Global equity ADR

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1 Global equity ADR 2015 Year End Report Composite Performance For Periods Ending December 31, Months 1 Year 3 Years 2 5 Years 2 10 Years 2 Since Inception 2,3 HL Global Equity ADR (gross of fees) HL Global Equity ADR (net of fees) MSCI All Country World Index 4, MSCI World Index 5, The Composite performance returns shown are preliminary; 2 Annualized Returns; 3 Inception Date: November 30, 1989 corresponds to that of the linked Global Equity Composite; 4 The Benchmark Index; 5 Gross of withholding taxes; 6 Supplemental Index. Please read the above performance in conjunction with the footnotes on the back page of this report. Past performance does not guarantee future results. All performance and data shown are in US dollar terms, unless otherwise noted. Sector Exposure Table of Contents HL Glbl ADR BENCHMARK 4 (Under) / Over the Benchmark 2 Market Review Info Technology Industrials Health Care Cash 3.4 Energy Cons Discretionary Materials Telecom Services Utilities Financials Cons Staples Performance and Attribution 3 Perspective and Outlook 5 Portfolio Structure 6 Portfolio Holdings 7 Portfolio Facts Market Review Equities rebounded across most international markets, with the exception of EMs and Canada. Geographic Exposure HL glbl ADR BENCHMARK 4 (Under) / Over the Benchmark Resource-heavy markets performed terribly overall, as energy and commodity prices fell. Cash 3.4 Europe ex-emu Emerging Markets United States Frontier Markets Middle East Pacific ex-japan Japan Canada Europe EMU Includes countries with less-developed markets outside the Index Stocks of many non-us high-quality companies and US companies of all qualities have become stretched in price since the global financial crisis. Portfolio Highlights We focus on high-quality companies while paying attention to price and growth prospects. We have increased our weight in Energy and EMs incrementally over the year. Sector and geographic allocations are supplemental information only and complement the fully compliant Global Equity ADR Composite GIPS Presentation. Source: Harding Loevner Global Equity ADR Model; MSCI Barra and S&P. MSCI Barra and S&P do not make any express or implied warranties or representations and shall have no liability whatsoever with respect to any GICS data contained herein. The portfolio s allocation to IT is near the maximum weight allowed by our risk-control measures Year End Report 1

2 Market Review Stock markets staged a torrid rebound in October, as the worst fears about China s economy and its exchange rate policy subsided, at least temporarily. Economic data in most of the developed world suggested continued modest growth, despite continued weakness in the price of energy and basic commodities. The rally in equities stalled out as the quarter progressed, though, even as consumer confidence stabilized in Asia and Europe. Continued employment growth in the US put the Federal Reserve back on track for its first interest rate hike in eight years, which it eventually delivered in December. A growing glut of energy product, piling up in inventories from Cushing, Texas pipeline depots to Iranian oil tankers awaiting the lifting of sanctions, kept downward pressure on oil and gas prices. Industrial metals also experienced collapsing prices, but these were from slumping demand as much as increased supply, with declines in heavy industrial activity in China continuing, even as monetary easing measures kept a floor under real estate and stock prices there. High-yield bond prices fell sharply, reflecting primarily the worsening credit quality of energy and resource companies, but more broadly reflecting anxiety about troubled developing economies and an economic expansion in the US that is already mature in comparison to post-war cycles. Market Performance (USD%) Market 4Q 2015 Trailing 12 months Canada Emerging Markets Europe EMU Europe ex-emu Japan Middle East Pacific ex-japan United STates MSCI ACW Index Sector Performance (USD%) of the MSCI ACW Index Sector 4Q 2015 Trailing 12 months Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Materials Telecom Services Utilities Source: Wilshire Atlas (as of December 31, 2015). MSCI Barra and S&P. The US dollar rose against nearly all currencies, exacerbating the debt burden of non-us borrowers. If the key yardstick in third quarter (negative) stock price performance was association with China, it was a broad recovery in most Asian markets that characterized the fourth quarter. Japan was the best performer among developed regions in the MSCI All Country World Index, but Australia, New Zealand, Hong Kong, Singapore, Indonesia, South Korea, Taiwan, and Malaysia all turned in positive returns for the quarter, in US dollars, so that Pacific ex-japan was the second-best performing major region, and Emerging Markets (EMs) managed to eke out a tiny positive