THOMAS WHITE FUNDS FAMILY
THOMAS WHITE WORLD FUND
440 South LaSalle Street
Chicago, IL 60605-1028
PROSPECTUS
June 28, 1994
as supplemented December 1, 1995
INVESTMENT OBJECTIVE AND POLICIES. The THOMAS WHITE WORLD FUND
(the Fund ) seeks long-term capital growth through a flexible
policy of investing in stocks and debt obligations of companies
and governments of any nation, including underdeveloped
countries. The Fund is a series of LORD ASSET MANAGEMENT TRUST.
PURCHASE OF SHARES. Please complete and return the Account
Application form. If you need assistance in completing this Form,
please call our Account Services Department. The Fund s Shares
may be purchased at a price equal to their net asset value next
computed upon acceptance of the Application. The minimum initial
purchase order is $2500, with subsequent investments of $100 or
more.
PROSPECTUS INFORMATION. This Prospectus sets forth concisely
information about the Fund that a prospective investor ought to
know before investing. Investors are advised to read and retain
this Prospectus for future reference. A Statement of Additional
Information ( SAI ) dated June 28, 1994 and supplemented December
1, 1995 has been filed with the Securities and Exchange
Commission and is incorporated in its entirety by reference in
and made a part of this Prospectus. This SAI is available without
charge upon request to the THOMAS WHITE FUNDS FAMILY, Suite 3900,
440 South LaSalle Street, Chicago, Illinois 60605-1028 - Account
Services Department - telephone 1-800-811-0535, telecopy 1-312-
663-8323.
Shares of the Fund are not deposits or obligations of, or
guaranteed or endorsed by, any bank; further, such shares are not
federally insured by the Federal Deposit Insurance Corporation,
the Federal Reserve Board, or any other agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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TABLE OF CONTENTS
Page
EXPENSE TABLE
SELECTED FINANCIAL INFORMATION
GENERAL DESCRIPTION
Investment Objective and Policies
INVESTMENT TECHNIQUES
Temporary Investments
Repurchase Agreements
Options on Securities or Indices
Forward Foreign Currency Contracts and Options on Foreign
Currencies
Futures Contracts
Brady Bonds
Depositary Receipts
Illiquid and Restricted Securities
Borrowing
Loans of Portfolio Securities
RISK FACTORS
HOW TO BUY SHARES OF THE FUND
Net Asset Value
Account Statements
HOW TO SELL SHARES OF THE FUND
INDIVIDUAL RETIREMENT ACCOUNTS (IRAs)
MANAGEMENT OF THE FUND
Investment Manager
Transfer Agent
Custodian
Brokerage Commissions
GENERAL INFORMATION
Description of Shares/Share Certificates
Meetings of Shareholders
Dividends and Distributions
Federal Tax Information
Inquiries
Performance Information
<PAGE>
EXPENSE TABLE
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases . . . . . . . None
Deferred Sales Charge . . . . . . . . . . . . . . . . None
Redemption Fee (as a percentage of the amount redeemed)
None*
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET
ASSETS)
Management Fees . . . . . . . . . . . . . . . . . . . 1.00%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . None
Other Expenses (audit, legal, shareholder services,
transfer agent and custodian) . . . . . . . . . . . 0.50%
Total Fund Operating Expenses . . . . . . . . . . . . 1.50%
___________________________
* The information in the table does not reflect the charge of up
to $15 per transaction if a Shareholder requests that
redemption proceeds be sent by express mail or wired to a
commercial bank account.
Example
1 Year 3 Years
You would pay the following expenses
on a $l,000 investment assuming (1)
5% annual return and (2) redemption
at the end of each time period: $15 $49
The table is based on estimated expenses for the
current fiscal year and is provided for purposes of
assisting current and prospective Shareholders in
understanding the various costs and expenses that an
investor in the Fund will bear, directly or indirectly. The
5% annual return and annual expenses should not be
considered a representation of actual or expected Fund
performance or expenses, both of which may vary.
SELECTED FINANCIAL INFORMATION
The following table of selected financial information
has been audited by McGladrey & Pullen LLP, independent
certified public accountants, for the period indicated in
their report which is included in the Fund s SAI. It should
be read in conjunction with the other financial statements
and notes thereto included in the Fund s SAI, which contains
further information about the Fund s performance, and which
is available to Shareholders upon request and without
charge.
June 28, 1994
Per Share Operating Performance (commencement
(for a Share outstanding throughout of operations) to
the period) October 31, 1994
Net asset value, beginning of period $10.00
Income from investment operations:
Net investment income 0.06
Net realized and unrealized gain 0.44
Change in net asset value 0.50
Net asset value, end of period $10.50
Total Return* 5.0%
Ratios/supplemental data
Net assets, end of period (000) $13,928
Ratio of expenses to average net assets 2.36%**
Ratio of expenses, net of reimbursement,
to average net assets 1.50%**
Ratio of net investment income to average
net assets 1.79%**
Portfolio turnover rate 0.01%
* Not annualized.
**Annualized
GENERAL DESCRIPTION
LORD ASSET MANAGEMENT TRUST (the Trust ) was organized
as a business trust under the laws of Delaware on February
9, 1994 and is registered under the Investment Company Act
of 1940 (the 1940 Act ) as an open-end diversified
management investment company. The Trust currently has one
series of Shares, which is a mutual fund: the THOMAS WHITE
WORLD FUND (the Fund ).
INVESTMENT OBJECTIVE AND POLICIES. The Fund s
investment objective is long-term capital growth. The Fund
seeks to achieve its objective through a flexible policy of
investing in stocks and debt obligations of companies and
governments of any nation, including underdeveloped
countries. Any income realized will be incidental.
The Fund invests in companies that the Investment
Manager believes will benefit from global economic trends,
promising technologies or products and specific country
opportunities resulting from changing geopolitical, currency
or economic relationships. It is expected that investments
will include companies of varying size as measured by
assets, sales or capitalization. The Fund generally invests
in equity securities of established companies listed on U.S.
or foreign securities exchanges, but also may invest in
securities traded over-the-counter. Although the Fund
generally invests in common stock, the Fund may also invest
in preferred stocks and certain debt securities, rated or
unrated, such as convertible bonds and bonds selling at a
discount, when the Investment Manager believes the potential
for appreciation will equal or exceed that available from
investments in common stock. The Fund may also invest in
warrants or rights to subscribe to or purchase such
securities, and sponsored or unsponsored American Depositary
Receipts ( ADRs ), European Depositary Receipts ( EDRs ) and
Global Depositary Receipts ( GDRs ) (collectively,
Depositary Receipts ). Under normal market conditions, the
Fund will invest its assets in at least three countries, one
of which may be the United States. Whenever, in the judgment
of Lord Asset Management, Inc. (the Investment Manager ),
market or economic conditions warrant, the Fund may adopt a
temporary defensive position and may invest without limit in
money market securities denominated in U.S. dollars or in
the currency of any foreign country. See Investment
Techniques -- Temporary Investments.
The Fund may invest no more than 5% of its total assets
in securities issued by any one company or government,
exclusive of U.S. Government securities. Although the Fund
may invest up to 25% of its total assets in a single
industry, it has no present intention of doing so. The Fund
may not invest more than 5% of its net assets in warrants
(exclusive of amounts acquired in units or attached to
securities) nor more than 15% of its total assets in
securities with a limited trading market. The Fund s
investment objective and the investment restrictions set
forth under Investment Objective and Policies -- Investment
Restrictions in the SAI are fundamental and may not be
changed without Shareholder approval. All other investment
policies and practices described in this Prospectus are not
fundamental, and may be changed by the Board of Trustees
without Shareholder approval. The Fund invests for long-term
growth of capital and does not intend to place emphasis upon
short-term trading profits. Accordingly, the Fund normally
expects to have an annual portfolio turnover rate of less
than 50%.
The Fund may also lend its portfolio securities and
borrow money for investment purposes (i.e., leverage its
portfolio). In addition, the Fund may enter into
transactions in options on securities, securities indices
and foreign currencies, forward foreign currency contracts,
and futures contracts and related options. When deemed
appropriate by the Investment Manager, the Fund may invest
cash balances in repurchase agreements and other money
market investments to maintain liquidity in an amount
sufficient to meet expenses or for day-to-day operating
purposes. These investment techniques are described below
under Investment Techniques and Risk Factors, and under
the heading Investment Objective and Policies in the SAI.
INVESTMENT TECHNIQUES
TEMPORARY INVESTMENTS. For temporary defensive
purposes, subject to the investment restrictions set forth
in the SAI, the Fund may invest up to 100% of its total
assets in the following money market securities, denominated
in U.S. dollars or in the currency of any foreign country,
issued by entities organized in the United States or any
foreign country: short-term (less than twelve months to
maturity) and medium-term (not greater than five years to
maturity) obligations issued or guaranteed by the U.S.
Government or the governments of foreign countries, their
agencies or instrumentalities; finance company and
corporate commercial paper, and other short-term corporate
obligations, in each case rated Prime-1 by Moody s Investors
Service, Inc. ( Moody s ) or A or better by Standard &
Poor s Corporation ( S&P ) or, if unrated, of comparable
quality as determined by the Investment Manager; obligations
(including certificates of deposit, time deposits and
bankers acceptances) of banks; and repurchase agreements
with banks and broker-dealers with respect to such
securities.
REPURCHASE AGREEMENTS. When the Fund acquires a
security from a U.S. bank or a registered broker-dealer, it
may simultaneously enter into a repurchase agreement,
wherein the seller agrees to repurchase the security at a
specified time and price. The repurchase price is in excess
of the purchase price by an amount which reflects an agreed-
upon rate of return, which is not tied to the coupon rate of
the underlying security. Under the 1940 Act, repurchase
agreements are considered to be loans collateralized by the
underlying security and therefore will be fully
collateralized. However, if the seller should default on its
obligation to repurchase the underlying security, the Fund
may experience delay or difficulty in exercising its rights
to realize upon the security and might incur a loss if the
value of the security declines, as well as costs in
liquidating the security.
OPTIONS ON SECURITIES OR INDICES. The Fund may write
(i.e., sell) covered put and call options and purchase put
and call options on securities or securities indices that
are traded on United States and foreign exchanges or in the
over-the-counter markets. An option on a security is a
contract that permits the purchaser of the option, in return
for the premium paid, the right to buy a specified security
(in the case of a call option) or to sell a specified
security (in the case of a put option) from or to the writer
of the option at a designated price during the term of the
option. An option on a securities index permits the
purchaser of the option, in return for the premium paid, the
right to receive from the seller cash equal to the
difference between the closing price of the index and the
exercise price of the option. The Fund may write a put or
call option only if the option is covered. This means
that so long as the Fund is obligated as the writer of a
call option, it will own the underlying securities subject
to the call, or hold a call at the same or lower exercise
price, for the same exercise period, and on the same
securities as the written call. A put is covered if the Fund
maintains liquid high grade assets with a value equal to the
exercise price in a segregated account, or holds a put on
the same underlying securities at an equal or greater
exercise price. The value of the underlying securities and
securities indices on which options may be written at any
one time will not exceed 15% of the total assets of the
Fund. The Fund will not purchase put or call options if the
aggregate premium paid for such options would exceed 5% of
its total assets.
FORWARD FOREIGN CURRENCY CONTRACTS AND OPTIONS ON
FOREIGN CURRENCIES. The Fund will normally conduct its
foreign currency exchange transactions either on a spot
(i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market, or through entering into
forward contracts to purchase or sell foreign currencies.
The Fund will generally not enter into a forward contract
with a term of greater than one year. A forward contract is
an obligation to purchase or sell a specific currency for an
agreed price at a future date which is individually
negotiated and privately traded by currency traders and
their customers.
The Fund will generally enter into forward contracts
only under two circumstances. First, when the Fund enters
into a contract for the purchase or sale of a security
denominated in a foreign currency, it may desire to lock
in the U.S. dollar price of the security in relation to
another currency by entering into a forward contract to buy
the amount of foreign currency needed to settle the
transaction. Second, when the Investment Manager believes
that the currency of a particular foreign country may suffer
or enjoy a substantial movement against another currency, it
may enter into a forward contract to sell or buy the former
foreign currency (or another currency which acts as a proxy
for that currency) approximating the value of some or all of
the Fund s portfolio securities denominated in such foreign
currency. This second investment practice is generally
referred to as cross-hedging. The Fund has no specific
limitation on the percentage of assets it may commit to
forward contracts, subject to its stated investment
objective and policies, except that the Fund will not enter
a forward contract if the amount of assets set aside to
cover forward contracts would impede portfolio management or
the Fund s ability to meet redemption requests. Although
forward contracts will be used primarily to protect the Fund
from adverse currency movements, they also involve the risk
that anticipated currency movements will not be accurately
predicted.
The Fund may purchase put and call options and write
covered put and call options on foreign currencies for the
purpose of protecting against declines in the U.S. dollar
value of foreign currency denominated portfolio securities
and against increases in the U.S. dollar cost of such
securities to be acquired. As in the case of other kinds of
options, however, the writing of an option on a foreign
currency constitutes only a partial hedge, up to the amount
of the premium received, and the Fund could be required to
purchase or sell foreign currencies at disadvantageous
exchange rates, thereby incurring losses. The purchase of an
option on a foreign currency may constitute an effective
hedge against fluctuations in exchange rates although, in
the event of rate movements adverse to the Fund s position,
it may forfeit the entire amount of the premium plus related
transaction costs. Options on foreign currencies to be
written or purchased by the Fund are traded on U.S. and
foreign exchanges or over-the-counter.
FUTURES CONTRACTS. The Fund may buy and sell financial
futures contracts, stock and bond index futures contracts,
foreign currency futures contracts and options on any of the
foregoing for hedging purposes only. A financial futures
contract is an agreement between two parties to buy or sell
a specified debt security at a set price on a future date.
An index futures contract is an agreement to take or make
delivery of an amount of cash based on the difference
between the value of the index at the beginning and at the
end of the contract period. A futures contract on a foreign
currency is an agreement to buy or sell a specified amount
of a currency for a set price on a future date.
When the Fund enters into a futures contract, it must
make an initial deposit, known as initial margin, as a
partial guarantee of its performance under the contract. As
the value of the security, index or currency fluctuates,
either party to the contract is required to make additional
margin payments, known as variation margin, to cover any
additional obligation it may have under the contract. In
addition, when the Fund enters into a futures contract, it
will segregate assets or cover its position in accordance
with the 1940 Act. See Investment Objective and Policies --
Futures Contracts in the SAI. With respect to positions in
futures and related options that do not constitute bona
fide hedging positions as defined in regulations of the
Commodity Futures Trading Commission, the Fund will not
enter into a futures contract or related option contract if,
immediately thereafter, the aggregate initial margin
deposits relating to such positions plus premiums paid by it
for open futures option positions, less the amount by which
any such options are in-the-money, would exceed 5% of the
Fund s total assets. The value of the underlying securities
on which futures contracts will be written at any one time
will not exceed 25% of the total assets of the Fund.
BRADY BONDS. The Fund may invest a portion of its
assets in certain debt obligations customarily referred to
as Brady Bonds, which are created through the exchange of
existing commercial bank loans to sovereign entities for new
obligations in connection with debt restructuring under a
plan introduced by former U.S. Secretary of the Treasury,
Nicholas F. Brady. Brady Bonds have been issued only
recently, and, accordingly, do not have a long payment
history. They may be collateralized or uncollateralized and
issued in various currencies (although most are U.S. dollar-
denominated), and they are actively traded in the over-the-
counter secondary market.
