As filed on November 5, 1996
Reg. No. 333-13239
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.___
Post-Effective Amendment No._1_
___________________________HARDING, LOEVNER FUNDS, INC.______________________
(Exact Name of Registrant as Specified in Charter)
_______________600 Fifth Avenue, 26th Floor New York, New York 10020_________
(Address of Principal Executive Offices) (Zip Code)
______________________________(212) 332-5210_________________________________
(Registrant's Telephone Number, Including Area Code)
William E. Vastardis,
Treasurer
Harding, Loevner Funds, Inc.
600 Fifth Avenue, 26th Floor
New York, New York 10020
_____________________________________________________________________________
(Name and Address of Agent for Service of Process)
Copies to: Eric P. Nachimovsky
AMT Capital Services, Inc.
600 Fifth Avenue, 26th Floor
New York NY 10020
William Goodwin, Esq.
Dechert Price & Rhoads
477 Madison Avenue
New York, New York 10020
_____________________________________________________________________________
Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration Statement becomes effective.
_____________________________________________________________________________
It is proposed that this filing will become effective immediately upon
filing pursuant to paragraph (b) of Rule 485.
The Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Section 24(f) under the Investment Company
Act of 1940; accordingly no fee is payable herewith.
HARDING, LOEVNER FUNDS, INC.
FORM N-14
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following pages and documents:
Front Cover
Contents Page
Cross-Reference Sheet
Letter to Limited Partners
Notice of Meeting of Limited Partners
PART A
Combined Prospectus/Proxy Statement
PART B
Statement of Additional Information
PART C
Other Information
Signatures
Exhibit
HARDING, LOEVNER FUNDS, INC.
REGISTRATION STATEMENT OF FORM N-14
CROSS REFERENCE SHEET
N-14 Information
Required in
Item No. Combined
Prospectus/Proxy Statement
1. Beginning of Registration Statement
and Outside Front Cover Page of
Prospectus Cover Page; Cross Reference Sheet
2. Beginning and
Outside Back Cover
Page of Prospectus Table of Contents
3. Synopsis Information and Risk
Factors Summary; Principal Risk Factors;
The Fund; The Agreement and Plan of
Exchange; Tax Consequences;
Comparison of the Partnership and
the Global Equity Portfolio
4. Information About the
Transaction Summary; Risk Factors; The
Agreement and Plan of Exchange;
Advantages to Limited Partners; Tax
Consequences; Securities to be
Issued; Comparison of the
Partnership and the Global Equity
Portfolio;
Capitalization
5. Information About the Registrant The Fund; Regulatory Matters
6. Information About the Partnership
Being Acquired Comparison of the Partnership and
the Global Equity Portfolio
7. Voting Information Introduction and Voting Information;
Synopsis
8. Interests of Certain Persons and
Expenses The Agreement and Plan of Exchange
9. Additional Information Required
for Reoffering by Persons Deemed
to be Underwriters Not Applicable
Part B: Information Required In
Statement of Additional Information
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. Additional Information About
the Registrant The Agreement and Plan of Exchange
13. Additional Information About the
Partnership Being Acquired HLM Global Equity Limited
Partnership
Amended and Restated Limited
Partnership Agreement
14. Financial Statements Financial Statements
Part C. Other Information
15. Indemnification Indemnification
16. Exhibits Exhibits
17. Undertakings Undertakings
HARDING, LOEVNER MANAGEMENT, L.P.
50 Division Street, Suite 401
Somerville, New Jersey 08876
(908) 218-7900
To: The Limited Partners of HLM Global Equity Limited Partnership
Dear Limited Partner:
You are cordially invited to attend a Meeting of Limited Partners of the
HLM Global Equity Limited Partnership (the "Partnership"), to be held on
November 27, 1996 at 10:00 a.m. Eastern time at the offices of Harding, Loevner
Funds, Inc. (the "Fund") on the 26th floor, located at 600 Fifth Avenue, New
York, New York 10020 (the "Meeting").
At the Meeting, Limited Partners will be asked to consider and take action
on the proposed Agreement and Plan of Exchange (the "Plan of Exchange"), a
copy of which is included herein, which will in effect reorganize the
Partnership such that the Partners of the Partnership will receive shares of
the newly-formed Global Equity Portfolio ("GE Portfolio") of the Fund. The
formal Notice of Meeting of Limited Partners and the Proxy Statement setting
forth in detail the matters to come before the meeting are attached, and a
Proxy Card is enclosed for you to complete and facsimile, and/or return in
the pre-addressed, postage-paid envelope provided.
IT IS IMPORTANT THAT YOU RETURN THE PROXY WHETHER OR NOT
YOU PLAN TO ATTEND THIS MEETING.
The Fund is a no-load, open-end investment company formed under Maryland
law as a "series mutual fund" (i.e., a single investment company with
different investment portfolios, each of which functions as a separate mutual
fund). The investment adviser for the Fund's four portfolios (the
"Portfolios") is Harding, Loevner Management, L.P. ("HLM"). The Fund's GE
Portfolio has investment objectives and policies which are substantially
similar those of the Partnership.
The Plan of Exchange, subject to the approval of Limited Partners,
will be accomplished by the transfer of Partnership assets, including but not
limited to stock, securities, cash and options, and liabilities to the GE
Portfolio in exchange ("Exchange") for shares of the GE Portfolio (the
"Shares"). The Partnership will then distribute the Shares to its
Partners in complete liquidation of the Partnership.
The attached Combined Prospectus/Proxy Statement contains a more
detailed description of the Exchange and a summary comparison of the
Partnership and the GE Portfolio. It also includes as an attachment the
Preliminary Prospectus and Statement of Additional Information
describing the Fund and the GE Portfolio.
The GE Portfolio intends to meet the necessary tests under the tax
laws to avoid income taxation at the Fund level. In addition, the Exchange
and related transactions are conditioned upon the receipt of a ruling from the
IRS on the Exchange and a satisfactory opinion of counsel to the effect that
the Exchange will be tax-free to Limited Partners.
In accordance with applicable law and the Amended and Restated Limited
Partnership Agreement of the Partnership dated as of November 1, 1994, this
notice is being mailed to all Limited Partners at least 20 days before
the Meeting. Limited Partners who do not want to receive shares of the GE
Portfolio may redeem their Partnership Units before the Exchange occurs.
HLM, as General Partner of the Partnership, has approved the terms of the
proposed Plan of Exchange and believes that it is in the best interests of
the Limited Partners. The primary advantages that the Exchange and related
transactions offers all Limited Partners include: increased liquidity and
flexibility through daily rather than monthly or quarterly purchases and
redemptions; optional automatic reinvestment of distributions; and the
potential to obtain greater economies of scale as a result of a larger asset
base. Another advantage is simplified tax reporting and investor accounting.
(Limited Partners will receive Form 1099's for dividends instead of K-1's).
The Exchange also provides for continuity of investment management by HLM.
HLM currently expects the Exchange to be completed by December 1, 1996,
based on November 30, 1996 net asset values. If this schedule is not
practicable for regulatory or other reasons, HLM will reschedule the closing
date and will notify you. Meanwhile, if you have any questions concerning the
enclosed materials, please feel free to call me at (908) 218-7900.
Sincerely,
HARDING, LOEVNER MANAGEMENT, L.P.
By: HLM Holdings, Inc., General Partner
By: David R. Loevner, President
Somerville, New Jersey
November 7, 1996
HLM GLOBAL EQUITY LIMITED PARTNERSHIP
50 Division Street, Suite 401
Somerville, New Jersey 08876
(908) 218-7900
NOTICE OF MEETING OF LIMITED PARTNERS
To be held on November 27, 1996
A Meeting of Limited Partners (the "Meeting") of HLM Global Equity Limited
Partnership (the "Partnership"), a New Jersey limited partnership, will be
held on November 27, 1996, at 10:00 a.m. Eastern time at the offices of Harding,
Loevner Funds, Inc. (the "Fund") located at the 26th Floor, 600 Fifth Avenue,
New York, New York 10020, or at such adjourned time as may be necessary to
reach a quorum to vote, for the following purposes:
(1) To approve or disapprove the proposed Agreement and Plan of Exchange (the
"Plan of Exchange") by and between the Partnership and the Fund, on behalf of
its Global Equity Portfolio (the "GE Portfolio"), providing for the transfer
of assets, subject to liabilities, of the Partnership in exchange for shares
of the GE Portfolio (the "Shares"); the distribution of such Shares to the
Partners in complete liquidation of the Partnership, as more fully described
in the accompanying Combined Prospectus/Proxy Statement; and the amendment of
the Amended and Restated Limited Partnership Agreement of the Partnership
dated as of November 1, 1994 (the "Amendment") to grant the General Partner of
the Partnership the authority to cause the Partnership to, in effect, convert
into or merge with a mutual fund such as the GE Portfolio; and
(2) To consider and act upon any other matters that may properly come before
the meeting and any adjournments thereof.
