THOMAS WHITE FUNDS FAMILY
OFFICERS AND TRUSTEES
Thomas S. White, Jr.
Chairman of the Board
and President
Jill F. Almeida
Trustee
Philip R. Haag
Trustee
Nicholas G. Manos
Trustee
Edward E. Mack III
Trustee
John N. Venson, D.P.M.
Trustee
Annual Report Douglas M. Jackman
Thomas White World Fund Vice President and Secretary
October 31, 1998
Brandon S. Joel
Treasurer
David Sullivan II
Assistant Treasurer
INVESTMENT ADVISER AND
ADMINISTRATOR
Thomas White International, Ltd.
440 S. LaSalle Street, Suite 3900
Chicago, Illinois 60605-1028
CUSTODIANS
State Street Bank and Trust Company
Boston, Massachusetts
Firstar Bank Milwaukee
Milwaukee, Wisconsin
LEGAL COUNSEL
Dechert Price & Rhoads
Washington, DC
INDEPENDENT ACCOUNTANTS
For current performance, net McGladrey & Pullen, LLP
asset value, or for assistance New York, New York
with your account, please contact
the Funds Family at 800-811-0535 or TRANSFER AGENT
visit our website at Firstar Mutual Fund Securities L.L.C.
www.thomaswhite.com Milwaukee, Wisconsin
<PAGE>
Thomas White Funds Family
Thomas White is the Funds' President and Portfolio Manager. He has been an
active investor since joining Goldman Sachs in 1966. His interests have always
been global. As a boy he grew up around the world, living and traveling
throughout Europe, North America and the Far East before graduating from Duke
University in 1965. Over his thirty-two years as an investment manager, he has
been with Lehman Brothers, Blyth Eastman Dillon and until 1992, four teen years
with Morgan Stanley. At Morgan Stanley, he was a Managing Director and the Chief
Investment Officer for the firm's American valuation-oriented equity investing.
Together with the organization's team of seasoned domestic and international
analysts, Mr. White directs the management of portfolio investments in Europe,
Africa, the United States, Latin America, Japan and Asia. The firm's research
division, the Global Capital Institute, produces monthly publications which pro
vide investment advice on the relative attractiveness of 2,400 common stocks in
forty-seven countries. These are purchased by major institutional asset
management organizations worldwide.
THE FOLLOWING LETTER WAS WRITTEN BY MR.
WHITE, THE FUNDS' PRESIDENT:
December 30, 1998
Dear Friends,
We appreciate your many compliments regard ing our market letters. These
timely communications during the recent turbulent market conditions were
obviously helpful. When storm clouds reappear, be assured you will get our
immediate attention and interpretation of the situation. In the interim, please
feel free to call me personally any time.
We are delighted that 99% of the Fund's shareholders held onto their
shares through the summer's decline, and have enjoyed this fall's recovery to
all time highs. The true test of our communications success is that timely
letters have reinforced clients' resolve to maintain their long-term investment
objectives. This success underscores the fact that stressful decisions are best
made within the context of your long-term investment plan and with the counsel
of trusted advisors.
Our recent letters may have given the false impression that we were
forecasting the market's short-term movements. Given that our advice was to
remain in the market and it subsequently resumed its upward trend, one might
conclude that we had some talent in this area. But alas, we lack the clairvoy
- -ance to warn clients in advance of a market decline. And yes, regretfully, bear
markets occur every three to five years and erode the Fund's value until the
lost ground is regained in the next advance.
Is there any way to side step bear markets? Short of not being an equity
investor, no! As an aside, given the amount of time spent discussing the
short-term direction of the market in the media, one would think professionals
could divine the future. Whenever I have had an interview on CNNfn or Bloomberg,
I always ask the correspondent if they believe people can time markets. They
reply, "certainly not, but that is what our listeners want you to comment on!"
The public's desire to time markets explains the media's focus, but do not
mistake this behavior for their endorsement of market timing.
<PAGE>
THE WORLD HAS CHANGED.
A GLOBAL PORTFOLIO OFFERS THE POTENTIAL
FOR BOTH IMPROVED PERFORMANCE AND
SMOOTHER RETURNS.
Dec Dec Dec Dec Nov
1960 1970 1980 1990 1998
Developed Markets
North America 75% 70% 60% 45% 53%
Europe 22% 22% 23% 25% 30%
Pacific 3% 8% 16% 27% 13%
Emerging Markets
.1% .2% .8% 3% 4%
--- --- --- -- --
100% 100% 100% 100% 100%
Global Market
Value ($trillions) $0.5 $2.0 $4.1 $8.2 $20.3
There has been growth in the relative size of developed and emerging markets
outside the United States since 1960. This means managers can now choose to
employ wider diversification in the design of their equity portfolios.
History shows that broad global diversification has in the past lowered the
volatility associated with single country portfolios. The Fund incorporates this
approach to obtain smoother returns for its shareholders.
Do bear markets disadvantage the long-term investor? No, but they create
conditions that can cause investors to make emotional mistakes. Navigating bear
markets is a skill investors must develop if they are going to be successful in
reaching their long-term investment goals. This is because staying invested is
the key to eventually enjoying the historical benefits of equity investing.
OUR PROJECTION OF FUTURE WORLD
GROWTH AND RESULTING EQUITY RETURNS
It is a common investor tendency to dwell on short- to intermediate-term
events. In reality, longer-term trends are far more predictable and meaningful
to future equity returns. Our long-term world vision makes us very enthusiastic
about the future of domestic and international investing.
First, some perspective: the annualized common stock returns in the United
States have averaged roughly 11.0% since 1926. The equivalent MSCI world and
regional returns, available since 1970, are shown in the return table on page 4.
World returns (+12.1%), European returns (+13.6%) and U.S. returns (+13.3%) have
been quite similar over this period.
We believe that over the next twenty years, world, European and U.S. equity
markets will produce annualized returns of 11%. This projection reflects our
strong confidence in a high level of future economic global growth. It is
tempered by the fact that equities are currently priced above their normal
valuations. The attractive conditions for world growth will probably cause
equities to be priced on the expensive side throughout this entire period.
<PAGE>
We see three positive trends heavily influencing the next twenty years:
I. The fall of the Berlin Wall in 1989 symbolized worldwide acceptance of the
West's successful recipe for economic growth. Countries represent ing seventy
percent of the earth's population have now begun a slow move toward improving
the standard of living of their citizens. This activity will generate
unparalleled business opportunities.
As Americans and Canadians, we recognize the magic that occurs when a new
immigrant arrives upon our shores. Gradually, painfully, but surely, nations
around the world will modify their economic systems affording ambitious
individuals the opportunity to improve their lives.
With just one superpower left, regional conflicts and terrorism will
replace World Wars. This is promoting a shift away from non-productive military
spending toward capital expenditures that benefit long-term growth. Regional
strife, caused by politi cal, ethnic and religious differences, will sadly con
tinue. United States now recognizes it cannot cure these situations and will
choose to avoid military involvement unless, as in Kuwait, it is strategically
necessary.
II.We believe that future advances in technology will lead to dramatic
improvements, corporate productivity and a cornucopia of new products.
