HARDING LOEVNER FUNDS INC, 485BPOS, 1999-01-27

HARDING LOEVNER FUNDS INC
485BPOS, 1999-01-27

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As filed with the Securities and Exchange Commission on
January 27, 1999.
File Nos. 333-09341,811-7739

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

__________________________

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X

Pre-Effective Amendment No.
- --------------------------------------------------------------------------

Post-Effective Amendment No. 4 X
- ------------------------------------------------------------

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. _6_
X

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)

Registrant's telephone number: 800-762-4848

WILLIAM E. VASTARDIS, Managing Director
Investors Capital Services, Inc.
600 Fifth Avenue, 26th Floor
New York, New York 10020

(Name and address of agent for service)

With a copy to:
Jack Murphy, Esq.
Dechert Price & Rhoads
1775 Eye Street,
N.W., Washington, D.C. 20006-2401
is legal counsel for the Fund.

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:
/ x / immediately upon filing pursuant to paragraph (b)
/ / On _____________, pursuant to paragraph (b)
/ / 60 days after filing, pursuant to paragraph (a)(1)
/ / On _____________, pursuant to paragraph (a) (1)
/ / 75 days after filing, pursuant to paragraph (a) (2)
/ / On _______________, pursuant to paragraph (a) (2)
of Rule 485.

Registrant has registered an indefinite number of
shares pursuant to Rule 24f-2 under the Investment
Company Act of 1940.

HARDING, LOEVNER FUNDS, INC.
Registration Statement on Form N-1A

CROSS REFERENCE SHEET
Pursuant to Rule 495(a)
Under the Securities Act of 1933

- ------------------------------------------------------------------------------

Form N-1A Item No. Location

Part A. Prospectus Caption

Item 1. Cover Page Cover Page

Item 2. Synopsis The Fund's Expenses

Item 3. Condensed Financial
Information Financial Highlights

Item 4. General Description of
Registrant Description of the Fund; Investment Policies;
Investment Restrictions; Risks Associated with
the Fund's Investment Policies and Investment
Techniques

Item 5. Management of the Fund Management of the Fund

Item 5A. Management's Discussion of Not Applicable
Fund Performance

Item 6. Capital Stock and Other Shareholder Information; Tax Considerations;
Dividends

Item 7. Purchase of Securities Being Purchase and Redemption of Shares;
Offered Dividends; Determination of Net Asset Value;
Distribution of Fund Shares

Item 8. Redemption or Repurchase Purchase and Redemption of Shares

Item 9. Pending Legal Proceedings Not Applicable

N-1A Item No. Statement of Additional Information Caption

Part B

Item 10. Cover Page Cover Page

Item 11. Table of Contents Table of Contents

Item 12. General Information and History Organization of the Fund

Item 13. Investment Objectives and Policies Supplemental Descriptions of Investments;
Supplemental Investment Techniques;
Supplemental Discussion of Risks Associated
With the Fund's Investment Policies and
Investment Techniques; Investment Restrictions

Item 14. Management of the Fund Management of the Fund

Item 15. Control Persons and Principal Not Applicable
Holders of Securities

Item 16. Investment Advisory and Other
Services Management of the Fund

Item 17. Brokerage Allocation Portfolio Transactions

Item 18. Capital Stock and Other Securities Shareholder Information; Tax Considerations;
Organization of the Fund

Item 19. Purchase, Redemption and Pricing
of Securities Being Offered Net Asset Value

Item 20. Tax Status Tax Considerations

Item 21. Underwriters Distribution of Fund Shares

Item 22. Calculation of Performance Data Calculation of Performance Data

Item 23. Financial Statements Financial Statements

</TABLE>

Part C

Information required to be included in Part C is
set forth under the appropriate Item, so numbered,
in Part C to this Registration Statement

HARDING, LOEVNER FUNDS, INC.

Prospectus - February 1, 1999

Harding, Loevner Funds, Inc. (the "Fund") is a no-load, open-end management
investment company (a "mutual fund") that currently has four separate
diversified portfolios (each a "Portfolio"), each of which has distinct
investment objectives and policies. There is no sales charge for purchase of
shares. Shares of each Portfolio may be purchased through AMT Capital
Securities, L.L.C. ("AMT Capital"), the Fund's exclusive distributor. The
minimum initial investment in any Portfolio is $100,000. Additional investments
or redemptions may be of any amount. The Portfolios and their investment
objectives are:

International Equity Portfolio - to seek long-term capital appreciation
through investments in equity securities of companies based outside the
United States.

Global Equity Portfolio - to seek long-term capital appreciation
through investments in equity securities of companies based both inside
and outside the United States.

Multi-Asset Global Portfolio - to seek long-term capital appreciation
and a growing stream of current income through investments in equity
and debt securities of companies based both inside and outside the
United States and debt securities of the United States and foreign
governments and their agencies and instrumentalities.

Emerging Markets Portfolio - to seek long-term capital appreciation
through investments in equity securities of companies based in developing
markets outside the United States.

No assurance can be given that a Portfolio's
investment objectives will be attained.

This Prospectus sets forth concisely the information that a prospective investor
should know before investing. It should be read and retained for future
reference. A Statement of Additional Information dated February 1, 1999,
containing additional information about the Fund (the "Statement of Additional
Information"), has been filed with the Securities and Exchange Commission (the
"Commission") and is incorporated by reference into this Prospectus. It is
available without charge and can be obtained by calling or writing Investors
Capital Services, Inc., a branch office of AMT Capital, at the telephone numbers
or address listed on the cover of this Prospectus.

THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

TABLE OF CONTENTS

Prospectus Highlights...........................................................

Fund Expenses..................................................................

Financial Highlights..........................................................

The Fund and Its Investment Objectives........................................

Investment Policies and
Strategy......................................................................

Descriptions of Investments...................................................

Risks Associated with the Fund's Investment Policies and Investment Techniques.

Investment Restrictions ......................................................

Yields and Total Return........................................................

Distribution of Fund Shares....................................................

Determination of Net Asset Value...............................................

Purchase and Redemption of Shares..............................................

Dividends......................................................................

Management of the Fund.........................................................

Tax Considerations.............................................................

Shareholder Information........................................................

Other
Parties.......................................................................

Shareholder
Inquiries......................................................................

PROSPECTUS HIGHLIGHTS

Harding, Loevner Funds, Inc. is a no-load, open-end
management investment company that currently has
four separate diversified Portfolios, each of which
has distinct investment objectives and policies.
There is no assurance that a Portfolio will achieve
its investment objective. For more information,
refer to "The Fund and Its Investment Objectives."

Investment Adviser

Harding, Loevner Management, L.P. ("HLM"), which manages approximately $1.3
billion in assets for private investors and institutions, serves as investment
adviser to the Fund. HLM provides the Fund with business and asset management
services, including investment research and advice and determining which
portfolio securities shall be purchased or sold on behalf of the Fund. For more
information, refer to "Management of the Fund."

Administrator

Investors Capital Services, Inc. ("Investors
Capital") serves as administrator to the Fund,
supervising the general day-to-day business
activities and operations of the Fund other than
investment advisory activities. For more
information, refer to "Management of the Fund."

Distributor

AMT Capital serves as the exclusive distributor of shares of the Fund's
Portfolios.

How to Invest

Shares of each Portfolio may be purchased without any sales charges, at their
net asset value next determined, after receipt of the order by submitting an
Account Application to Investors Capital and wiring federal funds to AMT
Capital's "Fund Purchase Account" at Investors Bank & Trust Company (the
"Transfer Agent"). The Portfolios are not available for sale in all states. For
information about the Fund's availability, contact an account representative at
Investors Capital or at AMT Capital.

The minimum initial investment per Portfolio is $100,000. There is no minimum
amount for subsequent investments. There are no sales commissions (loads) or
12b-1 fees. For more information, refer to "Purchase and Redemption of Shares."

How to Redeem Shares

Shares of each Portfolio may be redeemed, without charge, at their
net asset value next determined, after receipt by either the Transfer
Agent or Investors Capital of the redemption request. For more information,
refer to "Purchase and Redemption of Shares."

Risks

Prospective investors should consider certain risks associated with an
investment in any Portfolio. There is no assurance that a Portfolio will achieve
its investment objective. Each Portfolio invests in securities of companies
based outside of the United States. Investments in foreign securities involve
risks not associated with investments in securities issued by United States
entities. For more information, refer to "Investment Policies and Strategy,"
"Descriptions of Investments," and "Risks Associated with the Fund's Investment
Policies and Investment Techniques."

FUND EXPENSES

The following table illustrates the expenses and fees that a shareholder of the
Fund can expect to incur. The purpose of this table is to assist the investor in
understanding the various expenses that an investor in the Fund will bear
directly or indirectly.

Shareholder Transaction Expenses

Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fees None

Annual Fund Operating Expenses (after expense reimbursements, shown as a
percentage of average net assets)

Total Other
Expenses Total
Advisory 12b-1 (after expense Operating
Fees Fees reimbursements) Expenses
International Equity 0.75% None 0.25%(a) 1.00% (a)
Portfolio
Global Equity Portfolio 1.00% None 0.25% (a) 1.25% (a)
Multi-Asset Global 1.00% None 0.25% (a) 1.25% (a)
Portfolio
Emerging Markets 1.25% None 0.50% (a) 1.75% (a)
Portfolio

(a) Until further notice to shareholders, HLM has voluntarily agreed to cap the
total operating expenses at 1.00%, 1.25%, 1.25% and 1.75% (on an annualized
basis) of the average daily net assets of the International Equity Portfolio,
Global Equity Portfolio, Multi-Asset Global Portfolio and Emerging Markets
Portfolio, respectively. Without such cap, the total operating expenses (on an
annualized basis) for International Equity Portfolio, Global Equity Portfolio,
Multi-Asset Global Portfolio and Emerging Market Portfolio are estimated to be
1.06%, 1.37%, 2.17% and 2.00%, respectively, of their average daily net assets
(of which 0.16%, 0.22%, 1.02% and 0.60% is "other expenses"). Other expenses for
the Emerging Markets Portfolio are based on estimated amounts for the current
fiscal year. Certain portions of the transaction expenses (i.e. brokerage
commissions) are not included in the expenses subject to the cap described
above. See "Investment Policies and Strategy - Portfolio Turnover."

The following table illustrates the expenses that an investor would pay on each
$1,000 increment of its investment over various time periods, assuming a 5%
annual return. As noted in the table above, the Fund charges no redemption fees
of any kind.

Expenses Per $1,000 Investment (including expense
waivers and reimbursements)
<TABLE>
<S> <C> <C> <C> <C>

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
International Equity Portfolio $10 $32 $55 $122
Global Equity Portfolio $13 $40 $69 $151
Multi-Asset Global Portfolio $13 $40 $69 $151
Emerging Markets Portfolio $18 $55 $95 $206

</TABLE>

These examples should not be considered a representation of future expenses or
performance. Actual operating expenses and annual returns may be greater or less
than those shown.

FINANCIAL HIGHLIGHTS

The financial information in the following tables, which is included in the
financial statements of the Fund, has been audited by Ernst & Young LLP,
independent auditors. The audited financial statements for the period ended
October 31, 1998 are incorporated by reference in the Statement of Additional
Information. The Emerging Markets Portfolio had no operations through October
31, 1998. The International Equity Portfolio,
previously the AMT Capital Fund, Inc. - HLM International Equity Portfolio (the
"AMT Capital Portfolio"), commenced operations on May 11, 1994. Effective as of
the close of business on October 31, 1996, the AMT Capital Portfolio merged into
the International Equity Portfolio pursuant to shareholder approval of the
reorganization on October 30, 1996. The financial information should be read
in conjunction with the financial statements, which can be obtained upon
request without charge.

International Equity Portfolio

For the Year For the Year For the Ten For the Year For the Period
Ended Ended Months Ended Ended Ended
Oct. 31, 1998 Oct. 31, 1997 Oct. 31, 1996 Dec. 31, 1995 Dec. 31, 1994*

Per Share Data
Net asset value, beginning of
period $11.79 $11.61 $10.77 $ 9.71 10.00

Increase (Decrease) in Net
Assets from Operations
Investment income, net 0.14 0.13 0.08 0.10 0.04

Net realized and unrealized gain
(loss) on investments and foreign
currency-related transactions
(0.13) 0.05 (a) 0.97 1.06 (0.29)
---------------------------------- --------------- --------------- ------------------

Net increase (decrease) from
investment operations 0.01 0.18 1.05 1.16 (0.25)

---------------------------------- --------------- --------------- ------------------

Distributions to Shareholders
from
Investment income, net 0.11 0.00 (b) 0.08 0.10 0.03

Excess of investment income, net - - 0.03 - -

Net realized gain on investments
and foreign currency-related transactions 0.07 - 0.10 - -

Excess of net realized gain
on investments and foreign
currency-related transactions - - - - 0.01
---------------------------------- --------------- --------------- ------------------

Total distributions 0.18 0.00 0.21 0.10 0.04
---------------------------------- --------------- --------------- ------------------

Net asset value, end of period $ 11.62 $ 11.79 $ 11.61 $ 10.77 $ 9.71
================================== =============== =============== ==================

Total Return 0.06% 1.57% 9.81% (c) 11.99% (2.47%) (c)
- ------------

Ratios/Supplemental Data
Net assets, end of period (000's) $326,056 $ 387,304 $241,357 $ 67,727 $ 8,904

Ratio of expenses to average net 1.00% 1.00% 1.00% (d) 0.99% 0.95% (d)
assets

Ratio of investment income, net 1.14% 1.07% 1.29% (d) 1.30% 1.13% (d)
to average net assets

Decrease reflected in above
ratios
due to waiver of investment
advisory
and administration fees and
reimbursement of other expenses 0.04% 0.06% 0.14% (d) 0.54% 1.33% (d)

Portfolio turnover 33% 31% 17% (c) 28% 27% (c)

</TABLE>

(a) Includes the effect of net realized gains prior to a significant increase
in shares outstanding.
(b) Rounds to less than $0.01
(c) Not Annualized
(d) Annualized
* Commencement of Operations was May 11, 1994

Global Equity Portfolio Multi-Asset Global Portfolio
--------------------------------------------- ---------------------------------------------

For the Year For the Period From For the Year For the Period
Ended Dec. 1, 1996* to Ended From Nov. 1, 1996**
Oct. 31, 1998 Oct. 31, 1997 Oct. 31, 1998 To Oct. 31, 1997

------------------- ---------------------- ----------------- --------------------

Per Share
Data
Net asset value, beginning of $18.70 $17.58 (a) $11.26 $10.00
period

Increase in Net Assets from Operations
Investment income, net 0.20 0.19 0.52 0.25

Net realized and unrealized gain on
investments
and foreign currency-related transactions (0.55) 0.94 0.09 1.04

---------------- ---------------------- ----------------- --------------------

Net increase from investment
operations (0.35) 1.13 0.61 1.29
---------------- ---------------------- ----------------- --------------------

Distributions to Shareholders from:
Investment income, net 0.25 0.01 0.26 0.03

Net realized gain from investments and
foreign currency-related transactions 1.94 - 0.20 -

---------------- ---------------------- ----------------- --------------------

Total distributions 2.19 0.01 0.46 1.26

---------------- ---------------------- ----------------- --------------------

Net asset value, end of period $16.16 $ 18.70 $ 11.41 $11.26
- ------------------------------
================ ====================== ================= ====================

Total Return (2.46%) 6.45% (b) 5.53% 12.92%

Ratios/Supplemental Data
Net assets, end of period (000's) $30,763 $64,882 $6,327 $5,175

Ratio of net operating expenses to
average net assets 1.25% 1.25% (c) 1.25% 1.25%

Ratio of investment income, net to
average net assets 0.86% 1.05% (c) 2.58% 2.50%

Decrease reflected in above expense ratios
due to waiver of investment advisory
and reimbursement of other expenses 0.11% 0.12% (c) 0.71% 0.92%

Portfolio turnover 67% 39% (b) 29% 36%

</TABLE>

(a) The beginning net asset value of the Portfolio was equal to the total Net
Asset Value, as converted, of the outstanding Partnership Units
of Harding, Loevner Management, L.P.'s -
Global Equity Limited Partnership ("GELP") as of
November 30, 1996
(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

THE FUND AND ITS INVESTMENT OBJECTIVES

Harding, Loevner Funds, Inc. is a no-load, open-end management investment
company that currently has four separate diversified portfolios, each of which
has distinct investment objectives and policies. There is no assurance that a
Portfolio will achieve its investment objective.

The investment objective and policies of each Portfolio are described below.
Except as otherwise indicated, the investment policies may be changed at any
time by the Fund's Board of Directors to the extent that such changes are
consistent with the investment objective of the applicable Portfolio. However,
each Portfolio's investment objective is fundamental and may not be changed
without a majority vote of the Portfolio's outstanding shares, which is defined
as the lesser of (a) 67% of the shares of the applicable Portfolio present or
represented if the holders of more than 50% of the shares are present or
represented at the shareholders' meeting, or (b) more than 50% of the shares of
the applicable Portfolio (hereinafter, "majority vote"). The investment
objective of each of the Portfolios is:

Name of Portfolio Investment Objective

International Equity Portfolio To seek
long-term capital appreciation
through investments in equity
securities of companies based
outside the United States.

Global Equity Portfolio To seek
long-term capital appreciation
through investments in equity
securities of companies based
both inside and outside the
United States.

Multi-Asset Global Portfolio To seek
long-term capital appreciation
and a growing stream of current
income through investments in
equity and debt securities of
companies based both inside and
outside the United States and
debt securities of the United
States and foreign governments
and their agencies and
instrumentalities.

Emerging Markets Portfolio To seek
long-term capital appreciation
through investments in equity
securities of companies based
in developing markets outside
the United States.

INVESTMENT POLICIES AND STRATEGY

International Equity Portfolio

The International Equity Portfolio invests at least 65% of its total assets in
common stocks, securities convertible into such common stocks (including
American Depositary Receipts ("ADRs") and European Depositary Receipts
("EDRs")), closed-end investment companies, and rights and warrants issued by
companies that are based outside the United States. The Portfolio may invest in
forward foreign currency exchange contracts, equity derivative securities such
as options on common stocks and options, futures and options on futures on
foreign common stock indices. The Portfolio also may invest in securities of
U.S. companies which derive, or are expected to derive, a significant portion of
their revenues from their foreign operations, although under normal
circumstances not more than 15% of the Portfolio's total assets will be invested
in securities of U.S. companies. The Portfolio also may invest up to 35% of its
total assets in the types of short-term securities and in other debt securities
described under the caption "Descriptions of Investments" below.

The Portfolio may invest up to 20% of its total assets in convertible securities
and debt securities which are rated below investment-grade, that is, rated below
Baa by Moody's Investors Service, Inc. ("Moody's") or below BBB by Standard &
Poor's Corporation ("Standard & Poor's," or "S&P"), "junk bonds" and in unrated
securities judged to be of equivalent quality as determined by HLM.

The Portfolio will invest broadly in the available universe of common stocks of
companies domiciled in at least three countries in the following groups: (1)
Europe, including Austria, Belgium, Denmark, Finland, France, Germany, Ireland,
Italy, Luxembourg, the Netherlands, Norway, Spain, Sweden, Switzerland, and the
United Kingdom; (2) the Pacific Rim, including Australia, Hong Kong, Japan,
Malaysia, New Zealand, and Singapore; (3) Canada; and (4) countries with
"emerging markets" as defined by Morgan Stanley Capital International ("MSCI").
At least 65% of total assets will be denominated in at least three currencies
other than the U.S. dollar.

HLM's international equity investment approach is "bottom up." The approach
seeks to identify companies with excellent long-term business prospects, and
then to select from among them those whose stocks appear to offer attractive
absolute returns. HLM's investment criteria include both growth and value
considerations. HLM seeks companies that it believes have strong balance sheets,
sustainable internal growth, superior financial returns and defensible business
franchises. Typically, HLM will only invest in companies that it has analyzed
for a number of years. Country allocation and sector weightings reflect the
results of stock selection, which itself is strongly influenced by HLM's
cyclical and secular outlook for various industries, sectors, and national
economies. Explicit country or sector allocation decisions are taken only when
necessary to ensure that portfolios are well-diversified. HLM does not hedge
foreign currency exposure, except on rare occasions when it has a strong view on
the prospects for a particular currency or when hedging is desirable to improve
portfolio diversification. Currency hedging is done through the use of forward
contracts or options.

