N-30D 1 semiannualrpt.htm Thomas White Funds Family



























Semi - Annual Report

American Enterprise Fund

American Opportunities Fund

International Fund

April 30, 2002

 

 

 

 

 

 

 

 

FOR CURRENT PERFORMANCE, NET ASSET VALUE, OR FOR ASSISTANCE WITH YOUR ACCOUNT, PLEASE CONTACT THE FUNDS FAMILY AT 800-811-0535 OR VISIT OUR WEB SITE AT WWW.THOMASWHITE.COM.

THOMAS WHITE FUNDS FAMILY

OFFICERS AND TRUSTEES

Thomas S. White, Jr.

Chairman of the Board

and President

Jill F. Almeida

Trustee

Nicholas G. Manos

Trustee

Edward E. Mack III

Trustee

Elizabeth G. Montgomery

Trustee

John N. Venson, D.P.M.

Trustee

Douglas M. Jackman, CFA

Vice President and Secretary

David Sullivan II

Treasurer and

Assistant Secretary

INVESTMENT ADVISER AND

ADMINISTRATOR

Thomas White International, Ltd.

440 S. LaSalle Street, Suite 3900

Chicago, Illinois 60605-1028

CUSTODIANS

The Northern Trust Company

Chicago, Illinois

U.S. Bank, N.A.

Milwaukee, Wisconsin

LEGAL COUNSEL

Dechert

Washington, DC

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP

Chicago, Illinois

TRANSFER AGENT

U.S. Bank Fund Services LLC

Milwaukee, Wisconsin

 

 

 

 

Thomas White Funds Family
 

Lord Asset Management Trust

 

 

 

 

 

 

 

The Thomas White Funds Family

Capturing Value Worldwide SM

[graphic omitted]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thomas White Funds Family

Lord Asset Management Trust

THOMAS WHITE FUNDS FAMILY

Thomas White is the Funds' President and Portfolio Manager. He has been an investment professional 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-five years as an investment manager, he has been with Lehman Brothers, Blyth Eastman Dillon and until 1992, fourteen 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, North America, Latin America, Japan and Asia. The firm's research division, the Global Capital Institute, produces monthly publications that provide investment advice on the relative attractiveness of 3,800 common stocks in forty-eight countries. These are purchased by major institutional asset management organizations worldwide.

THE FOLLOWING LETTER WAS WRITTEN BY MR. WHITE, THE FUNDS. PRESIDENT:

June 30, 2002

Dear Friends,

We believe returns over the next ten years will be more modest than those enjoyed by investors in the 1990's. We, of course, have been discussing this theme since the technology bubble atmosphere of 2000. In this letter I want to focus on what we believe to be a suitable equity strategy for this decade's investment environment.

Investment Return Expectations

Long-term investment success is heavily the result of adhering to a well-conceived plan that is based on realistic return expectations.

No one can forecast the future with perfect accuracy. Nevertheless, our return estimates represent our judgment based on historical norms. They are consistent with past relationships between market valuations and subsequent returns.

The fact is we enter this decade with high equity valuations, low dividend yields and low interest rates. Given history as a guide, this implies average annual total return equity performance in the 6.5% to 8.5% range. It also suggests intermediate maturity bond returns of 3.5% to 4.5%.

What about real returns (returns after inflation)? Using the consensus projections of 2% to 3% inflation, our estimates of real returns are just mildly below the 1924-2001 averages of equity and bond returns.

What negative occurrences could cause our estimates to be too high? Unfortunately, the equity and fixed income markets are dangerously dependent on inflation staying low. A very weak dollar is the only current credible risk of increased inflation. International equity exposure would help to protect against this risk.

What about a scenario that would produce higher rates of return than we are projecting? Since current price-to-earnings ratios are near the top of their past seventy-eight-year range, it would be incredulous to project that they would rise from these levels. Accordingly, the market's upside surprises would have to come from stronger than expected growth in corporate earnings, say a 15% annualized growth rate for the decade. This is possible, but unlikely in a low inflation environment.

"Houses are best built on stone, not sand. Our thorough stock selection approach emphasizes the use of time-tested, fundamental valuation measurements and analyst judgement. The objective is to determine a company's intrinsic business worth."

"Our research division, the Global Capital Institute, is leading the asset management industry in the development of techniques to successfully value modern global companies."

Strategy Adjustments for the New Decade

We believe the market will return to a more normal, post-1990 pattern where bear markets occur every three to four years. Bear market declines would typically fall 35% from bull market highs. This is an environment where investors should adjust their strategies to reduce their portfolio volatility. Improving return stability will lessen the greatest risk to long-term investment success: abandoning equities at the point of maximum pessimism.

What can an investor do to reduce the volatility of annual equity returns without reducing the potential for strong long-term performance? History suggests there are two effective strategies.

Investment Styles:  Value versus Growth

The first strategy is to emphasize value style investing, and avoid the growth style. In value investing, the manager emphasizes buying a company whose stock is undervalued in terms of how its current financial ratios relate to their high and low range over the past ten years. By contrast, the growth manager is willing to buy a stock in the high range of these valuation ratios because his forecast of the future suggests the company' recent success will accelerate and the valuation ratios will rise further.

The value and growth investment styles have produced roughly the same performance over the long term, but there are distinct differences in the timing of their relative performance. The growth style outperforms in later stages of markets when speculation arises. The value style does better in falling markets and in the early stage of market recoveries when investors are more cautious.

We believe that, while both investment styles work well on paper, in real life investment conditions, the value style is far more likely to lead to successful long-term results. The giddy advances and frightening declines of growth investing promotes mistakes. This volatility tempts investors to rewrite their long-term investment plan on a yearly basis, a sure path to failure. Value investing usually produces lower volatility thus reducing the temptation to change course in midstream.

In short, long-term success demands being patient in a bear market, so we advise the greater stability of the value style.

Careful Asset Class Diversification

In addition to using the value style to promote less volatile returns, investors can also prudently allocate their equity exposure between the large-cap, smaller-cap and international asset classes.

Having your equity exposure in multiple asset classes tends to reduce volatility with no sacrifice to long-term returns. This is because, while long-term returns of asset classes are similar, their periods of out performance occur at different times.

Can one hope to shift between asset classes in a timely fashion? Unfortunately, timing asset class shifts has been no more successful than timing general market movements.

Meeting your portfolio return and stability objectives comes from establishing long-term allocations between asset classes and maintaining them. Maintaining allocation weights means you will be selling outperforming groups and redistributing funds into those underperforming. This, of course, is classic value investing.

As a value manager who searches for attractive investments both domestically and abroad, we established mutual funds in the three asset classes that we feel are the most capable of producing both strong and stable returns. These asset classes are large-cap value, mid-cap value and international value.

We have had the above three asset classes in our funds family since April 1, 1999. Since then smaller stocks have had a resurgence of popularity. Large-caps, which had outperformed from 1994 thru 1999, are now lagging. International stocks were unloved until foreign currencies started to outperform the dollar in February of this year. Since then they have outperformed domestic large-caps.

In the three-year plus performance period of the Funds (April 1, 1999 to April 30, 2002) the S &P 500 returned an annualized .4.42%. The TW American Enterprise Fund (US large-cap) returned -0.79% while the smaller cap TW American Opportunity Fund (US mid-cap) returned +9.72%. The TW International Fund (foreign large-cap) returned -1.28%.

Which of our three funds will outperform over the next three years? My guess is the international fund since the dollar is overvalued and the foreign asset class has been out of favor for so long, but this is just a guess. Please read more regarding this in the section reviewing the International Fund.

Most long-term investment plans set their equity asset class allocation weights to reflect their natural weights in the market. Currently largest-cap stocks (the top 200) represent 67% of US equities, mid caps 25% and small caps 8%. Non-US stocks make up 48% of the total world equity market, but American investors rarely have over 20% foreign exposure. Since appropriate allocation weights vary widely, I invite you to call us so we can discuss this matter in more detail.

In the recent distressing environment and difficult stock market, it is important that investors stay the course. As your advisor, we continue to execute our investment process in a consistent, business-like manner. We believe that equity investing rewards the patient investor who uses disciplined, time-tested valuation techniques and has realistic long-term goals.

All of us at the Thomas White Funds Family appreciate your confidence.

Thomas S. White, Jr.
President

 

 

$14.000

Thomas White Amer Opp Fund (US Mid-Cap)
Thomas White Amer Ent Fund (US Large-Cap)

  

$13,313
$9,758

  

$13.000

Thomas White Int Fund (Int'l Large-Cap)
S&P 500

$9,610
$8,699

  

$12.000

      

$11.000

      

$10.000

[line graph omitted]

$9.000

  

$8.000

  
   

3/31/99

5/31/99

7/31/99

9/30/99

11/30/99

1/31/00

3/31/00

5/31/00

7/31/00

9/30/00

11/30/00

1/31/01

3/31/01

5/31/01

7/31/01

9/30/01

11/30/01

3/31/02

4/30/02

 

The above chart presents performance in terms of an initial $10,000 investment in the American Opportunities American Enterprise, and International Funds, assuming all dividends reinvested, and the benchmark. The return for the period was 33.1% for the American Opportunities Fund, -2.4% for the American Enterprise Fund, -3.9% for the International Fund, and -13.0% for the S& P 500. April 1999 was the first full month all three Funds were in operation.

Past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost.

THE FUNDS HAVE IDENTICAL GOALS

The investment objectives of the American Enterprise, American Opportunities and International Funds are to achieve long-term capital growth.

THE THOMAS WHITE FUNDS'

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.

IV.  The Advisor adheres to a long-term investment approach, and it does not attempt to project short-term changes in the general market.

 

THE THOMAS WHITE FUNDS FAMILY

The American Enterprise Fund (large-cap value)

The American Opportunities Fund (mid-cap value)

The International Fund (foreign equities)

Mutual fund investors and their advisors have grown increasingly sophisticated in the management of retirement accounts. Funds are allocated by their investment style, cap size and between domestic and foreign stocks. The objective of this careful diversification is smoother performance. The Thomas White Funds described below should be used as individual components within an investor' total investment portfolio:

I.     The International Fund

We believe globalization will accelerate in the next decade. This trend started with the demise of the Soviet Union as a superpower and will speed up with the growing availability of the Internet worldwide.

The Fund is designed to represent the international equity component of an investor' portfolio of funds. It owns a broadly diversified list of undervalued common stocks located in all the major global industries. These securities are also widely diversified by geographical region and in both developed market and emerging market countries.

In August of 1998, Forbes Magazine honored the International Fund by placing it in their International Stock Funds' Best Buy List. We were the youngest of the twelve world funds making this list.

II.    The American Enterprise Fund

The American Enterprise Fund is designed to represent the large-cap value portion of our client's US equities.

