Harding, Loevner Funds, Inc.
President's Letter
June 22, 1997
Dear Shareholder:
We are pleased to present the Semi-Annual Report to Shareholders for the
periods ended April 30, 1997 (unaudited).
We greatly appreciate your participation in the Harding, Loevner Funds.
We welcome the opportunity to discuss the objectives and results of our
funds. Please do not hesitate to contact us with questions or comments
regarding this report, or for assistance in general.
Sincerely,
David R. Loevner
President
Harding, Loevner Funds, Inc.
Table of Contents
Performance Information and
Statements of Net Assets
- International Equity Portfolio............................1
- Global Equity Portfolio...................................5
- Multi-Asset Global Portfolio..............................9
Statements of Operations........................................13
Statements of Changes in Net Assets.............................14
Financial Highlights............................................15
Notes to Financial Statements...................................17
Harding, Loevner Funds, Inc.
International Equity Portfolio
April 30, 1997 (Unaudited)
Graph: Comparison of change in value of $10,000 investment in International
Equity Portfolio, the MSCI World EX-USA Index (Net Dividends reinvested)
and the Lipper International Equity Fund Index
Harding, Loevner Funds, Inc.
International Equity Portfolio - Statement of Net Assets
April 30, 1997 (Unaudited)
Shares Value
Long-Term Investments - 91.5%
Common Stock - 88.7%
Argentina - 1.0%
Quilmes Industrial SA - ADR (Foods/Beverages) 75,600 $ 841,050
Quilmes Industrial SA (Foods/Beverages) 290,600 2,688,050
3,529,100
Bermuda - 1.0%
PartnerRe Holdings Ltd. (Insurance) 105,300 3,540,713
Canada - 2.0%
Imperial Oil Ltd. (Oil/Gas) 152,000 6,935,000
France - 5.3%
Financiere et Industrielle Gaz et Eaux
(Diversified Holdings) 17,050 7,538,171
Michelin (CGDE) - Class B (Manufacturing) 199,748 11,162,338
18,700,509
Germany - 8.9%
Bayer AG (Chemicals) 284,000 11,300,953
Daimler-Benz AG (Automotive) 111,000 8,244,066
Deutsche Bank AG (Financial) 196,000 10,346,174
Hornbach Baumarkt AG (Retail) 33,500 1,064,106
Muenchener Rueckversicherung AG (Insurance) 215 520,892
31,476,191
Hong Kong - 8.1%
Hong Kong & China Gas Co., Ltd.
(Distribution-Oil/Gas) 4,742,400 7,530,534
HSBC Holdings p.l.c. (Financial) 152,000 3,846,114
Hutchison Whampoa Ltd. (Diversified Holdings) 1,489,000 11,053,124
Johnson Electric Holdings Ltd. (Electrical
Equipment) 2,354,020 6,381,929
28,811,701
Japan - 13.5%
Atlantis Japan Growth Fund (Investment Company)* 631,000 4,259,250
Canon, Inc. (Office Equipment) 420,000 9,958,251
Hirose Electric (Electrical Equipment) 127,000 6,942,733
Honda Motor Co. Ltd. (Automotive) 240,000 7,448,602
Mitsubishi Heavy Industries Ltd. (Aerospace) 1,440,000 9,505,475
Nippondenso Co. Ltd. (Electrical Equipment) 420,000 9,561,244
47,675,555
Shares Value
Malaysia - 3.4%
Nestle Berhad (Foods/Beverages) 585,000 $4,568,127
Sime Darby Berhad (Diversified Holdings) 2,400,000 7,410,359
11,978,486
Netherlands - 10.6%
IHC Caland NV (Transportation) 125,000 6,172,998
ING Groep NV (Financial) 179,500 7,049,153
Royal Dutch Petroleum Co. - ADR (Oil/Gas) 90,500 16,312,625
Wolters Kluwer NV (Publishing) 69,000 8,178,696
37,713,472
Norway - 1.9%
Norsk Hydro AS - ADR (Oil/Gas) 141,133 6,915,517
Singapore - 5.2%
Acer Computer International Ltd. (Computers) 560,000 963,200
Courts Ltd. (Retail) 605,000 765,664
Development Bank of Singapore - Foreign
Registered Shares (Financial) 842,000 10,015,491
Keppel Corp. Ltd. (Transportation) 1,548,750 6,747,666
18,492,021
South Africa - 2.0%
LibLife Strategic Investments Ltd.