Portfolio Turnover. Portfolio turnover will depend on factors such as volatility
in the markets that the Portfolio invests in, or the variability of cash flows
into and out of the Portfolio. Portfolio turnover is expected to be low,
generally below 50%, due to the emphasis on stock selection.

Global Equity Portfolio

The Global Equity Portfolio invests at least 65% of its total assets in common
stocks, securities convertible into such common stocks (including ADRs and
EDRs), closed-end investment companies, and rights and warrants issued by
companies that are based both inside and outside the United States. The
Portfolio may invest in forward foreign currency exchange contracts, equity
derivative securities such as options on common stocks and options, futures and
options on futures on foreign common stock indices. The Portfolio also may
invest up to 35% of its total assets in the types of short-term securities and
in other debt securities described under the caption "Descriptions of
Investments" below.

The Portfolio may invest up to 20% of its total assets in convertible securities
and debt securities which are rated below investment-grade.

The Portfolio will invest broadly in the available universe of common stocks of
companies domiciled in one of at least three countries including the United
States and the countries listed above in the description of the International
Equity Portfolio's investment policies and strategy. At least 65% of total
assets will be denominated in at least three currencies including the U.S.
dollar.

HLM's "bottom up" approach also is utilized for this Portfolio (see
International Equity Portfolio, above). HLM does not hedge foreign currency
exposure, except on rare occasions when it has a strong view on the prospects
for a particular currency or when hedging is desirable to improve portfolio
diversification. Currency hedging is done through the use of forward contracts
or options.

Multi-Asset Global Portfolio

The Multi-Asset Global Portfolio invests in common stocks, securities
convertible into such common stocks (including ADRs and EDRs), closed-end
investment companies, debt securities and rights and warrants issued by
companies that are based both inside and outside the United States and debt
securities of the United States and foreign governments and their agencies and
instrumentalities. The Portfolio may invest in forward foreign currency exchange
contracts, equity derivative securities such as options on common stocks and
options, futures and options on futures on foreign common stock indices. The
Portfolio also may invest its assets in the types of short-term securities
described under the caption "Descriptions of Investments" below.

The Portfolio will invest broadly in the available universe of equity and debt
securities of companies and debt securities of the United States and foreign
governments and their agencies and instrumentalities domiciled in at least three
countries including the United States. HLM's "bottom up" approach is utilized
for the selection of equity and fixed income investments for this Portfolio (see
International Equity Porfolio, above). While the Portfolio will generally
emphasize equity investments, the allocation of the Portfolio among equity,
fixed income and cash equivalent investments may range widely, and will vary
over time according to HLM's current assessment of the relative risk and
potential return of alternative investments. At least 65% of total assets will
be denominated in at least three currencies including the U.S. dollar.

HLM does not hedge foreign currency exposure, except on rare occasions when it
has a strong view on the prospects for a particular currency or when hedging is
desirable to improve portfolio diversification. Currency hedging is done through
the use of forward contracts or options.

Emerging Markets Portfolio

The Emerging Markets Portfolio invests at least 65% of its total assets in
common stocks, securities convertible into such common stocks (including ADRs
and EDRs), closed-end investment companies, and rights and warrants issued by
companies that are based in developing markets outside the United States. The
Portfolio may invest in forward foreign currency exchange contracts, equity
derivative securities such as options on common stocks and options, futures and
options on futures on foreign common stock indices. The Portfolio also may
invest in securities of U.S. companies which derive, or are expected to derive,
a significant portion of their revenues from their foreign operations, although
under normal circumstances not more than 15% of the Portfolio's total assets
will be invested in securities of U.S. companies. The Portfolio also may invest
up to 35% of its total assets in the types of short-term securities and in other
debt securities described under the caption "Descriptions of Investments" below.

The Portfolio may invest up to 20% of its total assets in convertible securities
and debt securities which are rated below investment-grade.

The Portfolio will invest broadly in the available universe of common stocks of
companies domiciled in one of at least three countries listed below under the
caption "Description of Investments - Emerging Markets Securities." At least 65%
of total assets will be denominated in at least three currencies other than the
U.S. dollar.

HLM's "bottom up" approach is utilized for this Portfolio (see International
Equity Portfolio, above). HLM does not hedge foreign currency exposure, except
on rare occasions when it has a strong view on the prospects for a particular
currency or when hedging is desirable to improve portfolio diversification.
Currency hedging is done through the use of forward contracts or options.

DESCRIPTIONS OF INVESTMENTS

The following briefly describes some of the different types of securities in
which each Portfolio, unless otherwise specified, may invest and investment
techniques in which each Portfolio may engage, subject to each Portfolio's
investment objective and policies. For a more extensive description of certain
of these assets and the risks associated with them, see the Statement of
Additional Information.

Equity Securities. The Portfolios will invest in various types of equity
securities, including common stocks, preferred stocks, convertible securities,
ADRs, EDRs, rights and warrants. The stocks that the Portfolios will invest in
may be either growth-oriented or value-oriented. Growth-oriented stocks are the
stocks of companies that are believed to have internal strengths, such as good
financial resources, a satisfactory rate of return on capital, a favorable
industry position, and superior management. Value-oriented stocks have lower
price multiples (either price/earnings or price/book) than other stocks in their
industry and sometimes also can display weaker fundamentals such as growth of
earnings and dividends. Rights and warrants are instruments which give the
holder the right to purchase the issuer's securities at a stated price during a
stated term.

Foreign Securities. The Portfolios will invest in foreign securities. Foreign
securities include equity, foreign-fixed income, or derivative securities
denominated in currencies other than the U.S. dollar, including any single
currency or multi-currency units, plus sponsored and unsponsored ADRs and EDRs.
ADRs typically are issued by a U.S. bank or trust company and evidence ownership
of underlying securities issued by a foreign corporation. EDRs, which sometimes
are referred to as Continental Depositary Receipts, are receipts issued in
Europe, typically by foreign banks and trust companies, that evidence ownership
of either foreign or domestic underlying securities. Unsponsored ADRs and EDRs
differ from sponsored ADRs and EDRs in that the establishment of unsponsored
ADRs and EDRs is not approved by the issuer of the underlying securities. Risks
associated with investing in foreign securities are described under the caption
"Risks Associated with the Fund's Investment Policies and Investment Techniques
- - Foreign Investments" below.

Emerging Markets Securities. For purposes of its investment policies, the Fund
defines an emerging market as any country, the economy and market of which is
generally considered to be emerging or developing by MSCI or, in the absence of
an MSCI classification, by the World Bank. Under this definition, the Fund
considers emerging markets to include all markets except Australia, Austria,
Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy,
Japan, the Netherlands, New Zealand, Norway, Singapore, Spain, Sweden,
Switzerland, the United Kingdom, and the United States.

Emerging Markets Debt Instruments. The Emerging Markets Portfolio and the
Multi-Asset Global Portfolio may invest in zero coupon securities and
convertible debt or other debt securities acquired at a discount. A portion of
the Portfolio's sovereign debt securities may be acquired at a discount. The
Portfolio will purchase only such securities to the extent consistent with the
Portfolio's investment objectives.

Foreign Governments and International and Supranational Agency Securities. The
Portfolios may purchase debt obligations issued or guaranteed by foreign
governments or their subdivisions, agencies and instrumentalities, and debt
obligations issued or guaranteed by international agencies and supranational
entities.

Convertible Securities. The Portfolios may invest in convertible preferred and
debt securities which are securities that may be converted into or exchanged
for, at either a stated price or stated rate, underlying shares of common stock.
Convertible securities have general characteristics similar to both fixed-income
and equity securities. Although to a lesser extent than with fixed-income
securities generally, the market value of convertible fixed income securities
tends to decline as interest rates increase and, conversely, tends to increase
as interest rates decline. In addition, because of the conversion feature, the
market value of convertible securities tends to vary with fluctuations in the
market value of the underlying common stocks and therefore also will react to
variations in the general market for equity securities. A unique feature of
convertible securities is that as the market price of the underlying common
stock declines, convertible securities tend to trade increasingly on a yield
basis, and so may not experience market value declines to the same extent as the
underlying common stock. When the market price of the underlying common stock
increases, the prices of the convertible securities tend to rise as a reflection
of the value of the underlying common stock. While no securities investments are
without risk, investments in convertible securities generally entail less risk
than investments in common stock of the same issuer.

Foreign Currency Transactions. The Portfolios do not hedge foreign currency
exposure, except on rare occasions when HLM has a strong view on the prospects
for a particular currency or when hedging is desirable to improve portfolio
diversification. Each Portfolio will conduct its currency transactions either on
a spot (cash) basis at the rate prevailing in the currency exchange market, or
through entering into forward contracts to purchase or sell currency. A forward
currency contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
The use of forward currency contracts does not eliminate fluctuations in the
underlying prices of the securities, but it does establish a rate of exchange
that can be achieved in the future. In addition, although forward currency
contracts limit the risk of loss due to a decline in the value of the hedged
currency, at the same time, they also limit any potential gain that might result
should the value of the currency increase. Each Portfolio will segregate cash,
or liquid portfolio securities in an amount at all times equal to or
exceeding their commitment with respect to contracts that are not part of a
designated hedge.

U.S. Treasury and other U.S. Government and
Government Agency Securities. Each Portfolio may
purchase securities issued by or guaranteed as to
principal and interest by the U.S. Government, its
agencies or instrumentalities and supported by the
full faith and credit of the United States ("U.S.
Government Securities"). Each Portfolio also may
purchase securities issued by a U.S.
Government-sponsored enterprise or federal agency
that is supported either by its ability to borrow
from the U.S. Treasury (e.g., Student Loan
Marketing Association) or by its own credit
standing (e.g., Federal National Mortgage
Association). Such securities do not constitute
direct obligations of the United States but are
issued, in general, under the authority of an Act
of Congress.

Inflation-Indexed Securities. Each Portfolio may invest in securities with a
nominal return linked to the inflation rate from bond markets worldwide such as
the U.S. Treasury Department's recently announced "inflation-protection" issues.
The initial issues are ten-year notes which are issued quarterly. Other
maturities will be added at a later date. The principal is adjusted for
inflation (payable at maturity) and the semi-annual interest payments equal a
fixed percentage of the inflation-adjusted principal amount. The inflation
adjustments are based upon the Consumer Price Index for Urban Consumers
("CPI-U"). These securities may also be eligible for coupon stripping under the
U.S. Treasury "STRIPS" program.

Corporate Debt Instruments. Each Portfolio may purchase commercial paper,
short-term notes and other obligations of U.S. and foreign corporate issuers
meeting the Portfolio's credit quality standards (including variable rate
notes). Other than the allowable 20% of a Portfolio's total assets invested in
below-investment grade convertible and other debt securities, all investments in
corporate debt instruments will be rated at least "BBB" or "A-1" (in the case of
commercial paper) by S&P, "Baa" or "P-1" (in the case of commercial paper) by
Moody's, or of comparable quality as determined by HLM.

Repurchase Agreements. Each Portfolio may enter into repurchase agreements under
which a bank or securities firm (that is a dealer in U.S. Government Securities
reporting to the Federal Reserve Bank of New York) agrees, upon entering into
the contract, to sell U.S. Government Securities to a Portfolio and repurchase
such securities from the Portfolio at a mutually agreed-upon price and date.
Repurchase agreements will generally be restricted to those that mature within
seven days. Securities subject to repurchase agreements will be held by the
Company's custodian, sub-custodian or in the Federal Reserve/Treasury book-entry
system. The Portfolios will engage in such transactions with parties
selected on the basis of such party's creditworthiness and will enter into
repurchase agreements only with financial institutions which are deemed by
HLM to be in good financial standing and which have been approved by the
Board of Directors.

For descriptions about other types of investments that each portfolio may invest
in, including, but not limited to warrants, bank obligations, reverse repurchase
agreements, when issued securities, futures contracts, stock index options,
options on futures contracts, securities lending, and the risks related to those
investments, see "Supplemental Descriptions of Investments," "Supplemental
Investment Techniques," and "Supplemental Discussion of Risks Associated with
the Fund's Investment Policies and Investment Techniques" in the Statement of
Additional Information.

RISKS ASSOCIATED WITH THE FUND'S INVESTMENT POLICIES
AND INVESTMENT TECHNIQUES

A more detailed discussion of the risks associated with the investment policies
and investment techniques of the Portfolios appears in the Statement of
Additional Information.

Foreign Investments. Securities issued by foreign governments, foreign
corporations, international agencies and obligations of foreign banks involve
risks not associated with securities issued by U.S. entities. Changes in foreign
currency exchange rates may affect the value of investments of a Portfolio. With
respect to certain foreign countries, there is the possibility of expropriation
of assets, confiscatory taxation and political or social instability or
diplomatic developments that could affect investment in those countries. There
may be less publicly available information about a foreign financial instrument
than about a United States instrument and foreign entities may not be subject to
accounting, auditing and financial reporting standards and requirements
comparable to those of United States entities. A Portfolio could encounter
difficulties in obtaining or enforcing a judgment against the issuer in certain
foreign countries. In addition, certain foreign investments may be subject to
foreign withholding or other taxes, although the Portfolio will seek to minimize
such withholding taxes whenever practical. Investors may be able to deduct such
taxes in computing their taxable income or to use such amounts as credits
against their United States income taxes if more than 50% of the Portfolio's
total assets at the close of any taxable year consist of stock or securities of
foreign corporations. Ownership of unsponsored ADRs may not entitle the
Portfolio to financial or other reports from the issuer to which it would be
entitled as the owner of sponsored ADRs. See "Tax Considerations."

Emerging Markets Securities. The risks of investing in foreign securities may be
intensified in the case of investments in issuers domiciled or doing substantial
business in emerging markets or countries with limited or developing capital
markets. Security prices and currency valuations in emerging markets can be
significantly more volatile
than in the more developed nations of the world, reflecting the greater
uncertainties of investing in less established markets and economies. In
particular, countries with emerging markets may have relatively unstable
governments, present the risk of sudden adverse government action and even
nationalization of businesses, restrictions on foreign ownership, or
prohibitions of repatriation of assets, and may have less protection of property
rights than more developed countries. The economies of countries with emerging
markets may be predominantly based on only a few industries, may be highly
vulnerable to changes in local or global trade conditions, and may suffer from
extreme and volatile debt burdens or inflation rates. Local securities markets
may trade a small number of securities and may be unable to respond effectively
to increases in trading volume, potentially making prompt liquidation of
substantial holdings difficult or impossible at times. Transaction settlement
and dividend collection procedures may be less reliable in emerging markets than
in developed markets. Securities of issuers located in countries with emerging
markets may have limited marketability and may be subject to more abrupt or
erratic price movements.

Derivatives and Hedging. The Portfolios may engage in hedging and other
strategic transactions and certain other investment practices which may entail
certain risks.

Derivatives involve special risks, including possible default by the other party
to the transaction, illiquidity and, to the extent HLM's view as to certain
market movements is incorrect, the risk that the use of Derivatives could result
in greater losses than if they had not been used. Use of put and call options
could result in losses to a Portfolio, force the purchase or sale of portfolio
securities at inopportune times or for prices higher or lower than current
market values or cause the Portfolio to hold a security it might otherwise sell.
The use of options and futures transactions entails certain special risks. In
particular, the variable degree of correlation between price movements of
futures contracts and price movements in the related portfolio position of a
Portfolio could create the possibility that losses on the Derivative will be
greater than gains in the value of the Portfolio's position. The loss from
investing in futures transactions which are unhedged or uncovered, is
potentially unlimited. In addition, futures and options markets could be
illiquid in some circumstances and certain over-the-counter options could have
no markets. A Portfolio might not be able to close out certain positions without
incurring substantial losses. To the extent a Portfolio utilizes futures and
options transactions for hedging, such transactions should tend to minimize the
risk of loss due to a decline in the value of the hedged position and, at the
same time, limit any potential gain to the Portfolio that might result from an
increase in value of the position. Finally, the daily variation margin
requirements for futures contracts create a greater ongoing potential financial
risk than would purchases of options, in which case the exposure is limited to
the cost of the initial premium and transaction costs. Losses resulting from the
use of Derivatives will reduce the Portfolio's net asset value, and possibly
income, and the losses may be greater than if Derivatives had not been used.
Additional information regarding the risks and special considerations associated
with Derivatives appears in the Statement of Additional Information.

High Yield/High Risk Securities. Each Portfolio may invest up to 20% of its
total assets in convertible securities and debt securities rated lower than Baa
by Moody's or BBB by S&P, or of equivalent quality as determined by HLM
(commonly referred to as "junk bonds"). The lower the ratings of such debt
securities, the greater their risks render them like equity securities. Each
Portfolio will invest no more than 10% of its total assets in securities rated B
or lower by Moody's or S&P, or of equivalent quality, but may invest in
securities rated C by Moody's or D by S&P, or the equivalent, which may be in
default with respect to payment of principal or interest.

Illiquid and Restricted Securities. Each Portfolio will not invest more than 15%
of the value of its net assets in illiquid securities. Illiquid securities are
securities which may not be sold or disposed of in the ordinary course of
business within seven days at approximately the value at which a Portfolio has
valued the investments, and include securities with legal or contractual
restrictions on resale, time deposits, repurchase agreements having maturities
longer than seven days and securities that do not have readily available market
quotations. In addition, a Portfolio may invest in securities that are sold in
private placement transactions between their issuers and their purchasers and
that are neither listed on an exchange nor traded over-the counter. These
factors may have an adverse effect on the Portfolio's ability to dispose of
particular securities and may limit a Portfolio's ability to obtain accurate
market quotations for purposes of valuing securities and calculating net asset
value and to sell securities at fair value. If any privately placed securities
held by a Portfolio are required to be registered under the securities laws of
one or more jurisdictions before being resold, the Portfolio may be required to
bear the expenses of registration.

Repurchase Agreements. In the event the other party to a repurchase agreement
becomes subject to a bankruptcy or other insolvency proceeding or such party
fails to satisfy its obligations thereunder, a Portfolio could (i) experience
delays in recovering cash or the securities sold (and during such delay the
value of the underlying securities may change in a manner adverse to the
Portfolio) or (ii) lose all or part of the income, proceeds or rights in the
securities to which the Portfolio would otherwise be entitled.

INVESTMENT RESTRICTIONS

The following fundamental investment restrictions apply to each Portfolio and
may be changed with respect to a particular Portfolio only by the majority vote
of that Portfolio's outstanding shares. Accordingly, no Portfolio may:

(a) invest more than 5% of its total assets in securities of any one
issuer, other than securities issued by the U.S. Government, its
agencies and instrumentalities, or purchase more than 10% of the voting
securities of any one issuer, with respect to 75% of a Portfolio's
total assets;

(b) invest more than 25% of its total assets in the securities
of companies primarily engaged in any one industry other than the U.S.
Government, its agencies or instrumentalities. Finance companies as a
group are not considered a single industry for purposes of this policy;

(c) borrow money, except through reverse repurchase agreements or from
a bank for temporary or emergency purposes in an amount not exceeding
one third of the value of its total assets nor will the Portfolios
borrow for leveraging purposes. In addition, although not a fundamental
policy, the Portfolios will repay any money borrowed before any
additional portfolio securities are purchased. See the Statement of
Additional Information for a further description regarding reverse
repurchase agreements; (d) purchase or sell real estate (other than
marketable securities representing interests in, or backed by, real
estate and securities of companies that deal in real estate or
mortgages) or real estate limited partnerships, or purchase or sell
physical commodities or contracts relating to physical commodities; or

(e) purchase or retain the securities of any open-end investment
companies.

The above percentage limits are based upon current asset values at the time of
the applicable transaction; accordingly, a subsequent change in asset or
security values will not affect a transaction which was in compliance with the
investment restrictions at the time such transaction was effected. See the
Statement of Additional Information for additional investment restrictions.

YIELDS AND TOTAL RETURN

The Portfolios' yield for any 30-day (or one month) period is computed by
dividing the net investment income per share earned during such period by the
maximum public offering price per share on the last day of the period, and then
annualizing such 30-day (or one month) yield in accordance with a formula
prescribed by the Commission which provides for compounding on a semiannual
basis. The Portfolios may from time to time advertise their total return. Any
total return quotations advertised will reflect the average annual compounded
rate of return during the designated time period based on a hypothetical initial
investment and the redeemable value of that investment at the end of the period.