III.   The American Opportunities Fund

The American Opportunities Fund is designed to represent the mid-cap value portion of our client's US equities. Both of our American Funds seek to obtain superior long-term returns while attempting to limit investment risk. The portfolios are constructed to take full advantage of our research department's ability to discover attractive investment opportunities in each major business sector within the United States. History shows that careful industry and company diversification can help lower portfolio volatility and reduce risk during difficult market environments.

The American Enterprise Fund uses a valuation-driven large-cap investment style and will select most of its stocks from those in the Russell 1000 Index. These companies range in market' capitalizations from roughly $1 to $310 billion.

The American Opportunities Fund will use a valuation-driven mid-cap investment style and will select most of its stocks from the 800 companies in the Russell Midcap Index. These stocks range in market capitalizations from roughly $1 to $15 billion.

The two American Funds are designed to complement each other. The American Enterprise Fund will tend to have superior returns during periods where larger stocks are outperforming. The American Opportunities Fund will tend to have superior returns during periods where smaller stocks outperform.

THE FUNDS ARE INVESTOR FRIENDLY

The Funds are 100% no-load, a distinct advantage since sales charges and 12b-1 fees reduce a shareholder's return. Each Fund has average or below average total expenses, in relation to their peers, and attempts to maintain low portfolio turnover, which is tax-efficient. In addition to managing mutual funds, our asset management division runs US large-cap, small-cap and fixed-income portfolios for clients. All of our investment asset classes use our traditional valuation-oriented investment approach.

 

 

THE WORLD HAS CHANGED.

ADDING AN INTERNATIONAL FUND TO U.S.
EQUITY HOLDINGS OFFERS THE POTENTIAL FOR
BOTH IMPROVED PERFORMANCE
AND SMOOTHER RETURNS.

GLOBAL STOCK MARKET ALLOCATION
 

Dec
1970

Dec
1980

Dec
1990

Dec
2000

Dec
2001

Developed Markets

          

Canada

4%

3%

2%

2%

2%

Europe

22%

23%

25%

28%

27%

Pacific

8%

16%

27%

14%

12%

United States

66%

57%

43%

52%

54%

Emerging Markets

.2%

.8%

3%

4%

4%
 

100%

100%

100%

100%

100%

Global Market

          

Value ($trillions)

$2.0

$4.1

$8.2

$26.9

$27.1
           

There has been growth in the relative size of developed and emerging markets outside the United States since 1960. This means investors can now choose to employ wider diversification in the design of their equity portfolios.

Thomas White suggests shareholders hold both its American Funds and its International Fund to obtain smoother returns.

History shows that broad global diversification has lowered the volatility associated with single country portfolios.

Source: Global Capital Institute

 

THE FUNDS HAVE COMMON OBJECTIVES

The common goals of the Thomas White Funds are to provide our shareholders with solid performance and above average portfolio stability.

We attempt to design funds that give shareholders a comfortable ride, in the roller coaster world of equities. Shareholders that can stay the course, and maintain a well-thought-out, long-term strategy, have traditionally done well in investing. Nervous equity investors tend to make mistakes they regret later.

How do we invest the portfolio and structure the funds to accomplish our goals of both strong and stable performance?

First, in terms of portfolio design, 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 an ongoing flow of attractive stocks in most every industry and country. This gives us the ability to construct carefully 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 each other, producing smoother overall performance, as well as the value added which comes from owning undervalued stocks.

Second, in designing the fund's structure, we try to attract and serve the prudent, long-term investor and discourage speculators. Please note the information in "Designing a Lifetime Investment Plan" and "The Power of Long-Term Investment Plans" located in the front section of the Funds' prospectus. Our Funds are ideal for these sort of lifetime savings plans. There is another advantage of having shareholders who are long-term investors. Long-term shareholders produce fewer fund redemptions, which means lower portfolio turnover in the Funds. A stable shareholder base also allows us to hold less liquidity-related cash, which can improve 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 assisting shareholders in reaching their investment goals. We know that our clients. accomplishments depend on their knowledge, planning and self-discipline. Accordingly, we attempt to focus our regular shareholder communications in these areas.

Finally, we send out special letters during periods of market turmoil. These are normally delivered in a timely fashion by fax or e-mail. Shareholder response to this form of communication has been quite enthusiastic. A complete set of past shareholder letters and reports are available at our website, www.thomaswhite.com or by calling 1-800-811-0535.

 

"The common goals of the Thomas White Funds are to provide
our shareholders with solid performance and above average
portfolio stability. . .

Shareholders that can 'stay the course' and maintain a well
thought out, long-term strategy, have traditionally done well in
equities."

THOMAS WHITE AMERICAN ENTERPRISE FUND

The American Enterprise Fund employs our organization' traditional valuation-oriented investment style and focuses its large-cap stock selection among the companies in the Russell 1000 Index. These companies range in market capitalizations from roughly $1 to $310 billion. The Fund also purchases some attractive smaller-cap stocks. Given that our security analysts regularly value over 2,300 domestic companies, this selection flexibility allows the portfolio manager to buy any of the investment opportunities they discover. Despite this flexibility, the Fund intends to maintain an average cap size that consistently places it in the large-cap category of funds as defined by Morningstar.

 

THOMAS WHITE AMERICAN ENTERPRISE FUND
TOP TEN HOLDINGS
ON APRIL 30, 2002
BASED ON TOTAL NET ASSETS

Company Industry

% of Total Net Assets

Phillip Morris
Consumer Staples

3.3%

Freddie Mac
Financial Diversified

1.8%

Fannie Mae
Financial Diversified

1.7%

Verizon Communications
Communications

1.7%

Johnson & Johnson
Health Care

1.7%

UST
Consumer Staples

1.6%

General Motors Corp. cl H
Services

1.6%

Chevron Texaco Corp.
Energy

1.6%

BJ's Wholesale Club
Consumer Retail

1.4%

Kimberly-Clark
Consumer Staples

1.4%

 

Performance

The Thomas White American Enterprise Fund returned 8.1% over the last six months through April, versus the Russell 1000 Value Index (8.9%) and the S&P 500 Index (2.3%). The equivalent returns over the last twelve months are -2.1% versus -3.9% and -12.6%. Since its inception, the Fund has returned an annualized 2.9% return. This compares to the Russell 1000 Value Index (4.8%) and the S&P 500 Index (0.7%).

Investment Strategy

There are several approaches portfolio managers can use in attempting to outperform their benchmarks. Some vary their cash levels; usually in an effort to correctly time market declines. Given our attitude that market timing cannot consistently add value, we maintain minimal cash levels.

Another approach is referred to as industry rotation, or market timing of industries. To be successful here, one needs to be good at forecasting movements in the business cycle, interest rates and the movement of commodity prices accurately. While we regularly discuss our analysis of the economy and have expectations of its direction, we do not value stocks in a way that depends on our forecasts being correct. Indeed, we buy economically sensitive companies when the consensus economic forecast suggests that we should not. We do this because this is when the stocks sell at the greatest discount to their long-term value. Short-term thinking creates undervalued opportunities. We accept possible short-term under performance in a stock in order to obtain solid out-performance in the long-term.

If we do not market time or time movements of industries, how do we add value? The answer is that we stress accurate stock selection within every major industry. Our eight security analysts have developed valuation techniques to aid them in selecting the stock that will outperform its industry peers. Our valuation tools vary with each industry. Our organization' long experience in following this approach gives us great confidence in its success. In the end, our expertise within each industry, gives us the capability of creating a much more diversified portfolio than most other portfolio managers.

With the S&P 500 Index down 30.5% since its high in August of 2000, there are many new undervalued opportunities. In our focus on new bargain-priced stocks, the portfolio is gradually shifting away from more defensive companies toward those currently depressed by the weak economy.

 

THOMAS WHITE AMERICAN ENTERPRISE FUND
INDUSTRY DISTRIBUTION
ON APRIL 30, 2002
BASED ON LONG-TERM SECURITIES

Aerospace

0.9%

Banking

7.6%

Building

0.8%

Capital Goods

1.0%

Chemicals

1.5%

Communications

2.5%

Consumer Durables

2.6%

Consumer Retail

5.6%

Consumer Staples

11.8%

Energy

6.6%

Financial Diversified

10.9%

Forest & Paper

0.9%

Health Care

7.2%

Industrial

4.5%

Insurance

4.6%

Metals & Mining

0.4%

Services

21.7%

Technology

6.3%

Transportation

1.4%

Utilities

1.2%

Total

100.0%

 

Our Current Portfolio

As is our traditional policy, we are fully invested and are maintaining broad industry diversification in order to achieve our objective of portfolio stability. The Fund currently owns 130 attractively priced businesses spanning every economic sector and major industry. As of April 30, the Fund' wide diversification was confirmed by the fact that its top ten holdings represented just 17.1% of its total net assets.

In conclusion, the Fund represents a diversified portfolio of undervalued large-cap securities with attractive futures and solid balance sheets. We have every confidence that these equities will enjoy strong relative performance reflecting the economic recovery now occurring.

 

PERFORMANCE AT A GLANCE

Relative Performance
April 30, 2002

American
Enterprise

Russell 1000
Value

S&P 500

Six Months

8.1%

8.9%

2.3%

YTD

0.7%

0.5%

-5.8%

One Year Total Return

-2.1%

-3.9%

-12.6%

Annualized Three Year
Total Return

-2.7%

-0.6%

-5.7%

Annualized Total Return
Since Inception (11/1/98)

2.9%

4.8%

0.7%


The S&P 500 is a market-weighted index of the largest 500 companies. Russell 1000 Index measures the performance of the 1,000 largest companies in the Russell 3000 Index. The Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. All indices are unmanaged and returns assume the reinvestment of dividends.

 

 

 

The American Enterprise Fund
vs
the Russell 1000 Value Index and
the S&P 500
November 1, 1998 to April 30, 2002

$15,000

Thomas White Amer Enterprise Fund
Russell 1000 Value
S&P 500 Companies

  

$11,065
$11,797
$10,249

  

$14,000

  

$13,000

[line graphic omitted]

$12,000

  

$11,000

  

$10,000

  
 

11/01/98

4/30/99

10/31/99

4/30/00

10/31/00

4/30/01

10/31/01

4/30/02
 

01/31/99

07/31/99

01/31/00

7/31/00

01/31/01

07/31/01

01/31/02

 

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 10.7% for the Fund, 18.0% for the Russell 1000 Value and 2.5% for the S&P 500. The one-year return for the Fund was -2.1%. The Fund' average annual total return was 2.9%.

Past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost.

