust, of which the
Fund is a series, is the controlling stockholder of both TMC and TSC.
TMC may use TSC and other firms that sell Fund shares to carry out the Fund's
transactions, provided that the Fund receives brokerage services and
commission rates comparable to those received from or charged by other
broker-dealers.
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INVESTMENT PRINCIPLES
The Fund seeks long-term capital appreciation by investing in equity and debt
securities of all types. The Fund expects to invest its assets primarily in
domestic equity securities selected on a value basis. However, the Fund may
buy foreign equity and debt securities, domestic debt securities and
securities that are not currently paying dividends, but which, in TMC's
opinion, offer prospects for capital appreciation.
The value of the Fund's investments varies based on many factors. Stock
values fluctuate in response to the activities of individual companies and
general market and economic conditions. The value of bonds fluctuates based
on changes in interest rates and in the credit quality of the issuer. In
general, bond prices rise when interest rates fall, and vice versa. TMC may
use various investment techniques to hedge the Fund's risks, but there is no
guarantee that these strategies will work as TMC intends. When you sell your
shares, they may be worth more or less than what you paid for them.
TMC intends to invest on an opportunistic basis, where in their opinion
there is 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. Other
contexts would include growing companies with consistent results, when they
are selling below historic norms, as well as companies whose growth in
products and services reflects social and economic changes. The Fund will
typically buy the latter when they are out of favor. The relative proportions
of these different types of securities will vary over time. The portfolio
ordinarily will reflect a bias towards certain stocks or industries when
those stocks or industries are depressed, reflecting unfavorable market
perceptions of company or industry fundamentals. TMC anticipates that the
portfolio ordinarily will have a weighted average dividend yield that is
higher than the Standard & Poor's 500 Index yield.
TMC primarily uses individual company and industry analysis when making
investment decisions for the Fund. The Fund will typically make 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 company's net assets or potential earning power. The fortunes of this
type of company are often cyclical:
They do well when the economy or their industry is doing well.
TMC's judgment in evaluating these companies, or the industries
in which they operate, will likely be contrary to the popular
perception of the moment. These companies are often attractive
candidates for corporate takeovers or restructuring when no
single person or group owns a controlling interest.
Consistent growth companies when they are selling at valuations
below historic norms. Stocks in this category generally sell at
premium valuations. The attractive feature of companies of this
type is steady earnings and dividend growth. Typically, these
companies have below average 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. The stock price of these smaller, less seasoned
companies will fluctuate more than the stock prices of the first
two types of company listed above. Under normal conditions the
proportion of the Fund invested in companies of this type will be
modest when compared to the proportion invested in cyclical or
consistent growth companies.
TMC selects securities, including equity securities, for inclusion in the
Fund's investment portfolio based on total return potential. "Total return"
means all elements of return including dividends (or interest ) and price
appreciation. TMC believes that investments in undervalued stocks, in
addition to offering potential capital appreciation, will help limit the
Fund's exposure to loss under adverse market conditions.
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Value, for purposes of the Fund's selection criteria, relates both to current
and to projected measures. Among the specific factors considered by TMC in
identifying undervalued securities for inclusion in the Fund are:
* price/earnings ratio * undervalued assets
* price to book value * relative earnings growth potential
* price/cash flow ratio * industry growth potential
* debt/capital ratio * industry leadership
* dividend yield * dividend growth potential
* dividend history * franchise value
* security and consistency * potential for favorable
of revenue stream developments
The Fund may invest in the stock of issuers of any size, including stocks of
small, unseasoned issuers.
Debt securities will be considered for investment when TMC believes them to
be more attractive than equity alternatives. When analyzing debt security
alternatives, TMC will ordinarily consider the issuer's overall financial
strength as well as prevailing market conditions for debt securities as
opposed to equities.
SECURITIES AND INVESTMENT PRACTICES AND RISKS
The following pages contain more detailed information about types of
instruments in which the Fund may invest, and strategies TMC may employ in
pursuit of the Fund's investment objective. A summary of risks and
restrictions associated with these instrument types and investment practices
is included as well. A complete listing of the Fund's policies and
limitations and more detailed information about the Fund's investments is
contained in the Fund's Statement of Additional Information (SAI). Policies
and limitations are considered at the time of purchase; the sale of
instruments is not required in the event of a subsequent change in
circumstances.
