THORNBURG INVESTMENT TRUST, 497, 1999-02-08

THORNBURG INVESTMENT TRUST
497, 1999-02-08

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THORNBURG LIMITED TERM INCOME FUNDS
Thornburg Limited Term U.S. Government Fund
Thornburg Limited Term Income Fund
Prospectus
February 1, 1999

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

<PAGE>

Table of Contents

__ Thornburg Limited Term U.S. Government Fund
Investment Goals
Principal Investment Strategies
Principal Risks of Investing in the Fund
Past Performance of the Fund
Fees and Expenses
__ Thornburg Limited Term Income Fund
Investment Goals
Principal Investment Strategies
Principal Risks of Investing in the Fund
Past Performance of the Fund
Fees and Expenses
__ Management Discussion of Fund Performance and Index
Comparisons
__ Additional Information About the Funds' Investments
__ Description of Potential Investors and Advantages
__ Your Account - Buying Fund Shares
__ Selling Fund Shares
__ Dividends and Distributions
__ Taxes
__ Investor Services, Individual Retirement Accounts
__ and Retirement Plans, Transaction Services
__ Dividends and Distributions
__ Taxes
__ Transaction Details
__ Exchange Restrictions
__ Investment Adviser and Management Fees
__ Financial Highlights
__ Additional Information

<PAGE>
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 are presented as bar graphs in the Prospectus>
Limited Term U.S. Government Fund Annual Total Returns For Class A Shares
- -------------------------------------------------------------------------
15%
12.53% 12.98%
10% 10.58%
8.59% 7.38% 6.99%
5% 6.19% 6.58%
4.29%
0%
(2.07%)
- -5
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Highest quarterly results for time period shown: 5.03% (quarter ended
6/30/89)
Lowest quarterly results for time period shown: (1.52)% (quarter ended
3/31/94).

Limited Term U.S. Government Fund Average Annual Total Returns
- ------------------------------------------------------------
(periods ended 12/31/98)

One Year Five Years Ten Years Since Inception
-------- ---------- --------- ---------------

Class A Shares
Inception 11/16/87 4.29% 5.11% 7.09% 6.98%

Lehman Index 8.49% 6.55% 8.39% 8.22%

Class C Shares
Inception 9/1/94 5.94% N/A N/A 6.37%

Lehman Index 8.49% 6.55% 8.39% 7.80%

The sales charge for Class A shares was not reflected in the returns shown
in the bar chart, and the returns would be less if the sales 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.

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)
- ----------------
Limited Term U.S. Government 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 (Load) (as a 0.50%* 0.50%**
percentage of the lesser of redemption proceeds
or original offering price)
* 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)
Limited Term U.S. Government Class A Class C
Management Fee .38% .38%
Distribution and Service (12b-1) Fees .25% 1.00%
Other Expenses .35% .83%
---- -----
Total Annual Fund Operating Expenses .98% 2.21%

Expenses reflect rounding and are restated to reflect current expenses.
Thornburg Management Company, Inc. (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 fees are .50%, actual Class C other expenses are .52%,
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.

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 $777 $1,421
Class C Shares 276 696 1,195 2,570

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 $777 $1,421
Class C Shares 226 696 1,194 2,570

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 are presented as bar graphs in the Prospectus>
Limited Term Income Fund Annual Total Returns for Class A Shares
- ------------------------------------------------------------
15% 15.42%

10% 9.57%
7.58% 6.40%
5% 5.58%

- -5 (3.04%)
1993 1994 1995 1996 1997 1998

Highest quarterly results for time period shown: 4.87% (quarter ended
6/30/95).
Lowest quarterly results for time period shown: (2.45)% (quarter ended
12/31/94).

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

One Year Five Years Ten Years Since Inception
-------- ---------- --------- ---------------

Class A Shares 3.74% 5.68% N/A 6.11%

Lehman Index 8.45% 6.52% _____% 6.54%

Class C Shares 5.47% N/A N/A 6.79%

Lehman Index 8.45% 6.52% _____% 7.95%

The sales charge for Class A shares was not reflected in the returns shown
in the bar charts, and the returns would be less if the sales 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.