The Portfolios will at times compare their performance to applicable published
indices, and also may disclose their performance as ranked by certain analytical
services. See the Statement of Additional Information for more information about
the calculation of yields and total returns. Performance figures are based upon
historical earnings and are not intended to indicate future performance.

DISTRIBUTION OF FUND SHARES

Shares of the Fund are distributed by AMT Capital pursuant to a Distribution
Agreement (the "Distribution Agreement") dated as of May 29, 1998 between the
Fund and AMT Capital. No fees are payable by the Fund pursuant to the
Distribution Agreement.

DETERMINATION OF NET ASSET VALUE

The "net asset value" per share of each Portfolio is calculated as of the close
of business on days when the New York Stock Exchange is open for business,
(hereinafter, "Business Day"). Each Portfolio determines its net asset value per
share by subtracting that Portfolio's liabilities (including accrued expenses
and dividends payable) from the total value of the Portfolio's investments and
other assets and dividing the result by the total outstanding shares of the
Portfolio.

For purposes of calculating each Portfolio's net asset value, securities are
valued as follows: (1) all portfolio securities for which over-the-counter
("OTC") market quotations are readily available are valued at their last sale
price, or if there are no trades, at the latest bid price; (2) deposits and
repurchase agreements are valued at their cost plus accrued interest unless HLM
determines in good faith, under procedures established by and under the general
supervision of the Fund's Board of Directors, that such value does not
approximate the fair value of such assets; (3) U.S. securities listed or traded
on an exchange are valued at their last sale price on that exchange, or if there
are no trades, at the mean between the latest bid and asked prices; (4) Non-U.S.
securities listed or traded on an exchange are valued at their last sale price
on that exchange on the current day, or if there are no trades on that day, at
the most recent sale price available on that exchange, (5) securities which are
traded both in the OTC market and on a stock exchange will be valued according
to the broadest and most representative market; (6) short-term obligations with
maturities of 60 days or less are valued at amortized cost, which constitutes
fair value as determined by the Fund's Board of Directors. Amortized cost
involves valuing an instrument at its original cost to the Portfolio and
thereafter assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument; and (7) the value of other assets for which market
quotations are not readily available will be determined in good faith by HLM at
fair value under procedures established by and under the general supervision of
the Fund's Board of Directors. Quotations of foreign securities denominated in a
foreign currency are converted to a U.S. dollar-equivalent at exchange rates
obtained from an automated pricing service at 11:00 EST at the bid price except
for the Royal Currencies (United Kingdom, Ireland, European Currency Unit,
Australia and New Zealand), which are valued at the ask price.

PURCHASE AND REDEMPTION OF SHARES

Purchases

There is no sales charge imposed by the Fund. The minimum initial investment in
any Portfolio of the Fund is $100,000; additional purchases or redemptions may
be of any amount. The Fund has authorized one or more brokers to accept, on its
behalf, purchase orders. Such brokers are authorized to designate other
intermediaries to accept purchase orders on the Fund's behalf. The Fund will be
deemed to have received a purchase order when an authorized broker or, if
applicable, a broker's authorized agent accepts the order. Share purchase orders
placed through an authorized broker or the broker's authorized designee will be
priced at the Fund's Net Asset Value next computed after they are accepted by an
authorized broker or the broker's authorized designee. With respect to purchases
of Fund shares through certain brokers: 1) a broker may charge transaction fees,
2) duplicate mailings of Fund material to shareholders who reside at the same
address may be eliminated, and 3) the minimum initial investment through certain
brokers may be less than a direct purchase with the Fund.

The offering of shares of the Fund is continuous and purchases of shares of the
Fund may be made on any Business Day. The Fund offers shares at a public
offering price equal to the net asset value next determined after receipt of a
purchase order.

Purchases of shares must be made by wire transfer of Federal funds. Share
purchase orders are effective on the date when Investors Capital, a branch
office of AMT Capital, receives a completed Account Application Form (and other
required documents) and Federal funds become available to the Fund in the Fund's
account with the Transfer Agent as set forth below. The shareholder's bank may
impose a charge to execute the wire transfer.
The wiring instructions are:

Investors Bank & Trust Company, Boston, MA
ABA#: 011-001-438
Account Name: AMT Capital Securities, L.L.C.
- Fund Purchase Account
Account #: 933333333
Reference: Harding, Loevner Funds, Inc. -
(designate Portfolio)

In order to purchase shares on a particular Business Day, a purchaser must call
Investors Capital at (212) 332-5210 prior to the close of business (normally
4:00 p.m. Eastern time) to inform the Fund of the incoming wire transfer and
must clearly indicate which Portfolio is to be purchased. If Federal funds are
received by the Fund that same day, the order will be effective on that day. If
the Fund receives notification after the above-mentioned cut-off times, or if
Federal funds are not received by the Transfer Agent, such purchase order shall
be executed as of the date that Federal funds are received.

Redemptions

The Fund will redeem all full and fractional shares of the Fund upon request of
shareholders. The redemption price is the net asset value per share next
determined after receipt by the Transfer Agent of proper notice of redemption as
described below. If such notice is received by the Transfer Agent by the close
of business (normally 4:00 p.m. Eastern time) on any Business Day, the
redemption will be effective on the date of receipt. Payment ordinarily will be
made by wire on the next Business Day but within no more than seven days from
the date of receipt. If the notice is received on a day that is not a Business
Day or after the above-mentioned cut-off times, the redemption notice will be
deemed received as of the next Business Day.

The Fund has authorized one or more brokers to accept, on its behalf, redemption
orders. Such brokers are authorized to designate other intermediaries to accept
redemption orders on the Fund's behalf. The Fund will be deemed to have received
a redemption order when an authorized broker or, if applicable, a broker's
authorized agent accepts the order. Share redemption orders placed through an
authorized broker or the broker's authorized designee will be priced at the
Fund's Net Asset Value next computed after they are accepted by an authorized
broker or the broker's authorized designee.

There is no charge imposed by the Fund to redeem shares of the Fund; however, a
shareholder's bank may impose its own wire transfer fee for receipt of the wire.
Redemptions may be executed in any amount requested by the shareholder up to the
amount such shareholder has invested in the Fund.

To redeem shares, a shareholder or any authorized agent (so designated on the
Account Application Form) must provide the Transfer Agent with the dollar or
share amount to be redeemed, the account to which the redemption proceeds should
be wired (which account shall have been previously designated by the shareholder
on its Account Application Form), the name of the shareholder and the
shareholder's account number. Shares redeemed receive dividends up to and
including the day preceding the day the redemption proceeds are wired.

A shareholder may change its authorized agent or the account designated to
receive redemption proceeds at any time by writing to the Transfer Agent with an
appropriate signature guarantee. Further documentation may be required when
deemed appropriate by the Transfer Agent.

A shareholder may request redemption by calling the Transfer Agent at (800)
247-0473. Telephone redemption is made available to shareholders of the Fund on
the Account Application Form. The Fund or the Transfer Agent employ reasonable
procedures designed to confirm that instructions communicated by telephone are
genuine. If either the Fund or the Transfer Agent does not employ such
procedures, it may be liable for losses due to unauthorized or fraudulent
instructions. The Fund or the Transfer Agent may require personal identification
codes and will only wire funds through pre-existing bank account instructions.
No bank instruction changes will be accepted via telephone.

Exchange Privilege

Shares of each Portfolio may be exchanged for shares of another Portfolio based
on the respective net asset values of the shares involved in the exchange,
assuming that shareholders wishing to exchange shares reside in states where
these mutual funds are qualified for sale. The Fund's Portfolio minimum amounts
of $100,000 would still apply. An exchange order is treated the same as a
redemption followed by a purchase. Investors who wish to make exchange requests
should telephone Investors Capital at (212) 332-5210 or the Transfer Agent at
(800) 247-0473.

DIVIDENDS

Each Portfolio will declare and pay a dividend from its net investment income,
and distributions from its realized net short-term and net long-term capital
gains, if any, at least annually by automatically reinvesting (unless a
shareholder has elected to receive cash) such dividends and distributions,
short-term or long-term capital gains in additional shares of the Portfolio at
the net asset value on the ex-date of the dividends or distributions.

MANAGEMENT OF THE FUND

Board of Directors

The Board of Directors of the Fund are responsible
for the overall management and supervision of the
Fund. The Fund's Directors are James C. Brady III,
Jane A. Freeman, Samuel R. Karetsky, David R.
Loevner and Carl W. Schafer. Additional
information about the Directors and the Fund's
executive officers may be found in the Statement of
Additional Information under the heading
"Management of the Fund - Board of Directors."

Investment Adviser

Subject to the direction and authority of the Fund's Board of Directors, HLM
provides investment advisory services to each Portfolio pursuant to Investment
Advisory Agreements, dated October 14, 1996. Under the Investment Advisory
Agreements, HLM is responsible for providing investment research and advice,
determining which portfolio securities shall be purchased or sold by each
Portfolio of the Fund, purchasing and selling securities on behalf of the
Portfolios and determining how voting and other rights with respect to the
portfolio securities of the Portfolios are exercised in accordance with each
Portfolio's investment objective, policies, and restrictions. HLM also provides
office space, equipment and personnel necessary to manage the Fund.

HLM, established in 1989, is a registered investment adviser that specializes in
global investment management for private investors and institutions. HLM
currently has approximately $1.3 billion in assets under management. HLM is
located at 50 Division Street, Suite 401, Somerville, NJ 08876. HLM manages
assets for several other registered investment companies.

HLM bears the expense of providing the above services to the Fund. For its
services, each of the International Equity Portfolio, Global Equity Portfolio,
Multi-Asset Global Portfolio and Emerging Markets Portfolio pay HLM a monthly
fee at an annual rate of 0.75%, 1.00%, 1.00% and 1.25%, respectively, of its
average daily net assets. The advisory fee paid by each Portfolio is higher than
that charged by most funds which invest primarily in U.S. securities, but not
necessarily higher than the fees charged to funds with investment objectives
similar to those of the Portfolios.

Portfolio Managers

Daniel D. Harding, CFA, (responsible for global portfolio management),
co-founder of HLM and a director of its general partner, is the firm's chief
investment officer, with overall responsibility for investment policy. Dan
served for twelve years as a senior investment manager with Rockefeller & Co.,
investment adviser to the Rockefeller family and related institutions. As
manager of the family's flagship equity, fixed income and balanced fund
portfolios, he set investment strategy and provided investment counseling to
family members, trusts and private businesses. In this capacity he also
spearheaded the diversification of the firm's investments into overseas markets.
Dan began his career as a trust investment officer at American National Bank &
Trust in Morristown, NJ. He is an honors graduate in History and International
Relations from Colgate University (1974), a Chartered Financial Analyst, and a
Chartered Investment Counselor. Dan is a trustee and treasurer of the Peck
School.

Simon Hallett, CFA, (responsible for international portfolio management), senior
portfolio manager and a director of the firm's general partner, is chairman of
the investment committee and a senior portfolio manager. Simon has managed
global portfolios for individuals and institutions since 1979, when he joined
the investment management department of London-based Buckmaster and Moore. In
1981 he moved to Hong Kong, where he began to concentrate on Asian markets, and
in 1984, joined Jardine Fleming Investment Management, one of Asia's largest and
most respected investment management companies. Simon's ultimate position at
Jardine Fleming was director in charge of a team of six portfolio managers
investing in the markets of Southeast and North Asia for a diverse clientele
comprising European pension plans, governments, and private clients, Rockefeller
& Co. among them. He joined HLM in 1991. A British subject, Simon is an honors
graduate of Oxford University in Politics, Philosophy and Economics.

Ferrill D.Roll, CFA (responsible for multi-asset global portfolio management), a
principal of the firm, is a portfolio manager and a member of the investment
committee. Ferrill has fifteen years' experience across a wide range of
international markets. For the four years prior to joining HLM in 1996, he was
general partner of Cesar Montemayor Capital, L.P., a global investment
partnership investing in fixed income, currency, and equity markets. Six years
before that, he worked in international equity sales, first at First Boston
(1985-1989) and later at Baring Securities (1989-1992), focusing primarily on
European markets. During 1990, he acted as head of Baring's German equity
research, in Frankfurt. From 1980-1984, Ferrill worked at JP Morgan, where he
advised corporate clients on foreign exchange markets and set up the currency
options trading department. He graduated from Stanford University in 1980 with a
degree in Economics.

G. "Rusty" Johnson III, CFA, (responsible for emerging markets portfolio
management), a principal of the firm, is the research manager and a member of
the investment committee. He began his career in Hong Kong in 1986, developing
computer-based arbitrage programs for Chin Tung Futures, subsequently a
subsidiary of Standard Chartered Bank. The following year he joined Jardine
Fleming Research to concentrate on Asian equities. After three years in Hong
Kong and two years in Bangkok, Rusty moved to Jardine Fleming's parent company,
Robert Fleming, in New York as an institutional broker of Asian equities. He
spent an additional year in institutional equity sales in New York with
Peregrine Securities before joining HLM in 1994. Rusty is a magna cum laude
graduate in Economics of Washington and Lee University (1986), where his program
included studies at Fu Jen University, Taiwan, and the Chinese University of
Hong Kong.

David R. Loevner, CFA, co-founder, is the chief executive officer of HLM and a
director of the firm's general partner. He serves on the investment committee,
and is responsible for the firm's administration, business development and
client service. His prior experience includes nine years with Rockefeller & Co.,
where he managed equity portfolios, counseled family members, and developed new
financial planning and asset allocation tools. David also managed a number of
professional service units within the Rockefeller family office, including the
Rockefeller Insurance Company, which he established in 1985. In 1987, David
established Rockefeller's first Asian office, in Hong Kong, from which he
directed a region-wide investment program comprising small company and venture
investments. Before Rockefeller, David worked for the World Bank, as country
economist for Brazil. He graduated summa cum laude from Princeton University
and, as a Sachs Scholar, received graduate degrees in Statistics and in
Economics from Oxford University. David is a director of the Princeton
University Investment Company, a trustee of Goucher College, an advisory trustee
of Outward Bound USA, and a Chartered Investment Counselor.

Alexander T. Walsh, CFA, a principal of the firm, is a portfolio manager and a
member of the investment committee. From 1979 through 1982, he worked in money
market trading and operations for J. Henry Schroder Bank & Trust Co., New
York. Alec joined Merrill Lynch, New York in 1982 as an account executive. In
1987 he moved to Paine Webber, where he built an institutional equity
clientele comprising Fortune 100 accounts and investment advisers. Promoted
to 1st Vice President in 1992, he remained with the firm until joining
HLM in 1994. Alec is a 1978 graduate of McGill University with a BA in North
American Studies.

S. Clarke Moody, a principal of the firm, is a research analyst. He has sixteen
years of corporate banking experience analyzing, marketing and executing
corporate finance transactions with companies across a range of industries and
geographies. Most recently, Clarke was a managing director at ABN AMRO Bank,
where he established and ran the New York-based global media and communications
finance unit. For the previous two years, he was a Director at Barclays de Zoete
Wedd in New York, where he dealt with companies in the technology and defense
industries. Clarke spent the bulk of his career at Chase Manhattan Bank, where
he focused on companies in the multinational pharmaceutical industry for seven
years in New York and Puerto Rico, and the capital goods and industrial
components industries for another four years in New York and Houston. A 1978
graduate of Colby College with a degree in English Literature, Clarke also
studied at the University of London.

Peter J. Baughan, CFA, is a securities analyst. He has fourteen years experience
analyzing and investing in companies in Asia, Europe and the U.S. He joins HLM
from Rockefeller & Co. where he has worked since 1988. With Rockefeller, Peter
spent two years in New York as an investment analyst and six years in London and
Paris as manager of the firm's European private equity investment portfolio.
From 1983-1988, Peter worked at Chase Manhattan Bank. Following credit training
and two years in international credit audit, Peter spent two years in Chase's
Jakarta office managing problem loan workouts. Peter is a 1983 graduate of the
University of North Carolina at Chapel Hill with a degree in political science.

Administrator

Pursuant to an Administration Agreement between the Fund and Investors Capital,
dated as of May 29, 1998, Investors Capital provides for administrative services
to, and assists in managing and supervising all aspects of, the general
day-to-day business activities and operations of the Fund other than investment
advisory activities, including custodial, transfer agency, dividend disbursing,
accounting, auditing, compliance and related services.

The Fund pays Investors Capital a monthly fee at an annual rate of 0.15% on the
first $500 million of the average daily net assets of the Fund, 0.10% on the
next $500 million of the average daily net assets of the Fund, and 0.05% on the
average daily net assets over $1 billion. Each Portfolio pays a proportionate
share of the fee based on its relative net assets.

Investors Capital, formerly AMT Capital Services, Inc. prior to its merger with
Investors Financial Services, Corp. on May 29, 1998, is an affiliate of
Investors Bank & Trust, Co. which serves as the Fund's custodian, fund
accounting agent and transfer agent. The senior managers of Investors Capital
are former officers of Morgan Stanley and the Vanguard Group, where they were
responsible for the private label administration group of Vanguard, which
administered nearly $10 billion in assets for 45 portfolios, respectively.

Year 2000 Problem

Many computer systems and applications in use today process transactions using
two-digit date fields for the year of the transaction, rather than the full
four digits. If these systems are not modified or replaced, transactions
occurring after 1999 could be processed as year "1900", which could result in
processing inaccuracies and computer system failures. This is commonly
known as the Year 2000 problem. Should any of the computer systems employed
by the Fund's major service providers fail to process Year 2000, that could have
a significant negative impact on the Fund's operations and the services that are
provided to the Fund's shareholders. In addition, to the extent that the
operations of issuers of securities held by the Fund are impaired by the Year
2000 problem, or prices of securities held by the Fund's decline as a result
of real or perceived problems relating to the Year 2000, the value of the Fund's
shares may be materially affected.

The Fund has been advised that the Investment Adviser, the
Distributor, the Administrator, the Custodian, and the Transfer
Agent (collectively "Service Providers") began to address the Year
2000 issue several years ago in connection with the replacement or
upgrading of certain computer systems and applications. During
1997, the Service Providers began a formal Year 2000 initiative,
which established a structured and coordinated process to deal with
the Year 2000 issue. The Service Providers report that they have
completed their assessment of the Year 2000 issues on its domestic
and international computer systems and applications. Currently,
the Board of Directors of the Fund expects that the full
integration testing of these systems and testing of interfaces with
third-party suppliers will continue through 1999. At this time the
Board of Directors of the Fund believes that the costs associated
with resolving this issue will not have a material adverse effect
on the operations of the Fund.

TAX CONSIDERATIONS

The following discussion is for general information only. An investor should
consult with his or her own tax adviser as to the tax consequences of an
investment in a Portfolio, including the status of distributions from each
Portfolio under applicable state or local law.

Federal Income Taxes

Each active Portfolio has qualified and intends to continue to qualify to be
treated as a regulated investment company ("RIC") under the Internal Revenue
Code of 1986, as amended. The Emerging Markets Portfolio intends to qualify
to be treated a regulated investment company. To qualify, a Portfolio must
meet certain income,
distribution and diversification requirements. In any year in which a Portfolio
qualifies as a RIC and distributes all of its taxable income and substantially
all of its net tax-exempt interest income on a timely basis, the Portfolio
generally will not pay U.S. federal income or excise tax. If in any year a
Portfolio should fail to qualify as a regulated investment company, the
Portfolio would be subject to federal income tax in the same manner as an
ordinary corporation, and distributions to shareholders would be taxable to such
holders as ordinary income to the extent of the earnings and profits of the
Portfolio. Distributions in excess of earnings and profits will be treated as a
tax-free return of capital, to the extent of a holder's basis in its shares, and
any excess, as a long- or short-term capital gain.

Each Portfolio intends to distribute all of its taxable income by automatically
reinvesting such amount in additional shares of the Portfolio and distributing
those shares to its shareholders, unless a shareholder elects on the Account
Application Form, to receive cash payments for such distributions. Shareholders
receiving distributions from the Fund in the form of additional shares will be
treated for federal income tax purposes as receiving a distribution in an amount
equal to the fair market value of the additional shares on the date of such a
distribution.

