<PAGE>
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Hansberger
[LOGO] -----------------
Institutional
Series
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SEMI-ANNUAL REPORT
June 30, 2000
International Value Fund
Emerging Markets Fund
<PAGE>
SHAREHOLDER LETTER
August 15, 2000
Dear Fellow Shareholder:
Major global and international equity benchmarks posted negative returns
during the first half of 2000 as fears of higher interest rates and resurgent
inflation and their resultant effects on corporate profits dominated investor
behavior. For the first six months of 2000, the Morgan Stanley Capital
International (MSCI) World index posted a negative return of 2.4%, while the
MSCI Europe, Australia and Far East (EAFE) index declined 4.0%. Emerging
market equity benchmarks underperformed those in developed markets; the MSCI
Emerging Markets Free (EMF) index fell 8% during the period.
The best performing sectors so far this year are energy, healthcare, and
utilities and the worst performing sectors are telecommunication services,
materials, and consumer discretionary. Healthcare and utilities traditionally
perform well in a volatile market given their historically defensive nature.
The Funds have benefited from their exposure to both the utility and health
care stocks in Europe. The telecommunications sector has performed poorly
lately due to the fear of the higher than expected costs of the new Universal
Mobile Telephone System (UMTS or 3G) licenses being auctioned in the UK and
Europe. The Fund's exposures to these sectors are about the same as that of
our competitors and the indices, but about half of the exposure is in
telecommunications companies in emerging markets where we are finding better
longer term value relative to these companies' developed market peers. In many
of these markets, the mobile phone will likely be the primary access to the
Internet. While our materials exposure has detracted from the Fund's overall
performance so far this year, we are still seeing opportunities in companies
with some of the highest earnings growth over the next two years trading at
some of the lowest relative multiples. Modest global GDP growth combined with
the restructuring of the supply and demand model of many of these commodities
stocks should benefit these stocks over the coming months. Over the first
half, we also began to witness the unraveling of some of the dot com sector as
the market correction has, for the time being, closed the IPO window and thus
cash necessary for operations for many of these companies. Several
bankruptcies were announced and many new business plans have been put on hold
awaiting better market conditions. The Funds have had only small indirect
exposures to this sector.
The economies in Asia have continued to recover strongly over the first half
of the year with first quarter GDP growth generally much higher than consensus
estimates. The rest of the year should see this trend continue. In addition,
current account and balance of payment surpluses continue to register record
highs across most of the region that has led to a more stable currency
environment. This has allowed most central banks in Asia to continue to keep
relatively relaxed monetary policies. However, the poor performance of Asian
stock markets so far this year has not reflected the positive fundamentals of
the economies. The primary reason for this has been due to uncertainty over
the interest rate environment in the US. Although most of the economies in
Asia have essentially delinked from the US and are adopting independent
monetary policies, sentiment in the markets is still very much affected by
what happens in the US. As long as the markets in the US remain volatile and
uncertainty over future interest rate hikes remain, upside in the Asian
markets over the short term will be limited. However, as we approach a peak in
the US interest rate cycle, markets in Asia should begin to mirror the
performance of the economies and upside should be significant.
As we have mentioned in previous correspondence, we are finding more
opportunities in the Japanese market on a selective basis and are encouraged
by both positive macro and company specific announcements that should serve as
catalysts for future company and stock performance. For example, the recent
Tankan survey went from a -9 to +3 diffusion index showing the highest level
of business optimism in Japan in three years. Additionally, a recent study by
Flemings, the investment bank, showed that 60 of the top 200 companies in
Japan have now announced the establishment of stock option plans, up from 14
companies in 1998. NEC, the Japanese semiconductor and computer services
company, recently announced a new three-year financial target of 15% return on
equity (ROE) up from 1.1% in 1999, which is a good example of Japanese
managements' new focus on improving shareholder value.
At the end of May, the U.S. House of Representatives approved Permanent
Normal Trade Relations (PNTR) status for China opening the way for increased
Foreign Direct Investment (FDI) by multinational firms, lower tariffs for
imported goods, and a closer economic relationship with the rest of the world.
As we have stated in the past, we believe that PNTR status and admission into
the World Trade Organization (WTO) for China will overall be
<PAGE>
advantageous for both China and the rest of the world over the longer term.
Also in a historic summit, North and South Korea discussed mutual areas of
future cooperation. While extremely positive from a geopolitical perspective,
market participants worried over the potential costs of a hoped for
reunification drawing comparisons to the issues that affected East and West
Germany.
According to the Organisation for Economic Co-operation and Development
(OECD), European economies are on track for their strongest economic growth in
the last ten years and this has helped bring the employment rate for the
region down from 11.5% in 1997 to 9.2% in 2000. As a further result, corporate
profits are also strong and merger activity continues at a high level. One of
the few recent negative developments in Europe has been the potential delay of
implementation of German tax reform measures from 2001 to 2002. While this
delay weighed negatively on the performance of the German Mark during the
first half, it has not seemed to stop the restructuring of Germany as some
companies have devised new derivative structures to delay recognition of
capital gains. We have uncovered new investment opportunities in the
technology related and consumer staple sectors as European stock markets and
the Euro have corrected this year. After hitting a lifetime low in May, the
Euro has rebounded but is still below its level at the beginning of the year.
We continue to expect a strengthening of the Euro over the next 12-18 months
to the 105-110 Euro/$ level.
The strong improvement in Euroland unemployment has defied most market
observers who view rigid employment laws and labor immobility as a core
weakness for Europe and the Euro. However, the improvement in unemployment has
been a result of the increase in flexible work arrangements; according to a
study by Morgan Stanley Dean Witter, flexible jobs have increased from 22% of
all employment in 1991 to over 27% in 1998. This is creating what some view as
a two-tiered job market. This situation may be behind the slow invitations to
emerging European countries to join the Euro by existing members who fear the
threat of an expanding workforce and the mobility of this cheaper labor pool.
As a whole, emerging markets have performed poorly this year because of the
fear of a "knock-on" effect from a slow down in the US. We have lowered our
exposure to emerging markets in the International Value Fund over the course
of the year as sell targets on several stocks have been achieved and we have
found better risk adjusted relative value elsewhere. Generally better economic
conditions in Latin America, manifested in more stable interest rates,
currencies, economic output and fiscal and trade performance have been
practically ignored by the markets that continue to focus on the potential
impact of higher US interest rates as well as regional risk premiums. In
another historic event, Vicente Fox, the candidate of the conservative
National Action Party, won Mexico's presidential election ousting the
Institutional Revolutionary Party from 71 years of power.
The US equity market continues to be split into growth and value camps, but
the market continues to be very narrow on the growth side of the market.
Following the demise of many of the highly regarded Internet related stocks
over the past several months, investors have fled to the "safety" of the
handful of internet related stocks that actually have earnings, and have
pushed their valuations to what we believe to be excessive levels. A recent
Sanford Bernstein study showed that even with their recent underperformance,
"New Economy" stocks are discounting 14-15% ten-year earnings growth versus 2-
3% for the "Old Economy" stocks. This is a highly optimistic figure given that
most of the revenues for the "New Economy" companies are derived from "Old
Economy" customers. In fact, we believe that this artificial distinction
between "Old Economy" and "New Economy" will become irrelevant as all good
companies take advantage of the "new economy infrastructure." In the meantime
as this shift becomes evident, we are comfortable owning those stocks with
proven business models, access to capital, earnings, and attractive
valuations.
If, as expected, earnings growth in the US market slows over the next year
and we then see the follow on effect to other global stock markets, mainly due
to the effects of higher global interest rates and inflation, we would expect
our value oriented discipline to continue to perform well versus more growth
oriented styles. We appreciate the confidence that you have placed in our firm
and your ongoing support. Please contact us should you desire elaboration on
any of the above topics or if you have any further questions.
For the Hansberger Institutional Series
Thomas L. Hansberger, CFA
Chief Investment Officer
Hansberger Global Investors, Inc.
