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HANSBERGER INSTITUTIONAL SERIES
International Fund
Emerging Markets Fund
Annual Report
December 31, 1996
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We are pleased to present the Annual Report for the Funds of Hansberger
Institutional Series listed below. Please call your Hansberger Institutional
Series contact at 1-800-414-6927 with any questions regarding these Financial
Statements.
Table of Contents
Portfolio of Investments:
International Fund................................ 1
Emerging Markets Fund............................. 2
Statements of Assets and Liabilities................... 3
Statements of Operations............................... 4
Statements of Changes in Net Assets.................... 5
Financial Highlights................................... 6
Notes to Financial Statements.......................... 7
Report of Independent Accountants...................... 10
This annual report contains certain investment return information. It should be
noted that past performance is not indicative of future results and the
investment return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth either more or less than their
original cost.
This report has been prepared for shareholders and may be distributed to others
only if preceded or accompanied by a current prospectus.
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Hansberger Institutional Series
Portfolio of Investments as of December 31, 1996
International Fund
<TABLE>
<CAPTION>
Face Discount Value
Amount Rate (Note A1)
- ------------------------- ------------- -----------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS - 88.63%
U.S. Treasury Bills
$ 50,000 01/02/97.............................................. 4.88% $ 49,993
3,802,000 03/27/97.............................................. 4.95% 3,757,564
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TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(Cost $3,807,557)..................................... 3,807,557
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TOTAL INVESTMENTS - 88.63%
(Cost $3,807,557*)............................................................ 3,807,557
NET OTHER ASSETS & LIABILITIES - 11.37%......................................... 488,278
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NET ASSETS - 100.00%............................................................ $ 4,295,835
===============
</TABLE>
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* Aggregate cost for Federal tax and book purposes.
The accompanying notes are an integral part of these financial statements.
1
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Hansberger Institutional Series
Portfolio of Investments as of December 31, 1996
Emerging Markets Fund
<TABLE>
<CAPTION>
Face Discount Value
Amount Rate (Note A1)
- ------------------------- ---------------- ---------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS - 86.18%
U.S. Treasury Bills
$ 50,000 01/02/97............................................. 4.88% $ 49,993
4,512,000 03/27/97............................................. 4.95% 4,459,266
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TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(Cost $4,509,259)................................... 4,509,259
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TOTAL INVESTMENTS - 86.18%
(Cost $4,509,259*)........................................................... 4,509,259
NET OTHER ASSETS & LIABILITIES - 13.82%........................................ 723,277
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NET ASSETS - 100.00%........................................................... $ 5,232,536
==============
</TABLE>
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* Aggregate cost for Federal tax and book purposes.
The accompanying notes are an integral part of these financial statements.
2
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<TABLE>
<CAPTION>
Hansberger Institutional Series
Statements of Assets and Liabilities
As of December 31, 1996
- ---------------------------------------------------------------------------------------------------------------------------
Emerging
International Markets
Fund Fund
------------------ -------------------
<S> <C> <C>
ASSETS:
Investments, at cost - see accompanying portfolios................ $ 3,807,557 $ 4,509,259
================== ===================
Investments, at value (Note A1)................................... $ 3,807,557 $ 4,509,259
Cash.............................................................. 1,246 1,518
Receivable for fund shares sold................................... 487,150 721,974
Receivable from Investment Adviser (Note B)....................... 8,858 8,984
Prepaid expenses.................................................. 3,487 3,487
Unamortized organization costs (Note A3).......................... 44,694 44,694
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Total Assets................................................... 4,352,992 5,289,916
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LIABILITIES:
Legal and audit fees payable...................................... 5,250 5,250
Organizational costs payable...................................... 44,719 44,719
Accrued expenses and other payables............................... 7,188 7,411
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Total Liabilities.............................................. 57,157 57,380
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NET ASSETS............................................................. $ 4,295,835 $ 5,232,536
================== ===================
NET ASSETS consist of:
Paid-in capital................................................... $ 4,294,822 $ 5,231,523
Undistributed net investment income............................... 1,013 1,013
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Total Net Assets....................................................... $ 4,295,835 $ 5,232,536
================== ===================
Shares of Beneficial Interest Outstanding
(unlimited authorization, no par value)........................... 424,451 517,011
Net Asset Value Per Share............................................. $10.12 $10.12
================== ===================
</TABLE>
3
The accompanying notes are an integral part of these financial statements.
