File No. 33-75138
As filed with the Securities and Exchange Commission on December 30, 1997
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 4 / X /
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 6 / X /
LORD ASSET MANAGEMENT TRUST
(Exact Name of Registrant as Specified in Charter)
440 South LaSalle Street, Chicago, Illinois 60605-1028
Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (312) 663-8300
Allan S. Mostoff, Esq. Thomas S. White
Dechert Price & Rhoads Thomas White International, Ltd.
1500 K Street, N.W. 440 South LaSalle Street
Washington, D.C. 20005 Chicago, Illinois 60605-1028
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box)
immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b)
X on March 1, 1998 pursuant to paragraph (a)
on (date) pursuant to paragraph (a) of Rule 485
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LORD ASSET MANAGEMENT TRUST
CROSS-REFERENCE SHEET
Item No. Caption
Part A
1 Cover Page
2 Expenses and Performance
3 Financial Information
4 The Fund in Detail
5 The Fund in Detail
5A Not Applicable
6 The Fund in Detail; Dividends,
Distributions and Taxes
7 Your Account at the Fund; Shareholder
Services and Account Policies
8 Your Account at the Fund; Shareholder
Services and Account Policies
9 Not Applicable
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Item No. Caption
Part B
10 Cover Page
11 Table of Contents
12 General Information and
History
13 Investment Objective and
Policies
14 Management of the Trust
15 Principal Shareholders
16 Investment Management and
Other Services
17 Brokerage Allocation
18 Description of Shares
19 Purchase, Redemption and
Pricing of Shares
20 Tax Status
21 Not Applicable
22 Performance Information
23 Financial Statements
<PAGE>
PROSPECTUS & APPLICATION
THOMAS WHITE WORLD FUND
Capturing Value WorldwideSM
March 1, 1998
Thomas White World Fund (the "Fund") seeks long-term capital growth through a
flexible policy of investing worldwide. It primarily invests in common stocks
within developed markets, including the United States, and to a lesser extent,
within emerging markets. The Fund is a series of the Lord Asset Management Trust
(the "Trust").
Lord Asset Management Trust
440 S. LaSalle Street, Suite 3900, Chicago, IL 60605
Please read this prospectus before investing, and keep it on file for future
reference. It contains information that an investor ought to know before
investing, including how the Fund invests and the services available to
shareholders.
A Statement of Additional Information ("SAI") dated March 1, 1998 has been filed
with the Securities and Exchange Commission, and is incorporated herein by
reference (is legally considered a part of this prospectus). The SAI is
available free upon request by calling:
1-800-811-0535.
LIKE ALL MUTUAL FUNDS, 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>
Contents
Fund Highlights 2 Goal, Strategy, and those
Investors who may find
the Fund attractive
Investment Approach 4 The Advisor's
Investment Approach
Expenses and 7 Expenses
Performance 8 Performance
9 Financial Information
Your Account 10 Doing Business With Thomas
at the Fund White International
10 How to Buy Shares
12 Choosing Your Account
Registration or
Retirement Accounts
16 How to Sell Shares
Shareholder Services 19 Statements and Reports
and Account Policies 19 Share Price
20 Purchases
21 Redemptions
22 Address Changes
22 Telephone Transactions
Dividends, Distributions 24 Distribution Options and Taxes
and Taxes 25 Foreign Taxes
The Fund in Detail 26 Organization
27 Management
27 Expenses
28 Securities, Investment
Practices and Risks
Contacting the Fund 36 Addresses and Phone Number
AN IMPORTANT PHONE NUMBER
All Shareholder Services: 1-800-811-0535
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Fund Highlights
Fund Goal
The Fund seeks long-term capital growth.
Investment Strategy The Fund primarily invests in international common stocks,
although it may occasionally hold fixed-income or other securities. Generally,
equity investments will represent a diversified portfolio of companies located
in the world's developed countries, including the United States. There will also
be a small portion of the assets in a diversified portfolio of companies from
the emerging market countries. The Fund seeks to own attractively-priced
companies that Thomas White International, Ltd., the Fund's investment advisor,
thinks will benefit from favorable long-term economic, social and political
trends.
Management
Thomas White International, Ltd. ("TWI" or "Advisor") chooses investments for
the Fund. Thomas S. White, Jr. is the Fund's portfolio manager and has been so
since its inception. The manager takes full advantage of the extensive
resources of the Global Capital Institute. This investment research
organization is wholly-owned by TWI. It has numerous experienced security
analysts that perform ongoing investment valuation work on three thousand
global companies in forty-seven countries. The Institute's monthly global
equity valuation publications are produced for use by its clients, who are
asset management organizations worldwide.
Those investors who may find the Fund attractive
The Fund is designed for individuals with long-term investment horizons who want
growth of capital rather than current income.
World funds characteristically obtain smoother performance than foreign funds.
This is because world funds have a portion of their assets in U.S. securities.
This exposure produces broader investment and portfolio diversification.
Investing directly in foreign markets is impractical for most investors because
of the complexity of doing research and making transactions. Investors must deal
with brokers in different time zones, arrange for available foreign currency,
coordinate widely varying settlement dates, follow local regulations, deal with
dividend tax withholding reclaims, etc. The Fund manages these areas for
shareholders. The shareholders of the Fund have a diversified worldwide
investment portfolio that is actively managed by experienced professionals. The
Fund represents a practical, low cost, 100% no-load vehicle. It enables the
individual ownership of an extensive worldwide investment portfolio.
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Risks and Potential Rewards
Shareholders should understand that all investments involve risk. 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.
The value of the Fund's investments and, therefore, investment performance will
vary from day to day. Performance depends on the manager's skill in selecting
stocks, as well as general market and economic conditions. When you sell your
shares, they may be worth more or less than the price you paid for them.
Did you know?
The Fund's investment advisor, Thomas White International, Ltd., also manages
portfolios for institutional clients in Europe, the U.K., the U.S. and Japan.
The portfolio manager, Thomas White, takes full advantage of the extensive
resources of the Global Capital Institute, a wholly-owned investment research
organization. The Institute's professionals do ongoing valuation-based security
analysis on three thousand global companies in forty-seven countries. Its
monthly equity valuation publications are produced for clients who are asset
management organizations located around the world.
The Fund will generally be fully-invested in common stocks. History shows that
over long periods, equities have outperformed bonds, cash equivalents and
inflation. Nevertheless, in the short term, stock performance may be volatile
and unpredictable, and may produce more negative annual returns than other asset
class. Moreover, holding foreign companies can entail taking more risk than
owning the stocks of domestic companies.
The Advisor recognizes the above risks and attempts in its management of the
Fund to moderate them. It believes that a professionally structured and
carefully monitored world portfolio can reduce the risks associated with
single-country, less-diversified equity portfolios. The Fund is designed for
investors who want to improve the return and risk profile of their equity
portfolios by having some exposure to foreign investing. Its objective is to
compliment, through diversification, single-country, domestic equity investing
It considers itself in competition with other foreign equity funds. While the
Fund attempts to configure its portfolio to moderate the natural volatility of
equities, its success in doing so cannot be assured.
The Fund is managed with a goal of producing long-term capitals gains so as to
minimize investor taxation. Current income is only a byproduct of the manager's
investment process, and is not a primary objective.
See "Your Account" for how to buy and redeem shares.
<PAGE>
Investment Approach
The Advisor's investment approach suggests that this Fund is appropriate for
investors who believe that foreign equity exposure will, as it has in the past,
improve the risk return profile of an equity portfolio.
This Fund is not for everyone. It has been designed by an experienced investment
advisor to be valuable to private investors who have long-term savings and
investment goals. It is best used by the person who recognizes the importance of
designing a lifetime investment plan and wants to save regularly and invest
those funds in a disciplined fashion. The Fund's shareholder communications are
addressed to this type of prudent investor in an attempt to assist their
particular needs and questions.
The Fund seeks to attract investors who will become increasingly comfortable
with the Advisor's investment approach and remain shareholders for the entire
life of their investment plans.
The Fund employs a valuation-based investment approach that the Advisor has used
successfully over many years. The Advisor attempts to obtain strong investment
performance, but only within the context of conservative investment management.
The Advisor seeks below average portfolio turnover, low portfolio volatility and
superior returns in difficult market environments.
The Advisor believes that this style of investing is more likely to sustain
superior returns over longer periods. This style may not be considered
aggressive enough by many who are willing to take greater risks for greater
rewards, despite the irregular returns and high volatility that may accompany
such an approach. This Fund is therefore not appropriate for aggressive,
short-term investors.
The Fund should be used by individuals who want to improve the return and risk
profile of their combined investments by having exposure to foreign investing.
It is designed for use as the international equity fund within a multi-fund
portfolio because it compliments domestic equity funds. The Advisor's private
clients have between 15% and 35% of their equity portfolios in world funds.
Investment Techniques
The Advisor's preference for below average portfolio turnover and stable
portfolios is reflected in an emphasize on stock selection and extensive country
diversification.
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Stocks typically are held for eighteen months to three years. Occasionally,
however, securities purchased on a long-term basis may be sold within eighteen
months after purchase due to a change in the circumstances of the company or
industry fundamentals, or in the general market or economic conditions.
The Fund invests primarily in equity securities, including common and preferred
stocks, warrants or other similar rights, and convertible securities. These
equity securities may be of any nation. The Fund may purchase foreign securities
in the form of American Depository Receipts (ADRs), European Depository Receipts
(EDRs), or other securities representing underlying shares of foreign issuers.
The Fund may also invest in any other type of security, including debt
securities.
Under normal market conditions, the Fund will invest in at least ten countries.
If investments in foreign securities appear to be relatively unattractive
because of current or anticipated adverse political or economic conditions, the
Fund may hold cash or cash equivalents, or invest any portion of its assets in
securities of the U.S. government and equity and debt securities of U.S.
companies, as a temporary defensive strategy.
Though not a standard procedure, the Fund may use various techniques to increase
or decrease its exposure to the effects of possible changes in security prices,
currency exchange rates, or other factors that affect the value of the Fund's
portfolio. These techniques include buying and selling options, futures
contracts, or options on futures contracts, or entering into forward foreign
currency exchange contracts.
Portfolio Diversification
In general, the more diversified a fund's portfolio of stocks, the less likely
that a specific stock's poor performance will hurt the fund. One measure of a
fund's level of diversification is the percentage of assets represented by its
ten largest holdings. According to the Morningstar Principia Database, as of
November 30, 1997, the average global mutual fund had 22.7% of its assets
invested in its ten largest holdings, while the Fund had only 11.6% of its
assets invested in its ten largest holdings.
Portfolio Turnover
Before investing in a mutual fund, investors should consider its portfolio
turnover rate. The portfolio turnover rate is an indication of how long the
manager holds securities in the portfolio. For example, if the portfolio
turnover rate is 100%, then the average holding period is one year. If the
portfolio turnover rate is 50%, then the average holding period would be two
years. Funds with high portfolio turnover rates have higher brokerage and other
transaction costs, and may be more likely than funds with low portfolio turnover
rates to generate capital gains that must be distributed to shareholders as
taxable income. According to the Morningstar Principia Database, the average
portfolio turnover rate for a global mutual fund is 83% as of November 30, 1997.
The Fund had a 48% portfolio turnover rate for the fiscal year ended October 31,
1997.
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Expenses and Performance
Expenses
Shareholder transaction expenses are charges paid when you buy or sell shares of
the Fund.
TRANSACTION EXPENSES
Maximum sales charge on purchases
and reinvested dividends..None
Deferred sales charge on
redemption................None
Wire transaction fee......$10
Annual fund operating expenses. Expenses include investment advisory fees as
well as the costs of maintaining accounts, administering the Fund, providing
shareholder services and other activities. The Fund's expenses are subtracted
daily and are therefore factored into the share price as reported; expenses are
not charged directly to shareholder accounts.
The following are projections based on historical expenses, and are calculated
as a percentage of average daily net assets.
Understanding Expenses
A mutual fund's expenses include those for the portfolio's management, as well
as the costs of producing shareholder statements, tax preparation and reporting
and other services. These expenses reduce shareholder assets daily so the Fund's
share price and returns include absorbing these expenses.
THOMAS WHITE WORLD FUND
Management fee..............................1.00%
12b-1 fee...................................None
Other Expenses..............................0.47%
Total fund operating expenses...............1.47%*
Example: Assume that the Fund's annual return is 5%, and that its operating
expenses are exactly as shown in the column to the left. For every $1,000 you
invested, here's how much you would have paid in total expenses if you closed
your account after the number of years indicated:
THOMAS WHITE WORLD FUND
After 1 year..............$ 15
After 3 years.............$ 47
After 5 year..............$ 81
After 10 years............$176
These examples illustrate the effect of expenses, but are not meant to suggest
actual or expected cost or returns, all of which may vary. Use of this assumed
5% return is required by the Securities and Exchange Commission; ("SEC") it is
not an illustration of past or future investment results.
* TWI has agreed to reimburse the Fund for its operating expenses in its current
fiscal year to the extent that the Fund's total operating expenses exceed 1.50%
of the Fund's average daily net assets.
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Performance
Mutual fund performance is commonly measured as total return. Total return is
the change in value of an investment in the Fund over a given period, assuming
reinvestment of any dividends and capital gains. Total return reflects actual
performance over a stated period of time. Average annual total return is a
hypothetical rate of return that, if achieved annually, would have produced the
same total return if performance had been constant over the entire period.
Average annual returns smooth out variations in performance; they are not the
same as actual year-by-year results. Total returns are based on past results and
are not a prediction of future performance. They do not include the effect of
income taxes.
The Fund sometimes shows its performance compared to stock indexes (described in
the statement of additional information), or gives its ratings or rankings
determined by an unrelated organization.
Information about the performance of the Fund is contained in the Annual Report
to Shareholders, which may be obtained free of charge by calling 1-800-811-0535.
The No-Load Advantage
. Thomas White World Fund is 100% no-load, which means that all of your money
goes to work for you immediately. There are no sales charges, no 12b-1 fees
and no back-end load fees, so all of your dollars are invested at net asset
value. The Fund typically invests in companies for longer holding periods, so
the frequency of its purchases and sales is below average. Lower portfolio
turnover helps to reduce trading costs and shareholders' taxes.
Fund Facts
. The Fund was opened to investors on June 28, 1994.
. The professionals at the Fund's advisor maintain a strong ethics policy that
restricts them from buying all common stocks. Ethics policies are in place to
assure Fund shareholders that potential conflicts of interest are minimized
and monitored.
. Thomas White International, Ltd., the advisor to the Fund, sells research to
institutional money managers worldwide.
<PAGE>
Financial Information
Thomas White World Fund
This table summarizes the Fund's financial history. The information has been
audited by McGladrey & Pullen, LLP, the Fund's independent auditors. Their audit
report covering each of the past three years and the period from June 28, 1994
(Inception) to October 31,1994, appears in the Fund's Annual Report to
Shareholders for the fiscal year ended October 31, 1997. The Annual Report to
Shareholders also includes more information about the Fund's performance.
For a free copy, please call 1-800-811-0535.
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Period from
June 28,1994
For a share outstanding throughout the period Year ended October 31 (Inception) to
- - --------------------------------------------------------------------------------------
1997 1996 1995 Oct. 31,`94
- - ------------------------------------- ---------- -------- --------- ------------
Net Asset Value, beginning of period $12.33 $11.31 $10.50 $10.00
Income From Investment Operations
Net investment income 0.20 0.19 0.19 0.06
Net realized and unrealized gain 1.65 1.51 0.71 0.44
- - ------------------------------------- ---------- -------- --------- ------------
Total from investment operations 1.85 1.70 0.90 0.50
Less Distributions
From net investment income (0.19) (0.20) (0.09) -
From net realized gains (0.76) (0.48) - -
- - ------------------------------------- ---------- -------- --------- ------------
Total distributions (0.95) (0.68) (0.09) -
- - ------------------------------------- ---------- -------- --------- ------------
Change in net asset value for the
period 0.90 1.02 .81 .50
- - ------------------------------------- ---------- -------- --------- ------------
Net Asset Value, end of period $13.23 $12.33 $11.31 $10.50
- - ------------------------------------- ---------- -------- --------- ------------
Total Return 15.80% 15.63% 8.65% 5.00%**
Ratios/Supplemental Data
Net assets at end of period (in $47,996 $39,157 $32,979 $13,928
thousands)
Ratio to average net assets:
Expenses (net of reimbursement) 1.47% 1.50% 1.49% 1.50%*+
Net investment income 1.60% 1.63% 2.08% 1.79%*
Portfolio turnover rate 48.19% 51.22% 64.54% 1.01%
Average commission rate paid (per
share):++ $0.0055 $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>
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Your Account at the Fund
Doing Business with Thomas White International
The Fund provides customers with service Monday through Friday, except holidays,
from 8:00 a.m. to 7:00 p.m. Chicago (central) time.
Call 1-800-811-0535:
. For help in setting up your account, prices, literature, or Fund information;
. For help with existing Individual Retirement Accounts ("IRAs"); o To add to
your existing account or to redeem shares by phone -- call our transfer agent
by 3:00 p.m. Chicago (central) time;
. For your last 5 transactions, current net asset value ("NAV"), current account
value and dividend distribution - Our automated phone system can provide
information 24 hours a day.
How to Buy Shares
You can open a new account by
mailing in an application with your check or money order.
After your account is open, you may add to it by:
. wiring money from your bank;
. moving money from your bank by telephone if you participate in the telephone
purchase plan;
. mailing a check or money order with the stub from one of your account
statements or a letter containing your name and account number.
You must make your telephone purchases by 3:00 p.m. Chicago (central) time.
If you are investing through an IRA for the first time, you will need a special
application. Call 1-800-811-0535 to receive information and an application for
an IRA. For both initial and subsequent IRA investments, please indicate the
year for which the investment is being made.
MINIMUM INVESTMENTS
To open an account $2,500
To open an IRA $1,000
To open an Automatic
Investment Account $1,000
To open a spousal IRA $ 200
To add to an account $ 100
If you sign up for the Automatic Investment Plan and later wish to change the
amount or frequency of your automatic investments, or stop future investments,
you may do so by simply calling us at 1-800-811-0535 at least one week prior to
your next scheduled investment date.
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. Investors may be charged a fee if they effect transactions
in Fund Shares through a broker, agent, or other Processing Intermediary. In
addition, the Investment Manager may, from time to time, make payments to
Processing Intermediaries for certain services to the Fund and/or its
Shareholders, including sub-administration, sub-transfer agency and Shareholder
servicing. Such payments are made out of the Investment Manager's own resources
and do not involve additional costs to the Fund or its Shareholders.