 

 

THOMAS WHITE AMERICAN ENTERPRISE FUND

Investment Portfolio                       April 30, 2002

Industry
Issue


Shares


Value

Common Stocks (97.6%)

Aerospace (0.9%)

Boeing Company

1,343

59,898

Raytheon

1,900

80,370

Banking (7.4%)

Bank One Corporation

3,100

126,697

BankAmerica Corporation

1,900

137,712

BB&T Corp.

4,500

171,360

Citigroup Inc.

2,500

108,250

Colonial Bancgroup

4,631

74,096

JP Morgan Chase & Co.

4,300

150,930

PNC Financial Corp.

2,400

132,360

Washington Mutual, Inc.

3,472

130,999

Wells Fargo & Co.

2,600

132,990

Building (0.8%)

Centex Corp. #

2,200

123,860

Capital Goods (0.9%)

Caterpillar, Inc.

800

43,696

Parker Hannifin Corp.

2,100

104,895

Chemicals (1.4%)

Cytec Industries Inc. *

1,800

59,382

E. I. du Pont de Nemours and Company

1,700

75,650

Englehard Corporation

1,600

48,672

Rohm and Haas Company

1,200

44,532

Communications (2.5%)

Telephone & Data Systems Inc.

1,653

142,158

Verizon Communications Inc.

6,518

261,436

Consumer Durables (2.5%)

Clayton Homes, Inc.

2,300

39,330

General Motors Corp.

2,900

186,035

Johnson Controls Inc.

400

34,500

Lear Corporation *

800

41,128

Mohawk Industries, Inc. *

850

54,681

Whirlpool Corp. #

600

44,970

Consumer Retail (5.5%)

BJ's Wholesale Club Inc. *

5,000

223,150

Nordstrom, Inc.

5,300

124,338

Office Depot Inc. *

3,200

61,248

Staples, Inc. *

5,200

103,844

Target Corporation

4,884

213,187

TJX Companies, Inc.

3,300

143,814

Consumer Staples (11.5%)

Alberto Culver Co. Class A

2,200

107,140

Constellation Brands, Inc. *

1,000

60,400

CVS Corp.

2,468

82,629

Kimberly-Clark Corporation

3,400

221,407

Kraft Foods, Inc.

3,500

143,640

Kroger Co. *

5,480

124,780

PepsiAmericas, Inc.

2,200

33,550

Philip Morris Companies Inc.

9,577

521,276

R.J. Reynolds Tobacco Holdings, Inc.

2,000

138,400

Smithfield Foods, Inc.

5,600

118,160

UST Inc.

6,457

256,989

Energy (6.5%)

Amerada Hess Corp.

1,550

119,164

Anadarko Petroleum Corp.

1,600

86,112

ChevronTexaco Corp.

2,846

246,777

Conoco Inc.

5,800

162,690

Exxon Mobil Corp.

4,400

176,748

Kerr-McGee Corp.

1,200

71,760

Noble Corporation *

2,200

95,370

Valero Energy Corp.

1,400

60,424

Financial Diversified (10.6%)

Allied Capital Corporation

1,500

39,150

Bear Stearns Companies Inc.

1,700

105,298

Equity Office Properties Trust

5,000

143,150

Equity Residential Properties Trust

6,100

172,020

Fannie Mae

3,400

268,362

Freddie Mac

4,400

287,540

Host Marriott Corporation *

6,500

77,415

Household International, Inc. #

2,773

161,638

iStar Financial Inc.

4,100

127,510

Kimco Realty Corp.

2,550

81,855

Lehman Brothers Holdings Inc.

1,200

70,800

Morgan Stanley Dean Witter & Co.

1,200

57,264

Plum Creek Timber Company, Inc.

2,600

79,170

Forest & Paper (0.9%)

Rayonier

1,400

82,138

Temple-Inland Inc.

1,053

55,746

Health Care (7.0%)

Baxter International Inc.

1,400

79,660

Becton, Dickinson and Company

1,200

44,604

Bristol-Myers Squibb Company

1,582

45,562

DENTSPLY International Inc.

2,400

95,208

Johnson & Johnson

4,064

259,527

Merck & Co., Inc. #

2,300

124,982

Mylan Laboratories Inc.

2,800

74,144

Pharmacia Corporation

3,600

148,428

Tenet Healthcare Corp. *

1,524

111,816

UnitedHealth Group Inc. #

1,298

113,977

Industrial (4.4%)

Air Products & Chemicals Inc.

1,707

82,021

American Standard Companies Inc. *

1,099

82,095

Illinois Tool Works Inc. #

700

50,470

ITT Industries, Inc.

1,422

99,341

Pactiv Corporation *

2,400

49,608

Sonoco Products Company

1,600

46,240

Teleflex Inc.

1,100

62,161

Textron Inc.

1,732

85,180

United Technologies Corporation

2,077

145,743

Insurance (4.5%)

Ambac Financial Group Inc.

1,100

69,146

American International Group, Inc

2,206

152,479

Berkshire Hathaway 'b' *

67

163,011

Lincoln National Corporation

1,900

91,010

MGIC Investment Corporation

700

49,952

Old Republic International Corp.

3,400

112,982

Principal Financial Group, Inc. *

2,600

72,280

Metals (0.4%)

Alcoa Inc.

1,900

64,657

Services (21.2%)

Banta Corp.

5,000

188,000

Carnival Corporation

4,700

156,557

CarMax, Inc. *#

7,400

218,300

Clear Channel Communications, Inc. *

2,100

98,595

Darden Restaurants, Inc.

2,200

87,780

Walt Disney Company #

6,600

152,988

Fortune Brands, Inc.

3,100

162,006

Gannett Co, Inc.

2,300

168,590

GTECH Holdings Corp. *

1,900

113,829

H&R Block, Inc.

2,600

104,312

Hilton Hotels Corporation

10,000

163,600

Hughes Electronics Corporation *

16,800

251,663

Interpublic Group of Companies, Inc. #

4,800

148,224

Knight Ridder Inc.

2,000

134,000

Liberty Media Corp. Series A*

14,563

155,824

Manpower, Inc.

1,600

64,400

Marriott International, Inc.

4,000

175,760

McDonald's Corporation

6,000

170,400

Republic Services, Inc. *

9,300

184,140

R. R. Donnelley & Sons Company

4,900

156,604

Waste Management, Inc.

4,500

118,530

TRICON Global Restaurants, Inc.

2,600

163,956

Yum! Brands, Inc. *

2,600

163,956

Technology (6.2%)

Electronic Data Systems Corp.

3,300

179,058

Equifax Inc.

5,100

139,332

First Data Corporation

1,500

119,235

Harris Corporation

900

32,589

Hewlett Packard #

8,000

136,800

Intel Corporation

2,500

71,525

Microsoft Corporation *

1,400

73,164

NCR Corporation *

3,700

143,782

Solectron Corporation *

900

6,570

Storage Technology Corporation *

1,500

30,870

Symantec Corporation *

1,100

38,951

Transportation (1.4%)

Fedex Corp.

1,000

51,670

Norfolk Southern Corp.

5,277

113,086

Southwest Airlines Co.

3,200

58,272

Utilities (1.1%)

TXU Corp.

3,300

179,586

Total Common Stocks

(Cost $14,848,615)

15,405,472

Short-Term Obligations (2.4%)

Principal
Amount

American Family Financial Services Demand Note 1.43%, due 1/14/03

$199,710

199,710

Wisconsin Corporate Central Credit Union Variable Demand Note

1.52%, due 1/17/03

175,838

175,838

Total Short-Term Obligations

(Cost $375,548)

375,548

Total Investments:

100.0%

(Cost $15,224,163)

15,781,020

Other Assets, Less Liabilities:

(0.0)%

(4,714)

Total Net Assets:

100.0%

$15,776,306

*  Non-Income Producing Securities
#  All or a portion of securities on loan at April 30, 2002 - See Note 1(g) to financial statements
ADR - American Depository Receipt.

 

THOMAS WHITE AMERICAN OPPORTUNITIES FUND

The American Opportunities Fund employs the same valuation-oriented investment style as our large-cap American Enterprise Fund, but focuses its selection among the 800 stocks in the Russell Midcap Index. These companies range in market capitalizations from roughly $1 to $15 billion. The Fund also purchases some attractive larger-cap and smaller-cap stocks. Given that our security analysts regularly value over 2,300 domestic companies, this selection flexibility allows the portfolio manager to buy any of the investment opportunities they discover. Despite this flexibility, the Fund intends to maintain an average cap size that consistently places it in the mid-cap category of funds as defined by Morningstar.

 

 

THOMAS WHITE AMERICAN
OPPORTUNITIES FUND
TOP TEN HOLDINGS

ON APRIL 30, 2002
BASED ON TOTAL NET ASSETS

Company Industry

% of Total Net Assets

CACI International Inc.
Technology

2.5%

Alberto Culver Co.
Consumer Staples

1.9%

Carmax Group
Services

1.7%

Dentsply International Inc.
Health Care

1.6%

ITT Education
Services

1.5%

Darden Restaurants, Inc.
Services

1.4%

Northrup Grumman
Aerospace

1.4%

Old Republic
Insurance

1.3%

NCR Corp
Technology

1.3%

Symantec Corp
Technology

1.2%

 

 

 

 

 

Performance

The Thomas White American Opportunities Fund returned 18.2% over the last six months through April, versus the Russell Midcap Value Index (20.2%) and the Russell Midcap Index (15.2%). The equivalent returns over the last twelve months are 12.7% versus 8.4% and -0.7%. Since its inception, the Fund has returned an annualized 9.4% return. This compares to the Russell Midcap Value Index (10.6%) and the Russell Midcap Index (8.2%).

Our Investment Strategy

There are several approaches portfolio managers can use in attempting to outperform their benchmarks. Some vary their cash levels; usually in an effort to correctly time market declines. Given our attitude that market timing cannot consistently add value, we maintain minimal cash levels.

Another approach is referred to as industry rotation, or market timing of industries. To be successful here, one needs to be good at forecasting movements in the business cycle, interest rates and the movement of commodity prices accurately.

While we regularly discuss our analysis of the economy and have expectations of its direction, we do not value stocks in a way that depends on our forecasts being correct. Indeed, we buy economically sensitive companies when the consensus economic forecast suggests that we should not. We do this because this is when the stocks sell at the greatest discount to their long-term value. Short-term thinking creates undervalued opportunities. We accept possible short-term under performance in a stock in order to obtain solid out performance in the long-term.

If we do not market time or time movements of industries, how do we add value? The answer is that we stress accurate stock selection within every major industry. Our eight security analysts have developed valuation techniques to aid them in selecting the stock that will outperform its industry peers. Our valuation criteria vary with each industry. Our organization's long experience in following this approach gives us great confidence in its success. In the end, our expertise within each industry, gives us the capability of creating a much more diversified portfolio than most other portfolio managers.

