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 Thomas White International, Ltd.
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
Douglas M. Jackman 555 Fifth Avenue
Vice-President and Secretary New York, New York 10017
Brandon S. Joel Transfer Agent
Treasurer Firstar Trust Company
615 East Michigan Street
Milwaukee, Wisconsin 53202
Thomas White World Fund The Following Letter was written by
Mr. White, the Fund's President:
Mr. White, the Fund's President June 26, 1997
and Portfolio Manager, has been an Dear Friends,
active professional investor and
analyst of common stocks since Many of you have recently called me
joining Goldman Sachs in 1966. His to discuss your ideas on how we can
interests have always been global. better serve our shareholders. Most of
As a boy he grew up around the world, you are excited about international
living in Naples, Manila and ten investing and have related many
other communities before graduating stories of the exciting changes that
from Duke University in 1965. Over are taking place around the world.
his thirty years as an investment If you have children or friends who
manager, he has been with Lehman would like to be involved with our
Brothers, Blyth Eastman Dillon and global fund, we invite their partici-
most recently, fourteen years with pation. 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 Perhaps it would be valuable, as we
valuation-oriented equity investing. approach the Fund's third birthday, to
summarize the thoughts I have presen-
Together with the organizations's ted in this column since inception in
team of seasoned domestic and 1994. These are important subjects
international analysts, Mr. White that are well worth reemphasizing,
directs the management of investment both to our old friends and to the
portfolios in Europe, the United States, many of you who are new shareholders.
Japan and the Far East. The firm's ------------------------------------
research division, the Global Capital The special advantages of a global
Institute, produces monthly publications portfolio.
which provide investment advice on the written December 28, 1994
relative attractiveness of 3000 common
stocks in forty-six countries. These Those of us who work with the Fund
are purchased by major institutional and its investments are excited about
asset management organizations world- the many opportunities that are in
wide. store for our shareholders over the
coming years. Managing your money in a
global portfolio allows us to bring
you many advantages:
1. We have the benefit of an expan-
THE WORLD HAS CHANGED. A GLOBAL ded number of investment opportu-
PORTFOLIO IS NOW BOTH LOGICAL AND nities.
INCREASINGLY INVITING. 2. There us the potential to reduce
Dec Dec Dec Dec Jun portfolio risk.
1960 1970 1980 1990 1997 3. Global portfolio mangagers have
Developed Mkts. the chance to soften interim
North America 75% 70% 61% 46% 40% portfolio declines in falling
Europe 22% 22% 23% 29% 26% markets.
Pacific 3% 8% 16% 25% 25% 4. Foreign exchange risk is diversi-
Emerging fied when investing internation-
Markets .1% .2% .8% 3% 9% ally.
100% 100% 100% 100% 100% 5. The long-term portfolio return
can be superior for a global
Global Market Value portfolio.
($trillions) $0.5 $2.0 $4.1 $8.2 $15.9 -----------------------------------
There has been a dramatic growth An individual should have and
in the relative size of developed and adhere to a sound investment plan.
and emerging markets outside the written June 22, 1995
United States. This means managers Recognizing your investment horizon
can now choose to employ wider diver- is the first step in developing a pro-
sification in the design of their per investment perspective. History
equity portfolios. suggests that an investor (saver) with
History shows that broad global di- a twenty plus year investment horizon
versification has in the past lowered should expect stock growth to average
the volatility associated with single 10%, twice the rate of bonds. Switch-
country portfolios. The Fund incor- ing back and forth between stocks and
porates this approach to obtain bonds only reduces long-term returns.
smoother returns for its shareholders. Most of a successful investor's twen-
ty-year return will come from holding
fast to the equity markets. With a
skilled professional portfolio man-
ager, your equity returns may average
12% versus 10%. This means that 83% of
your return will come from the market
itself. Clearly, staying put in equit-
ies for the long-term is a sound in-
vestment plan. Choosing this approach
is the most influential decision you
will make on your way to obtaining
superior returns.
Discouragement in falling markets
is the greatest threat to maintaining
a long-term plan. Accordingly, a sig-
nificant portion of this letter over
the years will be devoted to reinfor-
cing your decision to "Hold the
Course" and adhere to the investment
objectives you set at the beginning of
your journey.
------------------------------------
Free Enterprise and democracy is in
the process of converting the Asian
countries into fully developed, stable
nations.
written December 6, 1995
There will be bumps along the way,
but countries like China and India,
with their billion-strong populations,
are going to be mature industrial
nations within twenty-five years.
