N
OTES
TO
F
INANCIAL
S
TATEMENTS
December 31, 2013
1. Organization.
International Growth Fund (the
“Fund”) is the sole series of Hansberger International Series (the “Trust”), and is organized as a Massachusetts business trust. The Trust is registered under the Investment Company Act of 1940, as amended (the “1940
Act”) as an open-end management investment company. The Declaration of Trust permits the Board of Trustees to authorize the issuance of an unlimited number of shares of the Trust in multiple series.
The Fund is a diversified investment company.
The Fund offers Institutional Class and Advisor Class shares.
Expenses of the Fund are borne
pro rata
by the holders of each class of shares, except that each class bears expenses unique to that class (including transfer agent fees). Shares of each class
would receive their
pro rata
share of the net assets of the Fund if the Fund were liquidated. The Trustees approve separate distributions from net investment income on each class of shares.
2. Significant Accounting Policies.
The following is a summary of significant accounting policies consistently followed by
the Fund in the preparation of its financial statements. The Fund’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America which require the use of management estimates that
affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. Management has evaluated the events and transactions subsequent to year-end through the date the financial statements were
issued and has determined that there were no material events that would require disclosure in the Fund’s financial statements.
a. Valuation.
Fund securities and other investments are valued at market value based on market quotations obtained or
determined by independent pricing services recommended by the Adviser and approved by the Board of Trustees. Fund securities and other investments for which market quotations are not readily available are valued at fair value as determined in good
faith by the Adviser pursuant to procedures approved by the Board of Trustees, as described below. Market value is determined as follows:
Equity securities (including closed-end investment companies and exchange-traded funds) are valued at the last sale price quoted on the exchange or
market where traded most extensively or, if there is no reported sale during the day, the closing bid quotation as reported by an independent pricing service. Securities traded on the NASDAQ Global Select Market, NASDAQ Global Market and NASDAQ
Capital Market are valued at the NASDAQ Official Closing Price (“NOCP”), or if lacking an NOCP, at the most recent bid quotations on the applicable NASDAQ Market. In some foreign markets, an official close price and a last sale price may
be available from the foreign exchange or market. In those cases, the official close price is used. Debt securities (other than short-term obligations purchased with an original or remaining maturity of sixty days or less) and unlisted equity
securities are valued based on evaluated bids furnished to the Fund by an independent pricing service using market information, transactions for comparable securities and various relationships between securities, if available, or bid prices obtained
from broker-dealers. Broker-dealer bid prices may be used to value debt and equity securities where an independent pricing service is unable to price a security or where an independent pricing service does not provide a reliable price for the
security. Forward foreign currency contracts are valued utilizing interpolated rates determined based on information provided by an independent pricing service. Short-term obligations (purchased with an original or remaining maturity of sixty days
or less) are valued at amortized cost (which approximates market value).
Fund securities and other investments for which market quotations
are not readily available are valued at fair value as determined in good faith by the Adviser pursuant to procedures approved by the Board of Trustees. The Fund may also value securities and other investments at fair value in other circumstances
such as when extraordinary events occur after the close of a foreign market but prior to the close of the New York Stock Exchange (“NYSE”). This may include situations relating to a single issuer (such as a declaration of bankruptcy or a
delisting of the issuer’s security from the primary market on which it has traded) as well as events affecting the securities markets in general (such as market disruptions or closings and significant fluctuations in U.S. and/or foreign
markets). When fair valuing its securities or other investments, the Fund may, among other things, use modeling tools or other processes that may take into account factors such as securities or other market activity and/or significant events that
occur after the close of the foreign market and before the time the Fund’s NAV is calculated. Fair value pricing may require subjective determinations about the value of a security, and fair values used to determine the Fund’s
13
N
OTES
TO
F
INANCIAL
S
TATEMENTS
(continued)
December 31, 2013
NAV may differ from quoted or published prices, or from prices that are used by others, for the same securities. In addition, the use of fair value pricing may not always result in adjustments to
the prices of securities held by a Fund.