<PAGE>
CHOOSING YOUR ACCOUNT REGISTRATION OR RETIREMENT ACCOUNTS
- - --------------------------------------------------------------------------------
Individual or Joint Ownership
For your general investment needs
Individual accounts are owned by one person. Joint accounts can have two or more
owners.
- - --------------------------------------------------------------------------------
Gift or Transfer to a Minor (UGMA, UTMA)
To invest for a minor's education or other future needs
These custodial accounts provide ways to give money to a minor. The account
application must include the minor's social security number.
- - --------------------------------------------------------------------------------
Trust or Established Employee Benefit or Profit-Sharing Plan For money being
invested by a trust, employee benefit plan, or profit-sharing plan
The trust or plan must be established before an account can be opened.
- - --------------------------------------------------------------------------------
Corporation or Other Entity
For investment needs of corporations, associations, partnerships, institutions,
or other groups
You will need to send a certified corporate resolution with your application.
- - --------------------------------------------------------------------------------
Retirement
To shelter your retirement savings from taxes
Retirement plans allow individuals to shelter investment income and capital
gains from current taxes. Contributions to these accounts may be tax deductible.
IRAs require a special application (call 1-800-811-0535); lower minimum
investments apply.
. Individual Retirement Accounts (IRAs) allow any one of legal age and under 70
1/2 with earned income to save up to $2,000 per tax year. If your spouse has
(or elects to be treated as having) earned income of less than $250 your
spouse may invest in a "Spousal IRA." Each account is subject to the $2,000
maximum; the maximum for your combined accounts is $4,000.
. Rollover IRAs retain special tax advantages for certain distributions from
employer-sponsored retirement plans.
. Simplified Employee Pension Plans (SEP-IRAs) allow small business owners or
those with self-employment income to make tax-deductible contributions of up
to $30,000 per year for themselves and any eligible employees.
. Savings Incentive Match Plan for Employees (SIMPLE)- Firms with 100 or fewer
employees who do not have a retirement plan can establish a SIMPLE Plan.
Employees can establish a SIMPLE plan in the form of either an IRA or a 401(k)
plan. Employers using IRAs must either match the first 3% of pay each employee
defers under the plan, or alternatively, make a non-elective contribution of
2% of pay for each eligible employee.
. Other retirement plans- The Fund may be used as an investment in other kinds
of retirement plans, including Keogh or corporate profit sharing and money
purchase plans, 403(b) plans, and 401(k) plans. All of these accounts need to
be established by the trustee of the plan. The Fund does not offer prototypes
of these plans.
<PAGE>
HOW TO BUY SHARES OF THE FUND
Phone 1-800-811-0535
To open an account:
. You may only open a new account by phone if you wire your investment to the
Fund. See the section "Wire" below.
To add to an account:
. Use the telephone purchase plan to transfer funds from your bank account. Call
first to verify that this service is in place on your account. (This service
is not available for IRAs).
You must make your telephone purchases by 3:00 p.m. Chicago (central) time.
Mail
To open an account:
. Complete and sign the application.
Make your check payable to "Thomas White World Fund." Mail to the address
on the application, or for overnight delivery:
Thomas White World Fund
Shareholder Services Center
615 East Michigan Street 3rd Floor
Milwaukee, WI 53202
To add to an account:
. Make your check payable to "Thomas White World Fund" and include the stub
from one of your statements with a letter containing your name and account
number. Remember to always put your account number on your check. Mail to the
address on your statement.
<PAGE>
Wire
To open an account:
. If you make your initial investment by wire you must fill out an application
marked "follow-up" and send it to our transfer agent. The application must be
received before any of the purchased shares can be redeemed. Prior to wiring
your investment to the Fund, call and establish an account to ensure the
Transfer Agent correctly credits your account.
To add to an account:
. Wire to:
Firstar Bank Milwaukee, N.A.
ABA Number 07500-00022
Trust Funds, Acct Number 112-952-137
For further credit to Thomas White World Fund
(Investment account number)
(name or account registration)
Automatic Investment Plan
To open an account:
. You may open a new account with a $1,000 minimum initial investment if you
sign up for the Automatic Investment Plan. Fill out the Automatic Investment
Plan section on the application for monthly or quarterly transfers from your
bank account, or call 1-800-811-0535 for an application.
To add to an account:
. If you would like to add this service to your account, or if you already have
this service, you can easily change the frequency or amount of your automatic
investments over the phone by calling 1-800-811-0535.
<PAGE>
How to Sell Shares
You can arrange to take money out of your Fund account at any time by selling
(redeeming) some or all of your shares. Your shares will be sold at the next NAV
calculated after your order is received and accepted. See "Shareholder and
Account Policies" for more information about share price.
To sell shares in a regular (non-IRA) account, you may use any of the methods
described here. To sell shares in an IRA, your request must be made in writing.
If you need an IRA Withdrawal Request form, call us at 1-800-811-0535.
The Telephone Redemption Plan lets you redeem shares by phone. You must make
your telephone redemptions by 3:00 p.m. Chicago (central) time. You must have
selected this option on your application. If you have changed the address on
your account by telephone within 30 days of the request, this service is not
available. You must designate an account on your purchase application, or in
writing with a signature guarantee, to have proceeds of a redemption wired to
your bank account.
Selling Shares in Writing Please send a letter with:
. your name;
. your Fund account number;
. the dollar amount or number of shares to be redeemed;
. any other applicable requirements listed in the table on the next page.
Mail your letter to:
Thomas White World Fund
c/o Firstar Trust Co.
P.O. Box 701
Milwaukee, WI 53201-0701
If you are using overnight mail:
Thomas White World Fund
Mutual Fund Services
615 E. Michigan St.
3rd Floor
Milwaukee, WI 53202
Certain requests must include a signature guarantee, designed to protect you and
the Fund from fraud. You should be able to obtain a signature guarantee from a
bank, broker-dealer, credit union (if authorized under state law), securities
exchange or savings association. A notary public cannot provide a signature
guarantee.
Your request must be made in writing and include a signature guarantee if any of
the following situations applies:
. you wish to redeem more than $50,000 worth of shares;
. your name has changed by marriage or divorce (send a letter
indicating your account number(s) and old and new names, signing the letter
in both the old and new names and having both signatures guaranteed);
. your address has changed within the last 30 days and you would like to redeem
shares;
. the check is being mailed to an address different from the one on your account
(record address);
. the check is being made payable to someone other than the account owner; or
. you are instructing us to wire the proceeds to a bank or brokerage account and
have not signed up for the Telephone Redemption by Wire plan.
<PAGE>
HOW TO SELL SHARES OF THE FUND
Phone 1-800-962-1585
All accounts except IRAs To verify that the telephone redemption
plan is in place, call 1-800-811-0535. This
may be selected on the application.
You must make your telephone redemptions by 3:00 p.m. Chicago (central) time.
Mail
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Individuals, Joint Owners, The letter of instruction must be signed by
Sole Proprietorships, UGMA, all persons required to sign for transactions
UTMA (usually, all owners of the account), exactly
as their names appear on the account.
IRAs The account owner should complete an IRA
Withdrawal Request form. Call 1-800-811-0535
to request one.
Trust The trustee must sign the letter indicating
capacity as trustee. If the account
registration does not include the trustee's
name, provide a copy of the trust document
certified within the last 30 days.
Business or Organization The person or persons authorized by
corporate resolution to act on the account
must sign, in that person's official
capacity, the redemption request on the
corporation's stationery.
Include a corporate resolution certified
within 30 days if the amount to be redeemed
exceeds $50,000.
Executor, Administrator, Call 1-800-811-0535 for instructions.
Conservator, Guardian
</TABLE>
Wire
All account types except IRAs
. You must sign up for payment of redemptions by wire before using this
feature. Call to verify that this service is in place - 1-800-811-0535.
. There is a $10 fee for this service.
You must make your telephone redemptions by 3:00 p.m. Chicago (central) time.
Note: Some redemptions require signatures guarantees. Please see page 17.
<PAGE>
The Fund may hold payment on redemptions until it is reasonably satisfied that
it has received payment for a recent purchase made by check, by the Automatic
Purchase Plan, or by the Telephone Purchase Plan, which can take up to fifteen
days.
The price at which your shares will be redeemed is determined by the time of day
our transfer agent receives your redemption request. The price per share is
always the next NAV per share calculated after your redemption request,
including any required signature guarantee or supporting documents, is received.
The Fund calculates the NAV as of Closing Time on each day the New York Stock
Exchange (NYSE) is open for trading. Closing Time is the close of regular
session trading on the NYSE, which is usually 3:00 p.m. Chicago (central) time,
but is sometimes earlier.
To get today's price-
. Use the telephone redemption plan to call your redemption request in before
Closing Time.
. Have your written redemption request, with a signature guarantee, if
required, and any supporting documents, delivered to our transfer agent
before Closing Time.
Shareholder and Account Policies
Statements and reports that the Fund sends to you include:
. Confirmation statements (after every transaction in your account or
change in your account registration)
. Year-end account statements
. Quarterly statements o Annual and Semi-annual Reports
. Prospectus updates
If you would like us to send duplicate statements to someone, simply call us at
1-800-811-0535, and we can take your request over the phone.
If you need copies of your historical account information, please call
1-800-811-0535. There is a $15 fee per account charged for transcripts going
back more than three years from the date the request is received by the Fund.
Share Price
The Fund is open for business each day the New York Stock Exchange (NYSE) is
open. The offering price (price to buy one share) and redemption price (price to
sell one share) are the Fund's NAV calculated at the next Closing Time after
receipt of your order.
<PAGE>
The Fund's NAV is the value of a single share. The NAV is computed by adding up
the value of the Fund's investments, cash, and other assets, subtracting its
liabilities, and then dividing the result by the number of shares outstanding.
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 as of the close of trading
on the foreign exchange on which it is traded or as of 3:00 p.m. Chicago
(central) time, if that is earlier. That value is then converted into the U.S.
dollar equivalent using foreign exchange rates in effect at noon of that day.
The exception to this policy is Canadian securities, which are converted into
their U.S. dollar equivalent at the close of the Canadian market (3:00 p.m.
Chicago (central) time).
Securities for which market quotations are not readily available and other
assets are valued at fair value as determined by TWI using methods approved by
the Board of Trustees and subsequently ratified in good faith by the Board of
Trustees.
Your purchase or redemption of Fund shares will be priced at the next NAV
calculated after your investment (including the application, if for a new
account, and the money) or redemption request is received and accepted. An order
received before Closing Time will get that day's price. Telephone orders
received after Closing Time will receive the next day's NAV.
Purchases
. All of your purchases must be made in U.S. dollars and checks must be drawn on
U.S. banks. You may not open an account with a third party check. .
. The Fund does not accept cash or credit cards.
. If payment for your check or telephone order does not clear, your purchase
will be canceled and you will be liable for any losses or fees the Fund or its
transfer agent incurs.
. Your Automatic Investment Plan and Telephone Purchase Plan may be immediately
terminated in the event that any item is unpaid by your financial institution.
. When you make a purchase by telephone, the money is ordinarily drawn from your
bank account the day after you call and the Fund shares purchased are at the
NAV calculated after the money is transferred.
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. See the SAI for further information.
<PAGE>
Investors who make excessive moves in and out of the Fund generate additional
costs that fall upon all the Fund's shareholders. To minimize such costs, the
Fund reserves the right to reject any specific purchase order. Purchase orders
may also be refused if, in TWI's opinion, they are of a size that would disrupt
the management of the Fund.
Redemptions
. Normally, redemption proceeds will be mailed within seven days after the
transfer agent receives a request for redemption.
. The Fund may hold payment on redemptions until it is reasonably satisfied
that it has received payment for a recent purchase made by check, by the
Automatic Purchase Plan, or by the Telephone Purchase Plan, which can take
up to fifteen days.
. If you elected to participate in the Telephone Redemption by Wire plan,
payment will be sent for your redemption to your bank account by wire
transfer. There is a $10 fee for this service. In addition, your bank may
impose a fee for the incoming wire. Payment by wire is usually credited to
your bank account on the next business day after your call.
. Redemptions may be suspended or payment dates postponed on days when the
NYSE is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.
. Certain accounts (such as trust accounts, corporate accounts and custodial
accounts) may require documentation in addition to the redemption request.
Call 1-800-811-0535 for more information.
If the value of your account falls below $2,500, the Fund reserves the right to
close your account and send the proceeds to you. 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 will be sent to
the investor's address of record. A date at least 30 days after the mailing date
will be set 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 account value up to $2,500 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.
<PAGE>
If checks representing redemption proceeds or dividend and capital gains
distributions are returned "undeliverable" or remained uncashed for six months,
the checks shall be canceled and the proceeds will be reinvested in the Fund at
the per share NAV on the date of cancellation. In addition, after such six-month
period, your cash election will automatically be changed and future dividends
and distributions will be reinvested at the per share NAV determined on the date
of payment of such distributions.
Address Changes
You may change your address by calling 1-800-811-0535. The Fund will send a
written confirmation of the change to both your old and new addresses. No
telephone redemptions may be made for 30 days after a change of address by
phone. During those 30 days, a signature guarantee will be required for any
written redemption request unless your change of address was made in writing
with a signature guarantee.
Telephone Transactions
(For your protection, all transactions are completed over a recorded line.) You
may initiate many transactions by telephone:
. Change your address;
. Request duplicate statements to be sent to someone you designate;
. Request a current account statement;
. Purchase shares through the Telephone Purchase Plan (plan must be
pre-established);
. Redeem shares and have proceeds wired to a bank checking account (bank wire
redemption plan must be pre-established, not available for IRA accounts);
. Change the frequency or amount, or discontinue the Automatic Investment Plan
on your account(s);
. Add or discontinue the Telephone Redemption privilege to your account;
. Change your distribution option (does not apply to IRA accounts);
. Redeem shares, with a check sent to the address of record (does not apply to
IRA accounts, and your address of record must not have changed in the last 30
days);
. Exchange money from an individual account to an existing IRA account with an
identical registration;
. Change the contribution year on an IRA account to the previous year up until
April 15 of the current year.
<PAGE>
The Fund will not be responsible for any losses resulting from unauthorized
transactions if it follows reasonable procedures designed to verify the identity
of the caller. Those procedures may include recording the call, requesting
additional information, and sending written confirmation of telephone
transactions.
You should verify the accuracy of telephone transactions immediately upon
receipt of your confirmation statement. If you do not want to be able to
initiate purchase or redemption transactions by telephone, decline these
privileges on your account application or call the Fund for instructions at
1-800-811-0535.
If you are unable to reach the Fund by phone (for example during periods of
unusual market activity), consider placing your order by mail.
DOING BUSINESS WITH THOMAS WHITE INTERNATIONAL
From time to time you may find it necessary to make changes to your account
privileges or registration. The following easy-to-use shareholder forms are
available upon request by calling 1-800-811-0535:
To accomplish this: Please request this form:
For changes to account privileges . Application
For reregistering your current account . Application
For changes to your IRA beneficiary designations . Change of Benficiary
For transferring money from an IRA account with
another institution to the Fund . IRA Transfer Form
For redeeming shares from your IRA account . IRA Withdrawal
<PAGE>
Dividends, Distributions, and Taxes
The Fund distributes substantially all of its net income and realized capital
gains to shareholders each year. Normally, dividends and capital gains are
distributed in December.
Distribution Options
When you open an account, specify on your application how you want to receive
your distributions. If you later want to change your distribution option, call
us at 1-800-811-0535.
The Fund offers four options:
. Your income dividends and capital gain distributions will be automatically
reinvested in additional shares of the Fund. If you do not indicate a
choice on your application, you will be assigned this option.
. You will be sent a check for each income dividend and capital gain
distribution.
. Your capital gain distributions will be automatically reinvested, but you
will be sent a check for each income dividend.
. Your income dividends will be automatically reinvested, but you will be
sent a check for capital gain distributions.
For IRA accounts, all distributions will be automatically reinvested because
payment of distributions in cash would be a taxable distribution from your IRA,
and might be subject to income tax penalties if you are under 59 1/2 years old.
After you are 59 1/2, you may request payment of distributions in cash. When you
reinvest, the reinvestment price is the Fund's NAV at Closing Time on the
reinvestment date.
Taxes
As with any investment, you should consider how your investment in the Fund will
be taxed. If your account is a tax-deferred account, for example, an IRA or an
employee benefit plan account, the following tax discussion does not apply. If
your account is not a tax-deferred account, however, you should be aware of the
following tax rules:
Taxes on distributions
Each year, the Fund intends to elect and qualify for treatment as a regulated
investment company under the Internal Revenue Code. As such, the Fund intends to
distribute to shareholders substantially all of its net investment income and
realized capital gains, which generally will be subject to federal income tax
and may also be subject to state or local taxes. If you live outside the United
States, your distributions could also be taxed by the country in which you
reside.
Your distributions are taxable when they are paid, whether you take them in cash
or reinvest them in additional shares. However, distributions declared in
October, November or December and paid in January are taxable as if they were
received by you on December 31.
<PAGE>
For federal tax purposes, the Fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions are
taxed as long-term capital gains. Every January, the Fund will send you and the
IRS a statement, called a Form 1099, showing the amount of each taxable
distribution you received in the previous year.
Taxes on Transactions
Your redemptions - including exchanges between accounts - are subject to capital
gains tax. A capital gain or loss is the difference between the cost of your
shares and the price you receive when you sell them.
Whenever you sell shares of the Fund, we will send you a confirmation statement
showing how many shares you sold and at what price. You will also receive a
year-end statement every January. It is up to you or your tax preparer to
determine whether any given sale resulted in a capital gain, and if so, the
amount of tax to be paid.
Understanding Distributions:
As a Fund shareholder, you are entitled to your share of the Fund's net income
and any net gains realized on investments.
The Fund's income from dividends and interest, and any net realized short-term
capital gains, are paid to you as dividends. The Fund realizes capital gains
whenever it sells securities for a higher price than it paid for them. Net
realized long-term gains are paid to you as capital gain distributions.
Currently, short-term capital gains result from securities held less than
eighteen months, while long-term capital gains result from securities held
longer.
Be sure to keep your regular account statements; the information they contain
will be essential in calculating the amount of your capital gains.
Foreign Income Taxes
Investment income received by the Fund from sources within foreign countries may
by subject to foreign income taxes withheld at the source.
