As filed on _________, 1996
Reg. No. __________
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.___
___________________________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)
______________________________(800) 762-4848_________________________________
(Registrant's Telephone Number, Including Area Code)
William E. Vastardis, ________
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:
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 thirty days after
filing pursuant to paragraph (a) of Rule 488.
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
_________, 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 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 ________________,
based on _______________ 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
, 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 ______, 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 ________, 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
________________ 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: ___________, 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) 332-5211
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 _________, 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 _____________,
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
_____________, 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 ____________ 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 __________, 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) 332-5211
COMBINED PROSPECTUS/PROXY STATEMENT
Meeting of Limited Partners to be
held on ________, 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 _________, 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 ________, 1996, the record
date, will be entitled to vote such Units on all business to be presented at
the Meeting. On the record date, _____________ Units of the Partnership
were outstanding and entitled to be voted at the Meeting. As of the record
date there were ___ 5% beneficial holders of Partnership Units.
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 _____________, 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.
, 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
____________. 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 _____________,1996
based on __________, 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.
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 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. 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 the
Amendment to allow the General Partner to carry out the terms of the Plan of
Exchange. 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. 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
Although the basic investment strategies of the GE Portfolio are
substantially similar to those of the Partnership, the GE Portfolio is
authorized to employ certain secondary investment strategies not available to
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 December 31, 1995 (adjusted by Partnership Unit
redemptions and purchases on December 31, 1995), (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 December 31, 1995 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
$53,394,600 0 $53,394,600
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
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant 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 ___ day of ___________, 1996.
HARDING, LOEVNER FUNDS, INC.
By:_______________________
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 Date
_____________________ Secretary
Eric P. Nachimovsky
HLM GLOBAL EQUITY LIMITED PARTNERSHIP
50 Division Street, Suite 401
Somerville, New Jersey 08876
PROXY FOR A MEETING OF LIMITED PARTNERS
DATE: __________, 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
,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
212-332-5211
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 _________, 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) 332-5211 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 the proposed
Exchange, 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 Preliminary Prospectus and Statement
of Additional Information, dated _____, 1996 that is attached to the Combined
Prospectus/Proxy Statement as Appendix B and which is incorporated by reference
into this Statement.
FINANCIAL STATEMENTS
Included in Part A
HLM Global Equity Limited Partnership
Independent Auditors' Report
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 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.
(2) By-laws (previously filed as Exhibit (2) 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.
(3) Not Applicable.
(4) Form of Agreement and Plan of Exchange annexed hereto as
Appendix A.
(5) Not Applicable.
(6) Form of Investment Advisory Agreement between the Registrant and
Harding, Loevner Funds, Inc.
(7) Form of Distribution Agreement between the Registrant and AMT
Capital Services, Inc.
(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 September
3, 1996, File No. Reg. No. 333-11319).
(10) Not Applicable.
(11) Opinion and Consent of Dechert Price & Rhoads (previously filed
as Exhibit (11) to the Registrant's Registration Statement on Form
N-14, filed on September 3, 1996, File No. Reg. No. 333-11319).
(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 September 3, 1996, File No. Reg. No. 333-11319).
13(b) Form of Administration Agreement between the Registrant and
AMT Capital Services, Inc.
(14) Consents of Ernst & Young LLP independent auditors for the
Current Portfolio and the AMT Capital Fund, Inc. to be filed.
(14)(a) Consents of Rothstein, Kass & Company, P.C. independent
auditors for the Global Equity Limited Partnership to be filed.
(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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant 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 ___ day of ___________, 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 Date
/s/Eric P. Nachimovsky Secretary
Eric P. Nachimovsky
INDEX TO EXHIBITS INCLUDED IN PART C
Exhibit 4 Form of Agreement and Plan of Exchange annexed hereto as
Appendix A.
Exhibit 6 Form of Investment Advisory Agreement between the Registrant and
Harding, Loevner Funds, Inc.
Exhibit 7 Form of Distribution Agreement between the Registrant and AMT
Capital Services, Inc. Exhibit 13(b) Form of Administration
Agreement between the Registrant and AMT Capital Services, Inc.
Exhibit 13(b) Form of Administartion Agreement between the Registrant and AMT
Capital Services, Inc.
ADVISORY AGREEMENT
ADVISORY AGREEMENT, dated ___________, 1996, between Harding, Loevner
Funds, Inc., a Maryland corporation (the "Fund"), and Harding, Loevner
Management, L.P., a New Jersey limited partnership (the "Adviser").
In consideration of the mutual agreements herein made, the parties hereto
agree as follows:
1. Attorney-in-Fact. The Fund appoints the Adviser as its attorney-
in-fact to invest and reinvest the assets of the (insert name of Portfolio)
(the "Portfolio"), as fully as the Fund itself could do. The Adviser hereby
accepts this appointment.
2. Duties of the Adviser. (a) The Adviser shall be responsible for
managing the investment portfolio of the Portfolio, including, without
limitation, providing investment research, advice and supervision, determining
which portfolio securities shall be purchased or sold by the Portfolio,
purchasing and selling securities on behalf of the Portfolio and determining
how voting and other rights with respect to portfolio securities of the
Portfolio shall be exercised, subject in each case to the control of the Board
of Directors of the Fund (the "Board") and in accordance with the objective,
policies and principles of the Portfolio set forth in the Registration
Statement, as amended, of the Fund, the requirements of the Investment Company
Act of 1940, as amended, (the "Act") and other applicable law. In performing
such duties, the Adviser shall provide such office space, and such executive
and other personnel as shall be necessary for the investment operations of the
Portfolio. In managing the Portfolio in accordance with the requirements set
forth in this paragraph 2, the Adviser shall be entitled to act upon advice of
counsel to the Fund or counsel to the Adviser.
(b) Subject to Section 36 of the Act, the Adviser shall not be liable to
the Fund for any error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission in the management of the
Portfolio and the performance of its duties under this Agreement except for
losses arising out of the Adviser's willful misfeasance, bad faith, or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement. It is agreed
that the Adviser shall have no responsibility or liability for the accuracy or
completeness of the Fund's Registration Statement under the Act and the
Securities Act of 1933 except for information about the Adviser contained in
the Prospectus included as part of such Registration Statement supplied by the
Adviser for inclusion therein. The Fund agrees to indemnify and hold the
Adviser harmless from and against all claims, losses, costs, damages and
expenses, including reasonable fees and expenses for counsel, incurred by it
resulting from any claim, demand, action or suit in connection with or arising
out of any action or omission by the Adviser in the performance of this
Agreement except for those claims, losses, costs, damages and expenses
resulting from the Adviser's willful misfeasance, bad faith, or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
(c) The Adviser and its officers may act and continue to act as
investment advisers and managers for others (including, without limitation,
other investment companies), and nothing in this Agreement will in any way be
deemed to restrict the right of the Adviser to perform investment management or
other services for any other person or entity, and the performance of such
services for others will not be deemed to violate or give rise to any duty or
obligation to the Fund.
(d) Except as provided in Section 5, nothing in this Agreement will
limit or restrict the Adviser or any of its officers, affiliates or employees
from buying, selling or trading in any securities for its or their own account
or accounts. The Fund acknowledges that the Adviser and its officers,
affiliates or employees, and its other clients may at any time have, acquire,
increase, decrease or dispose of positions in investments which are at the same
time being acquired or disposed of for the account of the Portfolio. The
Adviser will have no obligation to acquire for the Portfolio a position in any
investment which the Adviser, its officers, affiliates or employees may acquire
for its or their own accounts or for the account of another client, if in the
sole discretion of the Adviser, it is not feasible or desirable to acquire a
position in such investment for the account of the Portfolio, provided that the
Adviser shall have acted in good faith and in a manner deemed equitable to the
Portfolio. The Adviser represents that it has adopted a code of ethics
governing personal trading that complies in all material respects with the
recommendations contained in the Investment Company Institute "Report of the
Advisory Group on Personal Investing," dated May 9, 1994, and the Adviser
agrees to furnish a copy of such code of ethics to the Directors of the Fund.
(e) If the purchase or sale of securities consistent with the investment
policies of the Portfolio and one or more other clients serviced by the Adviser
is considered at or about the same time, transactions in such securities will
be allocated among the Portfolio and clients in a manner deemed fair and
reasonable by the Adviser. Although there is no specified formula for
allocating such transactions, the various allocation methods used by the
Adviser, and the results of such allocations, are subject to periodic review by
the Board.
3. Expenses. The Adviser shall pay all of its expenses arising from
the performance of its obligations under this Agreement. Except as provided
below, the Adviser shall not be required to pay any other expenses of the Fund
(including out-of-pocket expenses, but not including the Adviser's overhead or
employee costs), including without limitation, organization expenses of the
Fund; brokerage commissions; maintenance of books and records which are
required to be maintained by the Fund's custodian or other agents of the Fund;
telephone, telex, facsimile, postage and other communications expenses;
expenses relating to investor and public relations; freight, insurance and
other charges in connection with the shipment of the Fund's portfolio
securities; indemnification of Directors and officers of the Fund; travel
expenses (or an appropriate portion thereof) of Directors and officers of the
Fund to the extent that such expenses relate to attendance at meetings of the
Board of Directors of the Fund or any committee thereof or advisors thereto
held outside of Somerville, New Jersey; interest, fees and expenses of
independent attorneys, auditors, custodians, accounting agents, transfer
agents, dividend disbursing agents and registrars; payment for portfolio
pricing or valuation service to pricing agents, accountants, bankers and other
specialists, if any; taxes and government fees; cost of stock certificates and
any other expenses (including clerical expenses) of issue, sale, repurchase or
redemption of shares; expenses of registering and qualifying shares of the Fund
under Federal and state laws and regulations; expenses of printing and
distributing reports, notices, dividends and proxy materials to existing
stockholders; expenses of printing and filing reports and other documents filed
with governmental agencies, expenses of printing and distributing prospectuses;
expenses of annual and special stockholders' meetings; costs of stationery,
fees and expenses (specifically including travel expenses relating to Fund
business) of Directors of the Fund who are not employees of the Adviser or its
affiliates; membership dues in the Investment Company Institute; insurance
premiums and extraordinary expenses such as litigation expenses.
4. Compensation. (a) As compensation for the services performed and
the facilities and personnel provided by the Adviser pursuant to this
Agreement, the Fund will pay to the Adviser promptly at the end of each
calendar month, a fee, calculated on each day during such month, at an annual
rate of (insert compensation rate) of the Portfolio's average daily net assets.
The Adviser shall be entitled to receive during any month such interim payments
of its fee hereunder as the Adviser shall request, provided that no such
payment shall exceed 50% of the amount of such fee then accrued on the books of
the Portfolio and unpaid.
(b) If the Adviser shall serve hereunder for less than the whole of any
month, the fee payable hereunder shall be prorated.
(c) For purposes of this Section 4, the "average daily net assets" of
the Portfolio shall mean the average of the values placed on the Portfolio's
net assets on each day pursuant to the applicable provisions of the Fund's
Registration Statement, as amended.
5. Purchase and Sale of Securities. The Adviser shall purchase
securities from or through and sell securities to or through such persons,
brokers or dealers as the Adviser shall deem appropriate in order to carry out
the policy with respect to the allocation of portfolio transactions as set
forth in the Registration Statement of the Fund, as amended, or as the Board
may direct from time to time. The Adviser will use its reasonable efforts to
execute all purchases and sales with dealers and banks on a best net price
basis. The Adviser will consider the full range and quality of services
offered by the executing broker or dealer when making these determinations.
Neither the Adviser nor any of its officers, affiliates or employees will act
as principal or receive any compensation from the Portfolio in connection with
the purchase or sale of investments for the Portfolio other than the fee
referred to in Paragraph 4 hereof.
