THORNBURG Rule 497(k)(1)(iii)(B)
LIMITED TERM
U.S. GOVERNMENT FUND
THORNBURG
LIMITED TERM
INCOME FUND
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Fund Profile
February 18, 2000
This Profile summarizes key information about the Funds that is included in
the Funds' prospectus. The Funds' prospectus includes additional
information about the Funds, including a more detailed description of the
risks associated with investing in the Funds that you may want to consider
before you invest. You may obtain the prospectus and other information
about the Funds at no cost by calling 800-847-0200.
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Investment Goal
Each Fund's primary investment goal is to provide, through investment in a
portfolio of fixed income obligations, as high a level of income as is
consistent, in the view of the Funds' investment adviser, with safety of
capital. Each Fund also seeks to reduce fluctuations in its share price
compared to longer term portfolios. No assurance can be given that these
goals will be achieved.
Principal Investment Strategies of the Funds
Limited Term U.S. Government Fund attempts to reach its primary goal by
investing mainly in obligations issued or guaranteed by the United States
Government or its agencies and instrumentalities, mortgage-backed
securities issued or guaranteed by U.S. agencies, and in participations in
such obligations or in repurchase agreements secured by such obligations.
Limited Term Income Fund attempts to reach its primary goal by investing
mainly in investment grade short and intermediate maturity bonds, including
some foreign securities, and in mortgage-backed securities. Investment
grade securities are rated in the four highest grades of a recognized
ratings agency. Each Fund also seeks to reduce fluctuations in its share
price compared to longer term portfolios by maintaining a portfolio of
investments with a dollar-weighed average portfolio maturity of not more
than five years. Additional information about each Fund's investments is
available in the Fund's annual and semi-annual reports to shareholders.
Additionally, in the Funds' annual reports you will find a discussion of
the market conditions and investment strategies that significantly affected
each Fund's performance during its last fiscal year. You may obtain the
Funds' most recent annual and semi-annual reports and the Funds' prospectus
at no cost by calling (800) 847-0200.
Principal Risks
The value of each Fund's shares and its dividends will change in response
to changes in interest rates. When interest rates increase, the value of
each Fund's investments declines and the Fund's share value is reduced.
This effect is more pronounced for any intermediate or longer term
obligations owned by the Funds. Value changes in response to interest rate
changes may be more pronounced for mortgage-backed securities owned by the
Funds. Additionally, decreases in market interest rates may result in
prepayments of certain obligations each Fund will acquire. These
prepayments may require a Fund to reinvest at a lower rate of return.
Some investments owned by the Funds may be subject to default or delays in
payment, or could be downgraded by rating agencies, reducing the value of a
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 Income 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. The loss of money is a risk of investing in
either of the Funds, and when you sell your shares they may be worth less
than what you paid for them.
An investment in either of the Funds is not a deposit in any bank and is
not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
Past Performance of Limited Term U.S. Government Fund
The following information provides some indication of the risks of
investing in Limited Term U.S. Government Fund by showing how the Fund's
investment results vary from year to year. The bar chart shows how the
annual total returns for Class A shares have been different in each full
year shown. The average annual total return figures compare Class A and
Class C share performance to the Lehman Brothers Intermediate Government
Bond Index, a broad measure of market performance. Performance in the past
is not necessarily an indication of how the Fund will perform in the
future.
<The following are presented as bar graphs in the Profile>
Limited Term U.S. Government Fund Annual Total Returns for Class A Shares
- -------------------------------------------------------------------------
15%
12.53% 12.98%
10% 10.58% 8.95%
7.38% 6.99%
5% 6.19% 6.58%
4.29%
0% (2.07%)
0.22%
- -5%
'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99
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).
The sales charge for Class A shares was not reflected in the returns shown
in the bar chart above, and the returns would be less if the sales charge
was taken into account.
