ANNUAL REPORT
THOMAS WHITE WORLD FUND
Thomas White World Fund
Officers and Trustees Investment Advisor and
Thomas S. White Jr. Administrator
Chairman of the Board and President Lord Asset Management Inc.
Jill F. Almeida 440 S. LaSalle Street, Suite 3900
Trustee Chicago. Illinois 60605-1028
Philip R. Haag Custodian
Trustee The Chase Manhattan Bank, N.A.
Nicholas G. Manos Metrotech Center
Trustee Brooklyn, New York 11245
Edward E. Mack III Legal Counsel
Trustee Dechert, Price & Rhoads
Michael R. Miller 1500 K Street, N.W.
Trustee Washington, DC 20005
John N. Venson, D.P.M. Independent Accountants
Trustee McGladrey & Pullen LLP
Peter A. Zaldivar 555 Fifth Avenue
Vice-President and Secretary New York, New York 10017
Roberta J. Johnson Transfer Agent
Vice-President and Treasurer Firstar Trust Company
615 East Michigan Street
Milwaukee, Wisconsin 53202
The Thomas White World Fund
Mr. White, the Fund's President and Portfolio
Manager, has been an active professional investor and
analyst of common stocks since joining Goldman Sachs
in 1966. His interests have always been global. As a
boy he grew up around the world, living in Naples,
Manila and ten other communities before graduating
from Duke University in 1965. Over his twenty-nine
years as an investment manager, he has been with
Lehman Brothers, Blyth Eastman Dillon and most
recently, fourteen years with Morgan Stanley. At
Morgan Stanley, he was a Managing Director and
Chief Investment Officer for the firm's valuation-oriented
equity investing.
Together with his team of Lord Asset Management
analysts, Mr. White manages a number of global and
country-specific investment portfolios. The group also
produces monthly publications which value global
securities. These are purchased by investment
organizations worldwide.
The Following Letter Was Written
By Mr. White While Traveling in the
Far East Researching The Fund's
Asian Holdings:
December 6, 1995
Dear Shareholder:
Vitality is the single word that repeatedly comes to mind
when I travel through the Orient. Singapore: steady,
strong, proud, 100% employment, construction everywhere
you look, clean-cut people, and a city with the cleanliness and
efficiency of Walt Disney World. Few Americans would
believe that such a place could exist outside of Orlando,
Florida.
Hong Kong: more energy, bustling, but people who
appear happy, not strained. The city looks like a handsome,
sixteen year-old boy, a bit awkward and already outgrowing
his new clothes, but smiling, proud and confident. Capitalism
has no better face than Hong Kong. It is obviously why
China is converting to this new religion. Shanghai: the past
and future financial center of China, is developing so quickly
that descriptions are not believable. There appears to be no
organization in China powerful enough to reverse this
momentum.
The bottom line is that free enterprise and democracy
is in the process of converting Asian countries into fully
developed, stable nations. There will be bumps along the
way, but countries like China and India, with their billion-strong
populations, are going to be mature industrial nations
within twenty-five years. Expanding world prosperity raises
the standard of living around the globe, as every country will
contribute and benefit. This will be led by the growth of new
and existing stock markets and their equities. These are the
means to finance the expansion. The world will continue to
be an exciting place with many positives for which to be
thankful.
How does your manager plan to take advantage of the
worldwide opportunities that our future holds? The answer
is in the same professional, thorough manner that we have
always approached investing. Our investment process is a
team effort. Each of our six regional analysts make important
contributions to the fund's success.
As the the Fund's Chief Investment Officer, my experience
has shaped our investment philosophy over the years. A
Scottish ancestry may explain that fact that we tend to
watch the downside first and the upside second. Can one
get superior, long-term equity performance while using an
approach stressing milder declines in down markets?
Absolutely! We have accomplished this successfully in the
past.
This manager's approach is to purchase a security when it
is priced as a bargain relative to other stocks. Lord's analysts
are skilled in determining the accurate valuation of companies.
Our investment strategy buys stocks at discounts and then
sells them when they are fully priced. The turnaround from
unpopular and undervalued to in vogue and overvalued takes
several years to complete.
