<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 3, 2000
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
POST-EFFECTIVE AMENDMENT NO. 4 /X/
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 6 /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
J. Christopher Jackson, Esq.
515 East Las Olas Boulevard
Suite 1300
Fort 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
- --------------------------------------------------------------------------------
----------------------------
It is proposed that this filing become effective (check appropriate box):
immediately upon filing pursuant to paragraph (b)
- -----
X on May 3, 2000 pursuant to paragraph (b)
- -----
60 days after filing pursuant to paragraph (a) (1)
- -----
on [date] pursuant to paragraph (a) (1)
- -----
75 days after filing pursuant to paragraph (a)(2)
- -----
on [date] pursuant to paragraph (a)(2)
If appropriate, check the following box:
- ----- this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
<PAGE>
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation
to the contrary is a criminal offense.
[LOGO OF HANSBERGER APPEARS HERE]
--------------------
Hansberger
--------------------
Institutional
Series
--------------------
PROSPECTUS
MAY 1, 2000
International Value Fund
(formerly International Fund)
Emerging Markets Fund
All Countries Fund SM
Adviser: Hansberger Global Investors, Inc.
<PAGE>
TABLE OF CONTENTS
Hansberger Institutional Series is a mutual fund that offers shares in four
separate investment portfolios (Funds). This prospectus gives you important
information about the International Value Fund, Emerging Markets Fund and All
Countries Fund SM (the "Funds") that you should know before investing and has
been arranged into different sections so that you can easily review this
important information. On the next page, there is some general information you
should know about before investing in the Funds, including information common
to each of the Funds.
For more detailed information about the Funds, please see:
<TABLE>
<S> <C>
International Value Fund.................................................. 2
Emerging Markets Fund..................................................... 5
All Countries Fund SM..................................................... 8
For more detailed information about the following topics, please see:
The Funds' Other Investments.............................................. 10
More Information About Risk............................................... 10
The Investment Adviser.................................................... 11
Purchasing, Selling and Exchanging Fund Shares............................ 12
Dividends, Distributions and Taxes........................................ 16
Financial Highlights...................................................... 19
</TABLE>
To obtain more information about Hansberger Institutional Series, please refer
to the back cover of this prospectus.
PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE.
<PAGE>
INTRODUCTION--PRINCIPAL RISKS COMMON TO ALL FUNDS
Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
a professional investment manager, invests it in securities like stocks and
bonds. The Funds are appropriate for long-term institutional investors who
seek exposure to global markets and are comfortable with the risks described
here. Before you invest, you should know a few things about investing in
mutual funds.
MANAGEMENT RISK
Each Fund seeks long-term capital growth as its investment goal and has its
own strategies for reaching that goal. Each Fund's assets are managed under
the direction of Hansberger Global Investors, Inc. (the "Adviser"). Still,
investing in a Fund involves risks, and there is no guarantee that a Fund will
achieve its goal. The Adviser makes judgments about several factors with
respect to each investment it makes on behalf of each Fund, including the
economy, but these judgments may not anticipate actual market movements or the
impact of economic conditions on issuers. In fact, no matter how good a job
the Adviser does, you could lose money on your investment in a Fund, just as
you could with other investments.
PRICE VOLATILITY
The value of your investment in a Fund is based on the market value (or price)
of the securities the Fund holds. These prices change daily due to economic
and other events that affect the securities markets generally, as well as
those that affect particular companies or governments. These price movements
sometimes called volatility, will vary depending on the types of securities
the Fund owns and the markets in which they trade. Historically, the equity
markets have moved in cycles, and the value of a Fund's equity securities may
fluctuate drastically from day-to-day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is
the principal risk of investing in the Funds.
INTERNATIONAL INVESTING
Investing in foreign countries poses distinct risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a
result, changes in the value of those currencies compared to the U.S. dollar
may affect (positively or negatively) the value of a Fund's investments. These
currency movements may happen separately from and in response to events that
do not otherwise affect the value of the security in the issuer's home
country.
EMERGING MARKETS
Emerging market countries are countries that the World Bank or the United
Nations considers to be emerging or developing. Emerging markets may be more
likely to experience political turmoil or rapid changes in market or economic
conditions than more developed countries. In addition, the financial stability
of issuers (including governments) in emerging market countries may be more
precarious than in other countries. As a result, there will tend to be an
increased risk of price volatility in the Fund's investments in emerging
market countries, which may be magnified by currency fluctuations relative to
the U.S. dollar.
1
<PAGE>
- -------------------------------------------------------------------------------
INTERNATIONAL VALUE FUND
- -------------------------------------------------------------------------------
FUND SUMMARY
INVESTMENT GOAL Long-term capital growth
RELATIVE SHARE PRICE
VOLATILITY Medium to High
PRINCIPAL INVESTMENT
STRATEGY Investing primarily in a diversified portfolio of
stocks and debt obligations of companies and
governments domiciled outside the United States
which the Adviser believes are undervalued
- -------------------------------------------------------------------------------
INVESTMENT STRATEGY
In selecting investments for the Fund, the Adviser, by engaging in its own
research and by reviewing research obtained through outside sources, seeks to
identify securities of companies that have a market value which the Adviser
believes is less than a company's intrinsic value based on its long-term
potential. The Adviser's portfolio investment decisions rely heavily on a
fundamental analysis of securities with a long-term investment perspective.
Fundamental analysis includes evaluating a company's prospects by focusing on
such factors as the quality of a company's management, its competitive
position within its industry, the financial strength of the company, the
quality of its earnings and the outlook for the company's future based on
these and other similar factors. The objective of this analysis is to identify
undervalued securities for the Fund, to hold them for the long-term and to
achieve long-term capital growth as the marketplace realizes the value of
these securities over time. The Adviser will also consider other factors in
making portfolio investment decisions including country and political risks,
and economic and market conditions.
The Adviser seeks to broaden the scope and increase the effectiveness of this
fundamental analysis by searching for undervalued securities in many countries
around the 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.
WHAT ARE THE RISKS OF INVESTING IN THE INTERNATIONAL VALUE FUND?
The Fund is exposed to management risk, price volatility, emerging markets
risk and the general risks of international investing.
2
<PAGE>
- -------------------------------------------------------------------------------
INTERNATIONAL VALUE FUND
- -------------------------------------------------------------------------------
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the variability of
the International Value Fund's returns. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
This bar chart shows changes in the total returns for the performance of the
Fund from year to year for two years.
[Chart appears here]
1997 (1.46)%
1998 (6.96)%
1999 29.35 %
<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
------------ -------------
<S> <C>
17.01% -20.50%
second quarter third quarter
1999 1998
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
This table compares the Fund's average annual total return for the year ending
December 31, 1999, to those of the MSCI EAFE Index.
<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR (12/30/96)
------ ----------
<S> <C> <C>
International Fund 29.35% 5.83%
MSCI EAFE Index* 27.30% 16.06%
</TABLE>
- --------
* MSCI EAFE Index is a widely-recognized index comprised of stocks traded in
the developed markets of Europe, Asia, and the Far East.
AN INDEX MEASURES THE MARKET
PRICES OF A SPECIFIC GROUP OF
SECURITIES IN A PARTICULAR MARKET
OR SECURITIES IN A MARKET SECTOR.
YOU CANNOT INVEST DIRECTLY IN AN
INDEX. UNLIKE A MUTUAL FUND, AN
INDEX DOES NOT HAVE AN INVESTMENT
ADVISER AND DOES NOT PAY ANY
EXPENSES OR IF AN INDEX HAD
EXPENSES, ITS PERFORMANCE WOULD BE
LOWER.
FUND FEES AND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services and other costs
of doing business. This table describes the highest fees and expenses that you
may currently pay if you hold shares of the Fund.
SHAREHOLDER FEES
<TABLE>
<S> <C>
Maximum Sales Charge (Load) None
Purchase Fee (as a percentage of amount purchased)+ 0.50%
Redemption Fee (as a percentage of amount redeemed)+ 0.50%
</TABLE>
- --------
+ These transaction fees represent the Adviser's estimate of transaction
costs, which include the costs of acquiring and disposing of the Fund's
portfolio securities. THE TRANSACTION FEES ARE NOT A SALES CHARGE OR LOAD,
AND ARE RETAINED BY THE FUND. The fees do not apply to, and are not charged
in connection with exchanges from one Fund to another, certain
insignificant transactions, including the reinvestment of dividends or
capital gain distributions, or transactions involving shareholders who
previously purchased shares that were not subject to the transaction fees.
3
<PAGE>
- -------------------------------------------------------------------------------
INTERNATIONAL VALUE FUND
- -------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
<TABLE>
<S> <C>
Management Fees 0.75%
Distribution and Service (12b-1) Fees None
Other Expenses 0.28%
----
Total Annual Fund Operating Expenses* 1.03%
</TABLE>
- --------
* The Fund's total actual annual fund operating expenses for the most recent
fiscal year were less than the amount shown above because the Adviser is
voluntarily waiving a portion of its fees and reimbursing other expenses in
order to keep total operating expenses at a specified level. The Adviser
may discontinue all or part of these waivers and reimbursements at any
time. With these fee waivers, the International Fund's actual total
operating expenses are 1.00%.
For more information about these fees, see "The Investment Adviser" and
"Purchasing, Selling and Exchanging Fund Shares."
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses
remain the same. Although your actual costs and returns might be different,
your approximate costs of investing $10,000 in the Fund, if you redeem at the
end of one of the indicated time periods, would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$207 $434 $679 $1,383
</TABLE>
and, your approximate costs of investing $10,000 in the Fund, if you do not
redeem at the end of one of the indicated time periods, would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$155 $378 $619 $1,309
</TABLE>
4
<PAGE>
- -------------------------------------------------------------------------------
EMERGING MARKETS FUND
- -------------------------------------------------------------------------------
INVESTMENT SUMMARY
INVESTMENT GOAL Long-term capital growth
RELATIVE SHARE PRICE
VOLATILITY High
PRINCIPAL INVESTMENT
STRATEGY Investing primarily in a diversified portfolio of
publicly traded equity securities of companies
located in emerging markets that the Adviser
believes are undervalued and, to a lesser degree,
investing in private placement emerging market
equity securities
- -------------------------------------------------------------------------------
INVESTMENT STRATEGY
In selecting investments for the Fund, the Adviser, by engaging in its own
research and by reviewing research obtained through outside sources, seeks to
identify securities of companies that have a market value which the Adviser
believes is less than a company's intrinsic value based on its long-term
potential. The Adviser's portfolio investment decisions rely heavily on a
fundamental analysis of securities with a long-term investment perspective.
Fundamental analysis includes evaluating a company's prospects by focusing on
such factors as the quality of a company's management, its competitive
position within its industry, the financial strength of the company, the
quality of its earnings and the outlook for the company's future based on
these and other similar factors. The objective of this analysis is to identify
undervalued securities for the Fund, to hold them for the long-term and to
achieve long-term capital growth as the marketplace realizes the value of
these securities over time. The Adviser will also consider other factors in
making portfolio investment decisions including country and political risks,
and economic and market conditions.
The Adviser seeks to broaden the scope and increase the effectiveness of this
fundamental analysis by searching for undervalued securities in many countries
around the 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. The Fund's investments generally will
reflect a broad cross-section of countries, industries, and companies in order
to minimize risk.
WHAT ARE THE RISKS OF INVESTING IN THE EMERGING MARKETS FUND?
The Fund is exposed to management risk, price volatility, emerging markets
risk and the general risks of international investing.
5
<PAGE>
- -------------------------------------------------------------------------------
EMERGING MARKETS FUND
- -------------------------------------------------------------------------------
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the variability of
the Emerging Markets Fund's returns. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
This bar chart shows changes in the total returns for the performance of the
Fund from year to year for two years.
[Chart Appears Here]
1997 (15.11)%
1998 (30.20)%
1999 65.82 %
<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
------------ --------------
<S> <C>
34.74% -26.07%
second quarter fourth quarter
1999 1997
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
This table compares the Fund's average annual total return for the year ending
December 31, 1999, to those of the MSCI Emerging Markets Free Index.
<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR (12/30/96)
------ ----------
<S> <C> <C>
Emerging Markets Fund 65.82% -0.60%
MSCI Emerging Markets Free Index* 66.41% 3.18%
</TABLE>
- --------
* MSCI Emerging Markets Free Index is a widely recognized index comprised of
stocks traded in the developing markets of the world that are open to
foreign investment.
AN INDEX MEASURES THE MARKET
PRICES OF A SPECIFIC GROUP OF
SECURITIES IN A PARTICULAR MARKET
OR SECURITIES IN A MARKET SECTOR.
YOU CANNOT INVEST DIRECTLY IN AN
INDEX. UNLIKE A MUTUAL FUND, AN
INDEX DOES NOT HAVE AN INVESTMENT
ADVISER AND DOES NOT PAY ANY
EXPENSES OR IF AN INDEX HAD
EXPENSES, ITS PERFORMANCE WOULD BE
LOWER.
FUND FEES AND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services and other costs
of doing business. This table describes the highest fees and expenses that you
may currently pay if you hold shares of the Fund.
SHAREHOLDER FEES
<TABLE>
<S> <C>
Maximum Sales Charge (Load) None
Purchase Fee (as a percentage of amount purchased)+ 1.00%
Redemption Fee (as a percentage of amount redeemed)+ 1.00%
</TABLE>
- --------
+ These transaction fees represent the Adviser's estimate of transaction
costs, which include the costs of acquiring and disposing of the Fund's
portfolio securities. THE TRANSACTION FEES ARE NOT A SALES CHARGE OR LOAD,
AND ARE RETAINED BY THE FUND. The fees do not apply to, and are not charged
in connection with exchanges from one Fund to another, certain
insignificant transactions, including the reinvestment of dividends or
capital gain distributions, or transactions involving shareholders who
previously purchased shares that were not subject to the transaction fees.
6
<PAGE>
- -------------------------------------------------------------------------------
EMERGING MARKETS FUND
- -------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
<TABLE>
<S> <C>
Management Fees 1.00%
Distribution and Service (12b-1) Fees None
Other Expenses 0.36%
----
Total Annual Fund Operating Expenses 1.36%*
</TABLE>
- --------
* The Fund's total actual annual fund operating expenses for the most recent
fiscal year were less than the amount shown above because the Adviser is
voluntarily waiving a portion of its fees and reimbursing other expenses in
order to keep total operating expenses at a specified level. The Adviser
may discontinue all or part of these waivers and reimbursements at any
time. With these fee waivers, the Emerging Markets Fund's actual total
operating expenses are 1.25%.
For more information about these fees, see "The Investment Adviser" and
"Purchasing, Selling and Exchanging Fund Shares."
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses
remain the same. Although your actual costs and returns might be different,
your approximate costs of investing $10,000 in the Fund, if you redeem at the
end of one of the indicated time periods, would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$342 $642 $964 $1,878
</TABLE>
and, your approximate costs of investing $10,000 in the Fund, if you do not
redeem at the end of one of the indicated time periods, would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$238 $531 $845 $1,735
</TABLE>
7
<PAGE>
- -------------------------------------------------------------------------------
ALL COUNTRIES FUND SM
- -------------------------------------------------------------------------------
FUND SUMMARY
INVESTMENT GOAL Long-term capital growth
RELATIVE SHARE PRICE VOLATILITY
Medium to High
PRINCIPAL INVESTMENT STRATEGYInvesting primarily in a diversified portfolio of
stocks and debt obligations of companies and
governments domiciled in any country which the
Adviser believes are undervalued, including the
United States
- -------------------------------------------------------------------------------
INVESTMENT STRATEGY
In selecting investments for the Fund, the Adviser, by engaging in its own
research and by reviewing research obtained through outside sources, seeks to
identify securities of companies that have a market value which the Adviser
believes is less than a company's intrinsic value based on its long-term
potential. The Adviser's portfolio investment decisions rely heavily on a
fundamental analysis of securities with a long-term investment perspective.
Fundamental analysis includes evaluating a company's prospects by focusing on
the quality of a company's management, its competitive position within its
industry, the financial strength of the company, the quality of its earnings
and the outlook for the company's future based on these and other similar
factors. The objective of this analysis is to identify undervalued securities
for the Fund, to hold them for the long-term and to achieve long-term capital
growth as the marketplace realizes the value of these securities over time.
The Adviser will also consider other factors in making portfolio investment
decisions including country and political risks, and economic and market
conditions. The Adviser seeks to broaden the scope and increase the
effectiveness of this fundamental analysis by searching for undervalued
securities in many countries around the 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.
WHAT ARE THE RISKS OF INVESTING IN THE ALL COUNTRIES FUND?
The Fund is exposed to management risk, price volatility, emerging markets
risk and the general risks of international investing.
8
<PAGE>
- -------------------------------------------------------------------------------
ALL COUNTRIES FUND SM
- -------------------------------------------------------------------------------
PERFORMANCE INFORMATION
The All Countries Fund SM has not commenced operations and, therefore, does
not yet have a performance history.
FUND FEES AND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services and other costs
of doing business. This table describes the highest fees and expenses that you
may currently pay if you hold shares of the Fund.
SHAREHOLDER FEES
<TABLE>
<S> <C>
Maximum Sales Charge (Load) None
Purchase Fee (as percentage of amount purchased)+ .50%
Redemption Fee (as a percentage of amount redeemed)+ .50%
</TABLE>
- --------
+ These transaction fees represent the Adviser's estimate of transaction
costs, which include the costs of acquiring and disposing of the Fund's
portfolio securities. THE TRANSACTION FEES ARE NOT A SALES CHARGE OR LOAD,
AND ARE RETAINED BY THE FUND. The fees do not apply to, and are not charged
in connection with exchanges from one Fund to another, certain
insignificant transactions, including the reinvestment of dividends or
capital gain distributions, or transactions involving shareholders who
previously purchased shares that were not subject to the transaction fees.
ANNUAL FUND OPERATING EXPENSES
<TABLE>
<S> <C>
Management Fees 0.75%
Distribution and Service (12b-1) Fees None
Other Expenses* 0.25%
----
Total Annual Fund Operating Expenses 1.00%
</TABLE>
- --------
* Other expenses are based on estimated amounts for the current fiscal year.
For more information about these fees, see "The Investment Adviser" and
"Purchasing, Selling and Exchanging Fund Shares."
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses
remain the same. Although your actual costs and returns might be different,
your approximate costs of investing $10,000 in the Fund, if you redeem at the
end of one of the indicated time periods, would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C>
$204 $425
</TABLE>
and, your approximate costs of investing $10,000 in the Fund, if you do not
redeem at the end of one of the indicated time periods, would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C>
$152 $368
</TABLE>
9
<PAGE>
THE FUNDS' OTHER INVESTMENTS
This prospectus describes each Fund's primary investment strategies and the
Funds will normally invest at least 65% of their assets in the types of
securities described in this prospectus. However, 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 depositary receipts (collectively, "Depositary
Receipts"). Each Fund may also lend its portfolio securities, sell securities
short, 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, futures contracts and related options, and swap
transactions, as well as other derivative instruments. When deemed appropriate
by the Adviser, the Fund may invest cash balances in repurchase agreements and
other money market investments to maintain liquidity in an amount sufficient
to meet expenses or for day-to-day operating purposes. These investment
techniques are described in detail in the Statement of Additional Information
(SAI). Of course, there is no guarantee that any Fund will achieve its
investment goal.
The investments and strategies described throughout this prospectus are those
that the Funds use under normal conditions. During unusual economic or market
conditions, or for temporary defensive or liquidity purposes, each Fund may
invest up to 100% of its assets in cash, money market instruments, repurchase
agreements and short-term obligations that would not ordinarily be consistent
with the Funds' objectives. The Funds will do so only if the Adviser believes
that the risk of loss outweighs the opportunity for gains or income.
MORE INFORMATION ABOUT RISK
INTERNATIONAL INVESTING
Each of the Funds invests primarily in equity securities of issuers located in
foreign countries. Investment in securities of foreign issuers involves some
risks different from, or in addition to, those affecting investments in
securities of U.S. issuers, including:
Regulation There may be less government supervision and
regulation of foreign securities exchanges,
brokers and listed companies than in the U.S.
Political/Economy A foreign jurisdiction might impose or change
withholding taxes or other levies on income
payable in connection with foreign securities.
There are risks of seizure, nationalization or
expropriation of a foreign issuer or foreign
deposits, and adoption of foreign governmental
restrictions such as capital or exchange
controls. Many emerging or developing countries
have less stable political and economic
environments than some more developed
countries.
Liquidity and Concentration Many foreign securities markets have
substantially less volume than U.S. national
securities exchanges. Available investments in
emerging countries may be highly concentrated
in a small number of issuers, or the issuers
may be unseasoned and/or have significantly
smaller market capitalization than in the U.S.
or more developed countries.
10
<PAGE>
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.
Brokerage Brokerage Commissions and other transaction
costs on foreign securities exchanges are
generally higher than in the U.S.
THE INVESTMENT ADVISER
Hansberger Global Investors, Inc., a wholly-owned subsidiary of Hansberger
Group Inc. 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 Value Fund 0.75%
Emerging Markets Fund 1.00%
All Countries Fund SM 0.75%
</TABLE>
PORTFOLIO MANAGEMENT TEAMS
Emerging THOMAS L. HANSBERGER is the Chairman and Chief Executive
Markets/All Officer of the Adviser and the Trust. Mr. Hansberger is
Countries primarily responsible for the day-to-day management of the
Emerging Markets and All Countries Funds. Before forming the
Adviser in 1994, 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, from 1985 to 1992. While at Templeton,
Mr. Hansberger served as director of research and was an
officer, director or primary portfolio manager for several
Templeton Mutual Funds.
International LAURETTA (RETZ) REEVES joined the Adviser in 1996 as
Value Managing Director of Research, portfolio manager and
research analyst. She is primarily responsible for the
day-to-day management of the International Value Fund.
From 1987 to 1996 Ms. Reeves was Senior Vice President at
Templeton Worldwide in the research and portfolio management
group. While at Templeton, Ms. Reeves managed several separate
accounts and mutual funds with over $1 billion dollars of
assets.
Emerging FRANCISCO ALZURU joined the Adviser in 1994 as a Managing
Markets/All Director of Latin America, portfolio manager and research
Countries analyst, specializing in Latin America. From 1990 to 1994,
prior to joining the Adviser, he worked at Vestcorp Partners
as their Latin American analyst.
11
<PAGE>
Emerging AJIT DAYAL joined the Adviser in 1998 as Managing Director
Markets/All of India. From 1995 to 1998, prior to joining the Adviser,
Countries he was portfolio manager of a venture capital fund for
Walden International Investment Group, and before that, from
1992 to 1995, he was a Director of all Jardine Fleming
companies in India, with direct responsibility for research
and investment management.
International JOHN FENLEY joined the Adviser in 1997 as a research
Value analyst, responsible for research coverage of global
equities. From 1995 to 1997, prior to joining the Adviser,
he was the portfolio manager for the Institutional
Investment Management Department of Sun Trust Bank, and
before that, from 1990 to 1995, served as a portfolio
manager and equity analyst for Fifth Third Bank.
Emerging AUREOLE FOONG joined the Adviser in 1997 as Director of
Markets Asian Research. From 1994 to 1997, prior to joining the
Adviser, he was a Director of Peregrine Asset Management
where he was responsible for several mutual fund and private
accounts investing in regional Asian markets.
Emerging VICTORIA GRETZKY joined the Adviser in 1996 as a research
Markets analyst. From 1993 to 1996, prior to joining the Adviser,
she was a research analyst for Optimum Consulting, a Russian
based firm which specialized in restructuring Russian
companies during privatization.
International RON HOLT joined the Adviser in 1997 as a research analyst.
Value From 1991 to 1997, prior to joining the Adviser, he was a
Vice President in the Corporate and Institutional Client
Group at Merrill Lynch.
Emerging ROBERT MAZUELOS joined the Adviser in 1995 as a research
Markets/All analyst. From 1991 to 1995, prior to joining the Adviser, he
Countries was a performance analyst at Templeton Investment Counsel,
Inc. where he was responsible for return analysis on
separate accounts and mutual funds.
Emerging VLADIMIR TYURENKOV joined the Adviser in 1995 as Managing
Markets Director of Eastern Europe and Russia, portfolio manager and
research analyst. From 1990 to 1993, prior to joining the
Adviser, he worked for the Russian Government and from 1993
to 1995 he worked extensively on the Pepperdine University
Russian Conversion and Privatization Program.
PURCHASING, SELLING AND EXCHANGING FUND SHARES
You may purchase, sell (redeem) and exchange 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 transaction fee; the
amount of any transaction fee is deducted from the total amount of your
investment, and the remaining amount of your investment is invested in Fund
shares. The redemption price of shares is a Fund's net asset value per share
next determined after receipt of your redemption request, less any applicable
transaction fee. 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.
12
<PAGE>
HOW TO PURCHASE FUND 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 Chase Global Funds Services Company
P.O. Box 2973
73 Tremont Street
Boston, MA 02208
Checks must be drawn on U.S. banks.
BY WIRE Have your bank send a Federal Funds wire or a bank wire to
the Trust, and mail your completed and signed Account
Registration Form to:
Hansberger Institutional Series
c/o Chase Global Funds Services Company
P.O. Box 2973
73 Tremont Street
Boston, MA 02208
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 1-800-414-6927 to receive a
wire control number. To be issued an account number, you
will need to provide a written application with 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 and/or
wire control number (be sure to have your bank include your
account number and the Fund's name):
The Chase Manhattan Bank
ABA Number 021000021
DDA Number 910 2 777076
Attn: Hansberger Institutional Series
Ref: (Fund name, account number, account name,
wire control number).
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.
13
<PAGE>
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. If wiring funds, please call 1-800-414-6927
to receive a wire control number. Your check, a cover letter, or your wire
instructions must specify the name of the Fund, the name on your account and
your account number, and you must call the Fund before wiring funds. Your
check or wire must be for at least $100,000.
OTHER PURCHASE INFORMATION
Payment for shares of a Fund must be in United States dollars, unless you have
received the Fund's prior written approval to make payment in other currencies
or by tendering securities.
No share certificates will be issued. All shares purchased for your account
will be confirmed to you and credited to your account on the Fund's books
maintained by the Transfer Agent.