Today's developed countries are sup-
plying the tools for this expansion.
This means every country around the
world will benefit, thus raising the
global standard of living. This acti-
vity will be fueled by the growth in
the number of public companies on new
and existing exchanges. Equity securi-
ties will supply most of the capital
necessary to finance the expansion.
The world will continue to be an exci-
ting place with many positives for
which to be thankful.
- ------------------------------------ ------------------------------------
Finding and developing a relationship Mr. White descibes the Fund to mutual
with a trusted manager is an important fund analysts from Moringstar and
step in successfully reaching your Value Line.
long-term investment goals. written December 16, 1996
written June 24, 1996
Our firm's goal is to assist share- My message to these analysts was
holders in becoming successful long- quite simple. The Fund is designed to
term investors. We use the word assist, attract and serve the individual who
because a shareholder's attitude, int- is a prudent, long-term investor. We
erest level and pattern of decisions use an investment approach that com-
will also influence their success. We bines our skills in valuing global
suggest the following: companies with our expertise in de-
signing stable portfolios. Our share-
1. Be as serious and thorough in de- holder communications emphasize topics
ciding on your investment manager that we feel are important to the in-
as you would in selecting a bus- vestment success of our individual
iness partner, a lawyer or a clients. Our institutional clients are
surgeon. seasoned professionals with estab-
lished objectives and clear investment
2. Be careful to avoid salesmen, de- perspectives. Since most individuals
spite what they call themselves. within the Fund are not full-time in-
vestors, we frequently discuss setting
3. Select a manager that has a conser- goals and developing a proper perspec-
vative, common sense investment tive. We feel this is an important
approach. aspect of helping shareholders to be-
come successful long-term investors.
4. Focus on one good manager. Spend Both analysts asked me to explain
the years necessary to develop a our decision to become a world fund.
valuable relationship. We strongly believe that a world fund
is the ideal portfolio structure to
5. Enjoy investing! There is no sub- satisfy our dual goals of superior
ject more interesting than the performance and smoother investment
stock market, especially global returns.
markets.
Superior performance can come from
Our objective is to gain your res- having the whole world from which to
pect over time as a trusted advisor. choose attractive investment opportun-
We want to manage your assets in the ities. Smoother investment returns
Fund throughout your career and retire- come from the effective diversifi-
ment. We take pride that our clients of cation that global investing allows.
many years rely on our skills and integ- ------------------------------------
rity. We have designed the Thomas White
World Fund to attract people who have
worked hard to save their money and
look forward to assisting them in
reaching their investment goals.
- ---------------------------------------
I hope this review has reinforced
your understanding of the Fund and its
management. Speaking on behalf of our
organization's fifteen professionals, we
appreciate your confidence and support.
We live in an exciting world that is ex-
periencing an era of peace and growing
prosperity. There is much to be thankful
for.
Thomas S. White, Jr.
President and Portfolio Manager
<TABLE>
THE TWENTY-SEVEN YEAR PERFORMANCE OF THE WORLD EQUITY MARKET AND ITS
MAJOR REGIONAL COMPONENTS
These Index Returns are in U.S. dollars. Five-year
MSCI INDICIES Gross regional performance success is ordered from #1 (best)
to #4 (Worst)
<S> <C> <C> <C> <C> <C>
Period: Jan. 1, 1970 to Pacific
Mar. 31, 1997 World USA Europe Japan Ex-Japan
FIVE-YEAR PERIOD RETURNS
1970-1974 -1.3% -3.4%(#3) -0.9%(#2) 16.0%(#1) -6.2%(#4)
1975-1979 16.0% 13.3%(#4) 18.9%(#2) 18.8%(#3) 27.5%(#1)
1980-1984 12.4% 14.5%(#2) 6.1%(#3) 17.0%(#1) 4.1%(#4)
1985-1989 28.0% 19.8%(#4) 32.3%(#2) 41.4%(#1) 22.4%(#3)
1990-1994 4.2% 9.2%(#2) 7.0%(#3) -3.4%(#4) 15.3%(#1)
1995-1997 (3/31) 15.7% 28.7%(#1) 21.8%(#2) -11.9%(#4) 13.1%(#3)
1970-1997 Returns 12.9% 11.8% 12.9% 14.4% 12.0%
Source: Morgan Stanley Capital International
The table above presents the performance of the global stock markets from
1970 to 1997. Returns are shown in a series of five-year periods. The
world's returns are followed by those of its four component regions.