As of December 31, 2013, approximately 82% of the market value of the Fund’s investments
was fair valued pursuant to procedures approved by the Board of Trustees as events occurring after the close of the foreign market were believed to materially affect the value of those securities.
b. Investment Transactions and Related Investment Income.
Investment transactions are accounted for on a trade date plus one
day basis for daily net asset value calculation. However, for financial reporting purposes, investment transactions are reported on trade date. Dividend income is recorded on ex-dividend date, or in the case of certain foreign securities, as soon as
the Fund is notified, and interest income is recorded on an accrual basis. Interest income is increased by the accretion of discount and decreased by the amortization of premium. In determining net gain or loss on securities sold, the cost of
securities has been determined on an identified cost basis. Investment income, non-class-specific expenses and realized and unrealized gains and losses are allocated on a
pro rata
basis to each class based on the relative net assets of each
class to the total net assets of the Fund.
c. Foreign Currency Translation.
The books and records of the Fund
are maintained in U.S. dollars. The values of securities, currencies and other assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars based upon foreign exchange rates prevailing at the end of the
period. Purchases and sales of investment securities, income and expenses are translated on the respective dates of such transactions.
Since
the values of investment securities are presented at the foreign exchange rates prevailing at the end of the period, it is not practical to isolate that portion of the results of operations arising from changes in exchange rates from fluctuations
which arise due to changes in market prices of investment securities. Such changes are included with the net realized and unrealized gain or loss on investments.
Net realized foreign exchange gains or losses arise from sales of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference
between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes
in the value of assets and liabilities, other than investment securities, at the end of the fiscal period, resulting from changes in exchange rates.
The Fund may use foreign currency exchange contracts to facilitate transactions in foreign-denominated investments. Losses may arise from changes in the value of the foreign currency or if the
counterparties do not perform under the contracts’ terms.
d. Forward Foreign Currency Contracts.
The Fund
may enter into forward foreign currency contracts, including forward foreign cross currency contracts, to acquire exposure to foreign currencies or to hedge the Fund’s investments against currency fluctuation. A contract can also be used to
offset a previous contract. These contracts involve market risk in excess of the unrealized gain or loss reflected in the Fund’s Statement of Assets and Liabilities. The U.S. dollar value of the currencies the Fund has committed to buy or sell
represents the aggregate exposure to each currency the Fund has acquired or hedged through currency contracts outstanding at period end. Gains or losses are recorded for financial statement purposes as unrealized until settlement date. Contracts are
traded over-the-counter directly with a counterparty. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. Certain contracts may require the movement of cash and/or securities as collateral for the Fund’s or counterparty’s net obligations under the contracts.
No forward foreign currency contracts were held by the Fund during the year ended December 31, 2013.
e. Federal and Foreign Income Taxes.
The Fund intends to meet the requirements of the Internal Revenue Code of 1986, as
amended, applicable to regulated investment companies, and to distribute to its shareholders substantially all of its net investment income and any net realized capital gains at least annually. Management has performed an analysis of the Fund’s
tax positions for the open tax years as of December 31, 2013 and has concluded that no provisions for income tax are
14
N
OTES
TO
F
INANCIAL
S
TATEMENTS
(continued)
December 31, 2013
required. The Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service. Management is not aware of any events that are
reasonably possible to occur in the next twelve months that would result in the amounts of any unrecognized tax benefits significantly increasing or decreasing for the Fund. However, management’s conclusions regarding tax positions taken may be
subject to review and adjustment at a later date based on factors including, but not limited to, new tax laws and accounting regulations and interpretations thereof.
The Fund may be subject to foreign withholding taxes on investment income and taxes on capital gains on investments that are accrued and paid based upon the Fund’s understanding of the tax rules and
regulations that exist in the countries in which the Fund invests. Foreign withholding taxes on dividend and interest income are reflected on the Statement of Operations as a reduction of investment income, net of amounts eligible to be reclaimed.