return despite sharp declines in Latin American and Central/Eastern European markets. Developed European markets, both within and outside the eurozone, were middling performers. The UK Index lagged the rest of Europe, primarily due to its hefty component of global mining giants, alongside its significant energy sector. Resource-heavy Canada performed worst among regions, and Norway, Russia, Brazil, Colombia, and South Africa also declined. (Australia was an exception to this resource curse in the quarter, aided by a rally in its currency.) The US market, one of the most resilient in the third quarter, still managed impressive gains in the final quarter in spite of the change to a tighter monetary policy by the Fed, led by resurgent merger activity and strong Information Technology (IT) and Health Care sectors. Viewed by sector, IT was the best-performing sector globally, while Materials and Energy were again the worst (along with Utilities), reflecting weaker prices for their underlying commodities. Among industry groups, automobiles, health care equipment, insurance, and semiconductors stood out as strong performers, while consumer durables declined in the quarter. For the full year, resource-heavy markets produced terrible returns overall, making Canada the worst-performing region in the year as well as the quarter. EMs were next worst, in part due to Malaysia, Indonesia, Columbia, and Brazil each suffering from resource woes, but also from currency weakness across a wider swath of markets as investors withdrew capital from the asset class, especially from countries seen as making poor policy choices or having weak external financing positions, such as Brazil, South Africa, and Turkey. Japan, an energy importer, enjoyed strong stock performance in the year, as its redoubled stimulus efforts pushed its price inflation into positive territory in the year, as intended. The US market managed a small positive total return in the year, which made it the second best major region. Meanwhile, the strength of the US currency against all others meant that European returns in US dollars were net negative in the year, with the eurozone almost managing to be flat, whilst Norway and the UK dragged non-emu returns lower. Stocks of high-quality companies outperformed those of lower quality in the quarter, as they had in the third quarter, and for the full year as well. Companies exhibiting faster recent growth did not, on average, see better stock price performance. However, highly priced stocks, and, in particular, the priciest 2

3 quintile of our composite valuation rankings, did perform better significantly better than the rest of the market (perhaps anticipating faster growth ahead). Performance and Attribution The Global Equity ADR composite returned 7.4% in the quarter, ahead of its benchmark, the MSCI All Country World Index, which returned 5.2%. The composite rose 2.9% in the full year, ahead of the Index, which fell 1.8% in the year. The charts on the right illustrate performance attribution for the year by sector and geography, respectively. In the fourth quarter, the portfolio was aided by the bounceback of stocks with high revenue exposure to China, and enjoyed good stocks within every region except the eurozone, where Linde s profit warning and Air Liquide s takeover bid for Airgas caused shares of both industrial gas producers to fall. Shares of Spanish bank BBVA also declined. Viewed by sector, the portfolio had outsized gains from its large holdings in IT; holdings in the sector returned almost double the already strong sector return. We own more than twice the Index weight in the software and services group, and enjoyed good returns from Alphabet (Google), Baidu, and Yandex, three dominant internet search engines from the US, China, and Russia, respectively. We also had good returns from Microsoft. Dassault Systèmes and MasterCard, although good stocks in nominal terms, actually lagged the software group. Amazon and Ctrip.com, the online Chinese travel agency, powered returns in Consumer Discretionary, along with advertising giant WPP. Within Industrials, the rebound of China-exposed shares drove returns in Fanuc and Makita, which joined MonotaRO and Roper to outshine the sector. Telecom Services dragged down relative performance, primarily due to MTN Group shares falling in reaction to a huge fine imposed by the Nigerian regulator for failing to deactivate unregistered mobile phones, apparently used by terrorists and organized criminals as well as by run-of-the-mill scofflaws and privacy seekers. For the year as a whole, the portfolio had positive stock selection in most regions, especially in US, Japan, and Europe ex-emu, but this was partially offset by negative stock selection within EMs. We also benefitted from having zero holdings in Canada. Viewed by sector, the story is much the same for the year as it is for the final quarter: large