Regional performance is highlighted using ranks from #1(best) to #4(worst)
to indicate the winners and losers in each five-year period. History shows
regional returns are unpredictable, with no area holding a monopoly on per-
formance.
Note that the world and its territories all have quite similar long-term
records. But observe the world index has a more stable return pattern than
any of its components. This is because regional moves tend to offset one
another.
The Fund's design reflects its manager's belief that shareholders will
benefit from smoother world performance. A more stable portfolio encourages
investors to stay the course in falling market environments. This promotes
success in reaching long-term investment goals.
</TABLE>
MANAGEMENT DISCUSSION
YOUR FUND'S OBJECTIVE December 30, 1997
The Thomas White World Fund This report discusses portfolio strategy
seeks long-term capital growth and performance as the Thomas White World
through a flexible policy of Fund approaches its third birthday at
investing primarily in stocks of month end. The six-month period officially
companies of any nation, including reviewed in this semi-annual report con-
underdeveloped countries. cuded on April 30, 1997. As of this wri-
ting the Fund has $48.1 million of share-
holder assets.
On April 30, the Fund's portfolio inclu-
ded 222 common stocks. These represesnted
94.1% 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 pleased with the
undervalued global companies. portfolio's progress this last six
months. Returns have been strong, both
II. A valuation-oriented invest- in an absolute sense and in comparison
ment approach can capture this to other global mutual funds.
potential while maintaining a
lower risk profile and above Performance Year T. White MSCI
average dividend income. Ended April 30, 1997 World World
III. We emphasize owning a broadly Six Months 6.5% 7.6%
diversified portfolio of One Year 9.5% 10.3%
undervalued companies with Average Annual Return
solid cash flows, attractive Since Inception (6/28/94) 12.7% 13.8%
growth potential and approp- Cumulative Total Return
riately conservative balance Since Inception (6/28/94) 40.5% 44.2%
sheets. Assumes reinvestment of dividends and
capital gain distributions.
IV. Currency projections have
minimal influence in stock PORTFOLIO STRATEGY REVIEW
selection and portfolio
design. The Fund's performace is the product of
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 overvalued.
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 return smoothness that
is the unique advantage of a world fund.
Furthermore, diversified country exposure
assures that the rewards of good stock
selection will not be eclipsed by a poorly
performing country. Accordingly, the
The Thomas White World Fund Fund's portfolio now owns common stocks in
Geographic distribution on in twenty major countries.
April 30, 1997
Based on Long-Term Securities
Over the last six months ended April 30,
Continental Europe 27.8% the Fund has mildly underperformed its
United Kingdom 10.8% its market benchmark, the Morgan Stanley
North America 38.7% Capital International World Index.
Latin America 0.8% Benchmark weights, as of May 1, in the
Japan 10.0% three large world subregions, are Europe
Far East 7.1% (27.6%), North America (49.6%), and the
Australia and New 4.9% Pacific (22.8%). Bottom-up stock valu-
Zealand ations influenced us to be more balanced
in these three regions (38.6%, 39.5% and
22.0%). The choice to over-weight Euro-
The Thomas White World Fund pean stocks, due to their attractive valu-
Top Ten Holdings on ations, reduced the Fund's performance.
April 30, 1997 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
ING Group 1.7% three regions partially offset the effect
Insurance, Netherlands of our regional country mix. The final re-
sult was a solid 6.5% retrun over the half
Bristol-Myers Squibb 1.3% year versus 7.6% for the MSCI World Index.
Healthcare, United States Our current strategy continues to stress
a more balanced regional mix.
Garan, Inc. 1.2% The transactions in the Fund's portfolio
Consumer Retail, United States Fund is the product of our organization's
monthly investment process. The port-
STET risp 1.1% folio's turnover rate of 19.5% over the
Communication, Italy last six months reflects positions which
were sold after our monthly review process
Philip Morris 1.1% because they became overvalued. This reg-
Consumer Staples, United States ular process allows us to maintain an
undervalued portfolio and benefit from our
Hoogovens NV 1.1% analyst's newest investment ideas.
Metals, Netherlands
HSBC Holdings 1.1%
Banking, Hong Kong
Harris Corporation 1.1%
Industrial, United States
Chase Manhattan Corp. 1.0%
Banking, United States
Eridania Beghin-Say 0.9%
Consumer Staples, France
The Thomas White World Fund is designed to take advantage of the positive
changes occurring in the world today.