The Plan of Exchange, the Amendment, the transactions contemplated thereby and
related matters are described in the attached Combined Prospectus/Proxy
Statement. A copy of the Plan of Exchange is attached as Appendix A to this
Combined Prospectus/Proxy Statement. A copy of the Amendment is attached as
Appendix C to this Combined Prospectus/Proxy Statement.
THE GENERAL PARTNER RECOMMENDS THAT
YOU VOTE IN FAVOR OF THE PROPOSAL
Only Limited Partners of record as of the close of business on November 1,
1996 will be entitled to vote at the Meeting and any adjournments thereof.
YOUR COOPERATION IN PROMPTLY COMPLETING, DATING, SIGNING, FAXING AND/OR
RETURNING THE ENCLOSED PROXY WILL BE APPRECIATED.
By order of the General Partner,
HARDING, LOEVNER MANAGEMENT, L.P.
By: HLM Holdings, Inc., General Partner
By: David R. Loevner, President
Place: 600 Fifth Avenue, 26th Floor, New York, New York 10020
Date: November 7, 1996
IMPORTANT: We urge you to complete, sign, date and facsimile and/or return
your proxy in the enclosed envelope which requires no postage and is intended
for your convenience. If you attend the Meeting, you may vote your
Partnership Units in person.
HLM GLOBAL EQUITY LIMITED PARTNERSHIP
50 Division Street, Suite 401
Somerville, New Jersey 08876
(908) 218-7900
HARDING, LOEVNER FUNDS, INC.
600 Fifth Avenue, 26th Floor
New York, New York 10020
(212) 332-5210
COMBINED PROSPECTUS/PROXY STATEMENT
____________________________
SOLICITATION OF PROXIES
____________________________
This Combined Prospectus/Proxy Statement is furnished in connection with
the solicitation of proxies by the General Partner of the HLM Global Equity
Limited Partnership (the "Partnership") to be voted at a Meeting of Limited
Partners to be held on November 27, 1996 at 10:00 a.m. Eastern time, at the
offices of Harding, Loevner Funds, Inc. (the "Fund") on the 26th floor,
located at 600 Fifth Avenue, New York, New York 10020, and at any
adjournment(s) thereof (the "Meeting").
The purpose of the Meeting is to vote on an Agreement and Plan of
Exchange (the "Plan of Exchange") among the Partnership, Harding, Loevner
Management, L.P., and the Fund, on behalf of the newly-formed Global Equity
Portfolio (the "GE Portfolio"), an investment portfolio of the Fund, that
would effect the reorganization of the Partnership into the GE Portfolio
and certain transactions and other actions contemplated thereby, as described
below (the "Exchange"). Pursuant to the Plan of Exchange, all of the assets
of the Partnership would be acquired by the GE Portfolio in exchange for
shares of common stock (the "Shares") in the GE Portfolio and the assumption
by the GE Portfolio of all of the liabilities of the Partnership. Such Shares
then would be distributed to Limited Partners at the rate of one Share (or
fraction thereof) for each Unit (or fraction thereof) in the Partnership. As
a result of the proposed transaction, each Limited Partner would receive a
number of full or fractional Shares, which will be determined by dividing the
aggregate net asset value of that Partner's Units by the initial net asset
value of the Shares. Such Shares would have an aggregate net asset value on
the effective date of the Exchange equal to the aggregate net asset value of
the Partnership Units. A copy of the form of the Plan of Exchange is
set forth in Appendix A to this Combined Prospectus/Proxy Statement.
The Partnership is a New Jersey limited partnership. The Fund is an
open-end, diversified investment company (i.e., mutual fund) incorporated in
the state of Maryland. The investment policies and restrictions of the GE
Portfolio are substantially similar to those of the Partnership.
This Combined Prospectus/Proxy Statement, which should be retained for
future reference, sets forth concisely the information about GE Portfolio, the
Fund, and the Partnership, and the transactions contemplated by the proposed
Exchange, that an investor should know before voting on the proposed Exchange.
A copy of the Preliminary Prospectus of the GE Portfolio, dated November 1,
1996 is included with Appendix B to this Combined Prospectus/Proxy Statement
and is incorporated by reference herein.
A Statement of Additional Information regarding the GE Portfolio, dated
November 1, 1996 has been filed with the Securities and Exchange Commission
(the "Commission") and is included with Appendix B to this Combined Prospectus/
Proxy Statement and is incorporated by reference herein.
The Amended and Restated Limited Partnership Agreement of the Partnership
dated as of November 1, 1994 (the "Partnership Agreement") does not, in its
current from, contemplate or permit a transaction such as the Exchange.
Therefore, another purpose of the Meeting is to vote on an Amendment
(the "Amendment") to the Partnership Agreement to grant the General Partner
of the Partnership the authority to cause the Partnership to, in effect,
convert into or merge with a mutual fund such as the GE Portfolio. A copy of
the form of the Amendment is set forth in Appendix C to this Combined
Prospectus/Proxy Statement and is incorporated by reference herein. The
Partnership Agreement and the Certificate of Limited Partnership of the
Partnership dated as of September 17, 1991 which was filed with the New
Jersey Secretary of State on September 18, 1991 (the "Partnership
Certificate"), are also incorporated by reference. A copy of the Partnership
Agreement and the Partnership Certificate may be obtained without charge by
contacting Harding, Loevner Management, L.P. ("HLM") located at 50 Division
Street, Suite 401 Somerville, New Jersey 08876 or by telephoning HLM at
(908) 218-7900.
A statement of additional information, dated November 7, 1996 relating
to the proposed transactions and other actions described in this Combined
Prospectus/Proxy Statement, including historical financial statements, has
been filed with the Commission and is incorporated by reference herein.
Copies of this statement of additional information may be obtained without
charge by contacting AMT Capital Services, Inc. located at 600 Fifth Avenue,
26th Floor, New York, New York 10020 or by telephoning AMT Capital Services,
Inc. at (800) 762-4848.
_______________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
__________________________
The date of this Combined Prospectus/Proxy Statement is November 7, 1996.
COMBINED PROSPECTUS/PROXY STATEMENT
TABLE OF CONTENTS
Page
INTRODUCTION AND VOTING INFORMATION
SUMMARY
RISK FACTORS
THE FUND
THE AGREEMENT AND PLAN OF EXCHANGE
ADVANTAGES TO LIMITED PARTNERS
TAX CONSEQUENCES
SECURITIES TO BE ISSUED
COMPARISON OF THE PARTNERSHIP AND THE GE PORTFOLIO
FINANCIAL INFORMATION
EXPENSES OF THE EXCHANGE
INITIAL APPROVALS
REGULATORY MATTERS
CAPITALIZATION
GENERAL PARTNER
LEGAL MATTERS RELATING TO THE EXCHANGE
PROPOSALS FOR FUTURE MEETINGS
Appendix A - Agreement and Plan of Exchange
Appendix B - Preliminary Prospectus and Statement of Additional Information
Appendix C - Amendment to the Partnership Agreement
Appendix D - Partnership Financial Information and Pro Forma Fund Information
HLM GLOBAL EQUITY LIMITED PARTNERSHIP
50 Division Street, Suite 401
Somerville, New Jersey 08876
(908) 218-7900
HARDING, LOEVNER FUNDS, INC.
600 Fifth Avenue, 26th Floor
New York, New York 10020
(212) 332-5210
COMBINED PROSPECTUS/PROXY STATEMENT
Meeting of Limited Partners to be
held on November 27, 1996.
____________________________
INTRODUCTION AND VOTING INFORMATION
Meeting of Limited Partners: Voting of Proxies: Adjournment
This Combined Prospectus/Proxy Statement is being furnished to Limited
Partners in connection with the solicitation by the General Partner of the
Partnership of proxies to be voted at a Meeting of Limited Partners of the
Partnership (the "Meeting") to be held on November 27, 1996 at 10:00 a.m.