U.S. dollar-denominated, collateralized Brady Bonds,
which may be fixed rate par bonds or floating rate discount
bonds, are generally collateralized in full as to principal
by U.S. Treasury zero coupon bonds which have the same
maturity as the Brady Bonds. Interest payments on these
Brady Bonds generally are collateralized on a one-year or
longer rolling-forward basis by cash or securities in an
amount that, in the case of fixed rate bonds, is equal to at
least one year of interest payments or, in the case of
floating rate bonds, initially is equal to at least one
year s interest payments based on the applicable interest
rate at that time and is adjusted at regular intervals
thereafter. Certain Brady Bonds are entitled to value
recovery payments in certain circumstances, which in effect
constitute supplemental interest payments, but generally are
not collateralized. Brady Bonds are often viewed as having
three or four valuation components: (i) the collateralized
repayment of principal at final maturity; (ii) the
collateralized interest payments; (iii) the uncollateralized
interest payments; and (iv) any uncollateralized repayment
of principal at maturity (these uncollateralized amounts
constitute the residual risk ). In light of the residual
risk of Brady Bonds and, among other factors, the history of
defaults with respect to commercial bank loans by public and
private entities of countries issuing Brady Bonds,
investments in Brady Bonds are considered speculative.
DEPOSITARY RECEIPTS. ADRs are Depositary Receipts
typically used by a U.S. bank or trust company which
evidence ownership of underlying securities issued by a
foreign corporation. EDRs and GDRs are typically issued by
foreign banks or trust companies, although they also may be
issued by U.S. banks or trust companies, and evidence
ownership of underlying securities issued by either a
foreign or a United States corporation. Generally,
Depositary Receipts in registered form are designed for use
in the U.S. securities market and Depositary Receipts in
bearer form are designed for use in securities markets
outside the United States. Depositary Receipts may not
necessarily be denominated in the same currency as the
underlying securities into which they may be converted. In
addition, the issuers of the securities underlying
unsponsored Depositary Receipts are not obligated to
disclose material information in the United States and,
therefore, there may be less information available regarding
such issuers and there may not be a correlation between such
information and the market value of the Depositary Receipts.
Depositary Receipts also involve the risks of other
investments in foreign securities, as discussed below. For
purposes of the Fund s investment policies, the Fund s
investments in Depositary Receipts will be deemed to be
investments in the underlying securities.
ILLIQUID AND RESTRICTED SECURITIES. The Fund may invest
up to 15% of its net assets in illiquid securities, for
which there is a limited trading market and for which a low
trading volume of a particular security may result in abrupt
and erratic price movements. The Fund may be unable to
dispose of its holdings in illiquid securities at then
current market prices and may have to dispose of such
securities over extended periods of time.
The Fund may also invest up to 10% of its total assets
in securities that are subject to contractual or legal
restrictions on subsequent transfer because they were sold
(i) in private placement transactions between their issuers
and their purchasers, or (ii) in transactions between
qualified institutional buyers pursuant to Rule 144A under
the U.S. Securities Act of 1933, as amended. As a result of
the absence of a public trading market, such restricted
securities may be less liquid and more difficult to value
than publicly traded securities. Although restricted
securities may be resold in privately negotiated
transactions, the prices realized from the sales could, due
to illiquidity, be less than those originally paid by the
Fund or less than their fair value. In addition, issuers
whose securities are not publicly traded may not be subject
to the disclosure and other investor protection requirements
that may be applicable if their securities were publicly
traded. If any privately placed or Rule 144A securities held
by the Fund are required to be registered under the
securities laws of one or more jurisdictions before being
resold, the Fund may be required to bear the expenses of
registration. Investment in Rule 144A securities could have
the effect of increasing the level of the Fund s illiquidity
to the extent that qualified institutional buyers become,
for a time, uninterested in purchasing such securities. Rule
144A securities determined by the Board of Trustees to be
liquid are not subject to the 15% limitation on investments
in illiquid securities.
BORROWING. The Fund may borrow up to one-third of the
value of its total assets from banks to increase its
holdings of portfolio securities. Under the 1940 Act, the
Fund is required to maintain continuous asset coverage of
300% with respect to such borrowings and to sell (within
three days) sufficient portfolio holdings to restore such
coverage if its value should decline to less than 300% due
to market fluctuations or otherwise, even if such
liquidations of the Fund s holdings may be disadvantageous
from an investment standpoint. Leveraging by means of
borrowing generally will exaggerate the effect of any
increase or decrease in the value of portfolio securities on
the Fund s net asset value, and money borrowed will be
subject to interest and other costs (which may include
commitment fees and/or the cost of maintaining minimum
average balances) which may or may not exceed the income
received from the securities purchased with borrowed funds.
Leveraging by means of borrowing is considered to be a
speculative investment technique.
LOANS OF PORTFOLIO SECURITIES. The Fund may lend to
banks and broker-dealers portfolio securities with an
aggregate market value of up to one-third of its total
assets. Such loans must be secured by collateral (consisting
of any combination of cash, U.S. Government securities or
irrevocable letters of credit) in an amount at least equal
(on a daily marked-to-market basis) to the current market
value of the securities loaned. The Fund may terminate the
loans at any time and obtain the return of the securities
loaned within five business days. The Fund will continue to
receive any interest or dividends paid on the loaned
securities and will continue to retain any voting rights
with respect to the securities. In the event that the
borrower defaults on its obligation to return borrowed
securities, because of insolvency or otherwise, the Fund
could experience delays and costs in gaining access to the
collateral and could suffer a loss to the extent that the
value of the collateral falls below the market value of the
borrowed securities.
RISK FACTORS
Shareholders should understand that all investments
involve risk and there can be no guarantee against loss
resulting from an investment in the Fund, nor can there be
any assurance that the Fund s investment objective will be
attained. As with any investment in securities, the value
of, and income from, an investment in the Fund can decrease
as well as increase, depending on a variety of factors which
may affect the values and income generated by the Fund s
portfolio securities, including general economic conditions,
market factors and currency exchange rates. Additionally,
investment decisions made by the Investment Manager will not
always be profitable or prove to have been correct. The Fund
is not intended as a complete investment program.
Successful use of futures contracts and related options
is subject to certain special risk considerations. A liquid
secondary market for any futures or option contract may not
be available when the Fund seeks to close a futures or
option position. In addition, there may be an imperfect
correlation between movements in the securities or foreign
currency on which the futures or option contract is based
and movements in the securities or currency in the Fund s
portfolio. Successful use of futures and options contracts
is further dependent on the Investment Manager s ability to
predict correctly movements in the direction of the
securities or foreign currency markets and no assurance can
be given that its judgment in this respect will be correct.
Successful use of options on securities or securities
indices is subject to similar risk considerations. In
addition, by writing covered call options, the Fund gives up
the opportunity, while the option is in effect, to profit
from any price increase in the underlying security above the
option exercise price.
The Fund has the right to purchase securities in any
foreign country, developed or underdeveloped. Investors
should consider carefully the substantial risks involved in
investing in securities issued by companies and governments
of foreign nations, which are in addition to the usual risks
inherent in domestic investments. There is the possibility
of expropriation, nationalization or confiscatory taxation,
taxation of income earned in foreign nations or other taxes
imposed with respect to investments in foreign nations,
foreign exchange controls (which may include suspension of
the ability to transfer currency from a given country),
default in foreign government securities, political or
social instability or diplomatic developments which could
affect investments in securities of issuers in foreign
nations. Some countries may withhold portions of interest
and dividends at the source. In addition, in many countries
there is less publicly available information about issuers
than is available in reports about companies in the United
States. Foreign companies are not generally subject to
uniform accounting, auditing and financial reporting
standards, and auditing practices and requirements may not
be comparable to those applicable to United States
companies. Further, the Fund may encounter difficulties or
be unable to pursue legal remedies and obtain judgments in
foreign courts. Commission rates in foreign countries, which
are sometimes fixed rather than subject to negotiation as in
the United States, are likely to be higher. Further, the
settlement period of securities transactions in foreign
markets may be longer than in domestic markets, which may
affect the timing of the Fund s receipt of proceeds from its
portfolio securities transactions. In many foreign
countries, there is less government supervision and
regulation of business and industry practices, stock
exchanges, brokers and listed companies than in the United
States. The foreign securities markets of many of the
countries in which the Fund may invest may also be smaller,
less liquid, and subject to greater price volatility than
those in the United States.
Investments in companies domiciled in developing
countries may be subject to potentially higher risks than
investments in developed countries. These risks include (i)
less social, political and economic stability; (ii) the
small current size of the markets for such securities and
the currently low or nonexistent volume of trading, which
result in a lack of liquidity and in greater price
volatility; (iii) certain national policies which may
restrict the Fund s investment opportunities, including
restrictions on investment in issuers or industries deemed
sensitive to national interests; (iv) foreign taxation; (v)
the absence of developed legal structures governing private
or foreign investment or allowing for judicial redress for
injury to private property; (vi) the absence, until recently
in certain Eastern European countries, of a capital market
structure or market-oriented economy; and (vii) the
possibility that recent favorable economic developments in
Eastern Europe may be slowed or reversed by unanticipated
political or social events in such countries.
Investments in Eastern European countries may involve
risks of nationalization, expropriation and confiscatory
taxation. The communist governments of a number of Eastern
European countries expropriated large amounts of private
property in the past, in many cases without adequate
compensation, and there can be no assurance that such
expropriation will not occur in the future. In the event of
such expropriation, the Fund could lose a substantial
portion of any investments it has made in the affected
countries. Further, no accounting standards exist in Eastern
European countries. Finally, even though certain Eastern
European currencies may be convertible into United States
dollars, the conversion rates may be artificial to the
actual market values and may be adverse to the Fund s
Shareholders.
The Fund is authorized to invest in medium quality or
high risk, lower quality debt securities that are rated in
any rating category by S&P or by Moody s, or which are not
rated by S&P or Moody s. As an operating policy, which may
be changed by the Board of Trustees without Shareholder
approval, the Fund will not invest or hold more than 5% of
its net assets in debt securities rated BBB or lower by S&P
or Baa or lower by Moody s or, if unrated, are of equivalent
investment quality as determined by the Investment Manager.
The Board may consider a change in this operating policy if,
in its judgment economic conditions change such that a
higher level of investment in high risk, lower quality debt
securities would be consistent with the interests of the
Fund and its Shareholders. High risk, lower quality debt
securities, commonly referred to as junk bonds, are
regarded, on balance, as predominantly speculative with
respect to the issuer s capacity to pay interest and repay
principal in accordance with the terms of the obligation and
may be in default. Unrated debt securities are not
necessarily of lower quality than rated securities but they
may not be attractive to as many buyers. Regardless of
rating levels, all debt securities considered for purchase
(whether rated or unrated) will be carefully analyzed by the
Investment Manager to insure, to the extent possible, that
the planned investment is sound. The Fund may, from time to
time, purchase defaulted debt securities if, in the opinion
of the Investment Manager, the issuer may resume interest
payments in the near future.
The Fund usually effects currency exchange transactions
on a spot (i.e., cash) basis at the spot rate prevailing in
the foreign exchange market. However, some price spread on
currency exchange (to cover service charges) will be
incurred when the Fund converts assets from one currency to
another.
There are further risk considerations, including
possible losses through the holding of securities in
domestic and foreign custodial banks and depositories,
described in the SAI.
HOW TO BUY SHARES OF THE FUND
Shares of the Fund may be purchased from the Fund at
the offering price, which is the net asset value of the Fund
as next determined upon receipt, and acceptance after
determination to be in good form, by the Fund of a completed
Account Application Form and check. The minimum initial
purchase order is $2,500, with subsequent investments of
$100 or more. The Fund has the right to reject any
application. Completed applications should be mailed
directly to THOMAS WHITE FORLD FUND, c/o Firstar Trust
Company, P.O. Box 701, Milwaukee, WI 53201-0701. To purchase
shares by overnight or express mail, please use the
following street address: THOMAS WHITE WORLD FUND,
Shareholder Services Center, 3rd Floor, 615 East Michigan
Street, Milwaukee, WI 53202.
Investors may also invest in the Fund by direct wire
transfer. The establishment of a new account or any
additional purchases by wire transfer should be preceded by
a telephone call to Firstar Trust Company (the "Transfer
Agent") at 1-800-811-0535. The investor will be asked to
provide his name, address, social security or tax
identification number, the amount of his investment and the
name and address of the bank that will be wiring the
investment. Funds should be wired through the Federal
Reserve System as follows:
Firstar Bank Milwaukee, N.A.
ABA Number 0750-00022
Trust Funds, Account Number 112-952-137
For further credit to Thomas White World Fund
(investment account number)
(name or account registration)
If an Investor purchases his initial Shares by wire,
the Investor must prepare and file a Purchase Application,
marked follow-up, with the Transfer Agent. The Transfer
Agent must receive the Purchase Application before any of
the Shares purchased can be redeemed.
Investors can purchase additional Shares by telephone.
Telephone transactions may not be used for initial
purchases. Only bank accounts held at domestic institutions
that are Automated Clearing House ( ACH ) members can be
used for telephone transactions. Shares will be purchased at
the net asset value determined as of the close of regular
trading on the date the Transfer Agent receives payment for
Shares purchased by electronic funds transfer through the
ACH system. Most transfers are completed within three
business days after a call to place an order.
Shares of the Fund may be purchased or sold through
certain broker-dealers, financial institutions or other
service providers ( Processing Intermediaries ). When Shares
of the Fund are purchased in this manner, the Processing
Intermediary, rather than its customer, may be the
Shareholder of record of the Shares. Processing
intermediaries may use procedures and impose restrictions in
addition to or different from those applicable to
Shareholders who invest directly in the Fund.
At the discretion of the Fund, investors may be
permitted to purchase Fund Shares by transferring securities
to the Fund that meet the Fund s investment objective and
policies. Securities transferred to the Fund will be valued
in accordance with the same procedures used to determine the
Fund s net asset value at the time of the next determination
of net asset value after such acceptance. Shares issued by
the Fund in exchange for securities will be issued at net
asset value determined as of the same time. All dividends,
interest, subscription, or other rights pertaining to such
securities shall become the property of the Fund and must be
delivered to the Fund by the investor upon receipt from the
issuer. Investors who are permitted to transfer such
securities will be required to recognize a gain or loss on
such transfer, and pay tax thereon, if applicable, measured
by the difference between the fair market value of the
securities and investor s basis therein. Securities will not
be accepted in exchange for shares of the Fund unless: (1)
such securities are, at the time of the exchange, eligible
to be included in the Fund and current market quotations are
readily available for such securities; (2) the investor
represents and warrants that all securities offered to be
exchanged are not subject to any restrictions upon their
sale by the Fund under the Securities Act of 1933 or under
the laws of the country in which the principal market for
such securities exists, or otherwise; and (3) the value of
any such security (except U.S. government securities) being
exchanged together with other securities of the same issuer
owned by the Fund, will not exceed 5% of the Fund s net
assets immediately after the transaction.