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)
- ---------------
Limited Term Income 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 (Load) 0.50 0.50%**
as a percentage of the lesser of redemption
proceeds or original offering price)

* imposed only on redemptions of purchases greater than $1 million in
the event of a redemption within 12 months of purchase.
** impose only on redemptions of Class C shares within 12 months of
purchase

Annual Fund Operating Expenses (expenses that are deducted
- ------------------------------ from Fund assets)
Limited Term Income Fund Class A Class C
------- -------
Management Fee .50% .50%
Distribution and Service (12b-1) Fees .25% 1.00%
Other Expenses .47% .80%
----- -----
Total Annual Fund Operating Expenses 1.22% 2.30%

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 .50%, actual Class C other expenses are .40%, 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 $372 $630 $909 $1,706
Class C Shares 285 727 1,246 2,674

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

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A Shares $372 $630 $909 $1,706
Class C Shares 236 727 1,246 2,674

MANAGEMENT DISCUSSION OF FUND PERFORMANCE AND INDEX COMPARISONS

The graphs below compare how $10,000 would have appreciated if invested in
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.
The Class A total return figures assume a shareholder purchases shares at the
public offering price applicable to investments 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 below 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.

Interest rates decreased through the end of 1997, but began increasing in
January 1998 and, then stayed approximately the same between February 1998
and May 1998, before decreasing again in June through September. In
general, interest rates have decreased since September 1997. For example,
the generic 30 year Treasury bond yielded 6.44% in October, 1997. Its yield
dropped to 5.7% in January 1998 before rising to 6.1% in May and then
dropping again to close at 4.98% on September 30, 1998.

In general, interest rate decreases since September 1997 have led to higher
bond prices and falling bond yields, although the yield premiums on
corporate bonds and mortgage backed securities over treasury bonds have
increased substantially. Five, ten and thirty year treasury bond prices
have increased by 5.5%, 11.8% and 18.5%, respectively, between October 1,
1997 and September 30, 1998. The net asset values of the Government Fund
and the Income Fund also increased over the same period, and the Funds'
dividend yields have decreased to a small extent. If interest rates
continue to fall, the net asset values of the Funds should rise, but the
dividends would be expected to decrease.

GOVERNMENT FUND
Index Comparisons
Compares performance of the Government Fund Class A shares and Class C shares
to the Lehman Brothers Intermediate Government Bond Index, and the Consumer
Price Index for the periods ended 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. Class A
shares became available on November 16, 1987, and 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> <In the prospectus, this table appears as two side-by-side graphs>
Class A Shares Class C Shares
<CAPTION>
FUND Lehman FUND Lehman
A Shares Government CPI C Shares Government CPI
-------- ----------- -------- -------- ----------- -------
<S> <C> <C> <C> <S> <C> <C> <C>
10/87 $ 9,750 $10,000 $10,000 8/94 $10,000 $10,000 $10,000
2/88 10,127 10,520 10,110 9/94 9,950 9,917 10,020
6/88 10,202 10,577 10,263 10/94 9,938 9,919 10,030
10/88 10,554 10,890 10,397 11/94 9,884 9,875 10,040
2/89 10,465 10,868 10,533 12/94 9,891 9,908 10,060
6/89 11,026 11,645 10,734 1/95 10,041 10,069 10,090
10/89 11,357 12,024 10,799 2/95 10,223 10,264 10,110
2/90 11,552 12,148 11,071 3/95 10,274 10,320 10,141
6/90 11,918 12,545 11,249 4/95 10,374 10,440 10,171
10/90 12,255 12,965 11,545 5/95 10,619 10,734 10,202
2/91 12,745 13,563 11,684 6/95 10,668 10,803 10,232
6/91 13,046 13,866 11,778 7/95 10,683 10,808 10,243
10/91 13,755 14,690 11,908 8/95 10,750 10,897 10,263
2/92 14,068 15,124 12,015 9/95 10,852 10,972 10,273
6/92 14,523 15,648 12,160 10/95 10,939 11,093 10,304
10/92 14,946 16,137 12,282 11/95 11,042 11,238 10,314
2/93 15,569 16,825 12,418 12/95 11,138 11,350 10,335
6/93 15,847 17,219 12,517 1/96 11,216 11,450 10,376
10/93 16,136 17,624 12,618 2/96 11,135 11,329 10,408
2/94 16,069 17,540 12,719 3/96 11,126 11,277 10,439
6/94 15,917 17,187 12,834 4/96 11,098 11,244 10,470
10/94 15,816 17,322 12,950 5/96 11,097 11,239 10,502
2/95 16,298 17,924 13,067 6/96 11,177 11,353 10,512
6/95 17,037 18,866 13,211 7/96 11,213 11,388 10,544
10/95 17,497 19,372 13,304 8/96 11,222 11,401 10,565
2/96 17,835 19,784 13,437 9/96 11,341 11,548 10,596
6/96 17,925 19,826 13,572 10/96 11,489 11,737 10,628
9/96 18,207 20,167 13,681 11/96 11,608 11,879 10,660
12/96 18,579 20,633 13,804 12/96 11,560 11,815 10,692
3/97 18,604 20,627 13,873 3/97 11,564 11,811 10,746
6/97 19,061 21,203 13,915 6/97 11,835 12,142 10,778
9/97 19,457 21,746 13,999 9/97 12,078 12,452 10,843
12/97 19,802 22,291 14,055 12/97 12,278 12,765 10,886
3/98 20,099 22,762 14,069 3/98 12,439 13,034 10,897
6/98 20,396 23,184 14,153 6/98 12,610 13,276 10,962
9/98 21,159 24,264 14,210 9/98 13,066 13,894 11,006
</TABLE>

