ANNUAL REPORT
THOMAS WHITE WORLD FUND
Thomas White World Fund
Officers and Trustees Investment Advisor and
Thomas S. White Jr. Administrator
Chairman of the Board and President Lord Asset Management Inc.
Jill F. Almeida 440 S. LaSalle Street, Suite 3900
Trustee Chicago. Illinois 60605-1028
Philip R. Haag Custodian
Trustee State Street Bank and Trust Co.
Nicholas G. Manos P.O. Box 1631
Trustee Boston, Massachusetts 02101
Edward E. Mack III Legal Counsel
Trustee Dechert, Price & Rhoads
Michael R. Miller 1500 K Street, N.W.
Trustee Washington, DC 20005
John N. Venson, D.P.M. Independent Accountants
Trustee McGladrey & Pullen LLP
Virge J. Trotter III 555 Fifth Avenue
Vice-President and Secretary New York, New York 10017
Brandon S. Joel Transfer Agent
Treasurer Firstar Trust Company
Roberta J. Johnson 615 East Michigan Street
Treasurer Milwaukee, Wisconsin 53202
Douglas M. Jackman
Vice-President
Thomas White World Fund The Following Letter was written by
Mr. White, the Fund's President:
Mr. White, the Fund's President December 16, 1996
and Portfolio Manager, has been an Dear Friends,
active professional investor and
analyst of common stocks since We at the Thomas White organiza-
joining Goldman Sachs in 1966. His tion have talked to so many of you
interests have always been global. recently that greeting you as "Dear
As a boy he grew up around the world, Shareholder" does not seem appropriate
living in Naples, Manila and ten anymore. Investing around the world
other communities before graduating is a fascinating subject matter and is
from Duke University in 1965. Over generating wide interest in the Fund.
his thirty years as an investment If you have children or friends who
manager, he has been with Lehman would also like to be involved with
Brothers, Blyth Eastman Dillon and global investing, we invite their par-
most recently, fourteen years with ticipation. Our phone number is
Morgan Stanley. At Morgan Stanley, 800-811-0535.
he was a Managing Director and Chief
Investment Officer for the firm's In recent years there have emerged
valuation-oriented equity investing. several excellent publications for
mutual fund investors. We feel this
Together with the organizations's development is beneficial for both the
team of seasoned domestic and inidividual investor and the profes-
international analysts, Mr. White sional fund manager. The two most ex-
directs the management of global, tensive publications in this field are
regional and country-specific Morningstar Mutual Funds and the Value
investment portfolios. The group also Line Mutual Fund Survey. Our Fund is
produces monthly publications which now reviewed by both of these fine or-
value global securities. These are ganizations. They produce a full page
purchased by institutional asset of general information, comparative
management organizations worldwide. data and written analysis on the
Thomas White World Fund, which is up-
dated every several months. After the
Fund becomes three years old next June
28, they will begin issuing ratings of
our relative attractiveness versus
other world funds in their universe.
Both analysts assigned to review our
organization were very thorough and
objective.
THE WORLD HAS CHANGED. A GLOBAL Our message to these analysts was
PORTFOLIO IS NOW BOTH LOGICAL AND quite simple. The Fund is designed to
INCREASINGLY INVITING. attract and serve the individual who
is a prudent, long-term investor. We
1960 1970 1980 1996 use an investment approach that
combines our skills in valuing global
US & Canada 75% 70% 61% 46% companies with our experience in de-
signing stable portfolios. Our share-
Europe 22% 22% 23% 29% holder communications emphasize topics
that we feel are important to the in-
Asia Pacific 3% 8% 16% 25% vestment success of our individual
100% 100% 100% 100% clients. Our institutional clients
outside the Fund are seasoned profes-
Global Market Value sionals with established objectives
(Billions) $500 $2,000 $4,100 $10,800 and clear investment perspectives.
Since individuals within the Fund are
The growth in markets abroad has not full-time investment profession-
provided a dramatic increase in the als, we frequently discuss setting
number of investment opportunities. goals and developing investment per-
spective. We feel this is an impor-
tant aspect of helping shareholders to
become successful long-term investors.
Both analyts asked us to explain
our decision to become a world fund.
We strongly believe that a world fund
is the ideal portfolio structure to
satisfy our dual goals of superior
performance and smoother investment
returns.