NET ASSET VALUE. The net asset value of the Shares of
the Fund is computed as of the close of trading on each day
the New York Stock Exchange is open for trading, by dividing
the value of the Fund s securities plus any cash and other
assets (including accrued interest and dividends receivable)
less all liabilities (including accrued expenses) by the
number of shares outstanding, adjusted to the nearest whole
cent. A security listed or traded on a recognized stock
exchange or NASDAQ, is valued at its last sale price on the
principal exchange on which the security is traded. The
value of a foreign security is determined in its national
currency as of the close of trading on the foreign exchange
on which it is traded or as of 4:00 p.m., New York time, if
that is earlier and that value is then converted into its
U.S. dollar equivalent at the foreign exchange rate in
effect at noon, New York time, on the day the value of the
foreign security is determined. If no sale is reported at
that time, the mean between the current bid and asked price
is used. Occasionally, events which affect the values of
such securities and such exchange rates may occur between
the times at which they are determined and the close of the
New York Stock Exchange, and will therefore not be reflected
in the computation of the Fund s net asset value. If events
materially affecting the value of such securities occur
during such period, then these securities will be valued at
fair value as determined by the management using methods
approved by the Board of Trustees and subsequently ratified
in good faith by the Board of Trustees. All other securities
for which over-the-counter market quotations are readily
available are valued at the mean between the current bid and
asked price. Securities for which market quotations are not
readily available and other assets are valued at fair value
as determined by the management using methods approved by
the Board of Trustees and subsequently ratified in good
faith by the Board of Trustees.
ACCOUNT STATEMENTS. Shareholder accounts are opened in
accordance with the Shareholder s registration instructions.
Transactions in the account, such as additional investments
and dividend reinvestments, will be reflected on regular
confirmation statements from the Fund.
HOW TO SELL SHARES OF THE FUND
Shares will be redeemed, without charge, on request of
the Shareholder in Proper Order to the Fund. "Proper
Order" means that the request to redeem must meet all the
following requirements:
1. It must be in writing, signed by the
Shareholder(s) exactly in the manner as the Shares are
registered, and must specify either the number of Shares, or
the dollar amount of Shares, to be redeemed and sent to the
THOMAS WHITE WORLD FUND, c/o Firstar Trust Company, P.O. Box
701, Milwaukee, WI 53201-0701;
2. The signature(s) of the redeeming Shareholder(s)
must be guaranteed by an eligible guarantor, including (1)
national or state banks, savings associations, savings and
loan associations, trust companies, savings banks,
industrial loan companies and credit unions; (2) national
securities exchanges, registered securities associations and
clearing agencies; (3) securities broker-dealers which are
members of a national securities exchange or a clearing
agency or which have minimum net capital of $100,000; or (4)
institutions that participate in the Securities Transfer
Agent Medallion Program ( STAMP ) or other recognized
signature medallion program. A notarized signature will not
be sufficient for the request to be in Proper Order. If the
Shares are registered in more than one name, the signature
of each of the redeeming Shareholders must be guaranteed. A
signature guarantee is not required for redemptions of
$25,000 or less, requested by and payable to all
Shareholders of record, to be sent to the address of record
for that account. However, the Fund reserves the right to
require signature guarantees on all redemptions. A signature
guarantee is also required in connection with any redemption
if the Fund has, within the 30-day period prior to receipt
of the redemption request, received instructions to change
the Shareholder s address of record;
3. Any outstanding certificates must accompany the
request together with a stock power signed by the
Shareholder(s), with signature(s) guaranteed as described in
Item 2 above; and
4. If the Shares being redeemed are registered in the
name of an estate, trust, custodian, guardian, retirement
plan or the like, or in the name of a corporation or
partnership, documents also must be included which, in the
judgment of the Fund, are sufficient to establish the
authority of the person(s) signing the request, and/or as
may be required by applicable laws or regulations, with
signature(s) guaranteed as described in Item 2 above.
Shares of the Fund may also be redeemed by calling the
Transfer Agent at 1-800-811-0535. To use this procedure, a
Shareholder must have elected this option on his account
application, which will be reflected in the records of the
Transfer Agent. The redemption proceeds must be mailed
directly to the investor or transmitted to the investor s
pre-authorized account at a domestic bank. To change the
designated account or address, a written request with
signature(s) guaranteed must be sent to the Transfer Agent.
Once made, telephone redemption requests cannot be modified
or canceled.
The Fund reserves the right to refuse a telephone
redemption if it is believed advisable to do so. Procedures
for redeeming Fund Shares by telephone may be modified or
terminated by the Fund at any time. In an effort to prevent
unauthorized or fraudulent redemption requests by telephone,
the Fund and the Transfer Agent have implemented procedures
designed to reasonably assure that telephone instructions
are genuine. These procedures include requesting
verification of various pieces of personal information,
recording telephone transactions, confirming transactions in
writing and restricting transmittal of redemption to pre-
authorized designations. Assuming that procedures such as
the above have been followed, the Fund will not be liable
for any loss, cost, or expense for acting upon an investor s
telephone redemption. As a result of this policy, the
investor will bear the risk of any loss unless the Fund
failed to follow such procedures.
To avoid delay in redemption or transfer, Shareholders
having questions about these requirements should contact the
Account Services Department by calling 1-800-811-0535.
The redemption price will be the net asset value of the
Shares next computed after the redemption request in Proper
Order is received by the Fund. Payment of the redemption
price ordinarily will be made by check (or by wire at the
sole discretion of the Fund if wire transfer is requested
including name and address of the bank and the Shareholder s
account number to which payment of the redemption proceeds
is to be wired) within seven days after receipt of the
redemption request in Proper Order. However, if Shares have
been purchased by check, the Fund will make redemption
proceeds available when a Shareholder s check received for
the Shares purchased has been cleared for payment by the
Shareholder s bank, which, depending upon the location of
the Shareholder s bank, could take up to fifteen days from
the purchase date. The check will be mailed by first class
mail to the Shareholder s registered address (or as
otherwise directed). Remittance by wire (to a commercial
bank account in the same name(s) as the Shares are
registered that has been in existence for more than six
months) or express mail if requested, will be at a charge of
up to $15, which will be deducted from the redemption
proceeds.
The Fund may involuntarily redeem an investor s Shares
if the net asset value of such Shares is less than $2500
provided that involuntary redemptions will not result from
fluctuations in the value of an investor s Shares. An
investor who makes the minimum initial purchase of $2500 may
not redeem any portion of the investment without subjecting
the balance to involuntary redemption if the net asset value
of the investor s remaining Shares is less than $2500
following the redemption. In addition, the Fund may
involuntarily redeem the Shares of any investor who has
failed to provide the Fund with a certified taxpayer
identification number or such other tax-related
certifications as the Fund may require. A notice of
redemption, sent by first-class mail to the investor s
address of record, will fix a date not less than 30 days
after the mailing date and Shares will be redeemed at net
asset value at the close of business on that date, unless
sufficient additional Shares are purchased to bring the
aggregate account value up to $2500 or more, or unless a
certified taxpayer identification number (or such other
information as the Fund has requested) has been provided, as
the case may be. A check for the redemption proceeds will be
mailed to the investor at the address of record.
INDIVIDUAL RETIREMENT ACCOUNTS ( IRAs )
An individual investor can select the Shares of the
THOMAS WHITE WORLD FUND to fund either an IRA, a rollover
IRA or a non-working spousal IRA. To establish an IRA,
please complete the IRA Application, and if the assets are
being moved from an existing IRA, please complete the IRA
Transfer Form. Application forms, as well as descriptions of
applicable service fees and certain limitations on
contributions and withdrawals, are available from the Fund
or the Transfer Agent upon request.
The Fund's minimum initial investment for an IRA is
$1,500 ($250 for spousal IRAs). The minimum subsequent
investment in each case is $100. Under the Internal Revenue
Code of 1986, as amended (the Code ), individuals may make
wholly or partly tax-deductible contributions up to $2,000
annually, depending on whether they are active participants
in an employer-sponsored retirement plan and on their income
level. An individual with a non-working spouse may establish
a separate IRA for the spouse under the same conditions
provided that no more than $2,000 may be contributed to the
IRA of either spouse. Earnings on investments held in an IRA
are not taxed until withdrawal.
Because a retirement program involves commitments
covering future years, it is important that the investment
objective of the Fund is consistent with your own retirement
objectives. Premature withdrawals from a retirement plan
will result in adverse tax consequences. Consultation with a
competent financial and tax adviser is recommended.
MANAGEMENT OF THE FUND
The Board of Trustees of the Trust has overall
responsibility for the conduct of the affairs of the Fund
and the Trust. The Trustees serve indefinite terms of
unlimited duration. The Trustees appoint their own
successors, provided that at least two-thirds of the
Trustees, after such appointment, have been elected by
Shareholders. Shareholders may remove a Trustee upon the
vote of two-thirds of the Trust s outstanding Shares. A
Trustee may be removed upon the written declaration of two-
thirds of the Trustees. Information relating to the Trustees
is set forth under the heading Management of the Trust in
the SAI.
INVESTMENT MANAGER. The Investment Manager of the Fund
is LORD ASSET MANAGEMENT, INC., Chicago, Illinois, a
registered investment adviser under the Investment Advisers
Act of 1940.
The Investment Manager furnishes the Fund with
investment research, advice and supervision. The Investment
Manager may, but is not required to, furnish some overhead
items and facilities for the Fund. As compensation for its
services, the Fund pays the Investment Manager a monthly fee
at the rate of 1.00% annually of the Fund s average daily
net assets. This fee is higher than advisory fees paid by
most other U.S. investment companies, primarily because
investing in securities of companies in foreign markets,
many of which are not widely followed by professional
analysts, requires the Investment Manager to invest
additional time and incur added expense in developing
specialized resources, including research facilities. The
Fund also pays its own operating expenses, including: (1)
the fees and expenses of the Trust s Independent Trustees;
(2) interest expenses; (3) taxes and governmental fees; (4)
brokerage commissions and other expenses incurred in
acquiring or disposing of portfolio securities; (5) the
expenses of registering and qualifying its Shares for sale
with the Securities and Exchange Commission ( SEC ) and with
various state securities commissions; (6) expenses of its
independent public accountants and legal counsel; (7)
insurance premiums; (8) fees and expenses of the Custodian
and any related services; (9) expenses of obtaining
quotations of portfolio securities and of pricing Shares;
(10) expenses of maintaining the Trust s legal existence and
of Shareholders meetings; (11) expenses of preparation and
distribution to existing Shareholders of periodic reports,
proxy material and prospectuses; and (12) fees and expenses
of membership in industry organizations.
The Investment Manager serves as adviser for a wide
variety of public and private clients in several nations.
The Investment Manager provides investment management and
advisory services to both an on- and off-shore client base,
including trusts, endowments, employee benefit plans and
individuals. Mr. Thomas S. White, Jr., the Fund s lead
portfolio manager and Chairman of the Investment Manager,
has been managing investments over the past 28 years. Mr.
White founded the Investment Manager in June, 1992. Before
that he was Managing Director and Chief Investment Officer
of The Chicago Group of Morgan Stanley Asset Management,
which he founded in 1982. Further information concerning the
Investment Manager is included under the heading Investment
Management and Other Services in the SAI.
TRANSFER AGENT. Firstar Trust Company, 615 East
Michigan Street, Milwaukee, WI 53202, serves as Transfer
Agent and monitors compliance with state "Blue Sky" laws.
CUSTODIAN. The Chase Manhattan Bank, N.A. serves as
custodian of the Fund s assets.
BROKERAGE COMMISSIONS. The Fund s brokerage policies
are described under the heading Brokerage Allocation in
the SAI. The Fund s brokerage policies provide that the
receipt of research services from a broker and the sale of
Shares by a broker are factors which may be taken into
account in allocating securities transactions, so long as
the prices and execution provided by the broker equal the
best available within the scope of the Fund s brokerage
policies.
GENERAL INFORMATION
DESCRIPTION OF SHARES/SHARE CERTIFICATES. The
capitalization of the Trust consists of an unlimited number
of Shares of beneficial interest, par value $0.01 per Share.
The Board of Trustees is authorized, in its discretion, to
classify and allocate the unissued Shares of the Trust in an
unlimited number of separate series and may in the future
divide existing series into two or more classes. Each Share
entitles the holder to one vote.
The Fund will not ordinarily issue certificates for
Shares purchased. Share certificates representing the whole
(not fractional) Shares are issued only upon the specific
request of the Shareholder made in writing to the Fund. No
charge is made for the issuance of one certificate for all
or some of the Shares purchased in a single order.
MEETINGS OF SHAREHOLDERS. Each share is entitled to one
vote on each matter presented to Shareholders. The Trust is
not required to hold annual Shareholder meetings and may
elect not to do so. Presently, the Trust does not intend to
hold annual Shareholder meetings. The Trust will call a
special meeting of Shareholders for the purpose of
considering the removal of a person serving as Trustee when
requested to do so by Shareholders holding at least 10% of
the Trust s outstanding Shares. In addition, the Trust is
required to assist Shareholder communications in connection
with the calling of Shareholder meetings to consider removal
of a Trustee or Trustees.
DIVIDENDS AND DISTRIBUTIONS. Each share of the Fund is
entitled to participate pro rata in any dividends and other
distributions declared by the board of Trustees with respect
to the Fund, and all shares of a series have equal rights in
the event of liquidation of that series.
Dividends and capital gain distributions (if any) are
usually paid in December representing all or substantially
all of the Fund s net investment income and net realized
capital gains. Income dividends and capital gain
distributions paid by the Fund, other than on those Shares
whose owners keep them registered in the name of a broker-
dealer, are automatically reinvested in whole or fractional
Shares of the Fund at net asset value as of the ex-dividend
date, unless a shareholder makes a written request for
payments in cash. Income dividends and capital gain
distributions will be paid in cash on Shares during the time
that their owners keep them registered in the name of a
broker-dealer, unless the broker-dealer has made
arrangements with the Fund for reinvestment.
Prior to purchasing Shares of the Fund, the impact of
dividends or capital gain distributions which have been
declared but not yet paid should be carefully considered.
Any dividend or capital gain distribution paid shortly after
a purchase by a Shareholder prior to the record date will
have the effect of reducing the per Share net asset value of
the Shares by the amount of the dividend or distribution.
All or a portion of such dividend or distribution, although
in effect a return of capital, generally will be subject to
tax.
Checks are forwarded by first class mail to the address
of record. The proceeds of any such checks which are not
accepted by the addressee and returned to the Fund will be
reinvested for the Shareholder s account in whole or
fractional Shares at net asset value next computed after the
check has been received by the Fund. Subsequent
distributions automatically will be reinvested at net asset
value as of the ex-dividend date in additional whole or
fractional Shares.
FEDERAL TAX INFORMATION. The Fund intends to elect to
be treated and to qualify each year as a regulated
investment company under Subchapter M of the Code. See the
SAI for a summary of the requirements that must be satisfied
to so qualify. A regulated investment company generally is
not subject to Federal income tax on income and gains
distributed in a timely manner to its shareholders. The Fund
intends to distribute to Shareholders substantially all of
its net investment income and realized capital gains, which
generally, will be taxable income or capital gains in their
hands. Distributions declared in October, November or
December to Shareholders of record on a date in such month
and paid during the following January will be treated as
having been received by Shareholders on December 31 in the
year such distributions were declared. The Fund will inform
Shareholders each year of the amount and nature of such
income or gains. A more detailed description of tax
consequences to Shareholders is contained in the SAI under
the heading Tax Status.
