HANSBERGER INSTITUTIONAL SERIES, N-1A EL, 1996-07-26

HANSBERGER INSTITUTIONAL SERIES
N-1A EL, 1996-07-26

Previous: HANSBERGER INSTITUTIONAL SERIES, N-8A, 1996-07-26

Next: TALLYCRAFT YACHT CORP, 10SB12G, 1996-07-26

<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON July 26, 1996

File No. 333-______
File No. 811-______
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 /X/

and

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /X/

HANSBERGER INSTITUTIONAL SERIES

-------------------
(Exact Name of Registrant as Specified in Charter)

515 East Las Olas Boulevard
Suite 1300
Fort Lauderdale, Florida 33301
(Address of Principal Executive Offices, Zip Code)

Registrant's Telephone Number, including Area Code (954) 522-5150

Thomas L. Hansberger
515 East Las Olas Boulevard
Suite 1300
Ft. Lauderdale, Florida 33301
(Name and Address of Agent for Service)

Copies to:

Kathryn B. McGrath, Esq.
and
W. John McGuire, Esq.
MORGAN, LEWIS & BOCKIUS LLP
1800 M Street, N.W.
Washington, D.C. 20036

- --------------------------------------------------------------------------------
/X/ Approximate date of Proposed Public
Offering:
As soon as practicable after the
effective date of this Registration Statement

- --------------------------------------------------------------------------------
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a)
may determine.

Pursuant to the provisions of Rule 24f-2 under the Investment Act of 1940, an
indefinite number of units of beneficial interest is being registered by this
Registration Statement.
- --------------------------------------------------------------------------------
<PAGE> 2
HANSBERGER INSTITUTIONAL SERIES
CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PART A -

Item 1. Cover Page Cover Page
Item 2. Synopsis Fee Summary, Introduction
Item 3. Condensed Financial Information Not Applicable
Item 4. General Description of Registrant Introduction; Investment Objectives and Policies;
General Information; Investment Limitations
Item 5. Management of the Fund Management of the Fund
Item 5A. Management's Discussion of Fund
Performance Not Applicable
Item 6. Capital Stock and Other Securities Valuation of Shares; Dividends and Capital Gains
Distributions; Taxes; Portfolio Transactions;
Performance Information
Item 7. Purchase of Securities Being Offered Purchase and Redemption of Shares
Item 8. Redemption or Repurchase Purchase and Redemption of Shares
Item 9. Pending Legal Proceedings Not Applicable

PART B -

Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History Organization of the Trust and the Funds
Item 13. Investment Objectives and Policies Investment Policies and Techniques; Investment
Restrictions
Item 14. Management of the Registrant Trustees and Officers of the Trust
Item 15. Control Persons and Principal
Holders of Securities Principal Shareholders
Item 16. Investment Advisory and Other
Services Investment Adviser; Custodian; Transfer Agent
and Dividend-Disbursing Agent
Item 17. Brokerage Allocation Fund Transactions and Brokerage
Item 18. Capital Stock and Other Securities Organization of the Trust and the Funds
Item 19. Purchase, Redemption, and Pricing
of Securities Being Offered Determination of Net Asset Value
Item 20. Tax Status Taxes
Item 21. Underwriters Transfer Agent and Dividend Disbursing Agent
Item 22. Calculation of Performance Data Performance Information
Item 23. Financial Statements Financial Statements
</TABLE>

<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

P R O S P E C T U S

[HANSBERGER LOGO]
HANSBERGER INSTITUTIONAL SERIES
515 East Las Olas Boulevard
Suite 1300
Fort Lauderdale, Florida
Telephone No. 954-522-5150

Hansberger Institutional Series (the "Trust"), a diversified
management investment company, is designed to provide institutional investors
with multi-national investment opportunities professionally managed by
Hansberger Global Investors, Inc. (the "Adviser"). The Trust currently
consists of four separate investment series (the "Funds") offering a range of
investment choices.

The Funds and their investment objectives are:

INTERNATIONAL FUND: Seeks to achieve long-term capital growth through
a flexible policy of investing in stocks and debt obligations of companies and
governments outside the United States including underdeveloped countries.

EMERGING MARKETS FUND. Seeks to achieve long-term capital growth
through a policy of investing primarily in publicly traded equity securities of
companies located in emerging markets.

FOREIGN SMALL CAP FUND. Seeks to achieve long-term capital growth
through a policy of investing primarily in equity securities of issuers with
relatively small market capitalizations located outside the United States. The
Fund will invest primarily in companies with market capitalizations of less
than $1 billion USD at the time of purchase.

ALL COUNTRIES FUND. Seeks to achieve long-term capital growth through
a policy of investing primarily in securities of companies of any country,
including the United States.

SHAREHOLDERS SHOULD UNDERSTAND THAT ALL INVESTMENTS INVOLVE RISK AND
THERE CAN BE NO GUARANTEE AGAINST LOSS RESULTING FROM AN INVESTMENT IN A FUND,
NOR CAN THERE BE ANY ASSURANCE THAT A FUND'S INVESTMENT OBJECTIVE WILL BE
ATTAINED. EACH FUND MAY INVEST WITHOUT LIMIT IN EMERGING MARKET COUNTRIES,
BORROW MONEY FOR INVESTMENT PURPOSES, AND MAY INVEST UP TO 15% OF ITS ASSETS IN
ILLIQUID SECURITIES, INCLUDING UP TO 10% OF ITS ASSETS IN RESTRICTED
SECURITIES, WHICH MAY INVOLVE GREATER RISK AND INCREASED FUND EXPENSES. IN
ADDITION, INVESTMENTS IN FOREIGN SECURITIES INVOLVE CERTAIN RISKS WHICH ARE NOT
NORMALLY INVOLVED IN INVESTMENT IN U.S. SECURITIES. SEE "RISK FACTORS."
INVESTORS SHOULD CAREFULLY CONSIDER THESE RISKS BEFORE INVESTING.

This Prospectus sets forth concisely information about the Funds that
you should know before investing. You should read it carefully and retain it
for future reference. Additional information about the Funds appears in a
Statement of Additional Information ("SAI"), dated __, 1996 and incorporated in
this Prospectus by reference. The SAI is available upon request and without
charge; write or call the Trust at the address or telephone number provided
above.
<PAGE> 4
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

The date of this Prospectus is __________, 1996.

-2-
<PAGE> 5
FEE SUMMARY

The following table and example are intended to assist you in
understanding the expenses and fees that a shareholder of a Fund will incur:

<TABLE>
<CAPTION>
Emerging Foreign All
International Markets Small Cap Countries
Fund Fund Fund Fund
------------- --------- --------- ---------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSE None None None None

ANNUAL FUND OPERATING EXPENSES (as a percentage
of average net assets)

Management Fees 0.80% 1.05% 0.90% 0.80%
12b-1 Fees None None None None
Other Expenses (after voluntary waivers)* 0.20% 0.45% 0.35% 0.20%
------------- --------- --------- ---------

Total Fund Operating Expenses (after voluntary
waivers)** 1.00% 1.50% 1.25% 1.00%
===============================================================================================================
</TABLE>

* Reflects voluntary waivers and reimbursements of fees by the Adviser
and Administrator. In the absence of such voluntary waivers or
reimbursements, Other Expenses for each of the following Funds are
estimated to be: International Fund - 0.40%; Emerging Markets Fund -
0.50%; Foreign Small Cap Fund - 0.40%; and All Countries Fund - 0.40%.

** Reflects voluntary waivers and reimbursements of fees by the Adviser
and Administrator. In the absence of such voluntary waivers or
reimbursements, Total Fund Operating Expenses for each of the
following Funds are estimated to be: International Fund - 1.20%;
Emerging Markets Fund - 1.55%; Foreign Small Cap Fund - 1.30; and All
Countries Fund - 1.20%. Although the Adviser and Administrator
anticipate voluntarily waiving fees and/or bearing expenses that will
result in total fund operating expenses as set forth above, they are
under no obligation to continue to do so. The Adviser has agreed to
waive its fees or reimburse Fund expenses if in any fiscal year a
Fund's expenses exceed the limit set by applicable state laws. See
"MANAGEMENT OF THE FUNDS -- Investment Adviser."

EXAMPLE

The following example demonstrates the expenses you would pay on a
$1,000 investment assuming (1) 5% annual return and (2) redemption at the end
of each time period:

<TABLE>
<CAPTION>
1 year 3 years
------------ ------------
<S> <C> <C>
International Fund $ $
Emerging Markets Fund $ $
Foreign Small Cap Fund $ $
All Countries Fund $ $
</TABLE>

THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. "OTHER
EXPENSES" ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT FISCAL YEAR. THE
ASSUMPTION OF A 5% ANNUAL RETURN IS REQUIRED BY THE U.S. SECURITIES AND
EXCHANGE COMMISSION (THE "SEC"), AND IS NOT A PREDICTION OF A FUND'S FUTURE
PERFORMANCE.

The Adviser may direct a Fund's securities transactions to brokers who
may agree to assume (or to arrange for third parties to assume) certain
expenses of the Fund.

-3-
<PAGE> 6
INTRODUCTION

This Prospectus describes four series of shares offered by, and the
operations of, the Hansberger Institutional Series (the "Trust"). The Trust is
an open-end management investment company established as a business trust under
the laws of the Commonwealth of Massachusetts by a Declaration of Trust dated
July __, 1996 (the "Declaration of Trust"). The Declaration of Trust
authorizes the assets and shares of the Trust to be divided into separate
series. The Trust currently consists of four diversified series; International
Fund, Emerging Markets Fund, Foreign Small Cap Fund and All Countries Fund (the
"Funds"). Each Fund's objective is long-term capital growth, but follows
different investment policies, and invests primarily in certain securities
consistent with those policies in attempting to meet its objective. See
"INVESTMENT OBJECTIVE AND POLICIES."

INVESTMENT ADVISER

Hansberger Global Investors, Inc. (the "Adviser") serves as investment
adviser to the Funds. See "MANAGEMENT OF THE FUNDS -- Investment Adviser."

INVESTMENT RISKS

There can be no assurance that any Fund will achieve its investment
objectives. In addition, special risks may be presented by the particular
investment policies of each Fund. For example, each Fund has the right to
purchase securities in any foreign country, developed or underdeveloped.
Investors should consider carefully the substantial risks involved in investing
in securities issued by companies and governments of foreign nations, which are
in addition to the usual risks inherent in domestic investments.

Each of the Funds' investment strategies involves specific risks
described in this Prospectus under "INVESTMENT OBJECTIVES AND POLICIES," and
"RISK FACTORS" and under "INVESTMENT POLICIES AND TECHNIQUES" in the SAI.

HOW TO INVEST

You may purchase shares at the Offering Price by check or by wire
directly from the Trust. The Offering Price is the net asset value per share
next determined after the Fund's transfer agent receives your order. See "FEE
SUMMARY."

Your minimum initial investment in the Trust is normally $1,000,000,
and each subsequent investment must be at least $10,000. At its discretion,
the Adviser may waive minimum investment requirements for certain investors,
clients and employees. No minimum applies to automatic reinvestment of
dividends and capital gains distributions. See "PURCHASE AND REDEMPTION OF
SHARES."

HOW TO REDEEM SHARES

You may redeem your shares of a Fund at any time at the net asset
value per share next determined after the Trust receives your redemption
request in "good order." Each Fund's net asset value per share fluctuates, so
a share's redemption price may be more or less than its purchase price. If you
reduce your total investment in a Fund to less than the minimum required
initial investment amount, your investment may be subject to redemption. See
"PURCHASE AND REDEMPTION OF SHARES."

-4-
<PAGE> 7
DIVIDENDS AND OTHER DISTRIBUTIONS

Each Fund expects to pay dividends and distribute capital gains at
least annually. Unless you provide written notice to the Fund to the contrary,
dividends and distributions will be automatically reinvested. See "DIVIDENDS
AND CAPITAL GAINS DISTRIBUTIONS."

INVESTMENT OBJECTIVES AND POLICIES

Each Fund's investment objective and the investment restrictions set
forth under "INVESTMENT RESTRICTIONS" in the SAI are fundamental and may not be
changed without Shareholder approval. All other investment policies and
practices described in this Prospectus are not fundamental, and may be changed
by the Board of Trustees without Shareholder approval.

INTERNATIONAL FUND

The Fund's investment objective is long-term capital growth. The Fund
seeks to achieve its objective by investing in stocks and debt obligations of
companies and governments outside the United States which the Adviser believes
are undervalued. Income will be an incidental consideration.

The Adviser's portfolio investment decisions rely heavily on a
fundamental analysis of securities with a long-term investment perspective.
The Adviser seeks to increase the scope and effectiveness of this fundamental
investment approach by extending the search for value into many countries
around he world. This global search provides the Adviser with more diverse
opportunities and flexibility to shift portfolio investments not only from
company to company and industry to industry, but also country to country, in
search of undervalued securities. Under normal market conditions, the Fund
will invest more than 80% of its assets in issuers located in at least three
countries other than the United States.

EMERGING MARKETS EQUITY FUND

The Fund's investment objective is long-term capital growth. The Fund
seeks to achieve this goal by investing primarily in a diversified portfolio of
publicly traded equity securities, of companies located in emerging markets,
that the Adviser believes are undervalued. The Fund may also, to a lesser
degree, invest in private placement emerging market equity securities.
Dividend and interest income from portfolio securities is largely an incidental
consideration.

-5-
<PAGE> 8
The Fund will invest in securities of issuers located in emerging
market countries. As used in this Prospectus, the terms "emerging market
country", "emerging country", or "developing country" apply to any country
that, in the Adviser's opinion, is generally considered to be an emerging or
developing country in the international financial community, which includes the
International Bank for Reconstruction and Development (the "World Bank") and
the International Finance Corporation. There are currently over 130 countries
that are emerging or developing countries under this standard; approximately 40
of these countries currently have stock markets. These countries generally
include every nation in the world except the Unites States, Canada, Japan,
Australia, New Zealand and most nations located in Western Europe. Securities
of issuers located in emerging market countries or traded in emerging markets
present greater liquidity risks and other risks than securities of issuers
located in developed countries and trade in more established markets.

By engaging in its own research and by reviewing research obtained
through outside sources, the Adviser seeks to identify appropriate investments
for the Fund. The Adviser considers a number of factors in evaluating
potential investments including political risks, classic macro-economic
variables and equity market valuations. The Adviser also focuses on the
quality of a company's management, the company's growth prospects, and the
financial well being of the company. The Fund's investments generally will
reflect a broad cross-section of countries, industries, and companies in order
to minimize risk. In situations where the market for a particular security is
determined by the Adviser to be sufficiently liquid, the Fund may engage in
short sales. These investment techniques are described below under "Investment
Techniques" and "RISK FACTORS," and under the heading "INVESTMENT POLICIES AND
TECHNIQUES" in the SAI.

FOREIGN SMALL CAP FUND

The Fund's investment objective is to provide long-term capital
growth. It seeks to achieve its objective by investing primarily in equity
securities of issuers with relatively small market capitalizations (share price
times number of equity securities outstanding) located outside the United
States which the Adviser believes are undervalued. Income will be an
incidental consideration.

The Adviser's portfolio investment decisions rely heavily on a
fundamental analysis of securities with a long-term investment perspective.
The Adviser seeks to increase the scope and effectiveness of this fundamental
investment approach by extending the search for value into many countries
around he world. This global search provides the Adviser with more diverse
opportunities and flexibility to shift portfolio investments not only from
company to company and industry to industry, but also country to country, in
search of undervalued securities. Under normal market conditions, the Fund
will invest its assets in companies located outside the United States with
individual market capitalizations of less than $1 billion USD (at the time of
purchase).

-6-
<PAGE> 9
ALL COUNTRIES FUND

The Fund's investment objective is long-term capital growth. The Fund
seeks to achieve its objective by investing in stocks and debt obligations of
companies and governments in any country which the adviser believes are
undervalued. Income will be an incidental consideration.

The Adviser's portfolio investment decisions rely heavily on a
fundamental analysis of securities with a long-term investment perspective.
The Adviser seeks to increase the scope and effectiveness of this fundamental
investment approach by extending the search for value into many countries
around he world. This global search provides the Adviser with more diverse
opportunities and flexibility to shift portfolio investments not only from
company to company and industry to industry, but also country to country, in
search of undervalued securities. Under normal market conditions the Fund will
invest its assets in at least three countries, which may include the United
States.

INVESTMENT POLICIES COMMON TO EACH FUND

Although each Fund generally invests in common stock, a Fund may also
invest in preferred stocks and certain debt securities, rated or unrated, such
as convertible bonds and bonds selling at a discount, when the Adviser believes
the potential for appreciation will equal or exceed that available from
investments in common stock. Each Fund may also invest in warrants or rights
to subscribe to or purchase such securities, and sponsored or unsponsored
American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"),
Global Depositary Receipts ("GDRs") and other depository receipts
(collectively, "Depositary Receipts"). Each Fund may also lend its portfolio
securities and borrow money for investment purposes (i.e., "leverage" its
portfolio). In addition, each Fund may enter into transactions in options on
securities, securities indices and foreign currencies, forward foreign currency
contracts, and futures contracts and related options. When deemed appropriate
by the Adviser, the Fund may invest cash balances in repurchase agreements and
other money market investment to maintain liquidity in an amount sufficient to
meet expenses or for day-to-day operating purposes. These investment
techniques are described below under "Investment Techniques" and "Risk
Factors," and under the heading "INVESTMENT POLICIES AND TECHNIQUES" in the
SAI. Whenever, in the judgment of Adviser, market or economic conditions
warrant, each Fund may adopt a temporary defensive position and may invest
without limit in money market securities denominated in U.S. dollars or in the
currency of any foreign country. See "Investment Techniques -- Temporary
Investments."

INVESTMENT TECHNIQUES

Unless specified to the contrary, each Fund may engage in the
investment techniques and make the types of investments described and discussed
in this section.

DEPOSITARY RECEIPTS. Each Fund may purchase sponsored and unsponsored
Depositary Receipts that are or become available, including ADRs, GDRs, EDRs
and other Depository Receipts. Depositary Receipts are typically issued by a
financial institution ("depository") and evidence ownership interests in a
security or a pool of securities ("underlying securities") that have been
deposited with the depository. In ADRs, the depository is typically a U.S.
financial institution and the underlying securities are issued by a foreign
issuer. In other Depositary Receipts, the depository may be a foreign or a
U.S. entity, and the underlying securities may have a foreign or a U.S. issuer.
Depositary Receipts will not necessarily be denominated in the same currency as
their underlying securities. Depositary Receipts may be issued pursuant to
sponsored or unsponsored programs. In sponsored programs, an issuer has made
arrangements to have its securities traded in the form of Depositary Receipts.
In unsponsored programs, the issuer may not be directly involved in the
creation of the program. Although regulatory requirements with respect to
sponsored and unsponsored programs are generally similar, in some cases it may
be easier to obtain financial information from an issuer that has participated
in the creation of a sponsored program. Accordingly, there may be less
information

-7-
<PAGE> 10
available regarding issuers of securities underlying unsponsored programs and
there may not be a correlation between such information and the market value of
the Depositary Receipts. For purposes of a Fund's investment policies,
investments in Depositary Receipts will be deemed to be investments in the
underlying securities. Thus, a Depositary Receipt representing ownership of
common stock will be treated as common stock.

SOVEREIGN DEBT. Each Fund may invest in Sovereign Debt, which may trade at a
substantial discount from face value. The Fund may hold and trade Sovereign
Debt of emerging market countries in appropriate circumstances and to
participate in debt conversion programs. Emerging country Sovereign Debt
involves a high degree of risk, is generally lower-quality debt, and is
considered speculative in nature. The issuer or governmental authorities that
control Sovereign Debt repayment ("sovereign debtors") may be unable or
unwilling to repay principal or interest when due in accordance with the terms
of the debt. A sovereign debtor's willingness or ability to repay principal
and interest due in a timely manner may be affected by, among other factors,
its cash flow situation, the extent of its foreign reserves, the availability
of sufficient foreign exchange on the date a payment is due, the relative size
of the debt service burden to the economy as a whole, the sovereign debtor's
policy towards the International Monetary Fund (the "IMF") and the political
constraints to which the sovereign debtor may be subject. Sovereign debtors
may also be dependent on expected disbursements from foreign governments,
multilateral agencies and others abroad to reduce principal and interest
arrearage on their debt. The commitment of these third parties to make such
disbursements may be conditioned on the sovereign debtor's implementation of
economic reforms or economic performance and the timely service of the debtor's
obligations. The sovereign debtor's failure to meet these conditions may cause
these third parties to cancel their commitments to provide funds to the
sovereign debtor, which may further impair the debtor's ability or willingness
to timely service its debts. In certain instances, a Fund may invest in
Sovereign Debt that is in default as to payments of principal or interest. A
Fund holding non-performing Sovereign Debt may incur additional expenses in
connection with any restructuring of the issuer's obligations or in otherwise
enforcing its rights thereunder.

BRADY BONDS. Each Fund may invest in Brady Bonds as part of its investment in
Sovereign Debt of countries that have restructured or are in the process of
restructuring their Sovereign Debt pursuant to the Brady Plan. Brady Bonds are
issued under the framework of the Brady Plan, an initiative announced by former
U.S. Treasury Secretary Nicholas F. Brady in 1989 as a mechanism for debtor
nations to restructure their outstanding external indebtedness. The Brady Plan
contemplates, among other things, the debtor nation's adoption of certain
economic reforms and the exchange of commercial bank debt for newly issued
bonds. In restructuring its external debt under the Brady Plan framework, a
debtor nation negotiates with its existing bank lenders as well as the World
Bank or IMF. The World Bank or IMF supports the restructuring by providing
funds pursuant to loan agreements or other arrangements that enable the debtor
nation to collateralize the new Brady Bonds or to replenish reserves used to
reduce outstanding bank debt. Under these loan agreements or other
arrangements with the World Bank or IMF, debtor nations have been required to
agree to implement certain domestic monetary and fiscal reforms. The Brady
Plan sets forth only general guiding principles for economic reform and debt
reduction, emphasizing that solutions must be negotiated on a case-by-case
basis between debtor nations and their creditors.

Brady Bonds are recent issues and do not have a long payment history.
Agreements implemented under the Brady Plan are designed to achieve debt and
debt-service reduction through specific options negotiated by a debtor nation
with its creditors. As a result, each country offers different financial
packages. Options have included the exchange of outstanding commercial bank
debt for bonds issued at 100% of face value of such debt, bonds issued at a
discount of face value of such debt, and bonds bearing an interest rate that
increases over time and the advancement of the new money for bonds. The
principal of certain Brady Bonds has been collateralized by U.S. Treasury zero
coupon bonds with a maturity equal to the final maturity of the Brady Bonds.
Collateral purchases are financed by the IMF, World Bank and the debtor
nations' reserves. Interest payments may also be collateralized in part in
various ways.

-8-
<PAGE> 11
Brady Bonds are often viewed as having three or four valuation
components: (i) the collateralized repayment of principal at final maturity;
(ii) the collateralized interest payments; (iii) the uncollateralized interest
payments; and (iv) any uncollateralized and of principal at maturity (these
uncollateralized amounts constitute the "residual risk"). In light of the
residual risk of Brady Bonds and, among other factors, the history of defaults
with respect to commercial bank loans by public and private entities of
countries issuing Brady Bonds, investments in Brady Bonds can be viewed as
speculative.

INVESTMENT FUNDS. Some emerging countries have laws and regulations that
preclude direct foreign investment in the securities of companies located
there. However, indirect foreign investment in the securities of companies
listed and traded on the stock exchanges in these countries is permitted by
certain emerging countries through specifically authorized investment funds.
Each Fund may invest in these investment funds subject to the provisions of the
Investment Company Act of 1940 and rules thereunder (the "1940 Act") and other
applicable laws as discussed below under "INVESTMENT LIMITATIONS." If a Fund
invests in investment funds, shareholders will bear not only their
proportionate share of the Fund's expenses (including operating expenses and
the fees of the Adviser), but also, indirectly, the similar expenses of the
underlying investment funds.

REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements with
brokers, dealers or banks ("counterparties") that the Adviser has determined
meet the credit guidelines established by the Board of Trustees. Repurchase
agreements will be fully collateralized, and may be viewed for purposes of the
1940 Act as a loan of money by the Fund to the counterparty. The Fund may
incur a loss if the counterparty defaults and the collateral value declines, or
if bankruptcy proceedings are commenced regarding the counterparty and the
Fund's realization upon the collateral is be delayed or limited. Each Fund's
aggregate investment in certain illiquid repurchase agreements and other
investments is limited as set forth under "INVESTMENT LIMITATIONS."

SECURITIES LENDING. Each Fund is authorized to lend up to 33 1/3% of the total
market value of its portfolio securities to brokers, dealers, domestic and
foreign banks or other financial institutions for the purpose of increasing its
net investment income; however, currently, no Fund intends to engage in such
lending. Any such loan must be fully secured; however, there may be risks of
delay in recovery of the securities or even loss of rights in the collateral
should the borrower of the securities fail financially. For more detailed
information about securities lending, see "INVESTMENT POLICIES AND TECHNIQUES"
in the SAI.

TEMPORARY INVESTMENTS. Each Fund may make money market investments pending
other investment or settlement for liquidity, or in adverse market conditions.
These money market investments include obligations of the U.S. Government and
its agencies and instrumentalities, obligations of foreign sovereignties, other
debt securities, commercial paper including bank obligations, certificates of
deposit (including Eurodollar certificates of deposit) and repurchase
agreements.

For temporary defensive purposes, during periods in which the Adviser
believes changes in economic, financial or political conditions make it
advisable, each Fund may reduce its holdings in equity and other securities and
may invest up to 100% of its assets in certain short-term (less than twelve
months to maturity) and medium-term (not greater than five years to maturity)
debt securities and in cash (U.S. dollars, foreign currencies, or multicurrency
units). These short-term and medium-term debt securities consist of (a)
obligations of governments, agencies or instrumentalities of any member state
of the Organization for Economic Cooperation and Development ("OECD"), (b) bank
deposits and bank obligations (including certificates of deposit, time deposits
and bankers' acceptances) of banks organized under the laws of any member state
of the OECD, denominated in any currency; (c) floating rate securities and
other instruments denominated in any currency issued by international
development agencies; (d) finance company and corporate commercial paper and
other short-term corporate debt obligations of corporations organized under the
laws of any member state of the OECD meeting the Fund's credit quality
standards; and (e) repurchase agreements with banks and broker-dealers covering
any of the foregoing securities. The short-term and

-9-
<PAGE> 12
medium-term debt securities in which a Fund may invest for temporary defensive
purposes will be those that the Adviser believes to be of high quality, i.e.,
subject to relatively low risk of loss of interest or principal (there is
currently no rating system for debt securities in most emerging countries). If
rated, these securities will be rated investment grade by rating services such
as Moody's or S&P (i.e., rated at least Baa or BBB).

"WHEN-ISSUED" SECURITIES. Each Fund may purchase securities on a when-issued
or delayed delivery basis. The price of debt obligations purchased on a
when-issued basis is fixed at the time the Fund commits to purchase, but
delivery and payment for the securities ("settlement") takes place at a later
date. The price of these securities may be expressed in yield terms; the Funds
will enter into these transactions in order to lock in the yield (price)
available at the time of commitment.

Between purchase and settlement, the Fund assumes the ownership risk
of the when-issued securities, including the risk of fluctuations in the
securities' market value due to, among other factors, a change in the general
level of interest rates. However, no interest accrues to the Fund during this
period.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS AND OPTIONS ON FOREIGN CURRENCIES.
Each Fund may enter into forward foreign currency exchange contracts ("forward
contracts"), providing for the purchase of or sale of an amount of a specified
currency at a future date. Each Fund may use forward contracts to protect
against a foreign currency's decline against the U.S. dollar between the trade
date and settlement date for a securities transaction, or to lock in the U.S.
dollar value of dividends declared on securities it holds, or generally to
protect the U.S. dollar value of the securities it holds against exchange rate
fluctuations. Each Fund may also use forward contracts to protect against
fluctuating exchange rates and exchange control regulations. Forward contracts
may limit a Fund's losses due to exchange rate fluctuation, but they will also
limit any gains that the Fund might otherwise have realized. Each Fund may
also enter into foreign currency futures contracts ("currency futures").

Except where segregated accounts are not required by the 1940 Act,
when a Fund enters into a forward contract or currency future, the Custodian
will place cash, U.S. government securities, or high-grade debt securities into
a segregated account of the Fund in an amount equal to the value of the Fund's
total assets committed to consummation of forward contracts and currency
futures. If the value of these segregated securities declines, additional cash
or securities will be placed in the account on a daily basis so that the
account value is at least equal to the Fund's commitments to such contracts.
See "INVESTMENT POLICIES AND TECHNIQUES -- Forward Currency Contracts" in the
SAI.

Each Fund may purchase put and call options and write covered put and
call options on foreign currencies for the purpose of protecting against
declines in the U.S. dollar value of foreign currency denominated portfolio
securities and against increases in the U.S. dollar cost of such securities to
be acquired. As in the case of other kinds of options, however, the writing of
an option on a foreign currency constitutes only a partial hedge, up to the
amount of the premium received, and the Fund could be required to purchase or
sell foreign currencies at disadvantageous exchange rates, thereby incurring
losses. The purchase of an option on a foreign currency may constitute an
effective hedge against fluctuations in exchange rates although, in the event
of rate movements adverse to the Fund's position, it may forfeit the entire
amount of the premium plus related transaction costs. Options on foreign
currencies to be written or purchased by the Funds are traded on U.S. and
foreign exchanges or over-the-counter.

NON-PUBLICLY TRADED SECURITIES. Each Fund may invest in securities that are
neither listed on a stock exchange nor traded over the counter, including
privately placed securities. These securities may present a higher degree of
business and financial risk, which can result in substantial losses. In the
absence of a public trading market for these securities, they may be less
liquid than publicly traded securities. Although these securities may be
resold in privately negotiated transactions, the prices realized from these
sales could be less than those originally paid by the Fund or less than what
the Fund may consider the fair value of such securities. Further, companies
whose securities are not publicly traded may not be subject to disclosure and

-10-
<PAGE> 13
other investor protection requirements that might apply if their securities
were publicly traded. If such securities are required to be registered under
the securities laws of one or more jurisdictions before being resold, the Fund
may be required to bear the costs of registration. As a general matter, each
Fund may not invest more than 15% of its total assets in illiquid securities,
including securities for which there is no readily available secondary market,
nor more than 10% of its total assets in securities that are restricted from
sale to the public without registration ("Restricted Securities") under the
Securities Act of 1933, as amended (the "1933 Act"). Subject to these limits,
however, a Fund may invest up to 25% of its total assets in Restricted
Securities that can be offered and sold to qualified institutional buyers under
Rule 144A under the 1933 Act ("144A Securities"). The Board of Trustees has
adopted guidelines and delegated to the Adviser, subject to the Board's
supervision, the daily function of determining and monitoring the liquidity of
144A Securities. Rule 144A Securities may become illiquid if qualified
institutional buyers are not interested in acquiring them. Investors should
note that investments of 5% of a Fund's total assets may be considered a
speculative activity and may involve greater risk and expense to the Fund.

BORROWING AND OTHER FORMS OF LEVERAGE. Each Fund may borrow money from
U.S.-regulated banks. The 1940 Act and each Fund's fundamental investment
policies restrict such borrowing to 33 1/3% of the Fund's total assets
(including the amount borrowed) less all liabilities and indebtedness other
than the borrowing. Borrowing creates leverage, which is a speculative
characteristic; leverage from borrowing will magnify declines as well as
increases in a Fund's net asset value per share and net yield. A Fund will
borrow only on a secured basis, and only when the Adviser believes that
borrowing will benefit the Fund after taking into account considerations such
as the costs of borrowing and the likely investment returns on securities
purchased with borrowed monies.

OPTIONS TRANSACTIONS. Each Fund may seek to hedge all or a portion of its
investments through options on other securities in which it may invest.
Options in which a Fund may transact will be traded on a recognized securities
or futures exchange or over the counter. Options markets in emerging countries
are currently limited and the nature of the strategies adopted by the Adviser
and the extent to which those strategies are used will depend on the
development of such markets.

Each Fund may write (i.e., sell) covered call options. A call gives
the purchaser the right to buy the security underlying the option from the Fund
at the stated exercise price, on or before a specified date (the "termination
date") that is usually not more than nine months from the date the option is
issued. A "covered" call means that so long as the Fund is obligated as the
writer of the option, it will own (i) the securities underlying the option, or
(ii) securities convertible or exchangeable (without the payment of any
consideration) into the securities underlying the option.