<PAGE>
PORTFOLIO MANAGEMENT REVIEW
INTERNATIONAL VALUE FUND
Market conditions during the six months ended June 30, 2000
During the first half of 2000, the major global stock markets retreated as
interest rates move higher in many major economies. Investor confidence waned
in reaction to the Federal Reserve's tightening bias in the U.S. During its
May meeting, the U.S. Federal Open Market Committee (FOMC) matched the sum of
its two previous interest rate hikes, in February and March, by raising the
Fed Funds rate 50 basis points to 6.50%. Investor sentiment oftentimes
deteriorates during a period of interest rate increases because there is a
heightened expectation for an economic slowdown. Because of its significance
in global demand, international markets are highly sensitive to the U.S.
economy.
Asian markets felt the pressure of the potential slowdown in the U.S
economy, as Asia was the poorest performer on a regional basis during the past
six months. The developed Asian markets did not escape the wrath as Japan
finished the period down -5.3%, Hong Kong down -13.1% and Singapore down -
22.7% based on the Morgan Stanley Capital International (MSCI) country
indices. In Japan, the recovery has been slow but the economy continues to
show signs of life. The Tankan business survey for June confirmed that
industrial output was rising. This was the first positive turn for the Tankan
in three years, which may reflect the strengthening economies throughout Asia.
Although economies in emerging Asia may be improving, the recovery has not
translated into appreciating stock prices on a broad basis. Although Malaysia
posted a 4.1% gain for the period, Thailand, the Philippines and Indonesia
posted negative returns of -36.0%, -35.9% and -43.5% respectively. In addition
to uncertainty about the demand from exports to the U.S. (generally between
20-30% of total exports in Southeast Asia countries), several emerging Asia
countries are also facing political turmoil. These events contributed to the
overall sluggishness in market performance throughout the region.
European markets, unlike the U.S., showed signs of accelerating growth
largely on the back of the weak Euro. Unfortunately, some of the growth was
curtailed as the European Central Bank (ECB) also raised interest rates. The
positive aspect is that interest rates in Europe are still generally low and
should not be detrimental for longer-term growth. Performance for the period
was mixed in the region as France and Italy posted gains of 6.2% and 4.2%,
respectively, while the U.K and Germany posted losses of -11.7% and -7.3%,
respectively.
Fund performance during the six months ended June 30, 2000
The Fund's total return for the half year ending June 30, 2000, was -5.23%
versus the MSCI EAFE Index return of -3.95% for the same period. The primary
factors affecting performance were the Fund's exposure to developing markets
and its overweight position in Asia. On a sector basis, pharmaceutical, energy
and utility exposure added to the Fund's performance while telecommunication,
basic materials and consumer discretionary stocks generally underperformed the
benchmark.
Market Outlook
Despite the threat of a slowing U.S. economy, there are numerous events
unfolding on a global basis that should reward international investors. In
Asia, we expect the recovery in Japan and China's accelerating economy to fuel
economic growth throughout the region. Europe's recovery continues to gain
momentum and this economic growth is likely to boost corporate earnings.
Overall, despite the potential of a U.S. economic slowdown, many international
markets are generating enough domestic demand that global growth is likely to
surprise on the upside over the near-term. Your Fund is positioned to take
advantage of this scenario.
Thank you for your interest and investment in the International Value Fund.
The analysts and portfolio managers at Hansberger Global Investors look
forward to serving you with our proven approach to international investing.
For the International Value Fund Team
Lauretta A. Reeves, CFA
Managing Director of Research
Hansberger Global Investors, Inc.
1
<PAGE>
Change in value of a $10,000 Investment
in the Hansberger International Fund vs. MSCI EAFE Index
1/1/97-6/30/00
[GRAPH]
Hansberger MSCI EAFE
International Fund Index
12/31/96 $10,000.00 $10,000.00
1/31/97 10,178.00 9,652.00
2/28/97 10,366.00 9,813.00
3/31/97 10,247.00 9,851.00
4/30/97 10,326.00 9,905.00
5/31/97 10,642.00 10,552.00
6/30/97 11,087.00 11,136.00
7/31/97 11,413.00 11,319.00
8/31/97 10,894.00 10,476.00
9/30/97 11,354.00 11,065.00
10/31/97 10,376.00 10,217.00
11/30/97 9,881.00 10,115.00
12/31/97 9,854.00 10,206.00
1/31/98 9.924.00 10,675.00
2/28/98 10,578.00 11,362.00
3/31/98 11,112.00 11,715.00
4/30/98 11,132.00 11,810.00
5/31/98 10,669.00 11,756.00
6/30/98 10,065.00 11,847.00
7/31/98 10,113.00 11,970.00
8/31/98 8,315.00 10,490.00
9/30/98 8,002.00 10,171.00
10/31/98 8,871.00 11,234.00
11/30/98 9,214.00 11,812.00
12/31/98 9,165.00 12,281.00
1/31/99 9,145.00 12,247.00
2/28/99 8,828.00 11,958.00
3/31/99 9,431.00 12,460.00
4/30/99 10,657.00 12,968.00
5/31/99 10,351.00 12,303.00
6/30/99 11,035.00 12,786.00
7/31/99 11,133.00 13,169.00
8/31/99 11,112.00 13,220.00
9/30/99 10,846.00 13,356.00
10/31/99 11,133.00 13,859.00
11/30/99 11,245.00 14,343.00
12/31/99 11,845.00 15,633.00
01/31/2000 11,329.00 14,643.00
02/29/2000 10,978.00 15,040.00
03/31/2000 11,711.00 15,626.00
04/30/2000 10,906.00 14,806.00
05/31/2000 10,731.00 14,448.00
06/30/2000 11,226.00 15,016.00
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Total Return
-------------------------------------------------------------------------------
Time Period Hansberger MSCI EAFE
International Value Fund Index
-------------------------------------------------------------------------------
Six Months (5.23)% (3.95)%
-------------------------------------------------------------------------------
One Year 1.73% 17.44%
-------------------------------------------------------------------------------
Average Annual
Since Inception (12/30/96) 3.36% 12.32%
-------------------------------------------------------------------------------
This graph compares the Fund's performance with the MSCI Europe Australasia Far
East ("EAFE") Index, a broad-based unmanaged index that represents the general
performance of international equity markets. Total returns for the Fund and the
index include reinvestment of all dividends and capital gains. The index does
not include commissions or fees that an investor purchasing the securities in
the index would pay. Past performance is no guarantee of future results, and
the investment return and principal value of an investment in the Fund will
fluctuate, so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Although the investment characteristics of the
index are similar to those of the Fund, the securities owned by the Fund and
those composing the index are likely to be different, and any securities that
the Fund and the index have in common are likely to have different weightings
in the respective portfolios. Investors cannot invest directly in the index.
2
<PAGE>
PORTFOLIO MANAGEMENT REVIEW
EMERGING MARKETS FUND
Market conditions during the six months ended June 30, 2000
Emerging markets had two very distinct performances in the first and second
quarters of this year. Following the outstanding performance of the last
quarter of 1999, the market consolidated its gains and traded sideways for
most of the six month period. However, the second quarter proved to be the
emerging markets' worst performing quarter since the third quarter of 1998,
when the Russian crisis affected markets worldwide. The spectacular fall of
many Nasdaq listed stocks in April and the volatility of that market coupled
with the uncertainty surrounding the behavior of interest rates in the US
dominated the emerging markets' performance throughout most of the second
quarter. Furthermore, telecommunication stocks, the Fund's largest sector
weighting, suffered along with the Nasdaq, as they were perceived to be part
of the expensive technology sector. Partially offsetting this poor performance
were the traditionally defensive energy, health care and utilities sectors
where the Fund maintains over-weighted positions. As a group, emerging markets
declined 7.99% in US Dollar terms during the first half of the year as
measured by the MSCI Emerging Markets Free Index, underperforming the world's
developed markets. The MSCI World Index declined 2.41%, while the EAFE (Europe
Asia and the Far East) Index declined 3.95% during the same period.