Superior performance can come both
from having a larger number of attrac-
tive investment opportunities and from
accurate stock selection. Our research
division, the Global Capital Insti-
tute, is widely recognized for its
analytical expertise in valuing compa-
nies in each of the top twenty-five
stock markets around the world. Its
monthly research publications, which
include over two hundred pages of de-
tailed company valuations, have been
used by institutional managers of in-
ternational portfolios since 1987. The
superior returns of our global invest-
ment management have been driven by
the accuracy of our research, as well
as the fact that it unearths so many
profitable opportunities.
Smoother investment returns are the
the second potential advantage of a
world fund. Its global breadth allows
the design of a portfolio that can
capture both strong and relatively
stable performance. This is because
the cyclical, but independent, swings
of individual country stock markets
largely disappear when they are
brought together into a world port-
folio. Their individual ups and downs
offset each other. Volatile, unruly
components unite to become a more
stable whole. In contrast to other
funds, we have designed our portfolio
to take maximum advantage of the
opportunity to obtain smoother perfor-
mance. The results are clear. The
Thomas White World Fund has had strong
performance and lower volatility in
its returns than most other world
funds since its inception.
Thomas S. White, Jr.
President and Portfolio
Manager
<TABLE>
The World Equity Market Index and its Major Regional Component Indices
Jan 1, 1970-Oct 31, 1996 Annualized Returns in U.S. Dollars with Regional
Performance Ranked #1 to #4
<S> <C> <C> <C> <C> <C>
Five-Year World Europe USA Japan Pacific
Periods Ex-Japan
1970-1974 -1.3% -0.9%(#2) -3.4%(#3) 16.0%(#1) -6.2%(#4)
1975-1979 16.0% 18.9%(#2) 13.3%(#4) 18.8%(#3) 27.5%(#1)
1980-1984 12.4% 6.1%(#3) 14.5%(#2) 17.0%(#1) 4.1%(#4)
1985-1989 28.0% 32.3%(#2) 19.8%(#4) 41.4%(#1) 22.4%(#3)
1990-1994 4.2% 7.0%(#3) 9.2%(#2) -3.4%(#4) 15.3%(#1)
1995-October 31, 1996 15.3% 17.7%(#2) 27.4%(#1) -5.2%(#4) 14.3%(#3)
US Dollar Return 11.7% 12.5% 11.6% 15.3% 12.1%
Standard Deviation
of Return 16.0% 17.3% 25.1% 25.1% 26.2%
Source: Morgan Stanley Capital International
</TABLE>
MANAGEMENT DISCUSSION
YOUR FUND'S OBJECTIVE December 16, 1996
The Thomas White World Fund This report represents the second full-
seeks long-term capital growth year annual report of the Thomas White
through a flexible policy of World Fund. The twelve-month review period
investing in stocks and debt concluded on October 31, 1996. As of this
obligations of companies and writing, the Fund has $40.5 million of
governments of any nation, shareholder assets.
including underdeveloped
countries. On October 31, the Fund's portfolio in-
cluded 187 companies. These represented
94.8% of the Fund's total value, with the
rest in cash equivalents or other assets.
The Fund's performance versus the Mor-
YOUR FUNDS'S INVESTMENT gan Stanley World Index is presented be-
PHILOSOPHY low. Current prices and return data now
appear daily in most domestic newspapers.
I. Superior returns can come from This can be found in the Mutual Fund Sec-
properly harnessing the high tion listed alphabetically under the "T"'s
potential inherent within as Thomas White. We are please with the
undervalued global companies. portfolio's progress this year. Returns
have been competitive, both in an absolute
II. A valuation-oriented invest- sense and in comparison to other global
ment style can capture this mutual funds.
potential while maintaining a
lower risk profile and healthy Performance Year T. White MSCI
dividend income. Ended October 31, 1996 World* World
III. We emphasize owning a broadly Annualized Since Inception
diversified portfolio of (6-28-94) 12.56% 13.35%
undervalued companies with One Year 15.63% 16.30%
solid cash flows, attractive Total Return Since
growth potential and approp- Inception 31.92% 34.09%
riately conservative balance * Assumes reinvestment of dividend &
sheets. capital gain distributions.
IV. Currency projections have PORTFOLIO STRATEGY AND REVIEW
minimal influence in stock
selection and portfolio The Fund's performace is the product of
design. our investment philosophy and portfolio
strategy. Our philosophy is that under-
valued companies produce superior returns.