Eastern time, at the offices of Harding, Loevner Funds, Inc., located at
600 Fifth Avenue, 26th Floor, New York, New York 10020 and at any
adjournment(s) thereof. The purpose of the Meeting is (1) to vote on the
proposed Agreement and Plan of Exchange (the "Plan of Exchange") among the
Partnership, Harding, Loevner Management, L.P. ("HLM"), and Harding, Loevner
Funds, Inc. ("the Fund"), on behalf of its Global Equity Portfolio (the "GE
Portfolio"), providing for the transfer of all of the assets of the
Partnership in exchange (the "Exchange") for shares of the GE Portfolio (the
"Shares") and the assumption by the GE Portfolio of all of the liabilities of
the Partnership; the distribution of such Shares to the Partners of the
Partnership in complete liquidation of the Partnership; and the amendment of
the Amended and Restated Limited Partnership Agreement of the Partnership
dated as of November 1, 1994 (the "Partnership Agreement") to grant the General
Partner of the Partnership the authority to grant the General Partner of the
Partnership the authority to cause the Partnership to, in effect, convert
into or merge with a mutual fund such as the GE Portfolio, all as more fully
described in this Combined Prospectus/Proxy Statement ("Proposal One"); and
(2) to consider and act upon any other matters that may properly come before
the Meeting and any adjournments thereof.
Record holders of Units of the Partnership which are denominated as
limited partner units at the close of business on November 1, 1996, the record
date, will be entitled to vote such Units on all business to be presented at
the Meeting. On the record date, 38,070 Units of the Partnership
were outstanding and entitled to be voted at the Meeting. As of the record
date there were three 5% beneficial holders of Partnership Units. Maine
Community Foundation, Inc. ("Maine") is the record holder of 2,316 (6.1%)
Partnership Units; James C. Brady, Jr. ("Brady") is the record holder of
2,179 (5.7%) Partnership Units; and Edward and Darlene Lowe Charitable Remainder
Unitrust 1995 ("Unitrust 1995") is the record holder of 2,000 (5.2%) Partnership
Units. The address of Maine is P.O. Box 148 Ellsworth, Maine 04605. The
address of Brady is Box 351 Gladstone, New Jersey 07934. The address of
Unitrust 1995 is P. O. Box 385 Cassopolis, Michigan 49031.
Pursuant to applicable law and the Partnership Agreement, Limited
Partners must receive at least 20 days' advance written notice of the
Meeting. This Combined Prospectus/Proxy Statement, the Notice of Meeting of
Limited Partners and the form of proxy are being first mailed to Limited
Partners on or about November 7, 1996.
The Fund is a no-load, open-end investment company incorporated in the
state of Maryland -- a mutual fund that offers four portfolios. Each
Portfolio functions in effect as a separate mutual fund. The Global
Equity Portfolio (the "GE Portfolio") is a separate class of the Fund's Common
Stock and has a $0.001 par value per share. The Exchange will be accomplished
by the Partnership conveying to the Fund all of its assets and liabilities, in
exchange for shares of the GE Portfolio whose investment objectives and
policies are substantially similar to those of the Partnership. Once the
Exchange is approved by Limited Partners, the Partnership will distribute the
Shares received in the Exchange, to its Partners on a pro rata basis in
complete liquidation of the Partnership.
Harding, Loevner Management, L.P. ("HLM"), as General Partner of the
Partnership, believes that the Exchange is in the best interests of the
Limited Partners. As shareholders of an open-end registered mutual fund,
Limited Partners who vote in favor of the Exchange will realize continuity of
investment management by HLM; increased liquidity and flexibility through
daily rather than monthly or quarterly purchases and redemptions; optional
automatic reinvestment of distributions; and simplified tax reporting and
investor accounting. (Limited Partners will receive Form 1099's for dividends
instead of K-1's).
The enclosed form of proxy, if properly executed and returned, will be
voted in accordance with the choices specified thereon. Limited Partners may
also use facsimile or other similar communication methods to vote their
relative percentage interests. If no choice is specified with respect to a
proposal, the proxy will be voted in favor of the proposal being considered,
and, in the discretion of the proxies named in the proxy card, on any other
matter properly brought before the Meeting. The representation in person or
by proxy of a majority of the outstanding Units of the Partnership which are
denominated as limited partner units is necessary to constitute a quorum for
voting on the proposals herein. If a quorum is present at the Meeting, the
approval of Proposal One will require the affirmative vote of at least a
majority of the votes cast and all votes shall be by relative percentage
interests held by Limited Partners (including the General Partner to the
extent that it holds Units of the Partnership which are denominated as
limited partner units) and not on a per capita basis. In the event that a
quorum is present at the meeting but sufficient votes to approve a proposal
are not received, or if a quorum is not present, an affirmative vote of a
majority of the Units represented at the meeting for adjournment will cause the
meeting to be adjourned to permit the further solicitation of proxies. Such
solicitation may be made by mail, facsimile and other similar means. Such
solicitations may be conducted by, among others, officers and employees of
the Fund, AMT Capital Services, Inc. and HLM (collectively referred to as the
"Solicitors"). The cost of such solicitation, if any, will be nominal.
As the Meeting date approaches, Limited Partners may receive calls from
the Solicitors if the Partnership has not yet received their votes.
Authorization to permit the Solicitors to execute proxies may be obtained by
electronically transmitted instructions from Limited Partners of the
Partnership.
Any proxy given by a Limited Partner, whether in writing or
electronically, is revocable. A Limited Partner may revoke the accompanying
proxy or a proxy given electronicaly at any time prior to its use by filing
with the Partnership a written revocation or duly executed proxy bearing a
later date. In addition, any Limited Partner who attends the Meeting in
person may vote by ballot at the Meeting, thereby canceling any proxy
previously given.
The Exchange provides that the expenses of the Exchange including the
costs and expenses incurred in the preparation and mailing of the notice, this
Combined Prospectus/Proxy Statement and the proxy, and incurred in the
solicitation of proxies and the legal expenses of the Exchange will be borne
by HLM.
Attached to this Combined Prospectus/Proxy Statement as Appendix B are
the Preliminary Prospectus relating to the Fund and the GE Portfolio (the
"Preliminary Prospectus"), as well as the Statement of Additional Information
concerning the Fund and the GE Portfolio (the "Statement of Additional
Information"). The Preliminary Prospectus and Statement of Additional
Information are incorporated in this Combined Prospectus/Proxy Statement
by reference. This Combined Prospectus/Proxy Statement sets forth information
about the Exchange and the GE Portfolio that Limited Partners should consider
before deciding whether or not to participate in the conversion process,
including whether to redeem their Partnership Units prior to the consummation
of the Exchange. It should be retained for future reference. A separate
Statement of Additional Information with respect to the Exchange, dated as of
the date of this Combined Prospectus/Proxy Statement, has been filed with the
Securities and Exchange Commission and is incorporated by reference in this
Combined Prospectus/Proxy Statement. This Statement of Additional Information
can be obtained without charge by calling AMT Capital Services, Inc. ("AMT
Capital"), at (800) 762-4848, or by writing to AMT Capital at 600 Fifth
Avenue, 26th Floor, New York, NY 10020.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
November 7, 1996
SUMMARY
The following Summary is qualified by reference to the more detailed
information contained elsewhere in this Combined Prospectus/Proxy Statement.
Exchange. Harding, Loevner Management, L.P. ("HLM"), the general
partner (the "General Partner") of HLM Global Equity Limited Partnership (the
"Partnership"), proposes at the Meeting to seek the approval of the Limited
Partners of the Partnership to convert the Partnership into mutual fund form
pursuant to an Agreement and Plan of Exchange (the "Plan of Exchange"). The
Plan of Exchange will be carried out by a transfer of all of the assets and
liabilities of the Partnership to the Global Equity Portfolio (the "GE
Portfolio") of Harding, Loevner Funds, Inc. (the "Fund"), whose investment
objectives and policies are substantially similar those of the Partnership, in
exchange for shares of the GE Portfolio (the "Exchange"). The Partnership will
then distribute the shares of the GE Portfolio (the "Shares") to its Partners
in complete liquidation of the Partnership. See the "Agreement and Plan of
Exchange".
Additionally, under the terms of Proposal One, the Limited Partners are
being asked to approve an amendment of the Amended and Restated Limited
Partnership Agreement of the Partnership dated as of November 1, 1994 (the
"Partnership Agreement"). Presently, the language of the Partnership
Agreement does not permit the General Partner to unilaterally convert the
Partnership into a mutual fund; hence, the Limited Partners are being asked
to consider amending the Partnership Agreement by adopting an Amendment (the
"Amendment") to the Partnership Agreement in the form of Appendix C to this
Combined Prospectus/Proxy Statement. The Amendment would grant the General
Partner of the Partnership the authority to cause the Partnership to, in
effect, convert into or merger with a mutual fund such as the GE Portfolio.