6. Term of Agreement. This Agreement shall continue in full force and
effect until two years from the date hereof, and will continue in effect from
year to year thereafter if such continuance is approved in the manner required
by the Act, provided that this Agreement is not otherwise terminated. The
Adviser may terminate this Agreement at any time, without the payment of any
penalty, upon 60 days' written notice to the Fund. The Fund may terminate this
Agreement with respect to the Portfolio at any time, without the payment of any
penalty, on 60 days' written notice to the Adviser by vote of either the
majority of the non-interested members of the Board or a majority of the
outstanding voting securities (as defined in Section 2(a)(42) of the Act) of
the Portfolio. This Agreement will automatically terminate in the event of its
assignment (the term "assignment" for this purpose having the meaning defined
in Section 2(a)(4) of the Act).
7. Changes in Membership. The Adviser is a limited partnership and,
pursuant to the New Jersey Uniform Securities Law and the Investment Advisers
Act of 1940, shall notify the Fund of any change in the membership of such
partnership within a reasonable time after the change.
8. Notices. Any notice or other communication authorized or required
hereunder shall be in writing or by confirming telegram, cable, telex or
facsimile sending device. Notice shall be addressed to the Fund at 50 Division
Street, Suite 401, Somerville, New Jersey 08876, Attention: President; and to
AMT Capital Services, Inc., 600 Fifth Avenue, 26th Floor, New York, New York
10020, Attention: Carla E. Dearing. Either party may designate a different
address by notice to the other party. Any such notice or other communication
shall be deemed given when actually received.
9. Amendment. This Agreement may be amended by the parties hereto
with respect to the Portfolio only if such amendment is specifically approved
(i) by the Board of Directors of the Fund or by the vote of a majority of
outstanding shares of the Portfolio ("Shares"), and (ii) by the Director(s)
who are not interested persons (the term "non interested" for this purpose
having the meaning defined in section 2 (a) (19) of the Act) of the Fund
("Non-Interested Director(s)"), which vote must be ast in person at a meeting
called for the purpose of voting on such approval.
10. Right of Adviser In Corporate Name. The Adviser and the Fund each
agree that the phrase "HLM," which comprises a component of the Portfolio's
corporate name, is a property right of the Adviser. The Fund agrees and
consents that (i) it will only use the phrase "HLM" as a component of its
corporate name and for no other purpose; (ii) it will not purport to grant to
any third party the right to use the phrase "HLM" for any purpose; (iii) the
Adviser or any corporate affiliate of the Adviser may use or grant to others
the right to use the phrase "HLM" or any combination or abbreviation thereof,
as all or a portion of a corporate or business name or for any commercial
purpose, including a grant of such right to any other investment company, and
at the request of the Adviser, the Fund will take such action as may be
required to provide its consent to such use or grant; and (iv) upon the
termination of any investment advisory agreement into which the Adviser and the
Fund may enter, the Fund shall, upon request by the Adviser, promptly take such
action, at its own expense, as may be necessary to change the Portfolio's
corporate name to one not containing the phrase "HLM" and following such a
change, shall not use the phrase "HLM" or any combination thereof, as part of
the Portfolio's corporate name or for any other commercial purpose, and shall
use its reasonable efforts to cause its officers, directors and stockholders to
take any and all actions which the Adviser may request to effect the foregoing
and recovery to the Adviser any and all rights to such phrase.
11. Miscellaneous. This Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require or
to impose any duty upon either of the parties to do anything in violation of
any applicable laws or regulations.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement
to be executed by their duly authorized officers as of the date first written
above.
ATTEST HARDING, LOEVNER FUNDS, INC.
By:_______________________________ By:_____________________________
, Secretary David R. Loevner, President
ATTEST HARDING, LOEVNER MANAGEMENT, L.P.
BY: HLM HOLDINGS, INC., GENERAL PARTNER
By:_______________________________ By:___________________________
, Secretary David R. Loevner, President
DISTRIBUTION AGREEMENT
AGREEMENT dated as of _____________,1996 by and between Harding, Loevner
Funds, Inc., an open-end management investment company organized as a
corporation under the laws of the State of Maryland (the "Fund"), and AMT
Capital Services, Inc., a Delaware corporation ("AMT Capital").
WHEREAS, the Fund desires that AMT Capital shall be, for the period of
this Agreement, the distributor of shares of the Fund (the "Shares");
WHEREAS, the Fund offers shares of three separate series (individually,
a "Series," and collectively, the "Series"), which have been registered under
the Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, the Fund desires to appoint AMT Capital as the distributor of
the Shares, and AMT Capital wishes to become the distributor of the Shares.
NOW, THEREFORE, in consideration of the above premises and of other good
and valuable consideration, the parties hereto, intending to be legally bound,
agree as follows:
1. Appointment of Distributor
The Fund hereby appoints AMT Capital as the distributor of the Fund's
Shares for the period and on the terms set forth in this Agreement. This
appointment applies to each existing Series of Shares, as well as any future
series provided (i) the Fund does not object to AMT Capital in writing on any
basis or (ii) AMT Capital does not object to the Fund in writing on the basis
of the capabilities of AMT Capital. AMT Capital accepts such appointment and
agrees to render the services and provide, at its own expense, the office
space, furnishings and equipment, and the personnel required by it to perform
the services on the terms herein provided.
2. Representation and Warranties of AMT Capital
AMT Capital represents and warrants to the Fund that:
A. AMT Capital is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has full power and
authority, corporate and otherwise, to consummate the transactions contemplated
by this Agreement. AMT Capital is duly qualified to carry out its business,
and is in good standing, in the State of New York.
B. The Board of Directors and stockholders of AMT Capital have taken all
action required by law and AMT Capital's Certificate of Incorporation and By-
Laws to authorize the execution and delivery of this Agreement by AMT Capital
and the consummation on behalf of AMT Capital of the transactions contemplated
by this Agreement. This Agreement constitutes a legal, valid and binding
obligation of AMT Capital enforceable in accordance with its terms. Neither
the execution and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will result in a breach of, or constitute a
default under, or with lapse of time or giving of notice or both will result in
a breach of or constitute a default under, or otherwise give any party thereto
the right to terminate (a) any mortgage, indenture, loan or credit agreement or
any other agreement or instrument evidencing indebtedness for money borrowed to
which AMT Capital is a party or by which AMT Capital or any of its properties
is bound or affected, or pursuant to which AMT Capital has guaranteed the
indebtedness of any person, or (b) any lease, license, contract or other
agreement to which AMT Capital is a party or by which AMT Capital or any of its
properties is bound or affected. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
result in, or require, the creation or imposition of any mortgage, deed or
trust, pledge, lien, security interest, or other charge or encumbrance of any
nature upon or with respect to any of the properties now or hereafter owned by
AMT Capital.
C. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will violate any provision
of the Certificate of Incorporation or By-Laws of AMT Capital.
D. Except such as have been obtained and as are in full force and
effect and subject to no dispute, claim or challenge, no permit, license,
franchise, approval, authorization, qualification or consent of, registration
or filing with, or notice to, any governmental authority is required in
connection with the execution and delivery by AMT Capital of this Agreement or
in connection with the consummation by AMT Capital of any transactions
contemplated by this Agreement, and no such permit, license, franchise,
approval, authorization, qualification or consent of, registration or filing
with, or notice to any federal, state or local governmental authority is
required in connection with AMT Capital's business or operations as currently
conducted or as currently contemplated to be conducted. AMT Capital has
conducted its business and operations in compliance with all applicable laws
and regulations.
E. AMT Capital is registered as a broker-dealer under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and is a member of the
National Association of Securities Dealers, Inc. (the "NASD").
3. Duties of the Fund
The Fund shall use its reasonable efforts to cooperate in the
maintenance by the investment adviser or other service provider of the
registration of the Fund's securities under the 1940 Act and the 1933 Act, and
the Fund and/or such service providers shall bear all expenses in connection
therewith. It is understood that this Agreement shall not require AMT Capital
to bear any expenses related to the Fund's registration or maintenance of the
Fund's registration.
The Fund shall cooperate in the qualification by the investment adviser
or other service provider of the Fund of each Series of Shares under the laws
of such states and other jurisdictions of the United States as the Fund shall
determine and shall execute and deliver such documents as may reasonably be
required for such purpose, but the Fund shall not be required to qualify as a
foreign business entity in any jurisdiction, nor effect any modification of
its policies or practices without prior approval of the Fund's Board of
Directors. The Fund's officers, subject to the direction of the Board of
Directors of the Fund and with the advice of AMT Capital, shall determine
whether it is desirable to qualify or continue to offer Shares of any Series
in any jurisdiction. AMT Capital shall have no obligation hereunder to assist
in the qualification of Shares of any Series in any jurisdiction or in the
maintenance of any qualification, other than its obligation to serve as
registered agent to the Fund and execute required filings.
The Fund will deliver to AMT Capital copies of each of the following
documents and will deliver to AMT Capital all future amendments and
supplements, if any:
A. a certified copy of the Articles of Incorporation of the Fund as
amended and currently in effect ("Charter");
B. a copy of the Fund's By-laws as amended and currently in effect
("By-laws") certified by the Secretary of the Fund;
C. the Fund's prospectus and statement of additional information
(including supplements thereto) which relate to the Shares (the "Prospectus"
and "SAI"); and
D. the Fund's current Registration Statement on Form N-1A as filed
under the 1940 and 1933 Acts, as such shall be amended from time to time (the
"Registration Statement").
The Fund and/or other service providers to the Fund shall also furnish
AMT Capital, with respect to a Series or the Fund, as applicable:
E. annual audit reports of the Fund's books and accounts made by
independent public accountants regularly retained by the Fund;
F. such additional copies of the Prospectus and SAI and annual, semi-
annual and other reports and communications to shareholders which relate to
the Shares as AMT Capital may reasonably require for sales purposes;
G. a monthly itemized list of the securities held by each Series;
H. monthly balance sheets of the Fund as soon as practicable after
the end of each month;
I. a survey indicating the states and jurisdictions in which each
Series is qualified for sale or exempt from the requirements of the securities
laws of such state or jurisdiction and the amounts of Shares of such Series
that may be sold in such states and jurisdictions, as such may be amended from
time to time ("Blue Sky Report"); and
J. from time to time such additional information regarding the Fund's
financial condition or the financial condition of a Series of Shares as AMT
Capital may reasonably request.
4. Duties of AMT Capital
AMT Capital shall act as agent for the distribution of, and shall use
appropriate efforts to solicit orders to purchase Shares of each Series. AMT
Capital agrees that all solicitations of orders to purchase and all sales of
Shares of each Series shall be made in accordance with the Charter, By-Laws,
and the Registration Statement, to the extent such documents have been
provided to AMT Capital, and in accordance with the Prospectus and the SAI,
and shall not at any time or in any manner violate any provisions of the laws
of the United States or of any state or other jurisdiction in which
solicitations are then being made, or of any rules and regulations made or
adopted by duly authorized agencies thereunder, including without limitation
those promulgated by the U.S. Securities and Exchange Commission (the "SEC")
and the NASD; provided that AMT Capital shall not be deemed to have violated
any state securities laws if it has acted in good faith and in accordance with
the Blue Sky Report.
AMT Capital will transmit any orders received by it for purchase or
redemption of Shares of any Series to the transfer agent and custodian for
that Series.
AMT Capital acknowledges that the only information provided to it by the
Fund is that contained in the Registration Statement, the Prospectus, the SAI,
and reports and financial information referred to in Section 2 herein.
Neither AMT Capital nor any other person is authorized by the Fund to give any
information or to make any representations, other than those contained in such
documents and any sales literature or advertisements approved by appropriate
representatives of the Fund.
AMT Capital may undertake or arrange for such advertising and promotion
as it believes reasonable in connection with the solicitation of orders to
purchase Shares; provided, however, that it shall provide the Fund with and
obtain the Fund's approval of copies of any advertising and promotional
materials approved, produced or used by AMT Capital prior to their use. AMT
Capital shall file such materials with the SEC and the NASD to the extent
required by the 1934 Act and the 1940 Act and the rules and regulations
thereunder, and by the rules of the NASD.
In carrying out its obligations hereunder, AMT Capital shall take, on
behalf of the Fund, all actions which appear to the Fund necessary to carry
into effect the distribution of the Shares of each Series.