With the market down from its high in August of 2000, there are many new undervalued opportunities. In our focus on new bargain priced stocks, the portfolio is gradually shifting away from more defensive companies toward those currently depressed by the weak economy.

 

 

THOMAS WHITE AMERICAN
OPPORTUNITIES FUND
INDUSTRY DISTRIBUTION
ON APRIL 30, 2002
BASED ON LONG-TERM SECURITIES

Aerospace

1.4%

Banking

8.4%

Building

2.1%

Capital Goods

1.9%

Chemicals

1.8%

Communications

0.8%

Consumer Durables

3.0%

Consumer Retail

6.5%

Consumer Staples

6.7%

Energy

5.4%

Financial Diversified

6.3%

Forest & Paper

1.5%

Health Care

8.8%

Industrial

5.3%

Insurance

7.6%

Metals & Mining

0.6%

Services

14.2%

Technology

12.6%

Transportation

1.8%

Utilities

3.3%

Total

100.0%

Our Current Portfolio

As is our traditional policy, we are fully invested and are maintaining broad industry diversification in order to achieve our objective of portfolio stability. The Fund currently owns 178 attractively priced businesses spanning every economic sector and major industry. As of April 30, 2002 the Fund's wide diversification was confirmed by the fact that its top ten holdings represented just 15.8% of its total net assets.

In conclusion, the Fund represents a diversified portfolio of undervalued mid-cap securities with attractive futures and solid balance sheets. We have every confidence that these equities will enjoy strong relative performance reflecting the economic recovery now occurring.

PERFORMANCE AT A GLANCE

Relative Performance
April 30, 2002

American
Opportunities
Fund

Russell
Midcap
Value

Russell
Midcap
Index

Six Months

18.2%

20.2%

15.2%

YTD

6.9%

7.8%

2.2%

One Year Total Return

12.7%

8.4%

-0.7%

Three Year Total Return

7.2%

7.4%

4.9%

Annualized Total Return
Since Inception (3/4/99)

9.4%

10.6%

8.2%


Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index. These represent approximately 31% of the total market capitalization of the Russell 3000 Index. Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index. This represents approximately 11% of the total market capitalization of the Russell 3000 Index. All indices are unmanaged and returns assume the reinvestment of dividends.

 

 

The American Opportunities Fund

vs

the Russell Midcap Value Index and

the Midcap Index

March 4, 1999 to April 30, 2002

$15,000

  

$14,000

  

$13,000

[line graph omitted]

$12,000

  

$11,000

  

$10,000

  

$9,000

  
   

7/31/99

1/31/00

7/31/00

1/31/01

7/31/01

1/31/02
 

4/30/99

10/31/99

4/30/00

10/31/00

4/30/01

10/31/01

4/30/02

 

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 33.0% for the Fund, 28.3% for the Russell Midcap Value and 37.4% for the Russell Midcap. The one-year return for the Fund was 12.7%. The Fund's average annual total return was 9.4%.

Past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost.

 

 

THOMAS WHITE AMERICAN OPPORTUNITIES FUND
Investment Portfolio                    April 30, 2002

Industry
Issue


Shares


Value

Common Stocks (98.0%)

Aerospace (1.4%)

Northrop Grumman Corp.

1,547

186,661

Banking (8.2%)

BB&T Corp.

3,600

137,088

Commerce Bancorp

1,500

74,085

Commerce Bancshares

1,680

74,542

Community First Bank

1,716

47,156

Colonial Bancgroup

3,869

61,904

First Tenn Natl

1,700

65,722

Golden West Finl

950

64,971

Greenpoint Financial

1,100

54,395

M&T Bank Corp.

1,800

153,684

North Fork Bancorp

3,400

131,308

PNC Bank Corp.

900

49,635

TCF Financial

1,200

62,460

Washington Federal

1,900

49,628

Washington Mutual

1,500

56,595

Building (2.0%)

KB Home

1,173

58,474

Lafarge North America Inc.

1,200

52,536

Ryland Group

800

88,000

Texas Industries, Inc.

1,129

43,783

Vulcan Materials Company

600

27,612

Capital Goods (1.9%)

Graco Inc.

2,250

100,710

Lincoln Electric Holdings Inc.

1,500

42,600

Manitowoc Company, Inc.

1,200

52,440

PACCAR Inc.

696

49,743

Chemicals (1.7%)

Airgas Inc. *

5,200

85,748

Engelhard Corp.

1,839

55,942

Lubrizol Corp.

1,100

37,928

Rohm & Haas

1,400

51,954

Communications (0.8%)

ALLTEL Corp. #

700

34,650

Telephone & Data Systems Inc.

800

68,800

Consumer Durables (2.9%)

ArvinMeritor Inc.

1,870

59,279

Clayton Homes, Inc.

3,000

51,300

Goodyear Tire & Rubber Company

2,656

59,096

Johnson Controls, Inc.

900

77,625

Lear Corp. *

952

48,942

Herman Miller, Inc.

1,000

24,430

Whirlpool Corp. #

928

69,554

Consumer Retail (6.4%)

American Eagle Outfitters, Inc. *

1,400

35,602

BJ's Wholesale Club, Inc. *

2,800

124,964

Fossil Inc. *

2,590

71,873

Fred's Inc.

2,100

81,742

Garan, Inc.

1,400

90,300

Liz Claiborne, Inc.

1,400

43,806

Office Depot, Inc. *

7,700

147,378

Payless ShoeSource, Inc. *

900

52,686

Ross Stores, Inc.

2,600

105,586

TJX Companies, Inc.

2,100

91,518

Consumer Staples (6.6%)

Alberto Culver Co. Class A

5,100

248,370

Casey's General Stores, Inc.

2,700

35,154

Constellation Brands, Inc. *

982

59,313

CVS Corp.

900

30,132

Helen of Troy Limited *

3,000

41,430

Kroger Co. *

2,000

45,540

Lancaster Colony Corp.

1,500

57,750

Pepsi Bottling Group, Inc.

3,200

91,648

R J Reynolds Tobacco

1,100

76,120

Scotts Company *

700

33,397

Smithfield Foods, Inc. *

3,000

63,300

UST Inc.

2,200

87,560

Energy (5.3%)

Amerada Hess Corp.

1,019

78,341

Anadarko Petroleum Corp.

1,322

71,150

BJ's Services Company *

1,200

44,088

Conoco Inc.

5,400

151,470

Devon Energy Corp.

1,200

59,172

GlobalSantaFe Corp.

1,165

40,880

Kerr-McGee Corp.

1,600

95,680

Marathon Oil Corp.

2,629

76,399

Noble Corporation *

2,000

86,700

Financial Diversified (6.2%)

A.G. Edwards, Inc.

1,757

71,896

AvalonBay Communities, Inc.

700

33,369

Boston Properties, Inc.

800

31,184

Countrywide Credit Industries, Inc.

1,100

51,381

Health Care Property Investors, Inc.

2,100

85,743

Hospitality Properties Trust

1,000

34,000

Istar Financial, Inc.

2,600

80,860

Kimco Realty Corp.

2,250

72,225

Lehman Brothers Holdings, Inc.

2,047

120,773

Loews Corp.

1,200

71,940

ProLogis Trust

5,000

111,000

Student Loan Corp.

600

58,410

Forest & Paper (1.4%)

Rayonier Inc.

1,289

75,626

Temple-Inland Inc.

988

52,305

Wausau-Mosinee Paper Corp.

2,337

30,404

Weyerhaeuser Company

527

31,414

Health Care (8.6%)

Beckman Coulter, Inc.

700

33,439

Bio-Rad Laboratories, Inc. *

600

28,980

Caremark RX, Inc. *

900

19,350

Covance Inc. *

2,000

40,140

CR Bard Inc.

2,800

153,832

DaVita Inc. *#

2,000

51,840

Dentsply International Inc.

5,250

208,268

Elan Corporation, plc ADR *

1,583

18,806

First Health Group Corp. *

1,400

40,600

Genzyme Corp. *

800

32,752

Guidant Corporation *

1,046

39,330

Medicis Pharmaceutical Corp. *

750

40,163

Mylan Laboratories Inc.

5,200

137,696

Orthodontic Centers of America, Inc. *

900

23,985

Oxford Health Plans, Inc. *

1,400

64,624

Tenet Healthcare Corp. *

1,400

102,718

UnitedHealth Group Inc. #

1,209

106,162

Industrial (5.2%)

Air Products & Chemicals Inc.

1,436

69,000

American Standard Companies Inc.*

898

67,081

AptarGroup, Inc.

1,400

52,010

Ball Corp.

1,600

76,080

C&D Technologies, Inc.

1,500

34,500

CLARCOR, Inc.

2,200

71,060

Hillenbrand Industries, Inc.

900

58,140

ITT Industries, Inc.

770

53,792

Pactiv Corp. *

2,800

57,876

Sonoco Products Company

2,991

86,440

Teleflex Inc.

1,100

62,161

Insurance (7.5%)

Alfa Corp.

1,512

48,520

Ambac Financial Group Inc.

1,750

110,005

Erie Indemnity Company

1,171

51,032

Hartford Financial Services Group, Inc.

1,299

90,021

Lincoln National Corp.

1,400

67,060

MGIC Investment Corp.

1,317

93,981

Old Republic International Corp.

5,300

176,119

PMI Group, Inc.

965

78,281

Principal Financial Group, Inc. *

2,600

72,280

Radian Group Inc.

1,486

77,123

White Mountains Insurance Group, Ltd.

350

125,475

Metals (0.6%)

Alcoa Inc.

2,400

81,672

Services (13.9%)

Banta Corp.

3,500

131,600

Brinker International, Inc. *#

2,700

92,988

CarMax Inc. *#

7,500

221,250

Cox Communications, Inc. *

718

23,974

Cox Radio, Inc. *

2,400

68,736

Darden Restaurants, Inc.

4,800

191,520

Fortune Brands, Inc.

2,900

151,554

Genuine Parts Company

1,600

55,216

GTECH Holdings Corp. *

1,000

59,910

H&R Block, Inc.

2,800

112,336

Hilton Hotels Corp.

2,700

44,172

Hollinger International Inc.

2,200

28,116

Hughes Electronics Corp. *

1,600

23,968

International Game Technology *

1,400

88,130

ITT Education Services, Inc. *

3,900

197,535

Knight Ridder Inc.

1,300

87,100

Liberty Media Corp. Series A *

3,200

34,240

Republic Services, Inc. *

2,800

55,440

USA Networks, Inc. *

1,500

44,865

Valassis Communications, Inc. *

1,050

39,260

Wackenhut Corrections Corp. *

2,600

39,390

Yum! Brands, Inc. *

900

56,754

Technology (12.4%)

Applied Materials, Inc. *#

2,800

68,096

AVX Corp.

