HANSBERGER INSTITUTIONAL SERIES, N-1A/A, 1996-09-23

HANSBERGER INSTITUTIONAL SERIES
N-1A/A, 1996-09-23

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 23, 1996

File No. 333-8919
File No. 811-7729
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. 1 /X/
and

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 1 /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:

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

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/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.
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<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

P R O S P E C T U S

[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 developing 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.

ALL COUNTRIES FUND.(SM) 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 DEVELOPING COUNTRIES, BORROW
MONEY FOR INVESTMENT PURPOSES, INVEST IN A VARIETY OF DERIVATIVE INSTRUMENTS,
AND MAY INVEST UP TO 15% OF ITS NET ASSETS IN ILLIQUID SECURITIES, EACH OF
WHICH MAY INVOLVE GREATER RISK AND/OR 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 October 1, 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.

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 October 1, 1996.
<PAGE> 4
INTRODUCTION

This Prospectus describes International Fund, Emerging Markets Fund,
Foreign Small Cap Fund and All Countries Fund _(the "Funds"), four diversified
series of shares offered by the Hansberger Institutional Series (the "Trust"),
an open-end management investment company. Each Fund's investment 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 developing. 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. You may be charged a fee if you
effect transactions through a broker or agent. See "PURCHASE AND REDEMPTION
OF SHARES." CURRENTLY, SHARES OF FOREIGN SMALL CAP FUND AND ALL COUNTRIES
FUND(SM) ARE NOT BEING OFFERED OR SOLD.

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."

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."

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:

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<PAGE> 5
<TABLE>
<CAPTION>
Emerging Foreign All
International Markets Small Cap Countries
Fund Fund Fund Fund(SM)
------------- --------- --------- ------------
<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 0.75% 1.00% 0.90% 0.75%
12b-1 Fees None None None None
Other Expenses (after voluntary waivers)* 0.25% 0.50% 0.35% 0.25%
----- ------ ------ ------

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 - 0.45%; Emerging Markets Fund -
0.55%; Foreign Small Cap Fund - 0.40%; and All Countries Fund(SM) -
0.45%.

** 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(SM) - 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:

1 year 3 years
------ -------
<S> <C> <C>
International Fund $ $
Emerging Markets Fund $ $
Foreign Small Cap Fund $ $
All Countries Fund(SM) $ $
</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
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. This 80% does not include the cash
position of the Fund.

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.

Under normal circumstances, the Fund will invest at least 70% of the
value of its total assets 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.

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<PAGE> 7
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 at least 70% of the value of its total assets in (1) companies
located in developing countries with individual market capitalizations of less
than $1.5 billion USD (at the time of purchase) and (2) companies located in
developed countries, other than the United States, with individual market
capitalizations of less than $750 million USD (at the time of purchase).

ALL COUNTRIES FUND(SM)

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 invest in closed-end investment
companies holding foreign securities, and 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

-5-
<PAGE> 8
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 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

-6-
<PAGE> 9
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.

Brady Bonds are often viewed as having three or four valuation
components: (i) the collateralized repay ment 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, as well as other closed-end
investment companies (collectively, "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.

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<PAGE> 10
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 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 in one of the three highest rating categories by
rating services such as Moody's Investors Service, Inc. or Standard & Poor's
Corporation (i.e., rated at least A).

"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.

-8-
<PAGE> 11
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
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 net 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 331/3% 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.

-9-
<PAGE> 12
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. 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.

-10-
<PAGE> 13
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.

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 secur ities exchanges,
brokers and listed companies than in the U.S.

LIQUIDITY AND Many foreign securities markets have substantially
CONCENTRATION 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 juris diction might impose or
change withholding taxes on income payable in
connection with foreign securities. There are risks
of seizure, nation alization 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

-11-
<PAGE> 14
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 curren cies, and a Fund may
temporarily hold uninvested reserves in bank
deposits in foreign currencies. The exchange rates
between the U.S. 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 invest ment 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.

-12-
<PAGE> 15
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). 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 paral leled 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 follow ing 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."

-13-
<PAGE> 16
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 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
---------------------
P.O. Box
----
---------------------------

Checks must be drawn on U.S. banks.

-14-
<PAGE> 17
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
---------------------
P.O. Box
----
---------------------------

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):

The Chase Manhattan Bank, N.A.
ABA Number __________
[ ]
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.