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 goal. Current holdings are described in the Fund's financial
reports which are sent to shareholders twice a year. For a free SAI or
financial report, call 800-847-0200.
Diversification. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested in
any one issuer or, on a broader scale, in any one industry.
Restrictions. With respect to 75% of its total assets, the Fund may not
invest more than 5% of its total assets at the time of purchase in any one
issuer. The Fund may not invest more than 25% of its total assets at the time
of purchase in any one industry. These limitations do not apply to U.S.
Government securities.
6
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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.
Restrictions. With respect to 75% of total assets, the Fund may not own more
than 10% of the outstanding voting securities of a single issuer.
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. 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 will also 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") are often
considered to be speculative and involve greater risk of default or price
changes due to changes in the issuer's credit worthiness, 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.
Restrictions. The Fund may not invest more than 35% of its assets at the time
of purchase in lower quality debt securities (those rated below Baa by
Moody's or BBB by S&P, and unrated securities judged by TMC to be of
equivalent quality). Refer to the Fund's SAI for a discussion of these
ratings.
Foreign Securities and foreign currencies may involve additional risks. These
include currency fluctuations, risks relating to political or economic
conditions in the foreign country, and the potentially less stringent
investor protection and disclosure standards of foreign markets. In
addition to the political and economic factors that can affect foreign
securities, a governmental issuer may be unwilling to repay principal and
interest when due, and may require that the conditions for payment be
renegotiated.
These factors could make foreign investments more volatile. The Fund will
only invest in companies domiciled in a country whose currency is freely
convertible into U.S. dollars.
Adjusting Investment Exposure. The 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
7
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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 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. If any
certificate of deposit is non-negotiable, and it matures in more than seven
days, it will be considered illiquid.
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.
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.
Restrictions. The Fund may not purchase a security if, as a result, at the
time of purchase more than 10% of its assets would be invested in illiquid
securities.
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.
Restrictions. The Fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33-1/3% of its total assets.
Securities Lending. Lending securities to broker-dealers and other
institutions is a means of earning income. This practice could result in a
loss or a delay in recovering the Fund's securities.
Restrictions. Loans, in the aggregate, may not exceed 33-1/3% of the Fund's
total assets.
Portfolio Turnover. The Fund does not anticipate that its portfolio
turnover rate will exceed 100%. This rate will vary from time to time.
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FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. All
policies stated throughout this prospectus, other than those identified in
the following paragraph, can be changed without shareholder approval.
The Fund seeks long term capital appreciation. With respect to 75% of the
Fund's total assets: 1) not more than 5% of the Fund's total assets, taken at
market value at the time of purchase, may be invested in the securities of
any one issuer (not including U.S. Government securities) and 2) the Fund may
not acquire more than 10% of the outstanding voting securities of any one
issuer.
The Fund may not invest more than 25% of its total assets in one industry.
The Fund may borrow only for temporary or emergency purposes, but not in an
amount exceeding 33-1/3% of its total assets. Loans, in the aggregate, may
not exceed 33-1/3% of the Fund's total assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the Fund pays fees related to its daily operations.
Expenses paid out of the Fund's assets are reflected in its share price or
dividends; they are neither billed directly to shareholders nor deducted from
shareholder accounts.
The Fund pays a management fee to TMC for managing its investments and
business affairs. The Fund also pays its other expenses.
TMC may, from time to time, agree to reimburse the Fund for management fees
and other expenses above a specified limit. TMC retains the ability to be
repaid by the Fund if expenses fall below the specified limit prior to the
end of the fiscal year. Reimbursement arrangements, which may be terminated
at any time without notice, can decrease the Fund's expenses and boost its
performance.
MANAGEMENT FEES AND ADMINISTRATIVE SERVICES FEES
TMC provides investment management services under an Investment Advisory
Agreement which provides for an investment fee, payable monthly, and computed
for the Fund at an annual rate shown in the adjoining scale as a percentage
of the Fund's average daily net assets.
TMC also receives a monthly fee from the Fund for performing certain
administrative services under an Administrative Services Agreement for Class
A and Class C shares calculated at an annual rate of .125% of average daily
net assets.
