THOMAS WHITE FUNDS FAMILY
THOMAS WHITE WORLD FUND
440 South LaSalle Street
Chicago, IL 60605-1028
PROSPECTUS
June 28, 1994
as supplemented January 24, 1996
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.
<PAGE>
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. State Street Bank and Trust Company
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 JANUARY 24, 1996
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 JANUARY 24, 1996, WHICH MAY BE OBTAINED
WITHOUT CHARGE UPON REQUEST TO
THE THOMAS WHITE FUNDS FAMILY
440 SOUTH LASALLE STREET, SUITE 3900
CHICAGO, ILLINOIS 60605-1028
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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 at the rate of 1.00%
annually
of the Fund's average daily net assets.
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. State Street Bank and Trust Company
serves as
Custodian of the Fund's assets, which are maintained at
the
Custodian's principal office, 1776 Heritage Drive, North
Quincy, Massachusetts 02171, 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