Dividends paid by a Portfolio from its investment company taxable income
(including interest and net short-term capital gains) will be taxable to a U.S.
shareholder as ordinary income, whether received in cash or in additional Fund
shares. Distributions of net capital gains (the excess of net long-term capital
gains over net short-term capital losses) are generally taxable to shareholders
at the applicable mid-term or long-term capital gains rates, regardless of how
long they have held their Portfolio shares. If a portion of a Portfolio's income
consists of dividends paid by U.S. corporations, a portion of the dividends paid
by the Portfolio may be eligible for the corporate dividends-received deduction.

A distribution will be treated as paid on December 31 of the current calendar
year if it is declared by a Portfolio in October, November or December with a
record date in any such month and paid by the Portfolio during January of the
following calendar year. Such distributions will be taxable to shareholders in
the calendar year in which the distributions are declared, rather than the
calendar year in which the distributions are received. Each Portfolio will
inform shareholders of the amount and tax status of all amounts treated as
distributed to them not later than 60 days after the close of each calendar
year.

The foregoing discussion is only a brief summary of the important federal tax
considerations generally affecting the Fund and its shareholders. As noted
above, IRAs receive special tax treatment. No attempt is made to present a
detailed explanation of the federal, state or local income tax treatment of the
Fund or its shareholders, and this discussion is not intended as a substitute
for careful tax planning. Accordingly, potential investors in the Fund should
consult their tax advisers with specific reference to their own tax situation.

State and Local Taxes

A Portfolio may be subject to state, local or foreign taxation in any
jurisdiction in which the Portfolio may be deemed to be doing business.

Portfolio distributions may be subject to state and local taxes. Distributions
of a Portfolio which are derived from interest on obligations of the U.S.
Government and certain of its agencies, authorities and instrumentalities may be
exempt from state and local taxes in certain states. Shareholders should consult
their own tax advisers regarding the particular tax consequences of an
investment in a Portfolio.

SHAREHOLDER INFORMATION

Description of the Fund

The Fund was established under Maryland law by the filing of its Articles of
Incorporation on July 31, 1996. The Fund's Articles of Incorporation permit the
Directors to authorize the creation of additional Portfolios, each of which may
issue separate classes of shares. Currently, the Fund has four separate
Portfolios.

Voting Rights

Each share of common stock of a Portfolio or class is entitled to one vote for
each dollar of net asset value and a proportionate fraction of a vote for each
fraction of a dollar of net asset value. Generally, shares of each Portfolio and
class vote together on any matter submitted to shareholders, except when
otherwise required by the 1940 Act or when a matter affects the interests of
each Portfolio or class in a different way, in which case the shareholders of
each Portfolio or class vote separately. If the Directors determine that a
matter does not affect the interests of a Portfolio or class, then the
shareholders of that Portfolio or class will not be entitled to vote on that
matter. Approval of the investment advisory agreements are matters to be
determined separately by each Portfolio (but not by each class of a Portfolio).
The election of the Fund's Board of Directors and the approval of the Fund's
independent auditors are voted upon by shareholders on a Fund-wide basis. As a
Maryland corporation, the Fund is not required to hold annual shareholder
meetings. Shareholder approval will be sought only for certain changes in the
Fund's or a Portfolio's operation and for the election of Directors under
certain circumstances.

Directors may be removed by shareholders at a special meeting. A special meeting
of the Fund shall be called by the Directors upon written request of
shareholders owning at least 10% of the Fund's outstanding shares. Shareholders
will be assisted in communicating with other shareholders in connection with
removing a Director as if Section 16(c) of the 1940 Act were applicable.

OTHER PARTIES

Custodian and Accounting Agent

Investors Bank & Trust Company, P.O. Box 1537, Boston, Massachusetts 02205-1537,
is Custodian for the securities and cash of the Fund and Accounting Agent for
the Fund.

Transfer and Dividend Disbursing Agent

Investors Bank & Trust Company, P.O. Box 1537, Boston, Massachusetts 02205-1537,
is Transfer Agent for the shares of the Fund, and Dividend Disbursing Agent for
the Fund.

Legal Counsel

Dechert Price & Rhoads, 1775 Eye Street, N.W., Washington, D.C. 20006-2401,
is legal counsel for the Fund.

Independent Auditors

Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019, is the
independent auditor for the Fund.

SHAREHOLDER INQUIRIES

Inquiries concerning the Fund may be made by writing to Investors Capital, 600
Fifth Avenue, 26th Floor, New York, New York 10020-2302 or by calling Investors
Capital at (212) 332-5210.

STATEMENT OF ADDITIONAL INFORMATION

Harding, Loevner Funds, Inc.
Distributed By: AMT Capital Securities, L.L.C.
600 Fifth Avenue
26th Floor
New York, NY 10020
(212) 332-5210

Harding, Loevner Funds, Inc. (the "Fund") is a
no-load, open-end management investment company
consisting of four diversified portfolios:
International Equity Portfolio, Global Equity
Portfolio, Emerging Markets Portfolio and
Multi-Asset Global Portfolio (each a "Portfolio").
There is no sales charge for purchase of shares.
Each Portfolio is managed by Harding, Loevner
Management, L.P. ("HLM"). Shares of each Portfolio
may be purchased through AMT Capital Securities,
L.L.C. ("AMT Capital").

This Statement of Additional Information is not a prospectus and should be read
in conjunction with the prospectus of the Fund, dated February 1, 1999, (the
"Prospectus"), which has been filed with the Securities and Exchange Commission
(the "Commission") and can be obtained, without charge, by calling or writing
Investors Capital Services, Inc. ("Investors Capital"), a branch office of AMT
Capital, at the telephone number or address stated above. This Statement of
Additional Information incorporates by reference the Prospectus.

February 1, 1999

TABLE OF CONTENTS
Page

Organization of the Fund.............................................. 3

Management of the Fund................................................ 4
Board of Directors and Officers.............................. 4
Investment Adviser........................................... 5
Administrator................................................ 6

Distribution of Fund Shares........................................... 6

Principal Holders of Securities........................................ 6

Supplemental Descriptions of Investments............................... 8

Supplemental Investment Techniques..................................... 12

Supplemental Discussion of Risks Associated With the
Fund's Investment Policies and Investment Techniques................... 18

Portfolio Transactions................................................. 19

Net Asset Value........................................................ 19

Tax Considerations..................................................... 20

Shareholder Information................................................ 24

Calculation of Performance Data........................................ 24

Ratings Descriptions................................................... 25

Financial Statements................................................... 26

ORGANIZATION OF THE FUND

The authorized capital stock of the Fund consists of 2,500,000,000 shares with
$.001 par value, allocated as follows: (i) 500,000,000 shares to the
International Equity Portfolio; (ii) 500,000,000 shares to the Global Equity
Portfolio; (iii) 500,000,000 shares to the Emerging Markets Portfolio; (iv)
500,000,000 shares to the Multi-Asset Global Portfolio and (v) 500,000,000
shares not yet allocated to any Portfolio. Holders of shares of a Portfolio have
one vote for each dollar, and a proportionate fraction of a vote for each
fraction of a dollar, of net asset value held by a shareholder. All shares
issued and outstanding are fully paid and non-assessable, transferable, and
redeemable at net asset value at the option of the shareholder. Shares have no
preemptive or conversion rights. The Board of Directors of the Fund, under
Maryland General Corporation Law, is authorized to establish more than one class
of shares for each portfolio of the Fund.

The shares of the Fund have non-cumulative voting rights, which means that the
holders of more than 50% of the shares voting for the election of Directors can
elect 100% of the Directors if they choose to do so, and, in such event, the
holders of the remaining less than 50% of the shares voting for the election of
Directors will not be able to elect any person or persons to the Board of
Directors.

MANAGEMENT OF THE FUND

BOARD OF DIRECTORS AND OFFICERS

The Fund is managed by its Board of Directors. The individuals listed below are
the officers and directors of the Fund. An asterisk (*) has been placed next to
the name of each director who is an "interested person" of the Fund, as such
term is defined in the Investment Company Act of 1940, as amended (the "1940
Act"), by virtue of his or her affiliation with the Fund or HLM.

-------------------------------------- -------------------- ----------------------------------------------
Position with the Principal Occupation
Name, Address and Age Company During Past Five Years
-------------------------------------- -------------------- ----------------------------------------------
-------------------------------------- -------------------- ----------------------------------------------
*James C. Brady III Director Brady Realty
Brady Realty Company Company
Box 351 Gladstone NJ 07934 1988-present.
Age, 40
-------------------------------------- -------------------- ----------------------------------------------
-------------------------------------- -------------------- ----------------------------------------------
Jane A. Freeman Director Formerly Investment Manager, Rockefeller & Co., 1988-
c/o Investors Capital Services, Inc. January, 1999.
600 Fifth Avenue, 26th Floor
NY, NY 10020
Age, 45
-------------------------------------- -------------------- ----------------------------------------------
-------------------------------------- -------------------- ----------------------------------------------
Samuel R. Karetsky Director European Investors, Inc., Managing Director 11/98 - present;
666 Madison Avenue, 16th Floor Samuel R. Karetsky L.L.C. 3/97 - 11/98; Morgan Stanley & Co.,
New York, NY 10021 Managing Director 6/95 - 3/97; OFFITBANK, Managing Director
Age, 53 4/90-6/95
-------------------------------------- -------------------- ----------------------------------------------
-------------------------------------- -------------------- ----------------------------------------------
Carl W. Schafer Director The Atlantic Foundation, President
66 Witherspoon Street 1990-present.
Princeton, NJ 08542
Age, 62
-------------------------------------- -------------------- ----------------------------------------------
-------------------------------------- -------------------- ----------------------------------------------
*David R. Loevner Director Harding Loevner Management, L.P. President
Harding Loevner Management, L.P. and CEO 7/89 - present; Rockefeller & Co.,
50 Division Street Suite 401, Investment Manager 1/81-7/89
Somerville, NJ 08876
Age, 44
-------------------------------------- -------------------- ----------------------------------------------
-------------------------------------- -------------------- ----------------------------------------------
William E. Vastardis Secretary and Investors Capital Services, Inc., (Formerly
Investors Capital Services, Inc. Treasurer AMT Capital Services, Inc.), Managing
600 Fifth Avenue, 26th Floor Director 7/92 - present; Vanguard Group
New York, NY 10020 Inc., Vice President, 1/87 - 4/92.
Age, 42
-------------------------------------- -------------------- ----------------------------------------------
-------------------------------------- -------------------- ----------------------------------------------
Richard Reiter Assistant Secretary Harding, Loevner Management, L.P. Product
Harding Loevner Management, L.P. Information Manager 4/96-present;
50 Division Street Suite 401, HarrisTrust, Vice President 4/91-4/96.
Somerville, NJ 08876
Age, 32
-------------------------------------- -------------------- ----------------------------------------------
-------------------------------------- -------------------- ----------------------------------------------
Carla E. Dearing Assistant Treasurer Investors Capital Services, Inc., (Formerly
Investors Capital Services, Inc. AMT Capital Services, Inc.), Managing
600 Fifth Avenue, 26th Floor Director, Principal and Director, 1/92 -
New York, NY 10020 present; AMT Capital Advisers, Inc.,
Age, 35 Principal and Senior Vice President, 1/92 -
5/98; Morgan
Stanley & Co.,
Vice
President,
11/88 - 1/92.
-------------------------------------- -------------------- ----------------------------------------------

</TABLE>

No employee of HLM or Investors Capital receives any compensation from the Fund
for acting as an officer or director of the Fund. The Fund pays each director
who is not a director, officer or employee of HLM, Investors Capital, or any of
their affiliates, a fee of $1,000 for each meeting attended, and each of the
Directors receives an annual retainer of $10,000 which is paid in quarterly
installments at the end of each quarter. Directors and officers of the Fund
collectively owned less than 1% of the Fund's outstanding shares as of October
31, 1998.

By virtue of the responsibilities assumed by HLM, Investors Capital and AMT
Capital and their affiliates under their respective agreements with the Fund,
the Fund itself requires no employees in addition to its officers.

Director's Compensation Table for the period ended October 31, 1998
- ------------------------------- ------------------------- --------------------- ---------------- --------------------
Director Aggregate Compensation Pension or Estimated Total Compensation
From Registrant Retirement Benefits Annual From Registrant
Accrued As Part of Benefits Upon and Fund Complex
Fund Expenses Retirement Paid to Directors
- ------------------------------- ------------------------- --------------------- ---------------- --------------------
- ------------------------------- ------------------------- --------------------- ---------------- --------------------
David R. Loevner $0 $0 $0 $0
- ------------------------------- ------------------------- --------------------- ---------------- --------------------
- ------------------------------- ------------------------- --------------------- ---------------- --------------------
James C. Brady III $15, 000 $0 $0 $15, 000
- ------------------------------- ------------------------- --------------------- ---------------- --------------------
- ------------------------------- ------------------------- --------------------- ---------------- --------------------
Jane A. Freeman $15, 000 $0 $0 $15, 000
- ------------------------------- ------------------------- --------------------- ---------------- --------------------
- ------------------------------- ------------------------- --------------------- ---------------- --------------------
Samuel R. Karetsky* $8,000 $0 $0 $8, 000
- ------------------------------- ------------------------- --------------------- ---------------- --------------------
- ------------------------------- ------------------------- --------------------- ---------------- --------------------
Carl W. Schafer $15, 000 $0 $0 $15, 000
- ------------------------------- ------------------------- --------------------- ---------------- --------------------
* This director was nominated on June 11, 1998.
</TABLE>

INVESTMENT ADVISER

HLM provides investment advisory services to the Fund. The terms of the
investment advisory agreements (the "Advisory Agreements") between the Fund, on
behalf of each Portfolio, and HLM obligate HLM to provide investment advisory
and portfolio management services to the Portfolios. HLM is a registered
investment adviser organized in 1989. HLM provides investment advisory services
to private investors and institutions.

The Advisory Agreements will remain in effect for two years following their date
of execution and thereafter will automatically continue for successive annual
periods, so long as such continuance is specifically approved at least annually
by (a) the Board of Directors or (b) the vote of a "majority" (as defined in the
1940 Act) of a Portfolio's outstanding shares voting as a single class;
provided, that in either event the continuance is also approved by at least a
majority of the Board of Directors who are not "interested persons" (as defined
in the 1940 Act) of the Fund by vote cast in person at a meeting called for the
purpose of voting on such approval.

The Advisory Agreements are terminable without penalty on not less than 60 days'
notice by the Board of Directors or by a vote of the holders of a majority of
the relevant Portfolio's outstanding shares voting as a single class, or upon
not less than 60 days' notice by HLM. Each of the Advisory Agreements will
terminate automatically in the event of its "assignment" (as defined in the 1940
Act).

HLM pays all of its own expenses arising from the performance of its obligations
under the Advisory Agreements. Under its Advisory Agreements, HLM also pays all
executive salaries and expenses of the Directors and Officers of the Fund who
are employees of HLM or its affiliates, and office rent of the Fund. Subject to
the expense reimbursement provisions described in the Prospectus under "Fund
Expenses," other expenses incurred in the operation of the Fund are borne by the
Fund, including, without limitation, investment advisory fees and administration
fees, brokerage commissions, interest, fees and expenses of independent
attorneys, auditors, custodians, accounting agents, transfer agents, taxes, 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 and proxy materials to
existing shareholders, expenses of printing and filing reports and other
documents filed with governmental agencies, expenses of annual and special
shareholders' meetings, expense of printing and distributing prospectuses, fees
and expenses of Directors of the Fund who are not employees of HLM or its
affiliates, membership dues in the Investment Company Institute, insurance
premiums and extraordinary expenses such as litigation expenses. Fund expenses
directly attributable to a Portfolio are charged to that Portfolio; other
expenses are allocated proportionately among all the Portfolios in relation to
the net assets of each Portfolio. For the years ended October 31, 1998, October
31, 1997, the ten months ended October 31, 1996, and the year ended December 31,
1995, the amount of advisory fees (net of waivers and reimbursements) paid by
each Portfolio were as follows:

----------------------------------- ------------------- -------------------- -------------------- ----------------------
Year Ended Year Ended October Period Ended Year Ended December
Portfolio October 31, 1998 31, 1997 October 31, 1996 31, 1995
----------------------------------- ------------------- -------------------- -------------------- ----------------------
International Equity Portfolio $2,662,338 $2,440,398 $724,042 $70,156
Global Equity Portfolio (1) 517,586 562,613 N/A N/A
Multi-Asset Global Portfolio (2) 17,250 3,824 N/A N/A
Emerging Markets Portfolio (3) N/A N/A N/A N/A
(1) Commencement of Operations was December 1, 1996.
(2) Commencement of Operations was November 1, 1996.
(3) Commencement of Operations was November 9, 1998

</TABLE>

ADMINISTRATOR

Pursuant to its terms, the administration agreement (the "Administration
Agreement") between the Fund and Investors Capital as Administrator, obligates
the Administrator to manage and supervise all aspects of the general day-to-day
business activities and operations of the Fund other than investment advisory
activities, including custodial, transfer agency, dividend disbursing,
accounting, auditing, compliance and related services. The Administration
Agreement will remain in effect until October 14, 2001 and thereafter will
automatically continue unless terminated on notice.

----------------------------------- ------------------- -------------------- -------------------- ----------------------
Year Ended Year Ended October Period Ended Year Ended December
Portfolio October 31, 1998 31, 1997 October 31, 1996 31, 1995
----------------------------------- ------------------- -------------------- -------------------- ----------------------
International Equity Portfolio $562,839 $530,546 $178,685 $47,765
Global Equity Portfolio (1) 87,686 95,888 N/A N/A
Multi-Asset Global Portfolio (2) 9,019 6,774 N/A N/A
Emerging Markets Portfolio (3) N/A N/A N/A N/A
(1) Commencement of Operations was December 1, 1996.
(2) Commencement of Operations was November 1, 1996.
(3) Commencement of Operations was November 9, 1998
</TABLE>

DISTRIBUTION OF FUND SHARES

Shares of the Fund are distributed by AMT Capital pursuant to a Distribution
Agreement (the "Distribution Agreement") between the Fund and AMT Capital. The
Fund and AMT Capital have agreed to indemnify one another against certain
liabilities. The Distribution Agreement will remain in effect until October 14,
1999 and thereafter will continue for successive annual periods only if its
continuance is approved annually by a majority of the Board of Directors who are
not parties to such agreements or "interested persons" of any such party and
either by votes of a majority of the Directors or a majority of the outstanding
voting securities of the Fund.

PRINCIPAL HOLDERS OF SECURITIES

As of January 5, 1999, no shareholder is deemed a "control person" of
the Fund as such term is defined in the 1940 Act.