Each Fund may also write (i.e., sell) covered put options. The writer
of a put incurs an obligation to buy the security underlying the option from
the put's purchaser at the exercise price at any time on or before the
termination date, at the purchaser's election (certain options a Fund writes
will be exercisable by the purchaser only on a specific date). Generally, a
put is "covered" if the Fund maintains cash, U.S. government securities or
other liquid high grade debt obligations equal to the exercise price of the
option or if the Fund holds a put on the same underlying security with a
similar or higher exercise price.

Each Fund may also purchase put or call options on individual
securities or baskets of securities. When a Fund purchases a call, it acquires
the right to buy the underlying security at the exercise price on or before the
termination date, and when a Fund purchases a put, it acquires the right to
sell the underlying security at the exercise price on or before the termination
date.

The primary risks associated with the use of options on securities are
(i) imperfect correlation between the change in market value of the securities
the Fund holds and the prices of options relating to the securities purchased
or sold by the Fund; and (ii) possible lack of a liquid secondary market for an
option. Options not traded on an exchange (OTC options) are often considered
illiquid and may be difficult to value.

-11-
<PAGE> 14
The Adviser believes that each Fund will minimize its risk of being unable to
close out an options contract by transacting in options only if there appears
to be a liquid secondary market for those options.

FUTURES CONTRACTS. Each Fund may buy and sell financial futures
contracts, stock and bond index futures contracts, foreign currency futures
contracts and options on any of the foregoing for hedging purposes only. A
financial futures contract is an agreement between two parties to buy or sell a
specified debt security at a set price on a future date. An index futures
contract is an agreement to take or make delivery of an amount of cash based on
the difference between the value of the index at the beginning and at the end
of the contract period. A futures contract on a foreign currency is an
agreement to buy or sell a specified amount of a currency for a set price on a
future date.

When a Fund enters into a futures contract, it must make an initial
deposit, known as "initial margin," as a partial guarantee of its performance
under the contract. As the value of the security, index or currency
fluctuates, either party to the contract is required to make additional margin
payments, known as "variation margin," to cover any additional obligation it
may have under the contract. In addition, when the Fund enters into a futures
contract, it will segregate assets or "cover" its position in accordance with
the 1940 Act. See "INVESTMENT POLICIES AND TECHNIQUES Derivative Instruments
- -- Futures Contracts" in the SAI. With respect to positions in futures and
related options that do not constitute "bona fide hedging" positions as defined
in regulations of the Commodity Futures Trading Commission, the Fund will not
enter into a futures contract or related option contract if, immediately
thereafter, the aggregate initial margin deposits relating to such positions
plus premiums paid by it for open futures option positions, less the amount by
which any such options are "in-the-money," would exceed 5% of the Fund's total
assets. The value of the underlying securities on which futures contracts will
be written at any one time will not exceed 25% of the total assets of the Fund.

The primary risks associated with the use of futures and options on
futures are (i) imperfect correlation between the change in market value of the
securities held by the Fund and the prices of related futures and options on
futures purchased or sold by the Fund, and (ii) possible lack of a liquid
secondary market for a futures contract (or related option) and the resulting
inability to close a futures position, which could have an adverse impact on
the Fund's ability to hedge. The risk of loss in trading on futures contracts
and related options in some strategies can be substantial, due both to the low
margin deposits required and the extremely high degree of leverage involved in
futures pricing. Gains and losses on futures and related options depend on the
Adviser's ability to predict correctly the direction of stock prices, interest
rates, and other economic factors. In the opinion of the Trustees, the risk
that Fund will be unable to close out a futures position or related options
contract will be minimized by only entering into futures contracts or related
options transactions for which there appears to be a liquid secondary market.
For more detailed information about futures transactions see "INVESTMENT
POLICIES AND TECHNIQUES" in the SAI.

SHORT SALES. Each Fund may from time to time sell securities short without
limitation, although initially it has no intention to sell securities short.
In a short sale, a Fund sells securities it does not own (but has borrowed) in
anticipation of a decline in the securities' market price. All short sales by
a Fund will be fully collateralized. Short sales involve certain risks and
special considerations; possible losses from short sales may be unlimited,
whereas losses from purchases of securities are limited to the total amount
invested. Each Fund may also sell short "against the box," that is, sell a
security that the Fund owns or has the right to acquire, for delivery at a
specified date in the future.

-12-
<PAGE> 15
RISK FACTORS

FOREIGN INVESTMENT

Investment in securities of foreign issuers and in foreign branches of
domestic banks, involves some risks different from, or in addition to, those
affecting investments in securities of U.S. issuers:

INFORMATION Publicly available information about foreign
issuers and economies may be limited.
Foreign issuers are not generally subject to
uniform accounting, auditing and financial
and other reporting standards and
requirements comparable to those applicable
to U.S. companies. Statistical information
about the economy in an emerging market
country may be unavailable, or if available
may be unreliable or not directly comparable
to information regarding the economy of the
U.S. or other more developed countries.

REGULATION There may be less government supervision and
regulation of foreign securities exchanges,
brokers and listed companies than in the U.S.

LIQUIDITY AND Many foreign securities markets have
CONCENTRATION substantially less volume than U.S. national
securities exchanges. Available investments
in emerging countries may be highly
concentrated in a small number of issuers, or
the issuers may be unseasoned and/or have
significantly smaller market capitalization
than in the U.S. or more developed countries.
Consequently, securities of foreign issuers
may be less liquid and more volatile than
those of comparable domestic issuers.

BROKERAGE Brokerage commissions and other transaction
costs on foreign securities exchanges are
generally higher than in the U.S.

TAXES Dividends and interest paid by foreign
issuers may be subject to withholding and
other foreign taxes, which may decrease the
net return on foreign investments as compared
to dividends and interest paid to the Fund by
U.S. companies. It is not expected that the
Funds or their shareholders would be able to
claim a credit for U.S. tax purposes for any
such foreign taxes. See "TAXES."

POLITICAL/ECONOMY Political and economic developments may
present risks. A foreign jurisdiction might
impose or change withholding taxes on income
payable in connection with foreign
securities. There are risks of seizure,
nationalization or expropriation of a foreign
issuer or foreign deposits, and adoption of
foreign governmental restrictions such as
exchange controls. Many emerging or
developing countries have less stable
political and economic environments than some
more developed countries, and may face
external stresses (including war) as well as
internal ones (including hyperinflation,
currency depreciation, limited resource
self-sufficiency, and balance of payments
issues and associated social unrest). It may
be more difficult to obtain a judgment in a
court outside the U.S.

CURRENCY EXCHANGE Securities of foreign issuers are frequently
denominated in foreign currencies, and a Fund
may temporarily hold uninvested reserves in
bank deposits in foreign currencies. The
exchange rates between the U.S.

-13-
<PAGE> 16
dollar and the currencies of emerging markets
countries may be volatile, and changes in
currency rates and exchange control
regulations may affect (favorably or
unfavorably) the value of a Fund's assets in
U.S. dollars. A Fund may incur costs in
converting between currencies.

REPATRIATION Foreign governments may delay or restrict
RESTRICTIONS repatriation of a Fund's investment income or
other assets. If, for any reason, a Fund
were unable, through borrowing or otherwise,
to distribute an amount equal to
substantially all of its investment company
taxable income (as defined for U.S. tax
purposes) within required time periods, the
Fund would cease to qualify for the favorable
tax treatment afforded regulated investment
companies under the U.S. Internal Revenue
Code of 1986, as amended (the "Code").

FOREIGN CUSTODIANS AND SECURITIES DEPOSITORIES

Rules adopted under the 1940 Act, permit the Funds to maintain its
foreign securities and cash in the custody of certain eligible non-U.S. banks
and securities depositories ("foreign custodians"). Pursuant to these rules,
each Fund's assets invested in foreign countries may be held by foreign
custodians that are approved by the Fund's Board of Trustees. The Board will
consider a number of factors in selecting foreign custodians, including but not
limited to the reliability and financial stability of the institution, the
ability of the institution to capably perform custodial services for the Fund,
the reputation of the institution in its national market, the political and
economic stability of the countries in which the foreign custodian is located,
and risks of potential nationalization or expropriation of Fund assets. In
addition, foreign custodians must, among other things, meet minimum
requirements for shareholder equity, have no lien on Fund assets, and maintain
adequate and accessible records. Certain banks in foreign countries may not be
eligible foreign custodians for the Funds, which may preclude a Fund from
purchasing securities in which it would otherwise invest; banks that are
eligible foreign custodians may be recently organized or otherwise lack
extensive operating experience.

INVESTING IN SMALLER CAPITALIZATION STOCKS

The Adviser believes that the issuers of smaller capitalization stocks
often have sales and earnings growth rates which exceed those of larger
companies, and that such growth rates may in turn be reflected in more rapid
share price appreciation. However, investing in smaller capitalization stocks
can involve greater risk than is customarily associated with investing in
stocks of larger, more established companies. For example, smaller
capitalization companies often have limited product lines, markets, or
financial resources, may be dependent for management on one or a few key
persons, and can be more susceptible to losses. Also, their securities may be
thinly traded (and therefore have to be sold at a discount from current prices
or sold in small lots over an extended period of time), may be followed by
fewer investment research analysts and may be subject to wider price swings and
thus may create a greater chance of loss than securities of larger
capitalization companies. Transaction costs in stocks of smaller
capitalization companies may be higher than those of larger capitalization
companies.

INVESTING IN LOWER RATED DEBT SECURITIES

Each Fund may invest in lower rated or unrated debt securities. Debt
considered below investment grade may be referred to as "junk bonds" or "high
risk" securities. The emerging country debt securities in which the Fund may
invest are subject to significant risk and will not be required to meet any
minimum rating standard or equivalent. Debt securities are subject to the risk
of the issuer's inability to meet principal and interest payments (credit risk)
and may also be subject to price volatility due to such factors as interest
rate sensitivity, market perception of the issuer's creditworthiness and
general market liquidity (market risk).

-14-
<PAGE> 17
Lower rated or unrated securities are more likely to react to developments
affecting market and credit risk than are more highly rated securities, which
react primarily to movements in general levels of interest rates. The market
values of debt securities tend to vary inversely with interest rate levels.
Yields and market values of lower rated and unrated debt will fluctuate over
time, reflecting not only changing interest rates but also the market's
perception of credit quality and the outlook for economic growth. When
economic conditions appear to be deteriorating, medium to lower rated
securities may decline in value due to heightened concern over credit quality,
regardless of prevailing interest rates. The Adviser will consider credit risk
and market risk in making debt security investment decisions for each Fund.
Investors should carefully consider the relative risks of investing in a Fund
that purchases lower rated and unrated debt securities, and should understand
that such securities are not generally meant for short-term investing.

The U.S. market for lower rated and unrated corporate debt is
relatively new and its recent growth paralleled a long period of economic
expansion and an increase in merger, acquisition and leveraged buyout activity.
In addition, trading markets for debt securities of issuers located in emerging
countries may be limited. Adverse economic developments may disrupt the market
for U.S. corporate lower rated and unrated debt securities and for emerging
country debt securities. Such disruptions may severely affect the ability of
issuers, especially highly leveraged issuers, to service their debt obligations
or to repay their obligations upon maturity. In addition, the secondary market
for lower rated and unrated debt securities, which is concentrated in
relatively few market makers, may not be as liquid as the secondary market for
more highly rated securities. As a result, the Adviser could find it more
difficult to sell these securities or may be able to sell the securities only
at prices lower than if such securities were widely traded. Prices realized
upon the sale of such lower rated or unrated securities, under these
circumstances, may be less than the prices used in calculating a Fund's net
asset value.

INVESTMENT LIMITATIONS

Each Fund has adopted certain fundamental investment policies and
restrictions. A Fund may not change its investment objective or any
fundamental policy or restriction without approval of the holders of a majority
of the Fund's outstanding shares. Each Fund has also instituted
non-fundamental operating policies. Although the Board of Trustees may change
operating policies without shareholder approval, the Trust will promptly notify
shareholders of any material change in non-fundamental operating policies. See
"INVESTMENT RESTRICTIONS" in the SAI.

Each Fund is a diversified investment company under the 1940 Act and
is therefore subject to the following limitations:

- as to 75% of its total assets, the Fund may not invest more than 5%
of its total assets in the securities of any one issuer, except
obligations of or securities guaranteed by the U.S. Government and
its agencies and instrumentalities, and

- the Fund may not own more than 10% of the outstanding voting
securities of any one issuer.

Each Fund also intends to comply with the diversification requirements imposed
by the Internal Revenue Code of 1986, as amended (the "Code"), for
qualification as a regulated investment company. See "TAXES."

Under each Fund's non-fundamental restrictions, a Fund may not (i)
invest more than 15% of the market value of its net assets in investments for
which market quotations are not readily available or that are otherwise
illiquid; (ii) mortgage, pledge or hypothecate any assets except in connection
with any such borrowing in amounts up to 33 1/3% of the value of the Fund's
net assets at the time of borrowing; or (iii) invest more than 5% of its net
assets in warrants (exclusive of amounts acquired in units or attached to

-15-
<PAGE> 18
securities). Each Fund may invest no more than 15% of its total assets in
securities issued by any one company or government, exclusive of U.S.
Government securities.

Each Fund will not invest 25% or more of the total value of its assets
in a particular industry. For purposes of this investment restriction, a
foreign government (but not the United States government) is deemed to be an
"industry," and therefore investments in the obligations of any one foreign
government may not equal or exceed 25% of the Fund's assets.

Each Fund's investment techniques are described herein under
"Investment Techniques" and "RISK FACTORS," and under the heading "INVESTMENT
POLICIES AND TECHNIQUES" in the SAI. Each Fund invests for long-term growth of
capital and does not intend to place emphasis upon short-term trading profits.
Accordingly, each Fund normally expects to have an annual portfolio turnover
rate of less than 50%.

PURCHASE AND REDEMPTION OF SHARES

You may purchase and redeem shares of each Fund on any day when the
New York Stock Exchange ("NYSE") is open for business (a "business day") so
long as the Custodian is also open for business that day. The purchase price
of shares is a Fund's net asset value per share next determined after receipt
of your purchase order, plus any applicable sales load; the amount of any sales
load is deducted from the total amount of your investment, and the remaining
amount of your investment is invested in the Fund. The redemption price of
shares is a Fund's net asset value per share next determined after receipt of
your redemption request in "good order." Each Fund's net asset value per share
is determined on each business day at the regular close of trading of the NYSE
(currently 4:00 p.m., Eastern time). Purchase orders and redemption requests
received prior to this time on any business day will be executed at the price
computed on that day; orders and requests received after the regular close of
the NYSE will be executed at the price computed on the next business day. The
Trust reserves the right to refuse any order for purchase of Shares.

HOW TO PURCHASE SHARES

HOW TO OPEN AN ACCOUNT. To open an account, you must complete an
Account Registration Form and send it to the Trust, and either send in your
check or arrange for a wire transfer. Your initial investment must be for at
least $1,000,000 unless you have received a waiver from the Adviser. For
purposes of meeting the required minimum investments, the Trust will aggregate
all accounts under common ownership or control, including accounts of spouses
and minor children. There is no minimum for employer sponsored 401(k) plans
that have more than 100 employee participants.

BY CHECK Make your check (or other negotiable bank draft or money order)
payable to "Hansberger Institutional Series," and mail it with
your completed and signed Account Registration Form to:
Hansberger Institutional Series
c/o Firstar Trust Company
P.O. Box ____
Milwaukee, Wisconsin 53201

Checks must be drawn on U.S. banks.

BY WIRE Have your bank send a Federal Funds wire or a bank wire to the
Trust, and mail your completed and signed Account Registration
Form to:

Hansberger Institutional Series
c/o Firstar Trust Company
P.O. Box ____

-16-
<PAGE> 19
Milwaukee, Wisconsin 53201

The Trust will accept your purchase order before receiving you
Account Registration Form only if you have provided certain
information with your wire.

You must follow these steps to purchase shares by wire:
First, telephone the Trust at 1-800-[XXX-XXXX] to receive an
account number. To be issued your account number, you will
need to provide your name, address, telephone number, Social
Security or Tax Identification Number, the amount being wired,
and the name of the bank sending the wire. Second, instruct
your bank to wire the specified amount to the following
account (be sure to have your bank include your account number
and the Fund's name):

Firstar Bank Milwaukee, N.A.
ABA Number 0750-00022
[ ]
Attn: Hansberger Institutional Series
Ref: (Fund name, account number, account name).

Federal Funds wires cannot be made on any federal holiday
restricting wire transfers, even if the NYSE is open on that
day. Liability of the Fund or its agents for fraudulent or
unauthorized wire instructions may be limited. See "Telephone
Transactions."

Your bank may charge a service fee for sending a Federal Funds
wire or bank wire.

HOW TO ADD TO YOUR INVESTMENT. You may purchase additional shares for
your account at any time by mailing a check or by wiring funds to the Fund
according to the procedures above. Your check, a cover letter, or your wire
instructions must specify the name of the Fund, the name on your account and
your account number, and you must call the Fund before wiring funds. Your
check or wire must be for at least $100,000.

OTHER PURCHASE INFORMATION

Payment for shares of a Fund must be in United States dollars, unless
you have received the Fund's prior written approval to make payment in other
currencies or by tendering securities.

No share certificates will be issued. All shares purchased for your
account will be confirmed to you and credited to your account on the Fund's
books maintained by the Transfer Agent.

To ensure that checks are collected, you may not redeem shares
purchased by check until payment for the purchase has been received; receipt
may take up to eight business days after purchase. If your purchase is
cancelled due to nonpayment or because your check does not clear, you will be
responsible for any loss incurred by the Fund or its agents, and you may be
restricted from making future investments in the Fund. If you are already a
shareholder, the Fund may redeem shares from your account(s) as reimbursement
for any such loss.

Investors may also purchase shares of the Fund through banks and
registered broker-dealers who do not have a dealer agreement with the
Distributor. Those banks and broker-dealers, who make purchases for their
customers, may charge a fee for such services.

The Fund reserves the right to reject any purchase order for shares if
the Fund or its agents determine that accepting such order would not be in the
best interest of the Fund or its existing shareholders.

-17-
<PAGE> 20
HOW TO REDEEM SHARES

You may withdraw all or any portion of the amount in your account by
redeeming your shares at any time. Redemption proceeds may be more or less
than the purchase price of your shares depending on, among other factors, the
market value of the investment securities held by the Fund at the time you
redeem. Please note that purchases made by check cannot be redeemed until
payment has been collected, which may take up to eight business days after
purchase. You may redeem shares of the Funds by mail or telephone.

BY MAIL Send your redemption request to: Hansberger Institutional
Series
c/o Firstar Trust Company
P.O. Box ____
Milwaukee, Wisconsin 53201

"Good order" means that your redemption request includes the
following documentation:

- A letter of instruction or a stock assignment
specifying the number of shares or dollar amount to
be redeemed, signed by all registered owners of the
shares in the exact names in which they are
registered.

- Any required signature guarantees (see "Further
Redemption Information" below).

- Other supporting legal documents, if required, in the
case of estates, trusts, guardianships,
custodianships, corporations, pension and profit
sharing plans and other organizations.

If you are uncertain of requirements for redemption of your
shares, consult with a representative of the Trust.

BY TELEPHONE If you have telephone transaction privileges, you can request
a redemption of your shares by calling the Fund; redemption
proceeds will be mailed to you or wired to your bank. When
placing a redemption order by telephone, you should have ready
the name and address on your account and the account number
from which you want to redeem shares, and your Social Security
or Tax I.D. number; additional personal identification
information may also be required. If you experience
difficulty placing a redemption order by telephone, you may
send your request by regular or express mail and it will be
effective at the net asset value next determined after it is
received in good order. The Fund's and the Transfer Agent's
liability for fraudulent or unauthorized telephone redemption
requests may be limited. See "SHAREHOLDER SERVICES --
Telephone Transaction Privilege."

To change a bank or bank account designated to receive your
redemption proceeds by wire, you must send a written request
to the Fund at the address above. Each shareholder must sign
any request to change the bank or bank account, and each
signature must be guaranteed.

FURTHER REDEMPTION INFORMATION

Normally the Funds make payment for all shares redeemed within one
business day after receiving the request in good order; payment may be delayed,
but not for more than seven days, except in the case of redemptions of shares
purchased by check, as discussed above. A Fund may suspend redemptions or

-18-
<PAGE> 21
postpone the effective date of redemptions at times when the NYSE is closed, or
under any emergency circumstances as determined by the SEC.

Each Fund may, although it does not intend to do so under normal
circumstances, pay redemption proceeds in whole or in part by a distribution in
kind of securities held in its portfolio, in conformity with applicable SEC
rules.

Due to the relatively high cost of maintaining smaller accounts, the
Trust reserves the right to redeem all of your shares if your redemptions cause
your account value to drop below the minimum required investment. The Trust
will not redeem an account whose value has dropped solely because of market
reductions in net asset value. If at any time your account value does not
equal or exceed the required minimum, you may be notified of this fact. You
will be allowed at least 60 days to add to your investment before any
involuntary redemption is processed.

To protect your account, the Trust and its agents from fraud,
signature guarantees are required for certain redemptions to verify the
identity of the person who has authorized a redemption from your account. A
signature guarantee is not required for redemptions of $50,000 or less,
requested by and payable to all Shareholders of record. Please contact the
Trust for further information. See "ADDITIONAL SHAREHOLDER INFORMATION" in the
SAI.

SHAREHOLDER SERVICES

EXCHANGE PRIVILEGE

You may exchange your shares of a Fund for shares of any other
available Fund without charge once every six months. Call the Trust to find
out what Funds are available. An exchange is treated as a redemption followed
by a purchase, and is subject to all requirements that apply to redemptions and
purchases. An exchange request will normally be effective at the net asset
value next determined after it is received in "good order." An exchange will
be considered a taxable event for shareholders subject to tax. Before you make
an exchange, you should read the prospectus disclosure relating to the new
Fund(s) in which you seek to invest. Shares of the new Fund(s) must be
registered for sale in your state of residence for the exchange privilege to be
available.

You may exchange shares by mail and, if you have telephone transaction
privileges, by telephone. See "Telephone Transaction Privilege."

BY MAIL Send your exchange request to: Hansberger Institutional
Series
c/o Firstar Trust Company
P.O. Box ____
Milwaukee, Wisconsin 53201.

Your exchange request must be in "good order" (see "How To
Redeem Shares -- By Mail" above), and must also include the
name of the new Fund(s) into which you wish to exchange your
shares.

BY TELEPHONE If you have telephone transaction privileges, you may exchange
shares by calling the Trust. You should have ready the
account name and address and the account number of the Fund
account from which you intend to exchange shares, the name of
the Fund into which you intend to exchange shares, and your
Social Security or Tax I.D. number; additional personal
identification information may also be required. If you
experience difficulty placing an exchange order by telephone,
you may send your request by regular or

-19-
<PAGE> 22
express mail and it will be effective at the net asset value
next determined after it is received in good order. The
Trust's and the Transfer Agent's liability for fraudulent or
unauthorized telephone transactions may be limited. See
"Telephone Transaction Privilege."

In order to prevent abuse of the exchange privilege to the disadvantage of
other shareholders, the Trust reserves the right to terminate the exchange
privilege of any shareholder at the Trust's sole discretion.

PURCHASES OR EXCHANGES BY TIMING ACCOUNTS

Market timing or allocation services ("Timing Accounts") generally
include accounts administered so as to redeem or purchase Shares based upon
certain predetermined market indicators. The Trust reserves the right to
temporarily or permanently terminate the exchange privilege or reject any
specific purchase order for any Timing Account or any person whose transactions
seem to follow a timing pattern. In addition, the Trust reserves the right to
refuse the purchase side of a redemption and purchase request by any Timing
Account, person, or group if, in the Adviser's judgement, a Fund would be
unable to invest effectively in accordance with its investment objectives and
policies, or would otherwise potentially be adversely affected. A
Shareholder's exchanges into a Fund may be restricted or refused if a Fund
receives or anticipates simultaneous orders affecting significant portions of
the Fund's assets. In particular, a pattern of exchanges, purchases and
redemptions that coincides with a "market timing" strategy may be disruptive to
a Fund and therefore may be refused.

TELEPHONE TRANSACTION PRIVILEGE

When you open your account, you may elect to have telephone
transaction privileges by completing the "Telephone Transaction" section of the
Account Registration Form. [You may have telephone access to certain
information regarding your account, such as your current share value, even if
you do not want the ability to make transactions by telephone.

During periods of drastic economic or market changes, telephone
redemption and exchange options may be difficult to implement, and you may need
to send your requests by mail.

The Funds and the Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine. These
procedures include requiring you to provide certain personal identification
information when you open your account and prior to effecting each transaction
requested by telephone. In addition, all telephone transaction requests will
be recorded and you may be required to provide additional written instructions
by facsimile. Neither the Funds nor the Transfer Agent will be responsible for
any loss, liability, cost or expense for following instructions received by
telephone that either of them reasonably believes to be genuine. The Fund or
the Transfer agent may be liable for any losses due to unauthorized or
fraudulent instructions in the event reasonable procedures are not followed.

TRANSFER OF REGISTRATION

You may transfer registration of any of your shares in a Fund to
another person by writing to the Transfer Agent at Hansberger Institutional
Series, c/o Firstar Trust Company, P.O. Box ____, Milwaukee, Wisconsin 53201.
Your written request must be in "good order" before any transfer can be
effective. For a description of "good order," see "How to Redeem Shares -- By
Mail" above.

-20-
<PAGE> 23
MANAGEMENT OF THE FUND

TRUSTEES AND OFFICERS

Pursuant to the Trust's Declaration of Trust, the Board of Trustees
decides upon matters of general policy and reviews the actions of each Fund's
Adviser, Administrator and Distributor. The officers of the Trust conduct and
supervise its daily business operations.

INVESTMENT ADVISER

Hansberger Global Investors is the Investment Adviser to the Trust.
The Adviser, with principal offices at 515 East Las Olas Blvd., Fort
Lauderdale, Florida, conducts a worldwide portfolio management business,
provides a broad range of portfolio management services to customers in the
United States and abroad. See "INVESTMENT ADVISER" in the SAI.

The Adviser provides each Fund with investment advice and portfolio
management services pursuant to an Investment Advisory Agreement (the "Advisory
Agreement"), and, subject to the supervision of the Board of Trustees, makes
each Fund's day-to-day investment decisions, arranges for the execution of
portfolio transactions and generally manages each Fund's investments. Under
the terms of its Advisory Agreement, each Fund pays the Adviser a monthly
advisory fee, accrued daily based on the Fund's average daily net assets, at
the annual rates set forth in the table below. Because each Fund invests
internationally, these advisory fees are higher than those of most investment
companies, but the Adviser believes the fees are comparable to those of
investment companies with similar objectives and policies.

<TABLE>
<CAPTION>
FUND ADVISORY FEE
---- ------------
<S> <C>
International Fund 0.80%
Emerging Markets Fund 1.05%
Foreign Small Cap Fund 0.90%
All Countries Fund 0.80%
</TABLE>

PORTFOLIO MANAGERS

THOMAS L. HANSBERGER, the Chairman and Chief Executive officer of the
Adviser, is also the chief investment officer of the Adviser. Before
forming the Adviser, Mr. Hansberger had served as chairman, president
and chief executive officer of Templeton Worldwide, Inc, the parent
holding company of the Templeton group of companies. While at
Templeton, Mr. Hansberger served as director of research and was an
officer, director or primary portfolio manager for several Templeton
Mutual Funds. He is the lead manager for the All Countries Fund.

JAMES E. CHANEY joined the Adviser as Chief Investment Officer in
1996. Prior to joining the Adviser, he was Executive Vice President
for Templeton Worldwide and a senior member of the Portfolio
Management/Strategy Committee. While at Templeton, Mr. Chaney managed
funds and accounts with assets totalling $5.2 billion. He is the lead
manager for the International Fund.

WILKIN W. TAI is a portfolio manager and research analyst. He is
director of emerging markets research and has primary responsibility
for coverage of the Asian markets. Prior to joining the Adviser, Mr.
Tai was a portfolio manager for G.T. Management and, prior to that,
was a portfolio manager and research analyst for Templeton Investment
Management in Singapore. He is the lead manager for the Emerging
Markets Fund and a member of the team that manages Foreign Small Cap
Fund.

-21-
<PAGE> 24
LAURETTA (RETZ) REEVES joined the Adviser in 1996 as a portfolio
manager and research analyst. Prior to joining the Adviser she was
Senior Vice President of Templeton Worldwide in the research and
portfolio management group with primary responsibility for numerous
industries and countries, including global chemicals and European
banks. Ms. Reeves is the coordinator of the team that manages Foreign
Small Cap Fund.

FRANCISCO ALZURU joined the Adviser in 1994 as a portfolio manager and
research analyst, specializing in Latin America. Prior to joining the
Adviser, he worked at Vestcorp Partners as their Latin American
analyst. Mr. Alzuru is a member of the team that manages Foreign
Small Cap Fund and assists in the management of All Countries Fund.

VLADIMIR TYURENKOV joined the Adviser in 1995 as managing director of
Eastern Europe and Russia. Prior to joining the Adviser, he spent
several years working for the Russian Government and worked
extensively on the Pepperdine University Russian Conversion and
Privatization Program. Mr. Tyurenkov is a member of the team that
manages Foreign Small Cap Fund.

ADMINISTRATOR AND TRANSFER AGENT

Firstar Trust Company, 615 East Michigan Street, Milwaukee, Wisconsin
53202 (the "Administrator" or "Transfer Agent") provides administrative
services to the Fund pursuant to an Administration Agreement (the
"Administration Agreement"). Services provided under the Administration
Agreement are subject to supervision by officers of the Fund and the Board of
Trustees, and include day-to-day administration of matters related to the
existence of the Fund, maintenance of its records, preparation of reports,
supervision of the Fund's arrangements with its custodian, and assistance in
preparing the Fund's registration statements under federal and state laws.
Also under the Administration Agreement, the Administrator (through its agents)
provides dividend disbursing and transfer agent services to the Fund. For
additional information regarding the Administration Agreement, see "TRANSFER
AGENT AND DIVIDEND-DISBURSING AGENT" in the SAI. For its services under the
Administration Agreement, each Fund pays the Administrator a monthly fee at an
annual rate of 0.15% of the average daily net assets of the Fund.

EXPENSES

Each Fund is responsible for payment of certain other fees and
expenses (including legal fees, accountant's fees, custodial fees and printing
and mailing costs) specified in the Administration and Distribution Agreements.
Each Fund will also bear a portion of its operating costs, including amortized
organizational costs.

VALUATION OF SHARES

The net asset value per share of a Fund is determined by dividing the
total market value of the Fund's investments and other assets, less any
liabilities, by the total number of the Fund's outstanding shares. Net asset
value per share is determined as of the regular close of the NYSE on each day
that the NYSE is open for business. Price information on listed securities is
taken from the exchange where the security is primarily traded. Securities
listed on a U.S. securities exchange for which market quotations are available
are valued at the last quoted sale price on the day the valuation is made.
Securities listed on a foreign exchange are valued at their closing price.
Unlisted securities and listed securities not traded on the valuation date for
which market quotations are not readily available are valued at a price within
a range not exceeding the current asked price nor less than the current bid
price. The current bid and asked prices are determined based on the average
bid and asked prices quoted on such valuation date by reputable brokers.

-22-
<PAGE> 25
Bonds and other fixed income securities are valued according to the
broadest and most representative market, which will ordinarily be the
over-the-counter market. Net asset value includes interest on fixed income
securities, which is accrued daily. In addition, bonds and other fixed income
securities may be valued on the basis of prices provided by a pricing service
when such prices are believed to reflect the fair market value of such
securities. The prices provided by a pricing service are determined without
regard to bid or last sale prices but take into account institutional size
trading in similar groups of securities and any developments related to the
specific securities. Securities not priced in this manner are valued at the
most recently quoted bid price, or, when securities exchange valuations are
used, at the latest quoted sale price on the day of valuation. If there is no
such reported sale, the latest quoted bid price will be used. Securities
purchased with remaining maturities of 60 days or less are valued at amortized
cost, if it approximates market value. In the event that amortized cost does
not approximate market value, market prices as determined above will be used.