Dividends and interest receivable on the Statement of Assets and Liabilities are net of foreign withholding taxes. Foreign withholding taxes eligible to be reclaimed are reflected on the Statement of Assets and Liabilities as tax reclaims
receivable. Capital gains taxes paid are included in net realized gain (loss) on investments in the Statement of Operations. Accrued but unpaid capital gains taxes are reflected as foreign taxes payable on the Statement of Assets and Liabilities, if
applicable, and reduce unrealized gains on investments. In the event that realized gains on investments are subsequently offset by realized losses, taxes paid on realized gains may be returned to the Fund. Such amounts, if applicable, are reflected
as foreign tax rebates receivable on the Statement of Assets and Liabilities and are recorded as a realized gain when received.
f. Dividends and Distributions to Shareholders.
Dividends and distributions are recorded on ex-dividend date. The timing and
characterization of certain income and capital gain distributions are determined annually in accordance with federal tax regulations, which may differ from accounting principles generally accepted in the United States of America. Permanent
differences are primarily due to differing treatments for book and tax purposes of items such as deferred Trustees’ fees, distributions in excess of income and/or capital gains and foreign currency gains and losses. Permanent book and tax basis
differences relating to shareholder distributions, net investment income and net realized gains will result in reclassifications to capital accounts. Temporary differences between book and tax distributable earnings are primarily due to deferred
Trustees’ fees and wash sales. Distributions from net investment income and short-term capital gains are considered to be distributed from ordinary income for tax purposes.
The tax characterization of distributions is determined on an annual basis. The tax character of distributions paid to shareholders during the years ended December 31, 2013 and 2012 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 Distributions Paid From:
|
|
|
2012 Distributions Paid From:
|
|
|
|
|
Ordinary
Income
|
|
|
Long-Term
Capital Gains
|
|
|
Total
|
|
|
Ordinary
Income
|
|
|
Long-Term
Capital Gains
|
|
|
Total
|
|
|
|
|
$
|
3,356,129
|
|
|
$
|
—
|
|
|
$
|
3,356,129
|
|
|
$
|
7,598,784
|
|
|
$
|
—
|
|
|
$
|
7,598,784
|
|
As of December 31, 2013, the components of distributable earnings on a tax basis were as follows:
|
|
|
|
|
|
|
Undistributed ordinary income
|
|
$
|
—
|
|
|
Undistributed long-term capital gains
|
|
|
—
|
|
|
|
|
|
|
|
|
Total undistributed earnings
|
|
|
—
|
|
|
|
|
|
|
|
|
Capital loss carryforward:
|
|
|
|
|
|
Short-term:
|
|
|
|
|
|
Expires December 31, 2017*
|
|
|
(181,480,643
|
)
|
|
|
|
|
|
|
|
Total capital loss carryforward
|
|
|
(181,480,643
|
)
|
|
Late-year ordinary and post-October capital loss deferrals**
|
|
|
(20,082
|
)
|
|
Unrealized appreciation
|
|
|
38,901,307
|
|
|
|
|
|
|
|
|
Total accumulated losses
|
|
$
|
(142,599,418
|
)
|
|
|
|
|
|
|
|
Capital loss carryforward utilized in the current year
|
|
$
|
41,333,301
|
|
|
|
|
|
|
|
|
*
|
A significant portion of the capital loss carryforwards for the Fund are subject to limitations pursuant to Section 382 of the Internal Revenue Code.
|
|
**
|
Under current tax law, capital losses, foreign currency losses, and losses on passive foreign investment companies after October 31 or December 31, as
applicable, may be deferred and treated as occurring on the first day of the following taxable year.
|
15
N
OTES
TO
F
INANCIAL
S
TATEMENTS
(continued)
December 31, 2013
g. Repurchase Agreements.