5. Distribution of Shares of each Series
The price at which Shares of each Series may be sold shall be the net
asset value per Share of such Series computed in the manner set forth in the
Fund's Prospectus and SAI in effect at the time of sale of the Shares of such
Series.
It is mutually understood and agreed that AMT Capital does not undertake
to sell all or any specific portion of the Shares of any Series. The Fund
shall not sell Shares of any Series except through AMT Capital, except that
the Fund may issue Shares of any Series at their net asset value to any
shareholder of the Fund (i) purchasing Shares with dividends or other
distributions received from the Fund pursuant to an offer made to all
shareholders, (ii) in connection with a pro rata distribution directly to the
shareholders of any Series, and (iii) otherwise in accordance with any then-
current Prospectus of the Fund. In addition, the Fund may issue Shares in
connection with the merger or consolidation of any other investment company or
series thereof with the Fund or one of its Series, or in connection with its
acquisition, by purchase or otherwise, of all or substantially all of the
assets of any investment company or series thereof or all or substantially all
of the outstanding shares of any such company or series thereof. Without
limitation of the foregoing, the phrase "any investment company" as used in
this paragraph shall include any private investment company organized as a
limited partnership or other entity.
AMT Capital may, and when requested by the Fund shall, suspend its
efforts to effectuate sales of Shares of any Series at any time when in the
opinion of AMT Capital or of the Fund no sales should be made because of
market or other economic considerations or abnormal circumstances of any kind.
The Fund may withdraw the offering of Shares of any Series at any time with or
without the consent of AMT Capital and shall withdraw the offering of Shares
of any Series when so required by the provisions of any statute or of any
order, rule or regulation of any governmental body having jurisdiction.
Whenever in the judgment of the Fund's officers such action is warranted
by unusual market, economic or political conditions, or by abnormal
circumstances of any kind, the Fund's officers may decline to accept any
orders for, or make any sales of the Shares of any Series until such time as
those officers deem it advisable to accept such orders and to make such sales.
In the event of such suspension of sales and until AMT Capital receives
written notification from the Fund that AMT Capital may resume accepting
orders for and making sales of the Shares of such Series, AMT Capital's duty
to distribute Shares of such Series shall be suspended.
AMT Capital will act only on its own behalf as principal if it chooses
to enter into selling arrangements with selected dealers or others.
6. Effectiveness of Registration
None of the Shares of any Series shall be offered by either AMT Capital
or the Fund under any of the provisions of this Agreement and no orders for
the purchase or sale of the Shares of any Series shall be accepted by the Fund
if and so long as the effectiveness of the Registration Statement then in
effect or any necessary amendments thereto shall be suspended under any of the
provisions of the 1933 Act or if and so long as a current Prospectus as
required by Section 5(b)(2) of the 1933 Act is not on file with the SEC;
provided, however, that nothing contained in this paragraph shall in any way
restrict or have application to or bearing upon the Fund's obligation to
repurchase Shares of any Series from any shareholder in accordance with the
provisions of the Prospectus, SAI, or Charter.
The Fund agrees to advise AMT Capital as soon as reasonably practicable
in writing:
(a) of any request by the SEC for amendments to the Registration
Statement, Prospectus or SAI then in effect or for additional information;
(b) in the event of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement, Prospectus or SAI
then in effect or the initiation by service of process on the Fund of any
proceeding for that purpose; and
(c) of the happening of any event that makes untrue any statement of a
material fact made in the Registration Statement, Prospectus or SAI then in
effect or that requires the making of a change in such Registration Statement,
Prospectus or SAI in order to make the statement therein not misleading in any
material respect.
For the purpose of this Section, informal requests by or action of the staff
of the SEC shall not be deemed requests by or actions of the SEC.
7. Expenses
The expenses connected with the Fund shall be allocable between the Fund
and AMT Capital as follows:
(a) AMT Capital shall furnish, at its expense and without cost to the
Fund, the services of personnel to the extent that such services are required
to carry out its obligations under this Agreement.
(b) The Fund assumes and shall pay or cause to be paid all other
expenses of the Fund, including, with limitation: the fees of the Fund's
investment adviser; the charges and expenses of any registrar, any custodian
or depository appointed by the Fund for the safekeeping of its cash, portfolio
securities and other property, and any stock transfer, dividend or accounting
agent or agents appointed by the Fund; the fees of any Fund administrator;
brokers' commissions chargeable to the Fund in connection with portfolio
securities transactions to which the Fund is a party; any fee paid pursuant to
any distribution plan, if and when adopted by the Fund pursuant to Rule 12b-1
under the 1940 Act; all taxes, including securities issuance and initial
transfer taxes, and corporate fees payable by the Fund to federal, state or
other governmental agencies; all costs and expenses in connection with the
organization of the Fund and the Series and the registration of the Shares
with the SEC and under state securities laws and in connection with
maintenance of registration of the Fund, Series and the Shares with the SEC
and various states and other jurisdictions (including filing fees and legal
fees and disbursements of counsel); the expenses of printing, including
printing setup charges, and distributing Prospectuses and SAIs of the Fund and
supplements thereto to the Fund's shareholders; all expenses of shareholders'
and Directors' meetings and of preparing, printing and mailing of proxy
statements and reports to shareholders; fees and travel expenses of Directors
who are not interested persons (as such term is defined in the 1940 Act) of
the Fund ("Non-Interested Directors") or members of any advisory board or
committee established by the Non-Interested Directors; all expenses incident
to the payment of any dividend, distribution, withdrawal or redemption,
whether in Shares or in cash; charges and expenses of any outside service used
for pricing of the Fund's Shares; charges and expenses of legal counsel to the
Fund and to the Non-Interested Directors, and of independent accountants to
the Fund, in connection with any matter relating to the Fund; membership dues
paid by the Fund to industry associations; interest payable on Fund
borrowings; postage; insurance premiums on property or personnel (including
officers and directors) of the Fund which inure to its benefit; extraordinary
expenses of the Fund (including, but not limited to, legal claims and
liabilities and litigation costs and any indemnification related thereto); and
all other charges and costs of the Fund's operation unless otherwise
explicitly provided herein.
8. Indemnity by Fund
The Fund agrees to indemnify and hold AMT Capital, its officers and
directors and each person (if any) who controls AMT Capital within the meaning
of Section 15 of the 1933 Act harmless from and against any losses, claims,
damages or liabilities to which any of such persons may become subject, under
the 1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement, the Prospectus, or the SAI or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading in any material respect, and will reimburse such persons for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such action or claim; provided, however, that
the Fund shall not be liable in any case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission was made in the
Registration Statement, the Prospectus or the SAI in reliance upon and in
conformity with written information furnished to the Fund by AMT Capital
expressly for use therein. AMT Capital, its officers, directors and control
persons shall be entitled to advances from the Fund for payment of the
reasonable expenses incurred by it or them in connection with the matter as to
which it or they are seeking indemnification in the manner and to the fullest
extent permissible under the Maryland General Corporation law.
AMT Capital agrees that, promptly upon its receipt of notice of the
commencement of any action against AMT Capital, its officers and/or directors
or against any person so controlling AMT Capital, in respect of which
indemnity or reimbursement may be sought from the Fund on account of its
agreement in the preceding paragraph, notice in writing will be given to the
Fund within 10 days after the summons or other first legal process shall have
been served. The failure to notify the Fund of any such action shall not
relieve the Fund from any liability which the Fund may have to the person
against whom such action is brought other than by reason of the indemnity
agreement contained in this Section 7. Thereupon, the Fund shall be entitled
to participate, to the extent that it shall wish (including the selection of
counsel with AMT Capital's reasonable approval), in defense thereof. In the
event the Fund elects to assume the defense of any such suit and retain
counsel of good standing reasonably approved by AMT Capital, the defendant or
defendants in such suit shall bear the expense of any additional counsel
retained by any of them; but in the case the Fund does not elect to assume the
defense of any such suit or in the case AMT Capital does not reasonably
approve of counsel chosen by the Fund, the Fund will reimburse AMT Capital,
its officers and directors or the controlling person or persons named as
defendant or defendants in such suit for the fees and expenses of any one
counsel or firm which may be retained on behalf of AMT Capital, its officers
and directors and such control persons.
In the event that any such claim for indemnification is made by any
director or person in control of AMT Capital who is also an officer or
director of the Fund, the Fund, at its expense to the extent permitted by law,
will submit to a court of appropriate jurisdiction the question of whether or
not indemnification by it is against public policy as expressed in the 1933
Act, the 1934 Act, and the 1940 Act, and the Fund and AMT Capital will be
governed by the final adjudication of such question.
The Fund's indemnification agreement contained in this Section and the
Fund's representations and warranties in this Agreement shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of AMT Capital, its officers and directors or any control person and
shall survive the sale of any of the Shares made pursuant to this Agreement.
This agreement of indemnity will inure exclusively to the benefit of AMT
Capital, its officers, directors and control persons, and to the extent
permitted by the 1940 Act to the benefit of any of their successors and
assigns. The Fund agrees promptly to notify AMT Capital of the commencement
of any litigation or proceeding against the Fund in connection with the issue
and sale of any Shares.
9. Indemnity by AMT Capital
AMT Capital agrees to indemnify and hold harmless the Fund, its officers
and directors and persons who control the Fund with the meaning of Section 15
of the 1933 Act from and against any losses, claims, damages or liabilities to
which any of such persons may become subject, under the 1933 Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof), arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, the
Prospectus, or the SAI or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in any
material respect, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, the Prospectus or the SAI in
reliance upon and in conformity with written information furnished to the Fund
by AMT Capital expressly for use therein; and will reimburse such persons for
any legal or other expenses reasonably incurred by such persons in connection
with investigating or defending any such action or claim. AMT Capital also
agrees to indemnify and hold harmless the Fund, its officers and directors and
control persons from and against any and all losses, claims, damages and
liabilities arising by reason of any person acquiring any Shares, which may be
based upon the 1933 Act or any other statute or at common law, on account of
any unauthorized or wrongful sales activities of AMT Capital or any of its
registered representatives, as defined under the By-Laws of the NASD,
including any failure to conform with any requirement of any state and federal
law relating to the sale of such Shares. Notwithstanding anything contained
herein to the contrary, AMT Capital shall not be responsible to the Fund for
and shall not indemnify and hold harmless the Fund, its officers and directors
and control persons from and against any such losses, claims, damages or
liabilities arising solely as a result of actions taken or omitted by AMT
Capital in good faith reliance on, and in conformity with, the Blue Sky
Report.
AMT Capital shall also indemnify and hold harmless the Fund, its
officers and directors and control persons for any liability to the Fund or to
the holders of Shares by reason of AMT Capital's willful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement.
The Fund, its officers, directors and control persons shall be entitled
to advances from AMT Capital for payment of the reasonable expenses incurred
by it or them in connection with the matters as to which it or they are
seeking indemnification in the manner and to the fullest extent permissible
under the Delaware General Corporation Law.
In case any action shall be brought against the Fund, its officers and
directors and control persons in respect of which it may seek indemnity or
reimbursement from AMT Capital on account of the agreement of AMT Capital
contained in this Section 8, AMT Capital shall have the rights and duties
given to the Fund, and the Fund, its officers and directors and control
persons shall have the rights and duties given to AMT Capital in the second
and third paragraphs of Section 8.
AMT Capital's indemnification agreement contained in this Section and
its representations and warranties in this Agreement shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of the Fund, its officers and directors or any control person and shall
survive the sale of any of the Shares made pursuant to this Agreement. This
agreement of indemnity will inure exclusively to the benefit of the Fund, its
officers, directors and control persons, and to the extent permitted by the
1940 Act to the benefit of any of their successors and assigns. AMT Capital
agrees promptly to notify the Fund of the commencement of any litigation or
proceeding against AMT Capital in connection with the issue and sale of any
Shares.
10. Services Not Exclusive
AMT Capital shall be deemed to be an independent contractor and shall,
unless otherwise expressly provided herein or authorized by the Fund from time
to time, have no authority to act or represent the Fund in any way or otherwise
be deemed an agent of the Fund.