Our goal is to assist you in becoming a successful, long-term investor.
We have every confidence that our investment philosophy will work well in
the exciting future we have before us.
Thomas S. White, Jr.
President and Portfolio Manager
<TABLE>
THE WORLD HAS CHANGED. A GLOBAL
PORTFOLIO IS NOW BOTH LOGICAL
AND INCREASINGLY INVITING.
<S> <C> <C> <C>
1960 1970 1995
US & Canada 75% 70% 40%
Europe 22% 22% 23%
Asia Pacific 3% 8% 37%
100% 100% 100%
Global Market
Value (Billions) $500 $2000 $9200
</TABLE>
<TABLE>
The World Equity Market and its Major Regonal Components
Jan 1, 1970-Dec 31, 1994 Returns in US Dollars with Regional
Performance Ranked #1 to #4
<S> <C> <C> <C> <C> <C>
Five-Year World Europe USA Japan Pacific
Periods Ex-Japan
1970-1974 -1.3% -0.9%(#2) -3.4%(#1) 16.0(#1) -6.2%(#4)
1975-1979 16.0% 18.9%(#2) 13.3%(#3) 18.8(#3) 27.5%(#1)
1980-1984 12.4% 6.1%(#3) 14.5%(#1) 17.0(#1) 4.1%(#4)
1985-1989 28.0% 32.3%(#2) 19.8%(#1) 41.4(#1) 22.4%(#3)
1990-1994 4.2% 7.0%(#3) 9.2%(#4) -3.4(#4) 15.3%(#1)
US Dollar Return 11.6% 12.4% 11.0% 16.3% 12.0%
Return Components:
Currency Return +1.4% +0.8% 0.0% +5.8% -0.7%
Local Mkt Return 10.0% 11.5% 11.0% 9.9% 12.8%
</TABLE>
YOUR FUND'S OBJECTIVE
The Thomas White World 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.
YOUR FUND'S INVESTMENT PHILOSOPHY
I. Superior returns can come from properly harnessing the
high potential inherent within undervalued global companies.
II. A value-oriented investment style can capture this potential
while maintaining a lower risk profile and high dividend
income.
III. We emphasize owning bargain-priced companies with solid cash
flows, attractive growth potentials and appropriately conservative
balance sheets.
IV. Currency projections are not a stong factor in our valuations.
Management Discussion December 27, 1995
This publication represents the second annual report of the
Thomas White World Fund. The period started on November
1, 1994 and ended on October 31, 1995. Our Fund will
celebrate its second birthday next year on June 28th. As of this
writing, we have $33 million of shareholder money in the
Fund. We at the Firm are appreciative and thankful for your
confidence in our organization.
On October 31, the Fund's portfolio of equities included
151 companies from seventeen countries around the world.
These represent 83.7% of the Fund's total value, with the rest
in cash equivalents or other assets.
The Fund's performance versus the Morgan Stanley World
Index is presented below. Current price and return data now
appear daily in most domestic newspapers. This can be found
in the Mutual Fund Section listed alphabetically under the
"T"s as Thom White. Many papers also regularly show the
year-to-date 1995 performance. We are pleased with the
portfolio's progress this year. Returns have been competitive,
both in an absolute sense and in comparison to other global
mutual funds.
<TABLE>
<S> <C> <C>
Performance Period T. White MSCI
Ending 10-31-95 World World
Since Inception (6-28-94) 14.09% 15.29%
Last Twelve Months 8.65% 9.47%
Year-To-Date 13.33% 13.40%
</TABLE>
Your Manager's Strength: Stock Selection
One of the keys to personal happiness is knowing one's
strengths and weaknesses and arranging your life accordingly.
The same is true in portfolio management. Lord Asset Management's
greatest skill is the precise valuation of corporations worldwide.
Our expertise in equity valuations is well recognized by the global
investment management community. We sell valuation research to asset
management firms around the world. Mr. White has been the featured
speaker to security analysts on the subject in Vancouver and Singapore
this year.