Computer-related technology is expanding earnings growth by reducing
business expenses and lowering manufacturing costs. Moreover, the cost of
computing power continues to decline. In terms of its capital expenditure
productivity, if an automobile's price had fallen at the same rate that computer
power has declined since 1960, a salesman's new Buick would now only cost $103.
Biotechnology advances will also spur major improvements in food production
and healthcare. Inflation should be contained as this new productivity keeps
costs low.
III.Global Communications and the Internet will empower the individual, both
politically and economically. This will benefit world growth.
People can be far more productive than technology. World progress is
heavily influenced by the genius of highly talented individuals. The United
States, with its open political and business environment, has nurtured talented
individuals allowing them to flourish. These individuals have in turn benefitted
economic growth and society.
Many Warren Buffetts and Bill Gates have succeeded, but so much potential
genius is currently going to waste. These individuals have been held back by
their repressive governments, their education, a lack of tools, capital,
information, etc. Global television broadcasts and, especially the Internet,
will improve these conditions by disseminating, at minimal cost, the latest
knowledge, methods, systems and resources. The liberation and development of
these talented humans will drive growth.
Given this attractive vision of the future, we recommend investors stay
fully invested and try to ignore the interim bumps in the road. We will do our
best to provide shareholders with strong long-term returns and stable interim
performance.
Speaking on behalf of our firm's fourteen professionals, we sincerely
appreciate your confidence in our organization and your support of our Funds. We
wish you a joyous holiday season and a prosperous New Year.
Thomas S. White, Jr.
President and Portfolio Manager
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
THE TWENTY-EIGHT YEAR PERFORMANCE OF
THE WORLD EQUITY MARKET AND
ITS MAJOR REGIONAL COMPONENTS
MSCI INDICES THESE INDEX RETURNS ARE IN U.S. DOLLARS. FIVE-YEAR REGIONAL
Gross PERFORMANCE SUCCESS IS ORDERED FROM #1 (BEST) TO #6 (WORST).
PERIOD: Jan. 1, 1970 WORLD EUROPE USA CANADA JAPAN PACIFIC EMERGING
to Nov. 30, 1998 EX JAPAN MARKETS
-----------------------------------------------------------------------------------------
FIVE-YEAR
PERIOD RETURNS
- ----------------------- -------------------------------------------------------------------------------------------
1970-1974 -1.3% 0.9% (#3) -2.3% (#4) 4.6%(#2) 16.0% (#1) -6.2% (#5) N/A
1975-1979 16.0% 18.9%(#2) 14.8% (#5) 17.9%(#4) 18.8% (#3) 27.5% (#1) N/A
1980-1984 12.4% 6.1% (#4) 14.8% (#2) 6.7%(#3) 17.0% (#1) 4.1% (#5) N/A
1985-1989 28.5% 32.3%(#2) 20.4% (#4) 16.9%(#5) 41.4% (#1) 22.4% (#3) 65.8%
1990-1994 4.6% 7.0% (#4) 8.7% (#3) 0.1%(#5) -3.4% (#6) 15.3% (#1) 9.5%(#2)
1995-1998 (11/30) 15.9% 23.4%(#2) 29.4% (#1) 13.2%(#3) -10.0% (#5) -2.6% (#4) -10.5%(#6)
1970-1998 12.1% 13.6% 13.3% 9.6% 13.0% 9.8% N/A
1988-1998 11.6% 15.4% 18.5% 8.4% -2.4% 9.8% 9.9%
</TABLE>
The table above presents the performance of the global stock markets from
January 1, 1970 to November 30, 1998. Returns are shown in a series of five-year
periods, except for the current four-year period. The world's returns are
followed by those of its four component regions.
Regional performances are highlighted using ranks from #1 (best) to #6
(worst) to indicate the winners and losers in each five-year period. History
shows regional returns are random in their timing, with no area holding a
permanent monopoly on performance.
Note that the world and its territories all have quite similar long-term
records. But observe the world index has a more stable return pattern than any
of its components. This is because regional bull and bear markets tend to offset
one another.
The Fund's design reflects your manager's belief that shareholders will
benefit from smoother world performance. A more stable portfolio encourages
investors to stay the course in falling market environment. This promotes
success in reaching long-term investment goals.
The MSCI developed country gross dividends return series is used for Europe,
Canada, Japan and the Pacific less Japan. United States returns reflect those of
the S&P 500 Composite. The MSCI emerging markets gross dividends return series
starts on January 1, 1988. World returns reflect the MSCI World index until the
MSCI All-Country index starts on January 1, 1988. World and All- Country World
returns are linked across the 1970-1998 period.
<PAGE>
THE WORLD FUND'S OBJECTIVE
The Thomas White World Fund seeks long-term capital growth through a
flexible policy of investing in stocks of global companies located around the
world, including emerging market countries.
THE AMERICAN GROWTH FUND'S
OBJECTIVE
The Thomas White American Growth Fund seeks long-term capital growth through
a policy of primarily investing in American companies across every major
industry sector.
THE FUND'S INVESTMENT PHILOSOPHY
I. Superior returns can come from properly harnessing the high potential
inherent within undervalued companies.
II. A valuation-oriented investment approach can capture this potential
while maintaining a lower risk profile.
III. Management emphasizes owning broadly diversified portfolios of
undervalued companies that have solid cash flows, attractive growth
potentials and appropriately conservative balance sheets.
Introducing the Thomas White American Growth
Fund, the second offering of the Thomas White
Funds Family.
Given our organization's extensive experience in domestic asset
management, we have decided to establish a new fund focused on large-cap U.S.
equities. This is the single most important asset class to American investors.
The Thomas White American Growth Fund will be a valuation-oriented, U.S. stock
fund whose goal is superior performance within the context of conservative
investing.
Starting a second fund is only possible because of our shareholders'
support for the Thomas White World Fund. It is now in its fifth year and is
doing quite well.
The World Fund was designed to represent the international stock portion
of our clients' portfolios, and thus diversify their equity holdings. It has
enjoyed an annualized return of 12.4% since inception. Morningstar has rated the
Fund "four-stars" since first ranking it. This indicates the Fund has stayed in
the top third of international mutual funds in terms of its trailing three-year
risk-adjusted performance. Just as important, the Fund has maintained a very
attractive Morningstar risk rating, currently in the safest five percent of
international funds. This indicates the Fund has had lower volatility and
superior downside performance over the last three years.
This August, Forbes Magazine honored the Fund by placing it in their
International Stock Funds "Best Buy List." We were the youngest of the twelve
funds making this list.
In short, we are thankful for being successful in our goal of providing
shareholders with strong performance and superior portfolio stability.
The Thomas White American Growth Fund is designed to be an investor's
core equity fund.
We have long recommended that our private account clients have about 33%
of their equity holdings in our World Fund, 57% in U.S. large-caps and 10% in
U.S. smaller-cap equities. The American Growth Fund is designed to represent the
large-company portion of our client's U.S. equi ties. We still manage U.S.
smaller-cap stocks and fixed-income portfolios as private client accounts,
although someday we may also have funds in these two asset classes. All of our
investment asset classes employ our traditional valuation-oriented investment
approach. The Funds are both no-load, have below average expenses and will have
tax- efficient, low portfolio turnover.