To ensure that checks are collected, you may not redeem shares purchased by
check until payment for the purchase has been received; receipt may take up to
eight business days after purchase. If your purchase is canceled 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 THE FUNDS CALCULATE NAV
NAV for one Fund share is the value of that share's portion of all of the net
assets in a Fund. In calculating NAV, the Funds generally value a Fund's
portfolio securities at their market price. If market prices are unavailable
or are unreliable, fair value prices may be determined in good faith using
methods approved by the Board of Trustees. The Funds hold portfolio securities
that are listed on foreign exchanges. These securities may trade on weekends
or other days when the Funds do not calculate NAV. As a result, the value of
these investments may change on days when you cannot purchase or sell Fund
shares.
14
<PAGE>
MINIMUM PURCHASES
To purchase shares of the Funds for the first time, you must invest at least
$1,000,000 in any such Fund. To purchase additional shares of the Funds, you
must invest at least $100,000. The Funds may accept investments of smaller
amounts at their discretion.
HOW TO SELL YOUR FUND SHARES
You may sell (usually called "redeem") your shares on any Business Day by
contacting the Funds directly by mail or telephone. Your 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. The sale price of each share will be the next NAV
determined after the Funds receive your request.
BY MAIL Send your redemption request to:
Hansberger Institutional Series
c/o Chase Global Funds Services Company
P.O. Box 2973
73 Tremont Street
Boston, MA 02208
BY TELEPHONE If you have telephone transaction privileges, you can
request a redemption of your shares by calling the Fund at
1-800-414-6927 prior to 4:00 P.M. Eastern Time, to receive
that day's closing net asset value; redemption proceeds will
be mailed to you or wired to your bank.
RECEIVING YOUR MONEY
Normally, the Funds will send your sale proceeds within five Business Days
after they receive your request. Your proceeds can be wired to a bank account
or sent to you by check. IF YOU RECENTLY PURCHASED YOUR SHARES BY CHECK,
REDEMPTION PROCEEDS MAY NOT BE AVAILABLE UNTIL YOUR CHECK HAS CLEARED (WHICH
MAY TAKE UP TO 15 BUSINESS DAYS).
REDEMPTIONS IN KIND
Each Fund may, although it does not intend to do so under normal
circumstances, pay redemption proceeds in whole or in part by a distribution
in kind of securities held in its portfolio, in conformity with applicable SEC
rules.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
The Funds may suspend your right to sell your shares if the NYSE restricts
trading, the SEC declares an emergency or for other reasons. More information
about this is in the SAI.
CLOSING SMALL ACCOUNTS
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.
15
<PAGE>
SIGNATURE GUARANTEES
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.
HOW TO EXCHANGE YOUR SHARES
You may exchange your shares of any Fund for shares of any other Fund on any
Business Day by contacting the Funds directly by mail or telephone. This
exchange privilege may be changed or canceled at any time upon 60 days'
notice. When you exchange shares, you are really selling your shares and
buying other Fund shares. So, your sale price and purchase price will be based
on the NAV next calculated after the Funds receive your exchange request.
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 TRANSACTIONS
Purchasing, selling and exchanging Fund shares over the telephone is extremely
convenient, but not without risk. Although we have certain safeguards and
procedures to confirm the identity of callers and the authenticity of
instructions, the Funds are not responsible for any losses or costs incurred
by following telephone instructions the Funds reasonably believe to be
genuine. If you transact with the Funds over the telephone, you will generally
bear the risk of any loss.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
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.
You will receive dividends and distributions in the form of additional Fund
shares unless you elect to receive payment in cash. To elect cash payment, you
must check off the appropriate box in the Distribution Option Section on the
Account Registration Form or notify the Fund in writing prior to the date of
the distribution. Your election will be effective for dividends and
distributions paid after the Fund receives your written notice. To cancel your
election, simply send the Funds written notice.
TAXES
PLEASE CONSULT YOUR TAX ADVISER REGARDING YOUR SPECIFIC QUESTIONS ABOUT
FEDERAL, STATE AND LOCAL INCOME TAXES. Below we have summarized some important
tax issues that affect the Funds and their shareholders. This summary is based
on current tax laws, which may change.
16
<PAGE>
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 Internal Revenue Code of 1986,
as amended (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 (the excess
of net long-term capital gain over net short-term capital loss) 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.
Distributions of net capital gain 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) as to
avoid the 4 percent excise tax imposed on undistributed income of regulated
investment companies.
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 on the last day of that year if the distributions are paid by the
Fund at any time during the following January.
The sale or redemption of shares may result in taxable gain or loss to the
redeeming shareholder, depending upon whether the fair market value of the
redemption proceeds exceeds or is less than the shareholder's adjusted basis
in the redeemed shares. The character of such a gain or loss for tax purposes
will depend on how long you have held your shares.
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.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED HEREIN FOR GENERAL INFORMATION
ONLY. YOU SHOULD CONSULT YOUR OWN TAX ADVISERS ABOUT THE TAX CONSEQUENCES OF
AN INVESTMENT IN THE FUND. Each Fund will distribute substantially all of its
income and capital gains, if any. The dividends and distributions you receive
may be subject to federal, state and local taxation, depending upon your tax
situation. Capital gains distributions may be taxable at different rates
depending on the length of time a Fund holds its portfolio securities. EACH
SALE OR EXCHANGE OF FUND SHARES IS A TAXABLE EVENT.
MORE INFORMATION ABOUT TAXES IS IN THE FUNDS' STATEMENT OF ADDITIONAL
INFORMATION.
17
<PAGE>
FINANCIAL HIGHLIGHTS
The tables that follow present performance information about the International
Value Fund and the Emerging Markets Fund. This information is intended to help
you understand each Fund's financial performance for the past two years. Some
of this information reflects financial information for a single Fund share.
The total returns in the tables represent the return that you would have
earned on an investment in a Fund, assuming you reinvested all of your
dividends and distributions.
This information has been audited by Arthur Andersen LLP, independent public
accountants. Their report, along with each Fund's financial statements,
appears in the annual report that accompanies the Statement of Additional
Information. You can obtain the annual report, which contains more performance
information, at no charge by calling 1-800-414-6927.
For a Share Outstanding Throughout each Period.
<TABLE>
<CAPTION>
INTERNATIONAL VALUE FUND
(FORMERLY INTERNATIONAL FUND)
------------------------------------------
1/1/99 1/1/98 1/1/97 12/30/96
TO- TO TO TO
12/31/99 12/31/98 12/31/97 12/31/96*+
-------- -------- -------- ----------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD.......................... $ 8.97 $ 9.79 $ 10.12 $10.12
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income ........... 0.13 0.14 0.10 --
Net Realized and Unrealized Loss
................................ 2.50 (0.81) (0.25) --
-------- -------- -------- ------
Total from Investment
Operations.................... 2.63 (0.67) (0.15) --
-------- -------- -------- ------
LESS DISTRIBUTIONS FROM:
Net Investment Income............ (0.11) (0.11) (0.08) --
In Excess of Net Investment
Income.......................... -- -- -- ++ --
Capital Gains.................... -- (0.04) (0.10) --
-------- -------- -------- ------
Total Distributions............ (0.11) (0.15) (0.18) --
-------- -------- -------- ------
Net Asset Value, End of Period... $ 11.49 $ 8.97 $ 9.79 $10.12
======== ======== ======== ======
TOTAL RETURN..................... 29.35% (6.96)% (1.46)% 0.00%
RATIOS AND SUPPLEMENTAL DATA:+
Net Assets, End of Period (in
Thousands)...................... $366,515 $280,493 $186,559 $4,296
RATIO OF EXPENSES TO AVERAGE NET
ASSETS (1)...................... 1.00% 1.00% 1.00% 1.00%**
Ratio of Net Investment Income to
Average Net Assets (1).......... 1.31% 1.82% 1.84% 3.50%**
Portfolio Turnover Rate.......... 51% 32% 14% 0.00%
- --------
(1) Effect of voluntary expense limitation during the period:
Ratio of Expenses to Average
Net Assets.................... 1.03% 1.10% 1.29% 77.13%**
Ratio of Net Income (Loss) to
Average Net Assets ........... 1.28% 1.72% 1.55% (72.63)%**
</TABLE>
* The 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.
++ Amount represents less than $0.01 per share.
18
<PAGE>
FINANCIAL HIGHLIGHTS
For a Share Outstanding Throughout each Period.
<TABLE>
<CAPTION>
EMERGING MARKETS FUND
------------------------------------------
1/1/99 1/1/98 1/1/97 12/30/96
TO- TO TO TO
12/31/99 12/31/98 12/31/97 12/31/96*+
-------- -------- -------- ----------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................... $ 5.91 $ 8.50 $ 10.12 $10.12
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income............. 0.03 0.04 0.05 --
Net Realized and Unrealized Loss.. 3.86 (2.61) (1.58) --
-------- -------- ------- -------
Total from Investment
Operations..................... 3.89 (2.57) (1.53) --
-------- -------- ------- -------
LESS DISTRIBUTIONS FROM:
Net Investment Income............. -- (0.02) (0.07) --
In Excess of Net Investment
Income........................... -- -- ++ -- --
Capital Gains..................... -- -- (0.02) --
-------- -------- ------- -------
Total Distributions............. -- (0.02) (0.09) --
-------- -------- ------- -------
Net Asset Value, End of Period.... $ 9.80 $ 5.91 $ 8.50 $10.12
======== ======== ======= =======
TOTAL RETURN...................... 65.82% (30.20)% (15.11)% 0.00%
RATIOS AND SUPPLEMENTAL DATA:+
Net Assets, End of Period (in
Thousands)....................... $350,206 $142,671 $36,720 $5,233
RATIO OF EXPENSES TO AVERAGE NET
ASSETS(1)........................ 1.25% 1.25% 1.50% 1.50%**
Ratio of Net Investment Income to
Average Net Assets(1)............ 0.39% 1.08% 1.12% 2.87%**
Portfolio Turnover Rate........... 43% 44% 15% 0.00%
- --------
(1) Effect of voluntary expense limitation during the period:
Ratio of Expenses to Average Net
Assets......................... 1.36% 1.68% 2.18% 65.28%**
Ratio of Net Income (Loss) to
Average Net Assets ............ 0.28% 0.65% 0.44% (60.91)%**
</TABLE>
* The 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.
++ Amount represents less than $0.01 per share.
19
<PAGE>
[Logo Appears Here]
ADVISER
Hansberger Global Investors, Inc.
CUSTODIAN
The Chase Manhattan Bank
INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
More information about the Funds is available without charge through the
following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI dated May 1, 2000, includes more detailed information about Hansberger
Institutional Series. The SAI is on file with the SEC and is incorporated by
reference into this prospectus. This means that the SAI, for legal purposes,
is a part of this prospectus.
ANNUAL AND SEMI-ANNUAL REPORTS
Additional information about each Fund is available in the Fund's annual and
semi-annual reports to shareholders. In the Funds' annual report you will find
a discussion of the market conditions and investment strategies that
significantly affected a Fund's performance during the last fiscal year. You
may obtain either or both of these reports at no cost by calling 1-800-414-
6927.
TO REQUEST INFORMATION OR ASK QUESTIONS:
BY TELEPHONE: Call 1-800-414-
6927
BY MAIL: Write to the Funds at:
Hansberger Institutional Series
c/o Chase Global Funds Services
Company P.O. Box 2973
73 Tremont Street
Boston, MA 02208
FROM THE SEC: You can also
obtain the SAI or the Annual and
Semi-Annual Reports of, as well
as other information about,
Hansberger Institutional Series
from the EDGAR Database on the
SEC's website
("http://www.sec.gov").* You may
review and copy documents at the
SEC Public Reference Room in
Washington, DC (for information
call 1-202-942-8090). You may
request documents by mail from
the SEC, upon payment of a
duplicating fee, by writing to:
Securities and Exchange
Commission, Public Reference
Section, Washington, DC 20549-
0102. You may also obtain this
information upon payment of a
duplicating fee, by e-mailing
the SEC at the following
address: [email protected].
*The Funds' Investment Company Act registration number is 811-7729.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
[LOGO APPEARS HERE]
HANSBERGER INSTITUTIONAL SERIES
515 EAST LAS OLAS BOULEVARD
SUITE 1300
FORT LAUDERDALE, FLORIDA 33301
TELEPHONE NO. 954-522-5150
Hansberger Institutional Series (the "Trust") is an open-end management
investment company currently consisting of four series, three of which are
described in this Statement of Additional Information ("SAI"); The INTERNATIONAL
VALUE FUND (formerly the International Fund), EMERGING MARKETS FUND,
INTERNATIONAL GROWTH FUND AND ALL COUNTRIES FUND/SM/ (each individually referred
to as a "Fund" or collectively referred to as the "Funds"), are described in
this Statement of Additional Information. The investment adviser of each Fund is
Hansberger Global Investors, Inc. (the "Adviser").
This SAI is not a prospectus and should be read in conjunction with the
prospectus offering shares of the Funds dated May 1, 2000 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 May 1, 2000.
THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONSTITUTE AN OFFER TO SELL
SECURITIES.
<PAGE>
TABLE OF CONTENTS
PAGE
INVESTMENT POLICIES AND TECHNIQUES................................. 1
Temporary Investments......................................... 1
Sovereign Debt................................................ 1
Brady Bonds................................................... 2
Illiquid and Restricted Securities............................ 3
Short Sales................................................... 4
Warrants...................................................... 4
Debt Obligations.............................................. 4
High Risk Debt Securities..................................... 5
Lending of Portfolio Securities............................... 7
Depositary Receipts........................................... 7
Derivative Instruments........................................ 8
Forward Currency Contracts and Options on Foreign Currencies.. 18
Foreign Currency Transactions................................. 19
When-Issued Securities........................................ 19
Foreign Investment Companies.................................. 20
Repurchase Agreements......................................... 20
Borrowing..................................................... 21
Mortgage Dollar Rolls and Reverse Repurchase Agreements....... 21
ADDITIONAL RISK FACTORS............................................ 22
INVESTMENT RESTRICTIONS............................................ 25
TRUSTEES AND OFFICERS OF THE TRUST................................. 27
PRINCIPAL SHAREHOLDERS............................................. 29
INVESTMENT ADVISER................................................. 30
FUND TRANSACTIONS AND BROKERAGE.................................... 31
CUSTODIAN.......................................................... 34
TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT....................... 35
TAXES.............................................................. 35
DETERMINATION OF NET ASSET VALUE................................... 38
ADDITIONAL SHAREHOLDER INFORMATION................................. 39
ORGANIZATION OF THE TRUST AND THE FUNDS............................ 40
PERFORMANCE INFORMATION............................................ 41
GENERAL INFORMATION................................................ 46
INDEPENDENT ACCOUNTANTS............................................ 46
LEGAL COUNSEL...................................................... 46
FINANCIAL STATEMENTS............................................... 46
Ratings Appendix................................................... A-1
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.
<PAGE>
INVESTMENT POLICIES AND TECHNIQUES
The following information supplements the discussion of each Fund's
investment goals and strategies that are described in detail in the Prospectus.
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).
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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 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
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the sovereign debtor may be subject. Sovereign debtors may also be dependent on
expected disbursements from foreign governments, multilateral agencies and
others abroad to reduce principal and interest arrearage on their debt. The
commitment of these third parties to make such disbursements may be conditioned
on the sovereign debtor's implementation of economic reforms or economic
performance and the timely service of the debtor's obligations. The sovereign
debtor's failure to meet these conditions may cause these third parties to
cancel their commitments to provide funds to the sovereign debtor, which may
further impair the debtor's ability or willingness to timely service its debts.
In certain instances, a Fund may invest in Sovereign Debt that is in default as
to payments of principal or interest. A Fund holding non-performing Sovereign
Debt may incur additional expenses in connection with any restructuring of the
issuer's obligations or in otherwise enforcing its rights thereunder.
BRADY BONDS
Each Fund may invest in Brady Bonds as part of its investment in Sovereign
Debt of countries that have restructured or are in the process of restructuring
their Sovereign Debt pursuant to the Brady Plan. Brady Bonds are issued under
the framework of the Brady Plan, an initiative announced by former U.S. Treasury
Secretary Nicholas F. Brady in 1989 as a mechanism for debtor nations to
restructure their outstanding external indebtedness. The Brady Plan
contemplates, among other things, the debtor nation's adoption of certain
economic reforms and the exchange of commercial bank debt for newly issued
bonds. In restructuring its external debt under the Brady Plan framework, a
debtor nation negotiates with its existing bank lenders as well as the World
Bank or IMF. The World Bank or IMF supports the restructuring by providing
funds pursuant to loan agreements or other arrangements that enable the debtor
nation to collateralize the new Brady Bonds or to replenish reserves used to
reduce outstanding bank debt. Under these loan agreements or other arrangements
with the World Bank or IMF, debtor nations have been required to agree to
implement certain domestic monetary and fiscal reforms. The Brady Plan sets
forth only general guiding principles for economic reform and debt reduction,
emphasizing that solutions must be negotiated on a case-by-case basis between
debtor nations and their creditors.
Brady Bonds are recent issues and do not have a long payment history.
Agreements implemented under the Brady Plan are designed to achieve debt and
debt-service reduction through specific options negotiated by a debtor nation
with its creditors. As a result, each country offers different financial
packages. Options have included the exchange of outstanding commercial bank debt
for bonds issued at 100% of face value of such debt, bonds issued at a discount
of face value of such debt, and bonds bearing an interest rate that increases
over time and the advancement of the new money for bonds. The principal of
certain Brady Bonds has been collateralized by U.S. Treasury zero coupon bonds
with a maturity equal to the final maturity of the Brady Bonds. Collateral
purchases are financed by the IMF, World Bank and the debtor nations' reserves.
Interest payments may also be collateralized in part in various ways.
Brady Bonds are often viewed as having three or four valuation components:
(i) the collateralized repayment of principal at final maturity; (ii) the
collateralized interest payments; (iii) the uncollateralized interest payments;
and (iv) any uncollateralized and of principal at maturity (these
uncollateralized amounts constitute the "residual risk"). In light of the
residual risk of Brady Bonds and, among other factors, the history of defaults
with respect to commercial bank loans by public and private entities of
countries issuing Brady Bonds, investments in Brady Bonds can be viewed as
speculative.
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ILLIQUID AND RESTRICTED 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 U.S. 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 U. S. 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. 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 the 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 Adviser and reported to 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.
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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. 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 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 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. This allows a Fund 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 than 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.
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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.
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 "Appendix of Ratings" set forth in the
back of this SAI.
HIGH RISK DEBT SECURITIES ("JUNK BONDS")
Each Fund may invest up to 20% of its net assets in non-investment grade
debt securities. Debt securities rated below Baa by Moody's Investors Service
("Moody's") or BBB by Standard & Poor's Corporation ("S&P"), or of comparable
quality, are considered below investment grade. Non-investment grade debt
securities ("high risk debt 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
"Appendix of Ratings" set forth in the back of this SAI for a description of
ratings.
The market for high risk debt 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
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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 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.
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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 OF PORTFOLIO SECURITIES
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.
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.
DEPOSITARY RECEIPTS
Each Fund may invest in sponsored or unsponsored depositary receipts and
other similar instruments, including American Depositary Receipts ("ADRs"),
European Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs")
(collectively, "Depositary 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. 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, such as GDRs and EDRs, may be issued in
bearer form and denominated in other currencies, and are generally designed for
use in securities markets outside the U.S. While the two types of Depositary
Receipt facilities ("unsponsored" or "sponsored") are similar, there are
differences regarding a holders' rights and obligations and the practices
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of market participants. A depository may establish an unsponsored facility
without participation by (or acquiescence of) the underlying issuer; typically,
however, the depository requests a letter of non-objection from the underlying
issuer prior to establishing the facility. Holders of unsponsored Depository
Receipts generally bear all the costs of the facility. The depository usually
charges fees upon the deposit and withdrawal of the underlying securities, the
conversion of dividends into U.S. dollars or other currency, the disposition of
non-cash distributions, and the performance of other services. The depository 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 Depository Receipt holders with respect to the
underlying securities.
Sponsored Depository Receipt facilities are created in generally the same
manner as unsponsored facilities, except that sponsored Depository Receipts are
established jointly by a depository and the underlying issuer through a deposit
agreement. The deposit agreement sets out the rights and responsibilities of the
underlying issuer, the depository and the Depository Receipt holders. With
sponsored facilities, the underlying issuer typically bears some of the costs of
the Depository Receipts (such as dividend payment fees of the depository),
although most sponsored Depository Receipts holders may bear costs such as
deposit and withdrawal fees. Depositories of most sponsored Depository Receipts
agree to distribute notices of shareholder meetings, voting instructions, and
other shareholder communications and information to the Depository Receipt
holders at the underlying issuer's request.
For purposes of a Fund's investment policies, investments in Depository
Receipts will be deemed to be investments in the underlying securities. Thus, a
Depository Receipt representing ownership of common stock will be treated as
common stock.
DERIVATIVE INSTRUMENTS
GENERAL DESCRIPTION. Each Fund may invest in a variety of derivative
instruments, including structured notes, swaps, 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 U.S.
Securities and Exchange Commission ("SEC"), options and futures exchanges upon
which the instruments may be traded, the U.S. 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 the 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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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
than 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 an advantageous 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 U.S. National Futures Association, which
regulate trading in the futures markets. Pursuant to Rule 4.5 of the
regulations under the U.S. 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 purchased 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.
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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 a
segregated custodial account if required to do so by the SEC and CFTC
regulations. Assets used as cover or 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.
STRUCTURED NOTES. Structured notes are Derivatives on which the amount of
principal repayment and or interest payments is based upon the movement of one
or more factors. These factors include, but are not limited to, currency
exchange rates, interest rates (such as the prime lending rate and LIBOR) and
stock indicies such as the S&P 500 Index. In some cases, the impact of the
movements of these factors may increase or decrease through the use of
multipliers or deflators. The use of structured notes allows a Fund to tailor
its investments to the specific risks and returns the Adviser wishes to accept
while avoiding or reducing certain other risks.
SWAPS, CAPS, COLLARS, AND FLOORS. Each Fund may enter into various types of
privately negotiated or over-the-counter derivatives transactions, including
swap transactions ("Swaps"), caps ("Caps"), Floors ("Floors"), Collars
("Collars"), similar transactions and related options. A Swap is a privately-
negotiated derivatives contract in which two parties agree, on specified payment
dates, to make or exchange payments calculated by reference to a specified rate,
index or asset and an agreed "notional amount." Some common examples of
underlying rates, indices and assets include: the market value of a single
equity or debt security, a group or "basket" of securities or a stock or fixed-
income index; fixed and floating interest rates; foreign currency exchange
rates; and various commodity prices or indices. For example, a Fund may enter
into an equity Swap on the value of a single common stock. The Swap is a
separate contract that does not require ownership of the underlying stock. In
the Swap, the Fund will agree with a swap dealer to make payments based upon
changes in the value of the stock. For example, on a specified payment date, if
the value of the stock has increased, one party (such as the Fund) will receive
a payment equal to the amount of that increase for the time period involved and
the notional number of shares, as well as receiving equivalent payments after
any distribution of a dividend on the security and perhaps making certain
interest-like payments on specified dates. If the value of the stock has
decreased, then rather than receiving a payment, the first party (such as the
Fund, in this example) would be obligated to make a payment to the other party
to the Swap. The Fund can take either position in the Swap; that is, the Fund
may be the party that receives a payment following an increase in value and pays
following a decrease or vice versa. In some cases, the Fund may also make or
receive additional payments on the effective date and/or termination date of the
Swap. Swaps are very flexible financing tools whose terms can be negotiated
between the parties .
The Funds may enter into various Swaps that may be based upon the value of
various debt and equity securities, baskets or indices. One example of a
situation in which a Fund may use an equity swap is to mimic some of the
benefits of ownership of "local shares" in a country in which the Fund, as a
foreigner, is prohibited from owning local shares. The terms of the Swaps
actually entered by the Fund may vary from the typical example described here.
In addition, the Funds may also enter into interest-rate and currency Swaps.
Both interest rate and currency Swaps involve exchanges or payment streams. In
the case of interest rate Swaps, the notional amount is used to calculate the
size of the payments, but generally is not exchanged; in certain currency Swaps,
payment of the entire notional amount in the two applicable currencies may be
exchanged by the parties on the effective date of the Swap and in some cases a
reverse exchange may be made on the termination date.
In addition to Swaps, the Funds may enter into Caps, Floors, and Collars
relating to securities, interest rates or currencies. In a Cap or Floor, the
buyer pays a premium (which is generally, but not always a single up-front
amount) for the right to receive payments from the other party if, on specified
payment dates, the applicable rate, index or asset is greater than (in the case
of a Cap) or less than (in the case of a Floor) an agreed level, for the period
involved and the applicable notional amount. A Collar is a combination
instrument in which the same party buys a Cap and sells a Floor. Depending upon
the terms of the Cap and Floor comprising the Collar, the premiums will
partially or entirely offset each other. The notional amount of a Cap, Collar or
Floor is used to calculate payments, but is not itself exchanged. The Funds may
be both buyers and sellers of these instruments. In addition, the Funds may
engage in combinations of put and call options on securities (also commonly
known as "collars"), which may involve physical delivery of securities. Puts,
calls, and securities collars are described in more detail under "Options"
below. Like Swaps, Caps, Floors and Collars are very flexible products. The
terms of the transactions entered by the Funds may vary from the typical
examples described here.
The Funds may enter into these over-the-counter derivative transactions with
a number of dealers, generally using standard forms of master agreement
documentation customized to suit the needs and circumstances of the Funds and
the dealers. These instruments are not traded on an organized exchange or,
generally speaking, through a clearinghouse. Because they are privately
negotiated bilateral contracts, in each case, the Fund and the dealer are each
exposed to the credit risk that the other party will not meet its obligations.
This risk will be greater with some derivative transactions than others,
depending upon the nature, size and terms of the transaction, as well as the
creditworthiness of the dealer. The size of a Fund's potential loss upon default
by the dealer or by the Fund itself if primarily related to the market value of
the transactions at the time of the default; since markets move both up and
down, it is also possible that the Fund could realize a gain. Consistent with
market practices, the Funds will generally make and receive payments on a net
basis and will, to the extent feasible, document Swaps, Caps, Floors and Collars
with a single dealer under a single master agreement to obtain the
risk-reduction and other benefits, where permitted by applicable law, of netting
upon default or other early termination. Events of default, other termination
events, damage calculations and remedies are among the legal terms specified in
the documentation.