The economies in Asia continued to recover strongly over the first half of
the year with GDP growth generally much higher than consensus estimates.
Current account and balance of payment surpluses continue to register record
highs across most of the region leading to a more stable currency environment,
perhaps with the exception of Indonesia. This has allowed most central banks
in Asia to continue to keep relatively relaxed monetary policies. However, the
poor performance of Asian stock markets so far this year has not reflected the
positive fundamentals of the economies and only China posted a positive
performance, perhaps as a result of its entrance into the WTO and the recent
approval of Permanent Normal Trade Relations (PNTR) status by the US House of
Representatives.
Much better economic conditions in the Latin countries were also ignored by
the markets, which continued to focus on the potential impact of higher US
interest rates as well as on higher regional risk premiums associated with a
more volatile Nasdaq market. While Chile and Mexico completed successful
Presidential elections during the period, Venezuela and Peru were sources of
concern for their botched elections. Mexico was the bright spot in the region
where Vicente Fox, an opposition candidate, won the mandate ousting the
government party which held power for over 70 years.
Israel posted one of the best performances in the EMEA (Europe, Middle East
and Africa) region despite its strong technology bias and its Nasdaq links.
Turkey continues to struggle with its reform process, which is aimed at
reducing its high inflation rates to European-like levels, and as a result the
market has cooled off somewhat. Its government coalition has been seriously
tested during the last few months, but so far continues to maintain its unity.
Mr. Putin's government in Russia continues to make strides towards the
stabilization of the country's economy as well as its political system, and
investors are taking notice of the progress made. Macro figures are showing
great improvement, and long awaited structural reforms are finally being
implemented. South Africa's currency weakened strongly as it was affected by
developments in Zimbabwe and the potential implications in its own internal
policies.
Fund performance during the six months ended June 30, 2000
The Fund's total return was -10.51% for the six month period ended June 30,
2000 vs. -7.99% for the MSCI Emerging Markets Free Index. Within the asset
class, Eastern Europe (-3.1%) outperformed Latin America (-3.8%) and Asia (-
9.7%), with Israel and Venezuela showing the best returns at 26.5% and 19%,
respectively, for the period. Indonesia, Thailand and Philippines were the
worst performing countries declining by 43.5%, 36.0% and 35.9%, respectively.
In terms of the Fund's sector exposure, the relative overweight position in
the telecom sector in all three regions hurt performance as stocks in this
sector were affected by the negative performance of the tech-heavy Nasdaq
index.
Market Outlook
Some of the themes we were expecting for this year have materialized without
a significant impact on market performance, which makes us optimistic about
the potential for outperformance in the second half of the year. China's entry
into the WTO and its new trade relations with the US, Malaysia's inclusion
into the MSCI Emerging Market Index and Mexico's investment grade status
failed to drive those markets higher during the first half, but continue to be
important issues going into the second half of 2000. In addition, the
convergence of several Eastern European economies with the European Community,
and generally better economic growth in Asia and Latin America, add optimism
about those markets and their expected performance.
For the Emerging Markets Fund Team
Thomas L. Hansberger, CFA
Chief Investment Officer
Hansberger Global Investors, Inc.
3
<PAGE>
Change in value of a $10,000 Investment
in the Hansberger Emerging Markets Fund vs. MSCI Emerging Markets Free Index
1/1/97-6/30/00
[GRAPH]
Hansberger Emerging MSCI Emerging
Markets Fund Markets Free Index
12/30/96 $10,000.00 $10,000.00
1/31/97 10,375.00 10,682.00
2/28/97 10,623.00 11,140.00
3/31/97 10,356.00 10,847.00
4/30/97 10,375.00 10,866.00
5/31/97 10,603.00 11,177.00
6/30/97 11,215.00 11,775.00
7/31/97 11,947.00 11,951.00
8/31/97 11,334.00 10,430.00
9/30/97 11,483.00 10,719.00
10/31/97 9,753.00 8,960.00
11/30/97 8,647.00 8,633.00
12/31/97 8,489.00 8,841.00
1/31/98 7,720.00 8,148.00
2/28/98 8,579.00 8,999.00
3/31/98 8,759.00 9,389.00
4/30/98 8,679.00 9,287.00
5/31/98 7,570.00 8,014.00
6/30/98 6,671.00 7,173.00
7/31/98 6,701.00 7,401.00
8/31/98 4,754.00 5,261.00
9/30/98 4,934.00 5,595.00
10/31/98 5,553.00 6,184.00
11/30/98 6,152.00 6,698.00
12/31/98 5,924.00 6,601.00
1/31/99 6,004.00 6,495.00
2/28/99 5,793.00 6,558.00
3/31/99 6,405.00 7,422.00
4/30/99 7,668.00 8,340.00
5/31/99 7,627.00 8,292.00
6/30/99 8,630.00 9,233.00
7/31/99 8,229.00 8,982.00
8/31/99 8,098.00 9,064.00
9/30/99 7,397.00 8,757.00
10/31/99 7,688.00 8,943.00
11/30/99 8,389.00 9,745.00
12/31/99 9,822.00 10,985.00
1/31/2000 9,472.00 11,050.00
2/29/2000 9,452.00 11,196.00
3/31/2000 9,853.00 11,251.00
4/30/2000 8,860.00 10,184.00
5/31/2000 8,329.00 9,763.00
6/30/2000 8,790.00 10,107.00
-------------------------------------------------------------------------------
Total Return
-------------------------------------------------------------------------------
Time Period Hansberger Emerging MSCI Emerging
Markets Fund Markets Free Index
-------------------------------------------------------------------------------
Six Months (10.51)% (7.99)%
-------------------------------------------------------------------------------
One Year 1.86% 9.47%
-------------------------------------------------------------------------------
Average Annual
Since Inception (12/30/96) (3.62)% 0.31%
-------------------------------------------------------------------------------
This graph compares the Fund's performance with the MSCI Emerging Markets Free
Index, a broad-based unmanaged index that represents the general performance of
equity markets in developing markets. Total returns for the Fund and the index
include reinvestment of all dividends and capitalizations. The index does not
include commissions or fees that an investor purchasing the securities in the
index would pay. Past performance is no guarantee of future results, and the
investment return and principal value of an investment in the Fund will
fluctuate, so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Although the investment characteristics of the
index are similar to those of the Fund, the securities owned by the Fund and
those composing the index are likely to be different, and any securities that
the Fund and the index have in common are likely to have different weightings
in the respective portfolios. Investors cannot invest directly in the index.