The Fund may enter into repurchase agreements, under the terms of a Master Repurchase Agreement,
under which the Fund acquires securities as collateral and agrees to resell the securities at an agreed upon time and at an agreed upon price. It is the Fund’s policy that the market value of the collateral for repurchase agreements be at least
equal to 102% of the repurchase price, including interest. Certain repurchase agreements are tri-party arrangements whereby the collateral is held in a segregated account for the benefit of the Fund and on behalf of the counterparty. Repurchase
agreements could involve certain risks in the event of default or insolvency of the counterparty, including possible delays or restrictions upon the Fund’s ability to dispose of the underlying securities. As of December 31, 2013, the Fund
had investments in repurchase agreements for which the value of the related collateral exceeded the value of the repurchase agreement. The gross value of repurchase agreements is included in the Statement of Assets and Liabilities for financial
reporting purposes.
h. Securities Lending.
The Fund has entered into an agreement with State Street Bank and
Trust Company (“State Street Bank”), as agent of the Fund, to lend securities to certain designated borrowers. The loans are collateralized with cash or securities in an amount equal to at least 105% or 102% of the market value (including
accrued interest) of the loaned international or domestic securities, respectively, when the loan is initiated. Thereafter, the value of the collateral must remain at least 102% of the market value (including accrued interest) of loaned securities
for U.S. equities and U.S. corporate debt; at least 105% of the market value (including accrued interest) of loaned securities for non-U.S. equities; and at least 100% of the market value (including accrued interest) of loaned securities for U.S.
Government securities, sovereign debt issued by non-U.S. Governments and non-U.S. corporate debt. In the event that the market value of the collateral falls below the required percentages described above, the borrower will deliver additional
collateral on the next business day. As with other extensions of credit, the Fund may bear the risk of loss with respect to the investment of the collateral. The Fund invests cash collateral in short-term investments, a portion of the income from
which is remitted to the borrowers and the remainder allocated between the Fund and State Street Bank as lending agent.
For the year ended
December 31, 2013, the Fund did not loan securities under this agreement.
i. Indemnifications.
Under the
Trust’s organizational documents, its officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts
with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However,
based on experience, the Fund expects the risk of loss to be remote.
3. Fair Value Measurements.
In
accordance with accounting standards related to fair value measurements and disclosures, the Fund has categorized the inputs utilized in determining the value of the Fund’s assets or liabilities. These inputs are summarized in the three broad
levels listed below:
|
|
—
|
|
Level 1 — quoted prices in active markets for identical assets or liabilities;
|
|
|
—
|
|
Level 2 — prices determined using other significant inputs that are observable either directly, or indirectly through corroboration with
observable market data (which could include quoted prices for similar assets or liabilities, interest rates, credit risk, etc.); and
|
|
|
—
|
|
Level 3 — prices determined using significant unobservable inputs when quoted prices or observable inputs are unavailable such as when there is
little or no market activity for an asset or liability (unobservable inputs reflect the Fund’s own assumptions in determining the fair value of assets or liabilities and would be based on the best information available).
|
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with
investing in those securities.
16
N
OTES
TO
F
INANCIAL
S
TATEMENTS
(continued)
December 31, 2013