Nothing herein shall be deemed to limit or restrict AMT Capital's right
or that of any of its affiliates or employees, to engage in any other business
or to devote time and attention to the distribution or other related aspects
of any other registered investment company or to render services of any kind
to any other corporation, firm, individual or association.
11. Term
This Agreement shall become effective at the close of business on the
date hereof and shall continue in full force and effect, subject to Section 14
hereof, for two years and thereafter as provided in Section 12 hereof.
12. Renewal
This Agreement shall continue in full force and effect from year to year
with respect to a Series, provided that such continuance is specifically
approved at least annually:
(a) (i) by the Fund's Board of Directors or (ii) by the vote of a
majority of the outstanding voting securities (as defined in Section 2(a)(42)
of the 1940 Act) that constitute Shares of such Series; and
(b) by the affirmative vote of a majority of the Non-Interested
Directors of the Fund by votes cast in person at a meeting specifically called
for the purpose of voting on such approval.
13. Amendment
This Agreement may be amended by the parties hereto with respect to a
Series only if such amendment is specifically approved (i) by the Board of
Directors of the Fund or by the vote of a majority of outstanding Shares, and
(ii) by a majority of the Non-Interested Directors of the Fund, which vote
must be cast in person at a meeting called for the purpose of voting on such
approval.
14. Termination
This Agreement may be terminated at any time, without the payment of any
penalty, by vote of the Fund's Board of Directors, by vote of a majority of
outstanding Shares (as defined in Section 2(a)(42) of the 1940 Act), or by AMT
Capital, on sixty (60) days' written notice to the other party. This
Agreement shall automatically terminate in the event of its assignment, the
term "assignment" for this purpose having the meaning defined in Section
2(a)(4) of the 1940 Act.
15. Confidentiality
AMT Capital agrees on behalf of itself and its directors, officers and
employees to treat confidentially and as proprietary information of the Fund
all records and other information relative to the Fund and its prior, present
or potential shareholders, and not to use such records and information for any
purpose other than performance of its responsibilities hereunder, except after
prior notification to and approval in writing by the Fund, which approval
shall not be unreasonably withheld when requested to divulge such information
by duly constituted authorities and may not be withheld where AMT Capital
would be exposed to civil or criminal contempt proceedings for failure to
comply, and AMT Capital shall disclose all such records and information to the
investment adviser to the Fund when so requested by the adviser or the Fund.
16. Notices
Any notice or other communication authorized or required hereunder shall
be in writing or by confirming telegram, cable, telex or facsimile sending
device. Notice shall be addressed to the Fund at 50 Division Street, Suite
401, Somerville, New Jersey 08876, Attention: President; and to AMT Capital
Services, Inc., 600 Fifth Avenue, 26th Floor, New York, New York 10020,
Attention: Carla E. Dearing. Either party may designate a different address
by notice to the other party. Any such notice or other communication shall be
deemed given when actually received.
17. Interpretation: Governing Law
Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretations thereof, if any, by the
United States courts or, in the absence of any controlling decision of any
such court, by rules, regulations or orders of the SEC issued pursuant to the
1940 Act. In addition, where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is revised by rule, regulation or
order of the SEC, such provision shall be deemed to incorporate the effect of
such rule, regulation or order. Otherwise, the provisions of this Agreement
shall be governed by the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
ATTEST: HARDING, LOEVNER FUNDS, INC.
BY:___________________ BY:_______________________
David R. Loevner
Secretary President
ATTEST: AMT CAPITAL SERVICES, INC.
BY:___________________ BY:_______________________
William E. Vastardis Carla E. Dearing
Senior Vice President President
ADMINISTRATION AGREEMENT
AGREEMENT dated as of _______, 1996 by and between Harding, Loevner
Funds, Inc., a Maryland corporation (the "Fund"), and AMT Capital Services,
Inc., a Delaware corporation ("AMT Capital").
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and offers shares of three separate series of its common stock, par value $.01
per share, which have been registered under the Securities Act of 1933, as
amended;
WHEREAS, AMT Capital is a service company which provides management,
administrative and other services to investment companies and other entities;
and
WHEREAS, the Fund desires to retain AMT Capital to render certain
management and administrative services, including supervision of certain third
party vendors to the Fund.
NOW, THEREFORE, in consideration of the above premises and of other good
and valuable consideration the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Appointment of Administrator
The Fund hereby appoints AMT Capital to act as administrator to the Fund
for the period and on the terms set forth in this Agreement. This appointment
applies to each existing series of the Fund, as well as any future series
provided (i) the Fund does not object to AMT Capital in writing on any basis or
(ii) AMT Capital does not object to the Fund in writing on the basis of the
capabilities of AMT Capital. AMT Capital accepts such appointment and agrees
to render the services and provide, at its own expense, the office space,
furnishings and equipment, and the personnel required by it to perform the
services on the terms and for the compensation herein provided.
As further delineated on Schedule A of this Agreement, which may be
amended by the parties from time to time, AMT Capital shall provide for, or
assist in managing and supervising all aspects of, the general day-to-day
business activities and operations of the Fund except for investment advisory
services, including custodial, transfer agency, dividend disbursing,
accounting, auditing and legal services. AMT Capital shall discharge such
responsibilities subject to the supervision and direction of the Fund's
officers and Board of Directors, and in compliance with the objectives,
policies and limitations set forth in the Fund's registration statement,
Articles of Incorporation, By-Laws and applicable laws and regulations. All
agreements with third parties shall be subject to review and approval by the
Fund's executive officers or Board of Directors.
AMT Capital will perform all of its obligations under this Agreement in
accordance with applicable law, including without limitation laws against
discrimination.
2. Representation and Warranties of AMT Capital
AMT Capital represents and warrants to the Fund that:
A. AMT Capital is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has full power and
authority, corporate and otherwise, to consummate the transactions contemplated
by this Agreement. AMT Capital is duly qualified to carry out its business,
and is in good standing, in the State of New York.
B. The Board of Directors and stockholders of AMT Capital have taken all
action required by law and AMT Capital's Certificate of Incorporation and By-
Laws to authorize the execution and delivery of this Agreement by AMT Capital
and the consummation on behalf of AMT Capital of the transactions contemplated
by this Agreement. This Agreement constitutes a legal, valid and binding
obligation of AMT Capital enforceable in accordance with its terms. Neither
the execution and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will result in a breach of, or constitute a
default under, or with lapse of time or giving of notice or both will result in
a breach of or constitute a default under, or otherwise give any party thereto
the right to terminate (a) any mortgage, indenture, loan or credit agreement or
any other agreement or instrument evidencing indebtedness for money borrowed to
which AMT Capital is a party or by which AMT Capital or any of its properties
is bound or affected, or pursuant to which AMT Capital has guaranteed the
indebtedness of any person, or (b) any lease, license, contract or other
agreement to which AMT Capital is a party or by which AMT Capital or any of its
properties is bound or affected. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
result in, or require, the creation or imposition of any mortgage, deed or
trust, pledge, lien, security interest, or other charge or encumbrance of any
nature upon or with respect to any of the properties now or hereafter owned by
AMT Capital.
C. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will violate any provision
of the Certificate of Incorporation or By-Laws of AMT Capital.
D. Except such as have been obtained and as are in full force and effect
and subject to no dispute, claim or challenge, no permit, license, franchise,
approval, authorization, qualification or consent of, registration or filing
with, or notice to, any governmental authority is required in connection with
the execution and delivery by AMT Capital of this Agreement or in connection
with the consummation by AMT Capital of any transactions contemplated by this
Agreement, and no such permit, license, franchise, approval, authorization,
qualification or consent of, registration or filing with, or notice to any
federal, state or local governmental authority is required in connection with
AMT Capital's business or operations as currently conducted or as currently
contemplated to be conducted. AMT Capital has conducted its business and
operations in compliance with all applicable laws and regulations.
3. Duties of the Fund
A. The Fund will deliver to AMT Capital copies of each of the
following documents and will deliver to AMT Capital all future amendments and
supplements, if any:
(1) A certified copy of the Articles of Incorporation of the Fund as
amended and currently in effect;
(2) A copy of the Fund's By-Laws as amended and currently in effect,
certified by the Secretary of the Fund;
(3) A copy of the resolution of the Fund's Board of Directors
authorizing this Agreement, certified by the Secretary of the Fund;
(4) The Fund's registration statement on Form N-1A as filed with, and
declared effective by, the U.S. Securities and Exchange Commission
("SEC"), and all amendments thereto;
(5) Each resolution of the Board of Directors of the Fund authorizing
the original issue of its shares, certified by the Secretary of the Fund;
(6) Copies of the resolutions of the Fund's Board of Directors
authorizing: (i) certain officers and employees of AMT Capital to give
instructions to the Fund's custodian and transfer agent as required by
agreements with such parties, and (ii) certain officers and employees of
AMT Capital to sign checks and pay expenses on behalf of the Fund,
certified by the Secretary of the Fund;
(7) A copy of the current Investment Advisory Agreement between the
Fund and Harding, Loevner Management, L.P.;
(8) A copy of the Custodian Agreement and Transfer Agency Agreement
relating to the Fund; and
(9) Such other certificates, documents or opinions which AMT Capital
may, in its reasonable discretion, deem necessary or appropriate in the
proper performance of its duties.
B. The Fund will cooperate in providing AMT Capital with all
information reasonably necessary to permit AMT Capital to perform its duties
hereunder.
C. The Fund certifies to AMT Capital that, as of the close of business
on the date of this Agreement, it has authorized capitalization of
2,500,000,000 shares of its common stock, $.01 par value (the "Shares"),
divided among its series, and agrees that AMT Capital will be promptly notified
from time to time when the Fund takes corporate action to increase the number
of authorized shares, including restoring redeemed shares held in its treasury
to the status of authorized and unissued shares.
4. Services To Be Obtained Independently By the Fund
The Fund shall, at its own expense, provide for any of its own:
A. Organizational expenses;
B. Services of an independent accountant;
C. Services of outside legal counsel (including such counsel's review
of the Fund's registration statement, proxy materials and other reports and
materials prepared by AMT Capital under this Agreement);
D. Services contracted for by the Fund directly from parties other
than AMT Capital acting as administrator (or subcontracted for by AMT Capital
on behalf of the Fund, subject to review and approval by the Fund's executive
officers or Board of Directors);
E. Trading operations and brokerage fees, commissions and transfer
taxes in connection with the purchase and sale of securities for its investment
portfolio;
F. Investment advisory services;
G. Taxes, insurance premiums and other fees and expenses applicable to
its operation;
H. Costs incidental to any meeting of shareholders including, but not
limited to, legal and accounting fees, proxy filing fees and costs incidental
to the preparation, printing and mailing of any proxy materials;
I. Cost incidental to Directors' meetings, including fees and expenses
of Directors;
J. The salary and expenses of any officer or employee of the Fund who
is not also an officer or employee of AMT Capital;
K. Custodian and depository banks, and all services related thereto;
L. Costs incidental to the preparation, printing and distribution of
its registration statement and any amendments thereto, and shareholder reports,
including printing setup, printing and mailing costs;
M. All registration fees and filing fees required under the securities
laws of the United States and state regulatory authorities;
N. Fidelity bond and director's and officers' liability insurance;
O. Record retention costs of third parties;
P. Distribution fees pursuant to any distribution plan, if and when
adopted pursuant to Rule 12b-1 under the 1940 Act; and
Q. Litigation and indemnification expenses and other extraordinary
expenses not incurred in the ordinary course of the Fund's business.
5. Price, Charges and Instructions
In consideration of the services rendered and expenses assumed by AMT
Capital pursuant to this Agreement, the Fund will pay AMT Capital (i) a monthly
fee at the annual rate of 0.15 % of the Fund's first $500 million of average
daily net assets; 0.10% of the Fund's next $500 million of average daily net
assets; and 0.05% of the Fund's average daily net assets over $1 billion. Such
sum shall be paid in monthly installments by the tenth day of each month for
the previous month.