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Net Assets of the Fund Annual Rate
- ---------------------- -----------
0 to $500 million .875%
$500 million to $1 billion .825%
$1 billion to $1.5 billion .775%
$1.5 billion to $2.0 billion .725%
Over $2.0 billion .675%
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OTHER EXPENSES
While the management and administrative services fees are significant
components of the Fund's annual operating costs, the Fund has other expenses
as well.
These expenses include legal, transfer agency, audit, and custodian fees;
transaction costs and commissions for buying and selling portfolio
securities; proxy solicitation costs; and the compensation of Trustees who
are not affiliated with TMC.
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YOUR ACCOUNT
BUYING FUND SHARES
The Fund currently issues multiple classes of shares, and Class A and
Class C shares are offered through this Prospectus. Each share represents an
equal undivided interest in the Fund's assets, and the Fund has investment
objectives and an investment portfolio common to all classes. The different
classes may have different sales charges and other expenses which may affect
performance.
Class A shares are sold subject to a sales charge which is deducted at
the time you purchase your shares. This class also pays a service fee.
Class C shares are sold at net asset value, and pay service and distribution
fees. The service and distribution fees are Fund expenses which are deducted
from the income of each class. Class C shares are subject to a 1% contingent
deferred sales charge (CDSC) if redeemed within one year of purchase. If you
do not specify a class of shares in your order, your money will be invested
in Class A shares.
Financial advisors and others who sell shares of the Fund receive
different compensation for selling different classes of the Fund's shares.
Fund shares may be purchased through firms which have agreements with the
Fund's distributor, Thornburg Securities Corporation (TSC), or through TSC in
those states where TSC is registered. Investors may telephone TSC at
1-800-847-0200 to obtain more information concerning classes of shares
available to them through their financial advisors. Investors also may
obtain information respecting the classes of shares through their financial
advisor or other person which is offering or making available the classes of
shares described in this Prospectus. The Fund and TSC reserve the right to
refuse any order in whole or in part.
The net asset value (NAV) of each class is the value of a single share of
that class. The NAV is computed by adding the value of the class'
investments, cash, and other assets, subtracting its liabilities, and then
dividing the result by the number of shares outstanding. Shares are purchased
at the next share price calculated after your investment is received and
accepted. Share price is normally calculated at 4 p.m. Eastern time.
____________________________________________________________________________
Class A Shares Dealer Concession
Total Sales Charge or Agency Commission
As Percentage As Percentage As Percentage
of Offering Price of Net Asset Value of Offering Price
----------------- ------------------ -----------------
Less than $50,000 4.50% 4.71% 4.00%
$50,000 to 99,999.99 4.00% 4.17% 3.50%
$100,000 to 249,999.99 3.50% 3.63% 3.00%
$250,000 to 499,999.99 3.00% 3.09% 2.50%
$500,000 to 999,999.99 2.00% 2.04% 1.50%
$1,000,000 and over 0.00% 0.00% *
* TSC intends to pay a commission of 1% to financial advisors who place
orders from $1 million to $2 million, a commission of .7% for portions
of any such trade exceeding $2 million and less than $4 million, and a
commission of .5% for portions of any such trade exceeding $4 million.
A 1% CDSC will be imposed on redemptions of any such purchases which occur
within 1 year. TMC and TSC also will make payments to dealers described
below under "Service and Distribution Plans."
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. These
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.
____________________________________________________________________________
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DESCRIPTION OF CLASSES OF SHARES
CLASS A SHARES
When you buy Class A shares the sales charge applicable to your investment is
deducted and the balance is invested at NAV. The sales charge is shown in
the table below. Because the fees for Class A shares are lower than for
Class C shares, Class A shares pay higher dividends than Class C shares. The
deduction of the initial sales charge, however, means that you purchase fewer
Class A shares than Class C shares 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.
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
on page 10, 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 the Fund with no sales charge if
you notify TSC or the Fund's transfer agent, NFDS, at the time you purchase
shares that you belong to one of the categories below:
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 you
reinvest in Class A shares of Thornburg Value Fund, if you held the original
shares for at least 60 days before the redemption. If you held the original
shares for less than 60 days, you will pay a sales charge equal to the
amount, if any, by which the Thornburg Value Fund sales charge exceeds the
sales charge you paid when buying the original shares.