LETTER OF INTENT. You may make an initial investment of less than $1
million if you execute a letter of intent ("Letter") which expresses your
intention to invest at least $1 million in the Funds within 13 months. The
minimum initial investment under a Letter is $100,000. If you do not invest
at least $1 million in shares of the Funds or other funds advised by the
Adviser within the 13-month period from execution of the Letter, the shares
actually purchased may be involuntarily redeemed and the proceeds sent to you
at your address of record. Any redemptions you make during the 13-month period
will be subtracted from the amount of Shares purchased for purposes of
determining whether the terms of the Letter have been completed.

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.

-15-
<PAGE> 18
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 Trust or its agents, and you may be
restricted from making future investments in the Trust. If you are already a
shareholder, the Trust may redeem shares from your account(s) as reimbursement
for any such loss.

If an investment in the Funds is made through a broker that has
executed a dealer agreement with the Trust, the Adviser or one of its
affiliates may make a payment out of its own resources to such dealer in an
amount not to exceed 0.25% of the amount invested. Dealers may contact the
Adviser for additional information.

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

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

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
-----------------------
P.O. Box
----
,
--------- --------- -----

"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

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<PAGE> 19
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
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 appli cable 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
-----------------------

P.O. Box
----
.
---------------------------

-17-
<PAGE> 20
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 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 com municated 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.

-18-
<PAGE> 21
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 Chase Global Fund Services Company, 73 Tremont Street, Boston, MA
02108-3913. 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.

MANAGEMENT OF THE FUND

TRUSTEES AND OFFICERS

The Board of Trustees decides upon matters of general policy and
reviews the actions of each Fund's Adviser and Administrator. The officers of
the Trust conduct and supervise its daily business operations. See "TRUSTEES
AND OFFICERS OF THE TRUST" in the SAI.

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 that
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 0.75%
Emerging Markets Fund 1.00%
Foreign Small Cap Fund 0.90%
All Countries Fund(SM) 0.75%
</TABLE>

PORTFOLIO MANAGERS

THOMAS L. HANSBERGER is the Chairman and Chief Executive Officer of
the Adviser and the Trust. 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(SM).

JAMES E. CHANEY joined the Adviser in 1996 as Chief Investment Officer
and is the lead manager for the International Fund. 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 numerous funds and separate
accounts, including the $2.5 billion Templeton Institutional Funds
Inc. Foreign Equity Series. During Mr. Chaney's tenure as portfolio
manager for

-19-
<PAGE> 22
the Templeton Institutional Funds Inc. Foreign Equity Series, October
1, 1993 to June 30, 1996, that fund reported an average annual total
return of 13.59%.*/

WILKIN W. TAI joined the Adviser in 1996 as 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.

LAURETTA (RETZ) REEVES joined the Adviser in 1996 as a portfolio
manager and Managing Director. 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 lead manager for the 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(SM).

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.

CHARLES F. GULDEN joined the Adviser in 1996 as a portfolio manager
and Managing Director. 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.

ADMINISTRATOR AND TRANSFER AGENT

Chase Global Funds Services Company, a subsidiary of The Chase
Manhattan Bank, 73 Tremont Street, Boston MA 02108-3913, (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 Trust 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, the
Trust pays the Administrator a monthly fee in proportion to the Funds combined
average daily net assets at the following annual rate: 0.12% of the first $500
million in average daily net assets, 0.08% for the next $500 million, and 0.06
for average net assets over $1 billion.

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

*/[Source of performance data].

-20-
<PAGE> 23
EXPENSES

Each Fund is responsible for payment of certain other fees and
expenses (including legal fees, accoun tant's fees, custodial fees and printing
and mailing costs) specified in the Advisory and Administration 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.

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.

-21-
<PAGE> 24
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.

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.

-22-
<PAGE> 25
The sale or redemption of shares may result in taxable gain or loss to
the redeeming shareholder, depend ing 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.

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,

-23-
<PAGE> 26
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 25, 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 may share an
adviser, 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 a 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.

-24-
<PAGE> 27
INDEPENDENT ACCOUNTANTS

, serves as independent accountants for
the Trust and audits its annual financial statements.

-25-
<PAGE> 28
STATEMENT OF ADDITIONAL INFORMATION

[LOGO]

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(SM) (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 October 1, 1996, 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 October 1, 1996.

1
<PAGE> 29
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
<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.

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<PAGE> 30
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

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<PAGE> 31
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.

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<PAGE> 32
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

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<PAGE> 33
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.

