Bill Fries, CFA
Thornburg Investment Management Inc.
119 East Marcy Street
Santa Fe, NM 87501

Bill Fries is the lead manager for the segment of the fund’s assets managed by Thornburg Investment Management (“Thornburg”). Fries joined Thornburg in 1995 as a Managing Director and Portfolio Manager. At Thornburg he has managed the Thornburg International Value Fund since May of 1998 and the Thornburg Value Fund since October of 1995. In total, as of December 31, 2004 Thornburg managed over $12.6 billion, including approximately $3.3 billion invested in the stocks of foreign companies. Fries has been an investment manager to Masters’ Select International Fund since September 2003.

Fries has been in the investment management business since the early 1970s. Prior to joining Thornburg he was vice president of equities at USAA Investment Management Company, where he created the investment strategy for the USAA Income Stock Fund and was its original portfolio manager. Fries also began managing the USAA Aggressive Growth Fund in early 1994 and he was in charge of the Basic Value Sector of the USAA Cornerstone Fund from 1984 to 1988. Also at USAA, he served as investment advisor to the company’s employee benefit plans and managed its insurance company equity portfolios from 1984 to 1988. Fries began his investment career as a securities analyst and bank investment officer. He received his designation as a Chartered Financial Analyst in 1974. Fries also served in the U.S. Marine Corps as a Communications Officer from 1961 to 1964.

Approximately 24% of the Fund’s assets are managed by Fries. He believes that a bottom-up approach to investing in undervalued securities will generate above-average returns with below market risk. His idea of value centers on his assessment of the intrinsic worth of an investment. The goal is to uncover promising companies with sound business fundamentals at a time when their intrinsic value is not fully recognized by the marketplace.

Thornburg’s initial search for investment ideas relies on quantitative screens. Starting with the international equity universe, Thornburg screens their databases for companies that appear attractive across a number of value parameters. Thornburg looks for securities that have low price-to-earnings, low price-to-cash flow and low price-to-book ratios. Companies ranging from small-cap to large-cap are considered. Additionally, a number of proprietary screens are employed in order to develop a comprehensive view of a company’s financial prospects. Thornburg scrutinizes the universe for companies that are strong and stable yet value-priced. This battery of screens generates a list of approximately 125 stocks that merit further consideration.

Thornburg will not purchase a security simply because it is priced cheaply relative to the market. The investment team spends the majority of its time on internal, bottom-up research, in its effort to understand the fundamental value of each stock that has been identified as promising. These efforts include thorough financial statement analysis, discussions with senior management of the companies, as well as coordinated research of the company’s competitors, suppliers and clientele. Fries seeks to uncover companies with promising prospects that are not yet reflected in the price of the stock. Many of the investments made will be contrary to the popular consensus despite industry leadership positions and positive outlooks for earnings per share growth. Ultimately, Fries and his team of analysts attempt to estimate the business value of each company as a going concern. They determine not only an intrinsic value for each stock, but also seek to identify where potential weaknesses may lie, in an attempt to minimize downside risk.

Each of the researched stocks is categorized into one of three pockets of value:

	Basic Value - Stocks of financially sound companies with well established businesses that are selling at low valuations relative to the company’s net assets or potential earning power
	Consistent Earners - Companies with steady earnings and dividend growth that are selling at attractive values and are priced below historical norms
	Emerging Franchises - Value-priced companies in the process of establishing a leading position in a product, service or market that is expected to grow at an above average rate

The dynamics of the companies that fall into each of these categories differ and, therefore, merit specific consideration within the context of that category. For example, Basic Value companies are generally more cyclically oriented than Emerging Franchises and require more thorough analysis of the companies’ product cycles and the historical and prospective impact of the economy on those products. Within the context of each value category, Thornburg’s analysts evaluate and rank the most attractive prospects. Generally, Fries’ segment of the Fund’s portfolio is expected to include stocks from each category, with Basic Value stocks comprising a larger portion of the portfolio than either of the other two categories. Because of the diversification across these categories, Fries’ portfolio will typically be eclectic and not easily categorized as “growth” or “value,” “small-cap” or “large-cap.”

References to other mutual funds should not be deemed an offer to sell or solicitation of an offer to buy shares of such funds.