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  • 1. The Firm 2011 First QuarterHarding Loevner invests in growing companies in the US, non-US developed, andemerging markets with the goal of achieving high excess returns with at- or below-market Investment Strategiesrisk. Employing a fundamentally-based, bottom-up stock picking approach, we build Frontier Emerging Markets 2%portfolios of high-quality growth stocks. Other <1% Intl Small Companies <1% Emerging Markets 31% InternationalInvestment Strategies Equity 35%Harding Loevner’s five related investment strategies are offered as institutional separateaccounts, mutual funds, and through sponsored wealth management programs. Weaccept custom investment guidelines, including social restrictions and after-tax returnobjectives. Global Equity 31% Growth Investing With A Global Perspective ▪ Global Equity ▪ Emerging Markets Account Types ▪ International Equity (non-US) ▪ Frontier Emerging Markets Sub-Advised Accounts SMA/UMA Programs 17% 24% ▪ International Small CompaniesThe Organization Mutual Funds (HL) 31% Separate Accounts 28%Former global investment managers for the Rockefeller family established Harding Loevnerin 1989. Our staff of 24 investment professionals has an average 20 years investmentexperience, and eight years with the firm. Assets under management as of March 31,2011 were $13.9 billion. Our clients are both tax-exempt and taxable, and include major Client Typesfoundations, endowments, pension plans, private family offices, and individuals. Weoffer comprehensive client service, timely communication, portfolio transparency, and Other Institutional 43%appropriate access to portfolio managers.In August 2009, Affiliated Managers Group (NYSE: AMG), an investment holdingcompany with stakes in a diverse group of boutique investment firms, acquired an interestin Harding Loevner. The remaining interest continues to be held by a broad group of Retirement 25% Individual Investors 32%Harding Loevner’s professionals. The firm is governed by a management committee ofeight senior employees. The operational and investment autonomy of Harding Loevner isassured by the terms of the limited partnership agreement.Investment Philosophy and ProcessHarding Loevner seeks superior returns from portfolios of companies that are well managed, financially sound, possess global competitiveadvantages and are positioned for superior growth. We believe that the insights gained through careful study of individual companies aremore valuable and reliable in the long term than forecasts of aggregate stock market directions.Harding Loevner undertakes in-depth fundamental research to identify growing companies and owns their shares when their prices areattractive. We analyze a company’s business model and its competitive position before making judgments about its share price. HardingLoevner, as distinct from other managers, screens for apparent bargains only stocks of companies that it has already determined aresuitable candidates for investment by virtue of their business quality. Up-front business analysis enables us to recognize when transientmarket misperceptions create investment opportunities.Each of Harding Loevner’s analysts is an industry specialist and a geographic generalist. This division of responsibilities encouragesdevelopment of deep expertise in the global competitive dynamics of industries and facilitates cross-border comparisons.Portfolio managers combine analyst recommendations with considerations of risk and their own investment views to construct anoptimal model portfolio upon which all client portfolios are based. The portfolio is concentrated to maximize the impact of analysts’insights, yet diversified to reduce risk. The portfolio managers sell a stock when it is ‘crowded out’ by a more attractive investmentopportunity, or downgraded due to price or deterioration in its fundamentals.HARDING LOEVNER LP50 Division Street, Fourth Floor • Somer ville, NJ 08876 • Tel (908) 218-7900 • Fax (908) 218-1915 • www.hardingloevner.com © 2011 Harding Loevner