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Hansberger Institutional Series
Statements of Operations
Two Day Period Ended December 31, 1996
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<TABLE>
<CAPTION>
Emerging
International Markets
Fund * Fund *
------------------ -------------------
<S> <C> <C>
INVESTMENT INCOME:
Interest income............................................................ $ 530 $ 627
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Total Income............................................................ 530 627
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EXPENSES:
Investment advisory fees (Note B):
Basic advisory fees..................................................... 88 143
Less: Waived fees...................................................... (88) (143)
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Investment advisory fees, net.............................................. -- --
Administration fees (Note C):
Basic administration fees............................................... 14 17
Less: Waived fees...................................................... (14) (17)
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Administration fees, net................................................... -- --
Custodian fees (Note D).................................................... 50 60
Shareholder reports........................................................ 2,000 2,000
Registration and filing fees............................................... 1,139 1,352
Legal and audit fees....................................................... 5,250 5,250
Trustees' fees and expenses (Note E)....................................... 12 12
Amortization of organization costs (Note A3)............................... 25 25
Miscellaneous expenses..................................................... 500 500
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Total Expenses........................................................... 8,976 9,199
Fees reimbursed by investment adviser (Note B)............................. (8,858) (8,984)
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Net Expenses............................................................ 118 215
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NET INVESTMENT INCOME......................................................... 412 412
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Net increase in net assets resulting from operations....................... $ 412 $ 412
================== ===================
</TABLE>
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* The International Fund and the Emerging Markets Fund commenced operations on
December 30, 1996
The accompanying notes are an integral part of these financial statements. 4
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Hansberger Institutional Series
Statements of Changes in Net Assets
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<TABLE>
<CAPTION>
Two Day Period Ended December 31, 1996
-----------------------------------------------------
Emerging
International Markets
Fund * Fund *
----------------------- --------------------
<S> <C> <C>
Increase in Net Assets
Operations:
Net investment income........................................... $ 412 $ 412
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Net increase in net assets resulting from operations............ 412 412
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Capital Share Transactions (1):
Subscribed................................................. 4,244,847 5,181,548
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Increase in net assets from share transactions.................. 4,244,847 5,181,548
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Net increase in net assets...................................... 4,245,259 5,181,960
NET ASSETS:
Beginning of period (December 30, 1996)...................... 50,576 50,576
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End of period (December 31, 1996)............................ $ 4,295,835 $ 5,232,536
======================= ====================
Undistributed net investment income included in end
of period net assets......................................... $ 1,013 $ 1,013
======================= ====================
- -------------------------------------------
(1) Shares Issued................................................... 419,451 512,011
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Net Increase in shares outstanding........................... 419,451 512,011
======================= ====================
</TABLE>
* The International Fund and the Emerging Markets Fund commenced
operations on December 30, 1996.