Customers of bank trust departments, companies with trust powers and
investment advisors who charge a fee for service, including investment
dealers who utilize wrap fee arrangements.
A shareholder of a Thornburg Bond Fund who is automatically reinvesting bond
fund dividends into shares of the Fund.
An officer, trustee, director, or employee of TMC (or any investment company
managed by TMC), TSC, any affiliated Thornburg Company, the Fund's Custody
Bank or Transfer Agent and members of their families.
11
<PAGE>
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 place 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.
Investors purchasing $1 million or more. However, a contingent deferred sales
charge of 1% applies to shares redeemed within one year of purchase.
A shareholder who redeems from another mutual fund (not a Money Market
fund) and places all or some of the proceeds in the Fund.
Certain employee benefit plans and insurance company separate accounts used
to fund annuity contracts. TMC or TSC intend to pay a commission of up to 1%
to the financial advisors who place orders for these plans.
Charitable organizations, including trusts established for the benefit of
charitable organizations. TMC or TSC intend to pay a commission of up to .5%
to the financial advisors who place orders for these organizations.
Those persons who are determined by the Trustees to have acquired their
shares under special circumstances not involving any sales expenses to the
Fund or Distributor.
Purchases placed through a broker that maintains one or more omnibus accounts
with the Fund provided that such purchases are made by: (i) financial
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 financial advisors or financial
planners who place trades for their own accounts if the accounts are linked
to the master account of such financial 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
CLASS C SHARES
On each business day the NAV is calculated. Class C shares are sold at their
NAV. Class C shares are charged higher annual expenses than Class A shares.
Class C shares carry a 1% CDSC for a period of one year. The CDSC is not
charged against shares you buy by reinvesting dividends or capital gains
distributions. 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.
12
<PAGE>
____________________________________________________________________________
OPENING AN ACCOUNT
Buying Shares To Open An Account To Add To An Account
In Minimum Minimum
-- ------- -------
Regular Accounts $5,000 $100
Retirement Accounts $2,000 $100
Automatic Investment Plans $ 100 $100
Through your Consult with your Consult with your
Financial Advisor financial advisor. financial adviser.
By Telephone Exchange from another Exchange from another
800-847-0200 Thornburg fund account Thornburg fund account
with the same registra- with the same regis-
tion, including name, tration, including
address, and taxpayer name, address, and
ID number. taxpayer ID number.
By Mail Complete and sign the Make your check
application. Make your payable to Thornburg
check payable to Thornburg Value Fund. Indicate
Value Fund. Mail to the your fund account
address indicated on the number on your check
application. and mail to the
address printed on
your statement.
Automatic Investment Use one of the above Uses Automated
Plan procedures to open Clearing House funds.
your account. Obtain an Sign up for this
Automatic Investment Plan service when opening
form to sign up for this your account, or
service. call 1-800-847-0200
to add 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 telephone or
mail as described on page 18. If there is no application accompanying this
Prospectus, call 800-847-0200.
If you are investing through a tax-sheltered retirement plan (such as an IRA)
for the first time, you will need a special application. Retirement investing
also involves its own investment procedures. Consult your financial advisor
or call 800-847-0200 for more information.
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.
13
<PAGE>
[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
the 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 elects 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.
SELLING FUND SHARES
You can withdraw money from your Fund account at any time by redeeming some
or all of your shares (selling them back to the Fund either directly or
through your 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 and accepted. 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 below.
To sell shares in a State Street Bank (Custodian) retirement account, your
request must be made in writing, except for exchanges to other Thornburg
funds, which can be requested by phone or in writing. Call 1-800-847-0200 for
further information.
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 the 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.
14
<PAGE>
____________________________________________________________________________
REDEEMING SHARES ACCOUNT TYPES SPECIAL REQUIREMENTS
---------------- ------------- --------------------
Through Your Financial Advisor All account types Consult with your
financial advisor.