If the Fund pays nonrefundable taxes to foreign governments during the year, the
taxes will reduce the Fund's dividends but will still be included in your
taxable income. You may be able to claim an offsetting credit or deduction on
your tax return for your share of foreign taxes paid by the Fund; this
information will be sent to you as part of your annual Form 1099.
<PAGE>
When you sign your account application, you will be asked to certify that:
. your Social Security or taxpayer identification number is correct, and
. that you are not subject to 31% backup withholding for failing to report
income to the IRS.
If you violate IRS regulations, the IRS can require the Fund to withhold 31% of
your taxable distributions and redemptions.
The Fund in Detail
Organization
Thomas White World Fund is a diversified series of Lord Asset Management Trust,
an open-end, management investment company and is registered under the
Investment Company Act of 1940 (the "1940 Act"). The Trust currently has one
series of Shares, which is a mutual fund: the Thomas White World Fund. The Trust
is a Delaware business trust organized on February 9, 1994.
Each share of the Fund is entitled to participate pro rata in any dividends and
other distributions declared by the Board of Trustees, and all shares of the
Fund have equal rights in the event of liquidation of the Fund.
The Trust is governed by a Board of Trustees, who are responsible for protecting
the interests of the shareholders of the Fund. The Trustees are experienced
executives and professionals who normally meet each quarter to oversee the
activities of the Trust and the Fund. A majority of Trustees are not otherwise
affiliated with the Fund or TWI.
The Fund may hold special meetings of shareholders to elect or remove Trustees,
change fundamental policies, approve a management contract, or for other
purposes. The Fund will mail proxy materials in advance, including a voting card
and information about the proposals to be voted on. You are entitled to one vote
for each share of the Fund that you own. Shareholders not attending these
meetings are encouraged to vote by proxy.
As of November 30, 1997, John W. Galbraith owned a controlling interest of the
Fund.
<PAGE>
Management
The Fund is managed by Thomas White International, Ltd., 440 S. LaSalle Street,
Suite 3900, Chicago, Illinois 60605. TWI chooses the Fund's investments and
handles its affairs, under the direction of the Board of Trustees. TWI provides
the Fund with investment research, advice, supervision and certain overhead
items and facilities. TWI provides investment management and advisory services
to both a domestic and international client base, including trusts, endowments,
corporations, employee benefit plans, Taft-Hartley plans and individuals.
Thomas S. White, Jr., the Fund's portfolio manager and Chairman of TWI, has been
managing investments over the past thirty-one years. Mr. White founded TWI in
June of 1992. Before that he was a Managing Director of Morgan Stanley Asset
Management and Chief Investment Officer of its Chicago Group, which he founded
in 1982. Further information concerning TWI is included under the heading
"Investment Management and Other Services" in the SAI.
Custodian
State Street Bank and Trust Company is the Fund's custodian.
Transfer Agent
Firstar Trust Company, 615 East Michigan Street, Milwuakee, WI 53202, serves as
transfer agent and monitors compliance with state laws.
Expenses
Like all mutual funds, the Fund pays expenses related to its daily operations.
Expenses paid out of the Fund's assets are reflected in its share price and
dividends.
The Fund pays a management fee, equal to 1.00% of the fund's average daily net
assets on an annual basis, to TWI for managing its investments and business
affairs. See "Expenses and Performance."
The Fund pays the management fee to TWI and the fees of its custodian, transfer
agent, auditors, and lawyers. It also pays other expenses such as the cost of
compliance with federal and state laws, proxy solicitations, shareholder
reports, taxes, insurance premiums, and the fees of Trustees who are not
otherwise affiliated with the Fund or TWI.
The Fund's total expense ratio is 1.47% compared to 2.00% for the average of the
203 world equity funds in the Morningstar Principia database on November 30,
1997.
<PAGE>
Brokerage Commissions
The receipt of research services from a broker and the sale of Fund shares by a
broker are factors that 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.
Securities, Investment Practices, and Risks
The following pages contain more detailed information about types of investments
the Fund may make, and strategies TWI may employ in pursuit of the Fund's
investment objective, including information about the associated risks and
restrictions. 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.
TWI may not buy all of these instruments or use all of these techniques to the
full extent permitted, unless it believes that doing so will help the Fund
achieve its goal.
Equities
Common stocks represent an equity (ownership) interest in a corporation. This
ownership interest often gives the Fund the right to vote on measures affecting
the company's organization and operations. Although common stocks have a history
of long-term growth in value, their prices tend to be unpredictable in the short
term.
Foreign Securities
International investing allows you to achieve greater diversification and to
take advantages of changes in foreign economies and market conditions. From time
to time, many foreign economies have grown faster than the U.S. economy, and the
returns on investments in these countries have exceeded those of similar U.S.
investments, although there can be no assurance that these conditions will
continue.
Investments in foreign securities provide opportunities different from those in
the U.S., and risks which may in some ways be greater than in U.S. investments,
including:
. fluctuations in exchange rates of foreign currencies;
. less public information with respect to issuers of securities;
. less governmental supervision of stock exchanges, securities brokers, and
issuers of securities;
. different accounting, auditing, and financial reporting standards; o
different settlement periods and trading practices;
. less liquidity, frequently greater price volatility, and higher transaction
costs;
. imposition of foreign taxes; and
. sometimes less advantageous legal, operational, and financial protections
applicable to foreign sub-custodial arrangements.
<PAGE>
Investing in countries outside the U.S. also involves political risk. A
foreign government might:
. restrict investments by foreigners;
. expropriate assets;
. seize or nationalize foreign bank deposits or other assets;
. establish exchange controls; or
. enact other policies that could affect investment in these nations.
Economies in individual markets may differ favorably or unfavorably from the
U.S. economy in such respects as:
. growth of gross domestic product;
. rates of inflation;
. currency depreciation;
. capital reinvestment;
. resource self-sufficiency; and
. balance of payments positions.
Many emerging market countries have experienced extremely high rates of
inflation for many years. That has had and may continue to have very negative
effects on the economies and securities markets of those countries.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid, and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the U.S. There also may be
a lower level of monitoring and regulation in emerging markets of traders,
insiders, and investors. Enforcement of existing regulations has been extremely
limited.
Under normal market conditions the Fund will hold no more than fifteen percent
of its net assets in emerging market securities.
Depositary Receipts
ADRs are Depositary Receipts typically issued by a U.S. bank or trust company
which allow indirect ownership of securities issued by foreign corporations.
Receipts are generally composed of one or more shares of an underlying security.
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.
<PAGE>
Depositary Receipts may involve many of the risks of other investments in
foreign securities, as discussed above. For purposes of the Fund's investment
policies, the Fund's investments in Depositary Receipts (other than ADRs) will
be deemed to be investments in the underlying securities.
Debt Securities
Bonds and other debt instruments are methods for an issuer to borrow money from
investors. The issuer pays the investor a fixed or variable rate of interest,
and must repay the amount borrowed at maturity. Debt securities have varying
degrees of quality and varying levels of sensitivity to changes in interest
rates.
The Fund is authorized to invest in medium quality or high risk, lower quality
debt securities that are rated in any rating category by Standard & Poor's
Ratings Services ("S&P") or Moody's Investors Service, Inc. ("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, of equivalent investment
quality as determined by TWI.
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 are considered to
be speculative with respect to the issuer's ability to pay interest and repay
principal.
The Fund may also invest in "Brady Bonds", which are debt obligations created
through the exchange of existing commercial bank loans to sovereign entities for
new obligations in connection with restructuring the debt of these entities. For
more information about Brady Bonds, see the SAI.
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
these 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.
<PAGE>
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. The Fund
will limit its use of futures contracts so that no more than 5% of the Fund's
total assets would be committed to initial margin deposits or premiums on such
contracts. 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.
Temporary Investments
The Fund may, because of adverse market conditions, decide to take a temporary
defensive position, subject to the restrictions explained in the SAI. The Fund
may invest up to 100% of its total assets in the following instruments:
. Short-term (less than 12 months to maturity) and medium-term (not greater
than 5 years to maturity) obligations issued or guaranteed by either the U.S.
government or the governments of foreign countries or their agencies
. Finance company and corporate commercial paper
. Other short-term corporate obligations
. Obligations (including certificates of deposit, time deposits and bankers'
acceptances) of banks
. Repurchase agreements with banks and broker-dealers
Repurchase Agreements
When the Fund purchases a security from a U.S. bank or registered broker-dealer,
it may simultaneously enter into a repurchase agreement. This means the seller
agrees to repurchase the security at a specified time and price. The repurchase
price will reflect an agreed upon rate of interest 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. All repurchase
agreements entered into by the Fund 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. Although the Fund may
enter into repurchase agreements, it has no present intention of doing so.
<PAGE>
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
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 currency exchange contracts. 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 generally will not
enter into a forward contract with a term of greater than one year.
The Fund generally will enter into forward contracts only under two
circumstances. 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 forward contract.
The Fund also may use a forward contract with respect to an actual or
anticipated portfolio security position denominated or quoted in a particular
currency. This second investment practice is generally referred to as
"cross-hedging." The Fund may cross-hedge with respect to the currency of a
particular country in amounts approximating actual or anticipated positions in
securities denominated in that currency. When the Fund owns or anticipates
owning securities in countries whose currencies are linked, TWI may aggregate
those positions as to the currency being hedged.
The Fund has no limitation on the percentage of assets it may commit to forward
contracts, subject to its stated investment objective and policies, as long as
the amount of assets set aside to cover forward contracts would not 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.
Like other kinds of options, however, the writing of an option on a foreign
currency creates 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. If, however, the rate moves adversely 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.
Some price spread on currency exchange (to cover service charges) will be
incurred when the Fund converts assets from one currency to another.
<PAGE>
Other Investment Companies
Certain markets are closed in whole or in part to equity investments by
foreigners. The Fund may be able to invest in such markets solely or primarily
through governmentally-authorized investment companies.
Investment in another investment company may involve the payment of a premium
above the value of the issuer's portfolio securities, and is subject to market
availability. In the case of a purchase of shares of such a company in a public
offering, the purchase price may include an underwriting spread. The Fund does
not intend to invest in such circumstances unless, in the judgment of TWI, the
potential benefits of such investment justify the payment of any applicable
premium or sales charge. As a shareholder in an investment company, the Fund
would bear its ratable share of that investment company's expenses, including
its advisory and administration fees. At the same time the Fund would continue
to pay its own management fees and other expenses.
The Fund may invest in shares of closed-end investment companies. Generally,
this would not exceed 10% of the Fund's net assets.
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. Borrowing is a form of
leverage, which generally will exaggerate the effect of any increase or decrease
in the value of portfolio securities on the Fund's NAV. Borrowings will be
subject to interest and other costs. For further details see the SAI.
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.
Illiquid Securities
The Fund may invest up to 15% of its net assets in illiquid securities, for
which there is a limited trading market and which may be subject to abrupt and
erratic price movements.
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.
<PAGE>
CONTACTING THE FUND
Mail
Thomas White World Fund .for regular mail delivery, including
c/o Firstar Trust Co. purchases, written exchanges,
P.O. Box 701 redemptions, and IRA contributions
Milwaukee, WI 53201-0701
Thomas White World Fund .for overnight deliveries of purchase,
Shareholder Services Center written exchanges, redemptions, or IRA
615 East Michigan Street, 3rd Floor contributions
Milwaukee, WI 53202
Thomas White International .the Fund's Manager
440 S. LaSalle Street, Suite 3900
Chicago, IL 60605
Phone
1-800-811-0535
. for Fund information, account balances, literature, prices, and
performance information
. for telephone purchases, exchanges and redemptions, and for IRA
information
Customer service is available on business days from 8:00 a.m. to 7:00 p.m.
Chicago (central) time. Telephone requests for purchase and redemptions from the
Fund must be made by 3:00 p.m. Chicago (central) time.
Wire
Firstar Bank Milwaukee, N.A.
ABA Number 07500-00022
Trust Funds, Acct Number 112-952-137
For further credit to Thomas White World Fund
(Investment account number)
(Name or account registration)
. to wire money from your bank to an existing account
Specify the name and the number on your account.
<PAGE>
THOMAS WHITE FUNDS FAMILY
THIS STATEMENT OF ADDITIONAL INFORMATION DATED
MARCH 1, 1998 IS NOT A PROSPECTUS. IT SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS OF THE
THOMAS WHITE WORLD FUND DATED MARCH 1, 1998
WHICH MAY BE OBTAINED
WITHOUT CHARGE UPON REQUEST TO
THE THOMAS WHITE FUNDS FAMILY
440 SOUTH LASALLE STREET, SUITE 3900
CHICAGO, ILLINOIS 60605-1028
TELEPHONE: 1-800-811-0535
TELECOPY: (312) 663-8323
TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY...........................................2
INVESTMENT OBJECTIVES AND POLICIES........................................2
Investment Policies....................................................2
Repurchase Agreements..................................................2
Loans of Portfolio Securities..........................................2
Debt Securities........................................................2
Futures Contracts......................................................3
Options on Securities, Indices and Futures.............................4
Foreign Currency Hedging Transactions..................................6
Foreign Market Risks...................................................7
Brady Bonds............................................................8
Illiquid and Restricted Securities.....................................8
Investment Restrictions................................................9
Additional Restrictions...............................................10
Risk Factors..........................................................11
Trading Policies......................................................12
MANAGEMENT OF THE TRUST..................................................12
PRINCIPAL SHAREHOLDERS...................................................14
INVESTMENT MANAGEMENT AND OTHER SERVICES.................................15
Investment Management Agreement.......................................15
Management Fees.......................................................16
Transfer Agent........................................................16
The Investment Manager................................................16
Custodian.............................................................17
Legal Counsel.........................................................17
Independent Accountants...............................................17
Reports to Shareholders...............................................17
BROKERAGE ALLOCATION.....................................................17
PURCHASE, REDEMPTION AND PRICING OF SHARES...............................19
TAX STATUS...............................................................21
DESCRIPTION OF SHARES....................................................25
PERFORMANCE INFORMATION..................................................26
FINANCIAL STATEMENTS.....................................................27
<PAGE>
GENERAL INFORMATION AND HISTORY
Lord Asset Management Trust (the "Trust") is organized as a business
trust under the laws of Delaware and is registered under the Investment Company
Act of 1940 (the "1940 Act"). The Trust has 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. Thomas White International,
Ltd., (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 Ratings Services ("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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
Foreign Market Risks. The Fund has the right to purchase securities in any
foreign country, developed or underdeveloped. Investors should consider
carefully the possibly 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 may 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.
<PAGE>
Investments in Eastern European countries may involve increased 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.
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 may be 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 may be considered speculative.
<PAGE>
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 Securities Act of 1933. 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.
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).
<PAGE>
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.
<PAGE>
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 more than 10% of a company's outstanding voting securities.
2. 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.
<PAGE>
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.
<PAGE>
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:
<TABLE>
<S> <C>
Name, Address and Principal Occupation
Offices with Trust During Past Five Years
Thomas S. White, Jr.* Chairman of Thomas White International, Ltd.;
440 S. LaSalle St. former Managing Director, Morgan Stanley Asset Management
Suite 3900
Chicago, IL 60605
Trustee, President
Brandon S. Joel Mutual Fund Administrative Manager of Thomas White International,
440 S. LaSalle St. Ltd.; former Senior Mutual Fund Accountant, John Nuveen & Co.
Suite 3900
Chicago, IL 60605
Treasurer
Douglas M. Jackman Analyst and Vice President of Thomas White International, Ltd.;
440 S. LaSalle St. formerly with Morgan Stanley, involved with equity analysis and
Suite 3900 foreign exchange
Chicago, IL 60605
Vice President and
Secretary
<PAGE>
Jill F. Almeida Retired; former Vice President, Security
1448 N. Lake Shore Dr. Pacific Bank
Chicago, IL 60610
Trustee
Philip R. Haag President, Baratek, Inc.
535 Balsam
Palatine, IL 60045
Trustee
Nicholas G. Manos* Attorney (of counsel), Gesas, Pilati & Gesas,
53 W. Jackson Blvd.
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 Industries
22160 N. Pepper Road
Barrington, IL 60010
Trustee
John N. Venson Medical Doctor (podiatry)
310 Meadowlake Lane
Lake Forest, IL 60045
Trustee
</TABLE>
* 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.
<PAGE>
The Trust pays each Trustee who is not an "interested person" of the Trust,
as that term is defined in the 1940 Act, an annual fee of $3,000. For the fiscal
year ended October 31, 1997, the Trust paid the following compensation to all
Trustees of the Trust:
<TABLE>
<S> <C> <C> <C> <C>
Aggregate Pension or Retirement Estimated Annual Total Compensation
Compensation Benefits Accrued as Benefits Upon
Fund Expenses Retirement
- - --------------------------------------------------------------------------------------------------------------------
Thomas S. White, Jr. $0 $0 $0 $0
Jill F. Almeida $3,000 $0 $0 $3,000
Philip R. Haag $3,000 $0 $0 $3,000
Nicholas G. Manos $0 $0 $0 $0
Edward E. Mack, III $3,000 $0 $0 $3,000
Michael R. Miller $3,000 $0 $0 $3,000
John N. Venson $3,000 $0 $0 $3,000
</TABLE>
PRINCIPAL SHAREHOLDERS
As of November 30, 1997, there were 3,628,090 Shares of the Fund
outstanding, of which 145,137 Shares (4.00%) were owned beneficially, directly
or indirectly, by all the Trustees and officers of the Fund as a group. As of
November 30, 1997, John Wm. Galbraith, P.O. Box 33030, St. Petersburg, FL 33733,
owned beneficially, directly or indirectly, 2,759,480 Shares (76.06%) of the
Fund and on that basis may be able to control the resolution of any matter
submitted for a Shareholder vote.
INVESTMENT MANAGEMENT AND OTHER SERVICES
Investment Manager Agreement. The Investment Manager of the Fund is Thomas
White International, Ltd., (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 March 10,
1995, 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 March 4, 1997 and will
continue through March 10, 1998. The Investment Management Agreement will
continue from year to year, 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.
<PAGE>
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 Thomas White
International, Ltd., 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.
<PAGE>
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.
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 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.
<PAGE>
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
<PAGE>
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 under writings 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.
For the fiscal year ended October 31, 1995, the Fund paid brokerage
commissions in the amount of $88,815, of which $28,289, representing $7,473,276
of securities purchases, was paid to broker-dealers that provided research
services to the Investment Manager. For the fiscal year ended October 31, 1996,
the Fund paid brokerage commissions in the amount of $89,686, of which $65,964,
representing $24,647,997 of securities transactions, was paid to broker-dealers
that provided research services to the Investment Manager. For the fiscal year
ended October 31, 1997, the Fund paid brokerage commissions in the amount of
$93,412, of which $79,609, representing $29,926,932 of securities transactions,
was paid to broker-dealers that provided research services to the Investment
Manager.