The accompanying notes are an integral part of these financial statements. 5
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<TABLE>
<CAPTION>
Hansberger Institutional Series
Financial Highlights
For a Share Outstanding Throughout the Period +
- ------------------------------------------------------------------------------------------------------------------------------------
Two Day Period Ended December 31, 1996
--------------------------------------------------------
Emerging
International Markets
Fund * Fund *
---------------------- ----------------------
<S> <C> <C>
Net Asset Value, Beginning of Period (December 30, 1996)............. $10.12 $10.12
---------------------- ----------------------
Income from Investment Operations
Net Investment Income.......................................... -- --
Net Realized and Unrealized Gain on Investments................ -- --
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Total from Investment Operations........................... -- --
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Net Asset Value, End of Period (December 31, 1996)................... $10 12 $10 12
====================== ======================
Total Return......................................................... 0.00% 0.00%
====================== ======================
Ratios and Supplemental Data:
Net Assets, End of Period (in Thousands)............................. $4,296 $5,233
Ratio of Expenses to Average Net Assets (1).......................... 1.00%** 1.50%**
Ratio of Net Investment Income to Average Net Assets (1)............. 3.50%** 2.87%**
Portfolio Turnover Rate.............................................. 0.00% 0.00%
Average Commission Rate.............................................. $0.0000 $0.0000
- ---------------------------------------------------------------------
(1)Effect of voluntary expense limitation during the period:
Ratio of Expenses to Average Net Assets 77.13%** 65.28%**
Ratio of Net Investment Loss to Average Net Assets (72.63)%** (60.91)%**
</TABLE>
* The International Fund and the Emerging Markets Fund commenced operations
on December 30, 1996.
** Annualized
+ The per share amounts for the two day period ended December 31, 1996 are
based on average outstanding shares.
6
The accompanying notes are an integral part of these financial statements.
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HANSBERGER INSTITUTIONAL SERIES
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
Hansberger Institutional Series (the "Trust"), a Massachusetts business trust,
is registered under the Investment Company Act of 1940, as amended, as an open-
end management investment company. As of December 31, 1996, the Trust was
comprised of 2 separate active, diversified portfolios (individually referred to
as a "Fund", collectively as the "Funds"). The International Fund and the
Emerging Markets Fund, each a Fund of the Trust, began operations on December
30, 1996.
The 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. The
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.
A. Accounting Policies: The following significant accounting policies are in
conformity with generally accepted accounting principles for investment
companies. Such policies are consistently followed by the Trust in the
preparation of the financial statements. Generally accepted accounting
principles may require management to make estimates and assumptions that affect
the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
1. Security Valuation: Equity securities listed on a U.S. exchange are valued
at the latest quoted sales price on the valuation date. 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 readily available are valued at a price within a range not exceeding the
current asked price nor less than the current bid price. Bonds and other fixed
income securities may be valued according to the broadest and most
representative market. In addition, bonds and other fixed income securities may
be valued on the basis of prices provided by a pricing service which are based
primarily on institutional size trading in similar groups of 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. Debt securities purchased with remaining
maturities of 60 days or less are valued at amortized cost, if it approximates
market value. All other securities and assets for which market values are not
readily available, including restricted securities and unlisted foreign
securities, are valued at fair value as determined in good faith by the Board of
Trustees, although the actual calculations may be done by others.
2. Taxes: It is each Fund's intention to qualify as a regulated investment
company and distribute all of its taxable income. Accordingly, no provision for
Federal income taxes is required in the financial statements. The Funds may be
subject to taxes imposed by countries in which it invests. Such taxes are
generally based on income and/or capital gains earned or repatriated. Taxes are
accrued and applied to net investment income, net realized capital gains and net
unrealized appreciation as the income and/or capital gains are earned.
3. Organizational Costs: The organizational costs of the Funds are being
amortized on a straight-line basis over a period of five years beginning with
each Fund's commencement of operations. Hansberger Global Investors has agreed
that in the event any of its initial shares in a Fund are redeemed, the proceeds
on redemption will be reduced by the pro-rata portion of any unamortized
organizational costs in the same proportion as the number of shares redeemed
bears to the initial shares held at time of redemption.
7
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HANSBERGER INSTITUTIONAL SERIES
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
4. Other: Security transactions are accounted for on the date the securities
are purchased or sold. Realized gains and losses on the sale of investment
securities are determined on the specific identified cost basis. Dividend
income is recorded on the ex-date (except that certain dividends from foreign
securities where the ex-dividend date may have passed are recorded as soon as
the Fund is informed of the ex-dividend data in the exercise of reasonable
diligence) net of applicable withholding taxes where recovery of such taxes is
not reasonably assured. Interest income is recognized on the accrual basis
except where collection is in doubt. Discounts and premiums on securities
purchased are amortized according to the effective yield method over their
respective lives. Most expenses of the Trust can be directly attributed to a
particular Fund. Expenses which cannot be directly attributed are apportioned
among the Funds based upon relative net assets. Distributions for the Funds are
recorded on the ex-date. Income and capital gain distributions are determined
in accordance with U.S. Federal income tax regulations which may differ from
generally accepted accounting principles.