The value of other assets and securities for which no quotations are
readily available (including restricted and unlisted foreign securities) and
those securities for which it is inappropriate to determine the prices in
accordance with the above-stated procedures are determined in good faith using
methods determined by the Board of Trustees. For purposes of calculating net
asset value per share, all assets and liabilities initially expressed in
foreign currencies will be translated into U.S. dollars at the mean of the bid
price and asked price for such currencies against the U.S. dollar last quoted
by any major bank.

PERFORMANCE INFORMATION

Each Fund may advertise its "total return," which shows what an
investment in the Fund would have earned over a specified period of time (such
as one, five or ten years) assuming that all distributions and dividends by the
Fund were reinvested on the reinvestment dates during the period. Total return
does not take into account any federal or state income taxes that may be
payable on dividends and distributions or on redemption. The Funds may also
include comparative performance information in advertising or marketing a
Fund's shares, including data from Lipper Analytical Services, Inc., other
industry publications, business periodicals, rating services and market
indices.

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS

All income dividends and capital gains distributions will
automatically be reinvested in additional shares at net asset value unless the
shareholder has elected to receive income dividends and capital gains
distributions in cash. A shareholder may make this election by providing
written notice to the Fund or by checking off the appropriate box in the
Distribution Option Section on the Account Registration Form.

Each Fund expects to distribute substantially all of its net
investment income in the form of dividends at least annually. Net capital
gains, if any, will be distributed annually.

Undistributed net investment income is included in a Fund's net assets
for the purpose of calculating net asset value per share. Therefore, on the
"ex-dividend" date, the net asset value per share excludes the dividend (i.e.,
is reduced by the per share amount of the dividend). Dividends paid shortly
after the purchase of shares by an investor, although in effect a return of
capital, are taxable to shareholders subject to income tax.

-23-
<PAGE> 26
TAXES

The following summary of United States federal income tax consequences
is based on current tax laws and regulations, which may be changed by
legislative, judicial, or administrative action.

No attempt has been made to present a detailed explanation of the
federal, state, or local income tax treatment of a Fund or its shareholders.
Accordingly, shareholders are urged to consult their tax advisers regarding
specific questions as to federal, state and local income taxes.

Each Fund is treated as a separate entity for federal income tax
purposes. Each Fund intends to qualify for the special tax treatment afforded
regulated investment companies under Subchapter M of the Code, so that each
Fund will be relieved of federal income tax on that part of its net investment
income and net capital gain that is distributed to shareholders.

Each Fund distributes substantially all of its net investment income
(including, for this purpose, net short-term capital gain) to shareholders.
Dividends from a Fund's net investment income are taxable to shareholders as
ordinary income, whether received in cash or in additional shares. Such
dividends paid by a Fund will generally qualify for the 70% dividends-received
deduction for corporate shareholders only to the extent of the aggregate
qualifying dividend income received by the Fund from U.S. corporations. Each
Fund will report annually to its shareholders the amount of dividend income
qualifying for such treatment.

Distributions of net capital gain (the excess of net long-term capital
gain over net short-term capital loss) are taxable to shareholders as long-term
capital gain, regardless of how long shareholders have held their shares. Each
Fund sends reports annually to its shareholders of the federal income tax
status of all distributions made during the preceding year.

Each Fund intends to make sufficient distributions or deemed
distributions of its ordinary income and capital gain net income (the excess of
short-term and long-term capital gains over short-term and long-term capital
losses), including any available capital loss carryforwards, prior to the end
of each calendar year to avoid liability for federal excise tax.

Dividends and other distributions declared by a Fund in October,
November or December of any year and payable to shareholders of record on a
date in such month will be deemed to have been paid by the Fund and received by
the shareholders in that year if the distributions are paid by the Fund at any
time during the following January.

The sale or redemption of shares may result in taxable gain or loss to
the redeeming shareholder, depending upon whether the fair market value of the
redemption proceeds exceeds or is less than the Shareholder's adjusted basis in
the redeemed shares. If capital gain distributions have been made in respect
of shares that are sold at a loss after being held for six months or less, then
the loss is treated as a long-term capital loss to the extent of the capital
gain distributions.

Shareholders are urged to consult with their tax advisors concerning
the application of state and local income taxes to investments in a Fund, which
may differ from the federal income tax consequences described above.

Investment income received by a Fund from sources within foreign
countries may be subject to foreign income taxes withheld at the source.
Information on taxation of a Fund by certain foreign countries is set out in
the SAI. To the extent that a Fund is liable for foreign income taxes so
withheld, the Fund intends to operate so as to meet the requirements of the
Code to pass through to the shareholders credit for foreign income taxes paid.
Although each Fund intends to meet Code requirements to pass through credit for
such taxes, there can be no assurance that each Fund will be able to do so.

-24-
<PAGE> 27
A Fund may be required to withhold Federal income tax at the rate of
31% of all taxable distributions (including redemptions) paid to Shareholders
who fail to provide the Fund with their correct taxpayer identification number
or to make required certifications or where the Fund or the Shareholder has
been notified by the Internal Revenue Service that the Shareholder is subject
to backup withholding. Corporate Shareholders and certain other Shareholders
specified in the Code are exempt from backup withholding. Backup withholding
is not an additional tax. Any amounts withheld may be credited against the
Shareholders' Federal income tax liability.

THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED HEREIN FOR GENERAL
INFORMATION ONLY. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISERS
ABOUT THE TAX CONSEQUENCES TO THEM OF AN INVESTMENT IN THE FUND.

PORTFOLIO TRANSACTIONS

Each Fund's Advisory Agreement authorizes the Adviser to select the
brokers or dealers that will execute the purchases and sales of investment
securities for the Fund and directs the Adviser to use its best efforts to
obtain the best available price and most favorable execution on all
transactions for the Fund. Each Fund has authorized the Adviser to pay higher
commissions in recognition of brokerage services which, in the opinion of the
Adviser, are necessary for the achievement of better execution, provided the
Adviser believes this to be in the best interest of the Fund.

Since shares of the Funds are not marketed through intermediary
brokers or dealers, it is not the Fund's practice to allocate brokerage or
principal business on the basis of sales of shares which may be made through
such firms. However, the Adviser may place portfolio orders with qualified
broker-dealers who recommend the Funds or who act as agents in the purchase of
shares of the Funds for their clients.

In purchasing and selling securities for a Fund, it is the Fund's
policy to seek to obtain quality execution at the most favorable prices,
through responsible broker-dealers. In selecting broker-dealers to execute the
securities transactions for a Fund, consideration will be given to such factors
as the price of the security, the rate of the commission, the size and
difficulty of the order, the reliability, integrity, financial condition,
general execution and operational capabilities of competing broker-dealers, and
the brokerage and research services which they provide to the Fund. Some
securities considered for investment by the Fund may also be appropriate for
other clients served by the Adviser. If purchase or sale of securities
consistent with the investment policies of the Fund and one or more of these
other clients served by the Adviser is considered at or about the same time,
transactions in such securities will be allocated among the Fund and such other
clients in a manner deemed fair and reasonable by the Adviser. Although there
is no specified formula for allocating such transactions, the various
allocation methods used by the Adviser, and the results of such allocations,
are subject to periodic review by the Board of Trustees.

GENERAL INFORMATION

ORGANIZATION OF THE TRUST AND THE FUNDS; DESCRIPTION OF SHARES

The Trust was organized as a Massachusetts business trust under a
Declaration of Trust dated July __, 1996. The Declaration of Trust permits the
Trust to issue an indefinite number of units of beneficial interest ("shares"),
with or without par value.

The Trust may issue shares in any number of "series"; each series of
the Trust is a separate portfolio and functions as a separate mutual fund,
although the Funds would share a common board of trustees, and

-25-
<PAGE> 28
may share an administrator, transfer agent, or custodian. All consideration
received by the Trust for shares of any series, and all assets of that series,
belong only to that series and are subject to that series' liabilities. The
Funds are currently the only series of the Trust. Each Fund currently offers
only one class of shares. The trustees may, however, create and issue
additional series of shares and may create and issue shares of additional
classes of one or more series.

Except as described below, the shares of each Fund, when issued, will
be fully paid, non-assessable, fully transferable and redeemable at the option
of the holder. The shares have no preference as to conversion, exchange,
dividends, retirement or other features and have no preemptive rights. Each
share entitles the shareholder of record to one vote. All shareholders of a
Fund may vote as a single class on each matter presented to shareholders for
action except with respect to any matter that affects one or more series or
class solely or in a manner different from others, in which case the shares of
the affected series or class are entitled to vote separately. The shares of
the Trust have non-cumulative rights, which means that the holders of more than
50% of the shares voting for the election of Trustees can elect 100% of the
Trustees if they choose to do so. Persons or organizations owning 25% or more
of the outstanding shares of the Fund may be presumed to "control" (as defined
in the 1940 Act) the Fund.

The Trust is not required to hold annual shareholder meetings;
shareholder meetings will be held from time to time for the election of
Trustees under certain circumstances, or to seek approval for changes to the
operations of the Trust or a Fund. A Trustee may be removed from office by the
remaining Trustees, or by the shareholders at a special meeting called on the
written request of shareholders owning at least 10% of the Trust's outstanding
shares.

REPORTS AND STATEMENTS TO SHAREHOLDERS

Each Fund's fiscal year ends on December 31st of each year. Each Fund
will send annual, semi-annual, and quarterly reports to its shareholders; the
financial statements appearing in annual reports are audited by the Trust's
independent accountants.

CUSTODIAN

The Chase Manhattan Bank, N.A. serves as each Fund's custodian. For
more information on the custodians see "CUSTODIAN" in the SAI.

INDEPENDENT ACCOUNTANTS

Arthur Andersen LLP serves as independent accountants for the Trust
and audits its annual financial statements.

-26-
<PAGE> 29
CHARLES F. GULDEN joined the Adviser in 1996 as a portfolio manager
and research analyst. Prior to joining the Adviser, he was Vice
President and Director of Templeton Worldwide in the research and
portfolio management group with primary research responsibility for
global health care services and agricultural chemical sectors. Mr.
Gulden assists in the management of All Countries Fund.

JOHN HOCK joined the Adviser in 1996 as a research analyst. Prior to
joining the adviser, he was a vice president and senior analyst in the
global securities research and economics group at Merrill Lynch. Mr.
Hock assists in the management of International Fund.

DAVID WU joined the Adviser in 1995 as a research analyst. His
research responsibilities include the analysis of emerging market
countries, primarily those in Asia. Prior to joining the Adviser, Mr.
Wu was an editor at Business Asia, Economist Intelligence Unit (the
Economist Group). He assists in the management of Emerging Markets
Fund.

-27-
<PAGE> 30
STATEMENT OF ADDITIONAL INFORMATION

HANSBERGER INSTITUTIONAL SERIES

515 East Las Olas Boulevard
Suite 1300
Fort Lauderdale, Florida
Telephone No. 954-522-5150

Hansberger Institutional Series (the "Trust") is an open-end
management investment company currently consisting of four series,
International Fund, Emerging Markets Fund, Foreign Small Cap Fund and All
Countries Fund (each individually referred to as a "Fund" or collectively
referred to as the "Funds"), each of which is described in this Statement of
Additional Information. The investment adviser of each Fund is Hansberger
Global Investors, Inc. (the "Adviser")

This Statement of Additional Information ("SAI") is not a prospectus
and should be read in conjunction with the prospectus offering shares of the
Trust dated [PROSPECTUS DATE], as it may be amended or supplemented from time
to time (the "Prospectus"). A copy of the Prospectus may be obtained without
charge by writing to, or calling, the Trust at the address and telephone number
listed above.

This Statement of Additional Information is dated [SAI DATE].

1
<PAGE> 31
TABLE OF CONTENTS
PAGE

<TABLE>
<S> <C>
INVESTMENT POLICIES AND TECHNIQUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Illiquid and Restricted Securities . . . . . . . . . . . . . . . . . . . . . . . . . .
Short Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
High Risk Debt Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lending of Portfolio Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depository Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign Currency Hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forward Currency Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign Currency Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
When-Issued Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign Investment Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage Dollar Rolls and Reverse Repurchase Agreements . . . . . . . . . . . . . . . . .
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TRUSTEES AND OFFICERS OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INVESTMENT ADVISER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FUND TRANSACTIONS AND BROKERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CUSTODIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT . . . . . . . . . . . . . . . . . . . . . . . . .
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ADDITIONAL SHAREHOLDER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ORGANIZATION OF THE TRUST AND THE FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LEGAL COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Appendix of Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
</TABLE>

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

No person has been authorized to give any information or to make any
representations other than those contained in this Statement of Additional
Information and the Prospectus and, if given or made, such information or
representations may not be relied upon as having been authorized by the Trust.

This Statement of Additional Information does not constitute an offer
to sell securities.

2
<PAGE> 32
INVESTMENT POLICIES AND TECHNIQUES

The following information supplements the discussion of each Fund's
investment objectives, policies and techniques that are described in detail in
the Prospectus under the caption "Investment Objectives and Policies".

ILLIQUID AND RESTRICTED SECURITIES

Certain securities exempt, or issued in transactions exempt, from
registration under the 1933 Act, including 144A Securities, may be considered
illiquid. The Board of Trustees is responsible for determining, to the extent
permissible under the federal securities laws, which securities are illiquid;
the Board has delegated this responsibility to the Adviser, who will make the
day-to-day determinations of the liquidity of securities. The Board retains
oversight and ultimate responsibility for these determinations. Although no
definitive liquidity criteria are used, the Board of Trustees has directed the
Adviser to examine factors such as (i) the nature of the market (including the
institutional private resale market) for a security, (ii) the terms of certain
instruments permitting disposition to the issuer thereof or a third party
(e.g., certain repurchase obligations and demand instruments), (iii)
availability of market quotations (e.g., for securities quoted in PORTAL
system), and (iv) other permissible relevant factors.

Restricted Securities may be sold only in privately negotiated
transactions or in a public offering under an effective registration statement
under the 1933 Act. If registration becomes necessary, the Fund may have to
pay all or part of the registration costs; in addition, considerable time may
elapse between the Fund's decision to sell and the time it may be permitted to
sell a security under an effective registration statement. If adverse market
conditions developed during such a period, the Fund might obtain a less
favorable price than prevailed when it decided to sell. Restricted Securities
will be priced at fair value, determined in good faith by the Board of
Trustees.

If, through appreciation of Restricted Securities or depreciation of
other securities, a Fund finds that more than 15% of its net assets are
invested in illiquid securities, including illiquid Restricted Securities, it
will take such steps, if any, as the Trustees deem advisable to protect
liquidity.

Each Fund may sell OTC options and may need to segregate assets or
cover its obligations as writer of such options. Assets used as cover for OTC
options written by a Fund will be considered illiquid unless such options are
sold to qualified dealers who agree that the Fund may repurchase any OTC option
it writes at a maximum price to be calculated by a formula set forth in the
option agreement. The cover for an OTC option written subject to this
procedure will be considered illiquid only to the extent that the maximum
repurchase price under the formula exceeds the intrinsic value of the OTC
option.

SHORT SALES

When a Fund sells short, it borrows the securities that it needs to
deliver to the buyer. The Fund must arrange through a broker to borrow these
securities and will become obligated to replace the borrowed securities at
whatever their market price may be at the time of replacement. The Fund may
have to pay a premium to borrow the securities and must pay any dividends or
interest payable on the securities until they are replaced.

A Fund's obligation to replace the securities borrowed in connection
with a short sale will be secured. The proceeds a Fund receives from the short
sale will be held on behalf of the broker until the Fund replaces the borrowed
securities, and the Fund will deposit collateral with the broker; this
collateral will consist of

3
<PAGE> 33
cash or liquid, high grade debt obligations. In addition, the Fund will
deposit collateral in a segregated account with the Custodian; this collateral
will consist of cash or liquid, high grade debt obligations equal to any
difference between the market value of (1) the securities sold at the time they
were sold short and (2) any collateral deposited with the broker in connection
with the short sale (not including the proceeds of the short sale).

Each Fund may sell securities short against the box to hedge
unrealized gains on portfolio securities. If a Fund sells securities short
against the box, it may protect unrealized gains, but will lose the opportunity
to profit on such securities if the price rises.

WARRANTS

Each Fund may buy warrants, which give the holder the right, but not
the obligation, to buy stock of an issuer ("underlying stock") at a given price
(usually higher that the price of the underlying stock when the warrant is
issued) prior to a specified expiration date or perpetually. Warrants may
trade separately or in connection with the acquisition of securities. A Fund
will not purchase warrants, valued at the lower of cost or market value, in
excess of 5% of the Fund's net assets; this limit includes warrants that are
not listed on any stock exchange, and such warrants are limited to 2% of the
Fund's net assets. Warrants acquired by a Fund in units or attached to
securities are not subject to these limits. Warrants do not carry dividend or
voting rights on the underlying stock, and do not represent any rights in the
assets of the issuer. As a result, warrants may be considered more speculative
than certain other investments. A warrant's value does not necessarily change
with the value of the underlying stock. A warrant ceases to have value if it
expires unexercised.

DEBT OBLIGATIONS: GENERAL

Each Fund may invest in debt obligations. Issuers of debt obligations
are contractually obliged to pay interest at a specified rate on specified
dates and to repay principal on a specified maturity date. Certain debt
obligations (usually intermediate- and long-term bonds) allow the issuer to
redeem or "call" a bond before its maturity. Issuers are most likely to call
debt when interest rates are falling.

PRICE VOLATILITY. The market value of debt generally varies inversely
to changes in interest rates; when interest rates decline, a debt obligation's
price usually rises, and when interest rates rise, a debt obligation's price
usually declines.

MATURITY. In general, the longer the maturity of a debt obligation,
the higher its yield and the more sensitive it is to changes in interest rates.
Conversely, the shorter the maturity, the lower the yield but the greater the
price stability. "Commercial paper" is generally considered the shortest form
of debt, and "bond" generally refers to securities with maturities over two
years. Bonds with maturities of three years or less are considered short-term,
bonds with maturities between three and seven years are considered
intermediate-term, and bonds with maturities greater than seven years are
considered long-term.

CREDIT QUALITY. The value of debt may also be affected by changes in
the issuer's credit rating or financial condition. Lower quality ratings
indicate a higher degree of risk as to payment of interest and return of
principal. To compensate investors for taking on increased risk, issuers
considered less creditworthy generally must offer investors higher interest
rates than issuers with better credit ratings.

4
<PAGE> 34
In conducting its credit research and analysis, the Adviser considers
both qualitative and quantitative factors to evaluate creditworthiness of
individual issuers. The Adviser also relies, in part, on credit ratings
compiled by a number of rating organizations. See the Ratings Appendix.

HIGH RISK DEBT SECURITIES ("JUNK BONDS")

Each Fund may invest up to [_]% of its net assets in non-investment
grade debt securities. Debt securities rated below Baa by Moody's or BBB by
S&P, or of comparable quality, are considered below investment grade.
Non-investment grade debt securities ("high risk securities") may include (i)
debt not in default but rated as low as C by Moody's, S&P, or Fitch Investors
Service, Inc. ("Fitch"), CC by Thomson BankWatch ("TBW") or ICBA, or CCC by
Duff & Phelps, Inc. ("D&P"); (ii) commercial paper rated as low as C (or D if
in default) by S&P, Not Prime by Moody's, F-S (or D if in default) by Fitch,
Duff 4 (or Duff 5 if in default) by Duff, TBW-4 by TBW, or D by ICBA; and (iii)
unrated debt securities of comparable quality. Each Fund may also buy debt in
default (rated D by S&P or TBW or Fitch, C by ICBA, DD by Duff, or of
comparable quality) and commercial paper in default (rated D by S&P or Fitch,
Not Prime by Moody's, Duff 5 by Duff, TBW-4 by TBW, D by ICBA, or of comparable
quality). Such securities, while generally offering higher yields than
investment grade securities with similar maturities, involve greater risks,
including the possibility of (or actual) default or bankruptcy. They are
regarded as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal. See the Ratings Appendix for a description
of ratings.

The market for high risk securities is relatively new and its growth
has paralleled a long economic expansion. It is not clear how this market
would withstand a prolonged recession or economic downturn, which could
severely disrupt this market and adversely affect the value of such securities.

Market values of high risk debt securities tend to reflect individual
corporate developments to a greater extent, and tend to be more sensitive to
economic conditions, than do higher rated securities. As a result, high risk
debt securities generally involve more credit risks than higher rated debt.
During an economic downturn or a sustained period of rising interest rates,
highly leveraged issuers of high risk debt may experience financial stress and
may not have sufficient revenues to meet their payment obligations. An
issuer's ability to service its debt obligations may also be adversely affected
by specific corporate developments, its own inability to meet specific
projected business forecasts, or unavailability of additional financing. The
risk of loss due to default by an issuer is significantly greater for high risk
debt than for higher rated debt because the high risk debt is generally
unsecured and often subordinated.

If the issuer of high risk debt defaulted, the Fund might incur
additional expenses in seeking recovery. Periods of economic uncertainty and
changes would also generally result in increased volatility in the market
prices of these securities and thus in a Fund's net asset value.

If a Fund invested in high risk debt experiences unexpected net
redemptions in a rising interest rate market, it may be forced to liquidate a
portion of its portfolio without regard to their investment merits. Due to the
limited liquidity of high risk debt securities, the Fund may be forced to
liquidate these securities at a substantial discount. Any such liquidation
would reduce the Fund's asset base over which expenses could be allocated and
could result in a reduced rate of return for the Fund.

PAYMENT EXPECTATIONS. During periods of falling interest rates,
issuers of high risk debt securities that contain redemption, call or
prepayment provisions are likely to redeem or repay the securities and
refinance with other debt at a lower interest rate. If a Fund holds debt
securities that are refinanced or

5
<PAGE> 35
otherwise redeemed, it may have to replace the securities with a lower yielding
security, which would result in a lower return.

CREDIT RATINGS. Credit ratings evaluate safety of principal and
interest payments, but do not evaluate the market value risk of high risk
securities and, therefore, may not fully reflect the true risks of an
investment. In addition, rating agencies may not make timely changes in a
rating to reflect changes in the economy or in the condition of the issuer that
affect the market value of the security. Consequently, credit ratings are used
only as a preliminary indicator of investment quality. Investments in high
risk securities will depend more heavily on the Adviser's credit analysis than
investment-grade debt securities. The Adviser will monitor each Fund's
investments and evaluate whether to dispose of or retain high risk securities
whose credit quality may have changed.

LIQUIDITY AND VALUATION. A Fund may have difficulty disposing of
certain high risk securities with a thin trading market. Not all dealers
maintain markets in all these securities, and for many such securities there is
no established retail secondary market. The Adviser anticipates that such
securities may be sold only to a limited number of dealers or institutional
investors. To the extent a secondary trading market does exist, it is
generally not as liquid as that for higher-rated securities; a lack of a liquid
secondary market may adversely affect the market price of a security, which may
in turn affect a Fund's net asset value and ability to dispose of particular
securities in order to meet liquidity needs or to respond to a specific
economic event, or may make it difficult for the Fund to obtain accurate market
quotations for valuation purposes. Market quotations on many high risk
securities may be available only from a limited number of dealers and may not
necessarily represent firm bids or prices for actual sales. During periods of
thin trading, the spread between bid and asked prices is likely to increase
significantly, and adverse publicity and investor perceptions (whether or not
based on fundamental analysis) may decrease the value and liquidity of a high
risk security.

LEGISLATION. Legislation has from time to time been or may be
proposed that is designed to limit the use of certain high risk debt. It is
not possible to predict the effect of such legislation on the market for high
risk debt. However, any legislation that may be proposed or enacted could have
a material adverse effect on the value of these securities, the existence of a
secondary trading market for the securities and, as a result, a Fund's net
asset values.

LENDING FUND SECURITIES

Each Fund may lend portfolio securities to qualified borrowers. In
determining whether to lend securities to a particular investor, the Adviser
will consider, and during the period of the loan will monitor, all relevant
facts and circumstances, including the borrower's creditworthiness. The
borrower must maintain collateral with the Custodian, either in cash, money
market instruments, or a letter of credit, in an amount at least equal to the
market value of the securities loaned, plus accrued interest and dividends or
other income, determined on a daily basis and adjusted accordingly.

Each Fund will retain authority to terminate any loan of its portfolio
securities at any time. A Fund may pay reasonable administrative and custodial
fees in connection with a loan and may pay the borrower or placing broker a
negotiated portion of the interest earned on cash or money market instruments
held as collateral. On any loan, a Fund will receive reasonable interest or a
flat fee from the borrower and amounts equivalent to any dividends, interest or
other distributions on the securities loaned. The Fund will retain record
ownership of loaned securities to exercise beneficial rights, such as voting
and subscription rights and rights to dividends, interest or other
distributions, when retaining such rights is considered to be in the Fund's
interest.

6
<PAGE> 36
DEPOSITARY RECEIPTS

Generally, ADRs are issued in registered form, denominated in U.S.
dollars, and designed for use in the U.S. securities markets. Other Depositary
Receipts may be issued in bearer form and denominated in other currencies, and
are generally designed for use in securities markets outside the U.S.

ADR facilities include American Depositary Shares and New York Shares,
and may be established as either "unsponsored" or "sponsored." While the two
types of ADR facilities are similar, there are differences regarding ADR
holders' rights and obligations and the practices of market participants. A
depositary may establish an unsponsored facility without participation by (or
acquiescence of) the underlying issuer; typically, however, the depositary
requests a letter of non-objection from the underlying issuer prior to
establishing the facility. Holders of unsponsored ADRs generally bear all the
costs of the ADR facility. The depositary usually charges fees upon the
deposit and withdrawal of the underlying securities, the conversion of
dividends into U.S. dollars, the disposition of non-cash distribution, and the
performance of other services. The depositary of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the underlying issuer or to pass through voting rights to ADR
holders in respect of the underlying securities.

Sponsored ADR facilities are created in generally the same manner as
unsponsored facilities, except that sponsored ADRs are established jointly by a
depositary and the underlying issuer through a deposit agreement. The deposit
agreement sets out the rights and responsibilities of the underlying issuer,
the depositary and the ADR holders. With sponsored facilities, the underlying
issuer typically bears some of the costs of the ADR (such as dividend payment
fees of the depositary), although ADR holders may bear costs such as deposit
and withdrawal fees. Depositories of most sponsored ADRs agree to distribute
notices of shareholder meetings, voting instructions, and other shareholder
communications and information to the ADR holders at the underlying issuer's
request.

DERIVATIVE INSTRUMENTS

GENERAL DESCRIPTION. Each Fund may invest in a variety of derivative
instruments, including options, futures contracts (sometimes referred to as
"futures"), options on futures contacts, and forward contracts to hedge its
other investments, or for risk management.

The use of these instruments is subject to regulation by the SEC,
options and futures exchanges upon which the instruments may be traded, the
Commodity Futures Trading Commission ("CFTC") and state regulatory authorities.
In addition, the Fund's ability to use these instruments will be limited by tax
considerations.

In addition to the investments and techniques described below and in
the Prospectus, the Adviser may use additional instruments and other hedging
techniques as they become available, to the extent that they are consistent
with a Fund's investment limitations and applicable regulation.

SPECIAL RISKS OF THESE INSTRUMENTS. Derivative instruments present
special considerations and risks. Risks pertaining to particular individual
instruments are described in following sections.

First, successful use of these instruments depends on the Adviser's
ability to predict movements in the overall securities and currency markets,
which requires different skills than predicting changes in the prices of
individual securities. There can be no assurance that any particular strategy
adopted will succeed.

7
<PAGE> 37
Second, correlation between the price movements of a hedging
instrument and the price movements of the investment being hedged may be
imperfect or even non-existent. For example, if the value of an instrument
used in a short hedge (such as writing a call option, buying a put option, or
selling a futures contract) increased by less than the decline in value of the
hedged investment, the hedge would not be fully successful. Imperfect
correlation could be due to factors unrelated to the value of the investments
being hedged, such as speculative or other pressures on the markets in which
these instruments are traded. The effectiveness of any hedge using instruments
on indices will depend on the degree of correlation between price movements in
the index and price movements in the hedged investments.

Third, while successful hedging strategies can reduce the risk of
loss, they can also reduce opportunity for gain by offsetting the positive
effect of favorable price movements in the hedged investments. For example, if
a Fund entered into a short hedge because the Adviser projected a decline in
the price of a portfolio security, but the price of that security increased,
the Fund's gain from that increase could be offset by a decline in the price of
the hedging instrument. Moreover, if the price of the hedging instrument
declined by more then the increase in the price of the hedged security, the
Fund could suffer a loss.

Fourth, if a Fund is unable to close out its positions in derivative
instruments, assets maintained as "cover" might be required to continue to be
maintained until the hedge position expired or matured. The requirements might
impair the Fund's ability to sell a portfolio security at a disadvantageous
time. A Fund's ability to close out a position in an instrument prior to
expiration or maturity depends on the existence of a liquid secondary market
or, in the absence of such a market, the ability and willingness of the
counterparty to the transaction to close out the position. There is no
assurance that any hedging position can be closed out at a time and price
favorable to the Fund.

GENERAL LIMITATION ON CERTAIN DERIVATIVE TRANSACTIONS. The Trust has
filed a notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the CFTC and the National Futures Association,
which regulate trading in the futures markets. Pursuant to Rule 4.5 of the
regulations under the Commodity Exchange Act (the "CEA"), the notice of
eligibility includes representations that a Fund will use futures contracts and
related options solely for bona fide hedging purposes within the meaning of
CFTC regulation, provided that a Fund may hold other positions in futures
contracts and related options that do not qualify as a bona fide hedging
position if the aggregate initial margin deposits and premiums required to
establish these positions, less the amount by which any such options positions
are "in the money," do not exceed 5% of the Fund's net assets. Adoption of
these guidelines does not limit the percentage of the Fund's assets at-risk to
5%.

In addition, (i) the aggregate value of securities underlying call
options on securities written by a Fund or obligations underlying put options
on securities written by a Fund determined as of the date of the options are
written will not exceed 25% of the Fund's net assets, (ii) the aggregate
premiums paid on all options purchase by a Fund and which are being held will
not exceed 20% of the Fund's net assets; (iii) a Fund will not purchase put or
call options, other than hedging positions, if, as a result thereof, more than
5% of its total assets would be so invested; and (iv) the aggregate margin
deposit required on all futures and options on futures transactions being held
will not exceed 5% of a Fund's total assets.

Transactions using options (other than purchased options) expose a
Fund to counterparty risk. To the extent required by SEC guidelines, each Fund
will not enter into any such transactions unless it owns either (1) an
offsetting ("covered") position in securities, other options, or futures or (2)
cash and liquid high grade debt obligations with value sufficient at all times
to cover its potential obligations to the extent not covered as provided in (1)
above. Each Fund will also set aside cash and/or appropriate liquid assets in
segregate custodial account if required to do so by the SEC and CFTC
regulations. Assets used as cover or

8
<PAGE> 38
held in a segregated account cannot be sold while the position in the
corresponding option or futures contract is open, unless they are replaced with
similar assets. As a result, the commitment of a large portion of a Fund's
assets to segregated accounts as a cover could impede portfolio management or
the Fund's ability to meet redemption requests or other current obligations.

OPTIONS. As described in the Prospectus, each Fund may write covered
call options and covered put options. As a matter of operating policy, the
value of the underlying securities on which a Fund will write options will not,
at any one time, exceed 5% of the Fund's total assets.

For writing a call, a Fund will receive a premium, which increases the
Fund's return on the underlying security in the event the option expires
unexercised or is closed out at a profit; however, by writing the call, the
Fund also limits its opportunity to profit from an increase in the market value
of the underlying security above the exercise price of the option for as long
as the Fund's obligation as writer of the option continues. Thus, the Fund's
total return when it is writing covered calls may be more or less than the
total return would have been from its underlying securities had it not written
the calls.

Each Fund may sell puts to receive the premiums paid by purchasers and
to close out long put positions. In addition, when the Adviser wishes to
purchase a security at a price lower than its current market price, the Fund
may write a covered put at an exercise price reflecting the lower purchase
price sought.

Each Fund may purchase calls to close out covered call positions or to
protect against an increase in the price of a security it anticipates
purchasing. Each Fund may purchase puts on securities that it holds only to
protect itself against a decline in the value of those securities. If a Fund
were to purchase a put on a security it holds, and the value of that underlying
security were to fall below the exercise price of the put, in an amount greater
than the premium paid for the option, the Fund would incur no additional loss.
Each Fund may also purchase puts to close out written put positions in a manner
similar to call option closing purchase transactions. There are no other
limits on each Fund's ability to purchase call and put options.