The adoption of the Amendment would, pursuant to the General Partner's broad
authority under the current Partnership Agreement, allow the General Partner
to execute any documents or take any such action as it deems necessary to
carry into effect the terms of the proposed Plan of Exchange.
The Fund. Harding, Loevner Funds, Inc. (the "Fund") is a no-load, open-
end investment company formed under Maryland law. The Fund was incorporated
on July 31, 1996 and will offer four portfolios, including the Global Equity
Portfolio whose investment objectives and policies are substantially similar
to those of the Partnership. The investment adviser to the Fund and the GE
Portfolio is HLM. The distributor and administrator to the Fund is AMT
Capital Services, Inc. The transfer agent and custodian to the Fund is
Investors Bank & Trust Company.
Tax Matters. The GE Portfolio intends to meet the necessary
requirements under the tax laws to avoid income taxation at the Fund level.
The Exchange of the Limited Partners into GE Portfolio Shares will be tax-free
to the Limited Partners. See "Tax Consequences" and "Comparison of the
Partnership and the GE Portfolio -- Tax Matters."
Advisory Fee. The GE Portfolio will have an advisory fee which is equal
to 1.00% of the average daily net assets of the GE Portfolio. Limited
Partners are not charged an advisory fee for an investment in the Partnership;
however, Limited Partners are charged an asset based fee for being an advisory
client of HLM. The advisory fee for the GE Portfolio is higher than most
registered investment companies but less than the fees for certain other
comparable investment companies. For a more detailed discussion, please see
"Comparison of the Partnership and the GE Portfolio -- Advisory Fees."
Advantages. HLM believes that the Exchange will be in the best
interests of the Limited Partners. The primary advantages include: the
continuity of investment management by HLM; increased liquidity and
flexibility through daily rather than monthly or quarterly purchases and
redemptions; simplified tax reporting and investor accounting; optional
automatic reinvestment of distributions; and the potential for lower fund
expenses achieved through economies of scale as the GE Portfolio targets
a larger investor base than the Partnership, which is limited to having no
more than 100 partners.
Timing. HLM and the GE Portfolio intend to complete the Exchange by
Dewcember 1, 1996. The Exchange could, however, be delayed for regulatory or
other reasons. HLM will provide additional information as to the timing of
the Exchange as it becomes available. Limited Partners who do not want to
participate in the Exchange may have their Partnership Units redeemed
prior to the consummation of the Exchange. See "The Agreement and Plan of
Exchange".
RISK FACTORS
Because the investment objective, policies, and restrictions of the GE
Portfolio are substantially similar to those of the Partnership, the
risks associated with the particular investment policies and strategies that
the GE Portfolio and the Partnership are authorized to employ also are
substantially similar. For additional information regarding the principal
risk factors of investing in the GE Portfolio, see "Risks Associated with the
Fund's Investment Policies and Investment Techniques," in the Preliminary
Prospectus and "Supplemental Discussion of Risks Associated With the Fund's
Investment Policies and Investment Techniques" in the Statement of Additional
Information.
The GE Portfolio is subject to certain investment restrictions that are
required by applicable laws and regulations and are intended to reduce the
risk to investors. These restrictions may, however, also have the effect of
preventing the GE Portfolio from pursuing investment opportunities otherwise
available to the Partnership.
Taxable Partnership investors who redeem their Partnership Units rather
than participate in the Exchange will have the normal tax consequences of
withdrawal from a limited partnership. In addition, the conversion could
cause taxable Partnership investors who are not calendar year taxpayers
to pay taxes on Partnership income before they otherwise would have. See "Tax
Consequences" below.
THE FUND
The Fund is a no-load, open-end investment company organized under
Maryland law as a "series mutual fund." The Fund was incorporated on July 31,
1996 and will offer four portfolios (the "Portfolios"), each of which is in
effect a separate open-end mutual fund. The Fund offers shares of common
stock, $0.001 par value per share, which are issued in series with each series
relating to a single portfolio. The GE Portfolio will serve as a successor
investment vehicle to the Partnership and have investment objectives and
policies which are substantially similar to those of the Partnership. The
investment adviser to the Fund is HLM.
Attached to this Combined Prospectus/Proxy Statement, and incorporated
by reference, are the Preliminary Prospectus and Statement of Additional
Information describing the Fund and the GE Portfolio. The related Statement
of Additional Information for the Exchange, which is also incorporated by
reference, can be obtained without charge by calling AMT Capital Services,
Inc. ("AMT Capital") at (800) 762-4848 or by writing to AMT Capital at 600
Fifth Avenue, 26th Floor, New York, NY 10020. Limited Partners should
carefully review the Preliminary Prospectus and the Statement of Additional
Information in conjunction with this Combined Prospectus/Proxy Statement.
THE AGREEMENT AND PLAN OF EXCHANGE
The conversion of the Partnership into mutual fund form will take place
pursuant to an Agreement and Plan of Exchange (the "Plan of Exchange"). The
following summary of the important terms and conditions of the Plan of
Exchange is qualified by reference to the Plan of Exchange, a copy of which is
attached to this Combined Prospectus/Proxy Statement as Appendix A.
The effect of the Plan of Exchange is that the Partnership will convey
all of its assets (including securities and cash) and all of its liabilities,
then existing, whether absolute, accrued, contingent or otherwise including
all contractual commitments or obligations, to the Fund in exchange for Shares
of the GE Portfolio (the "Exchange"). The Shares delivered to the Partnership
will have an aggregate net asset value equal to the net asset value of the
Partnership assets acquired. Those Shares will be distributed on a pro rata
basis to the Partners of record on the effective date of the Exchange. The
Partnership will be dissolved and liquidated as soon as possible after the
distribution of Shares to the Limited Partners. The number of Shares each
Partner will receive will be determined by dividing the aggregate net asset
value of that Partner's Units by the initial net asset value of the Shares.
The Exchange will not be effective until certain conditions are
satisfied, including the receipt of an exemptive order from the Securities and
Exchange Commission (the "SEC") permitting the Exchange, and an opinion of
counsel with respect to the tax consequences of the Exchange. See "Tax
Consequences" below. The exemptive order is required under the Investment
Company Act of 1940 (the "1940 Act") to permit the Fund to acquire securities
from the Partnership, which is technically an affiliate of the Fund. Although
HLM and the Fund believe an exemptive order will be obtained, they cannot
provide any assurances as to timing.
HLM currently expects the Exchange to take place on December 1, 1996
based on November 30, 1996 net asset values. If there are delays for
regulatory or other reasons, HLM will notify the Limited Partners promptly as
soon as the completion of the Exchange can be rescheduled.
Limited Partners who do not want to participate in the proposed
conversion may have their Partnership interests redeemed in accordance with
the normal redemption procedures on any regular redemption date before the
Exchange is effective and on the day the Exchange takes place. To have
their Partnership interests redeemed, Limited Partners should refer to the
Partnership Agreement (Section 5.02) for more details concerning redemption.
Upon consummation of the Exchange and the distribution of Shares to the
Limited Partners who participate in the conversion, the only shareholders of
the GE Portfolio will be the converting Limited Partners and HLM (see "Initial
Approvals" below). Thereafter, additional shares of the GE Portfolio
will be available to all other interested investors at the net asset value on
each "Business Day," defined as any day the New York Stock Exchange is open
for business. Shareholders in the GE Portfolio will be able to have their
Shares redeemed at net asset value on each Business Day. See the Preliminary
Prospectus under "Purchase and Redemption of Shares."
ADVANTAGES TO LIMITED PARTNERS
As shareholders of a no-load open-end, registered investment company,
former Limited Partners will receive continuity of portfolio management by
HLM. HLM, presently the investment adviser to the Limited Partnership, will
serve as the investment adviser to the GE Portfolio after the conversion is
complete.
Shareholders of the GE Portfolio have the potential to experience lower
investment management expenses than they would as limited partners in a
limited partnership. A mutual fund, unlike a partnership which must have by
law no more than 100 partners, may have an unlimited number of shareholders.
Accordingly, the GE Portfolio may achieve economies of scale for its
shareholders by spreading GE Portfolio's expenses over a larger investor
base.
Shareholders would receive other benefits such as increased liquidity
and flexibility through daily rather than monthly or quarterly purchases and
redemptions; optional automatic reinvestment of distributions; and simplified
tax reporting and investor accounting. Presently, Limited Partners receive
quarterly and/or monthly statements reflecting the valuation of their
Partnership Units. Shareholders in the GE Portfolio, on the other hand, would
receive a daily valuation of their shares in the GE Portfolio in the
form of a daily net asset value.