Accordingly, our efforts focus on analyz-
ing companies using our organization's
valuation methods. Our portfolio strategy
is to buy those companies that sell at the
greatest discount to their valuations,
then sell them when they are fairly
priced.
We believe that successful stock selec-
tion worldwide is one of our organiza-
tion's distinct strengths. Our analysts
have established methods of valuing stocks
in every developed country throughout the
world. We also believe that broad country
diversification best captures the poten-
tial for portfolio smoothness that is the
unique advantage of a world fund. Further-
more, diversified country exposure assures
that the rewards of good stock selection
will not be eclipsed by a poorly perform-
The Thomas White World Fund ing country. Accordingly, the Fund's port-
Geographic distribution on folio now owns common stocks in eighteen
October 31, 1996 major countries.
Based on Long-Term Securities
Over the last four quarters ending
Continental Europe 24.5% October 31, the Fund has mildly underper-
United Kingdom 9.5% formed its market benchmark, the Morgan
North America 41.1% Stanley Capital International World Index.
Latin America 0.6% Benchmark weights, as of October 31, 1996,
Japan 12.0% in the three large world subregions, are
Far East 7.2% Europe (29.3%), North America (45.4%), and
Australia and New 5.1% the Pacific (25.3%). Bottom-up stock valu-
Zealand ations directed the Fund's portfolio to be
more balanced in these three regions
(34.0%, 41.7% and 24.3%, as of October 31,
1996). Our choice of overweighting Euro-
The Thomas White World Fund pean stocks, due to their attractive valu-
Top Ten Holdings on ations, reduced the Fund's performance.
October 31, 1996 Returns were also held down by the Fund's
Based on Total Net Assets below-index exposure to United States
stocks. Despite rich stock valuations,
Company % of Total U.S. equities continue to enjoy stronger
Industry, Country Net Assets returns than foreign securities. Fortun-
ately, our strong stock selection in all
New World Development 1.8% three regions partially offset the effect
Industrial, Hong Kong of our regional country mix. The final re-
sult was a solid 15.63% retrun over the
ING Group 1.5% twelve months versus 16.30% for the MSCI
Insurance, Netherlands World Index. Our current strategy con-
tinues to maintain balanced regional
Garan, Inc. 1.2% weightings, as opposed to having a dispro-
Consumer Retail, United States portionate 45.4% of the portfolio in U.S.
equities.
Bristol Myers Squibb 1.2%
Healthcare, United States The purchase and sales of stocks in the
Fund over the last twelve months has been
Eridania Beghin-Say 1.1% the product of our organization's monthly
Consumer Staples, France investment process. This process begins
with the valuation of each company. Stocks
Chase Manhattan Corp. 1.0% that have reached fair value are then sold
Banking, United States and replaced with currently undervalued
securities. The process involves our en-
United Technologies 1.0% tire firm, from the research department to
Industrial, United States portfolio management to securities trad-
ing. The portfolio's turnover rate of
HSBC Holdings 0.9% 51.2% over the last year reflected on-
Banking, Hong Kong going, small monthly changes of stock-
holdings. This regular process allows the
DSM NV 0.9% Fund to benefit from the organization's
Chemicals, Netherlands most current research conclusions.
Electrolux 0.9%
Consumer Durables, Sweden
Performance Summary
This Fund's performance period since inception was two
years, four months and two days in length. Over this period the Fund's return,
with dividends reinvested, was 31.92%. In the same period the MSCI World
Index, with net dividends, returned 34.09%. The graph below shows the monthly
value of $10,000 initially invested in the Fund and the MSCI World Index.
<TABLE>
Pursuant to Rule 304(a) of Regulation S-T, the following table replaces
a graph showing growth of an initial $10,000 investment, assuming all
dividend and capital gain distributions reinvested, and the MSCI World Index
(see footnote 1). The return since inception (June 28, 1994) was 31.9% for the
Fund and 34.1% for the World Index (see footnote 2). The one year return for
the Fund was 15.6%. The Fund's average total return since inception was 12.6%.