The Fund may be required to withhold Federal income tax
at the rate of 31% of all taxable distributions (including
redemptions) paid to Shareholders who fail to provide the
Fund with their correct taxpayer identification number or to
make required certifications or where the Fund or the
Shareholder has been notified by the Internal Revenue
Service that the Shareholder is subject to backup
withholding. Corporate Shareholders and certain other
Shareholders specified in the Code are exempt from backup
withholding. Backup withholding is not an additional tax.
Any amounts withheld may be credited against the
Shareholder s Federal income tax liability.
INQUIRIES. Shareholders inquiries will be answered
promptly. They should be addressed to the THOMAS WHITE WORLD
FUND, c/o Firstar Trust Company, P.O. Box 701, Milwaukee, WI
53201-0701- telephone 1-800-811-0535, telecopy (312) 663-
8323.
Transcripts of Shareholder accounts less than three
years old are provided on request without charge; a fee of
$15 per account is charged for transcripts going back more
than three years from the date the request is received by
the Fund.
PERFORMANCE INFORMATION. The Fund may include its total
return in advertisements or reports to Shareholders or
prospective investors. Quotations of average annual total
return will be expressed in terms of the average annual
compounded rate of return on a hypothetical investment in
the Fund over a period of 1, 5 and 10 years (or up to the
life of the Fund), will reflect the deduction of a
proportional share of Fund expenses (on an annual basis),
and will assume that all dividends and distributions are
reinvested when paid. Total return may be expressed in terms
of the cumulative value of an investment in the Fund at the
end of a defined period of time. For a description of the
methods used to determine total return for the Fund, see the
SAI.
<PAGE>
THOMAS WHITE FUNDS FAMILY
THIS STATEMENT OF ADDITIONAL INFORMATION DATED
JUNE 28, 1994 AND SUPPLEMENTED DECEMBER 1, 1995
IS NOT A PROSPECTUS. IT SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS OF THE
THOMAS WHITE WORLD FUND DATED JUNE 28, 1994 AND
SUPPLEMENTED DECEMBER 1, 1995, WHICH MAY BE OBTAINED
WITHOUT CHARGE UPON REQUEST TO
THE THOMAS WHITE FUNDS FAMILY
440 SOUTH LASALLE STREET, SUITE 3900
CHICAGO, ILLINOIS 60605-1028
TELEPHONE: 1-800-811-0535
TELECOPY: (312) 663-8323
TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY
INVESTMENT OBJECTIVES AND POLICIES
Investment Policies
Repurchase Agreements
Loans of Portfolio Securities
Debt Securities
Futures Contracts
Options on Securities, Indices and Futures
Foreign Currency Hedging Transactions
Investment Restrictions
Additional Restrictions
Risk Factors
Trading Policies
MANAGEMENT OF THE TRUST
PRINCIPAL SHAREHOLDERS
INVESTMENT MANAGEMENT AND OTHER SERVICES
Investment Management Agreement
Management Fees
Transfer Agent
The Investment Manager
Custodian
Legal Counsel
Independent Accountants
Reports to Shareholders
BROKERAGE ALLOCATION
PURCHASE, REDEMPTION AND PRICING OF SHARES
TAX STATUS
DESCRIPTION OF SHARES
PERFORMANCE INFORMATION
FINANCIAL STATEMENTS
<PAGE>
GENERAL INFORMATION AND HISTORY
After organizing as a business trust under the laws of
Delaware as LORD ASSET MANAGEMENT TRUST (the Trust ) and
registering under the Investment Company Act of 1940 (the 1940
Act ), the Trust commenced business as an investment company on
June 28, 1994 with one series of Shares: THE THOMAS WHITE WORLD
FUND (the Fund ).
INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT POLICIES. The investment objective and policies
of the Fund are described in the Fund s Prospectus under the
heading General Description--Investment Objective and Policies.
REPURCHASE AGREEMENTS. Repurchase agreements are contracts
under which the buyer of a security simultaneously commits to
resell the security to the seller at an agreed-upon price and
date. Under a repurchase agreement, the seller is required to
maintain the value of the securities subject to the repurchase
agreement at not less than their repurchase price. LORD ASSET
MANAGEMENT INC. (the Investment Manager ) will monitor the value
of such securities daily to determine that the value equals or
exceeds the repurchase price. Repurchase agreements may involve
risks in the event of default or insolvency of the seller,
including possible delays or restrictions upon a Fund s ability
to dispose of the underlying securities. The Fund will enter into
repurchase agreements only with parties who meet creditworthiness
standards approved by the Board of Trustees, i.e., banks or
broker-dealers which have been determined by the Investment
Manager to present no serious risk of becoming involved in
bankruptcy proceedings within the time frame contemplated by the
repurchase transaction.
LOANS OF PORTFOLIO SECURITIES. The Fund may lend to banks
and broker-dealers portfolio securities with an aggregate market
value of up to one-third of its total assets. Such loans must be
secured by collateral (consisting of any combination of cash,
U.S. Government securities or irrevocable letters of credit) in
an amount at least equal (on a daily marked-to-market basis) to
the current market value of the securities loaned. The Fund
retains all or a portion of the interest received on investment
of the cash collateral or receives a fee from the borrower. The
Fund may terminate the loans at any time and obtain the return of
the securities loaned within five business days. The Fund will
continue to receive any interest or dividends paid on the loaned
securities and will continue to have voting rights with respect
to the securities. However, as with other extensions of credit,
there are risks of delay in recovery or even loss of rights in
collateral should the borrower fail.
DEBT SECURITIES. The Fund may invest in debt securities
which are rated in any rating category by Moody s Investors
Service, Inc. ( Moody s ) or by Standard & Poor s Corporation
( S&P") or which are not rated by Moody s or S&P. As an operating
policy, the Fund will not invest or hold more than 5% of its net
assets in debt securities rated Baa or lower by Moody s or BBB or
lower by S&P or, if unrated, are of equivalent investment quality
as determined by the Investment Manager. The market value of debt
securities generally varies in response to changes in interest
rates and the financial condition of each issuer. During periods
of declining interest rates, the value of debt securities
generally increases. Conversely, during periods of rising
interest rates, the value of such securities generally declines.
These changes in market value will be reflected in the Fund s net
asset value.
Although they may offer higher yields than do higher rated
securities, low rated and unrated debt securities generally
involve greater volatility of price and risk of principal and
income, including the possibility of default by, or bankruptcy
of, the issuers of the securities. In addition, the markets in
which low rated and unrated debt securities are traded are more
limited than those in which higher rated securities are traded.
The existence of limited markets for particular securities may
diminish the Fund s ability to sell the securities at fair value
either to meet redemption requests or to respond to changes in
the economy or in the financial markets and could adversely
affect and cause fluctuations in the daily net asset value of the
Fund s Shares.
Adverse publicity and investor perceptions, whether or not
based on fundamental analysis, may decrease the values and
liquidity of low rated debt securities, especially in a thinly
traded market. Analysis of the creditworthiness of issuers of low
rated debt securities may be more complex than for issuers of
higher rated securities, and the ability of the Fund to achieve
its investment objective may, to the extent of investment in low
rated debt securities, be more dependent upon such
creditworthiness analysis than would be the case if the Fund were
investing in higher rated securities.
Low rated debt securities may be more susceptible to real or
perceived adverse economic and competitive industry conditions
than investment grade securities. The prices of low rated debt
securities have been found to be less sensitive to interest rate
changes than higher rated investments, but more sensitive to
adverse economic downturns or individual corporate developments.
A projection of an economic downturn or of a period of rising
interest rates, for example, could cause a decline in low rated
debt securities prices because the advent of a recession could
lessen the ability of a highly leveraged company to make
principal and interest payments on its debt securities. If the
issuer of low rated debt securities defaults, a Fund may incur
additional expenses to seek recovery. The low rated bond market
is relatively new, and many of the outstanding low rated bonds
have not endured a major business recession.
The Fund may accrue and report interest on high yield bonds
structured as zero coupon bonds or pay-in-kind securities as
income even though it receives no cash interest until the
security s maturity or payment date. In order to qualify for
beneficial tax treatment afforded regulated investment companies,
the Fund must distribute substantially all of its net income to
Shareholders (see Tax Status ). Thus, the Fund may have to
dispose of its portfolio securities under disadvantageous
circumstances to generate cash in order to satisfy the
distribution requirement.
Recent legislation, which requires federally-insured savings
and loan associations to divest their investments in low rated
debt securities, may have a material adverse effect on the Fund s
net asset values and investment practices.
FUTURES CONTRACTS. The Fund may purchase and sell financial
futures contracts. Although some financial futures contracts call
for making or taking delivery of the underlying securities, in
most cases these obligations are closed out before the settlement
date. The closing of a contractual obligation is accomplished by
purchasing or selling an identical offsetting futures contract.
Other financial futures contracts by their terms call for cash
settlements.
The Fund may also buy and sell index futures contracts with
respect to any stock or bond index traded on a recognized stock
exchange or board of trade. An index futures contract is a
contract to buy or sell units of an index at a specified future
date at a price agreed upon when the contract is made. The index
futures contract specifies that no delivery of the actual
securities making up the index will take place. Instead,
settlement in cash must occur upon the termination of the
contract, with the settlement being the difference between the
contract price and the actual level of the index at the
expiration of the contract.
At the time the Fund purchases a futures contract, an amount
of cash, U.S. Government securities, or other highly liquid, high
grade debt securities equal to the market value of the contract
will be deposited in a segregated account with the Fund s
Custodian. When selling a futures contract, the Fund will
maintain with its Custodian liquid assets that, when added to the
amounts deposited with a futures commission merchant or broker as
margin, are equal to the market value of the instruments
underlying the contract. Alternatively, the Fund may cover its
position by owning the instruments underlying the contract or, in
the case of an index futures contract, owning a portfolio with a
volatility substantially similar to that of the index on which
the futures contract is based, or holding a call option
permitting the Fund to purchase the same futures contract at a
price no higher than the price of the contract written by the
Fund (or at a higher price if the difference is maintained in
liquid assets with the Fund s Custodian).
OPTIONS ON SECURITIES, INDICES AND FUTURES. The Fund may
write covered put and call options and purchase put and call
options on securities, securities indices and futures contracts
that are traded on United States and foreign exchanges and in the
over-the-counter markets.
An option on a security or a futures contract is a contract
that gives the purchaser of the option, in return for the premium
paid, the right to buy a specified security or futures contract
(in the case of a call option) or to sell a specified security or
futures contract (in the case of a put option) from or to the
writer of the option at a designated price during the term of the
option. An option on a securities index gives the purchaser of
the option, in return for the premium paid, the right to receive
from the seller cash equal to the difference between the closing
price of the index and the exercise price of the option.
The Fund may write a call or put option only if the option
is covered. A call option on a security or futures contract
written by the Fund is covered if the Fund owns the underlying
security or futures contract covered by the call or has an
absolute and immediate right to acquire that security without
additional cash consideration (or for additional cash
consideration held in a segregated account by its custodian) upon
conversion or exchange of other securities held in its portfolio.
A call option on a security or futures contract is also covered
if the Fund holds a call on the same security or futures contract
and in the same principal amount as the call written where the
exercise price of the call held (a) is equal to or less than the
exercise price of the call written or (b) is greater than the
exercise price of the call written if the difference is
maintained by the Fund in cash or high grade U.S. Government
securities in a segregated account with its custodian. A put
option on a security or futures contract written by the Fund is
covered if the Fund maintains cash or fixed income securities
with a value equal to the exercise price in a segregated account
with its custodian, or else holds a put on the same security or
futures contract and in the same principal amount as the put
written where the exercise price of the put held is equal to or
greater than the exercise price of the put written.
The Fund will cover call options on securities indices that
it writes by owning securities whose price changes, in the
opinion of the Investment Manager, are expected to be similar to
those of the index, or in such other manner as may be in
accordance with the rules of the exchange on which the option is
traded and applicable laws and regulations. Nevertheless, where
the Fund covers a call option on a securities index through
ownership of securities, such securities may not match the
composition of the index. In that event, the Fund will not be
fully covered and could be subject to risk of loss in the event
of adverse changes in the value of the index. The Fund will cover
put options on securities indices that it writes by segregating
assets equal to the option s exercise price, or in such other
manner as may be in accordance with the rules of the exchange on
which the option is traded and applicable laws and regulations.
The Fund will receive a premium from writing a put or call
option, which increases its gross income in the event the option
expires unexercised or is closed out at a profit. If the value of
a security, index or futures contract on which the Fund has
written a call option falls or remains the same, the Fund will
realize a profit in the form of the premium received (less
transaction costs) that could offset all or a portion of any
decline in the value of the portfolio securities being hedged. If
the value of the underlying security, index or futures contract
rises, however, the Fund will realize a loss in its call option
position, which will reduce the benefit of any unrealized
appreciation in its investments. By writing a put option, the
Fund assumes the risk of a decline in the underlying security,
index or futures contract. To the extent that the price changes
of the portfolio securities being hedged correlate with changes
in the value of the underlying security, index or futures
contract, writing covered put options will increase the Fund s
losses in the event of a market decline, although such losses
will be offset in part by the premium received for writing the
option.
The Fund may also purchase put options to hedge its
investments against a decline in value. By purchasing a put
option, the Fund will seek to offset a decline in the value of
the portfolio securities being hedged through appreciation of the
put option. If the value of the Fund s investments does not
decline as anticipated, or if the value of the option does not
increase, its loss will be limited to the premium paid for the
option plus related transaction costs. The success of this
strategy will depend, in part, on the accuracy of the correlation
between the changes in value of the underlying security, index or
futures contract and the changes in value of the Fund s security
holdings being hedged.
The Fund may purchase call options on individual securities
or futures contracts to hedge against an increase in the price of
securities or futures contracts that it anticipates purchasing in
the future. Similarly, the Fund may purchase call options on a
securities index to attempt to reduce the risk of missing a broad
market advance, or an advance in an industry or market segment,
at a time when the Fund holds uninvested cash or short-term debt
securities awaiting investment. When purchasing call options, the
Fund will bear the risk of losing all or a portion of the premium
paid if the value of the underlying security, index or futures
contract does not rise.
There can be no assurance that a liquid market will exist
when the Fund seeks to close out an option position. Trading
could be interrupted, for example, because of supply and demand
imbalances arising from a lack of either buyers or sellers, or
the options exchange could suspend trading after the price has
risen or fallen more than the maximum specified by the exchange.
Although the Fund may be able to offset to some extent any
adverse effects of being unable to liquidate an option position,
it may experience losses in some cases as a result of such
inability. The value of over-the-counter options purchased by the
Fund, as well as the cover for options written by the Fund are
considered not readily marketable and are subject to the Trust s
limitation on investments in securities that are not readily
marketable. See Investment Objectives and Policies Investment
Restrictions.
FOREIGN CURRENCY HEDGING TRANSACTIONS. In order to hedge
against foreign currency exchange rate risks, the Fund may enter
into forward foreign currency exchange contracts and foreign
currency futures contracts, as well as purchase put or call
options on foreign currencies, as described below. The Fund may
also conduct its foreign currency exchange transactions on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign
currency exchange market.
The Fund may enter into forward foreign currency exchange
contracts ( forward contracts ) to attempt to minimize the risk
to the Fund from adverse changes in the relationship between the
U.S. dollar and foreign currencies. A forward contract is an
obligation to purchase or sell a specific currency for an agreed
price at a future date which is individually negotiated and
privately traded by currency traders and their customers. The
Fund may enter into a forward contract, for example, when it
enters into a contract for the purchase or sale of a security
denominated in a foreign currency in order to lock in the U.S.
dollar price of the security. In addition, for example, when the
Fund believes that a foreign currency may suffer or enjoy a
substantial movement against another currency, it may enter into
a forward contract to sell an amount of the former foreign
currency approximating the value of some or all of its portfolio
securities denominated in such foreign currency. This second
investment practice is generally referred to as cross-hedging.
