A Straightforward Laddered Portfolio of U.S. Government Bonds

Thornburg Limited Term U.S. Government Fund  is a straightforward laddered portfolio–with an over 25-year track record–of bonds issued by the U.S. government. We do not reach for yield with this portfolio, but consider it a valuable part of an investor’s overall asset allocation.

Working Photo“The fund seeks to provide U.S. government-guaranteed cash flows without outsized interest-rate exposure, along with relative safety and stability. Though certainly not the most adventurous of portfolios, the fund has an over 25-year track record and can fit well into a larger asset allocation.”

— Jason Brady

A Simple, Straightforward Approach

The fund is a 10-year ladder of U.S. government bonds (U.S. Treasuries and other bonds issued by U.S. government agencies). Following our tradition of quality and transparency, we don’t employ leverage or the use of derivatives in the management of this fund. We believe the few extra basis points of yield potential they provide aren’t worth their added risk and complexity.

High Quality

Credit quality, in a portfolio that’s comprised almost exclusively of U.S. government bonds, is quite high, with the full faith and credit of the federal government behind interest and principal payments.

Reasonable Pursuit of Reasonable Objectives

Even in government-bond portfolios, managers often reach for yield through use of leverage or derivatives. While our prospectus permits us to purchase up to 20% non-government bonds (of any stripe), we don’t. It’s a simple, straightforward, clean approach designed to keep volatility and price movement in check.

Part of an Investor’s Overall Allocation

As has always been the case, government bond portfolios are best viewed as part of an investor’s overall asset allocation, where relative safety of principal, reduced volatility, and low correlation with equities is desired.

An Actively Managed Ladder

Laddering involves building a portfolio of staggered maturities so that a portion will mature each year. Money from maturing bonds provides an organic source of cash flow, and is typically reinvested in longer-maturity bonds within the range of the ladder. In the case of Limited Term U.S. Government Fund, the ladder ranges from zero to 10 years.

Best Fixed Income Fund Family

2012 Lipper Fund Award2012 – The firm ranked #1 out of 41 eligible firms in Lipper Inc.'s fixed income large firm universe for the three-year period ended 11/30/11.

2008 – The firm ranked #1 out of 41 eligible firms in Lipper Inc.'s fixed income large firm universe for the three-year period ended 12/31/07.

The Lipper Fund Awards program honors funds that have excelled in delivering consistently strong risk-adjusted performance, calculated with dividends reinvested and without sales charges, relative to peers. The Lipper Fund Awards program recognizes fund families with high average scores for all funds within a particular asset class or overall. Fund family awards are issued for the three-year period only. Thornburg did not win the awards for any years other than those listed above. Lipper’s Large Company universe was comprised of fund families with more than $40 billion in total net assets for the 2012 award and more than $28 billion for the 2008 award. Only fund families with at least five bond funds were eligible for the Fund Family Award.
Important Information
Before investing, carefully consider the Fund’s investment goals, risks, charges, and expenses. For a prospectus or summary prospectus containing this and other information, contact your financial advisor or visit our literature center. Read them carefully before investing.

Investments carry risks, including possible loss of principal. Portfolios investing in bonds have the same interest rate, inflation, and credit risks that are associated with the underlying bonds. The value of bonds will fluctuate relative to changes in interest rates, decreasing when interest rates rise. Unlike bonds, bond funds have ongoing fees and expenses. Investments in mortgage-backed securities (MBS) may bear additional risk. Investments in the Fund are not FDIC insured, nor are they bank deposits or guaranteed by a bank or any other entity.

Credit quality ratings for Thornburg’s global fixed income portfolios used ratings from Moody’s Investors Service. Where Moody’s ratings are not available, we have used S&P Global Ratings. Where neither rating is available, we have used ratings from other nationally recognized statistical rating organizations (NRSROs).

A bond credit rating assesses the financial ability of a debt issuer to make timely payments of principal and interest. Ratings of AAA (the highest), AA, A, and BBB are investment-grade quality. Ratings of BB, B, CCC, CC, C and D (the lowest) are considered below investment grade, speculative grade, or junk bonds.

The laddering strategy does not assure or guarantee better performance than a non-laddered portfolio and cannot eliminate the risk of investment losses.

Class R shares are limited to retirement platforms only.

Class I shares may not be available to all investors. Minimum investments for the I share class may be higher than those for other classes.

There is no guarantee that the Fund will meet its investment objectives.

Please see our glossary for a definition of terms.

Thornburg mutual funds are distributed by Thornburg Securities Corporation.

Thornburg Investment Management, Inc. mutual funds are sold through investment professionals including investment advisors, brokerage firms, bank trust departments, trust companies and certain other financial intermediaries. Thornburg Securities Corporation (TSC) does not act as broker of record for investors.