  • 2. Global Equity May 2011 Monthly UpdateThe Global Equity Composite declined 1.6% for the month, while global agriculture industry. It is in the midst of backward integra-the MSCI All Country World Index (“the Index”) declined 2.1%. tion to own croplands in niche areas as well as forward integrationYear-to-date the Composite is up 5.1% versus a return of 6.6% to build the company’s capacity in value-added processing.for the Index.The month of May saw a decline in commodities prices for the The resilience in the prices of the major agriculturalfirst time since August 2010, with the S&P GSCI Index down contracts—soybeans, wheat and corn—is notable.6.8% for the month. Not coincidentally, the US dollar rallied in themonth—for the first time since November. Commodities broadlywere the “anti-dollar” since the Fed announced its intentions to Staples, a leading office supplies company in the US and Europe,conduct a second round of quantitative easing (QE2) late last Au- declined sharply during the month after the company reportedgust. Perhaps the prospective removal of QE2 in June spurred the weaker than expected earnings. While the company did encountermirror-image moves in commodities and currencies, or maybe it sales weakness in Europe, and experienced a lag in passing onwas the hopes that Washington will finally get serious in address- cost increases, we were surprised by the severity of the market’sing the deficit, having reached the mandated federal debt ceiling. reaction in pummeling Staples’ share price. The company has aThe panicky price action in the early days of the month suggest history of strong returns on capital and is still expected to gener-to us that some element of the move in commodities and curren- ate over $1 billion in free cash flow this year. The balance sheetcies was simply because too many players with the same positions is also strong. In our view, the current share price is discount-headed for the exits at the same time. ing a 50% permanent decline in earnings. The market’s verdict is clear: Staples is a dead business, a victim of the move to a paper-Within the broad decline in overall commodity prices in May, the less society and a world of on-line commerce. We tend to thinkresilience in the prices of the major agricultural contracts—soy- this obituary is years premature, but are revisiting all aspects ofbeans, wheat and corn—is notable. World inventories of grains our investment thesis on Staples in trying to answer the question:are low due to a combination of steadily increasing consumption screaming bargain or value trap?of protein and weak crops last year in Australia, China and Russia.Demand is being driven largely by the increased consumption of Analyst travel in the month included ten days in Japan for Yokoanimal protein in Asia, a function of increased per capita income Sakai, who met with a wide range of companies during the annualas economies grow. We have three investments that should direct- reporting period. Ferrill Roll was in London visiting UK-basedly benefit from the above trends: Bunge, Monsanto and Olam banks and financial services companies, while Alec Walsh trav-International. Bunge is one of the worlds largest originators and eled to Switzerland to see a range of health care businesses.processors of soybeans and benefits from continued demand forprotein, particularly across emerging markets. Monsanto is, in ourview, the clear global leader in technology for advanced seeds andtraits designed to increase farm productivity. Olam International,based in Singapore, is a specialist supply chain company for the Returns (%) for the Periods Ending May 31, 20111 1 Month Calendar 1 Year 3 Years2 5 Years2 10 Years2 Since YTD Inception2,3 HL Global Equity (gross of fees) -1.56 5.13 29.22 2.97 7.34 6.75 9.97 HL Global Equity (net of fees) -1.56 4.96 28.80 2.60 6.86 6.25 9.25 MSCI All Country World Index4 -2.06 6.63 28.77 -0.86 4.02 5.13 6.81 MSCI World Index -1.97 7.28 28.73 -1.19 3.17 4.14 6.591 The May 2011 Composite performance shown is preliminary; Annualized returns; Inception Date: November 30, 1989; The Benchmark Index. 2 3 4The Global Equity Composite contains fully discretionary US dollar-based global equity accounts. Harding Loevner LP is an investment adviser registered with theSecurities and Exchange Commission. Harding Loevner is an affiliate of Affiliated Managers Group, Inc. (NYSE: AMG), an investment holding company with stakesin a diverse group of boutique firms. Harding Loevner claims compliance with the Global Investment Performance Standards (GIPS®). Harding Loevner has received afirm-wide GIPS verification by Ashland Partners & Company, LLP beginning November 1, 1989. The most recent verification was for the Quarter ending December 31,2010. The Global Equity Composite has received a performance examination beginning November 30, 1989. Performance data quoted represents past performance; pastperformance does not guarantee future results. Returns are presented both gross and net of