The Fund's portfolio reflects a management decision to
take full advantage of its ability to properly value companies. We
buy those that are undervalued and diversify worldwide. Other
managers emphasize trying to add value by selecting the country or
currency that will outperform. They claim an expertise in forecasting
economic and political events, like the business cycle, monetary
authority actions, election results, etc. Your Fund managers have no
illusions about their precision in the area of economic forecasting.
Utilizing our organization's strength, the Fund's portfolio
chooses to have broad exposure to each country where we find
undervalued companies. We are currently buying more equities
in Japan, where prices have fallen and remained depressed over the
last six years. Funds for these purchases are coming from the United
States, whose stock market was exceptionally strong this year. The
marvelous diversity of global market conditions, supply us with a
never ending flow of new undervalued stocks as candidates to purchase.
I hope this review helps you to understand the disciplines
and activities of your portfolio manager and the six global
securities analysts that assist him. Our performance will only
be superior if our research and discipline is superior. We
have this in mind daily as we strive to make you a successful
investor.
<TABLE>
The Thomas White World Fund
Geographic distribution on October 31, 1995
Based on Long-Term Securities
<S> <C>
Continental Europe 26.5%
United Kingdom 8.5%
North America 41.4%
Latin America 0.7%
Japan 9.8%
Far East 7.4%
Australia and New 5.7%
Zealand
</TABLE>
<TABLE>
The Thomas White World Fund
Top Ten Holdings on October 31, 1995
Based on Total Net Assets
<S> <C>
Company % of Total
Industry, Country Net Assets
New World Development Co. 1.5%
Industrial, Hong Kong
Jardine Strategic Holdings 1.4%
Industrial, Hong Kong
International Nederland Groep NV 1.4%
Insurance, Netherlands
Eridania Beghin-Say 1.3%
Staples, France
Hitachi Ltd ADR 1.3%
Technology, Japan
ITT 1.1%
Industrial, Japan
National Australia Bank 1.1%
Banking, Australia
Rhone-Poulenc Rorer 1.1%
Healthcare, United States
American Home Products 1.0%
Healthcare, United States
Boatmens Bancshares 1.0%
Banking, United States
</TABLE>
Performance Summary
This Fund's performance period since inception was one
year, four months and two days in length. Over this period the
Fund's return, with dividends reinvested, was 14.1%. This
included dividends of $0.086522 (income) and $0.000804
(capital gains). These were paid on December 29, 1994. In the
same period the MSCI World Index, with net dividends,
returned 15.3%. The graph below shows the monthly value of
$10,000 initially invested in the Fund and the MSCI World
Index.
<TABLE>
Pursuant to Rule 304(a) of Regulation S-T, the following table replaces
a graph showing growth of an initial $10,000 investment, assuming all
dividends reinvested, and the MSCI World Index (see footnote 1). The return
since inception(June 28, 1994) was 14.1% for the Fund and 15.3% for the World
Index (see footnote 2).
<S> <C> <C>
Fund MSCI World
Composite Index
6/30/94 $10,010 $10,028
7/31/94 10,440 10,217
8/31/94 10,690 10,522
9/30/94 10,380 10,243
10/31/94 10,500 10,532
11/30/94 10,130 10,073
12/31/94 10,067 10,168
1/31/95 9,966 10,012
2/28/95 10,259 10,156
3/31/95 10,531 10,643
4/30/95 10,803 11,011
5/31/95 11,035 11,103
6/30/95 11,106 11,097
7/31/95 11,550 11,650
8/31/95 11,389 11,388
9/30/95 11,570 11,717
10/31/95 11,409 11,529
Note: 1. MSCI World Index is with net dividends
2. Past performance should not be construed as a quarantee of
future performance.
</TABLE>
Dividend Information
On December 12, 1995, the Board of Directors declared a
dividend of $0.194880 per share from net investment income
and a distribution from net realized long-term gain of
$0.136889 and $0.346858 from net realized short-term gains
per share. These are payable December 29, 1995 to
shareholders of record December 26, 1995.
In accordance with current Internal Revenue Service
requirements, these distributions comprise substantially all
earnings of the Fund from net investment income through
December 31, 1995, and net realized gains through the fiscal
year ending October 31, 1995.