Each Fund may purchase or write put and call options on securities, on
indices, and foreign currency, and enter into closing transactions with respect
to such options to terminate an existing position. The purchase of call
options serves as a long hedge, and the purchase of put options serves as a
short hedge. Writing put or call options can enable the Fund to enhance income
by reason of the premiums paid by the purchaser of such options. Writing call
options serves as a limited short hedge because declines in the value of the
hedged investment would be offset to the extent of the premium received for
writing the option. However, if the security appreciates to a price higher
than the exercise price of the call option, it can be expected that the option
will be exercised and the Fund will be obligated to sell the security at less
than its market value or will be obligated to purchase the security at a price
greater than that at which the security must be sold under the option. All or
a portion of any assets used as cover for OTC options written by the Fund would
be considered illiquid to the extent described above under "Illiquid and
Restricted Securities." Writing put options serves as a limited long hedge
because increases in the value of the hedged investment would be offset to the
extent of the premium received for writing the option. However, if the
security depreciates to a price lower than the exercise price of the put
option, it can be expected that the put option will be exercised and the Fund
will be obligated to purchase the security at more than its market value.

The value of an option position will reflect, among other things, the
historical price volatility of the underlying investment, the current market
value of the underlying investment, the time remaining until expiration, the
relationship of the exercise price to the market price of the underlying
investment, and general market conditions. Options that expire unexercised
have no value. Options used by the Fund may include

9
<PAGE> 39
European-style options, which are exercisable only at expiration.
American-style options are exercisable at any time prior to the expiration
date.

A Fund may effectively terminate its right or obligation under an
option by entering into a closing transaction. For example, a Fund may
terminate its obligation under a call or put option that it had written by
purchasing an identical call or put option; this is known as a closing purchase
transaction. Conversely, a Fund may terminate a position in a put or call
option it had purchased by writing an identical put or call option; this is
known as a closing sale transaction. Closing transactions permit the Fund to
realize the profit or limit the loss on an option position prior to its
exercise or expiration.

Each Fund may purchase or write both exchange-traded and OTC options.
Exchange-traded options are issued by a clearing organization affiliated with
the exchange on which the option is listed that, in effect, guarantees
completion of every exchange-traded option transaction. OTC options are
contracts between the Fund and the counterparty to the transaction (usually a
securities dealer or a bank) with no clearing organization guarantee. Thus,
when a Fund purchases or writes an OTC option, it relies on the counterparty to
make or take delivery of the underlying investment upon exercise of the option.
Failure by the counterparty to do so would result in the loss of any premium
paid by the Fund as well as the loss of any expected benefit of the
transaction.

A Fund's ability to establish and close out positions in
exchange-listed options depends on the existence of a liquid market. Each Fund
intends to purchase or write only those exchange-traded options for which there
appears to be a liquid secondary market. However, there can be no assurance
that such a market will exist at any particular time. Closing transactions can
be made for OTC options only by negotiating directly with the counterparty, or
by a transaction in the secondary market if any such market exists. Although a
Fund will enter into OTC options only with counterparties that are expected to
be capable of entering into closing transactions with the Fund, there is no
assurance that the Fund will in fact be able to close out an OTC option at a
favorable price prior to expiration. In the event of insolvency of the
counterparty, the Fund might be unable to close out an OTC option position at
any time prior to its expiration.

If a Fund were unable to effect a closing transaction for an option it
had purchased, it would have to exercise the option to realize any profit. The
inability to enter into a closing purchase transaction for a covered call
option written by a Fund could cause material losses because the Fund would be
unable to sell the investment used as a cover for the written option until the
option expires or is exercised.

Each Fund may engage in options transactions on indices in much the
same manner as the options on securities discussed above, except that index
options may serve as a hedge against overall fluctuations in the securities
markets in general.

The writing and purchasing of options is a highly specialized activity
that involves investment techniques and risks different from those associated
with ordinary portfolio securities transactions. Imperfect correlation between
the options and securities markets may detract the effectiveness of attempted
hedging.

FUTURES CONTRACTS. Each Fund may enter into futures contracts,
including interest rate, index, and currency futures. Each Fund may also
purchase put and call options, and write covered put and call options, on
futures in which it is allowed to invest. The purchase of futures or call
options thereon can serve as a long hedge, and the sale of futures or the
purchase of put options thereon can serve as a short hedge. Writing covered
call options on futures contracts can serve as a limited short hedge, and
writing covered put options on futures contracts can serve as a limited long
hedge, using a strategy similar to that used for writing covered

10
<PAGE> 40
options in securities. A Fund's hedging may include purchases of futures as an
offset against the effect of expected increases in securities prices or
currency exchange rates and sales of futures as an offset against the effect of
expected declines in securities prices or currency exchange rates. A Fund's
futures transactions may be entered into for hedging purposes or risk
management. Each Fund may also write put options on futures contracts while at
the same time purchasing call options on the same futures contracts in order to
create synthetically a long futures contract position. Such options would have
the same strike prices and expiration dates. A Fund will engage in this
strategy only when the Adviser believes it is more advantageous to the Fund
than is purchasing the futures contract.

To the extent required by regulatory authorities, each Fund will only
enter into futures contracts that are traded on national futures exchanges and
are standardized as to maturity date and underlying financial instrument.
Futures exchanges and trading are regulated under the CEA by the CFTC.
Although techniques other than sales and purchases of futures contracts could
be used to reduce a Fund's exposure to market, currency, or interest rate
fluctuations, the Fund may be able to hedge its exposure more effectively and
perhaps at a lower cost through using futures contracts.

A futures contract provides for the future sale by one party and
purchase by another party of a specified amount of a specific financial
instrument (e.g., debt security) or currency for a specified price at a
designated date, time, and place. An index futures contract is an agreement
pursuant to which the parties agree to take or make delivery of an amount of
cash equal to the difference between the value of the index at the close of the
last trading day of the contract and the price at which the index futures
contract was originally written. Transactions costs are incurred when a
futures contract is bought or sold and margin deposits must be maintained. A
futures contract may be satisfied by delivery or purchase, as the case may be,
of the instrument, the currency, or by payment of the change in the cash value
of the index. More commonly, futures contracts are closed out prior to
delivery by entering into an offsetting transaction in a matching futures
contract. Although the value of an index might be a function of the value of
certain specified securities, no physical delivery of those securities is made.
If the offsetting purchase price is less than the original sale price, the Fund
realizes a gain; if it is more, the Fund realizes a loss. Conversely, if the
offsetting sale price is more than the original purchase price, the Fund
realizes a gain; if it is less, the Fund realizes a loss. The transaction
costs must also be included in these calculations. There can be no assurance,
however, that a Fund will be able to enter into an offsetting transaction with
respect to a particular futures contract at a particular time. If a Fund is
not able to enter into an offsetting transaction, it will continue to be
required to maintain the margin deposits on the futures contract.

No price is paid by a Fund upon entering into a futures contract.
Instead, at the inception of a futures contract, the Fund is required to
deposit in a segregated account with its custodian, in the name of the futures
broker through whom the transaction was effected, "initial margin" consisting
of cash, U.S. government securities or other liquid, high grade debt
obligations, in an amount generally equal to 10% or less of the contract value.
Margin must also be deposited when writing a call or put option on a futures
contract, in accordance with applicable exchange rules. Unlike margin in
securities transactions, initial margin on futures contracts does not represent
a borrowing, but rather is in the nature of a performance bond or good-faith
deposit that is returned to the Fund at the termination of the transaction if
all contractual obligations have been satisfied. Under certain circumstances,
such as periods of high volatility, the Fund may be required by an exchange to
increase the level of its initial margin payment, and initial margin
requirements might be increased generally in the future by regulatory action.

Subsequent "variation margin" payments are made to and from the
futures broker daily as the value of the futures position varies, a process
known as "marking to market." Variation margin does not involve borrowing, but
rather represents a daily settlement of the Fund's obligations to or from a
futures broker.

11
<PAGE> 41
When the Fund purchases an option on a future, the premium paid plus
transaction costs is all that is at risk. In contrast, when a Fund purchases
or sells a futures contract or writes a call or put option thereon, it is
subject to daily variation margin calls that could be substantial in the event
of adverse price movements. If the Fund has sufficient cash to meet daily
variation margin requirements, it might need to sell securities at a time when
such sales are disadvantageous. Purchasers and sellers of futures positions
and options on futures can enter into offsetting closing transactions by
selling or purchasing, respectively, an instrument identical to the instrument
held or written. Positions in futures and options on futures may be closed
only on an exchange or board of trade that provides a secondary market. Each
Fund intends to enter into futures transactions only on exchanges or boards of
trade where there appears to be a liquid secondary market. However, there can
be no assurance that such a market will exist for a particular contract at a
particular time.

Under certain circumstances, futures exchanges may establish daily
limits on the amount that the price of a future or option on a futures contract
can vary from the previous day's settlement price; once that limit is reached,
no trades may be made that day at a price beyond the limit. Daily price limits
do not limit potential losses because prices could move to the daily limit for
several consecutive days with little or no trading, thereby preventing
liquidation of unfavorable positions.

If a Fund were unable to liquidate a futures or option on a futures
contract position due to the absence of a liquid secondary market or the
imposition of price limits, it could incur substantial losses. The Fund would
continue to be subject to market risk with respect to the position. In
addition, except in the case of purchased options, the Fund would continue to
be required to make daily variation margin payments and might be required to
maintain the position being hedged by the future or option or to maintain cash
or securities in a segregated account.

Certain characteristics of the futures market might increase the risk
that movements in the prices of futures contracts or options on futures
contracts might not correlate perfectly with movements in the prices of the
investments being hedged. For example, all participants in the futures and
options on futures contracts markets are subject to daily variation margin
calls and might be compelled to liquidate futures or options on futures
contracts positions whose prices are moving unfavorably to avoid being subject
to further calls. These liquidations could increase price volatility of the
instruments and distort the normal price relationship between the futures or
options and the investments being hedged. Also, because initial margin deposit
requirements in the futures markets are less onerous than margin requirements
in the securities markets, there might be increased participation by
speculators in the future markets. This participation also might cause
temporary price distortions. In addition, activities of large traders in both
the futures and securities markets involving arbitrage, "program trading" and
other investment strategies might result in temporary price distortions.

FORWARD CURRENCY CONTRACTS

Each Fund may enter into forward currency contracts; such transactions
may serve as long hedges (for example, if the Fund seeks to buy a security
denominated in a foreign currency, it may purchase a forward currency contract
to lock in the $US price of the security) or as short hedges (the Fund
anticipates selling a security denominated in a foreign currency may sell a
forward currency contract to lock in the $US equivalent of the anticipated sale
proceeds).

A Fund may seek to hedge against changes in the value of a particular
currency by using forward contracts on another foreign currency or a basket of
currencies, the value of which the Adviser believes will have a positive
correlation to the values of the currency being hedged. In addition, a Fund
may use forward currency contracts to shift exposure to foreign currency
fluctuations from one country to another. For example, if a Fund owns
securities denominated in a foreign currency and the Adviser believes that
currency

12
<PAGE> 42
will decline relative to another currency, it might enter into a forward
contract to sell an appropriate amount of the first foreign currency, with
payment to be made in the second currency. Transactions that use two foreign
currencies are sometimes referred to as "cross hedges." Use of different
foreign currency magnifies the risk that movements in the price of the
instrument will not correlate or will correlate unfavorably with the foreign
currency being hedged.

The cost to a Fund of engaging in forward currency contracts varies
with factors such as the currency involved, the length of the contract period
and the market conditions then prevailing. Because forward currency contracts
are usually entered into on a principal basis, no fees or commissions are
involved. When a Fund enters into a forward currency contract, it relies on
the counterparty to make to take delivery of the underlying currency at the
maturity of the contract. Failure by the counterparty to do so would result in
the loss of any expected benefit of the transaction.

As is the case with future contracts, holders and writers of forward
currency contracts can enter into offsetting closing transactions, similar to
closing transactions on futures, by selling or purchasing, respectively, an
instrument identical to the instrument held or written. Secondary markets
generally do not exist for forward currency contracts, with the result that
closing transactions generally can be made for forward currency contracts only
by negotiating directly with the counterparty. Thus, there can be no assurance
that a Fund will in fact be able to close out a forward currency contract at a
favorable price prior to maturity. In addition, in the event of insolvency of
the counterparty, the Fund might be unable to close out a forward currency
contract at any time prior to maturity. In either event, the Fund would
continue to be subject to market risk with respect to the position, and would
continue to be required to maintain a position in securities denominated in the
foreign currency or to maintain cash or securities in a segregated account.

The precise matching of forward currency contract amounts and the
value of the securities involved generally will not be possible because the
value of such securities, measured in the foreign currency, will change after
the foreign currency contract has been established. Thus, a Fund might need to
purchase or sell foreign currencies in the spot (cash) market to the extent
such foreign currencies are not covered by forward contracts. The projection
of short-term currency market movements is extremely difficult, and the
successful execution of a short-term hedging strategy is highly uncertain.

FOREIGN CURRENCY TRANSACTIONS

Although each Fund values its assets daily in U.S. dollars, the Funds
are not required to convert their holdings of foreign currencies to U.S.
dollars on a daily basis. Each Fund's foreign currencies generally will be
held as "foreign currency call accounts" at foreign branches of foreign or
domestic banks. These accounts bear interest at negotiated rates and are
payable upon relatively short demand periods. If a bank became insolvent, a
Fund could suffer a loss of some or all of the amounts deposited. Each Fund
may convert foreign currency to U.S. dollars from time to time. Although
foreign exchange dealers generally do not charge a stated commission or fee for
conversion, the prices posted generally include a "spread," which is the
difference between the prices at which the dealers are buying and selling
foreign currencies.

WHEN-ISSUED SECURITIES

Normally, the settlement date on when-issued securities occurs within
one month of purchase commitment, but may take longer, albeit not more than 120
days after the trade date.

At the time a Fund commits to purchase a security on a when-issued
basis, it will record the transaction and reflect the value of that security in
determining its net asset value. The Adviser does not

13
<PAGE> 43
believe that any Fund's net asset value will be adversely affected by purchases
of securities on a when-issued basis.

While when-issued securities may be sold prior to settlement, the
Adviser intends to purchase such securities with the purpose of actually
acquiring them unless a sale appears desirable for investment reasons. Each
Fund will maintain a separate account with the Custodian, with a segregated
portfolio of cash and marketable securities at least equal in value to that
Fund's commitments to purchase when-issued securities. Such segregated
securities will mature (or, if necessary, be sold) on or before the settlement
date. When the time comes for a Fund to pay for when-issued securities, it
will meet its obligations from the then-available cash flow, the sale of the
securities held in this separate account, the sale of other securities;
although it would not normally expect to do so, the Fund may also meet this
obligation from the sale of the when-issued securities themselves, which may
have increased or decreased in market value.

When a Fund commits to purchase when-issued securities, it increases
its exposure to fluctuations in, e.g., market interest rates. Each Fund's
current policy is to limit its aggregate when-issued commitments to 15% of the
market value of its total assets less liabilities, other than the obligations
created by these commitments.

FOREIGN INVESTMENT COMPANIES

Some of the countries in which the Funds may invest may not permit
direct investment by outside investors. Investments in such countries may only
be permitted through foreign government-approved or -authorized investment
vehicles, which may include other investment companies. The Funds may also
invest in registered or unregistered closed-end investment companies.
Investing through such vehicles may involve frequent or layered fees or
expenses and may also be subject to limitation under the 1940 Act. Under the
1940 Act, a Fund may invest up to 10% of its assets in shares of investment
companies and up to 5% of its assets in any one investment company as long as
the investment does not represent more than 3% of the voting stock of the
acquired investment company.

REPURCHASE AGREEMENTS

In a repurchase agreement, a Fund buys a security from a counterparty
that has agreed to repurchase it at a mutually agreed upon date and repurchase
price, reflecting the interest rate effective for the term of the repurchase
agreement. The term of a repurchase agreement is usually from overnight to one
week and never exceeds one year; repurchase agreements with a maturity in
excess of seven days are considered illiquid. The counterparty's obligation to
repurchase is secured by the value of the underlying security; when the Fund
enters into a repurchase agreement, it always receives, as collateral,
underlying securities with a market value at least equal to the purchase price
(including accrued interest), and the Adviser will monitor, on an ongoing
basis, the value of the underlying securities to ensure that such value always
equals or exceeds the repurchase price plus accrued interest.

A Fund may, under certain circumstances, deem repurchase agreements
collateralized by U.S. government securities to be investments in U.S.
government securities.

BORROWING

Borrowing by a Fund will create the opportunity for increased net
income but, at the same time, will involve special risk considerations. Each
Fund will secure all borrowings; either the Custodian will segregate

14
<PAGE> 44
the Fund's assets securing the borrowing for the benefit of the lenders or
similar arrangements will be made with a suitable sub-custodian. If assets
used to secure the borrowing decrease in value, the Fund may be required to
pledge additional collateral to the lender in the form of cash or securities to
avoid liquidation of those assets. Proceeds of borrowing may be used for
investment purposes or to pay dividends.

Each Fund may also engage in dollar roll transactions and reverse
repurchase agreements, which may be considered a form of borrowing. In
addition, each Fund may borrow up to an additional one-third of its total
assets from banks for temporary or emergency purposes. A Fund will not
purchase securities when bank borrowings exceed one-third of its total assets.

MORTGAGE DOLLAR ROLLS AND REVERSE REPURCHASE AGREEMENTS

Each Fund may engage in reverse repurchase agreements to facilitate
portfolio liquidity, a practice common in the mutual fund industry, or for
arbitrage transactions discussed below. In a reverse repurchase agreement, the
Fund would sell a security and enter into an agreement to repurchase the
security at a specified future date and price. The Fund generally retains the
right to interest and principal payments on the security. Since the Fund
receives cash upon entering into a reverse repurchase agreement, it may be
considered a borrowing. (See "Borrowing" above.) When required by guidelines
of the SEC, the Fund will set aside permissible liquid assets in a segregated
account to secure its obligations to repurchase the security.

Each Fund may also enter into mortgage dollar rolls, in which the Fund
would sell mortgage-backed securities for delivery in the current month and
simultaneously contract to purchase substantially similar securities on a
specified future date. While the Fund would forego principal and interest paid
on the mortgage-backed securities during the roll period, it would be
compensated by the difference between the current sales price and the lower
price for the future purchase as well as by any equivalent to a lower forward
price. At the time the Fund would enter into a mortgage dollar roll, it would
set aside permissible liquid assets in a segregated account to secure its
obligation for the forward commitment to buy mortgage-backed securities.
Mortgage dollar roll transactions may be considered a borrowing by the funds.
(See "Borrowing" above.)

The mortgage dollar rolls and reverse repurchase agreements entered
into by the Funds may be used as arbitrage transactions in which a Fund will
maintain an offsetting position in investment grade debt obligations or
repurchase agreements that mature on or before the settlement date on the
related mortgage dollar roll or reverse repurchase agreements. Since the Fund
will receive interest on the securities or repurchase agreements in which it
invests the transaction proceeds, such transactions may involve leverage.
However, since such securities or repurchase agreements will be high quality
and will mature on or before the settlement date of the mortgage dollar roll or
reverse repurchase agreement, the Adviser believes that such arbitrage
transactions do not present the risks to the Fund that are associated with
other types of leverage.

INVESTMENT RESTRICTIONS

The following are fundamental investment limitations of the each Fund.
These fundamental limitations may not be changed without shareholder approval.

In accordance with these limitations, each Fund will not:

1. Invest in real estate or mortgages on real estate (although a Fund may
invest in marketable securities secured by real estate or interests
therein or issued by companies or investment trusts which invest in

15
<PAGE> 45
real estate or interests therein); invest in other open-end investment
companies (except in connection with a merger, consolidation,
acquisition or reorganization); invest in interests (other than
debentures or equity stock interests) in oil, gas or other mineral
exploration or development programs; or purchase or sell commodity
contracts (except futures contracts as described in the Fund's
prospectus).

2. Purchase any security (other than obligations of the U.S. Government,
its agencies or instrumentalities) if, as a result, as to 75% of the
Fund's total assets (i) more than 5% of the Fund's total assets would
then be invested in securities of any single issuer, or (ii) the Fund
would then own more than 10% of the voting securities of any single
issuer.

3. Act as an underwriter; issue senior securities except as set forth in
investment restrictions 5 and 6 below; or purchase on margin or sell
short, except that a Fund may make margin payments in connection with
futures, options and currency transactions.

4. Loan money, except that a Fund may (i) purchase a portion of an issue
of publicly distributed bonds, debentures, notes and other evidences
of indebtedness, (ii) enter into repurchase agreements and (iii) lend
its portfolio securities.

5. Borrow money, except that a Fund may borrow money from banks in an
amount not exceeding one-third of the value of its total assets
(including the amount borrowed).

6. Mortgage, pledge or hypothecate its assets (except as may be necessary
in connection with permitted borrowings); provided, however, this does
not prohibit escrow, collateral or margin arrangements in connection
with its use of options, futures contracts and options on future
contracts.

7. Invest 25% or more of its total assets in a single industry. For
purposes of this restriction, a foreign government is deemed to be an
"industry" with respect to securities issued by it.

If a Fund receives from an issuer of securities held by the Fund
subscription rights to purchase securities of that issuer, and if the Fund
exercises such subscription rights at a time when the Fund's portfolio holdings
of securities of that issuer would otherwise exceed the limits set forth in
Investment Restrictions 2 or 7 above, it will not constitute a violation if,
prior to receipt of securities upon exercise of such rights, and after
announcement of such rights, the Fund has sold at least as many securities of
the same class and value as it would receive on exercise of such rights.

ADDITIONAL RESTRICTIONS

Each Fund has adopted the following additional restrictions which
are not fundamental and which may be changed without Shareholder approval, to
the extent permitted by applicable law, regulation or regulatory policy. Under
these restrictions, each Fund may not:

1. Purchase or retain securities of any company in which Trustees or
officers of the Trust or of the Investment Manager, individually
owning more than 1/2 of 1% of the securities of such company, in the
aggregate own more than 5% of the securities of such company.

2. Invest more than 5% of the value of its total assets in securities of
issuers which have been in continuous operation less than three years.

16
<PAGE> 46
3. Invest more than 5% of its net assets in warrants whether or not
listed on the New York or American Stock Exchanges, and more than 2%
of its net assets in warrants that are not listed on those exchanges.
Warrants acquired in units or attached to securities are not included
in this restriction.

4. Purchase or sell real estate limited partnership interests.

5. Purchase or sell interests in oil, gas and mineral leases (other than
securities of companies that invest in or sponsor such programs).

6. Invest for the purpose of exercising control over management of any
company.

7. Purchase more than 10% of a company's outstanding voting securities.

8. Invest more than 15% of the Fund's total assets in securities that are
not readily marketable (including repurchase agreements maturing in
more than seven days and over-the-counter options purchased by the
Fund), including no more than 10% of its total assets in restricted
securities. Rule 144A securities determined by the Board of Trustees
to be liquid are not subject to the limitation on investment in
illiquid securities.

Whenever any investment policy or investment restriction states a
maximum percentage of a Fund's assets which may be invested in any security or
other property, it is intended that such maximum percentage limitation be
determined immediately after and as a result of that Fund's acquisition of such
security or property. The value of a Fund's assets is calculated as described
in its Prospectus under the heading "Valuation of Shares."

TRUSTEES AND OFFICERS OF THE TRUST

The name, age, address, principal occupation during the past five
years and other information about each Trustee and officer of the Trust is
shown below. Each Trustee who is considered to be an "interested person," as
defined in the 1940 Act, of the Trust is indicated by an asterisk.

<TABLE>
<CAPTION>
OFFICES WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
---------------- ------------ ----------------------
<S> <C> <C>
THOMAS L. HANSBERGER* (65) President and Director Chairman and Chief Executive officer,
515 East Las Olas Blvd. Hansberger Global Investors, Inc., 1994
Fort Lauderdale, FL to present; Chairman and Chief
Executive Officer, Templeton Worldwide,
1992 to 1993; Director and Chief
Executive Officer, Templeton, Galbraith
& Hansberger Ltd., 1985 to 1992.

THOMAS A. CHRISTENSEN (25) Treasurer Accountant, Hansberger Global
515 East Las Olas Blvd. Investors, Inc. 1995 to present;
Fort Lauderdale, FL Accountant, Arthur Andersen LLP, 1990
to 1994.
</TABLE>

17
<PAGE> 47
Vice President

Vice President

Secretary

Assistant Secretary

Assistant Treasurer

The Trust pays each Trustee who is not a director, officer, or
employee of the Adviser, or any affiliated company (a "disinterested trustee")
an annual fee of [$______], plus [$____] per Board meeting. In addition, the
Trust reimburses each disinterested Trustee for travel and other expenses
incurred in connection with attendance at such meetings. Other officers and
Trustees receive no compensation or expense reimbursement from the Trust.

As of [PROSPECTUS DATE], the officers and Trustees of the Trust, in
the aggregate, beneficially owned less than 1% of its outstanding shares.

PRINCIPAL SHAREHOLDERS

As of [PROSPECTUS DATE], Hansberger Global Investors, Inc. was the
sole shareholder of each Fund.

INVESTMENT ADVISER

Hansberger Global Investors, Inc. (the "Adviser") is the investment
adviser to each Fund. The Adviser is owned and controlled by Mr. Thomas L.
Hansberger who founded the Adviser in 1994. In addition to the Funds, the
Adviser is currently the investment manager of the Hansberger Global Fund plc.,
an investment company incorporated in Ireland. A brief description of the
investment advisory agreement ("Advisory Agreement") is set forth in the
Prospectus under "MANAGEMENT OF THE FUND -- Investment Adviser."

The Advisory Agreement, dated [_______ __], 1996, was approved by the
sole shareholder of each Fund on [VOTE DATE]. The Advisory Agreement will
continue in effect for two years following its effective date, and will
continue in effect thereafter only if such continuance is approved annually by
either the Board of Trustees or by vote of a majority of each Fund's
outstanding voting securities (as defined in the 1940 Act), and in either case
by the vote of a majority of the Trust's trustees who are neither parties to
the Advisory Agreement nor interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such approval. The Advisory
Agreement is terminable, without penalty, on 60 days' written notice by the
Board of Trustees, by vote of a majority of the Fund's outstanding voting
securities, or by the Adviser, and will terminate automatically in the event of
its assignment.

18
<PAGE> 48
The Adviser is responsible for investment decisions and supplies
investment research and portfolio management. At its expense, the Adviser
provides office space and all necessary office facilities, equipment and
personnel for servicing the investments of the Fund. The Adviser places all
orders for the purchase and sale of each Fund's portfolio securities at that
Fund's expense.

Except for expenses assumed by the Adviser as set forth above or by
the Distributor as described below with respect to the distribution of each
Fund's shares, each Fund is responsible for all its other expenses, including,
without limitation, interest charges, taxes, brokerage commissions, and similar
expenses, expenses of issue, sale, repurchase, or redemption of shares;
expenses of registering or qualifying shares of sale; expenses for printing and
distribution costs of Prospectuses and quarterly financial statements mailed to
existing shareholders; and charges of custodians, transfer agents (including
the printing and mailing of reports and notices to shareholders); registrars;
auditing and legal services, clerical services related to recordkeeping and
shareholder relations, printing stock certificates, and fees for trustees who
are not "interested persons" of the Adviser.

As compensation for its services, each Fund pays to the Adviser a fee
as described in the Prospectus.

The organizational expenses of each Fund in the amounts of
_______________, ______________, __________________, and ___________________
were advanced by the Adviser and will be reimbursed by the Fund over a period
of not more than 60 months from the date that Fund commenced operations.

The Advisory Agreement requires the Adviser to reimburse a Fund in the
event that the expenses and charges payable by that Fund in any fiscal year,
including the advisory fee but excluding taxes, interest, brokerage
commissions, and similar fees and to the extent permitted extraordinary
expenses, exceed a certain percentage of the average net asset value of the
Fund for such year. Such excess is determined by valuations made as of the
close of each business day of the year. This "certain percentage" is the most
restrictive percentage provided by the laws of the various states in which the
Fund's shares are qualified for sale. The most restrictive percentage
limitation currently applicable to the Fund is 2.5% of its average daily net
assets up to $30,000,000, 2% on the next $70,000,000 of its average daily net
assets and 1.5% of its average daily net assets in excess of $100,000,000.
Reimbursement of expenses in excess of the applicable limitation will be made
on a monthly basis and will be paid to the Fund by reduction of the Adviser's
fee, subject to later adjustment, month by month, for the remainder of the
fund's fiscal year. The Adviser may from time to time voluntarily absorb
expenses for the Fund in addition to the reimbursement of expenses in excess of
application limitations.

FUND TRANSACTIONS AND BROKERAGE

The Adviser is responsible for decisions to buy and sell securities
for each Fund and for the placement of a Fund's investment business and the
negotiation of the commissions to be paid on such transactions. It is the
policy of the Adviser to seek the best execution at the best security price
available with respect to each transaction, in light of the overall quality of
brokerage and research services provided to the Adviser or the Fund. In
over-the-counter transactions, orders are placed directly with a principal
market maker unless it is believed that better price and execution can be
obtained during a broker. The best price to a Fund means the best net price
without regard to the mix between purchase or sale price and commissions, if
any. In selecting broker-dealers and in negotiating commissions, the Adviser
considers a variety of factors, including best price and execution, the full
range of brokerage services provided by the broker, as well as its capital
strength and stability, and the quality of the research and research services
provided by the broker. Consistent with the foregoing primary considerations,
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc. and such other policies as the Trustees may determine, the Adviser may
consider

19
<PAGE> 49
sales of shares of the Funds as a factor in the selection of broker-dealers to
execute the Funds' portfolio transactions.

Section 28(e) of the Securities Exchange Act of 1934 ("Section 28(e)")
permits an investment adviser, under certain circumstances, to cause an account
to pay a broker or dealer a commission for effecting a transaction in excess of
the amount of commission another broker or dealer would have charged for
effecting the transaction in recognition of the value of the brokerage and
research services provided by the broker or dealer. Brokerage and research
services include (a) furnishing advice as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities; (b)
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy, and the performance of
accounts; and (c) effecting securities transactions and performing functions
incidental thereto (such as clearance, settlement, and custody).

In carrying out the provisions of the Advisory Agreements, the Adviser
may cause a Fund to pay, to a broker that provides brokerage and research
services to the Adviser, a commission for effecting a securities transaction in
excess of the amount another broker would have charged for effecting the
transaction. The Adviser believes it is important to its investment
decision-making process to have access to independent research. The Advisory
Agreements provide that such higher commissions will not be paid by a Fund
unless (a) the Adviser determines in good faith that the amount is reasonable
in relation to the services in terms of the particular transaction or in terms
of the Adviser's overall responsibilities with respect to the accounts as to
which it exercises investment discretion; (b) such payment is made in
compliance with provisions of Section 28(e), other applicable state and federal
laws, and the Advisory Agreement; and (c) in the opinion of the Adviser, the
total commissions paid by the Fund will be reasonable in relation to the
benefits to the Fund over the long term. The investment advisory fees paid by
each Fund under its Advisory Agreement are not reduced as a result of the
Adviser's receipt of research services.

Generally, research services provided by brokers may include
information on the economy, industries, groups of securities, individual
companies, statistical information, accounting and tax law interpretations,
political developments, legal developments affecting portfolio securities,
technical market action, pricing and appraisal services, credit analysis, risk
measurement analysis, performance analysis, and analysis of corporate
responsibility issues. Such research services are received are primarily in
the form of written reports, telephone contacts, and personal meetings with
security analysts. In addition, such research services may be provided in the
form of access to various computed-generated data, computed hardware and
software, and meetings arranged with corporate and industry spokesperson,
economists, academicians, and government representatives. In some cases,
research services are generated by third parties but are provided to the
Adviser by or through brokers. Such brokers may pay for all or a portion of
computer hardware and software costs relating to the pricing of securities.

Where the Adviser itself receives both administrative benefits and
research and brokerage services from the services provided by brokers, it makes
a good faith allocation between the administrative benefits and the research
and brokerage services, and will pay for any administrative benefits with cash.
In making good faith allocations of costs between administrative benefits and
research and brokerage services, a conflict of interest may exist by reason of
the Adviser's allocation of the costs of such benefits and services between
those that primarily benefit the Adviser and those that primarily benefit the
funds and other advisory clients.

From time to time, the Adviser may purchase securities for a Fund in a
fixed price offering. In these situations, the seller may be a member of the
selling group that will, in addition to selling the securities to the Funds and
other advisory clients, provide the Adviser with research. The National
Association of Securities Dealers has adopted rules expressly permitting these
types of arrangements under certain circumstances.