For purposes of this Section 5, the "average daily net assets" of the
Portfolio shall mean the average of the values placed on the Portfolio's net
assets on each day pursuant to the applicable provisions of the Fund's
Registration Statement, as amended.
In addition, AMT Capital shall be reimbursed for the reasonable cost of
any and all forms, including blank checks and proxies, used by it in
communicating with shareholders, directors, Fund management, or any regulatory
agencies on behalf of the Fund, or especially prepared for use in connection
with its obligations hereunder, as well as the reasonable cost of postage,
telephone, telex and telecopy used in communicating with shareholders,
directors, Fund management, or any regulatory agencies on behalf of the Fund,
travel-related expenses when incurred on official Fund business and microfilm
used each year to record the previous year's transactions in shareholder
accounts and computer tapes used for reasonable permanent storage of records,
permanent storage costs for hard copy Fund records and reasonable cost of
insertion of materials in mailing envelopes by outside firms. Prior to
ordering any forms in such supply as it estimates will be adequate for more
than two years' use, AMT Capital shall obtain the written consent of the Fund.
All forms for which AMT Capital has received reimbursement from the Fund shall
be and remain the property of the Fund until used.
At any time AMT Capital may apply to any executive officer of the Fund or
executive officer of the Fund's investment adviser for instructions, and may
consult with legal counsel for the Fund, if consented to by an executive
officer of the Fund at the expense of the Fund, with respect to any matter
arising in connection with the services to be performed by AMT Capital under
this Agreement and AMT Capital shall not be liable and shall be indemnified by
the Fund for any action taken or omitted by it in good faith in reliance upon
such instructions or upon the opinion of such counsel. AMT Capital shall be
protected and indemnified in acting upon any paper or document of the Fund
reasonably believed by it to be genuine and to have been signed by the proper
person or persons and shall not be held to have notice of any change of
authority of any representative of the Fund, until receipt of written notice
thereof from the Fund, unless an officer of AMT Capital shall have actual
knowledge of such change. AMT Capital shall also be protected and indemnified,
except where a stop order is in effect, in recognizing transfer documents which
AMT Capital reasonably believes to bear the proper manual or facsimile
signature of the officers of the Fund, and the proper counter-signatures of any
present or former transfer agent.
6. Limitation of Liability and Indemnification
A. AMT Capital shall provide its services in a professional manner
customarily provided by leading mutual fund administration companies. AMT
Capital shall be responsible for the performance of only such duties as are set
forth or contemplated herein or contained in instructions given to it by the
Fund which are not contrary to this Agreement. AMT Capital shall have no
liability for any loss or damage resulting from the performance or non-
performance of its duties hereunder unless caused by or resulting from the
gross negligence, bad faith or willful misconduct of AMT Capital, its officers
or employees or the violation by any of such persons of this Agreement. In no
event, however, shall AMT Capital be liable for any consequential damages
including, without limitation, any taxes, penalties, litigation expenses or
other loss or damage resulting from the failure by other persons providing
services to the Fund to conform to applicable legal or regulatory requirements,
or to the Fund's investment policies and restrictions as set forth in its
registration statement, notwithstanding that AMT Capital, in the course of
carrying out its monitoring duties hereunder, failed to discover such failure.
B. The Fund shall indemnify and hold AMT Capital harmless from all
loss, cost, damage and expense, including reasonable expenses for counsel,
incurred by it resulting from any claim, demand, action or suit in connection
with any action or omission by it in the performance of its duties hereunder,
or as a result of acting upon any instructions reasonably believed by it to
have been executed by a duly authorized officer of the Fund, provided that this
indemnification shall not apply to actions or omissions of AMT Capital, its
officers or employees in cases of its or their own negligence or misconduct or
the violation by any of such persons of this Agreement.
C. The Fund will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any liability subject to the indemnification provided above, and if the
Fund elects to assume the defense, such defense shall be conducted by counsel
chosen by the Fund. In the event the Fund elects to assume the defense of any
such suit and retain such counsel, AMT Capital or any of its affiliated
persons, named as defendant or defendants in the suit, may retain additional
counsel at its or their own expense, except that, if the Fund shall have
specifically authorized the retaining of such counsel, then the reasonable
expenses for such counsel shall be reimbursed by the Fund.
7. Confidentiality
AMT Capital agrees on behalf of itself and its directors, officers and
employees to treat confidentially and as proprietary information of the Fund
all records and other information relative to the Fund and its prior, present
or potential shareholders, and not to use such records and information for any
purpose other than performance of its responsibilities hereunder, except (i)
after prior notification to and approval in writing by the Fund, which
approval shall not be unreasonably withheld when requested to divulge such
information by duly constituted authorities and may not be withheld where AMT
Capital may be exposed to civil or criminal contempt proceedings for failure
to comply, and AMT Capital shall disclose all such records and information to
the investment adviser to the Fund when so requested by the adviser or the
Fund.
8. Compliance With Governmental Rules and Regulations
The Fund assumes full responsibility for complying with all applicable
requirements of the Securities Act of 1933, the 1940 Act and the Securities
Exchange Act of 1934, all as amended, and any laws, rules and regulations of
governmental authorities having jurisdiction, except to the extent that AMT
Capital specifically assumes any such obligations under the terms of this
Agreement.
AMT Capital shall maintain and preserve for the period prescribed, such
records relating to the services to be performed by AMT Capital under this
Agreement as are required pursuant to the 1940 Act and the Securities Exchange
Act of 1934, all as amended, and the rules and regulations thereunder. All
such records shall at all times remain the respective properties of the Fund,
shall be readily accessible during normal business hours and shall be promptly
surrendered upon the termination of this Agreement or otherwise on written
request. Records shall be surrendered in usable machine readable form.
9. Status of AMT Capital
AMT Capital shall be deemed to be an independent contractor and shall,
unless otherwise expressly provided herein or authorized by the Fund from time
to time, have no authority to act or represent the Fund in any way or otherwise
be deemed an agent of the Fund.
Nothing herein shall be deemed to limit or restrict AMT Capital's right
or that of any of its affiliates or employees, to engage in any other business
or to devote time and attention to the administration or other related aspects
of any other registered investment company or to render services of any kind to
any other corporation, firm, individual or association.
10. Printed Matter Concerning the Fund or AMT Capital
Neither the Fund nor AMT Capital shall publish and circulate any printed
matter which contains any reference to the other party without its prior
written approval, excepting such printed matter as refers in accurate terms to
AMT Capital's appointment under this Agreement and/or any other agreement
between the Fund and AMT Capital, and excepting as may be required by
applicable laws or regulations.
11. Term, Amendment and Termination
This Agreement may be modified or amended from time to time by mutual
agreement between the parties hereto. The Agreement shall remain in effect for
a period of five years from the date hereof, and shall automatically continue
in effect thereafter unless terminated by either party at the end of such
period or thereafter on 120 days' prior written notice. Upon termination of
the Agreement, the Fund shall pay to AMT Capital such compensation as may be
due under the terms hereof on the date of such termination.
12. Default
If either party materially breaches, materially neglects or materially
fails, in whole or in part, to perform its duties and/or observe its
obligations hereunder (a "Default"), that party is in Default hereunder (the
"Defaulting Party"). The other party hereto may give written notice to the
Defaulting Party and if such Default shall not have been remedied within thirty
(30) days after such written notice is given, then the party giving such notice
may terminate this Agreement by thirty (30) days written notice of such
termination to the Defaulting Party, but such termination shall not affect any
rights or obligations of either party arising from or relating to such Default
under the terms hereof.
In addition to the foregoing, it shall be deemed to be a Default under
this Agreement by AMT Capital if AMT Capital unilaterally terminates or causes
the termination of the Distribution Agreement dated as of ________________,
1996 between the Fund and AMT Capital.
Not in limitation of the foregoing, the Fund may terminate this Agreement
prior to the end of the initial five (5) year term of this Agreement, other
than for a Default by AMT Capital, upon ninety (90) days written notice to AMT
Capital and payment of liquidated damages to AMT Capital as follows: The
liquidated damages amount shall be equal to (i) the aggregate of monthly fees
due or paid to AMT Capital under this Agreement for the last six (6) months
prior to receipt of notice of termination, if this Agreement is so terminated
by the Fund in its first or second year, or (ii) the aggregate of the monthly
fees dues to AMT Capital under this Agreement for the last two (2) months prior
to receipt of notice of termination, if this Agreement is so terminated by the
Fund in its third, fourth, or fifth year. Upon payment of such sum, AMT
Capital shall have no further claim to fees due under this Agreement for
periods after the termination date.
The provisions of this Section 12 shall not limit either party's
termination rights under Section 11 of this Agreement. The provisions of
Section 11 and this Section 12 shall govern the method of termination of this
Agreement, but shall not limit any other rights or remedies of either party in
the event of any breach of this Agreement by the other party.
13. Notices
Any notice or other communication authorized or required hereunder shall
be in writing or by confirming telegram, cable, telex or facsimile sending
device. Notice shall be addressed to the Fund at 50 Division Street, Suite
401, Somerville, New Jersey 08876, Attention: President; and to AMT Capital
Services, Inc., 600 Fifth Avenue, 26th Floor, New York, New York 10020,
Attention: Carla E. Dearing. Either party may designate a different address
by notice to the other party. Any such notice or other communication shall be
deemed given when actually received.
14. Non-Assignability
This Agreement shall not be assigned by either of the parties hereto
without the prior consent in writing of the other party. Any purported
assignment in violation of this Agreement shall be void and of no effect.
15. Successors
This Agreement shall be binding on and shall inure to the benefit of the
Fund and AMT Capital, and their respective successors and permitted assigns.
16. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
ATTEST: HARDING, LOEVNER FUNDS, INC.
________________________ By:________________________
David R. Loevner,
Secretary President
ATTEST: AMT CAPITAL SERVICES, INC.
_______________________ By:________________________
William E. Vastardis, Carla E. Dearing,
Senior Vice President President
SCHEDULE A
to
ADMINISTRATION AGREEMENT
between
HARDING, LOEVNER FUNDS, INC.
and
AMT CAPITAL SERVICES, INC.
Pursuant to the attached Administration Agreement, AMT Capital Services, Inc.
("AMT Capital") will provide the following services to Harding, Loevner Funds,
Inc. (the "Fund"):
1) Supervision of all third party vendors to the Fund - AMT Capital
will supervise the quality of service and competitiveness of fees
of all Fund vendors, except the investment adviser. AMT Capital
will develop day-to-day working relationships with existing vendors
as well as evaluate alternative vendor candidates, as reasonably
requested by the Fund's officers. The vendors that AMT Capital
will be responsible for include:
a) Transfer and Dividend Disbursing Agent, Fund Accounting Agent
and Custodian - AMT Capital will make necessary efforts to
ensure that all legally required functions are performed at a
high quality level and at a competitive fee. AMT Capital
will strive to enhance the service levels as well as reporting
capabilities.
b) Outside Counsel, Independent Accountant and Other Vendors -
AMT Capital will coordinate communications with all other
Fund vendors with a goal of enhancing service levels while
controlling costs.
c) Insurance Providers - AMT Capital will identify potential
insurance providers and evaluate the comparative terms and
costs of fidelity bond, E&O and D&O coverage. AMT Capital
will continually monitor the appropriateness of the chosen
providers and coverage.
2) Monitor and Report on Compliance - AMT Capital will monitor the
Fund's compliance with the regulations of Sub-Chapter M of the
Internal Revenue Code with particular emphasis on the asset
diversification, income and short-short tests. AMT Capital will
monitor the Fund's compliance with the securities laws,
particularly the Investment Company Act of 1940, with particular
emphasis on the diversification and voting stock tests. AMT
Capital will monitor all Prospectus, Statement of Additional
Information and Board-imposed compliance limitations. AMT Capital
will report compliance status in all required areas in a format and
at a frequency mutually agreed upon between Fund officers and
directors and AMT Capital, including a quarterly review and
reporting pursuant to the Fund's Code of Ethics policy.