The following is a summary of the inputs used to value the Fund’s investments as of December 31, 2013, at value:
Asset Valuation Inputs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Common Stocks
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia
|
|
$
|
—
|
|
|
$
|
8,206,495
|
|
|
$
|
—
|
|
|
$
|
8,206,495
|
|
|
China
|
|
|
—
|
|
|
|
34,846,846
|
|
|
|
—
|
|
|
|
34,846,846
|
|
|
Denmark
|
|
|
2,960,508
|
|
|
|
3,166,918
|
|
|
|
—
|
|
|
|
6,127,426
|
|
|
France
|
|
|
4,660,572
|
|
|
|
9,833,843
|
|
|
|
—
|
|
|
|
14,494,415
|
|
|
Germany
|
|
|
—
|
|
|
|
19,958,360
|
|
|
|
—
|
|
|
|
19,958,360
|
|
|
Hong Kong
|
|
|
—
|
|
|
|
4,392,221
|
|
|
|
—
|
|
|
|
4,392,221
|
|
|
Indonesia
|
|
|
—
|
|
|
|
2,694,629
|
|
|
|
—
|
|
|
|
2,694,629
|
|
|
Italy
|
|
|
—
|
|
|
|
4,225,192
|
|
|
|
—
|
|
|
|
4,225,192
|
|
|
Japan
|
|
|
—
|
|
|
|
30,815,113
|
|
|
|
—
|
|
|
|
30,815,113
|
|
|
Korea
|
|
|
5,639,961
|
|
|
|
7,782,342
|
|
|
|
—
|
|
|
|
13,422,303
|
|
|
Norway
|
|
|
—
|
|
|
|
3,731,891
|
|
|
|
—
|
|
|
|
3,731,891
|
|
|
Singapore
|
|
|
—
|
|
|
|
10,848,248
|
|
|
|
—
|
|
|
|
10,848,248
|
|
|
Spain
|
|
|
—
|
|
|
|
3,087,546
|
|
|
|
—
|
|
|
|
3,087,546
|
|
|
Sweden
|
|
|
—
|
|
|
|
2,979,763
|
|
|
|
—
|
|
|
|
2,979,763
|
|
|
Switzerland
|
|
|
—
|
|
|
|
29,392,586
|
|
|
|
—
|
|
|
|
29,392,586
|
|
|
United Kingdom
|
|
|
3,682,519
|
|
|
|
42,945,904
|
|
|
|
—
|
|
|
|
46,628,423
|
|
|
All Other Common Stocks(a)
|
|
|
28,842,213
|
|
|
|
—
|
|
|
|
—
|
|
|
|
28,842,213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Common Stocks
|
|
|
45,785,773
|
|
|
|
218,907,897
|
|
|
|
—
|
|
|
|
264,693,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-Term Investments
|
|
|
—
|
|
|
|
2,048,518
|
|
|
|
—
|
|
|
|
2,048,518
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
45,785,773
|
|
|
$
|
220,956,415
|
|
|
$
|
—
|
|
|
$
|
266,742,188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Details of the major categories of the Fund’s investments are reflected within the Portfolio of Investments.
|
A common stock valued at $5,631,819 was transferred from Level 1 to Level 2 during the period ended December 31, 2013. At December 31, 2013,
this security was fair valued pursuant to procedures approved by the Board of Trustees as events occurring after the close of the foreign market were believed to materially affect the value of the security.
A common stock valued at $5,693,583 was transferred from Level 2 to Level 1 during the period ended December 31, 2013. At December 31, 2013,
this security was valued at the market price in the foreign market in accordance with the Fund’s valuation policies.
All transfers are
recognized as of the beginning of the reporting period.
4. Purchases and Sales of Securities.
For the year ended
December 31, 2013, purchases and sales of securities (excluding short-term investments) were $170,253,497 and $475,892,818, respectively.
5. Management Fees and Other Transactions with Affiliates.
a. Management Fees.
Hansberger Global Investors, Inc. (“HGI”), a subsidiary of Natixis Global Asset Management, L.P. (“Natixis US”), which is part of
Natixis Global Asset Management, an international asset management group based in Paris, France, serves as investment adviser to the Fund. Under the terms of the management agreement, the Fund pays a management fee at the annual rate of 0.75% of the
Fund’s average daily net assets, calculated daily and payable monthly.
HGI has given a binding undertaking to the Fund to waive
management fees and/or reimburse certain expenses to limit the Fund’s operating expenses, exclusive of acquired fund fees and expenses, brokerage expenses, interest expense, taxes and extraordinary expenses. This undertaking is in effect until
April 30, 2014 and is reevaluated on an annual basis. Management
17
N
OTES
TO
F
INANCIAL
S
TATEMENTS
(continued)
December 31, 2013
fees payable, as reflected on the Statement of Assets and Liabilities, is net of waivers and/or expense reimbursements, if any, pursuant to this undertaking. Waivers/reimbursements that exceed
management fees payable are reflected on the Statement of Assets and Liabilities as receivable from investment adviser.