holdings of IT companies helped, and good stocks from within Industrials, Consumer Discretionary, and IT drove good relative performance, offset partially by poor stocks in Telecom Services (MTN Group and América Móvil), Companies held in the portfolio during the year appear in bold type; only the first reference to a particular holding appears in bold. The portfolio is actively managed therefore holdings shown may not be current. Portfolio holdings should not be considered recommendations to buy or sell any security. It should not be assumed that investment in the security identified has been or will be profitable. To request a complete list of holdings for the past year, please contact Harding Loevner. A complete list of holdings at December 31, 2015 is available on page 6 of this report. sector Performance Attribution TRAILING 12 MONTHS Global Equity ADR composite vs. MSCI ACW Index % Return Value Added Industrials Info Technology Cons Discretionary Energy Utilities Health Care (Elekta and Sonova), and Consumer Staples, where Bunge, Procter & Gamble, and Colgate Palmolive all underperformed the sector. Perspective and Outlook Market participants and pundits have been preoccupied with trying to estimate the changing likelihood, anticipate the timing, and predict the uncertain consequences of central bank policy actions, whether they be further monetary easing by the European Central Bank or the People s Bank of China, or the eventual rate hike by the Fed. This has the effect of increasing market volatility in both upward and downward directions, Cash Materials Total Variance: 4.8 Total Stock Selection: 3.2 Total Group Weight: 1.6 Financials Health Care Telecom Services Stock Selection Group Weight Overall Contribution geographic Performance Attribution TRAILING 12 MONTHS Global Equity ADR composite vs. MSCI ACW Index % Return Value Added United States Canada Europe ex-emu Japan Pacific ex-japan Source: Wilshire Atlas; Harding Loevner Global Equity ADR Composite; MSCI Barra and S&P. The total variance shown here may differ from the variance of the Composite performance and benchmark performance shown on page 1 of this report due to the way in which Wilshire Atlas calculates performance attribution. This information is supplemental to the Composite GIPS presentation. Cash Europe EMU Middle East Cons Staples Total Variance: 4.8 Total Stock Selection: 3.9 Total Group Weight: 0.9 Emerging Markets Stock Selection Group Weight Overall Contribution 3

4 but is merely typical speculative activity. While we take note of general trends and abrupt shifts of direction in monetary policies, we try to avoid getting caught up in the squiggles of policy arcana. We are firmly convinced that such tea-leaf reading offers little in the way of useful prescriptive guidance for long-term investors. We would say, however, that the conflicting messages being delivered by strong stock markets, falling resource prices, and a tightening US monetary policy are extraordinarily confusing. Our approach is more detached. We concentrate instead on the long-term opportunities and threats facing companies, evaluating whether their competitive advantage can lead to extended profitability, and then deciding what to pay for the stocks of such companies that can. In this endeavor, though, the work has become more difficult: the market embrace of high-quality businesses over the extended run of rising stock markets since the global financial crisis means that we are finding many of the stocks of companies we admire and want to own are becoming stretched in price, relative to what we can justify in our assumptions. The chart below shows the widening divergence of Harding Loevner s composite valuation measure for the (top) quartile of highest-quality non-us stocks from that of the rest of the non-us market. Clearly visible is the slow and steady rise over the last seven years in how pricey stocks of the best companies have become, even as the also-rans languish in some sort of value purgatory. But also visible is the priciness of US stocks of any quality relative to all but the highest-quality quartile of non-us companies. This stretching valuation is, in part, a result of the valid recognition by investors that sustainably profitable companies are scarce, and the main priority since the financial crisis of individuals and company managements alike has been to VR Expensive Cheap Valuation Ranks of US and Non-US High-Quality Companies vs All Others Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Top Quality Outside US Top Quality US All Others Outside US All Others US Based on Harding Loevner s composite valuation and quality measures, ranked. Source: HOLT data, median calculations. attempt to reduce high debt levels rather than to borrow for greater spending or investment. Moreover, competition is fierce, with new business models threatening many established ones, so that the