As of January 5, 1999, the following persons held 5 percent or more
of the outstanding shares of the International Equity Portfolio:

Title of Class Name and Address of Beneficial Owner Amount and Nature of Percent of
- -------------- ------------------------------------ --------------------- ----------
Beneficial Ownership Portfolio
Common Stock, Wilmington Trust Company Agent for Longwood Direct Ownership 9.1%
$.001 per Share Gardens, Wilmington, DE 19890-0001

Common Stock, NationsBanc Montgomery Securities, Inc. - Direct Ownership 8.6%
$.001 per Share Custody Account for the Exclusive Benefit
of Customers, 600 Montgomery Street, San
Francisco, CA 94111

Common Stock, The National Gallery of Art, Sixth and Direct Ownership 8.3%
$.001 per Share Constitution Ave., Washington, DC 20565

Common Stock, Children's Hospital of Philadelphia, 34th Direct Ownership 8.2%
$.001 per Share and Civic Center Blvd., Philadelphia, PA
19104

Common Stock, The Bank of New York (nominee) Mutual Direct Ownership 6.2%
$.001 per Share Fund/Reorg. Dept., P.O. Box 1066, Wall
Street Station, New York, NY 10268

Common Stock, The Public Welfare Foundation, 2600 Direct Ownership 5.4%
$.001 per Share Virginia Avenue NW, Washington, DC 20037

</TABLE>

As of January 5, 1998, the following persons held 5 percent or more of the
outstanding shares of the Global Equity Portfolio:

Title of Class Name and Address of Beneficial Owner Amount and Nature of Percent of
- -------------- ------------------------------------ --------------------- ----------

Common Stock, Edward & Darlene Lowe Charitable Remainder Direct Ownership 13.4%
$.001 per Share Unitrust P.O. Box 385 Cassopolis, MI 49031

Common Stock, Summit Bank (nominee), P O Box 821 Direct Ownership 9.8%
$.001 per Share Hackensack, NJ 07602

Common Stock, Katherine H. Olmstead, 158 Hobart Road Direct Ownership 9.1 %
$.001 per Share Chesnut Hill, MA 02167

Common Stock, Ann S. Bowers Separate Property Trust c/o Direct Ownership 8.3%
$.001 per Share the Noyce Foundation 450 Sheridan Avenue
Palo Alto, CA 94306
Common Stock, Simon N. Greg 1976 Trust, James C. Brady Direct Ownership 8.3%
$.001 per Share Jr., Gordon O. Danser & Sara P. Peacock
Trustees, c/o Gordon O. Danser, Five
Independence Way, Princeton, NJ 08540

Common Stock, Bowes Family Partnership, One Maritime Direct Ownership 6.2%
$.001 per Share Plaza, San Francisco, CA 94111

Common Stock, Jason A. Greg 1976 Trust, James C. Brady Direct Ownership 6.0%
$.001 per Share Jr., Gordon O. Danser & Sara P. Peacock
Trustees, c/o Gordon O. Danser, Five
Independence Way, Princeton, NJ 08540

Common Stock, Ms. Geraldine Karetsky, TAG Associates Direct Ownership 5.3%
$.001 per Share Ltd., 75 Rockefeller Plaza, Suite 900, New
York, NY 10019
</TABLE>

As of January 5, 1999, the following persons held
5 percent or more of the outstanding shares of the
Multi-Asset Global Portfolio:
<TABLE>
<S> <C> <C> <C>

Title of Class Name and Address of Beneficial Owner Amount and Nature of Percent of
- -------------- ------------------------------------ --------------------- ----------
Beneficial Ownership Portfolio
Common Stock, Edgmont Consultants (Defined Benefit Plan Direct Ownership 45.4%
$.001 per Share and Money Purchase Plan) 308 French Road,
Newtown Square, PA 19073

Common Stock, Harding, Loevner Management, L.P (Profit Direct Ownership 33.8%
$.001 per Share Sharing Thrift Plan and Investment
Adviser's Account), 50 Division Street,
Suite 401, Somerville, NJ 08876
</TABLE>

As of January 5, 1999, the following persons held
5 percent or more of the outstanding shares of the
Emerging Markets Portfolio:

Common Stock, Harding, Loevner Management, L.P Direct Ownership 43.1%
$.001 per Share (Investment Adviser's Account), 50 Division
Street, Suite 401, Somerville, NJ 08876

Common Stock, Alan & Susan Rothenberg Revocable Trust Direct Ownership 14.8%
$.001 per Share 42 Seventh Avenue, San Francisco, CA 94118

Common Stock, David R. Loevner, 73 Westcott Road, 73 Direct Ownership 9.8%
$.001 per Share Westcott Road, Princeton, NJ 08540

Common Stock, McCurry Companies, 1779 Tribute Road, Suite Direct Ownership 9.8%
$.001 per Share C, PO Box 838, Sacramento,CA 95812

Common Stock, Jane Hallett, 207 Russell Road, Princeton, Direct Ownership 7.3%
$.001 per Share NJ 08540

Common Stock, Tucker Anthony Inc. Custodian FBO Winton Direct Ownership 7.3%
$.001 per Share Tolles IRA, 21 Lincoln Street, Glen Ridge,
NJ 07028

</TABLE>

SUPPLEMENTAL DESCRIPTIONS OF INVESTMENTS

The different types of securities in which the Portfolios may invest, subject to
their respective investment objective, policies and restrictions, are described
in the Prospectus under "Descriptions of Investments." Additional information
concerning the characteristics of certain of the Portfolios' investments are set
forth below.

Bank Obligations. The Fund limits its investments in U.S. (domestic) bank
obligations to obligations of U.S. banks that in HLM's opinion meet sufficient
creditworthiness criteria. Domestic bank obligations are defined as instruments:
issued by U.S. (domestic) banks; U.S. branches of foreign banks, if such
branches are subject to the same regulation as U.S. banks; and foreign branches
of U.S. banks. However, HLM must determine that the investment risk associated
with investing in instruments issued by such branches is the same as that of
investing in instruments issued by the U.S. parent bank, in that the U.S. parent
bank would be unconditionally liable in the event that the foreign branch failed
to pay on its instruments. The Fund limits its investments in foreign bank
obligations to obligations of foreign banks (including U.S. branches of foreign
banks) that, in the opinion of HLM, are of an investment quality comparable to
obligations of U.S. banks in which each Portfolio may invest. Each Portfolio may
invest in obligations of domestic and foreign banks, including time deposits,
certificates of deposit, bankers' acceptances, letters of credit, bank notes,
deposit notes, Eurodollar or Yankeedollar time deposits, Eurodollar or
Yankeedollar certificates of deposit, variable rate notes, loan participations,
variable amount master demand notes and custodial receipts. Other than the
allowable 20% of a Portfolio's total assets invested in below-investment grade
convertible and other debt securities, all investments in bank obligations will
be rated at least "B" by Thomson Bankwatch or similarly rated by IBCA Ltd., or
of comparable quality as determined by HLM.

Brady Bonds. Each Portfolio, subject to limitations, may invest in "Brady
Bonds," which are debt securities issued or guaranteed by foreign governments in
exchange for existing external commercial bank indebtedness under a plan
announced by former U.S. Treasury Secretary Nicholas F. Brady in 1989. To date,
over $154 billion (face amount) of Brady Bonds have been issued by the
governments of 13 countries, the largest proportion having been issued by
Argentina, Brazil, Mexico and Venezuela. Brady Bonds have been issued only
recently, and accordingly, they do not have a long payment history. Brady Bonds
may be collateralized or uncollateralized, are issued in various currencies
(primarily the U.S. dollar) and are actively traded in the over-the-counter
secondary market. Each Portfolio may invest in either collateralized or
uncollateralized Brady Bonds. U.S. dollar-denominated, collateralized Brady
Bonds, which may be fixed rate par bonds or floating rate discount bonds, are
collateralized in full as to principal by U.S. Treasury zero coupon bonds having
the same maturity as the bonds. Interest payments on such bonds generally are
collateralized by cash or securities in an amount that, in the case of fixed
rate bonds, is equal to at least one year of rolling interest payments or, in
the case of floating rate bonds, initially is equal to at least one year's
rolling interest payments based on the applicable interest rate at the time and
is adjusted at regular intervals thereafter. Brady Bonds which have been issued
to date are rated BB or B by S&P or Ba or B by Moody's or, in cases in which a
rating by S&P or Moody's has not been assigned, are generally considered by the
Adviser to be of comparable quality.

Corporate Debt Instruments. Corporate debt securities of domestic and foreign
issuers include such instruments as corporate bonds, debentures, notes,
commercial paper, medium-term notes, variable rate notes and other similar
corporate debt instruments.

Derivatives. The Portfolios are authorized to use various hedging and investment
strategies described below to hedge broad or specific market movements, or to
seek to increase the Portfolios' income or gains. The Portfolios may purchase
and sell (or write) exchange-listed and over-the-counter put and call options on
securities, financial futures contracts, equity indices and other financial
instruments and enter into financial futures contracts (collectively, these
transactions are referred to in this Statement of Additional Information as
"Derivatives").

Derivatives may be used to attempt to protect against possible changes in the
market value of securities held or to be purchased by a Portfolio resulting from
securities market movements to protect the Portfolio's unrealized gains in the
value of its securities, to facilitate the sale of those securities for
investment purposes, to establish a position in the derivatives markets as a
temporary substitute for purchasing or selling particular securities or to seek
to enhance the Portfolio's income or gain. The Portfolios may use any or all
types of Derivatives at any time; no particular strategy will dictate the use of
one type of transaction rather than another, as use of any Derivatives will be a
function of numerous variables, including market conditions. The ability of a
Portfolio to utilize Derivatives successfully will depend on, in addition to the
factors described above, HLM's ability to predict pertinent market movements,
which cannot be assured. These skills are different from those needed to select
the Portfolio's securities. The Portfolios are not "commodity pools" (i.e.,
pooled investment vehicles which trade in commodity futures contracts and
options thereon and the operator of which is registered with the Commodity
Futures Trading Commission (the "CFTC")) and Derivatives involving futures
contracts and options on futures contracts will be purchased, sold or entered
into only for bona fide hedging purposes, provided that a Portfolio may enter
into such transactions for purposes other than bona fide hedging if, immediately
thereafter, the sum of the amount of its initial margin and premiums on open
contracts and options would not exceed 5% of the liquidation value of the
Portfolio's portfolio, provided, further, that, in the case of an option that is
in-the-money, the in-the-money amount may be excluded in calculating the 5%
limitation. The use of certain Derivatives will require that the Portfolio
segregate cash, liquid high grade debt obligations or other assets to the extent
the Portfolio's obligations are not otherwise "covered" through ownership of the
underlying security or financial instrument.

Futures Contracts. The Portfolios may use stock index futures contracts
("futures contracts") as a hedge against the effects of changes in the market
value of the stocks comprising the relevant index. In managing its cash flows, a
Portfolio may also use futures contracts as a substitute for holding the
designated securities underlying the futures contract. A futures contract is an
agreement to purchase or sell a specified amount of designated securities for a
set price at a specified future time. At the time the Portfolio enters into a
futures transaction, it is required to make a performance deposit ("initial
margin") of cash or liquid securities in a segregated account in the name of the
futures broker. Subsequent payments of "variation margin" are then made on a
daily basis, depending on the value of the futures position which is continually
marked to market. The Portfolios will segregate cash, U.S. Government securities
or other high grade debt obligations in an amount sufficient to meet its
obligations under these transactions.

If the Portfolio enters into a short position in a futures contract as a hedge
against anticipated adverse market movements and the market then rises, the
increase in the value of the hedged securities will be offset in whole or in
part, by a loss on the futures contract. If instead the Portfolio purchases a
futures contract as a substitute for investing in the designated underlying
securities, the Portfolio will experience gains or losses that correspond
generally to gains or losses in the underlying securities. The latter type of
futures contract transactions permits the Portfolio to experience the results of
being fully invested in a particular asset class, while maintaining the
liquidity needed to manage cash flows into or out of the Portfolio (e.g.,
purchases and redemptions of Portfolio shares). Under normal market conditions,
futures contracts positions may be closed out on a daily basis.

Stock Index Options. The Portfolios may purchase or sell options on stock
indices on U.S. and foreign exchanges or in the over-the-counter markets. An
option on a stock index permits the purchaser of the option, in return for the
premium paid, the right to receive from the seller cash equal to the difference
between the closing price of the index and the exercise price of the option. The
Portfolios will segregate cash, or liquid portfolio securities in an amount
sufficient to meet its obligations under these transactions.

Options on Futures Contracts. The Portfolios may purchase or sell options on
futures contracts as an alternative to buying or selling futures contracts.
Options on futures contracts are similar to options on the security underlying
the futures contracts except that options on stock index futures contracts give
the purchaser the right to assume a position at a specified price in a stock
index futures contract at any time during the life of the option. The Portfolios
will segregate cash, U.S. Government securities or other high grade debt
obligations in an amount sufficient to meet its obligations under these
transactions.

Repurchase Agreements. When participating in repurchase agreements, a Portfolio
buys securities from a vendor (e.g., a bank or securities firm) with the
agreement that the vendor will repurchase the securities at the same price plus
interest at a later date. Repurchase agreements may be characterized as loans
secured by the underlying securities. Such transactions afford an opportunity
for the Portfolio to earn a return on available cash at minimal market risk,
although the Portfolio may be subject to various delays and risks of loss if the
vendor becomes subject to a proceeding under the U.S. Bankruptcy Code or is
otherwise unable to meet its obligation to repurchase. The securities underlying
a repurchase agreement will be marked to market every business day so that the
value of such securities is at least equal to the value of the repurchase price
thereof, including the accrued interest thereon.

Reverse Repurchase Agreements. Each Portfolio may 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 the
Portfolio agrees to repurchase the securities at an agreed-upon price and date.
The difference between the amount the Portfolio receives for the securities and
the amount it pays on repurchase is deemed to be a payment of interest.
The Fund will maintain for each Portfolio a segregated custodial account
containing cash, or other appropriate liquid,
unencumbered securities having an aggregate value at least equal to the amount
of such commitments to repurchase, including accrued interest, and will
subsequently monitor the account to ensure such equivalent value is maintained
until payment is made. Reverse repurchase agreements will generally be
restricted to those that mature within seven days. The Portfolios will engage in
such transactions with parties selected on the basis of such party's
creditworthiness. Reverse repurchase agreements involve the risk that the market
value of the portfolio securities sold by a Portfolio may decline below the
price of the securities at which the Portfolio is obligated to repurchase
them. Reverse repurchase agreements create leverage, a speculative
factor, and will be considered as borrowings for the purposes of limitations
on borrowings.

U.S. Treasury and U.S. Government Agency Securities. U.S. Government Securities
include instruments issued by the U.S. Treasury, including bills, notes and
bonds. These instruments are direct obligations of the U.S. Government and, as
such, are backed by the full faith and credit of the United States. They differ
primarily in their interest rates, the lengths of their maturities and the dates
of their issuances. In addition, U.S. Government Securities include securities
issued by instrumentalities of the U.S. Government, such as the Government
National Mortgage Association ("GNMA"), which are also backed by the full faith
and credit of the United States. U.S. Government Agency Securities include
instruments issued by instrumentalities established or sponsored by the U.S.
Government, such as the Student Loan Marketing Association ("SLMA"), the Federal
National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage
Corporation ("FHLMC"). While these securities are issued, in general, under the
authority of an Act of Congress, the U.S. Government is not obligated to provide
financial support to the issuing instrumentalities.

Warrants. The Portfolios may invest up to 10% of the value of their total assets
(valued at the lower of cost or market) in warrants for equity securities, which
are securities permitting, but not obligating, their holder to subscribe for
other equity securities. Warrants do not carry with them the right to dividends
or voting rights with respect to the securities that they entitle their holder
to purchase, and they do not represent any rights in the assets of the issuer.
As a result, an investment in warrants may be considered more speculative than
certain other types of investments. In addition, the value of a warrant does not
necessarily change with the value of the underlying securities and a warrant
ceases to have value if it is not exercised prior to its expiration date.

When-Issued Securities. The Portfolios may purchase securities on a firm
commitment basis, including when-issued securities. Securities purchased on a
firm commitment basis are purchased for delivery beyond the normal settlement
date at a stated price and yield. Such securities are recorded as an asset and
are subject to changes in value based upon changes in the general level of
interest rates. The Portfolios will only make commitments to purchase securities
on a firm commitment basis with the intention of actually acquiring the
securities but may sell them before the settlement date if it is deemed
advisable. When a Portfolio purchases securities on a when-issued or forward
commitment basis, the Portfolio will maintain in a segregated
account cash and liquid, unencumbered securities having a value (determined
daily) at least equal to the amount of the Portfolio's purchase commitments. In
the case of a forward commitment to sell portfolio securities, the Portfolio
will hold the portfolio securities themselves in a segregated account while the
commitment is outstanding. These procedures are designed to ensure that the
Portfolio will maintain sufficient assets at all times to cover its obligations
under when-issued purchases and forward commitments.

SUPPLEMENTAL INVESTMENT TECHNIQUES

Borrowing. Each Portfolio may borrow money temporarily from banks when (i) it is
advantageous to do so in order to meet redemption requests, (ii) a Portfolio
fails to receive transmitted funds from a shareholder on a timely basis, (iii)
the custodian of the Fund fails to complete delivery of securities sold or (iv)
a Portfolio needs cash to facilitate the settlement of trades made by the
Portfolio. In addition, each Portfolio may, in effect, lend securities by
engaging in reverse repurchase agreements and may, in effect, borrow money by
doing so. Securities may be borrowed by engaging in repurchase agreements. See
"Investment Restrictions" and "Supplemental Descriptions of Investments."

Securities Lending. Although, the Fund has no current plans to do so, each
Portfolio is authorized to lend securities from its investment portfolios, with
a value not exceeding 33 1/3% of its total assets, to banks, brokers and other
financial institutions if it receives collateral in cash, U.S. Government
Securities or other high grade liquid investments which will be maintained at
all times in an amount equal to at least 102% of the current market value of the
loaned securities. The loans will be terminable at any time by the Fund and the
relevant Portfolio will then receive the loaned securities within five days.
During the period of such a loan, the Portfolio receives the income on the
loaned securities and a loan fee and may thereby increase its total return. A
Portfolio continues to receive interest or dividends on the securities loaned
and simultaneously earns either interest on the investment of the cash
collateral or fee income if the loan is otherwise collateralized. However, a
Portfolio normally pays lending fees and related expenses from the interest or
dividends earned on invested collateral. Should the borrower of the securities
fail financially, there is a risk of delay in recovery of the securities or loss
of rights in the collateral. However, loans are made only to borrowers which are
approved by the Board of Directors and are deemed by HLM to be of good financial
standing. A Portfolio may invest cash collateral it receives in connection with
a loan of securities in securities of the U.S. Government and its agencies and
other high quality short-term debt instruments. For purposes of complying with
each Portfolio's investment policies and restrictions, collateral received in
connection with securities loans will not be deemed an asset of a Portfolio
unless otherwise required by law.

Foreign Currency Hedging. The Portfolios may enter into forward foreign currency
contracts (a "forward contract") and may purchase and write (on a covered basis)
exchange-traded or over-the-counter ("OTC") options on currencies, foreign
currency futures contracts, and options on foreign currency futures contracts
primarily to protect against a decrease in the U.S. dollar equivalent value of
its foreign currency portfolio securities or the payments thereon that may
result from an adverse change in foreign currency exchange rates. The Portfolios
may at times hedge all or some portion of their currency exchange risk.
Conditions in the securities, futures, options, and foreign currency markets
will determine whether and under what circumstances a Portfolio will employ any
of the techniques or strategies described below and in the section of the
Prospectus entitled "Descriptions of Investments." A Portfolio's ability to
pursue certain of these strategies may be limited by applicable regulations of
the Commodity Futures Trading Commission ("CFTC") and the federal tax
requirements applicable to regulated investment companies (see "Tax
Considerations").

Forward Contracts. Sale of currency for dollars under such a contract
establishes a price for the currency in dollars. Such a sale insulates returns
from securities denominated in that currency from exchange rate fluctuations to
the extent of the contract while the contract is in effect. A sale contract will
be advantageous if the currency falls in value against the dollar and
disadvantageous if it increases in value against the dollar. A purchase contract
will be advantageous if the currency increases in value against the dollar and
disadvantageous if it falls in value against the dollar.

The Portfolios may use forward contracts to insulate existing security positions
against exchange rate movement ("position hedges") or to insulate proposed
transactions against such movement ("transaction hedges"). For example, to
establish a position hedge, a forward contract on a foreign currency might be
sold to protect against the decline in the value of that currency against the
dollar. To establish a transaction hedge, a foreign currency might be purchased
on a forward basis to protect against an anticipated increase in the value of
that currency against the dollar.

Futures Contracts. U.S. futures contracts have been designed by exchanges which
have been designated as "contracts markets" by the CFTC, and must be executed
through a futures commission merchant, or brokerage firm, that is a member of
the relevant contract market. Futures contracts trade on a number of exchange
markets and, through their clearing corporations, the exchanges guarantee
performance of the contracts as between the clearing members of the exchange.
The Portfolios may also enter into futures contracts that are based on
securities that would be eligible investments for the Portfolios. The Portfolios
may enter into contracts that are denominated in currencies other than the U.S.
dollar.

Although futures contracts by their terms call for the actual delivery or
acquisition of securities or currency, in most cases the contractual obligation
is fulfilled before the date of the contract without having to make or take
delivery of the securities or currency. The offsetting of a contractual
obligation is accomplished by buying (or selling, as the case may be) on a
commodities exchange an identical futures contract calling for delivery in the
same month. Such a transaction, which is effected through a member of an
exchange, cancels the obligation to make or take delivery of the securities or
currency. Since all transactions in the futures market are made, offset, or
fulfilled through a clearinghouse associated with the exchange on which the
contracts are traded, a Portfolio will incur brokerage fees when it purchases or
sells futures contracts.