These forty-six countries contain over Whether you realize it or not, you are
3000 companies that meet the fund's at the very epicenter of what is dri-
quality standards. As a shareholder, ving change in today's world: An un-
you are a partial owner of 222 of the precedented explosion of highly
most undervalued of these firms. beneficial global capitalism.
DEVELOPED MARKETS EMERGING MARKETS
EUROPE PACIFIC EUROPE, MIDDLE EAST & ASIA PACIFIC
Austria Australia AFRICA India
Belgium Hong Kong Greece Pakistan
Denmark Japan Hungary Sri Lanka
Finland New Zealand Poland China
France Singapore Portugal Indonesia
Germany Turkey Korea
Ireland Israel Malaysia
Italy South Africa Philippines
Netherlands Zimbabwe Taiwan
Norway Thailand
Spain LATIN AMERICA
Sweden Argentina
Switzerland Brazil
United Kingdom Chile
Columbia
NORTH AMERICA Mexico
Canada Peru
United States Venezuela
The Fund takes full advantage of the analysis on 4200 global companies. Its
extensive resources of the Global Cap- monthly publications are sold to asset
ital Institute. This investment re- management organizations worldwide.
search organization does valuation
Performance Summary
This Fund's performance period since inception was two years, ten months and two
days in length. Over this period the Fund's return, with dividends reinvested,
was 40.5%. In the same period the MSCI World Index, with net dividends,
returned 44.2%. 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 40.5% for the
Fund and 44.2% for the World Index (see footnote 2). The one year return for
the Fund was 9.5%. The Fund's average total return since inception was 12.7%.
<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
11/30/96 13,898 14,157
12/31/96 13,960 13,928
1/31/97 14,018 14,094
2/28/97 14,145 14,253
3/31/97 13,937 13,968
4/30/97 14,053 14,422
5/31/97 14,907 15,309
6/30/97 15,358 16,070
7/31/97 15,947 16,808
8/31/97 15,115 15,681
9/30/97 16,074 16,530
10/31/97 15,277 15,658
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 11, 1997, the Board of
Trustees authorized an income dividend and capital gains distribution with an
ex-date of December 23, 1997, payable on December 26, 1997, for shareholders of
record December 22, 1997.
In accordance with current Internal Revenue Service requirements, these
distributions comprised substantially all earnings of the Fund from net
investment income through December 31, 1997, and net realized gains through the
fiscal year ending October 31, 1997.
<TABLE>
THOMAS WHITE WORLD FUND
Portfolio of Investments October 31, 1997
Issue Industry Shares Value
<S> <C> <C> <C> <C>
COMMON STOCKS: 87.0%
ARGENTINA: 0.4%
Telecom Argentaria* Communications 16,500 $82,525
YPF Sociedad* Energy 2,700 85,885
168,410
AUSTRALIA: 2.8%
Goodman Fielder Ltd. Consumer Staples 236,300 361,232
National Australia Bank Ltd. ADR Banking 4,300 296,700
Pacific Dunlop Ltd Industrial 93,700 199,749
Rothmans Holdings Ltd. Consumer Staples 56,000 275,677
Santos Ltd. Energy 46,437 212,969
1,346,327
BELGIUM: 1.1%
Cobepa Financial Diversified 4,300 178,618
Solvay Chemicals 6,000 360,867
539,485
BRAZIL 1.1%
Electrobras (Centr)* Utilities 175,000 75,793
Ipiranga Petroleum PN* Energy 7,288,000 105,6762
Itausa Inv Itau SA Financial Diversified 125,000 85,125
Petroleo Brasileir Energy 409,000 76,115
Telebras Preferred* Communications 778,000 77,644
Vale do Rio Dolce (Cia) Metals 4,600 88,967
509,320
CANADA: 2.4%
BCE Inc. Communication 9,800 272,955
Canadian Pacific Transportation 5,200 154,612