rare business with durable and rising profitability should be, and increasingly is, highly prized. But another factor is at play, as investors have reacted to declining bond yields, as well as to the memory of deep recession following the crisis, by embracing equity securities of stable businesses. Part of the explanation of rising valuation for high quality derives from market innovation, whereby investors, rightly impressed by the multi-year (but backwardlooking) outperformance of high-quality stocks, are drawn to investment strategies that harness new quantitative methods to exploit past patterns. One manifestation of this, loosely labeled Smart Beta, backtests models that would have produced the favorable returns that accrued to certain strategies, including favoring a factor such as high quality, and sets up semi-passive funds in anticipation that those strategies will continue to deliver in future similar performance as they have in the past. Clearly, we face competition from a quality-favoring strategy, since the ability to measure quality objectively using published historical financial data has been honed through iteration by us and others, while the theoretical merits of hewing to the high-quality road have become better documented in the academic literature. But one look at the chart above suggests that mechanically buying high-quality companies heedless of price or other considerations is increasingly perilous, if one still believes that stock prices must eventually, at some point, reflect the present value of their cash flows. That is, price matters; and so do the profit and dividend growth prospects that a given high-quality business faces through the windshield, i.e., in the future, rather than in the rear-view mirror. Attention to those two additional facets ones not so easily discerned from published historical financial data has always been central to our fundamental analytical process, aiding us in triangulating on good, sound, long-term investment candidates. They price and growth prospects are likely to become even more important for our decision making in the quarters ahead. In addition to giving equal opportunity to the analysis of growth and proper value of companies, we are working incrementally (as is our habit) on some important facets of quality that are hard to measure. Management quality, and the effectiveness of corporate governance in setting incentives and monitoring management behavior, have long been the most subjective of our four fundamental criteria. We ve always paid careful attention to this area, as we have psychological scars from seeing cash flows from strong businesses being diverted to empire building, related party transactions, national service, or other forms of cronyism, malfeasance, or confiscation that harm the interests of public shareholders. Our assessments along this vector have been strengthened by our adoption of two separate checklists regarding corporate governance, which ensure we are looking under rocks systematically, checking for maggots. 4

5 Increasingly, we recognize the need to be as systematic and vigilant about societal and environmental risks to long-term shareholder returns as we have been about governance risks. As a result, we are building a similar checklist system that will oblige us to think more consistently about the risks along those dimensions inherent in the businesses we research, or being taken unnecessarily by their managements. Good returns are ultimately derived from sustainable profit growth. When a company such as MTN Group, the South African telecom operator, is slammed by a multi-billion dollar fine for blithely ignoring clear regulations aimed squarely at reducing criminality among its customer base, we have clearly missed or ignored something in our due diligence. Look for more from us on these topics in future; and see our 2015 Second Quarter Report for our general views on how our investment process intersects with what has come to be commonly referred to as ESG. Portfolio Structure The media has been replete with discussions of the FANG stocks (Facebook, Amazon, Netflix, Google) driving the returns of the US market. To a large degree, this is a canard, in that market indexes can always be reverse-engineered to say that if you had only owned such-and-such, you could have bettered the market. Indeed, one of our colleagues proposed another acronym, NONSENSE, whose constituents did even better than FANG as a mini portfolio last year. 1 Keen market observer Clifford Asness has argued that the US market was no more narrow i.e., its performance derived from a small subset of stocks in 2015 than it has been on average over the past 20 years. 