<S> <C> <C>
Fund MSCI World
Composite Index
6/30/94 $10,010 $10,028
7/31/94 10,440 10,217
8/31/94 10,690 10,522
9/30/94 10,380 10,243
10/31/94 10,500 10,532
11/30/94 10,130 10,073
12/31/94 10,067 10,168
1/31/95 9,966 10,012
2/28/95 10,259 10,156
3/31/95 10,531 10,643
4/30/95 10,803 11,011
5/31/95 11,035 11,103
6/30/95 11,106 11,097
7/31/95 11,550 11,650
8/31/95 11,389 11,388
9/30/95 11,570 11,717
10/31/95 11,409 11,529
11/30/95 11,621 11,927
12/31/95 11,983 12,272
1/31/96 12,357 12,493
2/29/96 12,432 12,567
3/31/96 12,507 12,773
4/30/96 12,839 13,070
5/31/96 12,914 13,079
6/30/96 12,903 13,143
7/31/96 12,475 12,677
8/31/96 12,710 12,820
9/30/96 13,021 13,319
10/31/96 13,192 13,409
Note: 1. MSCI World Index is with net dividends
2. Past performance should not be construed as a guarantee of
future performance.
</TABLE>
Dividend Information
The Fund pays dividends annually. On December 9, 1996, the Board of
Trustees authorized an income dividend and capital gains distribution with an
ex-date of December 24, 1996, payable on December 27, 1996, for shareholders of
record December 23, 1996.
In accordance with current Internal Revenue Service requirements, these
distributions will comprise substantially all earnings of the Fund from net
investment income through December 31, 1996, and net realized gains through the
fiscal year ending October 31, 1996.
Information regarding the taxability of the above-mentioned
dividends and distributions will be sent to shareholders following
the close of the calendar year.
<TABLE>
THOMAS WHITE WORLD FUND
Portfolio of Investments
Issue Industry Shares Value
<S> <C> <C> <C> <C>
COMMON STOCKS: 94.8%
AUSTRALIA: 4.7%
Email Ltd. Industrial 73,900 $202,892
Goodman Fielder Ltd. Consumer Staples 236,300 276,707
National Australia Bank Ltd. Banking 20,760 227,490
National Australia Bank Ltd. ADR Banking 4,300 235,963
Pacific Dunlop Ltd Industrial 93,700 207,583
Rothmans Holdings Ltd. Consumer Staples 56,000 358,887
Santos Ltd. Energy 79,500 317,014
1,826,536
BELGIUM: 1.2%
Cobepa Financial Diversified 3,400 117,076
Solvay Chemicals 600 359,250
476,326
CANADA: 2.6%
BCE Inc. Communication 4,900 225,222
Canfor Corporation Building 11,200 112,912
Methanex Corporation * Chemicals 16,300 138,156
Quebecor Incorporated Class B Services 9,300 159,040
Royal Bank of Canada Banking 6,200 205,108
Transalta Corporation Utilities 12,900 163,285
1,003,723
FINLAND: 1.4%
Orion B Healthcare 7,000 236,390
UPM-Kymmene Oy* Forest & Paper 15,200 307,648
544,038
FRANCE: 5.0%
Assurance General France Insurance 8,800 259,238
Bouygues Building 2,058 201,418
Cap Gemini Technology 2,700 131,334
Christian Dior Consumer Retail 1,900 252,393
Danone Consumer Staples 1,200 164,095
Eridania Beghin-Say Consumer Staples 2,600 413,440
Saint Louis SA Services 1,000 253,370
Societe Generale Banking 2,100 285,887
1,961,175
GERMANY: 1.2%
Bankges Berlin Banking 13,500 228,926
Merck KGAA Healthcare 6,700 245,410
474,336
HONG KONG: 5.8%
Amoy Properties Financial Diversified 149,500 184,677
Hopewell Holdings Building 337,000 226,666
HSBC Holdings Banking 18,000 366,712
Jardine Strategic Holdings Services 88,500 288,510
New World Development Co. Industrial 124,000 721,779
Semi-Tech Industrial 91,806 163,883
Wheelock & Company Consumer Retail 140,000 315,098
2,267,325
ITALY: 3.9%
Banca Commerciale Italiana SPA Banking 93,600 161,011
Banco Popolare di Bergamo Banking 19,200 301,638
Benetton SPA Consumer Retail 19,500 226,272
Fiat Consumer Duraables 65,100 172,717
Stet Risp NON CV Communication 130,300 347,236
Telecom Italia Communication 133,400 297,882
1,506,756
JAPAN: 12.0%
Aoki International Consumer Retail 7,000 130,233