4
<PAGE>
International Value Fund
Portfolio of Investments
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note A1)
--------------------------------------------------------------------------------
<C> <S> <C>
Common Stocks - 91.9%
Australia - 1.6%
269,090 National Australia Bank Ltd. ........................ $ 4,483,599
------------
Austria - 1.7%
44,816 Bank Austria AG...................................... 2,180,875
53,450 VA Technologie AG.................................... 2,813,110
------------
4,993,985
------------
Bermuda - 1.4%
73,500 XL Capital Limited................................... 3,978,188
------------
Brazil - 1.6%
55,000 Companhia Vale do Rio Doce S.A ADR................... 1,548,822
130,000 Embratel Participacoes S.A. ADR...................... 3,071,250
------------
4,620,072
------------
Croatia - 0.6%
161,000 Pliva d.d. GDR(c).................................... 1,731,909
------------
Czech Republic - 0.7%
295,500 Komercni Banka A.S. GDR(a)........................... 2,009,400
------------
Denmark - 1.6%
330,000 Nordic Baltic Holding AB............................. 2,404,418
26,100 Unidanmark A/S, Class A - Registered................. 2,135,215
------------
4,539,633
------------
Finland - 0.8%
183,400 Kemira Oyj........................................... 892,127
130,000 Metso Oyj............................................ 1,562,324
------------
2,454,451
------------
France - 3.3%
137,000 Alstom S.A........................................... 3,699,284
26,800 Compagnie de Saint Gobain S.A........................ 3,619,557
170,000 Usinor S.A........................................... 2,072,226
------------
9,391,067
------------
Germany - 4.2%
54,000 BASF AG.............................................. 2,188,971
56,000 DaimlerChrysler AG................................... 2,935,033
93,000 Jenoptik AG.......................................... 2,661,101
92,000 Veba AG.............................................. 4,431,355
------------
12,216,460
------------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note A1)
--------------------------------------------------------------------------------
<C> <S> <C>
Greece - 1.0%
115,000 Hellenic Telecommunications Organization S.A......... $ 2,803,766
------------
Hong Kong - 3.8%
301,000 HSBC Holdings plc.................................... 3,436,470
225,500 Hutchison Whampoa Ltd. .............................. 2,834,841
1,260,000 SmarTone Telecommunications Holdings Ltd............. 2,788,147
712,500 Wing Hang Bank Ltd. ................................. 1,773,138
------------
10,832,596
------------
Hungary - 0.9%
75,000 Matav Rt. ADR........................................ 2,582,813
------------
Ireland - 1.1%
1,155,000 Eircom Plc........................................... 3,084,589
------------
Italy - 1.6%
780,000 ENI S.p.A. .......................................... 4,500,982
------------
Japan - 26.2%
680,000 Asahi Chemical Industry Co. Ltd. .................... 4,804,748
308,000 Ataka Construction & Engineering..................... 792,162
500,000 Dai-Ichi Kangyo Bank Ltd. ........................... 3,791,983
205,000 Daiichi Pharmaceutical Co., Ltd. .................... 5,195,252
234,400 Daito Trust Construction Co. ........................ 3,864,525
390,000 Daiwa Securities Co., Ltd. .......................... 5,143,907
697,000 Dowa Fire & Marine Insurance Co. .................... 1,864,883
132,000 Fujitsu Ltd. ........................................ 4,563,946
470,000 Hitachi Ltd. ........................................ 6,774,695
118,000 Honda Motor Co Ltd. ................................. 4,013,189
1,125,000 JGC Corp. ........................................... 4,536,248
1,175,000 Marubeni Corp. ...................................... 4,040,463
184,000 Marui Co., Ltd. ..................................... 3,518,960
140,000 Nihon Unisys, Ltd. .................................. 2,829,149
1,505,000 Nippon Fire & Marine Insurance Co. .................. 4,523,011
662,000 Nishimatsu Construction Co., Ltd. ................... 2,606,962
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
International Value Fund (continued)
Portfolio of Investments
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note A1)
--------------------------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Japan (continued)
70 NTT Mobile Communications Network, Inc. ............. $ 1,892,694
129,000 Sankyo Co., Ltd. .................................... 2,910,688
653,000 Sumitomo Trust & Banking Co. Ltd. ................... 4,644,731
900,000 Toyo Trust & Banking................................. 3,035,470
------------
75,347,666
------------
Korea - 2.0%
143,000 Hyundai Electronics Industries Co. .................. 2,821,461
33,000 Pohang Iron & Steel Co., Ltd.(b)..................... 2,925,318
------------
5,746,779
------------
Malaysia - 1.3%
2,000,000 Technology Resources Industries Bhd. ................ 2,126,316
823,000 United Engineers (Malaysia).......................... 1,678,487
------------
3,804,803
------------
Mexico - 1.1%
55,000 Telefonos de Mexico S.A., Class L, ADR............... 3,141,875
------------
Netherlands - 2.1%
377,800 EVC International N.V. .............................. 3,423,283
60,000 Royal KPN NV......................................... 2,681,132
------------
6,104,415
------------
New Zealand - 2.9%
2,237,000 Air New Zealand Ltd., Class B........................ 2,277,391
2,164,563 Carter Holt Harvey Ltd. ............................. 1,878,684
1,264,900 Fletcher Challenge Energy............................ 4,124,324
------------
8,280,399
------------
Norway - 0.7%
111,700 Odfjell ASA.......................................... 1,430,967
31,600 Petroleum Geo-Services A/S........................... 539,149
------------
1,970,116
------------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note A1)
-------------------------------------------------------------------------------
<C> <S> <C>
Peru - 0.5%
111,600 Southern Peru Copper Corp. ......................... $ 1,360,125
------------
Philippines - 0.1%
218,200 Philippine National Bank............................ 285,047
------------
Portugal - 1.0%
245,000 Portugal Telecom.................................... 2,748,088
------------
Russia - 0.7%
40,000 LUKoil Holdings ADR................................. 2,044,800
------------
Singapore - 1.9%
650,000 City Developments Ltd. ............................. 2,520,984
439,872 United Overseas Bank Ltd. .......................... 2,877,310
------------
5,398,294
------------
Slovakia - 0.2%
256,500 Slovakofarma A.S. GDR(c)............................ 596,363
------------
Slovenia - 0.6%
192,300 SKB Banka GDR(c).................................... 1,644,165
------------
South Africa - 1.1%
73,752 AngloGold Ltd. ..................................... 3,015,396
------------
Spain - 2.8%
259,000 Iberdrola S.A. ..................................... 3,334,962
105,000 Repsol S.A. ........................................ 2,088,106
125,320 Telefonica S.A. .................................... 2,689,430
------------
8,112,498
------------
Sweden - 2.1%
31,500 ABB Ltd. ........................................... 3,646,692
174,500 Assidoman AB........................................ 2,480,715
------------
6,127,407
------------
Switzerland - 6.5%
2,000 Novartis AG, (Registered)........................... 3,164,534
415 Roche Holding AG.................................... 4,035,393
6,500 Schweizerische Lebensversicherungs-und
Rentenanstalt...................................... 3,880,656
12,500 Swisscom AG......................................... 4,324,597
22,800 UBS AG.............................................. 3,336,722
------------
18,741,902
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
International Value Fund (continued)
Portfolio of Investments
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note A1)
--------------------------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Taiwan - 0.5%
153,000 R.O.C. Taiwan Fund................................... $ 1,329,188
------------
Thailand - 1.7%
3,065,100 Bangkok Bank Public Co., Ltd.(a)..................... 3,755,579
200 Thai International Fund IDR.......................... 1,210,000
------------
4,965,579
------------
United Kingdom - 10.0%
130,000 Barclays plc......................................... 3,230,974
595,000 British Airways plc.................................. 3,420,215
167,274 Cable & Wireless plc................................. 2,831,466
935,000 Corus Group plc...................................... 1,364,871
370,000 Nycomed Amersham plc................................. 3,671,625
509,000 PowerGen plc......................................... 4,350,298
1,263,559 Rolls-Royce plc...................................... 4,482,199
129,571 Royal Bank of Scotland plc........................... 2,167,783
550,000 Unilever plc......................................... 3,327,940
------------
28,847,371
------------
Total -- Common Stocks
(Cost $254,370,244)................................. 263,835,786
------------
</TABLE>
(a)Non-income producing securities.
(b) Fair valued securities--See Note A1. Total Market value of fair valued
securities owned at June 30, 2000 was $2,925,318 or 1.0% of net assets.
(c)144A Security--Certain conditions for public sale may exist.
ADRAmerican Depositary Receipt.
GDRGlobal Depositary Receipt.