By Mail Individual, Your financial
Send to: Joint Tenant, advisor may charge a
NFDS Sole Proprietorship, fee. The letter of
c/o Thornburg Funds UGMA, UTMA instruction must be
P.O. Box 419017 signed by all persons
Kansas City, MO required to sign for
64141-6017 transactions, exactly
as their names appear
on the account, and
must include:
* Your name,
* The Fund's name,
* Your Fund account
number,
* The dollar amount
or number of
shares to be
redeemed,
* Any other
applicable
requirements
listed above,
* Signature
guarantee,
if required.
Retirement Account The account owner
should complete a
retirement distri-
bution form. Call
800-847-0200 to
request one.
Trust 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 At least one person
Organization authorized by corpo-
rate resolution to
act on the account
must sign the letter
which must be signa-
ture guaranteed.
Include a corporate
resolution with
corporate seal.
Executor, Adminis- Call 800-847-0200
trator, Conservator for instructions.
Guardian
By Telephone All Account Types You must sign up for
800-847-0200 Except Retirement this feature before
and Street-Name using it.
Accounts Minimum Wire $1,000
Minimum Check $50.00
By Systematic Withdrawal Plan All Account Types You must sign up for
this feature to use
it.
Minimum Account
Balance $10,000
Minimum Check $50.00
_____________________________________________________________________________
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 7:30 am to 4:30 pm Mountain Time. Whenever you call, you can
speak with someone equipped to provide the information or service you need.
15
<PAGE>
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.
STATEMENTS AND REPORTS that Thornburg Funds send to you include the
following:
* Account statements after every transaction affecting your account
* Quarterly 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 the 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. Certain
restrictions apply for retirement accounts. Call 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 the Thornburg Value Fund. You will pay the
difference between the front end sales charge you paid, if any, on the other
fund and the front end sales charge applicable to the Fund if you have not
held the original shares for a minimum of 60 days. If you are exchanging
from the Fund into another Thornburg Fund, you may qualify for a reduced
sales charge or no sales charge on that fund. Please consult the 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 20.
Systematic withdrawal plans let you set up periodic redemptions from your
account. Because of the Fund's sales charge, 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.
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 by telephone simply by calling a Fund Customer Service
Representative before 2:30 Eastern time. 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.
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
Thornburg Funds
P.O. Box 419017
Kansas City, MO 64141-6017
16
The Fund, TSC, TMC and the Fund's 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 Fund's Transfer Agent will attempt to implement
reasonable procedures to prevent unauthorized transactions, and the Fund or
its Transfer Agent could be liable if these procedures are not employed.
These procedures will include recording of telephone transactions, providing
written confirmation of such transitions within 5 days, and requesting
certain information to better confirm the identity of the caller at the time
of the transaction.
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
The Fund distributes substantially all of its net income and realized capital
gains to shareholders each year. The Fund will distribute its net investment
income quarterly, and will distribute any net realized capital gains at least
annually. Capital gains distributions normally will be declared and payable
in December.
Distribution Options The Fund earns dividends from stocks and interest from
bond, money market, and other investments. These are passed along as dividend
distributions. The 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. The Fund offers four options,
which you can change at any time.
Capital Gain
Reinvestment Option. Your capital gain distributions 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.
Cash Option. You will be sent a check for your capital gain distributions.
Dividends
Reinvestment Option. Your dividend distributions will be invested
automatically in additional shares of the Fund. If you do not indicate a
choice on your application, you will be assigned this option.
Cash Option. You will be sent a check for your dividend distributions. For
retirement accounts, all distributions are automatically reinvested. When you
are over 59-1/2 years old, you may elect to receive distributions in cash.
Shares purchased through reinvestment of dividend and capital gain
distributions are not subject to the Fund's sales charge or contingent
deferred sales charge.
TAXES
As with any investment, you should consider how your investment in the Fund
will be taxed. If your account is not a tax-deferred retirement account, you
should be aware of these tax implications.
17
<PAGE>
Taxes on Distributions. Distributions are subject to federal income tax, and
may also be subject to state or local taxes. If you live outside the United
States, your distributions could also be taxed by the country in which you
reside. Your distributions are taxable when they are paid, whether you take
them in cash or reinvest them. For federal tax purposes, the Fund's income
and short-term capital gains distributions are taxed as dividends; long-term
capital gains distributions are taxed as long-term capital gains. Every
January, the Fund will send you and the IRS a statement showing the taxable
distributions paid to you in the previous year. You should consult with your
tax advisor for the correct federal and state treatment of distributions.