Aoyama Trading Consumer Retail 7,000 178,763
Bank of Iwate Banking 1,700 91,751
Best Denki Consumer Retail 10,000 126,371
Dai-Dan Company Ltd. Building 13,000 184,818
Dainippon Ink & Chemicals, Inc. Chemicals 20,000 85,476
Dowa Mining Metals 29,000 125,213
East Japan Railway Transportation 22 100,974
Fuji Photo Film Company Services 6,000 172,181
Fujitsu Ltd. Technology 21,000 184,292
Fukuoka City Bank Banking 19,000 141,561
General Sekiyu Energy 18,000 139,482
Hisamitsu Pharmaceutical
Company Inc. Healthcare 16,000 135,920
Hitachi Ltd. ADR Technology 2,600 232,375
Hokkaido Electric Power Utilities 3,900 78,034
Itoham Foods Consumer Staples 17,000 110,400
Japan Tobacco Consumer Staples 17 119,947
Juroku Bank Banking 11,000 55,507
Kyushu Electric Power Co., Inc. Utilities 3,000 79,746
Marubeni Industrial 30,000 138,744
Matsushita Electric Industries Co. Consumer Durables 6,000 95,831
Nichimen Corporation Industrial 35,000 141,596
Nikko Securities Financial Diversified 14,000 133,918
Nintendo Company Services 4,000 252,742
NOK Corporation Consumer Durables 26,000 172,952
San-In-Godo Bank Banking 7,000 51,233
Sanki Engineering Capital Goods 16,000 188,152
Shiga Bank Banking 41,000 219,481
Shinwa Bank Banking 23,000 121,307
Shiseido Company Consumer Staples 7,000 81,703
Suzuki Motor Consumer Durables 15,000 152,699
Takara Standard Consumer Durables 15,000 139,534
Yamanouchi Pharmanceuticals Co. Healthcare 9,000 182,448
Yaskawa Electric Company Capital Goods 40,000 154,104
4,699,488
MALYASIA: 1.4%
Oriental Holdings Berhad Services 30,800 209,557
Perlis Plantation Berhad Consumer Staples 43,750 125,471
Rashid Hussain Berhad Financial Diversified 35,000 218,750
553,778
MEXICO: 0.6%
Telefonos de Mexico Series L ADR Communication 7,400 225,700
225,700
NETHERLANDS: 6.0%
Bolswessanen CF Consumer Staples 15,000 260,394
DSM NV Chemicals 3,800 363,374
Hoogovens Metals 9,700 344,767
ING Groep NV Insurance 19,189 597,344
OCE Grinten Industrial 1,100 117,162
Philips Electronics NV Industrial 5,700 200,583
Randstad Holdings Services 1,800 145,326
Royal Dutch Petroleum Energy 1,100 181,913
Wolters Kluwer Services 1,200 154,012
2,364,875
NEW ZEALAND: 0.4%
Brierley Investments Ltd. Industrial 89,600 81,903
Fletcher Challenge Building Building 5,800 15,741
Fletcher Challenge Energy Utilities 5,800 16,563
Fletcher Challenge Paper Forest & Paper 11,600 21,042
Fletcher Forest Division Forest & Paper 3,291 5,504
140,753
NORWAY 0.7%
Den Norske Bank A Banking 87,300 288,230
288,230
SPAIN: 1.5%
FECSA Utilities 35,000 279,507
U Fenosa Utilities 45,900 297,556
577,063
SWEDEN: 2.6%
Electrolux B Consumer Durables 6,500 361,259
SKF B Industrial 9,300 205,481
Trelleborg B Industrial 16,300 210,392
Volvo B Consumer Durables 11,800 244,590
1,021,722
SWITZERLAND: 0.9%
George Fischer Capital Goods 200 190,304
SMH AG Services 1,200 167,915
358,219
UNITED KINGDOM: 9.4%
Abbey National PLC Banking 20,700 214,148
Arjo Wiggins Appleton PLC Forest & Paper 61,800 160,964
British Petroleum Co. Energy 18,650 201,896
British Steel Metals 66,200 184,281
British Telecom Communication 32,400 187,768
Burton Group PLC Consumer Retail 106,600 259,432
Chubb Security Services 27,200 140,806
Coats Viyella Consumer Retail 42,600 106,449
General Accident Insurance 17,400 209,607
Harrison & Crosfield PLC Industrial 89,300 186,074
Hillsdown Holdings Consumer Staples 61,800 176,556
Inchcape Services 43,200 201,830
Ladbroke Group Services 63,996 206,790
National Westminster Bank PLC Banking 18,300 213,299
NFC PLC Transportation 50,000 153,020
Severn Trent Utilities 13,500 135,375
Southwest Water Utilities 22,300 210,913