2 That said, we noted last quarter that our portfolio now has roughly one-fifth of its capital invested in companies whose businesses are centered on online relationships with their customers. That baker s dozen of stocks is spread across four markets on three continents and represents three different sectors. Still, their contribution to portfolio returns for the year was a large net positive one, and the contribution of the other four-fifths of the portfolio was net negative. In a market environment that saw the highest quintile of valuation deliver the best returns, it will not surprise that two-thirds of these online-oriented holdings reside in that rarified and pricey stratum of the market. This is an area where we have been rewarded so far to remain tolerant of high apparent valuations in the face of disruptive business models and highgrowth expectations. our opportunity set. In the Energy sector, the portfolio began the year more than 3% under the Index weight of 8%. Over the course of 2015, the sector has been pummeled by the decline in oil and gas prices, and sharp cuts in spending by energy producers. While the Index weight for Energy has shrunk by almost 20%, we gradually added to our Energy holdings, and now almost match the Index weight. We have added more assiduously to EMs this year, with eight new purchases or additions to existing holdings, while selling or reducing just three. It has been an incremental, but costly venture, as much of what we bought has subsequently declined in price. The portfolio is overweight EMs, with roughly oneninth of assets invested there. Our holdings significantly outperformed the regional index in the latest quarter, but there was a clear divergence between the Nifty-like (internet business model) holdings such as online travel agent Ctrip.com and search engine Yandex, and the rest, spread across Financials, Energy, and Telecom Services. This quarter, we increased our position in Itau Unibanco, the privately managed Brazilian bank, whose share price has been pummeled by economic and political turmoil, but whose long experience in managing the historical volatility of Brazilian macroeconomic cycles has few peers. The steep decline of the real over the year and in the quarter has made the shares appear unusually attractive. Holdings within IT have outperformed the sector in the quarter and the year, and remain just below the 25% maximum that our risk constraints allow, but only because we trimmed some holdings more than once in order to keep them within range. The general structure of the holdings has changed little, with over half the allocation in the software and services group within IT. We sold our holding in ebay, after the formal spinout of its online payments business, PayPal, which remains in the portfolio. ebay, owned since 2006 and added to near the bottom of the financial crisis, has been an outstanding investment. We re just not sure its future growth is as rosy as its share price implied. We sold Bunge, whose shares fell sharply on a Halloween profit warning. We lost patience with this under-achieving company, which we believed should have been more stable after disposing of its volatile fertilizer business some years ago, and should have prospered in a weak-currency environment in South America, its largest exporting region. That is not to say we have not responded to price, nor completely abandoned valuation discipline. In the year, we have added significantly to some of the cheapest, most beaten-up stocks in 1 NONSENSE: Netflix, O2 Czech, Netease, Sohgo Security, Evergrande Real Estate, Nvidia, Shimadzu, Eisai Co. 2 Clifford Asness, SNAFU: Situation Normal, All FANGed Up, AQR (January 11, 2016). 5

6 Global Equity ADR Holdings (as of December 31, 2015) Sector/Company/Description Country End Wt. Consumer Discretionary Amazon.com Online retailer US 2.1 Ctrip.com Travel agent China 1.3 Nike Global athletic footwear and apparel US 4.3 Priceline Online travel search services US 2.9 WPP Advertising and marketing services UK 1.7 Consumer Staples Colgate Palmolive Household products US 1.8 L'Oréal Beauty and personal care products France 1.0 Nestlé Food company Switzerland 1.5 Energy ExxonMobil Integrated oil and gas company US 1.0 Sasol Refined product and chemicals group South Africa 0.9 Schlumberger Oilfield services company US 2.9 Tenaris Steel pipe manufacturer Italy 0.9 Financials AIA Group Life insurance Hong Kong 2.9 American Express Consumer finance and payments US 1.8 Bank Central Asia Commercial bank Indonesia 0.7 BBVA Commercial bank Spain 0.8 First Republic Bank Private banking and wealth management US 2.2 Garanti Bank Commercial bank Turkey 0.8 ICICI Bank Commercial bank India 1.8 Itau Unibanco Commercial bank Brazil 1.0 SVB Financial Commercial bank US 2.0 Wells Fargo Commercial bank US 1.9 Health Care Abbott Labs Health care and nutrition products US 1.1 Abcam Research antibody manufacturer/distributor UK 0.6 DaVita HealthCare Partners Dialysis & medical services US 1.8 Elekta Radiation therapy equipment Sweden 1.4 Essilor International Ophthalmic lens manufacturer France 1.1 Grifols Biopharmaceutical