20
<PAGE> 50
Generally, the seller will provide research "credits" in these situations at a
rate that is higher than the rate available for typical secondary market
transactions. These arrangements may not fall within the safe harbor of
Section 28(e).

Each year, the Adviser will consider the amount and nature of research
and research services provided by brokers, as well as the extent to which such
services are relied upon, and attempts to allocate a portion of the brokerage
business of the Fund and other advisory clients on the basis of that
consideration. In addition, brokers may suggest a level of business they would
like to receive in order to continue to provide such services. The actual
brokerage business received by a broker may be more or less than the suggested
allocations, depending upon the Adviser's evaluation of all applicable
considerations.

The Adviser may direct the purchase of securities on behalf of each
Fund and other advisory clients in secondary market transactions, in public
offerings directly from an underwriter, or in privately negotiated transactions
with an issuer. When the Adviser believes the circumstances so warrant,
securities purchased in public offerings may be resold shortly after
acquisition in the immediate aftermarket for the security in order to take
advantage of price appreciation from the public offering price or for other
reasons. Short-term trading of securities acquired in public offerings, or
otherwise, may result in higher portfolio turnover and associated brokerage
expenses.

The Adviser is responsible for selecting brokers in connection with
foreign securities transactions. The fixed commissions paid in connection with
most foreign stock transactions are usually higher than negotiated commissions
on U.S. stock transactions. Foreign stock exchanges and brokers are subject to
less government supervision and regulation as compared with the U.S. exchanges
and brokers. In addition, foreign security settlements may in some instances
be subject to delays and related administrative uncertainties.

The Adviser places portfolio transactions for other advisory accounts,
including other mutual funds managed by the Adviser. Research services
furnished by firms through which the Fund effects its securities transactions
may be used by the Adviser in servicing all of its accounts; not all of such
services may be used by the Adviser in connection with each Fund. In the
opinion of the Adviser, it is not possible to measure separately the benefits
from research services to each of the accounts (including the Fund) managed by
the Adviser. Because the volume and nature of the trading activities of the
accounts are not uniform, the amount of commissions in excess of those charged
by another broker paid by each account for brokerage and research services will
vary. However, in the opinion of the Adviser, such costs to each Fund will not
be disproportionate to the benefits received by it on a continuing basis.

The Adviser seeks to allocate portfolio transactions equitably
whenever concurrent decisions are made to purchase or sell securities by a Fund
and another advisory account. In some cases, this procedure could have an
adverse effect on the price or the amount of securities available to the Fund.
In making such allocations between a Fund and other advisory accounts, the main
factors considered by the Adviser are the respective investment objectives, the
relative size of portfolio holdings of the same or comparable securities, the
availability of cash for investment, the size of investment commitments
generally held, and the opinions of the persons responsible for recommending
the investment.

Because each Fund is newly-organized, it paid no brokerage commissions
during the past fiscal year.

It is anticipated that the annual turnover rate of each Fund will not
exceed 100% under normal circumstances.

21
<PAGE> 51
CUSTODIAN

The Chase Manhattan Bank, N.A., 4 Chase Metro Tech Center, 18th Floor,
Brooklyn, New York 11245, serves as custodian of the assets of the Trust and
has custody of all of its securities and cash. The Custodian delivers and
receives payment for securities sold, receives and pays for securities
purchased, collects income from investments, and performs other duties, all as
directed by the officers of the Trust. In addition, the Trust, with the
approval of the Board of Trustees and subject to the rules of the SEC, may have
sub-custodians in those foreign countries in which it invests its assets. The
Custodian and sub-custodians are in no way responsible for any of the
investment policies or decisions of a Fund.

TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT

Firstar Trust Company, the Trust's administrator, acts as transfer
agent and dividend-disbursing agent for the Fund. The Transfer Agent is
compensated under the Administration Agreement discussed in the Prospectus.

From time to time, the Fund, directly or indirectly through
arrangements with the Adviser, may pay amounts to third parties that provide
transfer agent and other administrative services relating to the Fund to
persons who beneficially own interests in the Fund, such as participants in
401(k) plans. These services may include, among other things, sub-accounting
services, answering inquiries relating to the Fund, transmitting, on behalf of
the Fund, proxy statements, annual reports, updated Prospectuses, other
communications regarding the Fund, and related services as the Fund or
beneficial owners may reasonably request. In such cases, the Fund will not pay
fees at a rate that is greater than the rate the Fund is currently paying the
Adviser for providing these services to Fund shareholders.

TAXES

GENERAL

As indicated under "Taxes" in the Prospectus, each Fund intends to
continue to qualify annually for treatment as a regulated investment company
("RIC") under the Code. This qualification does not involve government
supervision of a Fund's management practices or policies.

In order to qualify for treatment as a RIC under the code, each Fund
must distribute to its shareholder for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment
income, net short-term capital gain, and net gains from certain foreign
currency transactions ("Distribution Requirement") and must meet several
additional requirements. These requirements include the following: (1) the
Fund must derive at least 90% of its gross income each taxable year from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of securities or foreign currencies or other
income (including gains from options, futures, or forward contracts) derived
with respect to its business of investing in securities of those currencies
("Income Requirement"); (2) the Fund must derive less than 30% of its gross
income each taxable year from the sale or other disposition of securities, or
any of the following that were held for less than three months - options or
futures (other than those on foreign currencies), or foreign currencies (or
options and futures with respect to securities) ("30% Limitation"); (3) at the
close of each quarter of the Fund's taxable year, at least 50% of the value of
its total assets must be represented by cash and cash items, U.S. government
securities, securities of other RICs, and other securities, with these other
securities limited, in respect of any one issuer, to an amount that does not
exceed 5% of the value of the Fund's total assets and that does not represent
more than 10% of the issuers

22
<PAGE> 52
outstanding voting securities; and (4) at the close of each quarter of the
Fund's taxable year, not more than 25% of the value of its total assets may be
invested in securities (other than U.S. government securities or the securities
of other RICs) of any one issuer.

If shares are sold at a loss after being held for six months or less,
the loss will be treated as long-term, instead of short-term, capital loss to
the extent of any capital gain distributions received on those shares.

Each Fund will be subject to a nondeductible 4% excise tax ("Excise
Tax") to the extent it fails to distribute by the end of any calendar year
substantially all of its ordinary income for that year and capital gain net
income for the one-year period ending on October 31 of that year, plus certain
other amounts.

FOREIGN TRANSACTIONS

Dividends and interest received by a Fund may be subject to income,
withholding, or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. If more than 50% of the value of
a Fund's total assets at the close of its taxable year consists of securities
of foreign corporations, it will be eligible to, and may, file an election with
the Internal Revenue Service that would enable its shareholders, in effect, to
receive the benefit of the foreign tax credit with respect to any foreign and
U.S. possessions income taxes paid by it. Pursuant to the elections, the Funds
would treat those taxes as dividends paid to its shareholders and each
shareholder would be required to (1) include in gross income, and treat as paid
by him, his proportionate share of those taxes, (2) treat his share of those
taxes and any dividend paid by the Fund that represents income from foreign or
U.S. possessions sources as his own income from those sources, and (3) either
deduct the taxes deemed paid by him in computing his taxable income, or,
alternatively, use the foregoing information in calculating the foreign tax
credit against his federal income tax. Each Fund will report to its
shareholders shortly after each taxable year their respective shares of its
income from sources within, and taxes paid to, foreign countries and U.S.
possessions if it makes this elections.

Each Fund maintains its accounts and calculates its income in U.S.
dollars. In general, gain or loss (1) from the disposition of foreign
currencies and forward currency contracts, (2) from the disposition of
foreign-currency-denominated debt securities that are attributable to
fluctuations in exchange rates between the date the securities are acquired and
their disposition date, and (3) attributable to fluctuations in exchange rates
between the time the Fund accrues interest or other receivables or expenses or
other liabilities denominated in a foreign currency and the time the Fund
actually collects those receivables or pays those liabilities will be treated
as ordinary income or loss. A foreign-currency-denominated debt security
acquired by a Fund may bear interest at a high normal rate that takes into
account expected decreased in the value of the principal amount of the security
due to anticipated currency devaluations; in that case, the Fund would be
required to include the interest in income as it accrues but generally would
realize a currency loss with respect to the principal only when the principal
was received (through disposition or upon maturity).

Each Fund may invest in the stock of "passive foreign investment
companies" ("PFICs"). A PFIC is a foreign corporation that, in general, meets
either of the following tests: (1) at least 75% of its gross income is passive
or (2) an average of at least 50% of its assets produce, or are held for the
production of, passive income. Under certain circumstances, a Fund will be
subject to federal income tax on a portion of any "excess distribution"
received on the stock or of any gain on disposition of the stock (collectively,
"PFIC income"), plus interest thereon, even if the Fund distributes the PFIC
income as a taxable dividend to its

23
<PAGE> 53
shareholders. The balance of the PFIC income will be included in the Fund's
investment company taxable income and, accordingly, will not be taxable to it
to the extent that income is distributed to its shareholders. If a Fund
invests in a PFIC and elects to treat the PFIC as a "qualified electing fund,"
then in lieu of the foregoing tax and interest obligation, the Fund will be
required to include in income each year its pro rata share of the qualified
electing fund's annual ordinary earnings and net capital gain (the excess of
net long-term capital gain over net short-term capital loss) - which probably
would have to be distributed to its shareholders to satisfy the Distribution
Requirement and avoid imposition of the Excise Tax - even if those earnings and
gain were not received by the Fund. In most instances it will be very
difficult, if not impossible, to make this election because of certain of its
requirements.

Pursuant to proposed regulations, open-end RICs such as the Funds
would be entitled to elect to "mark-to-market" their stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each
taxable year the excess, as of the end of that year, of the fair market value
of each such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).

DERIVATIVE INSTRUMENTS

The use of derivatives strategies, such as purchasing and selling
(writing) options and futures and entering into forward currency contracts,
involves complex rules that will determine for income tax purposes the
character and timing of recognition of the gains and losses the Fund realizes
in connection therewith. Gains from the disposition of foreign currencies
(except certain gains therefrom that may be excluded by future regulations),
and income from transaction in options, futures, and forward currency contracts
derived by a Fund with respect to its business of investing in securities or
foreign currencies, will qualify as permissible income under the Income
Requirement. However, income from the disposition of options and futures
(other than those on foreign currencies) will be subject to the 30% Limitation
if they are held for less than three months. Income from the disposition of
foreign currencies, and options, futures, and forward contracts on foreign
currencies, that are not directly related to a Fund's principal business of
investing in securities (or options and futures with respect to securities)
also will be subject to the 30% Limitation if they are held for less than three
months.

If a Fund satisfies certain requirements, any increase in value of a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether the Fund satisfies the
30% Limitation. Thus, only the net gain (if any) from the designated hedge
will be included in gross income for purposes of that limitation. Each Fund
intends that, when it engages in hedging strategies, the hedging transactions
will qualify for this treatment, but at the present time it is not clear
whether this treatment will be available for all of the Fund's hedging
transactions. To the extent this treatment is not available or is not elected,
a Fund may be forced to defer the closing out of certain options, futures, or
forward currency contracts beyond the time when it otherwise would be
advantageous to do so, in order for the Fund to continue to qualify as a RIC.

For federal income tax purposes, each Fund is required to recognize as
income for each taxable year its net unrealized gains and losses on options,
futures, or forward currency contracts that are subject to section 1256 of the
Code ("Section 1256 Contracts") and are held by the Fund as of the end of the
year, as well as gains and losses on Section 1256 Contracts actually realized
during the year. Except for Section 1256 Contracts that are part of a "mixed
straddle" and with respect to which a Fund makes a certain election, any gain
or loss recognized with respect to Section 1256 Contracts is considered to be
60% long-term capital gain or loss and 40% short-term capital gain or loss,
without regard to the holding period of the Section 1256

24
<PAGE> 54
Contract. Unrealized gains on Section 1256 Contracts that have been held by a
Fund for less than three months as of the end of its taxable year, and that are
recognized for federal income tax purposes as described above, will not be
considered gains on investments held for less than three months for purposes of
the 30% Limitation.

DETERMINATION OF NET ASSET VALUE

As set forth in the Prospectus under the caption "Valuation of Shares"
the net asset value of each Fund will be determined as of the close of trading
on each day the New York Stock Exchange (the "NYSE") is open for trading. The
NYSE is open for trading Monday through Friday except on New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day. Additionally, if any of the holidays
falls on a Sunday, the NYSE will not be open for trading on the succeeding
Monday, unless unusual business conditions exist, such as the ending of a
monthly or yearly accounting period.

Debt securities are valued by a pricing service that utilizes
electronic data processing techniques to determine values for normal
institutional-sized trading units of debt securities without regard to sale or
bid prices when such values are believed to more accurately reflect the fair
market value for such securities. Otherwise, sale or bid prices when such
values are believed to more accurately reflect the fair market value for such
securities. Otherwise, sale or bid prices are used. Any securities or other
assets for which market quotations are not readily available are valued at fair
value as determined in good faith by the Board of Trustees. Debt securities
having remained maturities of 60 days or less when purchased are valued by the
amortized cost method when the Board of Trustees determined that the fair value
of such securities is their amortized cost. Under this method of valuation, a
security is initially valued at its acquisition cost, and thereafter, accretion
of any discount or amortization of any premium is assumed each day, regardless
of the impact of the fluctuating rates on the market value of the instrument.

ADDITIONAL SHAREHOLDER INFORMATION

TELEPHONE EXCHANGE AND REDEMPTION PRIVILEGES

Shares of a Fund and any other mutual funds sponsored by the Adviser
may be exchanged for each other without charge at relative net asset values
once per six month period. Exchanges will be effected by redemption of shares
of the Fund held and purchase of shares of the fund for which Fund shares are
being exchanged (the "New Fund"). For federal income tax purposes, any such
exchange constitutes a sale upon which a capital gain or loss will be realized,
depending upon whether the value of the shares being exchanged is more or less
than the shareholder's adjusted cost basis. If you are interested in
exercising any of these exchange privileges, you should obtain Prospectuses of
other sponsored funds from the Adviser. Upon a telephone exchange, the
transfer agent establishes a new account in the New Fund with the same
registration and dividend and capital gains options as the redeemed account,
unless otherwise specified, and confirms the purchase to you.

The Telephone Exchange and Redemption Privileges are available only in
states where shares of the New Fund may be sold, and may be modified or
discontinued at any time. Additional information regarding the Telephone
Exchange and Redemption Privileges is contained in the Prospectus.

SIGNATURE GUARANTEES

25
<PAGE> 55
The signature(s) of redeeming shareholders must generally be
guaranteed by an "eligible guarantor," including: (1) national or state banks,
savings associations, savings and loan associations, trust companies, savings
banks, industrial loan companies and credit unions; (2) national securities
exchanges, registered securities associations and clearing agencies; (3)
securities broker-dealers which are members of a national securities exchange
or clearing agency or which have minimum net capital of $100,000, or (4)
institutions that participate in the Securities Transfer Agent Medallion
Program ("STAMP") or other recognized signature medallion program. A notarized
signature will not be sufficient. If share are registered in more than one
name, the signature of each of the redeeming Shareholders must be guaranteed.

REDEMPTIONS IN KIND

If the Board of Trustees determines that it would be detrimental to
the best interests of the remaining shareholders of the Fund to make payment
wholly or partly in cash, the Fund may pay the redemption proceeds in whole or
in part by a distribution in-kind of portfolio securities, in conformity with
applicable rules of the SEC. Distributions-in-kind will be made in readily
marketable securities. Investors may incur brokerage charges on the sale of
portfolio securities received in distributions in kind.

ORGANIZATION OF THE TRUST AND THE FUNDS

The Funds are separate series of an open-end investment company
organized as a trust under the laws of the Commonwealth of Massachusetts, of a
type commonly known as a Massachusetts business trust. The Board of Trustees
may allocate assets, liabilities, income and expenses to the Trust's separate
series (and classes, if any), and may divide or redivide any unissued shares of
the Trust into one or more additional series. Fractional shares have the same
rights proportionately as do full shares. Shares have no subscription or
preemptive rights and only such conversion or exchange rights as the Board of
Trustees may grant in its discretion.

When issued for payment as described in the Prospectus and this SAI,
each Fund's shares will be fully paid and non-assessable, subject only to the
possibility of shareholder liability described in the Prospectus. All
consideration received by the Trust for shares of any Fund and all assets in
which such consideration is invested belong to that Fund and would be subject
to the liabilities related thereto.

LIMITATION OF TRUSTEES' LIABILITY

The Declaration of Trust provides that a Trustee shall be liable only
for his or her own willful defaults and, if reasonable care has been exercised
in the selection of officers, agents, employees or investment advisers, shall
not be liable for any neglect or wrongdoing of any such person. The
Declaration of Trust also provides that the Trust will indemnify its Trustees
and officers against liabilities and expenses incurred in connection with
actual or threatened litigation in which they may be involved because of their
offices with the Trust unless it is determined in the manner provided in the
Declaration of Trust that they have not acted in good faith in the reasonable
belief that their actions were in the best interests of the Trust. However,
nothing in the Declaration of Trust shall protect or indemnify a Trustee
against any liability for his or her willful misfeasance, bad faith, gross
negligence or reckless disregard of his or her duties.

PERFORMANCE INFORMATION

As described under "Performance Information" in the Prospectus, each
Fund's historical performance or return may be shown in the form of "average
annual total return," "total return," and "cumulative total return." From time
to time, the Adviser may voluntarily waive all or a portion of its management
fee and/or

26
<PAGE> 56
absorb certain expenses for a Fund. Without waivers and absorption of
expenses, performance results will be lower. No historical performance
represents the future performance of the Fund.

27
<PAGE> 57
AVERAGE ANNUAL TOTAL RETURN

The average annual total return of a Fund is computed by funding the
average annual compounded rates of return over these periods that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:
n
P(1+T) =ERV

P= a hypothetical initial payment of $10,000.
T= average annual total return.
n= number of years.
ERV= ending redeemable value of a hypothetical $10,000
payment made at the beginning of the stated periods at the end
of the stated periods.

TOTAL RETURN

Calculation of a Fund's total return is not subject to a standardized
formula. Total return performance for a specific period is calculated by first
taking an investment (assumed below to be $10,000) ("initial investment") in
the Fund's shares on the first day of the period and computing the "ending
value" of that investment at the end of the period. The total return
percentage is then determined by subtracting the initial investment from the
ending value and dividing the remainder by the initial investment and
expressing the result as a percentage. The calculation assumes that all income
and capital gains dividends paid by the Fund have been reinvested at net asset
value on the reinvestment dates during the period. Total return may also be
shown as the increased dollar value of the hypothetical investment over the
period.

CUMULATIVE TOTAL RETURN

Cumulative total return represents the simple change in value of an
investment over a stated period and may be quoted as a percentage or as a
dollar amount. Total returns and cumulative total returns may be broken down
into their components of income and capital (including capital gains and
changes in share price) in order to illustrate the relationship between these
factors and their contributions to total return.

The Funds' performance figures will be based upon historical results
and will not represent future performance. Each Fund's shares are sold at net
asset value per share. Each Fund's returns and net asset value will fluctuate
and shares are redeemable at the then current net asset value, which may be
more or less than original cost. Factors affecting a Fund's performance
include general market conditions, operating expenses, and investment
management. Any additional fees charged by a dealer or other financial
services firm will reduce the returns described in this section.

COMPARISONS

(1) U.S. TREASURY BILLS, NOTES, OR BONDS
Investors may want to compare the performance of a Fund to that of
U.S. Treasury bills, notes or bonds, which are issued by the U.S. government.
Treasury obligations are issued in selected denominations. Rates of Treasury
obligations are fixed at the time of issuance and payment of principal and
interest is backed by the full faith and credit of the United States Treasury.
The market value of such instruments will generally

28
<PAGE> 58
fluctuate inversely with interest rates prior to maturity and will equal par
value at maturity. Generally, the values of obligations with shorter
maturities will fluctuate less than those with longer maturities.

(2) CERTIFICATES OF DEPOSIT
Investors may want to compare a Fund's performance to that of
certificates of deposit offered by banks and other depositary institutions.
Certificates of deposit may offer fixed or variable interest rates and
principal is guaranteed and may be insured. Withdrawal of the deposits prior
to maturity normally will be subject to a penalty. Rates offered by banks and
other depositary institutions are subject to change at any time specified by
the issuing institution.

(3) MONEY MARKET FUND
Investors may want to compare performance of a Fund to that of money
market funds. Money market fund yields will fluctuate and shares are not
insured, but share values usually remain stable.

(4) LIPPER ANALYTICAL SERVICES, INC. ("LIPPER") AND OTHER INDEPENDENT
RANKING ORGANIZATIONS
From time to time, in marketing and other fund literature, a Fund's
performance may be compared to the performance of other mutual funds in general
or to the performance of particular types of mutual funds, with similar
investment goals, as tracked by independent organizations. Among these
organizations, Lipper, a widely used independent research firm which ranks
mutual funds by overall performance, investment objectives, and assets, may be
cited. Lipper performance figures are based on changes in net asset value,
with all income and capital gain dividends reinvested. Such calculations do
not include the effect of any sales charges imposed by other funds. Each Fund
will be compared to Lipper's appropriate funding category, that is, by fund
objective and portfolio holdings. Each Fund's performance may also be compared
to the average performance of its Lipper category.

(5) MORNINGSTAR, INC.
Each Fund's performance may also be compared to the performance of
other mutual funds by Morningstar, Inc., which ranks funds on the basis of
historical risk and total return. Morningstar's rankings range from five stars
(highest) to one star (lowest) and represent Morningstar's assessment of the
historical risk level and total return of a fund as a weighted average for 3,
5, and 10 year periods. Rankings are not absolute and do not represent future
results.

(6) INDEPENDENT SOURCES
Evaluations of Fund performance made by independent sources may also
be used in advertisements concerning a Fund, including reprints of, or
selections from, editorials or articles about the Fund, especially those with
similar objectives. Sources for Fund performance information and articles
about the Funds may include publications such as Money, Forbes, Kiplinger's,
Smart Money, Morningstar, Inc.; Financial World; Business Week; U.S. News and
World Report, The Wall Street Journal, Barron's and a variety of investment
newsletters.

(7) INDICES
A Fund may compare its performance to a wide variety of indices
including the Consumer Price Index; Dow Jones Average of 30 Industrials; NASDAQ
Over-the-Counter Composite Index; Standard & Poor's 500 Stock Index; Standard &
Poor's 400 Mid-Cap Stock Index; Standard & Poor's 600 Small-Cap Index; Wilshire
4500 Index; Wilshire 5000 Index; Wilshire Small Cap Index; Wilshire Small Cap
Growth Index; Wilshire Small Cap Value Index; Wilshire Midcap 750 Index;
Wilshire Midcap Growth Index; Wilshire Midcap Value Index; Wilshire Large Cap
Growth Index; Russell 1000 Index; Russell 1000 Growth Index; Russell 2000
Index; Russell 2000 Small Stock Index; Russell 2000 Growth Index; Russell 2000
Value Index; Russell 2500 Index; Russell 3000 Stock Index; Russell Mid Cap
Index; Russell Mid Cap Growth Index; Russell Mid Cap

29
<PAGE> 59
Value Index; Value Line Index; Morgan Stanley Capital International EAFE(R)
Index (Net Dividend, Gross Dividend, and Price-Only); and Morgan Stanley
Capital International World Index.

In addition, a Fund may compare its performance to certain other
indices that measure stock market performance in geographic areas in which the
Fund may invest. The market prices and yields of the stocks in these indexes
will fluctuate. A Fund may also compare its portfolio weighting to the EAFE
Index weighting, which represents the relative capitalization of the major
overseas markets on a dollar-adjusted basis.

There are differences and similarities between the investments that
the Fund may purchase for its portfolio and the investments measured by these
indices.

(8) HISTORICAL INFORMATION
Because each Fund's investments are denominated primarily in foreign
currencies, the strength or weakness of the U.S. dollar as against these
currencies may account for part of the Fund's investment performance.
Historical information regarding the value of the dollar versus foreign
currencies may be used from time to time in advertisements concerning a Fund.
Such historical information is not indicative of future fluctuations in the
value of the U.S. dollar against these currencies. Marketing materials may
cite country and economic statistics and historical stock market performance
for any of the countries in which the Fund invests, including the following:
population growth, gross domestic product, inflation rate, average stock market
price earnings ratios and the total value of stock markets. Sources for such
statistics may include official publications of various foreign governments,
exchanges, or investment research firms. In addition, marketing materials may
cite the Adviser's views or interpretations of such statistical data or
historical performance.

(9) HISTORICAL ASSET CLASS RETURNS
From time to time, marketing materials may portray the historical
returns of various asset classes. Such presentations will typically compare
the average annual rates of return of inflation, U.S. Treasury bills, bonds,
common stocks, and small stocks. There are important differences between each
of these investments that should be considered in viewing any such comparison.
The market value of stocks will fluctuate with market conditions, and
small-stock prices generally will fluctuate more than large-stock prices. Bond
prices generally will fluctuate inversely with interest rates and other market
conditions, and the prices of bonds with longer maturities generally will
fluctuate more than those of shorter-maturity bonds. Interest rates for bonds
may be fixed at the time of issuance, and the payment of principal and interest
may be guaranteed by the issuer and, int he case of U.S. Treasury obligations,
backed by the full faith and credit of the U.S. Treasury.

(10) OTHER FUND ADVISED BY HANSBERGER
Hansberger Global Investors, Inc. advises a number of mutual funds
investing in a variety of markets. The Fund may be compared, from time to
time, to other mutual funds advised by Hansberger Global Investors, Inc. based
on a risk/reward profile. In general, the degree of risk associated with any
investment product is varies directly with that product's potential level of
reward. This correlation or any Fund's individual profile may be described or
discussed in marketing materials; this discussion will not be used to compare
the risk and reward potential of the Fund with that of any mutual fund or
investment product other than those advised by Hansberger Global Investors,
Inc. Marketing materials may also discuss the relationship between risk and
reward as it relates to an individual investor's portfolio.

ADDITIONAL FUND INFORMATION

(1) PORTFOLIO CHARACTERISTICS

30
<PAGE> 60
In order to present a more complete picture of a Fund's portfolio,
marketing materials may include various actual or estimated portfolio
characteristics, including but not limited to median market capitalizations,
earnings per share, alphas, betas, price/earnings ratios, returns on equity,
dividend yields, capitalization ranges, growth rates, price/book ratios, top
holdings, sector breakdowns, asset allocations, quality breakdowns, and
breakdowns by geographic region.

(2) MEASURES OF VOLATILITY AND RELATIVE PERFORMANCE

Occasionally statistics may be used to specify Fund volatility or
risk. The general premise is that greater volatility connotes greater risk
undertaken in achieving performance. Measure of volatility or risk are
generally used to compare the Fund's net asset value or performance relative to
a market index. One measure of volatility is beta. Beta is the volatility of
a fund relative to the total market as represented by the Standard & Poor's 500
Stock Index. A beta of more than 1.00 indicated volatility greater than the
market, and a beta of less than 1.00 indicates volatility less than the market.
Another measures of volatility or risk is standard deviation. Standard
deviation is a statistical tool that measures the degree to which a fund's
performance has varied from its average performance during a particular time
period.

Standard deviation is calculated using the following formula:

2
Standard deviation=the square root of Sigma(x -x )
i m
---------------
n-1

where Sigma= "the sum of,"

x = each individual return during the time period,
i

x = the average return over the time period, and
m

n = the number of individual returns during the time period.

Statistics may also be used to discuss a Fund's relative performance.
One such measure is alpha. Alpha measures the actual return of a fund compared
to the expected return of a fund given its risk (as measured by beta). The
expected return is based on how the market as a whole performed, and how the
particular fund has historically performed against the market. Specifically,
alpha is the actual return less the expected return. The expected return is
computed by multiplying the advance or decline in a market representation by
the fund's beta. A positive alpha quantifies the value that the fund manager
has added, and a negative alpha quantifies the value that the fund manager has
lost.

Other measures of volatility and relative performance may be used as
appropriate. However, all such measures will fluctuate and do not represent
future results.

GENERAL INFORMATION

BUSINESS PHILOSOPHY

The Adviser is an independent investment adviser, owned by
professionals active in its management. Recognizing that the investors are the
focus of its business, the Adviser strives for excellence both in investment
management and in the service provided to investors. This commitment affects
many aspects of the business, including professional staffing, product
development, investment management, and service delivery.

31
<PAGE> 61
The increasing complexity of the capital markets requires specialized
skills and processes for each asset class and style. Therefore, the Adviser
believes that active management should produce greater returns than a passively
managed index. The Adviser has brought together a group of top-flight
investment professionals with diverse product expertise, and each concentrates
on their investment specialty. The Adviser believes that people are the firm's
most important asset. For this reason, continuity of professionals is critical
to the firm's long-term success.

INVESTMENT ENVIRONMENT

Discussions of economic, social and political conditions and their
impact on the Funds may be used in advertisements and sales materials. Such
factors that may affect a Fund include changes in interest rates, political
developments, the competitive environment, consumer behavior, industry trends,
technological advances, macroeconomic trends, and the supply and demand of
various financial instruments. In addition, marketing materials may cite the
Adviser's views or interpretations of such factors.

INDEPENDENT ACCOUNTANTS

Arthur Andersen LLP, [ADDRESS], are the independent accountants for
the Trust, providing audit services and assistance and consultation with
respect to the preparation of filings with the SEC.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP, 1800 M Street, N.W., Washington, D.C.
20036, acts as legal counsel for the Trust.

FINANCIAL STATEMENTS

32
<PAGE> 62
RATINGS APPENDIX

STANDARD & POOR'S

A Standard & Poor's corporate or municipal debt rating is a current
assessment of the creditworthiness of an obligor with respect to a specific
obligation. This assessment may take into consideration obligors such as
guarantors, insurers, or lessees.

The debt rating is not a recommendation to purchase, sell, or hold a
security, as it does not comment on market price or suitability for a
particular investor.

The ratings are based, in varying degrees, on the following
considerations:

(1) Likelihood of default. The rating assesses the obligor's capacity
and willingness as to timely payment of interest and repayment of principal in
accordance with the terms of the obligation.

(2) The obligation's nature and provisions.

(3) Protection afforded to, and relative position of, the obligation
in the event of bankruptcy, reorganization, or other arrangement under
bankruptcy laws and other laws affecting creditors' rights.

Likelihood of default is indicated by an issuer's senior debt rating.
If senior debt is not rated, an implied senior debt rating is determined.
Subordinated debt usually is rated lower than senior debt to better reflect
relative position of the obligation in bankruptcy. Unsecured debt, where
significant secured debt exists, is treated similarly to subordinated debt.

LONG-TERM RATINGS DEFINITIONS: The ratings from "AA" to "CCC" may be modified
by the addition of a plus (+) or minus (-) sign to show relative standing
within the major rating categories.

INVESTMENT GRADE
AAA Highest rating assigned by S&P. Capacity to pay interest and repay
principal is extremely strong.

AA Very strong capacity to pay interest and repay principal and differs
from the highest rated debt only in small degree.

A Strong capacity to pay interest and repay principal, although it is
somewhat more susceptible to adverse effects of changes in
circumstances and economic conditions than debt in higher-rated
categories.

BBB Adequate capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.

SPECULATIVE GRADE
BB Less near-term vulnerability to default than other speculative grade
debt. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions that could lead to
inadequate capacity to meet timely interest and principal payments.
The "BB" rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied "BBB-" rating.

B Greater vulnerability to default but presently has the capacity to
meet interest payments and principal repayments. Adverse business,
financial, or economic conditions would likely impair capacity or
willingness to pay interest and repay principal. The "B" rating
category also is used for debt subordinated to senior debt that is
assigned an actual or implied "BB" or "BB-" rating.

RATINGS APPENDIX - 1
<PAGE> 63
CCC Current identifiable vulnerability to default, and is dependent on
favorable business, financial, and economic conditions to meet timely
payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, it is not likely
to have the capacity to pay interest and repay principal. The "CCC"
rating category also is used for debt subordinated to senior debt that
is assigned an actual or implied "B" or "B-" rating.

CC Typically applied to debt subordinated to senior debt which is
assigned an actual or implied "CCC" rating.

C Typically applied to debt subordinated to senior debt which is
assigned an actual or implied "CCC-" debt rating. The "C" rating may
be used to cover a situation where a bankruptcy petition has been
filed, but debt service payments are continued.