(Diversified Holdings) 1,906,995 7,251,258
Spain - 3.1%
Banco Intercontinental Espanol (Financial) 73,500 10,971,652
Sweden - 14.0%
Astra AB - Bearer Shares (Pharmeceuticals) 243,700 9,680,871
ABB AG - Registered Shares (Engineering) 50,700 11,831,148
Nestle SA - ADR (Foods/Beverages) 186,000 11,298,049
Novartis AG (Pharmeceuticals) 6,050 7,981,726
SGS Societe Generale de Surveillance
Holding SA - Bearer Shares (Commercial Services) 2,400 4,972,826
SGS Societe Generale de Surveillance Holding SA -
Registered Shares (Commercial Services) 10,000 3,892,663
49,657,283
Thailand - 1.9%
The Siam Cement Co., Ltd. (Manufacturing/
Distribution) 246,000 6,597,701
United Kingdom - 6.8%
Railtrack Group p.l.c. (Transportation/Rail) 363,000 2,743,841
Rentokil Group p.l.c. (Commercial Services) 1,575,000 10,345,027
Rio Tinto p.l.c. (Mining) 698,000 11,090,440
24,179,308
Total Common Stock - (Cost - $301,736,861) 314,425,467
Shares Value
Rights & Warrants - 0.0%
Acer Computer Int'l Ltd. Warrants Expiring
7/31/01 (Singapore)* 112,000 $ 35,242
Atlantis Japan Growth Fund Warrants Expiring
4/30/10 (Japan)* 53,000 40,890
Daimler Benz AG Rights Expiring
5/13/97 (Germany)* 111,000 9,616
Total - (Cost - $43,680) 85,748
Face Amount
Convertible Bonds - 2.8%
Bangkok Bank Public Co., 3.250% due 3/3/04
(Thailand) $ 7,900,000 7,307,500
Far East Levingston Ship, 1.500% due 5/02/01
(Singapore) 3,340,000 2,705,400
Total - (Cost - $11,581,010) 10,012,900
Total Long-Term Investments -
(Cost - $313,361,551) 324,524,115
Cash Equivalents - 8.2%
Investors Bank & Trust Company Repurchase
Agreement, 4.93% due 5/1/97#; Issued
4/30/97 (Collateralized by various FHLMCs,
FNMAs, and GNMAs) (Cost - $29,035,656) 29,035,656 29,035,656
Total Investments - 99.7% (Cost - $342,397,207) 353,559,771
Other Assets Net of Liabilities - 0.3%
Foreign currency holdings (Cost - $884,810) 874,422
Receivable for Capital Stock sold 123,143
Other assets 1,313,074
Payable to Investment Adviser (23,603)
Other liabilities (1,163,766)
Other assets and liabilities, net 1,123,270
Net Assets - 100.0%
Applicable to 29,991,813 outstanding $.001
par value shares (authorized 500,000,000 shares) $ 354,683,041
Net Asset Value, Offering and Redemption Price
Per Share $ 11.83
Components of Net Assets as of April 30, 1997
were as follows:
Capital Stock at par value ($.001) $ 29,992
Capital Stock in excess of par value 342,821,365
Undistributed investment income, net 470,355
Accumulated net realized gain 205,463
Net unrealized appreciation on investments
and on assets and liabilities denominated
in foreign currencies 11,155,866
$ 354,683,041
* Non-income producing security
# Security, or a portion thereof, is segregated for partially paid shares
ADR American Depositary Receipt
See Notes to Financial Statements
Harding, Loevner Funds, Inc.
Global Equity Portfolio
April 30, 1997 (Unaudited)
Graph: Comparison of change in value of $10,000 investment in Global Equity
Portfolio, the MSCI World Index (Net Dividends Reinvested) and the
Lipper Global Equity Fund Index.
Harding, Loevner Funds, Inc.
Global Equity Portfolio - Statement of Net Assets
April 30, 1997 (Unaudited)
Shares Value
Long-Term Investments - 92.7%
Common Stock - 83.9%
Argentina - 1.0%
Quilmes Industrial SA (Foods/Beverages) 50,000 $ 462,500
Quilmes Industrial SA - ADR (Foods/Beverages) 20,000 222,500
685,000
Bermuda - 1.2%
PartnerRe Holdings Ltd. (Insurance) 25,000 840,625
France - 2.5%
Financiere et Industrielle Gaz et Eaux
(Diversified Holdings) 3,977 1,758,317
Germany - 4.3%
Daimler-Benz AG (Automotive) 20,000 1,485,417
Deutsche Bank AG (Financial) 30,000 1,583,598
3,069,015
Hong Kong - 7.0%
Hong Kong & China Gas Co., Ltd.
(Distribution-Oil/Gas) 900,000 1,429,125
Hutchison Whampoa Ltd.
(Diversified Holdings) 300,000 2,226,956
Johnson Electric Holdings Ltd.
(Electrical Equipment) 500,000 1,355,538
5,011,619
Japan - 6.5%
Atlantis Japan Growth Fund
(Investment Company)* 100,000 675,000
Canon, Inc. (Office Equipment) 50,000 1,185,506
Honda Motor Co. Ltd. (Automotive) 46,000 1,427,649
Mitsubishi Heavy Industries Ltd. (Aerospace) 200,000 1,320,205
4,608,360
Malaysia - 2.2%
Nestle Berhad (Foods/Beverages) 100,000 780,876
Sime Darby Berhad (Diversified Holdings) 250,000 771,912
1,552,788
Netherlands - 5.5%
Royal Dutch Petroleum Co. - ADR (Oil/Gas) 15,000 2,703,750
Wolters Kluwer NV (Publishing) 10,000 1,185,318
3,889,068
Singapore - 1.0%
Keppel Corp. Ltd. (Transportation) 187,500 816,909
South Africa - 1.1%
LibLife Strategic Investments Ltd.