A Fund's obligations will be accrued daily (offset against any amounts owing
to the Fund) and any accrued but unpaid net amounts owed to a Swap Counterparty
will be covered by the maintenance of a segregated account consisting of cash
or liquid securities to avoid any potential leveraging of the Fund. To the
extent that these Swaps, Caps, Floors, and Collars are entered into for hedging
purposes, the Adviser believes such obligations do not constitute "senior
securities" under the 1940 Act and, accordingly, will not treat them as being
subject to a Fund's borrowing restrictions.
The over-the-counter derivatives markets have grown substantially in recent
years with a large number of banks and investment banking firms acting both as
principals and as agents utilizing standardized documentation. As a result,
these markets have become increasingly liquid. Different product and geographic
segments of these markets have developed at different rates and are subject to
different risks. As a result, both the liquidity and the risks associated with
individual derivative transactions will vary greatly.
The use of over-the-counter derivatives is a highly specialized activity,
which involves investment techniques, and risks different from those associated
with ordinary Fund securities transactions. If the Adviser is incorrect in its
forecasts of market values, interest rates, and currency exchange rates, the
investment performance of the Funds would be less favorable than it would have
been if this investment technique were not used.
OPTIONS. 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 puts 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 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 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.
Each Fund may purchase or write put and call options on securities, 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.
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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 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. The
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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.
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 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
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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.
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 does not have 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
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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 futures
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.
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.
FORWARD CURRENCY CONTRACTS AND OPTIONS ON FOREIGN CURRENCIES
Each Fund may enter into forward currency contracts; such transactions may
serve as long hedges (for example, if the Fund seeks to buy a security
denominated in a foreign currency, it may purchase a forward currency contract
to lock in the $US price of the security) or as short hedges (the Fund
anticipates selling a security denominated in a foreign currency may sell a
forward currency contract to lock in the $US equivalent of the anticipated sale
proceeds).
A Fund may seek to hedge against changes in the value of a particular
currency by using forward contracts on another foreign currency or a basket of
currencies, the value of which the Adviser believes will have a positive
correlation to the values of the currency being hedged. In addition, a Fund may
use forward currency contracts to shift exposure to foreign currency
fluctuations from one country to another. For example, if a Fund owns
securities denominated in a foreign currency and the Adviser believes that
currency
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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 or 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.
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.
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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
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. Normally, the settlement date on when-issued securities occurs
within one month of purchase commitment, but may take longer, albeit not more
than 120 days after the trade date.
At the time a Fund commits to purchase a security on a when-issued basis,
it will record the transaction and reflect the value of that security in
determining its net asset value. The Adviser does not 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.
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. 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
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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, generally 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.
If a Fund invests in investment companies, 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 companies.
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. 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. 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
delayed or limited.
A Fund may, under certain circumstances, deem repurchase agreements
collateralized by U.S. government securities to be investments in U.S.
government securities.
BORROWING
Each Fund may borrow money from U.S.-regulated banks. The 1940 Act and
each Fund's fundamental investment policies restrict such borrowing to
33 1/3% of the Fund's total assets (including the amount borrowed) less all
liabilities and indebtedness other than the borrowing. Borrowing creates
leverage, which is a speculative characteristic; leverage from borrowing will
magnify declines as well as increases in a Fund's net asset value per share and
net yield. A Fund will borrow only on a secured basis, and only when the
Adviser believes that borrowing will benefit the Fund after taking into account
considerations such as the costs of borrowing and the likely investment returns
on securities purchased with borrowed monies.
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.
17
<PAGE>
Each Fund may also engage in mortgage 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.
ADDITIONAL 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
18
<PAGE>
the economy in an emerging market country may be unavailable, or if available
may be unreliable or not directly comparable to information regarding the
economy of the U.S. or other more developed countries.
REGULATION. There may be less government supervision and regulation of
foreign securities exchanges, brokers and listed companies than in the U.S.
LIQUIDITY AND CONCENTRATION. Many foreign securities markets have
substantially less volume than U.S. national securities exchanges. Available
investments in emerging countries may be highly concentrated in a small number
of issuers, or the issuers may be unseasoned and/or have significantly smaller
market capitalization than in the U.S. or more developed countries.
Consequently, securities of foreign issuers may be less liquid and more volatile
than those of comparable domestic issuers.
BROKERAGE. Brokerage commissions and other transaction costs on foreign
securities exchanges are generally higher than in the U.S.
TAXES. Dividends and interest paid by foreign issuers may be subject to
withholding and other foreign taxes, which may decrease the net return on
foreign investments as compared to dividends and interest paid to the Fund by
U.S. companies. It is expected that the Funds' shareholders will be able to
claim a credit for U.S. tax purposes for any such foreign taxes, although there
can be no assurance that they will be able to do so. See "TAXES."
POLITICAL/ECONOMY. Political and economic developments may present risks.
A foreign jurisdiction might impose or change withholding taxes on income
payable in connection with foreign securities. There are risks of seizure,
nationalization or expropriation of a foreign issuer or foreign deposits, and
adoption of foreign governmental restrictions such as exchange controls. Many
emerging or developing countries have less stable political and economic
environments than some more developed countries, and may face external stresses
(including war) as well as internal ones (including hyperinflation, currency
depreciation, limited resource self-sufficiency, and balance of payments issues
and associated social unrest). It may be more difficult to obtain a judgment in
a court outside the U.S.
CURRENCY EXCHANGE. Securities of foreign issuers are frequently
denominated in foreign currencies, and a Fund may temporarily hold uninvested
reserves in bank deposits in foreign currencies. The exchange rates between the
U.S. 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 RESTRICTIONS. Foreign governments may delay or restrict
repatriation of a Fund's investment income or other assets. If, for any reason,
a Fund were unable, through borrowing or otherwise, to distribute an amount
equal to substantially all of its investment company taxable income (as defined
for U.S. tax purposes) within required time periods, the Fund would cease to
qualify for the favorable tax treatment afforded regulated investment companies
under the U.S. Internal Revenue Code of 1986, as amended (the "Code").
19
<PAGE>
INVESTING IN SMALLER CAPITALIZATION STOCKS
The Adviser believes that the issuers of smaller capitalization stocks
often have sales and earnings growth rates which exceed those of larger
companies, and that such growth rates may in turn be reflected in more rapid
share price appreciation. However, investing in smaller capitalization stocks
can involve greater risk than is customarily associated with investing in stocks
of larger, more established companies. For example, smaller capitalization
companies often have limited product lines, markets, or financial resources, may
be dependent for management on one or a few key persons, and can be more
susceptible to losses. Also, their securities may be thinly traded (and
therefore have to be sold at a discount from current prices or sold in small
lots over an extended period of time), may be followed by fewer investment
research analysts and may be subject to wider price swings and thus may create a
greater chance of loss than securities of larger capitalization companies.
Transaction costs in stocks of smaller capitalization companies may be higher
than those of larger capitalization companies.
INVESTING IN LOWER RATED DEBT SECURITIES
Each Fund may invest in lower rated or unrated debt securities. Debt
considered below investment grade may be referred to as "junk bonds" or "high
risk" securities. The emerging country debt securities in which the Fund may
invest are subject to significant risk and will not be required to meet any
minimum rating standard or equivalent. Debt securities are subject to the risk
of the issuer's inability to meet principal and interest payments (credit risk)
and may also be subject to price volatility due to such factors as interest rate
sensitivity, market perception of the issuer's creditworthiness and general
market liquidity (market risk). Lower rated or unrated securities are more
likely to react to developments affecting market and credit risk than are more
highly rated securities, which react primarily to movements in general levels of
interest rates. The market values of debt securities tend to vary inversely with
interest rate levels. Yields and market values of lower rated and unrated debt
will fluctuate over time, reflecting not only changing interest rates but also
the market's perception of credit quality and the outlook for economic growth.
When economic conditions appear to be deteriorating, medium to lower rated
securities may decline in value due to heightened concern over credit quality,
regardless of prevailing interest rates. The Adviser will consider credit risk
and market risk in making debt security investment decisions for each Fund.
Investors should carefully consider the relative risks of investing in a Fund
that purchases lower rated and unrated debt securities, and should understand
that such securities are not generally meant for short-term investing.
The U.S. market for lower rated and unrated corporate debt is relatively
new and its recent growth paralleled a long period of economic expansion and an
increase in merger, acquisition and leveraged buyout activity. In addition,
trading markets for debt securities of issuers located in emerging countries may
be limited. Adverse economic developments may disrupt the market for U.S.
corporate lower rated and unrated debt securities and for emerging country debt
securities. Such disruptions may severely affect the ability of issuers,
especially highly leveraged issuers, to service their debt obligations or to
repay their obligations upon maturity. In addition, the secondary market for
lower rated and unrated debt securities, which is concentrated in relatively few
market makers, may not be as liquid as the secondary market for more highly
rated securities. As a result, the Adviser could find it more difficult to sell
these securities or may be able to sell the securities only at prices lower than
if such securities were widely traded. Prices realized upon the sale of such
lower rated or unrated securities, under these circumstances, may be less than
the prices used in calculating a Fund's net asset value.
20
<PAGE>
FOREIGN CUSTODIANS AND SECURITIES DEPOSITORIES
Rules adopted under the 1940 Act, permit the Funds to maintain their
foreign securities and cash in the custody of certain eligible non-U.S. banks
and securities depositories (collectively, "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 or Foreign
Custody Manager. A number of factors will be considered 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.
INVESTMENT RESTRICTIONS
The following are fundamental investment limitations of each Fund. These
fundamental limitations may not be changed without shareholder approval.
In accordance with these limitations, each Fund will not:
1. Invest in real estate or mortgages on real estate (although a Fund may
invest in marketable securities secured by real estate or interests therein
or issued by companies or investment trusts which invest in 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
herein).
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
21
<PAGE>
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, 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 engage in dollar roll transactions and
reverse repurchase agreements, and 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 Adviser, individually owning more than 1/2 of 1% of
the securities of such company, in the aggregate own more than 5% of the
securities of such company.
2. Invest more than 5% of the value of its total assets in securities of
issuers which have been in continuous operation less than three years.
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
22
<PAGE>
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. 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 herein under
the heading "DETERMINATION OF NET ASSET VALUE."
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 THE PAST FIVE YEARS
- -------------------------- ------------------ -------------------------------------------
<S> <C> <C>
THOMAS L. HANSBERGER* President and Chairman and Chief Executive
(67) Trustee Officer, President and
515 East Las Olas Blvd. Treasurer, Hansberger Global
Fort Lauderdale, FL Investors, Inc., 1994 to
present; Chairman and Chief
Executive Officer, President and
Treasurer, Hansberger Group,
Inc., 1999 to present; Chairman
and Chief Executive Officer,
Templeton Worldwide, 1992 to
1993; Director and Chief
Executive Officer, Templeton,
Galbraith & Hansberger Ltd.,
1985 to 1992.
J. CHRISTOPHER JACKSON, Vice President and Senior Vice President and
ESQ.* (48) Trustee General Counsel, Hansberger
515 East Las Olas Blvd. Global Investors, Inc. 1996 to
Fort Lauderdale, FL present; Senior Vice President,
General Counsel and Assistant
Secretary of Hansberger Group,
Inc., 1999 to present. Vice
President, Associate General
Counsel and Assistant Secretary,
Van Kampen American Capital,
Inc. 1986 to 1996.
</TABLE>
23
<PAGE>
<TABLE>
<S> <C> <C>
KATHRYN B. MCGRATH, Trustee Partner, Morgan, Lewis & Bockius
ESQ.*(55) LLP, 1990 to present.
1800 M Street, N.W.
Washington, DC
STUART B. ROSS (63) Trustee Executive Vice President, Xerox
100 First Stamford Place Corporation, 1990 to present; Chief
Stamford, CT Executive Officer, Xerox Financial
Services, Inc., 1990 to present.
WILLIAM F. WATERS, ESQ. Trustee Retired; former Senior Vice President, Merrill Lynch,
(68) Merrill Lynch & Co., 1984 to 1996.
640 Hollow Tree Ridge Road
Darien, CT
CHARLES F. GULDEN (38) Vice President Managing Director, Hansberger Global
515 East Las Olas Blvd. Investors, Inc. 1996 to present; Vice
Fort Lauderdale, FL President and Director of Research &
Portfolio Management, Templeton
Worldwide, 1989 to 1996.
WESLEY E. FREEMAN (50) Vice President Managing Director, Hansberger Global
515 East Las Olas Blvd. Investors, Inc. 1996 to present; Executive
Fort Lauderdale, FL Vice President for Institutional Business
Development, Templeton Worldwide,
1989 to 1996.
THOMAS A. CHRISTENSEN, Jr. (29) Treasurer CFO, 1998 to present; Vice President and
515 East Las Olas Blvd. Controller, Hansberger Global Investors, Inc.
Fort Lauderdale, FL 1996 to 1998; CFO of Hansberger Group, Inc.
from 1999 to present. Accountant, Arthur
Andersen LLP, 1993 to 1996.
KIMBERLEY SCOTT (37) Secretary Senior Vice President, Chief Administrative
515 East Las Olas Blvd. Officer, Chief Compliance Officer and Assistant
Fort Lauderdale, FL Treasurer, Hansberger Global Investors, Inc.
1994 to present; Senior Vice President,
Executive Assistant and Portfolio Supervisor,
Templeton Worldwide, 1992 to 1994.
KARL O. HARTMANN, ESQ. (45) Assistant Secretary Senior Vice President and General
73 Tremont Street Counsel, Chase Global Funds Services
Boston, MA Company, 1991 to present.
HELEN A. ROBICHAUD, ESQ. (48) Assistant Secretary Vice President and Associate
73 Tremont Street General Counsel, Chase
Boston, MA Global Funds Services
Company, 1994 to present.
</TABLE>
The Trust pays each Trustee who is not a director, officer, partner or
employee of the Adviser, any affiliated company, or legal counsel to the Adviser
("Disinterested Trustee"), an annual fee of $3,500, plus $500 per Board meeting.
In addition, the Trust reimburses each Disinterested Trustee for travel and
other
24
<PAGE>
expenses incurred in connection with attendance at such meetings. Other
officers and Trustees receive no compensation or expense reimbursement from the
Trust. For the fiscal year ending December 31, 1999, the Trust paid the
following amounts to Trustees and officers of the Trust:
<TABLE>
<CAPTION>
Pension or Total Compensation
Aggregate Retirement from Registrant
Compensation Benefits Estimated and Fund Complex
From Registrant Accrued as Part Annual Benefit Paid to Directors
Name of Person, for Fiscal Year of Fund Upon for Fiscal Year
Position Ended 1999 Expenses Retirement Ended 1999
==============================================================================================================
<S> <C> <C> <C> <C>
Stuart B, Ross, $5,500 N/A N/A $5,500 for
Trustee service
on one board
William F. Waters, $5,500 N/A N/A $5,500 for
Trustee service
on one board
</TABLE>
As of March 31, 2000, subject to officers and Trustees owning more than 1%
of Fund(s), the officers and Trustees of the Trust, in the aggregate,
beneficially owned less than 1% of the outstanding shares of the
Emerging Markets Fund. As of the same date, the officers and Trustees of the
Trust, in the aggregate, beneficially owned less than 1% of the outstanding
shares of the International Value Fund.
CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS
The following table sets forth the information concerning beneficial
ownership, as of March 31, 2000, of the Funds' shares by each person who
beneficially owned more than 5% of the voting securities of any Fund.
<TABLE>
<CAPTION>
Shares Percentage of
Name and Address Beneficially Outstanding
of Shareholder Fund Owned Shares Owned
- --------------------------------- ------------------------ ------------- --------------
<S> <C> <C> <C>
Northern Trust Company, International Value Fund 6,842,799.753 20.98%
Trustee ------------------------ ------------- -----
- ---------------------------------
FBO CPC International
Retirement Plan
- ---------------------------------
P.O. Box 92956
- ---------------------------------
Chicago, IL 60675
- ---------------------------------
Citibank N.A. Trustee International Value Fund 5,085,084.769 15.62%
- --------------------------------- ------------------------ ------------- -----
FBO Albemarle Corporation
- ---------------------------------
Attn: Cathy Blackshear
- ---------------------------------
111 Wall St. 14th Fl.
- ---------------------------------
New York, NY 10043
- ---------------------------------
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Shares Percentage of
Name and Address Beneficially Outstanding
of Shareholder Fund Owned Shares Owned
- --------------------------------- ------------------------ ------------- --------------
<S> <C> <C> <C>
Mercantile Safe Deposit & Trust International Value Fund 2,773,114.155 8.50%
- --------------------------------- ------------------------ ------------- -----
Trustee for NFL Reciprocal
Trust
- ---------------------------------
766 Old Hammonds Ferry Rd.
- ---------------------------------
Linthicum, MD 21090
- ---------------------------------
Texas Tech University International Value Fund 2,569,890.665 7.88%
- --------------------------------- ------------------------ ------------- ----
P.O. Box 41098
- ---------------------------------
Lubbock, TX 79409-1098
- ---------------------------------
Northern Trust Company, International Value Fund 2,316,453.084 7.10%
- --------------------------------- ------------------------ ------------- -----
Trustee
- ---------------------------------
FBO Noram
- ---------------------------------
P.O. BOX 92956
- ---------------------------------
Chicago, IL 60675
- ---------------------------------
*The Trustees of Emerging Markets Fund 15,063,536.49 41.30%
- --------------------------------- ------------------------ ------------- -----
Princeton University
- ---------------------------------
22 Chambers Street
- ---------------------------------
Suite 200
- ---------------------------------
Princeton, NJ 08542
- ---------------------------------
Massachusetts Institute of Emerging Markets Fund 3,088,957.414 8.47%
Technology ------------------------ ------------- -----
- ---------------------------------
238 Main Street
- ---------------------------------
Suite 200
- ---------------------------------
Cambridge, MA 02142-1012
- ---------------------------------
The Reed Institute Emerging Markets Fund 2,940,270.96 8.06%
- --------------------------------- ------------------------ ------------ -----
DBA Reed College
- ---------------------------------
3203 S.E. Woodstock Blvd.
- ---------------------------------
Portland, OR 97202
- ---------------------------------
Duke University Emerging Markets Fund 2,885,004.953 7.91%
- --------------------------------- ------------------------ ------------- -----
2200 W. Main Street, Suite 1000
- ---------------------------------
Durham, NC 27705
- ---------------------------------
The Andrew W. Mellon Foundation Emerging Markets Fund 2,000,684.402 5.49%
- --------------------------------- ------------------------ ------------- -----
140 E. 62/nd/ Street
- ---------------------------------
New York, NY 10021
- ---------------------------------
Tobias White & Co. Emerging Markets Fund 1,979,870.686 5.43%
- --------------------------------- ------------------------ ------------- -----
Genesee TowerS Suite 1802
- ---------------------------------
120 E. 1/st/ Street
- ---------------------------------
Flint, MI 48502-1940
- ---------------------------------
</TABLE>
*Any person who owns beneficially, either directly on through one or more
controlled companies, more than 25% of the voting securities of the Trust is
presumed to control the Trust under the provisions of the Investment Company
Act. Note that a controlling person possesses the ability to control the outcome
of matters submitted for shareholder vote of the Trust or a particular Fund.
INVESTMENT ADVISER
Hansberger Global Investors, Inc., a wholly owned subsidiary of Hansberger
Inc., a Delaware Corporation (the "Adviser") is the investment adviser to each
Fund. The Adviser, a Delaware corporation, is controlled by Mr. Thomas L.
Hansberger who founded the Adviser in 1994. A brief description of the
investment advisory agreement ("Advisory Agreement") is set forth in the
Prospectus under "The Investment Adviser."
26
<PAGE>
The Advisory Agreement, dated October 17, 1996, was approved by the sole
shareholder of the International Fund and the Emerging Markets Fund on October
4, 1996. The Advisory Agreement will continue in effect 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, 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 for 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 record keeping and shareholder relations, 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. For the fiscal year ended December 31, 1999, the
Trust paid advisory fees of $2,325,461 and $2,172,001, respectively, for the
International Value Fund and the Emerging Markets Fund. For the fiscal year
ended December 31, 1998, the Trust paid advisory fees of $1,527,034 and
$469,117, respectively, for the International Value Fund and the Emerging
Markets Fund. For the fiscal year ended December 31, 1997, the Trust paid
advisory fees of $523,870 and $98,153, respectively, for the International Value
Fund and the Emerging Markets Fund. Because each Fund was newly organized,
neither Fund paid advisory fees during the fiscal year ended December 31, 1996.
The International Growth Fund and the All Countries Fund/SM/ have not commenced
operations, therefore, advisory fees were not paid as of December 31, 1999.
Both the Fund and the Adviser have adopted a code of ethics that complies
with the requirements of Rule 17j-1 under the 1940 Act. Each of these codes of
ethics permit the personnel subject to those codes to invest in securities,
including securities that may be purchased by a Fund.
FUND TRANSACTIONS AND BROKERAGE
The Adviser is responsible for decisions to buy and sell securities for
each Fund and for the placement of a Fund's investment business and the
negotiation of the commissions to be paid on such transactions. It is the
policy of the Adviser to seek the best execution at the best security price
available with respect to each transaction, in light of the overall quality of
brokerage and research services provided to the Adviser or the Fund. In over-
the-counter transactions, orders are placed directly with a principal market
maker unless it is believed that better price and execution can be obtained
using a broker. In determining the abilities of a broker or dealer to obtain
best execution, the Adviser considers relevant factors including: the ability
and willingness of the broker or dealer to facilitate the Fund's portfolio
transaction by participating therein for its own account; speed, efficiency and
confidentiality; familiarity with the market for a particular security; and the
reputation and perceived soundness of the 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
27
<PAGE>
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 Conduct Rules of the
National Association of Securities Dealers, Inc. (the "NASD") 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. However, 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.
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 Agreement, 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 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 accounts as to which it exercises
investment discretion. 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 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 computer-
generated data, computer 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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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 NASD 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).
Twice a year, the Adviser, through a committee of its securities analysts,
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
attempt 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
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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.
If purchase or sale of securities consistent with the investment policies
of the Fund and one or more of these other clients served by the Adviser is
considered at or about the same time, transactions in such securities will be
allocated among the Fund and such other clients pursuant to guidelines deemed
fair and reasonable by the Adviser. Generally, under those guidelines, the Funds
and other participating clients will be allocated at least $25,000 of the
relevant security, with any remaining shares allocated on a pro rata basis. In
the event that there are not enough securities available to allocate each
participating client $25,000 worth of the security, the Adviser will use a
random allocation procedure, randomly selecting one participating client to
commence allocation.
For the fiscal year ended December 31, 1999, the International Value Fund
and the Emerging Markets Fund paid brokerage commissions of $943,869 and
$1,077,073, respectively. For the fiscal year ended December 31, 1998, the
International Value Fund and Emerging Markets Fund paid brokerage commissions of
approximately $945,933 and $746,560, respectively. For the fiscal year ended
December 31, 1997, the International Value Fund and Emerging Markets Fund paid
brokerage commissions of approximately $664,634 and $216,314, respectively.
Because each Fund was newly organized, the Funds paid no brokerage commissions
during the fiscal year ended December 31, 1996. Because an affiliate of J.M.
Sassoon owns approximately 7.09% of the Adviser and affiliates of Salomon Smith
Barney own approximately 6.94% of the Adviser, J.M. Sassoon and Salomon Smith
Barney, are considered affiliates of the Adviser, which in turn is an affiliate
of the Trust. For the fiscal year ended December 31, 1999: (1) the Trust paid
brokerage commissions of approximately $17,779 and $44,125 to J.M. Sassoon and
Salomon Smith Barney, respectively; (2) commissions paid to J.M. Sassoon and
Salomon Smith Barney represented approximately .88% and 2.18%, respectively,
of the total brokerage commissions paid; and (3) the dollar amount of such
transactions in which commissions paid J.M. Sassoon and Salomon Smith Barney,
represented approximately .65% and 2.19%, respectively, of the aggregate dollar
amount of transactions for which commissions were paid by the Trust. For the
fiscal year ended December 31, 1998: (1) the Trust paid brokerage commissions of
approximately $6,287 and $41,442 to J.M. Sassoon and Salomon Smith Barney,
respectively; (2) commissions paid to J.M. Sassoon and Salomon Smith Barney,
represented approximately .37% and 2.45.%, respectively, of the total brokerage
commissions paid; and (3) the dollar amount of such transactions in which
commissions paid to J.M. Sassoon and Salomon Smith Barney, represented
approximately .20% and 3.99%, respectively, of the aggregate dollar amount of
transactions for which commissions were paid by the Trust. For the fiscal year
ended December 31, 1997: (1) the Trust paid brokerage commissions of
approximately $5,591, $5,031, and $4,991 to J.M. Sassoon, Salomon Brothers, and
Smith Barney, respectively; (2) commissions paid to J.M. Sassoon, Salomon
Brothers, and Smith Barney, represented approximately .63%, .57%, and .57%,
respectively, of the total brokerage commissions paid; and (3) the dollar amount
of such transactions in which commissions paid to J.M. Sassoon, Salomon
Brothers, and Smith Barney, represented approximately .32%, .96%, and .37%,
respectively, of the aggregate dollar amount of transactions for which
commissions were paid by the Trust.
It is anticipated that the annual portfolio turnover rate of each Fund will
not exceed 100% under normal circumstances. For the fiscal year ended December
31, 1999, the portfolio turnover rates were approximately 51% and 43% for the
International Fund and the Emerging Markets Fund, respectively.
CUSTODIAN
The Chase Manhattan Bank, 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
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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 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 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.