and diagnostics Spain 0.9 IMS Health Information services provider US 1.8 Lonza Group Biopharmaceuticals/pharma manufacturing Switzerland 1.4 Roche Holding Pharma and diagnostic equipment Switzerland 1.3 Shire Prescription medication developer UK 2.3 Sonova Holding Hearing aid manufacturer Switzerland 1.1 Waters Analytic instruments for life sciences US 1.2 Sector/Company/Description Country End Wt. Industrials 3M Company Diversified industrial conglomerate US 1.4 Atlas Copco Industrial compressors and mining equipment Sweden 1.0 Fanuc Industrial robots, controls, machine tools Japan 2.9 Makita Power tool manufacturer Japan 1.2 MonotaRO Online distributor of maintenance supplies Japan 2.0 Roper Niche industrial business conglomerate US 2.9 Rotork Electric actuator maker UK 0.7 Verisk Risk analytics US 2.3 Information Technology ALPHABET Internet search and multimedia US 4.0 ARM Holdings Semiconductor chip designer UK 1.4 Baidu Internet search provider China 1.8 Cognex Electrical components manufacturer US 0.9 Dassault Systèmes CAD/CAM software designer France 1.2 F5 Networks Network technology US 1.7 Facebook Social network US 1.4 IPG Photonics High performance fiber lasers/amplifiers US 1.3 MasterCard Global payments US 2.2 Microsoft Software company US 1.5 PayPal Electronic payment solutions US 1.6 Red Hat Software and services US 1.1 salesforce.com Cloud-computing software company US 1.2 Tencent Internet, mobile, and telecom provider China 1.1 Trimble Navigation GPS technology US 0.6 Yandex Russian search engine Russia 1.1 Materials Air Liquide Industrial gas company France 1.1 Linde Industrial gases and engineering Germany 0.7 Monsanto Seed, genomics, and agricultural products US 1.0 Telecom Services América Móvil Cellular phone operator Mexico 0.6 MTN Group Cellular phone operator South Africa 0.5 Utilities No holdings Cash 3.4 Model Portfolio holdings are supplemental information only and complement the fully compliant Global Equity ADR Composite GIPS Presentation. The portfolio is actively managed therefore holdings shown may not be current. Portfolio holdings should not be considered recommendations to buy or sell any security. It should not be assumed that investment in the security identified has been or will be profitable. To request a complete list of portfolio holdings for the past year contact Harding Loevner. 6

7 Last Quarter Largest Contributors to Absolute Return Sector Weight Contribution Alphabet INFT Amazon DSCR Roper INDU Baidu INFT Ctrip.com DSCR Largest Detractors from Absolute Return Sector Weight Contribution F5 Networks INFT IMS Health HLTH MTN Group TCOM ICICI Bank FINA last 12 months Largest Contributors to Absolute Return Sector Weight Contribution Alphabet INFT MonotaRO INDU Amazon DSCR Nike DSCR Lonza Group HLTH Largest Detractors from Absolute Return Sector Weight Contribution ICICI Bank FINA F5 Networks INFT Garanti Bank FINA MTN Group TCOM American Express FINA Schlumberger ENER The 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 has been 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 quarter and the last 12 months. Past performance does not guarantee future results. In the charts above, weight is the average percentage weight of the holding during the period, and contribution is the contribution to overall performance over the period. Contributors and detractors exclude cash and securities in the Composite not held in the Model Portfolio. Quarterly data is not annualized. Portfolio Characteristics quality & GROWTH RISK & VALUATION HL Global adr MSCI ACWI HL Global ADR MSCI ACWI Profit Margin ALPHA RETURN ON ASSETS BETA RETURN ON EQUITY R-SQUARED DEBT/EQUITY RATIO STANDARD DEVIATION STD DEV OF 5 YEAR ROE SHARPE RATIO SALES GROWTH 1, PRICE/EARNINGS Earnings GROWTH 1, PRICE/CASH FLOW CASH FLOW GROWTH 1, PRICE/BOOK Dividend growth 1, DIVIDEND YIELD Market Cap HL Global ADR MSCI ACWI HL Global ADR MSCI ACWI WTD MEDIAN MKT CAP (US $B) WTD AVG MKT CAP (US $B) Weighted median; 2 Trailing five years, annualized; 3 Weighted harmonic mean; 4 Weighted mean. Source (Alpha, Beta, R-Squared, Sharpe Ratio, Standard Deviation): evestment Alliance (ea); Harding Loevner Global Equity ADR Composite, based on the Composite returns; MSCI Barra. Source (other characteristics): Wilshire Atlas (Run Date: January x, 2015); Harding Loevner Global Equity ADR Model, based on the underlying holdings; MSCI Barra. Completed Portfolio Transactions Positions Established Positions Sold Company Country Sector Company Country Sector No new purchases were made in the fourth quarter. Bunge United States STPL ebay United States INFT Portfolio attribution and characteristics are supplemental information only and complement the fully compliant Global Equity ADR Composite GIPS Presentation. The portfolio is actively managed therefore holdings shown may not be current. Portfolio holdings should not be considered recommendations to buy or sell any security. It should not be assumed that investment in the security identified has been or will be profitable. 7