<PAGE>
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.
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 per Share is determined as of the close of business on the
New York Stock Exchange, which generally 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, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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)n = ERV (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). Total return for a period
is the percentage change in value during the period of an investment in Fund
shares. 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 fiscal year ended
October 31, 1997 was 15.80%. The average annual total return from June 28, 1994
(commencement of operations) through October 31, 1997 was 13.52%. Cumulative
total return for the same period was 52.77%.
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.
<PAGE>
(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.
FINANCIAL STATEMENTS
The Trust's audited financial statements for the Fund, including the
related notes thereto, dated October 31, 1997, are incorporated by reference in
the SAI from the Annual Report of the Trust dated as of October 31, 1997. A copy
of the report delivered with this SAI should be retained for future reference.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements: Audited financial statements as
of October 31, 1997 are incorporated by reference in
Part B of the Registration Statement from the Trust's
Annual Report dated as of October 31, 1997 and include
the following:
Independent Auditor's Report
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Notes to Financial Statements
Investment Portfolio
(b) Exhibits:
(1) Trust Instrument
(2) By-Laws
(3) Not Applicable
(4) Not Applicable
(5) Form of investment management agreement (1)
(6) Not Applicable
(7) Not Applicable
(8) Form of custody agreement (1)
(9) (a) Form of transfer agent agreement (1)
(b) Form of blue sky compliance servicing
agreement (1)
(10) Opinion and consent of counsel
<PAGE>
(11) Consent of independent public accountants
(12) Not Applicable
(13) Initial capital agreement
(14) Not Applicable
(15) Not Applicable
(16) Form of computation of performance
evaluations
(18) Not Applicable
(19) (a) Powers of attorney for Messrs. White, Miller,
Haag, Manos, and Mack, and for Ms. Almeida
(b) Powers of attorney for Messrs. Joel and Venson
(1)
(20) Secretary's certificate pursuant to Rule
483(b)
(27) Financial data schedule
-------------------
(1) Filed with Post-Effective Amendment No. 2 to Registrant's
Registration Statement on February 28, 1996.
Item 25. Persons Controlled by or Under Common Control with
Registrant
None.
Item 26. Number of Record Holders
Shares of Beneficial Interest, par value $0.01 per
share: 93 shareholders as of November 30, 1997.
<PAGE>
Item 27. Indemnification
Reference is made to Article X, Section 10.02 of the
Registrant's Trust Instrument, which is filed herewith.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees,
officers and controlling persons of the Registrant by the
Registrant pursuant to the Trust Instrument or otherwise,
the Registrant is aware that in the opinion of the
Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act and,
therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by
trustees, officers or controlling persons of the Registrant
in connection with the successful defense of any act, suit
or proceeding) is asserted by such trustees, officers or
controlling persons in connection with the shares being
registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against
public policy as expressed in the Act and will be governed
by the final adjudication of such issues.
Item 28. Business and Other Connections of Investment Advisers
and their Officers and Directors
The business and other connections of Lord Asset
Management, Inc. are described in Parts A and B.
For information relating to the investment advisers'
officers and directors, reference is made to Form ADV filed
under the Investment Advisers Act of 1940 by Lord Asset
Management, Inc.
Item 29. Principal Underwriters
Not Applicable.
<PAGE>
Item 30. Location of Accounts and Records
The accounts, books and other documents required to be
maintained by Registrant pursuant to Section 31(a) of the
Investment Company Act of 1940 and rules promulgated
thereunder are in the possession of Lord Asset Management,
Inc., 440 South LaSalle Street, Chicago, Illinois
60605-1028.
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
(a) Not Applicable.
(b) Registrant undertakes to call a meeting of
Shareholders for the purpose of voting upon the
question of removal of a Trustee or Trustees when
requested to do so by the holders of at least 10%
of the Registrant's outstanding shares of
beneficial interest and in connection with such
meeting to comply with the shareholder
communications provisions of Section 16(c) of the
Investment Company Act of 1940.
(c) Registrant undertakes to furnish to each person to whom
a prospectus is delivered a copy of the Registrant's
latest Annual Report to Shareholders upon request and
without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant has duly
caused this Post-Effective Amendment No. 3 to the Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Washington, D.C. on
this 30 day of December, 1997.
Lord Asset Management Trust
<PAGE>
By: *
Thomas S. White, Jr.
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 3 to the Registration Statement on Form
N-1A has been signed below by the following persons on behalf of Lord
Asset Management Trust in the capacities and on
the date indicated:
<TABLE>
<S> <C> <C>
Signature Title Date
* Trustee and President December 30, 1997
Thomas S. White, Jr. (Principal Executive
Officer)
* Treasurer (Principal December 30, 1997
Brandon S. Joel Financial and
Accounting Officer)
* Trustee December 30, 1997
Michael R. Miller
* Trustee December 30, 1997
Jill F. Almeida
Trustee December 30, 1997
Philip R. Haag
* Trustee December 30, 1997
Nicholas G. Manos
* Trustee December 30, 1997
Edward E. Mack, III
* Trustee December 30, 1997
John N. Venson
</TABLE>
*By: /s/ William J. Kotapish
William J. Kotapish
as attorney-in-fact
* Powers of Attorney are included as exhibits in Post-Effective
Amendment No. 2 filed February 28, 1996 and in this Post-Effective
Amendment No. 4.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
FILED
WITH
REGISTRATION STATEMENT
ON
FORM N-1A
LORD ASSET MANAGEMENT TRUST
Exhibit Number Description
1 Trust Instrument
2 By-laws
10 Opinion and consent of counsel
11 Consent of independent public accountants
13 Initial capital agreement
16 Form of computation of performance evaluations
19(a) Powers of attorney
20 Secretary's certificate
27 Financial data schedule
LORD ASSET MANAGEMENT TRUST
TRUST INSTRUMENT
DATED FEBRUARY 9, 1994
LORD ASSET MANAGEMENT TRUST
TABLE OF CONTENTS
Page
ARTICLE I NAME AND DEFINITIONS
Section 1.01 Name 1
Section 1.02 Definitions 1
ARTICLE II BENEFICIAL INTEREST
Section 2.01 Shares of Beneficial Interest 2
Section 2.02 Issuance of Shares 3
Section 2.03 Register of Shares
and Share Certificates 3
Section 2.04 Transfer of Shares 3
Section 2.05 Treasury Shares 4
Section 2.06 Establishment of Series 4
Section 2.07 Investment in the Trust 5
Section 2.08 Assets and Liabilities
of Series 5
Section 2.09 No Preemptive Rights 6
Section 2.10 No Personal
Liability of Shareholders 6
Section 2.11 Assent to Trust Instrument. 7
ARTICLE III THE TRUSTEES
Section 3.01 Management of the Trust 7
Section 3.02 Initial Trustees 8
Section 3.03 Term of Office 8
Section 3.04 Vacancies and Appointments 8
Section 3.05 Temporary Absence 9
Section 3.06 Number of Trustees 9
Section 3.07 Effect of Ending of
a Trustee's Service 9
Section 3.08 Ownership of
Assets of the Trust 9
ARTICLE IV POWERS OF THE TRUSTEES
Section 4.01 Powers 9
Section 4.02 Issuance and
Repurchase of Shares 13
Section 4.03 Trustees and
Officers as Shareholders 13
Section 4.04 Action by the Trustees 13
Section 4.05 Chairman of the Trustees 14
Section 4.06 Principal Transactions 14
ARTICLE V EXPENSES OF THE TRUST 14
<PAGE>
ARTICLE VI INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT
Section 6.01 Investment Adviser 15
Section 6.02 Principal Underwriter 16
Section 6.03 Administrator 16
Section 6.04 Transfer Agent 16
Section 6.05 Parties to Contract 16
Section 6.06 Provisions and Amendments 17
ARTICLE VII SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 7.01 Voting Powers 17
Section 7.02 Meetings 18
Section 7.03 Quorum and Required Vote 18
ARTICLE VIII CUSTODIAN
Section 8.01 Appointment and Duties 19
Section 8.02 Central Certificate System 19
ARTICLE IX DISTRIBUTIONS AND REDEMPTIONS
Section 9.01 Distributions 20
Section 9.02 Redemptions 20
Section 9.03 Determination of
Net Asset Value 20
and Valuation of Portfolio Assets
Section 9.04 Suspension of the Right
of Redemption 22
ARTICLE X LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 10.01 Limitation of Liability 22
Section 10.02 Indemnification 22
Section 10.03 Shareholders 24
ARTICLE XI MISCELLANEOUS
Section 11.01 Trust Not a Partnership 24
Section 11.02 Trustee's Good Faith Action, 25
Expert Advice, No Bond or Surety
Section 11.03 Establishment of Record Dates 25
Section 11.04 Termination of Trust 25
Section 11.05 Reorganization 26
Section 11.06 Filing of Copies,
References, Headings 27
Section 11.07 Applicable Law 27
Section 11.08 Amendments 28
Section 11.09 Fiscal Year 29
Section 11.10 Name Reservation 29
Section 11.11 Provisions in Conflict
with Law 29
<PAGE>
LORD ASSET MANAGEMENT TRUST
February 9, 1994
TRUST INSTRUMENT, made by Thomas S. White, Jr. and Thomas H. Forester (the
"Trustees").
WHEREAS, the Trustees desire to establish a business trust for the
investment and reinvestment of funds contributed thereto;
NOW THEREFORE, the Trustees declare that all money and property contributed
to the trust hereunder shall be held and managed in trust under this Trust
Instrument as herein set forth below.
ARTICLE I
NAME AND DEFINITIONS
Section 1.01 Name. The name of the trust created hereby is "Lord Asset
Management Trust."
Section 1.02 Definitions. Wherever used herein, unless otherwise required
by the context or specifically provided:
(a) "Bylaws" means the Bylaws of the Trust as adopted by the Trustees, as
amended from time to time.
(b) "Commission" has the meaning given it in the 1940 Act. "Affiliated
Person," "Assignment," "Interested Person" and "Principal Underwriter" shall
have the respective meanings given them in the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Commission or any rules or
regulations adopted by or interpretive releases of the Commission thereunder.
"Majority Shareholder Vote" shall have the same meaning as the term "vote of a
majority of the outstanding voting securities" is given in the 1940 Act, as
modified by or interpreted by any applicable order or orders of the Commission
or any rules or regulations adopted by or interpretive releases of the
Commission thereunder.
(c) "Delaware Act" refers to Chapter 38 of Title 12 of the Delaware Code
entitled "Treatment of Delaware Business Trusts," as amended from time to time.
<PAGE>
(d) "Net Asset Value" means the net asset value of each Series of the Trust
determined in the manner provided in Article IX, Section 9.03 hereof.
(e) "Outstanding Shares" means those Shares shown from time to time in the
books of the Trust or its transfer agent as then issued and outstanding, but
shall not include Shares which have been redeemed or repurchased by the Trust
and which are at the time held in the treasury of the Trust.
(f) "Principal Underwriter" means a party, other than the Trust, to a
contract described in Section 6.02 hereof.
(g) "Series" means a series of Shares of the Trust established in
accordance with the provisions of Article II, Section 2.06 hereof.
(h) "Shareholder" means a record owner of Outstanding Shares of the Trust.
(i) "Shares" means the equal proportionate transferable units of beneficial
interest into which the beneficial interest of each Series of the Trust or class
thereof shall be divided and may include fractions of Shares as well as whole
Shares.
(j) The "Trust" means Lord Asset Management Trust and reference to the
Trust, when applicable to one or more Series of the Trust, shall refer to any
such Series.
(k) The "Trustees" means the person or persons who has or have signed this
Trust Instrument, so long as he or they shall continue in office in accordance
with the terms hereof, and all other persons who may from time to time be duly
qualified and serving as Trustees in accordance with the provisions of Article
III hereof and reference herein to a Trustee or to the Trustees shall refer to
the individual Trustees in their capacity as Trustees hereunder.
(l) "Trust Property" means any and all property, real or personal, tangible
or intangible, which is owned or held by or for the account of one or more of
the Trust or any Series, or the Trustees on behalf of the Trust or any Series.
(m) The "1940 Act" means the Investment Company Act of 1940, as amended
from time to time.
<PAGE>
ARTICLE II
BENEFICIAL INTEREST
Section 2.01 Shares of Beneficial Interest. The beneficial interest in the
Trust shall be divided into such transferable Shares of one or more separate and
distinct Series or classes of a Series as the Trustees shall from time to time
create and establish. The number of Shares of each Series, and class thereof,
authorized hereunder is unlimited and each Share shall have a par value of
$0.01. All Shares issued hereunder, including without limitation, Shares issued
in connection with a dividend in Shares or a split or reverse split of Shares,
shall be fully paid and nonassessable.
Section 2.02 Issuance of Shares. The Trustees in their discretion may, from
time to time, without vote of the Shareholders, issue Shares, in addition to the
then issued and outstanding Shares and Shares held in the treasury, to such
party or parties and for such amount and type of consideration, subject to
applicable law, including cash or securities, at such time or times and on such
terms as the Trustees may deem appropriate, and may in such manner acquire other
assets (including the acquisition of assets subject to, and in connection with,
the assumption of liabilities) and businesses. In connection with any issuance
of Shares, the Trustees may issue fractional Shares and Shares held in the
treasury. The Trustees may from time to time divide or combine the Shares into a
greater or lesser number without thereby changing the proportionate beneficial
interests in the Trust. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or 1/1,000th of a Share or
integral multiples thereof. The Trustees, the Principal Underwriter or any other
person the Trustees may authorize for the purpose may, in their discretion,
reject any application for the issuance of Shares.
Section 2.03 Register of Shares and Share Certificates. A register shall be
kept at the principal office of the Trust or an office of the Trust's transfer
agent which shall contain the names and addresses of the Shareholders of each
Series, the number of Shares of that Series (or any class or classes thereof)
held by them respectively and a record of all transfers thereof. As to Shares
for which no certificate has been issued, such register shall be conclusive as
to who are the holders of the Shares and who shall be entitled to receive
dividends or other distributions or otherwise to exercise or enjoy the rights of
Shareholders. No Shareholder shall be entitled to receive payment of any
dividend or other distribution, nor to have notice given to him as herein or in
the Bylaws provided, until he has given his address to the transfer agent or
such officer or other agent of the Trustees as shall keep the said register for
entry thereon. It is not contemplated that certificates will be issued for the
Shares; however, the Trustees, in their discretion, may authorize the issuance
of Share certificates and promulgate appropriate rules and regulations as to
their use.
Section 2.04 Transfer of Shares. Except as otherwise provided by the
Trustees, Shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing, upon
delivery to the Trustees or the Trust's transfer agent of a duly executed
instrument of transfer and such evidence of the genuineness of such execution
and authorization and of such other matters as may be required. Upon such
delivery the transfer shall be recorded on the register of the Trust, after
which the transferee of Shares will be regarded as a Shareholder. Until such
record is made, the Shareholder of record shall be deemed to be the holder of
such Shares for all purposes hereunder and neither the Trustees nor the Trust,
nor any transfer agent or registrar nor any officer, employee or agent of the
Trust shall be affected by any notice of the proposed transfer.
<PAGE>
Section 2.05 Treasury Shares. Shares held in the treasury shall, until
reissued pursuant to Section 2.02 hereof, not confer any voting rights on the
Trustees, nor shall such Shares be entitled to any dividends or other
distributions declared with respect to the Shares.
Section 2.06 Establishment of Series. The Trust created hereby shall
consist of one or more Series and separate and distinct records shall be
maintained by the Trust for each Series and the assets associated with any such
Series shall be held and accounted for separately from the assets of the Trust
or any other Series. The Trustees shall have full power and authority, in their
sole discretion, and without obtaining any prior authorization or vote of the
Shareholders of any Series of the Trust, to establish and designate and to
change in any manner any such Series of Shares or any classes of initial or
additional Series and to fix such preferences, voting powers, rights and
privileges of such Series or classes thereof as the Trustees may from time to
time determine, to divide or combine the Shares or any Series or classes thereof
into a greater or lesser number, to classify or reclassify any issued Shares or
any Series or classes thereof into one or more Series or classes of Shares, and
to take such other action with respect to the Shares as the Trustees may deem
desirable. The establishment and designation of any Series shall be effective
upon the adoption of a resolution by a majority of the Trustees setting forth
such establishment and designation and the relative rights and preferences of
the Shares of such Series. A Series may issue any number of Shares and need not
issue shares. At any time that there are no Shares outstanding of any particular
Series previously established and designated, the Trustees may by a majority
vote abolish that Series and the establishment and designation thereof.
All references to Shares in this Trust Instrument shall be deemed to be
Shares of any or all Series, or classes thereof, as the context may require. All
provisions herein relating to the Trust shall apply equally to each Series of
the Trust, and each class thereof, except as the context otherwise requires.
<PAGE>
Each Share of a Series of the Trust shall represent an equal beneficial
interest in the net assets of such Series. Each holder of Shares of a Series
shall be entitled to receive his pro rata share of all distributions made with
respect to such Series. Upon redemption of his Shares, such Shareholder shall be
paid solely out of the funds and property of such Series of the Trust.
Section 2.07 Investment in the Trust. The Trustees shall accept investments
in any Series of the Trust from such persons and on such terms as they may from
time to time authorize. At the Trustees' discretion, such investments, subject
to applicable law, may be in the form of cash or securities in which the
affected Series is authorized to invest, valued as provided in Article IX,
Section 9.03 hereof. Investments in a Series shall be credited to each
Shareholder's account in the form of full Shares at the Net Asset Value per
Share next determined after the investment is received or accepted as may be
determined by the Trustees; provided, however, that the Trustees may, in their
sole discretion, (a) fix the Net Asset Value per Share of the initial capital
contribution, (b) impose a sales charge upon investments in the Trust in such
manner and at such time determined by the Trustees or (c) issue fractional
Shares.