From time to time, the Funds, directly or indirectly through arrangements
with the Adviser or Administrator, may pay amounts to third parties that provide
transfer agent and other administrative services relating to a 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 Administrator 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 Subchapter M of the Internal Revenue Code of 1986, as amended ("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 annually to its Shareholders at least the sum of 90% of its net
investment income excludable from gross income plus 90% of its investment
company taxable income (generally, net investment income plus net short-term
capital gain) (the "Distribution Requirement") and also must meet several
additional requirements. Among these
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requirements are the following: (a) at least 90% of a Fund's gross income each
taxable year must be derived from dividends, interest, payments with respect to
securities loans, and gains from the sale or other disposition of stock or
securities, or certain other income; (b) a Fund must derive less than 30% of its
gross income each taxable year from the sale or other disposition of stocks,
securities, options, futures or forward contracts, or foreign currencies (or
options, futures or forward contracts on foreign currencies) that are not
directly related to a Fund's business of investing in stock or securities, held
for less than three months; and (c) diversify its holdings so that; (i) at the
close of each quarter of a 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 such other
securities limited, in respect to any one issuer, to an amount that does not
exceed 5% of the value of a Fund's assets and that does not represent more than
10% of the outstanding voting securities of such issuer; and (ii) at the close
of each quarter of a Fund's taxable year, not more than 25% of the value of its
assets may be invested in securities (other than U.S. Government securities or
the securities of other RICs) of any one issuer or of two or more issuers which
are engaged in the same, similar or related trades or businesses if the Fund
owns at least 20% of the voting power of such issuers. Requirement (b) no longer
applies for tax years beginning after August 5, 1997. Notwithstanding the
Distribution Requirement described above, which only requires a Fund to
distribute at least 90% of its annual investment company taxable income and does
not require any minimum distribution of net capital gain (the excess of net
long-term capital gain over net short-term capital loss), a Fund will be subject
to a nondeductible 4% excise tax to the extent it fails to distribute by the end
of any calendar year 98% of its ordinary income for that year and 98% of its
capital gain net income for the one-year period ending on October 31 of that
year, plus certain other amounts. Each Fund intends to make sufficient
distributions to avoid liability for the 4% federal excise tax. Any gain or loss
recognized on a sale or redemption of shares of a Fund by a Shareholder who is
not a dealer in securities will generally be treated as long-term capital gain
or loss if the shares have been held for more than eighteen months, mid-term if
the shares have been held for more than eighteen months, mid-term if the shares
have been held for over one year but not for over eighteen months, and short-
term if for a year or less. If shares on which a net capital gain distribution
has been received are subsequently sold or redeemed, and such shares have been
held for six months or less, any loss recognized by a shareholder will be
treated as long-term capital loss to the extent of the long-term capital gain
distributions.
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, the Fund 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 the Fund. 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
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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 election.
Each Fund maintains its accounts and calculates its income in U.S. dollars.
In general, gain or loss (1) from the disposition of foreign currencies and
forward currency contracts, (2) from the disposition of foreign-currency-
denominated debt securities that are attributable to fluctuations in exchange
rates between the date the securities are acquired and their disposition date,
and (3) attributable to fluctuations in exchange rates between the time the Fund
accrues interest or other receivables or expenses or other liabilities
denominated in a foreign currency and the time the Fund actually collects those
receivables or pays those liabilities, will be treated as ordinary income or
loss. A foreign-currency-denominated debt security acquired by a Fund may bear
interest at a high normal rate that takes into account expected decreases 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.
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Gains from the disposition of foreign currencies (except certain gains
therefrom that may be excluded by future regulations), and income from
transaction in options, futures, and forward currency contracts derived by a
Fund with respect to its business of investing in securities or foreign
currencies, will qualify as permissible income under the Income Requirement.
However, income from the disposition of options and futures (other than those on
foreign currencies) will be subject to the 30% Limitation if they are held for
less than three months. Income from the disposition of foreign currencies, and
options, futures, and forward contracts on foreign currencies, that are not
directly related to a Fund's principal business of investing in securities (or
options and futures with respect to securities) also will be subject to the 30%
Limitation if they are held for less than three months.
If a Fund satisfies certain requirements, any increase in value of a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether the Fund satisfies the
30% Limitation. Thus, only the net gain (if any) from the designated hedge will
be included in gross income for purposes of that limitation. Each Fund intends
that, when it engages in hedging strategies, the hedging transactions will
qualify for this treatment, but at the present time it is not clear whether this
treatment will be available for all of the Fund's hedging transactions. To the
extent this treatment is not available or is not elected, a Fund may be forced
to defer the closing out of certain options, futures, or forward currency
contracts beyond the time when it otherwise would be advantageous to do so, in
order for the Fund to continue to qualify as a RIC.
For federal income tax purposes, each Fund is required to recognize as
income for each taxable year its net unrealized gains and losses on options,
futures, or forward currency contracts that are subject to section 1256 of the
Code ("Section 1256 Contracts") and are held by the Fund as of the end of the
year, as well as gains and losses on Section 1256 Contracts actually realized
during the year. Except for Section 1256 Contracts that are part of a "mixed
straddle" and with respect to which a Fund makes a certain election, any gain or
loss recognized with respect to Section 1256 Contracts is considered to be 60%
long-term capital gain or loss and 40% short-term capital gain or loss, without
regard to the holding period of the Section 1256 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
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 trading (currently 4:00 pm, Eastern
time) of the New York Stock Exchange ("NYSE") on each day that the NYSE is open
for business. The NYSE is open for trading Monday through Friday except on the
following holidays: New Year's Day, Martin Luther King, Jr. 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.
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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.
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 are used when such values are believed
to more accurately reflect the fair market value for such securities. 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 remaining maturities of 60 days or less when purchased
are valued by the amortized cost method when the Board of Trustees has
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.
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 deter mined 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.
The calculation of net asset value does not usually take place
contemporaneously with the determination of the prices of the portfolio
securities used in such calculation. Trading in securities on foreign
securities exchanges and over-the-counter markets is normally completed well
before the regular close of trading on the NYSE on each business day on which
the NYSE is open for trading. In addition, foreign securities trading in a
particular country or countries may not take place on all business days the NYSE
is open. Furthermore, trading takes place in various foreign markets on days
which are not business days on which the NYSE is open and on which the Funds'
net asset values are not calculated. As a result, events affecting the values
of portfolio securities that occur between the time their prices are determined
and the close of the NYSE will not be reflected in a Fund's calculation of net
asset values unless the Adviser determines that the particular event may
materially affect net asset value, in which case an adjustment will be made.
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
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exchanged (the "New Fund"). For federal income tax purposes, any such exchange
constitutes a sale upon which a capital gain or loss will be realized, depending
upon whether the value of the shares being exchanged is more or less than the
shareholder's adjusted cost basis. If you are interested in exercising any of
these exchange privileges, you should obtain Prospectuses of other sponsored
funds from the Adviser. Upon a telephone exchange, the transfer agent
establishes a new account in the New Fund with the same registration and
dividend and capital gains options as the redeemed account, unless otherwise
specified, and confirms the purchase to you.
The Telephone Exchange and Redemption Privileges are available only in
states where shares of the New Fund may be sold, and may be modified or
discontinued at any time. See "Purchasing, selling and exchanging Fund shares"
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. See "Purchasing, selling
and exchanging Fund shares" in the Prospectus.
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 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.
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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.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for
his or her own willful defaults and, if reasonable care has been exercised in
the selection of officers, agents, employees or investment advisers, shall not
be liable for any neglect or wrongdoing of any such person. The Declaration of
Trust also provides that the Trust will indemnify its Trustees and officers
against liabilities and expenses incurred in connection with actual or
threatened litigation in which they may be involved because of their offices
with the Trust unless it is determined in the manner provided in the Declaration
of Trust that they have not acted in good faith in the reasonable belief that
their actions were in the best interests of the Trust. However, nothing in the
Declaration of Trust shall protect or indemnify a Trustee against any liability
for his or her willful misfeasance, bad faith, gross negligence or reckless
disregard of his or her duties.
PERFORMANCE INFORMATION
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:
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<PAGE>
P(1+T)/n/=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.
The average annual total return of the International Value Fund and the Emerging
Markets Fund for the period from inception to February 29, 2000 were 3.00% and
- -1.77%, respectively. The average annual total return of the International Value
Fund and the Emerging Markets Fund for the fiscal year ended December 31, 1999
were 29.35% and 65.82%, respectively.
TOTAL RETURN
Calculation of a Fund's total return is not subject to a standardized
formula. Total return performance for a specific period is calculated by first
taking an investment (assumed below to be $10,000) ("initial investment") in the
Fund's shares on the first day of the period and computing the "ending value" of
that investment at the end of the period. The total return percentage is then
determined by subtracting the initial investment from the ending value and
dividing the remainder by the initial investment and expressing the result as a
percentage. The calculation assumes that all income and capital gains dividends
paid by the Fund have been reinvested at net asset value on the reinvestment
dates during the period. Total return may also be shown as the increased dollar
value of the hypothetical investment over the period.
CUMULATIVE TOTAL RETURN
Cumulative total return represents the simple change in value of an
investment over a stated period and may be quoted as a percentage or as a dollar
amount. Total returns and cumulative total returns may be broken down into
their components of income and capital (including capital gains and changes in
share price) in order to illustrate the relationship between these factors and
their contributions to total return.
The Funds' performance figures will be based upon historical results and
will not represent future performance. Each Fund's shares are sold at net asset
value per share. Each Fund's returns and net asset value will fluctuate and
shares are redeemable at the then current net asset value, which may be more or
less than original cost. Factors affecting a Fund's performance include general
market conditions, operating expenses, and investment management. Any
additional fees charged by a dealer or other financial services firm will reduce
the returns described in this section.
COMPARISONS
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
38
<PAGE>
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
depository 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 depository 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.
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
39
<PAGE>
Index; Russell Mid Cap Value Index; Value Line Index; Morgan Stanley Capital
International EAFE(R) Index; Morgan Stanley Capital International World Index;
Morgan Stanley Capital International All Country World Index; and Salomon
Brothers 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, in the case of
U.S. Treasury obligations, backed by the full faith and credit of the U.S.
Treasury.
OTHER FUNDS 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 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.
40
<PAGE>
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 = the square root of E x\\i\\ - x\\m\\
----------------
n-1
where E = "the sum of,"
x\\i\\ = each individual return during the time period,
x\\m\\ = the average return over the time period, and
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.
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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
Arthur Andersen LLP, 225 Franklin Street, Boston, MA 02110, 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 acts as legal counsel for the Trust.
FINANCIAL STATEMENTS
Each Fund's fiscal year ends on December 31st of each year. Each Fund will
send annual and semi-annual reports to its shareholders; the financial
statements appearing in annual reports are audited by the Trust's independent
accountants. The Trust's financial statements for the Funds, including the
Portfolios of Investments, Statements of Assets and Liabilities, Statements of
Operations, Statements of Changes in Net Assets, Financial Highlights, Notes to
Financial Statements and the Report of Independent Public Accountants, all of
which are included in the 1999 Annual Report to Shareholders, are hereby
42
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incorporated by reference into this Statement of Additional Information. A copy
of the Annual Report to Shareholders must accompany this Statement of Additional
Information.
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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
A-1
<PAGE>
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.
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
A-2
<PAGE>
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.
D Obligation is in payment default.
MOODY'S
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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.
A-3
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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
A-4
<PAGE>
length of time. Such bonds lack outstanding investment characteristics and
in fact have speculative characteristics as well.
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.
A-5
<PAGE>
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.
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 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.
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.
THOMSON BANKWATCH
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A-6
<PAGE>
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.
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
A-7
<PAGE>
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.
A-8
<PAGE>
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.
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.
A-9
<PAGE>
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.
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.
A-10
<PAGE>
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.
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.
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
"DDD", "DD", or "D" categories.
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 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.
A-11
<PAGE>
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:
A-12
<PAGE>
AAA Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.
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.
A-13
<PAGE>
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.
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.
A-14
<PAGE>
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.
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.
A-15
<PAGE>
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.
A-16
<PAGE>
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.
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.
A-17
<PAGE>
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 would
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.
D A bank which is currently under performing 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.
A-18
<PAGE>
PART C: OTHER INFORMATION
Item 23. Exhibits:
Exhibits filed pursuant to Form N-1A:
(a) Articles of Incorporation
(1) Agreement and Declaration of Trust of the Registrant, dated July
25, 1996 (incorporated herein by reference to Initial Registration
Statement filed on July 26, 1996).
(2) Amendment to the Agreement and Declaration of Trust (incorporated
herein by reference to Pre-Effective Amendment No. 1 filed on
September 23, 1996)
(3) Amended and Restated Agreement and Declaration of Trust of the
Registrant, dated October 4, 1996, (incorporated herein by
reference to Pre-Effective Amendment No. 2 filed on October 18,
1996).
(b) By-Laws
(1) By-Laws of the Registrant (incorporated herein by reference to
Initial Registration Statement filed on July 26, 1996).
(c) Instruments Defining Rights of Security Holders
(1) By-Laws
See Section 2 and Section 7
(2) Declaration
See Article III - "Shares", Section 1, Section 2 and Section 6
(d) Investment Advisory Contracts
(1) Investment Advisory Agreement (incorporated herein by reference
to Post-Effective Amendment No. 3 to the Registration Statement
filed on March 1, 1999).
1
<PAGE>
(e) Underwriting Contracts
Not Applicable
(f) Bonus or Profit Sharing Contracts
Not Applicable
(g) Custodian Agreements
(1) Custodian Agreement, (incorporated herein by reference to Post-
Effective Amendment No. 3 to the Registration Statement filed on March 1,
1999)
(h) Other Material Contracts
(1) Administrative Agreement, (incorporated herein by reference to Post-
Effective Amendment No. 3 to the Registration Statement filed on March 1,
1999)
(i) Legal Opinions
(1) Opinion and Consent of Counsel, (incorporated herein by
reference to the 24f-2 Notice filed on February 24, 1997).
(j) Other Opinions
(1) Opinion and Consent of Independent Public Accountants, filed
herewith.
(k) Omitted Financial Statements.
Not Applicable.
(l) Initial Capital Agreements.
Not Applicable.
(m) Rule 12b-1 Plan.
Not Applicable.
(n) Financial Data Schedule.
Financial Data Schedules, filed herewith.
(o) Rule 18f-3 Plan.
Not Applicable.
(p) Code of Ethics
(1) Hansberger Institutional Series Amended Code of Ethics (filed herewith)
(2) Hansberger Global Investors Amended Code of Ethics (filed herewith)
Item 24. 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 25. Indemnification.
Article VIII of the Agreement and Restated Declaration of Trust filed as
Exhibit 1 to the Registration Statement is incorporated by reference to Pre-
Effective Amendment No. 2 filed on October 18, 1996. Insofar as indemnification
for liability arising under the Securities Act of 1933, as amended, may be
permitted to trustees, officers and controlling persons of the Registrant
pursuant to the Declaration of Trust or otherwise, the Registrant is aware that
in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Act and, therefore, is
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by trustees, officers or controlling persons of the Registrant
in connection with the successful defense of any act, suit or proceeding) is
asserted by such trustees, officers or controlling persons in connection with
the shares being registered, the Registrant will, unless in the opinion of its
counsel the matter had been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issues.
Item 26. Business and Other Connections of the 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, Suite
1300, Fort Lauderdale, Florida 33301. The Adviser is an investment adviser
registered under the Investment Advisers Act of 1940, as amended (the "Advisers
Act").
2
<PAGE>
<TABLE>
<CAPTION>
Name and Position with Name of Other Company Connection with Other
Investment Adviser Company
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Hansberger, Thomas Loren The Hansberger Global Fund PLC Director
Trustee and President
Hansberger Global Investors Ltd. Director
Hansberger Global Investors Inc. Chairman, CEO, President,
Director and Treasurer
Hansberger Global Investors Director
(Hong Kong) Limited
Hansberger Group, Inc. Director
- ---------------------------------------------------------------------------------------------------------
Jackson, J. Christopher Hansberger Global Board of Directors
Director Investors, Inc.
- ---------------------------------------------------------------------------------------------------------
Scott, Kimberley A. Hansberger Global Board of Directors
Director Investors, Inc.
- ---------------------------------------------------------------------------------------------------------
Cribiore, Alberto Hansberger Group, Inc. Board of Directors
Director
- ---------------------------------------------------------------------------------------------------------
Chapman, Max Carroll Jr. Hansberger Group, Inc. Board of Directors
Director
- ---------------------------------------------------------------------------------------------------------
Cumming, Virgil Howard Hansberger Group, Inc. Board of Directors
Director
- ---------------------------------------------------------------------------------------------------------
Teo, George Hansberger Group, Inc. Board of Directors
Director
- ---------------------------------------------------------------------------------------------------------
Bieck, Erik Erwin
Managing Director
- ---------------------------------------------------------------------------------------------------------
Scott, Kimberly Ann Hansberger Global Investors (HK) Director
SVP, Secretary, Chief Limited
Compliance Officer and
Chief Administrative The Hansberger Global Fund Director
Officer
Hansberger Global Investors Director
Limited
- ---------------------------------------------------------------------------------------------------------
Jackson, Jerald Christopher McCarthy, Crisanti & Maffei, Inc. General Counsel and
SVP, General Counsel, and Secretary
Assistant Secretary
MCM Group, Inc. General Counsel and
Secretary
- ---------------------------------------------------------------------------------------------------------
Freeman, Wesley Edmond
Managing Director,
Institutional
- ---------------------------------------------------------------------------------------------------------
Alzuru, Francisco
Managing Director of
Latin & South
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Item 27. Principal Underwriters.
None
Item 28. Location of Accounts and Records
Books or other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940 as amended, (the "1940 Act"), and the rules
promulgated thereunder, are maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b); (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
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) 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 29. Management Services.
None.
Item 30. Undertakings.
Not Applicable
3
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all of the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Post-Effective Amendment No. 4 to Registration Statement No. 333-8919 to be
signed on its behalf by the undersigned, thereunto duly authorized in the City
of Fort Lauderdale, and State of Florida on the 3rd day of May, 2000.
HANSBURGER INSTITUTIONAL SERIES
*
By:---------------------------------
Thomas L. Hansberger, President
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in the
capacity on the dates indicated.
* Trustee and President May 3, 2000
- ------------------------------
Thomas L. Hansberger
* Trustee and Vice President May 3, 2000
- ------------------------------
J. Christopher Jackson
* Trustee May 3, 2000
- ------------------------------
Kathryn B. McGrath
* Trustee May 3, 2000
- ------------------------------
Stuart B. Ross
* Trustee May 3, 2000
- ------------------------------
William F. Waters
* Chief Financial Officer May 3, 2000
- ------------------------------
Thomas A. Christensen
*By: /s/ J. Christopher Jackson
--------------------------
J. Christopher Jackson,
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Name Exhibit Page
- ---- ------- ----
Investment Advisory Agreement Ex-99.D
Global Custody Agreement Ex-99.G
Mutual Funds Service Agreement Ex-99.H
Hansberger Institutional Series Amended Code of Ethics Ex-99.Q(1)
Hansberger Global Investors Amended Code of Ethics Ex-99.Q(2)
Opinion and consent of Independent Public Accountants,
filed herewith. Ex-99.J
Financial Data Schedule for the Emerging Markets Fund,
filed herewith ExB27.1
Financial Data Schedule for the International Fund,
filed herewith. ExB27.2
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 17th day of October, 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 accounts as to which the Adviser exercises
investment discretion. 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>
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 monthly 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 month.
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 month as a
percentage of the total number of days in such month.
4. Expense Limitation. To the extent applicable, the Adviser's
compensation for any fiscal year of a Fund shall be reduced by the amount, if
any, by which each Fund's expense for such fiscal year exceeds the most
restrictive applicable expense limitation of any jurisdiction in which the
Fund's shares are qualified for offer and sale, as such limitations set forth in
the most recent notice thereof furnished by the Adviser to the Fund. For
purposes of this paragraph there shall be excluded from computation of each
Fund's expenses any amount borne directly or indirectly by the Fund which is
permitted to be excluded from the computation of such limitation by such statue
or regulatory authority. As of the end of a Fund's fiscal year if the expenses
of the Fund properly included in such calculation exceed the amount permitted
annually by the most restrictive applicable expense limitation, the Adviser
shall make a refund payment to the Fund, so that the total net expense for the
preceding year will not exceed such amount.
5. Expenses. In addition to the fee of the Adviser, each Fund shall
assume and pay any expenses for services rendered by a custodian for the
safekeeping of the Fund's securities or other property, for keeping its books of
account, for any other charges of the custodian and for calculating the net
asset value of the Fund as provided above. The Adviser shall not be required to
pay, and each Fund shall assume and pay, the charges and expenses of its
operations, including compensation of the trustees (other than those who are
interested persons of the Adviser), charges and expenses of independent
accountants, of legal counsel and of any transfer or dividend disbursing agent,
costs of acquiring and disposing of portfolio securities, cost of listing shares
of the New York Stock Exchange or other exchange interest (if any) on
obligations incurred by the Fund, membership dues in the Investment Company
Institute or any similar organization, costs of reports and notices to
shareholders, costs of registering shares of the Fund under the federal
securities laws, miscellaneous expenses and all taxes and fees to federal, state
or other governmental agencies on account of the registration of securities
issued by the Fund, filing of corporate documents or otherwise. Each Fund shall
not pay or incur any obligation for any management or administrative expenses
for which the Fund intends to seek reimbursement from the Adviser without first
obtaining the written approval of the Adviser. The Adviser shall arrange, if
desired by a Fund, for officers or employees of the Adviser to serve, without
compensation from the Fund, as trustees, officers or agents of the Fund if duly
elected or appointed to such positions and subject to their individual consent
and to any limitations imposed by law.
6. 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.
7. 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.
8. 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.
9. 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.
10. 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
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
<PAGE>
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.
11. 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.
12. Duration and Termination. This Agreement, unless sooner terminated
as provided herein, shall continue until October 17, 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 60 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.
13. 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.
14. Independent Contractor. The Adviser shall be deemed to be an
independent contractor under this Agreement and, unless otherwise expressly
provided or authorized, shall have no authority to act for or represent the Fund
in any way or otherwise be deemed as agent to the Fund.
15. Governing Law. All questions concerning the validity, meaning and
effect of this Agreement shall be determined in accordance with the laws
(without giving effect to the conflict-of-law principles thereof) of the
Commonwealth of Massachusetts applicable to contracts made and to be performed
in that state.
16. 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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of this 17th day of October, 1996.
HANSBERGER GLOBAL INVESTORS, INC. HANSBERGER INSTITUTIONAL SERIES
By /s/ Thomas L. Hansberger By /s/ J. Christopher Jackson
----------------------------- -------------------------------
Name Thomas L. Hansberger Name: J. Christopher Jackson
--------------------------- -----------------------------
Title: Chairman and Chief Title: Vice-President
------------------------- ----------------------------
Executive Officer
-------------------------
<PAGE>
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%
<PAGE>
[LOGO OF CHASE
APPEARS HERE]
GLOBAL CUSTODY AGREEMENT
This AGREEMENT is effective September 20th, 1996, and is between
THE CHASE MANHATTAN BANK ("Bank") and Hansberger Institutional Series
("Customer").
1. Customer Accounts.
Bank agrees to establish and maintain the following accounts ("Accounts"):
(a) A custody account in the name of Customer ("Custody Account") for any
and all stocks, shares, bonds, debentures, notes, mortgages or other obligations
for the payment of money, bullion, coin and any certificates, receipts, warrants
or other instruments representing rights to receive, purchase or subscribe for
the same or evidencing or representing any other rights or interests therein and
other similar property whether certificated or uncertificated as may be received
by Bank or its Subcustodian (as defined in Section 3) for the account of
Customer ("Securities"); and
(b) A deposit account in the name of Customer ("Deposit Account") for any
and all cash in any currency received by Bank or its Subcustodian for the
account of Customer, which cash shall not be subject to withdrawal by draft or
check.
Customer warrants its authority to: 1) deposit the cash and Securities
("Assets") received in the Accounts and 2) give Instructions (as defined in
Section 11) concerning the Accounts. Bank may deliver securities of the same
class in place of those deposited in the Custody Account.
Upon written agreement between Bank and Customer, additional Accounts may
be established and separately accounted for as additional Accounts hereunder.
2. Maintenance of Securities and Cash at Bank and Subcustodian Locations.
Unless Instructions specifically require another location acceptable
to Bank:
(a) Securities shall be held in the country or other jurisdiction in which
the principal trading market for such Securities is located, where such
Securities are to be presented for payment or where such Securities are
acquired; and
(b) Cash shall be credited to an account in a country or other
jurisdiction in which such cash may be legally deposited or is the legal
currency for the payment of public or private debts.
<PAGE>
Cash may be held pursuant to Instructions in either interest or non-
interest bearing accounts as may be available for the particular currency. To
the extent Instructions are issued and Bank can comply with such Instructions,
Bank is authorized to maintain cash balances on deposit for Customer with itself
or one of its "Affiliates" at such reasonable rates of interest as may from time
to time be paid on such accounts, or in non-interest bearing accounts as
Customer may direct, if acceptable to Bank. For purposes hereof, the term
"Affiliate" shall mean an entity controlling, controlled by, or under common
control with, Bank.
If Customer wishes to have any of its Assets held in the custody of an
institution other than the established Subcustodians as defined in Section 3 (or
their securities depositories), such arrangement must be authorized by a written
agreement, signed by Bank and Customer.
3. Subcustodians and Securities Depositories.
Bank may act hereunder through the subcustodians listed in Schedule A
hereof with which Bank has entered into subcustodial agreements
("Subcustodians"). Customer authorizes Bank to hold Assets in the Accounts in
accounts which Bank has established with one or more of its branches or
Subcustodians. Bank and Subcustodians are authorized to hold any of the
Securities in their account with any securities depository in which they
participate.
Bank reserves the right to add new, replace or remove Subcustodians.
Customer shall be given reasonable notice by Bank of any amendment to
Schedule A. Upon request by Customer, Bank shall identify the name, address and
principal place of business of any Subcustodian of Customer's Assets and the
name and address of the governmental agency or other regulatory authority that
supervises or regulates such Subcustodian.
4. Use of Subcustodian.
(a) Bank shall identify the Assets on its books as belonging to Customer.
(b) A Subcustodian shall hold such Assets together with assets belonging
to other customers of Bank in accounts identified on such Subcustodian's books
as custody accounts for the exclusive benefit of customers of Bank.
(c) Any Assets in the Accounts held by a Subcustodian shall be subject
only to the instructions of Bank or its agent. Any Securities held in a
securities depository for the account of a Subcustodian shall be subject only to
the instructions of such Subcustodian.
