JANUARY 2015 4th Quarter 2014 Portfolio Manager Market Commentary Thornburg International Value Fund Bill Fries, cfa Portfolio Manager Lei Wang, cfa Portfolio Manager Best International Large-Cap Growth Fund International Value Fund Performance A shares, as of December 31, 2014 SINCE 1-YR 3-YR 5-YR 10-YR INCEP Without sales charge -5.90% 7.77% 4.31% 5.94% 7.71% With sales charge -10.14% 6.14% 3.35% MSCI EAFE Index -4.90% 11.06% 5.33% MSCI AC World ex-U.S. Index -3.43% 9.49% 4.89% 5.45% 7.41% 4.43% 4.01% 5.59% 5.03% Periods over one year are annualized. Inception of the A shares is 5/28/98. Performance data shown represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate so shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than quoted. For performance current to the most recent month end, visit thornburg.com or call 877-215-1330. The maximum sales charge for the Fund’s A shares is 4.50%. The total annual fund operating expense for A shares is 1.25%. As the United States Federal Reserve begins to move off center stage, the European Central Bank and Bank of Japan prepare to step into the spotlight. They were joined this quarter by China’s policy makers, who sought to stimulate that economy through stronger lending growth, via lower interest rates. As expected, these shifts led to a nother quarter of heightened volatility, with the VIX index (a popular measure for the implied volatility of the S&P 500 Index) spiking to levels not seen for over two years. The global equity, fixed income, and (more recently) commodity markets continue to grapple with the impact of a strong dollar and less intervention by the Fed—in an uneven global-demand environment. During the period, the Thornburg International Value Fund (A shares without sales charge) delivered negative 1.79% in performance versus the MSCI EAFE Index’s negative 3.57% and the MSCI ACWI ex-U.S. Index’s return of negative 3.81%. We continue to believe our diversification enables the portfolio to perform relatively well during periods such as this, where macroeconomic influences on the market remain strong. Fourth-quarter performance was lead by companies in the technology and consumer sectors. Top contributors included Chinese e-commerce giant Alibaba, cable operator Liberty Global, Japanese entertainment company Sony, and two semiconductor stocks, TSMC and NXP. Alibaba became the largest IPO in history; investors see potential for the leader in the fast growing Chinese e-commerce market. Liberty Global climbed on the recent rumors of a merger with Vodafone Group. The potential merger is seen as being conducive to Liberty Global’s move toward offering mobile services across multiple markets. Sony has shown tangible progress on its ambitions to exit underperforming businesses and increase profits in its leading entertainment assets. TSMC and NXP both benefit from increasing penetration of the electronic devices markets. Detractors during the fourth quarter included oil names Total and BG Group, Japan’s Nippon Telegraph & Telephone (NTT), multinational Spanish banking group Banco Bilbao Vizcaya A rgentaria (BBVA), and Japan Tobacco. Total and 2 | International Value Fund TOP 10 HOLDINGS AS OF 11/30/14 China Mobile Communications Corp. 3.2% ING Groep N.V. 3.2% Novartis AG 3.2% Sony 3.2% Hong Kong Exchanges and Clearing Limited 3.1% UBS Group AG 3.1% Sumitomo Mitsui Trust 3.1% Mitsubishi UFJ Financial Group 3.1% Intesa Sanpaolo 3.1% Roche Holding AG 3.0% BG shares have both come under pressure along with oil prices. NTT underperformed as its wireless subsidiary Docomo has made slow progress on its turnaround. BBVA has declined recently as earnings growth has proved to be lower than expected due to increased competition in Spain and depreciation of the Mexican peso. The bank’s recent acquisition of an additional material stake in Garanti Bank also put downward pressure on the stock. Japan Tobacco has been weak as the deteriorating economic conditions in Russia and depreciating ruble have hit its earnings. Looking forward, global economies are diverging, with improving economic growth in the United States and weakness in much of the rest of the world spurring monetary policy responses. Market r eaction to the Fed’s withdrawal of stimulus remains to be seen. Through the recent transition period, we have witnessed volatility in all markets—from currencies and commodities to high-yield bonds and stocks—as participants attempt to reprice assets in a post-QE (quantitative easing) world. This could provide opportunities for us as markets temporarily mis-price high-quality companies. We also think this turbulence highlights the importance of remaining diversified, not only to withstand market gyrations but also to be in position to capitalize on them. During this transition, we are also watching the dollar. For dollar-based investors focused primarily on non-dollar markets, the currency movements will impact returns. The portfolio has thus far ben efited from partial currency hedges and current consensus expects further dollar strength in 2015. The impact of the dollar on oil and other commodities has also been pronounced during this quarter. This is another area where we look for dislocations of price and value after large moves. Despite the complicated market environment and the recent weak performance of international markets, we remain optimistic. The U.S. economy has provided a case study to central bankers globally that may be contemplating their own weak growth