(Diversified Holdings) 196,957 748,920
Shares Value
Sweden - 2.2%
Investor AB - Class B (Investment Company) 35,000 $ 1,530,957
Switzerland - 7.3%
ABB AG - Registered Shares (Engineering) 7,000 1,633,492
Nestle SA - ADR (Foods/Beverages) 30,000 1,822,266
SGS Societe Generale de Surveillance
Holding SA - Registered Shares (Commercial
Services) 4,500 1,751,698
5,207,456
Thailand - 1.1%
The Siam Cement Co., Ltd. (Manufacturing
/Distribution) 30,000 804,598
United Kingdom - 4.9%
Railtrack Group p.l.c. (Transportation/Rail) 75,000 566,909
Rentokil Group p.l.c. (Commercial Services) 200,000 1,313,654
Rio Tinto p.l.c. (Mining) 100,000 1,588,888
3,469,451
United States - 36.1%
Abbott Laboratories (Health Care) 35,000 2,135,000
Airgas, Inc. (Manufacturing/Distribution)* 50,000 743,750
Allied Capital Corp. (Investment Company) 39,285 604,007
Allied Signal, Inc. (Aerospace/Defense) 10,000 722,500
Boeing Co. (Aerospace/Defense) 15,000 1,479,375
Colgate-Palmolive Co. (Consumer Products) 15,000 1,665,000
Deere & Co. (Manufacturing) 25,000 1,150,000
Dover Corp. (Manufacturing) 40,000 2,120,000
Electronic Data Systems Corp. (Computer Services) 30,000 1,001,250
Exxon Corp. (Oil/Gas) 40,000 2,265,000
FNMA (Financial) 40,000 1,645,000
Motorola, Inc. (Electronics) 20,000 1,145,000
Schlumberger, Ltd. (Oil/Gas) 20,000 2,215,000
ServiceMaster LP (Commercial Service) 45,000 1,389,375
Thermo Electron Corp. (Manufacturing)* 60,000 2,070,000
Union Pacific Corp. (Transportation/Rail) 25,000 1,593,750
Union Pacific Resources Group, Inc. (Oil/Gas) 21,173 574,318
Wrigley (WM) Jr. Co. (Foods/Confectionery) 20,000 1,165,000
25,683,325
Total Common Stock - (Cost - $45,214,608) 59,676,408
Rights & Warrants - 0.1%
Atlantis Japan Growth Fund Warrants Expiring
4/30/10 (Japan)* 16,000 12,344
Daimler Benz AG Rights Expiring
5/13/97 (Germany)* 20,000 1,733
Scania AB Warrants Expiring
6/4/99 (Sweden)* 30,000 30,798
Total - (Cost - $212,335) 44,875
Fixed Income - 8.7% Face Amount
Argentina - 1.9%
Republic of Argentina FRN, 6.625%
due 3/31/05 $ 1,455,000 1,334,963
Face Amount Value
Thailand - 1.9%
Bangkok Bank Public Co. CVT,
3.250% due 3/3/04 $ 1,500,000 $ 1,387,500
United States - 4.9%
JP Morgan Co. FRN, 4.00% due 2/15/12 1,000,000 972,507
Rockefeller Center Property CVT,
0.000% due 12/31/00 650,000 424,125
U.S. Treasury Note, 6.125% due 5/31/97 1,000,000 1,000,311
U.S. Treasury Note, 8.750% due 8/15/00 1,000,000 1,066,250
3,463,193
Total Fixed Income - (Cost - $5,637,149) 6,185,656
Total Long-Term Investments -
(Cost - $51,064,092) 65,906,939
Cash Equivalents - 7.1%
Investors Bank & Trust Company Repurchase
Agreement, 4.93% due 5/1/97#; Issued
4/30/97 (Collateralized by $5,100,699 par
of Federal Home Loan Mortgage Corp. ARM,
7.787% due 3/1/24, value $5,292,092)
(Cost - $5,039,984) 5,039,984 5,039,984
Total Investments - 99.8% (Cost - $56,104,076) 70,946,923
Other Assets Net of Liabilities - 0.2%
Other assets 257,915
Payable to Investment Adviser (30,030)
Other liabilities (113,421)
Other assets and liabilities, net 114,464
Net Assets - 100.0%
Applicable to 3,982,099 outstanding
$.001 par value shares
(authorized 500,000,000 shares) $ 71,061,387
Net Asset Value, Offering and Redemption
Price Per Share $ 17.85
Components of Net Assets as of April 30, 1997
were as follows:
Capital Stock at par value ($.001) $ 3,982
Capital Stock in excess of par value 53,717,326
Undistributed investment income, net 242,540
Accumulated net realized gain 2,255,383
Net unrealized appreciation on investments
and on assets and liabilities denominated
in foreign currencies 14,842,156
$ 71,061,387
* Non-income producing security
# Security, or a portion thereof, is segregated
for partially paid shares
ADR American Depositary Receipt
ARM Adjustable Rate Mortgage
CVT Convertible Bond
FRN Floating Rate Note
See Notes to Financial Statements
Harding, Loevner Funds, Inc.
Multi-Asset Global Portfolio
April 30, 1997 (Unaudited)
Graph: Comparison of change in value of $10,000 investment in Multi-Asset
Global Portfolio, The Customized Global Balanced Index* and the Lippper
Global Fund Index.
Harding, Loevner Funds, Inc.