(d) Any agreement Bank enters into with a Subcustodian for holding its
customer's assets shall provide that such assets shall not be subject to any
right, charge, security interest, lien or claim of any kind in favor of such
Subcustodian except for safe custody or administration, and that the beneficial
ownership of such assets shall be freely transferable without the payment of
money or value other than for safe custody or administration. The foregoing
shall not apply to the extent of any special agreement or arrangement made by
Customer with any particular Subcustodian.
5. Deposit Account Transactions.
(a) Bank or its Subcustodians shall make payments from the Deposit Account
upon receipt of Instructions which include all information required by Bank.
2
<PAGE>
(b) In the event that any payment to be made under this Section 5 exceeds
the funds available in the Deposit Account, Bank, in its discretion, may advance
Customer such excess amount which shall be deemed a loan payable on demand,
bearing interest at the rate customarily charged by Bank on similar loans.
(c) If Bank credits the Deposit Account on a payable date, or at any time
prior to actual collection and reconciliation to the Deposit Account, with
interest, dividends, redemptions or any other amount due, Customer shall
promptly return any such amount upon oral or written notification: (i) that such
amount has not been received in the ordinary course of business or (ii) that
such amount was incorrectly credited. If Customer does not promptly return any
amount upon such notification, Bank shall be entitled, upon oral or written
notification to Customer, to reverse such credit by debiting the Deposit Account
for the amount previously credited. Bank or its Subcustodian shall have no duty
or obligation to institute legal proceedings, file a claim or a proof of claim
in any insolvency proceeding or take any other action with respect to the
collection of such amount, but may act for Customer upon Instructions after
consultation with Customer.
6. Custody Account Transactions.
(a) Securities shall be transferred, exchanged or delivered by Bank or
its Subcustodian upon receipt by Bank of Instructions which include all
information required by Bank. Settlement and payment for Securities received
for, and delivery of Securities out of, the Custody Account may be made in
accordance with the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivery of Securities to a
purchaser, dealer or their agents against a receipt with the expectation of
receiving later payment and free delivery. Delivery of Securities out of the
Custody Account may also be made in any manner specifically required by
Instructions acceptable to Bank.
(b) Bank, in its discretion, may credit or debit the Accounts on a
contractual settlement date with cash or Securities with respect to any sale,
exchange or purchase of Securities. Otherwise, such transactions shall be
credited or debited to the Accounts on the date cash or Securities are actually
received by Bank and reconciled to the Account.
(i) Bank may reverse credits or debits made to the Accounts in its
discretion if the related transaction fails to settle within a reasonable
period, determined by Bank in its discretion, after the contractual
settlement date for the related transaction.
(ii) If any Securities delivered pursuant to this Section 6 are
returned by the recipient thereof, Bank may reverse the credits and debits
of the particular transaction at any time.
7. Actions of Bank.
Bank shall follow Instructions received regarding assets held in the
Accounts. However, until it receives Instructions to the contrary, Bank shall:
(i) Present for payment any Securities which are called, redeemed
or retired or otherwise become payable and all coupons and other income
items which call for payment upon presentation, to the extent that Bank or
Subcustodian is actually aware of such opportunities.
(ii) Execute in the name of Customer such ownership and other
certificates as may be required to obtain payments in respect of
Securities.
3
<PAGE>
(iii) Exchange interim receipts or temporary Securities for
definitive Securities.
(iv) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, Affiliates of Bank or any
Subcustodian.
(v) Issue statements to Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.
Bank shall send Customer an advice or notification of any transfers of
Assets to or from the Accounts. Such statements, advices or notifications shall
indicate the identity of the entity having custody of the Assets. Unless
Customer sends Bank a written exception or objection to any Bank statement
within sixty (60) days of receipt, Customer shall be deemed to have approved
such statement. In such event, or where Customer has otherwise approved any such
statement, Bank shall, to the extent permitted by law, be released, relieved and
discharged with respect to all matters set forth in such statement or reasonably
implied therefrom as though it had been settled by the decree of a court of
competent jurisdiction in an action where Customer and all persons having or
claiming an interest in Customer or Customer's Accounts were parties.
All collections of funds or other property paid or distributed in respect
of Securities in the Custody Account shall be made at the risk of Customer.
Bank shall have no liability for any loss occasioned by delay in the actual
receipt of notice by Bank or by its Subcustodians of any payment, redemption or
other transaction regarding Securities in the Custody Account in respect of
which Bank has agreed to take any action hereunder.
8. Corporate Actions; Proxies; Tax Reclaims.
(a) Corporate Actions. Whenever Bank receives information concerning the
-----------------
Securities which requires discretionary action by the beneficial owner of the
Securities (other than a proxy), such as subscription rights, bonus issues,
stock repurchase plans and rights offerings, or legal notices or other material
intended to be transmitted to securities holders ("Corporate Actions"), Bank
shall give Customer notice of such Corporate Actions to the extent that Bank's
central corporate actions department has actual knowledge of a Corporate Action
in time to notify its customers.
When a rights entitlement or a fractional interest resulting from a rights
issue, stock dividend, stock split or similar Corporate Action is received which
bears an expiration date, Bank shall endeavor to obtain Instructions from
Customer or its Authorized Person, but if Instructions are not received in time
for Bank to take timely action, or actual notice of such Corporate Action was
received too late to seek Instructions, Bank is authorized to sell such rights
entitlement or fractional interest and to credit the Deposit Account with the
proceeds or take any other action it deems, in good faith, to be appropriate in
which case it shall be held harmless for any such action.
(b) Proxy Voting. Bank shall provide proxy voting services, if elected by
------------
Customer, in accordance with the terms of the proxy voting services rider
hereto. Proxy voting services may be provided by Bank or, in whole or in part,
by one or more third parties appointed by Bank (which may be Affiliates of
Bank).
(c) Tax Reclaims.
------------
(i) Subject to the provisions hereof, Bank shall apply for a
reduction of withholding tax and any refund of any tax paid or tax credits
which apply in each applicable market in respect of
4
<PAGE>
income payments on Securities for the benefit of Customer which Bank
believes may be available to such Customer.
(ii) The provision of tax reclaim services by Bank is conditional
upon Bank receiving from the beneficial owner of Securities (A) a
declaration of its identity and place of residence and (B) certain other
documentation (pro forma copies of which are available from Bank). Customer
acknowledges that, if Bank does not receive such declarations,
documentation and information, additional United Kingdom taxation shall be
deducted from all income received in respect of Securities issued outside
the United Kingdom and that U.S. non-resident alien tax or U.S. backup
withholding tax shall be deducted from U.S. source income. Customer shall
provide to Bank such documentation and information as it may require in
connection with taxation, and warrants that, when given, this information
shall be true and correct in every respect, not misleading in any way, and
contain all material information. Customer undertakes to notify Bank
immediately if any such information requires updating or amendment.
(iii) Bank shall not be liable to Customer or any third party for
any tax, fines or penalties payable by Bank or Customer, and shall be
indemnified accordingly, whether these result from the inaccurate
completion of documents by Customer or any third party, or as a result of
the provision to Bank or any third party of inaccurate or misleading
information or the withholding of material information by Customer or any
other third party, or as a result of any delay of any revenue authority or
any other matter beyond the control of Bank.
(iv) Customer confirms that Bank is authorized to deduct from any
cash received or credited to the Deposit Account any taxes or levies
required by any revenue or governmental authority for whatever reason in
respect of the Securities or Cash Accounts.
(v) Bank shall perform tax reclaim services only with respect to
taxation levied by the revenue authorities of the countries notified to
Customer from time to time and Bank may, by notification in writing, at its
absolute discretion, supplement or amend the markets in which the tax
reclaim services are offered. Other than as expressly provided in this
sub-clause, Bank shall have no responsibility with regard to Customer's tax
position or status in any jurisdiction.
(vi) Customer confirms that Bank is authorized to disclose any
information requested by any revenue authority or any governmental body in
relation to Customer or the Securities and/or Cash held for Customer.
(vii) Tax reclaim services may be provided by Bank or, in whole or
in part, by one or more third parties appointed by Bank (which may be
Affiliates of Bank); provided that Bank shall be liable for the performance
of any such third party to the same extent as Bank would have been if it
performed such services itself.
9. Nominees.
Securities which are ordinarily held in registered form may be registered
in a nominee name of Bank, Subcustodian or securities depository, as the case
may be. Bank may without notice to Customer cause any such Securities to cease
to be registered in the name of any such nominee and to be registered in the
name of Customer. In the event that any Securities registered in a nominee name
are called for partial redemption by the issuer, Bank may allot the called
portion to the respective beneficial holders of such class of security in any
manner Bank deems to be fair and equitable. Customer shall hold Bank,
Subcustodians,
5
<PAGE>
and their respective nominees harmless from any liability arising directly or
indirectly from their status as a mere record holder of Securities in the
Custody Account.
10. Authorized Persons.
As used herein, the term "Authorized Person" means employees or agents
including investment managers as have been designated by written notice from
Customer or its designated agent to act on behalf of Customer hereunder. Such
persons shall continue to be Authorized Persons until such time as Bank receives
Instructions from Customer or its designated agent that any such employee or
agent is no longer an Authorized Person.
11. Instructions.
The term "Instructions" means instructions of any Authorized Person
received by Bank, via telephone, telex, facsimile transmission, bank wire or
other teleprocess or electronic instruction or trade information system
acceptable to Bank which Bank believes in good faith to have been given by
Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which Bank may specify. Unless
otherwise expressly provided, all Instructions shall continue in full force and
effect until canceled or superseded.
Any Instructions delivered to Bank by telephone shall promptly thereafter
be confirmed in writing by an Authorized Person (which confirmation may bear the
facsimile signature of such Person), but Customer shall hold Bank harmless for
the failure of an Authorized Person to send such confirmation in writing, the
failure of such confirmation to conform to the telephone instructions received
or Bank's failure to produce such confirmation at any subsequent time. Bank may
electronically record any Instructions given by telephone, and any other
telephone discussions with respect to the Custody Account. Customer shall be
responsible for safeguarding any testkeys, identification codes or other
security devices which Bank shall make available to Customer or its Authorized
Persons.
12. Standard of Care; Liabilities.
(a) Bank shall be responsible for the performance of only such duties as
are set forth herein or expressly contained in Instructions which are consistent
with the provisions hereof as follows:
(i) Bank shall use reasonable care with respect to its obligations
hereunder and the safekeeping of Assets. Bank shall be liable to Customer
for any loss which shall occur as the result of the failure of a
Subcustodian to exercise reasonable care with respect to the safekeeping of
such Assets to the same extent that Bank would be liable to Customer if
Bank were holding such Assets in New York. In the event of any loss to
Customer by reason of the failure of Bank or its Subcustodian to utilize
reasonable care, Bank shall be liable to Customer only to the extent of
Customer's direct damages, to be determined based on the market value of
the property which is the subject of the loss at the date of discovery of
such loss and without reference to any special conditions or circumstances.
Bank shall have no liability whatsoever for any consequential, special,
indirect or speculative loss or damages (including, but not limited to,
lost profits) suffered by Customer in connection with the transactions
contemplated hereby and the relationship established hereby even if Bank
has been advised as to the possibility of the same and regardless of the
form of the action. Bank shall not be responsible for the insolvency of
any Subcustodian which is not a branch or Affiliate of Bank.
6
<PAGE>
(ii) Bank shall not be responsible for any act, omission, default
or the solvency of any broker or agent which it or a Subcustodian appoints
unless such appointment was made negligently or in bad faith.
(iii) Bank shall be indemnified by, and without liability to
Customer for any action taken or omitted by Bank whether pursuant to
Instructions or otherwise within the scope hereof if such act or omission
was in good faith, without negligence. In performing its obligations
hereunder, Bank may rely on the genuineness of any document which it
believes in good faith to have been validly executed.
(iv) Customer agrees to pay for and hold Bank harmless from any
liability or loss resulting from the imposition or assessment of any taxes
or other governmental charges, and any related expenses with respect to
income from or Assets in the Accounts.
(v) Bank shall be entitled to rely, and may act, upon the advice
of counsel (who may be counsel for Customer) on all matters and shall be
without liability for any action reasonably taken or omitted pursuant to
such advice.
(vi) Bank need not maintain any insurance for the benefit of
Customer.
(vii) Without limiting the foregoing, Bank shall not be liable for
any loss which results from: 1) the general risk of investing, or 2)
investing or holding Assets in a particular country including, but not
limited to, losses resulting from malfunction, interruption of or error in
the transmission of information caused by any machines or system or
interruption of communication facilities, abnormal operating conditions,
nationalization, expropriation or other governmental actions; regulation of
the banking or securities industry; currency restrictions, devaluations or
fluctuations; and market conditions which prevent the orderly execution of
securities transactions or affect the value of Assets.
(viii) Neither party shall be liable to the other for any loss due to
forces beyond their control including, but not limited to strikes or work
stoppages, acts of war (whether declared or undeclared) or terrorism,
insurrection, revolution, nuclear fusion, fission or radiation, or acts of
God.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that Bank shall have no duty or
responsibility to:
(i) question Instructions or make any suggestions to Customer or
an Authorized Person regarding such Instructions;
(ii) supervise or make recommendations with respect to investments
or the retention of Securities;
(iii) advise Customer or an Authorized Person regarding any default
in the payment of principal or income of any security other than as
provided in Section 5(c) hereof;
(iv) evaluate or report to Customer or an Authorized Person
regarding the financial condition of any broker, agent or other party to
which Securities are delivered or payments are made pursuant hereto; and
7
<PAGE>
(v) review or reconcile trade confirmations received from brokers.
Customer or its Authorized Persons (as defined in Section 10) issuing
Instructions shall bear any responsibility to review such confirmations
against Instructions issued to and statements issued by Bank.
(c) Customer authorizes Bank to act hereunder notwithstanding that Bank or
any of its divisions or Affiliates may have a material interest in a
transaction, or circumstances are such that Bank may have a potential conflict
of duty or interest including the fact that Bank or any of its Affiliates may
provide brokerage services to other customers, act as financial advisor to the
issuer of Securities, act as a lender to the issuer of Securities, act in the
same transaction as agent for more than one customer, have a material interest
in the issue of Securities, or earn profits from any of the activities listed
herein.
13. Fees and Expenses.
Customer agrees to pay Bank for its services hereunder the fees set forth
in Schedule B hereto or such other amounts as may be agreed upon in writing,
together with Bank's reasonable out-of-pocket or incidental expenses, including,
but not limited to, legal fees. Bank shall have a lien on and is authorized to
charge any Accounts of Customer for any amount owing to Bank under any provision
hereof.
14. Miscellaneous.
(a) Foreign Exchange Transactions. To facilitate the administration of
------------------------------
Customer's trading and investment activity, Bank is authorized to enter into
spot or forward foreign exchange contracts with Customer or an Authorized Person
for Customer and may also provide foreign exchange through its subsidiaries,
Affiliates or Subcustodians. Instructions, including standing instructions, may
be issued with respect to such contracts but Bank may establish rules or
limitations concerning any foreign exchange facility made available. In all
cases where Bank, its subsidiaries, Affiliates or Subcustodians enter into a
foreign exchange contract related to Accounts, the terms and conditions of the
then current foreign exchange contract of Bank, its subsidiary, Affiliate or
Subcustodian and, to the extent not inconsistent, this Agreement shall apply to
such transaction.
(b) Certification of Residency, etc. Customer certifies that it is a
--------------------------------
resident of the United States and agrees to notify Bank of any changes in
residency. Bank may rely upon this certification or the certification of such
other facts as may be required to administer Bank's obligations hereunder.
Customer shall indemnify Bank against all losses, liability, claims or demands
arising directly or indirectly from any such certifications.
(c) Access to Records. Bank shall allow Customer's independent public
------------------
accountant reasonable access to the records of Bank relating to the Assets as is
required in connection with their examination of books and records pertaining to
Customer's affairs. Subject to restrictions under applicable law, Bank shall
also obtain an undertaking to permit Customer's independent public accountants
reasonable access to the records of any Subcustodian which has physical
possession of any Assets as may be required in connection with the examination
of Customer's books and records.
(d) Governing Law; Successors and Assigns, Captions THIS AGREEMENT SHALL
-----------------------------------------------
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN NEW YORK and shall not be assignable by either party, but
shall bind the successors in interest of Customer and Bank. The captions given
to the sections and subsections of this Agreement are for convenience of
reference only and are not to be used to interpret this Agreement.
8
<PAGE>
(e) Entire Agreement; Applicable Riders. Customer represents that the
------------------------------------
Assets deposited in the Accounts are (Check one):
Employee Benefit Plan or other assets subject to the Employee
---- Retirement Income Security Act of 1974, as amended ("ERISA");
X Mutual Fund assets subject to certain Securities and Exchange
---- Commission ("SEC") rules and regulations;
Neither of the above.
----
This Agreement consists exclusively of this document together with
Schedules A and B, Exhibits I - _______ and the following Rider(s) [Check
applicable rider(s)]:
ERISA
----
X MUTUAL FUND
----
X PROXY VOTING
----
SPECIAL TERMS AND CONDITIONS
----
There are no other provisions hereof and this Agreement supersedes any
other agreements, whether written or oral, between the parties. Any amendment
hereto must be in writing, executed by both parties.
(f) Severability. In the event that one or more provisions hereof are held
-------------
invalid, illegal or unenforceable in any respect on the basis of any particular
circumstances or in any jurisdiction, the validity, legality and enforceability
of such provision or provisions under other circumstances or in other
jurisdictions and of the remaining provisions shall not in any way be affected
or impaired.
(g) Waiver. Except as otherwise provided herein, no failure or delay on
-------
the part of either party in exercising any power or right hereunder operates as
a waiver, nor does any single or partial exercise of any power or right preclude
any other or further exercise, or the exercise of any other power or right. No
waiver by a party of any provision hereof, or waiver of any breach or default,
is effective unless in writing and signed by the party against whom the waiver
is to be enforced.
(h) Representations and Warranties. (i) Customer hereby represents and
------------------------------
warrants to Bank that: (A) it has full authority and power to deposit and
control the Securities and cash deposited in the Accounts; (B) it has all
necessary authority to use Bank as its custodian; (C) this Agreement is its
legal, valid and binding obligation, enforceable in accordance with its terms;
(D) it shall have full authority and power to borrow moneys and enter into
foreign exchange transactions; and (E) it has not relied on any oral or written
representation made by Bank or any person on its behalf, and acknowledges that
this Agreement sets out to the fullest extent the duties of Bank. (ii) Bank
hereby represents and warrants to Customer that: (A) it has the power and
authority to perform its obligations hereunder, (B) this Agreement constitutes a
legal, valid and binding obligation on it; enforceable in accordance with its
terms; and (C) that it has taken all necessary action to authorize the execution
and delivery hereof.
(i) Notices. All notices hereunder shall be effective when actually
--------
received. Any notices or other communications which may be required hereunder
are to be sent to the parties at the following addresses or such other addresses
as may subsequently be given to the other party in writing: (a) Bank: The
9
<PAGE>
Chase Manhattan Bank, 4 Chase MetroTech Center, Brooklyn, NY 11245, Attention:
Global Custody Division; and (b) Customer Hansberger Institutional Series, 515
East Las Olas Blvd, Suite 1300, Ft. Lauderdale, FL, 33301 Attn: Kimberly Scott,
Secretary
(j) Termination. This Agreement may be terminated by Customer or Bank by
------------
giving sixty (60) days written notice to the other, provided that such notice to
Bank shall specify the names of the persons to whom Bank shall deliver the
Assets in the Accounts. If notice of termination is given by Bank, Customer
shall, within sixty (60) days following receipt of the notice, deliver to Bank
Instructions specifying the names of the persons to whom Bank shall deliver the
Assets. In either case Bank shall deliver the Assets to the persons so
specified, after deducting any amounts which Bank determines in good faith to be
owed to it under Section 13. If within sixty (60) days following receipt of a
notice of termination by Bank, Bank does not receive Instructions from Customer
specifying the names of the persons to whom Bank shall deliver the Assets, Bank,
at its election, may deliver the Assets to a bank or trust company doing
business in the State of New York to be held and disposed of pursuant to the
provisions hereof, or to Authorized Persons, or may continue to hold the Assets
until Instructions are provided to Bank.
(k) Money Laundering. Customer warrants and undertakes to Bank for itself
----------------
and its agents that all Customer's customers are properly identified in
accordance with U.S. Money Laundering Regulations as in effect from time to
time.
(l) Imputation of certain information. Bank shall not be held responsible
---------------------------------
for and shall not be required to have regard to information held by any person
by imputation or information of which Bank is not aware by virtue of a 'Chinese
Wall' arrangement. If Bank becomes aware of confidential information which in
good faith it feels inhibits it from effecting a transaction hereunder Bank may
refrain from effecting it.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first-above written.
CUSTOMER
Hansberger Institutional Series
By: /s/ Kimberly Scott
---------------------------------
Title: Secretary
Date: September 20, 1996
THE CHASE MANHATTAN BANK
By: /s/ Lenore Vanden Handel
----------------------------------
Title: Vice President
Date: September 24, 1996
78111
10
<PAGE>
STATE OF FLORIDA )
: ss.
COUNTY OF BROWARD)
On this twentieth day of September , 1996, before me personally came
Kimberly Scott, to me known, who being by me duly sworn, did depose and say that
he/she resides in Ft. Lauderdale, FL at 2743 N.E. 14th Street, that he/she is
Secretary of Hansberger Institutional Series, the entity described in and which
executed the foregoing instrument; that he/she knows the seal of said entity,
that the seal affixed to said instrument is such seal, that it was so affixed by
order of said entity, and that he/she signed his/her name thereto by like
order.
/s/ Sandra L. Miller
-------------------------------
Sworn to before me this 20th
day of September 1996.
- -----------------------------------
Notary
Sandra L. Miller
[LOGO] My Commission #CC525896 Expires
February 6, 2000
Bonded Thru Troy Fain Insurance, Inc.
<PAGE>
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
On this day of , 199 ,
before me personally came , to me known, who being by me
duly sworn, did depose and say that he/she resides in
at ; that
he/she is a Vice President of THE CHASE MANHATTAN BANK, the corporation
described in and which executed the foregoing instrument; that he/she knows the
seal of said corporation, that the seal affixed to said instrument is such
corporate seal, that it was so affixed by order of the Board of Directors of
said corporation, and that he/she signed his/her name thereto by like order.
-------------------------------
Sworn to before me this ______________
day of ______________, 199_.
- -----------------------------------
Notary
<PAGE>
Mutual Fund Rider to Global Custody Agreement
Between The Chase Manhattan Bank and
Hansberger Institutional Series
effective September 20, 1996
Customer represents that the Assets being placed in Bank's custody are
subject to the Investment Company Act of 1940 (the Act), as the same may be
amended from time to time.
Except to the extent that Bank has specifically agreed to comply with
a condition of a rule, regulation, interpretation promulgated by or under the
authority of the SEC or the Exemptive Order applicable to accounts of this
nature issued to Bank (1940 Act, Release No. 12053, November 20, 1981), as
amended, or unless Bank has otherwise specifically agreed, Customer shall be
solely responsible to assure that the maintenance of Assets hereunder complies
with such rules, regulations, interpretations or exemptive order promulgated by
or under the authority of the Securities Exchange Commission.
The following modifications are made to the Agreement:
Section 3. Subcustodians and Securities Depositories.
------------------------------------------
Add the following language to the end of Section 3:
The terms Subcustodian and securities depositories as used herein
shall mean a branch of a qualified U.S. bank, an eligible foreign
custodian or an eligible foreign securities depository, which are
further defined as follows:
(a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined
in Rule 17f-5 under the Investment Company Act of 1940;
(b) "eligible foreign custodian" shall mean (i) a banking institution
or trust company incorporated or organized under the laws of a country
other than the United States that is regulated as such by that
country's government or an agency thereof and that has shareholders'
equity in excess of $200 million in U.S. currency (or a foreign
currency equivalent thereof), (ii) a majority owned direct or indirect
subsidiary of a qualified U.S. bank or bank holding company that is
incorporated or organized under the laws of a country other than the
United States and that has shareholders' equity in excess of $100
million in U.S. currency (or a foreign currency equivalent thereof)
(iii) a banking institution or trust company incorporated or organized
under the laws of a country other than the United States or a majority
owned direct or indirect subsidiary of a qualified U.S. bank or bank
holding company that is incorporated or organized under the laws of a
country other than the United States which has such other
qualifications as shall be specified in Instructions and approved by
Bank; or (iv) any other entity that shall have been so qualified by
exemptive order, rule or other appropriate action of the SEC; and
(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the
laws of a country other than the United States, which operates (i) the
central system for handling securities or equivalent book-entries in
that country, or (ii) a transnational system for the central handling
of securities or equivalent book-entries.
<PAGE>
Customer represents that its Board of Directors has approved each of the
Subcustodians listed in Schedule A hereto and the terms of the subcustody
agreements between Bank and each Subcustodian, which are attached as Exhibits I
through _____ of Schedule A, and further represents that its Board has
determined that the use of each Subcustodian and the terms of each subcustody
agreement are consistent with the best interests of the Fund(s) and its (their)
shareholders. Bank shall supply Customer with any amendment to Schedule A for
approval. Customer has supplied or shall supply Bank with certified copies of
its Board of Directors resolution(s) with respect to the foregoing prior to
placing Assets with any Subcustodian so approved.
Section 11. Instructions.
-------------
Add the following language to the end of Section 11:
Deposit Account Payments and Custody Account Transactions made pursuant to
Section 5 and 6 hereof may be made only for the purposes listed below.
Instructions must specify the purpose for which any transaction is to be
made and Customer shall be solely responsible to assure that Instructions
are in accord with any limitations or restrictions applicable to Customer
by law or as may be set forth in its prospectus.