Tate & Lyle Consumer Staples 23,900 185,973
T & N PLC Consumer Durables 79,100 166,102
Unigate Group Consumer Staples 28,000 198,276
3,699,559
UNITED STATES: 33.5%
Abbott Laboratories Healthcare 3,400 172,125
Amerada Hess Corporation Energy 4,300 238,113
America Online* Technology 700 18,988
American National Insurance Co. Insurance 3,400 222,700
American Stores Consumer Staples 6,000 248,250
Amsouth Bancorp Banking 4,700 217,963
Anheuser Busch Consumer Staples 6,600 254,100
Atlantic Richfield Energy 1,300 172,250
Avery Denison Services 3,400 223,975
Becton Dickinson Healthcare 3,800 165,300
Black & Decker Services 3,400 127,075
Bristol Myers Squibb Co. Healthcare 4,300 454,725
Brown Forman B Consumer Staples 5,100 220,575
Chase Manhattan Corporation Banking 4,680 401,310
Cisco Systems* Technology 800 49,500
CMS Energy Corporation Utilities 2,100 66,413
Comerica Banking 2,700 143,438
Comsat Corporation Series 1 Communication 9,800 230,300
Eckerd Corporation* Consumer Staples 2,700 74,925
Edison International Utilities 10,000 197,500
Entergy Utilities 2,800 78,400
First of America Banking 2,600 141,375
Ford Motor Company Consumer Durables 8,100 253,125
Garan Services, Inc. Consumer Retail 27,000 455,625
General Dynamics Corporation Aerospace 3,900 267,638
General Motors Corporation Consumer Durables 2,400 129,300
General Motors Corp. Class H Industrial 5,200 277,550
GPU Incorporated Utilities 2,500 82,188
Harris Corporation Industrial 5,300 331,913
HBO & Company Technology 800 48,100
ITT Hartford Corporation Insurance 3,000 189,000
ITT Industries Consumer Durables 9,800 227,850
JC Penny, Inc. Consumer Retail 2,300 120,750
JP Morgan & Company Banking 2,300 198,662
McDonnell Douglas Corporation Aerospace 5,000 272,500
Mellon Bank Corporation Banking 1,350 87,919
Midamerican Energy Utilities 4,800 74,400
Murphy Oil Energy 6,200 306,125
National Service Industries Industrial 6,700 231,150
Norfolk Southern Corporation Transportation 2,700 240,638
Nynex Corporation Communication 6,100 271,450
Ornda Health* Healthcare 5,100 138,975
Pacific Telesis Group Communication 5,100 173,400
Philip Morris Cos., Inc. Consumer Staples 3,900 361,236
Pitney Bowes Inc. Services 2,600 145,275
PPG Industries Inc. Chemicals 5,400 307,800
Reebok International Ltd. Consumer Retail 4,200 150,150
RJR Nabisco Holdings Group Consumer Staples 7,400 213,675
Sara Lee Corporation Consumer Staples 7,100 252,050
Schering-Plough Healthcare 4,400 281,600
Southern New England
Telecommunications Corp Communication 1,900 70,775
Sprint Corp. Communication 5,700 223,725
Sun Microsystems* Technology 800 48,800
SuperValu Incorporated Consumer Staples 9,800 291,550
Textron Incorporated Industrial 2,300 204,125
Transamerica Corporation Insurance 2,300 174,512
Union Texas Petroleum Energy 7,600 162,450
United Technologies Corporation Industrial 3,000 386,250
USLife Corporation Insurance 7,650 239,061
US Robotics Technology 400 25,150
USX Marathon Corporation Energy 11,800 258,125
VF Corporation Consumer Retail 2,600 169,975
Warner-Lambert Healthcare 2,200 139,975
Washington Post Class B Services 600 197,400
Xerox Corporation Services 6,900 319,987
13,121,204
Total Common Stocks (Cost $33,443,257) $37,110,806
US GOVERNMENT 2.8%
BONDS
Principal
Amount
U.S. Treasury Bill, 02/06/97 (Cost $1,109,705) 1,125,000 $1,109,705
TIME DEPOSIT: 2.0%
Par
Value
State Street Bank and Trust Co. Eurodollar Time
Deposit 2.75%, due 11/01/96 (Cost $794,000) $794,000 $794,000
Total Investments: 99.6% (Cost$35,346,962) 39,014,511
Other Assets, Less
Liabilities: 0.4% 142,546
Total Net Assets: 100% $39,157,057
* Non-income Producing Security
See Notes to Financial Statements.