Because in connection with the Fund s forward foreign currency
transactions, an amount of its assets equal to the amount of the
purchase will be held aside or segregated to be used to pay for
the commitment, the Fund will always have cash, cash equivalents
or high quality debt securities available in an amount sufficient
to cover any commitments under these contracts or to limit any
potential risk. The segregated account will be marked-to-market
on a daily basis. While these contracts are not presently
regulated by the Commodity Futures Trading Commission ( CFTC ),
the CFTC may in the future assert authority to regulate forward
contracts. In such event, the Fund s ability to utilize forward
contracts in the manner set forth above may be restricted.
Forward contracts may limit potential gain from a positive change
in the relationship between the U.S. dollar and foreign
currencies. Unanticipated changes in currency prices may result
in poorer overall performance for the Fund than if it had not
engaged in such contracts.
The Fund may purchase and write put and call options on
foreign currencies for the purpose of protecting against declines
in the dollar value of foreign portfolio securities and against
increases in the dollar cost of foreign securities to be
acquired. As is the case with other kinds of options, however,
the writing of an option on foreign currency will constitute only
a partial hedge up to the amount of the premium received, and the
Fund could be required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The
purchase of an option on foreign currency may constitute an
effective hedge against fluctuation in exchange rates, although,
in the event of rate movements adverse to its position, the Fund
may forfeit the entire amount of the premium plus related
transaction costs. Options on foreign currencies to be written or
purchased by the Fund will be traded on U.S. and foreign
exchanges or over-the-counter.
The Fund may enter into exchange-traded contracts for the
purchase or sale for future delivery of foreign currencies
( foreign currency futures ). This investment technique will be
used only to hedge against anticipated future changes in exchange
rates which otherwise might adversely affect the value of the
Fund s portfolio securities or adversely affect the prices of
securities that the Fund intends to purchase at a later date. The
successful use of foreign currency futures will usually depend on
the ability of the Investment Manager to forecast currency
exchange rate movements correctly. Should exchange rates move in
an unexpected manner, the Fund may not achieve the anticipated
benefits of foreign currency futures or may realize losses.
INVESTMENT RESTRICTIONS. The Fund has imposed upon itself
certain investment restrictions which, together with its
investment objective, are fundamental policies except as
otherwise indicated. No changes in the Fund s investment
objective or these investment restrictions can be made without
the approval of the Fund s Shareholders. For this purpose, the
provisions of the 1940 Act require the affirmative vote of the
lesser of either (1) 67% or more of the Shares of the Fund
present at a Shareholders meeting at which more than 50% of the
outstanding Shares of the Fund are present or represented by
proxy or (2) more than 50% of the outstanding Shares of the Fund.
In accordance with these restrictions, the Fund will not:
1. Invest in real estate or mortgages on real estate (although
the Fund may invest in marketable securities secured by real
estate or interests therein or issued by companies or
investment trusts which invest in real estate or interests
therein); invest in other open-end investment companies
(except in connection with a merger, consolidation,
acquisition or reorganization); invest in interests (other
than debentures or equity stock interests) in oil, gas or
other mineral exploration or development programs; or
purchase or sell commodity contracts (except futures
contracts as described in the Fund s prospectus).
2. Purchase any security (other than obligations of the U.S.
Government, its agencies or instrumentalities) if, as a
result, as to 75% of the Fund s total assets (i) more than
5% of the Fund s total assets would then be invested in
securities of any single issuer, or (ii) the Fund would then
own more than 10% of the voting securities of any single
issuer.
3. Act as an underwriter; issue senior securities except as set
forth in investment restrictions 5 and 6 below; or purchase
on margin or sell short, except that the Fund may make
margin payments in connection with futures, options and
currency transactions.
4. Loan money, except that a Fund may (i) purchase a portion of
an issue of publicly distributed bonds, debentures, notes
and other evidences of indebtedness, (ii) enter into
repurchase agreements and (iii) lend its portfolio
securities.
5. Borrow money, except that the Fund may borrow money from
banks in an amount not exceeding one-third of the value of
its total assets (including the amount borrowed).
6. Mortgage, pledge or hypothecate its assets (except as may be
necessary in connection with permitted borrowings);
provided, however, this does not prohibit escrow, collateral
or margin arrangements in connection with its use of
options, futures contracts and options on future contracts.
7. Invest 25% or more of its total assets in a single industry.
For purposes of this restriction, a foreign government is
deemed to be an industry with respect to securities issued
by it.
8. Participate on a joint or a joint and several basis in any
trading account in securities. (See Investment Objectives
and Policies Trading Policies as to transactions in the
same securities for the Fund and/or other clients with the
same adviser.)
If the Fund receives from an issuer of securities held by
the Fund subscription rights to purchase securities of that
issuer, and if the Fund exercises such subscription rights at a
time when the Fund s portfolio holdings of securities of that
issuer would otherwise exceed the limits set forth in Investment
Restrictions 2 or 7 above, it will not constitute a violation if,
prior to receipt of securities upon exercise of such rights, and
after announcement of such rights, the Fund has sold at least as
many securities of the same class and value as it would receive
on exercise of such rights.
ADDITIONAL RESTRICTIONS. The Fund has adopted the following
additional restrictions which are not fundamental and which may
be changed without Shareholder approval, to the extent permitted
by applicable law, regulation or regulatory policy. Under these
restrictions, the Fund may not:
1. Purchase or retain securities of any company in which
Trustees or officers of the Trust or of the Investment
Manager, individually owning more than 1/2 of 1% of the
securities of such company, in the aggregate own more than
5% of the securities of such company.
2. Invest more than 5% of the value of its total assets in
securities of issuers which have been in continuous
operation less than three years.
3. Invest more than 5% of its net assets in warrants whether or
not listed on the New York or American Stock Exchanges, and
more than 2% of its net assets in warrants that are not
listed on those exchanges. Warrants acquired in units or
attached to securities are not included in this restriction.
4. Purchase or sell real estate limited partnership interests.
5. Purchase or sell interests in oil, gas and mineral leases
(other than securities of companies that invest in or
sponsor such programs).
6. Invest for the purpose of exercising control over management
of any company.
7. Purchase more than 10% of a company s outstanding voting
securities.
8. Invest more than 15% of the Fund s total assets in
securities that are not readily marketable (including
repurchase agreements maturing in more than seven days and
over-the-counter options purchased by the Fund), including
no more than 10% of its total assets in restricted
securities. Rule 144A securities determined by the Board of
Trustees to be liquid are not subject to the limitation on
investment in illiquid securities.
Whenever any investment policy or investment restriction
states a maximum percentage of the Fund s assets which may be
invested in any security or other property, it is intended that
such maximum percentage limitation be determined immediately
after and as a result of that Fund s acquisition of such security
or property. The value of a Fund s assets is calculated as
described in its Prospectus under the heading How to Buy Shares
of the Fund.
RISK FACTORS. The Fund has the right to purchase securities
in any foreign country, developed or underdeveloped. Investors
should consider carefully the substantial risks involved in
securities of companies and governments of foreign nations, which
are in addition to the usual risks inherent in domestic
investments.
There may be less publicly available information about
foreign companies comparable to the reports and ratings published
about companies in the United States. Foreign companies are not
generally subject to uniform accounting, auditing and financial
reporting standards, and auditing practices and requirements may
not be comparable to those applicable to United States companies.
Foreign markets have substantially less volume than the New York
Stock Exchange and securities of some foreign companies are less
liquid and more volatile than securities of comparable United
States companies. Commission rates in foreign countries, which
are generally fixed rather than subject to negotiation as in the
United States, are likely to be higher. In many foreign countries
there is less government supervision and regulation of stock
exchanges, brokers and listed companies than in the United
States.
The Fund endeavors to buy and sell foreign currencies on as
favorable a basis as practicable. Some price spread in currency
exchange (to cover service charges) will be incurred,
particularly when the Fund changes investments from one country
to another or when proceeds of the sale of Shares in U.S. dollars
are used for the purchase of securities in foreign countries.
Also, some countries may adopt policies which would prevent the
Fund from transferring cash out of the country or withhold
portions of interest and dividends at the source. There is the
possibility of expropriation, nationalization or confiscatory
taxation, withholding and other foreign taxes on income or other
amounts, foreign exchange controls (which may include suspension
of the ability to transfer currency from a given country),
default in foreign government securities, political or social
instability, or diplomatic developments which could affect
investments in securities of issuers in foreign nations.
The Fund may be affected either unfavorably or favorably by
fluctuations in the relative rates of exchange between the
currencies of different nations, by exchange control regulations
and by indigenous economic and political developments. Through
the flexible policy of the Fund, the Investment Manager endeavors
to avoid unfavorable consequences and to take advantage of
favorable developments in particular nations where from time to
time it places the investments of the Fund.
The exercise of this flexible policy may include decisions
to purchase securities with substantial risk characteristics and
other decisions such as changing the emphasis on investments from
one nation to another and from one type of security to another.
Some of these decisions may later prove profitable and others may
not. No assurance can be given that profits, if any, will exceed
losses.
The Trustees consider at least annually the likelihood of
the imposition by any foreign government of exchange control
restrictions which would affect the liquidity of the Fund s
assets maintained with custodians in foreign countries, as well
as the degree of risk from political acts of foreign governments
to which such assets may be exposed. They also consider the
degree of risk involved through the holding of portfolio
securities in domestic and foreign securities depositories (see
Investment Management and Other Services--Custodian and Transfer
Agent ). However, in the absence of willful misfeasance, bad
faith or gross negligence on the part of the Investment Manager,
any losses resulting from the holding of the Fund s portfolio
securities in foreign countries and/or with securities
depositories will be at the risk of the Shareholders. The
Trustees will take such measures, which may from time to time
include expropriation insurance or depository account insurance,
to the extent that, in their good faith judgment, they deem
advisable under prevailing conditions. No assurance can be given
that the Trustees appraisal of the risks will always be correct
or that such exchange control restrictions or political acts of
foreign governments might not occur.
There are additional risks involved in futures transactions.
These risks relate to the Fund s ability to reduce or eliminate
its futures positions, which will depend upon the liquidity of
the secondary markets for such futures. The Fund intends to
purchase or sell futures only on exchanges or boards of trade
where there appears to be an active secondary market, but there
is no assurance that a liquid secondary market will exist for any
particular contract at any particular time. Use of futures for
hedging may involve risks because of imperfect correlations
between movements in the prices of the futures on the one hand
and movements in the prices of the securities being hedged or of
the underlying security, currency or index on the other.
Successful use of futures by the Fund for hedging purposes also
depends upon the Investment Manager s ability to predict
correctly movements in the direction of the market, as to which
no assurance can be given.
There are several risks associated with transactions in
options. For example, there are significant differences between
the securities and options markets that could result in an
imperfect correlation between these markets, causing a given
transaction not to achieve its objectives. A decision as to
whether, when and how to use options involves the exercise of
skill and judgment, and even a well-conceived transaction may be
unsuccessful to some degree because of market behavior or
unexpected events. There can be no assurance that a liquid market
will exist when the Fund seeks to close out an option position.
If the Fund were unable to close out an option that it had
purchased on a security or a securities index, it would have to
exercise the option in order to realize any profit or the option
may expire worthless. If trading were suspended in an option
purchased by the Fund, it would not be able to close out the
option. If restrictions on exercise were imposed, the Fund might
be unable to exercise an option it has purchased. Except to the
extent that a call option on a security or securities index
written by the Fund is covered by an option on the same security
or index purchased by the Fund, movements in the security or
index may result in a loss to the Fund. However, such losses may
be mitigated by changes in the value of the Fund s securities
during the period the option was outstanding.
TRADING POLICIES. The Investment Manager serves as
investment adviser to other clients. Accordingly, the respective
portfolios of the Fund and such clients may contain many or some
of the same securities. When the Fund and other clients of the
Investment Manager are engaged simultaneously in the purchase or
sale of the same security, the transactions will be placed for
execution in a manner designed to be equitable to all parties.
The larger size of the transaction may affect the price of the
security and/or the quantity which may be bought or sold for the
Fund. If the transaction is large enough, brokerage commissions
in certain countries may be negotiated below those otherwise
chargeable.
Sale or purchase of securities, without payment of brokerage
commissions, fees (except customary transfer fees) or other
remuneration in connection therewith, may be effected between the
Fund and other clients of the Investment Manager under procedures
adopted pursuant to Rule 17a-7 under the 1940 Act.
MANAGEMENT OF THE TRUST
The name, address, principal occupation during the past five
years and other information with respect to each of the Trustees
and Executive Officers of the Trust are as follows:
Name, Address and Principal Occupation
Offices with Trust During Past Five Years
Thomas S. White, Jr.* Chairman of LORD ASSET MANAGEMENT
440 S. LaSalle St. INC.; former Managing Director,
Suite 3900 Morgan Stanley Asset Management
Chicago, IL 60605
Trustee, President
Roberta J. Johnson Chief Account Administrator of LORD
440 S. LaSalle St. ASSET MANAGEMENT INC.; former
Suite 3900 Assistant Vice President, The
Chicago, IL 60605 Chicago Corporation
Vice President and
Treasurer
Peter A. Zaldivar Analyst and Vice President of LORD
440 S. LaSalle St. ASSET MANAGEMENT INC.
Suite 3900
Chicago, IL 60605
Vice President and
Secretary
Jill F. Almeida Retired; former Vice President,
1448 N. Lake Security Pacific Bank
Shore Dr.
Chicago, IL 60610
Trustee
Philip R. Haag President, Baratek, Inc.
535 Balsam
Palatine, IL 60045
Trustee
Nicholas G. Manos* Attorney (of counsel), Gesas,
53 W. Jackson Blvd.Ltd. Pilati & Gesas
Suite 528
Chicago, IL 60604
Trustee
Edward E. Mack III President, Mack & Parker
55 East Jackson Street
Chicago, IL 60604
Trustee
Michael R. Miller Senior Vice President, CTI
22160 N. Pepper Road Industries
Barrington, IL 60010
Trustee
John N. Venson Medical Doctor (podiatry)
310 Meadowlake Lane
Lake Forest, IL 60045
Trustee
* Messrs. White and Manos are interested persons of the Trust
as that term is defined in the 1940 Act. Mr. Manos is the father-
in-law of Mr. White.
PRINCIPAL SHAREHOLDERS
As of November 30, 1994, there were 1,338,893 Shares of the
Fund outstanding, of which 93,422 Shares (6.98%) were owned
beneficially, directly or indirectly, by all the Trustees and
officers of the Fund as a group. As of November 30, 1994, John W.
Galbraith, P.O. Box 33030, St. Petersburg, FL 33733, owned
beneficially, directly or indirectly, 996,009 Shares (74.39%) of
the Fund, the University of Dubuque Endowment Fund, 2000
University Avenue, Dubuque, IA 52001, owned beneficially,
directly or indirectly 134,875 Shares (10.07%) of the Fund, and
Thomas S. White, Jr., 440 S. LaSalle Street, Suite 3900, Chicago,
IL 60605, owned beneficially, directly or indirectly, 78,437
Shares (5.86%) of the Fund.