In addition, the Form 1099 tax reporting forms that the GE Portfolio
will issue to its shareholders are considerably simpler than the Form K-1's
issued by the Partnership. The 1099's will also be issued earlier in the year
than the K-1's.
TAX CONSEQUENCES
The Exchange is conditioned upon the receipt from Dechert Price &
Rhoads, counsel to the Fund, of an opinion to the effect that the Exchange
will have the following tax consequences to the GE Portfolio and the
Partnership: (i) no gain or loss will be recognized by the Partnership on the
transfer of its securities to the GE Portfolio in exchange for Shares (Code
Section 351(a)); (ii) no gain or loss will be recognized by the GE Portfolio
upon receipt of the Partnership's securities in exchange for Shares (Code
Section 1032 (a)); (iii) the basis to the GE Portfolio of the transferred
securities of the Partnership will be the same as the basis of the Partnership
immediately prior to the Exchange (Code Section 362(a)); (iv) the basis of
Shares received by the Partnership will be equal to the basis of the assets
exchange for them reduced by the liabilities assumed by the GE Portfolio (Code
Sections 358(a) and (d)); (v) the holding period of the securities
received by the GE Portfolio will be the same as the holding period of the
securities in the hands of the Partnership immediately prior to the Exchange
(Code Section 1223(2)); and (vi) the holding period of the Shares to be
received by the Partnership will include the period during which the
Partnership assets exchanged therefor were held (Code Section 1223(1)), which
means a portion of the gain or losses recognized upon the redemption of any
Share within 12 months of the date of the Exchange may be short-term gain or
loss. The opinion of counsel will be based upon certain facts,
representations, and assumptions, and it will not be binding on the Internal
Revenue Service or the courts if challenged. Moreover, the conclusions
expressed in the opinion are based on current law and authorities, both of
which are subject to change, even retroactively.
If any of the securities transferred by the Partnership to the GE
Portfolio in the Exchange are debt securities purchased by the Partnership at
a discount, such transfer would result in the recognition of income to the
Partnership in an amount equal to the accrued market discount with respect to
such securities at the time of the Exchange. It is not expected that any of
the securities so transferred will have any accrued market discount, or, if
they do, that it will be more than minimal.
The Exchange will have the following tax consequences to Limited
Partners: (i) the Limited Partner's basis for its Shares will be equal to the
Limited Partner's basis of its former Partnership Units minus the amount of
cash, if any, it received pursuant to the liquidation of its Partnership
interest (Code Section 732(b)); (ii) a Limited Partner's holding period with
respect to its Shares will include the Partnership's holding period of such
Shares (Code Section 735(b)) (see clause (vi) in the preceding paragraph); and
(iii) the distribution of the Shares from the Partnership to a Limited
Partner, which will be in liquidation of its Partnership Units, will not
cause taxable gain or loss to be recognized by the Limited Partner, except for
gain equal to the amount by which any cash actually distributed or deemed to
be distributed (a partner will be deemed to have received a cash distribution
equal to its allocable share of Partnership liabilities assumed by the GE
Portfolio), exceeds the Limited Partner's basis in his Partnership Units (Code
Section 731(a)). HLM does not expect that any Limited Partner will receive
cash in excess of its basis in Partnership Units.
Each Limited Partner must include in taxable income for its tax year its
share of Partnership income for the Partnership's tax year that ends with or
within the Limited Partner's tax year. Consequently, because the
Partnership's tax year will end when the Partnership terminated, if a taxable
Limited Partner is not a calendar year taxpayer, the conversion could cause
such a Limited Partner to pay taxes on Partnership income sooner than it
otherwise would have.
Limited Partners should consult their advisers regarding the tax
consequences of the Exchange to them, including state, local and, if
applicable, foreign tax consequences.
Taxable Limited Partners who choose to have Partnership Units redeemed
before the Exchange will be subject to the normal tax consequences of
withdrawing from a limited partnership. As these consequences will vary
depending on each Limited Partner's particular circumstances, taxable
Limited Partners should consult their advisers concerning the tax effects of
withdrawing from the Partnership.
SECURITIES TO BE ISSUED
The GE Portfolio, a separate series of the Fund, will issue Shares in
exchange for assets and liabilities of the Partnership, which Shares will then
be distributed to the Partners of the Partnership in the liquidation of the
Partnership. The Shares constitute one class of the Fund and will have equal
rights as to dividends and in liquidation in respect to the GE Portfolio and
will have no preemptive subscription or conversion rights. Shares issued in
the Exchange will be fully paid and non-assessable. The GE Portfolio has
500,000,000 authorized shares. See the Statement of Additional Information
under "Organization of the Fund." The Shares delivered in the Exchange will
have the same net asset value as the net assets of the Limited Partnership
being delivered in the Exchange.
COMPARISON OF THE PARTNERSHIP AND THE GE PORTFOLIO
General
As mentioned above, the investment objectives and policies of the GE
Portfolio are substantially similar to the investment objectives and policies
of the Partnership. There are, however, for various reasons (including
differences in structure, and the different applicable regulatory systems),
some differences between the Partnership and the GE Portfolio. The following
paragraphs summarize the material similarities and differences.
For a more complete comparison of the Partnership and the GE Portfolio,
Limited Partners should refer to the Partnership Agreement and to the material
with respect to the GE Portfolio set forth in the Fund's Preliminary
Prospectus and related Statement of Additional Information. In addition,
Limited Partners may obtain copies of the Fund's Articles of Incorporation and
By-Laws by submitting a written request to Eric P. Nachimovsky, General
Counsel, AMT Capital Services, Inc., the Fund's administrator and distributor,
at 600 Fifth Avenue, 26th Floor, New York, NY 10020.
Tax Status
Like the Partnership, the GE Portfolio will not be subject to federal
income taxes if it complies with the relevant tax laws and regulations.
Limited Partners participating in the conversion will essentially be trading
one pass-through entity for another.
The Partnership is not subject to federal income taxes at the
partnership level. Limited Partners, however, must take into account their
distributive share of partnership items of income, gain, loss, deduction or
credit, regardless of whether or not cash distributions are made with respect
to such items. Pursuant to the Partnership Agreement, a Limited Partner's
distributive share of such items may include special allocations of taxable
gain and loss to eliminate differentials between the book gain or loss
allocated to each Partner and the taxable gain or loss so allocated.
Similarly, the GE Portfolio will not pay any federal income taxes, as
long as it qualifies for treatment as a "regulated investment company" under
the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code").
To do so, the GE Portfolio, must among other things, distribute its net
investment income and net realized capital gains in accordance with the
Internal Revenue Code requirements. The GE Portfolio will elect to be treated
as a regulated investment company and intends to meet the necessary
requirements on an ongoing basis. Dividends derived from the GE Portfolio's
taxable net investment income and distributions of the Portfolio's net short-
term capital gains (including short-term gains from investment in tax-exempt
obligations) are taxable to shareholders as ordinary income for federal income
tax purposes. Distributions of long-term capital gains are taxable to
shareholders as long-term capital gains. Any dividend or capital gains
distribution received by a shareholder of the GE Portfolio will have the
effect of reducing the net asset value of the shareholder's Shares by the
exact amount of such dividend or distribution. If the net asset value of the
Shares should be reduced below a shareholder's cost as a result of the
payment of dividends or capital gains distributions, such payment or
distribution would be in part a return of the shareholder's investment to the
extent of such reduction below the shareholder's cost, but nonetheless would
be fully taxable at either ordinary or capital gains rates.
Any Limited Partners that are foreign taxpayers should consult their tax
advisers with respect to the consequences of becoming a shareholder in the
Fund. With respect to mutual fund share dividends, investment companies
generally must pay withholding taxes on behalf of foreign shareholders at a
30% rate. These taxes may not apply under certain circumstances or may be
subject to reduction under applicable tax treaties, and foreign shareholders
may be entitled to tax credits or deductions with respect to these withholding
taxes in other countries in which they pay taxes.
For additional information regarding the tax consequences of an
investment in the GE Portfolio, see the Preliminary Prospectus under "Tax
Considerations" and the Statement of Additional Information for the Fund under
"Tax Considerations."
Distributions
The Partnership may make distributions of partnership assets from time
to time at the sole discretion of the General Partner. The Partnership's
practice has been to distribute quarterly all of its net income, but not
to distribute any of its capital gains.