Taxes on Transactions. Your redemptions, including exchanges to other
Thornburg Funds, are subject to capital gains tax. A capital gain or loss is
the difference between the cost of your shares and the price you receive when
you sell them. Whenever you sell shares of the Fund you will be sent a
confirmation statement showing how many shares you sold and at what price.
At the end of the year the Fund will also send you a statement showing the
average cost basis of the shares you redeemed. However, it is up to you or
your tax preparer to determine whether this sale resulted in a capital gain
and, if so, the amount of federal and state taxes to be paid. Be sure to keep
your regular account statements; the information they contain will be
essential in calculating the amount of your capital gains.
Effect of Foreign taxes. The Fund may pay withholding or other taxes to
foreign governments during the year. These taxes reduce the Fund's
distributions, but are included in the taxable income reported on your tax
statement. You may be able to claim an offsetting tax credit or itemized
deduction for foreign taxes paid by the Fund. Your tax statement will
generally show the amount of foreign tax for which a credit or deduction may
be available.
____________________________________________________________________________
TURNOVER AND CAPITAL GAINS
The Fund does not intend to engage in short-term trading for profits. Its
goal is long-term capital appreciation. Nevertheless, when the Fund believes
that a security will no longer contribute to that goal, it will normally sell
that security. When the 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 gains distributions or take
them in cash, the distribution is taxable. To minimize taxable capital gain
distributions, the Fund will realize available capital losses, when, in the
judgment of the portfolio manager, the integrity and potential appreciation
of the portfolio would be unaffected by doing so.
SERVICE AND DISTRIBUTION PLANS
Service Plan - Both Classes. Each class has adopted a Service Plan under
which TMC makes payments to securities dealers and other financial
institutions and organizations to obtain various shareholder related
services. The Service Plan permits each class to reimburse TMC for these
payments at annual rates of up to .25% of the class' net assets. No assets of
any class will be used to reimburse expenses attributable to any other class.
Class C Distribution Plan. The Fund has adopted a Class C Distribution Plan
applicable to Class C shares, under which the Fund will pay to TSC on a
monthly basis an annual distribution fee of up to .75% of the average daily
net assets attributable to Class C shares. This distribution fee is in
addition to the service fee described above under "Service Plan - Both
Classes" and is charged to and reduces the income allocated to Class C
shares. TSC intends to use these amounts principally to compensate dealers
(including banks) who sell Class C shares. TSC also will engage in other
distribution related activities, including advertising and other promotional
activities. However, the distribution fee paid to TSC is not computed with
respect to TSC's actual expenses, and the fees received by TSC may be more or
less than its actual distribution expenses. TSC may, but is not obligated to,
waive any part or all of its compensation provided for under the Class C
Distribution Plan.
18
<PAGE>
The Glass-Steagall Act prohibits certain banks from underwriting mutual fund
shares. The Fund does not believe that this prohibition will apply to the
sales charge described on page 10 or to the plans described above. However,
no assurance can be given that the Glass-Steagall Act will not be interpreted
so as to prohibit these arrangements. In that event, the ability of the Fund
to market its shares could be impaired to a small extent. In addition, state
securities laws on this issue may differ from interpretations of federal law,
and banks and financial institutions may be required to register as dealers
pursuant to state law.
TRANSACTION DETAILS
The Fund is 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.
The Fund's assets are valued primarily on the basis of market quotations.
Foreign securities are valued on the basis of quotations from the primary
market in which they are traded, and are translated from the local currency
into U.S. dollars using current exchange rates. If quotations are not readily
available, or if the values have been materially affected by events occurring
after the closing of foreign markets, assets are valued by a method that the
Trustees believe accurately reflects fair value.
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 the 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 visiting your
financial advisor.
The Fund reserves the right to suspend the offering of shares for a period of
time. The Fund also reserves the right to reject any specific purchase order,
including certain purchases by exchange. See "Exchange Restrictions" on page
20. Purchase orders may be refused if, in TMC's opinion, they would disrupt
management of the 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 and accepted. 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 Fund does 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 the 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.
19
<PAGE>
Certain financial institutions which 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.