3) Prepare and Monitor Annual Compliance and Administrative Calendar -
AMT Capital will prepare an annual calendar which will include key
dates in the operations of the Fund, such as Board and Audit
Committee meetings and mailings, filing dates, compliance
monitoring and other mutually agreed upon events. AMT Capital will
monitor the calendar and report on status of activity on a regular
basis to Fund officers.
4) Board of Directors' Meetings - AMT Capital will prepare and mail
all necessary Resolutions, Agenda, Powers of Attorney and other
material in advance of each Board meeting, and will prepare and
mail all Board written consents. AMT Capital will do a
presentation to the Board of the status of all administrative and
operations functions at each meeting. AMT Capital will coordinate
other Vendor presentations to the Board when required. AMT Capital
will pay all required directors' fees and expenses, from the Fund's
accounts maintained with its custodian, on a timely and accurate
basis.
5) Monthly Fund Management Reporting - AMT Capital will collect,
review and summarize all Vendor reports. AMT Capital will prepare
a monthly administrative report which will include the financial
statements, a compliance summary, expense ratio calculations,
portfolio turnover ratio calculations and performance calculations,
and will prepare other reasonably requested activity reports.
6) Shareholder Reports - AMT Capital will prepare the semi-annual and
annual financial reports and footnotes required by SEC regulation
for reporting to the shareholders and the SEC. AMT Capital will
coordinate with the Investment Adviser and Independent Accountants
to obtain the appropriate letters to the shareholders. AMT Capital
will coordinate the printing of the reports and mail to the
shareholders as well as file copies with the appropriate regulatory
authorities. AMT Capital will respond to any shareholder inquiries
under the direction of the Fund's officers.
7) Tax Filings - AMT Capital will prepare for Fund officer review all
necessary tax returns and file such returns on a timely basis with
the appropriate regulatory authorities. These will include all
Federal corporate and excise tax returns, state returns, and 1099
MISC returns for directors fees, and if required, for fees to third
party vendors.
8) SEC Filings - AMT Capital will prepare for Fund officer review all
necessary filings and make such filings on a timely basis with the
SEC. These will include Form N-SAR, Rule 24e-2 and 24f-2 filings,
proxy materials, post-effective amendments to Form N-1A and any
other SEC filings.
9) Blue Sky Monitoring and Filings - AMT Capital will monitor Blue Sky
compliance in each jurisdiction and perform all administrative
functions, including the making of necessary filings on behalf of
the Fund, under the supervision of the Fund's Distributor. AMT
Capital will report the status of the Fund's registration of each
series of Shares on a regular basis to the Fund's directors and
officers.
10) Other Filings - On behalf of the Fund, AMT Capital will prepare and
file any other required documents with the appropriate
jurisdiction, including abandoned property reports and state
corporate law filings.
11) Holdings Reconciliations - AMT Capital will review holdings
reconciliations between the Custodian and Fund Accounting Agent and
between the Investment Adviser and the Custodian/Fund Accounting
Agent. All discrepancies will be researched and reported promptly
to the Fund's officers or directors.
12) Proxy Statement and Annual Meeting - AMT Capital will prepare all
proxy materials, file them with the SEC and mail them to the
shareholders. AMT Capital will set up the Annual Meeting, prepare
the agenda and script, tabulate and solicit votes if requested to
do so by the Fund's officers or directors and perform the duties of
the inspector of elections.
13) Fund Expenses - AMT Capital will review all Fund expenses and
strive to create efficiencies and economies of scale wherever
possible. AMT Capital, under supervision and direction of Fund
officers, will pay all Fund bills in an accurate and timely manner
from the Fund's accounts maintained with its custodian.
14) New Series Registration - AMT Capital will assist management in the
preparation of and filing with the SEC of all new Series or other
changes to the Fund's prospectus and Statement of Additional
Information.
15) General - AMT Capital will make its staff available to Fund
management to assist in or to respond to any reasonable request for
Fund- or industry-related information. If requested, AMT Capital
will make its facilities available for meetings of the Fund's
officers or directors. AMT Capital will assist in any examination
of the Fund by the SEC, IRS or any other regulatory agency.
APPENDIX A
AGREEMENT AND PLAN OF EXCHANGE
AGREEMENT AND PLAN OF EXCHANGE, dated ________, 1996 (the "Plan of
Exchange"), among Harding, Loevner Funds, Inc., a Maryland corporation (the
"Fund"), on behalf of its Global Equity Portfolio (the "GE Portfolio"), Harding,
Loevner Management, L.P., a New Jersey limited partnership ("HLM"), and HLM
Global Equity Limited Partnership, a New Jersey limited partnership (the
"Partnership"):
RECITALS
1. HLM is the General Partner of the Partnership. The Partnership is a
pooled vehicle for collective investment.
2. The Fund is a no-load, open-end investment company incorporated in the
state of Maryland organized as a "series mutual fund." It issues a separate
class of shares of its Common Stock, par value $0.001 per share, for each of its
portfolios. The Fund's GE Portfolio will have investment objectives and
policies substantially similar to those of the Partnership. HLM is the
investment adviser to the GE Portfolio.
3. HLM, as General Partner of the Partnership, and the Board of Directors
of the Fund have determined that it is in the best interests of the Partnership
and the GE Portfolio, respectively, that substantially all of the assets of the
Partnership be acquired by the GE Portfolio pursuant to this Plan of Exchange
and in accordance with applicable law.
4. The Partnership and the GE Portfolio desire to enter into a Plan of
Exchange.
5. HLM itself has agreed to certain terms and conditions set forth below.
In consideration of the covenants and agreements contained in this Plan of
Exchange, the parties agree as follows:
PLAN OF EXCHANGE
The Exchange will be comprised of the acquisition by the GE Portfolio of
substantially all of the properties and assets of the Partnership in exchange
for shares of the Common Stock of the GE Portfolio (the "Shares"), and the
subsequent dissolution of the Partnership and distribution to the general
partner (the "General Partner") and the limited partners of the Partnership
(the "Limited Partners" and, together with the General Partner, the "Partners"),
of all of the Shares so received by the Partnership, all upon and subject to the
terms set forth in this Plan of Exchange (the "Exchange"). Upon the
Partnership's distribution of its Shares, Partners will be entitled to receive
that portion of such shares that the number of units of Partnership interest
("Partnership Units"), owned by such Partners prior to the Exchange bears to
the total number of the outstanding Partnership Units. Any assets retained by
the Partnership in excess of amounts needed to pay or provide for accrued
expenses will be distributed to its Partners of record as of the Exchange Date
(as defined in Section 6 below). After the distribution of any such excess
amounts, and the Shares, the Partnership will be completely liquidated and
dissolved.
AGREEMENT
In consideration of the following covenants and agreements, the Partnership
and the GE Portfolio, agree as follows (and HLM agrees as set forth in Section
10 below):
1. Representations and Warranties of the Partnership. The Partnership
represents and warrants to the GE Portfolio that:
(a) The Partnership is a limited partnership duly formed and validly
existing under the laws of the State of New Jersey and has power to own all of
its properties and assets and to carry out this Plan of Exchange.
(b) Subject to the approval of the Limited Partners, the General Partner
has approved this Plan of Exchange and the transactions contemplated by it
hereunder, including the dissolution of the Partnership.
(c) Except as disclosed in the most recent financial statements of the
Partnership included in the Registration Statement (as defined below), there are
no material legal, administrative or other proceedings pending or, to the
knowledge of HLM, threatened against the Partnership.
(d) At both the Valuation Time (as defined in Section 3(d) below) and
the Exchange Date (if different), the Partnership will have full right, power
and authority to sell, assign, transfer and deliver the assets and properties to
be transferred by it under this Plan of Exchange.
(e) To the best of HLM's knowledge, no consent, approval, authorization,
or order of any court or governmental authority is required for the consummation
by the Partnership of the transactions contemplated by this Plan of Exchange,
except such as may be required under the Securities Act of 1933, as amended
(the "1933 Act"), the Securities Exchange Act of 1934, as amended (the "1934
Act"), the Investment Company Act of 1940, as amended (the "1940 Act"), or state
securities or blue sky laws (which term includes the laws of the District of
Columbia and of Puerto Rico).
(f) The Registration Statement filed with respect to the Exchange
transaction, and the registration of the Shares under the applicable federal
securities laws (the "Registration Statement") on the effective date of the
Registration Statement and through the Exchange Date (as defined in Section 6
below), insofar as it specifically relates to the Partnership, will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
(j) There are no material contracts outstanding to which the Partnership
is a party, other than those disclosed to the Fund.
2. Representations and Warranties of the Fund. The Fund on behalf of the
GE Portfolio represents and warrants to and agrees with the Partnership that:
(a) The Fund is a corporation duly formed and validity existing under
the laws of the State of Maryland and has power to carry on its business as it
is now being conducted and to carry out this Plan of Exchange.
(b) The Fund has filed the Registration Statement with the SEC.
(c) At the Exchange Date, all Shares to be issued to the Partnership
will have been duly authorized and, when issued and delivered pursuant to this
Plan of Exchange, will be legally and validly issued and will be fully paid
nonassessable; and no shareholder of the GE Portfolio will have any preemptive
right of subscription or purchase with respect to any Shares.
(d) To the best of the Fund's knowledge, no consent, approval,
authorization, or order of any governmental authority is required for the
consummation by the Fund of the transactions contemplated by this Plan of
Exchange, except such as may be required under the 1933 Act, the 1933 Act, the
1934 Act, and the 1940 Act, or state securities or blue sky laws.
(e) The issuance of Shares pursuant to this Plan of Exchange will be in
compliance with all applicable federal and state securities laws.
(f) The Registration Statement, on its effective date and through the
Exchange Date, (i) will comply in all material respects with the provisions of
the 1933 Act, the 1934 Act, and the 1940 Act, and the rules and regulations
thereunder and (ii) insofar as it does not specifically relate to the
Partnership, will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
(g) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Fund or any properties or assets held
by it. The Fund knows of no facts which might form the basis for the
institution of any such proceedings which would materially and adversely affect
its business and is not a party to or subject to the provisions of any order,
decree or judgment of any court or governmental body which materially and
adversely affects its business or its ability to consummate the transactions
herein contemplated.
3. Transfer of Assets.
(a) Subject to the terms and conditions contained in this Plan of
Exchange, the Fund, on behalf of the GE Portfolio, agrees to acquire from the
Partnership, and the Partnership agrees to transfer to the GE Portfolio, on the
Exchange Date all of the securities and cash of the Partnership in exchange for
the number of the Shares in the GE Portfolio determined in accordance with
Section 4 below. As soon as practicable after the Exchange Date, the
Partnership will dissolve and distribute all the Shares received by it to its
Partners.
(b) The Partnership will pay or cause to be paid to the Fund for the
account of the GE Portfolio any interest or dividends received on or after the
Exchange Date with respect to securities transferred to the GE Portfolio under
this Plan of Exchange. The Partnership will transfer to the GE Portfolio any
distributions, rights, stock dividends or other securities received by the
Partnership after the Exchange Date as distributions on or with respect to the
securities transferred, which shall be deemed included in assets transferred to
the GE Portfolio on the Exchange Date and shall not be separately valued unless
the securities in respect of which such distribution is made shall have gone
"ex" such distribution prior to the Valuation Time. Notwithstanding the
foregoing, the GE Portfolio shall not be entitled to receive any interest or
dividends or other distributions on securities not transferred to it under
this Plan of Exchange.
(c) The Fund, on behalf of the GE Portfolio, shall assume all liabilities
then existing, whether absolute, accrued, contingent or otherwise including
all contractual commitments or obligations of the Partnership.
(d) The Valuation Time shall be 4:00 p.m., Eastern Time, on the last day
of the month during which the conditions of Sections 7, 8 and 9 are satisfied
(the "Valuation Date"), or such other date and time as may be mutually agreed
upon in writing by the Partnership and the Fund (the "Valuation Time").
