3rd Quarter 2017

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For the third quarter of 2017 Thornburg Global Opportunities Fund produced a total return of 3.67% (I shares), versus 5.18% for the benchmark MSCI All Country World Index (ACWI). This brings our year-to-date return to 18.55% for the fund, versus 17.25% for the same index. Additionally, the fund's net asset value (NAV) ended the quarter near a new all-time high. Recall that Thornburg Global Opportunities Fund seeks capital appreciation from a focused portfolio of equity investments from around the world. We believe the structure of the fund—built on our core investment principles of flexibility, focus, and value—gives us a durable framework for value-added investing.

The performance of the fund has compared well to its benchmark over most longer time periods. From its inception on July 28, 2006, through September 30, 2017, the fund has outpaced the ACWI by an average margin of more than 500 basis points (or five percentage points) per year, resulting in a total cumulative return since inception of 221.2% (I shares) versus 88.24% for the index. Over this same period, the fund has exhibited volatility—as measured by beta—nominally lower than that of the index.1 As of September 30, 2017, the fund's Class A and I shares are both rated four stars by Morningstar and rank in the top 1% of World Large Stock funds for the time period starting August 2006.

The fund's cumulative return from inception is shown in Chart 1 below.

Markets advanced again in the third quarter of 2017, marking the fifth consecutive quarter of positive returns for most major indices. Asset prices and global economic expansion continued to be aided by accommodative monetary policies, and a weakening U.S. dollar boosted developing markets. Against a favorable macroeconomic backdrop, rising geopolitical tensions on the Korean peninsula and the terrorist attack in Barcelona did little to disrupt investor optimism during the period. From an industry perspective, 10 of the ACWI's 11 sectors delivered positive returns for the September quarter, ranging from 2.5% (health care) to 9.4% (energy). Consumer staples was the only sector with a negative result, producing a negative 0.2% return.

The fund's third-quarter results illustrate the merits of our geographic flexibility, as only one U.S. holding placed among our top five contributors. Performance was led by a diversified group of companies that are principally long-time investments in the fund. The table below left shows five of our top performers for the quarter.


Baidu, Inc. China
CF Industries Holdings USA
Galaxy Entertainment Group China
Mineral Resources Australia
NN Group NV Netherlands
Contributors listed in alphabetical order.

Chinese internet leader Baidu was a standout during the quarter, with the shares up nearly 40% to a new high. Management reported strong second-quarter operating results, and the company reduced its aggressive promotional spending on its "Online-to-Offline" (O2O) e-commerce initiatives. Doing so highlighted the robust profitability of the company's core search business, which had been obscured of late by O2O's operations. Furthermore, the company sold its food delivery business, Waimai, at an attractive valuation to an Alibaba-backed competitor. Baidu thereby converted its ownership of loss-making, sub-scale Waimai into a minority stake in the largest food delivery company in China.

Shares of CF Industries—a U.S. producer of nitrogen-based fertilizer—also perked up in the third quarter in conjunction with signs of a thawing in the North American fertilizer market. Following a long period of oversupply and a profit drought for CF, competition from imported fertilizer seems to be shriveling. Rounding out our top five were Mineral Resources, an Australian mining concern; NN Group, a Dutch insurer; and Galaxy Entertainment, a Hong Kong gaming and leisure group, which we have owned since 2012.

A handful of holdings also declined in the quarter. Five of these, all of which we continue to hold, are listed below.


Aena Spain
Altice NV Netherlands
Altice USA USA
easyJet plc U.K.
Kraft Heinz USA
Detractors listed in alphabetical order.

Shares of Spanish airport operator Aena were hampered by management turnover, uncertainty regarding dividend, and the terrorist attack in Barcelona. Both Altice NV, a multi-national telecommunications company, and its U.S. subsidiary, Altice USA, declined as acquisition prospects seemed to ebb.3 Lastly, lowcost U.K. airline easyJet also descended during the quarter as profit expectations were tempered by stronger-than-expected industry capacity growth.

In late July we made a new purchase of New World Development, a Hong Kong-based real estate group. Founded in 1970 by Cheng Yu-tung, New World is a leading property developer and landlord with additional operations in infrastructure, facility services, and hospitality. One of the company's largest property developments to date, Victoria Dockside, a mixed-use site on the waterfront in Kowloon, Hong Kong, is opening late this year and expected to be fully occupied in 2019. New World also owns a large tract of Hong Kong farmland, which could be developed for residential use in a market that is physically supply-constrained. Beyond property development, management's recent efforts to simplify its portfolio and improve capital allocation are encouraging. For now, New World Development trades at a material discount to book value and offers a 4% dividend yield.