8 Global Equity ADR Composite Performance (as of December 31, 2015) Global ADR Gross Global ADR Net MSCI ACWI 1 MSCI World 2 Global ADR 3-Yr Std Deviation 3 MSCI ACWI 3-Yr Std Deviation 3 MSCI World 3-Yr Std Deviation 3 Internal Dispersion 4 No. of Accounts 5 Composite Assets N.M N.M N.M N.M ($M) Percent Firm Assets 1 Benchmark Index; 2 Supplemental Index; 3 Variability of the composite and the Index returns over the preceding 36-month period, annualized; 4 Assetweighted standard deviation (gross of fees); 5 Total product accounts and assets are 705 and are $147 million, respectively, at December 31, 2015 and are presented as supplemental information; 6 The 2015 performance returns and assets shown are preliminary; 7 N.M. Information is not statistically significant due to an insufficient number of portfolios in the Composite for the entire year. The Global Equity ADR Composite contains fully discretionary, fee paying global equity accounts with the objective of long-term capital appreciation. Securities are held in Depository Receipt (DR) form, including American Depository Receipts (ADRs) and Global Depository Receipts (GDRs) or are otherwise traded on US exchanges. For comparison purposes, the Composite is measured against the MSCI All Country World Index, presented gross of withholdings. (Prior to December 31, 2012, the Composite was measured against the MSCI All Country World Index net of foreign withholding taxes for the periods presented. The presentation was changed to conform the treatment of withholding of the benchmark with that of the Composite.) The exchange rate source of the benchmark is Reuters. The exchange rate source of the Composite is Bloomberg. Additional information about the benchmark, including the percentage of composite assets invested in countries or regions not included in the benchmark, is available upon request. 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 and emerging markets. The Index consists of 46 developed and emerging market countries. The MSCI World Index is a free floatadjusted market capitalization index that is designed to measure global developed market equity performance. The Index consists of 23 developed market countries. You cannot invest directly in these Indices. Harding Loevner LP claims compliance with the Global Investment Performance Standards (GIPS ) and has prepared and presented this report in compliance with the GIPS standards. Harding Loevner has been independently verified by Ashland Partners & Company, LLP for the period November 1, 1989 through September 30, Verification assesses whether (1) the firm has complied with all composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm s policy and procedures are designed to calculate and present performance in compliance with GIPS standards. The Global Equity ADR Composite has been examined for the periods December 1, 1989 through September 30, The verification and performance examination reports are available upon request. Harding Loevner LP is an investment adviser registered with the Securities and Exchange Commission. Harding Loevner is an affiliate of Affiliated Managers Group, Inc. (NYSE: AMG), an investment holding company with stakes in a diverse group of boutique firms. The firm maintains a complete list and description of composites, which is available upon request. Results are based on fully discretionary accounts under management, including those accounts no longer with the firm. Composite performance is presented gross of withholding taxes on dividends, interest income and capital gains. Additional information is available upon request. Past performance does not guarantee future results. Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request. The US dollar is the currency used to express performance. Returns are presented both gross and net of management fees and include the reinvestment of all income. Net returns are calculated using actual fees. Actual returns will be reduced by investment advisory fees and other expenses that may be incurred in the management of the account. The standard fee schedule generally applied to separate Global Equity ADR accounts is 0.80% annually of the market value up to $20 million; 0.40% of amounts above $20 million. Actual investment advisory fees incurred by clients may vary. The annual composite dispersion presented is an asset-weighted standard deviation calculated for the accounts in the composite the entire year. The Global Equity ADR Composite was created on October 31, Performance prior to October 31, 2001 is that of the Global Equity Composite, which was managed similarly and materially represented the strategy of the Global ADR Composite. 400 Crossing Blvd, Fourth FlOOr Bridgewater, NJ T (908) F (908) hardingloevner.com 2016 harding loevner