2,200

43,846

BARRA, Inc. *

1,200

59,268

Bel Fuse Inc. 'b'

2,000

53,680

CACI International Inc. *

10,924

329,621

Certegy Inc. *

1,400

54,320

Cypress Semiconductor Corp. *

3,684

82,043

Dupont Photomasks, Inc. *

986

38,434

Equifax, Inc.

2,800

76,496

First Data Corp.

1,533

121,858

Harris Corp.

3,764

136,294

Lexmark International, Inc. *

600

35,868

NCR Corp. *

4,285

166,515

Scientific-Atlanta, Inc.

3,000

60,000

Solectron Corp. *

4,200

30,660

Symantec Corp. *

4,394

155,592

Syntel, Inc. *

4,900

71,050

Zebra Technologies Corp. *

1,000

56,670

Transportation (1.7%)

Canadian Pacific Railway Ltd.

1,100

18,546

Fedex Corp.

550

5,286

Norfolk Southern Corp.

1,300

53,404

Roadway Corp.

6,022

100,869

Union Pacific Corp. #

800

41,608

Utilities (3.3%)

Nicor Inc.

1,500

70,170

Northwestern Corp.

2,069

42,559

OGE Energy Corp.

1,300

30,745

ONEOK Inc.

2,900

63,394

Pinnacle West Capital Corp.

2,100

92,022

TXU Corp.

2,500

136,050

Total Common Stocks

(Cost $10,588,583)

12,997,729

Short-Term Obligations (2.0%)

Principal
Amount

Wisconsin Corporate Central Credit Union Variable Demand Note

186,600

186,600

1.52%, due 1/14/03

Wisconsin Electric Power Company Demand Note 1.43%, due 6/21/02

79,324

79,324

Total Short-Term Obligations

(Cost $265,923)

265,923

Total Investments:

100.0%

(Cost $10,854,506)

13,263,652

Other Assets, Less Liabilities:

(0.0)%

(4,494)

Total Net Assets:

100.0%

$13,259,159

* Non-Income Producing Securities

# All or a portion of securities on loan at April 30, 2002 - See Note 1 (g) to financial statements.

ADR - American Depository Receipt.

THOMAS WHITE INTERNATIONAL FUND

Performance

Year to date, the Thomas White International Fund returned 12.2%, out-performing our MSCI All-Country less US benchmark (8.4%). The international equity markets under performed the MSCI USA Index (1.4%) over the same period. Of the 7.0% difference between the US and international returns, 0.5% was due to depreciating foreign currencies.

The International Fund has enjoyed solid long-term performance since its inception on June 28, 1994. Its 7.3% annualized return compares favorably to the MSCI All-Country less US Index (2.8%).

 

THOMAS WHITE INTERNATIONAL FUND

TOP TEN HOLDINGS

ON APRIL 30, 2002

BASED ON TOTAL NET ASSETS

Company Industry, Country

% of Total Net Assets

Brit American Tobacco
Consumer Staples, United Kingdom

2.9%

Telefonos De Mex S A Adr
Communications, Mexico

2.3%

Imperial Chemical
Chemicals, United Kingdom

1.9%

Altadis
Consumer Staples, Spain

1.8%

Total Fina
Energy, France

1.8%

Saint-Gobain
Industrial, France

1.7%

Diageo PLC ADR
Consumer Staples, United Kingdom

1.7%

ING Groep NV

Insurance, Netherlands

1.5%

British Aerospace
Aerospace, United Kingdom

1.5%

Telebras ADR H
Communications, Brazil

1.5%

Near-Term Strategy

The stocks of the European telecommunication, media and technology industries (called the TMT sector outside the US) have been falling since the top of the international market in March of 2000. This has been due to their excessive valuations and weak earnings. Our earlier rotation away from these securities into undervalued, more defensive companies, largely explains the portfolio's out performance since the market's peak. This year we have been increasing our exposure to depressed cyclical companies in response to the business recovery beginning in Europe and Asia.

The portfolio's regional and country mix over-weights the Far East, Latin America and Australia, equally weights Europe and Canada, and mildly underweights Japan. This configuration reflects Japan's slowness to modernize its regulations and restructure its financial and industrial corporations.

 

THE THOMAS WHITE INTERNATIONAL FUND IS DESIGNED TO BENEFIT FROM THE POSITIVE CHANGES OCCURRING IN THE WORLD.

These forty-seven countries are home to over 1,600 companies that meet the Fund's quality standards. Each shareholder, is a partial owner of 126 of the most undervalued of these firms. International 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

Colombia

Finland

Singapore

Mexico

France

  

Peru

Germany

EMERGING MARKETS

Venezuela

Greece

GREATER EUROPE

  

Ireland

Czech Republic

INDIAN SUBCONTINENT

Italy

Hungary

India

Netherlands

Poland

Pakistan

Norway

Russia

  

Portugal

Turkey

FAR EAST

Spain

  

China

Sweden

MIDDLE EASE

Indonesia

Switzerland

Israel

Korea

United Kingdom

  

Malaysia
 

AFRICA

Philippines

NORTH AMERICA

Egypt

Taiwan

Canada

Morocco

Thailand
 

South Africa

  

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 perform ongoing 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.

Longer-Term Strategy


For several years our portfolio strategy has focused on larger, well-managed firms with global presence. Many of these companies are at an earlier stage of management restructuring than their peers in the United States. International restructuring is proceeding at a pace only restrained by the dictates of political realities. Every year there is an increasing shift of the working population from government-owned monopolies to shareholder-owned enterprises. The result is the same persistent increase in productivity that drove US markets ever higher in the 1990's.


Our goal is to hold companies that will benefit from the strong earnings growth being generated from improving management and more productive employees. The higher return potential of international equities comes from their relative undervaluation and their opportunity to raise margins and capital returns up to the standards of US corporations.

Could international stocks outperform US equities over the coming ten years?


Our organization feels that international stocks could have superior performance to US equities over the next ten years due to the relative undervaluation of foreign stocks and the overvaluation of the US dollar. Specifically, we believe investors should expect large-cap international equities to return 10.0% between 2002 and 2011, versus 7.5% for comparable US stocks.


We base this belief on the historical relationship between company valuations and future stock returns. International stock indices currently have lower p/e and price-to-book ratios and higher dividend yields. Our projection is also based on the economic concept of purchasing power parity. This suggests the dollar's current price relationship with other major currencies is quite high and unsustainable over the long term.

History suggests international returns will be similar to US returns in the long run.


The graph on page 28 presents the performance of the world's major regions since 1970. International equities outperformed US stocks for a twenty-year period from 1970 to 1990, but they have under-performed for the last eleven years, largely because of low equity returns in Japan.


The relative equity performance between countries and regions is explained by: 1) the valuation levels at the beginning of the performance period, 2) the earnings growth over the period and 3) the currency return over the period. It is important to note that all of these factors tend to ebb and flow, but over time they end up producing very similar returns. Observe that the 1970-2001 returns are all quite similar for the major regions. Over this period international returns were 10.9% versus the 11.6% US returns.

Japanese investors suffered terribly by failing to diversify their portfolios internationally.

The Japanese investment public has learned the hard way that it is important to diversify internationally.

War-ravaged, Japanese industry was at first, understandably inferior, but it quickly improved and in time set new standards for excellence. Despite this, the image of low quality persisted well into the 1960's. Accordingly, Japanese equities were incorrectly undervalued relative to the rest of the world.

Japanese investors finally recognized how attractive their own stocks were and drove the market higher for the next twenty years (1970-1990). The country's export-driven companies continued to perfect their business models and by the late 1980's their success became known as an .economic miracle. The earlier error in perception by investors that resulted in extreme under-valuation was in time repeated.

THE THIRTY YEAR PERFORMANCE OF
THE INTERNATIONAL EQUITY MARKET AND
ITS MAJOR REGIONAL COMPONENTS

MSCI INDICES

Gross

THESE INDEX RETURNS ARE IN US DOLLARS. FIVE-YEAR REGIONAL PERFORMANCE SUCCESS IS NUMBERED FROM #1 (BEST) to #5 (WORST)

PERIOD: Jan. 1, 1970 to Dec. 31, 2001
FIVE YEAR PERIOD RETURNS



INT'L



CANADA



EUROPE



JAPAN



PACIFIC

EX JAPAN



EMERGING MARKETS



US

1970-1974

3.3%

4.6%(#2)  

-0.9%(#3)

16.0%(#1)

-6.2%(#4)

N/A

-3.4%

1975-1979

19.0%

17.9%(#4) 

18.9%(#2)

18.8%(3)   

27.5%(#1)

N/A

13.3%

1980-1984

9.5%

6.7%(#2)  

6.1%(#3)

17.0%(#1)

4.1%(#4)

N/A

14.5%

1985-1989

35.0%

16.9%(#5)  

32.3%(#3)

41.4%(#2)

22.4%(#4)

52.2%(#1)

19.8%

1990-1994

2.4%

0.1%(#5)  

7.0%(#3)

-3.4%(#5)

15.3%(#2)

20.9%(#1)

9.2%

1995-1999

12.4%

20.5%(#2)  

22.5%(#1)

2.1%(#4)

5.0%(#3)

2.0%(#5)

29.7%

2000-2001 (to Dec. 31)

-17.3%

-8.1%(#1)  

-14.1%(#3)

-28.7%(#5)

-12.4%(#2)

-17.7%(#4)

-12.3%
               

1970-2001

10.9%

9.6%         

11.8%

11.1%        

9.1%        

N/A

11.6%

1988-2001

5.0%

8.6%         

11.0%

-3.0%        

8.2%        

11.3%        

14.5%

The table above presents the performance of the international stock markets from January 1, 1970 to December 31, 2001. Returns are shown in a series of five-year periods. The international returns are followed by those of the world's regions, then for comparison, the US returns.

Regional performances (not including the US) are highlighted using ranks from #1 (best) to #5 (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 international market and its territories all have quite similar long-term records. But observe that the international 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 benefit from smoother international performance. A more stable portfolio encourages investors to stay the course in a falling market environment. This promotes success in reaching long-term investment goals.

The MSCI developed country gross dividends return series is used for US, Europe, Canada, Japan and the Pacific less Japan. The Free MSCI emerging markets free gross dividends return series starts on January 1, 1988. International returns reflect the MSCI World less US Free Index until the MSCI All-Country less US Free Index starts on January 1, 1988. World less US Free and All-Country World less US returns are linked across the 1970-2001 period.