At the time a futures contract is purchased or sold, a Portfolio must allocate
in cash or securities, an initial margin. Initial margin on U.S. exchanges may
range from approximately 3% to approximately 15% of the value of the securities
or commodities underlying the contract. Under certain circumstances, however,
such as periods of high volatility, the Portfolio may be required by an exchange
to increase the level of its initial margin payment. Additionally, initial
margin requirements may be increased generally in the future by regulatory
action. An outstanding futures contract is valued daily and the payment in cash
of a "variation margin" generally will be required, a process known as "marking
to the market." Each day the Portfolio will be required to provide (or will be
entitled to receive) variation margin in an amount equal to any decline (in the
case of a long futures position) or increase (in the case of a short futures
position) in the contract's value from the preceding day.

Options on Foreign Currencies. The Portfolios may purchase and sell (or write)
put and call options on foreign currencies to protect against a decline in the
U.S. dollar-equivalent value of their portfolio securities or payments due
thereon or a rise in the U.S. dollar-equivalent cost of securities that they
intend to purchase. A foreign currency put option grants the holder the right,
but not the obligation, at a future date to sell a specified amount of a foreign
currency to its counterparty at a predetermined price. Conversely, a foreign
currency call option grants the holder the right, but not the obligation, to
purchase at a future date a specified amount of a foreign currency at a
predetermined price.

Options on Futures Contracts. The purchase of a call option on a futures
contract is similar in some respects to the purchase of a call option on an
individual security or currency. Depending on the pricing of the option compared
to either the price of the futures contract upon which it is based or the price
of the underlying securities or currency, it may or may not be less risky than
ownership of the futures contract or the underlying securities or currency. As
with the purchase of futures contracts, when a Portfolio is not fully invested
it may purchase a call option on a futures contract to hedge against a market
advance due to declining interest rates or a change in foreign exchange rates.

The writing of a call option on a futures contract constitutes a partial hedge
against declining prices of the security or foreign currency which is
deliverable upon exercise of the futures contract. If the futures price at
expiration of the option is below the exercise price, the Portfolio will retain
the full amount of the option premium which provides a partial hedge against any
decline that may have occurred in the Portfolio's portfolio holdings. The
writing of a put option on a futures contract constitutes a partial hedge
against increasing prices of the security or foreign currency which is
deliverable upon exercise of the futures contract. If the futures price at
expiration of the option is higher than the exercise price, the Portfolio will
retain the full amount of the option premium which provides a partial hedge
against any increase in the price of securities which the Portfolio intends to
purchase. If a put or call option the Portfolio has written is exercised, the
Portfolio will incur a loss that will be reduced by the amount of the premium it
receives. Depending on the degree of correlation between changes in the value of
its portfolio securities and changes in the value of its futures positions, the
Portfolio's losses from existing options on futures may to some extent be
reduced or increased by changes in the value of portfolio securities.

The purchase of a put option on a futures contract is similar in some respects
to the purchase of protective put options on portfolio securities.

Restrictions on the Use of Futures Contracts and Options on Futures Contracts.
Regulations of the CFTC applicable to the Portfolios require that all of the
Portfolios' futures and options on futures transactions constitute bona fide
hedging transactions, except that a transaction need not constitute a bona fide
hedging transaction entered into for other purposes if, immediately thereafter,
the sum of the amount of initial margin deposits on a Portfolio's existing
futures positions and premiums paid for related options would not exceed 5% of
the value of the Portfolio's total assets.

Illiquid Securities. Although each of the Portfolios may invest up to 15% of the
value of its net assets in illiquid assets, it is not expected that any
Portfolio will invest a significant portion of its assets in illiquid
securities. All repurchase agreements and time deposits maturing in more than
seven days are treated as illiquid assets. A Portfolio also may purchase
securities that are not registered under the Securities Act of 1933, as amended
(the "1933 Act"), but which can be sold to qualified institutional buyers in
accordance with Rule 144A under that Act ("Rule 144A securities"). Rule 144A
securities generally must be sold to other qualified institutional buyers. A
Portfolio also may invest in commercial obligations issued in reliance on the
so-called "private placement" exemption from registration afforded by Section
4(2) of the 1933 Act ("Section 4(2) paper"). Section 4(2) paper is restricted as
to disposition under the federal securities laws, and generally is sold to
institutional investors such as the Portfolio who agree that they are purchasing
the paper for investment and not with a view to public distribution. Any resale
by the purchaser must be in an exempt transaction. Section 4(2) paper normally
is resold to other institutional investors like the Portfolio through or with
the assistance of the issuer or investment dealers who make a market in the
Section 4(2) paper, thus providing liquidity. If a particular investment in Rule
144A securities, Section 4(2) paper or private placement securities is not
determined to be liquid, that investment will be included within the 15%
limitation on investment in illiquid securities. Not all Rule 144A securities
can be deemed liquid; HLM will monitor the liquidity of such restricted
securities under the supervision of the Board of Directors.

SUPPLEMENTAL DISCUSSION OF RISKS
ASSOCIATED WITH THE FUND'S INVESTMENT
POLICIES AND INVESTMENT TECHNIQUES

Additional information concerning risks associated with certain of the
Portfolios' investments is set forth below.

Creditworthiness. In general, certain obligations which the Portfolios may
invest in are subject to credit risks such as the loss of credit ratings or
possible default. After purchase by a Portfolio of the Fund, a security may
cease to be rated or its rating may be reduced below the minimum required for
purchase by the Fund. Neither event will require a sale of such security by the
Portfolio. However, HLM will consider such event in its determination of whether
a Portfolio should hold the security. To the extent that the ratings given by
S&P or Moody's may change as a result of changes in such organizations or their
rating systems, the Fund will attempt to use comparable ratings as standards for
investments in accordance with the investment policies contained in the
Prospectus and in this Statement of Additional Information.

Foreign Bank Obligations. Obligations of foreign banks involve somewhat
different investment risks than those affecting obligations of United States
banks, including the possibilities that their liquidity could be impaired
because of future political and economic developments, that their obligations
may be less marketable than comparable obligations of United States banks, that
a foreign jurisdiction might impose withholding taxes on interest income payable
on those obligations, that foreign deposits may be seized or nationalized, that
foreign governmental restrictions such as exchange controls may be adopted that
might adversely affect the payment of principal and interest on those
obligations and that the selection of those obligations may be more difficult
because there may be less publicly available information concerning foreign
banks or the accounting, auditing and financial reporting standards, practices
and requirements applicable to foreign banks may differ from those applicable to
United States banks. Foreign banks generally are not subject to examination by
any United States government agency or instrumentality. Also, investments in
commercial banks located in several foreign countries are subject to additional
risks due to the combination in such banks of commercial banking and diversified
securities activities.

High Yield/High Risk Debt Securities. Each Portfolio may invest up to 20% of its
assets in convertible securities and debt securities which are rated below
investment-grade. Below investment grade securities carry a high degree of risk
(including the possibility of default or bankruptcy of the issuers of such
securities), generally involve greater volatility of price and risk of principal
and income, and may be less liquid, than securities in the higher rating
categories and are considered speculative. The lower the ratings of such debt
securities, the greater their risks render them like equity securities. See
"Ratings Descriptions" in this Statement of Additional Information for a more
complete description of the ratings assigned by ratings organizations and their
respective characteristics.

Economic downturns have disrupted in the past, and could disrupt in the future,
the high yield market and have impaired the ability of issuers to repay
principal and interest. Also, an increase in interest rates would have a greater
adverse impact on the value of such obligations than on comparable higher
quality debt securities. During an economic downturn or period of rising
interest rates, highly leveraged issues may experience financial stress which
would adversely affect their ability to service their principal and interest
payment obligations. Prices and yields of high yield securities will fluctuate
over time and, during periods of economic uncertainty, volatility of high yield
securities may adversely affect a Portfolio's net asset value. In addition,
investments in high yield zero coupon or pay-in-kind bonds, rather than
income-bearing high yield securities, may be more speculative and may be subject
to greater fluctuations in value due to changes in interest rates.

The trading market for high yield securities may be thin to the extent that
there is no established retail secondary market or because of a decline in the
value of such securities. A thin trading market may limit the ability of a
Portfolio to accurately value high yield securities in its portfolio and to
dispose of those securities. Adverse publicity and investor perceptions may
decrease the values and liquidity of high yield securities. These securities
also may involve special registration responsibilities, liabilities and costs.

Credit quality in the high yield securities market can change suddenly and
unexpectedly, and even recently issued credit ratings may not fully reflect the
actual risks posed by a particular high-yield security. For these reasons, it is
the policy of HLM not to rely exclusively on ratings issued by established
credit rating agencies, but to supplement such ratings with its own independent
and on-going review of credit quality. The achievement of a Portfolio's
investment objective by investment in such securities may be more dependent on
HLM's credit analysis than is the case for higher quality bonds. Should the
rating of a portfolio security be downgraded, HLM will determine whether it is
in the best interest of the Portfolio to retain or dispose of such security.

Prices for below investment-grade securities may be affected by legislative and
regulatory developments.

Foreign Securities. Foreign financial markets, while growing in volume, have,
for the most part, substantially less volume than United States markets, and
securities of many foreign companies are less liquid and their prices more
volatile than securities of comparable domestic companies. The foreign markets
also have different clearance and settlement procedures, and in certain markets
there have been times when settlements have been unable to keep pace with the
volume of securities transactions, making it difficult to conduct such
transactions. Delivery of securities may not occur at the same time as payment
in some foreign markets. Delays in settlement could result in temporary periods
when a portion of the assets of a Portfolio is uninvested and no return is
earned thereon. The inability of a Portfolio to make intended security purchases
due to settlement problems could cause the Portfolio to miss attractive
investment opportunities. Inability to dispose of portfolio securities due to
settlement problems could result either in losses to a Portfolio due to
subsequent declines in value of the portfolio security or, if the Portfolio has
entered into a contract to sell the security, could result in possible liability
to the purchaser.

Although HLM will use reasonable efforts to obtain the best available price and
the most favorable execution with respect to all transactions, HLM will consider
the full range and quality of services offered by the executing broker or dealer
when making these determinations. Fixed commissions on many foreign stock
exchanges are generally higher than negotiated commissions on U.S. exchanges.
Certain foreign governments levy withholding taxes against dividend and interest
income. Although in some countries a portion of these taxes are recoverable, the
non-recovered portion of foreign withholding taxes will reduce the income
received by the Portfolios on these investments. However, these foreign
withholding taxes are not expected to have a significant impact on the
Portfolios, since each Portfolio's investment objective is to seek long-term
capital appreciation and any income should be considered incidental.

Foreign Currency Hedging. The success of currency hedging will depend on the
ability of HLM to predict exchange rate fluctuations. Predicting such
fluctuations is extremely difficult and thus the successful execution of a
hedging strategy is highly uncertain. An incorrect prediction will cause poorer
Portfolio performance than would otherwise be the case. Forward contracts that
protect against anticipated losses have the corresponding effect of canceling
possible gains if the currency movement prediction is incorrect.

Precise matching of forward contract amounts and the value of portfolio
securities is generally not possible because the market value of the protected
securities will fluctuate while forward contracts are in effect. Adjustment
transactions are theoretically possible but time consuming and expensive, so
contract positions are likely to be approximate hedges, not perfect.

The cost to a Portfolio of engaging in foreign currency forward contracts will
vary with factors such as the foreign currency involved, the length of the
contract period, and the market conditions then prevailing, including general
market expectations as to the direction of the movement of various foreign
currencies against the U.S. dollar. Furthermore, HLM may not be able to purchase
forward contracts with respect to all of the foreign currencies in which a
Portfolio's securities may be denominated. In those circumstances the
correlation between the movements in the exchange rates of the subject currency
and the currency in which the portfolio security is denominated may not be
precise. Moreover, if the forward contract is entered into in an
over-the-counter transaction, as will usually be the case, the Portfolio
generally will be exposed to the credit risk of its counterparty. If the
Portfolio enters into such contracts on a foreign exchange, the contract will be
subject to the rules of that foreign exchange. Foreign exchanges may impose
significant restrictions on the purchase, sale, or trading of such contracts,
including the imposition of limits on price moves. Such limits may significantly
affect the ability to trade such a contract or otherwise to close out the
position and could create potentially significant discrepancies between the cash
and market value of the position in the forward contract. Finally, the cost of
purchasing forward contracts in a particular currency will reflect, in part, the
rate of return available on instruments denominated in that currency. The cost
of purchasing forward contracts to hedge portfolio securities that are
denominated in currencies that in general yield high rates of return may thus
tend to reduce that rate of return toward the rate of return that would be
earned on assets denominated in U.S. dollars.

Futures Contracts. Futures contracts entail special risks. Among other things,
the ordinary spreads between values in the cash and futures markets, due to
differences in the character of these markets, are subject to distortions
relating to: (1) investors' obligations to meet additional variation margin
requirements; (2) decisions to make or take delivery, rather than entering into
offsetting transactions; and (3) the difference between margin requirements in
the securities markets and margin deposit requirements in the futures market.
The possibility of such distortion means that a correct forecast of general
market or foreign exchange rate trends still may not result in a successful
transaction.

Although the Fund believes that the use of such contracts and options thereon
will benefit the Portfolios, if predictions about the general direction of
securities market movements or foreign exchange rates are incorrect, a
Portfolio's overall performance would be poorer than if it had not entered into
any such contracts or purchased or written options thereon.

A Portfolio's ability to establish and close out positions in futures contracts
and options on futures contracts will be subject to the development and
maintenance of a liquid market. Although a Portfolio generally will purchase or
sell only those futures contracts and options thereon for which there appears to
be a liquid market, there is no assurance that a liquid market on an exchange
will exist for any particular futures contract or option thereon at any
particular time. Where it is not possible to effect a closing transaction in a
contract to do so at a satisfactory price, the Portfolio would have to make or
take delivery under the futures contract or, in the case of a purchased option,
exercise the option. In the case of a futures contract that a Portfolio has sold
and is unable to close out, the Portfolio would be required to maintain margin
deposits on the futures contract and to make variation margin payments until the
contract is closed.

Under certain circumstances, exchanges may establish daily limits in the amount
that the price of a futures contract or related option contract may vary either
up or down from the previous day's settlement price. Once the daily limit has
been reached in a particular contract, no trades may be made that day at a price
beyond that limit. The daily limit governs only price movements during a
particular trading day and therefore does not limit potential losses because the
limit may prevent the liquidation of unfavorable positions. Futures or options
contract prices could move to the daily limit for several consecutive trading
days with little or no trading and thereby prevent prompt liquidation of
positions and subject some traders to substantial losses.

Buyers and sellers of foreign currency futures contracts are subject to the same
risks that apply to the use of futures generally. In addition, there are risks
associated with foreign currency futures contracts and their use as hedging
devices similar to those associated with forward contracts on foreign
currencies. Further, settlement of a foreign currency futures contract must
occur within the country issuing the underlying currency. Thus, a Portfolio must
accept or make delivery of the underlying foreign currency in accordance with
any U.S. or foreign restrictions or regulations regarding the maintenance of
foreign banking arrangements by U.S. residents and may be required to pay any
fees, taxes or charges associated with such delivery that are assessed in the
country of the underlying currency.

Options on Foreign Currency. As in the case of other types of options, the
benefit to a Portfolio deriving from the purchase of foreign currency options
will be reduced by the amount of the premium and related transaction costs. In
addition, where currency exchange rates do not move in the direction or to the
extent anticipated, the Portfolio could sustain losses on transactions in
foreign currency options that would require them to forego a portion or all of
the benefits of advantageous changes in such rates.

A Portfolio may write options on foreign currencies for hedging purposes. For
example, where the Portfolio anticipates a decline in the dollar value of
foreign currency denominated securities due to adverse fluctuations in exchange
rates it could, instead of purchasing a put option, write a call option on the
relevant currency. If the expected decline occurs, the option will most likely
not be exercised, and the decrease in value of portfolio securities will be
offset by the amount of the premium received.

Similarly, instead of purchasing a call option to hedge against an anticipated
increase in the dollar costs of securities to be acquired, a Portfolio could
write a put option on the relevant currency which, if rates move in the manner
projected, will expire unexercised and allow the Portfolio to hedge such
increased costs up to the amount of the premium. As in the case of other types
of options, however, the writing of a foreign currency option will constitute
only a partial hedge up to the amount of the premium, and only if rates move in
the expected direction. If this movement does not occur, the option may be
exercised and the Portfolio would be required to purchase or sell the underlying
currency at a loss which may not be fully offset by the amount of the premium.
Through the writing of options on foreign currencies, the Portfolio also may be
required to forego all or a portion of the benefits that might otherwise have
been obtained from favorable movements in exchange rates.

Options on Futures Contracts. The amount of risk a Portfolio assumes when it
purchases an option on a futures contract is the premium paid for the option
plus related transaction costs. In addition to the correlation risks discussed
above, the purchase of an option also entails the risk that changes in the value
of the underlying futures contract will not be fully reflected in the value of
the option purchased. Options on foreign currency futures contracts may involve
certain additional risks. Trading options on foreign currency futures contracts
is relatively new. The ability to establish and close out positions in such
options is subject to the maintenance of a liquid secondary market. To mitigate
this problem, a Portfolio will not purchase or write options on foreign currency
futures contracts unless and until, in HLM's opinion, the market for such
options has developed sufficiently that the risks in connection with such
options are not greater than the risks in connection with transactions in the
underlying foreign currency futures contracts. Compared to the purchase or sale
of foreign currency futures contracts, the purchase of call or put options
thereon involves less potential risk to the Portfolio because the maximum amount
at risk is the premium paid for the option (plus transaction costs). However,
there may be circumstances when the purchase of a call or put option on a
foreign currency futures contract would result in a loss, such as when there is
no movement in the price of the underlying currency or futures contract, when
use of the underlying futures contract would not result in a loss.

Lower-Rated Debt Securities ("Junk Bonds"). The market value of lower-rated debt
securities tend to reflect individual corporate developments to a greater extent
than do higher-rated securities, which react primarily to fluctuations in the
general level of interest rates. Lower-rated debt securities also tend to be
more sensitive to general economic conditions than are higher-rated debt
securities.

INVESTMENT RESTRICTIONS

In addition to the fundamental investment restrictions noted in
the Prospectus, the Fund has adopted the investment restrictions listed below
relating to the investment of each Portfolio's assets and its activities. These
also are fundamental policies that may not be changed without the approval of
the holders of a majority of the outstanding voting securities of a Portfolio
(which for this purpose and under the 1940 Act means the lesser of (i) 67% of
the shares represented at a meeting at which more than 50% of the outstanding
shares are represented or (ii) more than 50% of the outstanding shares). None of
the Portfolios may: (1) issue senior securities (other than with respect to
borrowing through the use of reverse repurchase agreements or from a bank for
temporary or emergency purposes as set forth in the Prospectus under "Investment
Restrictions.");

(2) make loans, except (a) through the purchase of all or a portion of an issue
of debt securities in accordance with its investment objective, policies and
limitations, or (b) by engaging in repurchase agreements with respect to
portfolio securities, or (c) by lending securities to other parties, provided
that no securities loan may be made, if, as a result, more than 33 1/3% of the
value of its total assets would be lent to other parties;

(3) underwrite securities of other issuers;

(4) invest in companies for the purpose of exercising control or management;

(5) purchase or sell physical commodities or related commodity contracts;

(6) invest directly in interests in oil, gas or other mineral exploration or
development programs or mineral leases; or

(7) invest more than 10% of its total assets in warrants.

Whenever an investment policy or limitation states a maximum percentage of a
Portfolio's assets that may be invested in any security or other asset or sets
forth a policy regarding quality standards, such standard or percentage
limitation shall be determined immediately after and as a result of the
Portfolio's acquisition of such security or other asset. Accordingly, any later
increase or decrease in a percentage resulting from a change in values, net
assets or other circumstances will not be considered when determining whether
that investment complies with the Portfolio's investment policies and
limitations.

Each Portfolio's investment objectives and other investment policies not
designated as fundamental in this Statement of Additional Information are
non-fundamental and may be changed at any time by action of the Board of
Directors. Although a non-fundamental policy, each Portfolio may not purchase
securities on margin or make short sales, unless, by virtue of its ownership of
other securities, it has the right to obtain securities equivalent in kind and
amount to the securities sold and, if the right is conditional, the sale is made
upon the same conditions, except that the Fund may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities.

PORTFOLIO TRANSACTIONS

The Advisory Agreements authorize HLM to select the brokers or dealers that will
execute the purchases and sales of investment securities for each of the Fund's
Portfolios and HLM to use reasonable efforts to obtain the best available price
and the most favorable execution with respect to all transactions for the
Portfolios. HLM will consider the full range and quality of services offered by
the executing broker or dealer when making these determinations. Neither HLM nor
any of its officers, affiliates, or employees will act as principal or receive
any compensation from the Portfolios in connection with the purchase or sale of
investments for the Portfolios.