For the year ended
December 31, 2013, the expense limits as a percentage of average daily net assets under the expense limitation agreements were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Expense Limit as a Percentage of Average
Daily Net Assets
|
|
|
|
|
Institutional Class
|
|
|
Advisor Class
|
|
|
|
|
|
1.00
|
%
|
|
|
1.15
|
%
|
HGI shall be permitted to recover expenses it has borne under the expense limitation agreement (whether through waiver of
its management fees or otherwise) on a class by class basis in later periods to the extent the annual operating expenses of a class fall below a class’ expense limits, provided, however, that a class is not obligated to pay such
waived/reimbursed fees or expenses more than one year after the end of the fiscal year in which the fees or expenses were waived/reimbursed.
For the year ended December 31, 2013, the management fees for the Fund were $2,669,469 (effective rate of 0.75% of average daily net assets).
For the year ended December 31, 2013, class-specific expenses of $19,912 have been reimbursed for Advisor Class. Expense reimbursements
are subject to possible recovery until December 31, 2014.
No expenses were recovered during the year ended December 31, 2013 under
the terms of the expense limitation agreement.
b. Distribution Agreement.
NGAM Distribution, L.P. (“NGAM
Distribution”), which is a wholly-owned subsidiary of Natixis US, serves as the distributor of the Fund and provides distribution services pursuant to a distribution agreement. Under the distribution agreement, the Fund does not pay NGAM
Distribution for its services.
c. Administrative Fees.
NGAM Advisors, L.P. (“NGAM Advisors”), provides
certain administrative services for the Fund and contracts with State Street Bank to serve as sub-administrator. NGAM Advisors is a wholly-owned subsidiary of Natixis US. Pursuant to an agreement among Natixis Funds Trust I, Natixis Funds Trust II,
Natixis Funds Trust IV, Gateway Trust (“Natixis Funds Trusts”), Loomis Sayles Funds I, Loomis Sayles Funds II (“Loomis Sayles Funds Trusts”), Hansberger International Series and NGAM Advisors, the Fund pays NGAM Advisors monthly
its
pro rata
portion of fees equal to an annual rate of 0.0575% of the first $15 billion of the average daily net assets of the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Hansberger International Series, 0.0500% of the next $15
billion, 0.0400% of the next $30 billion and 0.0350% of such assets in excess of $60 billion, subject to an annual aggregate minimum fee for the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Hansberger International Series of $10 million,
which is reevaluated on an annual basis.
For the year ended December 31, 2013, the administrative fees for the Fund were $157,153.
d. Sub-Transfer Agent Fees.
NGAM Distribution has entered into agreements, which include servicing agreements,
with financial intermediaries that provide recordkeeping, processing, shareholder communications and other services to customers of the intermediaries that hold positions in the Fund and has agreed to compensate the intermediaries for providing
those services. Intermediaries transact with the Fund primarily through the use of omnibus accounts on behalf of their customers who hold positions in the Fund. These services would have been provided by the Fund’s transfer agent and other
service providers if the shareholders’ accounts were maintained directly at the Fund’s transfer agent. Accordingly, the Fund has agreed to reimburse NGAM Distribution for all or a portion of the servicing fees paid to these intermediaries.
The reimbursement amounts (sub-transfer agent fees) paid to NGAM Distribution are subject to a current per-account equivalent fee limit approved by the Fund’s Board, which is based on fees for similar services paid to the Fund’s transfer
agent and other service providers.
18
N
OTES
TO
F
INANCIAL
S
TATEMENTS
(continued)
December 31, 2013
For the year ended December 31, 2013, the sub-transfer agent fees (which are reflected in transfer agent fees and expenses in the Statement of
Operations) for the Fund were as follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-Transfer Agent Fees
|
|
|
|
|
Institutional Class
|
|
|
Advisor Class
|
|
|
|
|
$
|
1,043
|
|
|
$
|
3,798
|
|
As of December 31, 2013, the Fund owes NGAM Distribution the following reimbursements for sub-transfer agent fees
(which are reflected in the Statement of Assets and Liabilities as payable to distributor):
|
|
|
|
|
|
|
|
|
|
|
|
|
Reimbursements
of
Sub-Transfer Agent
Fees
|
|
|
|
|
Institutional Class
|
|
|
Advisor Class
|
|
|
|
|
$
|
20
|
|
|
$
|
43
|
|
e. Trustees Fees and Expenses.