Quebecor Incorporated Class B Services & Growth 9,300 197,984
Royal Bank of Canada Banking 6,200 331,514
Shell Canada Energy 9,100 184,040
1,141,105
DENMARK: 0.6%
Codan Forsikring Insurance 2,000 307,580
307,580
FINLAND: 1.2%
Orion B Healthcare 7,000 258,225
Rauma Industrial 423 7,924
UPM-Kymmene Oy Forest & Paper 15,200 335,256
601,405
FRANCE: 4.6%
Assurance General France Insurance 8,800 462,056
Bouygues Building 2,458 229,630
Cap Gemini Technology 2,700 213,935
Christian Dior Consumer Retail 1,900 210,372
Eridania Beghin-Say Consumer Staples 2,600 373,340
Societe Generale Banking 2,656 363,002
Worms Et Cie Financial Diversified 4,000 342,546
2,194,881
GERMANY: 1.3%
Bankgesellschaft Berlin Banking 15,800 389,158
Merck KGAA Healthcare 6,700 248,601
637,759
GREECE 0.3%
Alpha Credit Bank Banking 700 46,193
Delta Dairy Consumer Staples 4,200 53,907
OTE Communications 3,200 66,772
166,872
HONG KONG: 2.9%
Cheung Kong Financial Diversified 10,700 74,401
China Resources Financial Diversified 16,000 43,881
HSBC Holdings Banking 18,000 407,504
Hong Kong Land Holdings Financial Diversified 54,000 123,120
Jardine Strategic Holdings Services & Growth 88,500 283,200
Johnson Electric Industrial 30,000 81,888
Lai Sun Development Financial Diversified 96,000 39,744
Lai Sun Hotel Warrants* Services & Growth 19,267 198
Shangri-La Asia Services & Growth 104,000 77,366
Swire Pacific A Transportation 15,000 80,142
Wheelock & Company Consumer Retail 140,000 159,376
1,370,820
INDONESIA: 0.2%
Guadang Garam Consumer Staples 24,000 67,905
Pab K Tjiwi Kimia Forest & Paper 133,000 48,877
116,782
ISRAEL: 0.2%
Bezeq Israel Telecom Communications 17,000 43,722
IDB Holding Corp. Financial Diversified 2,000 42,837
86,559
ITALY: 4.7%
Banco Popolare di Bergamo Banking 19,200 304,115
Banco Commerciale Italia Banking 146,600 401,391
Fiat Spa Consumer Durables 71,610 226,860
Montedison Industrial 392,900 317,502
Telecom Italia risp Communication 130,300 524,001
Telecom Italia spa Communication 74,111 462,920
2,236,789
JAPAN: 5.6%
Family Mart Consumer Retail 4,000 176,033
Fuji Photo Film Services & Growth 5,000 181,357
Kyocera Corporation Technology 3,000 171,956
NGK Spark PLug Consumer Durables 23,000 160,151
Nintendo Company Services & Growth 2,400 207,645
Nissan Motor Company Consumer Durables 31,000 165,311
Nippon Telephone & Telegraph Communications 20 169,710
Rinnai Consumer Durables 11,000 179,360
Shiseido & Company Consumer Staples 12,000 163,721
Sony Corporation Technology 2,000 166,216
Suzuki Motor Consumer Durables 21,000 223,619
Taiyo Yuden Technology 18,000 208,145
TDK Corporation Technology 2,000 166,050
Toshiba Corporation Technology 2,000 176,822
Yamanouchi Pharmanceuticals Healthcare 7,000 172,572
2,688,468
MALYASIA: 0.6%
AMMB Holdings Berhad Banking 20,600 33,388
Genting Berhad Services, & Growth 18,200 50,878
MBF Capital Banking 50,000 29,145
Oriental Holdings Services & Growth 25,600 51,771
Perlis Plantation Consumer Staples 43,750 79,367
Perusahaan Otomobl Consumer Durables 27,100 64,476
309,025
MEXICO: 1.0%
Grupo Ind Maseca B* Consumer Staples 76,500 74,075
Telefonos de Mexico Series L ADR Communications 7,400 309,413
Vitro sa Ord NPV* Industrial 18,900 74,447
457,935
NETHERLANDS: 6.1%
Baan* Technology 2,500 176,450
Bols Wessanen Consumer Staples 15,150 241,074
DSM NV Chemicals 3,918 352,553
Hoogovens NV Metals 8,334 380,734
ING Groep NV Insurance 15,446 646,177
KLM Transportation 9,800 331,001
KNP BT Forest & Paper 10,000 226,882
Randstad Holdings Services & Growth 5,250 208,852