CI Reserved for income bonds on which no interest is being paid.

D Issue is in payment default, or the obligor has filed for bankruptcy.
The "D" rating is used when interest or principal payments are not
made on the date due, even if the applicable grace period has not
expired, unless S&P believes that such payments will be made during
such grace period.

DEBT OBLIGATIONS OF ISSUERS OUTSIDE THE UNITED STATES AND ITS TERRITORIES are
rated on the same basis as domestic corporate and municipal issues. The
ratings measure the creditworthiness of the obligor but do not take into
account currency exchange and related uncertainties.

NOTES: An S&P note rating reflects the liquidity factors and market access
risks unique to notes. Notes due in three years or less will likely receive a
note rating. Notes maturing beyond three years will most likely receive a
long-term debt rating. The following criteria will be used in making that
assessment: Amortization schedule - the larger the final maturity relative to
other maturities, the more likely it will be treated as a note; Source of
payment - the more dependent the issue is on the market for its refinancing,
the more likely it will be treated as a note.

SP-1 Strong capacity to pay principal and interest. An issue determined to
possess a very strong capacity to pay debt service is given a plus(+)
designation.

SP-1 Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term
of the notes.

SP-3 Speculative capacity to pay principal and interest.

COMMERCIAL PAPER/SHORT TERM RATING DEFINITIONS: A Standard & Poor's short term
rating is a current assessment of the likelihood of timely payment of debt with
an original maturity of no more than 365 days, such as commercial paper. It is
also assigned to remarketed long term debt with a provision that allows the
holder to put the debt back to the company in less than one year, in addition
to the usual long term rating. (Medium term note programs are assigned long
term ratings.)

A-1 Highest category; degree of safety regarding timely payment is strong.
Debt determined to possess extremely strong safety characteristics is
denoted with a plus sign (+) designation.

A-2 Capacity for timely payment is satisfactory. However, the relative
degree of safety is not as high as for issues designated "A-1".

A-3 Adequate capacity for timely payment. It is, however, more vulnerable
to the adverse effects of changes in circumstances than obligations
carrying the higher designations.

B Regarded as having only speculative capacity for timely payment.

C Assigned to short-term debt obligations with a doubtful capacity for
payment.

RATINGS APPENDIX - 2
<PAGE> 64
D Obligation is in payment default.

MOODY'S

Moody's bond ratings, where specified, are applied to senior bank obligations
and insurance company senior policyholder and claims obligations with an
original maturity in excess of one year. Obligations relying upon support
mechanisms such as letters-of-credit and bonds of indemnity are excluded unless
explicitly rated.

Obligations of a branch of a bank are considered to be domiciled in the country
in which the branch is located. Unless noted as an exception, Moody's rating
on a bank's ability to repay senior obligations extends only to branches
located in countries which carry a Moody's sovereign rating. Such branch
obligations are rated at the lower of the bank's rating or Moody's sovereign
rating for the bank deposits for the country in which the branch is located.

When the currency in which an obligation is denominated is not the same as the
currency of the country in which the obligation is domiciled, Moody's ratings
do not incorporate an opinion as to whether payment of the obligation will be
affected by the actions of the government controlling the currency of
denomination. In addition, risk associated with bilateral conflicts between an
investor's home country and either the issuer's home country or the country
where an issuer branch is located are not incorporated into Moody's ratings.

Moody's makes no representation that rated bank obligations or insurance
company obligations are exempt from registration under the U.S. Securities Act
of 1933 or issued in conformity with any other applicable law or regulation.
Nor does Moody's represent that any specific bank or insurance company
obligation is legally enforceable or is a valid senior obligation of a rated
issuer.

Moody's ratings are opinions, not recommendations to buy or sell, and their
accuracy is not guaranteed. A rating should be weighed solely as one factor in
an investment decision and you should make your own study and evaluation of any
issuer whose securities or debt obligations you consider buying or selling.

LONG TERM: Moody's applies numerical modifiers 1, 2 and 3 in each generic
rating classification from Aa through B. The modifier 1 indicates that the
security ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the issue
ranks in the lower end of its generic rating category.

Aaa Judged to be of the best quality. They carry the smallest degree of
investment risk and are generally referred to as "gilt edged".
Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such
issues.

Aa Judged to be of high quality by all standards. Together with the Aaa
group they comprise what are generally known as high-grade bonds.
They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements
present which make the long-term risk appear somewhat larger than the
Aaa securities.

A Possess many favorable investment attributes and are to be considered
as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the
future.

Baa Considered as medium-grade obligations (i.e., they are neither highly
protected nor poorly secured). Interest payments and principal
security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over
any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.

RATINGS APPENDIX - 3
<PAGE> 65
Ba Judged to have speculative elements; their future cannot be considered
as well-assured. Often the protection of interest and principal
payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B Generally lack characteristics of the desirable investment. Assurance
of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.

Caa Of poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest.

Ca Speculative in a high degree. Such issues are often in default or
have other marked shortcomings.

C Lowest rated class of bonds, and issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment
standing.

SHORT-TERM:

Moody's short-term debt ratings are opinions of the ability of issuers to repay
punctually senior debt obligations which have an original maturity not
exceeding one year. Obligations relying upon support mechanisms such as
letters-of-credit and bonds of indemnity are excluded unless explicitly rated.

Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:

PRIME-1 Issuers rated Prime-1 (or supporting institutions)
have a superior ability for repayment of senior
short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the
following characteristics: Leading market positions
in well-established industries; high rates of return
on funds employed; conservative capitalization
structure with moderate reliance on debt and ample
asset protection; broad margins in earnings coverage
of fixed financial charges and high internal cash
generation; and well-established access to a range of
financial markets and assured sources of alternate
liquidity.

PRIME-2 Issuers rated Prime-2 (or supporting institutions)
have a strong ability for repayment of senior
short-term debt obligations. This will normally be
evidenced by many of the characteristics cited above
but to a lesser degree. Earnings trends and coverage
ratios, while sound, may be more subject to
variation. Capitalization characteristics, while
still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.

PRIME-3 Issuers rated Prime-3 (or supporting institutions)
have an acceptable ability for repayment of senior
short-term obligations. The effect of industry
characteristics and market compositions may be more
pronounced. Variability in earnings and
profitability may result in changes in the level of
debt protection measurements and may require
relatively high financial leverage. Adequate
alternate liquidity is maintained.

NOT PRIME Issuers rated Not Prime do not fall within any of the
Prime rating categories.

Obligations of a branch of a bank are considered to be domiciled in the country
in which the branch is located. Unless noted as an exception, Moody's rating
on a bank's ability to repay senior obligations extends only to branches
located in countries which carry a Moody's sovereign rating. Such branch
obligations are rated at the lower of the bank's rating or Moody's sovereign
rating for bank deposits for the country in which the branch is located.

RATINGS APPENDIX - 4
<PAGE> 66
affected by actions of the government controlling the currency of denomination.
In addition, risks associated with bilateral conflicts between an investor's
home country and either the issuer's home country or the country where an
issuer's branch is located are not incorporated into Moody's short-term debt
ratings.

Moody's makes no representation that rated bank or insurance company
obligations are exempt from registration under the U.S. Securities Act of 1933
or issued in conformity with any other applicable law or regulation. Nor does
Moody's represent that any specific bank or insurance company obligation is
legally enforceable or a valid senior obligation of a rated issuer.

When an issuer represents to Moody's that its short-term debt obligations are
supported by the credit of another entity or entities, then the names of such
supporting entities are listed with the name of the issuer, or indicated with a
footnote reference, in Moody's publications. In assigning ratings to such
issuer's, Moody's evaluates the financial strength of the affiliated
corporations, commercial banks, insurance companies, foreign governments or
other entities, but only as one factor in the total rating assessment. Moody's
makes no representation and gives no opinion on the legal validity or
enforceability of any support arrangements.

THOMSON BANKWATCH

Thomson BankWatch ("TBW") ratings are based upon a qualitative and
quantitative analysis of all segments of the organization, including holding
company and operating subsidiaries.

SHORT-TERM RATINGS: TBW's short-term ratings do not consider any collateral or
security as the basis for the rating, although some securities may in fact have
collateral. Further, these ratings do not incorporate consideration of the
possible sovereign risk associated with a foreign deposit (defined as a deposit
taken in a branch outside the country in which the rated entity is
headquartered) of the rated entity. TBW's short-term ratings are intended to
assess the likelihood of an untimely or incomplete payment of principal or
interest.

TBW-1 Highest category; very high likelihood that principal and interest
will be paid on a timely basis.

TBW-2 Second-highest category; while the degree of safety regarding timely
repayment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated "TBW-1".

TBW-3 Lowest investment-grade category; while the obligation is more
susceptible to adverse developments (both internal and external) than
those with higher ratings, the capacity to service principal and
interest in a timely fashion is considered adequate.

TBW-4 Lowest rating category; regarded as non-investment grade and therefore
speculative.

LONG-TERM DEBT RATINGS: TBW's long-term debt ratings apply to specific issues
of long-term debt and preferred stock. They specifically assess the likelihood
of an untimely repayment of principal or interest over the term to maturity of
the rated instrument. Ratings may include a plus (+) or minus (-) designation,
which indicates where within the respective category the issue is placed.

INVESTMENT GRADE
AAA Highest category; ability to repay principal and interest on a timely
basis is very high.

AA Second-highest category; superior ability to repay principal and
interest on a timely basis, with limited incremental risk compared to
issues rated in the highest category.

RATINGS APPENDIX - 5
<PAGE> 67
A Third-highest category; ability to repay principal and interest is
strong. Issues rated "A" could be more vulnerable to adverse
developments (both internal and external) than obligations with higher
ratings.

BBB Lowest investment-grade category; acceptable capacity to repay
principal and interest. Issues rated "BBB" are, however, more
vulnerable to adverse developments (both internal and external) than
obligations with higher ratings.

NON-INVESTMENT GRADE
BB Suggests that likelihood of default is considerably less than for
lower-rated issues. However, there are significant uncertainties that
could affect the ability to adequately service debt obligations.

B Higher degree of uncertainty and therefore greater likelihood of
default than higher-rated issues. Adverse developments could well
negatively affect the payment of interest and principal on a timely
basis.

CCC Clearly have a high likelihood of default, with little capacity to
address further adverse changes in financial circumstances.

CC Applied to issues that are subordinate to other obligations rated
"CCC" and are afforded less protection in the event of bankruptcy or
reorganization.

D Default

IBCA

LONG-TERM RATINGS: "+" or "-" may be appended to a rating to denote relative
status within major rating categories.

AAA Lowest expectation of investment risk. Capacity for timely repayment
of principal and interest is substantial, such that adverse changes in
business, economic or financial conditions are unlikely to increase
investment risk substantially.

AA Very low expectation of investment risk. Capacity for timely
repayment of principal and interest is substantial. Adverse changes
in business, economic or financial conditions may increase investment
risk, albeit not very significantly.

A Low expectation of investment risk. Capacity for timely repayment of
principal and interest is strong, although adverse changes in
business, economic or financial conditions may lead to increased
investment risk.

BBB Currently low expectation of investment risk. Capacity for timely
repayment of principal and interest is adequate, although adverse
changes in business, economic or financial conditions are more likely
to lead to increased investment risk than for obligations in other
categories.

BB Possibility of investment risk developing. Capacity for timely
repayment of principal and interest exists, but is susceptible over
time to adverse changes in business, economic or financial conditions.

B Investment risk exists. Timely repayment of principal and interest is
not sufficiently protected against adverse changes in business,
economic or financial conditions.

CCC Current perceived possibility of default. Timely repayment of
principal and interest is dependent on favorable business, economic or
financial conditions.

CC Highly speculative or have a high risk of default.

RATINGS APPENDIX - 6
<PAGE> 68
C Currently in default.

SHORT-TERM RATINGS:

A1+ Highest capacity for timely repayment.

A1 Strong capacity for timely repayment.

A2 Satisfactory capacity for timely repayment, although such capacity may
be susceptible to adverse changes in business, economic, or financial
conditions.

A3 Adequate capacity for timely repayment. Such capacity is more
susceptible to adverse changes in business, economic, or financial
conditions than for obligations in higher categories.

B Capacity for timely repayment is susceptible to adverse changes in
business, economic, or financial conditions.

C Inadequate capacity to ensure timely repayment.

D High risk of default or currently in default.

FITCH

INVESTMENT GRADE BOND RATINGS

Fitch investment grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The ratings
represent Fitch's assessment of the issuer's ability to meet the obligations of
a specific debt issue or class of debt in a timely manner.

The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and prospective
financial condition and operating performance of the issuer and any guarantor,
as well as the economic and political environment that might affect the
issuer's future financial strength and credit quality.

Fitch ratings do not reflect any credit enhancement that may be
provided by insurance policies or financial guaranties unless otherwise
indicated.

Bonds that have the same rating are of similar but not necessarily
identical credit quality since the rating categories do not fully reflect small
differences in the degrees of credit risk.

Fitch ratings are not recommendations to buy, sell, or hold any
security. Ratings do not comment on the adequacy of market price, the
suitability of any security for a particular investor, or the tax-exempt nature
or taxability of payments made in respect of any security.

Fitch ratings are based on information obtained from issuers, other
obligors, underwriters, their experts, and other sources Fitch believes to be
reliable. Fitch does not audit or verify the truth or accuracy of such
information. Ratings may be changed, suspended, or withdrawn as a result of
changes in, or the unavailability of, information or for other reasons.

PLUS (+) MINUS (-) Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the
rating category. Plus and minus signs, however, are
not used in the "AAA" category.

RATINGS APPENDIX - 7
<PAGE> 69
AAA Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.

AA Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated "AAA".
Because bonds rated in the "AAA" and "AA" categories are not
significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated "F-1+".

A Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes
in economic conditions and circumstances than bonds with higher
ratings.

BBB Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on
these bonds, and therefore impair timely payment. The likelihood that
the ratings of these bonds will fall below investment grade is higher
than for bonds with higher ratings.

SPECULATIVE GRADE BOND RATINGS

Fitch speculative grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The ratings
("BB" to "C") represent Fitch's assessment of the likelihood of timely payment
of principal and interest in accordance with the terms of obligation for bond
issues not in default. For defaulted bonds, the rating ("DDD" to "D") is an
assessment of the ultimate recovery value through reorganization or
liquidation.

Bonds that have the same rating are of similar but not necessarily
identical credit quality since rating categories cannot fully reflect the
differences in degrees of credit risk.

BB Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be
identified which could assist the obligor in satisfying its debt
service requirements.

B Bonds are considered highly speculative. While bonds in this class
are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the
obligor's limited margin of safety and the need for reasonable
business and economic activity throughout the life of the issue.

CCC Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.

CC Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C Bonds are in imminent default in payment of interest or principal.

DDD, DD, AND D Bonds are in default on interest and/or principal
payments. Such bonds are extremely speculative and
should be valued on the basis of their ultimate
recovery value in liquidation

RATINGS APPENDIX - 8
<PAGE> 70
or reorganization of the obligor. "DDD" represents
the lowest potential for recovery on these bonds, and
"D" represents the lowest potential for recovery.

SHORT-TERM RATINGS

Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes.

The short-term rating places greater emphasis than a long-term rating
on the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.

F-1+ Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely
payment.

F-1 Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues
rated "F-1+"

F-2 Good Credit Quality. Issues assigned this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is
not as great as for issues assigned "F-1+" and "F-1" ratings.

F-3 Fair Credit Quality. Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is
adequate, however, near-term adverse changes could cause these
securities to be rated below investment grade.

F-S Weak Credit Quality. Issues assigned this rating have characteristics
suggesting a minimal degree of assurance for timely payment and are
vulnerable to near-term adverse changes in financial and economic
conditions.

D Default. Issues assigned this rating are in actual or imminent
payment default.

DUFF & PHELPS

These ratings represent a summary opinion of the issuer's long-term fundamental
quality. Rating determination is based on qualitative and quantitative factors
which may vary according to the basic economic and financial characteristics of
each industry and each issuer. Important considerations are vulnerability to
economic cycles as well as risks related to such factors as competition,
government action, regulation, technological obsolescence, demand shifts, cost
structure, and management depth and expertise. The projected viability of the
obligor at the trough of the cycle is a critical determination.

Each rating also takes into account the legal form of the security, (e.g.,
first mortgage bonds, subordinated debt, preferred stock, etc.). The extent of
rating dispersion among the various classes of securities is determined by
several factors including relative weightings of the different security classes
in the capital structure, the overall credit strength of the issuer, and the
nature of covenant protection. Review of indenture restrictions is important
to the analysis of a company's operating and financial constraints.

The Credit Rating Committee formally reviews all ratings once per quarter (more
frequently, if necessary). Ratings of "BBB" and higher fall within the
definition of investment grade securities, as defined by bank and insurance
supervisory authorities.

LONG-TERM DEBT:
AAA Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.

RATINGS APPENDIX - 9
<PAGE> 71
AA+, AA or AA- High credit quality. Protection factors are strong.
Risk is modest but may vary slightly from time to
time because of economic conditions.

A+, A or A- Protection factors are average but adequate.
However, risk factors are more variable and greater
in periods of economic stress.

BBB+, BBB or BBB- Below average protection factors but still considered
sufficient for prudent investment. Considerable
variability in risk during economic cycles.

BB+, BB or BB- Below investment grade but deemed likely to meet
obligations when due. Present or prospective
financial protection factors fluctuate according to
industry conditions or company fortunes. Overall
quality may move up or down frequently within this
category.

B+, B or B- Below investment grade and possessing risk that
obligations will not be met when due. Financial
protection factors will fluctuate widely according to
economic cycles, industry conditions and/or company
fortunes. Potential exists for frequent changes in
the rating within this category or into a higher or
lower rating grade.

CCC Well below investment grade securities. Considerable
uncertainty exists as to timely payment of principal,
interest or preferred dividends. Protection factors
are narrow and risk can be substantial with
unfavorable economic/industry conditions, and/or with
unfavorable company developments.

DD Defaulted debt obligations. Issuer failed to meet
scheduled principal and/or interest payments.

SHORT-TERM DEBT:

Duff & Phelps' short-term ratings are consistent with the rating criteria
utilized by money market participants. The ratings apply to all obligations
with maturities of under one year, including commercial paper, the uninsured
portion of certificates of deposit, unsecured bank loans, master notes, bankers
acceptances, irrevocable letters of credit, and current maturities of long-term
debt. Asset-backed commercial paper is also rated according to this scale.

Emphasis is placed on liquidity which we define as not only cash from
operations, but also access to alternative sources of funds including trade
credit, bank lines, and the capital markets. An important consideration is the
level of an obligor's reliance on short-term funds on an ongoing basis.

The distinguishing feature of Duff & Phelps' short-term ratings is the
refinement of the traditional "1" category. The majority of short-term debt
issuers carry the highest rating, yet quality differences exist within that
tier. As a consequence, Duff & Phelps has incorporated gradations of "1+"(one
plus) and "1-" (one minus) to assist investors in recognizing those
differences.

Duff & Phelps' ratings are recognized by the SEC for broker-dealer
requirements, specifically capital computation guidelines. Our ratings meet
Department of Labor ERISA guidelines governing pension and profit sharing
investments. State regulators also recognize Duff & Phelps' ratings for
insurance company investment portfolios.

Duff 1+ Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of
funds, is outstanding, and safety is just below risk-free U.S.
Treasury short-term obligations.

Duff 1 Very high certainty of timely payment. Liquidity
factors are excellent and supported by good
fundamental protection factors. Risk factors are
minor.

RATINGS APPENDIX - 10
<PAGE> 72
Duff 1- High certainty of timely payment. Liquidity factors
are strong and supported by good fundamental
protection factors. Risk factors are very small.

Duff 2 Good certainty of timely payment. Liquidity factors
and company fundamentals are sound. Although ongoing
funding needs may enlarge total financing
requirements, access to capital markets is good.
Risk factors are small.

Duff 3 Satisfactory liquidity and other protection factors
qualify issue as to investment grade. Risk factors
are larger and subject to more variation.
Nevertheless, timely payment is expected.

NON-INVESTMENT GRADE
Duff 4 Speculative investment characteristics. Liquidity is
not sufficient to insure against disruption in debt
service. Operating factors and market access may be
subject to a high degree of variation.

Duff 5 Default. Issuer failed to meet scheduled principal
and/or interest payments.

SPECIALIZED RATINGS

TBW COUNTRY RATINGS

TBW's Country Ratings represent TBW's assessment of the overall
political and economic stability of a country in which a bank is domiciled.

TBW considers factors other than the financial strength of the
individual company. In particular, the CONTEXT of the company--country risk
and the complexion of its domestic financial system--becomes critical. TBW
focuses on both political risk--the WILLINGNESS to meet external debt
obligations--and economic risk--the ABILITY to repay external debts.

I An industrialized country with a long history of political stability,
effective economic management, sustainable financial conditions, and
continuing access to global capital markets on favorable terms.
Short-run risk of default is nonexistent.

I/II An industrialized country with a long history of political and
economic stability that is currently experiencing some short-term
political and/or economic difficulties. It enjoys continuing access
to global capital markets, though at somewhat higher margins.
Short-run risk of default is very low.

II An industrialized country with a history of political and economic
stability that is currently experiencing serious political and/or
economic difficulties. It enjoys continuing access to global capital
markets, though at significantly higher margins. Short-run risk of
default is low.

II/III A newly industrialized country with a generally healthy economy that
currently enjoys wide access to global capital markets. Short-run
risk of default is very low.

III A newly industrialized country with a generally healthy economy but
with some significant political and/or economic difficulties. It
currently enjoys some access to global capital markets. Short-run
risk of default is low.

III/IV A newly industrialized country experiencing serious political and/or
economic difficulties. It enjoys only very limited access to global
capital markets. Short-run risk of default is low to medium.

IV A non-industrialized country that has limited access to world capital
markets. Short-run risk of default is low.

RATINGS APPENDIX - 11
<PAGE> 73
IV/V A non-industrialized country with a history of external debt servicing
problems that is currently experiencing serious political and/or
economic difficulties. It enjoys only limited access to world capital
markets. Short-run risk of default is low to medium.

V A non-industrialized country with no access to world capital markets
and which is considered in default on some or all of its external
debt. Short-run risk of default is medium to high.

TBW INTRA-COUNTRY ISSUER RATINGS

TBW's Intra-Country Issuer Ratings provide a relative assessment of
each bank's financial performance and its ability to meet its obligations
within the context of the local market. These ratings are not directly
comparable from country to country.

Further, sovereign risk is not factored into the Intra-Country
Ratings. However, the ratings do incorporate systemic risks which may be
prevalent within certain banking systems that could preclude any bank within
the system from achieving the top rating.

TBW assigns only one Intra-Country Issuer Rating to each company,
factoring consolidated financials into the overall assessment.

The ratings are assigned using an intermediate time horizon.
Intra-Country Issuer Ratings incorporate an overall assessment of the company's
financial strength, in addition to TBW's opinion of the vulnerability of the
company to adverse developments (which may affect the market's perception of
the company, thereby its access to funding and the marketability of its
securities).

IC-A Company possesses an exceptionally strong balance sheet and earnings
record, translating into an excellent reputation and very good access
to its natural money markets. If weakness or vulnerability exists in
any aspect of the company's business, it is entirely mitigated by
other consideration.

IC-A/B Company is financially very solid with a favorable track record and no
readily apparent weakness. Its overall risk profile, while low, is
not quite as favorable as for companies in the highest rating
category.

IC-B A strong company with a solid financial record and well received by
its natural money markets. Some minor weaknesses may exist, but any
deviation from the company's historical performance levels should be
both limited and short-lived. The likelihood of a significant problem
developing is small, yet slightly greater than for a higher-rated
company.

IC-B/C Company is clearly viewed as a good credit. While some shortcomings
are apparent, they are not serious and/or are quite manageable in the
short-term.

IC-C Company is inherently a sound credit with no serious deficiencies, but
financials reveal at least one fundamental area of concern that
prevents a higher rating. Company may recently have experienced a
period of difficulty, but those pressures should not be long-term in
nature. The company's ability to absorb a surprise, however, is less
than that for organizations with better operating records.

IC-C/D While still considered an acceptable credit, the company has some
meaningful deficiencies. Its ability to deal with further
deterioration is less than that of better-rated companies.

IC-D Company's financials suggest obvious weaknesses, most likely created
by asset quality considerations and/or a poorly structured balance
sheet. A meaningful level of uncertainty and vulnerability exists
going forward. The ability to address further unexpected problems
must be questioned.

IC-D/E Company has areas of major weakness that may include funding and/or
liquidity difficulties. A high degree of uncertainty exists about the
company's ability to absorb incremental problems.

RATINGS APPENDIX - 12
<PAGE> 74
IC-E Very serious problems exist for the company, creating doubt about its
continued viability without some form of outside assistance,
regulatory or otherwise.
ICBA

ICBA's bank rating sheets provide both specialist bank ratings and, in
most cases, short-and long-term ratings. The former were specifically
developed for banks and are designed to assess the current performance of a
bank and whether, in ICBA's opinion, it would receive support if it ran into
difficulties. ICBA assesses these two issues by means of the INDIVIDUAL RATING
and the LEGAL RATING.

LEGAL RATING: Banking differs from other industries in that it is invariably
dependent on depositor confidence. A bank may have excellent ratios but, if it
cannot maintain this confidence, it will have a liquidity crisis. Because of
the role that banks play in the financial system they are heavily regulated
and, as part and parcel of this regulation, central banks are seen as potential
lenders of last resort. Much interbank lending is done on the basis of this
lender of last resort role, and this consideration is assessed in ICBA's Legal
Rating.

The support provided by central banks or shareholders is rarely a
statutory requirement. Consequently, it is necessary to visit and study the
country concerned in order to gain a full understanding of the history and
traditions of its banking system and of the precedents which have been
established there. It is also necessary to assess the possible support a bank
might receive as a result of its ownership and/or economic and international
significance.

In all countries covered, IBCA has discussions with the supervisory
authorities. ICBA also analyzes their past behavior and keep abreast of all
relevant banking legislation. On these bases, ICBA assigns Legal Ratings to
particular banks. These ratings constitute IBCA's opinions alone and are not
submitted to the authorities for their comment or endorsement. A legal rating
of 2, 3 or 4 may be qualified by the suffix "T," which indicates significant
existing or potential transfer risk of economic and/or political origin that
might prevent support for foreign currency creditors.

1 A bank for which there is a clear legal guarantee on the part of a
state to provide support OR a bank of such importance both
internationally and domestically that, in our opinion, support from a
state would be forthcoming, if necessary. The state in question must
clearly be prepared and able to support its principal banks.

2 A bank for which, in ICBA's opinion, state support would be
forthcoming, even in the absence of a legal guarantee. This could be,
for example, because of the bank's importance to the economy or its
historic relationship with the authorities.

3 A bank which has institutional owners of sufficient reputation and
possessing such resources that, in our opinion, shareholder support
wold be forthcoming, if necessary.

4 A bank for which support is likely but not certain.

5 A bank which cannot rely on outside assistance.

INDIVIDUAL RATING: ICBA's individual performance rating of banks
attempts to answer the question: "If the bank were entirely independent and
could not rely on support from the state authorities or its owners, how would
it be viewed?". Thus, the Individual bank rating permits an evaluation of
banks divorced entirely from consideration of support. ICBA may use gradations
among these ratings, i.e., A/B, B/C, C/D and D/E.

A A bank of impeccable financial condition, with a consistent record of
above average performance.

B A bank with a sound risks profile and without significant problems.
The bank's performance has generally been in line with or better than
that of its peers.

C A bank which has an adequate risks profile but possesses one or more
troublesome aspects, giving rise to the possibility of risk
developing, or which has generally failed to perform in line with its
peers.

RATINGS APPENDIX - 13
<PAGE> 75
D A bank which is currently underperforming in some notable manner. Its
financial condition is likely to be below average and its
profitability poor. The bank has the capability of recovering using
its own resources, but this is likely to take some time.

E A bank with very serious problems which either requires or is likely
to require external support.

RATINGS APPENDIX - 14
<PAGE> 76
SUMMARY OF PUBLISHERS' EXCLUSIONS AND EXEMPTIONS
FROM INVESTMENT ADVISER REGISTRATION
IN THE VARIOUS STATES

<TABLE>
<CAPTION>
====================================================================================================================================
States that do not have States that exclude from the definition of States that exclude from the definition of
a publisher's exclusion "investment adviser" a publisher of any bona fide "investment adviser" a publisher of any bona fide
from the definition of newspaper, news magazine, or business or financial newspaper, news column, newsletter, news magazine,
investment adviser. publication of general, regular, and paid or business or financial publication or service,
circulation. whether communicated in hard copy form, or by
electronic means, that does not consist of
rendering advice on the basis of the specific
investment situation of each client.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

Florida (i)(+) (but Alaska New Jersey Alabama (b) Montana
follows Lowe, per California (e) (i) (+) New York (u) Arizona (b) (i) Nebraska
administrative order) Connecticut (i) (+) North Dakota Arkansas Nevada (b)
Delaware Ohio District of Columbia New Mexico (b)
Hawaii Oklahoma (i) (+) Georgia North Carolina
Illinois Oregon (c) (i) Idaho (i) Rhode Island
Kansas (i) Pennsylvania (e) (+) Indiana (i) South Dakota (i)
Kentucky (i) Puerto Rico Maine (b) Utah
Louisiana South Carolina Maryland (i) Vermont
Michigan Tennessee (i) (+) Massachusetts Virginia
Mississippi Texas (u) Minnesota Wisconsin
New Hampshire Washington (i) Missouri
West Virginia
====================================================================================================================================
</TABLE>

<TABLE>
<S> <C> <C> <C>
(c) Exclusion applies to publisher and any contribu- (b) Exclusion applies more broadly to include owners,
tors. operators, producers or employees of a cable, ra-
dio or television network, station, or production
(e) Exclusion applies to the publisher and its employ- facility.
ees.
(+) Other conditions may apply.
(i) State has issued interpretive or no-action letters on
the scope of the publisher's exclusion.

(u) Exclusion available for paid and unpaid circulation.
</TABLE>

* The information contained in this chart is based upon a review of
statutes and regulations of various jurisdictions as reported in
loose-leaf services, interpretive advice obtained from representatives of
certain state securities commissions, and other sources, all of which are
subject to change.

July 24, 1996
<PAGE> 77
PART C: OTHER INFORMATION

Item 24. Financial Statements and Exhibits:

(a) Financial Statements

*Report of Independent Certified Public Accountant

*Statement of Assets and Liabilities

(b) Exhibits

1 Agreement and Declaration of Trust of the Registrant,
dated July 26, 1996, filed herewith.
2 By-Laws of the Registrant, filed herewith.
*5 Form of Investment Advisory Agreement
*8 Form of Custodian Agreement
*9(a) Form of Administration Agreement
*9(b) Form of Transfer Agent Agreement
*10 Opinion and Consent of Counsel.
*11 Opinion and Consent of Independent Public Accountants
*16 Performance Calculations.

* To be filed by amendment

Item 25. Persons Controlled by or under Common Control with Registrant:

See the Prospectus and the Statement of Additional Information
regarding the Registrant's control relationships.

Item 26. Number of Holders of Securities: One as of the effective date of
this registration statement.

Item 27. Indemnification: Reference is made to Articles VIII and IX of the
Registrant's Declaration of Trust

C-1
<PAGE> 78
Item 28. Business and Other Connections of Investment Adviser:

ADVISER

Hansberger Global Investors, Inc. (the "Adviser") is the investment adviser for
the Trust. The principal address is 515 East Las Olas Boulevard, Ft.
Lauderdale, Florida 33301. The Adviser is an investment adviser registered
under the Advisers Act.

The list required by this Item 28 of officers and directors of the Adviser,
together with information as to any other business profession, vocation or
employment of substantial nature engaged in by such officers and directors
during the past two years is incorporated by reference to Schedules A and D of
Form ADV filed by the Adviser under the Advisers Act (SEC File No. 801-46059).