The Trust does not pay any compensation directly to its
officers or Trustees who are directors, officers or employees of NGAM Advisors, NGAM Distribution, Natixis US or their affiliates. The Chairperson of the Board receives a retainer fee at the annual rate of $285,000. The Chairperson does not receive
any meeting attendance fees for Board of Trustees meetings or committee meetings that she attends. Each Independent Trustee (other than the Chairperson) receives, in the aggregate, a retainer fee at the annual rate of $115,000. Each Independent
Trustee also receives a meeting attendance fee of $10,000 for each meeting of the Board of Trustees that he or she attends in person and $5,000 for each meeting of the Board of Trustees that he or she attends telephonically. In addition, each
committee chairperson receives an additional retainer fee at the annual rate of $17,500. Each Contract Review and Governance Committee member is compensated $6,000 for each Committee meeting that he or she attends in person and $3,000 for each
meeting that he or she attends telephonically. Each Audit Committee member is compensated $6,000 for each Committee meeting that he or she attends in person and $3,000 for each meeting that he or she attends telephonically. These fees are allocated
among the funds in the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Hansberger International Series based on a formula that takes into account, among other factors, the relative net assets of each fund. Trustees are reimbursed for travel
expenses in connection with attendance at meetings.
Effective January 1, 2014, the Chairperson of the Board will receive a retainer fee
at the annual rate of $300,000 and each Independent Trustee (other than the Chairperson) will receive, in the aggregate, a retainer fee at the annual rate of $130,000. All other Trustee fees will remain unchanged.
A deferred compensation plan (the “Plan”) is available to the Trustees on a voluntary basis. Deferred amounts remain in the Fund until
distributed in accordance with the provisions of the Plan. The value of a participating Trustee’s deferral account is based on theoretical investments of deferred amounts, on the normal payment dates, in certain funds of the Natixis Funds
Trusts, Loomis Sayles Funds Trusts and Hansberger International Series as designated by the participating Trustees. Changes in the value of participants’ deferral accounts are allocated
pro rata
among the funds in the Natixis Funds
Trusts, Loomis Sayles Funds Trusts, and Hansberger International Series, and are normally reflected as Trustees’ fees and expenses in the Statement of Operations. The portions of the accrued obligations allocated to the Fund under the Plan
are reflected as Deferred Trustees’ fees in the Statement of Assets and Liabilities.
6. Class-Specific Transfer Agent Fees
and Expenses.
For the year ended December 31, 2013, class-specific transfer agent fees and expenses (including sub-transfer agent fees and expenses) for the Fund were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfer Agent Fees
and Expenses
|
|
|
|
|
Institutional Class
|
|
|
Advisor Class
|
|
|
|
|
$
|
6,394
|
|
|
$
|
28,839
|
|
19
N
OTES
TO
F
INANCIAL
S
TATEMENTS
(continued)
December 31, 2013
7. Line of Credit.
The Fund, together with certain other funds of Natixis Funds Trusts, Loomis Sayles Funds Trusts and
Hansberger International Series, participates in a $200,000,000 committed unsecured line of credit provided by State Street Bank, with an individual limit of $125,000,000 for each fund that participates in the line of credit. Interest is charged to
each participating fund based on its borrowings at a rate per annum equal to the greater of the Federal Funds rate or overnight LIBOR, plus 1.25%. In addition, a commitment fee of 0.10% per annum, payable at the end of each calendar quarter, is
accrued and apportioned among the participating funds based on their average daily unused portion of the line of credit.
During the year
ended December 31, 2013, the Fund had an average daily balance on the line of credit (for those days on which there were borrowings) of $14,827,755 at a weighted average interest rate of 1.39%.