<PAGE>
The common objective of the Thomas White Funds is to provide our
shareholders with strong performance and above average portfolio stability.
The Boeing Company attempts to build aircraft that gives passengers the
feeling that they are in a pleasant living room, although they are flying at
35,000 feet. We also attempt to design funds that give shareholders a
comfortable ride, despite being exposed to the stressful world of equities.
Share holders that can "stay the course" and maintain a well thought out,
long-term strategy do well in equities. Nervous equity investors, exposed to
volatile funds, tend to make mistakes they later regret.
How do we to make our Fund shareholders feel comfortable within the
volatile world of the stock market?
First, we design portfolios to have strong performance and to be more
stable than most other similar funds. We select stocks on the basis of how they
will perform in both rising and declining markets. Our 100%-owned research unit,
the Global Capital Institute, provides us with an ongoing flow of attractive
stocks in most every industry and country. This gives us the ability to
construct care fully diversified portfolios. Owning undervalued companies in all
of the major industries or countries can moderate the disruption caused by
unpredictable business and market cycles. Strong and weak sectors tend to
offset, producing smoother overall performance, as well as the value added that
comes from owning undervalued stocks.
Second, we try to attract and serve the prudent, long-term investor and
discourage specula tors. Please recall "Designing a Lifetime Investment Plan"
and "The Power of Long-Term Investment Plans" on pages 3 and 4 of the
information attached to the current prospectus. Our Funds are applicable to
these sorts of plans. Long-term shareholders also produce fewer fund redemptions
and therefore lower portfolio turnover in the Fund. They also allow us to hold
less liquidity-related cash, which also improves long-term performance.
Third, we encourage shareholders to develop confidence in our advice.
Working with a trusted advisor increases the likelihood of investment success.
We take great pride as professionals in assist ing clients attain their
investment goals. We know that a client's accomplishments depend on their
knowledge, planning and self-discipline. Accord ingly, we attempt to focus our
regular shareholder communications in these areas. We send out special letters
during periods of market stress. These can be sent to you via fax or email. If
you would like to be included on this distribution list, please call us with
your fax number or email address. A complete set of past shareholder letters and
reports is available at our website, www.thomaswhite.com or by calling
1-800-811-0535.
We would encourage all of our World Fund shareholders to also own positions
in the American Growth Fund. Our suggested mix would be 67% American Fund and
33% World Fund. This combination should maximize an investor's risk/reward
investment profile. Please call 1-800- 811-0535 and ask to speak to Tom White or
Doug Jackman personally about this important asset alloca tion decision. As
initial American Growth Fund investors, they invite you to hear why they became
shareholders.
Data from Morningstar Principia (10/31/98). Morningstar proprietary ratings
reflect historical risk-adjusted performance. The ratings are subject to change
every month. Morningstar ratings are calculated from the funds' three-, five-,
and ten-year average annual returns (if applicable) in excess of 90-day Treasury
bill returns with appropriate fee adjustments, and a risk factor that reflects
fund performance below 90-day T-bill returns. Thomas White World Fund received 4
stars for the three year period. 10% of the funds in a category receive 5 stars,
22.5% receive 4 stars, 35% receive 3 stars, 22.5% receive 2 stars, and 10%
receive 1 star. The fund was rated among 849 international equity funds for a 3
year period.
<PAGE>
THOMAS WHITE WORLD FUND
TOP TEN HOLDINGS
ON OCTOBER 31, 1998
BASED ON TOTAL NET ASSETS
Company % of Total
Industry, Country Net Assets
- --------------------------------------------------------
Berkshire CL A
Financial Diversified, United States 1.68%
Dell Computer
Technology, United States 1.64%
ING Group
Insurance, Netherlands 1.31%
General Electric
Industrial, United States 0.91%
Brown Forman
Consumer Staples, United States 0.91%
Safeway
Consumer Staples, United States 0.91%
US West
Communications, United States 0.90%
Fannie Mae
Financial Diversified, United States 0.89%
Bell Atlantic
Communications, United States 0.87%
Bouygues
Building, France 0.86%
MANAGEMENT DISCUSSION: THE WORLD FUND
December 30, 1998
This report discusses portfolio strategy and performance as the Thomas
White World Fund approaches the close of December 1998. The twelve-month period
reviewed in this annual report concluded on October 31, 1998. As of this
writing, the Fund has $63.4 million of shareholder assets.
On October 31, the Fund's portfolio included 247 common stocks. These
represented 88.4% of the Fund's total value, with the rest in cash equivalents
or other assets.
The Fund's performance versus the Morgan Stanley World and All-Country
World Indices is presented below. Current price and return data now appear daily
in most domestic newspapers. This can be found in the mutual fund section listed
alphabetically in the "T" section as Thomas White. Daily quotes and additional
information can be obtained at www.thomaswhite.com. The World Fund's stock
ticker is TWWDX.
We are pleased with the portfolio's progress this year. Returns have been
strong, both in an absolute sense and in comparison to other world mutual funds.
Our recent underperformance versus the world indices relates to the greater
relative strength of U.S. markets, which now represent over 50% of the indices'
total weight. At the Fund's initiation in June of 1994, the U.S. weight in these
indices was below 33%.
PERFORMANCE T. White World1 MSCI AC
October 31, 1998 World Funds World World
- -----------------------------------------------------------
Six Months -6.5% -12.0% -3.0% -4.5%
One Year 8.6% 1.8% 15.3% 12.8%
Average
Annual Return
Since Inception
(June 28, 1994) 12.4% 10.3% 14.6% 13.5%
Cumulative Total Return
Since Inception
(June 28, 1994) 66.0% 53.1% 80.5% 73.6%
Assumes reinvestment of dividends and capital gain distributions.
1Morningstar's category covering all world funds. This series starts July 1,
1994.
<PAGE>
THOMAS WHITE WORLD FUND
GEOGRAPHIC DISTRIBUTION
ON OCTOBER 31, 1998
BASED ON LONG-TERM SECURITIES
- --------------------------------------------------------
CONTINENTAL EUROPE 27.6%
UNITED KINGDOM 11.0%
AFRICA & MIDDLE EAST 0.9%
NORTH AMERICA 42.3%
LATIN AMERICA 2.5%
JAPAN 5.7%
FAR EAST 6.4%
AUSTRALIA & NEW ZEALAND 3.6%
Total 100.0%
- --------------------------------------------------------
DEVELOPED MARKETS 93.5%
EMERGING MARKETS 6.5%
Total 100.0%
PORTFOLIO STRATEGY REVIEW: THE WORLD FUND
The Fund's performance is the product of our investment philosophy and
portfolio strategy. Our philosophy is that undervalued companies produce
superior returns. Accordingly, our efforts focus on analyzing companies using
our organization's valuation methods. Our portfolio strategy is to buy those
companies that sell at the greatest discount to their valuations, then sell them
when they are overvalued.
We believe that successful stock selection worldwide is one of our
organization's distinct strengths. Our analysts have established methods of
valuing stocks in the twenty-one developed countries and in twenty-six emerging
market countries throughout the world. We also believe that broad country
diversification can best capture the potential for smooth portfolio return that
is the unique advantage of a world fund. Furthermore, diversified country
exposure assures that the rewards of good stock selection will not be eclipsed
by a poorly performing country. Accordingly, as of this writing, the Fund's
portfolio has equity investments in nineteen of the developed countries and in
eighteen emerging market countries.