Item 29. Principal Underwriters: None

Item 30. Location of Accounts and Records:

Books or other documents required to be maintained by Section 31(a) of
the Investment Company Act of 1940, and the rules promulgated
thereunder, are maintained as follows:

(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3);
(6); (8); (12); and 31a-1(d), the required books and records will be
maintained at the offices of
Registrant's Custodian: The Chase Manhattan Bank, N.A.
4 Chase Metro Tech Center
18th Floor
Brooklyn, New York 11245

(b)/(c) With respect to Rules 31a-1(a); 31a-1(b)(1),(4); (2)(C) and
(D); (4); (5); (6); (8); (9); (10); (11); and 31a-1(f), the required
books and records are maintained at the offices of Registrant's
Administrator:

(c) With respect to Rules 31a-1(b)(5), (6), (9) and (10) and
31a-1(f), the required books and records are maintained at the
principal offices of the Registrant's Adviser:
Hansberger Global Investors, Inc.
515 East Las Olas Boulevard
Suite 1300
Fort Lauderdale, Florida 33301

Item 31. Management Services: None.

C-2
<PAGE> 79
Item 32. Undertakings:

Registrant hereby undertakes that whenever shareholders meeting the
requirements of Section 16(c) of the Investment Company Act of 1940 inform the
Board of Directors of their desire to communicate with Shareholders of the
Corporation, the Directors will inform such Shareholders as to the approximate
number of Shareholders of record and the approximate costs of mailing or afford
said Shareholders access to a list of Shareholders.

Registrant hereby undertakes to call a meeting of Shareholders for
the purpose of voting upon the question of removal of a Director(s) when
requested in writing to do so by the holders of at least 10% of Registrant's
outstanding shares and in connection with such meetings to comply with the
provisions of Section 16(c) of the Investment Company Act of 1940.

Registrant hereby undertakes to file a post-effective amendment,
including financial statements which need not be audited, within 4-6 months
from the effective date of the Registrant's 1933 Act Registration Statement.

C-3
<PAGE> 80
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Fort Lauderdale, State of Florida on the 26th
day of July, 1996.

Hansberger Institutional Series

By: /s/ Thomas L. Hansberger
------------------------
Thomas L. Hansberger
President

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following person in the capacity on the
dates indicated:

SIGNATURE AND TITLE DATE

/s/ Thomas L. Hansberger July 26, 1996
------------------------------
Thomas L. Hansberger
President and Trustee

/s/ Thomas A. Christensen July 26, 1996
-------------------------
Thomas A. Christensen
Treasurer (Principal Financial
and Accounting Officer)

C-4
<PAGE> 81
EXHIBIT INDEX

<TABLE>
<CAPTION>
Name Exhibit Page
---- ------- ----
<S> <C>
Agreement and Declaration of Trust of the Ex-99.B1
Registrant, dated July 26, 1996,
filed herewith.

By-Laws of the Registrant, filed herewith. Ex-99.B2
</TABLE>

C-5

<PAGE> 1
EXHIBIT 99.B1

HANSBERGER INSTITUTIONAL SERIES

AGREEMENT AND DECLARATION OF TRUST

AGREEMENT AND DECLARATION OF TRUST dated as of the __th day of July,
1996, by Thomas L. Hansberger, the Trustee hereunder, and by the holders of
Shares of beneficial interest to be issued hereunder as hereinafter provided.

WITNESSETH that

WHEREAS, this Trust has been formed to carry on the business of an
investment company; and

WHEREAS, the Trustee and any successor Trustees elected in
accordance with Article IV hereof have agreed to manage all property coming
into their hands as trustees of a Massachusetts voluntary association with
transferable Shares in accordance with the provisions hereinafter set forth.

NOW, THEREFORE, the Trustee and any successor Trustees elected in
accordance with Article IV hereof hereby declare that they will hold all cash,
securities and other assets, which they may from time to time acquire in any
manner as Trustees hereunder IN TRUST to manage and dispose of the same for the
pro rata benefit of the holders from time to time of Shares in this Trust
issued hereunder on the terms and conditions hereinafter set forth.

ARTICLE I
NAME, PRINCIPAL PLACE OF BUSINESS AND RESIDENT AGENT, AND DEFINITIONS

NAME

Section l. This Trust shall be known as the Hansberger Institutional
Series, and the Trustees shall conduct the business of the Trust under that
name or any other name as they may from time to time determine.

PRINCIPAL PLACE OF BUSINESS AND RESIDENT AGENT

Section 2. The principal place of business of the Trust is 515 East
Las Olas Blvd., Suite 1300, Fort Lauderdale, Florida 33301. The name of the
Trust's resident agent in the Commonwealth of Massachusetts is CT Corporation
System at 2 Oliver Street, Boston, Massachusetts 02109.
<PAGE> 2

2
<PAGE> 3
DEFINITIONS

Section 3. Whenever used herein, unless otherwise required by the
context or specifically provided:

(a) The "Trust" refers to the Hansberger All Countries Trust, the
trust created hereby.

(b) "Trustee" or "Trustees" refers to the Trustees of the Trust
named herein or elected in accordance with Article IV hereof and
then in office.

(c) "Shares" refers to units of beneficial interest in the assets of
the Trust, when used in relation to any particular series
established by the Trustees hereunder refers to units of
beneficial interest in the assets specifically allocated to that
series, and includes fractional as well as whole Shares.

(d) "Shareholder" means a record owner of Shares.

(e) "Affiliated Person," "Assignment," " "Interested Person," and
"Principal Underwriter" shall have the meanings given them in
the 1940 Act

(f) "Majority Shareholder Vote" shall have the same meaning as "vote
of a majority of the outstanding voting securities" as that
phrase is defined in the 1940 Act, except that such term may be
used herein with respect to the Shares of the Trust as a whole
or the Shares of a particular series, as the context may
require.

(g) "Declaration of Trust" shall mean this Agreement and Declaration
of Trust, as amended or restated from time to time, provided
that reference made in this Agreement and Declaration of Trust
to "hereby," "hereof," "herein," "hereunder" or similar terms
shall be deemed to refer to this Declaration of Trust rather
than the Article or Section in which such words appear, unless
the context otherwise requires.

(h) "By-Laws" shall mean the By-Laws of the Trust referred to in
Article IV, Section 3 hereof, as amended from time to time.

(i) The "1940 Act" refers to the Investment Company Act of 1940 and
the Rules and Regulations thereunder, all as amended from time
to time.

(j) "Disinterested Trustees" shall mean Trustees who are not
"interested persons" as such term is defined in the 1940 Act
(including any Trustee who has been exempted from being an
"interested person" by any rule, regulation or order of

3
<PAGE> 4
the Commission). In limitation of the foregoing, however, as
used in Article VIII hereof, a "Disinterested Trustee" shall
mean a Disinterested Trustee against whom, at the time of the
votes to be taken pursuant to said Article VIII, none of the
actions, suits or other proceedings referred to in such Article
VIII, nor any other action, suit or other proceeding on the same
or similar grounds is or has been pending.

ARTICLE II
PURPOSE

The purpose of the Trust is to provide investors with one or more
investment portfolio(s) consisting primarily of securities, including debt
instruments or obligations.

ARTICLE III
SHARES

DIVISION OF BENEFICIAL INTEREST

Section 1. The Trustees may divide the beneficial interest in the
Trust into an unlimited number of Shares and authorize the issuance of Shares
without prior Shareholder approval. Shares may be issued in series and, if so,
Shares of any series will constitute units of beneficial interest in assets of
the Trust specifically allocated to such series. Shares of the Trust, or any
series thereof, shall have no par value, shall represent equal and
proportionate interests in the Trust, or such series, with none having priority
or preference over any other except as specifically set forth in this Article
Ill, and shall be transferable. All Shares issued hereunder, including any
Shares issued in payment of dividends or other distributions or in connection
with any split of Shares, shall be fully paid and non-assessable. Shares of the
Trust or of any series may be issued in two or more classes, as the Trustees
may, without Shareholder approval,. authorize, and Shared of any class shall be
identical to those of any other class of the Trust or such series except that,
if the Trustees have authorized the issuance of Shares of any particular series
in two or more classes, then such classes may, consistent with the 1940 Act, or
pursuant to any exemptive order issued by the Commission and other applicable
law, have such variations as to dividends, redemption charges, conversion,
voting rights, net asset value, expenses borne by the class, and other matters
as the Trustees shall have determined. The Trustees may from time to time,
without Shareholder approval, divide or combine the Shares of a series into a
greater or lesser number without thereby changing their proportionate
beneficial interests in assets allocated to such series.

4
<PAGE> 5
OWNERSHIP OF SHARES

Section 2. The ownership of Shares shall be recorded on the books of
the Trust or its transfer or similar agent. No certificates certifying the
ownership of Shares shall be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the transfer of Shares and
similar matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent of the Trust, as the case may be, shall be conclusive
as to who are the Shareholders of each series or class and as to the number of
Shares of each series or class held from time to time by each Shareholder.

INVESTMENTS IN THE TRUST: ASSETS OF THE SERIES

Section 3. The Trustees may accept investments in the Trust from
such persons and on such terms and, subject to any requirements of law, for
such consideration, which may consist of cash or tangible or intangible
property or a combination thereof, as they may from time to time authorize.

All consideration received by the Trust for the issue or sale of
Shares of each series, together with all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation thereof, and any funds or payments derived from any reinvestment of
such proceeds in whatever form the same may be, shall irrevocably belong to
subject only to the rights of creditors, and shall be so recorded upon the
books of account of the Trust and are herein referred to as "assets of' such
series. In addition, any assets, income, earnings, profits, and proceeds
thereof, funds, or payments which are not readily identifiable as belonging to
any particular series shall be allocated by the Trustees between and among one
or more of the series in such manner as they, in their sole discretion, deem
fair and equitable. Each such allocation to any series shall be conclusive and
binding upon the Shareholders of all series for all purposes, and shall be
referred to as assets belonging to that series. No holder of Shares of any
particular series shall have any claim on or right to any assets allocated or
belonging to any other series.

ESTABLISHMENT OF CLASS OR SERIES

Section 4. The establishment and designation of any class or series
of Shares shall be effective upon the adoption of a resolution by a majority of
the Trustees (or of a committee thereof) setting forth such establishment and
designation and the relative rights and preferences of the Shares of such class
or series. Such establishment and designation shall not constitute an amendment
to this Declaration of Trust, although the Trustees may, at their option, set
forth such establishment and designation in a written instrument signed by them
or by an officer of the Trust. The Trustees (or a committee thereof) may by
majority vote amend such establishment and designation. At any time, if no
Shares are outstanding of a particular class

5
<PAGE> 6
or series previously so established and designated, the Trustees (or a
committee thereof) may by majority vote abolish such class or series and said
establishment and designation thereof.

NO PREEMPTIVE RIGHTS

Section 5. Shareholders shall have no preemptive or other right to
receive, purchase or subscribe for any additional Shares or other securities
issued by the Trust, except as otherwise provided herein or as the Trustees in
their sole discretion shall have determined by resolution.

STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY

Section 6. Shares shall be deemed to be personal property giving
only the rights provided in this instrument. Every Shareholder by virtue of
having become a Shareholder shall be held to have expressly assented and agreed
to the terms of this Declaration of Trust and to have become a party hereto.
The death of a Shareholder during the continuance of the Trust shall not
operate to terminate the same nor entitle the representative of any deceased
Shareholder to an accounting or to take any action in court or elsewhere
against the Trust or the Trustees, but only to the rights of said decedent
under this Trust. Ownership of Shares shall not entitle the Shareholder to any
title in or to the whole or any part of the Trust property or right to call for
a partition or division of the same or for an accounting, nor shall the
ownership of Shares constitute the Shareholders partners. Neither the Trust
nor the Trustees, nor any officer, employee or agent of the Trust shall have
any power to bind personally any Shareholder, nor, except as specifically
provided herein, to call upon any Shareholder for the payment of any sum of
money or assessment whatsoever other than such as the Shareholder may at any
time personally agree to pay.

TRUSTEES AND OFFICERS AS SHAREHOLDERS

Section 7. Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of Shares of the Trust to the same extent as if he or
she were not a Trustee, officer or agent; and the Trustees may issue and sell
or cause to be issued and sold Shares to and buy such Shares from any such
person of any firm or company in which he is interested, subject only to the
general limitations herein contained as to the sale and purchase of such
Shares; and all subject to any restrictions which may be contained in the
By-Laws.

6
<PAGE> 7
ARTICLE IV
THE TRUSTEES

QUALIFICATION; NUMBER OF TRUSTEES; ELECTION

Section 1. Each Trustee shall be a natural person and may, but need
not, be a Shareholder. A Trustee may be elected either by the Trustees or the
Shareholders subject to the limitations of the 1940 Act. Each Trustee shall
hold office during the lifetime of this Trust until the election and
qualification of his or her successor, or until he or she sooner dies, resigns
or is removed. The initial Trustee shall be Robert A. Nesher. The number of
Trustees shall be fixed from time to time by a vote of a majority of the
Trustees then in office, except that, commencing with the first Shareholders'
meeting at which Trustees are elected, there shall be not fewer than three nor
more than fifteen Trustees. The number of Trustees so fixed may be increased
either by the Shareholders or by the Trustees by a vote of a majority of the
Trustees then in office. The number of Trustees so fixed may be decreased
either by the Shareholders or by the Trustees by vote of a majority of the
Trustees then in office. but only to eliminate vacancies existing by reason of
the death, resignation or removal of one or more Trustees.

In case of the declination, death, resignation, retirement, removal,
incapacity, or inability of any of the Trustees, or in case a vacancy shall
exist by reason of an increase in number, or for any other reason, the
remaining Trustees shall fill such vacancy by appointing such other person as
they in their discretion shall see fit consistent with the 1940 Act. Until any
such vacancy is filled as provided in this Section l, the Trustees then in
office shall, regardless of their number, have all powers granted to and
discharge all duties imposed on the Trustees hereby. Such appointment shall be
evidenced by a written instrument signed by a majority of the Trustees in
office, even though less than a quorum, or by recording in the records of the
Trust, and shall take effect upon such signing or recording and the acceptance
of such appointment by the Trustee so appointed. An appointment of a Trustee
may be made by the Trustees then in office in anticipation of a vacancy to
occur by reason of retirement, resignation or increase in number of Trustees
effective at a later date, provided that said appointment shall become
effective only at or after the effective date of said retirement, resignation
or increase In number of Trustees.

REMOVAL AND RESIGNATION

Section 2. By vote of the Shareholders holding a majority of the
shares entitled to vote, the Shareholders may remove a Trustee with or without
cause. By vote of a majority of the Trustees then in office, the Trustees may
remove a Trustee with or without cause. Any Trustee may resign at any time by
written instrument signed by him or her and delivered to any officer of the
Trust, to each other Trustee or to a meeting of the Trustees. Such resignation
shall be effective upon receipt unless specified to be effective at some other
time. Except to the extent

7
<PAGE> 8
expressly provided in a written agreement with the Trust, no Trustee resigning
and no Trustee removed shall have any right to any compensation for any period
following. his or her resignation or removal, or any right to damages on
account of such removal.

EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE

Section 3. The death, declination, resignation, retirement, removal,
or incapacity of the Trustees, or any one of them, shall not operate to annul
the Trust or to revoke any existing agency created pursuant to the terms of
this Declaration of Trust.

POWERS

Section 4. Subject to the provisions of this Declaration of Trust,
the Trustees shall manage the business of the Trust as an investment company,
and they shall have all powers necessary or convenient to carry out that
responsibility. Without limiting the foregoing, the Trustees may adopt By-Laws
not inconsistent with this Declaration of Trust providing for the conduct of
the business of the Trust and may amend and repeal them to the extent that such
ByLaws do not reserve that right to the Shareholders; they may f,ill vacancies
in their number, including vacancies resulting from increases in their number,
and may elect and remove such and appoint and terminate such agents as they
consider appropriate; they may appoint their own number, and terminate, any one
or more committees consisting of two or more :Trustees, including an executive
committee which may, when the Trustees are not in session exercise some or all
of the powers and authority of the Trustees as the Trustees may determine; they
may appoint an advisory board, the members of which shall not be Trustees and
need not be Shareholders; they may employ one or more investment advisers or
administrators as provided in Section 9 of this Article IV; they may employ one
or more custodians of the assets of the trust and may authorize such custodians
to employ subcustodians and to deposit all or any part of such assets in a
system or systems for the central handling of securities, retain a transfer
agent or a Shareholder servicing agent, or both, provide for the distribution
of Shares by the Trust, through one or more principal underwriters or
otherwise, set record dates for the determination of Shareholders with respect
to various matters, and in general delegate such authority as they consider
desirable to any officer of the Trust, to any committee of the Trustees and to
any agent or employee of the Trust or to any such custodian or underwriter; and
they may elect and remove such officers and appoint and terminate such agents
as they consider appropriate.

Without limiting the foregoing, the Trustees shall have power and
authority:

(a) To invest and reinvest cash, and to hold cash uninvested;

(b) To sell, exchange, lend, pledge, mortgage, hypothecate, write
options on and lease any or all of the assets of the Trust;

8
<PAGE> 9
(c) To vote or give assent, or exercise any rights of ownership,
with respect to stock or other securities or property, and to
execute and deliver proxies or powers of attorney to such person
or persons as the Trustees shall deem proper, granting to such
person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;

(d) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities;

(e) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form,
or in the name of the Trustees or of the Trust or in the name of
a custodian, subcustodian or other depositary or a nominee or
nominees or otherwise;

(f) To establish separate and distinct series of shares with
separately defined investment objectives, policies and purposes,
and with separately defined relative powers, rights, privileges
and liabilities, and to allocate assets, liabilities and
expenses of the Trust to a particular series of Shares or to
apportion the same among two or more series, provided that any
liability or expense determined by the Trustees to have been
incurred by a particular series of Shares shall be payable
solely out of the assets of that series and to establish
separate classes of shares of each series, all in accordance
with Article Ill hereof;

(g) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any
security or property of which is or was held in the Trust; to
consent to any contract, lease, mortgage, purchase or sale of
property by such corporation or issuer, and to pay calls or
subscriptions with respect to any security held in the Trust;

(h) To join with other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in that
connection to deposit any security with, or transfer any
security to, any such committee, depositary or trustee, and to
delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the
Trustees shall deem proper, and to agree to pay, and to pay,
such portion of the expenses and compensation of such committee,
depositary or trustee as the Trustees shall deem proper;

(i) To compromise, arbitrate or otherwise adjust claims in favor of
or against the Trust or any matter in controversy, including but
not limited to claims for taxes;

(j) To enter into joint ventures, general or limited partnerships
and any other combinations or associations;

9
<PAGE> 10
(k) To borrow funds;

(l) To endorse or guarantee the payment of any notes or other
obligations of any person; to make contracts of guaranty or
suretyship, or otherwise assume liability for payment thereof;
and to mortgage and pledge the Trust property or any part
thereof to secure any or all of such obligations;

(m) To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the
conduct of the business, including, without limitation,
insurance policies insuring the assets of the Trust and payment
of distributions and principal on its portfolio investments, and
insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers or
administrators, principal underwriters, or independent
contractors of the Trust individually against all claims and
liabilities of every nature arising by reason of holding, being
or having held any such office or position, or by reason of any
action alleged to have been taken or omitted by any such person
as Shareholder, Trustee, officer, employee, agent, investment
adviser or administrator, principal underwriter, or independent
contractor, including any action taken or omitted that may be
determined to constitute negligence, whether or not the Trust
would have the power to indemnify such person against such
liability;

(n) To pay pensions for faithful service, as deemed appropriate by
the trustees. and to adopt, establish and carry out pension,
profit-sharing, share bonus, share purchase, savings, thrift and
other retirement, incentive and benefit plans, trusts and
provisions, including the purchasing of life insurance and
annuity contracts as a means of providing such retirement and
other benefits, for any or all of the Trustees, officers,
employees and agents of the Trust;

(o) To establish, from time to time, a minimum total investment for
Shareholders, and to require the redemption of the Shares of any
Shareholders whose investment is less than such minimum upon
giving notice to such Shareholder;

(p) To enter into contracts of any kind and description;

(q) To name, or to change the name or designation of the Trust or
any series or class of the Trust;

(r) To take whatever action may be necessary to enable the Trust to
comply with any applicable Federal, state or local statute, rule
or regulation; and

(s) To engage in any other lawful act or activity in which
corporations organized under the Massachusetts Business
Corporation Law may engage.

10
<PAGE> 11
The Trustees shall not in any way be bound or limited by any present
or future law or custom in regard to investments by Trustees.

MANNER OF ACTING

Section 5. Except as otherwise provided herein or from time to time
in the By-Laws, any action to be taken by the Trustees, or a committee thereof,
may be taken by a majority of the Trustees present at a meeting of Trustees, or
of the committee members present at a meeting of such committee (if in either
case a quorum be present), within or without Massachusetts, including any
meeting held by means of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can
communicate with each other simultaneously and participation by such means
shall constitute presence in person at a meeting, or by written consent of a
majority of the Trustees, or members of such committee, then in office. At any
meeting of the Trustees, or a committee thereof, a majority of the Trustees or
members of such committee, as the case may be, shall constitute a quorum. If a
quorum is present when a duly called or held meeting is convened, the Trustees
present thereat may, following the withdrawal of one or more Trustees
originally present, continue to transact business until adjournment thereof,
even though such Trustees would not otherwise constitute a quorum. Meetings of
the Trustees, or a committee thereof, may be called orally or in writing by the
Chairman of the Trustees or of such committee or by any two other Trustees or
committee members, as the case may be. Notice of the time, date and place of
all meeting of the Trustees, or a committee thereof, shall be given to each
Trustee or committee member as provided in the By-Laws.

Notice of any meeting need not be given to any Trustee (or committee
member) who attends that meeting without objecting to the lack of notice or who
executes a written waiver of notice with respect to the meeting. Subject to the
requirements of the 1940 Act the Trustees by majority vote may delegate to any
one of their number the authority to approve particular matters or take
particular actions on behalf of the Trust.

PAYMENT OF EXPENSES BY THE TRUST

Section 6. The Trustees are authorized to pay or to cause to be paid
out of the principal or income of the Trust, or partly out of principal and
partly out of income, as they deem fair, all expenses, fees, charges, taxes and
liabilities incurred or arising in connection with the Trust, or in connection
with the management thereof including, but not limited to, the Trustees'
compensation, as authorized pursuant to Article VII, Section l hereof, and
reimbursement for expenses and disbursements and such expenses and charges for
the services of the Trust's officers, employees, investment adviser or
administrator, principal underwriter, auditor, counsel, custodian, transfer
agent, Shareholder servicing agent, and such other agents or independent
contractors and such other expenses and charges as the Trustees may deem
necessary or proper to incur, provided, however, that all expenses, fees,
charges, taxes and liabilities incurred or arising in connection with a
particular series of Shares or class as

11
<PAGE> 12
determined by the Trustees consistent with applicable law, shall be payable
solely out of the assets of that series or class. Any general liabilities,
expenses, costs, charges or reserves of the Trust which are not readily
identifiable as belonging to any particular series shall be allocated and
charged by the Trustees between or among any one or more of the series in such
manner as the Trustees in their sole discretion deem fair and equitable. Bach
such allocation shall be conclusive and binding upon the Shareholders of all
series for all purposes. Any creditor of any series may look only to the assets
of that series to satisfy such creditor's debt.

Section 7. The Trustees shall have the power as frequently as they
may determine, to cause each Shareholder to pay directly, in advance or
arrears. for any and all expenses of the Trust, an amount fixed from time to
time by the Trustees, by setting off such charges due from such Shareholder
from declared but unpaid dividends owed such Shareholder and/or by reducing the
number of Shares in the account of such Shareholder by that number of full
and/or fractional Shares which represents the outstanding amount of such
charges due from such Shareholder.

OWNERSHIP OF ASSETS OF THE TRUST

Section 8. Title to all of the assets of each series of Shares and
the Trust shall at all times be considered as vested in the Trustees as joint
tenants. The right, title and interest of the Trustees in such assets shall
vest automatically in each person who may hereafter become a Trustee, and upon
any Trustees' death, resignation or removal, such Trustee shall automatically
cease to have any right, title or interest in such assets. Vesting and
cessation of title as set forth in this Section 8 shall be effective
notwithstanding the absence of execution and delivery of any conveyancing
documents.

ADVISORY, ADMINISTRATION AND DISTRIBUTION

Section 9. The Trustees may, at any time and from time to time,
contract with respect to the Trust or any series thereof for exclusive or
nonexclusive advisory and/or administration services with First National Bank
of Commerce in New Orleans Trust Group, SEI Financial Management Corporation, a
Delaware corporation, and/or any other corporation, trust, association or other
organization, every such contract to comply with such requirements and
restrictions as may be set forth in the By-Laws; and any such contract may
contain such other terms interpretive of or in addition to said requirements
and restrictions as the Trustees may determine, including, without limitation,
in the case of a contract for advisory or sub-advisory services, authority to
determine from time to time what investments shall be purchased, held, sold or
exchanged and what portion, if any, of the assets of the Trust or any series
thereof shall be held uninvested and to make changes in the investments of the
Trust or any series thereof. Any contract for advisory services shall be
subject to such Shareholder approval as is required by the 1940 Act. The
Trustees may also, at any time and from time to time, contract with SEI
Financial Services Company, a Pennsylvania corporation, and/or any other
corporation, trust, association or other organization, appointing it exclusive
or nonexclusive

12
<PAGE> 13
distributor or principal underwriter for the Shares, every such contract to
comply with such requirements and restrictions as may be set forth in the
By-Laws, and any such contract may contain such other terms interpretive of or
in addition to said requirements and restrictions as the Trustees may
determine.

The fact that:

(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee,
administrator, adviser, principal underwriter, or distributor or
agent of or for any corporation, trust, association, or other
organization, or of or for any parent or affiliate of any
organization, with which an advisory or administration or
principal underwriter's or distributor's contract, or transfer,
Shareholder servicing or other agency contract may have been or
may hereafter be made, or that any such organization, or any
parent or affiliate thereof, is a Shareholder or has an interest
in the Trust, or that

(ii) any corporation, trust, association or other organization with
which an advisory or administration or principal underwriter's
or distributor's contract, or transfer, Shareholder servicing or
other agency contract may have been or may hereafter be made
also has an advisory or administration contract, or principal
underwriter's or distributor's contract, or transfer,
Shareholder servicing or other agency contract with one or more
other corporations, trusts, associations, or other
organizations, or has other businesses or interests

shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its
Shareholders.

13
<PAGE> 14
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS

The Shareholders shall have power to vote only (i) for the election
or removal of Trustees as provided in Article IV, Section 1 hereof, (il) with
respect to any investment adviser as provided in Article IV, Section 7 hereof,
(iii) with respect to any termination of the Trust or any series or class to
the extent and as provided in Article IX, Section 4 hereof, (iv) with respect
to any amendment of this Declaration of Trust to the extent and as provided in
Article Ix, Section 7 hereof, (v) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not a court action,
proceeding or claim should or should not be brought or maintained derivatively
or as a class action on behalf of the Trust or the Shareholders, (vi) with
respect to any merger, consolidation, sale of assets, or incorporation of the
Trust or any series to the extent and as provided in Article Ix, Sections 6 and
7 hereof, and (vii) with respect to such additional matters relating to the
Trust as may be required by law, by this Declaration of Trust, by the By-Laws
or by any registration of the Trust with the Securities and Exchange Commission
or any state, or as the Trustees may consider necessary or desirable.
Notwithstanding any other provisions of this Declaration of Trust, on any
matter submitted to a vote of Shareholders, all Shares of the Trust then
entitled to vote shall be voted by individual series or class, except that (1)
when so required by the 1940 Act, then Shares shall be voted in the aggregate
and not by individual series or class, and (2) when the Trustees have
determined that the matter affects only the interests of one or more series or
class, then only Shareholders of such series or class(es) shall be entitled to
vote thereon. The Shareholders may hold meetings and take action as provided in
the By-Laws, subject to the requirements of the 1940 Act where applicable.
Until Shares are issued, the Trustees may exercise all rights of Shareholders
and may take any action required by law, this Declaration of Trust or the
By-Laws to be taken by Shareholders.

ARTICLE VI
DISTRIBUTIONS, REDEMPTIONS, REPURCHASES
AND DETERMINATION OF NET ASSET VALUE

DISTRIBUTIONS

Section 1. The Trustees may, but need not, distribute from time to
time to the Shareholders of each series such income and gains, accrued or
realized, as the Trustees may determine, after providing for actual and accrued
expenses and liabilities (including such reserves as the Trustees may
establish) determined in accordance with good accounting practices. The
Trustees shall have full discretion to determine which items shall be treated
as income and which items as capital and their determination shall be binding
upon the Shareholders. Distributions of each year's income of each series, if
any be made, in one or more payments, which shall be in Shares, in cash or
otherwise and on a date or dates

14
<PAGE> 15
determined by the Trustees. At any time and from time to time in their
discretion, the Trustees may distribute to the Shareholders of any one or more
series as of a record date or dates determined by the Trustees, in Shares, in
cash or otherwise, all or part of any gains realized on the sale or disposition
of property of the series or otherwise, or all or part of any other principal
of the Trust attributable to the series. Each distribution pursuant to this
Section 1 shall be made ratably according to the number of Shares of the series
or class held by the several Shareholders on the applicable record date
thereof, provided that no distributions need be made on Shares purchased
pursuant to orders received, or for which payment is made, after such time or
times as the Trustees may determine. Any such distribution paid in Shares will
be paid at the net asset value thereof as determined in accordance with this
Declaration of Trust.

REDEMPTIONS AND REPURCHASES

Section 2. Any holder of Shares of the Trust may, by presentation
of a written request, together with his or her certificates, if any, for such
Shares, in proper form for transfer, at the office of the Trust, the adviser,
the underwriter or the distributors, or at a principal office of a transfer or
Shareholder services agent appointed by the Trust (as the Trustees may
determine), or in accordance with such other procedures for redemption as the
Trustees may from time to time authorize, redeem his or her Shares in
accordance with the provisions of this Section 2 for the net asset value
thereof determined and computed in accordance with the By-Laws, less any
redemption charge the Trustees may establish including any contingent deferred
sales charge to which redemption of such Shares may be subject. Upon receipt
of such written request for redemption of Shares by the Trust, the adviser, the
underwriter or the distributor, or the Trust's transfer or Shareholder services
agent, the Trust shall purchase such Shares and shall pay therefor the net
asset value thereof next determined after such receipt or, in the case of
Shares for which certificates have been issued, the net asset value thereof
next determined after such Shares are tendered in proper form for transfer to
the Trust or, in either case, the net asset value thereof determined as of such
other time fixed by the Trustees, as may be permitted or required by the 1940
Act.

The obligation of the Trust to redeem its Shares as set forth in
this Section 2 shall be subject to the condition that, during any time of
emergency, as hereinafter defined, such obligation may be suspended by the
Trust by or under authority of the Trustees for such period or periods during
such time of emergency as shall be determined by or under authority of the
Trustees. If there is such a suspension, any Shareholder may withdraw any
demand for redemption and any tender or Shares which has been received by the
Trust during any such period and any tender of Shares the applicable net asset
value of which would but for such suspension be calculated as of a time during
such period. Upon such withdrawal, the Trust shall return to the Shareholder
the certificates therefor, if any. Shareholders who do not so withdraw any
such demand shall receive payment based on the net asset value next determined
after the termination of such suspension. For the purposes of any such
suspension "time of

15
<PAGE> 16
emergency" shall mean, either with respect to all Shares or any series of
Shares, as appropriate, any period during which:

(a) the New York Stock Exchange is closed other than for customary
weekend and holiday closings; or

(b) the Trustees or authorized officers of the Trust shall have
determined in compliance with any applicable rules and
regulations or orders of the Commission either that trading on
the New York Stock Exchange is restricted or that an emergency
exists as a result of which (i) disposal by the Trust of
securities owned by it is not reasonably practicable or (ii) it
is not reasonably practicable for the Trust fairly to determine
the current value of the net assets of the Trust or of a series:
or

The Trust may also purchase, repurchase or redeem Shares in
accordance with such other methods, upon such other terms and subject to such
other conditions as the Trustees may from time to time authorize at a price not
exceeding the net asset value of such Shares in effect when the purchase or
repurchase or any contract to purchase or repurchase is made.

PAYMENT IN KIND

Section 3. Subject to any generally applicable limitation imposed by
the Trustees, any payment on redemption, purchase or repurchase by the Trust of
Shares may, if authorized by the Trustees, be made wholly or partly in kind,
instead of in cash. Such payment in kind shall be made by distributing
securities or other property, constituting, in the opinion of the Trustees, a
fair representation of the various types of securities and other property then
held by the series of Shares being redeemed, purchased or repurchased (but not
necessarily involving a portion of each of that series' holdings) and taken at
their value used in determining the net asset value of the Shares in respect of
which payment is made.