Dividends from the net investment income of the GE Portfolio will be
declared and paid on an annual basis. The GE Portfolio will distribute its
realized net short-term capital gains and net long-term capital gains at least
annually by automatically reinvesting such short-term or long-term capital
gains in additional GE Portfolio Shares at the net asset value on the ex-date
of the distribution unless investors elect to receive cash dividends and
distributions.
As with the Partnership, shareholders in the GE Portfolio will be taxed
on GE Portfolio dividends and distributions, regardless of whether or not they
are reinvested. See the Preliminary Prospectus under "Dividends, Tax
Considerations."
Purchases and Redemptions
As mentioned above, Limited Partners can acquire new Partnership Units,
or have their Units redeemed, on a monthly or quarterly basis. Shareholders
of the GE Portfolio will be able to acquire additional Shares, or have their
Shares redeemed, on any Business Day.
Advisory Fees
The GE Portfolio has an advisory fee which is 1.00% of the average daily
net assets of the GE Portfolio. The General Partner of the Partnership, HLM,
does not charge the Partnership an advisory fee for its investment management
services to the Partnership. Limited Partners, all of whom are advisory
clients of HLM, are assessed an investment management fee based upon the
market value of their assets under HLM's management. This investment
management fee is generally payable quarterly in advance.
This asset based fee structure is not possible in registered investment
companies on a shareholder-by-shareholder basis. Accordingly, all of the
shareholders of the GE Portfolio will in effect pay the same advisory fee,
subject however to the discretion of HLM to return a portion of GE Portfolio's
advisory fees charged to its investment clients. The return of a portion of
the advisory fees that HLM earns on the GE Portfolio to Limited Partners is
intended to maintain substantially the same overall expense level currently
in place for Limited Partners in the Partnership.
The following table and example provide a comparison of the estimated
annual operating expenses (as a percentage of average net assets)
the Partnership currently pays and the estimated amounts the GE Portfolio would
pay following the consummation of the Reorganization:
Comparative Expense Table
Annual Fund Operating Expenses
(as a percentage of average net assets)
Partnership GE Portfoilio
Existing Expenses Estimated Expenses
Investment Advisory Fees 1.00% (a)
1.00%
Other Expenses- (after reimbursement) N/A (b) 0.25% (c)
Total Operating Expenses
(after reimbursement) N/A (d) 1.25% (c)
(a) The General Partner of the Partnership, HLM, does not
charge the Partnership an advisory fee for its investment management
services to the Partnership. Limited Partners, all of whom are
advisory clients of HLM, are assessed an investment management fee
based upon the market value of their assets under HLM's management.
Clients with less than $20 million under HLM's management are assessed
a management fee of 1.00%., and any assets over $20 million are
assessed a management fee of .50%
(b) The other expenses of the Partnership for the fiscal year
ended December 31, 1995 were a total of $95,784. These expenses
cannot be stated in percentage terms because the Partnership does
not value its assets daily and as such the Partnership cannot compute
its average net assets. The Partnership only values its securities
on a monthly basis.
(c) This amount reflects voluntary expense reimbursements as explained
hereinafter. Absent these voluntary expense reimbursements, the
ratio of "Other Expenses" to average net assets is estimated to be
1.50% for the GE Portfolio.
(d) This number cannot be stated as a percentage of average net assets of
the partnership because of the reasons set forth in footnote (b).
Expenses
The Partnership pays (or reimburses the General Partner for) all
expenses in the operation of the Partnership, including, but not limited to,
brokerage and commission expenses, custodian fees and charges, accounting and
auditing fees, legal fees and disbursements, and taxes and governmental fees,
if any. In addition the General Partner is reimbursed for other expenses
incurred in the organization and maintenance of the Partnership. The
Partnership does not have an expense cap. For further details as to the
expenses of the Partnership, please refer to the Partnership Agreement
(Sections 2.04 and 6.05).
HLM, at its discretion and until further notice from HLM, has
voluntarily agreed to cap the total operating expenses of the GE Portfolio at
1.25%. For further information on the expenses of the GE Portfolio, please
refer to the Preliminary Prospectus of the Fund under "Fund Expenses".
Rights of Holders
The rights of Limited Partners and shareholders of a Maryland corporation
differ in several respect including, but not limited to, governing laws and
regulations; management structure; voting rights; and meeting requirements.
The rights of Limited Partners in the Partnership are governed by the
Partnership Agreement and by the New Jersey Limited Partnership Act.
Generally, Limited Partners are not permitted to participate in Partnership
management and have very limited voting rights. Limited Partner meetings are
not required. For further details as to the rights of the Limited Partners,
please refer to the Partnership Agreement (Article VII).
Limited Partners who participate in the conversion of the Partnership
will become shareholders of a Maryland corporation. As such, they will have
rights granted under the Articles of Incorporation of the Fund and Maryland
corporate law. As a Maryland corporation, the Fund is not required to hold a
an annual shareholder meeting. Shareholder approval will be sought only for
certain changes in the GE Portfolio's operation and for an election of Directors
under certain circumstances. Directors may be removed by shareholders at a
special meeting. A special meeting of the Fund shall be called by the Directors
upon written request of shareholders owning at least 10% of the Fund's
outstanding shares. See "Securities To Be Issued" above and the Statement of
Additional Information under "Organization of the Fund."
The Partnership Agreement did not contemplate the conversion of the
Partnership into mutual fund format. Accordingly, the General Partner, HLM,
does not have the authority, under the language of the Partnership Agreement,
to carry out the terms of the Plan of Exchange unilaterally. Thus, the General
Partner has proposed in Proposal One that Limited Partners approve an Amendment
to the Partnership Agreement. The Amendment would specifically give the
General Partner the power and authority to cause the Partnership to merge into
a mutual fund provided that the terms and structure of the merger are subject to
the vote of the Limited Partners. A copy of the Amendment to the Partnership
Agreement giving the General Partner such additional authority attached hereto
as Appendix C.
ERISA
Limited Partners subject to the Employee Retirement Income Social
Security Act of 1974 ("ERISA") will have the same responsibilities with
respect to an investment in the GE Portfolio as they do with respect to their
investment in the Partnership.
Transferability
The Shares will be more liquid than Partnership Units. Partnership
Units may be transferred only under limited circumstances. Shares in
the GE Portfolio will be transferable and redeemable on each Business Day.
Reports
The GE Portfolio will deliver to its shareholders annual and semi-annual
reports substantially similar to those distributed by the Partnership (except
for minor differences dictated by regulatory or other considerations).
Limited Partners currently receive shareholder reports quarterly (unaudited)
and audited financial statements annually.
Advisory Relationship and Management
The conversion will not substantially affect day-to-day portfolio
management. HLM will provide its advisory services to the GE Portfolio in
substantially the same manner as it does to the Partnership. The same
personnel that currently advise the Partnership will continue to advise the GE
Portfolio. In addition, various HLM officers will be officers of the Fund.
In terms of overall management, however, the GE Portfolio is somewhat
different because of its corporate structure and applicable investment company
regulations. The principal difference is the governance of the Fund by the
Board of Directors rather than by a general partner.
The rights and duties of HLM as General Partner and investment manager
of the Partnership are set forth in the Partnership Agreement (Article VI).
Generally speaking, HLM is exclusively responsible for the management of
the Partnership and has full authority to manage the affairs of the Partnership
within the framework established by the Partnership Agreement. HLM may not be
removed except for cause, and with the vote of seventy-five percent (75%) of
the Units.
The overall control of the Fund and the GE Portfolio is vested in its
Board of Directors. The required percentage of directors are not "interested
persons" within the meaning of the 1940 Act. Among other things, this means
that they are not affiliated with HLM or any broker-dealer firm. The Board of
Directors as a whole, and the disinterested director(s) in particular, have a
variety of statutory and regulatory duties and obligations, especially in
connection with the Advisory Agreement. See the Statement of Additional
Information for the Fund for a description of the officers and directors of
the Fund. The Board of Directors delegates certain day-to-day
responsibilities to its officers, some of whom are also offices of HLM.
The Fund also engages its investment adviser (the "Adviser") through an
Advisory Agreement (the "Advisory Agreement") granting the Adviser broad powers
to manage the investment affairs of the GE Portfolio, subject to the general
oversight and particular statutory responsibilities of the Board of Directors.