Over the twelve-month period ending October 31, the Fund underperformed its
market benchmarks, the MSCI World and All-Country World Indices. Benchmark
weights of the All-Country world subregions are Europe, the Middle East and
Africa (30.8%), the Americas (54.0%) and the Pacific (15.2%). Bottom-up stock
valuations influenced us to be more balanced in these three regions (39.6%,
44.8% and 15.6%), respectively. The choice to over-weight European stocks, due
to their attractive outlook, helped the Fund's performance. Returns were
restrained by the Fund's exposure to Pacific stocks and below index exposure to
U.S. stocks. Despite inexpensive valuations, equities in the Far East continue
to produce poor returns. Fortunately, our strong stock selection in all three
regions partially offset our Far East exposure. The final result was a solid
8.6% twelve-month return versus 1.8% for the Morningstar World Funds Index. This
measure represents the average world fund tracked by Morningstar. These compare
to 15.3% for the MSCI World and 12.8% for the All-Country World Indices. The
MSCI World less U.S. index returned 8.7% over the year. Our current strategy
continues to stress a more balanced regional mix.
<PAGE>
The transactions in the Fund's portfolio are the product of our
organization's monthly investment process. The portfolio's tax-efficient
turnover rate of 51% over the last twelve months reflects positions which were
sold after our monthly review process because they became overvalued. This
regular process allows us to maintain an undervalued portfolio and benefit from
our analysts' newest investment ideas.
The Thomas White World Fund is designed to benefit from the
positive changes occurring in the world.
These forty-seven countries contain over 2,400 companies that meet the
Fund's quality standards. Each shareholder, is a partial owner of 247 of the
most undervalued of these firms. World Fund Shareholders are at the very
epicenter of what is driving change in today's world: An unprecedented explosion
of highly beneficial global capitalism.
DEVELOPED MARKETS PACIFIC LATIN AMERICA
EUROPE Australia Argentina
Austria Hong Kong Brazil
Belgium Japan Chile
Denmark New Zealand Columbia
Finland Singapore Mexico
France Peru
Germany EMERGING MARKETS Venezuela
Ireland GREATER EUROPE
Italy Czech Republic INDIAN SUBCONTINENT
Netherlands Greece India
Norway Hungary Pakistan
Spain Poland Sri Lanka
Sweden Portugal
Switzerland Russia FAR EAST
United Kingdom Turkey China
Indonesia
NORTH AMERICA MIDDLE EAST Korea
Canada Israel Malaysia
United States Phillippines
AFRICA Taiwan
South Africa Thailand
The Fund takes full advantage of the extensive resources of the Global
Capital Institute. This investment research organization is owned by Thomas
White International, the Fund's manager. The Institute's professionals do
on-going valuation-based security analysis of companies in forty-seven
countries. Its monthly equity valuation publications are produced for clients
who are asset management organizations located around the world.
<PAGE>
chart omitted
PERFORMANCE SUMMARY: THE WORLD FUND
The Fund's performance period since inception was four years, four months
and two days in length. Over this period the Fund's cumulative total return,
with dividend and capital gain distributions reinvested, was 66.0%. In the same
period the MSCI World Index ( net dividends) returned 80.5%, the MSCI AC Index
returned 73.6% and the Morningstar World Funds Index returned 52.6%. The graph
below shows the monthly value of $10,000 initially invested in the Fund and the
various benchmarks.
Thomas White World Fund
THE FUND'S PERFORMANCE VS THE MSCI WORLD, MSCI ALL COUNTRY
AND MORNINGSTAR WORLD FUNDS INDICES
June 28, 1994 to October 31, 1998
[Graph captioned "The current value of an initial $10,000 investment with
dividends reinvested" plotting the data points listed below]
Thomas White MSCI MSCI Morningstar
World Fund World Index AC World Category
6/28/94 10000 10000 10000 10000.00
6/30/94 10010 10028 10000 10000.00
7/31/94 10440 10216.53 10221.33 10260.00
8/31/94 10690 10522 10585.42 10629.36
9/30/94 10380 10243.17 10336.86 10459.29
10/31/94 10500 10532.02 10601.78 10605.72
11/30/94 10130 10072.83 10141.36 10128.46
12/31/94 10067.11 10167.51 10176.75 10057.56
1/31/95 9966.24 10012.46 9969.66 9745.78
2/28/95 10258.77 10155.63 10076.14 9901.71
3/31/95 10531.13 10643.1 10537.67 10149.25
4/30/95 10803.48 11011.36 10920.94 10474.03
5/31/95 11035.49 11102.75 11041.51 10704.46
6/30/95 11106.1 11097.2 11043.95 10907.84
7/31/95 11549.94 11649.94 11578.29 11496.87
8/31/95 11388.55 11387.81 11324.79 11381.90
9/30/95 11570.12 11716.92 11636.36 11598.15
10/31/95 11408.72 11529.45 11441.87 11354.59
11/30/95 11620.55 11927.22 11801.79 11536.27
12/31/95 11982.92 12273.11 12157.17 11755.46
1/31/96 12357.39 12492.79 12427.42 12072.85
2/29/96 12432.28 12566.5 12479.16 12241.87
3/31/96 12507.17 12772.59 12671.27 12437.74
4/30/96 12838.84 13070.19 12980.67 12873.06
5/31/96 12913.74 13079.34 12994.09 13027.54
6/30/96 12903.04 13143.43 13065.36 12988.46
7/31/96 12475.08 12676.84 12577.38 12403.98
8/31/96 12710.46 12820.09 12732.5 12714.08
9/30/96 13020.73 13318.79 13202.67 13082.79
10/31/96 13191.91 13409.13 13255.47 13056.62
11/30/96 13898.05 14157.36 13964.12 13644.17
12/31/96 13960.43 13928.01 13761.86 13657.81
1/31/97 14018.17 14093.75 13992.73 13944.63
2/28/97 14145.19 14253.01 14183.51 13986.46
3/31/97 13937.34 13967.95 13899.79 13734.70
4/30/97 14052.81 14421.91 14346.23 13858.32
5/31/97 14907.3 15308.86 15202.23 14717.53
6/30/97 15357.63 16069.71 15980.15 15320.95
7/31/97 15946.53 16807.95 16702.71 16010.39
8/31/97 15115.14 15680.98 15530.82 15193.86
9/30/97 16073.55 16530.1 16359.09 16059.91
10/31/97 15276.8 15658.14 15385.02 15032.08
11/30/97 15426.92 15932.16 15620.39 15002.01
12/31/97 15594.27 16123.66 15825.47 15137.03
1/31/98 15838.69 16570.32 16172.05 15273.27
2/28/98 16853.05 17688.82 17289.54 16357.67
3/31/98 17794.09 18433.04 18019.16 17159.19
4/30/98 17745.2 18610.4 18177.73 17382.26
5/31/98 17598.55 18374.39 17821.44 17138.91
6/30/98 17610.77 18808.02 18133.32 17087.50
7/31/98 17720.76 18774.17 18140.57 16967.88
8/31/98 15398.73 16267.82 15595.45 14354.83
9/30/98 15435.39 16552.73 15907.36 14354.83
10/31/98 16596.41 18046.26 17361.29 15316.60
11/30/98 17415.23 19116.63 18413.73 16128.38
The above chart presents performance in terms of an initial $10,000
investment in the Fund, assuming all dividends reinvested, and various
benchmarks. The return since inception was 66.0% for the Fund, 80.5% for the
MSCI World Index, 73.6% for the MSCI All Country Index and 52.6% for the
Morningstar World Funds Index. The one year return for the Fund was 8.6%. The
Fund's average annual total return since inception was 12.4%. 2
<PAGE>
Note:1. MSCI World Index is with net dividends. Morningstar World Funds Index
is from July 1, 1994.