THOMAS WHITE INTERNATIONAL FUND
REGIONAL EXPOSURE
ON APRIL 30, 2002
BASED ON LONG-TERM SECURITIES


Continental Europe


35.1%

United Kingdom

20.7%

Africa & Middle East

0.0%

Canada

2.7%

Latin America

9.0%

Japan

15.3%

Far East

5.9%

Australia & New Zealand

4.6%

TOTAL

100.0%



This time the misperception was of invincibility. This, of course, led to dramatic overvaluation. The bubble burst in mid-1989 and Japan has traded well below its 1989 highs for the last eleven years.


What is the moral of this story?

Diversify internationally to smooth out your annual returns. Put yourself in the place of a Japanese investor at the market peak in 1989 who did not choose to diversify outside his own country. He felt this way because his local equities had performed so well over the previous ten years. Does this sound familiar to conditions in America today?

 

PERFORMANCE AT A GLANCE

The International Fund vs. its Benchmarks



Relative Performance

April 30, 2002


Thomas White
International
Fund


MSCI
All Country World
ex US


MSCI

All Country
World

Six Months

12.2%  

8.4%

4.7%

YTD

6.2%

2.3%

-2.3%

One Year

-4.5%  

-11.2%    

-12.6%  

Three Years

-2.8%  

-5.2% 

-6.1%

Five Years

4.3%

1.2%

3.8%

Average Annual Return Since Inception (June 28, 1994)

7.3%

2.8%

7.2%

Cumulative Total Return Since Inception (June 28, 1994)

73.3%

24.3%  

73.1%


MSCI All Country World is a compilation of the market indices for 47 developed and emerging market countries. The MSCI All Country World ex US represents the same countries as the All Country Index except it does not include the US. All indices are unmanaged and returns assume the reinvestment of dividends. The International Fund also assumes the reinvestment of dividends and capital gains distributions.



The International Fund

vs.

MSCI Indices

June 28, 1994 to April 30, 2002

$26,000

Thomas White Int'l Fund

  

$17,327

  

$25,000

MSCI All Cty World

  

$17,308

  

$24,000

MSCI All Cty World ex US

  

$12,427

  

$23,000

  

$22,000

  

$21,000

  

$20,000

[line graph omitted]

$19,000

  

$18,000

  

$17,000

  

$16,000

  

$15,000

  

$14,000

  

$13,000

  

$12,000

  

$11,000

  

$10,000

  

$9,000

  

$8,000

  
   

04/30/95

04/30/96

04/30/97

04/30/98

04/30/99

04/30/00

04/30/01

04/30/02
 

10/31/94

10/31/95

10/31/96

10/31/97

10/31/98

10/31/99

10/31/00

10/31/01

04/30/02

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 73.3% for the Fund, 24.3% for the MSCI All Country World ex US and 73.1% for the MSCI All Country Index. The one-year return for the Fund was -4.5%. The Fund's average annual total return since inception was 7.3%. The MSCI Indices are gross dividends.

Past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost.

 

THOMAS WHITE INTERNATIONAL FUND

Investment Portfolio                       April 30, 2002

COUNTRY

ISSUE

INDUSTRY

SHARES

VALUE

COMMON STOCKS

97.9%

      

AUSTRALIA:

3.7%

      
 

BHP Billiton ADR #

Metals & Mining

2,271

26,230

 

BHP Billiton Ltd

Metals & Mining

17,412

101,340

 

National Australia Bank ADR #

Banking

2,900

272,165

 

National Australia Bank

Banking

5,121

95,899

 

News Corp Ltd ADR

Services

13,400

353,492

 

Rio Tinto Plc ADR #

Metals & Mining

1,700

128,605

 

Telstra Corp Communications

  

60,800

166,774

       

1,144,505

 

BELGIUM

2.5%

      
         
 

Fortis AG

Insurance

10,700

245,574

 

Groupe Bruxelles Lambert #

Financial Diversified

5,900

327,364

 

Solvay

Chemicals

2,800

186,381

       

759,319

 

BRAZIL:

4.9%

      
 

Banco Bradesco

Banking

6,000

177,660

 

Eletrobras

Utilities

23,225,200

318,185

 

Petrobras PN

Energy

17,990

416,970

 

Tele Brasil-Telebras Hldrs ADS #

Communications

14,800

462,944

 

Vale do Rio Doce PN

Metals & Mining

4,600

123,771

       

1,499,530

 

CANADA:

2.6%

      
 

BCE Inc

Communications

12,300

215,232

 

Enbridge Inc

Energy

3,800

110,049

 

Royal Bank Of Canada

Banking

5,400

189,053

 

Shell Canada

Energy

9,100

304,552

       

818,886

 

CHINA:

0.9%

      
 

Petrochina ADR #

Energy

13,200

268,356
 

FRANCE:

5.5%

      
 

Alcatel

Technology

10,000

125,022

 

Alstom

Industrial

11,300

146,466

 

Michelin (Fran)

Consumer Durables

8,500

329,219

 

Saint-Gobain

Industrial

3,100

530,535

 

Total Fina

Energy

3,733

565,565

       

1,696,807
 

GERMANY:

9.0%

      
 

BASF #

Chemicals

10,300

439,759

 

Bayer AG #

Chemicals

4,300

141,564

 

BMW

Consumer Durables

6,600

263,358

 

Deutsche Telekom NPV

Communications

14,000

186,381

 

E. On AG

Utilities

6,800

351,882

 

Hypovereinsbank

Banking

9,200

323,185

 

Merck KGAA

Healthcare

4,700

138,858

 

RWE AG

Utilities

7,800

295,082
 

Schering AG

Healthcare

6,600

401,873
 

Siemens AG

Industrial

3,600

217,907
       

2,759,849
 

HONG KONG:

3.5%

      
 

China Telecom (Hong Kong)

Communications

22,800

74,688
 

Hong Kong Electric

Utilities

45,000

170,780
 

HSBC Holdings

Banking

30,400

361,511
 

Jardine Matheson

Industrial

45,000

270,000
 

Swire Pacific Ltd.

Industrial

34,600

207,171
       

1,084,150
 

IRELAND:

2.2%

      
 

Allied Irish Bank

Banking

20,000

265,716
 

Bank of Ireland

Banking

35,500

413,770
       

679,486
 

ITALY:

1.8%

      
 

ENI Spa

Energy

19,100

293,156

 

Telecom Italia Spa

Communications

31,600

251,331

       

544,487
 

JAPAN:

15.0%

      
 

Canon

Technology

6,000

229,549

 

Daiwa House Inds

Building

36,000

229,547

 

Denso

Consumer Durables

8,100

131,010

 

Fuji Photo Film

Services

5,000

158,631

 

Hitachi Ltd

Technology

38,000

281,010

 

Honda Motor

Consumer Durables

4,200

188,118

 

Japan Tobacco

Consumer

63

381,625
 

Komatsu Ltd

Capital Goods

95,000

343,501

 

Matsushita Electric Industries #

Technology

19,000

254,121

 

Millea Holdings

Insurance

34

264,386

 

Mitsubishi Heavy Ind

Capital Goods

131,000

414,589

 

Mitsubishi Tokyo Fin

Banking

20

136,703

 

Nipponkoa

Insurance

35,000

126,553

 

Ntt

Communications

94

369,129

 

Ono Pharmaceutical

Healthcare

3,000

98,211
 

Sankyo Co

Healthcare

9,000

136,819

 

Sony Corp

Technology

4,000

214,619

 

Sumitomo Bank

Banking

13,000

57,823

 

Takeda Chem Inds

Healthcare

6,000

262,208

 

Yamada Denki

Consumer Retail

4,400

338,040

       

4,616,192
 

MEXICO:

3.9%

      
 

America Movil ADR Ser L Shrs

Communications

9,600

179,040

 

Cemex ADR

Building

9,623

305,049

 

Telefonos de Mexico ADR Ord L Shrs

Communications

18,800

711,392

       

1,195,481
 

NETHERLANDS:

5.0%

      
 

ABN-AMRO Holdings

Banking

17,100

338,857
 

Aegon

Insurance

6,200

142,407
 

ING Group

Insurance

17,694

466,973
 

Philips Electronics

Industrial

10,476

323,376
 

Unilever

Consumer Staples

4,000

257,611
       

1,529,224
 

NEW ZEALAND:

0.8%

      
 

Telecom Corporation of New Zealand

Communications

13,600

236,232
 

PORTUGAL:

0.9%

      
 

Portugal Telecom #

Communications

37,500

273,596
 

SINGAPORE:

2.2%

      
 

DBS Group Holdings

Banking

43,030

332,553

 

OCBC

Banking

48,800

350,203

       

682,756
 

SOUTH AFRICA:

0.8%

      
 

Gold Field Ltd. #

Industrial

20,200

243,798
 

SOUTH KOREA:

4.5%

      
 

Korea Electric Power Corp ADR #

Utilities

35,900

384,130

 

Korea Telecom Corp Sponsored ADR #

Communications

13,100

296,715

 

Pohang Iron & Steel ADR

Metals & Mining

8,800

215,160

 

Samsung Electronics

Technology

1,200

355,624

 

SK Telecom

Communications

740

144,383

       

1,396,012
 

SPAIN:

5.9%

      
 

Altadis

Consumer Staples

26,900

567,948

 

Banco Popular Espanol

Banking

3,600

147,573

 

Bbva

Banking

20,100

234,276

 

Repsol

Energy

16,100

197,660

 

Telefonica, S.A. ADR

Communications

12,163

392,987

 

Telefonica, S.A.

Communications

12,409

132,785

 

Union Electrica Fenosa

Utilities

9,200

162,172

       

1,835,401
 

SWEDEN:

0.6%

      
 

Electrolux - B Shares

Consumer Durables

11,200

186,353
 

SWITZERLAND:

1.0%

      
 

Swisscom

Communications

700

208,958
 

Zurich Financial Services

Insurance

379

88,216
       

297,174
 

TAIWAN:

0.4%

      
 

Taiwan Semiconductor

Technology

53,200

134,261
 

UNITED KINGDOM:

20.3%

      
 

Allied Domecq

Consumer Staples

50,000

307,815

 

Assoc Br Foods

Consumer Staples

20,000

175,936

 

BG Group Plc #

Energy

65,422

292,521

 

Boots

Consumer Retail

29,200

302,661

 

BP Plc

Energy

32,600

280,008

 

British American Tobacco

Consumer Staples

86,100

881,759

 

British Aerospace

Aerospace

91,500

465,854

 

British Telecom

Communications

57,400

216,042

 

Centrica

Utilities

65,000

200,317

 

Corus Group *

Metals & Mining

127,700

146,702

 

Diageo Plc ADR

Consumer Staples

10,000

528,500

 

Imperial Chemical

Consumer Staples

25,100

578,602

 

Imperial Tobacco

Industrial

120,000

355,918

 

Invensys

Consumer Retail

87,800

188,184

 

Marks & Spencer Cl B *

Consumer Retail

71,076

88,669

 

Marks & Spencer Plc

Building

13,800

411,644

 

RMC

Consumer Staples

38,100

131,261

 

SA Breweries Plc

Consumer Staples

17,900

308,480

 

Scot & Newcastle

Consumer Staples

24,285

163,991

 

Unilever Plc

Consumer Staples

50,000

222,487

       

6,247,351
 

Total Common Stocks

  

(Cost $27,518,345)

  

30,129,206
 

SHORT TERM

       

OBLIGATIONS:

1.8%

  

Par Value

  
 

The Northern Trust Company Eurodollar

  

$557,735

557,735
 

Time Deposit 0.50%, due 05/01/02

      

Total Short Term Obligations

  

(Cost $557,735)

  

557,735
         

Total Investments

 99.7% 

(Cost $28,076,080)

  

30,686,941

Other Assets, Less Liabilities:

  0.3%

    

96,584

Total Net Assets:

100.0%  

    

$30,783,525

*  Non-Income Producing Securities
#  All or a portion of securities on loan at April 30, 2002 . See Note 1 (g) to financial statements.
ADR - American Depository Receipt.