Section 2.08 Assets and Liabilities of Series. All consideration received
by the Trust for the issue or sale of Shares of a particular Series, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever from the same may be,
shall be held and accounted for separately from the other assets of the Trust
and of every other Series and may be referred to herein as "assets belonging to"
that Series. The assets belonging to a particular Series shall belong to that
Series for all purposes, and to no other Series, subject only to the rights of
creditors of that Series. In addition, any assets, income, earnings, profits or
funds, or payments and proceeds with respect thereto, which are not readily
<PAGE>
identifiable as belonging to any particular Series shall be allocated by the
Trustees between and among one or more of the Series in such manner as the
Trustees, in their sole discretion, deem fair and equitable. Each such
allocation shall be conclusive and binding upon the Shareholders of all Series
for all purposes, and such assets, income, earnings, profits or funds, or
payments and proceeds with respect thereto, shall be assets belonging to that
Series. The assets belonging to a particular Series shall be so recorded upon
the books of the Trust, and shall be held by the Trustees in trust for the
benefit of the holders of Shares of that Series. The assets belonging to each
particular Series shall be charged with the liabilities of that Series and all
expenses, costs, charges and reserves attributable to that Series. Any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular Series shall be allocated
and charged by the Trustees between or among any one or more of the Series in
such manner as the Trustees in their sole discretion deem fair and equitable.
Each such allocation shall be conclusive and binding upon the Shareholders of
all Series for all purposes. Without limitation of the foregoing provisions of
this Section 2.08, but subject to the right of the Trustees in their discretion
to allocate general liabilities, expenses, costs, charges or reserves as herein
provided, the debts, liabilities, obligations and expenses incurred, contracted
for or otherwise existing with respect to a particular Series shall be
enforceable against the assets of such Series only, and not against the assets
of the Trust generally. Notice of this contractual limitation on inter-Series
liabilities may, in the Trustees' sole discretion, be set forth in the
certificate of trust of the Trust (whether originally or by amendment) as filed
or to be filed in the Office of the Secretary of State of the State of Delaware
pursuant to the Delaware Act, and upon the giving of such notice in the
certificate of trust, the statutory provisions of Section 3804 of the Delaware
Act relating to limitations on inter-Series liabilities (and the statutory
effect under Section 3804 of setting forth such notice in the certificate of
trust) shall become applicable to the Trust and each Series. Any person
extending credit to, contracting with or having any claim against any Series may
look only to the assets of that Series to satisfy or enforce any debt,
liability, obligation or expense incurred, contracted for or otherwise existing
with respect to that Series. No Shareholder or former Shareholder of any Series
shall have a claim on or any right to any assets allocated or belonging to any
other Series.
Section 2.09 No Preemptive Rights. Shareholders shall have no preemptive or
other right to subscribe to any additional Shares or other securities issued by
the Trust or the Trustees, whether of the same or other Series.
Section 2.10 No Personal Liability of Shareholder. Each Shareholder of the
Trust and of each Series shall not be personally liable for the debts,
liabilities, obligations and expenses incurred by, contracted for, or otherwise
existing with respect to, the Trust or by or on behalf of any Series. The
Trustees shall have no power to bind any Shareholder personally or to call upon
any Shareholder for the payment of any sum of money or assessment whatsoever
other than such as the Shareholder may at any time personally agree to pay by
way of subscription for any Shares or otherwise. Every note, bond, contract or
other undertaking issued by or on behalf of the Trust or the Trustees relating
to the Trust or to a Series shall include a recitation limiting the obligation
represented thereby to the Trust or to one or more Series and its or their
assets (but the omission of such a recitation shall not operate to bind any
Shareholder or Trustee of the Trust).
<PAGE>
Section 2.11 Assent to Trust Instrument. Every Shareholder, by virtue of
having purchased a Share shall become a Shareholder and shall be held to have
expressly assented and agreed to be bound by the terms hereof.
ARTICLE III
THE TRUSTEES
Section 3.01 Management of the Trust. The Trustees shall have exclusive and
absolute control over the Trust Property and over the business of the Trust to
the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Trust Instrument. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the State of Delaware, in any and
all states of the United States of America, in the District of Columbia, in any
and all commonwealths, territories, dependencies, colonies, or possessions of
the United States of America, and in any foreign jurisdiction and to do all such
other things and execute all such instruments as they deem necessary, proper or
desirable in order to promote the interests of the Trust although such things
are not herein specifically mentioned. Any determination as to what is in the
interests of the Trust made by the Trustees in good faith shall be conclusive.
In construing the provisions of this Trust Instrument, the presumption shall be
in favor of a grant of power to the Trustees.
The enumeration of any specific power in this Trust Instrument shall not be
construed as limiting the aforesaid power. The powers of the Trustees may be
exercised without order of or resort to any court.
Except for the Trustees named herein or appointed to fill vacancies
pursuant to Section 3.04 of this Article III, the Trustees shall be elected by
the Shareholders owning of record a plurality of the Shares voting at a meeting
of Shareholders. Such a meeting shall be held on a date fixed by the Trustees.
In the event that less than a majority of the Trustees holding office have been
elected by Shareholders, the Trustees then in office will call a Shareholders'
meeting for the election of Trustees.
<PAGE>
Section 3.02 Initial Trustees. The initial Trustees shall be the persons
named herein. On a date fixed by the Trustees, the Shareholders shall elect at
least two (2) but not more than fifteen (15) Trustees, as specified by the
Trustees pursuant to Section 3.06 of this Article III.
Section 3.03 Term of Office. The Trustees shall hold office during the
lifetime of this Trust, and until its termination as herein provided; except (a)
that any Trustee may resign his trust by written instrument signed by him and
delivered to the other Trustees, which shall take effect upon such delivery or
upon such later date as is specified therein; (b) that any Trustee may be
removed at any time by written instrument, signed by at least two-thirds of the
number of Trustees prior to such removal, specifying the date when such removal
shall become effective; (c) that any Trustee who requests in writing to be
retired or who has died, become physically or mentally incapacitated by reason
of disease or otherwise, or is otherwise unable to serve, may be retired by
written instrument signed by a majority of the other Trustees, specifying the
date of his retirement; and (d) that a Trustee may be removed at any meeting of
the Shareholders of the Trust by a vote of Shareholders owning at least
two-thirds of the Outstanding Shares.
Section 3.04 Vacancies and Appointments. In case of the declination to
serve, death, resignation, retirement, removal, physical or mental incapacity by
reason of disease or otherwise, or a Trustee is otherwise unable to serve, or an
increase in the number of Trustees, a vacancy shall occur. Whenever a vacancy in
the Board of Trustees shall occur, until such vacancy is filled, the other
Trustees shall have all the powers hereunder and the certificate of the other
Trustees of such vacancy shall be conclusive. In the case of an existing
vacancy, the remaining Trustees shall fill such vacancy by appointing such other
person as they in their discretion shall see fit consistent with the limitations
under the 1940 Act. Such appointment shall be evidenced by a written instrument
signed by a majority of the Trustees in office or by resolution of the Trustees,
duly adopted, which shall be recorded in the minutes of a meeting of the
Trustees, whereupon the appointment shall take effect.
An appointment of a Trustee may be made by the Trustees then in office in
anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees. As soon as any
Trustee appointed pursuant to this Section 3.04 shall have accepted this trust,
the trust estate shall vest in the new Trustee or Trustees, together with the
continuing Trustees, without any further act or conveyance, and he shall be
deemed a Trustee hereunder. The power to appoint a Trustee pursuant to this
section 3.04 is subject to the provisions of Section 16(a) of the 1940 Act.
<PAGE>
Section 3.05 Temporary Absence. Any Trustee may, by power of attorney,
delegate his power for a period not exceeding six months at any time to any
other Trustee or Trustees, provided that in no case shall less than two Trustees
personally exercise the other powers hereunder except as herein otherwise
expressly provided.
Section 3.06 Number of Trustees. The number of Trustees shall be at least
two (2), and thereafter shall be such number as shall be fixed from time to time
by a majority of the Trustees, provided, however, that the number of Trustees
shall in no event be more than fifteen (15).
Section 3.07 Effect of Ending of a Trustee's Service. The declination to
serve, death, resignation, retirement, removal, incapacity, or inability of the
Trustees, or any one of them, shall not operate to terminate the trust or to
revoke any existing agency created pursuant to the terms of this Trust
Instrument.
Section 3.08 Ownership of Assets of the Trust. The assets of the Trust and
of each Series shall be held separate and apart for any assets now or hereafter
held in any capacity other than as Trustee hereunder by the Trustees or any
successor Trustees. Legal title in all of the assets of the Trust and the right
to conduct any business shall at all times be considered as vested in the
Trustees on behalf of the Trust, except that the Trustees may cause legal title
to any Trust Property to be held by or in the name of the Trust, or in the name
of any person as nominee. No Shareholder shall be deemed to have a severable
ownership in any individual asset of the Trust or of any Series or any right of
partition or possession thereof, but each Shareholder shall have, except as
otherwise provided for herein, a proportionate undivided beneficial interest in
the Trust or Series. The Shares shall be personal property giving only the
rights specifically set forth in this Trust Instrument.
<PAGE>
ARTICLE IV
POWERS OF THE TRUSTEES
Section 4.01 Powers. The Trustees in all instances shall act as principals,
and are and shall be free from the control of the Shareholders. The Trustees
shall have full power and authority to do any and all acts and to make and
execute any and all contracts and instruments that they may consider necessary
or appropriate in connection with the management of the Trust, and to vary the
investments of any Series in accordance with the prospectus applicable to such
Series. The Trustees shall not in any way be bound or limited by present or
future laws or customs in regard to trust investments, but shall have full
authority and power to make any and all investments which they, in their sole
discretion, shall deem proper to accomplish the purpose of this Trust without
recourse to any court or other authority. Subject to any applicable limitation
in this Trust Instrument or the Bylaws of the Trust, the Trustees shall have the
power and authority:
(a) To invest and reinvest cash and other property, and to hold cash or
other property uninvested, without in any event being bound or limited by any
present or future law or custom in regard to investments by trustees, and to
sell, exchange, lend, pledge, mortgage, hypothecate, write options on and lease
any or all of the assets of the Trust;
(b) To operate as and carry on the business of an investment company, and
exercise all the powers necessary and appropriate to the conduct of such
operations;
(c) To borrow money and in this connection issue notes or other evidence of
indebtedness; to secure borrowings by mortgaging, pledging or otherwise
subjecting as security the Trust Property; to endorse, guarantee, or undertake
the performance of an obligation or engagement of any other Person and to lend
Trust Property;
(d) To provide for the distribution of interests of the Trust either
through a principal underwriter in the manner hereinafter provided for or by the
Trust itself, or both, or otherwise pursuant to a plan of distribution of any
kind;
(e) To adopt Bylaws not inconsistent with this Trust Instrument providing
for the conduct of the business of the Trust and to amend and repeal them to the
extent that they do not reserve that right to the Shareholders; such Bylaws
shall be deemed incorporated and included in this Trust Instrument;
<PAGE>
(f) To elect and remove such officers and appoint and terminate such agents
as they consider appropriate;
(g) To employ one or more banks, trust companies or companies that are
members of a national securities exchange or such other entities as the
Commission may permit as custodians of any assets of the Trust subject to any
conditions set forth in this Trust Instrument or in the Bylaws;
(h) To retain one or more transfer agents and shareholder servicing agents,
or both;
(i) To set record dates in the manner provided herein or in the Bylaws;
(j) To delegate such authority as they consider desirable to any officers
of the Trust and to any investment adviser, manager, custodian, underwriter or
other agent or independent contractor;
(k) To sell or exchange any or all of the assets of the Trust, subject to
the provisions of Article XI, subsection 11.04(b) hereof;
(l) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
powers of attorney to such person or persons as the Trustees shall deem proper,
granting to such person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;
(m) To exercise powers and rights of subscription or otherwise which in any
manner arise out of ownership of securities;
(n) To hold any security or property in a form not indicating any trust,
whether in bearer, book entry, unregistered or other negotiable form; or either
in the name of the Trust or in the name of a custodian or a nominee or nominees,
subject in either case to proper safeguards according to the usual practice of
Delaware business trusts or investment companies;
<PAGE>
(o) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article II hereof and to establish classes of
such Series having relative rights, powers and duties as they may provide
consistent with applicable law;
(p) Subject to the provisions of Section 3804 of the Delaware Act, to
allocate assets, liabilities and expenses of the Trust to a particular Series or
to apportion the same between or among two or more Series, provided that any
liabilities or expenses incurred by a particular Series shall be payable solely
out of the assets belonging to that Series as provided for in Article II hereof;
(q) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of which is
held in the Trust; to consent to any contract, lease, mortgage, purchase, or
sale of property by such corporation or concern, and to pay calls or
subscriptions with respect to any security held in the Trust;
(r) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited to,
claims for taxes;
(s) To make distributions of income and of capital gains to Shareholders in
the manner provided herein;
(t) To establish, from time to time, a minimum investment for Shareholders
in the Trust or in one or more Series or class, and to require the redemption of
the Shares of any Shareholders whose investment is less than such minimum, or
who does not satisfy any other criteria the Trustees may set from time to time,
upon giving notice to such Shareholder;
(u) To establish one or more committees, to delegate any of the powers of
the Trustees to said committees and to adopt a committee charter providing for
such responsibilities, membership (including Trustees, officers or other agents
of the Trust therein) and any other characteristics of said committees as the
Trustees may deem proper. Notwithstanding the provisions of this Article IV, and
in addition to such provisions or any other provision of this Trust Instrument
or of the Bylaws, the Trustees may by resolution appoint a committee consisting
of less than the whole number of Trustees then in office, which committee may be
empowered to act for and bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office, with respect to the
institution, prosecution, dismissal, settlement, review or investigation of any
action, suit or proceeding which shall be pending or threatened to be brought
before any court, administrative agency or other adjudicatory body;
<PAGE>
(v) To interpret the investment policies, practices or limitations of any
Series;
(w) To establish a registered office and have a registered agent in the
state of Delaware; and
(x) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable
or proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses shall be construed as objects and powers, and the
foregoing enumeration of specific powers shall not be held to limit or restrict
in any manner the general powers of the Trustees. Any action by one or more of
the Trustees in their capacity as such hereunder shall be deemed an action on
behalf of the Trust or the applicable Series, and not an action in an individual
capacity.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust.
No one dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see to the application
of any payments made or property transferred to the Trustees or upon their
order.
Section 4.02 Issuance and Repurchase of Shares. The Trustees shall have the
power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell,
reissue, dispose of, and otherwise deal in Shares and, subject to the provisions
set forth in Article II and Article IX, to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of Shares any funds or
property of the Trust, or the particular Series of the Trust, with respect to
which such Shares are issued.
<PAGE>
Section 4.03 Trustees and Officers as Shareholders. Any Trustee, officer or
other agent of the Trust may acquire, own and dispose of Shares to the same
extent as if he were not a Trustee, officer or agent; and the Trustees may issue
and sell or cause to be issued and sold Shares to and buy such Shares from any
such person or any firm or company in which he is interested, subject only to
the general limitations herein contained as to the sale and purchase of such
Shares; and all subject to any restrictions which may be contained in the
Bylaws.
Section 4.04 Action by the Trustees. Except as otherwise provided herein or
in the Bylaws, any action to be taken by the Trustees may be taken by a majority
of the Trustees present at a meeting of Trustees (a quorum being present),
including any meeting held by means of a conference telephone circuit or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, or by written consents of the entire number of
Trustees then in office. The Trustees may adopt Bylaws not inconsistent with
this Declaration to provide for the conduct of the business of the Trust and may
amend or repeal such Bylaws to the extent such power is not reserved to the
Shareholders.
Section 4.05 Chairman of the Trustees. The Trustees shall appoint one of
their number to be Chairman of the Board of Trustees. The Chairman shall preside
at all meetings of the Trustees, shall be responsible for the execution of
policies established by the Trustees and the administration of the Trust, and
may be (but is not required to be) the chief executive, financial and/or
accounting officer of the Trust.
Section 4.06 Principal Transactions. Except to the extent prohibited by
applicable law, the Trustees may, on behalf of the Trust, buy any securities
from or sell any securities to, or lend any assets of the Trust to, any Trustee
or officer of the Trust or any firm of which any such Trustee or officer is a
member acting as principal, or have any such dealings with any investment
adviser, administrator, distributor or transfer agent for the Trust or with any
Interested Person of such person; and the Trust may employ any such person, or
firm or company in which such person is an Interested Person, as broker, legal
counsel, registrar, investment adviser, administrator, distributor, transfer
agent, dividend disbursing agent, custodian or in any other capacity upon
customary terms.
<PAGE>
ARTICLE V
EXPENSES OF THE TRUST
Subject to the provisions of Article II, Section 2.08 hereof, the Trustees
shall be reimbursed from the Trust estate or the assets belonging to the
appropriate Series for their expenses and disbursements, including, without
limitation, interest charges, taxes, brokerage fees and commissions; expenses of
issue, repurchase and redemption of shares; certain insurance premiums;
applicable fees, interest charges and expenses of third parties, including the
Trust's investment advisers, managers, administrators, distributors, custodian,
transfer agent and fund accountant; fees of pricing, interest, dividend, credit
and other reporting services; costs of membership in trade associations;
telecommunications expenses; funds transmission expenses; auditing, legal and
compliance expenses; costs of forming the Trust and maintaining corporate
existence; costs of preparing and printing the Trust's prospectuses, statements
of additional information and shareholder reports and delivering them to
existing shareholders; expenses of meetings of shareholders and proxy
solicitations therefore; costs of maintaining books and accounts; costs of
reproduction, stationery and supplies; fees and expenses of the Trustees;
compensation of the Trust's officers and employees and costs of other personnel
performing services for the Trust; costs of Trustee meetings; Securities and
Exchange Commission registration fees and related expenses; state or foreign
securities laws registration fees and related expenses; and for such
non-recurring items as may arise, including litigation to which the Trust (or a
Trustee acting as such) is a party, and for all losses and liabilities by them
incurred in administering the Trust, and for the payment of such expenses,
disbursements, losses and liabilities the Trustees shall have a lien on the
assets belonging to the appropriate Series, or in the case of an expense
allocable to more than one Series, on the assets of each such Series, prior to
any rights or interests of the Shareholders thereto. This section shall not
preclude the Trust from directly paying any of the aforementioned fees and
expenses.
<PAGE>
ARTICLE VI
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT
Section 6.01 Investment Adviser. The Trustees may in their discretion, from
time to time, enter into an investment advisory contract or contracts with
respect to the Trust or any Series whereby the other party or parties to such
contract or contracts shall undertake to furnish the Trustees with such
investment advisory, statistical and research facilities and services and such
other facilities and services, if any, all upon such terms and conditions as may
be prescribed in the Bylaws or as the Trustees may in their discretion determine
(such terms and conditions not to be inconsistent with the provisions of this
Trust Instrument or of the Bylaws). Notwithstanding any other provision of this
Trust Instrument, the Trustees may authorize any investment adviser (subject to
such general or specific instructions as the Trustees may from time to time
adopt) to effect purchases, sales or exchanges of portfolio securities, other
investment instruments of the Trust, or other Trust Property on behalf of the
Trustees, or may authorize any officer, agent, or Trustee to effect such
purchases, sales or exchanges pursuant to recommendations of the investment
adviser (and all without further action by the Trustees). Any such purchases,
sales and exchanges shall be deemed to have been authorized by all of the
Trustees.