Average Annual Total Returns (at max. Average Annual Total Returns
offering price) C Shares One Year (12 mos. ended
A Shares One Year: (12 mos. ended 9/30/98): 8.19%
9/30/98): 5.99% From Inception (9/1/94): 6.77%
Five Years: 5.08%
10 Years: 7.11%
From Inception (11/16/87): 7.13%

INCOME FUND
Index Comparisons
Compares performance of the Income Fund Class A shares and Class C shares to
the Lehman Brothers Intermediate Government Corporate Bond Index, and the
Consumer Price Index for the periods ended 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. Class A shares became available on October 1, 1992 and 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> <In the prospectus, this table appears as two side-by-side graphs>
Class A Shares Class C Shares
<CAPTION>
FUND Lehman FUND Lehman
A Shares Government CPI C Shares Government CPI
-------- ---------- ------- -------- ---------- -------
<S> <C> <C> <C> <S> <C> <C> <C>
9/92 $ 9,750 $10,000 $10,000 8/94 $10,000 $10,000 $10,000
12/92 9,778 9,964 10,090 9/94 9,928 9,908 10,020
3/93 10,168 10,359 10,171 12/94 9,688 9,896 10,060
6/93 10,374 10,583 10,232 3/95 10,065 10,331 10,141
9/93 10,661 10,821 10,284 6/95 10,543 10,847 10,232
12/93 10,715 10,839 10,366 9/95 10,808 11,027 10,273
3/94 10,550 10,544 10,428 12/95 11,122 11,450 10,335
6/94 10,506 10,480 10,491 3/96 11,074 11,355 10,439
9/94 10,646 10,566 10,575 6/96 11,220 11,425 10,512
12/94 10,385 10,554 10,618 9/96 11,578 11,628 10,596
3/95 10,802 11,017 10,703 10/96 11,834 11,834 10,628
6/95 11,328 11,568 10,799 11/96 12,014 11,990 10,660
9/95 11,627 11,759 10,843 12/96 11,928 11,913 10,692
12/95 11,986 12,211 10,908 1/97 11,910 11,960 10,703
3/96 11,937 12,109 11,017 2/97 11,928 11,982 10,735
6/96 12,107 12,184 11,094 3/97 11,840 11,900 10,746
9/96 12,504 12,400 11,183 4/97 11,917 12,040 10,756
12/96 12,895 12,705 11,284 5/97 12,044 12,140 10,767
3/97 12,813 12,690 11,341 6/97 12,161 12,251 10,778
6/97 13,162 13,064 11,375 . . .
9/97 13,449 13,417 11,443 9/97 12,403 12,581 10,843
12/97 13,615 13,704 11,489 12/97 12,544 12,851 10,886
3/98 13,815 14,040 11,501 3/98 12,726 13,165 10,897
6/98 13,969 14,304 11,570 6/98 12,844 13,413 10,962
9/98 14,400 14,945 11,616 9/98 13,228 14,014 11,006
</TABLE>