Multi-Asset Global Portfolio - Statement of Net Assets
April 30, 1997 (Unaudited)
Shares Value
Long-Term Investments - 92.7%
Common Stock - 60.4%
Argentina - 0.5%
Quilmes Industrial SA (Foods/Beverages) 1,500 $ 13,875
Quilmes Industrial SA - ADR (Foods/Beverages) 750 8,348
22,223
Bermuda - 1.0%
PartnerRe Holdings Ltd. (Insurance) 1,400 47,075
France - 3.0%
Financiere et Industrielle Gaz et Eaux
(Diversified Holdings) 200 88,424
Michelin (CGDE) - Class B (Manufacturing) 800 44,706
133,130
Germany - 4.0%
Bayer AG (Chemicals) 2,000 79,584
Deutsche Bank AG (Financial) 1,900 100,295
179,879
Hong Kong - 3.4%
HSBC Holdings p.l.c. (Financial) 2,000 50,607
Hutchison Whampoa Ltd. (Diversified Holdings) 14,000 103,924
154,531
Japan - 4.5%
Atlantis Japan Growth Fund
(Investment Company)* 3,600 24,300
Canon, Inc. (Office Equipment) 2,000 47,420
Honda Motor Co. Ltd. (Automotive) 2,000 62,072
Mitsubishi Heavy Industries Ltd. (Aerospace) 10,000 66,010
199,802
Malaysia - 0.8%
Sime Darby Berhad (Diversified Holdings) 11,000 33,964
Netherlands - 3.6%
Royal Dutch Petroleum Co. - ADR (Oil/Gas) 900 162,225
Singapore - 1.1%
Keppel Corp. Ltd. (Transportation) 11,250 49,015
Sweden - 2.4%
Investor AB - Class B (Investment Company) 2,500 109,354
Switzerland - 6.5%
ABB AG - Registered Shares (Engineering) 420 98,010
Nestle SA - ADR (Foods/Beverages) 1,600 97,187
SGS Societe Generale de Surveillance
Holding SA - Registered Shares (Commercial
Services) 250 97,317
292,514
Thailand - 0.7%
The Siam Cement Co., Ltd. (Manufacturing
/Distribution) 1,100 29,502
Shares Value
United Kingdom - 2.9%
Rentokil Group p.l.c. (Commercial Services) 8,100 $ 53,203
Rio Tinto p.l.c. (Mining) 4,800 76,267
129,470
United States - 26.0%
Abbott Laboratories (Pharmeceuticals) 1,500 91,500
Allied Capital Corp. (Manufacturing) 3,013 46,325
Boeing Co. (Aerospace/Defense) 600 59,175
Colgate-Palmolive Co. (Consumer Products) 900 99,900
Deere & Co. (Manufacturing) 1,700 78,200
Dover Corp. (Manufacturing) 2,200 116,600
Electronic Data Systems Corp. (Computer Services) 900 30,038
Exxon Corp. (Oil/Gas) 2,400 135,900
FNMA (Financial) 2,500 102,813
Motorola, Inc. (Electronics) 600 34,350
Royce OTC Micro-Cap Trust, Inc. (Investment Company) 5,000 40,625
Schlumberger, Ltd. (Oil/Gas) 800 88,600
Thermo Electron Corp. (Manufacturing)* 2,500 86,250
U.S. West, Inc.Telecommunications) 1,300 45,662
Union Pacific Corp. (Transportation/Rail) 1,100 70,124
Wrigley (WM) Jr. Co. (Foods/Confectionery) 700 40,774
1,166,836
Total Common Stock - (Cost - $2,589,970) 2,709,520
Warrants - 0.1%
Atlantis Japan Growth Fund Warrants
Expiring 4/30/10 (Japan)* 309
Scania AB Warrants Expiring 6/4/99 (Sweden)* 2,053
Total (Cost - $2,710) 2,362
Fixed Income - 32.2%
Face Amount (a)
Argentina - 5.0%
Republic of Argentina FRN, 6.625% due
3/31/05 $ 242,500 222,494
Germany - 2.8%
Bundesrepublic Deutschland, 6.7500% due
4/22/03 DEM 200,000 124,920
Singapore - 0.7%
Far East Levingston Ship CVT., 1.500%
due 5/02/01 40,000 32,400
South Africa - 0.9%
Republic of South Africa, 12.000%
due 2/28/05 ZAR 200,000 39,389
Thailand - 1.7%
Bangkok Bank Public Co. CVT, 3.250%
due 3/3/04 82,000 75,850
Face Amount Value
United States - 21.1%
Capital Cities/ABC, Inc., 8.750%
due 8/15/21 $ 25,000 $ 27,910
GNMA Pool #390577, 7.0 % due 6/15/09 115,498 114,885
GNMA, 8.000% due 8/15/07 16,721 16,967
GNMA, 8.500% due 5/15/18 22,398 23,147
GNMA, 9.500% due 9/20/20 14,504 15,460
GPA Delaware, Inc., 8.750% due 12/15/98 50,000 50,500
Rockefeller Center Property CVT, 0.000%
due 12/31/00 100,000 65,250
U.S. Treasury Note, 6.125% due 5/31/97 50,000 50,016
U.S. Treasury Note, 6.375% due 5/15/99 150,000 150,189
U.S. Treasury Note, 8.750% due 8/15/00 125,000 133,280
U.S. Treasury Note, 7.875% due 8/15/01 25,000 26,211
U.S. Treasury Note, 7.000% due 7/15/06 75,000 76,219
U.S. Treasury Inflation Index Note, 3.375%
due 1/15/07 200,208 196,828
946,862
Total Fixed Income - (Cost - $1,459,840) 1,441,915
Total Long-Term Investments - (Cost - $4,052,520) 4,153,797
Cash Equivalents - 7.1%
Investors Bank & Trust Company Repurchase
Agreement, 4.93% due 5/1/97; Issued
4/30/97 (Collateralized by $498,000
par of Federal Home Loan Mortgage Corp.
Pool # G10263, 8.00% due 9/1/09, value
$335,429) (Cost - $319,103) 319,103 319,103
Total Investments - 99.8% (Cost - $4,371,623) 4,472,900
Other Assets Net of Liabilities - 0.2%
Unrealized appreciation on forward contracts 2,428
Other assets 29,460
Payable to Investment Adviser (986)
Other liabilities (19,946)
Other assets and liabilities, net 10,956
Net Assets - 100.0%
Applicable to 424,407 outstanding $.001 par
value shares
(authorized 500,000,000 shares) $ 4,483,856
Net Asset Value, Offering and Redemption Price
Per Share $ 10.56
Components of Net Assets as of April 30, 1997
were as follows:
Capital Stock at par value ($.001) $ 424
Capital Stock in excess of par value 4,307,378
Undistributed investment income, net 34,432
Accumulated net realized gain 37,909
Net unrealized appreciation on investments and on
assets and liabilities denominated in foreign currencies 103,713
$ 4,483,856
* Non-income producing security
(a) Currency shown in U.S. Dollars unless otherwise indicated
ADR American Depositary Receipt
CVT Convertible Bond
DEM Deutschemark
FRN Floating Rate Note
ZAR South African Rand
See Notes to Financial Statements
Harding, Loevner Funds, Inc.