The Trustees may, subject to the requirements of the 1940 Act, authorize
the investment adviser to employ, from time to time, one or more sub-advisers to
perform such of the acts and services of the investment adviser, and upon such
terms and conditions, as may be agreed upon between the investment adviser and
sub-adviser (such terms and conditions not to be inconsistent with the
provisions of this Trust Instrument or of the Bylaws). Any reference in this
Trust Instrument to the investment adviser shall be deemed to include such
sub-advisers, unless the context otherwise requires.
Section 6.02 Principal Underwriter. The Trustees may in their discretion
from time to time enter into an exclusive or non-exclusive underwriting contract
or contracts providing for the sale of Shares, whereby the Trust may either
agree to sell Shares to the other party to the contract or appoint such other
party its sales agent for such Shares. In either case, the contract shall be on
such terms and conditions as may be prescribed in the Bylaws and as the Trustees
may in their discretion determine (such terms and conditions not to be
inconsistent with the provisions of this Trust Instrument or of the Bylaws); and
such contract may also provide for the repurchase or sale of Shares by such
other party as principal or as agent of the Trust.
<PAGE>
Section 6.03 Administration. The Trustees may in their discretion from time
to time enter into one or more management or administrative contracts whereby
the other party or parties shall undertake to furnish the Trustees with
management or administrative services. The contract or contracts shall be on
such terms and conditions as may be prescribed in the Bylaws and as the Trustees
may in their discretion determine (such terms and conditions not to be
inconsistent with the provisions of this Trust Instrument or of the Bylaws).
Section 6.04 Transfer Agent. The Trustees may in their discretion from time
to time enter into one or more transfer agency and Shareholder service contracts
whereby the other party or parties shall undertake to furnish the Trustees with
transfer agency and Shareholder services. The contract or contracts shall be on
such terms and conditions as may be prescribed in the Bylaws and as the Trustees
may in their discretion determine (such terms and conditions not to be
inconsistent with the provisions of this Trust Instrument or of the Bylaws).
Section 6.05 Parties to Contract. Any contract of the character described
in Sections 6.01, 6.02, 6.03 and 6.04 of this Article VI or any contract of the
character described in Article VIII hereof may be entered into with any
corporation, firm, partnership, trust or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, trustee,
shareholder, or member of such other party to the contract, and no such contract
shall be invalidated or rendered void or voidable by reason of the existence of
any relationship, nor shall any person holding such relationship be disqualified
from voting on or executing the same in his capacity as Shareholder and/or
Trustee, nor shall any person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was not
inconsistent with the provisions of this Article VI or Article VIII hereof or of
the Bylaws. The same person (including a firm, corporation, partnership, trust,
or association) may be the other party to contracts entered into pursuant to
Sections 6.01, 6.02, 6.03 and 6.04 of this Article VI or pursuant to Article
VIII hereof, and any individual may be financially interested or otherwise
affiliated with persons who are parties to any or all of the contracts mentioned
in this Section 6.05.
<PAGE>
Section 6.06 Provisions and Amendments. Any contract entered into pursuant
to Sections 6.01 or 6.02 of this Article VI shall be consistent with and subject
to the requirements of Section 15 of the 1940 Act, if applicable, or other
applicable Act of Congress hereafter enacted with respect to its continuance in
effect, its termination, and the method of authorization and approval of such
contract or renewal thereof, and no amendment to any contract entered into
pursuant to Section 6.01 of this Article VI shall be effective unless assented
to in a manner consistent with the requirements of said Section 15, as modified
by any applicable rule, regulation or order of the Commission.
ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 7.01 Voting Powers. The Shareholders shall have power to vote only
(a) for the election of Trustees as provided in Article III, Sections 3.01 and
3.02 hereof, (b) for the removal of Trustees as provided in Article III, Section
3.03(d) hereof, (c) with respect to any investment advisory contract as provided
in Article VI, Section 6.06 hereof, and (d) with respect to such additional
matters relating to the Trust as may be required by law, by this Trust
Instrument, or the Bylaws or any registration of the Trust with the Commission
or any State, or as the Trustees may consider desirable.
On any matter submitted to a vote of the Shareholders, all Shares shall be
voted separately by individual Series, except (i) when required by the 1940 Act,
Shares shall be voted in the aggregate and not by individual Series; and (ii)
when the Trustees have determined that the matter affects the interests of more
than one Series, then the Shareholders of all such Series shall be entitled to
vote thereon. The Trustees may also determine that a matter affects only the
interests of one or more classes of a Series, in which case any such matter
shall be voted on by such class or classes. Each whole Share shall be entitled
to one vote as to any matter on which it is entitled to vote, and each
fractional Share shall be entitled to a proportionate fractional vote. There
shall be no cumulative voting in the election of trustees. Shares may be voted
in person or by proxy or in any manner provided for in the Bylaws. A proxy may
be given in writing. The Bylaws may provide that proxies may also, or may
instead, be given by any electronic or telecommunications device or in any other
manner. Notwithstanding anything else herein or in the Bylaws, in the event a
proposal by anyone other than the officers or Trustees of the Trust is submitted
to a vote of the Shareholders of one or more Series or of the Trust, or in the
event of any proxy contest or proxy solicitation or proposal in opposition to
any proposal by the officers or Trustees of the Trust, Shares may be voted only
in person or by written proxy. Until Shares are issued, the Trustees may
exercise all rights of Shareholders and may take any action required or
permitted by law, this Trust Instrument or any of the Bylaws of the Trust to be
taken by Shareholders.
<PAGE>
Section 7.02 Meetings. A meeting of the Shareholders shall be held at such
times, on such day and at such hour as the Trustees may from time to time
determine, either at the principal office of the Trust, or at such other place,
within or without the State of Delaware, as may be designated by the Trustees,
for such purposes as may be specified by the Trustees.
Section 7.03 Quorum and Required Vote. One-third of Shares entitled to vote
in person or by proxy shall be a quorum for the transaction of business at a
Shareholders' meeting, except that where any provision of law or of this Trust
Instrument permits or requires that holders of any Series shall vote as a Series
(or that holders of a class shall vote as a class), then one-third of the
aggregate number of Shares of that Series (or that class) entitled to vote shall
be necessary to constitute a quorum for the transaction of business by that
Series (or that class). Any lesser number shall be sufficient for adjournments.
Any adjourned session or sessions may be held, within a reasonable time after
the date set for the original meeting, without the necessity Of further notice.
Except when a larger vote is required by law or by any provision of this Trust
Instrument or the Bylaws, a majority of the Shares voted in person or by proxy
shall decide any questions and a plurality shall elect a Trustee, provided that
where any provision of law or of this Trust Instrument permits or requires that
the holders of any Series shall vote as a Series (or that the holders of any
class shall vote as a class), then a majority of the Shares present in person or
by proxy of that Series (or class) or, if required by law, a majority of the
Shares of that Series (or class), voted on the matter in person or by proxy
shall decide that matter insofar as that Series (or class) is concerned.
Shareholders may act by unanimous written consent. Actions taken by Series (or
class) may be consented to unanimously in writing by Shareholders of
that Series (or class).
<PAGE>
ARTICLE VIII
CUSTODIAN
Section 8.01 Appointment and Duties. The Trustees shall at all times employ
a bank, a company that is a member of a national securities exchange, or a trust
company, each having capital, surplus and undivided profits of at least two
million dollars ($2,000,000) and is a member of the Depository Trust Company as
custodian with authority as its agent, but subject to such restrictions,
limitations and other requirements, if any, as may be contained in the Bylaws of
the Trust: (a) to hold the securities owned by the Trust and deliver the same
upon written order or oral order confirmed in writing; (b) to receive and
receipt for any moneys due to the Trust and deposit the same in its own banking
department or elsewhere as the Trustees may direct; and (c) to disburse such
funds upon orders or vouchers.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian, and upon such terms and conditions, as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees, subject to such
restrictions, limitations and other requirements, if any, as may be contained in
the Bylaws of the Trust.
Section 8.02 Central Certificate System. Subject to such rules, regulations
and orders as the Commission may adopt, the Trustees may direct the custodian to
deposit all or any part of the securities owned by the Trust in a system for the
central handling of securities established by a national securities exchange or
a national securities association registered with the Commission under the
Securities Exchange Act of 1934, as amended, or such other person as may be
permitted by the Commission, or otherwise in accordance with the 1940 Act,
pursuant to which system all securities of any particular class or series of any
issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust or its custodians, sub-custodians or other agents.
<PAGE>
ARTICLE IX
DISTRIBUTIONS AND REDEMPTIONS
Section 9.01 Distributions.
(a) The Trustees may from time to time declare and pay dividends or other
distributions with respect to any Series. The amount of such dividends or
distributions and the payment of them and whether they are in cash or any other
Trust Property shall be wholly in the discretion of the Trustees.
(b) Dividends and other distributions may be paid or made to the
Shareholders of record at the time of declaring a dividend or other distribution
or among the Shareholders of record at such other date or time or dates or times
as the Trustees shall determine, which dividends or distributions, at the
election of the Trustees, may be paid pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees may
determine. The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans or related plans as the Trustees
shall deem appropriate.
(c) Anything in this Trust Instrument to the contrary notwithstanding, the
Trustees may at any time declare and distribute a stock dividend pro rata among
the Shareholders of a particular Series, or class thereof, as of the record date
of that Series fixed as provided in Subsection 9.01(b) hereof.
Section 9.02 Redemptions. In case any holder of record of Shares of a
particular Series desires to dispose of his Shares or any portion thereof, he
may deposit at the office of the transfer agent or other authorized agent of
that Series a written request or such other form of request as the Trustees may
from time to time authorize, requesting that the Series purchase the Shares in
accordance with this Section 9.02; and the Shareholder so requesting shall be
entitled to require the Series to purchase, and the Series or the principal
underwriter of the Series shall purchase his said Shares, but only at the Net
Asset Value thereof (as described in Section 9.03 of this Article IX). The
Series shall make payment for any such Shares to be redeemed, as aforesaid, in
cash or property from the assets of that Series and payment for such Shares
shall be made by the Series or the principal underwriter of the Series to the
Shareholder of record within seven (7) days after the date upon which the
request is effective. Upon redemption, shares shall become Treasury shares and
may be re-issued from time to time.
<PAGE>
Section 9.03 Determination of Net Asset Value and Valuation of Portfolio
Assets. The term "Net Asset Value" of any Series shall mean that amount by which
the assets of that Series exceed its liabilities, all as determined by or under
the direction of the Trustees. Such value shall be determined separately for
each Series and shall be determined on such days and at such times as the
Trustees may determine. Such determination shall be made with respect to
securities for which market quotations are readily available, at the market
value of such securities; and with respect to other securities and assets, at
the fair value as determined in good faith by the Trustees; provided, however,
that the Trustees, without Shareholder approval, may alter the method of valuing
portfolio securities insofar as permitted under the 1940 Act and the rules,
regulations and interpretations thereof promulgated or issued by the Commission
or insofar as permitted by any Order of the Commission applicable to the Series.
The Trustees may delegate any of their powers and duties under this Section 9.03
with respect to valuation of assets and liabilities. The resulting amount, which
shall represent the total Net Asset Value of the particular Series, shall be
divided by the total number of shares of that Series outstanding at the time and
the quotient so obtained shall be the Net Asset Value per Share of that Series.
At any time the Trustees may cause the Net Asset Value per Share last determined
to be determined again in similar manner and may fix the time when such
redetermined value shall become effective. If, for any reason, the net income of
any Series, determined at any time, is a negative amount, the Trustees shall
have the power with respect to that Series (a) to offset each Shareholder's pro
rata share of such negative amount from the accrued dividend account of such
Shareholder, (b) to reduce the number of Outstanding Shares of such Series by
reducing the number of Shares in the account of each Shareholder by a pro rata
portion of that number of full and fractional Shares which represents the amount
of such excess negative net income, (c) to cause to be recorded on the books of
such Series an asset account in the amount of such negative net income (provided
that the same shall thereupon become the property of such Series with respect to
such Series and shall not be paid to any Shareholder), which account may be
reduced by the amount, of dividends declared thereafter upon the Outstanding
Shares of such Series on the day such negative net income is experienced, until
such asset account is reduced to zero; (d) to combine the methods described in
clauses (a) and (b) and (c) of this sentence; or (e) to take any other action
they deem appropriate, in order to cause (or in order to assist in causing) the
Net Asset Value per Share of such Series to remain at a constant amount per
Outstanding Share immediately after each such determination and declaration. The
Trustees shall also have the power not to declare a dividend out of net income
for the purpose of causing the Net Asset Value per Share to be increased. The
Trustees shall not be required to adopt, but may at any time adopt, discontinue
or amend the practice of maintaining the Net Asset Value per Share of the Series
at a constant amount.
<PAGE>
Section 9.04 Suspension of the Right of Redemption. The Trustees may
declare a suspension of the right of redemption or postpone the date of payment
as permitted under the 1940 Act. Such suspension shall take effect at such time
as the Trustees shall specify but not later than the close of business on the
business day next following the declaration of suspension, and thereafter there
shall be no right of redemption or payment until the Trustees shall declare the
suspension at an end. In the case of a suspension of the right of redemption, a
Shareholder may either withdraw his request for redemption or receive payment
based on the Net Asset Value per Share next determined after the termination of
the suspension. In the event that any Series is divided into classes, the
provisions of this Section 9.03, to the extent applicable as determined in the
discretion of the Trustees and consistent with applicable law, may be equally
applied to each such class.
ARTICLE X
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 10.01 Limitation of Liability. A Trustee, when acting in such
capacity, shall not be personally liable to any person other than the Trust or a
beneficial owner for any act, omission or obligation of the Trust or any
Trustee. A Trustee shall not be liable for any act or omission or any conduct
whatsoever in his capacity as Trustee, provided that nothing contained herein or
in the Delaware Act shall protect any Trustee against any liability to the Trust
or to Shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee hereunder.
<PAGE>
Section 10.02 Indemnification.
(a) Subject to the exceptions and limitations contained in Subsection
10.02(b):
(i) every person who is, or has been, a Trustee or officer of the
Trust (hereinafter referred to as a "Covered Person") shall be
indemnified by the Trust to the fullest extent permitted by law
against liability and against all expenses reasonably incurred or
paid by him in connection with any claim, action, suit or
proceeding in which he becomes involved as a party or otherwise
by virtue of his being or having been a Trustee or officer and
against amounts paid or incurred by him in the settlement
thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened while
in office or thereafter, and the words "liability" and "expenses"
shall include, without limitation, attorneys' fees, costs,
judgments, amounts paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Trust or
its Shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of his office or (B) not to have acted in good faith
in the reasonable belief that his action was in the best interest
of the Trust; or
<PAGE>
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office,
(A) by the court or other body approving the settlement; (B) by
at least a majority of those Trustees who are neither Interested
Persons of the Trust nor are parties to the matter based upon a
review of readily available facts (as opposed to a full
trial-type inquiry); or (C) by written opinion of independent
legal counsel based upon a review of readily available facts (as
opposed to a full trial-type inquiry);
provided, however, that any Shareholder may, by appropriate legal
proceedings, challenge any such determination by the Trustees or by independent
counsel.
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not be exclusive of
or affect any other rights to which any Covered Person may now or hereafter be
entitled, shall continue as to a person who has ceased to be a Covered Person
and shall inure to the benefit of the heirs, executors and administrators of
such a person. Nothing contained herein shall affect any rights to
indemnification to which Trust personnel, other than Covered Persons, and other
persons may be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
Subsection 10.02(a) of this Section 10.02 may be paid by the Trust or Series
from time to time prior to final disposition thereof upon receipt of an
undertaking by or on behalf of such Covered Person that such amount will be paid
over by him to the Trust or Series if it is ultimately determined that he is not
entitled to indemnification under this Section 10.02; provided, however, that
either (i) such Covered Person shall have provided appropriate security for such
undertaking, (ii) the Trust is insured against losses arising out of any such
advance payments or (iii) either a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the matter, or independent legal
counsel in a written opinion, shall have determined, based upon a review of
readily available facts (as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such Covered Person will be
found entitled to indemnification under Section 10.02.
<PAGE>
Section 10.03 Shareholders. In case any Shareholder of any Series shall be
held to be personally liable solely by reason of his being or having been a
Shareholder of such Series and not because of his acts or omissions or for some
other reason, the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives, or, in the case of a corporation
or other entity, its corporate or other general successor) shall be entitled out
of the assets belonging to the applicable Series to be held harmless from and
indemnified against all loss and expense arising from such liability. The Trust,
on behalf of the affected Series, shall, upon request by the Shareholder, assume
the defense of any claim made against the Shareholder for any act or obligation
of the Series and satisfy any judgment thereon from the assets of the Series.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Trust Not A Partnership. It is hereby expressly declared that
a trust and not a partnership is created hereby; provided, however, that it is
acknowledged that, for federal tax purposes, the trust created hereby may be
characterized as a corporation. No Trustee hereunder shall have any power to
bind personally either the Trust officers or any Shareholder. All persons
extending credit to, contracting with or having any claim against the Trust or
the Trustees shall look only to the assets of the appropriate Series or (if the
Trustees shall have yet to have established Series) of the Trust for payment
under such credit, contract or claim; and neither the Shareholders nor the
Trustees, nor any of their agents, whether past, present or future, shall be
personally liable therefor. Nothing in this Trust Instrument shall protect a
Trustee against any liability to which the Trustee would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of the office of Trustee hereunder.
Section 11.02 Trustee's Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees of their powers and discretion hereunder in
good faith and with reasonable care under the circumstances then prevailing
shall be binding upon everyone interested. Subject to the provisions of Article
X hereof and to Section 11.01 of this Article XI, the Trustees shall not be
liable for errors of judgment or mistakes of fact or law. The Trustees may take
advice of counsel or other experts with respect to the meaning and operation of
this Trust Instrument, and subject to the provisions of Article X hereof and
Section 11.01 of this Article XI, shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice.
The Trustees shall not be required to give any bond as such, nor any surety if a
bond is obtained.