(a) In connection with the purchase or sale of Securities at prices as
confirmed by Instructions;
(b) When Securities are called, redeemed or retired, or otherwise become
payable;
(c) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment;
(d) Upon conversion of Securities pursuant to their terms into other
securities;
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities;
(f) For the payment of interest, taxes, management or supervisory fees,
distributions or operating expenses;
(g) In connection with any borrowings by Customer requiring a pledge of
Securities, but only against receipt of amounts borrowed;
(h) In connection with any loans, but only against receipt of adequate
collateral as specified in Instructions which shall reflect any
restrictions applicable to Customer;
(i) For the purpose of redeeming shares of the capital stock of Customer
and the delivery to, or the crediting to the account of, Bank, its
Subcustodian or Customer's transfer agent, such shares to be purchased or
redeemed;
(j) For the purpose of redeeming in kind shares of Customer against
delivery to Bank, its Subcustodian or Customer's transfer agent of such
shares to be so redeemed;
(k) For delivery in accordance with the provisions of any agreement among
Customer, Bank and a broker-dealer registered under the Securities Exchange
Act of 1934 and a member of The National Association of Securities Dealers,
Inc., relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange, or of any
similar organ-
2
<PAGE>
ization or organizations, regarding escrow or other arrangements in
connection with transactions by Customer;
(l) For release of Securities to designated brokers under covered call
options, provided, however, that such Securities shall be released only
upon payment to Bank of monies for the premium due and a receipt for the
Securities which are to be held in escrow. Upon exercise of the option, or
at expiration, Bank shall receive from brokers the Securities previously
deposited. Bank shall act strictly in accordance with Instructions in the
delivery of Securities to be held in escrow and shall have no
responsibility or liability for any such Securities which are not returned
promptly when due other than to make proper request for such return;
(m) For spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related
transactions;
(n) For other proper purposes as may be specified in Instructions issued
by an officer of Customer which shall include a statement of the purpose
for which the delivery or payment is to be made, the amount of the payment
or specific Securities to be delivered, the name of the person or persons
to whom delivery or payment is to be made, and a certification that the
purpose is a proper purpose under the instruments governing Customer; and
(o) Upon the termination hereof as set forth in Section 14(j).
Section 12. Standard of Care; Liabilities.
------------------------------
Add the following at the end of Section as 12:
(d) Bank hereby warrants to Customer that in its opinion, after due
inquiry, the established procedures to be followed by each of its branches,
each branch of a qualified U.S. bank, each eligible foreign custodian and
each eligible foreign securities depository holding Customer's Securities
pursuant hereto afford protection for such Securities at least equal to
that afforded by Bank's established procedures with respect to similar
securities held by Bank and its securities depositories in New York.
Section 14. Access to Records.
------------------
Add the following language to the end of Section 14(c):
-------------------------------------------------------
Upon reasonable request from Customer, Bank shall furnish Customer such
reports (or portions thereof) of Bank's system of internal accounting
controls applicable to Bank's duties hereunder. Bank shall endeavor to
obtain and furnish Customer with such similar reports as it may reasonably
request with respect to each Subcustodian and securities depository holding
Assets.
3
<PAGE>
GLOBAL PROXY SERVICE RIDER
To Global Custody Agreement
Between
THE CHASE MANHATTAN BANK
AND
Hansberger Institutional Series (the "Customer")
dated September 20, 1996.
1. Global Proxy Services (the "Services") shall be provided for the countries
listed in the procedures and guidelines ("Procedures") furnished to
Customer, as the same may be amended by Bank from time to time on prior
notice to Customer. The Procedures are incorporated by reference herein
and form a part of this Rider.
2. The Services shall consist of those elements as set forth in the
Procedures, and shall include (a) notifications ("Notifications") by Bank
to Customer of the dates of pending shareholder meetings, resolutions to be
voted upon and the return dates as may be received by Bank or provided to
Bank by its Subcustodians or third parties, and (b) voting by Bank of
proxies based on Customer Directions. Original proxy materials or copies
thereof shall not be provided. Notifications shall generally be in English
and, where necessary, shall be summarized and translated from such non-
English materials as have been made available to Bank or its Subcustodian.
In this respect Bank's only obligation is to provide information from
sources it believes to be reliable and/or to provide materials summarized
and/or translated in good faith. Bank reserves the right to provide
Notifications, or parts thereof, in the language received. Upon reasonable
advance request by Customer, backup information relative to Notifications,
such as annual reports, explanatory material concerning resolutions,
management recommendations or other material relevant to the exercise of
proxy voting rights shall be provided as available, but without
translation.
3. While Bank shall attempt to provide accurate and complete Notifications,
whether or not translated, Bank shall not be liable for any losses or other
consequences that may result from reliance by Customer upon Notifications
where Bank prepared the same in good faith.
4. Notwithstanding the fact that Bank may act in a fiduciary capacity with
respect to Customer under other agreements or otherwise under the
Agreement, in performing Services Bank shall be acting solely as the agent
of Customer, and shall not exercise any discretion with regard to such
Services.
5. Proxy voting may be precluded or restricted in a variety of circumstances,
including, without limitation, where the relevant Financial Assets are: (i)
on loan; (ii) at registrar for registration or reregistration; (iii) the
subject of a conversion or other corporate action; (iv) not held in a name
subject to the control of Bank or its Subcustodian or are otherwise held in
a manner which precludes voting; (v) not capable of being voted on account
of local market regulations or practices or restrictions by the issuer; or
(vi) held in a margin or collateral account.
6. Customer acknowledges that in certain countries Bank may be unable to vote
individual proxies but shall only be able to vote proxies on a net basis
(e.g., a net yes or no vote given the voting instructions received from all
---
customers).
<PAGE>
7. Customer shall not make any use of the information provided hereunder,
except in connection with the funds or plans covered hereby, and shall in
no event sell, license, give or otherwise make the information provided
hereunder available, to any third party, and shall not directly or
indirectly compete with Bank or diminish the market for the Services by
provision of such information, in whole or in part, for compensation or
otherwise, to any third party.
8. The names of Authorized Persons for Services shall be furnished to Bank in
accordance with (S)10 of the Agreement. Fees for the Services shall be
agreed as set forth in (S)13 of the Agreement or separately agreed.
2
<PAGE>
DOMESTIC AND GLOBAL
SPECIAL TERMS AND CONDITIONS RIDER
----------------------------------
Domestic Corporate Actions and Proxies
- --------------------------------------
With respect to domestic U.S. and Canadian Securities (the latter if held in
DTC), the following provisions shall apply rather than the pertinent provisions
of Section 8 of the Agreement and the Global Proxy Service rider:
Bank shall send to Customer or the Authorized Person for a Custody Account,
such proxies (signed in blank, if issued in the name of Bank's nominee or
the nominee of a central depository) and communications with respect to
Securities in the Custody Account as call for voting or relate to legal
proceedings within a reasonable time after sufficient copies are received
by Bank for forwarding to its customers. In addition, Bank shall follow
coupon payments, redemptions, exchanges or similar matters with respect to
Securities in the Custody Account and advise Customer or the Authorized
Person for such Account of rights issued, tender offers or any other
discretionary rights with respect to such Securities, in each case, of
which Bank has received notice from the issuer of the Securities, or as to
which notice is published in publications routinely utilized by Bank for
this purpose.
<PAGE>
[LOGO OF CHASE APPEARS HERE]
August, 1996 SCHEDULE A
17-F5 ELIGIBLE SUB-CUSTODIANS EMPLOYED BY
-----------------------------------------
THE CHASE MANHATTAN BANK, LONDON, GLOBAL CUSTODY
------------------------------------------------
COUNTRY SUB-CUSTODIAN CORRESPONDENT BANK
- ------- ------------- ------------------
ARGENTINA The Chase Manhattan Bank The Chase Manhattan Bank
- ---------
Arenales 707, 5th Floor Buenos Aires
De Mayo 130/140
1061 Buenos Aires
ARGENTINA
AUSTRALIA The Chase Manhattan Bank The Chase Manhattan Bank
- ---------
36th Floor Sydney
World Trade Centre
Jamison Street
Sydney
New South Wales 2000
AUSTRALIA
AUSTRIA Creditanstalt - Bankverein Credit Lyonnais Bank
- -------
Schottengasse 6 Vienna
A - 1011, Vienna
AUSTRIA
BANGLADESH Standard Chartered Bank Standard Chartered Bank
- ----------
18-20 Motijheel C.A. Dhaka
Box 536,
Dhaka-1000
BANGLADESH
BELGIUM Generale Bank Credit Lyonnais Bank
- -------
3 Montagne Du Parc Brussels
1000 Bruxelles
BELGIUM
BOTSWANA Barclays Bank of Botswana Limited Barclays Bank of Botswana
- --------
Barclays House Gaborone
Khama Crescent
Gaborone
BOTSWANA
<PAGE>
[LOGO OF CHASE APPEARS HERE]
BRAZIL Banco Chase Manhattan, S.A. Banco Chase Manhattan S.A.
- ------
Chase Manhattan Center Sao Paulo
Rua Verbo Divino, 1400
Sao Paulo, SP 04719-002
BRAZIL
CANADA The Royal Bank of Canada The Royal Bank of Canada
- ------
Royal Bank Plaza Toronto
Toronto
Ontario M5J 2J5
CANADA
Canada Trust Royal Bank of Canada
Canada Trust Tower Toronto
BCE Place
161 Bay at Front
Toronto
Ontario M5J 2T2
CANADA
CHILE The Chase Manhattan Bank, The Chase Manhattan Bank,
- -----
Agustinas 1235 Santiago
Casilla 9192
Santiago
CHILE
COLOMBIA Cititrust Colombia S.A. Cititrust Colombia S.A.
- --------
Sociedad Fiduciaria Sociedad Fiduciaria
Carrera 9a No 99-02 Santafe de Bogota
Santafe de Bogota, DC
COLOMBIA
CYPRUS Barclays Bank, plc Barclays Bank plc,
- ------
Cyprus Offshore Banking Unit Nicosia
2nd & 3rd Floor
88 Dighenis Akritas Avenue
PO Box 7320
1644 Nicosia
CYPRUS
CZECH REPUBLIC Ceskoslovenska Obchodni Banka, A.S. Komercni Banka, A.S.,
- --------------
Na Prikope 14 Praha
115 20 Praha 1
CZECH REPUBLIC
<PAGE>
[LOGO OF CHASE APPEARS HERE]
<TABLE>
<S> <C> <C>
DENMARK Den Danske Bank Den Danske Bank
- -------
2 Holmens Kanala DK 1091 Copenhagen
Copenhagen
DENMARK
ECUADOR Citibank, N.A. Citibank, N.A.,
- -------
Juan Leon Mera Quito
130 y Patria
Quito
ECUADOR
EGYPT National Bank of Egypt National Bank of Egypt
- -----
1187, Corniche El-Nile Plaza Cairo
Cairo
EGYPT
EUROBONDS Cedel Bank S.A. ECU: Lloyds Bank PLC
- ---------
67 Boulevard Grande Duchesse Charlotte International Banking Division
LUXEMBOURG London
A/c The Chase Manhattan Bank, N.A. For all other currencies: see
London relevant country
A/c No. 17817
EURO CDS First Chicago Clearing Centre ECU: Lloyds Bank PLC
- --------
27 Leadenhall Street Banking Division London
London EC3A 1AA For all other currencies: see
UNITED KINGDOM relevant country
FINLAND Merita Bank KOP Merita Bank KOP
- -------
Aleksis Kiven 3-5 Helsinki
00500 Helsinki
FINLAND
FRANCE Banque Paribas Societe Generale
- ------
Ref 256 Paris
BP 141
3, Rue D'Antin
75078 Paris
Cedex 02
FRANCE
GERMANY Chase Bank A.G. Chase Bank A.G.
- -------
Alexanderstrasse 59 Frankfurt
Postfach 90 01 09
60441 Frankfurt/Main
GERMANY
</TABLE>
<PAGE>
[LOGO OF CHASE APPEARS HERE]
GHANA Barclays Bank of Ghana Ltd Barclays Bank
- -----
Barclays House Accra
High Street
Accra
GHANA
GREECE Barclays Bank Plc National Bank of Greece S.A.
- ------
1 Kolokotroni Street Athens
10562 Athens A/c Chase Manhattan Bank,
GREECE London
A/c No. 040/7/921578-68
HONG KONG The Chase Manhattan Bank, The Chase Manhattan Bank,
- ---------
40/F One Exchange Square Hong Kong
8, Connaught Place
Central, Hong Kong
HONG KONG
HUNGARY Citibank Budapest Rt. Citibank Budapest Rt.
- -------
Vaci Utca 19-21 Budapest
1052 Budapest V
HUNGARY
INDIA The Hongkong and Shanghai The Hongkong and Shanghai
- -----
Banking Corporation Limited Banking Corporation Limited
52/60 Mahatma Gandhi Road Bombay
Bombay 400 001
INDIA
Deutsche Bank AG Deutsche Bank
Securities & Custody Services Bombay
Kodak House
222 D.N. Road, Fort
Bombay 400 001
INDIA
<PAGE>
[LOGO OF CHASE APPEARS HERE]
INDONESIA The Hongkong and Shanghai The Chase Manhattan Bank
- --------- Banking Corporation Limited Jakarta
World Trade Center
JL. Jend Sudirman Kav. 29-31
Jakarta 10023
INDONESIA
IRELAND Bank of Ireland Allied Irish Bank
- -------
International Financial Services Dublin
Centre
1 Harbourmaster Place
Dublin 1
IRELAND
ISRAEL Bank Leumi Le-Israel B.M. Bank Leumi Le-Israel B.M.
- ------
19 Herzl Street Tel Aviv
61000 Tel Aviv
ISRAEL
ITALY The Chase Manhattan Bank The Chase Manhattan Bank
- -----
Piazza Meda 1 Milan
20121 Milan
ITALY
JAPAN The Fuji Bank Ltd The Chase Manhattan Bank
- -----
6-7 Nihonbashi-Kabutocho Tokyo
Chuo-Ku
Tokyo
JAPAN
JORDAN Arab Bank Limited Arab Bank Limited
- ------
P O Box 950544-5 Amman
Amman
Shmeisani
JORDAN
KENYA Barclays Bank of Kenya Barclays Bank of Kenya
- -----
Third Floor Nairobi
Queensway House
Nairobi
Kenya
LUXEMBOURG Banque Generale du Luxembourg S.A. Banque Generale du Luxembourg
- ---------- S.A.
50 Avenue J.F. Kennedy Luxembourg
L-2951 LUXEMBOURG
<PAGE>
[LOGO OF CHASE APPEARS HERE]
MALAYSIA The Chase Manhattan Bank The Chase Manhattan Bank
- --------
Pernas International Kuala Lumpur
Jalan Sultan Ismail
50250, Kuala Lumpur
MALAYSIA
MAURITIUS Hongkong and Shanghai Banking Hongkong and Shanghai Banking
- --------- Corporation Ltd Corporation Ltd.
Curepipe Road Curepipe
Curepipe
MAURITIUS
MEXICO The Chase Manhattan Bank, S.A. No correspondent Bank
- ------
Prolongacion Paseo de la Reforma
no. 600,
PB Colonia Santa Fe Pena Blanca
01210 Mexico D.F.
MOROCCO Banque Commerciale du Maroc Banque Commerciale du Maroc
- -------
2 Boulevard Moulay Youssef Casablanca
Casablanca 20000
MOROCCO
NAMIBIA Standard Bank Namibia Ltd Standard Bank of South Africa
- ------- Mutual Platz - 3rd Floor Ltd
P.O. Box 3327 Johannesburg
Windhoek
NAMIBIA
NETHERLANDS ABN AMRO N.V. Generale Bank
- ----------- Securities Centre Nederland N.V.
P O Box 3200 Rotterdam
4800 De Breda
NETHERLANDS
NEW ZEALAND National Nominees Limited National Bank of New Zealand
- -----------
Level 2 BNZ Tower Wellington
125 Queen Street
Auckland
NEW ZEALAND
NORWAY Den Norske Bank Den Norske Bank
- ------
Kirkegaten 21 Oslo
Oslo 1
NORWAY
<PAGE>
[LOGO OF CHASE APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C> <C>
PAKISTAN Citibank N.A. Citibank N.A.
- --------
I.I. Chundrigar Road Karachi
AWT Plaza
Karachi
PAKISTAN
Deutsche Bank A.G. Deutsche Bank A.G.
Unitowers Karachi
I.I. Chundrigar Road
Karachi
PAKISTAN
PERU Citibank N.A. Citibank N.A.
- ----
Camino Real 457 Lima
CC Torre Real - 5th Floor
San Isidro, Lima 27
PERU
PHILIPPINES The Hongkong and Shanghai The Hongkong and Shanghai
- ----------- Banking Corporation Limited Banking Corporation Limited
Hong Kong Bank Centre 3/F Manila
San Miguel Avenue
Ortigas Commercial Centre
Pasig Metro Manila
PHILIPPINES
POLAND Bank Polska Kasa Opieki S.A. Bank Polska Kasa Opieki S.A.
- ------
Curtis Plaza Warsaw
Woloska 18
02-675 Warsaw
POLAND
For Mutual Funds:
Bank Handlowy W. Warszawie. S.A. Bank Polska Kasa Opieki S.A.
Custody Dept. Warsaw
Capital Markets Centre
UI, Nowy Swiat 6/12
00-920 Warsaw
POLAND
PORTUGAL Banco Espirito Santo e Comercial de Lisboa Banco Nacional Ultra Marino
- --------
Servico de Gestaode Titulos Lisbon
R. Mouzinho da Silveira, 36 r/c
1200 Lisbon
PORTUGAL
</TABLE>
<PAGE>
[LOGO OF CHASE APPEARS HERE]
RUSSIA Chase Manhattan Bank The Chase Manhattan Bank
- ------ International ("CMBI")
1st Tverskaya - Yamskaya, 23 New York
125047 Moscow A C The Chase Manhattan
Russia London (US$ Nostro Account)
SHANGHAI (CHINA) The Hongkong and Shanghai Citibank
- ----------------
Banking Corporation Limited New York
Corporate Banking Centre
Unit 504, 5/F Shanghai Centre
1376 Nanjing Xi Lu
Shanghai
THE PEOPLE'S REPUBLIC OF
CHINA
SHENZHEN (CHINA) The Hongkong and Shanghai The Chase Manhattan Bank
- ---------------- Banking Corporation Limited Hong Kong
1st Floor
Central Plaza Hotel
No.1 Chun Feng Lu
Shenzhen
THE PEOPLE'S REPUBLIC OF
CHINA
SINGAPORE The Chase Manhattan Bank The Chase Manhattan Bank.
- ---------
Shell Tower Singapore
50 Raffles Place
Singapore 0104
SINGAPORE
SLOVAK REPUBLIC Ceskoslovenska Obchodni
- --------------- Banka, A.S. Ceskoslovenska Obchodni Banka
Michalska 18 Slovak Republic
815 63 Bralislava
SLOVAK REPUBLIC
SOUTH AFRICA Standard Corporate and
- ------------ Merchant Bank Standard Corporate and
46 Marshall Street Merchant Bank
Johannesburg 2001 South Africa
SOUTH AFRICA
SOUTH KOREA The Hongkong & Shanghai The Hongkong & Shanghai
- ----------- Banking Corporation Limited Banking Corporation Limited
6/F Kyobo Building Seoul
#1 Chongro, 1-ka Chongro-ku.
Seoul
SOUTH KOREA
<PAGE>
[LOGO OF CHASE APPEARS HERE]
SPAIN The Chase Manhattan Bank Chase Manhattan Bank
- -----
Paseo de la Castellana, 51 Madrid
28046 Madrid
SPAIN
SRI LANKA The Hongkong & Shanghai The Hongkong & Shanghai
- --------- Banking Corporation Limited Banking Corporation Limited
Unit #02-02 West Block Colombo
World Trade Center
Colombo I,
SRI LANKA
SWEDEN Skandinaviska Enskilda Banken Svenska Handelsbanken
- ------
Kungstradgardsgatan 8 Stockholm
Stockholm S-106 40
SWEDEN
SWITZERLAND Union Bank of Switzerland Union Bank of Switzerland
- -----------
45 Bahnhofstrasse Zurich
8021 Zurich
SWITZERLAND
TAIWAN The Chase Manhattan Bank, No correspondent Bank
- ------
14th Floor,
2, Tun Hwa S. Road Sec. 1
Taipei
TAIWAN
Republic of China
THAILAND The Chase Manhattan Bank The Chase Manhattan Bank
- --------
Bubhajit Building Bangkok
20 North Sathorn Road
Silom, Bangrak
Bangkok 10500
THAILAND
TURKEY The Chase Manhattan Bank The Chase Manhattan Bank
- ------
Emirhan Cad. No: 145 Istanbul
Atakule, A Blok Kat: 11
80700-Dikilitas/Besiktas
Istanbul
TURKEY
<PAGE>
[LOGO OF CHASE APPEARS HERE]
U.K. The Chase Manhattan Bank The Chase Manhattan Bank
- ----
Woolgate House London
Coleman Street
London EC2P 2HD
UNITED KINGDOM
URUGUAY The First National Bank of Boston The First National Bank of Boston
- -------
Zabala 1463 Montevideo
Montevideo
URUGUAY
U.S.A The Chase Manhattan Bank The Chase Manhattan Bank
- -----
1 Chase Manhattan Plaza New York
New York
NY 10081
U.S.A
VENEZUELA Citibank N.A Citibank N.A
- ---------
Carmelitas a Altagracia Caracas
Edificio Citibank
Caracas 1010
VENEZUELA
ZAMBIA Barclays Bank of Zambia Barclays Bank of Zambia
- ------
Kafue House Lusaka
Cairo Road
P.O. Box 31936
Lusaka
ZAMBIA
ZIMBABWE Barclays Bank of Zimbabwe Barclays Bank of Zimbabwe
- -------- Harare
Ground Floor
Tanganyika House
Corner of 3rd Street & Union
Avenue
Harare
ZIMBABWE
<PAGE>
FEE AGREEMENT
FOR THE FUND OF THE
HANSBERGER INSTITUTIONAL SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL CUSTODY FEE (BASED ON MARKET VALUE) BASIS POINTS
- ------------------------------------------ ------------
<S> <C>
U.S. 3 basis points
Canada 3 basis points
Cedel 5 basis points
Country Group 1 8 basis points
Country Group 2 25 basis points
Country Group 3 35 basis points
Country Group 4 40 basis points
Country Group 5 45 basis points
TRADING TRANSACTION CHARGE USD $
- -------------------------- -----
U.S. 20
Canada 65
Cedel 50
Country Group 1 85
Country Group 2 100
Country Group 3 125
Country Group 4 175
Country Group 5 225
PROXY VOTING TRANSACTION CHARGE
- -------------------------------
Per Vote/Per Account (Includes notification via InfoStation) 50
OUT OF POCKET EXPENSES
Domestic None.
Foreign Includes scrip fees, stamp duties, and
special transportation and insurance
costs for holding/transporting
securities outside the local market.
</TABLE>
NO MINIMUM FEE FOR THE FIRST YEAR.
MINIMUM FEE OF $25,000 FOR THE SECOND YEAR.
MINIMUM FEE OF $50,000 AFTER THE THIRD YEAR.
<TABLE>
<CAPTION>
GROUP 1 GROUP 2 GROUP 3 GROUP 4 GROUP 5
- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Austria Mexico Philippines Argentina Bangladesh
Australia Thailand Portugal Brazil Botswana
Belgium South Korea Chile Colombia
Denmark Taiwan Bangladesh Cyprus
Finland China Czech Republic
France India Ecuador
Germany Indonesia Estonia
Hong Kong Israel Greece
Ireland Jordan Hungary
Italy Turkey Morocco
London CD's Uruguay Namibia
Japan Pakistan
Malaysia Peru
Netherlands Poland
New Zealand Sri Lanka
Norway Tunisia
Singapore Venezuela
South Africa Zambia
Spain Zimbabwe
Sweden
Switzerland
United Kingdom
</TABLE>
<PAGE>
FEE AGREEMENT
FOR THE FUND OF THE
HANSBERGER INSTITUTIONAL SERIES
- --------------------------------------------------------------------------------
Please acknowledge your acceptance of this schedule by signing below.
/s/ Lenore Vanden Handel /s/ Kimberley Scott
- --------------------------- -------------------------------
Chase Manhattan Bank Hansberger Institutional Series
***Please note: Attached to the fee agreement is a letter outlining the minimums
for all Chase services to be rendered to the Hansberger Institutional Series and
we ask that this be included as a rider to the fee agreement.
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
. Fund Administration Services
. Fund Accounting Services
. Transfer Agency Services
CHASE GLOBAL FUNDS SERVICES COMPANY
October 1, 1996
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
Table of Contents
-----------------
Section Page
- ------- ----
1. Appointment................................ 1
2. Representations and Warranties............. 1
3. Delivery of Documents...................... 3
4. Services Provided.......................... 4
5. Fees and Expenses.......................... 5
6. Limitation of Liability
and Indemnification...................... 7
7. Term....................................... 9
8. Notices.................................... 10
9. Waiver..................................... 10
10. Force Majeure.............................. 10
11. Amendments................................. 11
12. Severability............................... 11
13. Miscellaneous.............................. 11
14. Governing Law.............................. 11
Signatures........................................ 12
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
Table of Contents (continued)
-----------------------------
Page
----
Schedule A -- Fees and Expenses......................... A-1
Schedule B -- Fund Administration Services Description.. B-1
Schedule C -- Fund Accounting Services Description...... C-1
Schedule D -- Transfer Agency Services Description...... D-1
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
AGREEMENT made as of October 1, 1996 by and between Hansberger
Institutional Series (the "Fund"), a Massachusetts business trust, and Chase
Global Funds Services Company ("Chase"), a Delaware corporation.
W I T N E S S E T H:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund wishes to contract with Chase to provide certain
services with respect to the Fund;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints Chase to provide services for
the Fund, as described hereinafter, subject to the supervision of the Board of
Trustees of the Fund (the "Board"), for the period and on the terms set forth in
this Agreement. Chase accepts such appointment and agrees to furnish the
services herein set forth in return for the compensation as provided in Section
5 of and Schedule A to this Agreement.