<TABLE>
<CAPTION>
Face Value
Amount (Note A1)
--------------------------------------------------------------------------------
<C> <S> <C>
U.S. Government Obligations - 3.4%
U. S. Treasury Bills - 3.4%
$9,393,000 07/20/00, 5.71%...................................... $ 9,359,635
385,000 09/21/00, 5.85%...................................... 380,068
------------
Total -- U.S. Government Obligations
(Cost $9,739,701)................................... 9,739,703
------------
Total Investments -- 95.3%
(Cost $264,109,945)................................. 273,575,489
Other Assets and Liabilities
(Net) -- 4.7%....................................... 13,532,664
------------
NET ASSETS -- 100%................................... $287,108,153
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Emerging Markets Fund
Portfolio of Investments
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note A1)
--------------------------------------------------------------------------------
<C> <S> <C>
Common Stocks - 93.4%
Argentina - 1.2%
140,000 Telecom Argentina S.A. ADR.......................... $ 3,850,000
------------
Brazil - 11.1%
100,000 Brasil Distribuicao Pao de Acucar GDR............... 3,212,500
176,900 Companhia Vale do Rio Doce S.A. ADR................. 4,981,575
265,000 Embratel Participacoes S.A. ADR..................... 6,260,625
242,000,000 Gerdau S.A. ........................................ 2,952,038
241,600 Petroleo Brasileiro S.A. ADR........................ 7,299,098
150,000 Tele Norte Leste Participacoes S.A. ADR............. 3,543,750
125,000 Unibanco - Uniao de Bancos Brasileiros S.A. GDR..... 3,593,750
850,000 Usiminas S.A. Pfd. A Shares......................... 3,930,690
------------
35,774,026
------------
Chile - 1.1%
185,948 Cia. de Telecomunicaciones de Chile S.A. ADR........ 3,370,308
------------
China - 4.6%
664,000 Huaneng Power International, Inc. ADR............... 8,839,500
43,634,000 Shanghai Petrochemical Co. Ltd., Class H............ 5,933,172
------------
14,772,672
------------
Croatia - 1.1%
343,000 Pliva d.d. GDR(c)................................... 3,689,720
------------
Czech Republic - 0.9%
454,999 Komercni Banka A.S. GDR............................. 3,093,993
------------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note A1)
--------------------------------------------------------------------------------
<C> <S> <C>
Greece - 1.1%
146,666 Hellenic Telecommunications Organization S.A. ...... $ 3,575,801
------------
Hong Kong - 6.6%
512,124 HSBC Holdings plc................................... 5,846,839
425,700 Hutchison Whampoa Ltd. ............................. 5,351,626
901,000 SmarTone Telecommunications Holdings Ltd. .......... 1,993,746
659,500 Swire Pacific Ltd., Class A......................... 3,857,764
1,741,500 Wing Hang Bank Ltd. ................................ 4,333,924
------------
21,383,899
------------
Hungary - 3.3%
88,600 BorsodChem Rt. ..................................... 2,734,728
82,800 EGIS Rt. ........................................... 3,462,275
130,000 Matav Rt. ADR....................................... 4,476,875
------------
10,673,878
------------
India - 4.8%
485,000 Bajaj Auto Ltd. GDR(c).............................. 4,437,750
820,000 Gujarat Ambuja Cements Ltd. GDR(c).................. 3,526,000
225,000 Larsen & Toubro Ltd. GDR(c)......................... 2,500,312
245,000 Mahanagar Telephone Nigam Ltd. GDR(c)............... 2,495,938
975,000 Tata Engineering & Locomotive GDR(c)................ 2,691,195
------------
15,651,195
------------
Indonesia - 2.1%
5,085,000 PT Indofood Sukses Makmur Tbk. ..................... 2,774,165
191,600 PT Indosat ADR...................................... 2,179,450
2,011,000 PT Semen Gresik (Persero) Tbk. ..................... 1,826,615
------------
6,780,230
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Emerging Markets Fund (continued)
Portfolio of Investments
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note A1)
--------------------------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Israel - 2.6%
155,100 ECI Telecom Ltd. ................................... $ 5,525,437
300,000 Partner Communications ADR.......................... 2,850,000
------------
8,375,437
------------
Korea - 9.8%
300,000 Hyundai Electronics Industries Co................... 5,919,150
339,275 Kookmin Bank GDR(c)................................. 4,308,792
122,000 Korea Electric Power Corp........................... 3,785,745
66,000 Korea Telecom Corp.................................. 5,812,605
175,000 Pohang Iron & Steel Co.(b).......................... 4,200,000
13,342 Samsung Electronics Co.............................. 4,415,325
4 Samsung Fire & Marine Insurance..................... 111
94,790 SK Telecom Co., Ltd. ADR............................ 3,442,062
------------
31,883,790
------------
Malaysia - 7.5%
1,300,000 Commerce Asset-Holding Bhd.......................... 3,763,158
1,090,000 Malayan Banking Bhd................................. 4,417,368
408,000 Malaysian Pacific Industries........................ 4,187,368
3,135,000 Road Builder (M) Holdings Bhd....................... 3,465,000
3,000,000 Technology Resources Industries Bhd................. 3,189,474
800,000 Telekom Malaysia Bhd................................ 2,757,895
1,300,000 United Engineers (Malaysia) Ltd..................... 2,651,316
------------
24,431,579
------------
Mexico - 9.4%
207,129 Cemex S.A. ADR(a)................................... 4,841,640
1,200,000 Grupo Financiero Banamex Accival S.A.(a)............ 5,121,171
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note A1)
--------------------------------------------------------------------------------
<C> <S> <C>
Mexico (continued)
200,000 Grupo Iusacell S.A de C.V. ADR...................... $ 3,125,000
958,000 Grupo Mexico S.A., Series B......................... 2,657,461
40,000 Grupo Televisa S.A. ADR............................. 2,757,500
67,400 Telefonos de Mexico S.A., Class L, ADR.............. 3,850,225
259,000 Tubos de Acero de Mexico S.A. ADR................... 3,593,625
192,000 Wal-Mart De Mexico S.A. ADR......................... 4,505,856
------------
30,452,478
------------
Peru - 1.2%
284,000 Credicorp Ltd....................................... 2,556,000
104,600 Southern Peru Copper Corp........................... 1,274,812
------------
3,830,812
------------
Philippines - 2.1%
449,460 Metropolitan Bank & Trust Co........................ 2,099,212
200,000 Philippine Long Distance Telephone Company.......... 3,583,815
770,100 Philippine National Bank(a)......................... 1,006,027
------------
6,689,054
------------
Poland - 4.9%
68,200 BRE Bank S.A........................................ 2,114,413
1,000,000 Polski Koncern Naftowy Orlen S.A.................... 4,707,882
561,300 Telekomunikacja Polska S.A. GDR(c).................. 4,021,378
345,284 Zaclady Metali Lekkich Kety(a)...................... 4,971,823
------------
15,815,496
------------
Russia - 6.1%
48,000 GAZ Auto Plant...................................... 1,152,000
105,000 LUKoil Holdings ADR................................. 5,367,600
41,300 Mobile Telesystems ADR.............................. 887,950
400,000 Norilsk Nickel(a)................................... 2,930,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Emerging Markets Fund (continued)
Portfolio of Investments
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note A1)
--------------------------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Russia (continued)
362,370 Rostelecom ADR...................................... $ 4,937,246
344,800 Surgutneftegaz ADR.................................. 4,594,460
------------
19,869,256
------------
Singapore - 3.0%
810,000 City Developments Ltd. ............................. 3,141,534
302,380 DBS Group Holdings Ltd. ............................ 3,885,867
427,680 United Overseas Bank Ltd. .......................... 2,797,560
------------
9,824,961
------------
Slovakia - 1.6%
13,000 SES A.S.(a)(b)...................................... 31,981
1,224,000 Slovakofarma A.S. GDR(a)(c)......................... 2,845,800
186,340 Slovnaft A.S. ...................................... 2,208,659
------------
5,086,440
------------
South Africa - 1.6%
1,400,000 Old Mutual plc...................................... 3,076,074
550,300 Standard Bank Investment Corp., Ltd. ............... 2,152,465
------------
5,228,539
------------
Taiwan - 2.3%
1,128,000 Acer Peripherals Inc. .............................. 3,194,011
1,496,400 United Microelectronics............................. 4,164,108
------------
7,358,119
------------
Thailand - 3.4%
390,000 Advanced Info Service Public Co., Ltd. ............. 4,858,200
2,084,300 Bangkok Bank Public Co., Ltd.(a).................... 2,553,833
3,240,000 Land & House Public Co., Ltd. ...................... 1,695,469
2,442,200 Thai Farmer's Bank Public Co., Ltd.(a) ............. 2,057,246
------------
11,164,748
------------
Total -- Common Stocks
(Cost $256,165,496)................................ 302,626,431
------------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note A1)
--------------------------------------------------------------------------------
<C> <S> <C>
Warrants - 0.0%
Mexico - 0.0%
10,820 Cemex S.A. Warrants expiring 12/13/02(a)
(Cost $18,935)..................................... $ 28,746
------------
<CAPTION>
Value
Face Amount (Note A1)
--------------------------------------------------------------------------------
<C> <S> <C>
U.S. Government Obligations - 7.4%
U.S. Treasury Bills - 7.4%
$ 6,044,000 07/20/00, 5.71%..................................... $ 6,026,388
18,124,000 09/21/00, 5.85%..................................... 17,891,788
------------
Total -- U.S. Government Obligations
(Cost $23,918,173)................................. 23,918,176
------------
TOTAL INVESTMENTS -- 100.8%
(Cost $280,102,604)................................. 326,573,353
Other Assets and Liabilities
(Net) -- (0.8)%.................................... (2,666,128)
------------
NET ASSETS -- 100%.................................. $323,907,225
============
</TABLE>
(a)Non-income producing securities.