Statements of Operations
April 30, 1997 (Unaudited)
Global Equity Multi-Asset Global
International Portfolio Portfolio
Equity Portfolio For the Period For the Period
For the Six Months From From
Ended April 30, 1997 Dec. 1, 1996* Nov. 1, 1996*
to April 30, 1997 to April 30, 1997
Investment Income
Interest $ 657,002 $ 192,871 $ 47,644
Dividends (net of
withholding taxes
of $275,704,
$30,387 and $1,575,
respectively) 1,841,285 463,079 24,016
Total investment income 2,498,287 655,950 71,660
Expenses
Investment advisory fees 1,124,182 288,019 19,804
Administration fees 224,836 43,203 2,960
Custodian fees 154,719 24,510 6,837
Shareholder recordkeeping
fees 21,392 6,565 758
Legal fees 5,000 4,545 375
Audit fees 12,083 9,091 10,000
Directors' fees and
expenses 12,600 4,200 86
Insurance expense 7,899 1,530 -
State registration filing
fees 5,523 533 533
SEC filing fees 33,214 16,415 1,305
Organizational costs 11,436 3,812 -
Other fees and expenses 10,420 3,007 915
Total operating expenses 1,623,304 405,430 43,573
Waiver of investment
advisory fee (124,399) (45,406) (18,818)
Net operating expenses 1,498,905 360,024 24,755
Investment Expense 9,238 4,076 363
Total expenses 1,508,143 364,100 25,118
Investment income, net 990,144 291,850 46,542
Realized and unrealized
gain (loss) on
investments and foreign
currency-related
transactions
Net realized gain from
investments 304,294 2,241,813 31,543
Net realized gain (loss)
from foreign currency-
related transactions (98,831) 13,570 6,366
Net unrealized appreciation
(depreciation) on
investments 2,460,638 (1,645,603) 101,277
Net unrealized appreciation
(depreciation) on
translation of assets
and liabilities
denominated in foreign
currencies (1,657) (691) 2,436
Realized and unrealized
gain on investments and
foreign currency-related
transactions 2,664,444 609,089 141,622
Net increase in net
assets resulting from
operations $ 3,654,588 $ 900,939 $ 188,164
*Commencement of Operations
See Notes to Financial Statements
Harding, Loevner Funds, Inc.
Statements of Changes in Net Assets
For the Periods Ended
<TABLE>
<C> <C> <C> <C>
<S> International Equity Global Equity Multi-Asset Global
Portfolio Portfolio Portfolio
For the Six For the Ten For the Period From For the Period From
Months Months Ended Dec. 1, 1996* Nov. 1, 1996*
Ended April 30, 1997 Oct. 31, 1996 to April 30, 1997 to April 30, 1997
(Unaudited) (Unaudited) (Unaudited)
Increase in Net
Assets from Operations
Investment income, net $ 990,144 $ 1,541,518 $ 291,850 $ 46,542
Net realized gain from
investments and foreign
currency-related
transactions 205,463 2,679,097 2,255,383 37,909
Net unrealized
appreciation
(depreciation) on
investments
and on translation
of assets and
liabilities denominated
in foreign currencies 2,458,981 4,804,186 (1,646,294) 103,713
Net increase in net
assets resulting
from operations 3,654,588 9,024,801 900,939 188,164
Distributions to
Shareholders from
Investment income,
net 59,386 1,541,518 49,310 12,110
In excess of investment
income, net - 649,872 - -
Net realized gain from
investments and
foreign currency-
related transactions - 2,144,787 - -
Total distributions 59,386 4,336,177 49,310 12,110
Capital Share
Transactions, Net 109,730,603 168,942,060 70,209,758 4,307,802
Total increase in
net assets 113,325,805 173,630,684 71,061,387 4,483,856
Net Assets
Beginning of
period 241,357,236 67,726,552 - -
End of period $ 354,683,041 $ 241,357,236 $ 71,061,387 $ 4,483,856
Undistributed
(Distributions
in excess of)
Investment Income,
Net $ 470,355 $ (460,403) $ 242,540 $ 34,432
</TABLE>
* Commencement of Operations
See Notes to Financial Statements
Harding, Loevner Funds, Inc.