</TABLE>
<TABLE>
THOMAS WHITE WORLD FUND
Statement of Assets and Liabilities
October 31, 1996
<S> <C>
ASSETS
Investments in securities at value (cost $35,346,962) $39,014,511
Cash 638
Receivables:
Investment securities sold 26,023
Dividends and interest 146,741
Prepaid expenses and deferred organization costs 16,191
Equipment 13,546
Total assets 39,217,650
LIABILITIES
Accrued expenses 57,340
Due to Manager 3,253
Total liabilities 60,593
NET ASSETS
Source of Net Assets:
Net capital paid in on shares of beneficial interest $32,641,239
Undistributed net investment income 498,263
Accumulated net realized gain 2,350,006
Net unrealized appreciation 3,667,549
Net assets $39,157,057
Shares outstanding 3,175,674
Net asset value per share $12.33
See Notes to Financial Statements.
</TABLE>
<TABLE>
THOMAS WHITE WORLD FUND
Statement of Operations
Year Ended October 31, 1996
INVESTMENT INCOME
<S> <C>
Income:
Dividends (net of foreign taxes withheld of $84,454) $1,019,514
Interest 145,814
Total investment income 1,165,328
Expenses:
Investment management fees 371,850
Custodian fees 46,997
Transfer Agent Fees 19,849
Audit fees and expenses 24,280
Trustees' fees and expenses 14,275
Printing Expenses 2,997
Legal fees and expenses 16,240
Organization costs 6,017
Registration fees 25,118
Depreciation expense 17,068
Other expenses 12,821
Total expenses 557,512
Net investment income 607,816
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 2,434,680
Unrealized appreciation on investments 2,215,073
Net gain on investments 4,649,753
Net increase in net assets from operations $5,257,569
See Notes to Financial Statements.
</TABLE>
<TABLE>
THOMAS WHITE WORLD FUND
Statements of Changes in Net Assets
Year Year
Ended Ended
October 31, 1996 October 31, 1995
<S> <C> <C>
Change in net assets from operations:
Net investment income $ 607,816 $ 508,915
Net realized gain 2,434,680 1,339,827
Unrealized appreciation for the period 2,215,073 979,253
Net increase in net assets from operations 5,257,569 2,827,995
Distributions to shareholders:
From net investment income (573,868) (117,567)
From net realized gain (1,424,501) (1,093)
Fund share transactions 2,919,256 16,340,920
Total increase 6,178,456 19,050,255
Net assets:
Beginning of period 32,978,601 13,928,346
End of year $ 39,157,057 $ 32,978,601
See Notes to Financial Statements.
</TABLE>
THOMAS WHITE WORLD FUND
Notes to Financial Statement
October 31, 1996
Note 1. Summary of Accounting Policies
Lord Asset Management Trust (the "Trust") was organized as a Delaware
business trust on February 9, 1994, as an open-end diversified management
investment company. The Trust currently has one series of Shares, the
Thomas White World Fund (the "Fund"). The following is a summary of
significant accounting policies followed in the preparation of its financial
statements.
(a) Valuation of securities. Securities listed or traded on a recognized
national or foreign stock exchange or NASDAQ are valued at the last
reported sales prices on the principal exchange on which the
securities are traded. Over-the-counter securities and listed
securities for which no sale is reported are valued at the mean between
the last current bid and asked prices. Securities for which market
quotations are not readily available are valued at fair value as
determined by management and approved in good faith by the Board of
Trustees.