Vendex International Cert. Services & Growth 4,354 236,904
Wolters Kluwer Services & Growth 1,212 148,315
2,948,942
NEW ZEALAND: 0.2%
Lion Nathan Limited Consumer Staples 33,000 79,533
79,533
NORWAY 0.8%
Den Norske Bank A Banking 87,300 393,016
393,016
PHILIPPINES: 0.1%
Metropolitan Bank & Trust Company Banking 4,400 30,772
Philippines Long Distance Communications 1,600 39,604
70,376
PORTUGAL: 0.2%
Telecom Portugal Communications 1,200 49,130
Banco Espir Santo Banking 1,800 52,093
101,223
SINGAPORE: 0.3%
Fraser & Neave Consumer Staples 7,800 39,074
Overseas Union Bank Banking 9,300 30,961
UOL Ltd. Financial Diversified 66,000 56,918
United Overseas Bank Banking 5,600 30,894
157,847
SOUTH AFRICA: 0.6%
Anglo American Industries Industrial 900 26,902
Anglo American Corporation Industrial 2,200 94,987
Anglovaal Industries Industrial 8,800 20,458
Anglovaal Ltd. Industrial 1,900 29,974
First National Bank Banking 6,600 49,800
Rembrandt Group Consumer Staples 7,200 59,034
Reunert Ltd. Industrial 8,600 16,958
298,113
SPAIN: 1.2%
Fuerzas Elec Catalan SA Utilities 15,945 123,100
Union Elec Fenosa Utilities 45,900 437,831
560,931
SWEDEN: 2.8%
Electrolux B Consumer Durables 6,500 536,947
SKF B Industrial 12,000 278,200
Trelleborg B Industrial 16,300 215,005
Volvo B Consumer Durables 11,210 292,744
1,322,896
SWITZERLAND: 1.2%
Fischer (Georg) AG Capital Goods 200 266,457
Novartis Reg Health Care 200 313,152
579,609
THAILAND: 0.2%
Advanced Information Service Communications 7,300 39,175
Bank of Ayudhya Banking 32,500 26,039
Thai Airways International Transportation 35,300 40,344
105,558
TURKEY: 0.4%
Akbank Banking 1,121,000 76,340
Arcelik Consumer Durables 660,000 73,656
Netas* Technology 61,000 18,270
Petkim* Chemicals 43,000 24,119
192,385
UNITED KINGDOM: 9.3%
Abbey National Banking 20,700 329,805
Bank of Scotland Banking 17,000 140,061
Boots Consumer Retial 8,400 120,514
British Steel Metals 66,200 175,231
British Telecom Communications 32,400 246,010
Commercial Union Insurance 11,000 154,493
Courtaulds Plc Chemicals 37,000 171,669
Guardian Royal Insurance 44,613 221,022
Harrison & Crosfield Industrial 89,300 189,548
Hillsdown Holdings Consumer Staples 61,800 175,252
Imperial Chemicals Industries Plc Chemicals 14,600 211,915
Inchcape Services & Growth 43,800 159,485
Ladbroke Group Services & Growth 63,996 286,446
Lonrho Industrial 75,700 123,209
MFI Furniture Consumer Retail 29,900 59,704
National Grid Group Utilities 48,100 225,791
National Westminster Bank Banking 18,779 270,523
Next Consumer Retail 12,600 147,470
Pearson Services & Growth 11,300 145,528
Redland Building 7,300 41,648
Severn Trent Utilities 13,977 203,575
Southwest Water Utilities 14,918 214,276
Tate & Lyle Consumer Staples 23,900 182,273
Unigate Group Consumer Staples 28,000 271,802
4,467,250
UNITED STATES: 32.6%
Allmerica Financial Insurance 910 42,656
American National Insurance Co. Insurance 1,800 172,800
American Stores Consumer Staples 12,000 308,250
Amsouth Bancorp Banking 7,050 338,841
Atlantic Richfield Energy 2,600 214,013
Bell Atlantic Communications 4,684 374,135
Black & Decker Services & Growth 3,400 129,413
BMC Software* Technology 1,600 96,600
Bristol Myers Squibb Health Care 8,000 702,000
Brown Forman B Consumer Staples 11,500 565,656
Champion International Forest & Paper 3,100 171,081
CMS Energy Corporation Utilities 2,100 76,650
Columbia HCA/Health Care Corp Health Care 11,200 316,400
Comerica Banking 2,700 213,469
Dell Computer* Technology 3,600 288,450