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<PAGE> 34
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.

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<PAGE> 35
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> 36
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> 37
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> 38
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> 39
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

12
<PAGE> 40
example, if a Fund owns securities denominated in a foreign currency and the
Adviser believes that currency 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.

13
<PAGE> 41
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 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, or
may place economic restrictions on, 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 that invest in foreign securities. 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

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<PAGE> 42
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 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:

15
<PAGE> 43
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
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.

16
<PAGE> 44
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.

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 net 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). Rule 144A securities determined by the Board of Trustees to
be liquid are not subject to this limitation.

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 Trustee 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.

Trustee

Trustee
</TABLE>

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<PAGE> 45
<TABLE>
<S> <C> <C>
Trustee

Trustee

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

Vice President
( )
515 East Las Olas Blvd.
Fort Lauderdale, FL
Vice President
( )
515 East Las Olas Blvd.
Fort Lauderdale, FL

Vice President
( )
515 East Las Olas Blvd.
Fort Lauderdale, FL

KIMBERLY SCOTT ( ) Secretary
515 East Las Olas Blvd.
Fort Lauderdale, FL

Assistant Secretary
Assistant Treasurer
</TABLE>

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 October 1, 1996, the officers and Trustees of the Trust, in the
aggregate, beneficially owned less than 1% of its outstanding shares.

PRINCIPAL SHAREHOLDERS

As of October 1, 1996, 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

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<PAGE> 46
("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], 1996. 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.

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

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<PAGE> 47
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 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.

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<PAGE> 48
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. 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 each 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 Funds) 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

21
<PAGE> 49
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.

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

Chase Global Fund Services, 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

22
<PAGE> 50
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 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

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<PAGE> 51
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 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

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<PAGE> 52
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 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 regular 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

25
<PAGE> 53
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

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

26
<PAGE> 54
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 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 a Fund.

AVERAGE ANNUAL TOTAL RETURN

The average annual total return of a Fund is computed by finding the
average annual compounded rates of return over designated time 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.

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<PAGE> 55
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

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 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.

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.

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.

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.

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.

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<PAGE> 56
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.

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 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.

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.

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.

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<PAGE> 57
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.

30
<PAGE> 58
ADDITIONAL FUND INFORMATION

PORTFOLIO CHARACTERISTICS. 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.

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.

31
<PAGE> 59
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.

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

, 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> 60
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> 61
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> 62
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> 63
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> 64
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> 65
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> 66
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> 67
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> 68
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> 69
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> 70
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> 71
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> 72
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> 73
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> 74
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

<TABLE>
<S> <C>
1(a) Agreement and Declaration of Trust of the Registrant, dated July 25, 1996.(1)/
1(b) Amendment to the Agreement and Declaration of Trust, filed herewith.
2 By-Laws of the Registrant(1)/
--
5 Form of Investment Advisory Agreement, filed herewith.
*8 Form of Custodian Agreement
*9 Form of Administration Agreement.
*10 Opinion and Consent of Counsel.
*11 Opinion and Consent of Independent Public Accountants.
*16 Performance Calculations.
*27 Financial Data Schedules.
</TABLE>

* 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

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

(1)/ Filed with initial registration statement on July 26, 1996.

C-1
<PAGE> 75
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:

Chase Global Funds Services Company
73 Tremont Street
Boston, Massachusetts 02108

C-2
<PAGE> 76
(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.

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> 77
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
Pre-effective Amendment No. 1 to the 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 20th day of September, 1996.

Hansberger Institutional Series

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

Pursuant to the requirements of the Securities Act of 1933, this Pre-effective
Amendment No. 1 to the Registration Statement has been signed below by the
following person in the capacity on the dates indicated:

<TABLE>
<CAPTION>
SIGNATURE AND TITLE DATE
------------------------------ ----
<S> <C>
/s/ Thomas L. Hansberger September 20, 1996
------------------------------
Thomas L. Hansberger
President and Trustee

/s/ Thomas A. Christensen September 20, 1996
------------------------------
Thomas A. Christensen
Treasurer (Principal Financial
and Accounting Officer)
</TABLE>

C-4
<PAGE> 78
EXHIBIT INDEX

<TABLE>
<CAPTION>
Name Exhibit Page
---- ------- ----
<S> <C>
Amendment to the Agreement and Declaration
of Trust, filed herewith Ex-99.B1(b)