Information regarding the taxability of the above-mentioned
dividends and distributions will be sent to shareholders following
the close of the calendar year.
<TABLE>
THOMAS WHITE WORLD FUND
Portfolio of Investments
Issue Industry Shares Value
<S> <C> <C> <C> <C>
COMMON STOCKS: 83.7%
AUSTRALIA: 4.4%
Email Ltd. Industrial 73,900 $185,570
Goodman Fielder Ltd Consumer Staples 236,300 237,363
National Australia Bank Ltd. Banking 20,760 177,562
National Australia Bank Ltd. ADR Banking 4,300 185,975
Pacific Dunlop Ltd Industrial 93,700 226,735
Rothmans Holdings Ltd. Consumer Staples 56,000 208,807
Santos Ltd. Energy 79,500 214,761
1,436,773
BELGIUM: 1.2%
G.I.B. Holdings Consumer Staples 4,300 168,060
Tractabel Invest Inter BV Utility 600 219,587
387,647
CANADA: 2.4%
BCE Inc. Communication 4,900 164,457
Canfor Corporation Building 11,200 116,622
Methanex Corporation * Chemicals 16,300 109,111
Royal Bank of Canada Banking 6,200 138,917
Quebecor Incorporated Class B Services 9,300 140,070
Transalta Corporation Utilities 12,900 139,121
808,298
FINLAND: 1.7%
Huhtamaki OY Consumer Staples 6,500 192,983
Kesko OY Services 16,000 200,570
Metsa-Serla OY Forest & Paper 4,400 163,812
557,365
FRANCE: 5.0%
Alcatel Alsthom Industrial 2,000 170,972
Bouygues Building 2,000 212,897
CGIP Industrial 800 151,484
Eridania Beghin-Say Consumer Staples 2,600 437,503
Esso (Francaise) Energy 1,500 164,585
Peugot SA Consumer Durables 1,300 169,519
Saint Louis SA Services 500 143,910
Union Assurance de Paris Insurance 7,500 194,985
1,645,855
GERMANY: 3.3%
AGIV AG Industrial 5,000 105,072
AVA Allgemeine Handels Consumer Retail 500 189,557
Bayer AG Chemicals 700 186,064
Douglas Holding AG Services 5,000 182,812
Hoechst AG Chemicals 800 209,975
Volkswagen AG Consumer Durables 700 220,404
1,093,884
HONG KONG: 5.1%
Amoy Properties Financial Diversified 149,500 144,073
Hopewell Holdings Building 337,000 212,748
Jardine Strategic Holdings Services 177,000 476,130
New World Development Co. Industrial 124,000 482,806
New World Infrastructure Building 206 362
Semi-Tech (Global) Industrial 90,000 140,868
Wheelock & Company Consumer Retail 140,000 230,902
1,687,889
ITALY: 2.6%
Banca Commerciale Italiana SPA Banking 93,600 182,670
Benetton SPA Consumer Retail 19,500 202,018
Instituto Mobilare Italiano SPA Banking 34,300 187,487
Stet Risp NON CV Communication 130,300 284,575
856,750
JAPAN: 8.2%
Bank of Iwate Banking 1,700 91,577
Brothers Industries Capital Goods 18,000 90,441
Chiba Kogyo Bank Banking 1,500 57,003
Dainippon Ink & Chemicals, Inc. Chemicals 20,000 85,210
East Japan Railway Transportation 22 104,074
Fuji Photo Film Company Consumer Retail 12,000 297,355
Hisamitsu Pharmaceutical
Company Inc. Healthcare 10,000 69,344
Hitachi Ltd. ADR Technology 4,100 428,963
Hokkaido Electric Power Co., Inc. Utilities 3,060 71,030
Juroku Bank Banking 11,000 54,407
Kyushu Electric Power Co., Inc. Utilities 3,030 71,818
Marudai Food Company Consumer Staples 38,000 256,808
Matsushita Electric Industries Co. Consumer Durables 6,000 85,211
Nichimen Corporation Industrial 21,000 74,661
Nintendo Company Consumer Retail 4,000 294,613
Oita Bank Banking 8,000 64,250
San-In-Godo Bank Banking 7,000 58,208
Seiyu Consumer Retail 6,000 69,931
Sekisui House Building 19,000 219,589
Shionogi & Company Healthcare 10,000 83,839
Shiseido Company Healthcare 7,000 70,617
2,698,949
MALYASIA: 1.1%
Aokam Perdana Berhad Building 43,000 72,102
Oriental Holdings Berhad Services 22,000 101,319
Perlis Plantation Berhad Consumer Staples 35,000 104,017
Rashid Hussain Berhad Financial Diversified 35,000 86,793