(b) Fair valued securities--See Note A1. Total Market value of fair valued
securities owned at June 30, 2000 was $31,981 or 0.0% of net assets.
(c)144A Security--Certain conditions for public sale may exist.
ADRAmerican Depositary Receipt.
GDRGlobal Depositary Receipt.
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Statements of Assets and Liabilities
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
International
Value Emerging
Fund Markets Fund
------------- ------------
<S> <C> <C>
ASSETS:
Investments, at Cost -- see accompanying
portfolios........................................ $264,109,945 $280,102,604
============ ============
Investments, at Value (Note A1).................... $273,575,489 $326,573,353
Cash............................................... 3,600,385 --
Foreign Currency (Cost $2,146,829, $2,563,201)..... 2,132,201 2,532,197
Receivable for Fund Shares Sold.................... -- 5,560
Receivable for Investments Sold.................... 6,258,398 2,614,755
Dividends Receivable............................... 1,969,686 2,045,997
Deferred Organization Costs (Note A5).............. 15,124 25,256
Other Assets....................................... 16,964 17,855
------------ ------------
Total Assets...................................... 287,568,247 333,814,973
------------ ------------
LIABILITIES:
Payable for Investments Purchased.................. -- 8,929,927
Overdraft Payable.................................. -- 578,701
Investment Advisory Fees Payable (Note B).......... 150,812 203,869
Administration Fees Payable........................ 31,896 36,457
Custodian Fees Payable............................. 65,999 95,148
Professional Fees Payable.......................... 23,920 23,956
Accrued Expenses and Other Liabilities............. 187,467 39,690
------------ ------------
Total Liabilities................................. 460,094 9,907,748
------------ ------------
Net Assets......................................... $287,108,153 $323,907,225
============ ============
NET ASSETS CONSIST OF:
Paid-in Capital.................................... $268,497,025 $271,596,877
Undistributed Net Investment Income................ 3,923,057 1,953,677
Accumulated Net Realized Gain...................... 5,244,480 3,922,704
Unrealized Appreciation of Investments and Foreign
Currency Translations............................. 9,443,591 46,433,967
------------ ------------
Net Assets......................................... $287,108,153 $323,907,225
============ ============
Shares of Beneficial Interest Outstanding
(unlimited authorization, no par value)........... 26,384,134 36,950,917
============ ============
Net Asset Value Per Share.......................... $ 10.88 $ 8.77
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Statements of Operations
Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
International
Value Emerging
Fund Markets Fund
------------- ------------
<S> <C> <C>
Investment Income:
Dividends........................................ $ 4,518,338 $ 3,887,424
Interest......................................... 460,374 286,058
------------ ------------
Total Income.................................... 4,978,712 4,173,482
------------ ------------
Expenses:
Investment Advisory Fees (Note B):
Basic Fees...................................... 1,218,132 1,654,074
Less: Fees Waived............................... (63,500) (91,981)
------------ ------------
Investment Advisory Fees--Net.................... 1,154,632 1,562,093
Administration Fees.............................. 193,209 198,965
Custodian Fees................................... 204,929 292,135
Professional Fees................................ 41,355 40,696
Trustees' Fees and Expenses (Note E)............. 3,418 3,262
Amortization of Organization Costs (Note A5)..... 5,040 --
Miscellaneous Expenses........................... 23,575 18,004
------------ ------------
Net Expenses..................................... 1,626,158 2,115,155
------------ ------------
Net Investment Income............................ 3,352,554 2,058,327
------------ ------------
Net Realized Gain (Loss):
Security Transactions............................ 6,589,972 20,705,259
Foreign Currency Transactions.................... (900,880) (336,167)
------------ ------------
Net Realized Gain............................... 5,689,092 20,369,092
------------ ------------
Net Change in Unrealized Appreciation
(Depreciation) on:
Investments...................................... (29,620,544) (60,317,708)
Foreign Currency Translations.................... (7,964) (67,091)
------------ ------------
Net Unrealized Appreciation (Depreciation) ..... (29,628,508) (60,384,799)
------------ ------------
Net Realized Gain (Loss) and Unrealized
Appreciation (Depreciation)..................... (23,939,416) (40,015,707)
------------ ------------
Net Increase (Decrease) in Net Assets Resulting
from Operations................................. $(20,586,862) $(37,957,380)
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
International Value Fund
----------------------------------
Six Months Ended
June 30, 2000 Year Ended
(Unaudited) December 31, 1999
---------------- -----------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net Investment Income...................... $ 3,352,554 $ 4,223,588
Net Realized Gain.......................... 5,689,092 15,412,793
Net Unrealized Appreciation
(Depreciation)............................ (29,628,508) 62,911,019
------------ ------------
Net Increase (Decrease) in Net Assets
Resulting from Operations................. (20,586,862) 82,547,400
------------ ------------
Distributions:
Net Investment Income...................... -- (3,437,712)
Capital Gains.............................. -- --
------------ ------------
Total Distributions....................... -- (3,437,712)
------------ ------------
Capital Share Transactions (Note G):
Proceeds from Shares Sold.................. 20,280,963 27,232,804
Net Asset Value on Reinvestment of
Distributions............................. -- 3,015,004
Cost of Shares Redeemed.................... (79,567,821) (23,566,302)
Transaction Fees........................... 466,418 231,583
------------ ------------
Increase (Decrease) in Net Assets from
Capital Share Transactions................ (58,820,440) 6,913,089
------------ ------------
Net Increase (Decrease) in Net Assets...... (79,407,302) 86,022,777
Net Assets:
Beginning of Period....................... 366,515,455 280,492,678
------------ ------------
End of Period............................. $287,108,153 $366,515,455
============ ============
Undistributed Net Investment Income
Included in End of Period Net Assets...... $ 3,923,057 $ 570,503
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Emerging Markets Fund
----------------------------------
Six Months Ended
June 30, 2000 Year Ended
(Unaudited) December 31, 1999
---------------- -----------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net Investment Income...................... $ 2,058,327 $ 953,370
Net Realized Gain.......................... 20,369,092 8,148,655
Net Unrealized Appreciation
(Depreciation)............................ (60,384,799) 113,501,407
------------ ------------
Net Increase (Decrease) in Net Assets
Resulting from Operations................. (37,957,380) 122,603,432
------------ ------------
Capital Share Transactions (Note G):
Proceeds from Shares Sold.................. 13,475,290 91,845,766
Net Asset Value on Reinvestment of
Distributions............................. -- --
Cost of Shares Redeemed.................... (1,969,897) (7,810,657)
Transaction Fees........................... 153,143 896,795
------------ ------------
Increase in Net Assets from Capital Share
Transactions.............................. 11,658,536 84,931,904
------------ ------------
Net Increase (Decrease) in Net Assets...... (26,298,844) 207,535,336
Net Assets:
Beginning of Period....................... 350,206,069 142,670,733
------------ ------------
End of Period............................. $323,907,225 $350,206,069
============ ============
Undistributed Net Investment Income (Loss)
Included in End of Period Net Assets...... $ 1,953,677 $ (104,650)
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
Financial Highlights
For a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
International Value Fund
Six Months Ended -------------------------------------------------------------------------
June 30, 2000 Year Ended Year Ended Year Ended Period Ended
(Unaudited) December 31, 1999 December 31, 1998 December 31, 1997 December 31, 1996*+
---------------- ----------------- ----------------- ----------------- -------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 11.49 $ 8.97 $ 9.79 $ 10.12 $10.12
Income from Investment
Operations:
Net Investment Income... 0.13 0.13 0.14 0.10 --
Net Realized and
Unrealized Gain
(Loss)................. (0.74) 2.50 (0.81) (0.25) --
-------- -------- -------- -------- ------
Total from Investment
Operations............ (0.61) 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.... 0.00 (0.11) (0.15) (0.18) --
-------- -------- -------- -------- ------
Net Asset Value, End of
Period................. $ 10.88 $ 11.49 $ 8.97 $ 9.79 $10.12
======== ======== ======== ======== ======
Total Return............ (5.23)% 29.35 % (6.96)% (1.46)% 0.00 %
Ratios and Supplemental
Data:+
Net Assets, End of
Period (in Thousands).. $287,108 $366,515 $280,493 $186,559 $4,296
Ratio of Expenses to
Average Net Assets(1).. 1.00 %** 1.00 % 1.00 % 1.00 % 1.00 %**
Ratio of Net Investment
Income to Average Net
Assets(1).............. 2.06 %** 1.31 % 1.82 % 1.84 % 3.50 %**
Portfolio Turnover
Rate................... 33 % 51 % 32 % 14 % 0 %
--------------------------------------------
(1) Effect of voluntary expense limitation
during the period:
Ratio of Expenses to
Average Net Assets.... 1.04 %** 1.03 % 1.10 % 1.29 % 77.13 %**
Ratio of Net Investment
Income (Loss) to
Average Net Assets.... 2.02 %** 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.