Form of Investment Advisory Agreement,
filed herewith Ex-99.B5
</TABLE>

C-5

<PAGE> 1

EXHIBIT-99.B1(b)

HANSBERGER INSTITUTIONAL SERIES
WRITTEN INSTRUMENT AMENDING THE AGREEMENT AND DECLARATION OF
TRUST

The undersigned, being the sole Trustee of Hansberger Institutional
Series (the "Trust"), a business trust organized under the laws of The
Commonwealth of Massachusetts pursuant to an Agreement and Declaration of Trust
dated July 25, 1996, does hereby amend, effective upon the filing of this
instrument in the office of the Secretary of State of The Commonwealth of
Massachusetts, the Agreement and Declaration of Trust to amend Article I,
Section 2 the Trust's resident agent in The Commonwealth of Massachusetts from
CT Corporation System at 2 Oliver Street, Boston, Massachusetts 02109 to Chase
Global Funds Services Company at 73 Tremont Street, Boston, Massachusetts
02108.

IN WITNESS WHEREOF, the undersigned has signed this present on the
date indicated.

, 1996
- ------------------------------- -------------------------
Thomas L. Hansberger, as Trustee
and not individually

<PAGE> 1
EXHIBIT-99.B5

INVESTMENT ADVISORY AGREEMENT

AGREEMENT made this _____ day of September, 1996, by and between
Hansberger Institutional Series (the "Trust"), a business trust organized under
the laws of the Commonwealth of Massachusetts, and Hansberger Global Investors,
Inc. (the "Adviser").

1. DUTIES OF ADVISER. The Trust hereby appoints the Adviser to act
as investment adviser to each of the Funds listed on Schedule A hereto (the
"Funds"), for the period and on such terms set forth in this Agreement. The
Trust employs the Adviser to manage the investment and reinvestment of the
assets of the Funds, to continuously review, supervise and administer the
investment program of each of the Funds, to determine in its discretion the
securities to be purchased or sold and the portion of each such Fund's assets
to be held uninvested, to provide the Trust with records concerning the
Adviser's activities which the Trust is required to maintain, and to render
regular reports to the Trust's officers and Board of Trustees concerning the
Adviser's discharge of the foregoing responsibilities. The Adviser shall
discharge the foregoing responsibilities subject to the control of the officers
and the Board of Trustees of the Trust, and in compliance with the objectives,
policies and limitations set forth in the Trust's prospectus and applicable
laws and regulations. The Adviser accepts such employment and agrees to render
the services and to provide, at its own expense, the office space, furnishings
and equipment and the personnel required by it to perform the services on the
terms and for the compensation provided herein.

2. FUND TRANSACTIONS. The Adviser is authorized to select the
brokers or dealers that will execute the purchases and sales of securities for
each of the Funds and is directed to use its best efforts to obtain the best
available price and most favorable execution, except as prescribed herein.
Subject to policies established by the Board of Trustees of the Trust, the
Adviser may also be authorized to effect individual securities transactions at
commission rates in excess of the minimum commission rates available, if the
Adviser determines in good faith that such amount of commission is reasonable
in relation to the value of the brokerage or research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
Adviser's overall responsibilities with respect to the Trust. The execution of
such transactions shall not be deemed to represent an unlawful act or breach of
any duty created by this Agreement or otherwise. The Adviser will promptly
communicate to the officers and Trustees of the Trust such information relating
to Fund transactions as they may reasonably request.
<PAGE> 2

3. COMPENSATION OF THE ADVISER. For the services to be rendered by
the Adviser as provided in Section 1 of this Agreement, the Trust shall pay to
the Adviser at the end of each of the Trust's fiscal quarters, an advisory fee
calculated by applying a quarterly rate, based on the annual percentage rates
set forth opposite each Fund's name on Schedule A hereto, to each Fund's
average daily net assets for the quarter.

In the event of termination of this Agreement, the fee provided
under this Section shall be computed on the basis of the period ending on the
last business day on which this Agreement is in effect subject to a pro rata
adjustment based on the number of days elapsed in the current fiscal quarter as
a percentage of the total number of days in such quarter.

4. OTHER SERVICES. At the request of the Trust, the Adviser, in its
discretion may make available to the Trust office facilities, equipment,
personnel and other services. Such office facilities, equipment, personnel and
services shall be provided for or rendered by the Adviser and billed to the
Trust at the Adviser's cost.