Financial Highlights
April 30, 1997 (Unaudited)
<TABLE>
International Equity Portfolio
<S> <C> <C> <C> <C>
For the For the
Six Months Ten Months For the Year For the Period
Ended Ended Ended Ended
April 30, 1997 Oct. 31, 1996 Dec. 31, 1995 Dec. 31, 1994*
Per Share Data
Net asset value,
beginning of period $ 11.61 $ 10.77 $ 9.71 $ 10.00
Increase (Decrease)
in Net Assets
from Operations
Investment income, net 0.16 0.08 0.10 0.04
Net realized and
unrealized gain (loss)
on investments and
foreign currency-related
transactions 0.06 0.97 1.06 (0.29)
Net increase (decrease)
from investment operations 0.22 1.05 1.16 (0.25)
Distributions to
Shareholders from
Investment income, net 0.00 (c) 0.08 0.10 0.03
In excess of investment
income, net - 0.03 - -
Net realized gain from
investments and foreign
currency-related
transactions - 0.10 - -
Temporary overdistribution
of net realized gain on
investments and foreign
currency-related
transactions - - - 0.01
Total distributions 0.00 (c) 0.21 0.10 0.04
Net asset value,
end of period $ 11.83 $ 11.61 $ 10.77 $ 9.71
Total Return 1.92% (b) 9.81% (b) 11.99% (2.47%) (b)
Ratios/Supplemental
Data
Net assets, end of
period $ 354,683,041 $ 241,357,236 $ 67,726,552 $ 8,903,878
Ratio of net
operating
expenses to
average net
assets 1.00% (a) 1.00% (a) 0.99% 0.95% (a)
Ratio of total
expenses to average
net assets 1.01% (a) 1.00% (a) 0.99% 0.95% (a)
Ratio of investment
income, net to average
net assets 0.66% (a) 1.29% (a) 1.30% 1.13% (a)
Decrease reflected in
above expense ratios
due to waiver of
investment advisory
and administration fees
and reimbursement of
other expenses 0.08% (a) 0.14% (a) 0.54% 1.33% (a)
Portfolio turnover 13% (b) 17% (b) 28% 27% (b)
Average Commission
Rate Paid** $ 0.0361 $ 0.0229 N/A N/A
</TABLE>
(a) Annualized
(b) Not Annualized
(c) Rounds to less than $0.01
* Commencement of Operations was May 11, 1994
** Represents total commissions paid on portfolio equity securities
divided by the total number of shares purchased or sold on which
commissions were charged. This disclosure is required by the
SEC beginning in 1996.
See Notes To Financial Statements
Harding, Loevner Funds, Inc.
Financial Highlights
April 30, 1997 (Unaudited)
Global Equity Multi-Asset Global
Portfolio Portfolio
For the Period For the Period
December 1, 1996* to November 1, 1996**
April 30, 1997 April 30, 1997
Per Share Data
Net asset value, beginning of
period $ 17.58 (a) $ 10.00
Increase in Net Assets from
Operations
Investment income, net 0.06 0.08
Net realized and unrealized gain
on investments and foreign
currency-related transactions 0.22 0.51
Net increase from investment
operations 0.28 0.59
Distributions to Shareholders from
Investment income, net 0.01 0.03
Net asset value, end of period $ 17.85 $ 10.56
Total Return 1.61% (b) 5.90% (b)
Ratios/Supplemental Data
Net assets, end of period $ 71,061,387 $ 4,483,856
Ratio of net operating
expenses to average net
assets 1.25% (c) 1.25% (c)
Ratio of total expenses to
average net assets 1.26% (c) 1.27% (c)
Ratio of investment income,
net to average net assets 1.01% (c) 2.37% (c)
Decrease reflected in above
expense ratios due to waiver
of investment advisory fees 0.16% (c) 0.95% (c)
Portfolio turnover 17% (b) 12% (b)
Average Commission Rate Paid ** $ 0.0288 0.0570
(a) The beginning Net Asset
Value of the Portfolio was
equal to the total Net
Asset Value of the outstanding
Partnership Units of Harding,
Loevner Management, LPs Global
Equity Limited Partnership
("GELP") as of November 30, 1996
($1,758 divided by 100).
(b) Not Annualized
(c) Annualized
* Commencement of Operations was
December 1, 1996 following a tax
free merger with GELP which was formed on
September 27, 1991
** Commencement of Operations
*** Represents total commissions paid on
portfolio equity securities divided
by the total number of shares purchased
or sold on which commissions were charged.
See Notes to Financial Statements
Harding, Loevner Funds, Inc.
Notes to Financial Statements
April 30, 1997 (Unaudited)
1. Organization
Harding, Loevner Funds, Inc. (the "Fund") was organized as a Maryland
corporation on July 31, 1996 and is registered under the Investment Company Act
of 1940, as amended, as an open-end management investment company. The Fund
currently has four Portfolios, three of which were active as of April 30, 1997.
The three active Portfolios are: International Equity Portfolio ("International
Equity"); Global Equity Portfolio ("Global Equity"); and Multi-Asset Global
Portfolio ("Multi-Asset Global"). International Equity, previously the HLM
International Equity Portfolio of the AMT Capital Fund, Inc. (the "AMT Capital
Portfolio"), commenced investment operations on May 11, 1994. Effective as of
the close of business on October 31, 1996, the AMT Capital Portfolio merged
into International Equity pursuant to shareholder approval of the tax-free
reorganization. Global Equity commenced operations on December 1, 1996
following a tax-free merger with Harding, Loevner Management, LP's - Global
Equity LP ("GELP"). Multi-Asset Global commenced operations on November 1,
1996. The Fund is managed by Harding, Loevner Management, L.P. (the
"Investment Adviser"). The Funds organizational costs are being amortized by
the International Equity and Global Equity Portfolios.
2. Summary of Significant Accounting Policies
Securities
All securities transactions are recorded on a trade date basis. Interest income
and expenses are recorded on an accrual basis. Dividend income is recorded on
the ex-dividend date. The Fund amortizes discount or premium on a daily basis
to interest income. The Fund uses the specific identification method for
determining gain or loss on sales of securities.
Income Tax
It is the policy of each Portfolio of the Fund to qualify as a regulated
investment company, if such qualification is in the best interest of its
shareholders, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of taxable income sufficient to relieve
it from substantially all Federal income and excise taxes.
Valuation
All investments in the Fund are valued daily at their market price, which
results in unrealized gains or losses. Securities traded on an exchange are
valued at their last sales price on that exchange. Securities for which no
sales are reported are valued at the latest bid price obtained from a
quotation reporting system or from established market makers. Repurchase
agreements are generally valued at their cost plus accrued interest.