The amount and character of income and capital gain distributions to be paid by
the Trust are determined in accordance with Federal income tax regulations which
may differ from generally accepted accounting principles. These differences are
primarily due to differing book and tax treatment for organizational expenses.
Permanent book and tax basis differences relating to shareholder distributions
may result in reclassifications among undistributed net investment income,
accumulated net realized gain and paid in capital.
Permanent book and tax basis differences, if any, are not included in ending
undistributed net investment income for the purpose of calculating net
investment income per share in the Financial Highlights.
B. Adviser: Hansberger Global Investors, Inc. (the "Adviser") provides each
Fund with investment advisory services pursuant to an investment advisory
agreement at a monthly fee calculated at the annual rate of 0.75% and 1.00% of
average daily net assets of the International Fund and the Emerging Markets
Fund, respectively. The Adviser has voluntarily agreed to reduce advisory fees
payable to it and to reimburse the Funds, if necessary, if the annual operating
expenses, as defined, expressed as a percentage of average daily net assets,
exceed the maximum ratios of 1.00% for the International Fund and 1.50% for the
Emerging Markets Fund. The Adviser, at its discretion, may revise or
discontinue the voluntary fee waivers and reimbursements at any time.
C. Administrator: Chase Global Fund Services Company (the "Administrator" or
"CGFSC"), a subsidiary of The Chase Manhattan Bank, provides the Trust with
administrative, dividend disbursing and transfer agent services pursuant to an
Administrative Agreement (the "Agreement"). Under the 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
of average daily net assets, 0.08% for the next $500 million of average daily
net assets, and 0.06% for average daily net assets over $1 billion. Certain
employees of CGFSC are officers of the Fund.
D. Custodian: The Chase Manhattan Bank serves as the Trust's custodian in
accordance with a custodian agreement. Custodian fees are computed and payable
monthly based on assets held, investment purchases and sales activity, an
account maintenance fee, plus reimbursement for certain out-of-pocket expenses.
8
<PAGE>
HANSBERGER INSTITUTIONAL SERIES
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
E. Trustee Fees: The Trust pays each Trustee, who is not also an officer or
affiliated person, an annual fee plus travel and other expenses incurred in
attending Board meetings. Trustees who are also officers or affiliated persons
receive no remuneration for their service as Trustees.
Expenses for the period ended December 31, 1996 include legal fees paid to
Morgan, Lewis & Bockius LLP. A partner of that firm is a Trustee to the Trust.
F. Purchases and Sales: There were no long-term purchases and sales of
investment securities for the period ended December 31, 1996.
G. Other: From time to time, certain Funds of the Trust have shareholders that
hold a significant portion of a Fund's outstanding shares. Investment
activities of these shareholders could have a material impact on those Funds.
9
<PAGE>
Report of Independent Public Accountants
To the Shareholders and Trustees of Hansberger Institutional Series:
We have audited the accompanying statements of assets and liabilities of
Hansberger Institutional Series, a Massachusetts business trust, comprising the
International Fund and the Emerging Markets Fund (the Funds), including the
portfolios of investments, as of December 31, 1996 and the related statements of
operations, the statements of changes in net assets and the financial highlights
for the period from December 30, 1996 (commencement of operations) to December
31, 1996. These financial statements and the financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights
referred to above present fairly, in all material respects, the financial
position of the Funds as of December 31, 1996, the results of their operations,
the changes in their net assets and the financial highlights for the period from
December 30, 1996 (commencement of operations) to December 31, 1996, in
conformity with generally accepted accounting principles.
Arthur Andersen LLP
Boston, Massachusetts,
January 17, 1997
10