 

THOMAS WHITE FUNDS FAMILYi

Statements of Assets and Liabilities

April 30, 2002



ASSETS

AMERICAN
ENTERPRISE
FUND

AMERICAN
OPPORTUNITIES
FUND


INTERNATIONAL
FUND

Investments in securities at market value1

$       15,781,020

$          13,263,650

$          30,686,939

Receivables:

      

  Dividends and interest

14,752

8,906

159,742

  Other

2,496

1,862

5,301

Held as Collateral for Loaned Securities2

830,141

631,292

2,894,217

Prepaid expenses

1,001

527

129

Total assets

16,629,410

13,906,237

33,746,328
       

LIABILITIES

      

Due to advisor

11,721

10,099

25,143

Accrued expenses

11,242

5,687

43,444

Collateral on Loaned Securities

830,141

631,292

2,894,217

Total liabilities

853,104

647,078

2,962,804
       

NET ASSETS

      

Source of Net Assets:

      

  Net capital paid in on shares of beneficial interest

$      17,517,479

$          10,744,371

$          29,854,425

  Undistributed net investment income (Accumulated Net investment loss)

3,640

(3,363)

(5,495)

  Accumulated net realized gain (loss)

(2,301,671)

109,001

(1,676,265)

  Net unrealized appreciation (depreciation) on investments and foreign currency translations

556,858

2,409,150

2,610,859

Net assets

$      15,776,306

$          13,259,159

$          30,783,524

Shares outstanding

1,440,124

1,051,271

2,960,229

Net asset value and offering price per share

$            10.95

$                12.61

$                10.40

1  Cost Basis:

      American Enterprise Fund: $15,224,163

      American Opportunities Fund: $10,854,500

      International Fund: $28,076,080

2  Value of securities out on loan at 04/30/2002:

      American Enterprise Fund: $812,150

      American Opportunities Fund: $602,860

      International Fund: $3,110,427

THOMAS WHITE FUNDS FAMILY

Statements of Operations

Six Months Ended April 30, 2002

 

AMERICAN
ENTERPRISE
FUND

AMERICAN
OPPORTUNITIES
FUND


INTERNATIONAL
FUND

INVESTMENT INCOME

      

Income:

      

  Dividends

$           126,158

$              87,063

$          251,277

1

  Interest

4,042

3,278

4,701

  

Total investment income

130,200

90,341

255,978

  
         

Expenses:

        

  Investment management   fees (note 4)

77,730

61,415

144,064

  

  Audit fees and expenses

8,201

5,308

10,475

  

  Custodian fees

3,843

3,988

32,419

  

  Trustees' fees and   expenses

2,445

1,540

4,869

  

  Registration fees

3,331

2,848

14,964

  

  Transfer Agent fees

6,666

6,364

12,566

  

  Printing expenses

2,170

1,516

3,998

  

  Legal fees and expenses

7,177

5,179

15,959

  

  Other expenses

4,688

3,526

8,205

  

    Total expenses

116,251

91,684

247,519

  

    Reimbursement from Investment Manager

(11,316)

(8,774)

(31,426)

  

    Net expenses

104,935

82,910

216,093

  

    Net investment income (loss)

25,265

7,431

39,885

  
         

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS

        
         

Net realized gain (loss) on investments & foreign currency transactions

(26,253)

173,961

(1,356,048)

  

Net change in unrealized appreciation (depreciation) on investments and foreign currency translations

1,195,665

1,834,487

4,633,607

  

      Net gain (loss) on investments

1,169,412

2,008,448

3,277,559

  

      Net increase (decrease) in net assets from
      operations


$       1,194,677


$          2,015,879


$          3,317,444

 


1  Net of foreign taxes withheld of $21,463.

 

See Notes to Financial Statements.

THOMAS WHITE FUNDS FAMILY

Statements of Changes in Net Assets

 

American Enterprise Fund

American Opportunities Fund
 

Six Months
Ended April
30, 2002

Year Ended
October 31,
2001

Six Months
Ended April
30, 2002

Year Ended
October 31,
2001

Change in net assets from operations:
    Net investment income
    Net realized gain (loss)
    Net unrealized appreciation (depreciation)
    on investments


$     25,265
(26,253)
1,195,665


$     67,805
(1,785,677)
(423,777)


$     7,431
173,961
1,834,487


$     33,812
(63,944)
(207,447)

Net increase (decrease) in net assets from operations

1,194,677

(2,141,649)

2,015,879

(237,579)


Distributions to shareholders:
    From net investment income*
    From net realized gain



---------
---------



(78,885)
---------



---------
---------



(39,865)
---------

Fund share transactions (Note 3)

10,061

138,700

454,188

680,552

                Total increase (decrease)

1,204,738

(2,081,834)

2,470,067

403,108

Net assets:
Beginning period


14,571,568


16,653,402


10,789,092


10,385,984

End of period

$15,776,306

$14,571,568

$13,259,159

$10,789,092

*Distribution in excess of net investment
  Income


$                        0


$           11,080


$               0


$        6,053
         
         
 

International Fund

    
 

Six Months
Ended April
30, 2002

Year Ended
October 31,
2001

    

Change in net assets from operations:
    Net investment income (loss)
    Net realized gain on investments and
    foreign currency transactions
    Net unrealized appreciation (depreciation)
    on investments and foreign currency
    translations


$     39,885
(1,356,048)

4,633,607


$      161,336
(320,215)

(7,041,648)

    

Net increase (decrease) in net assets from operations

3,317,444

(7,200,527)

    

Distributions to shareholders:
    From net investment income*
    From net realized gain


------
------


(190,659)
------

    

Fund share transactions (Note 3)
                Total increase (decrease)

(189,699)
3,127,745

942,583
(6,448,603)

    

Net assets:
Beginning of period


27,655,779


34,104,382

    

End of period

$30,783,524

$    27,655,779

    

*Distribution in excess of net investment
  Income


$           0


$        29,323

    

See Notes to Financial Statements.

THOMAS WHITE FUNDS FAMILY

Notes to Financial Statements

Six Months Ended April 30, 2002

NOTE 1.  SUMMARY OF ACCOUNTING POLICIES

Lord Asset Management Trust (the "Trust") was organized as a Delaware business trust on February 9, 1994, as an open-end diversified management investment company. The Trust currently has three series of Shares, the Thomas White American Enterprise Fund (the "American Enterprise Fund") that commenced operations on November 1, 1998, the Thomas White American Opportunities Fund (the "American Opportunities Fund") that commenced operations on March 4, 1999, and the Thomas White International Fund (the "International Fund") that commenced operations on June 28, 1994, collectively referred to as the "Fund." The investment objective of each Fund is to seek long-term capital growth. The American Enterprise Fund primarily invests in equity securities of large U.S. companies. The American Opportunities Fund will also invest in U.S. equity securities, with a focus on mid-size and small companies. The International Fund will primarily invest in equity securities of companies located in the world's developed countries outside of the U.S. 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 closing sale price is reported are valued at the mean between the last current bid and asked price. 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.

Net realized gain (loss) on investments and foreign currency transactions include those gains and losses arising from the sale 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 appreciation (depreciation) on investments and foreign currency translations include the 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 each 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)  Security Transactions and Investment Income. 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. Realized gains and losses are determined on a FIFO basis.

(f)  Distributions to Shareholders. The Funds usually declare and pay dividends from net investment income annually, but may be done more frequently to avoid excise tax. Distributions of net realized capital gains, if any, will be distributed at least annually.

(g)  Securities Lending. The Thomas White American Enterprise Fund, American Opportunities Fund and International Fund may lend investment securities to investors who borrow securities in order to complete certain transactions. By lending investment securities, a Fund attempts to increase its net investment income through the receipt of interest earned on loan collateral. Any increase or decline in the market price of the securities loaned that might occur and any interest earned or dividends declared during the term of the loan would be for the account of the Fund. Risks of delay in recovery of the securities or even loss of rights in the collateral may occur should the borrower of the securities fail financially. Risk may also arise to the extent that the value of the securities loaned increases above the value of the collateral received. It is each Fund's policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day. Therefore, the value of the collateral may be temporarily less than the value of the securities on loan.

Funds that lend securities receive cash as collateral in an amount equal to or exceeding 102% of the current market value of the loaned securities. Any cash received as collateral is invested by the securities lending agent in accordance with pre-established guidelines as set forth in the securities lending agreement. A portion of the interest received on the loan collateral is retained by the Fund and the remainder is rebated to the borrower of the securities. From the interest retained by the Fund, 50% is paid to the securities lending agents for the Thomas White International Fund for its services and 40% is paid to the securities lending agent for the Thomas White American Enterprise and Thomas White American Opportunities Funds for their services. The net amount of interest earned, after the interest rebate and the allocation to the securities lending agent, is included in the Statement of Operations as interest income. The value of loaned securities and related collateral outstanding at April 30, 2002 are as follows:

Portfolio

Value of Loaned Securities

Value of Collateral


Thomas White American Enterprise


$812,150


$830,141

Thomas White American Opportunities

602,860

631,292

Thomas White International Fund

3,110,427

2,894,217

Each Fund has earned interest income on securities lending (after rebates to borrowers and allocation to the securities lending agent) as follows:

Portfolio

Net Interest Earned by Portfolio


Thomas White American Enterprise


$1,240

Thomas White American Opportunities

1,104

Thomas White International Fund

3,153

Note 2.  Significant Shareholder. At April 30, 2002 the Thomas White American Enterprise Fund, Thomas White American Opportunities Fund and Thomas White International Fund had a shareholder who held 80.8%, 60.2% and 67.6%, respectively, of each fund's outstanding shares. Investment activities of this shareholder could have a material effect on each Fund.