364,231
MEXICO: 0.6%
Telefonos de Mexico Series L ADR Communication 7,400 203,500
203,500
NETHERLANDS: 3.9%
ABN-AMRO Holdings NV Banking 7,500 314,815
Aegon Insurance 4,750 180,136
Koninklijke Hoogovens NV Metals 4,300 147,008
International Nederlanden Groep NV Insurance 7,517 447,831
Philips Electronics NV Industrial 5,100 196,961
1,286,751
NEW ZEALAND: 0.4%
Brierley Investments Ltd. Industrial 89,600 69,780
Fletcher Challenge Ltd. Forest & Paper 23,200 61,401
Fletcher Challenger Ltd.
- Forest Division Forest & Paper 3,291 4,540
135,721
SPAIN: 1.5%
Argentaria Corp. Bancaria de Espana Banking 6,200 218,827
Iberdrola SA Utility 35,600 268,207
487,034
SWEDEN: 0.9%
Svenska Handelsbanken AF Banking 16,500 289,813
289,813
SWITZERLAND: 2.1%
Elektrowatt Inhaber Utility 700 210,984
Sulzer AG Capital Goods 200 298,770
Winterthur Schweiz Insurance 300 200,615
710,369
UNITED KINGDOM: 7.1%
Abbey National PLC Banking 17,600 148,588
Arjo Wiggins Appleton PLC Forest & Paper 32,400 119,864
BAA PLC Services 17,600 136,624
Bass PLC Consumer Staples 15,400 161,834
British Airways Transportation 29,300 210,770
British Petroleum Co. Energy 18,500 137,255
Burton Group PLC Consumer Retail 106,600 170,219
Coats Viyella Consumer Retail 42,600 126,616
Daily Mail & General Trust Services 6,000 121,895
Harrison & Crosfield PLC Industrial 55,300 125,896
Hillsdown Holdings Consumer Staples 45,400 120,224
Ladbroke Group Services 48,800 127,300
Mercury Asset Management Financial Diversified 6,516 95,137
National Westminster Bank PLC Banking 15,500 154,630
NFC PLC Transportation 50,000 122,525
Northern Foods Consumer Staples 42,900 126,152
Severn Trent Utility 13,500 136,812
2,342,341
UNITED STATES: 32.2%
Amerada Hess Corporation Energy 4,300 194,038
American Brands Inc. Consumer Staples 6,400 274,400
American Home Products Corporation Healthcare 3,900 345,638
American National Insurance Co. Insurance 3,400 193,800
Anheuser Busch Cos. Inc. Consumer Staples 2,600 171,600
Archer Daniels Midland Corporation Consumer Staples 13,335 215,027
Boatmens Bancshares Incorporated Banking 8,900 338,200
Bristol Myers Squibb Co. Healthcare 4,300 327,875
Chase Manhattan Corporation Banking 4,500 256,500
Comsat Corporation Series 1 Communication 9,800 194,775
Consolidated Natural Gas Co. Energy 5,600 212,800
Detroit Edison Co. Utility 6,700 226,125
Dial Corporation Ariz Services 11,600 282,750
Digital Equipment Corp. * Technology 1,000 54,125
Dow Chemical Co. Chemicals 2,700 185,287
First Chicago Corporation Banking 900 61,087
Ford Motor Company Consumer Durables 8,100 232,875
General Dynamics Corporation Aerospace 3,900 215,962
General Motors Corp. Class H Consumer Durables 5,200 218,400
Goodyear Tire & Rubber Company Consumer Durables 6,100 231,800
Harris Corporation Technology 5,300 305,412
International Business
Machines Corp. Technology 500 48,625
ITT Corporation Industrial 3,000 367,500
JC Penny, Inc. Consumer Retail 2,300 96,887
Kroger Company * Consumer Staples 7,100 236,962
McDonnell Douglas Corporation Aerospace 2,500 204,375
Mellon Bank Corporation Banking 1,350 67,669
Midlantic Corporation Banking 4,900 259,700
National Service Industries Industrial 6,700 199,325
Norfolk Southern Corporation Transportation 2,700 208,575
Nynex Corporation Communication 6,100 286,700
Ogden Corporation Services 11,000 250,250
Pacific Telesis Group Communication 5,100 154,912
Panhandle Eastern Corporation Energy 10,100 255,025
Phillip Morris Cos., Inc. Consumer Staples 2,600 219,700
Reebok International Ltd. Consumer Retail 4,200 142,800
Rhone Poulenc Rorer, Inc. Healthcare 7,400 348,725