<PAGE>
Section 11.03 Establishment of Record Dates. The Trustees may close the
Share transfer books of the Trust for a period not exceeding sixty (60) days
preceding the date of any meeting of Shareholders, or the date for the payment
of any dividends or other distributions, or the date for the allotment of
rights, or the date when any change or conversion or exchange of Shares shall go
into effect; or in lieu of closing the stock transfer books as aforesaid, the
Trustees may fix in advance a date, not exceeding sixty (60) days preceding the
date of any meeting of Shareholders, or the date for payment of any dividend or
other distribution, or the date for the allotment of rights, or the date when
any change or conversion or exchange of Shares shall go into effect, as a record
date for the determination of the Shareholders entitled to notice of, and to
vote at, any such meeting, or entitled to receive payment of any such dividend
or other distribution, or to any such allotment of rights, or to exercise the
rights in respect of any such change, conversion or exchange of Shares, and in
such case such Shareholders and only such Shareholders as shall be Shareholders
of record on the date so fixed shall be entitled to such notice of, and to vote
at, such meeting, or to receive payment of such dividend or other distribution,
or to receive such allotment or rights, or to exercise such rights, as the case
may be, notwithstanding any transfer of any Shares on the books of the Trust
after any such record date fixed as aforesaid.
Section 11.04 Termination of Trust.
(a) This Trust shall continue without limitation of time but subject to the
provisions of Subsection 11.04(b).
(b) The Trustees may, subject to a Majority Shareholder Vote of each Series
affected by the matter or, if applicable, to a Majority Shareholder Vote of the
Trust, and subject to a vote of a majority of the Trustees,
(i) sell and convey all or substantially all of the assets of the
Trust or any affected Series to another trust, partnership,
association or corporation, or to a separate series of shares
thereof, organized under the laws of any state which trust,
partnership, association or corporation is an open-end management
investment company as defined in the 1940 Act, or is a series
thereof, for adequate consideration which may include the
assumption of all outstanding obligations, taxes and other
liabilities, accrued or contingent, of the Trust or any affected
Series, and which may include shares of beneficial interest,
stock or other ownership interests of such trust, partnership,
association or corporation or of a series thereof; or
<PAGE>
(ii) at any time sell and convert into money all of the assets of
the Trust or any affected Series.
Upon making reasonable provision, in the determination of the Trustees, for
the payment of all such liabilities in either (i) or (ii), by such assumption or
otherwise, the Trustees shall distribute the remaining proceeds or assets (as
the case may be) of each Series (or class) ratably among the holders of Shares
of that Series then outstanding.
(c) Upon completion of the distribution of the remaining proceeds or the
remaining assets as provided in Subsection 11.05(b), the Trust or any affected
Series shall terminate and the Trustees and the Trust shall be discharged of any
and all further liabilities and duties hereunder and the right, title and
interest of all parties with respect to the Trust or Series shall be cancelled
and discharged.
Upon termination of the Trust, following completion of winding up of its
business, the Trustees shall cause a certificate of cancellation of the Trust's
certificate of trust to be filed in accordance with the Delaware Act, which
certificate of cancellation may be signed by any one Trustee.
Without limiting the generality of the foregoing, existence of the Trust
shall not be affected by sales or purchases of Shares or status of any
Shareholders.
<PAGE>
Section 11.05 Reorganization. Notwithstanding anything else herein, the
Trustees, in order to change the form of organization of the Trust, may, without
prior Shareholder approval, (a) cause the Trust to merge or consolidate with or
into one or more trusts, partnerships, associations or corporations so long as
the surviving or resulting entity is an open-end management investment company
under the 1940 Act, or is a series thereof, that will succeed to or assume the
Trust's registration under that Act and which is formed, organized or existing
under the laws of a state, commonwealth, possession or colony of the United
States or (b) cause the Trust to incorporate under the laws of Delaware. Any
agreement of merger or consolidation or certificate of merger may be signed by a
majority of Trustees and facsimile signatures conveyed by electronic or
telecommunication means shall be valid.
Pursuant to and in accordance with the provisions of Section 3815(f) of the
Delaware Act, and notwithstanding anything to the contrary contained in this
Trust Instrument, an agreement of merger or consolidation approved by the
Trustees in accordance with this Section 11.05 may effect any amendment to the
Trust Instrument or effect the adoption of a new trust instrument of the Trust
if it is the surviving or resulting trust in the merger or consolidation.
Section 11.06 Filing of Copies, References, Headings. The original or a
copy of this Trust Instrument and of each amendment hereof or Trust Instrument
supplemental hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. Anyone dealing with the Trust may rely on a
certificate by an officer or Trustee of the Trust as to whether or not any such
amendments or supplements have been made and as to any matters in connection
with the Trust hereunder, and with the same effect as if it were the original,
may rely on a copy certified by an officer or Trustee of the Trust to be a copy
of this Trust Instrument or of any such amendment or supplemental Trust
Instrument. In this Trust Instrument or in any such amendment or supplemental
Trust Instrument, references to this Trust Instrument, and all expressions like
"herein," "hereof" and "hereunder," shall be deemed to refer to this Trust
Instrument as amended or affected by any such supplemental Trust Instrument. All
expressions like "his", "he" and "him", shall be deemed to include the feminine
and neuter, as well as masculine, genders. Headings are placed herein for
convenience of reference only and in case of any conflict, the text of this
Trust Instrument, rather than the headings, shall control. This Trust Instrument
may be executed in any number of counterparts each of which shall be deemed an
original.
<PAGE>
Section 11.07 Applicable Law. The trust set forth in this instrument is
made in the State of Delaware, and the Trust and this Trust Instrument, and the
rights and obligations of the Trustees and Shareholders hereunder, are to be
governed by and construed and administered according to the Delaware Act and the
laws of said State; provided, however, that there shall not be applicable to the
Trust, the Trustees or this Trust Instrument (a) the provisions of Section 3540
of Title 12 of the Delaware Code or (b) any provisions of the laws (statutory or
common) of the State of Delaware (other than the Delaware Act) pertaining to
trusts which relate to or regulate (i) the filing with any court or governmental
body or agency of trustee accounts or schedules of trustee fees and charges,
(ii) affirmative requirements to post bonds for trustees, officers, agents or
employees of a trust, (iii) the necessity for obtaining court or other
governmental approval concerning the acquisition, holding or disposition of real
or personal property, (iv) fees or other sums payable to trustees, officers,
agents or employees of a trust, (v) the allocation of receipts and expenditures
to income or principal, (vi) restrictions or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding of trust assets, or (vii) the
establishment of fiduciary or other standards of responsibilities or limitations
on the acts or powers of trustees, which are inconsistent with the limitations
or liabilities or authorities and powers of the Trustees set forth or referenced
in this Trust Instrument. The Trust shall be of the type commonly called a
"business trust", and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust under
Delaware law. The Trust specifically reserves the right to exercise any of the
powers or privileges afforded to trusts or actions that may be engaged in by
trusts under the Delaware Act, and the absence of a specific reference herein to
any such power, privilege or action shall not imply that the Trust may not
exercise such power or privilege or take such actions.
Section 11.08 Amendments. Except as specifically provided herein, the
Trustees may, without shareholder vote, amend or otherwise supplement this Trust
Instrument by making an amendment, a Trust Instrument supplemental hereto or an
amended and restated trust instrument. Shareholders shall have the right to vote
(a) on any amendment which would affect their right to vote granted in Section
7.01 of Article VII hereof, (b) on any amendment to this Section 11.08, (c) on
any amendment as may be required by law or by the Trust's registration statement
filed with the Commission and (d) on any amendment submitted to them by the
Trustees. Any amendment required or permitted to be submitted to Shareholders
which, as the Trustees determine, shall affect the Shareholders of one or more
Series shall be authorized by vote of the Shareholders of each Series affected
and no vote of shareholders of a Series not affected shall be required.
Notwithstanding anything else herein, any amendment to Article X hereof shall
not limit the rights to indemnification or insurance provided therein with
respect to action or omission of Covered Persons prior to such amendment.
<PAGE>
Section 11.09 Fiscal Year. The fiscal year of the Trust shall end on a
specified date as set forth in the Bylaws, provided, however, that the Trustees
may, without Shareholder approval, change the fiscal year of the Trust.
Section 11.10 Name Reservation. The Trustees on behalf of the Trust
acknowledge that Lord Asset Management, Inc. ("LAMI") has licensed to the Trust
the non-exclusive right to use the name "Lord Asset Management" as part of the
name of the Trust, and has reserved the right to grant the non-exclusive use of
the name "Lord Asset Management" or any derivative thereof to any other party.
In addition, LAMI reserves the right to grant the non-exclusive use of the name
Lord Asset Management to, and to withdraw such right from, any other business or
other enterprise. LAMI reserves the right to withdraw from the Trust the right
to use said name Lord Asset Management and will withdraw such right if the Trust
ceases to employ, for any reason, LAMI, an affiliate or any successor as adviser
of the Trust.
Section 11.11 Provisions in Conflict With Law. The provisions of this Trust
Instrument are severable, and if the Trustees shall determine, with the advice
of counsel, that any of such provisions is in conflict with the 1940 Act, the
regulated investment company provisions of the Internal Revenue Code or with
other applicable laws and regulations, the conflicting provision shall be deemed
never to have constituted a part of this Trust Instrument; provided, however,
that such determination shall not affect any of the remaining provisions of this
Trust Instrument or render invalid or improper any action taken or omitted prior
to such determination. If any provision of this Trust Instrument shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any matter affect such provisions in any other jurisdiction or any
other provision of this Trust Instrument in any jurisdiction.
<PAGE>
IN WITNESS WHEREOF, the undersigned, being all of the initial Trustees of
the Trust, have executed this instrument as of date first written above.
/s/ Thomas S. White, Jr.
Thomas S. White, Jr., as Trustee
and not individually
/s/ Thomas H. Forester
Thomas H. Forester, as Trustee
and not individually
BYLAWS
OF
LORD ASSET MANAGEMENT TRUST
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS 1
ARTICLE II - OFFICES 1
Section 1. Resident Agent 1
Section 2. Offices 1
ARTICLE III - SHAREHOLDERS 2
Section 1. Meetings 2
Section 2. Notice of Meetings 2
Section 3. Record Date for Meetings
and Other Purposes 2
Section 4. Proxies 3
Section 5. Action without Meeting 4
ARTICLE IV - TRUSTEES 4
Section 1. Meetings of the Trustees 4
Section 2. Quorum and Manner of Acting 6
ARTICLE V - COMMITTEES 6
Section 1. Executive and Other Committees 6
Section 2. Meetings, Quorum and Manner of Acting 7
ARTICLE VI - OFFICERS 8
Section 1. General Provisions 8
Section 2. Term of Office and Qualifications 8
Section 3. Removal 9
Section 4. Powers and Duties of the President 9
Section 5. Powers and Duties of Vice Presidents 9
Section 6. Powers and Duties of the Treasurer 10
Section 7. Powers and Duties of the Secretary 11
Section 8. Powers and Duties of Assistant
Treasurers 11
Section 9. Powers and Duties of Assistant
Secretaries 11
Section 10. Compensation of Officers and Trustees
and Members of the Advisory Board 11
ARTICLE VII - FISCAL YEAR 12
ARTICLE VIII - SEAL 12
ARTICLE IX - WAIVERS OF NOTICE 12
ARTICLE X - CUSTODY OF SECURITIES 13
Section 1. Employment of a Custodian 13
Section 2. Action Upon Termination of
Custodian Agreement 13
Section 3. Provisions of Custodian Agreement 14
Section 4. Central Certificate System 15
Section 5. Acceptance of Receipts in Lieu of
Certificates 15
ARTICLE XI - AMENDMENTS 16
ARTICLE XII - INSPECTION OF BOOKS 16
ARTICLE XIII - MISCELLANEOUS 17
<PAGE>
BYLAWS
OF
LORD ASSET MANAGEMENT TRUST
ARTICLE I
DEFINITIONS
Any terms defined in the Trust Instrument of Lord Asset Management Trust
dated February 9, 1994, as amended from time to time, shall have the same
meaning when used herein. ARTICLE II OFFICES Section 1. Resident Agent. The
Trust shall maintain a resident agent in the State of Delaware, which agent
shall initially be The Corporation Trust Company, 30 The Green, Dover, Delaware
19901. The Trustees may designate a successor resident agent, provided, however,
that such appointment shall not become effective until written notice thereof is
delivered to the office of the Secretary of State. Section 2. Offices. The Trust
may have its principal office and other offices in such places within as well as
without the State of Delaware as the Trustees may from time to time determine.
ARTICLE III
SHAREHOLDERS
Section 1. Meetings. Meetings of the Shareholders shall be held as provided
in the Trust Instrument at such place within or without the State of Delaware as
the Trustees shall designate.
Section 2. Notice of Meetings. Notice of all meetings of the Shareholders,
stating the time, place and purposes of the meeting, shall be given by the
Trustees by mail to each Shareholder at his address as recorded on the register
of the Trust mailed at least ten (10) days and not more than sixty (60) days
before the meeting. Only the business stated in the notice of the meeting shall
be considered at such meeting. Any adjourned meeting may be held as adjourned
without further notice. No notice need be given to any Shareholder who shall
have failed to inform the Trust of his current address or if a written waiver of
notice, executed before or after the meeting by the Shareholder or his attorney
thereunto authorized, is filed with the records of the meeting. Section 3.
Record Date for Meetings and Other Purposes. For the purpose of determining the
Shareholders who are entitled to notice of and to vote at any meeting, or to
participate in any distribution, or for the purpose of any other action, the
Trustees may from time to time close the transfer books for such period, not
exceeding sixty (60) days, as the Trustees may determine; or without closing the
transfer books the Trustees may fix a date not more than sixty (60) days prior
to the date of any meeting of Shareholders or distribution or other action as a
record date for the determinations of the persons to be treated as Shareholders
of record for such purposes, subject to the provisions of the Trust Instrument.
<PAGE>
Section 4. Proxies. At any meeting of Shareholders, any holder of Shares
entitled to vote thereat may vote by proxy, provided that no proxy shall be
voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent of the Trust as the Secretary may
direct, for verification prior to the time at which such vote shall be taken.
Proxies may be solicited in the name of one or more Trustees or one or more of
the officers of the Trust. Only Shareholders of record shall be entitled to
vote. Each whole share shall be entitled to one vote as to any matter on which
it is entitled by the Trust Instrument to vote, and each fractional Share shall
be entitled to a proportionate fractional vote. When any Share is held jointly
by several persons, any one of them may vote at any meeting in person or by
proxy in respect of such Share, but if more than one of them shall be present at
such meeting in person or by proxy, and such joint owners or their proxies so
present disagree as to any vote to be cast, such vote shall not be received in
respect of such Share. A proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its exercise,
and the burden of proving invalidity shall rest on the challenger. If the holder
of any such Share is a minor or legally incompetent, and subject to guardianship
or the legal control of any other person as regards the charge or management of
such Share, he may vote by his guardian or such other person appointed or having
such control, and such vote may be given in person or by proxy.
Section 5. Action Without Meeting. Any action which may be taken by
Shareholders may be taken without a meeting if all Shareholders entitled to vote
on the matter consent to the action in writing and the written consents are
filed with the records of the meetings of Shareholders. Such consents shall be
treated for all purposes as a vote taken at a meeting of Shareholders.
<PAGE>
ARTICLE IV
TRUSTEES
Section 1. Meetings of the Trustees. The Trustees may in their discretion
provide for regular or stated meetings of the Trustees. Notice of regular or
stated meetings need not be given. Meetings of the Trustees other than regular
or stated meetings shall be held whenever called by the President, or by any one
of the Trustees, at the time being in office. Notice of the time and place of
each meeting other than regular or stated meetings shall be given by the
Secretary or an Assistant Secretary or by the officer or Trustee calling the
meeting and shall be mailed to each Trustee at least two days before the
meeting, or shall be telegraphed, cabled, or wirelessed to each Trustee at his
business address, or personally delivered to him at least one day before the
meeting. Such notice may, however, be waived by any Trustee. Notice of a meeting
need not be given to any Trustee if a written waiver of notice, executed by him
before or after the meeting, is filed with the records of the meeting, or to any
Trustee who attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him. A notice or waiver of notice need not
specify the purpose of any meeting. The Trustees may meet by means of a
telephone conference circuit or similar communications equipment by means of
which all persons participating in the meeting shall be deemed to have been held
at a place designated by the Trustees at the meeting. Participation in a
telephone conference meeting shall constitute presence in person at such
meeting. Any action required or permitted to be taken at any meeting of the
Trustees may be taken by the Trustees without a meeting if all the Trustees
consent to the action in writing and the written consents are filed with the
records of the Trustees' meetings. Such consents shall be treated as a vote for
all purposes.
Section 2. Quorum and Manner of Acting. A majority of the Trustees shall be
present in person at any regular or special meeting of the Trustees in order to
constitute a quorum for the transaction of business at such meeting and (except
as otherwise required by law, the Trust Instrument or these Bylaws) the act of a
majority of the Trustees present at any such meeting, at which a quorum is
present, shall be the act of the Trustees. In the absence of a quorum, a
majority of the Trustees present may adjourn the meeting from time to time until
a quorum shall be present. Notice of an adjourned meeting need not be given.
<PAGE>
ARTICLE V
COMMITTEES
Section 1. Executive and Other Committees. The Trustees by vote of a
majority of all the Trustees may elect from their own number an Executive
Committee to consist of not less than three (3) to hold office at the pleasure
of the Trustees, which shall have the power to conduct the current and ordinary
business of the Trust while the Trustees are not in session, including the
purchase and sale of securities and the designation of securities to be
delivered upon redemption of Shares of the Trust, and such other powers of the
Trustees as the Trustees may, from time to time, delegate to them except those
powers which by law, the Trust Instrument or these Bylaws they are prohibited
from delegating. The Trustees may also elect from their own number other
Committees from time to time, the number composing such Committees, the powers
conferred upon the same (subject to the same limitations as with respect to the
Executive Committee) and the term of membership on such Committees to be
determined by the Trustees. The Trustees may designate a chairman of any such
Committee. In the absence of such designation, the Committee may elect its own
Chairman.
Section 2. Meetings, Quorum and Manner of Acting. The Trustees may (1)
provide for stated meetings of any Committee, (2) specify the manner of calling
and notice required for special meetings of any Committee, (3) specify the
number of members of a Committee required to constitute a quorum and the number
of members of a Committee required to exercise specified powers delegated to
such Committee, (4) authorize the making of decisions to exercise specified
powers by written assent of the requisite number of members of a Committee
without a meeting, and (5) authorize the members of a Committee to meet by means
of a telephone conference circuit. The Executive Committee shall keep regular
minutes of its meetings and records of decisions taken without a meeting and
cause them to be recorded in a book designated for that purpose and kept in the
Office of the Trust.