In addition to New World, we initiated positions in Bayer AG, a German life-sciences group, and Zayo Group, a telecommunications company in Colorado. We sold our remaining stakes in Express Scripts, Ferrovial SA, and Mondelez during the quarter.

Relative to the index, we are overweight consumer discretionary and telecommunications, and underweight financials and health care. Geographically, the fund is overweight China and Europe and has no direct exposure to Japan. Emerging market investments comprise about 17% of the portfolio. The average one-year forward price-to-earnings multiple of the companies owned in Thornburg Global Opportunities Fund stands at 17.5x, vs. 16.7x for the ACWI.

The following table illustrates the fund's largest geographic weightings:

USA 39%
Netherlands 11%
United Kingdom 8%
China 9%
Spain 5%
*As a percent of the fund.
During the third quarter of 2017, investors debated the future economic direction of China, Europe, various emerging markets, and the U.S. They considered potential policy actions by the U.S. Federal Reserve, Congress, the Trump administration, and the implications of significant elections in France and Germany. Many political and macroeconomic issues remain open; importantly, however, overall global consumer spending is growing and most macroeconomic indicators around the world have positively surprised year-to-date, with the U.S. a relative laggard.

Earnings expectations for the MSCI All Country World Index portfolio for 2017 have improved following strong recent results in most markets, and global economic growth expectations have risen. These trends continue to support a rotation of investor preferences from more defensive debt and equity assets to those more economically sensitive. Under the current administration, political gridlock seems likely to persist in Washington, D.C. While the U.S. Federal Reserve has stepped up the pace of Federal funds target rate hikes, most major central banks continue to pursue very easy monetary conditions.

We remind fellow shareholders of the fund to maintain a long-term investment perspective. Though we remain constructive about the long-term prospects for the fund, we expect periods of volatility. Our experience over many years supports the notion that our investment framework—predicated on bottom-up, fundamental value investing—can add value versus broad equity benchmarks over time.

1. Source: Weekly beta as measured by Bloomberg.

2. Holdings are classified by country of risk, determined at Thornburg's discretion.

3. For more discussion of Altice and other fund holdings, see this recent interview: Van Doorn, Philip, “Managers of $2.3 billion global fund turn away from the U.S.” MarketWatch.com, 17 July 2017.

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, see the mutual funds performance page or call 877-215-1330. The maximum sales charge for the Fund’s A shares is 4.50%.

Morningstar Rankings (as of 9/30/17)

1-YR 3-YR 5-YR 10-YR INCEP
Class A 7% 14% 5% 9% 1%
Class I 7% 12% 4% 7% 1%
# of Funds 842 703 583 320 443

Rankings are based on total returns without sales charge.
Source: Morningstar Direct.

To determine a fund's Morningstar Rating™, funds with at least a three-year history are ranked in their categories by their Morningstar Risk-Adjusted Return scores. The top 10% receive 5 stars; the next 22.5%, 4 stars; the middle 35%, 3 stars; the next 22.5%, 2 stars; and the bottom 10% receive 1 star. The Risk-Adjusted Return accounts for variation in a fund's performance (including the effects of all sales charges), placing more emphasis on downward variations and rewarding consistent performance. Other share classes may have different performance characteristics. © 2017 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

Thornburg Global Opportunities Fund's Overall Morningstar Rating among 703 World Large Stock funds is based on risk-adjusted returns for Class A & I shares and uses a weighted average of the fund's three-, five-, and 10-year ratings: 4 stars, 5 stars, and 4 stars (A shares) and 4 stars, 5 stars, and 4 stars (I shares), among 703, 583, and 320 funds, respectively, as of 9/30/17.

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.

Unless otherwise noted, the source of all data is Thornburg Investment Management, Inc., as of 9/30/17.

Investments carry risks, including possible loss of principal. Additional 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- and mid-capitalization companies may increase the risk of greater price fluctuations. Investments in the Fund are not FDIC insured, nor are they bank deposits or guaranteed by a bank or any other entity.

The views expressed are subject to change and do not necessarily reflect the views of Thornburg Investment Management, Inc. This information should not be relied upon as a recommendation or investment advice and is not intended to predict the performance of any investment or market.

Any securities, sectors, or countries mentioned are for illustration purposes only. Holdings are subject to change. Under no circumstances does the information contained within represent a recommendation to buy or sell any security.

Diversification does not assure or guarantee better performance and cannot eliminate the risk of investment losses.

Funds invested in a limited number of holdings may expose an investor to greater volatility.

The performance of any index is not indicative of the performance of any particular investment. Unless otherwise noted, index returns reflect the reinvestment of income dividends and capital gains, if any, but do not reflect fees, brokerage commissions or other expenses of investing. Investors may not make direct investments into any index.

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