management fees and include the reinvestment of all income. The US dollaris the currency used to express performance. For complete information on the construction and historical record of the Global Equity Composite, please contact HardingLoevner at (908) 218-7900 or visit www.hardingloevner.com.The MSCI All Country World Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global developed andemerging markets. The Index consists of 45 developed and emerging market countries. The MSCI World Index is a free float-adjusted market capitalization index that isdesigned to measure global developed market equity performance. The Index consists of 24 developed market countries. You cannot invest directly in these Indices.Bold indicates companies held in the portfolio during the month. The portfolio is actively managed therefore holdings may not be current. They should not be consideredrecommendations to buy or sell any security. It should not be assumed that investment in the securities identified has been or will be profitable. To request a complete listof holdings for the past year, please contact Harding Loevner. Fundamental. Thinking. Worldwide.SM
  • 3. Fundamental. Thinking. Worldwide.SM Contributors to Returns (%) for the Month Ending May 31, 2011 Largest Contributors Sector Country Portfolio Weight Contribution Anta Sports Products Consumer Discretionary China 1.1 0.16 F5 Networks Information Technology United States 1.1 0.13 Monsanto Materials United States 2.1 0.09 Novartis Health Care Switzerland 1.0 0.09 Adobe Systems Information Technology United States 2.9 0.09 Largest Detractors Sector Country Portfolio Weight Contribution Staples Consumer Discretionary United States 1.9 -0.43 Li & Fung Consumer Discretionary Hong Kong 2.4 -0.30 Emerson Electric Industrials United States 2.6 -0.27 eBay Information Technology United States 2.5 -0.24 Fanuc Industrials Japan 2.6 -0.19The portfolio holdings identified above do not represent all of the securities held in the portfolio. It should not be assumed that investment in the securities identified hasbeen or will be profitable. The following information is available upon request: (1) information describing the methodology of the contribution data in the charts above;and (2) a list showing the weight and contribution of all holdings during the month. Past performance does not guarantee future results. In the charts above, “weight” isthe average percentage weight of the holding during the period, and “contribution” is the contribution to overall performance over the period. The portfolio is activelymanaged therefore holdings shown may not be current. They should not be considered recommendations to buy or sell any security. Sector Exposure (%) at May 31, 2011 Sector HL Global MSCI ACW Index Over/Under the Benchmark Info Technology 24.5 11.4 Cons Staples 14.4 9.5 Cons Discretionary 14.4 10.0 Cash 1.9 – Health Care 7.2 8.7 Industrials 9.3 10.8 Materials 7.2 9.0 Telecom Services 0.9 4.6 Utilities 0.0 3.7 Energy 6.8 11.9 Financials 13.4 20.4 -14.0 -14.0 -7.0 -7.0 0.0 0.0 7.0 7.0 14.0 14.0 Geographical Exposure (%) at May 31, 2011 Region HL Global MSCI ACW Index Over/Under the Benchmark United States 53.1 42.8 Cash 1.9 – Japan 8.7 7.6 Frontier Markets 0.0 – Pacific ex-Japan 4.9 5.1 Middle East 0.0 0.3 Europe ex-EMU 12.2 13.8 Emerging Markets 10.5 13.6 Canada 0.9 4.7 Europe EMU 7.8 12.1 -12.0 -12.0 -6.0 -6.0 0.0 0.0 6.0 6.0 12.0 12.0Source: Wilshire Atlas; MSCI Barra and S&P. MSCI and S&P do not make any express or implied warranties or representations and shall have no liability whatsoeverwith respect to any GICS data contained herein. Portfolio holdings and sector/geographic allocations are supplemental information only and complement a fully compliantGlobal Equity Composite GIPS Presentation, which is available upon request.HARDING LOEVNER LP50 Division Street, Fourth Floor • Somer ville, NJ 08876 • Tel (908) 218-7900 • Fax (908) 218-1915 • www.hardingloevner.com © 2011 Harding Loevner