INVESTMENT MANAGEMENT AND OTHER SERVICES
INVESTMENT MANAGEMENT AGREEMENT. The Investment Manager of
the Fund is LORD ASSET MANAGEMENT INC. (the Investment
Manager ), an Illinois corporation with offices in Chicago,
Illinois. The Investment Management Agreement between the
Investment Manager and the Trust on behalf of the Fund, dated
June 28, 1994, was approved by the Board of Trustees, including
approval by a majority of the Trustees who were not parties to
the Investment Management Agreement or interested persons of any
such party, at a meeting on June 17, 1994 and by Catherine N.
Manos Declaration of Trust, as sole Shareholder of the Fund, on
June 24, 1994, and will continue through June 28, 1996. The
Investment Management Agreement will continue from year to year
thereafter, subject to approval annually by the Board of Trustees
or by vote of a majority of the outstanding Shares of the Fund
(as defined in the 1940 Act) and also, in either event, with the
approval of a majority of those Trustees who are not parties to
the Agreement or interested persons of any such party in person
at a meeting called for the purpose of voting on such approval.
The Investment Management Agreement requires the Investment
Manager to furnish the Fund with investment research and advice.
In so doing, without cost to the Fund, the Investment Manager may
receive certain research services described below. The Investment
Manager is not required to furnish any personnel, overhead items
or facilities for the Fund, including daily pricing or trading
desk facilities, although such expenses are paid by investment
advisers of some other investment companies. It is currently
expected that these expenses will be borne by the Fund, although
certain of these expenses may be borne by the Investment Manager.
In addition, the Investment Manager may pay, out of its own
assets and at no cost to the Fund, amounts to certain broker-
dealers in connection with the provision of administrative
services and/or with the distribution of the Fund s Shares.
The Investment Management Agreement provides that the
Investment Manager will select brokers and dealers for execution
of the Fund s portfolio transactions consistent with the Trust s
brokerage policies (see Brokerage Allocation ). Although the
services provided by broker-dealers in accordance with the
brokerage policies incidentally may help reduce the expenses of
or otherwise benefit the Investment Manager and other investment
advisory clients of the Investment Manager, as well as the Fund,
the value of such services is indeterminable and the Investment
Manager s fee is not reduced by any offset arrangement by reason
thereof.
When the Investment Manager determines to buy or sell the
same securities for the Fund that the Investment Manager has
selected for one or more of its other clients, the orders for all
such securities transactions are placed for execution by methods
determined by the Investment Manager, with approval by the
Trust s Board of Trustees, to be impartial and fair, in order to
seek good results for all parties (see Investment Objective and
Policies--Trading Policies ). Records of securities transactions
of persons who know when orders are placed by the Fund are
available for inspection at least four times annually by the
Compliance Officer of the Trust so that the Independent Trustees
can be satisfied that the procedures are generally fair and
equitable for all parties.
The Investment Management Agreement further provides that
the Investment Manager shall have no liability to the Trust, the
Fund or any Shareholder of the Fund for any error of judgment,
mistake of law, or any loss arising out of any investment or
other act or omission in the performance by the Investment
Manager of its duties under the Agreement or for any loss or
damage resulting from the imposition by any government of
exchange control restrictions which might affect the liquidity of
the Fund s assets, or from acts or omissions of custodians or
securities depositories, or from any wars or political acts of
any foreign governments to which such assets might be exposed,
except for any liability, loss or damage resulting from willful
misfeasance, bad faith or gross negligence on the Investment
Manager s part or reckless disregard of its duties under the
Investment Management Agreement. The Investment Management
Agreement will terminate automatically in the event of its
assignment, and may be terminated by the Trust on behalf of the
Fund at any time without payment of any penalty on 60 days
written notice, with the approval of a majority of the Trustees
of the Trust in office at the time or by vote of a majority of
the outstanding Shares of the Fund (as defined by the 1940 Act).
The Trust uses the names LORD ASSET MANAGEMENT and Thomas
White in the names of the Trust and the Fund, respectively, by
license from the Investment Manager and would be required to stop
using those names if LORD ASSET MANAGEMENT INC. ceased to be the
Investment Manager of the Fund. The Investment Manager has the
right to use those names in connection with other enterprises,
including other investment companies.
MANAGEMENT FEES. For its services, the Fund pays the
Investment Manager a monthly fee equal to 1/12 of 1.00% (1.00%
annually) of the Fund s net assets at the end of the preceding
month.
The amount of such fee would be reduced by the amount by
which the Fund s annual expenses for all purposes (including the
investment management fee) except taxes, brokerage fees and
commissions, and extraordinary expenses such as litigation,
exceed any applicable state regulations. The strictest rule
currently applicable to a Fund is 2.5% of the first $30,000,000
of net assets, 2.0% of the next $70,000,000 of net assets and
1.5% of the remainder.
TRANSFER AGENT. Firstar Trust Company serves as the transfer
and dividend disbursing agent for the Fund pursuant to the
transfer agency agreement (the Transfer Agent Agreement ), under
which Firstar (i) issues and redeems shares, (ii) prepares and
transmits payments for dividends and distributions declared by
the Fund, (iii) prepares shareholder meeting lists and, if
applicable, mail, receive and tabulate proxies, and (iv) provides
a Blue Sky System which will enable the Fund to monitor the total
number of shares sold in each state. Firstar is located at 615
East Michigan Street, Milwaukee, WI 53202. Compensation for the
services of the Transfer Agent is based on a schedule of charges
agrees on from time to time.
THE INVESTMENT MANAGER. The Investment Manager is wholly
owned by Thomas S. White, Jr.
CUSTODIAN. The Chase Manhattan Bank, N.A. serves as
Custodian of the Fund s assets, which are maintained at the
Custodian s principal office, MetroTech Center, Brooklyn, New
York 11245, and at the offices of its branches and agencies
throughout the world. The Custodian has entered into agreements
with foreign sub-custodians approved by the Trustees pursuant to
Rule 17f-5 under the 1940 Act. The Custodian, its branches and
sub-custodians generally do not hold certificates for the
securities in their custody, but instead have book records with
domestic and foreign securities depositories, which in turn have
book records with the transfer agents of the issuers of the
securities. Compensation for the services of the Custodian is
based on a schedule of charges agreed on from time to time.
LEGAL COUNSEL. Dechert Price & Rhoads, 1500 K Street, N.W.,
Washington, D.C. 20005, is legal counsel for the Trust.
INDEPENDENT ACCOUNTANTS. The firm of McGladrey & Pullen LLP,
555 Fifth Avenue, New York, New York 10017, serves as
independent accountants for the Trust. Its audit services
comprise examination of the Fund s financial statements and
review of the Fund s filings with the Securities and Exchange
Commission and the Internal Revenue Service.
REPORTS TO SHAREHOLDERS. The Trust s fiscal year ends on
October 31. Shareholders will be provided at least semiannually
with reports showing the portfolio of the Fund and other
information, including an annual report with financial statements
audited by the independent accountants.
BROKERAGE ALLOCATION
The Investment Management Agreement provides that the
Investment Manager is responsible for selecting members of
securities exchanges, brokers and dealers (such members, brokers
and dealers being hereinafter referred to as brokers ) for the
execution of the Trust s portfolio transactions and, when
applicable, the negotiation of commissions in connection
therewith. All decisions and placements are made in accordance
with the following principles:
1. Purchase and sale orders will usually be placed with brokers
who are selected by the Investment Manager as able to
achieve best execution of such orders. Best execution
means prompt and reliable execution at the most favorable
securities price, taking into account the other provisions
hereinafter set forth. The determination of what may
constitute best execution and price in the execution of a
securities transaction by a broker involves a number of
considerations, including without limitation, the overall
direct net economic result to the Fund (involving both price
paid or received and any commissions and other costs paid),
the efficiency with which the transaction is effected, the
ability to effect the transaction at all where a large block
is involved, availability of the broker to stand ready to
execute possibly difficult transactions in the future, and
the financial strength and stability of the broker. Such
considerations are judgmental and are weighed by the
Investment Manager in determining the overall reasonableness
of brokerage commissions.
2. In selecting brokers for portfolio transactions, the
Investment Manager takes into account its past experience as
to brokers qualified to achieve best execution, including
brokers who specialize in any foreign securities held by the
Fund.
3. The Investment Manager is authorized to allocate brokerage
business to brokers who have provided brokerage and research
services, as such services are defined in Section 28 (e) of
the Securities Exchange Act of 1934 (the 1934 Act ), for
the company and/or other accounts, if any, for which the
Investment Manager exercises investment discretion (as
defined in Section 3 (a) (35) of the 1934 Act) and, as to
transactions as to which fixed minimum commission rates are
not applicable, to cause the Fund to pay a commission for
effecting a securities transaction in excess of the amount
another broker would have charged for effecting that
transaction, if the Investment Manager determines in good
faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services
provided by such broker, viewed in terms of either that
particular transaction or the Investment Manager s overall
responsibilities with respect to the company and the other
accounts, if any, as to which it exercises investment
discretion. In reaching such determination, the Investment
Manager is not required to place or attempt to place a
specific dollar value on the research or execution services
of a broker or on the portion of any commission reflecting
either of said services. In demonstrating that such
determinations were made in good faith, the Investment
Manager shall be prepared to show that all commissions were
allocated and paid for purposes contemplated by the Trust s
brokerage policy; that commissions were paid only for
products or services which provide lawful and appropriate
assistance to the Investment Manager in the performance of
its investment decision-making responsibilities; and that
the commissions paid were within a reasonable range. The
determination that commissions were within a reasonable
range shall be based on any available information as to the
level of commissions known to be charged by other brokers on
comparable transactions, but there shall be taken into
account the Trust s policies that (i) obtaining a low
commission is deemed secondary to obtaining a favorable
securities price, since it is recognized that usually it is
more beneficial to the Fund to obtain a favorable price than
to pay the lowest commission; and (ii) the quality,
comprehensiveness and frequency of research studies which
are provided for the Trust and the Investment Manager are
useful to the Investment Manager in performing its advisory
services under its Investment Management Agreement with the
Trust. Research services provided by brokers to the
Investment Manager are considered to be in addition to, and
not in lieu of, services required to be performed by the
Investment Manager under its Investment Management
Agreement. Research furnished by brokers through whom the
Trust effects securities transactions may be used by the
Investment Manager for any of its accounts, and not all such
research may be used by the Investment Manager for the
Trust. When execution of portfolio transactions is allocated
to brokers trading on exchanges with fixed brokerage
commission rates, account may be taken of various services
provided by the broker, including quotations outside the
United States for daily pricing of foreign securities held
in a Fund s portfolio.
4. Purchases and sales of portfolio securities within the
United States other than on a securities exchange shall be
executed with primary market makers acting as principal
except where, in the judgment of the Investment Manager,
better prices and execution may be obtained on a commission
basis or from other sources.
5. Sales of the Fund s Shares (which shall be deemed to include
also shares of other investment companies registered under
the 1940 Act which have the same investment adviser) made by
a broker are one factor among others to be taken into
account in deciding to allocate portfolio transactions
(including agency transactions, principal transactions,
purchases in underwritings or tenders in response to tender
offers) for the account of the Fund to that broker; provided
that the broker shall furnish best execution as defined in
paragraph 1 above, and that such allocation shall be within
the scope of the Fund s policies as stated above; and
provided further, that in every allocation made to a broker
in which the sale of Shares is taken into account there
shall be no increase in the amount of the commissions or
other compensation paid to such broker beyond a reasonable
commission or other compensation determined, as set forth in
paragraph 3 above, on the basis of best execution alone or
best execution plus research services, without taking
account of or placing any value upon such sale of Shares.
Insofar as known to management, no Trustee or officer of the
Trust, nor the Investment Manager or any person affiliated with
any of them, has any material direct or indirect interest in any
broker employed by or on behalf of the Trust for the Fund. All
portfolio transactions will be allocated to broker-dealers only
when their prices and execution, in the good faith judgment of
the Investment Manager, are equal to the best available within
the scope of the Trust s policies. There is no fixed method used
in determining which broker-dealers receive which order or how
many orders.
PURCHASE, REDEMPTION AND PRICING OF SHARES
The Prospectus describes the manner in which the Fund s
Shares may be purchased and redeemed. See How to Buy Shares of
the Fund and How to Sell Shares of the Fund. Shares of the
Fund are offered directly to the public by the Fund. The Fund
employs no Distributor.
Net asset value per Share is determined as of the close of
business on the New York Stock Exchange, which currently is 4:00
p.m. (Eastern time) every Monday through Friday (exclusive of
national business holidays). The Trust s offices will be closed,
and net asset value will not be calculated, on those days on
which the New York Stock Exchange is closed, which currently are:
New Year s Day, Presidents Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Trading in securities on European and Far Eastern securities
exchanges and over-the-counter markets is normally completed well
before the close of business in New York on each day on which the
New York Stock Exchange is open. Trading of European or Far
Eastern securities generally, or in a particular country or
countries, may not take place on every New York business day.
Furthermore, trading takes place in various foreign markets on
days which are not business days in New York and on which a
Fund s net asset value is not calculated. Each Fund calculates
net asset value per Share, and therefore effects sales,
redemptions and repurchases of its Shares, as of the close of the
New York Stock Exchange once on each day on which that Exchange
is open. Such calculation does not take place contemporaneously
with the determination of the prices of many of the portfolio
securities used in such calculation and if events occur which
materially affect the value of those foreign securities, they
will be valued at fair market value as determined by the
management using methods approved by the Board of Trustees and
subsequently ratified in good faith by the Board of Trustees.
The Board of Trustees may establish procedures under which
the Fund may suspend the determination of net asset value for the
whole or any part of any period during which (1) the New York
Stock Exchange is closed other than for customary weekend and
holiday closings, (2) trading on the New York Stock Exchange is
restricted, (3) an emergency exists as a result of which disposal
of securities owned by the Fund is not reasonably practicable or
it is not reasonably practicable for the Fund fairly to determine
the value of its net assets, or (4) for such other period as the
Securities and Exchange Commission may by order permit for the
protection of the holders of the Fund s Shares.
TAX STATUS
The Fund intends normally to pay a dividend at least once
annually representing substantially all of its net investment
income (which includes, among other items, dividends and
interest) and to distribute at least annually any realized
capital gains. By so doing and meeting certain diversification of
assets and other requirements of the Internal Revenue Code of
1986, as amended (the Code ), the Fund intends to qualify
annually as a regulated investment company under the Code. The
status of the Fund as a regulated investment company does not
involve government supervision of management or of their
investment practices or policies. As a regulated investment
company, the Fund generally will be relieved of liability for
U.S. Federal income tax on that portion of its net investment
income and net realized capital gains which it distributes to its
Shareholders. Amounts not distributed on a timely basis in
accordance with a calendar year distribution requirement also are
subject to a non deductible 4% excise tax. To prevent application
of the excise tax, the Fund intends to make distributions in
accordance with the calendar year distribution requirement.
Dividends of net investment income and net short-term
capital gains are taxable to Shareholders as ordinary income.
Distributions of net investment income may be eligible for the
corporate dividends-received deduction to the extent attributable
to the Fund s qualifying dividend income. However, the
alternative minimum tax applicable to corporations may reduce the
benefit of the dividends-received deduction. Distributions of net
capital gains (the excess of net long-term capital gains over net
short-term capital losses) designated by the Fund as capital gain
dividends are taxable to Shareholders as long-term capital gains,
regardless of the length of time the Fund s Shares have been held
by a Shareholder, and are not eligible for the dividends-received
deduction. All dividends and distributions are taxable to
Shareholders, whether or not reinvested in Shares of the Fund.