Average Annual Total Returns (at max. Average annual Total Returns
(offering price) C Shares One Year (12 mos. ended
A Shares One Year: (12 mos. ended 9/30/98): 6.65%
9/30/98): 4.40% From Inception (9/1/94): 7.09%
Five Years: 5.66%
From Inception (10/01/92): 6.27%

ADDITIONAL INFORMATION ABOUT THE FUNDS' INVESTMENTS

Intermediate Term Bonds and Price Stability

Normally, the Funds expect to offer greater price stability than a higher
yielding long-term bond fund and higher yields than most short-term
investments. Historically, intermediate-term government bonds enjoyed higher
returns, compounded annually over the period 1926-1994, as compared to
long-term government bonds and 90-day U.S. Treasury Bills. Intermediate-term
bonds outperformed longer-term issues because intermediate-term bonds did not
suffer the large capital losses which befell higher yielding long-term bonds
when bond yields rose. Intermediate-term bonds, which have less price
stability than short-term obligations, nonetheless outperformed short-term
bills because the yield on intermediate-term obligations typically is higher
than the yield on short-term obligations. The combination of price stability
and relatively high yield enjoyed by intermediate-term bonds caused these
bonds to outperform normally higher yielding long-term bonds and normally
more stable short-term bills during the periods described. The relationship
between interest rates and the values of obligations, as shown by the
foregoing study, applies to all types of debt securities and has been
consistently demonstrated in the portfolios managed by the Funds' investment
adviser and the markets observed by the adviser. However, no assurance can
be given that each Fund's short and intermediate-term obligations will
perform as well in the future as intermediate-term government bonds have in
the past.

U.S. Government Securities. 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. Either 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. From time to time either Fund may invest 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. 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 credit support passes through or is otherwise available
to the participants or the trustee for all participants. Similarly, either
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 would sell a security to a
purchaser and agree to repurchase the security in the future. The Funds 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.

Securities rated BBB by Standard & Poor's or Baa by Moody's are neither
highly protected nor poorly secured. These securities normally pay higher
yields but involve potentially greater price variability than higher-quality
securities. These securities are regarded as having adequate capacity to
repay principal and pay interest, although adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to do
so. Such securities may have speculative elements as well as
investment-grade characteristics.

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. Some mortgage-backed securities which the Fund
may purchase will not be backed by the full faith and credit of the U.S.
Government. 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,
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. 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 these techniques 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.

YEAR 2000

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.

DESCRIPTION OF POTENTIAL INVESTORS AND ADVANTAGES

Counsel to the Funds has advised that in their view shares of the 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 Fund's Statement of Additional
Information, and upon counsel's receipt of undertakings by TMC and the
Government Fund respecting investment policies. In addition, the Government
Fund 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.

Investment in a Fund relieves the investor of many investment management and
administrative burdens usually associated with the direct purchase and sale
of fixed income debt securities, otherwise consistent with that Fund's
investment objectives and management policies. These include: (i) selection
of portfolio investments; (ii) surveying the market for the best price at
which to buy and sell; (iii) valuation of portfolio securities; (iv)
selecting and scheduling of maturities and reinvestments; (v) receipt,
delivery and safekeeping of securities; and (vi) portfolio recordkeeping.

In addition, each Fund gives smaller investors access to investments in
certain obligations, such as GNMA certificates, which these smaller investors
would not otherwise have because of the relatively high minimum purchase
amounts for such securities. In the same regard, investment in a Fund
permits the smaller investor to diversify an investment among a variety of
obligations.

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 in the portfolio 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. However, a higher rate
of portfolio turnover may result in increased transaction costs to that Fund,
and could result in increased capital gains distributions to shareholders.