2. Past performance should not be construed as a guarantee of
future performance.
[GRAPHIC OMITTED]
DIVIDEND INFORMATION: THE WORLD FUND
The Fund pays dividends annually. On December 10, 1998, the Board of
Trustees authorized an income dividend of $0.129 and a long-term capital gain of
$0.908 distribution with an ex-date of December 23, 1998, payable on December
28, 1998, for shareholders of record December 22, 1998. There were no short-term
gains.
In accordance with current Internal Revenue Service requirements, these
distributions comprised substantially all earnings of the Fund from net
investment income through December 31, 1998, and net realized gains through the
fiscal year ending October 31, 1998.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
THOMAS WHITE WORLD FUND
Investment Portfolio October 31, 1998
- ---------------------------------------------------------------------------------------------------------------------------------
Country Issue Industry Shares Value
- ----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS: 89.6%
- ----------------------------------------------------------------------------------------------------------------------------------
ARGENTINA: 0.3%
Telecom Argentina Communications 16,500 $106,435
YPF Sociedad Energy 2,700 78,308
------------
184,743
- -------------------------------------------------------------------------------------------------------------------------
AUSTRALIA: 3.0%
National Australia Bank ADR Banking 4,300 286,488
National Australia Bank Banking 18,821 250,494
News Corporation Service 67,500 463,172
Santos Ltd. Energy 29,438 86,860
Telstra Corporation Communications 103,200 411,407
Woolworths Consumer Retail 66,700 235,751
------------
1,734,172
- -------------------------------------------------------------------------------------------------------------------------
AUSTRIA: 0.1%
OMV AG Energy 800 74,943
------------
74,943
- -------------------------------------------------------------------------------------------------------------------------
BELGIUM: 1.0%
Electrabel Utilities 1,000 368,313
Electrafina Financial 1,600 206,723
Diversified
------------
575,036
- -------------------------------------------------------------------------------------------------------------------------
BRAZIL: 1.0%
Eletrobras PNB Utilities 6,284,000 145,789
Gerasul Utilities 3,750,000 3,750
Ipiranga Petroleum PN Energy 7,288,000 39,355
Itausa PN Financial 125,000 66,113
Diversified
Petrobras PN Energy 409,000 51,493
Telebras ADR Communications 2,400 182,250
Vale do Rio Doce PN Metals & Mining 4,600 69,492
------------
558,242
- -------------------------------------------------------------------------------------------------------------------------
CANADA: 2.0%
BCE Inc. Communications 9,800 332,318
Canadian Pacific Ltd. Transportation 8,500 190,995
Quebecor Incorporated Class B Services 9,300 188,790
Royal Bank of Canada Banking 6,200 285,820
Shell Canada Energy 9,100 144,235
------------
1,142,158
- -------------------------------------------------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------------------------------------------------
CZECH REPUBLIC: 0.2%
SPT Telecom* Communications 5,000 75,534
Tabak Consumer Staples 200 46,789
------------
122,323
- -------------------------------------------------------------------------------------------------------------------------
FINLAND: 0.8%
Orion B Health Care 9,800 235,033
UPM-Kymmene Forest & Paper 9,600 228,333
------------
463,366
- -------------------------------------------------------------------------------------------------------------------------
FRANCE: 3.8%
Altran Technology Technology 500 97,761
AXA-UAP Insurance 3,400 384,063
Bouygues Building 2,458 495,623
Cap Gemini Technology 800 120,155
Danone Consumer Staples 300 79,270
France Telecom Communications 3,100 216,072
L' Oreal Consumer Staples 200 114,219
Paribas Banking 3,1200 359,953
Pernod Ricard Consumer Staples 3,000 199,658
Scor Insurance 2,200 126,075
------------
2,192,849
- -------------------------------------------------------------------------------------------------------------------------
GERMANY: 3.7%
Axel Springer Services 100 69,317
BASF Chemicals 7,200 303,354
Commerzbank Banking 10,300 309,176
Deutsche Telecom Communications 7,900 213,327
DT Lufthansa Transportation 11,200 246,068
Merck KGAA Health Care 6,700 272,596
SAP AG Technology 700 340,074
Volkswagen Consumer Durables 3,500 262,861
Wella Stamm AG Consumer Staples 150 111,660
------------
2,128,433
- -------------------------------------------------------------------------------------------------------------------------
GREECE: 0.4%
Alpha Credit Bank Banking 777 62,014
Ergo Bank Banking 4,200 62,090
OTE Communications 3,555 80,723
------------
204,827
- -------------------------------------------------------------------------------------------------------------------------
HONG KONG: 3.1%
Cheung Kong Financial 16,700 114,246
Diversified
China Telecom* Communications 103,600 194,561
CITIC Pacific Services 20,000 49,178
CLP Holdings Utilities 25,900 145,423
HSBC Holdings Banking 18,000 412,404
Hong Kong & China Gas Utilities 97,900 138,998
Hong Kong Electric Utilities 44,800 164,228
Johnson Electric Industrial 60,000 139,405
New World Development Industrial 65,300 151,718
SHK Properties Financial 31,600 220,258
Diversified
Smartone Telecom Communications 19,400 55,090
------------
1,785,509
- -------------------------------------------------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------------------------------------------------
HUNGARY: 0.2%
Matav ADR Communications 4,400 118,250
------------
118,250
- -------------------------------------------------------------------------------------------------------------------------
INDONESIA: 0.2%
Guadang Garam Consumer Staples 24,000 21,631
Indosat Communications 23,000 24,815
Tambang Timah Metals & Mining 53,000 29,113
Telkom Indonesia Communications 100,000 24,670
------------
100,229
- -------------------------------------------------------------------------------------------------------------------------
ISRAEL: 0.1%
Bezeq Israel Telecom Communications 17,000 48,671
IDB Holding Corp. Financial 2,000 38,298
Diversified
------------
86,969
- -------------------------------------------------------------------------------------------------------------------------
ITALY: 4.0%
Autostrade Utilities 38,800 170,165
Banca Popolare di Bergamo Banking 19,200 396,768
Banca Commerciale Popolare Milano Banking 24,600 192,564
Benetton Group Consumer Retail 78,000 130,837
Edison Utilities 39,400 347,634
Fiat Spa Consumer Durables 71,610 202,835
Mediaset Services 28,700 181,815
Montedison Industrial 392,900 387,242
Telecom Italia spa Communications 41,411 299,017
------------
2,308,877
- -------------------------------------------------------------------------------------------------------------------------
JAPAN: 5.1%
Bridgestone Consumer Durables 6,000 132,058
Canon Technology 6,000 113,523
Familymart Consumer Retail 4,000 202,849
Fuji Photo Film Services 5,000 183,199
Honda Motor Consumer Durables 5,000 150,163