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
Financial Highlights
For a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Six Months Emerging Markets Fund
Ended -------------------------------------------------------------------------
June 30, 2000 Year Ended Year Ended Year Ended Period Ended
(Unaudited) December 31, 1999 December 31, 1998 December 31, 1997 December 31, 1996*+
------------- ----------------- ----------------- ----------------- -------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 9.80 $ 5.91 $ 8.50 $ 10.12 $10.12
-------- -------- -------- ------- ------
Income from Investment
Operations:
Net Investment Income... 0.06 0.03 0.04 0.05 --
Net Realized and
Unrealized Gain
(Loss)................. (1.09) 3.86 (2.61) (1.58) --
-------- -------- -------- ------- ------
Total from Investment
Operations............ (1.03) 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................. $ 8.77 $ 9.80 $ 5.91 $ 8.50 $10.12
======== ======== ======== ======= ======
Total Return............ (10.51)% 65.82 % (30.20)% (15.11)% 0.00 %
Ratios and Supplemental
Data:+
Net Assets, End of
Period (in Thousands).. $323,907 $350,206 $142,671 $36,720 $5,233
Ratio of Expenses to
Average Net Assets(1).. 1.25 %** 1.25 % 1.25 % 1.50 % 1.50 %**
Ratio of Net Investment
Income to Average Net
Assets(1).............. 1.21 %** 0.39 % 1.08 % 1.12 % 2.87 %**
Portfolio Turnover
Rate................... 27 % 43 % 44 % 15 % 0 %
--------------------------------------------
(1) Effect of voluntary
expense limitation
during the period:
Ratio of Expenses to
Average Net Assets.... 1.30 %** 1.36 % 1.68 % 2.18 % 65.28 %**
Ratio of Net Investment
Income (Loss) to
Average Net Assets.... 1.16 %** 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.
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
Notes to Financial Statements
June 30, 2000 (Unaudited)
Hansberger Institutional Series (the "Trust"), a Massachusetts business trust,
is registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company. As of June 30, 2000, the Trust was
comprised of two separate active, diversified portfolios (individually re-
ferred to as a "Fund", collectively as the "Funds"). The International Value
Fund and the Emerging Markets Fund, each a Fund of the Trust, commenced opera-
tions on December 30, 1996.
The International Value Fund seeks to achieve long-term capital growth through
a flexible policy of investing in stocks and debt obligations of companies and
governments outside the United States including developing countries. The
Emerging Markets Fund seeks to achieve long-term capital growth through a pol-
icy of investing primarily in publicly traded equity securities of companies
located in emerging markets.
A. Accounting Policies: The following significant accounting policies are in
conformity with generally accepted accounting principles for investment compa-
nies. Such policies are consistently followed by the Trust in the preparation
of the financial statements. Generally accepted accounting principles may re-
quire management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could dif-
fer from those estimates.
1. Security Valuation: Equity securities listed on a U.S. exchange are val-
ued at the latest quoted sales price on the valuation date. Securities
listed on a foreign exchange are valued at their closing price. Unlisted se-
curities and listed securities not traded on the valuation date for which
market quotations are readily available are valued at a price within a range
not exceeding the current asked price nor less than the current bid price.
Bonds and other fixed income securities may be valued according to the
broadest and most representative market. In addition, bonds and other fixed
income securities may be valued on the basis of prices provided by a pricing
service which are based primarily on institutional size trading in similar
groups of securities. Securities not priced in this manner are valued at the
most recently quoted bid price, or, when securities exchange valuations are
used, at the latest quoted sale price on the day of valuation. If there is
no such reported sale, the latest quoted bid price will be used. Debt secu-
rities purchased with remaining maturities of 60 days or less are valued at
amortized cost, which approximates market value. All other securities and
assets for which market values are not readily available, including re-
stricted securities and unlisted foreign securities, are valued at fair
value as determined in good faith by the Board of Trustees, although the ac-
tual calculations may be done by others.
The Funds' investments in emerging markets or developing markets may subject
the Funds to a greater degree of risk than in a developed market. Risks as-
sociated with these developing markets, attributable to political, social or
economic factors, may affect the price of the Funds' investments and income
generated by these investments, as well as the Funds' ability to repatriate
such amounts.
2. Foreign Currency Translation: The accounting records of the Funds are
maintained in U.S. dollars. Investment securities and other assets and lia-
bilities denominated in a foreign currency are translated into U.S. dollars
at the foreign currency exchange rates applicable on that day. Purchases and
sales of securities, income receipts and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates of
the transactions. Net realized gains and losses on foreign currency transac-
tions represent net gains and losses from sales and maturities of forward
currency contracts, disposition of foreign currencies, currency gains and
losses realized between the trade and settlement dates on securities trans-
actions and the difference between the amount of net investment income ac-
crued and the U.S. dollar amount actually received. The effect of changes in
foreign currency exchange rates on investments in securities are not segre-
gated in the Statement of Operations from the effects of changes in market
prices of those securities, but are included with the net realized and
unrealized gain or loss on investment in securities.
3. Forward Currency Exchange Contracts: The Funds may enter into forward
currency exchange contracts in connection with planned purchases or sales of
securities or to hedge the value of some or all of a Fund's portfolio secu-
rities. A forward currency contract is an agreement between two parties to
purchase and sell currency at a set price on a future date. The market value
of a forward currency contract fluctuates with changes in currency exchange
rates applicable on that day. Forward currency contracts are marked-to-mar-
ket daily using the forward foreign currency exchange rates applicable on
that day or at such other rates as deemed appropriate. The change in value
is
17
<PAGE>
Notes to Financial Statements (continued)
recorded by the Funds as an unrealized gain or loss. When a forward currency
contract is extinguished, either by delivering the currency or by entering
into another forward currency contract, the Fund records a realized gain or
loss equal to the difference between the value of the contract at the time
it was opened and the value of the contract at settlement date. The Funds
could be exposed to risk if the counterparties are unable to meet the terms
of the contracts or if the value of the currency changes unfavorably rela-
tive to the U.S. dollar.