YOUR ACCOUNT

BUYING FUND SHARES IN GENERAL

Each Fund offers Class A and 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 Funds 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. All orders are subject to acceptance, 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
Fund distributor, TSC, at (800) 847-0200 to obtain more information
concerning the various classes of shares which may be available to them
through their financial advisors. Investors also may obtain information
respecting the different classes of shares through their financial advisor or
other person which 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 next
determined after receipt of your order. The net asset value (NAV) is the
value of a share, and is computed for each class 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>
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%
</TABLE>

SALES CHARGE REDUCTIONS AND WAIVERS FOR CLASS A SHARES

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
Fund's Custody Bank or Transfer Agent and members of their families
including trusts established for the benefit of the foregoing.

CHARITABLE ORGANIZATIONS OR FOUNDATIONS, including trusts established
for the benefit of charitable organizations or foundations, may
purchase shares of the Funds at no sales charge. TMC or TSC intend to
pay a commission of up to 1/2 of 1% to financial advisors who place
orders for these purchasers.

CERTAIN EMPLOYEE BENEFIT PLANS and insurance company separate accounts
used to fund annuity contracts may purchase shares of the Funds at no
sales charge. TMC and TSC may pay a sales fee of up to 1/2 of 1% to
financial advisors who place orders for these purchasers. If such a
fee is paid, a contingent deferred sales charge of the same percentage
will be imposed on redemptions within one year of purchase.

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.

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 TRUSTEES OF THE FUNDS 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 advisers 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 advisers or financial planners who place trades for
their own accounts if the accounts are linked to the master account of
such investment adviser 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 a 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 Fund
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.

Class C shares are charged higher annual expenses than Class A shares. 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. The CDSC is imposed upon the lower of the
purchase price or net asset value at redemption for each share redeemed. 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 account other than
retirement accounts 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 feature
Accounts 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
- ----------------------------------------------------------------------------
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 its 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 GAIN
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 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
The Funds have elected and intend to continue qualification as regulated
investment companies under Subchapter M of the Internal Revenue Code of 1986
(the "Code"). Distributions 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 by the recipient shareholders 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 to the distributee shareholders,
regardless of the length of time the shareholder has owned the shares, and
whether received as cash or in additional shares.

Redemption or resale of shares by a shareholder will be a taxable transaction
for federal income tax purposes, and the shareholder will recognize a 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.

Each shareholder will be notified annually by the shareholder's Fund as to
the amount and characterization of distributions paid to or reinvested by the
shareholder for the preceding taxable year. A Fund may be required to
withhold federal income tax at a rate of 31% from distributions otherwise
payable to a shareholder if (i) the shareholder has failed to furnish that
Fund with his or her taxpayer identification number, (ii) that Fund is
notified that the shareholder's number is incorrect, (iii) the Internal
Revenue Service notifies that Fund that the shareholder has failed properly
to report certain income, or (iv) when required to do so, the shareholder
fails to certify under penalty of perjury that he is not subject to this
withholding.

The tax discussion set forth above is for general information only, and
relates primarily to tax consequences affecting individual shareholders.
Prospective investors, and particularly persons who are not individuals,
should consult their own tax advisers regarding the federal, state, local and
other tax consequences to investors of investment in the Funds.

INVESTOR SERVICES
Thornburg Funds provide a variety of services to help you manage your
account.

INFORMATION SERVICES
Thornburg Funds' telephone representatives are available Monday through
Friday from 9:30 am to 6:30 pm 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)

INDIVIDUAL RETIREMENT ACCOUNTS AND RETIREMENT PLANS
Shares of the Funds may be purchased by retirement plans and in connection
with individual retirement plans ("IRA's"). The purchase of shares may be
limited by the governing instrument of any such plan. The minimum initial
investment imposed by the Funds in connection with an IRA is $2,000.

A standardized IRA is available through TSC for individuals wishing to open
an IRA. The cost to open an IRA under this program is $10, the annual fee is
$10 for each Fund purchased through the IRA and, and the fee for a
termination of the IRA or a rollover or transfer to a successor custodian is
$10. State Street Bank and Trust Company, as custodian for the program, may
amend the provisions of the IRA's opened through the program to assure
continued qualification under the Internal Revenue Code or for other reasons.