KAO Corporation Consumer Staples 12,000 243,006
NGK Spark Plug Consumer Durables 23,000 214,132
Nintendo Services 2,400 203,878
Nippon Telephone & Telegraph Communications 20 156,513
Olympus Optical Technology 12,000 123,562
Ono Pharmaceutical Health Care 5,000 149,305
Pioneer Electric Technology 8,000 131,800
Promise Financial 3,000 135,662
Diversified
Shiseido & Company Consumer Staples 12,000 131,388
Sony Corporation Technology 2,000 126,995
TDK Corporation Technology 2,000 131,800
Yamanouchi Pharmaceutical Health Care 7,000 200,616
Yasuda Fire & Marine Insurance Insurance 36,000 177,310
------------
2,907,759
- -------------------------------------------------------------------------------------------------------------------------
MALAYSIA: 0.3%
Golden Hope Plantation Consumer Staples 39,000 23,911
Perlis Plantation Consumer Staples 43,750 43,059
Petronas Gas Utilities 30,000 54,081
Telekom Malaysia Communication 29,000 51,512
------------
172,563
- -------------------------------------------------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------------------------------------------------
MEXICO: 0.9%
Cemex CPO Building 30,400 72,346
Maseca B Consumer Staples 76,500 62,072
Telefonos de Mexico Series L ADR Communications 7,400 390,812
------------
525,230
- -------------------------------------------------------------------------------------------------------------------------
NETHERLANDS: 4.5%
ABN-AMRO Holdings Banking 17,500 327,521
Akzo Nobel Chemicals 5,900 229,046
DSM NV Chemicals 3,918 181,431
Hoogovens NV Metals & Mining 4,334 131,172
ING Groep NV Insurance 15,598 754,001
Laurus NV Utilities 3,048 76,578
Philips Electronics Industrial 2,800 148,826
Royal Dutch Energy 6,900 332,806
Vedior Consumer Retail 4,296 109,347
Vendex International Cert. Services 4,354 110,590
VNU Services 5,300 183,081
------------
2,584.399
- -------------------------------------------------------------------------------------------------------------------------
NEW ZEALAND: 0.2%
Lion Nathan Limited Consumer Staples 33,000 86,509
------------
86,509
- -------------------------------------------------------------------------------------------------------------------------
NORWAY: 0.5%
Den Norske Bank A Banking 87,300 306,798
------------
306,798
- -------------------------------------------------------------------------------------------------------------------------
PAKISTAN: 0.1%
Pakistan Telephone Communications 650 20,800
------------
20,800
- -------------------------------------------------------------------------------------------------------------------------
PHILIPPINES: 0.3%
Manila Electric Utilities 18,000 53,084
Philippines Long Distance Communications 4,200 100,446
------------
153,530
- -------------------------------------------------------------------------------------------------------------------------
POLAND: 0.2%
BPH Banking 1,900 123,672
------------
123,672
- -------------------------------------------------------------------------------------------------------------------------
PORTUGAL: 0.2%
Banco Espir Santo Banking 2,385 70,396
Telecom Portugal Communications 1,200 56,799
------------
127,195
- -------------------------------------------------------------------------------------------------------------------------
RUSSIA: 0.1%
Lukoil ADR Energy 800 13,000
Gazprom ADR Energy 3,500 31,855
------------
44,855
<PAGE>
- -------------------------------------------------------------------------------------------------------------------------
SINGAPORE: 1.2%
City Development Financial 13,000 47,126
Diversified
Development Bank of Singapore - Foreign Banking 14,800 92,755
Fraser & Neave Consumer Staples 7,800 24,921
Singapore Airlines - Foreign Transportation 21,400 131,488
Singapore Telecom Communications 202,100 348,926
UOL Ltd. Financial 66,000 36,491
Diversified
------------
681,707
- -------------------------------------------------------------------------------------------------------------------------
SOUTH AFRICA: 0.4%
Anglo American Corp SA Industrial 1,100 35,916
De Beers Consumer Retail 1,400 19,526
Firstrand Insurance 15,525 20,153
Liberty Life Association Insurance 2,800 48,064
Nedcor Banking 700 14,019
Rembrandt Group Consumer Staples 7,200 48,021
South African Brewery Consumer Staples 1,800 35,018
Standard Bank Inv. Banking 7,000 21,154
------------
241,871
- -------------------------------------------------------------------------------------------------------------------------
SOUTH KOREA: 0.5%
Pohang Iron & Steel Metals & Mining 2,200 122,813
SK Telecom Communications 206 142,976
------------
265,789
- -------------------------------------------------------------------------------------------------------------------------
SPAIN: 1.1%
Iberdrola Utilities 17,000 274,309
Telefonica de Espana Communications 14,000 355,102
------------
629,411
- -------------------------------------------------------------------------------------------------------------------------
SWEDEN: 0.5%
SE Banken A Banking 20,600 304,233
------------
304,233
- -------------------------------------------------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------------------------------------------------
SWITZERLAND: 3.4%
Fischer (Georg) AG Capital Goods 1,000 343,888
Nestle AG Consumer Staples 200 424,153
Novartis Reg Health Care 200 359,352
Roche GS Health Care 18 209,426
Swatch Group AG Services 1,800 245,545
Swiss Reinsurance Insurance 170 377,555
------------
1,959,919
- -------------------------------------------------------------------------------------------------------------------------
THAILAND: 0.2%
Advanced Information Service Communications 11,900 82,259
Thai Airways International Transportation 35,300 46,112
------------
128,371
- -------------------------------------------------------------------------------------------------------------------------
TURKEY: 0.2%
Akbank Banking 1,793,600 26,366
Arcelik Consumer Durables 1,320,000 30,228
Cukurova Elektri Utilities 17,900 20,195
KOC Holdings Consumer Durables 283,100 26,017
Netas* Technology 61,000 7,042
Petkim Chemicals 43,000 9,700
------------
119,548
- -------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM: 9.9%
Abbey National Banking 20,700 401,311
Allied Domecq Consumer Staples 22,300 204,984
Bank of Scotland Banking 17,000 183,967
BG Plc Utilities 60,800 398,325
Boots Consumer Retail 8,527 127,975
British Airways Transportation 22,786 166,037
British Petroleum Energy 25,028 367,469
British Steel Metals & Mining 66,200 113,957
British Telecom Communications 32,400 419,933
CGU Plc Insurance 11,000 173,456
Guardian Royal Insurance 42,488 204,151
Halifax Banking 11,700 155,065
Ladbroke Group Services 63,996 233,694
Misys Technology 11,900 83,133
National Westminster Bank Banking 18,779 315,735
Pearson Services 11,300 197,922
P & O DFD Transportation 15,356 160,787
Powergen Utilities 18,500 262,038
Siebe Industrial 32,400 132,801
Smithkline Beecham Health Care 33,700 419,039
Somerfield Consumer Retail 14,100 90,843
Tate & Lyle Consumer Staples 23,900 143,797
Thames Water Utilities 14,300 264,328