Some securities considered for investment by the Fund's Portfolios also may be
appropriate for other clients advised by HLM. If the purchase or sale of
securities consistent with the investment policies of a Portfolio and one or
more of these other clients advised by HLM 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 HLM, as the case may be.
Although there is no specified formula for allocating such transactions, the
various allocation methods used by HLM, and the results of such allocations, are
subject to periodic review by the Board of Directors. Brokers are selected on a
basis of their overall assistance in terms of execution capabilities and
research services, provided that their commission schedules are competitive with
other firms providing similar services.

No trades will be executed with HLM, its affiliates, officers or employees
acting as principal or agent for others, although such entities and persons may
be trading contemporaneously in the same or similar securities, except HLM may
effect cross-trades provided that they are conducted at market price and
absent any commission.

For the years ended October 31, 1998, October 31,1997, the period ended October
31, 1996, and the year ended December 31, 1995, the amount of brokerage
commissions paid by each Portfolio were as follows:
<TABLE>
<S> <C> <C> <C> <C>

- -------------------------------- ---------------------- -------------------- --------------------- -------------------
Year Ended October Year Ended October Period Ended Year Ended Dec.
Portfolio 31, 1998 31, 1997 October 31, 1996 31, 1995
- -------------------------------- ---------------------- -------------------- --------------------- -------------------
International Equity Portfolio $695,309 $794,431 $690,589 $242,975
Global Equity Portfolio (1) 148,242 82,629 N/A N/A
Multi-Asset Global Portfolio (2) 5,196 6,256 N/A N/A

Emerging Markets Portfolio (3) N/A N/A N/A N/A

</TABLE>

(1) Commencement of Operations was December 1, 1996.
(2) Commencement of Operations was November 1, 1996.
(3) Commencement of Operations was November 9, 1998.

NET ASSET VALUE

As used in the Prospectus, "Business Day" refers to those days when the New York
Stock Exchange is open for business, which is Monday through Friday except for
holidays. As of the date of this Statement of Additional Information, such
holidays are: New Year's Day, Martin Luther King Jr.'s Birthday, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day.

TAX CONSIDERATIONS

The following summary of tax consequences, which does not purport to be
complete, is based on U.S. federal tax laws and regulations in effect on the
date of this Statement of Additional Information, which are subject to change by
legislative or administrative action.

Qualification as a Regulated Investment Company. Each active Portfolio has
qualified and intends to continue to qualify to be treated as a regulated
investment company ("RIC") under the Internal Revenue Code of 1986, as amended
(the "Code"). Each of the active Portfolios qualified as a RIC for the periods
ended October 31, 1998. The Emerging Markets Portfolio intends to qualify to
be treated a as a regulated investment company. To qualify as a RIC, a Portfolio
must, among other
things, (a) derive at least 90% of its gross income each taxable year from
dividends, interest, payments with respect to securities loans and gains from
the sale or other disposition of securities or foreign currencies, or other
income derived from its business of investing in securities (the "Qualifying
Income Requirement"); (b) diversify its holdings so that, at the end of each
quarter of the Portfolio's taxable year, (i) at least 50% of the market value of
the Portfolio's assets is represented by cash and cash items (including
receivables), U.S. Government securities, securities of other RICs and other
securities, with such other securities of any one issuer limited for the
purposes of this calculation to an amount not greater than 5% of the value of
the Portfolio's total assets and not greater than 10% of the outstanding voting
securities of such issuer and (ii) not more than 25% of the value of the
Portfolio's total assets is invested in the securities of any one issuer (other
than U.S. Government securities or the securities of other RICs); and (c)
distribute at least 90% of its investment company taxable income (which
includes, among other items, dividends, interest and net short-term capital
gains in excess of net long-term capital losses) each taxable year.

If for any taxable year a Portfolio does not qualify as a RIC, all of its
taxable income will be taxed to the Portfolio at corporate rates. For each
taxable year that the Portfolio qualifies as a RIC, it will not be subject to
federal income tax on that part of its investment company taxable income and net
capital gains (the excess of net long-term capital gain over net short-term
capital loss) that it distributes to its shareholders. In addition, to avoid a
nondeductible 4% federal excise tax, the Portfolio must distribute during each
calendar year an amount equal to at least the sum of 98% of its ordinary income
(not taking into account any capital gains or losses) determined on a calendar
year basis, 98% of its capital gains in excess of capital losses determined in
general on an October 31 year-end basis, and any undistributed amounts from
previous years.

Distributions. Each Portfolio's automatic reinvestment of its taxable investment
income, net short-term capital gains and net long-term capital gains in
additional shares of the Portfolio and distribution of such shares to
shareholders will be taxable to the Portfolio's shareholders. In general, such
shareholders will be treated as if such income and gains had been distributed to
them by the Portfolio and then reinvested by them in shares of the Portfolio,
even though no cash distributions have been made to shareholders. The automatic
reinvestment of taxable investment income and net realized short-term capital
gains of the Portfolio will be taxable to the Portfolio's shareholders as
ordinary income. If a portion of a Portfolio's income consists of dividends paid
by U.S. corporations, a portion of the dividend paid by the Portfolio may be
eligible for the corporate dividend received deduction. A distribution will be
treated as paid on December 31 of the current calendar year if it is declared by
a Portfolio in October, November or December with a record date in such a month
and paid the Portfolio during January of the following calendar year. Such
distributions will be taxable to the shareholders in the calendar year in which
the distributions are declared, rather than in the year in which the
distributions are received. Each Portfolio will inform shareholders of the
amount and tax status of all amounts treated as distributed to them not later
than 60 days after the close of each calendar year.

Sale of Shares. Upon the sale or other disposition of shares of a Portfolio, or
upon receipt of a distribution in complete liquidation of a Portfolio, a
shareholder generally will realize a capital gain or loss which will be
long-term or short-term, generally depending upon the shareholder's holding
period for the shares. Any loss realized on the sale or exchange will be
disallowed to the extent the shares disposed of are replaced (including shares
acquired pursuant to a dividend reinvestment plan) within a period of 61 days
beginning 30 days before and ending 30 days after disposition of the shares. In
such a case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss. Any loss realized by the shareholder on a disposition of
Portfolio shares held by the shareholder for six months or less will be treated
as a long-term capital loss to the extent of any distributions of net capital
gains deemed received by the shareholder with respect to such shares.

Zero Coupon Securities. Investments by a Portfolio in zero coupon securities
(other than tax-exempt zero coupon securities) will result in income to the
Portfolio equal to a portion of the excess of the face value of the securities
over their issue price (the "original issue discount") each year that the
securities are held, even though the Portfolio receives no cash interest
payments. This income is included in determining the amount of income which the
Portfolio must distribute to maintain its status as a RIC and to avoid the
payment of federal income tax and the 4% excise tax.

Backup Withholding. A Portfolio may be required to withhold U.S. federal income
tax at the rate of 31% of all amounts deemed to be distributed as a result of
the automatic reinvestment by the Portfolio of its income and gains in
additional shares of the Portfolio and, all redemption payments made to
shareholders who fail to provide the Portfolio with their correct taxpayer
identification number or to make required certifications, or who have been
notified by the Internal Revenue Service that they are subject to backup
withholding. Backup withholding is not an additional tax. Any amounts withheld
will be credited against a shareholder's U.S. federal income tax liability.
Corporate shareholders and certain other shareholders are exempt from such
backup withholding.

Tax Treatment of Hedging Transactions. The taxation of equity options and
over-the-counter options on debt securities is governed by the Code section
1234. Pursuant to Code section 1234, the premium received by a Portfolio for
selling a put or call option is not included in income at the time of receipt.
If the option expires, the premium is short-term capital gain to the Portfolio.
If the Portfolio enters into a closing transaction, the difference between the
amount paid to close out its position and the premium received is short-term
capital gain or loss. If a call option written by the Portfolio is exercised,
thereby requiring the Portfolio to sell the underlying security, the premium
will increase the amount realized upon the sale of such security and any
resulting gain or loss will be a capital gain or loss, and will be long-term or
short-term depending upon the holding period of the security. With respect to a
put or call option that is purchased by a Portfolio, if the option is sold, any
resulting gain or loss will be a capital gain or loss, and will be long-term or
short-term, depending upon the holding period of the option. If the option
expires, the resulting loss is a capital loss and is long-term or short-term,
depending upon the holding period of the option. If the option is exercised, the
cost of the option, in the case of a call option, is added to the basis of the
purchased security and, in the case of a put option, reduces the amount realized
on the underlying security in determining gain or loss.

Certain options, futures, and forward contracts in which a Portfolio may invest
are "section 1256 contracts." Gains and losses on section 1256 contracts
generally are treated as 60% long-term (taxed at the 20% long-term capital gains
rate) and 40% short-term capital gains or losses ("60/40 treatment"), regardless
of the Portfolio's actual holding period for the contract. Also, a section 1256
contract held by the Portfolio at the end of each taxable year (and generally,
for the purposes of the 4% excise tax, on October 31 of each year) must be
treated as if the contract had been sold at its fair market value on that day
("mark to market treatment"), resulting in unrealized gains and losses being
treated as though they were realized. Foreign currency gain or loss (discussed
below) arising from section 1256 contracts may, however, be treated as ordinary
income or loss. Generally, hedging transactions undertaken by a Portfolio may
result in "straddles" for federal income tax purposes. The straddle rules may
affect the character of gains or losses realized by the Portfolio. In addition,
losses realized by the Portfolio on positions that are part of a straddle may be
deferred under the straddle rules rather than being taken into account in
calculating the taxable income for the taxable year in which such losses are
realized. Further, the Portfolio may be required to capitalize, rather than
deduct currently, any interest expense on indebtedness incurred or continued to
purchase or carry any positions that are part of a straddle. Because only a few
regulations implementing the straddle rules have been promulgated, the tax
consequences to the Portfolio of engaging in hedging transactions are not
entirely clear. Hedging transactions may increase the amount of short-term
capital gain realized by a Portfolio which is taxed as ordinary income when
distributed to shareholders.

The Portfolio may make one or more of the elections available under the Code
that are applicable to straddles. If the Portfolio makes any of the elections,
the amount, character, and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections may
accelerate the recognition of gains or losses from the affected straddle
positions.

Because the straddle rules may affect the amount, character, and timing of gains
or losses from the positions that are part of a straddle, the amount of
Portfolio income that is distributed to members and that is taxed to them as
ordinary income or long-term capital gain may be increased or decreased as
compared to a fund that did not engage in such hedging transactions.

Tax Treatment of Foreign Currency-Related Transactions. Gains or losses
attributable to fluctuations in exchange rates that occur between the time a
Portfolio accrues receivables or liabilities denominated in a foreign currency
and the time the Portfolio actually collects such receivables, or pays such
liabilities, generally are treated as ordinary income or ordinary loss.
Similarly, on disposition of certain options, futures, and forward contracts and
on disposition of debt securities denominated in a foreign currency, gains or
losses attributable to fluctuations in the value of foreign currency between the
date of acquisition of the security or contract and the date of disposition also
are treated as ordinary gain or loss. These gains or losses, referred to under
the Code as "Section 988" gains or losses, may increase or decrease the amount
of the Portfolio's investment company taxable income to be distributed to
members as ordinary income.

Tax Treatment of Passive Foreign Investment Companies. Each Portfolio may invest
in the stock of "passive foreign investment companies" ("PFICs") if such stock
is a permissible investment. A PFIC is a foreign corporation - other than a
"controlled foreign corporation" as to which a Portfolio is a U.S. shareholder,
that in general meets either of the following tests: (1) at least 75% of its
gross income is passive or (2) an average of at least 50% of its assets produce,
or are held for the production of passive income. If a Portfolio invests in
stock of certain foreign investment companies, the Portfolio may be subject to
U.S. federal income taxation on a portion of any "excess distribution" with
respect to, or gain from the disposition of, such stock. The tax would be
determined by allocating on a pro rata basis such distribution or gain to each
day of the Portfolio's holding period for the stock. The distribution or gain so
allocated to any taxable year of the Portfolio, other than the taxable year of
the excess distribution or disposition, would be taxed to the Portfolio at the
highest ordinary income rate in effect for such year, and the tax would be
further increased by an interest charge to reflect the value of the tax deferral
deemed to have resulted from the ownership of the foreign company's stock. Any
amount of distribution or gain allocated to the taxable year of the distribution
or disposition would be included in the Portfolio's investment company taxable
income and, accordingly, would not be taxable to the Portfolio to the extent
distributed by the Portfolio as a dividend to its shareholders.

A Portfolio may be able to make an election, in lieu of being taxable in the
manner described above, to include annually in income its pro rata share of the
ordinary earnings and net capital gain of any foreign investment company in
which it invests, regardless of whether it actually received any distributions
from the foreign company. These amounts would be included in the Portfolio's
investment company taxable income and net capital gain which, to the extent
distributed by the Portfolio as ordinary or capital gain dividends, as the case
may be, would not be taxable to the Portfolio. In order to make this election,
the Portfolio would be required to obtain certain annual information from the
foreign investment companies in which it invests, which in many cases may be
difficult to obtain.

Alternatively, each Portfolio may elect to "mark-to-market" its stock in any
PFIC. "Marking to market," in this context, means including in ordinary income
each taxable year, the excess, if any, of the fair market value of a PFIC's
stock over a Portfolio's adjusted basis therein as of the end of that year.
Pursuant to the election, a Portfolio also would be allowed to deduct (as an
ordinary, not capital, loss) the excess, if any, of its adjusted basis in PFIC
stock over the fair market value thereof as of the taxable year end, but only to
the extent of any net mark-to-market gains with respect to that stock included
by the Portfolio for prior taxable years. A Portfolio's adjusted basis in each
PFIC's stock with respect to which it makes this election will be adjusted to
reflect the amounts of income included and deductions taken under the election.

Foreign Shareholders. U.S. taxation of a
shareholder who, as to the United States, is a
non-resident alien individual, a foreign trust or
estate, foreign corporation, or foreign partnership
("foreign shareholder") depends on whether the
income from the Portfolio is "effectively
connected" with a U.S. trade or business carried on
by such shareholder.

If the income from a Portfolio is not "effectively connected" with a U.S. trade
or business carried on by the foreign shareholder, deemed distributions by the
Portfolio of investment company taxable income will be subject to a U.S. tax of
30% (or lower treaty rate), which tax is generally withheld from such
distributions. Deemed distributions of capital gain dividends and any gain
realized upon redemption, sale or exchange of shares will not be subject to U.S.
tax at the rate of 30% (or lower treaty rate) unless the foreign shareholder is
a nonresident alien individual who is physically present in the U.S. for more
than 182 days during the taxable year and meets certain other requirements.
However, this 30% tax on capital gains of non-resident alien individuals who are
physically present in the United States for more than the 182-day period only
applies in exceptional cases because any individual present in the United States
for more than 182 days during the taxable year is generally treated as a
resident for U.S. federal income tax purposes. In that case, such individual
would be subject to U.S. federal income tax on the individual's worldwide income
at the graduated rates applicable to U.S. citizens, rather than the 30% U.S.
tax. In the case of a foreign shareholder who is a non-resident alien
individual, the Portfolio may be required to withhold U.S. federal income tax at
a rate of 31% of deemed distributions of net capital gains and redemption
payments unless the foreign shareholder certifies his or her non-U.S. status
under penalties of perjury or otherwise establishes an exemption. See "Backup
Withholding" above.

If the income from a Portfolio is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then deemed distributions of
investment company taxable income and capital gain dividends and any gain
realized upon the redemption, sale or exchange of shares of the Portfolio will
be subject to U.S. federal income tax at the graduated rates applicable to U.S.
citizens or domestic corporations. Foreign corporate shareholders may also be
subject to the branch profits tax imposed by the Code.

The tax consequences to a foreign shareholder entitled to claim the benefits of
an applicable tax treaty may be different from those described herein. Foreign
shareholders are advised to consult their own advisers with respect to the
particular tax consequences to them of an investment in a Portfolio.

Foreign Withholding Taxes. Income received by a Portfolio from sources within
foreign countries may be subject to withholding and other taxes imposed by such
countries. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes. If more than 50% of the value of a Portfolio's
total assets at the close of its taxable year consists of securities of foreign
corporations, the Portfolio will be eligible and may elect to "pass through" to
the Portfolio's shareholders the amount of foreign taxes paid by the Portfolio.
Pursuant to this election, a shareholder will be required to include in gross
income (in addition to dividends actually received) its pro rata share of the
foreign taxes paid by the Portfolio, and may be entitled either to deduct its
pro rata share of the foreign taxes in computing its taxable income or to use
the amount as a foreign tax credit against its U.S. federal income tax
liability, subject to limitations. Each shareholder will be notified within 60
days after the close of the Portfolio's taxable year whether the foreign taxes
paid by the Portfolio will "pass through" for that year. If a Portfolio is not
eligible to make the election to "pass through" to its shareholders its foreign
taxes, the foreign taxes it pays will reduce its investment company taxable
income and distributions by the Portfolio will be treated as U.S. source income.

Generally, a credit for foreign taxes is subject to the limitation that it may
not exceed the shareholder's U.S. tax attributable to its foreign source taxable
income. For this purpose, if the pass-through election is made, the source of
the Portfolio's income flows through to its shareholders. With respect to the
Portfolios, gains from the sale of securities will be treated as derived from
U.S. sources and certain currency fluctuation gains, including fluctuation gains
from foreign currency denominated debt securities, receivables and payables,
will be treated as ordinary income derived from U.S. sources. The limitation on
the foreign tax credit is applied separately to foreign source passive income
(as defined for purposes of the foreign tax credit), including the foreign
source passive income passed through by the Portfolios. Shareholders who are not
liable for federal income taxes will not be affected by any such "pass through"
of foreign tax credits.

Other Taxes A Portfolio may be subject to state, local or foreign taxes in any
jurisdiction in which the Portfolio may be deemed to be doing business. In
addition, shareholders of a Portfolio may be subject to state, local or foreign
taxes on distributions from the Portfolio. In many states, Portfolio
distributions which are derived from interest on certain U.S. Government
obligations may be exempt from taxation.

Shareholders are advised to consult their own tax advisers with respect to the
particular tax consequences to them of an investment in a Portfolio.

SHAREHOLDER INFORMATION

Certificates representing shares of a particular Portfolio will not be issued to
shareholders. Investors Bank & Trust Company, the Fund's Transfer Agent, will
maintain an account for each shareholder upon which the registration and
transfer of shares are recorded, and any transfers shall be reflected by
bookkeeping entry, without physical delivery. Detailed confirmations of each
purchase or redemption are sent to each shareholder. Monthly statements of
account are sent which include shares purchased as a result of a reinvestment of
Portfolio distributions.

The Transfer Agent will require that a shareholder provide requests in writing,
accompanied by a valid signature guarantee form, when changing certain
information in an account (i.e., wiring instructions, telephone privileges,
etc.).

Fund management reserves the right to waive the minimum initial investment in
any Portfolio.

The Fund reserves the right, if conditions exist which make cash payments
undesirable, to honor any request for redemption or repurchase order with
respect to shares of a Portfolio by making payment in whole or in part in
readily marketable securities chosen by the Fund and valued as they are for
purposes of computing the Portfolio's net asset value (redemption-in-kind). If
payment is made in securities, a shareholder may incur transaction expenses in
converting theses securities to cash. The Fund has elected, however, to be
governed by Rule 18f-1 under the 1940 Act as a result of which the Fund is
obligated to redeem shares with respect to any one shareholder during any 90-day
period, solely in cash up to the lesser of $250,000 or 1% of the net asset value
of a Portfolio at the beginning of the period.

CALCULATION OF PERFORMANCE DATA

The Portfolios may, from time to time, include the 30-day yield in
advertisements or reports to shareholders or prospective investors. Quotations
of yield will be based on all investment income per share during a particular
30-day (or one month) period (including dividends and interest), less expenses
accrued during the period ("net investment income"), and are computed by
dividing net investment income by the maximum offering price per share on the
last day of the period, according to the following formula which is prescribed
by the Commission:

YIELD = 2 x { [ ((a - b) / (c x d)) + 1]6 - 1 }

Where: a = dividends and interest earned during the period;
b = expenses accrued for the period (net of
reimbursements);
c = the average daily number of shares of a Portfolio
outstanding during the period that
were entitled to receive dividends; and
d = the maximum offering price per share on the last
day of the period.