Du Pont Company Chemicals 3,200 182,000
Enova Corporation Utilities 10,500 255,281
Entergy Utilities 2,800 68,425
Exel Limited Insurance 1,800 108,788
Federated National Mortgage Assoc. Financial Diversified 7,200 348,750
First of America Banking 3,900 217,425
FMC Software* Technology 2,500 202,031
Ford Motor Company Consumer Durables 8,100 353,869
Garan, Inc. Consumer Retail 18,000 398,250
General Dynamics Corporation Aerospace 3,900 316,631
General Motors Corp. Class H Industrial 5,200 328,900
GPU Inc. Utilities 2,500 90,469
Harris Corporation Industrial 10,600 462,425
Intel Technology 1,400 107,800
ITT Industries Consumer Durables 9,800 309,313
JP Morgan & Company Banking 2,300 252,425
King World Productions Services & Growth 2,800 132,300
Mellon Bank Corporation Banking 5,200 268,125
Merrill Lynch Financial Diversified 1,600 108,200
Midamerican Energy Utilities 4,800 85,800
Murphy Oil Energy 6,200 359,213
National Service Industries Industrial 6,700 296,475
Norfolk Southern Corporation Transportation 8,100 260,213
Peoplesoft Inc.* Technology 1,400 88,025
Phelps Dodge Corporation Metals 1,000 74,375
Philip Morris Consumer Staples 9,700 384,363
Phillips Petroleum Energy 6,300 304,763
PPG Industries Inc. Chemicals 5,400 305,775
Raytheon Industrial 4,100 222,425
Rite Aid Corporation Consumer Staples 7,700 457,188
Royal Dutch Petroleum Energy 4,400 231,550
Schering-Plough Health Care 8,800 493,350
Southern New England
Telecommunications Corp Communications 7,100 304,413
St. Paul Companies Insurance 1,700 135,894
SuperValu Incorporated Consumer Staples 9,800 358,925
Tele-Communications Inc. A* Services & Growth 5,408 124,046
Tele-Communications TCI A* Services & Growth 3,092 71,309
Tellabs Incorporated* Technology 2,000 108,000
Torchmark Corporation Insurance 2,600 103,675
Travelers Group Incorporated Financial Diversified 4,500 315,000
Unilever NV Consumer Staples 2,400 128,100
US West Communication Communications 9,000 358,313
USX Marathon Corporation Energy 11,800 421,850
VF Corporation Consumer Retail 2,600 232,375
Warner-Lambert Health Care 2,200 315,013
Washington Post Class B Services & Growth 600 260,400
Xerox Corporation Services & Growth 3,700 293,456
15,616,105
Total Common Stocks (Cost $34,531,546) $41,773,306
US GOVERNMENT 2.9%
BONDS:
Principal
Amount
U.S. Treasury Bill, 02/05/98 (Cost $1,402,043) 1,422,000 $1,402,689
TIME DEPOSIT: 9.8%
Par
Value
State Street Bank and Trust Co. Eurodollar Time
Deposit 4.50%, due 11/01/97 (Cost $4,678,000) 4,678,000 4,678,000
Total Investments: 99.7% (Cost$40,611,589) 47,853,995
Other Assets, Less
Liabilities: 0.3% 141,577
Total Net Assets: 100% $47,995,572
* Non-income Producing Security
See Notes to Financial Statements.
</TABLE>
<TABLE>
THOMAS WHITE WORLD FUND
Statement of Assets and Liabilities
October 31, 1997
<S> <C>
ASSETS
Investments in securities at value (cost $40,611,589) $47,853,995
Cash 6,802
Receivables:
Dividends and interest 131,499
Investment securities sold 3,359
Fund shares sold 60,000
Prepaid expenses and deferred organization costs 10,443
Equipment 8,564
Total assets 48,074,662
LIABILITIES
Accrued expenses 79,090
Total liabilities 79,090
NET ASSETS
Source of Net Assets:
Net capital paid in on shares of beneficial interest $38,226,198
Undistributed net investment income 629,990
Accumulated net realized gain 1,896,978
Net unrealized appreciation 7,242,406
Net assets $47,995,572
Shares outstanding 3,628,204
Net asset value per share $13.23
See Notes to Financial Statements.