(b) Foreign currency translation. Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. When the Fund purchases or sells a foreign security it
will customarily enter into a foreign exchange contract to minimize
foreign exchange risk from the trade date to the settlement date of
such transaction.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from
the fluctuations arising from changes in market prices of securities
held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from
sales of foreign currencies, currency gains or losses realized
between the trade and settlement dates on securities transactions,
the differences between the amounts of dividends, and foreign
withholding taxes recorded on the Fund's books, and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of
assets and liabilities other than investments in securities at the end
of the fiscal period, resulting from changes in the exchange rates.
(c) Income taxes. It is the Fund's intention to comply with the provisions
of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its
shareholders. Therefore, no provision has been made for federal income
taxes. Distributions to shareholders are recorded on the ex-dividend
date. Income distributions and capital gain distributions are
determined in accordance with income tax regulations.
(d) Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principals requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the reported amounts of increases and decreases
in net assets from operations during the period. Actual results could
differ from these estimates.
(e) Deferred organization costs. Organization costs have been deferred and
are being amortized over the period ending June 28, 1999.
(f) Other. Investment transactions are accounted for on a trade date basis.
Interest is accrued on a daily basis and dividend income is recorded on
the ex-dividend date, except that certain dividends from foreign
securities are recorded when the information is available to the Fund.
Note 2. Transactions in Shares of Beneficial Interest
As of October 31, 1996, there were an unlimited number of $.01 par value
shares of beneficial interest authorized. Transactions are summarized as
follows:
<TABLE>
Year Ended Year Ended
October 31, 1996 October 31, 1995
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 175,437 $2,048,354 1,579,042 $16,248,265
Shares issued on
reinvestment of
distributions 175,904 1,968,358 11,889 118,659
Shares redeemed (90,857) (1,097,457) (2,379) (26,004)
Net increase 260,484 $2,919,256 1,588,552 $16,340,920
</TABLE>
Note 3. Investment Management Fees and Other Transactions with Affiliates
The Fund pays monthly an investment management fee to Lord Asset
Management Inc. at the rate of 1% of the Fund's average daily net assets. The
fee is subject to reduction in any year to the extent that expenses (exclusive
of certain expenses) of the Fund exceed any applicable state regulations. The
strictest rule currently applicable to the Fund is 2.5% of the first $30 million
of net assets, 2.0% of the next $70 million of net assets, and 1.5% of the
remainder. For the year ended October 31, 1996, Lord Asset Management agreed
to reimburse expenses to the extent that the Fund's total operating expenses
exceeded 1.50% of the Fund's average daily net assets. No reimbursement was
required for the year ended October 31, 1996.
Note 4. Investment Transactions
During the period ended October 31, 1996, the cost of purchases and the
proceeds from sales of investment securities, other than short-term
obligations, were $22,186,028 and $17,333,468, respectively. The cost of
securities for federal income tax purposes was $35,431,634. Realized gains
and losses are reported on an identified cost basis.
At OCtober 31, 1996, the aggregate gross unrealized appreciation and
depreciation of portfolio securities, based upon cost for federal income tax
purposes, were as follows:
<TABLE>
<S> <C>
Unrealized appreciation $4,936,295
Unrealized depreciation (1,353,418)
Net unrealized appreciation $3,582,877
</TABLE>
<TABLE>
Note 5. Selected Financial Information
Period from
Year Year June 28, 1994
Ended Ended (Inception) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
<S> <C> <C> <C>
Per share operating performance
(For a share outstanding throughout the period)
Net asset value, beginning of period $11.31 $10.50 $10.00
Income from investment operations:
Net investment income 0.19 0.19 0.06
Net realized and unrealized gain 1.51 0.71 0.44
1.70 0.90 0.50
Distributions:
From net investment income (0.20) (0.09) --
From net realized gains (0.48) -- --
Change in net asset value for the period 1.02 0.81 0.50
Net asset value, end of period $12.33 $11.31 $10.50
Total Return 15.63% 8.65% 5.00%**
Ratios/supplemental data
Net assets, end of period (000) $39,157 $32,979 $13,928
Ratio to average net assets:
Expenses (net of reimbursement) 1.50% 1.49% 1.50%*+
Net investment income 1.63% 2.08% 1.79%*
Portfolio turnover rate 51.22% 64.54% 0.01%
Average commission rate (per share)++ $0.0337 $0.0303 $0.0618
* Annualized
+ In the absence of the expense reimbursement, expenses would have been 2.36%
of average net assets.
</TABLE>