4. Shares Issued in Exchange for Assets and Valuation.
(a) Full corresponding Shares and, to the extent necessary, a fractional
Share of an aggregate net asset value equal to the value of the assets the
Partnership acquired shall be issued by the Fund in exchange for such assets of
the Partnership. Value in all cases shall be determined as of the Valuation
Time. The value of the assets of the Partnership to be acquired by the GE
Portfolio and the net asset value per share of the Shares shall be determined in
accordance with the procedures for determining the value of the Portfolio's
assets described in the Prospectus that forms part of the Registration Statement
under the caption "Net Asset Value". The Fund shall issue the corresponding
Shares to the Partnership. The Partnership will receive an aggregate number of
corresponding Shares equal to the total net asset value of the outstanding
Partnership Units on the Exchange Date, divided by 100, which will be the
initial net asset value of the Shares. In lieu of delivering certificates
for Shares, the Fund shall credit the Shares to the Partnership's account on
the stock record books of the Fund and shall deliver a confirmation of that
credit to the Partnership. The Partnership shall then deliver written
instructions to the Fund's transfer agent to set up accounts for its Partners on
the stock record books of the Fund.
(b) HLM has acquired its interest in the Partnership in return for capital
contributions, all as fully described in the Partnership's Limited Partnership
Agreement. As part of the Exchange contemplated by this Plan of Exchange, HLM
will receive shares in the GE Portfolio in the Exchange and will be free to
hold those shares or have them redeemed at any time.
5. Limited Partners Notice. The Partnership has provided to its Limited
Partners a Combined Prospectus/Proxy Statement dated _____________, 1996 with
respect to the transactions contemplated hereby, as contemplated by Article VII
of its Amended and Restated Limited Partnership Agreement dated as of November
1, 1994. The Partnership will also provide to its Limited Partners a copy of
the Preliminary Prospectus included in the Fund's Registration Statement. The
Partnership will provide such supplementary notices or materials as HLM and the
Fund consider to be desirable.
6. Delivery of Assets; Exchange Date. With respect to the Exchange, delivery
of Partnership assets to be transferred and Shares to be issued shall be made as
of the Valuation Time, or such other date and time agreed to by the Partnership
and the Fund. The date and time upon which such delivery is to take place is
referred to in this Plan of Exchange as the "Exchange Date." The Partnership
assets to be transferred shall be delivered on the Exchange Date to the Fund's
custodian or relevant subcustodian (in either case, the "Custodian"), as
directed by the Fund prior to the Exchange Date, for the account of the GE
Portfolio, with all securities not in bearer form duly endorsed, or accompanied
by duly endorsed separate assignments or stock powers, in proper form for
transfer, with signatures guaranteed, and with all necessary state stock
transfer stamps, if any, sufficient to transfer good and marketable title
thereto (including all accrued interest and dividends and rights pertaining
thereto) to the Custodian for the account of the GE Portfolio free and clear
of all liens, encumbrances, rights, restrictions and claims. All cash delivered
by the Partnership shall be in the form of currency and immediately available
funds payable to the order of the GE Portfolio.
7. The Fund's Conditions Precedent. The obligations of the Fund under this
Plan of Exchange with respect to the Partnership shall be subject to the
following conditions:
(a) That the Partnership shall have furnished to the Fund a statement of
the Partnership's net assets, including a list of securities owned by the
Partnership with their respective tax costs and values determined as provided in
Section 4 above, all as of the Valuation Time.
(b) That as of the Valuation Time and as of the Exchange Date all
representations and warranties of the Partnership made in this Plan of Exchange
are true and correct as if made at and as of each such date, and that the
Partnership has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to such dates.
8. The Partnership's Conditions Precedent. The obligations of the
Partnership under this Plan of Exchange shall be subject to the condition that
as of the Valuation Time and as of the Exchange Date all representations and
warranties of the Fund made in this Plan of Exchange are true and correct as if
made at and as of each such date, and that the Fund has complied with all of
the agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to such dates.
9. The Fund's and The Partnership's Conditions Precedent.
(a) With respect to the Exchange transaction described in this Plan of
Exchange, the obligations of both the Fund and the Partnership under this Plan
of Exchange shall be subject to the following conditions:
(i) That there shall not be any material litigation pending with
respect to the Exchange.
(ii) That the Registration Statement shall have become effective under
the 1940 Act and 1933 Act, and no stop order suspending such effectiveness shall
have been issued and no proceedings of that purpose shall have been instituted
or, to the knowledge of the Fund or the Partnership shall be contemplated by
the SEC.
(iii) The SEC shall have issued an order under Section 17(b) of the Act
permitting the Exchange.
(iv) The Fund and the Partnership shall have received an opinion of
counsel to the Fund substantially to the following effects with respect to the
Exchange: (A) no gain or loss will be recognized by the Partnership on the
transfer of its portfolio securities to the GE Portfolio in exchange for Shares;
(B) no gain or loss will be recognized by the GE Portfolio upon receipt of the
Partnership's portfolio securities in exchange for Shares; (C) the basis to the
GE Portfolio of the transferred portfolio securities will be the same as the
basis of the securities held by the Partnership immediately prior to the
Exchange; and (F) the holding period of the Shares received by the Partnership
will include the period during which the Partnership assets exchanged therefor
were held.
(v) The GE Portfolio and the Partnership shall have received any
state securities law orders or clearances that counsel for the GE Portfolio and
the Partnership consider necessary in connection with the Exchange and related
transactions.
10. Obligations of HLM. HLM agrees with the Partnership and the GE Portfolio
as follows:
(a) Expenses. Whether or not the Exchange transaction is consummated,
HLM agrees to pay all expenses incurred (including but not limited to printing
expenses, brokerage commissions, mailing costs and fees and disbursements of
counsel and accountants) by the GE Portfolio in connection with the Exchange.
These expenses do not include certain organization costs relating to the
formation of the GE Portfolio, which will be borne by the GE Portfolio and
amortized over five years, as more fully described in the Fund's Registration
Statement.
(b) Indemnification. HLM will indemnify and hold harmless the Fund from
and against any losses, claims, damages or liabilities to which the Fund may
become subject, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof), arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact specifically relating
to the Partnership and contained in the Registration Statement, or any
amendment or supplement thereto, as of their respective dates, or arising out of
or based upon the omission or alleged omission to state therein a material fact
specifically related to the Partnership required to be stated therein or
necessary to make the statements therein specifically relating to the
Partnership not misleading in any material respect, in each case under this
sentence (ii) to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in the
Registration Statement in reliance upon and in conformity with written
information about the Partnership furnished to the Fund by HLM expressly for
use therein; and will reimburse the Fund for any legal or other expenses
reasonably incurred by the Fund in connection with investigating or defending
any such action or claim. The Fund agrees that, promptly upon its receipt of
notice of the commencement of any action against the Fund in respect of which
indemnity or reimbursement may be sought from HLM on account of its agreement
in this paragraph, notice in writing will be given to HLM within 10 days after
the summons or other first legal process shall have been served. The failure to
notify HLM of any action shall not relieve HLM from any liability which HLM
may have to the Fund other than by reason of the indemnity agreement contained
in this paragraph. Thereupon, HLM shall be entitled to participate, to the
extent that it shall wish (including the selection of counsel with the Fund's
reasonable approval), in defense thereof. In the event HLM elects to assume
the defense of any such suit and retain counsel of good standing reasonably
approved by the Fund, the Fund shall bear the expense of any additional counsel
retained by it; but in the case HLM does not elect to assume the defense of any
such suit or in the case the Fund does not reasonably approve of counsel chosen
by HLM, HLM will reimburse the Fund for the fees and expenses of any one counsel
or firm which may be retained on behalf of the Fund.
11. Indemnification by the Fund. Fund will indemnify and hold harmless the
Partnership and HLM from and against any losses, claims, damages or liabilities
to which the Partnership or HLM may become subject, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof), arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact specifically relating to the Partnership and contained in the
Registration Statement, or any amendment or supplement thereto, as of their
respective dates, or arising out of or based upon the omission or alleged
omission to state therein a material fact specifically related to the
Partnership required to be stated therein or necessary to make the statements
therein specifically relating to the Partnership not misleading in any material
respect, in each case under this sentence to the extent, but only to the extent,
that the Fund is not entitled to indemnification from HLM pursuant to Section
10(b) hereof; and will reimburse the Partnership for any legal or other expenses
reasonably incurred by the Partnership or HLM in connection with investigating
or defending any such action or claim. The Partnership and HLM agree that,
promptly upon their receipt of notice of the commencement of any action against
the Partnership or HLM in respect of which indemnity or reimbursement may be
sought from Fund on account of its agreement in this paragraph, notice in
writing will be given to Fund within 10 days after the summons or other first
legal process shall have been served. The failure to notify Fund of any action
shall not relieve Fund from any liability which Fund may have to the Partnership
or HLM other than by reason of the indemnity agreement contained in this
paragraph. Thereupon, the Fund shall be entitled to participate, to the extent
that it shall wish (including the selection of counsel with the Partnership and
HLM's reasonable approval), in defense thereof. In the event Fund elects to
assume the defense of any such suit and retains counsel of good standing
reasonably approved by the Partnership and HLM, the Partnership and HLM shall
bear the expense of any additional counsel retained by it; but in the case the
Fund does not elect to assume the defense of any such suit or in the case the
Partnership and HLM do not reasonably approve of counsel chosen by Fund, the
Fund will reimburse the Partnership and HLM for the fees and expenses of any one
counsel or firm which may be retained on behalf of the Partnership and HLM.
12. Shareholder Approval of Advisory Agreement. Immediately before the
consummation of the Exchange, shareholders of the GE Portfolio will have
approved the Investment Advisory Agreement between the GE Portfolio and HLM.
13. Broker or Finder's Fee. The Partnership and GE Portfolio each represent
that there is no person who has dealt with it and who by reason of such dealings
is entitled to any finder's or other similar fee or commission arising out of
the transactions contemplated by this Plan of Exchange.
14. Termination of Plan of Exchange. This Plan of Exchange may be
terminated entirely at any time prior to the Exchange Date by mutual consent of
HLM as General Partner of the Partnership and the Board of Directors of the
Fund, evidenced by appropriate resolutions. In such an event, this Plan of
Exchange shall become void and have no effect as to the terminated Exchange,
without any liability on the part of any party to it or the directors, officers
or shareholders of the Fund, the Limited Partners, or the directors, officers or
partners of HLM as the General Partner of the Partnership in respect of this
Plan of Exchange, except the obligation of HLM to pay expenses.
15. Waiver. At any time prior to the Exchange Date, HLM as General Partner
of the Partnership or the Board of Directors of the Fund may (a) extend the time
for the performance of any of the obligations or other acts of the other; (b)
waive any inaccuracy in the representations of the other; and (c) waive
compliance by the other with any of the agreements or conditions set forth
herein. Any such extension or waiver must be in writing.
16. No Survival of Representations. None of the representations and
warranties in this Plan of Exchange shall survive the Exchange Date.
17. Agreement Entire; Governing Law. Except as provided herein, this Plan of
Exchange supersedes all previous correspondence or oral communications among the
parties regarding the exchanges, constitutes the only understanding with respect
to the exchanges, may not change except by an agreement signed by each party
and shall be construed in accordance with and governed by the laws of the State
of New Jersey; provided, however, that the due authorization execution and
delivery of this Plan of Exchange with respect to any party shall be construed
in accordance with and governed by the laws of the jurisdiction of formation,
organization or incorporation of that party.
18. Counterparts. This Plan of Exchange may be executed in any number of
counterparts, each of which, when executed and delivered, shall be deemed to be
an original.
IN WITNESS WHEREOF, the Partnership, HLM, and the Fund on behalf of the
GE Portfolio have each caused this Plan of Exchange to be executed on its behalf
by its duly authorized representative as of the _____ day of _______, 1996.
HLM GLOBAL EQUITY LIMITED PARTNERSHIP
By: HARDING, LOEVNER MANAGEMENT, L.P.
By: HLM Holdings, Inc., General Partner
By: _________________________________
Name: David R. Loevner
Title: President
HARDING, LOEVNER FUNDS, INC.