SCE Corporation Utility 10,000 170,000
Snap-On Inc. Services 1,200 50,850
Southern New England
Telecommunications Corp Communication 1,900 68,637
Sprint Corp. Communication 5,700 219,450
SuperValu Incorporated Consumer Staples 6,200 190,650
Textron Incorporated Industrial 2,300 158,125
Transamerica Corporation Insurance 2,300 155,825
Unicom Corporation Utility 2,000 65,500
United Technologies Corporation Industrial 3,000 266,250
USLife Corporation Insurance 7,650 218,025
USX Marathon Corporation Energy 11,800 209,450
VF Corporation Consumer Retail 2,600 124,475
Williams Company Incorporated Energy 4,200 162,225
Witco Corporation Services 6,200 175,150
Xerox Corporation Services 2,300 298,425
10,619,243
Total Common Stocks (Cost $26,159,937) 27,612,413
US GOVERNMENT 5.8%
BONDS
Principal
Amount
U.S. Treasury Bill, 08/22/96 2,000,000 $1,913,143
Total U.S. Government (Cost $1,913,143) 1,913,143
Bonds
Total Investments: 89.5% (Cost$28,073,080) 29,525,556
Other Assets, Less
Liabilities: 10.5% 3,453,045
Total Net Assets: 100% $32,978,601
* Non-income Producing Security
See Notes to Financial Statements.
</TABLE>
<TABLE>
THOMAS WHITE WORLD FUND
Statement of Assets and Liabilities
October 31, 1995
<S> <C>
ASSETS
Investments in securities at value (cost $28,073,080) $29,525,556
Cash (including $2,829,645 at interest) 2,895,716
Receivables:
Investment securities sold 425,924
Dividends and interest 142,372
Deferred organization costs 21,928
Equipment 30,614
Total assets 33,042,110
LIABILITIES
Accrued expenses 63,509
Total liabilities 63,509
NET ASSETS
Source of Net Assets:
Net capital paid in on shares of beneficial interest $29,721,983
Undistributed net investment income 464,315
Accumulated net realized gain 1,339,827
Net unrealized appreciation 1,452,476
Net assets $32,978,601
Shares outstanding 2,915,190
Net asset value per share $11.31
See Notes to Financial Statements
</TABLE>
<TABLE>
THOMAS WHITE WORLD FUND
Statement of Operations
Year Ended October 31, 1995
INVESTMENT INCOME
<S> <C>
Income:
Dividends (net of foreign taxes withheld of $61,436) $690,545
Interest 183,907
Other 971
Total investment income 875,423
Expenses:
Investment management fees 245,788
Custodian fees 21,354
Audit fees and expenses 16,993
Trustees' fees and expenses 15,005
Legal fees and expenses 25,004
Organization costs 6,001
Registration Fees 7,812
Depreciation Expense 10,349
Other expenses 18,202
Total expenses 366,508
Net investment income 508,915
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain:
Investments 1,337,019
Foreign currency transactions 2,808
1,339,827
Unrealized appreciation on investments 979,253
Net gain on investments 2,319,080
Net increase in net assets from operations $2,827,995
</TABLE>
<TABLE>
THOMAS WHITE WORLD FUND
Statements of Changes in Net Assets
Period from
Year June 28, 1994
Ended (Inception) to
October 31, 1995 October 31, 1994
<S> <C> <C>
Change in net assets from operations:
Net investment income $ 508,915 $ 72,967
Net realized gain 1,339,827 1,093
Unrealized appreciation for the period 979,253 473,223
Net increase in net assets from operations 2,827,995 547,283
Distributions to shareholders:
From net investment income (117,567)
From net realized gain (1,093)
Fund share transactions 16,340,920 13,281,063
Total increase 19,050,255 13,828,346
Net assets:
Beginning of period 13,928,346 100,000
End of period $ 32,978,601 $ 13,928,346
See Notes to Financial Statements
</TABLE>
THOMAS WHITE WORLD FUND
Notes to Financial Statement
October 31, 1995
Note 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.