  • 4. Emerging Markets May 2011 Monthly UpdateThe Emerging Markets Composite fell 2.8% in May, while the During the month, we completed the purchase of one new posi-MSCI Emerging Markets Index (“the Index”) declined 2.6%. tion in the portfolio, Anta Sports Products, and sold two, InfosysFor the year, the Composite has fallen 0.4%, while the Index has and MediaTek. Anta Sports is a Chinese sportswear maker thatgained 2.6%. is growing rapidly as it capitalizes on its improving brand image among Chinese consumers, and undercuts its well-known rivals,Emerging markets struggled in May due to a number of factors: such as Nike, on price. We sold India’s Infosys as it became in-Inflation generally remained high during the month, helping to creasingly apparent that its high margins and returns relative to theedge interest rates higher. Tensions in the Middle East persisted. rest of the Information Technology consulting and software ser-The potential for supply chain disruptions due to the earthquake vices industry are under threat from heightened competition. Wein Japan, particularly in autos and technology, seemed to increase. thought the shares were fairly valued given our lowered expecta-Also, there were renewed concerns over Greece’s economic fu- tions, and preferred to take a “wait and see” approach to whether orture and the stability of the eurozone. A sharp 8% sell off in oil not management’s plans to introduce more defensible intellectualprices due to concerns over the global growth outlook did not property-based services into the company’s mix will bear fruit.brighten the picture either. Anta Sports is a Chinese sportswear maker that isFor the month and year-to-date, emerging markets have laggeddeveloped markets, as measured by the MSCI World Index. Only growing rapidly as it capitalizes on its improvingsix of the 21 markets in the Emerging Markets Index were in posi- brand image among Chinese consumers.tive territory for the month, and among the BRIC markets (Brazil,Russia, India and China), which comprise 47% of the Index, only A similar case, but in a different industry, was Taiwan’s Medi-China outperformed, rising less than 1%. Egypt was the best-per- aTek, a fabless designer of semiconductor chips for cell phonesforming country for the month, rising almost 11% in US dollar and digital media devices. We sold our position as the company’sterms, followed by Morocco (+3%), Colombia (+ 2%), and Peru sales of 2G and more technologically-advanced 3G chipsets are(+1%). Egypt and Peru were two of the worst performing markets increasingly hindered by lower-cost offerings from rivals. Ques-in April. Turkey (down over 12%) and Russia (down over 6%), tions are also being raised about whether or not MediaTek will bewere two of the worst performing markets amid heightened un- able to climb the next step on the technology ladder with its 3Gcertainties ahead of the June elections in Turkey and the potential product. Overall, it appears to us that the competitive environ-increase in energy industry taxation in Russia. ment is making it more difficult for the company to replicate the former success and profitability it had in 2G.Only two sectors were in positive territory for the month: HealthCare and Consumer Discretionary. All other sectors were down in Analyst travels in the month included a trip by Jafar Rizvi toMay, with the worst performers being Energy and Materials. China, where he met with a number of technology and telecom companies. Returns (%) for the Periods Ending May 31, 20111 1 Month Calendar 1 Year 3 Years2 5 Years2 10 Years2 Since YTD Inception2,3 HL Emerging Markets (gross of fees) -2.83 -0.36 27.26 -0.56 11.53 16.87 17.81 HL Emerging Markets (net of fees) -2.89 -0.72 26.07 -1.47 10.51 15.82 16.91 MSCI Emerging Markets Index4 -2.58 2.57 29.18 1.45 12.04 16.48 14.191 The May 2011 Composite performance shown is preliminary; Annualized returns; Inception Date is November 30, 1998; The Benchmark Index. 2 3 4The Emerging Markets Composite contains fully discretionary US dollar-based emerging markets accounts investing in non-US equity and equity equivalent securitiesand cash reserves of companies domiciled predominantly in emerging markets countries. Harding Loevner LP is an investment adviser registered with the Securitiesand Exchange Commission. Harding Loevner is an affiliate of Affiliated Managers Group, Inc. (NYSE: AMG), an investment holding company with stakes in a diversegroup of boutique firms. Harding Loevner claims compliance with the Global Investment Performance Standards (GIPS®). Harding Loevner has received a firm-wideGIPS verification by Ashland Partners & Company, LLP beginning November 1, 1989. The most recent verification was for the Quarter ending December 31, 2010.The Emerging Markets Composite has received a performance examination beginning November 30, 1998. Performance data quoted represents past performance; pastperformance does not guarantee future results. Returns are presented both gross and net of management fees and include the reinvestment of all income. The US dollar isthe currency