Each of the Portfolios may, from time to time, include "total return" in
advertisements or reports to shareholders or prospective investors. Quotations
of average annual total return will be expressed in terms of the average annual
compounded rate of return of a hypothetical investment in a Portfolio of the
Fund over periods of 1, 5 and 10 years (up to the life of the Portfolio),
calculated pursuant to the following formula which is prescribed by the
Commission:

P(1 + T)n = ERV

Where:
P = a hypothetical initial payment of $1,000,
T = the average annual total return,
n = the number of years, and
ERV = the ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period.

All total return figures assume that all dividends are reinvested when paid.

The total return as defined above for the Fund's Portfolios for the period ended
October 31, 1998, and since the commencement of operations of each Portfolio
(annualized) to October 31, 1998 are as follows:

One Year Five Years Life of Portfolio Inception
International Equity Portfolio 0.06% n/a 4.52%* 5/11/94
Global Equity Portfolio (2.46%) n/a 0.53%* 12/1/96
Multi-Asset Global Portfolio 5.53% n/a 9.17%* 11/1/96
Emerging Markets Portfolio n/a n/a n/a 11/09/98
*Annualized

</TABLE>

RATINGS DESCRIPTIONS

Standard & Poor's Corporation

AAA. Bonds rated AAA are highest grade debt
obligations. This rating indicates an extremely
strong capacity to pay principal and interest.
AA. Bonds rated AA also qualify as high-quality
obligations. Capacity to pay principal and
interest is very strong, and in the majority of
instances they differ from AAA issues only in small
degree.

A. Bonds rated A have a strong capacity to pay principal and interest, although
they are more susceptible to the adverse effects of changes in circumstances and
economic conditions.

BBB. Bonds rated BBB are regarded as having adequate capacity to pay interest or
principal. Although these bonds normally exhibit adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and principal.

BB and Lower. Bonds rated BB, B, CCC, CC, C and D are regarded, on balance, as
predominately speculative with respect to the issuer's capacity to pay interest
and principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and D the highest degree of speculation. While such
bonds may have some quality and protective characteristics, these are outweighed
by large uncertainties or major risk exposures to adverse conditions.

The ratings AA to D may be modified by the addition of a plus or minus sign to
show relative standing within the major rating categories.

A-1. Standard & Poors Commercial Paper ratings are current assessments of the
likelihood of timely payments of debts having original maturity of no more than
365 days. The A-1 designation indicates the degree of safety regarding timely
payment is very strong.

A-2. Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1.

Moody's Investors Service, Inc.

Aaa. Bonds are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to change,
such changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues.

Aa. Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuations of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than the Aaa securities.

A. Bonds which are rated A possess many favorable investment attributes and may
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

Baa. Baa rated bonds are considered medium-grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present, but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.

Ba. Bonds which are rated Ba are judged to have speculative elements because
their future cannot be considered as well assured. Uncertainty of position
characterizes bonds in this class, because the protection of interest and
principal payments may be very moderate and not well safeguarded.

B and Lower. Bonds which are rated B generally lack characteristics of a
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the security over any long period of time may be
small. Bonds which are rated Caa are of poor standing. Such securities may be in
default of there may be present elements of danger with respect to principal or
interest. Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings. Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

Moody's applies the numerical modifiers 1, 2, and 3 in each generic rating
classification from Aa through C in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

Moody's ratings for state and municipal and other short-term obligations will be
designated Moody's Investment Grade ("MIG"). This distinction is in recognition
of the differences between short-term credit risk and long-term risk. Factors
affecting the liquidity of the borrower are uppermost in importance in
short-term borrowing, while various factors of the first importance in long-term
borrowing risk are of lesser importance in the short run.

MIG-1. Notes bearing this designation are of the best quality enjoying strong
protection from established cash flows of funds for their servicing or from
established and broad-based access to the market for refinancing, or both.

MIG-2. Notes bearing this designation are of favorable quality, with all
security elements accounted for, but lacking the undeniable strength of the
previous grade. Market access for refinancing, in particular, is likely to be
less well established.

P-1. Moody's Commercial Paper ratings are opinions of the ability of issuers to
repay punctually promissory obligations not having an original maturity in
excess of nine months. The designation "Prime-1" or "P-1" indicates the highest
quality repayment capacity of the rated issue.

P-2. Issuers have a strong capacity for repayment of short-term promissory
obligations.

Thomson BankWatch, Inc.

A. Company possess an exceptionally strong balance sheet and earnings record,
translating into an excellent reputation and unquestioned access to its natural
money markets. If weakness or vulnerability exists in any aspect of the
company's business, it is entirely mitigated by the strengths of the
organization.

A/B. Company is financially very solid with a favorable track record and no
readily apparent weakness. Its overall risk profile, while low, is not quite as
favorable as companies in the highest rating category.

IBCA Limited

A1. Short-term obligations rated A1 are supported by a very strong capacity for
timely repayment. A plus sign is added to those issues determined to possess the
highest capacity for timely payment.

Fitch Investors Service, Inc.

F-1. The rating F-1 is the highest rating assigned by Fitch. Among the factors
considered by Fitch in assigning this rating are: (1) the issuer's liquidity;
(2) its standing in the industry; (3) the size of its debt; (4) its ability to
service its debt; (5) its profitability; (6) its return on equity; (7) its
alternative sources of financing; and (8) its ability to access the capital
markets. Analysis of the relative strength or weakness of these factors and
others determines whether an issuer's commercial paper is rated F-1.

FINANCIAL STATEMENTS

The Fund's audited Financial Statements, including the Financial Highlights, for
the year ended October 31, 1998 appearing in the Annual Report to Shareholders
and the report thereon of Ernst & Young LLP, independent auditors, appearing
therein are hereby incorporated by reference in this Statement of Additional
Information. The Annual Report to Shareholders is delivered with this Statement
of Additional Information to shareholders requesting this Statement of
Additional Information.

Part C. OTHER INFORMATION

Item 23. Exhibits

Exhibit Number Description
1(a) Articles of Incorporation, dated July 31, 1996 (previously filed as
Exhibit (1) to Registrant's Registration Statement on Form N-1A, File Nos.
333-09341, 811-07739) and incorporated herein by reference.

2 By-laws (previously filed as Exhibit (2) to Registrant's Registration
Statement on Form N-1A, File Nos. 333-09341, 811-07739) and incorporated
herein by reference.

3 None

4 None

5(a) Advisory Agreement, dated October 14, 1996 between the Registrant
(International Equity Portfolio) and Harding, Loevner Management, L.P.
(previously filed as Exhibit 5(a) to Pre-Effective Amendment No.1 to
Registrant's Registration Statement on Form N-1A, File Nos. 333-09341,
811-07739) and incorporated herein by reference.

5(b) Advisory Agreement, dated October 14, 1996 between the Registrant (Global
Equity Portfolio) and Harding, Loevner Management, L.P. (previously filed
as Exhibit 5(b) to Pre-Effective Amendment No.1 to Registrant's
Registration Statement on Form N-1A, File Nos. 333-09341, 811-07739) and
incorporated herein by reference.

5(c) Advisory Agreement, dated October 14, 1996 between the Registrant
(Multi-Asset Global Portfolio) and Harding, Loevner Management, L.P.
(previously filed as Exhibit 5(c) 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.

5(d) Advisory Agreement, dated October 14, 1996 between the Registrant
(Emerging Markets Portfolio) and Harding, Loevner Management, L.P.
(previously filed as Exhibit 5(d) 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.

6(a) Distribution Agreement, dated October 14, 1996 between Registrant and AMT
Capital Services, Inc. (previously filed as Exhibit 6(a) to Pre-Effective
Amendment No.1 to Registrant's Registration Statement on Form N-1A, File
Nos. 333-09341, 811-07739) and incorporated herein by reference.

6(b) Distribution Agreement, dated May 29, 1998 between Registrant and AMT
Capital Securities, L.L.C. (previously filed as Exhibit 6(b) to
Pre-Effective Amendment No.3 to Registrant's Registration Statement on
Form N-1A, File Nos. 333-09341, 811-07739) and incorporated herein by
reference.

7 None

8 Form of Custodian Agreement, dated October 28, 1996 between Registrant
and Investors Bank & Trust Company (previously filed as Exhibit 8 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.

9(a) Administration Agreement, dated October 14, 1996 between Registrant and
AMT Capital Services, Inc. (previously filed as Exhibit 9(a) to
Pre-Effective Amendment No.1 to Registrant's Registration Statement on
Form N-1A, File Nos. 333-09341, 811-07739) and incorporated herein by
reference.

9(b) Form of Transfer Agency Agreement, dated October 28, 1996 between
Registrant and Investors Bank & Trust Company (previously filed as Exhibit
9(b) to Pre-Effective Amendment No.1 to Registrant's Registration
Statement on Form N-1A, File Nos. 333-09341, 811-07739) and incorporated
herein by reference.

9(c) Administration Agreement, dated May 29, 1998 between Registrant and
Investors Capital Services, Inc. (previously filed as Exhibit 9(c) to
Pre-Effective Amendment No.3 to Registrant's Registration Statement on
Form N-1A, File Nos. 333-09341, 811-07739) and incorporated herein by
reference.

10 Opinion and Consent of Dechert Price & Rhoads (previously filed as Exhibit
10 to Pre-Effective Amendment No.1 to Registrant's Registration Statement
on Form N-1A, File Nos. 333-09341, 811-07739) and incorporated herein by
reference.

11 Consent of Ernst & Young ( filed herewith).

12 None

13(a) Share Purchase Agreement, dated October 14, 1996 between Registrant and
David R. Loevner for the International Equity Portfolio (previously filed
as Exhibit 13(a) to Pre-Effective Amendment No.1 to Registrant's
Registration Statement on Form N-1A, File Nos. 333-09341, 811-07739) and
incorporated herein by reference.

13(b) Share Purchase Agreement, dated October 14, 1996 between Registrant and
David R. Loevner for the Emerging Markets Portfolio (previously filed as
Exhibit 13(b) to Pre-Effective Amendment No.1 to Registrant's Registration
Statement on Form N-1A, File Nos. 333-09341, 811-07739) and incorporated
herein by reference.

13(c) Share Purchase Agreement, dated October 14, 1996 between Registrant and
David R. Loevner for the Multi-Asset Global Portfolio (previously filed as
Exhibit 13(c) 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.

13(d) Share Purchase Agreement, dated October 14, 1996 between Registrant and
David R. Loevner for the Global Equity Portfolio (previously filed as
Exhibit 13(d) to Pre-Effective Amendment No.1 to Registrant's Registration
Statement on Form N-1A, File Nos. 333-09341, 811-07739) and incorporated
herein by reference.

14 None

15 Not Applicable

16 Performance Information Schedule (filed herewith)

17 Financial Data Schedule (filed herewith)

18 None

</TABLE>

Item 24
Persons Controlled by or under Common Control with Registrant

As of December 31, 1998, the following shareholder was deemed to be a
"control person" of the Fund as such term is defined in the 1940 Act.
<TABLE>
<S> <C> <C> <C>

Name and Address of Nature of Beneficial Percent
Title of Class Beneficial Owner Ownership of Portfolio
None.

</TABLE>

Item 25
Indemnification.

The Registrant shall indemnify directors,
officers, employees and agents of the Registrant
against judgements, 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, as
amended (the "Securities Act"), may be permitted to
directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or
otherwise, Registrant understands that in the
opinion of the Securities and Exchange Commission
such indemnification is against public policy as
expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other
than the payment by Registrant of expenses incurred
or paid by a director, officer or controlling
person of 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 Securities Act and will be
governed by the final adjudication of such issue.

Item 26
Business and Other Connections of Investment
Adviser.

Harding, Loevner Management, LP (the
"Investment Adviser") is a company organized under
the laws of New Jersey State and it is an
investment adviser registered under the Investment
Advisers Act of 1940 (the "Advisers Act").
The list required by this Item 26 of
officers and directors of the Investment Adviser,
together with information as to any other business,
profession, vocation or employment of a substantial
nature engaged in by such officers and directors
during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by
the Investment Adviser pursuant to the Advisers Act
(SEC File No. 801-36845).

Item 27
Principal Underwriter.

In addition to the Registrant, AMT Capital
Securities, L.L.C. currently acts as distributor to
FFTW Funds, Inc., SAMCO Fund, Inc., Holland Series
Fund, Inc. and TIFF Investment Program, Inc. AMT
Capital Securities, L.L.C. is registered with the
Securities and Exchange Commission as a
broker/dealer and is a member of the National
Association of Securities Dealers, Inc.

For each Director or officer of AMT Capital
Securities, L.L.C.

Name and Principal
Business Address Positions & Offices Positions & Offices
with Underwriter with Distributor with Registrant

Alan M. Trager Director, Chairman and None
600 Fifth Avenue Treasurer
26th Floor
New York, NY 10020

Arthur Goetchius President
600 Fifth Avenue
26th Floor
New York, NY 10020

Carla E. Dearing Vice President Assistant Treasurer
600 Fifth Avenue
26th Floor
New York, NY 10020

Not applicable.

Item 28
Location of Accounts and Records.

All accounts, books and other
documents required to be maintained by Section
31(a) of the Investment Company Act of 1940, as
amended (the "1940 Act"), and the rules thereunder
will be maintained at the offices of the
Investment Adviser, the Custodian and the
Administrator.

Harding, Loevner Management, L.P.
50 Division Street, Suite 401
Somerville, N.J. 08876

Investors Capital Services, Inc.
600 Fifth Avenue, 26th Floor
New York, New York 10020

Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02117-9130

Item 29
Management Services.

Not applicable.

Item 30
Undertakings.

Not applicable

Registrant hereby undertakes to call a meeting of
shareholders for the purpose of voting upon the
question of removal of one or more of the
Registrant's directors when requested in writing to
do so by the holders of at least 10% of the
Registrant's outstanding shares of common stock
and, in connection with such meeting, to assist in
communications with other shareholders in this
regard, as provided under Section 16(c) of the 1940
Act.

SIGNATURES

Pursuant to the requirements of the Securities Act
of 1933 and the Investment Company Act of 1940, the
Registrant certifies that it meets all the
requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in
the City of Somerville, State of New Jersey on the
29th day of January, 1999.

HARDING, LOEVNER FUNDS, INC.

By: /s/ David R. Loevner

David R. Loevner, President

Pursuant to the requirements of the Securities Act
of 1933, this Post-Effective Amendment to the
Registration Statement had been signed below by the
following persons in the capacities indicated on
the 29th day of January, 1999.

Signature Title
/s/ David R. Loevner Director and President
David R. Loevner
/s/ William E. Vastardis Secretary and Treasurer
William E. Vastardis
*/s/ Jane A. Freeman Director
Jane A. Freeman
*/s/ Carl W. Schafer Director
Carl W. Schafer
*/s/ Samuel R. Karetsky Director
Samuel R. Karetsky
*/s/ James C. Brady III Director
James C. Brady III
* Attorney-in-Fact /s/ William E. Vastardis

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

________________________________

EXHIBITS

FORM N-1A

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

AND THE

INVESTMENT COMPANY ACT OF 1940

________________________________

HARDING, LOEVNER FUNDS, INC.

HARDING, LOEVNER FUNDS, INC.
EXHIBIT INDEX

11 Consent of Ernst & Young.
16 Performance Information Schedule
17 Financial Data Schedule

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions
"Financial
Highlights", "Other Parties-Independent Auditors" and
"Financial Statements" and to the use of our report dated
December 3, 1998, which is incorporated by reference, in
this Registration Statement (Form N-1A No. 333-09341) of
Harding, Loevner Funds, Inc.

/s/Ernst & Young LLP
ERNST & YOUNG LLP

New York, New York
January 25, 1999

Performance Information Schedule

Total Return
- -------------------------------------------------------------------------------

Performance Information Schedule

Total Return
- -----------------------------------------------------------------------------------------

Date of Net Cap. Shares Returns
Distribution Income Gains. Reinvested NAV Inception 1 Year

Harding, Loevner Funds, Inc.
International Equity Portfolio

5/11/94 10.00 1,000.00
12/31/94 0.03158 0.01167 0.445 9.71 975.32
4/25/95 0.01500 0.00000 0.152 10.32 1,038.16
6/30/95 0.00000 0.00000 0.000 10.32 1,038.16
7/25/95 0.05500 0.00000 0.529 10.46 1,057.78
10/23/95 0.01880 0.00000 0.183 10.41 1,054.62
12/29/95 0.01166 0.00000 0.110 10.77 1,092.28
4/30/96 0.00000 0.00000 0.000 11.57 1,173.41
8/16/96 0.02189 0.00000 0.191 11.63 1,181.71
10/31/96 0.08949 0.10499 1.696 11.65 1,203.51
12/31/96 0.00254 0.00000 0.022 12.20 1,260.59
10/31/97 0.00000 0.00000 0.000 11.79 1,218.22 1,000.00
12/31/97 0.10608 0.06914 1.573 11.51 1,207.40 991.11
10/31/98 0.00000 0.00000 0.000 11.62 1,218.94 1,000.59

Performance Information Schedule

Total Return
- -----------------------------------------------------------------------------------------

Date of Net Cap. Shares Returns
Distribution Income Gains. Reinvested NAV Inception 1 Year

Harding Loevner Funds
Global Equity Portfolio

12/1/96 17.58 1,000.00
12/31/96 0.01273 0.00000 0.041 17.55 999.02
10/31/97 0.00000 0.00000 0.000 18.70 1,064.48 1,000.00
12/31/97 0.24565 1.94345 7.330 17.00 1,092.33 1,026.15
10/31/98 0.00000 0.00000 0.000 16.16 1,038.35 975.45

Performance Information Schedule

Total Return
- -----------------------------------------------------------------------------------------

Date of Net Cap. Shares Returns
Distribution Income Gains. Reinvested NAV Inception 1 Year

Harding Loevner Funds
Multi Asset Global Portfolio

11/1/96 10.00 1,000.00
12/31/96 0.02900 0.00000 0.280 10.35 1,037.90
10/31/97 0.00000 0.00000 0.000 11.26 1,129.15 1,000.00
12/31/97 0.46045 0.00000 4.152 11.12 1,161.29 1,028.46
10/31/98 0.00000 0.00000 0.000 11.41 1,191.58 1,055.28

</TABLE>

<ARTICLE> 6
<CIK> 0001018170
<NAME> HARDING, LOEVNER FUNDS, INC.
<SERIES>
<NUMBER> 1
<NAME> INTERNATIONAL EQUITY PORTFOLIO
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 324428
<INVESTMENTS-AT-VALUE> 325748
<RECEIVABLES> 1127
<ASSETS-OTHER> 44
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 326919
<PAYABLE-FOR-SECURITIES> 788
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 75
<TOTAL-LIABILITIES> 863
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 322348
<SHARES-COMMON-STOCK> 28071
<SHARES-COMMON-PRIOR> 32838
<ACCUMULATED-NII-CURRENT> 3657
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1323)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1374
<NET-ASSETS> 326056
<DIVIDEND-INCOME> 7264
<INTEREST-INCOME> 760
<OTHER-INCOME> 0
<EXPENSES-NET> 3752
<NET-INVESTMENT-INCOME> 4272
<REALIZED-GAINS-CURRENT> (1323)
<APPREC-INCREASE-CURRENT> (1207)
<NET-CHANGE-FROM-OPS> 1742
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3376
<DISTRIBUTIONS-OF-GAINS> 2200
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2961
<NUMBER-OF-SHARES-REDEEMED> 8084
<SHARES-REINVESTED> 356
<NET-CHANGE-IN-ASSETS> (61248)
<ACCUMULATED-NII-PRIOR> 2760
<ACCUMULATED-GAINS-PRIOR> 2200
<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 2814
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<GROSS-EXPENSE> 3904
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<PER-SHARE-NAV-BEGIN> 11.79
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CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the
captions "Financial
Highlights", "Other Parties - Independent Auditors"
and "Financial Statements" and to the use of our
report dated December 3, 1997, which is
incorporated by reference, in this Registration
Statement (Form N-1A No. 333-09341) of Harding,
Loevner Funds, Inc.

ERNST & YOUNG LLP

New York, New York
November 27, 1998