2. Representations and Warranties.
(a) Chase represents and warrants to the Fund that:
(i) Chase is a corporation, duly organized and existing under the
laws of the State of Delaware;
(ii) Chase is duly qualified to carry on its business in the
Commonwealth of Massachusetts;
1
<PAGE>
(iii) Chase is empowered under applicable laws and by its Articles
of Incorporation and By-Laws to enter into and perform this Agreement;
(iv) all requisite corporate proceedings have been taken to
authorize Chase to enter into and perform this Agreement;
(v) Chase has, and will continue to have, access to the
facilities, personnel and equipment required to fully perform its duties and
obligations hereunder;
(vi) no legal or administrative proceedings have been instituted,
or to the knowledge of the Fund, or threatened, which would impair Chase's
ability to perform its duties and obligations under this Agreement; and
(vii) Chase's entrance into this Agreement shall not cause a
material breach or be in material conflict with any other agreement or
obligation of Chase or any law or regulation applicable to Chase;
(b) The Fund represents and warrants to Chase that:
(i) the Fund is a Massachusetts business trust, duly organized
and existing and in good standing under the laws of Massachusetts;
(ii) the Fund is empowered under applicable laws and by its
Charter Document and By-Laws to enter into and perform this Agreement;
(iii) all requisite proceedings have been taken to authorize the
Fund to enter into and perform this Agreement;
(iv) the Fund is an investment company properly registered under
the 1940 Act;
(v) a registration statement under the Securities Act of 1933, as
amended ("1933 Act") and the 1940 Act on Form N-1A has been filed and will be
effective and will remain effective during the term of this Agreement, and all
necessary filings under the laws of the states will have been made and will be
current during the term of this Agreement;
2
<PAGE>
(vi) no legal or administrative proceedings have been instituted
or threatened which would impair the Fund's ability to perform its duties and
obligations under this Agreement;
(vii) the Fund's registration statements comply in all material
respects with the 1933 Act and the 1940 Act (including the rules and regulations
thereunder) and none of the Fund's prospectuses and/or statements of additional
information contain any untrue statement of material fact or omit to state a
material fact necessary to make the statements therein not misleading; and
(viii)the Fund's entrance into this Agreement shall not cause a
material breach or be in material conflict with any other agreement or
obligation of the Fund or any law or regulation applicable to it.
3. Delivery of Documents. The Fund will promptly furnish to Chase such
copies, properly certified or authenticated, of contracts, documents and other
related information that Chase may request or requires to properly discharge its
duties. Such documents may include but are not limited to the following:
(a) Resolutions of the Board authorizing the appointment of Chase to
provide certain services to the Fund and approving this Agreement;
(b) The Fund's Charter Document;
(c) The Fund's By-Laws;
(d) The Fund's Notification of Registration on Form N-8A under the 1940
Act as filed with the Securities and Exchange Commission ("SEC");
(e) The Fund's registration statement including exhibits, as amended,
on Form N-1A (the "Registration Statement") under the 1933 Act and the 1940 Act,
as filed with the SEC;
(f) Copies of the Investment Advisory Agreement between the Fund and
its investment adviser (the "Advisory Agreement");
(g) Opinions of counsel and auditors' reports;
3
<PAGE>
(h) The Fund's prospectus(es) and statement(s) of additional
information relating to all funds, series, portfolios and classes, as
applicable, and all amendments and supplements thereto (such Prospectus(es) and
Statement(s) of Additional Information and supplements thereto, as presently in
effect and as from time to time hereafter amended and supplemented, herein
called the "Prospectuses"); and
(i) Such other agreements as the Fund may enter into from time to time
including securities lending agreements, futures and commodities account
agreements, brokerage agreements and options agreements.
4. Services Provided.
(a) Chase will provide the following services subject to the control,
direction and supervision of the Board and in compliance with the objectives,
policies and limitations set forth in the Fund's Registration Statement, Charter
Document and By-Laws; applicable laws and regulations; and all resolutions and
policies implemented by the Board:
(i) Fund Administration,
(ii) Fund Accounting, and
(iii) Transfer Agency.
A detailed description of each of the above services is contained in Schedules
B, C and D, respectively, to this Agreement.
(b) Chase will also:
(i) provide office facilities with respect to the provision of the
services contemplated herein (which may be in the offices of Chase or a
corporate affiliate of Chase);
(ii) provide the services of individuals to serve as officers of
the Fund who will be designated by Chase and elected by the Board subject to
reasonable Board approval;
(iii) provide or otherwise obtain personnel sufficient for
provision of the services contemplated herein;
4
<PAGE>
(iv) furnish equipment and other materials, which are necessary or
desirable for provision of the services contemplated herein; and
(v) keep records relating to the services provided hereunder in such
form and manner as Chase may deem appropriate or advisable. To the extent
required by Section 31 of the 1940 Act and the rules thereunder, Chase agrees
that all such records prepared or maintained by Chase relating to the services
provided hereunder are the property of the Fund and will be preserved for the
periods prescribed under Rule 31a-2 under the 1940 Act, maintained at the Fund's
expense, and made available in accordance with such Section and rules.
5. Fees and Expenses.
(a) As compensation for the services rendered to the Fund pursuant to
this Agreement the Fund shall pay Chase monthly fees determined as set forth in
Schedule A to this Agreement. Such fees are to be billed monthly and shall be
due and payable upon receipt of the invoice. Upon any termination of the
provision of services under this Agreement before the end of any month, the fee
for the part of the month before such termination shall be prorated according to
the proportion which such part bears to the full monthly period and shall be
payable upon the date of such termination.
(b) For the purpose of determining fees calculated as a function of
the Fund's assets, the value of the Fund's assets and net assets shall be
computed as required by its currently effective Prospectus, generally accepted
accounting principles, and resolutions of the Board.
(c) The Fund may request additional services, additional processing,
or special reports, with such specifications and requirements documentation as
may be reasonably required by Chase . If Chase elects to provide such services
or arrange for their provision, it shall be entitled to additional fees and
expenses at its customary rates and charges.
5
<PAGE>
(d) Chase will bear its own expenses in connection with the
performance of the services under this Agreement except as provided herein or as
agreed to by the parties. The Fund agrees to promptly reimburse Chase for any
services, equipment or supplies ordered by or for the Fund through Chase and for
any other expenses that Chase may incur on the Fund's behalf at the Fund's
request or as consented to by the Fund. Such other expenses to be incurred in
the operation of the Fund and to be borne by the Fund, include, but are not
limited to: taxes; interest; brokerage fees and commissions; salaries and fees
of officers and trustees who are not officers, directors, shareholders or
employees of Chase, or the Fund's investment adviser or distributor; SEC and
state Blue Sky registration and qualification fees, levies, fines and other
charges; EDGAR filing fees', processing services and related fees; postage and
mailing costs; costs of share certificates; advisory and administration fees;
charges and expenses of pricing and data services, independent public
accountants and custodians; insurance premiums including fidelity bond premiums;
legal expenses; consulting fees; customary bank charges and fees; costs of
maintenance of trust existence; expenses of typesetting and printing of
Prospectuses for regulatory purposes and for distribution to current
shareholders of the Fund (the Fund's Adviser or distributor to bear the expense
of all other printing, production, and distribution of Prospectuses, and
marketing materials); expenses of printing and production costs of shareholders'
reports and proxy statements and materials; expenses of proxy solicitation,
proxy tabulation and annual meetings; costs and expenses of Fund stationery and
forms; costs and expenses of special telephone and data lines and devices; costs
associated with trust, shareholder, and Board meetings; trade association dues
and expenses; reprocessing costs to Chase caused by third party errors; and any
extraordinary expenses and other customary Fund expenses. In addition, Chase may
utilize one or more independent pricing services to obtain securities prices and
to act as backup to the primary pricing services, in connection with determining
the net asset values of the Fund. The Fund will reimburse Chase for the Fund's
share of the cost of such services based upon the actual usage, or a pro-rata
estimate of the use, of the services for the benefit of the Fund.
6
<PAGE>
(e) All fees, out-of-pocket expenses, or additional charges of Chase
shall be billed on a monthly basis and shall be due and payable within fifteen
(15) days of receipt of the invoice.
(f) Chase will render, after the close of each month in which services
have been furnished, a statement reflecting all of the charges for such month.
The Fund will pay to Chase the expenses of effecting collection of any unpaid
charges, including reasonable attorney's fees.
(g) In the event that the Fund is more than sixty (60) days delinquent
in its payments of monthly billings in connection with this Agreement (with the
exception of specific amounts which may be contested in good faith by the Fund),
this Agreement may be terminated upon thirty (30) days' written notice to the
Fund by Chase. The Fund must notify Chase in writing of any contested amounts
within thirty (30) days of receipt of a billing for such amounts. Disputed
amounts are not due and payable while they are being investigated.
6. Limitation of Liability and Indemnification.
(a) Chase shall not be liable for any error of judgment or mistake of
law or for any loss or expense suffered by the Fund, in connection with the
matters to which this Agreement relates, except for a loss or expense solely
caused by or resulting from willful misfeasance, bad faith or negligence on
Chase's part in the performance of its duties or from reckless disregard by
Chase of its obligations and duties under this Agreement. In no event shall
Chase be liable for any indirect, incidental, special or consequential losses or
damages of any kind whatsoever (including but not limited to lost profits), even
if Chase has been advised of the likelihood of such loss or damage and
regardless of the form of action.
7
<PAGE>
(b) Subject to Section 6(a) above, Chase shall not be responsible for,
and the Fund shall indemnify and hold Chase harmless from and against, any and
all losses, damages, costs, reasonable attorneys' fees and expenses, payments,
expenses and liabilities incurred by Chase, any of its agents, or the Fund's
agents in the performance of its/their duties hereunder, including but not
limited to those arising out of or attributable to:
(i) any and all actions of Chase or its officers or agents
required to be taken pursuant to this Agreement;
(ii) the reliance on or use by Chase or its officers or agents of
information, records, or documents which are received by Chase or its officers
or agents and furnished to it or them by or on behalf of the Fund, and which
have been prepared or maintained by the Fund or any third party on behalf of the
Fund;
(iii) the Fund's refusal or failure to comply with the terms of
this Agreement or the Fund's lack of good faith, or its actions, or lack
thereof, involving negligence or willful misfeasance;
(iv) the breach of any representation or warranty of the Fund
hereunder;
(v) the taping or other form of recording of telephone
conversations or other forms of electronic communications with investors and
shareholders, not in violation of applicable law or reliance by Chase on
telephone or other electronic instructions of any person acting on behalf of a
shareholder or shareholder account for which telephone or other electronic
services have been authorized;
(vi) the reliance on or the carrying out by Chase or its officers
or agents of any proper instructions reasonably believed to be duly authorized,
or requests of the Fund or recognition by Chase of any share certificates which
are reasonably believed to bear the proper signatures of the officers of the
Fund and the proper countersignature of any transfer agent or registrar of the
Fund;
8
<PAGE>
(vii) any delays, inaccuracies, errors in or omissions from
information or data provided to Chase by data, corporate action, pricing
services or securities brokers and dealers;
(viii)the offer or sale of shares by the Fund (other than by Chase
or its affiliates) in violation of any requirement under the Federal securities
laws or regulations or the securities laws or regulations of any state, or in
violation of any stop order or other determination or ruling by any Federal
agency or any state agency with respect to the offer or sale of such shares in
such state (1) resulting from activities, actions, or omissions by the Fund or
its other service providers and agents, or (2) existing or arising out of
activities, actions or omissions by or on behalf of the Fund prior to the
effective date of this Agreement;
(ix) any failure of the Fund's registration statement to comply
with the 1933 Act and the 1940 Act (including the rules and regulations
thereunder) and any other applicable laws, or any untrue statement of a material
fact or omission of a material fact necessary to make any statement therein not
misleading in a Fund's prospectus;
(x) the actions taken by the Fund, its investment adviser, and
its distributor in compliance with applicable securities, tax, commodities and
other laws, rules and regulations, or the failure to so comply; and
(xi) all actions, inactions, omissions, or errors caused by third
parties to whom Chase or the Fund has assigned any rights and/or delegated any
duties under this Agreement at the request of or as required by the Fund, its
investment advisers, distributor, administrator or sponsor.
9
<PAGE>
(c) In performing its services hereunder, Chase shall be entitled to
rely on any oral or written instructions, notices or other communications,
including electronic transmissions, from the Fund and its custodians, officers
and directors, investors, agents and other service providers which Chase
reasonably believes to be genuine, valid and authorized, and shall be
indemnified by the Fund for any loss or expense caused by such reliance. Chase
shall also be entitled to consult with and rely on the advice and opinions of
outside legal counsel retained by the Fund, as necessary or appropriate.
(d) Chase shall indemnify and hold the Fund harmless from and against
any and all losses, damages, costs, charges, reasonable counsel fees, payments,
expenses and liability arising out of or attributable to Chase's refusal or
failure to comply with the material terms of this Agreement, or Chase's lack of
good faith, negligence or willful misconduct, or the breach of any material
representation or warranty of Chase hereunder.
7. Term. This Agreement shall become effective on the date first
hereinabove written and may be modified or amended from time to time by mutual
agreement between the parties hereto. The Agreement shall continue in effect
unless terminated by either party on 180 days' prior written notice. Upon
termination of this Agreement, the Fund shall pay to Chase such compensation and
any out-of-pocket or other reimbursable expenses which may become due or payable
under the terms hereof as of the date of termination or after the date that the
provision of services ceases, whichever is later.
8. Notices. Any notice required or permitted hereunder shall be in
writing and shall be deemed effective on the date of personal delivery (by
private messenger, courier service or otherwise) or upon confirmed receipt of
telex or facsimile, whichever occurs first, or upon receipt if by mail to the
parties at the following address (or such other address as a party may specify
by notice to the other):
If to the Fund:
Hansberger Institutional Series
c/o Hansberger Global Investors, Inc.
515 East Las Olas Boulevard, Suite 1300
Fort Lauderdale, Florida 33301
Attention: J. Christopher Jackson, Esq.
Fax: 954-522-3557
If to Chase:
Chase Global Funds Services Company
73 Tremont Street
Boston, MA 02108
Attention: Karl O. Hartmann, General Counsel
Fax: 617-557-8616
10
<PAGE>
9. Waiver. The failure of a party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver nor
shall it deprive such party of the right thereafter to insist upon strict
adherence to that term or any term of this Agreement. Any waiver must be in
writing signed by the waiving party.
10. Force Majeure. Chase shall not be responsible or liable for any harm,
loss or damage suffered by the Fund, its investors, or other third parties or
for any failure or delay in performance of Chase's obligations under this
Agreement arising out of or caused, directly or indirectly, by circumstances
beyond Chase's control. In the event of a force majeure, any resulting harm,
loss, damage, failure or delay by Chase will not give the Fund the right to
terminate this Agreement.
11. Amendments. This Agreement may be modified or amended from time to
time by mutual written agreement between the parties. No provision of this
Agreement may be changed, discharged, or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, discharge or termination is sought.
12. Severability. If any provision of this Agreement is invalid or
unenforceable, the balance of the Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance it shall nevertheless
remain applicable to all other persons and circumstances.
13. As provided for in Article IX, Section 1 of the Amended and Restated
Agreement and Declaration of Trust of the Hansberger Institutional Series (the
"Trust"), dated as of October 4, 1996 (under which the Trust is organized as a
business trust under the laws of the Commonwealth of Massachusetts), the
shareholders, trustees, officers, employees and other agents of the Trust shall
not personally be bound by or liable for the matters set forth herein, nor shall
resort be had to their private properties for the satisfaction of any
obligation or claim hereunder. A Certificate of Trust referring to the aforesaid
Amended and Restated Agreement and Declaration of Trust is on file with the
Secretary of the Commonwealth of Massachusetts.
14. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY THE SUBSTANTIVE
LAWS OF THE STATE OF NEW YORK.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first written above.
HANSBERGER INSTITUTIONAL
SERIES
By: /s/ Thomas L. Hansberger
-------------------------------
Name: Thomas L. Hansberger
-----------------------------
Title: President
----------------------------
CHASE GLOBAL FUNDS
SERVICES COMPANY
By: /s/ Bernard Dagnall
-------------------------------
Name: Bernard Dagnall
-----------------------------
Title: President
----------------------------
12
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE A
FEES AND EXPENSES
Fund Administration and Accounting Fees
A. For the services rendered under this Agreement, the Fund shall pay to the
Administrator an annual fee based on the following schedule:
12 basis points on the first $500 million in total assets, plus
8 basis points on the next $500 million in total assets, plus
6 basis points on the total assets in excess of $1 billion
B. The foregoing calculation is based on the average daily net assets of the
Fund. The fees will be computed, billed and payable monthly.
C. The Fund shall pay to the Administrator a minimum fee based on the
following schedule:
Year 1 No Minimum
Year 2 $2,500.00 per month per Portfolio of the Fund
Year 3 $5,000.00 per month per Portfolio of the Fund
D. Out-of-pocket expenses, including but not limited to those in Section
5(d), and travel and lodging expenses for Fund officers to attend Board
Meetings, will be computed, billed and payable monthly.
Transfer Agency Fees
A. For transfer agency services, the Fund shall pay an annual fee of $15.00
per account that is maintained on the shareholder services system.
B. Out-of-pocket expenses, including but not limited to those in Section
5(d), and the cost of forms, statements and confirms, telecommunications
facilities, microfiche, proxy processing, and voice response unit usage,
and customary bank charges and offsets and customized systems and
technology charges, which will be computed, billed and payable monthly.
A-1
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE B
GENERAL DESCRIPTION OF FUND ADMINISTRATION SERVICES
I. Financial and Tax Reporting
A. Prepare management reports and Board of Trustees materials, such as
unaudited financial statements and summaries of dividends and
distributions.
B. Report Fund performance to outside services as directed by Fund
management.
C. Calculate dividend and capital gain distributions in accordance with
distribution policies detailed in the Fund's prospectus(es). Assist
Fund management in making final determinations of distribution
amounts.
D. Estimate and recommend year-end dividend and capital gain
distributions necessary to establish Fund's status as a regulated
investment company ("RIC") under Section 4982 of the Internal Revenue
Code of 1986, as amended (the "Code") regarding minimum distribution
requirements.
E. Working with the Fund's public accountants or other professionals,
prepare and file Fund's Federal tax return on Form 1120-RIC along with
all state and local tax returns where applicable. Prepare and file
Federal Excise Tax Return (Form 8613).
F. Prepare and file Fund's Form N-SAR with the SEC.
G. Prepare and coordinate printing of Fund's Semiannual and Annual
Reports to Shareholders.
H. In conjunction with transfer agent, notify shareholders as to what
portion, if any, of the distributions made by the Fund's during the
prior fiscal year were exempt-interest dividends under Section 852
(b)(5)(A) of the Code.
I. Provide Form 1099-MISC to persons other than corporations (i.e.,
Trustees) to whom the Fund paid more than $600 during the year.
B-1
<PAGE>
J. Prepare and file California State Expense Limitation Report, if
applicable.
K. Provide financial information for Fund proxies and prospectuses
(Expense Table).
II. Portfolio Compliance
A. Assist with monitoring each Investment Fund's compliance with
investment restrictions (e.g., issuer or industry diversification,
etc.) listed in the current prospectus(es) and Statement(s) of
Additional Information, although primary responsibility for such
compliance shall remain with the Fund's investment adviser or
investment manager.
B. Assist with monitoring each Investment Fund's compliance with the
requirements of Section 851 of the Code for qualification as a RIC
(i.e., 90% Income, 30% Income - Short Three, Diversification Tests),
although primary responsibility for such compliance shall remain with
the Fund's investment adviser or investment manager.
C. Assist with monitoring investment manager's compliance with Board
directives such as "Approved Issuers Listings for Repurchase
Agreements", Rule 17a-7, and Rule 12d-3 procedures, although primary
responsibility for such compliance shall remain with the Fund's
investment adviser or investment manager.
D. Mail quarterly requests for "Securities Transaction Reports" to the
Fund's Trustees and Officers and "access persons" under the terms of
the Fund's Code of Ethics and SEC regulations.
III. Regulatory Affairs and Corporate Governance
A. Prepare and file post-effective amendments to the Fund's registration
statement and supplements as needed.
B. Prepare and file proxy materials and administer shareholder meetings.
C. Prepare and file all state registrations of the Fund's securities
including annual renewals; registering new funds, portfolios, or
classes; preparing and filing sales reports; filing copies of the
registration statement, prospectus and statement of additional
information; and increasing registered amounts of securities in
individual states.
B-2
<PAGE>
D. Prepare Board materials for Board meetings.
E. Assist with the review and monitoring of fidelity bond and errors and
omissions insurance coverage and the submission of any related
regulatory filings.
F. Prepare and update documents such as charter document, by-laws, and
foreign qualification filings.
G. Provide support with respect to routine regulatory examinations or
investigations of the Fund.
H. File copies of financial reports to shareholders with the SEC under
Rule 30b2-1.
IV. General Administration
A. Furnish officers of the Fund, subject to reasonable Board approval.
B. Prepare fund, portfolio or class expense projections, establish
accruals and review on a periodic basis, including expenses based on a
percentage of average daily net assets (advisory and administrative
fees) and expenses based on actual charges annualized and accrued
daily (audit fees, registration fees, directors' fees, etc.).
C. For new funds, portfolios and classes, obtain Employer or Taxpayer
Identification Number and CUSIP numbers, as necessary. Estimate
organizational costs and expenses and monitor against actual
disbursements.
D. Coordinate all communications and data collection with regard to any
regulatory examinations and yearly audits by independent accountants.
B-3
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE C
DESCRIPTION OF FUND ACCOUNTING SERVICES
I. General Description
Chase shall provide the following accounting services to the Fund:
A. Maintenance of the books and records for the Fund's assets, including
records of all securities transactions.
B. Calculation of each funds', portfolios' or classes' Net Asset Value in
accordance with the Prospectus, and after the fund, portfolio or class
meets eligibility requirements, transmission to NASDAQ and to such other
entities as directed by the Fund.
C. Accounting for dividends and interest received and distributions made by
the Fund.
D. Coordinate with the Fund's independent auditors with respect to the
annual audit, and as otherwise requested by the Fund.
E. As mutually agreed upon, Chase will provide domestic and/or international
reports.
C-1
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE D
DESCRIPTION OF TRANSFER AGENCY SERVICES
The following is a general description of the transfer agency services
Chase shall provide to the Fund.
A. Shareholder Recordkeeping. Maintain records showing for each Fund
shareholder the following: (i) name, address, appropriate tax
certification and tax identifying number; (ii) number of shares of
each fund, portfolio or class; (iii) historical information including,
but not limited to, dividends paid, date and price of all transactions
including individual purchases and redemptions, based upon appropriate
supporting documents; and (iv) any dividend reinvestment order,
application, specific address, payment and processing instructions and
correspondence relating to the current maintenance of the account.
B. Shareholder Issuance. Record the issuance of shares of each fund,
portfolio or class. Except as specifically agreed in writing between
Chase and the Fund, Chase shall have no obligation when countersigning
and issuing and/or crediting shares to take cognizance of any other
laws relating to the issue and sale of such shares except insofar as
policies and procedures of the Stock Transfer Association recognize
such laws.
C. Transfer, Purchase and Redemption Orders. Process all orders for the
transfer, purchase and redemption of shares of the Fund in accordance
with the Fund's current prospectus and customary transfer agency
policies and procedures, including electronic transmissions which the
Fund acknowledges it has authorized, or in accordance with any
instructions of the Fund or its agents which Chase reasonably believes
to be authorized.
D. Shareholder Communications. Transmit all communications by the Fund
to its shareholders promptly following the delivery by the Fund of the
material to be transmitted by mail, telephone, courier service or
electronically.
E. Proxy Materials. Assist with the mailing or transmission of proxy
materials, tabulating votes, and compiling and certifying voting
results. Services may include the provision of inspectors of election
at any meeting of shareholders.
D-1
<PAGE>
F. Share Certificates. If permitted by Fund policies, and if a
shareholder of the Fund requests a certificate representing shares,
Chase as Transfer Agent, will countersign and mail a share certificate
to the investor at his/her address as it appears on the Fund's
shareholder records.
G. Returned Checks. In the event that any check or other negotiable
instrument for the payment of shares is returned unpaid for any
reason, Chase will take such steps, as Chase may, in its discretion,
deem appropriate and notify the Fund of such action. However, the
Fund remains ultimately liable for any returned checks or negotiable
instruments of its shareholders.
H. Shareholder Correspondence. Acknowledge all correspondence from
shareholders relating to their share accounts and undertake such other
shareholder correspondence as may from time to time be mutually agreed
upon.
I. Tax Reporting. Chase shall issue appropriate shareholder tax forms as
required.
J. Dividend Disbursing. Chase will prepare and mail checks, place wire
transfers or credit income and capital gain payments to shareholders.
The Fund will advise Chase of the declaration of any dividend or
distribution and the record and payable date thereof at least five (5)
days prior to the record date. Chase will, on or before the payment
date of any such dividend or distribution, notify the Fund's Custodian
of the estimated amount required to pay any portion of such dividend
or distribution payable in cash, and on or before the payment date of
such distribution, the Fund will instruct its Custodian to make
available to Chase sufficient funds for the cash amount to be paid
out. If a shareholder is entitled to receive additional shares by
virtue of any such distribution or dividend, appropriate credits will
be made to each shareholder's account.
K. Escheatment. Chase shall provide escheatment services only with
respect to the escheatment laws of the Commonwealth of Massachusetts,
including those which relate to reciprocal agreements with other
states.
L. Telephone Services. Chase will provide staff coverage, training and
supervision in connection with the Fund's telephone line for
shareholder inquiries, and will respond to inquiries concerning
shareholder records, transactions processed by Chase, procedures to
effect the shareholder records and inquiries of a general nature
relative to shareholder services. All other telephone calls will be
referred to the Fund, as appropriate.
D-2
<PAGE>
M. Fulfillment Services. As directed by the Fund, the Fund Adviser or the
Distributor, or upon the request of prospective shareholders either by
telephone or in writing, Chase will mail reasonable quantities of
prospectuses, applications to purchase shares, and other information
normally sent to prospective shareholders.
D-3
<PAGE>
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the use of our reports
for Hansberger Institutional Series (comprising the International Value Fund and
the Emerging Markets Fund) dated February 4, 2000 (and to all references to our
firm) included in or made a part of Post-Effective Amendment No. 4 and Amendment
No. 6 to Registration Statement File Nos. 333-8919 and 811-7729,
respectively.