Note 2. Transactions in Shares of Beneficial Interest
As of October 31, 1995, there were an unlimited number of $.01 par value
shares of beneficial interest authorized. Transactions are summarized as
follows:
<TABLE>
Year Ended Period from June 28, 1994
October 31, 1995 (Inception) to October 31, 1994
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 1,579,042 $16,248,265 1,316,638 $13,281,063
Shares issued on
reinvestment of
distributions 11,889 118,659
Shares redeemed (2,379) (26,004)
Net increase 1,588,552 $16,340,920 1,316,638 $13,281,063
</TABLE>
Note 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% of the Fund's average daily net assets. Prior
to March 1, 1995, the Fund paid 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
2.5% of the first $30 million of net assets, 2.0% of the next $70 million of
net assets, and 1.5% of the remainder. No reimbursement was required for the
year ended October 31, 1995.
Note 4. Investment Transactions
During the year ended October 31, 1995, the cost of purchases and the
proceeds from sales of investment securities, other than short-term
obligations, were $26,970,987 and $13,791,648, respectively. The cost of
securities for federal income tax purposes was $28,157,752. Realized gains
and losses are reported on an identified cost basis.
At October 31, 1995, the aggregate gross unrealized appreciation and
depreciation of portfolio securities, based upon cost for federal income tax
purposes, were as follows:
<TABLE>
<S> <C>
Unrealized appreciation $2,737,124
Unrealized depreciation (1,369,320)
Net unrealized appreciation $1,367,804
</TABLE>
<TABLE>
Note 5. Selected Financial Information
Period from
Year June 28, 1994
Ended (Inception) to
October 31, 1995 October 31, 1994
<S> <C> <C>
Per share operating performance
(For a share outstanding throughout the period)
Net asset value, beginning of period $10.50 $10.00
Income from investment operations:
Net investment income 0.19 0.06
Net realized and unrealized gain 0.71 0.44
0.90 0.50
Distributions from net investment income (0.09)
Change in net asset value for the period 0.81 0.50
Net asset value, end of period $11.31 $10.50
Total Return 8.65% 5.00%
Ratios/supplemental data
Net assets, end of period (000) $32,979 $13,928
Ratio to average net assets:
Expenses (net of reimbursement) 1.49% 1.50%+
Net investment income 2.08% 1.79%*
Portfolio turnover rate 64.54% 0.01%
* Annualized
+ In the absence of the expense reimbursement, expenses would have been 2.36%
of average net assets.
</TABLE>
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, 1995, and the related statement of
operations for the year then ended, the statement of changes in
net assets and the selected financial information for the year
then ended and for the period from June 28, 1994 (inception) to
October 31, 1995. 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 audits.
We conducted our audits 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, 1995, by correspondence
with the custodian. 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 audits provide 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, 1995, the results of its operations, the changes
in its net assets, and the selected financial information for the
periods indicated, in conformity with generally accepted
accounting principles.
McGladrey & Pullen
New York, New York
November 17, 1995