</TABLE>
<TABLE>
THOMAS WHITE WORLD FUND
Statement of Operations
Year Ended October 31, 1997
INVESTMENT INCOME
<S> <C>
Income:
Dividends (net of foreign taxes withheld of $117,564) $1,245,676
Interest 141,884
Total investment income 1,387,560
Expenses:
Investment management fees (note 3) 451,010
Custodian fees 53,610
Transfer Agent Fees 19,993
Audit fees and expenses 19,292
Trustees' fees and expenses 15,726
Printing Expenses 12,000
Legal fees and expenses 29,009
Organization costs 6,042
Registration fees 33,596
Depreciation expense 4,981
Other expenses 19,161
Total expenses 664,420
Net investment income 723,140
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 1,981,651
Unrealized appreciation on investments 3,574,857
Net gain on investments 5,556,508
Net increase in net assets from operations 6,279,648
See Notes to Financial Statements.
</TABLE>
<TABLE>
THOMAS WHITE WORLD FUND
Statements of Changes in Net Assets
Year Year
Ended Ended
1997 1996
<S> <C> <C>
Change in net assets from operations:
Net investment income $ 723,140 $ 607,816
Net realized gain 1,981,651 2,434,680
Unrealized appreciation for the period 3,574,857 2,215,073
Net increase in net assets from operations 6,279,648 5,257,569
Distributions to shareholders:
From net investment income (591,413) (573,868)
From net realized gain (2,434,679) (1,424,501)
Fund share transactions 5,584,959 2,919,256
Total increase 8,838,515 6,178,456
Net assets:
Beginning of period 39,157,057 32,978,601
End of year $ 47,995,572 $ 39,157,057
See Notes to Financial Statements.
</TABLE>
THOMAS WHITE WORLD FUND
Notes to Financial Statement
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 investment objective of the Fund is
to seek long-term capital growth by investing in stocks and debt obligations of
companies and governments of any nation. 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 principles 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, 1997, 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, 1997 October 31, 1996
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 242,690 $3,097,633 175,437 $2,048,354
Shares issued on
reinvestment of
distributions 249,893 2,986,226 175,904 1,968,359
Shares redeemed (40,053) (498,900) (90,857) (1,097,457)
Net increase 452,530 5,584,959 260,484 $2,919,256
</TABLE>
Note 3. Investment Management Fees and Other Transactions with Affiliates
The Fund pays monthly an investment management fee to Thomas White
International, Ltd. at the rate of 1% of the Fund's average daily net assets.
Note 4. Investment Transactions
For the year ended October 31, 1997, the cost of purchases and the
proceeds from sales of investment securities, other than short-term
obligations, were $20,090,372 and $20,969,921, respectively. The cost of
securities for federal income tax purposes was $40,696,261. Realized gains
and losses are reported on an identified cost basis.
At October 31, 1997, 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 $9,223,756
Unrealized depreciation (2,066,022)
Net unrealized appreciation $7,157,734
</TABLE>
<TABLE>
Note 5. Selected Financial Information
Year
Ended
October 31, 1997
<S> <C>
Per share operating performance
(For a share outstanding throughout the period)
Net asset value, beginning of period $12.33
Income from investment operations:
Net investment income 0.20
Net realized and unrealized gain 1.65
1.85
Distributions:
From net investment income (0.19)
From net realized gains (0.76)
(0.95)
Change in net asset value for the period (0.90)
Net asset value, end of period $13.23
Total Return 15.80%
Ratios/supplemental data
Net Assets. End of period (000) $47,996
Ratio to average net assets:
Expenses (net of reimbursement) 1.47%
Net Investment Income 1.60%
Portfolio turnover rate 48.19%
Average commission rate (per share):++ $0.0055
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) -- --
(0.68) (0.09) --
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% 1.01%
Average commission rate (per share)++ $0.0337 $0.0303 $0.0618
* Annualized
** Not annualized.
+ In the absence of the expense reimbursement, expenses would have been 2.36%
of average net assets.
++ Required by regulations issued in 1995.
</TABLE>
Independent Auditor's Report
The Board of Trustees
Thomas White World Fund
We have audited the accompanying statement of assets and
liabilities, including the investment portfolio, of Thomas White
World Fund as of October 31, 1997, and the related statement of
operations for the year then ended, the statement of changes in
net assets for each of the two years in the period then ended,
and the selected financial information for each of the three years
in the period then ended and 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 audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and selected financial information are
free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation
of securities owned as of October 31, 1997, by correspondence
with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and selected financial
information referred to above present fairly, in all material
respects, the financial position of Thomas White World Fund as
of October 31, 1997, the results of its operations, the changes
in its net assets, and the selected financial information for the
periods indicated, in conformity with generally accepted
accounting principles.
McGladrey & Pullen
New York, New York
November 21, 1997