5. REPORTS. The Trust and the Adviser agree to furnish to each
other current prospectuses, proxy statements, reports to shareholders,
certified copies of their financial statements, and such other information with
regard to their affairs as each may reasonably request.

6. STATUS OF ADVISER. The services of the Adviser to the Trust are
not to be deemed exclusive, and the Adviser shall be free to render similar
services to others so long as its services to the Trust are not impaired
thereby.

7. LIABILITY OF ADVISER. In the absence of (i) willful misfeasance,
bad faith or gross negligence on the part of the Adviser in performance of its
obligations and duties hereunder, (ii) reckless disregard by the Adviser of its
obligations and duties hereunder, or (iii) a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the Investment Company Act of 1940
("Investment Company Act"), the Adviser shall not be subject to any liability
whatsoever to the Trust, or to any shareholder of the Trust, for any error or
judgment, mistake of law or any other act or omission in the course of, or
connected with, rendering services hereunder including, without limitation, for
any losses that may be sustained in connection with the purchase, holding,
redemption or sale of any security on behalf of any Fund of the Trust.

8. PERMISSIBLE INTERESTS. Subject to and in accordance with the
Declaration of Trust of the Trust and the Articles of Incorporation (or other
governing or organizational documents) of the Adviser, Trustees, agents and
shareholders of the Trust are or may be interested in the Adviser (or any
successor thereof) as officers, directors or otherwise; officers, agents and

<PAGE> 3

directors of the Adviser are or may be interested in the Trust as Trustees,
officers, shareholders or otherwise; and the Adviser (or any successor) is or
may be interested in the Trust as a shareholder or otherwise. The effect of
any such interrelationships shall be governed by said Declaration of Trust or
Articles of Incorporation (or other governing or organizational documents) and
provisions of the Investment Company Act.

9. DECLARATION OF TRUST. The Adviser is hereby expressly put on
notice of the limitation of shareholder and Trustee liability as set forth in
Articles III and VII of the Declaration of Trust of the Trust and agrees that
the obligations assumed by the Trust pursuant to this Agreement shall be
limited in all cases to the Trust and its assets, and the Adviser shall not
seek satisfaction of any such obligation from the shareholders or any
shareholder of the Trust. Nor shall the Adviser seek satisfaction of any such
obligations from the Trustees or any individual Trustee.

10. DURATION AND TERMINATION. This Agreement, unless sooner
terminated as provided herein, shall continue until September __, 1998 and
thereafter for additional periods of one year from the anniversary thereof, but
only so long as such continuance is specifically approved at least annually (a)
by the vote of a majority of those members of the Board of Trustees of the
Trust who are not parties to this Agreement or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of each Fund of the Trust;
provided, however, that if the holders of any Fund fail to approve the
Agreement as provided herein, the Adviser may continue to serve in such
capacity in the manner and to the extent permitted by the Investment Company
Act and Rules thereunder. This Agreement may be terminated by any Fund of the
Trust at any time, without the payment of any penalty, by vote of a majority of
the entire Board of Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Fund on 60 days' written notice to the
Adviser. This Agreement may be terminated by the Adviser at any time, without
the payment of any penalty, upon 90 days' written notice to the Trust. This
Agreement will automatically and immediately terminate in the event of its
assignment. Any notice under this Agreement shall be given in writing,
addressed and delivered or mailed postpaid, to the other party at any office of
such party.

As used in this Section 10, the terms "assignment," "interested
persons," and "a vote of a majority of the outstanding voting securities" shall
have the respective meanings set forth in Section 2(a)(4), Section 2(a)(19) and
Section 2(a)(42) of the Investment Company Act.

11. AMENDMENT OF AGREEMENT. This Agreement may be amended by mutual
consent, but the consent of the Trust must be approved (a) by a vote of a
majority of those members of the Board of Trustees of the Trust who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such amendment, and (b)
by vote of a majority of the outstanding voting securities of each Fund of the
Trust.

<PAGE> 4

12. SEVERABILITY. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of this ____ day of September, 1996.

HANSBERGER GLOBAL INVESTORS, INC. HANSBERGER INSTITUTIONAL SERIES

By By
--------------------------- ---------------------------
Name Name:
------------------------ ------------------------
Title: Title:
------------------------ -------------------------

<PAGE> 5

Schedule A

Fund Rate
- ---- ----

International Fund 0.75%

Emerging Markets Fund 1.00%

Foreign Small Cap Fund 0.90%

All Countries Fund(SM) 0.75%