Securities for which market quotations are not readily available and illiquid
securities are valued by the Board of Directors. As of April 30, 1997, there
were no securities in the Fund which required valuation by the Board of
Directors.
Expenses
Expenses directly attributed to a specific Portfolio of the Fund are charged
to that Portfolio's operations; expenses not directly attributable to a
specific Portfolio are allocated among the Portfolios' based on their average
daily net assets.
Dividends to Shareholders
It is the policy of the Fund to declare dividends from net investment income
annually. Net short-term and long-term capital gains distributions for the
Portfolios, if any, are normally distributed on an annual basis.
Dividends from net investment income and distributions from realized gains from
investment transactions have been determined in accordance with the income tax
regulations and may differ from net investment income and realized gains
recorded by the Portfolios for financial reporting purposes. Differences result
primarily from foreign currency transactions and timing differences related to
recognition of income, and gains and losses from investment transactions. To
the extent that any differences which are permanent in nature result in
overdistributions to shareholders, the amount of the overdistribution is
reclassified within the capital accounts based on their federal tax basis
treatment. Temporary differences do not require reclassification. Dividends
and distributions which exceed net investment income and net realized capital
gains for financial reporting purposes but not for tax purposes are reported as
distributions in excess of net investment income and net realized capital
gains, respectively. To the extent that they exceed net investment income and
net realized gains for tax purposes, they are reported as distributions of
capital stock in excess of par.
During the ten months ended October 31, 1996, the AMT Capital Portfolio
reclassified $184,775 between distributions in excess of investment income and
accumulated net realized gain on investments and foreign currency-related
transactions. This reclassification had no effect on net investment income,
net realized gains and losses, and net assets.
Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the mean
of the quoted bid and asked prices of such currencies against the U.S. dollar.
Purchases and sales of portfolio securities are translated at the rates of
exchange prevailing when such securities were acquired or sold. Income and
expenses are translated at exchange rates prevailing when accrued. The Fund does
not isolate that portion of the results of operations resulting from changes in
foreign exchange rates on investments from the fluctuations arising from changes
in market prices of securities held. Such fluctuations are included with the net
realized and unrealized gain or loss from investments.
Net realized gains and losses from foreign currency-related transactions arise
from sales of foreign currency, currency gains or losses realized between the
trade and settlement dates on securities transactions, and the difference
between the amounts of dividends, interest, and foreign withholding taxes
recorded on the Portfolio's books, and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized appreciation or depreciation
on translation of assets and liabilities denominated in foreign currencies
arise from changes in the value of assets and liabilities other than
investments in securities at the period end, resulting from changes in the
exchange rate. At April 30, 1997, International Equity, Global Equity and
Multi-Asset Global had balances of $3,690, ($691) and $8, respectively of net
unrealized appreciation and depreciation related to the changes in the exchange
rate in the value of other assets and liabilities excluding foreign currency
and forward foreign currency contracts and investments.
Estimates
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates.
3. Investment Advisory Agreement and Affiliated Transactions
The Fund's Board of Directors has approved investment advisory agreements (the
"Agreements") with the Investment Adviser. In addition, the Fund has an
administration agreement with AMT Capital Services, Inc., which assists in
managing and supervising all aspects of the Portfolios other than investment
advisory activities. The advisory fee and administration fees are computed
daily at an annual rate of .75% and .15%, respectively, of the average daily
net assets of International Equity, and 1.00% and .15%, respectively, for each
of Global Equity and Multi-Asset Global. The Investment Adviser has
voluntarily agreed to reduce their fee to the extent that aggregate expenses
(exclusive of brokerage commissions, other investment expenses, interest on
borrowings, taxes and extraordinary expenses) exceed an annual rate of 1.00%,
1.25%, and 1.25%, respectively, of the average daily net assets of
International Equity, Global Equity and Multi-Asset Global.
Directors' fees and expenses of $10,500 were paid for the six months ended
April 30, 1997 to directors who are not employees of the Investment Adviser.
4. Investment Transactions
Purchase cost and proceeds from sales of investment securities, other than
short-term investments, for the periods ended April 30, 1997 were as follows
for each of the Portfolios:
Purchase Cost of Proceeds from Sales of
Portfolio Investment Securities Investment Securities
International Equity $ 127,473,788 $ 36,151,157
Global Equity 10,967,687 12,358,539
Multi-Asset Global 4,478,683 457,538
The components of net unrealized appreciation on investments at April 30, 1997
for each of the Portfolios were as follows:
Unrealized Unrealized
Portfolio Appreciation Depreciation Net
International
Equity $ 23,983,874 $ 12,821,310 $ 11,162,564
Global Equity 17,084,741 2,241,894 14,842,847
Multi-Asset Global 221,695 120,418 101,277
The cost of securities owned by the Portfolios at April 30, 1997 for Federal
tax purposes was substantially the same as for financial statement purposes.
5. Forward Foreign Exchange Contracts
The Portfolios, on occasion, enter into forward foreign exchange contracts in
order to hedge their exposure to changes in foreign currency exchange rates on
its foreign portfolio holdings. A forward foreign exchange contract is a
commitment to purchase or sell a foreign currency at a future date at a
negotiated forward rate. The gain or loss arising from the difference between
the cost of the original contracts and the closing of such contracts is
included in net realized gains or losses on foreign currency-related
transactions. Fluctuations in the value of forward foreign exchange contracts
are recorded for book purposes as unrealized appreciation or depreciation on
assets and liabilities denominated in foreign currencies by the Portfolio.