Shareholders will be notified annually as to the Federal tax
status of dividends and distributions they receive and any tax
withheld thereon.
Distributions by the Fund reduce the net asset value of the
Fund Shares. Should a distribution reduce the net asset value
below a Shareholder s cost basis, the distribution nevertheless
would be taxable to the Shareholder as ordinary income or capital
gain as described above, even though, from an investment
standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax
implication of buying Shares just prior to a distribution by the
Fund. The price of Shares purchased at that time includes the
amount of the forthcoming distribution, but the distribution will
generally be taxable to them.
Certain of the debt securities acquired by the Fund may be
treated as debt securities that were originally issued at a
discount. Original issue discount can generally be defined as the
difference between the price at which a security was issued and
its stated redemption price at maturity. Although no cash income
is actually received by the Fund, original issue discount on a
taxable debt security earned in a given year generally is treated
for Federal income tax purposes as interest and, therefore, such
income would be subject to the distribution requirements of the
Code.
Some of the debt securities may be purchased by the Fund at
a discount which exceeds the original issue discount on such debt
securities, if any. This additional discount represents market
discount for Federal income tax purposes. The gain realized on
the disposition of any taxable debt security having market
discount will be treated as ordinary income to the extent it does
not exceed the accrued market discount on such debt security.
Generally, market discount accrues on a daily basis for each day
the debt security is held by the Fund at a constant rate over the
time remaining to the debt security s maturity or, at the
election of the Fund, at a constant yield to maturity which takes
into account the semi-annual compounding of interest.
The Fund may invest in stocks of foreign companies that are
classified under the Code as passive foreign investment companies
( PFICs ). In general, a foreign company is classified as a PFIC
if at least one-half of its assets constitute investment-type
assets or 75% or more of its gross income is investment-type
income. Under the PFIC rules, an excess distribution received
with respect to PFIC stock is treated as having been realized
ratably over the period during which the Fund held the PFIC
stock. The Fund itself will be subject to tax on the portion, if
any, of the excess distribution that is allocated to that Fund s
holding period in prior taxable years (and an interest factor
will be added to the tax, as if the tax had actually been payable
in such prior taxable years) even though the Fund distributes the
corresponding income to Shareholders. Excess distributions
include any gain from the sale of PFIC stock as well as certain
distributions from a PFIC. All excess distributions are taxable
as ordinary income.
The Fund may be able to elect alternative tax treatment with
respect to PFIC stock. Under an election that currently may be
available, the Fund generally would be required to include in its
gross income its share of the earnings of a PFIC on a current
basis, regardless of whether any distributions are received from
the PFIC. If this election is made, the special rules, discussed
above, relating to the taxation of excess distributions, would
not apply. Alternatively, the Fund may be able to elect to mark
to market its PFIC stock, resulting in the stock being treated as
sold at fair market value on the last business day of each
taxable year. Any resulting gain would be reported as ordinary
income, and any resulting loss would not be recognized. If this
election were made, the special rules described above with
respect to excess distributions would still apply. The Fund s
intention to qualify annually as a regulated investment company
may limit its election with respect to PFIC stock.
Because the application of the PFIC rules may affect, among
other things, the character of gains, the amount of gain or loss
and the timing of the recognition of income with respect to PFIC
stock, as well as subject the Fund itself to tax on certain
income from PFIC stock, the amount that must be distributed to
Shareholders, and which will be taxed to Shareholders as ordinary
income or long-term capital gain, may be increased or decreased
substantially as compared to a fund that did not invest in PFIC
stock.
Income received by a Fund from sources within foreign
countries may be subject to withholding and other income or
similar taxes imposed by such countries. If more than 50% of the
value of the Fund s total assets at the close of its taxable year
consists of securities of foreign corporations, the Fund will be
eligible and intends to elect to pass through to the Fund s
Shareholders the amount of foreign taxes paid by the Fund.
Pursuant to this election, a Shareholder will be required to
include in gross income (in addition to taxable dividends
actually received) his pro rata share of the foreign taxes paid
by a Fund, and will be entitled either to deduct (as an itemized
deduction) his pro rata share of foreign income and similar taxes
in computing his taxable income or to use it as a foreign tax
credit against his U.S. Federal income tax liability, subject to
limitations. No deduction for foreign taxes may be claimed by a
Shareholder who does not itemize deductions, but such a
Shareholder may be eligible to claim the foreign tax credit (see
below). Each Shareholder will be notified within 60 days after
the close of the Fund s taxable year whether the foreign taxes
paid by the Fund will pass through for that year.
Generally, a credit for foreign taxes is subject to the
limitation that it may not exceed the Shareholder s U.S. tax
attributable to his foreign source taxable income. For this
purpose, if the pass-through election is made, the source of the
Fund s income flows through to its Shareholders. With respect to
the Fund, gains from the sale of securities will be treated as
derived from U.S. sources and certain currency fluctuation gains
including fluctuation gains from foreign currency denominated
debt securities, receivables and payables, will be treated as
ordinary income derived from U.S. sources. The limitation on
foreign tax credit is applied separately to foreign source
passive income (as defined for purposes of the foreign tax
credit), including the foreign source passive income passed
through by the Fund. Shareholders may be unable to claim a credit
for the full amount of their proportionate share of the foreign
taxes paid by a Fund. Foreign taxes may not be deducted in
computing alternative minimum taxable income and the foreign tax
credit can be used to offset only 90% of the alternative minimum
tax (as computed under the Code for purposes of this limitation)
imposed on corporations and individuals. If a Fund is not
eligible to make the election to pass through to its
Shareholders its foreign taxes, the foreign income taxes it pays
generally will reduce investment company taxable income and the
distributions by a Fund will be treated as United States source
income.
Certain options and futures and foreign currency forward
contracts in which the Fund may invest may be section 1256
contracts. Gains or losses on section 1256 contracts generally
are considered 60% long-term and 40% short-term capital gains or
losses ( 60/40 ) however, foreign currency gains or losses (as
discussed below) arising from certain section 1256 contracts may
be treated as ordinary income or loss. Also, section 1256
contracts held by the Fund at the end of each taxable year (and
on certain other dates as prescribed under the Code) are marked-
to-market with the result that unrealized gains or losses are
treated as though they were realized.
Generally, the hedging transactions undertaken by the Fund
may result in straddles for U.S. Federal income tax purposes.
The straddle rules may affect the character of gains (or losses)
realized by the Fund. In addition, losses realized by the Fund on
positions that are part of the straddle may be deferred under the
straddle rules, rather than being taken into account in
calculating the taxable income for the taxable year in which the
losses are realized. Because only a few regulations implementing
the straddle rules have been promulgated, the tax consequences to
the Fund of hedging transactions are not entirely clear. The
hedging transactions may increase the amount of short-term
capital gain realized by the Fund which is taxed as ordinary
income when distributed to Shareholders.
The Fund may make one or more of the elections available
under the Code which are applicable to straddles. If the Fund
makes any of the elections, the amount, character, and timing of
the recognition of gains or losses from the affected straddle
positions will be determined under rules that vary according to
the election(s) made. The rules applicable under certain of the
elections may operate to accelerate the recognition of gains or
losses from the affected straddle positions.
Because application of the straddle rules may affect the
character of gains or losses, defer losses and/or accelerate the
recognition of gains or losses from the affected straddle
positions, the amount which must be distributed to Shareholders
and which will be taxed to Shareholders as ordinary income or
long-term capital gain may be increased or decreased as compared
to a fund that did not engage in such hedging transactions.
Requirements relating to the Fund s tax status as a
regulated investment company may limit the extent to which the
Fund will be able to engage in transactions in options and
futures and foreign currency forward contracts.
Under the Code, gains or losses attributable to fluctuations
in foreign currency exchange rates which occur between the time
the Fund accrues income or other receivables or accrues expenses
or other liabilities denominated in a foreign currency and the
time the Fund actually collects such receivables or pays such
liabilities generally are treated as ordinary income or ordinary
loss. Similarly, on disposition of some investments, including
debt securities denominated in a foreign currency and certain
futures contracts and options, gains or losses attributable to
fluctuations in the value of foreign currency between the date of
acquisition of the security or contract and the date of
disposition also are treated as ordinary gain or loss. These
gains and losses, referred to under the Code as section 988
gains and losses, may increase or decrease the amount of the
Fund s net investment income to be distributed to its
Shareholders as ordinary income. For example, fluctuations in
exchange rates may increase the amount of income that the Fund
must distribute in order to qualify for treatment as a regulated
investment company and to prevent application of an excise tax on
undistributed income. Alternatively, fluctuations in exchange
rates may decrease or eliminate income available for
distribution. If section 988 losses exceed other net investment
income during a taxable year, the Fund would not be able to make
ordinary dividend distributions, or distributions made before the
losses were realized would be recharacterized as return of
capital to Shareholders for Federal income tax purposes, rather
than as an ordinary dividend, reducing each Shareholder s basis
in his Fund Shares.
Upon the sale or exchange of his Shares, a Shareholder will
realize a taxable gain or loss depending upon his basis in the
Shares. Such gain or loss will be treated as capital gain or loss
if the Shares are capital assets in the Shareholder s hands, and
generally will be long-term if the Shareholder s holding period
for the Shares is more than one year and generally otherwise will
be short-term. Any loss realized on a sale or exchange will be
disallowed to the extent that the Shares disposed of are replaced
(including replacement through the reinvesting of dividends and
capital gain distributions in the Fund) within a period of 61
days beginning 30 days before and ending 30 days after the
disposition of the Shares. In such a case, the basis of the
Shares acquired will be adjusted to reflect the disallowed loss.
Any loss realized by a Shareholder on the sale of the Fund s
Shares held by the Shareholder for six months or less will be
treated for Federal income tax purposes as a long-term capital
loss to the extent of any distributions of long-term capital
gains received by the Shareholder with respect to such Shares.
The Fund generally will be required to withhold Federal
income tax at a rate of 31% ( backup withholding ) from dividends
paid, capital gain distributions, and redemption proceeds to
shareholders if (1) the Shareholder fails to furnish the Fund
with the Shareholder s correct taxpayer identification number or
social security number and to make such certifications as the
Fund may require, (2) the Internal Revenue Service notifies the
Shareholder or the Fund that the Shareholder has failed to report
properly certain interest and dividend income to the Internal
Revenue Service and to respond to notices to that effect, or (3)
when required to do so, the Shareholder fails to certify that he
is not subject to backup withholding. Any amounts withheld may be
credited against the Shareholder s Federal income tax liability.
Ordinary dividends and taxable capital gain distributions
declared in October, November, or December with a record date in
such month and paid during the following January will be treated
as having been paid by the Fund and received by Shareholders on
December 31 of the calendar year in which declared, rather than
the calendar year in which the dividends are actually received.
Distributions and redemptions also may be subject to state,
local and foreign taxes. U.S. tax rules applicable to foreign
investors may differ significantly from those outlined above.
This discussion does not purport to deal with all of the tax
consequences relating to an investment in the Fund. Shareholders
are advised to consult their own tax advisers for details with
respect to the particular tax consequences to them of an
investment in the Fund.
DESCRIPTION OF SHARES
The Shares of the Fund have the same preferences, conversion
and other rights, voting powers, restrictions and limitations as
to dividends, qualifications and terms and conditions of
redemption, except as follows: all consideration received from
the sale of Shares of the Fund, together with all income,
earnings, profits and proceeds thereof, belongs to the Fund and
is charged with liabilities in respect of the general liabilities
of the Trust. The net asset value of a Share of the Fund is based
on the assets belonging to the Fund less the liabilities charged
to the Fund, and dividends are paid on Shares of the Fund only
out of lawfully available assets belonging to the Fund. In the
event of liquidation or dissolution of the Trust, the
Shareholders of the Fund will be entitled, to the assets
belonging to the Fund out of assets of the Trust available for
distribution.
The Shares have non-cumulative voting rights so that the
holders of a plurality of the Shares voting for the election of
Trustees at a meeting at which 50% of the outstanding Shares are
present can elect all the Trustees and in such event, the holders
of the remaining Shares voting for the election of Trustees will
not be able to elect any person or persons to the Board of
Trustees.
PERFORMANCE INFORMATION
The Fund may, from time to time, include its total return in
advertisements or reports to Shareholders or prospective
investors. Quotations of average annual total return for the Fund
will be expressed in terms of the average annual compounded rate
of return of a hypothetical investment in the Fund over periods
of one, five, or ten years (up to the life of the Fund)
calculated pursuant to the following formula: P(1+T)superscript n
= RV (where P = a hypothetical initial payment of $1,000, T = the
average annual total return, n = the number of years, and ERV =
the ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the period). All total return figures reflect
the deduction of a proportional share of the Fund s expenses on
an annual basis, and assume that all dividends and distributions
are reinvested when paid. Total return for the period from June
28, 1994 (commencement of operations) through October 31, 1994,
on an annualized basis, was 15.31%.
Performance information for the Fund may be compared, in
reports and promotional literature, to: (i) the Standard & Poor s
500 Stock Index, Dow Jones Industrial Average, or other unmanaged
indices so that investors may compare each Fund s results with
those of a group of unmanaged securities widely regarded by
investors as representative of the securities market in general;
(ii) other groups of mutual funds tracked by Lipper Analytical
Services, a widely used independent research firm which ranks
mutual funds by overall performance, investment objectives and
assets, or tracked by other services, companies, publications, or
persons who rank mutual funds on overall performance or other
criteria; and (iii) the Consumer Price Index (measure for
inflation) to assess the real rate of return from an investment
in the Fund. Unmanaged indices may assume the reinvestment of
dividends but generally do not reflect deductions for
administrative and management costs and expenses.
Performance information for the Fund reflects only the
performance of a hypothetical investment in the Fund during the
particular time period on which the calculations are based.
Performance information should be considered in light of the
Fund s investment objective and policies, characteristics and
quality of the portfolio and the market conditions during the
given time period, and should not be considered as a
representation of what may be achieved in the future.
From time to time, the Fund and the Investment Manager may
also refer to the following information:
(1) The Investment Manager s and its affiliates market share of
international equities managed in mutual funds prepared or
published by Strategic Insight or a similar statistical
organization.
(2) The performance of U.S. equity and debt markets relative to
foreign markets prepared or published by Morgan Stanley
Capital International or a similar financial organization.
(3) The capitalization of U.S. and foreign stock markets as
prepared or published by the International Finance Corp.,
Morgan Stanley Capital International or a similar financial
organization.
(4) The geographic distribution of the Fund s portfolio.
(5) The gross national product and populations, including age
characteristics, of various countries as published by
various statistical organizations.
(6) To assist investors in understanding the different returns
and risk characteristics of various investments, the Fund
may show historical returns of various investments and
published indices (e.g., Ibbotson Associates, Inc. Charts
and Morgan Stanley EAFE -Index).
(7) The major industries located in various jurisdictions as
published by the Morgan Stanley Index.
In addition, the Fund and the Investment Manager may also refer
to the number of shareholders in the Fund or the dollar amount of
fund and private account assets under management in advertising
materials.