ADDITIONAL PROVISIONS RELATING TO REDEMPTIONS AND REPURCHASES

Section 4. The completion of redemption, purchase or repurchase of
Shares shall constitute a full discharge of the Trust and the Trustees with
respect to such Shares and the Trustees may require that any certificate or
certificates issued by the Trust to evidence the ownership of such Shares shall
be surrendered to the Trustees for cancellation or notation.

16
<PAGE> 17
ASSETS AVAILABLE FOR DIVIDENDS DISTRIBUTIONS. REDEMPTIONS AND REPURCHASES

Section 5. No dividend or distribution (including, without
limitation, any distribution paid upon termination of the Trust or of any
series) with respect to, nor any redemption or repurchase of, the Shares of any
series shall be effected by the Trust other than from the assets of such
series.

REDEMPTIONS AT THE OPTION OF THE TRUST

Section 6. The Trustees shall have the power at any time to redeem
Shares, of any class of any series, of a Shareholder at a redemption price
determined in accordance with the provisions of Section 2 of this Article if at
such time the aggregate net asset value of the Shares of that class of that
series in such Shareholder's account is less than the minimum investment amount
established by the Trustees for that class of that series. A Shareholder shall
be notified prior to any such redemption and shall be allowed [60 days] to make
additional investments in Shares of that class of that series before such
redemption is effected.

ARTICLE VII
COMPENSATION AND LIMITATION
OF LIABILITY OF TRUSTEES

COMPENSATION

Section 1. The Trustees as such shall be entitled to reasonable
compensation from the Trust; they may fix the amount of their compensation.
Nothing herein shall in any way prevent the employment of any Trustee for
advisory, administration, legal, accounting, investment banking or other
services and payment for the same by the Trust.

LIMITATION OF LIABILITY

Section 2. The Trustees shall not be responsible or liable in
any event for any neglect or wrongdoing of any officer, agent, employee,
investment adviser or administrator, principal underwriter or custodian, nor
shall any Trustee be responsible for the act or omission of any other Trustee,
but nothing herein contained shall protect any Trustee against any liability to
which he or she would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office.

Every note, bond, contract, instrument, certificate, Share or
undertaking and every other act or thing whatsoever executed or done by or on
behalf of the Trust or the Trustees or any of them in connection with the Trust
shall be conclusively deemed to have been executed

17
<PAGE> 18
or done only in or with respect to their or his or her capacity as Trustees or
Trustee, and such Trustees or Trustee shall not be personally liable thereon.

ARTICLE VIII
INDEMNIFICATION

Subject to the exceptions and limitations contained in this Article.
every person who is, or has been, a Trustee or officer of the Trust shall be
indemnified by the Trust to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him in
connection with any claim. action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of his being or having been a
Trustee or officer and against amounts paid or incurred by him in settlement
thereof.

No indemnification shall be provided hereunder to a Trustee or
officer:

(a) against any liability to the Trust or its Shareholders by reason
of a final adjudication by the court or other body before which
the proceeding was brought that he engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office;

(b) with respect to any matter as to which he shall have been
finally adjudicated not to have acted in good faith in the
reasonable belief that his action was in the best interests of
the Trust;

(c) in the event of a settlement or other disposition not involving
a final adjudication (as provided in paragraph (a) or (b)) and
resulting in a payment by a Trustee or officer, unless there has
been either a determination that such Trustee or officer did not
engage in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his
office by the court or other body approving the settlement or
other disposition or a reasonable determination, based on a
review of readily available facts (as opposed to a full
trial-type inquiry) that he did not engage in such conduct:

(i) by a vote of a majority of the Disinterested
Trustees acting on the matter (provided that
a majority of the Disinterested Trustees then
in office act on the matter); or

(ii) by written opinion of independent legal
counsel.

The rights of indemnification hereinafter provided may be insured
against by policies maintained by the Trust, shall be severable, shall not
affect any other rights to which any

18
<PAGE> 19
Trustee or officer may now or hereafter be entitled, shall continue as to a
person who has ceased to be such Trustee or officer and shall inure to the
benefit of the heirs, executors and administrators of such a person. Nothing
contained herein shall affect any rights to indemnification to which Trust
personnel other than Trustees and officers may be entitled by contract or
otherwise under law.

Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in the next to the last
paragraph of this Article shall be advanced by the Trust prior to final
disposition thereof upon receipt of an undertaking by or on behalf of the
recipient to repay such amount if it is ultimately determined that he is not
entitled to indemnification under this Article, provided that either:

(a) such undertaking is secured by a surety bond
or some other appropriate security or the
Trust shall be insured against losses arising
out of any such advances; or

(b) a majority of the Disinterested Trustees
acting on the matter (provided that a
majority of the Disinterested Trustees then
in office act on the matter) or independent
legal counsel in a written opinion shall
determine, based upon a review of the readily
available facts (as opposed to a full
trial-type inquiry), that there is reason to
believe that the recipient ultimately will be
found entitled to indemnification.

As used in this Article, the words "claim," "action", "suit" or
proceeding" shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened; and the words
"liability" and "expenses" shall include without limitation, attorney's fees.
costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.

In case any Shareholder or former Shareholder shall be held to be
personally liable solely by reason of his or her being or having been a
shareholder and not because of his or her acts or omissions or for some other
reason, the shareholder or former Shareholder (or his or her heirs, executors,
administrators or other legal representatives or in the case of a corporation
or other entity, its corporate or other general successor) shall be entitled to
be held harmless from and indemnified against all loss and expenses arising
from such liability, but only out of the assets of the particular series of
Shares of which he or she is or was a Shareholder.

19
<PAGE> 20
ARTICLE IX
MISCELLANEOUS

TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE: NOTICE

Section 1. All persons extending credit to, contracting with or
having any claim against the Trust or a particular series or class of Shares
shall look only to the assets of the Trust or the assets of that particular
series of Shares for payment under such credit, contract or claim; and neither
the Shareholders nor the Trustees, nor any of the Trust's officers, employees
or agents, whether past, present or future, shall be personally liable
therefor. Nothing in this Declaration of Trust shall protect any Trustee
against any liability to which such Trustee would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of Trustee.

Every note, bond, contract, instrument, certificate or undertaking
made or issued by the Trustees or by any officers or officer shall give notice
that this Declaration of Trust is on file with the Secretary of the
Commonwealth of Massachusetts and shall recite that the same was executed or
made by or on behalf of the Trust or by them as Trustees or Trustee or as
officers or officer and not individually and that the obligations of such
instrument are not binding upon any of them or the Shareholders individually
but are binding only upon the assets and property of the Trust, and may contain
such further recital as he or she or they may deem appropriate, but the
omission thereof shall not operate to bind any Trustees or Trustee or officers
or officer or Shareholders or Shareholder individually.

TRUSTEES' GOOD FAITH ACTION, EXPERT ADVICE; NO BOND OR SURETY

Section 2. The exercise by the Trustees of their powers and
discretion hereunder shall be binding upon everyone interested. A Trustee
shall be liable for his or her own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee, and for nothing else, and shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees may take advice of counsel or
other experts with respect to the meaning and operation of this Declaration of
Trust, and shall be under no liability for any act or omission in accordance
with such advice or for failing to follow such advice. The Trustees shall not
be required to give any bond as such, nor any surety if a bond is required.

LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES

Section 3. No person dealing with the Trustees shall be bound to
make any inquiry concerning the validity of any transaction made or to be made
by the Trustees or to see to the application of any payments made or property
transferred to the Trust or upon its order.

20
<PAGE> 21
DURATION AND TERMINATION OF TRUST

Section 4. Unless terminated as provided herein, the Trust shall
continue without limitation of time. The Trust may be terminated at any time by
vote of Shareholders holding at least a majority of the Shares entitled to vote
or by the Trustees by written notice to the Shareholders. Any series of Shares
may be terminated at any time by vote of Shareholders holding at least a
majority of the Shares of such series entitled to vote or by the Trustees by
written notice to the Shareholders of such series. Upon termination of the
Trust or of any one or more series of Shares, after paying or otherwise
providing for all charges, taxes, expenses and liabilities, whether due or
accrued or anticipated, of the Trust or of the particular series as may be
determined by the Trustees, the Trust shall, in accordance with such procedures
as the Trustees consider appropriate, reduce the remaining assets to
distributable form in cash or Shares or other securities, or any combination
thereof, and distribute the proceeds to the Shareholders of the series
involved, ratably according to the number of Shares of such series held by the
several Shareholders of such series on the date of termination.

Section 5. The original or a copy of this instrument and of each
amendment hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. A copy of this instrument and of each amendment
hereto shall be filed by the Trust with the Secretary of the Commonwealth of
Massachusetts and with the Boston City Clerk, as well as any other governmental
office where such filing may from time to time be required. Anyone dealing with
the Trust may rely on a certificate by an officer of the Trust as to whether or
not any such amendments have been made and as to any matters in connection with
the Trust hereunder; and. with the same effect as if it were the original, may
rely on a copy certified by an officer of the Trust to be a copy of this
instrument or of any such amendments. In this instrument and in such amendment,
references to this instrument, and the expression "herein," "hereof," and
"hereunder" shall be deemed to refer to this instrument as amended from time to
time. Headings are placed herein for convenience of reference only and shall
not be taken as part hereof or control or affect the meaning, construction or
effect of this instrument. This instrument may be executed in any number of
counterparts each of which shall be deemed an original.

MERGER, CONSOLIDATION AND SALE OF ASSETS

Section 6. The Trust may merge or consolidate with any other
corporation, association, trust or other organization or may sell, lease or
exchange all or substantially all of the assets of the Trust (or all or
substantially all of the assets allocated or belonging to a particular series
of the Trust) including its good will, upon such terms and conditions and for
such consideration when and as authorized, at any meeting of Shareholders
called for such purpose, by the vote or written consent of the Shareholders of
all series of the Trust voting as a single class, or of the affected series of
the Trust, as the case may be; and any such merger, consolidation, sale, lease
or exchange shall be deemed for all purposes to have been accomplished under
and

21
<PAGE> 22
pursuant to the statutes of the Commonwealth of Massachusetts. Nothing
contained herein shall be construed as requiring approval of Shareholders for
any sale of assets in the ordinary course of the business of the Trust. Holders
of Shares of any series or class shall have no appraisal rights with respect to
their Shares.

INCORPORATION, REORGANIZATION

Section 7. With the approval of the Shareholders, the Trustees may
cause to be organized or assist in organizing a corporation or corporations
under the laws of any jurisdiction, or any other trust, unit investment trust,
partnership, association or other organization to take over the assets of the
Trust or to carry on any business in which the Trust shall directly or
indirectly have any interest, and to sell, convey and transfer such assets to
any such corporation, trust, partnership, association or organization in
exchange for the shares or securities thereof or otherwise, and to lend money
to, subscribe for the shares or securities of, and enter into any contracts
with any such corporation, t:rust, partnership, association or organization in
which the Trust holds or is about to acquire shares or any other interest.
Subject to Section 6 of this Article IX, the Trustees may also cause a merger
or consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to
the extent permitted by law. Nothing contained in this Section shall be
construed as requiring approval of Shareholders for the Trustees to organize or
assist in organizing one or more corporations, trusts, partnerships,
associations or other organizations and selling, conveying or transferring a
portion of the assets of the Trust to such organization or entities.

With the approval of Shareholders of any series the Trustees may
sell lease or exchange all of the assets allocated or belonging to that series,
or cause to be organized or assist in organizing a corporation or corporations
under the laws of any other jurisdiction, or any other trust, unit investment
trust, partnership, association or other organization, to take over all of the
assets allocated or belonging to that series and to sell, convey or transfer
such assets to any such corporation, trust, unit investment trust, partnership,
association, or other organization in exchange for the shares or securities
thereof or otherwise.

APPLICABLE LAW

Section 8. The Trust shall be of the type commonly called a
Massachusetts business trust, and without limiting the provisions hereof, the
Trust may exercise all powers which are ordinarily exercised by such a trust.
This Declaration of Trust is to be governed by and construed and administered
according to the laws of said Commonwealth.

AMENDMENTS

22
<PAGE> 23
Section 9. This Declaration of Trust may be amended at any time by
an instrument in writing signed by a majority of the then Trustees when
authorized to do so by a vote or written consent of Shareholders, except that
an amendment which shall affect the holders of one or more series or classes of
Shares but not the holders of all outstanding series or classes shall be
authorized by vote or written consent of the Shareholders of each series or
classes affected and no vote of Shareholders of a series or classes not
affected shall be required. Amendments having the purpose of changing the name
of the Trust or of supplying any omission, curing any ambiguity or curing,
correcting or supplementing any defective or inconsistent provision contained
herein shall not require authorization by Shareholder vote.

23
<PAGE> 24
IN WITNESS WHEREOF, the undersigned being the sole initial Trustee
of the Trust has executed this document this ____ day of July, 1996.

-------------------------
Thomas L. Hansberger, as Trustee
and not individually

<PAGE> 1
EXHIBIT 99.B2

BY-LAWS

HANSBERGER INSTITUTIONAL SERIES

SECTION 1. AGREEMENT AND DECLARATION OF TRUST AND PRINCIPAL OFFICE

1.1 Agreement and Declaration of Trust. These By-Laws shall be subject
to the Agreement and Declaration of Trust, as from time to time in
effect (the "Declaration of Trust"), of the Hansberger Institutional
Series, a Massachusetts business trust established by the
Declaration of Trust (the "Trust").

1.2 Principal Office of the Trust. The principal office of the Trust
shall be located in Fort Lauderdale, Florida. The principal office
of the Trust in Massachusetts shall be the offices of C.T.
Corporation Systems, 2 Oliver Street, Boston, Massachusetts 02109.

SECTION 2. SHAREHOLDERS

2.1 Annual Meeting. The Trust will not hold annual meetings of the
shareholders.

2.2 Special Meetings. A special meeting of the Shareholders of the Trust
or of any series or class may be called at any time by the Trustees,
by the President or such other person or persons as may be specified
in these By-Laws, and held from time to time for the purpose of
taking action upon any matter requiring the vote or the authority of
the Shareholders of the Trust or any series or class as herein
provided or upon any other matter deemed by the Trustees to be
necessary or desirable. Written notice of any meeting of
Shareholders shall be given or caused to be given by the Trustees by
mailing such notice at least seven days before such meeting, postage
prepaid stating the time, place and purpose of the meeting, to each
Shareholder at the Shareholder's address as it appears on the
records of the Trust. Each call of a meeting shall state the place,
date, hour and purposes of the meeting. If the Trustees shall fail
to call or give notice of any meeting of Shareholders for a period
of thirty days after written application by Shareholders holding at
least 10% of the Shares then outstanding requesting a meeting to be
called for a purpose requiring action by the Shareholders as
provided herein or in the By-Laws, then Shareholders holding at
least 10% of the Shares then outstanding may call and give notice of
such meeting, and thereupon the meeting shall be held in the manner
provided for herein in case of call thereof by the Trustees. Notice
of a meeting need not be given to any Shareholder if a written
waiver of notice, executed by him or her before or after the
meeting, is filed with the records of the meeting, or to any
Shareholder who attends the meeting without protesting prior thereto
or at its commencement the lack of notice to him or her.

1
<PAGE> 2
2.3 Place of Meetings. All meetings of the shareholders shall be held at
such place within the United States as shall be designated by the
Trustees or the president of the Trust.

2.4 Notice of Meetings. A written notice of each meeting of shareholders
stating the place. date and hour and the purposes of the meeting,
shall be given at least seven days before the meeting to each
shareholder entitled to vote thereat by leaving such notice with him
or at his residence or usual place of business or by mailing it,
postage prepaid. and addressed to such shareholder at his address as
it appears in the records of the Trust. Such notice shall be given
by the secretary or an assistant secretary or by an officer
designated by the Trustees. No notice of any meeting of shareholders
need be given to a shareholder if a written waiver of notice,
executed before or after the meeting by such shareholder or his
attorney thereunto duly authorized, is filed with the records of
the meeting.

2.5 Voting Powers. Each whole Share shall be entitled to one vote as to
any matter on which it is entitled to vote and each fractional Share
shall be entitled to a proportionate fractional vote. There shall be
no cumulative voting in the election of Trustees. Shares may be
voted in person or by proxy.

A proxy with respect to Shares held in the name of two or more
persons shall be valid if executed by any one of them unless at or
prior to the exercise of the proxy the Trust receives a specific
written notice to the contrary from any one of them. A proxy
purporting to be executed by or on behalf of a Shareholder shall be
deemed valid unless challenged at or prior to its exercise and the
burden of proving invalidity shall rest on the challenger.

2.6 Quorum and Required Vote. A majority of the Shares entitled to vote
shall be a quorum for the transaction of business at a Shareholders'
meeting, except that where any provision of law or of the
Declaration of Trust permits or requires that holders of any series
or class shall vote as a series or class, then a majority of the
aggregate number of Shares of that series or class entitled to vote
shall be necessary to constitute a quorum for the transaction of
business by that series or class. Any lesser number, however, shall
be sufficient for adjournments. Any adjourned session or sessions
may be held within a reasonable time after the date set for the
original meeting without the necessity of further notice.

Except when a larger vote is required by any provisions of the
Declaration of Trust or these By-Laws, a majority of the Shares
voted on any matter shall decide such matter and a plurality shall
elect a Trustee, provided that where any provision of law or of this
Declaration of Trust permits or requires that the holders of any
series or class shall vote as a series or class, then a majority of
the Shares of that series or class voted on the matter shall decide
that matter insofar as that series or class is concerned.

2
<PAGE> 3
2.7 Ballots. No ballot shall be required for any election unless
requested by a shareholder present or represented at the meeting and
entitled to vote in the election.

2.8 Proxies. Shareholders entitled to vote may vote either in person or
by proxy' in writing dated not more than six months before the
meeting named therein. which proxies shall be filed with the
secretary or other person responsible to record the proceedings of
the meeting before being voted. Unless otherwise specifically
limited by their terms. such proxies shall entitle the holders
thereof to vote at any adjournment of such meeting but shall not be
valid after the final adjournment of such meeting.

2.9 Action by Written Consent. Any action taken by Shareholders may be
taken without a meeting if a majority of Shareholders entitled to
vote on the matter (or such larger vote as shall be required by any
provision of the Declaration of Trust or these By-Laws) consent to
the action in writing and such written consents are filed with the
records of the meetings of Shareholders. Such consent shall be
treated for all purposes as a vote taken at a meeting of
Shareholders.

SECTION 3. TRUSTEES

3.1 Committees and Advisory Board. The Trustees may appoint from their
number an executive committee and other committees. Except as the
Trustees may otherwise determine, any such committee may make rules
for conduct of its business. The Trustees may appoint an advisory
board to consist of not less than two nor more than five members.
The members of the advisory board shall be compensated in such
manner as the Trustees may determine and shall confer with and
advise the Trustees regarding the investments and other affairs of
the Trust Each member of the advisory board shall hold office until
the first meeting of the Trustees following the next annual meeting
of the shareholders and until his successor is elected and
qualified, or until he sooner dies, resigns, is removed, or becomes
disqualified, or until the advisory board is sooner abolished by the
Trustees.

3.2 Regular Meetings. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the
Trustees may from time to time determine, provided that notice of
the first regular meeting following any such determination shall be
given to absent Trustees. A regular meeting of the Trustees may be
held without call or notice immediately after and at the same place
as the annual meeting of the shareholders.

3.3 Special Meetings. Special meetings of the Trustees may be held at
any time and at any place designated in the call of the meeting,
when called by the Chairman of the Board, the president or the
treasurer or by two or more Trustees, sufficient notice thereof
being given to each Trustee by the secretary or an assistant
secretary or by the officer or one of the Trustees calling the
meeting.

3
<PAGE> 4
3.4 Notice. It shall be sufficient notice to a Trustee to send notice by
mail at least forty-eight hours or by telegram at least twenty-four
hours before the meeting addressed to the Trustee at his or her
usual or last known business or residence address or to give notice
to him or her in person or by telephone at least twenty-four hours
before the meeting. Notice of a meeting need not be given to any
Trustee if a written waiver of notice. executed by him or her before
or after the meeting, is filed with the records of the meeting, or
to any Trustee who attends the meeting without protesting prior
thereto or at its commencement the lack of notice to him or her.
Neither notice of a meeting nor a waiver of a notice need specify
the purposes of the meeting.

3.5 Quorum. At any meeting of the Trustees one-third of the Trustees
then in office shall constitute a quorum; provided, however, a
quorum shall not be less than two. Any meeting may be adjourned
from time to time by a majority of the votes cast upon the question,
whether or not a quorum is present, and the meeting may be held as
adjourned without further notice.

SECTION 4. OFFICERS AND AGENTS

4.1 Enumeration: Qualification. The officers of the Trust shall be a
president, a treasurer, a secretary and such other officers, if any,
as the Trustees from time to time may in their discretion elect or
appoint The Trust may also have such agents, if any, as the Trustees
from time to time may in their discretion appoint. Any officer may
be but none need be a Trustee or shareholder. Any two or more
offices may be held by the same person.

4.2 Powers. Subject to the other provisions of these By-Laws, each
officer shall have, in addition to the duties and powers herein and
in the Declaration of Trust set forth, such duties and powers as are
commonly incident to his or her office as if the Trust were
organized as a Massachusetts business corporation and such other
duties and powers as the Trustees may from time to time designate.

4.3 Election. The president, the treasurer and the secretary shall be
elected annually by the Trustees. Other officers, if any, may be
elected or appointed by the Trustees at any time.

4.4 Tenure. The president, the treasurer and the secretary shall hold
office for a one year term and until their respective successors are
chosen and qualified, or in each case until he or she sooner dies,
resigns, is removed or becomes disqualified. Each agent shall
retain his or her authority at the pleasure of the Trustees.

4.5 President and Vice Presidents. The president shall be the chief
executive officer of the Trust. The president shall, subject to the
control of the Trustees, have general charge and supervision of the
business of the Trust. Any vice president shall have such duties and
powers as shall be designated from time to time by the Trustees.

4
<PAGE> 5
4.6 Chairman of the Board. if a Chairman of the Board of Trustees is
elected, he shall have the duties and powers specified in these
By-Laws and, except as the Trustees shall otherwise determine,
preside at all meetings of the shareholders and of the Trustees at
which he or she is present and have such other duties and powers as
may be determined by the Trustees.

4.7 Treasurer and Controller. The treasurer shall be the chief financial
officer of the Trust and subject to any arrangement made by the
Trustees with a bank or trust company or other organization as
custodian or transfer or shareholder services agent. shall be in
charge of its valuable papers and shall have such other duties and
powers as may be designated from time to time by the Trustees or by
the president. If at any time there shall be no controller, the
treasurer shall also be the chief accounting officer of the Trust
and shall have the duties and powers prescribed the Trust and shall
have the duties and powers prescribed herein for the controller. Any
assistant treasurer shall have such duties and powers as shall be
designated from time to time by the Trustees.

The controller, if any be elected, shall be the chief accounting
officer of the Trust and shall be in charge of its books of account
and accounting records. The controller shall be responsible for
preparation of financial statements of the Trust and shall have such
other duties and powers as may be designated from time to time by
the Trustees or the president.

4.8 Secretary and Assistant Secretaries. The secretary shall record all
proceedings of the shareholders and the Trustees in books to be kept
therefor, which books shall be kept at the principal office of the
Trust. In the absence of the secretary from any meeting of
shareholders or Trustees, an assistant secretary, or if there be
none or he or she is absent, a temporary clerk chosen at the meeting
shall record the proceedings thereof in the aforesaid books.

SECTION 5. RESIGNATION AND REMOVALS

Any Trustee, officer or advisory board member may resign at any time by
delivering his or her resignation in writing to the Chairman of the Board, the
president, the treasurer or the secretary or to a meeting of the Trustees. The
Trustees may remove any officer elected by them with or without cause by the
vote of a majority of the Trustees then in office. Except to the extent
expressly provided in a written agreement with the Trust, no Trustee, officer,
or advisory board member resigning, and no officer or advisory board member
removed shall have any right to any compensation for any period following his
or her resignation or removal, or any right to damages on account of such
removal.

SECTION 6. VACANCIES

5
<PAGE> 6
A vacancy in any office may be filled at any time. Each successor shall hold
office for the unexpired term, and in the case of the president, the treasurer
and the secretary, until his or her successor is chosen and qualified, or in
each case until he or she sooner dies, resigns, is removed or becomes
disqualified.

SECTION 7. SHARES OF BENEFICIAL INTEREST

In lieu of issuing certificates for shares, the Trustees or the transfer or
shareholder services agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case be deemed, for all purposes here under. to be the holders
of certificates for such shares as if they had accepted such certificates and
shall be held to have expressly assented and agreed to the terms hereof.

SECTION 8. RECORD DATE

The Trustees may fix in advance a time, which shall not be more than 60 days
before the date of any meeting of shareholders or the date for the payment of
any dividend or making of any other distribution to shareholders, as the record
date for determining the shareholders having the right to notice and to vote at
such meeting and any adjournment thereof or the right to receive such dividend
or distribution, and in such case only shareholders of record on such record
date shall have such right, notwithstanding any transfer of shares on the books
of the Trust after the record date.

SECTION 9. SEAL

The seal of the Trust shall, subject to alteration by the Trustees, consist of
a flat-faced circular die with the word "Massachusetts", together with the name
of the Trust and the year of its organization, cut or engraved thereon; but,
unless otherwise required by the Trustees, the seal shall not be necessary to
be placed on, and its absence shall not impair the validity of, any document,
instrument or other paper executed and delivered by or on behalf of the Trust.

SECTION 10. EXECUTION OF PAPERS

Except as the Trustees may generally or in particular cases authorize the
execution thereof in some other manner, all deeds, leases, transfers,
contracts, bonds, notes, checks, drafts and other obligations made, accepted or
endorsed by the Trust shall be signed, and any transfers of securities standing
in the name of the Trust shall be executed, by the president or by one of the
vice presidents or by the treasurer or by whomsoever else shall be designated
for that purpose by the vote of the Trustees and need not bear the seal of the
Trust.

SECTION 11. FISCAL YEAR

6
<PAGE> 7
The fiscal year of the Trust shall end on such date in each year as the
Trustees shall from time to time determine.

SECTION 12. PROVISIONS RELATING TO THE CONDUCT OF THE TRUST'S BUSINESS

12.1 Dealings with Affiliates. The Trust shall not purchase or retain
securities issued by any issuer if one or more of the holders of the
securities of such issuer or one or more of the officers or
directors of such issuer is an officer or Trustee of the Trust or
officer or director of any organization, association or corporation
with which the Trust has an investment adviser's contract
("investment adviser"), if to the knowledge of the Trust one or more
of such officers or Trustees of the Trust or such officers or
directors of such investment advisers owns beneficially more than
one-half of one percent of the shares or securities of such issuer
and such officers, Trustees and directors owning more than one-half
of one percent of such shares or securities together own
beneficially more than five percent of such outstanding shares or
securities. Each Trustee and officer of the Trust shall give notice
to the secretary of the identity of all issuers whose securities are
held by the Trust of which such officer or Trustee owns as much as
one-half of one percent of the outstanding securities, and the Trust
shall not be charged with the knowledge of such holdings in the
absence of receiving such notice if the Trust has requested such
information not less often than quarterly.

Subject to the provisions of the preceding paragraph, no officer,
Trustee or agent of the Trust and no officer, director or agent of
any investment adviser shall deal for or on behalf of the Trust with
himself as principal or agent, or with any partnership, association
or corporation in which he has a material financial interest;
provided that the foregoing provisions shall not prevent (a)
officers and Trustees of the Trust from buying, holding or selling
shares in the Trust, or from being partners, officers or directors
of or financially interested in any investment adviser to the Trust
or in any corporation, firm or association which may at any time
have a distributor's or principal underwriter's contract with the
Trust; (b) purchases or sales of securities or other property if
such transaction is permitted by or is exempt or exempted from the
provisions of the Investment Company Act of 1940 or any Rule or
Regulation thereunder and if such transaction does not involve any
commission or profit to any security dealer who is, or one or more
of whose partners. shareholders, officers or directors is, an
officer or Trustee of the Trust or an officer or director of the
investment adviser, administrator or principal underwriter of the
Trust; (c) employment of legal counsel, registrar, transfer agent,
shareholder services, dividend disbursing agent or custodian who is,
or has a partner, stockholder, officer or director who is, an
officer or Trustee of the Trust; (d) sharing statistical, research
and management expenses, including office hire and services, with
any other company in which an officer or Trustee of the Trust is an
officer or director or financially interested.

12.2 Dealing in Securities of the Trust. The Trust, the investment
adviser, any corporation, firm or association which may at any time
have an exclusive distributor's or principal

7
<PAGE> 8
underwriter's contract with the Trust (the "distributor") and the
officers and Trustees of the Trust and officers and directors of
every investment adviser and distributor, shall not take long or
short positions in the securities of the Trust, except that:

(a) the distributor may place orders with the Trust for its shares
equivalent to orders received by the distributor;

(b) shares of the Trust may be purchased at not less than net asset
value for investment by the investment adviser and by officers
and directors of the distributor, investment adviser, or the
Trust and by any trust, pension, profit-sharing or other
benefit plan for such persons, no such purchase to be in
contravention of any applicable state or federal requirement.

12.3 Limitation on Certain Loans. The Trust shall not make loans to any
officer, Trustee or employee of the Trust or any investment adviser
or distributor or their respective officers, directors or partners
or employees.

12.4 Custodian. All securities and cash owned by the Trust shall be
maintained in the custody of one or more banks or trust companies
having (according to its last published report) not less than two
million dollars ($2,000,000) aggregate capital, surplus and
undivided profits (any such bank or trust company is hereinafter
referred to as the "custodian"); provided, however, the custodian
may deliver securities as collateral on borrowings effected by the
Trust, provided, that such delivery shall be conditioned upon
receipt of the borrowed funds by the custodian except where
additional collateral is being pledged on an outstanding loan and
the custodian may deliver securities lent by the Trust against
receipt of initial collateral specified by the Trust. Subject to
such rules, regulations and orders, if any, as the Securities and
Exchange Commission may adopt, the Trust may, or may not permit any
custodian to, deposit all or any part of the securities owned by the
Trust in a system for the central handling of securities operated by
the Federal Reserve Banks, or established by a national securities
exchange or national securities association registered with said
Commission under the Securities Exchange Act of 1934, or such other
person as may be permitted by said Commission, pursuant to which
system all securities of any particular class or series of any issue
deposited with the system are treated as fungible and may be
transferred or pledged by bookkeeping entry, without physical
delivery of such securities.

The Trust shall upon the resignation or inability to serve of its
custodian or upon change of the custodian:

(a) in the case of such resignation or inability to serve use its
best efforts a successor custodian;

8
<PAGE> 9
(b) require that the cash and securities owned by this corporation
be delivered directly to the successor custodian; and

(c) in the event that no successor custodian can be found, submit to
the shareholders, before permitting delivery of the cash and
securities owned by this Trust otherwise than to a successor
custodian, the question whether or not this Trust shall be
liquidated or shall function without a custodian.

12.5 Limitations on Investment. Each series of shares may not invest in
securities other than those described in the Trust's then current
prospectus as appropriate for the series of shares for which such
securities are being purchased.

12.6 Determination of Net Asset Value. Determinations of net asset value
made in good faith shall be binding on all parties concerned.

The term "net asset value" with respect to Shares of any series
shall mean that amount by which the assets of that series exceed its
liabilities, all as determined by or under the direction of the
Trustees. Such value shall be determined on such days and at such
times as the Trustees may determine. Such determination shall be
made with respect to securities for which market quotations are
readily available, at the market value of such securities; and with
respect to other securities and assets, at the fair value as
determined in good faith by the Trustees, provided, however, that
the Trustees, without Shareholder approval, may alter the method of
appraising portfolio securities insofar as permitted under the 1940
Act and interpretations thereof promulgated or issued by the
Commission or insofar as permitted by any order of the Commission.
The Trustees may delegate any powers and duties under this Section
12.6 with respect to appraisal of assets and liabilities. At any
time the Trustees may cause the value per Share last determined to
be determined again in similar manner and may fix the time when such
redetermined value shall become effective.

12.7 Reports to Shareholders; Distributions from Realized Gains. The
Trust shall send to each shareholder of record at least annually a
statement of the condition of the Trust and of the results of its
operation, containing all information required by applicable laws or
regulations.

SECTION 13. AMENDMENTS

These By-Laws may be amended or repealed, in whole or in part, by a majority of
the Trustees then in office at any meeting of the Trustees, or by one or more
writings signed by such majority.