/s/ Arthur Andersen LLP
- -----------------------
Boston, Massachusetts
April 24, 2000
<PAGE>
AMENDED CODE OF ETHICS
I. Introduction
------------
This Amended Code of Ethics (the "Code") has been adopted by the Board of
Trustees of the Hansberger Institutional Series (the "Fund"). The Code is
based on the principle that the officers, directors and employees of the
Fund owe a fiduciary duty to, among others, the shareholders of the Funds,
to conduct their personal securities transactions in a manner which does
not interfere with Fund portfolio transactions or otherwise take unfair
advantage of their relationship to the Fund. Persons covered by this Code
must adhere to this general principle as well as comply with the Code's
specific provisions. Technical compliance with the Code's procedures will
not automatically insulate from scrutiny trades which show a pattern of
abuse of the individual's fiduciary duties to the Fund.
Under Section 17(j) of the Investment Company Act of 1940, as amended (the
"Investment Company Act") and Rule 17j-1 thereunder, registered investment
companies are required to adopt a written Code of Ethics. This Code
includes the terminology used in Rule 17j-1.
II. Definitions
-----------
(1) "Access Person" means any (1) director, (2) trustee, (3) officer, (4)
general partner, (5) employee of the Fund or of any company in a
control relationship to the Fund, who, in connection with his regular
functions or duties, makes, participates in, or obtains information
regarding the purchase or sale of a security by the Fund, or whose
functions relate to the making of any recommendations with respect to
such purchases or sales; and (6) natural person in a control
relationship to the Fund who obtains information concerning
recommendations made to the Fund with regard to the purchase or sale
of a security.
(2) A security is "being considered for purchase or sale" when a
recommendation to purchase or sell a security has been made and
communicated and, with respect to the person making the
recommendation, when such person seriously considers making such a
recommendation.
(3) "Beneficial ownership" shall be interpreted in the same manner as it
would be in determining whether a person is subject to the provisions
of Section 16 of the U.S. Securities Exchange Act of 1934, as amended
and the rules and regulations thereunder, except that the
determination of direct or indirect beneficial ownership shall apply
to all securities which an access person has or acquires.
(4) "Chief Compliance Officer" means Kimberly A. Scott.
(5) "Company" means Hansberger Global Investors, Inc. and its
subsidiaries.
(6) "Compliance Officer" means Kimberly A. Scott
(7) "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the Investment Company Act.
(8) "Disinterested Trustee" means a trustee or director of the Fund who is
not an "interested person" of the Fund within the meaning of Section
2(a)(19) of the Investment Company Act.
(9) "Investment Personnel" means portfolio managers, security analysts,
traders and other individuals who provide information and advice to a
portfolio manager or who assist in the execution of the portfolio
managers' decisions.
1
<PAGE>
(10) "General Counsel" means J. Christopher Jackson.
(11) "Portfolio Manager" means any person who exercises investment
discretion on behalf of the Fund.
(12) "Purchase or sale of a security" includes, inter alia, the writing of
----- ----
an option to purchase or sell a security.
(13) "Security" shall have the meaning set forth in Section 2(a)(36) of the
Investment Company Act and, for purposes of this Code of Ethics, shall
include options on Securities and transactions in related futures
contracts, except that it shall not include shares of registered open-
end investment companies, securities issued by the Government of the
United States, short-term debt securities which are "government
securities" within the meaning of Section 2(a)(16) of the Investment
Company Act, bankers" acceptances, bank certificates of deposit,
commercial paper and such other money market instruments as designated
by the Board.
III. Standards of Conduct
--------------------
It is a violation of Rule 17j-1 and this Code for any Access Person in
connection with the purchase or sale, directly or indirectly, of a
security:
(1) to employ any device, scheme or artifice to defraud the Fund;
(2) to make to the Fund any untrue statement of a material fact or omit to
state to such registered investment company a material fact necessary
in order to make the statements made, in light of the circumstances
under which they are made, not misleading;
(3) to engage in any act, practice, or course of business which operates
or would operate as a fraud or deceit upon the Fund; or
(4) to engage in any manipulative practice with respect to the Fund.
IV. Exempted Transactions
---------------------
The prohibitions of Section V of this Code shall not apply to
(1) Purchases or sales effected in any account over which an Access Person
has no direct or indirect influence or control;
(a) Purchases or sales of Securities which are not eligible for
purchase or sale by the Fund;
(b) Purchases or sales which are nonvolitional on the part of either
the Access Person or the Fund;
(c) Purchases which are part of an automatic dividend reinvestment
plan; and
(d) Purchases effected upon the exercise of rights issued by an
issuer pro-rata to all holders of a class of its securities, to
--------
the extent such rights were acquired from such issuer, and sales
of such rights so acquired;
(2) In addition, the Compliance Officer or General Counsel may approve a
purchase or sale if he or she determines after appropriate inquiry
that the transaction is consistent with the fiduciary duty owed to the
Fund and is not potentially harmful to the Fund because: (a) it does
not conflict with any Security being considered for purchase or sale
by the Fund and (b) the decision to purchase or sell the Security is
not the result of information obtained in the course of an Access
Person's relationship with the Fund or its Adviser.
2
<PAGE>
V. Prohibited Conduct
------------------
(1) Access Persons shall not purchase a Security in an initial public
offering.
(a) A Disinterested Trustee of the Fund is only prohibited from
purchasing a security in an initial public offering if such
trustee knew or, in the ordinary course of fulfilling his
official duties as a trustee of the Fund, should have known that
the Fund or any investment company advised by a subsidiary of the
Company has a pending "buy" order in such security.
(2) Access Persons shall not purchase a security in a "private placement"
without obtaining prior written approval from the office of the Chief
Compliance Officer.
(a) A Disinterested Trustee of the Fund is only prohibited from
purchasing a security in a "private placement" if such trustee
knew or, in the ordinary course of fulfilling his official duties
as a trustee of the Fund, should have known that the Fund or any
investment company advised by a subsidiary of the Company has a
pending "buy" or "sell" order in such security.
(3) No Access Persons shall execute a Securities transaction on a day
during which the Fund or any investment company advised by a
subsidiary of the Company has a pending "buy" or "sell" order in such
security.
(a) A Disinterested Trustee of the Fund is only prohibited from
executing a securities transaction if such trustee knew or, in
the ordinary course of fulfilling his official duties as a
trustee of the Fund, should have known that the Fund or any
investment company advised by a subsidiary of the Company has a
pending "buy" or "sell" order in such security.
(4) Access Persons shall not purchase or sell a Security (or a related
Security) within seven calendar days before or after the Fund, or any
other advisory client over which the Company exercises investment
discretion, trades in such Security. Any profits realized on trades
within the prescribed period shall be disgorged (unless the trade is
otherwise exempted under Section IV.(2) of this Code).
(5) Investment Personnel shall not profit from the purchase and sale, or
sale and purchase, of the same or equivalent securities within 60
calendar days. Any profits realized on such trades shall be disgorged
to a charitable organization.
(6) Access Persons shall not accept gifts of more than de minimis value
from any person or entity that does business on behalf of the Fund.
(7) Access Persons shall not serve on the boards of directors of publicly
traded companies without obtaining prior written approval from the
office of the Chief Compliance Officer except that this requirement
shall not apply to Disinterested Trustees.
(8) No Access Persons shall purchase or sell any Security for his account
or for any Beneficial Account unless the proposed sale has been
reported to and pre-cleared by the Compliance Department, except that
this pre-clearance requirement shall not apply to:
(a) securities issued by the U.S. Government or by any open-end
investment company;
(b) money market instruments;
(c) the acquisition of securities through automatic reinvestment
plans;
(d) the exercise of pro rata rights;
3
<PAGE>
(e) purchase or sales through any profit sharing, pension or other
benefit plan of the Company;
(9) No Access Person shall open or maintain a brokerage account for his or
her own account or for any Beneficial Account unless he directs the
broker to provide duplicate confirmations and account statements to
the Legal Department, except this requirement shall not apply to
Disinterested Trustees.
(10) All Investment Personnel shall disclose all personal Securities
holdings upon the commencement of employment and thereafter on an
annual basis to the Legal Department.
(11) Access Persons shall not join an investment club or enter into an
investment partnership without obtaining prior written approval from
the office of the Chief Compliance Officer, except that this
requirement shall not apply to Disinterested Trustees.
(12) Access Persons shall not purchase shares in a closed-end investment
company distributed by the Company without obtaining prior written
approval from the office of the Chief Compliance Officer, except that
this requirement shall not apply to Disinterested Trustees.
VI. Reporting
- -------------
(a) Every Access Person other than Disinterested Trustees shall report to
the Fund the information described in Section VI (c) of this Code with
respect to transactions in any Security in which such Access Person
has, or by reason of such transaction acquires, any direct or indirect
beneficial ownership in the Security; provided, however, that an
Access Person shall not be required to make a report with respect to
transactions effected for any account over which such person does not
have any direct or indirect influence.
(b) A Disinterested Trustee of the Fund need only report a transaction in
a Security if such trustee, at the time of that transaction, knew or,
in the ordinary course of fulfilling his official duties as a trustee
of the Fund, should have known that, during the 15-day period
immediately preceding the date of the transaction by the trustee, such
Security was purchased or sold by the Fund or was being considered by
the Fund for purchase or sale by the Fund.
(c) Every report shall be made not later than 10 days after the end of the
calendar quarter in which the transactions to which the report relates
was effected, and shall contain the following information:
(i) The date of the transaction, the title and the number of shares,
and the principal amount of each security involved;
(ii) The nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);
(iii) The price at which the transaction was effected; and
(iv) The name of the broker, dealer or bank with or through whom the
transaction was effected.
(d) Any such report may contain a statement that the report shall not be
construed as an admission by the person making such report that he has
any direct or indirect beneficial ownership in the security to which
the report relates.
(e) Notwithstanding the provisions set forth in paragraphs VI (a) - (d)
above, no person shall be required to make a report where such report
would duplicate information recorded by the investment adviser to the
Fund pursuant to Rule 204-2(a) of the Investment Advisers Act of
4
<PAGE>
1940, as amended.
5
<PAGE>
VII. Sanctions
---------
Upon discovering a violation of this Code, the Board of Trustees of the
Fund may impose such sanctions as it deems appropriate.
[Copy of Rule 17j-1, as amended, attached hereto and made part hereof]
6
<PAGE>
(Fund Name)
AMENDED CODE OF ETHICS
ACKNOWLEDGMENT
--------------
I have received and reviewed the Hansberger Institutional Series Code of Ethics.
I understand its provisions and their applicability to me.
___________________________________________
(Name - Please Print)
___________________________________________
(Position)
___________________________________________
(Date)
___________________________________________
(Company)
___________________________________________
(Signature)
Detach and return this acknowledgment to LeAnne Cooley, Hansberger Global
Investors, Inc., 515 East Las Olas Blvd., Suite 1300, Ft. Lauderdale, Florida
33301.
7
<PAGE>
HANSBERGER GLOBAL INVESTORS, INC.
AMENDED CODE OF ETHICS
The success of Hansberger Global Investors, Inc. ("HGII") depends on public
confidence in our integrity and professionalism. To reinforce that confidence,
employees must always avoid activities, interests and relationships that might
interfere with making decisions in the best interest of the client and the firm.
The following are some of the areas in which conflicts of interest may arise.
l. DEFINITIONS
A. "Access Person" means any director of the Company or Employee who, in
connection with regular functions or duties, makes, participates in,
or has the ability to obtain information regarding the purchase or
sale of a security by a Company client, or whose functions relate to
the making of any recommendations with respect to such purchases or
sales. In the event that any individual or company should be in a
control relationship to a client or the Company, the term "Access
Person" would include such an individual or company to the same extent
as an Employee of the client or the Company.
B. "Adviser's Act" means the U.S. Investment Advisers Act of 1940, as
amended.
C. "Employee" means any officer or employee of the Company, but does not
mean any Outside Director.
D. "Employee Account" means all accounts in the name of or for the
benefit of an Employee, his or her spouse, dependent children or any
person living with an Employee or to whom an Employee contributes
economic support, as well as any other account with respect to which
an Employee exercises investment discretion or provides investment
advice.
E. "Company" means HGII and its subsidiaries.
F. "Compliance Department" means the Company's compliance department
located in Fort Lauderdale, Florida.
G. "Director of Compliance" means Kimberley A. Scott.
H. "1940 Act" means the U.S. Investment Company Act of 1940, as amended.
I. "Investment Personnel" means portfolio managers, security analysts,
traders and other Employee who provide information and advice to a
portfolio manager or who assist in the execution of a portfolio
manager's decision.
J. "Legal Department" means the Company's legal department located in
Fort Lauderdale, Florida.
K. "Outside Director" means a director of the Company who is not an
"interested person" of the Company within the meaning of Section
2(a)(19)(B) of the 1940 Act.
L. "Portfolio Manager" means any person who exercises investment
discretion on behalf of the Company or any Company client.
M. "Security" refers not only to the instruments set forth in Section
2(a)(36) of the 1940 Act, or the instruments set forth in Section
202(a)(18) of the Adviser's Act, but to any instrument into which such
instrument may be converted, any warrant of any issuer that has issued
the instrument, and any option, such as a put, call, straddle or
spread (whether or not such option is "covered") relating to an
instrument. In addition, security means any future or option Commodity
transaction. It does not include (a) any instrument representing a
direct obligation of the United States Government, (b) any instrument
issued by an open-end investment company, or (c) any instrument issued
by an unit investment trust.
1
<PAGE>
II. STANDARDS OF CONDUCT FOR PERSONAL SECURITIES TRANSACTIONS
The following rules are intended to provide guidance to Employees with
respect to personal securities transactions.
A. Employees
The following prohibitions are applicable to Employees.
1. Employees are prohibited from the following activities unless
they have obtained prior written approval from the Director of
Compliance or the Legal Department:
a. Employees may not join an investment club or enter into an
investment partnership;
b. Employees may not purchase for their own account a security
in a private placement;
c. Employees may not purchase shares in closed-end investment
companies distributed by the Company; and
d. Employees may not serve on the boards of directors of either
publicly traded or privately held companies nor may they
serve as members of any creditor committees.
2. Employees shall not open or maintain a brokerage account for
their own account or for any Beneficial Account unless the
Employee directs the broker to provide duplicate confirmations
and account statements to the Compliance Department.
3. For the purpose of purchasing Company sponsored mutual funds at
net asset value, Employees may have joint accounts only with
spouses, their children under age 21, parents, step-parents,
parents-in-law, brothers, sisters, grandchildren or grandparents
and a trustee or custodian of any qualified pension or profit
sharing plan or IRA established for the benefit of such persons.
4. Employees shall not purchase securities during an initial public
offering.
5. No Employee shall execute a Securities transaction on a day
during which a client advised by the Company has a pending "buy"
or "sell" order in such Security.
6. No Employee shall purchase or sell any Security for their account
or for any Beneficial Account unless the proposed purchase or
sale has been reported to and pre-cleared by the Director of
Compliance or in his or her absence the Legal Department.
a. This pre-clearance requirement shall not apply to:
1) Securities issued by the U.S. Government or by any open-
end investment company;
2) Money market instruments;
3) The acquisition of securities through automatic dividend
reinvestment plans;
4) The exercise of pro rata rights; and
5) Purchases or sales through any profit sharing, pension or
other benefit plan of the Company.
b. All proposed personal securities transactions shall be
documented either on
2
<PAGE>
a Personal Security Trade Authorization Form (a copy of
which is attached as Exhibit A) or on an electronic form
provided on the Employee's personal computer and forwarded
to the Director of Compliance.
c. Subject to the further provisions set forth herein, the
Director of Compliance or in his or her absence, the General
Counsel or, as the case may be, shall pre-clear the purchase
or sale of a Security if the transaction does not violate
the Company's Code of Ethics. Such determination shall be
by:
1) Reviewing the portfolios managed by the Company; and
2) Determining if the security is currently on the Company's
then current research database or is then currently under
consideration for adding to the Company's database
pending review by the Company's research committee.
d. In the event the proposed trade does not appear to violate
the Company's Code of Ethics, or any other Code of Ethics
applicable to HGI or its employees, the Director of
Compliance, or in his or her absence, the General Counsel,
will authorize the Employee to execute the trade.
1) The Director of Compliance shall execute the Trade
Authorization Form.
2) The Director of Compliance shall communicate
authorization of the trade to the Employee.
3) The time at which the trade authorization is communicated
to the Employee shall be documented on the Authorization
Form.
e. The trade authorization is effective for the remainder of
the trading day unless otherwise indicated by the Director
of Compliance.
f. The Director of Compliance shall maintain the originally
executed Authorization Form. A copy of the executed
Authorization Form will be available to the Employee upon
request.
7. All Employees and Outside Directors shall report all security
transactions to the Compliance Department within ten (10)
calendar days after the end of each calendar quarter. The report
shall contain the date of the transaction; the title, number of
shares, and nature of the transaction; the price at which the
transaction was effected; and the name of the broker, dealer or
bank which or through whom the transaction was effected. Reports
shall be made on forms sent to the Employees and Outside
Directors every quarter.
8. Employees shall not profit from the purchase and sale, or sale
and purchase, of the same or equivalent Securities within 60
calendar days. Any profits realized on such trades shall be
disgorged to a charitable organization.
9. All Employees shall disclose all personal and beneficial
Securities holdings upon the commencement of employment and
thereafter on an annual basis to the Compliance Department.
10. Employees may not speak in or to the media, on or off the record,
regarding any security without the prior authorization of the
Chief Compliance Officer or the General Counsel.
11. Access Persons shall not purchase or sell a Security (or a
related Security) within seven (7) calendar days before or after
any advisory client, over which the Company exercises investment
discretion, trades in such Security. Any profits realized on a
trade in such a Security, within the prescribed period, shall be
disgorged.
3
<PAGE>
B. Notwithstanding the foregoing, the Chief Compliance Officer may
approve an Employee's purchase or sale of a Security that would
otherwise violate the provisions set forth above if he or she
determines after appropriate inquiry that the transaction is
consistent with the fiduciary duty owed to the Company's clients and
is not potentially harmful to a client because: (a) it does not
conflict with any Security being considered for purchase or sale by
any current advisory client and (b) the decision to purchase or sell
the Security is not the result of information obtained in the course
of an Employee's relationship with an advisory client or an adviser.
III. INSIDER TRADING
The following rules are intended to apply to all Employees and Director with
respect to insider trading.
A. Identifying Inside Information
Before trading for yourself or others, including investment companies
or private accounts managed by the Company in the securities of a
company about which you may have potential inside information, ask
yourself the following questions:
Is the information material? Is this information that an investor
would consider important in making his or her investment decisions? Is
this information that would substantially affect the market price of
the securities if generally disclosed?
Is the information non-public? To whom has this information been
provided? Has the information been effectively communicated to the
marketplace? (For example, published in Reuters, The Wall Street
------- ---------------
Journal or other publications of general circulation?)
-------
If, after consideration of the above, you believe that the information may be
material and non-public, you should take the following steps:
1. Report the matter immediately to the Compliance Officer.
2. Do not purchase or sell the securities on behalf of yourself or
others, including investment companies or private accounts managed by
the Company.
3. Do not communicate the information inside or outside the Company,
other than to the Compliance Officer.
4. After the Compliance Officer has reviewed the issue, you will be
instructed either to continue the prohibitions against trading and
communication noted in 2. and 3. above, or you will be allowed to
trade and communicate the information.
B. Restricting Access to Material Non-public Information
Information in your possession that is identified as material and non-public may
not be communicated to anyone, including persons within the Company, except as
provided in subparagraph 1 above. In addition, care should be taken so that
such information is secure. For example, files containing material non-public
information should be sealed; access to computer files containing material non-
public information should be restricted.
To implement the proper restriction of access to material non-public
information, various Company employees and/or departments are responsible for
the following:
1. General Access Control Procedures
The Company has established a process by which access to sensitive company files
that may contain non-public information is carefully limited. Since most of the
Company's files, which have insider-trading implications are stored in
computers, personal identification numbers, passwords and/or code access numbers
are distributed to specified individuals only. This activity is monitored on an
ongoing basis. In
4
<PAGE>
addition, access to certain areas of the Company likely to contain sensitive
information, are restricted by access codes.
Employees are made aware of their duties with respect to information being
stored in non-accessible file cabinets. Employees are reminded that they should
log off of their computers once having completed a task so as to limit
information availability; places within the Company where any non-public
information would be accessible are limited; specific fax machines are used to
relay sensitive, potentially non-public information; access to all areas of the
Company are limited through one main reception area so that outsiders are
immediately identified and escorted to their proper destinations; and draft
memoranda that may contain insider information are destroyed immediately after
their use.
2. Personnel Department Procedures
Prior to an individual's formal offer of employment, the Personnel Department
provides the individual with the Company's Policies and Procedures with respect
to insider trading and clarifies that the Company views that the person's
willingness to adhere to these policies and procedures to be a condition
precedent to accepting employment with the Company.
The Compliance Officer assists the Personnel Department by responding to insider
policy questions from prospective employees so that it is clear what they can or
cannot do with respect to insider trading as an employee of the Company.
New hires are provided with an acknowledgment form to execute before formally
commencing employment in which the individual represents that he or she has
received the Company's Procedures on Insider Trading, has read and understood
them, and that continued employment with the Company is dependent upon
compliance with those procedures.
Annually, the Personnel Department elicits a written statement from all Company
employees that they have not violated any of the Company's Insider Trading
Policies and Procedures.
C. Supervisory Procedures for Effectuating Compliance
The roles of the Compliance Department and the Legal Department are critical to
the implementation and maintenance of HGII's Policies and Procedures against
Insider Trading. Supervisory procedures can be divided into three categories -
Prevention of Insider Trading, Detection of Insider Trading and Control of
Inside Information.
1. Prevention of Insider Trading
To prevent insider trading, the Compliance and/or Legal Departments:
a. provide, on a regular basis, an educational program to
familiarize officers, directors and employees with, and meet on a
selective basis with newly hired personnel to inform them of the
Company's Policies and Procedures;
b. answer questions regarding the Company's Policies and Procedures;
c. resolve issues of whether information received by an officer,
director or employee of the Company is material and non-public;
d. review on a regular basis and update as necessary the Company's
Policies and Procedures;
5
<PAGE>
2. Detection of Insider Trading
To detect insider trading, the Compliance Department is responsible for:
a. reviewing the trading activity reports filed by each officer,
director and employee, with particular emphasis on employees that
have access to non-public information and sample testing of all
employees;
b. reviewing the trading activity of investment companies and
private accounts managed by the Company;
c. reviewing the trading activity of the Company's own account;
d. coordinating the review of such reports with other appropriate
officers, directors or employees of the Company; and
e. periodically generating reports for management on those tests.
3. Control of Inside Information
When it has been determined that an officer, director or employee of the Company
has material non-public information, measures will be implemented to prevent
dissemination of such information. For example:
a. All employees of the Company will be notified that they are
prohibited from disclosing to other persons ("tippees") inside
information about the issuer in question and from trading in the
securities in question in "personal securities transactions" or
for the accounts of clients (notwithstanding the inclusion of
such securities on any "recommended to buy" or "recommended to
sell" lists compiled by the Company), until further notice.
b. Following receipt of notice prohibiting certain trades and until
receipt of further notice, every employee with material non-
public information shall file with the Compliance Officer, a
weekly written report of all personal securities transactions as
defined in the Company's Code of Ethics, during the prior week.
(This report is in addition to the standard Form filed with the
Compliance Officer.)
c. The Compliance Department will review such reports weekly as well
as the Company's records of trades for client's accounts in order
to determine if these procedures or the Company's Code of Ethics
have been violated.
d. The Compliance Department will maintain and regularly update a
list of every employee who has indicated or about whom it has
been indicated that he or she has come into contact with material
non-public information so that it can emphasize these particular
Insiders in its monitoring program.
e. The Compliance Department will place any written materials
containing the inside information in a confidential file.
4. Special Reports to Management
Promptly upon learning of a violation of the Company's Compliance Procedures for
Insider Trading, the Compliance Department should determine whether a written
report to senior management, the Company Executive Committee, and/or the
appropriate Board of Directors is warranted taking into consideration the nature
of the violation in light of all relevant facts and circumstances.
5. Annual Reports to Management
6
<PAGE>
On an annual basis, the Compliance Department should prepare a written report to
the Management of the Company setting forth a summary of existing procedures to
detect and prevent insider trading and recommendations for improvement, if any,
and a description of HGII's continuing educational program regarding Insider
Trading, including the dates and attendees of such programs since the last
report to management.
7
<PAGE>
Exhibit A
================================================================================
HANSBERGER GLOBAL INVESTORS
PERSONAL SECURITIES TRANSACTION REQUEST FORM
================================================================================
Employee Name:_________________________________________________________
Legal Name of Account:_________________________________________________
Transaction Date:_________________ Time Requested:_______________
BUY__________ SELL_______________ Security:_____________________
# of Shares/Face Value:___________ Approx. Price:________________
Broker:___________________________ Account #:____________________
Contact in Compliance Department: Kimberley Scott
To the best of my knowledge this proposed transaction does not violate the
provisions of the HGI Code of Ethics.
Employee Signature:_________________ Date:________________________
- --------------------------------------------------------------------------------
FOR COMPLIANCE USE ONLY
Contact in Trading:______________________________________________________
Contact in Research:_____________________________________________________
Comments: This security has no pending trade tickets, nor is it listed on the
database, value or source of funds lists.
Compliance Completed/Checked By:________________________________________
Compliance Officer:______________________________________________________
- --------------------------------------------------------------------------------
NOTIFICATION OF APPROVAL OR DENIAL
Date:_______________________________ Time Responded:______________
Approved:_______ Denied:_______
Comments:_____________________________________________________________
Form Completed By:_____________________________________________________
8
<PAGE>
- --------------------------------------------------------------------------------
ACKNOWLEDGMENT
--------------
I have received and reviewed the Hansberger Global Investors, Inc., Amended Code
---------------------------------
of Ethics. I understand its provisions and their applicability to me.
Name: ________________________________________________________________
(Please Print)
Position: ________________________________________________________________
Date: ________________________________________________________________
Company: ________________________________________________________________
Signature: ________________________________________________________________
Detach and return this acknowledgment to the Office of Compliance,
Attention Kim Scott, Fort Lauderdale, FL.
- -----------------------------------------
9
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