If you are considering establishing a retirement plan or purchasing a Fund's
shares in connection with a retirement plan, you should consult with your
attorney or tax adviser with respect to plan requirements and tax aspects
pertaining to you.

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 Income 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 27.

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.

TRANSACTION DETAILS
The Funds are open for business each day the New York Stock Exchange (NYSE)
is open. Each class of shares of each 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 your 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 __. 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 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 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 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.

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 sold 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.
* Each 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. Each Fund 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 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 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 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.

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 Service Agreement which requires TMC to supervise, administer
and perform certain administrative services necessary for the maintenance of
each class of shareholders. TMC's services are supervised by the Trust's
Trustees.

For each of the Funds, TMC receives a management fee computed according to
the tables below and paid monthly as a percentage of each Fund's average
daily assets.

<TABLE>
INVESTMENT MANAGEMENT FEE RATES
<CAPTION>
- -----------
INCOME FUND
- -----------
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
0 to $500 million .50%
$500 million to $1 billion .45%
$1 billion to $1.5 billion .40%
$1.5 billion to $2 billion .35%
Over $2 billion .275%
- ---------------
GOVERNMENT FUND
- ---------------
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
0 to $1 billion .375%
$1 billion to $2 billion .325%
Over $2 billion .275%
</TABLE>

For the Funds' most recent fiscal year ended September 30, 1998, Government
Fund and Income Fund paid an annual management fee of .375% and .50%,
respectively, of average daily net assets.

Each Fund also pays to TMC an administrative services fee computed at an
annual rate of .125% of the average daily net assets of Class A and Class C
shares, payable monthly.

TMC was established in 1982. Today the Thornburg Funds include Thornburg
Limited Term Municipal Fund - National Portfolio, Thornburg Limited Term
Municipal Fund - California Portfolio, Thornburg Intermediate Municipal Fund,
Thornburg New Mexico Intermediate Municipal Fund, Thornburg New York
Intermediate Municipal Fund, Thornburg Florida Intermediate Municipal Fund,
Thornburg Value Fund, and Thornburg Global Value Fund, in addition to the
Funds described in this prospectus. The Thornburg Funds total approximately
$2.2 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.

Steven J. Bohlin, a Managing Director of TMC, is the portfolio manager of
each of the Fund portfolios. He has held this responsibility since 1988 for
the Government Fund and since the inception of the Income Fund in 1992. Mr.
Bohlin is 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
for these expense reimbursements if expenses fall below the limit prior to
the end of the fiscal year. Fee waivers or reimbursement of expenses to a
Fund will improve 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. 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 "Buying Fund Shares."

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

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

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 1-800-847-0200. If you
would prefer to speak with a Thornburg Funds representative, please call
during business hours and follow the simple instructions you will receive.

FINANCIAL HIGHLIGHTS

The Financial Highlights table is intended to help you understand the Funds'
financial performance for the past five years. 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 for the
fiscal years and periods shown. 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.

FINANCIAL HIGHLIGHTS
<TABLE>
- -------------------------
THORNBURG GOVERNMENT FUND
- -------------------------
FISCAL YEAR OR PERIOD
---------------------------------------------------------------------------------------
CLASS A CLASS C
------------------------------------------ ------------------------------------------
Period
9/1/94
to
Year Ended September 30: Year ended September 30: 9/30/94
1998 1997 1996 1995 1994 1998 1997 1996 1995 <F(a)>
<CAPTION> ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.31 $12.24 $12.40 $12.03 $12.92 $12.37 $12.29 $12.45 $12.08 $12.21

Net Investment Income .69 .75 .76 .75 .67 .64 .70 .71 .69 .06
Net Gains (or Losses) on Securities .35 .07 (.16) .37 (.89) .34 .08 (.16) .37 (.13)
(Realized and Unrealized) ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment Operations $1.04 $.82 $.60 $1.12 $(.22) $.98 $.78 $.55 $1.06 $(.07)