outlook. Several have made first steps toward more accommodative (and, in some cases, unconventional) monetary policy. It may be decades before we can assess any additional impacts from this style of economic support but we do believe from the U.S. experiment that monetary stimulus has so far supported asset prices and, more importantly for us, equity prices. The valuations in Japan and Europe remain attractive especially for companies that benefit from a weaker local currency. Ongoing efforts by the BOJ (Bank of Japan) and ECB (European Central Bank) to support the economies are likely to weaken currencies further but could also support broader risk-taking that eventually leads to acceleration of economic growth. The combination of potential growth and low valuations support overseas developed equity markets. As we have said over the last few quarters, the outlook remains cloudy, and we continue to expect periods of volatility as macroeconomic concerns wax and wane. We will remain vigilant about maintaining our diversification across sector, geography, and baskets. Recent results have shown that good diversification and adherence to our three-basket approach prove beneficial during periods, such as the one we are currently experiencing. Thank you for investing alongside us in the Thornburg International Value Fund. n 3 | International Value Fund Important Information Investments in the fund carry risks, including possible loss of principal. Special risks may be associated with investments outside the United States, especially in emerging markets, including currency fluctuations, illiquidity, volatility, and political and economic risks. Investments in small capitalization companies may increase the risk of greater price fluctuations. Investments in the Fund are not FDIC insured, nor are they deposits of or guaranteed by a bank or any other entity. The views expressed by the portfolio managers reflect their professional opinions and should not be considered buy or sell recommendations. These views are subject to change. There is no guarantee the Fund will meet its objectives. Diversification does not assure or guarantee better performance and cannot eliminate the risk of investment losses. Representative purchases and sales includes material transactions other than recently purchased securities, which may be excluded for best execution purposes. Any securities, countries, and sectors mentioned are for informational purposes only. Portfolio holdings are subject to change daily. Under no circumstances does the information contained within represent a recommendation to buy or sell securities. The MSCI EAFE (Europe, Australasia, Far East) Index is an unmanaged index. It is a generally accepted benchmark for major overseas markets. Index weightings represent the relative capitalizations of the major overseas developed markets on a U.S. dollar adjusted basis. The index is calculated with net dividends reinvested in U.S. dollars. The MSCI All Country (AC) World ex-US Index is a market capitalization weighted index representative of the market structure of 45 developed and emerging market countries in North and South America, Europe, Africa, and the Pacific Rim, excluding securities of United States’ issuers. The index is calculated with gross dividends reinvested in U.S. dollars. The S&P 500 Index is an unmanaged broad measure of the U.S. stock market. The performance of any index is not indicative of the performance of any particular investment. Keep in mind that indices do not take into account any fees and expenses of the individual investments that they track. You cannot make an investment in any index. Quantitative Easing is the Federal Reserve’s monetary policy used to stimulate the U.S. economy following the recession that began in 2007/08. VIX is the ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index, which shows the market’s expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. This volatility is meant to be forward looking and is calculated from both calls and puts. The Thornburg International Value Fund, Institutional class, led the 113-fund international large-cap growth category to take the 2012 Lipper Fund Award for the 10-year period ended 11/30/2011. Lipper Fund Awards are granted annually to the fund in each Lipper classification that consistently delivered the strongest risk-adjusted performance (calculated with dividends reinvested). Awards are given for three-year, five-year, and ten-year periods. The fund did not win the award for other time periods or subsequent years. Class I shares may not be available to all investors and minimum investments may be higher. Established in 1988, the Morningstar Fund Manager of the Year Award recognizes portfolio managers who demonstrate excellent investment skill and the courage to differ from the consensus. To qualify for the award, managers must have not only a great year, but also must have a record of delivering outstanding long-term performance and of aligning their interests with shareholders’. The Fund Manager of the Year Award winners are chosen based upon Morningstar’s proprietary research and in-depth evaluation by its senior analysts. Thornburg has not won the Fund Manager of the Year award in subsequent years. 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 thornburg.com. Read them carefully before investing. Thornburg Securities Corporation, Distributor | 2300 North Ridgetop Road | Santa Fe, New Mexico 87506 | 877.215.1330 1/9/15 TH1759