Unilever Consumer Staples 27,200 271,619
WPP Group Services 46,100 227,862
------------
5,720,228
<PAGE>
- -------------------------------------------------------------------------------------------------------------------------
UNITED STATES: 35.9%
American International Group Insurance 1,900 161,975
American National Insurance Insurance 1,800 151,200
Amgen* Health Care 6,300 494,944
Amsouth Bancorp Banking 10,575 423,661
Bell Atlantic Communications 9,368 497,675
Berkshire Hathaway Class A Financial 15 967,500
Diversified
Black & Decker Services 6,800 351,475
BMC Software* Technology 3,200 153,800
Brown Forman B Consumer Staples 7,700 523,119
Caterpillar Capital Goods 3,900 175,500
Chase Manhattan Banking 8,300 475,175
Citigroup Financial 6,750 317,672
Diversified
Coastal Corporation Energy 6,700 236,175
Comerica Banking 4,050 261,225
Cooper Industries Industrial 4,300 189,738
Dell Computer* Technology 14,400 943,200
Donnelley & Sons Services 7,000 301,875
Dow Chemical Chemicals 2,900 271,513
Eastman Chemical Chemicals 3,000 176,250
EMC Corporation Technology 2,300 148,063
Exel Limited Insurance 1,800 137,588
Federal National Mortgage Association Financial 7,200 509,850
Diversified
FDX Corporation* Services 5,300 278,581
FMC Corporation* Industrial 2,500 127,656
Ford Motor Company Consumer Durables 8,100 439,425
General Dynamics Corporation Aerospace 7,800 461,663
General Electric Industrial 3,400 525,750
GPU Inc. Utilities 2,500 107,813
GTE Corporation Communication 1,900 111,506
Guidant Health Care 6,200 474,300
Harris Corporation Industrial 10,600 371,663
Intel Technology 1,400 124,863
K Mart* Consumer Retail 21,000 296,625
King World Productions* Services 5,600 147,000
Lucent Technologies Technology 3,100 248,581
Marshall & Ilsley Banking 8,400 409,500
McKesson Corporation Health Care 4,400 338,800
Mellon Bank Corporation Banking 5,200 312,650
Merck & Company Health Care 2,600 351,650
Mobil Corporation Energy 5,500 416,281
National Service Industries Industrial 6,700 240,363
Norfolk Southern Corporation Transportation 8,100 266,794
Pacificare B* Health Care 2,900 228,375
Peoplesoft Incorporated* Technology 2,800 59,325
PG & E Corporation Utilities 5,500 167,406
Phelps Dodge Corporation Metals & Mining 1,000 57,625
Phillips Petroleum Energy 6,300 384,925
Quaker Oats Consumer Staples 7,900 466,594
Raytheon A Industrial 2,924 163,744
Raytheon B Industrial 4,100 238,056
Rite Aid Corporation Consumer Staples 12,300 488,156
Rockwell International Industrial 5,700 234,056
<PAGE>
Royal Dutch Petroleum Energy 5,200 256,100
Safeway Incorporation* Consumer Staples 10,900 521,156
SBC Communication Communication 9,135 423,065
Sempra Energy Utilities 10,500 273,000
St. Paul Companies Insurance 3,400 112,625
Tele-Communications Inc. A* Services 5,408 227,812
Tele-Communications TCI A* Services 6,184 115,177
Tellabs Incorporated* Technology 2,000 110,000
TJX Companies Consumer Retail 15,000 284,062
TRW Incorporated Industrial 5,800 330,237
Unilever NV Consumer Staples 2,400 180,600
US West Communication Communications 9,000 516,374
Vulcan Materials Building 1,800 213,524
Warner Lambert Health Care 3,700 289,987
Xerox Corporation Services 3,700 358,436
------------
20,621,054
------------
Total Common Stocks (Cost $44,376,546) 51,506,367
------------
- ---------------------------------------------------------------------------------------------------------------------------------
TIME DEPOSIT: 11.6%
Par Value
State Street Bank and Trust Co. Eurodollar
Time Deposit 4.75%, due 11/02/98 (Cost $6,647,000) $6,647,000 6,647,000
- ---------------------------------------------------------------------------------------------------------------------------------
Total Investments: 101.2% (Cost $51,023,546) 58,153,367
Other Assets, Less Liabilities: (1.2%) (688,952)
=========== ==============
Total Net Assets: 100% $57,464,415
=========== ==============
* Non-Income Producing Securities
See Notes to Financial Statements.
<PAGE>
THOMAS WHITE WORLD FUND
Statement of Assets and Liabilities
October 31, 1998
- -------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments in securities at value (cost $51,023,546) $ 58,153,367
Cash 2,019
Receivables:
Dividends and interest 131,629
Securities sold 130,320
Fund shares sold 4,255
Prepaid expenses 3,886
Equipment 3,398
------------------------------------
Total assets 58,428,874
------------------------------------
LIABILITIES
Accrued expenses 81,207
Payables:
Securities purchased 89,245
Fund shares redeemed 794,007
------------------------------------
Total liabilities 964,459
------------------------------------
NET ASSETS
Source of Net Assets:
Net capital paid in on shares of beneficial interest $ 45,875,443
Undistributed net investment income 538,467
Accumulated net realized gain 3,920,684
Net unrealized appreciation 7,129,821
------------------------------------
Net assets $ 57,464,415
====================================
Shares outstanding 4,231,192
Net asset value per share $ 13.58
====================================
See Notes to Financial Statements.
<PAGE>
THOMAS WHITE WORLD FUND
Statement of Operations
Year Ended October 31, 1998
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Income:
Dividends (net of foreign taxes withheld of $96,192) $ 1,067,529
Interest 295,945
-----------------------
Total investment income 1,363,474
-----------------------
Expenses:
Investment management fees (note 3) 534,735
Custodian fees 65,187
Transfer Agent fees 21,310
Audit fees and expenses 25,232
Trustees' fees and expenses 15,940
Printing expenses 5,034
Legal fees and expenses 27,161
Organization costs 5,982
Registration fees 31,797
Depreciation expense 5,167
Other expenses 21,051
-----------------------
Total expenses 758,596
Net investment income 604,878
-----------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments 3,965,958
Unrealized depreciation on investments (112,585)
-----------------------
Net gain on investments 3,853,373
-----------------------
Net increase in net assets from operations $ 4,458,251
=======================
See Notes to Financial Statements.
<PAGE>
THOMAS WHITE WORLD FUND
Statements of Changes in Net Assets
Years Ended October 31, 1997 & 1998
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from operations: 1998 1997
----------------------------------------------------------
Net investment income $ 604,878 $ 723,140
Net realized gain 3,965,958 1,981,651
Unrealized appreciation (depreciation) for the year (112,585) 3,574,857
----------------------------------------------------------
Net increase in net assets from operations 4,458,251 6,279,648
Distributions to shareholders:
From net investment income (696,401) (591,413)
From net realized gain (1,942,252) (2,434,679)
Fund share transactions 7,649,245 5,584,959
----------------------------------------------------------
Total increase 9,468,843 8,838,515
Net assets:
Beginning of year 47,995,572 39,157,057
----------------------------------------------------------
End of year $ 57,464,415 $ 47,995,572
==========================================================
See Notes to Financial Statements.