See the Preliminary Prospectus under "Management of the Fund" for information
concerning the Adviser. The Advisory Agreement must be approved by the
Fund's Director(s) who are not "interested persons," and may be continued from
year to year if approved at least annually by the Board of Directors or the
holders of a majority of the Shares and by the disinterested directors. The
initial Advisory Agreement may be terminated on 60 days' notice by the Fund's
Board of Directors or by the holders of a majority of the Shares. The Adviser
may also terminate the Advisory Agreement on 60 days' notice. The term of the
Advisory Agreement is two years and it may not be assigned. See the Statement
of Additional Information under "Investment Adviser" for additional
information concerning the Advisory Agreement.
Investment Restrictions
The GE Portfolio's investment restrictions reflect the addition of some
restrictions implemented in compliance with the 1940 Act. Some of the
investment restrictions of the GE Portfolio include the following: limitations
on investment in the total assets of any one issuer; limitations on investment
in the securities of companies in any one industry; limitations on borrowing
money; and limitations on purchasing or selling real estate. For a comparison
of the Partnership's investment restrictions with the GE Portfolio's, see the
Partnership Agreement (Section 2.03) and the Statement of Additional
Information for the GE Portfolio under "Investment Restrictions".
Additional Investment Strategies
The basic investment strategies of the GE Portfolio are substantially
similar to those of the Partnership. For a description of the investment
strategies and techniques available to the GE Portfolio, and the risks
associated with those strategies and techniques, see the Preliminary Prospectus
under "Investment Policies, Risks Associated with the Fund's Investment Policies
and Investment Techniques," and Statement of Additional Information for the
Fund under "Supplemental Descriptions of Investments," "Supplemental Investment
Techniques," and "Supplemental Discussion of Risks Associated With the
Fund's Investment Policies and Investment Techniques," and "Risk Factors."
FINANCIAL INFORMATION
Appendix D contains recent historical financial and portfolio
information with respect to the Partnership. The GE Portfolio has not
commenced investment operations as yet and as such no audited financial
statements are available.
EXPENSES OF THE EXCHANGE
The expenses of the Exchange will be borne by HLM. As described above,
certain organizational expenses relating to the formation and registration of
the GE Portfolio will be paid by the GE Portfolio and amortized over five
years. The amount of such annual amortization will, however, be included in
the calculation of the GE Portfolio expenses subject to the expense
limitations described above under "Comparison of the Partnership and the GE
Portfolio-Expenses".
INITIAL APPROVALS
The GE Portfolio has issued a nominal number of Shares in the GE
Portfolio to David R. Loevner. David R. Loevner has voted those Shares for
the approval of the Advisory Agreement relating to the GE Portfolio.
REGULATORY MATTERS
The Fund and the GE Portfolio are subject to the informational
requirements of the Securities Exchange Act of 1934 and the 1940 Act. In
accordance with those laws and the related regulations, the Fund and the
GE Portfolio must comply with a variety of requirements, in addition to
those referred to above with respect to the Board of Directors. Those
requirements include various investment restrictions and diversification rules,
annual prospectus updates, shareholder approval of any changes to the Advisory
Agreement, and other requirements related to fidelity bonds, custodial
and depository arrangements, transfer agent arrangements, liquidity and other
matters. In addition, upon the commencement of investment operations, the GE
Portfolio will file reports, proxy statements and other information with
the Securities and Exchange Commission. Reports, proxy statements and other
information filed by the Fund may be inspected and copied at the public
references facilities of the Commission in Washington, D.C., at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549. Copies of such materials
can be obtained at prescribed rates upon request to the Public Reference
Branch, Office of Consumer Affairs and Information Services, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
CAPITALIZATION
The following table shows (1) the capitalization (adjusted net assets)
of the Partnership as of September 30, 1996), (2) the capitalization
of the GE Portfolio immediately before the Exchange ("initial net assets"),
and (3) the pro forma combined capitalization of the Partnership and the GE
Portfolio on a pro forma basis (using September 30, 1996 Partnership adjusted
net asset values) after giving effect to the proposed Exchange at net asset
value:
HLM GLOBAL EQUITY LIMITED PARTNERSHIP
Pro Forma
Partner- Partner- Pro Forma Pro Forma Fund Net
ship ship
Partner- Units Net Asset Initial Combined Fund Shares Assets
ship Fund
Net Outstan- Value/Unit Net Net Assets Outstanding
Value/Share
Assets ding Assets
$63,845,547 38,070 $1,677.06 0 $63,845,547 6,384,554 $10.00
GENERAL PARTNER
As General Partner of the Partnership, HLM is required by the Partnership
Agreement and applicable tax law to maintain an investment in the
Partnership. The General Partner is required to make an initial contribution
to the Partnership and make such additional contributions as necessary to
maintain an ownership interest of at least one percent (1%) of the total
percentage interests in the Partnership. HLM, as investment adviser to the GE
Portfolio, is not required to maintain any investment in the Fund.
LEGAL MATTERS RELATING TO THE EXCHANGE
Pitney, Hardin, Kipp & Szuch, is acting as counsel for the Partnership.
Dechert Price & Rhoads is acting as counsel to the Fund and will deliver an
opinion as to certain legal matters in connection with the issuance of the
Shares.
Neither law firm should be deemed to represent the Limited Partners or
the shareholders of the GE Portfolio in connection with the Plan of Exchange
and related transactions.
PROPOSALS FOR FUTURE MEETINGS
The Fund is not required to hold annual shareholder meetings in any year in
which no meeting is required under the 1940 Act. Consequently, the Fund
does not intend to hold annual shareholder meetings each year, but meetings
may be called by the Board of Directors from time to time. Proposals of
shareholders that are intended to be presented at a future shareholder
meeting must be received by the Fund by a reasonable time prior to the Fund's
mailing of proxy statements relating to such meeting.
By Order of the General Partner
HARDING, LOEVNER MANAGEMENT, L.P.
By: HLM Holdings, Inc., General Partner
By: David R. Loevner, President
HLM GLOBAL EQUITY LIMITED PARTNERSHIP
50 Division Street, Suite 401
Somerville, New Jersey 08876
PROXY FOR A MEETING OF LIMITED PARTNERS
DATE: November 7, 1996
THIS PROXY IS SOLICITED BY THE GENERAL PARTNER OF HLM GLOBAL EQUITY
LIMITED PARTNERSHIP (the "Partnership") for use at a Meeting of Limited
Partners of the Partnership, which meeting will be held at 10:00 a.m. at
the offices of Harding, Loevner Funds, Inc. (the "Fund") located on the 26th
floor at 600 Fifth Avenue, New York, New York 10020, and any adjournments
thereof (the "Meeting").
The undersigned Limited Partner of the Partnership, revoking any and all
previous proxies heretofore given for Units of the Partnership held by
the undersigned ("Units"), does hereby appoint ______________ and
_______________ , or any of them, with full power of substitution to each, to
be the attorneys and proxies of the undersigned (the "Proxies"), to attend the
Meeting, and to represent and direct the voting interest represented by the
Units as of the record date for said Meeting for the Proposals specified
below.
This proxy, if properly executed, will be voted in the manner as
directed herein by the undersigned Limited Partner. Unless otherwise
specified below in the squares provided, the undersigned's vote will be
cast "FOR" Proposal One. In their discretion, the Proxies are authorized to
transact and vote upon such other matters and business as may come
before the Meeting or any adjournments thereof.
Proposal One. To approve the proposed Agreement and Plan of Exchange
(the "Plan of Exchange") among the Partnership, Harding, Loevner
Funds, Inc., and the Fund, on behalf of its Global Equity Portfolio
(the "GE Portfolio"), providing for the transfer of all of the assets
of the Partnership in exchange for shares of the GE Portfolio (the
"Shares") and the assumption by the GE Portfolio of all of the
liabilities of the Partnership; the distribution of such Shares to
the Partners of the Partnership in complete liquidation of the
Partnership; and the proposed Amendment of the Amended and Restated
Limited Partnership Agreement of the Partnership dated as of November
1, 1994.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Proposal Two. To consider and act upon any other matters that may
properly come before the Meeting and any adjournments thereof.
To avoid adjourning the Meeting to a subsequent date, please facsimile,
and/or return this proxy in the enclosed self-addressed, postage-paid
envelope. THIS PROXY IS SOLICITED ON BEHALF OF THE GENERAL PARTNER, WHICH
RECOMMENDS A VOTE FOR PROPOSAL ONE.
Dated:_________________________, 199_
___________________
___________________________
Beneficial Limited Partner Signature of Limited Partner
______________________________
Relative Percentage Interests (Units)
held by Limited Partner
This proxy may be revoked by the Limited Partner at any time prior to
the Meeting.