Limited Term U.S. Government Fund Average Annual Total Returns
- --------------------------------------------------------------
(periods ended 12/31/99)
Since
One Year Five Years Ten Years Inception
Class A Shares (1.27)% 5.81% 6.15% 6.49% (11/16/87)
Lehman Index 0.49% 6.93% 7.10% 7.51%
Class C Shares (0.11)% 5.71% N/A 5.12% (9/1/94)
Lehman Index 0.49% 6.93 N/A 6.47%
Past Performance of Limited Term Income Fund
The following information provides some indication of the risks of
investing in Limited Term Income Fund by showing how the Fund's investment
results vary from year to year. The bar chart shows how the annual total
returns for Class A shares have been different in each full year shown.
The average annual total return figures compare Class A and Class C share
performance to the Lehman Brothers Intermediate Corporate Bond Index, a
broad measure of market performance. Performance in the past is not
necessarily an indication of how the Fund will perform in the future.
<The following are presented as bar graphs in the Profile>
Limited Term Income Fund Annual Total Returns for Class A Shares
- --------------------------------------------------------------
20%
15% 15.42%
10% 9.57%
7.58% 6.40%
5% 5.58%
0%
(3.07%) 0.38%
- -5%
'93 '94 '95 '96 '97 '98 '99
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).
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.
Limited Term Income Fund Average Annual Total Returns
- -----------------------------------------------------
(periods ended 12/31/99)
One Year Five Years Since Inception
-------- ---------- ---------------
Class A Shares (1.12)% 6.64% 5.45% (10/1/92)
Lehman Index 0.39% 7.10% 5.92%
Class C Shares 0.05% 6.54% 5.49% (9/1/94)
Lehman Index 0.39% 7.10% 6.62%
Fees and Expenses of the Funds
The following tables describe the fees and expenses that you may pay if you
buy and hold shares of a Fund.
Shareholder Fees (Fees Paid Directly From Your Investment)
- ----------------
Limited Term U.S. Government Fund
Class A Class C
------- -------
Maximum Sales Charge (load) On Purchases 1.50% none
(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 Fund
Class A Class C
Management Fee .38% .38%
Distribution and Service (12b-1) Fees .24% 1.00%
Other Expenses .33% .60%
---- -----
Total Annual Fund Operating Expenses .95% 1.98%*
*Thornburg Investment Management, Inc. and Thornburg Securities Corporation
intend to waive fees and reimburse expenses so that actual Class C expenses
are 1.40%. Waiver of fees and 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, dividends and distributions are reinvested, 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 $246 $450 $671 $1,310
Class C Shares $253 $628 $1,080 $2,337
You would pay the following expenses if you did not redeem your Class C
shares:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class C Shares $203 $628 $1,080 $2,337
Shareholder Fees (Fees Paid Directly From Your Investment)
- ---------------
Limited Term Income Fund
Class A Class C
------- -------
Maximum Sales Charge On Purchases 1.50% none
(as a percentage of offering price)
Maximum Deferred Sales Charge 0.59%* 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.
** 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 Income Fund
Class A Class C
------- -------
Management Fee .50% .50%
Distribution and Service (12b-1) Fees .24% 1.00%
Other Expenses .45% .72%
------- -------
Total Annual Fund Operating Expenses 1.19%* 2.22%*
*Thornburg Investment Management, Inc. and Thornburg Securities Corporation
intend to waive fees and reimburse expenses so that actual Class A expenses
are .99% and actual Class C expenses are 1.40%. Waiver of fees and
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, dividends and distributions are reinvested, 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 $270 $525 $ 800 $1,586
Class C Shares $278 $703 $1,205 $2,591
You would pay the following expenses if you did not redeem your Class C
shares:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class C Shares $228 $703 $1,205 $2,591
Investment Adviser and Portfolio Managers
The Funds' investment adviser is Thornburg Investment Management, Inc.
(Thornburg), providing investment management and administrative services.
Steven J. Bohlin, who is a managing director of Thornburg, is the portfolio
manager for the Funds, and has served in that capacity for the Government
Fund since 1988 and for the Income Fund since its inception in 1992. Mr.
Bohlin is assisted by other employees of Thornburg in managing the Funds'
portfolios.