<PAGE>
[MCGLADREY & PULLEN LOGO]
Independent Auditor s Report
The Board of Trustees
Thomas White World Fund
We have audited the accompanying statement of assets and
liabilities, including the investment portfolio, of Thomas White
World Fund as of October 31, 1994, and the related statement of
operations, the statement of changes in net assets, and the
selected financial information for the period from June 28, 1994
(inception) to October 31, 1994. These financial statements and
selected financial information are the responsibility of the
Fund s management. Our responsibility is to express an opinion
on these financial statements and selected financial information
based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and selected financial information are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation
of securities owned as of October 31, 1994, by correspondence
with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the financial statements and selected financial
information referred to above present fairly, in all material
respects, the financial position of Thomas White World Fund as of
October 31, 1994, the results of its operations, the changes in
its net assets, and the selected financial information for the
period indicated, in conformity with generally accepted
accounting principles.
MCGLADREY & PULLEN
New York, New York
December 7, 1994
<PAGE>
FINANCIAL STATEMENTS
THOMAS WHITE WORLD FUND
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1994
ASSETS
Investments in securities at value
(cost $13,088,816) $13,562,039
Cash (including $264,581 at interest) 271,773
Receivables for dividends and interest 42,150
Due from Manager 6,243
Deferred organization costs 27,929
Other assets 40,963
Total assets 13,951,097
LIABILITIES
Accrued expenses 22,751
NET ASSETS
SOURCE OF NET ASSETS:
Net capital paid in on shares of
beneficial interest $13,381,063
Undistributed net investment income 72,967
Accumulated net realized gain 1,093
Net unrealized appreciation 473,223
NET ASSETS $13,928,346
Shares outstanding (Note 2) 1,326,638
$ 10.50
Net asset value per share
See Notes to Financial Statements.
<PAGE>
THOMAS WHITE WORLD FUND
STATEMENT OF OPERATIONS
Period from June 28, 1994 (inception) to October 31, 1994
INVESTMENT INCOME
INCOME: (net of $9,671 foreign taxes withheld)
Dividends $ 130,787
Interest 3,454
Total investment income 134,241
EXPENSES:
Investment management fees 42,982
Custodian fees 7,350
Audit fees and expenses 15,000
Trustees fees and expenses 3,750
Legal fees and expenses 15,700
Other expenses 11,657
Total expenses 96,439
Reimbursement from Investment Manager (35,165)
Net expenses 61,274
Net investment income 72,967
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 1,093
Unrealized appreciation on investments 473,223
NET GAIN ON INVESTMENTS 474,316
Net increase in net assets from operations $ 547,283
See Notes to Financial Statements.
<PAGE>
THOMAS WHITE WORLD FUND
STATEMENT OF CHANGES IN NET ASSETSS
Period from June 28, 1994 (Inception) to October 31, 1994
CHANGE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 72,967
Net realized gain on investments 1,093
Unrealized appreciation for the period 473,223
Net increase in net assets from 547,283
operations
FUND SHARE TRANSACTIONS 13,281,063
Total increase 13,828,346
NET ASSETS:
Beginning of period 100,000
End of period $ 13,928,346
See Notes to Financial Statements.
<PAGE>
THOMAS WHITE WORLD FUND
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1994
1. SUMMARY OF ACCOUNTING POLICIES
Lord Asset Management Trust (the Trust ) was organized as a
Delaware business trust on February 9, 1994 as an open-end
diversified management investment company. The Trust currently
has one series of Shares, the Thomas White World Fund (the
Fund ). The following is a summary of significant accounting
policies followed in the preparation of its financial statements.
(a) VALUATION OF SECURITIES. Securities listed or traded on a
recognized national or foreign stock exchange or NASDAQ are
valued at the last reported sales prices on the principal
exchange on which the securities are traded. Over-the-
counter securities and listed securities for which no sale
is reported are valued at the mean between the last current
bid and asked prices. Securities for which market
quotations are not readily available are valued at fair
value as determined by management and approved in good faith
by the Board of Trustees.
(b) FOREIGN CURRENCY TRANSLATION. Portfolio securities and
other assets and liabilities denominated in foreign
currencies are translated into U.S. dollar amounts at date
of valuation. Purchases and sales of portfolio securities
and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates
of such transactions. When the Fund purchases or sells a
foreign security it will customarily enter into a foreign
exchange contract to minimize foreign exchange risk from
the trade date to the settlement date of such transaction.
The Fund does not isolate that portion of the results of
operations resulting from changes in foreign exchange rates
on investments from the fluctuations arising from changes in
market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss
from investments.
Reported net realized foreign exchange gains or losses arise
from sales of foreign currencies, currency gains or losses
realized between the trade and settlement dates on
securities transactions, the differences between the amounts
of dividends, and foreign withholding taxes recorded on the
Fund s books, and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange
gains and losses arise from changes in the value of assets
and liabilities other than investments in securities at the
end of the fiscal period, resulting from changes in the
exchange rates.
(c) INCOME TAXES. It is the Fund s intention to comply with the
provisions of the Internal Revenue Code applicable to
regulated investment companies and to distribute all of its
taxable income to its shareholders. Therefore, no provision
has been made for federal income taxes. Distributions to
shareholders are recorded on the ex-dividend date. Income
distributions and capital gain distributions are determined
in accordance with income tax regulations.
(d) DEFERRED ORGANIZATION COSTS. Organization costs have been
deferred and are being amortized over the period ending June
28, 1999.
(e) OTHER. Investment transactions are accounted for on a trade
date basis. Interest is accrued on a daily basis and
dividend income is recorded on the ex-dividend date, except
that certain dividends from foreign securities are recorded
when the information is available to the Fund.
2. TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
As of October 31, 1994, there were an unlimited number of $.01
par value shares of beneficial interest authorized. Transactions
are summarized as follows:
SHARES AMOUNT
Shares sold 1,316,638 $13,281,063
Shares redeemed 0 0
Net increase 1,326,638 $13,281,063
3. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH
AFFILIATES
The Fund pays monthly an investment management fee to Lord Asset
Management at the rate of 1/12 of 1% of the Fund s net assets at
the end of each month. The fee is subject to reduction in any
year to the extent that expenses (exclusive of certain expenses)
of the Fund exceed any applicable state regulations. The
strictest rule currently applicable to the Fund is 2 % of the
first $30 million of net assets, 2.0% of the next $70 million of
net assets, and 1.5% of the remainder. Although not required to
do so, the Manager reimbursed fees of $35,165 for the period
ended October 31, 1994.
4. INVESTMENT TRANSACTIONS
During the period ended October 31, 1994, the cost of purchases
and the proceeds from sales of investment securities, other than
short-term obligations, were $11,705,231 and $1,093,
respectively. The cost of securities for federal income tax
purposes was $13,088,816. Realized gains and losses are reported
on an identified cost basis.
At October 31, 1994, the aggregate gross unrealized appreciation
and depreciation of portfolio securities, based upon cost for
federal income tax purposes, were as follows:
Unrealized appreciation $ 790,538
Unrealized depreciation (317,315)
Net unrealized appreciation $473,223
5. SELECTED FINANCIAL INFORMATION
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
Period from
June 18, 1994
(Inception) to
October 31, 1994
Net asset value, beginning of period $ 10.00
Income from investment operations
Net investment income .06
Net realized and unrealized gain .44
Change in net asset value for the
period .50
Net asset value, end of period $ 10.50
TOTAL RETURN 5.0%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $ 13,928
Ratio to average net assets:
Expenses (net of reimbursement) 1.50%*+
Net investment income 1.79%*
Portfolio turnover rate 0.01%
* Annualized
+ In the absence of the expense reimbursement, expenses would
have been 2.36% of average net assets.
<PAGE>
THOMAS WHITE WORLD FUND
INVESTMENT PORTFOLIO
October 31, 1994
Country Issue Industry Shares Value
COMMON 87.5%
STOCKS:
AUSTRALIA 3.1%
National Banking 8,400 $333,900
Australia
Bank Ltd. ADR
Rothmans Consumer 26,200 100,775
Holdings Ltd. Staples
434,675
BELGIUM 2.4%
Electrabel Utility 700 124,350
Kredietbank Banking 600 118,601
Tractebel Industrial 300 93,602
Invest Inter
BV
336,553
CANADA 3.4%
BCE Inc. Communication 6,500 228,239
Royal Bank of Banking 11,600 243,319
Canada
471,558
FRANCE 5.4%
Bouygues Building 800 82,083
*Bouygues Sub Building 800 202
Rights
11/02/94
Cie de Saint- Metals 1,300 164,963
Gobain
Elf Aquitaine Energy 2,600 192,246
Eridania Consumer 1,100 148,990
Beghin-Say Staples
Societe Banking 1,400 158,064
Generale
746,548
GERMANY 4.9%
Bayer AG Chemicals 800 187,119
Deutsche Bank Banking 300 147,757
AG
Veba AG Utility 600 200,997
Volkswagen AG Consumer 500 146,726
Durables
682,599
HONG KONG 7.2%
HSBC Holdings Banking 16,700 197,755
Hopewell Financial
Holdings Diversified 173,000 178,000
New World Financial 54,200 172,903
Development Diversified
Jardine Industrial 78,000 299,809
Strategic
Holdings
Wheelock & Industrial 69,000 149,130
Company
997,597
ITALY 3.9%
*Credito Banking 90,000 297
Italiano 8%
Bond Warrants
11/15/94
*Credito Banking 90,000 6,795
Italiano
Ordinary Share
Warrants
11/15/94
Credito Banking 90,000 96,129
Italiano SPA
Italgas SPA Utility 42,400 129,642
Stet Risp NON Communication 123,800 306,863
CV
539,726
JAPAN 8.2%
Bank of Iwate Banking 1,700 94,659
Fuji Photo Consumer 7,000 166,735
Film Company Retail
Hisamitsu Healthcare 10,000 84,554
Pharmaceutical
Company Inc.
Hitachi Ltd. Technology 1,700 173,825
ADR
Marudai Food Consumer 18,000 138,461
Company Staples
Mitsubishi Technology 22,000 164,468
Electric
Corporation
Nintendo Consumer 2,000 111,569
Company Retail
Seiyu Consumer 6,000 73,624
Retail
Sekisui House Building 12,000 136,110
1,144,005
MEXICO 1.5%
Telefonos de Communication 3,800 209,475
Mexico Series
L ADR
209,475
NETHERLANDS 3.9%
ABN-AMRO Banking 3,500 124,444
Holdings NV
Aegon Insurance 2,700 166,837
Akzo Nobel NV Chemicals 1,000 126,373
International Insurance 2,700 126,450
Nederlanden
Groep NV
544,104
NEW ZEALAND 1.4%
Fletcher Forest & 33,800 91,159
Challenge Ltd. Paper
Brierley Industrial 128,600 96,604
Investments
Ltd.
187,763
SPAIN 4.0%
Banco Popular Banking 1,300 163,253
Espanol
Iberdrola SA Utility 24,200 159,592
Telefonica de Communication 5,600 226,800
Espana ADR
549,645
SWITZERLAND 4.7%
Ciba-Geigy Chemicals 300 177,026
Inhaber
Holderbank Buildings 200 154,330
Finaciere
Glaris
Schweizerische Banking 200 187,458
Bankgesell-
schaft Inhaber
Sulzer AG Capital Goods 200 137,766
656,580
UNITED KINGDOM 4.2%
British Transportation 19,700 113,601
Airways
British Steel Metals 9,700 252,200
PLC ADR
Severn Trent Services & 24,000 225,838
Growth
591,639
UNITED STATES 29.3%
Allied Signal Industrial 1,300 45,012
Inc.
Amerada Hess Energy 1,600 79,600
Corporation
American Consumer 2,800 97,300
Brands Inc. Staples
American Healthcare 1,600 158,000
Cyanamid
Company
American Insurance 3,300 90,750
General
Corporation
American Home Healthcare 1,500 95,250
Products
Corporation
American Insurance 1,100 51,700
National
Insurance
Company
Baxter Healthcare 3,300 85,800
International
Inc.
Becton Healthcare 300 14,175
Dickinson &
Company
Boatmens Banking 2,800 82,950
Bancshares
Incorporated
Boeing Company Aerospace 2,600 114,075
Boston Edison Utility 1,800 42,075
Company
Brown Forman Consumer 1,600 49,200
Corporation Staples
Series B
Chase Banking 1,300 46,800
Manhattan
Corporation
Chrysler Consumer 900 43,875
Corporation Staples
Cincinnati Communication 5,400 99,225
Bell Inc. New
Citicorp Banking 2,300 109,825
Comsat Communication 2,500 53,750
Corporation
Series I
Consolidated Energy 2,000 72,500
Natural Gas
Dial Consumer 4,000 82,500
Corporation Staples
First Chicago Banking 900 44,100
Corporation
Fleming Consumer 3,300 79,200
Companies Staples
Incorporated
Ford Motor Consumer 3,400 100,300
Company Durables
General Aerospace 1,400 59,325
Dynamics
Corporation
Goodyear Tire Consumer 2,500 87,500
& Rubber Durables
Company
*Harris Technology 100 1,400
Computer
Corporation
Harris Technology 2,000 85,750
Corporation
International Technology 500 37,250
Business
Machines Corp.
ITT Industrial 1,200 105,900
Corporation
K Mart Consumer 4,700 76,963
Corporation Retail
Kroger Company Consumer 1,800 47,025
Retail
Lincoln Banking 2,300 83,375
National
Corporation
McDonnell Aerospace 600 84,600
Douglas
Corporation
Mellon Bank Banking 900 50,062
Corporation
Melville Consumer 800 26,700
Corporation Retail
Midlantic Banking 1,500 42,000
Corporation
Monsanto Chemical 800 60,900
Company
Norfolk Transportation 1,300 81,900
Southern
Corporation
Nynex Communication 1,700 66,725
Corporation
Ogden Services & 4,100 88,150
Corporation Growth
Pacific Communication 2,000 63,250
Telesis Group
Panhandle Energy 3,900 91,650
Eastern
Corporation
Pennzoil Energy 1,600 82,400
Company
Ralston Purina Consumer 2,700 114,750
Company Staples
Reebok Consumer 1,100 43,862
International Retail
Ltd.
Reynolds & Services & 1,800 44,775
Reynolds Growth
Rite Aid Consumer 4,500 108,000
Corporation Staples
SCE Corp Utility 4,700 65,212
Servicemaster Services & 2,600 63,050
Limited Growth
Partnership
Snap-On Inc. Services & 1,200 38,100
Growth
Southern New Communication 1,900 67,212
England
Telecommunica-
tions
Corporation
Unicom Utility 2,000 43,250
Corporation
*Unisys Technology 3,600 38,250
Corporation
United Aerospace 1,600 100,800
Technologies
Corporation
USX Marathon Energy 4,600 86,250
Group
VF Corporation Consumer 700 35,438
Retail
Witco Chemicals 3,000 84,000
Corporation
Xerox Services & 900 92,250
Corporation Growth
4,085,986
Total Common Stocks (Cost $11,705,230) $12,178,453
Country Issue Industry Shares Value
U.S. 9.9%
GOVERNMENT
BONDS
U.S. Principal
Treasury Amount
Bill, 4.97% 1,400,000 $1,383,586
01/26/95
Total U.S. Government Bonds (Cost $1,383,586) $ 1,383,586
Total Investments: 97.4% (Cost $13,088,816) 13,562,039
Other Assets, Less
Liabilities: 2.6% 366,307
Total Net Assets: 100% $13,928,346
*Non-income Producing Security
See Notes to Financial Statements