Dividends (from Net Investment Income) (.69) (.75) (.76) (.75) (.67) (.64) (.70) (.71) (.69) (.06)
Distributions (from Capital Gains) - - - - - - - - - -
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions (.69) (.75) (.76) (.75) (.67) (.64) (.70) (.71) (.69) (.06)

Net Asset Value, End of Period $12.66 $12.31 $12.24 $12.40 $12.03 $12.71 $12.37 $12.29 $12.45 $12.08
Total Return <F(b)> 8.75% 6.86% 4.92% 9.66% (1.72)% 8.19% 6.49% 4.51% 9.07% (.50)%

Net Assets, End of Period (000's omitted) $129,312 133,711 139,510 142,849 177,439 6,446 4,299 2,780 2,217 1,005

Ratio of Expenses to Average Net Assets (.97)% (.97)% (.99)% (.99)% (.95)% (1.40)% (1.40)% (1.39)% (1.52)% (1.63)%
(After Expense Reductions) <F(c)>
Ratio of Net Income to Average Net Assets 5.61% 6.09% 6.11% 6.23% 5.38% 5.16% 5.65% 5.72% 5.68% 5.45%
(After Expense Reductions) <F(c)>

Portfolio Turnover Rate 29.77% 41.10% 23.27% 28.31% 80.58% 29.77% 41.10% 23.27% 28.31% 80.58%

Ratio of Expenses to Average Net Assets (.97)% (.97)% (.99)% (.99)% (.95)% (1.70)% (2.24)% (2.35)% (2.30)% (1.63)%
(Before Expense Reductions)

- ---------------------
THORNBURG INCOME FUND
- ---------------------
FISCAL YEAR OR PERIOD
---------------------------------------------------------------------------------------
CLASS A CLASS C
------------------------------------------ ------------------------------------------
Period
9/1/94
to
Year Ended September 30: Year ended September 30: 9/30/94
1998 1997 1996 1995 1994 1998 1997 1996 1995 <F(a)>
<CAPTION> ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.37 $12.23 $12.11 $11.83 $12.55 $12.34 $12.20 $12.08 $11.78 $11.92

Net Investment Income .72 .76 .76 .76 .67 .66 .71 .71 .70 .06
Net Gains (or Losses) on Securities .13 .14 .12 .28 (.69) .13 .14 .12 .30 (.14)
(Realized and Unrealized) ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment Operations $.85 $.90 $.88 $1.04 $(.02) $.79 $.85 $.83 $1.00 $(.08)

Dividends (from Net Investment Income) (.72) (.76) (.76) (.76) (.67) (.66) (.71) (.71) (.70) (.06)
Distributions (from Capital Gains) - - - - (.03) - - - - -
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions (.72) (.76) (.76) (.76) (.70) (.66) (.71) (.71) (.70) (.06)

Net Asset Value, End of Period $12.50 $12.37 $12.23 $12.11 $11.83 $12.47 $12.34 $12.20 $12.08 $11.78
Total Return <F(b)> 7.08% 7.56% 7.54% 9.22% (.14)% 6.65% 7.13% 7.12% 8.87% (.72)%

Net Assets, End of Period (000's omitted) $35,866 31,281 23,433 23,222 21,683 7,147 5,382 2,695 1,032 53

Ratio of Expenses to Average Net Assets 1.00% 1.00% .95% .83% .66% 1.40% 1.40% 1.36% 1.36% (1.20)%
(After Expense Reductions) <F(c)>
Ratio of Net Income to Average Net Assets 5.81% 6.16% 6.31% 6.50% 5.51% 5.40% 5.76% 5.91% 6.03% 5.14%
(After Expense Reductions) <F(c)>

Portfolio Turnover Rate 41.01% 13.87% 44.35% 43.12% 84.35% 41.01% 13.87% 44.35% 43.12% 84.35%

Ratio of Expenses to Average Net Assets 1.22% 1.27% 1.37% 1.48% 1.47% 1.80% 2.44% 3.20% 4.75% 1.20%
(Before Expense Reductions)

<FN> Footnotes to Financial Highlights Tables
<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
</FN> </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.

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 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. Neither 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
email: [email protected]

Securities and Exchange Commission Investment Company Act of 1940 file number
811-05201