When you place an order to sell shares your shares will be sold at the next
NAV calculated after your request is received and accepted. (Except that a
CDSC will be deducted for a period of one year from Class C share redemptions
and from Class A share redemptions from accounts in which the initial
purchase was $1 million or more.) 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 the Fund, it may take up to seven days to pay you.
* Telephone redemptions sent over the wire generally will be credited to
your bank account on the business day after your phone call.
* The Fund may hold payment on redemptions until it is reasonably
satisfied that investments 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.
* To the extent consistent with state and federal law the Fund may make
payment of share redemptions either in cash or in kind. The Fund has
elected to pay in cash all requests for redemption by any shareholder.
It may, however, limit such cash redemptions in respect to each
shareholder during any 90 day period to the lesser of $250,000 or 1%
of the net asset value of the 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 shares of the Fund for
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 into a fund with a higher sales charge you will 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 if the shares originally purchased have been
held less than 60 days. For example, if you had already paid a sales
charge of 2.5% on your shares and you exchange them within 60 days
of purchase into a fund with a 4.5% sales charge, you would pay an
additional 2% sales charge.
20
<PAGE>
* Exchanges may have tax consequences for you.
* Because excessive trading can hurt fund performance and shareholders,
the Fund reserves the right to temporarily or permanently terminate
the exchange privilege of any investor who makes more than four
exchanges out of the 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.
* The exchange limit may be modified for accounts in certain
institutional retirement plans to conform to plan exchange limits and
Department of Labor regulations.
* The 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 the 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 the Fund.
Although the Fund will attempt to give prior notice whenever it is reasonably
able to do so, it may impose these restrictions at any time. The Fund
reserves the right to terminate or modify the exchange privilege in the
future.
CALCULATION OF PERFORMANCE
The Fund will from time to time display performance information, including
total return, average annual return and current dividend return, in
advertising, sales literature and reports to shareholders. The Fund's
performance ordinarily will be expressed as "total return," which is the
change in share value over time, assuming reinvestment of any dividends and
capital gains. "Cumulative total return" describes total return over a stated
period, while "average annual total return" is a hypothetical rate of return
which, if achieved annually, would have produced the same cumulative total
return if performance had been constant for the period shown. Average annual
return tends to reduce variations in return over the period, and investors
should recognize that the average figures are not the same as actual annual
returns. The Fund may display return information for differing periods
without annualizing the results and without taking sales charges into effect.
The Fund's "yield" also may be displayed. Yield is computed by dividing the
Fund's net interest and dividend income for a given 30 days or one month
period by the maximum share offering price at the end of the period. The
result is "annualized" to arrive at an annual percentage rate. In addition,
the Fund may use the same method for 90 day or quarterly periods. All
performance figures are calculated separately for Class A and Class C shares.
The figures are historical, and do not predict future returns.
Advertisements, sales literature and reports may describe current investment
strategies, market and economic conditions and specific portfolio holdings.
These materials may compare the total return, yield, net asset value,
volatility or other portfolio measures of the Fund to other investments,
other mutual funds, mutual fund indices or averages, and broader indices or
markets, such as the Standard & Poor's 500 Stock Index, the NASDAQ composite
or the consumer price index. These materials also may discuss the performance
ratings, index comparisons or commentary published by mutual fund
statistical, ranking or rating services, such as Morningstar or Lipper
Analytical Services, Inc. or publications such as Forbes or Money Magazine.
21
<PAGE>
INVESTMENT ADVISER
Thornburg Management Company, Inc.
119 East Marcy Street
Santa Fe, New Mexico 87501
DISTRIBUTOR
Thornburg Securities Corporation
119 East Marcy Street
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
No dealer, sales representative or any other person has been authorized to
give any information or to make any representation not contained in the
Prospectus and, if given or made, the information or representation must not
be relied upon as having been authorized by the Fund or the Distributor. This
Prospectus constitutes an offer to sell securities of the Fund only in those
states where the Fund's shares have been registered or otherwise qualified
for sale. The Fund will not accept applications from persons residing in
states where the Fund's shares are not registered.
[LOGO]
Thornburg Securities Corporation, Distributor
119 East Marcy Street, Santa Fe, New Mexico 87501
(800)847-0200
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