Purchase of Fund Shares
Each Fund offers multiple classes of shares. Purchases of Class A and
Class C shares are described below:
Class A Shares
Class A shares are sold subject to a sales charge deducted at the time you
purchase your shares:
Sales Charge Sales Charge
as a percentage as a percentage
Purchase Amount of Offering Price of Net Asset Value
- --------------- ----------------- -------------------
[S] [C] [C]
Less than $249,999.99 1.50% 1.52%
$250,000 to 499,999.99 1.25% 1.27%
$500,000 to 999,999.99 1.00% 1.01%
$1,000,000 and up 0.00% 0.00%
No sales charge will be payable at the time of purchase on investments of
$1 million or more made by a purchaser. A contingent deferred sales
charge will be imposed on these investments in the event of a share
redemption within one year following the share purchase at the rate of 1/2
of 1% of the value of the shares redeemed.
Shareholders who sign a letter of intent to purchase more than $250,000
over 13 months may buy Class A shares at a reduced sales charge. Certain
shareholders may buy Class A shares at no sales charge:
- shareholders who purchase shares within 24 months of redeeming
Class A shares;
- customers of trust companies or bank trust departments;
- customers of fee for service financial advisors;
- shareholders investing through a broker dealer's wrap program;
- shareholders whose orders are placed through certain broker dealers
maintaining omnibus accounts.
Class C Shares
Class C shares are sold at net asset value, but are subject to higher
annual expenses. Class C shares are subject to a 1/2 of 1% contingent
deferred sales charge if redeemed within one year of purchase.
The minimum purchase to open an account is $5,000 for both Class A and
Class C shares, but retirement accounts may be opened with $2,000. Minimum
additional purchase for any account is $100. Minimum account size is
$1,000, and accounts falling below that amount may be subject to mandatory
redemption. Purchases may be made by mail, through your financial advisor
or by telephone.
Redeeming Fund Shares
You can withdraw money from your Fund account on any Fund business day by
redeeming some or all of your shares (selling them back to the Fund either
directly or through your financial advisor). Your shares will be redeemed
by the Fund at the net asset value next computed after your order is
received in proper form. If your purchase was subject to a contingent
deferred sales charge within one year of purchase, the charge will be
deducted. You may redeem Fund shares by mail, through your financial
advisor, or by telephone, if you have previously signed up for the
telephone redemption feature.
Distributions and Taxes
Each Fund distributes substantially all of its net income and realized
capital gains to shareholders each year. Each Fund declares its net
investment income daily as a dividend and distributes it monthly. Each
Fund will distribute any net realized capital gains at least annually.
Distributions are reinvested automatically in additional shares unless you
elect to receive them in cash. Distributions representing net investment
income and net short-term capital gains will be taxable to recipient
shareholders as ordinary income for federal income tax purposes. Any
distributions of long-term capital gains are taxed as long-term capital
gains for federal income tax purposes. State income tax treatment of
shareholder distributions may vary from federal treatment of distributions.
Other Fund Services
* Thornburg Funds telephone representatives: Monday through Friday from
7:30 a.m. to 4:30 p.m. Mountain Time, at 1-800-847-0200.
* Thornburg Funds Audio Response System: 24 hours a day, 7 days a week.
Call 1-800-847-0200.
* The Automatic Investment Plan: transfer as little as $100 from your bank
account on a weekly, monthly or quarterly basis.
* Exchange Class A shares of any other Thornburg Fund for Class A
shares of a Fund without paying any additional sales charge.
* Website: Contact Thornburg on the Internet at www.Thornburg.com
Contact your financial advisor or the Funds for more information on these
and other services available to you.
Please call 1-800-847-0200 or your financial advisor for an application to
purchase shares of the Funds. A copy of the Funds' prospectus will be sent
to you with the application.
<LOGO>
Thornburg Securities Corporation, Distributor
119 East Marcy Street, Santa Fe, New Mexico 87501
800-847-0200
www.thornburg.com e-mail: [email protected]