At April 30, 1997 Multi-Asset Global had the following outstanding forward
foreign exchange contracts:
Contract Unrealized
Amount Cost Value Appreciation
Forward Foreign Exchange
Sell Contracts
200,000 German Deutschemark $ 118,343 $ 115,915 $ 2,428
The Portfolios enter into foreign currency transactions on the spot markets in
order to pay for foreign investment purchases or to convert to dollars the
proceeds from foreign investment sales or coupon interest receipts. There were
no open foreign exchange contracts to buy or sell currency on the spot markets
as of April 30, 1997.
6. Capital Share Transactions
Transactions in capital stock for International Equity were as follows for the
periods indicated:
Six Months Ended Ten Months Ended
April 30, 1997 October 31, 1996
Shares Amount Shares Amount
Shares sold 9,529,234 $ 113,580,785 14,950,392 $ 174,317,309
Shares issued
related to
reinvestment
of dividends 3,525 43,005 301,338 3,510,073
9,532,759 113,623,790 15,251,730 177,827,382
Shares redeemed 326,077 3,893,187 755,840 8,885,322
Net increase 9,206,682 $ 109,730,603 14,495,890 $ 168,942,060
Transactions in capital stock for Global Equity were as follows for the period
indicated:
For the Period December 1, 1996*
to April 30, 1997
Shares Amount
Shares issued related
to acquisition of GELP 3,866,979 $ 67,981,491
Shares sold 174,092 3,254,903
Shares issued related to
reinvestment of dividends 2,220 38,964
4,043,291 71,275,358
Shares redeemed 61,192 1,065,600
Net increase 3,982,099 $ 70,209,758
* Commencement of operations
Transactions in capital stock for Multi-Asset Global were as follows
for the period indicated:
For the Period November 1, 1996
to April 30, 1997*
Shares Amount
Shares sold 423,237 $ 4,295,692
Shares issued related
to reinvestment of
dividends 1,170 12,110
424,407 4,307,802
Shares redeemed - -
Net increase 424,407 $ 4,307,802
* Commencement of operations was November 1, 1996
7. Repurchase and Reverse Repurchase Agreements
Each Portfolio may enter into repurchase agreements under which a
bank or securities firm that is a primary or reporting dealer in
U.S. Government securities agrees, upon entering into a contract, to
sell U.S. Government Securities to a Portfolio and repurchase such
securities from such Portfolio at a mutually agreed upon price and
date.
Each Portfolio is also permitted to enter into reverse repurchase
agreements under which a primary or reporting dealer in U.S.
Government securities purchases U.S. Government securities from a
Portfolio and such Portfolio agrees to repurchase the securities at
an agreed upon price and date.
Each Portfolio may engage in repurchase and reverse repurchase
transactions with parties selected on the basis of such party's
creditworthiness. Securities purchased subject to repurchase
agreements must have an aggregate market value greater than or equal
to the repurchase price plus accrued interest at all times. If the
value of the underlying securities falls below the value of the
repurchase price plus accrued interest, the Portfolio will require
the seller to deposit additional collateral by the next business
day. If the request for additional collateral is not met, or the
seller defaults on its repurchase obligation, the Portfolio
maintains the right to sell the underlying securities at market
value and may claim any resulting loss against the seller. When a
Portfolio engages in reverse repurchase transactions, such Portfolio
will maintain, in a segregated account with its custodian,
securities equal in value to those subject to the agreement.
At April 30, 1997, the International Equity Portfolio entered into a
repurchase agreement which was collateralized by the following
securities:
Collateral Par Value Market Value
FHLMC Libor FRN 1499 FD, 6.750%
due 4/15/23 $5,000,000 $4,527,051
FHLMC Libor FRN 1642 FA, 6.900%
due 11/15/23 2,000,000 1,889,792
FHLMC COF FRN 1633 FH, 5.959%
due 6/15/23 3,730,000 3,447,304
FNMA CMT FRN G92-5 FA, 6.515%
due 1/25/22 4,500,000 4,454,842
FNMA Libor FRN 92-177 F, 6.86875%
due 10/25/22 6,000,000 6,204,444
FNMA Libor FRN G92-65 FA, 6.769%
due 11/25/22 3,000,000 1,549,944
FNMA COF FRN 93-129 FA, 5.759%
due 1/25/08 6,500,000 3,700,576
FNMA Libor FRN 96-40 FB, 6.81875
due 6/25/22 1,420,000 1,428,885
GNMA ARM # 008633, 7.125% due 5/20/25 4,957,000 3,285,002
Total $30,487,840
8. Fund Mergers and Acquisitions
Effective as of the close of business on October 31, 1996, International Equity
received the net assets of the AMT Capital Portfolio pursuant to an Agreement
and Plan of Reorganization dated October 14, 1996. The shareholders of the AMT
Capital Portfolio approved the tax-free reorganization on October 30, 1996.
All assets and liabilities of the AMT Capital Portfolio were transferred to
International Equity. Prior to the reorganization, International Equity had no
operations.
Effective as of the close of business on November 30, 1996, Global Equity
acquired the net assets of GELP pursuant to approval of the tax-free
reorganization by the Limited Partners of GELP. The acquisition was
accomplished by a tax-free exchange of 38,670 units of GELP for 3,866,979
shares of Global Equity, in a 1:100 exchange on November 30, 1996. The
aggregate net assets of GELP and Global Equity immediately before the
acquisition were $67,981,491 and $0, respectively, of which $16,488,450
represented unrealized appreciation of GELP's net assets. Immediately after
the acquisition, the combined net assets amounted to $67,981,491.
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