used to express performance. For complete information on the construction and historical record of the Emerging Markets Composite, please contact HardingLoevner at (908) 218-7900 or visit www.hardingloevner.com.The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emergingmarkets. The Index consists of 21 emerging market countries. The MSCI World Index is a free float-adjusted market capitalization index that is designed to measure globaldeveloped market equity performance. The Index consists of 24 developed market countries. You cannot invest directly in these Indices.Bold indicates companies held in the portfolio during the month. The portfolio is actively managed therefore holdings may not be current. They should not be consideredrecommendations to buy or sell any security. It should not be assumed that investment in the securities identified has been or will be profitable. To request a complete listof holdings for the past year, please contact Harding Loevner. Fundamental. Thinking. Worldwide.SM
  • 5. Fundamental. Thinking. Worldwide.SM Contributors to Returns (%) for the Month Ending May 31, 2011 Largest Contributors Sector Country Portfolio Weight Contribution X5 Retail Group Cons Staples Russia 1.6 0.18 AmorePacific Cons Staples South Korea 0.8 0.13 Hengan International Cons Staples China 1.1 0.12 Hikma Pharmaceuticals Health Care United Kingdom 1.6 0.10 Taiwan Semiconductor Info Technology Taiwan 2.1 0.09 Largest Detractors Sector Country Portfolio Weight Contribution Gazprom Energy Russia 2.3 -0.33 Hypermarcas Cons Staples Brazil 0.7 -0.26 América Móvil Telecom Services Mexico 2.6 -0.22 Ambuja Cements Materials India 1.4 -0.21 VanceInfo Tech Info Technology China 0.8 -0.17The portfolio holdings identified above do not represent all of the securities held in the portfolio. It should not be assumed that investment in the securities identified hasbeen or will be profitable. The following information is available upon request: (1) information describing the methodology of the contribution data in the charts above;and (2) a list showing the weight and contribution of all holdings during the month. Past performance does not guarantee future results. In the charts above, “weight” isthe average percentage weight of the holding during the period, and “contribution” is the contribution to overall performance over the period. The portfolio is activelymanaged therefore holdings shown may not be current. They should not be considered recommendations to buy or sell any security. Sector Exposure (%) at May 31, 2011 Sector HL EM MSCI EM Index Over/Under the Benchmark Cons Staples 14.2 6.6 Cash 4.3 – Cons Discretionary 10.9 7.5 Health Care 3.6 1.0 Telecom Services 8.7 7.1 Info Technology 12.7 12.7 Industrials 6.7 7.4 Energy 11.6 14.7 Utilities 0.0 3.5 Financials 18.7 24.6 Materials 8.6 14.9 -8.0 -8.0 -4.0 -4.0 0.0 0.0 4.0 4.0 8.0 8.0 Geographical Exposure (%) at May 31, 2011 Country HL EM MSCI EM Index Over/Under the Benchmark Developed Markets* 5.0 – Cash 4.3 – Mexico 8.2 4.3 Other Emerging Markets** 18.9 15.2 Frontier Markets 2.1 – Russia 8.5 6.7 Brazil 14.8 15.3 India 5.3 7.1 South Africa 4.7 7.3 China 13.9 17.8 Taiwan 5.7 11.5 South Korea 8.6 14.8 -8.0 -4.0 0.0 4.0 8.0 -8.0 -4.0 0.0 4.0 8.0*Includes countries outside the benchmark where holdings that have operations and/or sales focused in emerging markets are based; **Includes the remaining 13 smalleremerging markets countries where holdings that have operations and/or sales focused in emerging markets are based.Source: Wilshire Atlas; MSCI Barra and S&P. MSCI and S&P do not make any express or implied warranties or representations and shall have no liability whatsoeverwith respect to any GICS data contained herein. Portfolio holdings and sector/geographic allocations are supplemental information only and complement a fully compliantEmerging Markets Composite GIPS Presentation, which is available upon request.HARDING LOEVNER LP50 Division Street, Fourth Floor • Somer ville, NJ 08876 • Tel (908) 218-7900 • Fax (908) 218-1915 • www.hardingloevner.com © 2011 Harding Loevner
  • 6. Contact InformationTo receive additional presentation materials that were discussed at the Citywire New York Trade Mission andto learn more about Harding Loevner, please contact Kevin Ferguson, Manager of Institutional BusinessDevelopment at kferguson@hlmnet.com or (908)947-0457.HARDING LOEVNER LP50 Division Street, Fourth Floor • Somer ville, NJ 08876 • Tel (908) 218-7900 • Fax (908) 218-1915 • www.hardingloevner.com © 2011 Harding Loevner