THOMAS WHITE FUNDS FAMILY

Notes to Financial Statements

Six Months Ended April 30, 2002

Note 3. Transactions in Shares of Beneficial Interest (All amounts in thousands)

As of April 30, 2002, there were an unlimited number of $.01 par value shares of beneficial interest authorized. Transactions are summarized as follows:

 

American Enterprise Fund

American Opportunities Fund
 

Six Months
Ended
April 30, 2002

Year
Ended
October 31, 2001

Six Months
Ended
April 30, 2002

Year
Ended
October 31, 2001
 

Shares

Amount

Shares

Amount

Shares

Amount

Shares

Amount

Shares sold

25

$    265

67

$      770

41

$      471

67

$      734

Shares issued on reinvestment of dividends & distributions



0



0



8



79



0



0



3



35

Shares redeemed

(23)

(255)

(64)

(710)

(1)

(17)

(8)

(88)

Net (decrease)

1

$10

11

$139

40

$454

62

$681

 

International Fund
 

Six Months
Ended
April 30, 2002

Year
Ended
October 31, 2001
 

Shares

Amount

Shares

Amount

Shares sold

177

$      1,681

527

$       5,720

Shares issued on reinvestment of dividends & distributions



0



0



19



180

Shares redeemed

(199)

(1,870)

(465)

(4,957)

Net increase (decrease)

(22)

$(190)

81

$943

Note 4. Investment Management Fees and Other Transactions with Affiliates

Each Fund pays a monthly investment management fee to Thomas White International, Ltd. (the "Advisor") at the rate of 1/12% of the Fund's average daily net assets. For the current fiscal year the Advisor has contractually agreed to reduce its management fee for the International Fund, the American Enterprise Fund and the American Opportunities Fund to the extent that the total operating fees exceed 1.50%, 1.35%, and 1.35% of the respective Fund's average daily net assets

Note 5. Investment Transactions

During the six months ended April 30, 2002 the cost of purchases and the proceeds from sales of investment securities, other than short-term obligations, were as follows:

The cost of securities for federal income tax purposes was substantially the same for each Fund as that shown in the investment portfolio.

THOMAS WHITE FUNDS FAMILY

Notes to Financial Statements

Six Months Ended April 30, 2002

 

Fund

Purchases

Sales

American Enterprise Fund

$6,378,619

$6,421,100

American Opportunities Fund

2,662,041

2,198,890

International Fund

10,156,701

10,277,594

 

At April 30, 2002 the aggregate gross unrealized appreciation and depreciation of portfolio securities, based upon cost for federal income tax purposes, were as follows:

Fund

Unrealized
Appreciation

Unrealized
Depreciation

Net Unrealized
Appreciation
(Depreciation)

American Enterprise Fund

1,445,896

(889,038)

556,858

American Opportunities Fund

2,853,438

(444,288)

2,409,150

International Fund

4,978,542

(2,367,683)

2,610,859

As of October 31, 2001, the Funds had tax basis capital losses, which may be carried forward up to eight years to offset future capital gains. Such losses expire as follows:

Expiration Date

American
Enterprise
Fund

American
Opportunities
Fund

International
Fund

10/31/2007

$79,601

-------

-------

10/31/2008

410,141

-------

-------

10/31/2009

1,763,751

53,881

320,216

Total

2,253,493

53,881

320,216

 

THOMAS WHITE FUNDS FAMILY

Notes to Financial Statements

Six Months Ended April 30, 2002

Note 6.  Financial Highlights

 

American Enterprise Fund
 

Period
Ended
April 30,
2002

Year
Ended
October
31, 2001

Year
Ended
October 31,
2000

Year
Ended
October 31
1999

Per share operating performance
(For a share outstanding throughout the period)

      

Net asset value, beginning of period

$           10.13

$          11.66

$       12.07

$             10.00

Income from investment operations:

        

    Net investment income (loss)

0.02

0.05

0.05

0.01

    Net realized and unrealized

0.80

(1.53)

(0.40)

2.06

gains (losses)

        
 

0.82

(1.48)

(0.35)

2.07

Distributions:

        

    From net investment income

-------

(0.05)

(0.06)

-------

    From net realized gain

-------

-------

-------

-------
 

-------

(0.05)

(0.06)

-------
         

Change in net asset value for the period

0.82

(1.53)

(0.41)

2.07
         

Net asset value, end of period

$           10.95

$           10.13

$          11.66

$           12.07
         

Total Return

8.09%

(12.66)%

(2.90)%

20.70%

Ratios/supplemental data

        
         

Net assets, end of period (000)

$          15,776

$          14,572

$         16,653

$           22,114

Ratio to average net assets:

        

Expenses (net of reimbursement)

1.34%*+

         1.35%*+

1.35%*+

1.35%*+

Net Investment income/loss (net)

0.32%*+

 0.42%*+

0.28%*+

 0.23%*

of reimbursement)

        
         

Portfolio turnover rate

41.33%*

 87.34%

67.28%

4.58%
         

*   Annualized     ** Not annualized

+   In the absence of the expense reimbursement for the American Enterprise Fund the ratio of expenses to average net assets would have been 1.49% and the ratio of net investment income to average net assets would have been 0.10% for the current year.

In the absence of the expense reimbursement for the American Enterprise Fund the ratio of expenses to average net assets would have been 1.47% and the ratio of net investment income to average net assets would have been 0.31% for the year ended 2001.

In the absence of the expense reimbursement for the American Enterprise Fund the ratio of expenses to average net assets would have been 1.39% and the ratio of net investment income to average net assets would have been 0.25% for the year ended 2000.

In the absence of the expense reimbursement for the American Enterprise Fund the ratio of expenses to average net assets would have been 1.58% and the ratio of net investment income to average net assets would have been 0.00% for the year ended October 31, 1999.

 

 

THOMAS WHITE FUNDS FAMILY

Notes to Financial Statements

Period Ended April 30, 2002

 

American Opportunities Fund
 

Period
Ended
April 30,
2002

Year
Ended
October
31, 2001

Year
Ended
October
31, 2000

March 4, 1999
(commencement
of operations) to
October 31, 1999

Per share operating performance
(For a share outstanding throughout the period)

      

Net asset value, beginning of period

$           10.67

$          10.95

$        10.73

$              10.00

Income from investment\

operations:

        

Net investment income (loss)

0.01

0.03

0.04

0.02

Net realized and unrealized

1.93

(0.27)

0.72

0.71

gains (losses)

        
 

1.94

(0.24)

0.76

0.73

Distributions:

        

From net investment income

-------

(0.04)

(0.04)

-------

From net realized gain

-------

-------

(0.50)

-------
 

-------

(0.04)

(0.54)

-------
         

Change in net asset value for the

1.94

(0.28)

0.22

0.73

period

        

Net asset value, end of period

$          12.61

$          10.67

$       10.95

$              10.73
         

Total Return

18.18%

(2.20)%

7.25%

7.30%**

Ratios/supplemental data

        
         

Net assets, end of period (000)

$         13,259

$          10,789

$ 10,386

$             9,931

Ratio to average net assets:

        

Expenses (net of reimbursement)

1.34%+

1.35%+

1.35%*+

1.35%*+

Net Investment income/loss (net)

0.12%+

0.31%+

0.22%+

0.22%*

of reimbursement)

        
         

Portfolio turnover rate

18.97%

83.34%

62.14%

$          3.53%**
         

 

* Annualized ** Not annualized

+ In the absence of the expense reimbursement for the American Opportunities Fund the ratio of expenses to average net assets would have been 1.48% and the ratio of net investment income to average net assets would have been (0.01)% for the current period.

In the absence of the expense reimbursement, for the American Opportunities Fund the ratio of expenses to average net assets would have been 1.54% and the ratio of net investment income to average net assets would have been 0.13% for the year ended 2001.

In the absence of the expense reimbursement, for the American Opportunities Fund the ratio of expenses to average net assets would have been 1.47% and the ratio of net investment income to average net assets would have been 0.11% for the year ended 2000.

In the absence of the expense reimbursement, for the American Opportunities Fund the ratio of expenses to average net assets would have been 1.70% and the ratio of net investment income to average net assets would have been (0.13)% for the year ended 1999.

THOMAS WHITE FUNDS FAMILY

Notes to Financial Statements

Period Ended April 30, 2002
           
 

International Fund
 

Period Ended

April 30,

2002

Year Ended

October 31,

2001

Year Ended

October 31,

2000

Year Ended

October 31,

1999

Year Ended

October 31,

1998

Per share operating performance

(For a share outstanding throughout the period)

          
           

Net asset value, beginning of period

$9.27

$11.76

13.30

$13.58

13.23
           

Income from investment operations:

          
 

Net investment income (loss)

0.01

0.06

(0.01)

0.07

0.15
 

Net realized and unrealized gains (losses)

1.12

(2.49)

(0.05)

2.32

0.93
   

1.13

(2.43

(0.06)

2.39

1.08
             

Distributions:

          
 

From net investment income

-------

(0.06)

(0.07)

(0.13)

(0.19)
 

From net realized gains

-------

-------

(1.41)

(2.54)

(0.54)
   

-------

(0.06)

(1.48)

(2.67)

(0.73)
             

Change in net asset value for the period

1.13

(2.49)

(1.54)

(0.28)

0.35

Net asset value, end of period

$10.40

$9.27

$11.76

$13.30

$13.58
           

Total Return

12.19%

(20.63)%

(1.26)%

18.78%

8.64%

Ratios/supplemental data

Net assets, end of period (000)

$30,784

$27,656

$34,104

$41,665

$57,464

Ratio to average net assets:

          

Expenses (net of reimbursement)

1.49%+

1.50%+

1.50%

1.44%

1.42%

Net investment income/loss (net of reimbursement)

0.27%

0.51%

(0.04)%

0.46%

1.13%

Portfolio turnover rate

34.77%

35.38%

38.37%

67.48%

51.41%
           

+

In the absence of the expense reimbursement for the International Fund the ratio of expenses to average net assets would have been 1.71% and the ratio of net investment income to average net assets would have been 0.06% for the current period.
   
 

In the absence of the expense reimbursement for the International Fund the ratio of expenses to average net assets would have been 1.66% and the ratio of net investment income to average net assets would have been 0.35% for the year ended October 31, 2001.
   
 

In the absence of the expense reimbursement for the International Fund the ratio of expenses to average net assets would have been 1.52% and the ratio of net investment income to average net assets would have been (0.06)% for the year ended October 31, 2000.

 

..