NOTE: Please sign exactly as your name appears hereon. If the Units are
registered in more than one name, all registered individuals should sign
this proxy; but if one registered individual signs, this signature binds the
other registered individual. When signing as an attorney, executor,
administrator, agent, trustee, or guardian, or custodian for a minor, please
give full title as such. If a partnership, please sign in partnership name by
an authorized person.
PART B- STATEMENT OF ADDITIONAL INFORMATION
November 7, 1996
Acquisition of the assets and liabilities of
HLM GLOBAL EQUITY LIMITED PARTNERSHIP
50 Division Street, Suite 401
Somerville, New Jersey 08876
908-218-7900
By and in the exchange for the shares of
GLOBAL EQUITY PORTFOLIO
HARDING, LOEVNER FUNDS, INC.
600 Fifth Avenue, 26th Floor
New York, New York 10020
212-332-5210
This Statement of Additional Information (the "Statement") relates to
the proposed transfer of all the assets and balance sheet liabilities of HLM
Global Equity Limited Partnership (the "Partnership") to the Global Equity
Portfolio (the "GE Portfolio") of Harding, Loevner Funds, Inc. (the "Fund").
The Partnership will convey all of its assets and balance sheet liabilities to
the Fund in exchange for shares of the GE Portfolio. This Statement is not a
prospectus and is meant to be read in conjunction with the Combined
Prospectus/Proxy Statement dated November 7, 1996 that the Statement
accompanies. A copy of the Combined Prospectus/Proxy Statement may be
obtained without charge by calling AMT Capital Services, Inc., the Fund's
administrator and distributor at (212) 332-5210 or by writing to AMT Capital
Services, Inc. at 600 Fifth Avenue, 26th Floor, New York, NY 10020.
TABLE OF CONTENTS
Page
The Exchange
Financial Statements
THE EXCHANGE
The limited partners of the Partnership (the "Limited Partners") are
being advised of an Agreement and Plan of Exchange (the "Plan of Exchange").
Under the Plan of Exchange, all of the assets of the Partnership will be
acquired by the Fund and the balance sheet liabilities of the Partnership will
be assumed by the Fund in exchange for shares of the GE Portfolio. The Fund,
an open-end management investment company organized as a Maryland corporation,
has not yet commenced the offering of any shares of the GE Portfolio to the
public.
For detailed information about the Plan of Exchange and related
transactions, Limited Partners should refer to the Combined Prospectus/Proxy
Statement. For further information about the Fund and the GE Portfolio,
Limited Partners should refer to the Fund's Prospectus and Statement of
Additional Information, dated November 1, 1996 that is attached to the
Combined Prospectus/Proxy Statement as Appendix B and which is incorporated by
reference into this Statement.
FINANCIAL STATEMENTS
Page
Unaudited Portfolio Appraisal of
HLM Global Equity Limited Partnership
as of September 30, 1996
Independent Auditors' Report
dated February 1, 1996
Financial Statement
Statement of Financial Condition
as of December 31, 1995
Statement of Income for the Year
Ended December 31, 1995
Statement of Changes in
Partners' Capital for the
Year Ended December 31, 1995
Schedule of Investments in
Securities as of December 31, 1995
Notes to Financial Statements
PART C. OTHER INFORMATION
Item 15. Indemnification
The Registrant shall indemnify directors, officers, employees and
agents of the Registrant against judgments, fines, settlements and
expenses to the fullest extent allowed, and in the manner provided,
by applicable federal and Maryland law, including Section 17(h) and
(i) of the Investment Company Act of 1940.
Item 16. Exhibits
(1) Articles of Incorporation, dated July 31, 1996 (previously filed
as Exhibit (1) to Registrant's Registration Statement on Form N-1A,
File Nos. 333-09341, 811-07739) and incorporated herein by reference.
(2) By-laws (previously filed as Exhibit (2) to Registrant's
Registration Statement on Form N-1A, File Nos. 333-09341, 811-07739)
and incorporated herein by reference.
(3) Not Applicable.
(4) Form of Agreement and Plan of Exchange (previously filed as
Exhibit (4) to the Registrant's Registration Statement on Form N-14,
filed on October 1, 1996, File No. Reg. No. 333-13239).
(5) Not Applicable.
(6) Investment Advisory Agreement between the Registrant and Harding,
Loevner Management, L.P. (previously filed as Exhibit (5)(b) to Pre-
Effective Amendment No. 1 to Registrant's Registration Statement on
Form N-1A, File Nos. 333-09341, 811-07739) and incorporated herein by
reference.
(7) Distribution Agreement between the Registrant and AMT Capital
Services, Inc. (previously filed as Exhibit (6)(a) to Pre-Effective
Amendment No. 1 to Registrant's Registration Statement on Form N-1A,
File Nos. 333-09341, 811-07739) and incorporated herein by reference.
(8) Not Applicable.
(9) Form of Custodian Agreement between the Registrant and Investors
Bank & Trust Company (previously filed as Exhibit (9) to the
Registrant's Registration Statement on Form N-14, filed on October 1,
1996, File No. Reg. No. 333-13239).
(10) Not Applicable.
(11) Opinion and Consent of Dechert Price & Rhoads (previously filed
as Exhibit (10) to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A, File Nos. 333-09341, 811-07739)
and incorporated herein by reference.
(12) Opinion of Dechert Price & Rhoads regarding certain tax matters
and consequences to shareholders to be filed.
(13)(a) Form of Transfer Agency and Service Agreement between the
Registrant and Investors Bank & Trust Company (previously filed as
Exhibit (13)(a) to the Registrant's Registration Statement on Form N-
14, filed on October 1, 1996, File No. Reg. No. 333-13239).
13(b) Administration Agreement between the Registrant and AMT Capital
Services, Inc. (previously filed as Exhibit (9)(a) to Pre-Effective
Amendment No. 1 to Registrant's Registration Statement on Form N-1A,
File Nos. 333-09341, 811-07739) and incorporated herein by reference.
(14) Consent of Ernst & Young LLP independent auditors for the GE
Portfolio (Filed herewith).
(14)(a) Consent of Rothstein, Kass & Company, P.C. independent auditors
for the HLM Global Equity Limited Partnership (Filed herewith).
(15) There are no financial statements omitted pursuant to Item
14(a)(1).
(16) Not applicable.
Item 17. Undertakings
The Registrant shall indemnify directors, officers, employees and
agents of the Registrant against judgments, fines, settlements and
expenses to the fullest extent allowed, and in the manner
provided, by applicable federal and Maryland law, including
Section 17(h) and (i) of the Investment Company Act of 1940. In
this regard, the Registrant undertakes to abide by the provisions
of Investment Company Act Releases No. 11330 and 7221 until
amended or superseded by subsequent interpretation of legislative
or judicial action.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
The Registrant hereby undertakes to file, by post-effective
amendment, an opinion of counsel or a copy of an IRS ruling
supporting the tax consequences of the proposed reorganization
within a reasonable time after receipt of such opinion or ruling.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Somerville and State of New Jersey
on the 5th day of November, 1996.
HARDING, LOEVNER FUNDS, INC.
By: /s/ David R. Loevner
David R. Loevner, President
(Principal Executive, Financial
and Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement had been signed below by the following persons in the capacities and
on the dates indicated.
Signature Title
/s/ David R. Loevner Director and President (Principal Executive,
David R. Loevner Financial and Accounting Officer)
/s/ William E. Vastardis
William E. Vastardis Secretary and Treasurer
/s/ *
Jane A. Freeman Director
/s/ *
Carl W. Schafer Director
/s/ *
James C. Brady III Director
* Attorney-in-Fact /s/William E. Vastardis
INDEX TO EXHIBITS INCLUDED IN PART C
Exhibit 14 Consent of Rothstein, Kass & Company, P.C. independent auditors
for the HLM Global Equity Limited Partnership.
Exhibit 14(a) Consent of Ernst & Young LLP independent auditors for the
GE Portfolio
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference of our report dated February 1,
1996 in this Registration Statement (Form N-14 No. 333-13239) of Harding,
Loevner Funds, Inc.
/s/ Rothstein, Kass & Company, P.C.
Rothstein, Kass & Company, P.C.
Roseland, New Jersey
November 5, 1996
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" and "Independent Auditors" in the Prospectus and to the
incorporation by reference of our report dated February 9, 1996 of AMT Capital
Fund, Inc. in the Registration Statement (Form N-1A No. 333-09341) of the
Harding, Loevner Funds, Inc., which is incorporated by reference in this
Registration Statement (Form N-14, No. 332-13239) of the Harding, Loevner
Funds, Inc.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
New York, New York
November 5, 1996