ARTICLE VI
OFFICERS
Section 1. General Provisions. The officers of the Trust shall be a
President, a Treasurer and a Secretary, who shall be elected by the Trustees.
The Trustees may elect or appoint such other officers or agents as the business
of the Trust may require, including one or more Executive Vice Presidents, one
or more Vice Presidents, one or more Assistant Secretaries, and one or more
Assistant Treasurers. The Trustees may delegate to any officer or Committee the
power to appoint any subordinate officers or agents.
<PAGE>
Section 2. Term of Office and Qualifications. Except as otherwise provided
by law, the Trust Instrument or these Bylaws, the President, the Treasurer and
the Secretary shall each hold office until his successor shall have been duly
elected and qualified, and all other officers shall hold office at the pleasure
of the Trustees. The Secretary and Treasurer may be the same person. A Vice
President and the Treasurer or Assistant Treasurer or a Vice President and the
Secretary or Assistant Secretary may be the same person, but the offices of Vice
President and Secretary and Treasurer shall not be held by the same person. The
President shall hold no other office. Except as above provided, any two offices
may be held by the same person. Any officer may be, but none need be, a Trustee
or Shareholder. Section 3. Removal. The Trustees, at any regular or special
meeting of the Trustees, may remove any officer without cause, by a vote of a
majority of the Trustees then in office. Any officer or agent appointed by an
officer or Committee may be removed with or without cause by such appointing
officer or Committee.
Section 4. Powers and Duties of the President. The President may call
meetings of the Trustees and of any Committee thereof when he deems it necessary
and shall preside at all meetings of the Shareholders. Subject to the control of
the Trustees and to the control of any Committees of the Trustees, within their
respective spheres, as provided by the Trustees, he shall at all times exercise
a general supervision and direction over the affairs of the Trust. He shall have
the power to employ attorneys and counsel for the Trust and to employ such
subordinate officers, agents, clerks and employees as he may find necessary to
transact the business of the Trust. He shall also have the power to grant,
issue, execute or sign such powers of attorney, proxies or other documents as
may be deemed advisable or necessary in furtherance of the interests of the
Trust. The President shall have such other powers and duties as from time to
time may be conferred upon or assigned to him by the Trustees. Section 5. Powers
and Duties of Vice Presidents. In the absence or disability of the President,
any Vice President designated by the Trustees shall perform all the duties and
may exercise any of the powers of the President, subject to the control of the
Trustees. Each Vice President shall perform such other duties as may be assigned
to him from time to time by the Trustees and the President.
<PAGE>
Section 6. Powers and Duties of the Treasurer. The Treasurer shall be the
principal financial and accounting officer of the Trust. He shall deliver all
funds of the Trust which may come into his hands to such Custodian as the
Trustees may employ pursuant to Article X of these Bylaws. He shall in general
perform all the duties incident to the office of Treasurer and such other duties
as from time to time may be assigned to him by the Trustees. Section 7. Powers
and Duties of the Secretary. The Secretary shall keep the minutes of all
meetings of the Trustees and of the Shareholders in proper books provided for
that purpose; he shall have custody of the seal of the Trust; he shall have
charge of the Share transfer books, lists and records unless the same are in the
charge of the Transfer Agent. He shall attend to the giving and serving of all
notices by the Trust in accordance with the provisions of these Bylaws and as
required by law; and subject to these Bylaws, he shall in general perform all
duties incident to the office of Secretary and such other duties as from time to
time may be assigned to him by the Trustees. Section 8. Powers and Duties of
Assistant Treasurers. In the absence or disability of the Treasurer, any
Assistant Treasurer designated by the Trustees shall perform all the duties, and
may exercise any of the powers, of the Treasurer. Each Assistant Treasurer shall
perform such other duties as from time to time may be assigned to him by the
Trustees.
Section 9. Powers and Duties of Assistant Secretaries. In the absence or
disability of the Secretary, any Assistant Secretary designated by the Trustees
shall perform all the duties, and may exercise any of the powers, of the
Secretary. Each Assistant Secretary shall perform such other duties as from time
to time may be assigned to him by the Trustees. Section 10. Compensation of
Officers and Trustees and Members of the Advisory Board. Subject to any
applicable provisions of the Trust Instrument, the compensation of the officers
and Trustees and members of any Advisory Board shall be fixed from time to time
by the Trustees or, in the case of officers, by any Committee or officer upon
whom such power may be conferred by the Trustees. No officer shall be prevented
from receiving such compensation as such officer by reason of the fact that he
is also a Trustee.
<PAGE>
ARTICLE VII
FISCAL YEAR
The fiscal year of the Trust shall begin on the first day of November in
each year and shall end on the 31st day of October in each year, provided,
however, that the Trustees may from time to time change the fiscal year.
ARTICLE VIII
SEAL
The Trustees may adopt a seal which shall be in such form and shall have
such inscription thereon as the Trustees may from time to time prescribe.
ARTICLE IX
WAIVERS OF NOTICE
Whenever any notice is required to be given by law, the Trust Instrument or
these Bylaws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto. A notice shall be deemed to have been telegraphed,
cabled or wirelessed for the purposes of these Bylaws when it has been delivered
to a representative of any telegraph, cable or wireless company with
instructions that it be telegraphed, cabled or wirelessed.
ARTICLE X
CUSTODY OF SECURITIES
Section 1. Employment of a Custodian. The Trust shall place and at all
times maintain in the custody of a Custodian (including any sub-custodian for
the Custodian, which may be a foreign bank which meets applicable requirements
of law) all trusts, securities and similar investments included in the Trust
Property. The Custodian (and any sub-custodian) shall be a bank having not less
than $2,000,000 aggregate capital, surplus and undivided profits and shall be
appointed from time to time by the Trustees, who shall fix its remuneration.
Section 2. Action Upon Termination of Custodian Agreement. Upon termination
of a Custodian Agreement or inability of the Custodian to continue to serve, the
Trustees shall promptly appoint a successor custodian, but in the event that no
successor custodian can be found who has the required qualifications and is
willing to serve, the Trustees shall call as promptly as possible a special
meeting of the Shareholders to determine whether the Trust shall function
without a custodian or shall be liquidated. If so directed by vote of the
holders of a majority of the outstanding voting securities, the Custodian shall
deliver and pay over all Trust Property held by it as specified in such vote.
<PAGE>
Section 3. Provisions of Custodian Agreement. The following provisions
shall apply to the employment of a Custodian and to any contract entered into
with the Custodian so employed:
The Trustees shall cause to be delivered to the Custodian all
securities included in the Trust Property or to which the Trust
may become entitled, and shall order the same to be delivered by
the Custodian only in completion of a sale, exchange, transfer,
pledge, loan of portfolio securities to another person, or other
disposition thereof, all as the Trustees may generally or from
time to time require or approve or to a successor Custodian; and
the Trustees shall cause all trusts included in the Trust
Property or to which it may become entitled to be paid to the
Custodian, and shall order the same disbursed only for investment
against delivery of the securities acquired, or the return of
cash held as collateral for loans of portfolio securities, or in
payment of expenses, including management compensation, and
liabilities of the Trust, including distributions to
shareholders, or to a successor Custodian. In connection with the
Trust's purchase or sale of futures contracts, the Custodian
shall transmit, prior to receipt on behalf of the Trust of any
securities or other property, funds from the Trust's custodian
account in order to furnish to and maintain funds with brokers as
margin to guarantee the performance of the Trust's futures
obligations in accordance with the applicable requirements of
commodities exchanges and brokers.
<PAGE>
Section 4. Central Certificate System. Subject to such rules, regulations
and orders as the Commission may adopt, the Trustees may direct the Custodian to
deposit all or any part of the securities owned by the Trust in a system for the
central handling of securities established by a national securities exchange or
a national securities association registered with the Commission under the
Securities Exchange Act of 1934, or such other person as may be permitted by the
Commission, or otherwise in accordance with the 1940 Act, pursuant to which
system all securities of any particular class or series of any issuer deposited
within the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of such securities, provided that
all such deposits shall be subject to withdrawal only upon the order of the
Trust. Section 5. Acceptance of Receipts in Lieu of Certificates. Subject to
such rules, regulations and orders as the Commission may adopt, the Trustees may
direct the Custodian to accept written receipts or other written evidences
indicating purchases of securities held in book-entry form in the Federal
Reserve System in accordance with regulations promulgated by the Board of
Governors of the Federal Reserve System and the local Federal Reserve Banks in
lieu of receipt of certificates representing such securities.
ARTICLE XI
AMENDMENTS
These Bylaws, or any of them, may be altered, amended or repealed, or new
Bylaws may be adopted by (a) vote of a majority of the Shares outstanding and
entitled to vote or (b)e Trustees, provided, however, that no Bylaw may be
amended, adopted or repealed by the Trustees if such amendment, adoption or
repeal requires, pursuant to law, the Trust Instrument or these Bylaws, a vote
of the Shareholders.
ARTICLE XII
INSPECTION OF BOOKS
The Trustees shall from time to time determine whether and to what extent,
and at what times and places, and under what conditions and regulations the
accounts and books of the Trust or any of them shall be open to the inspection
of the shareholders; and no shareholder shall have any right of inspecting any
account or book or document of the Trust except as conferred by laws or
authorized by the Trustees or by resolution of the shareholders.
<PAGE>
ARTICLE XIII
MISCELLANEOUS
(A) Except as hereinafter provided, no officer or Trustee of the Trust and
no partner, officer, director or shareholder of the Investment Adviser of the
Trust or of the Distributor of the Trust, and no Investment Adviser or
Distributor of the Trust, shall take long or short positions in the securities
issued by the Trust.
(1) The foregoing provisions shall not prevent the Distributor
from purchasing Shares from the Trust if such purchases are
limited (except for reasonable allowances for clerical errors,
delays and errors of transmission and cancellation of orders) to
purchases for the purpose of filling orders for such Shares
received by the Distributor, and provided that orders to purchase
from the Trust are entered with the Trust or the Custodian
promptly upon receipt by the Distributor of purchase orders for
such Shares, unless the Distributor is otherwise instructed by
its customer.
(2) The foregoing provision shall not prevent the Distributor
from purchasing Shares of the Trust as agent for the account of
the Trust.
(3) The foregoing provision shall not prevent the purchase from
the Trust or from the Distributor of Shares issued by the Trust,
by any officer, or Trustee of the Trust or by any partner,
officer, director or shareholder of the Investment Adviser of the
Trust or of the Distributor of the Trust at the price available
to the public generally at the moment of such purchase, or as
described in the then currently effective Prospectus for the
Series of such Shares.
(4) The foregoing shall not prevent the Distributor, or any
affiliate thereof, of the Trust from purchasing Shares prior to
the effectiveness of the first registration statement relating to
the Shares under the Securities Act of 1933.
<PAGE>
(B) The Trust shall not lend assets of the Trust to any officer or Trustee
of the Trust, or to any partner, officer, director or shareholder of, or person
financially interested in, the Investment Adviser of the Trust, or the
Distributor of the Trust, or to the Investment Adviser of the Trust or to the
Distributor of the Trust.
(C) The Trust shall not impose any restrictions upon the transfer of the
Shares of the Trust except as provided in the Trust Instrument, but this
requirement shall not prevent the charging of customary transfer agent fees.
(D) The Trust shall not permit any officer or Trustee of the Trust, or any
partner, officer or director of the Investment Adviser or Distributor of the
Trust to deal for or on behalf of the Trust with himself as principal or agent,
or with any partnership, association or corporation in which he has a financial
interest; provided that the foregoing provisions shall not prevent (a) officers
and Trustees of the Trust or partners, officers or directors of the Investment
Adviser or Distributor of the Trust from buying, holding or selling shares in
the Trust, or from being partners, officers or directors or otherwise
financially interested in the Investment Adviser or Distributor of the Trust;
(b) purchases or sales of securities or other property by the Trust from or to
an affiliated person or to the Investment Adviser or Distributor of the Trust if
such transaction is exempt from the applicable provisions of the 1940 Act; (c)
purchases of investments for the portfolio of any Series of the Trust or sales
of investments owned by any Series of the Trust through a security dealer who
is, or one or more of whose partners, shareholders, officers or directors is, an
officer or Trustee of the Trust, or a partner, officer or director of the
Investment Adviser or Distributor of the Trust, if such transactions are handled
in the capacity of broker only and commissions charged do not exceed customary
brokerage charges for such services; (d) employment of legal counsel, registrar,
Transfer Agent, dividend disbursing agent or Custodian who is, or has a partner,
shareholder, officer, or director who is, an officer or Trustee of the Trust, or
a partner, officer or director of the Investment Adviser or Distributor of the
Trust, if only customary fees are charged for services to the Trust; (e) sharing
statistical research, legal and management expenses and office hire and expenses
with any other investment company in which an officer or Trustee of the Trust,
or a partner, officer or director of the Investment Adviser or Distributor of
the Trust, is an officer or director or otherwise financially interested.
[Dechert Price & Rhoads Letterhead]
June 23, 1994
Lord Asset Management Trust
440 South LaSalle Street
Suite 3900
Chicago, IL 60605
Dear Sirs:
In connection with the registration under the Securities Act of 1933 of an
indefinite number of shares of beneficial interest of Lord Asset Management
Trust (the "Trust"), we have examined such matters as we have deemed necessary
to give this opinion.
On the basis of the foregoing, it is our opinion that the shares have ben
duly authorized and, when paid for as contemplated by the Trust's Registration
Statement, will be validly issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to all references to our firm therein.
Very truly yours,
/s/ Dechert Price & Rhoads
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use of our report dated November 21, 1997, on the
financial statements of the Thomas White World Fund series of Lord Asset
Management Trust referred to therein, in Post-Effective Amendment No. 4 to the
Registration Statement on Form N-1A, File No. 33-75138 as filed with the
Securities and Exchange Commission.
We also consent to the reference to our Firm in the Prospectus under the caption
"Selected Financial Information" and in the Statement of Additional Information
under the caption "Independent Accountants."
McGladrey & Pullen, LLP
New York, New York
December 29, 1997
[Thomas White Funds Family Letterhead]
June 15, 1994
Mrs. Catherine N. Manos
as Trustee for the Catherine N. Manos
Declaration of Trust dated 9/18/85
342 Gatesby Road
Riverside, IL 60546
Dear Ms. Manos:
Lord Asset Management Trust (the "Trust") hereby accepts your offer to
purchase 10,000 shares of Thomas White World Fund at a price of $10.00 per share
for an aggregate purchase price of $100,000. This agreement is subject to the
understanding that you have no present intention of selling or redeeming the
shares so acquired.
Any redemption of these shares by you will be reduced by a pro rata portion
of any then unamortized organization expenses of the Trust. This proration will
be calculated by dividing the number of shares to be redeemed by the aggregate
number of shares held which represent the initial capital of the Trust.
Sincerely,
/s/ Thomas H. Forester
Lord Asset Management Trust
Thomas H. Forester
Executive Vice President
Accepted: /s/ Catherine N. Manos, as Trustee
Catherine N. Manos as Trustee for the Catherine N. Manos
Declaration of Trust dated 9/18/85
FORM OF COMPUTATION OF PERFORMANCE EVALUATIONS
Thomas White World Fund
Average Annual Return Since Inception
P(1+T)n = ERV
$1,000(1+T)125/365 = $1,050
1+T = 1.1531
T = .1531
T = 15.31%
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Pre-Effective Amendment No. 2 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Chicago,
State of Illinois, on this 17th day of June, 1994.
Lord Asset Management Trust
By:/s/ Thomas S. White, Jr.
Thomas S. White, Jr.
President
KNOW ALL BY THESE PRESENTS, that the persons whose signatures appear below
constitute and appoint Allan S. Mostoff, William J. Kotapish, and Thomas H.
Forester, and each of them, to act severally as attorneys-in-fact and agents,
with power of substitution and resubstitution, for the undersigned in any and
all capacities to sign the Registration Statement of Lord Asset Management Trust
and any pre- or post-effective amendments thereto, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and conforming all that
said attorneys-in-fact, or their substitute or substitutes, may do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No. 2 to the Registration Statement on Form N-1A has
been signed below by the following persons on behalf of Lord Asset Management
Trust in the capacities and on the date indicated:
Signature Title Date
/s/ Thomas S. White, Jr. Trustee and June 17, 1994
President (Principal Executive
Thomas S. White, Jr. Officer)
/s/ Roberta J. Johnson Treasurer (Prin- June 17, 1994
Roberta J. Johnson cipal Financial and
Accounting Officer)
/s/ Michael R. Miller Trustee June 17, 1994
Michael R. Miller
/s/ Jill Almeida Trustee June 17, 1994
Jill Almeida
/s/ Michael S. Duffey Trustee June 17, 1994
Michael S. Duffey
/s/ Phillip R. Haag Trustee June 17, 1994
Phillip R. Haag
/s/ Nicholas Manos Trustee June 17, 1994
Nicholas Manos
/s/ Edward E. Mack, III Trustee June 17, 1994
Edward E. Mack, III
LORD ASSET MANAGEMENT TRUST
SECRETARY'S CERTIFICATE
The undersigned, being the duly elected Secretary of Lord Asset Management
Trust (the "Trust"), hereby certifies that the following resolutions have been
duly adopted by the Trust's Board of Trustees, and that said resolutions remain
in effect on the date hereof.
RESOLVED, that the officers and Trustees of the Trust be, and
they hereby are, authorized in the name and on behalf of the
Trust to execute, or grant power of attorney to counsel to
execute, a Notification of Registration on Form N-8A under the
Investment Company Act of 1940, and a Registration Statement
on Form N-1A under the Securities Act of 1933 and the
Investment Company Act of 1940, to offer and sell an unlimited
number of shares of beneficial interest of the Trust; to
execute, or grant power of attorney to counsel to execute, any
amendments thereto in such form as may be approved by counsel;
to file or authorize the filing of such documents with the
Securities and Exchange Commission; and to designate agents
for service of process.
December 27, 1994
/s/ Thomas H. Forester
Thomas H. Forester
b:\Secretary
<TABLE> <S> <C>
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<S> <C>
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<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-1-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 40612
<INVESTMENTS-AT-VALUE> 47854
<RECEIVABLES> 195
<ASSETS-OTHER> 26
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</TABLE>