</TABLE>
<PAGE>
THOMAS WHITE WORLD FUND
Notes to Financial Statements
Year Ended October 31, 1998
- --------------------------------------------------------------------------------
Note 1. Summary of Accounting Policies
Lord Asset Management Trust (the "Trust") was organized as a Delaware business
trust on February 9, 1994, as an open-end diversified management investment
company. Effective November 1, 1998, the Trust is comprised of two series of
Shares, the Thomas White World Fund (the "Fund") and the Thomas White American
Growth Fund. The investment objective of the Fund is to seek long-term capital
growth by investing in stocks and debt obligations of companies and governments
of any nation. The following is a summary of significant accounting policies
followed in the preparation of its financial statements.
(a) Valuation of securities. Securities listed or traded on a recognized
national or foreign stock exchange or NASDAQ are valued at the last
reported sales prices on the principal exchange on which the securities
are traded. Over-the-counter securities and listed securities for which
no sale is reported are valued at the mean between the last current bid
and asked prices. Securities for which market quotations are not
readily available are valued at fair value as determined by management
and approved in good faith by the Board of Trustees.
(b) Foreign currency translation. Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. When the Fund purchases or sells a foreign security it
will customarily enter into a foreign exchange contract to minimize
foreign exchange risk from the trade date to the settlement date of
such transaction.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from
the fluctuations arising from changes in market prices of securities
held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales
of foreign currencies, currency gains or losses realized between the
trade and settlement dates on securities transactions, the differences
between the amounts of dividends, and foreign withholding taxes
recorded on the Fund's books, and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized foreign exchange
gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at the end of the
fiscal period, resulting from changes in the exchange rates.
(c) Income taxes. It is the Fund's intention to comply with the provisions
of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its
shareholders. Therefore, no provision has been made for federal income
taxes. Distributions to shareholders are recorded on the ex-dividend
date. Income distributions and capital gain distributions are
determined in accordance with income tax regulations.
(d) Use of estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent liabilities at the
date of the financial statements and the reported amounts of increases
and decreases in net assets from operations during the period. Actual
results could differ from these estimates.
(e) Other. Investment transactions are accounted for on a trade date basis.
Interest is accrued on a daily basis and dividend income is recorded on
the ex-dividend date, except that certain dividends from foreign
securities are recorded when the information is available to the Fund.
<PAGE>
Note 2. Transactions in Shares of Beneficial Interest
As of October 31, 1998, there were an unlimited number of $.01 par value shares
of beneficial interest authorized. Transactions are summarized as follows:
<TABLE>
<S> <C> <C> <C>
Year Ended Year Ended
October 31, 1998 October 31, 1997
-------------------------------------- ------------------------------------
Shares Amount Shares Amount
----------------- ------------------ --------------- ------------------
Shares sold 758,837 $ 10,174,935 242,690 $ 3,097,633
Shares issued on
reinvestment of
distributions 207,791 2,591,156 249,893 2,986,226
Shares redeemed (363,640) (5,116,846) (40,053) (498,900)
----------------- ------------------ --------------- ------------------
Net increase 602,988 $ 7,649,245 452,530 $ 5,584,959
----------------- ------------------ --------------- ------------------
Note 3. Investment Management Fees and Other Transactions with Affiliates
The Fund pays monthly an investment management fee to Thomas White
International, Ltd. at the rate of 1% of the Fund's average daily net assets.
Note 4. Investment Transactions
During the year ended October 31, 1998, the cost of purchases and the proceeds
from sales of investment securities, other than short-term obligations, were
$30,120,825 and $24,342,898, respectively. The cost of securities for federal
income tax purposes was the same as that shown in the investment portfolio.
At October 31, 1998, the aggregate gross unrealized appreciation and
depreciation of portfolio securities, based upon cost for federal income tax
purposes, were as follows:
Unrealized appreciation $ 10,759,443
Unrealized depreciation (3,629,622)
------------------
Net unrealized appreciation $ 7,129,821
------------------
<PAGE>
Note 5. Selected Financial Information
Period from
Year Ended Year Ended Year Ended Year Ended June 28, 1994
October October 31, October 31, October 31, (Inception)
31, 1998 1997 1996 1995 to October
31, 1994
--- ------------ -- ------------- --- ------------- -- -------------- --- ---------------
Per share operating performance
(For a share outstanding throughout the period)
Net asset value, beginning of $ 13.23 $ 12.33 $ 11.31 $ 10.50 $ 10.00
period
--- ------------ -- ------------- --- ------------- -- -------------- --- ---------------
Income from investment
operations:
Net investment income 0.15 0.20 0.19 0.19 0.06
Net realized and
unrealized gain 0.93 1.65 1.51 0.71 0.44
--- ------------ -- ------------- --- ------------- -- -------------- --- ---------------
1.08 1.85 1.70 0.90 0.50
Distributions:
From net investment income (0.19) (0.19) (0.20) (0.09) -
From net realized gains (0.54) (0.76) (0.48) - -
--- ------------ -- ------------- --- ------------- -- -------------- --- ---------------
(0.73) (0.95) (0.68) (0.09) -
Change in net asset value for
the period 0.35 0.90 1.02 0.81 0.50
=== ============ == ============= === ============= == ============== === ===============
Net asset value, end of period $ 13.58 $ 13.23 $ 12.33 $ 11.31 $ 10.50
=== ============ == ============= === ============= == ============== === ===============
Total Return 8.64% 15.80% 15.63% 8.65% 5.00% **
Ratios/supplemental data
Net assets. End of period (000) $ 57,464 $ 47,996 $ 39,157 $ 32,979 $ 13,928
Ratio to average net assets:
Expenses (net of 1.42% 1.47% 1.50% 1.49% 1.50% *+
reimbursement)
Net investment income 1.13% 1.60% 1.63% 2.08% 1.79% *
Portfolio turnover rate 51.41% 48.19% 51.22% 64.54% 1.01%
* Annualized
** Not annualized.
+ In the absence of the expense reimbursement, expenses would have been 2.36% of average net assets.
</TABLE>
<PAGE>
McGladrey & Pullen, LLP
Certified Public Accountants and Consultants
Independent Auditor's Report
The Board of Trustees
Thomas White World Fund
We have audited the accompanying statement of assets and liabilities,
including the investment portfolio, of Thomas White World Fund as of October 31,
1998, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended, and the selected financial information for each of the four years in the
period then ended and for the period from June 28, 1994 (inception) to October
31, 1994. These financial statements and selected financial information are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and selected financial information based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and selected
financial information are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of October 31, 1998, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and selected financial information
referred to above present fairly, in all material respects, the financial
position of Thomas White World Fund as of October 31, 1998, the results of its
operations, the changes in its net assets, and the selected financial
information for the periods indicated, in conformity with generally accepted
accounting principles.
McGladrey & Pullen
New York, New York
November 18, 1998