4. Taxes: It is each Fund's intention to qualify as a regulated investment
company and distribute all of its taxable income. Accordingly, no provision
for Federal income taxes is required in the financial statements. The Funds
may be subject to taxes imposed by countries in which it invests. Such taxes
are generally based on income and/or capital gains earned or repatriated.
Taxes are accrued and applied to net investment income, net realized capital
gains and net unrealized appreciation as the income and/or capital gains are
earned.
5. Organizational Costs: The organizational costs of the Funds are being am-
ortized on a straight-line basis over a period of five years beginning with
each Fund's commencement of operations. Hansberger Global Investors, Inc.
has agreed that in the event any of its initial shares in a Fund are re-
deemed, the proceeds on redemption will be reduced by the pro-rata portion
of any unamortized organizational costs in the same proportion as the number
of shares redeemed bears to the initial shares held at time of redemption.
6. Other: Security transactions are accounted for on the date the securities
are purchased or sold. Realized gains and losses on the sale of investment
securities are determined on the specific identified cost basis. Dividend
income is recorded on the ex-date (except that certain dividends from for-
eign securities where the ex-dividend date may have passed are recorded as
soon as the Fund is informed of the ex-dividend date in the exercise of rea-
sonable diligence) net of applicable withholding taxes where recovery of
such taxes is not reasonably assured. Interest income is recognized on the
accrual basis except where collection is in doubt. Discounts and premiums on
securities purchased are amortized according to the effective yield method
over their respective lives. Most expenses of the Trust can be directly at-
tributed to a particular Fund. Expenses which cannot be directly attributed
are apportioned among the Funds based upon relative net assets. Distribu-
tions for the Funds are recorded on the ex-date. Income and capital gain
distributions are determined in accordance with U.S. Federal income tax reg-
ulations, which may differ from generally accepted accounting principles.
These differences are primarily due to differing book and tax treatment for
organizational expenses.
Permanent book and tax basis differences relating to shareholder distribu-
tions may result in reclassifications to paid-in capital, undistributed net
investment income (loss) and accumulated net realized gain (loss) on invest-
ments and foreign currency transactions. Undistributed net investment income
(loss) and accumulated net realized gain (loss) may include temporary book
and tax differences which should reverse in a subsequent period.
Distributions in excess of tax basis earnings and profits will be reported
in the Funds' financial statements as a return of capital. Furthermore, dif-
ferences in the recognition or classification of income between the finan-
cial statements and tax earnings and profits which result in temporary over-
distributions for financial statement purposes are classified as distribu-
tions in excess of net investment income or in excess of accumulated net re-
alized gains.
Permanent book and tax basis differences, if any, are not included in ending
undistributed net investment income for the purpose of calculating net in-
vestment income per share in the Financial Highlights.
B. Adviser: Hansberger Global Investors, Inc., a wholly-owned subsidiary of
Hansberger Group, Inc., (the "Adviser") provides each Fund with investment ad-
visory services pursuant to an investment advisory agreement at a monthly fee
calculated at the annual rate of 0.75% and 1.00% of average daily net assets
of the International Value Fund and the Emerging Markets Fund, respectively.
The Adviser has voluntarily agreed to reduce advisory fees payable to it and
to reimburse the Funds, if necessary, if the annual operating expenses as de-
fined, expressed as a percentage of average daily net assets, exceed the maxi-
mum ratios of 1.00% for the International Value Fund and 1.25% for the Emerg-
ing Markets Fund. The Adviser, at its discretion, may revise or discontinue
the voluntary fee waivers and reimbursements at any time.
18
<PAGE>
Notes to Financial Statements (continued)
C. Administrator: Chase Global Funds Services Company (the "Administrator" or
"CGFSC"), a subsidiary of The Chase Manhattan Bank, provides the Trust with ad-
ministrative, dividend disbursing and transfer agent services pursuant to an
Administrative Agreement (the "Agreement"). Under the Agreement the Trust pays
the Administrator a monthly fee in proportion to the Funds combined average
daily net assets at the following annual rate: 0.12% of the first $500 million
of average daily net assets, 0.08% for the next $500 million of average daily
net assets, and 0.06% for average daily net assets over $1 billion. Certain em-
ployees of CGFSC are officers of the Fund.
D. Custodian: The Chase Manhattan Bank serves as the Trust's custodian in ac-
cordance with a custodian agreement. Custodian fees are computed and payable
monthly based on assets held, investment purchases and sales activity, an ac-
count maintenance fee, plus reimbursement for certain out-of-pocket expenses.
E. Trustee Fees: The Trust pays each Trustee, who is not also an officer or af-
filiated person, an annual fee plus travel and other expenses incurred in at-
tending Board meetings. Trustees who are also officers or affiliated persons
receive no remuneration for their service as Trustees.
Expenses for the period ended June 30, 2000, include legal fees paid to Morgan,
Lewis & Bockius LLP. A partner of that firm is a Trustee to the Trust.
F. Purchases and Sales: For the period ended June 30, 2000, purchases and sales
of investment securities other than long-term U.S. Government securities and
short-term investments were:
<TABLE>
<CAPTION>
Fund Purchases Sales
---- ------------ ------------
<S> <C> <C>
International Value Fund.............................. $101,137,487 $166,553,397
Emerging Markets Fund................................. 86,411,380 93,614,860
</TABLE>
There were no purchases or sales of long-term U.S. Government securities during
the period ended June 30, 2000.
During the period ended June 30, 2000, the Funds paid brokerage commissions to
Salomon Smith Barney, an affiliated broker/dealer of the Adviser, as follows:
<TABLE>
<CAPTION>
Fund Salomon Smith Barney
---- --------------------
<S> <C>
International Value Fund................................... $62,487
Emerging Markets Fund...................................... 17,843
</TABLE>
G. Capital Share Transactions: Transactions in fund shares for the periods in-
dicated below:
<TABLE>
<CAPTION>
International Value
Fund Emerging Markets Fund
---------------------- ---------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
6/30/00 12/31/99 6/30/00 12/31/99
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Shares sold...................... 1,899,484 2,674,774 1,447,445 12,635,405
Shares issued on reinvestment of
distributions................... -- 268,494 -- --
Shares repurchased............... 7,417,181 2,303,890 221,697 1,045,466
---------- ---------- ---------- ----------
Increase (decrease).............. (5,517,697) 639,378 1,225,748 11,589,939
Fund shares:
Beginning of period.............. 31,901,831 31,262,453 35,725,169 24,135,230
---------- ---------- ---------- ----------
End of period.................... 26,384,134 31,901,831 36,950,917 35,725,169
========== ========== ========== ==========
</TABLE>
Shareholders entering after April 1, 1997, are charged a transaction fee in
connection with each purchase and redemption of shares of each Fund. The trans-
action fee is 0.50% for the International Value Fund and 1.00% for the Emerging
Markets Fund. The transaction fee is not a sales charge and is retained by the
Funds. The fee does not apply to and is not charged in connection with ex-
changes 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 fee.
H. Other: At June 30, 2000, cost, unrealized appreciation, unrealized (depreci-
ation), and net unrealized appreciation (depreciation) for U.S. Federal income
tax purposes of the investments of the Funds were:
<TABLE>
<CAPTION>
Net Unrealized
Unrealized Unrealized Appreciation
Fund Cost Appreciation (Depreciation) (Depreciation)
---- ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C>
International Value
Fund................... $264,109,945 $37,890,550 $(28,425,006) $9,465,544
Emerging Markets Fund... 280,102,604 74,321,288 (27,850,539) 46,470,749
</TABLE>
From time to time, certain Funds of the Trust have shareholders that hold a
significant portion of a Fund's outstanding shares. Investment activities of
these shareholders could have a material impact on those Funds.
At December 31, 1999, the International Value Fund and the Emerging Markets
Fund had a capital loss carryforward of $394,999 and $16,445,903, respectively,
to offset future capital gains which will expire December 31, 2006.
19