GLOBAL EQUITY PORTFOLIO
By: __________________________________
Name:
Title:
HARDING, LOEVNER MANAGEMENT, L.P.
By: HLM Holdings, Inc., General Partner
By: _________________________________
Name: David R. Loevner
Title: President
HLM GLOBAL
EQUITY LIMITED PARTNERSHIP,
a New Jersey Limited Partnership
WHEREAS, HLM Global Equity Limited Partnership, a New Jersey limited
partnership (the "Partnership"), was formed pursuant to that certain Limited
Partnership Agreement, dated as of September 16, 1991, which was amended and
restated by that certain Amended and Restated Limited Partnership Agreement
dated as of November 1, 1994 (as so amended and restated, the "Partnership
Agreement"); and
WHEREAS, the Partnership desires to facilitate its conversion, in effect,
to a registered investment company (also known as a "mutual fund");
NOW, THEREFORE, upon the approval of the limited partners pursuant to
Section 7.06(c) of the Partnership Agreement, the Partnership Agreement is
amended as follows:
1. Defined Terms: Capitalized terms used herein without definition shall
have the meanings given such terms in the Partnership Agreement.
2. Effect on Partnership Agreement. Except as expressly provided herein,
the terms and provisions of the Partnership Agreement shall be unchanged and
shall continue in full force and effect.
3. Amendment to Article II. A new Section 2.05 is hereby added to the end
of Article II of the Partnership Agreement, to read as follows:
2.05 Conversion to Registered Investment Company ("Mutual Fund").
Notwithstanding anything to the contrary contained in this part Agreement, the
General Partner shall have the power and authority, at any time and from time to
time, to cause the Partnership to, in effect, convert into or merge with a
mutual fund; provided that the terms and structure of any transaction to
accomplish such result shall require the vote of the Limited Partners using the
procedures and voting requirements set forth in Sections 7.06, 7.07 and 7.08, as
applicable, of this part Agreement.
4. Amendment of Certificate of Limited Partnership. The General Partner is
hereby authorized to prepare, execute and file a Certificate of Amendment of the
Partnership's Certificate of Limited Partnership in order to reflect this
Amendment.
HLM GLOBAL EQUITY LIMITED PARTNERSHIP
(A Limited Partnership)
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORT
DECEMBER 31, 1995
CONTENTS
Independent Auditors' Report 1
Financial Statements
Statement of Financial Condition 2
Statement of Income 3
Statement of Changes in Partners' Capital 4
Schedule of Investments in Securities 5-10
Notes to Financial Statements 11-12
Independent Auditors' Report on Supplementary Information 13
Supplementary Information
Schedule of Partner's Capital Account 14
INDEPENDENT AUDITORS' REPORT
To the Partners of HLM Global Equity Limited Partnership
(A Limited Partnership)
We have audited the accompanying statement of financial condition of HLM Global
Equity Limited Partnership (A Limited Partnership), including the schedule of
investments in securities as of December 31, 1995, and the related statements
of income and changes in partners' capital for the year then ended. These
financial statements are the responsibility of the General Partner of HLM
Global Equity Limited Partnership. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by the General Partner, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of HLM Global Equity Limited
Partnership (A Limited Partnership) as of December 31, 1995, and the results of
its operations and changes in its partners' capital for the year then ended, in
conformity with generally accepted accounting principles.
Roseland, New Jersey
February 1, 1996
STATEMENT OF FINANCIAL CONDITION
December 31, 1995
ASSETS
Investments in securities, at market
(cost $41,854,053) $ 50,236,365
Money market fund 3,158,235
$ 53,394,600
-------------
PARTNERS' CAPITAL
Partners' capital $ 53,394,600
-------------
STATEMENT OF INCOME
Year Ended December 31, 1995
Investment income
Interest $ 122,232
Dividends 1,234,278
Total investment income 1,356,510
Operating expenses
Professional fees 25,699
Bank and clearing charges 70,085
Total operating expenses 95,784
Net investment income 1,260,726
Realized gain and unrealized appreciation
on investments
Realized gain 237,309
Prior years' unrealized net appreciation
realized this year 22,179
Net realized gain 215,130
Unrealized net appreciation this year 6,101,098
Net realized gain and unrealized appreciation
on investments 6,316,228
Net income $ 7,576,954
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
Year Ended December 31, 1995
Partners' capital, December 31, 1994 $ 35,725,844
Contributions of capital, January 1, 1995 3,763,550
Withdrawals and distributions, January 1, 1995 (528,949)
Partners' capital, January 1, 1995 38,960,445
Contributions of capital
As of April 1, 1995 1,504,455
As of July 1, 1995 6,433,365
As of October 1, 1995 1,227,525
Total Contributions 9,165,345
Withdrawals and distributions
As of April 1, 1995 (1,422,351)
As of July 1, 1995 (493,499)
As of October 1, 1995 (392,294)
Total withdrawals and distributions (2,308,144)
45,817,646
Net income 7,576,954
PARTNERS' CAPITAL, December 31, 1995 $ 53,394,600
SCHEDULE OF INVESTMENTS IN SECURITIES
December 31, 1995
Number of
Shares, Options Market
or Face Value Value
Common Stocks (87.98%)
United States (42.77%)
Banking (2.25%)
15,000 Morgan (J.P.) & Co. Inc. (42.77%) $ 1,203,750
Computers (.77%)
15,000 Silicon Graphics Inc. 414,375
Conglomerate (3.03%)
44,000 Dover Corp. 1,622,500
Consumers (2.63%)
20,000 Colgate-Palmolive Co. 1,405,000
Electronics (2.51%)
35,000 AMP Inc. 1,338,750
Financial Services (3.09%)
30,000 Allied Capital Corp. 408,750
10,000 Federal National Mortgage Association 1,238,750
1,647,500
Insurance (2.51%)
22,000 Exel Ltd. 1,339,250
Machinery (2.08%)
30,000 Cummins Engine Co. Inc. 1,110,000
Miscellaneous (1.70%)
30,000 Servicemaster L.P. 907,500
Mutual Fund (2.16%)
150,000 Pennsylvania Mutual Fund 1,153,500
Oil & Gas (6.72%)
15,000 Exxon Corp. 1,207,500
100,000 Parker Drilling Co. 612,500
15,000 Schlumberger Ltd. 1,038,750
25,000 Unocal Corp. 728,125
3,586,875
Pharmaceuticals (2.73%)
35,000 Abbott Labs 1,456,875
Technology (6.45%)
20,000 FlightSafety International 1,005,000
12,000 Motorola Inc. 684,000
33,720 Thermo Electron Corp. 1,753,440
3,442,440
Transportation (4.14%)
10,000 Boeing Co. 783,750
21,600 Union Pacific Corp. 1,425,600
2,209,350
Total United States 22,837,665
Argentina (1.16%)
Beverage - Alcohol (1.16%)
40,000 Quilmes Industrial 620,000
Bermuda (1.28%)
Insurance (1.28%)
25,000 PartnerRe Holdings Ltd. 687,500
France (1.64%)
Utilities (1.64%)
2,526 GAZ et Eaux 880,614
Germany (3.39%)
Banking (1.78%)
20,000 Deutsche Bank 950,200
Conglomerate (1.61%)
2,000 Hochtief 857,640
Total Germany 1,807,840
Hong Kong (4.22%)
Conglomerate (3.39%)
300,000 Hutchison Whampoa Ltd. 1,812,000
Machinery (.83%)
250,000 Johnson Electric Holdings 440,000
Total Hong Kong 2,252,000
Indonesia (1.00%)
Consumers (1.00%)
200,000 Wicaksana Overseas International 532,000
Japan (9.37%)
Automobile (2.30%)
60,000 Honda Motor Co., Ltd. 1,230,000
Computer (1.37%)
27,300 Canon Sales 733,824
Conglomerate (2.24%)
150,000 Mitsubishi Heavy Industries 1,195,500
Electronics (1.72%)
50,000 Canon Inc. 913,500
Retail - Department Stores (1.74%)
15,000 Ito-Yokado Co. Ltd, ADR 928,200
Total Japan 5,001,024
Netherlands (5.45%)
Media/Entertainment (1.75%)
10,000 Wolters Kluwer N.V. 935,900
Oil & Gas (3.70%)
14,000 Royal Dutch Petroleum Co. ADR 1,975,750
Total Netherlands 2,911,650
Scandinavia (1.05%)
Transportation (1.05%)
40,000 Unitor ADR 558,400
Singapore/Malaysia (4.99%)
Conglomerate (3.46%)
150,000 Keppel Corporation Ltd. 1,317,000
200,000 Sime Darby Berhad 528,000
Consumers (1.53%)
111,000 Nestle Malaysia 816,960
Total Singapore/Malaysia 2,661,960
South Africa (1.10%)
Conglomerate (1.10%)
150,000 Liblife Strategic Investment 586,500
Switzerland (8.49%)
Conglomerates (2.98%)
7,000 Brown Boveri 1,589,910
Consumers (2.59%)
25,000 Nestle Registered ADR 1,383,750
Miscellaneous (2.92%)
4,500 Societe General De Surveillance Holdings SA 1,560,465
Total Switzerland 4,534,125
United Kingdom (2.07%)
Environmental (.97%)
100,000 Rentokil Group 519,000
Media/Entertainment (1.10%)
150,000 Blenheim Exhibitions Group 586,500
Total United Kingdom 1,105,500
Total Common Stock 46,976,778
Long Term Debt (6.09%)
Argentina (2.00%)
1,500,000 Argentina Republic Ser. L 1,072,500
6.5%, Due March 31, 2005
Thailand (2.19%)
Banking
1,100,000 Bangkok Bank Public Co.
3.25%, Due March 3, 2004 1,171,500
United States (1.90%)
1,000,000 U.S. Treasury Notes
6.125%, Due May 31, 1997 1,012,187
Total Long Term Debt 3,256,187
Options (.01%)
United States
10,000 International Finance Corp. Yen Put Wts. 3,400
Total investments in securities $ 50,236,365
See accompanying notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
1. Summary of significant
accounting policies Valuation of Investments and Securities Sold Short
HLM Global Equity Limited Partnership (the
"Partnership") values investments in securities
and securities sold short, which are listed on a
national securities exchange, at their last
sales price as of the last business day of the
year. Investments not so listed are valued by
the General Partner based upon brokers'
representative prices.
Investment Transactions and Related Investment Income
Investment transactions are accounted for on a
trade-date basis. Dividend income and dividends
paid on short sales are recorded on the ex-dividend
date.
Income Taxes
The Partnership does not record a provision for
income taxes because the individual partners
report their share of the Partnership's income
or loss on their income tax returns. The
financial statements reflect the Partnership's
transactions without adjustment, if any,
required for federal income tax purposes.
2. Unrealized net
appreciation on
investments The total unrealized net appreciation on
investments at December 31, 1995 amounts to
$8,382,312 and is attributable to the following
partnership years:
Unrealized Net
Appreciation
(Depreciation)
Year ended December 31
1993 $ 2,443,786
1994 (162,572)
1995 6,101,098
$ 8,382,312
3. Net realized gain
on investments The 1995 realized gain consists of $84,369 of
short-term loss and $321,678 of long-term gain.
The net realized gain on investments during the
current year included prior years' unrealized
net appreciation of $22,179 and is attributable
to the following partnership years:
Total Short-Term Long-Term
Year Ended December 31:
1993 $ 678,527 $ - $ 678,527
1994 (656,348) (51,413) (604,935)
$ 22,179 $(51,413) $ 73,592
4. 1995 partnership
periods The General Partner authorized contributions to,
and withdrawals of capital during the year. As
a result of such capital activity, the year
ended December 31, 1995 consists of the
following partnership periods and unaudited net
income, respectively:
Net
Income
January 1 to March 31 $ 1,223,959
April 1 to June 30 4,048,005
July 1 to September 30 813,512
October 1 to December 31 1,491,478
$ 7,576,954
5. Subsequent events As of January 1, 1996, the Partnership received
capital contributions of $736,267 and paid
capital withdrawals of $1,069,440 resulting in
partnership capital of $53,061,427.