8. Interest Expense.
The Fund may incur interest expense on cash overdrafts at the custodian or from use of the line of
credit. Interest expense incurred for the year ended December 31, 2013 is reflected on the Statement of Operations.
9. Concentration of Risk.
The Fund’s investments in foreign securities are subject to foreign currency fluctuations,
higher volatility than U.S. securities, varying degrees of regulation and limited liquidity. Greater political, economic, credit and information risks are also associated with foreign securities.
The Fund’s investments in emerging markets companies, which may be smaller and have shorter operating histories than companies in developed markets,
involves risks in addition to, and greater than, those generally associated with investing in companies in developed foreign markets. The extent of economic development, political stability, market depth, infrastructure, capitalization and
regulatory oversight in emerging market economies is generally less than in more developed markets.
10. Brokerage Commission
Recapture.
The Fund has entered into agreements with certain brokers whereby the brokers will rebate a portion of brokerage commissions. All amounts rebated by the brokers are returned to the Fund under such agreements and are
included in realized gains on investments in the Statement of Operations.
For the year ended December 31, 2013, the Fund had no amounts
rebated under these agreements.
11. Concentration of Ownership.
From time to time, the Fund may have a
concentration of one or more accounts constituting a significant percentage of shares outstanding. Investment activities by holders of such accounts could have material impacts on the Fund. As of December 31, 2013, based on management’s
evaluation of the shareholder account base, the Fund had accounts representing controlling ownership of more than 5% of the Fund’s total outstanding shares. The number of such accounts, based on accounts that represent more than 5% of an
individual class of shares, and the aggregate percentage of net assets represented by such holdings was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of > 5%
Account Holders
|
|
|
Percentage of
Ownership
|
|
|
|
|
|
5
|
|
|
|
74.60
|
%
|
Omnibus shareholder accounts for which NGAM Advisors understands that the intermediary has discretion over the underlying
shareholder accounts are included in the table above. For other omnibus accounts, the Fund does not have information on the individual shareholder accounts underlying omnibus accounts; therefore, there could be other 5% shareholders in addition to
those disclosed in the table above.
20
N
OTES
TO
F
INANCIAL
S
TATEMENTS
(continued)
December 31, 2013
12. Capital Shares.
The Fund may issue an unlimited number of shares of beneficial interest, without par value. Transactions
in capital shares were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31, 2013
|
|
|
Year Ended
December 31, 2012
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Institutional Class
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued from the sale of shares
|
|
|
623,674
|
|
|
$
|
10,861,909
|
|
|
|
1,540,482
|
|
|
$
|
22,128,571
|
|
|
Issued in connection with the reinvestment of distributions
|
|
|
156,616
|
|
|
|
2,748,605
|
|
|
|
343,767
|
|
|
|
5,252,756
|
|
|
Redeemed
|
|
|
(19,699,473
|
)
|
|
|
(318,719,767
|
)
|
|
|
(10,073,420
|
)
|
|
|
(145,300,294
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change
|
|
|
(18,919,183
|
)
|
|
$
|
(305,109,253
|
)
|
|
|
(8,189,171
|
)
|
|
$
|
(117,918,967
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advisor Class
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued from the sale of shares
|
|
|
19,024
|
|
|
$
|
311,359
|
|
|
|
36,698
|
|
|
$
|
535,779
|
|
|
Issued in connection with the reinvestment of distributions
|
|
|
2,293
|
|
|
|
40,272
|
|
|
|
3,309
|
|
|
|
50,589
|
|
|
Redeemed
|
|
|
(87,609
|
)
|
|
|
(1,435,511
|
)
|
|
|
(204,526
|
)
|
|
|
(2,948,052
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change
|
|
|
(66,292
|
)
|
|
$
|
(1,083,880
|
)
|
|
|
(164,519
|
)
|
|
$
|
(2,361,684
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) from capital share transactions
|
|
|
(18,985,475
|
)
|
|
$
|
(306,193,133
|
)
|
|
|
(8,353,690
|
)
|
|
$
|
(120,280,651
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21