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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-07739
Harding, Loevner Funds, Inc.
(Exact name of registrant as specified in charter)
400 Crossing Boulevard
Fourth Floor
Bridgewater, NJ 08807
(Address of principal executive offices) (Zip code)
Marcia Y. Lucas, Esq.
The Northern Trust Company
333 South Wabash Ave
Chicago, IL 60604
With a copy to:
Stephen H. Bier, Esq.
Dechert LLP
1095 Avenue of the Americas
New York, NY 10036
(Name and address of agent for service)
Registrant’s telephone number, including area code: (877) 435-8105
Date of fiscal year end: 10/31
Date of reporting period: 04/30/2022
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Item 1. Reports to Stockholders.
(a) | The following is a copy of the report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1) |
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Global Equity Portfolio
International Equity Portfolio
International Small Companies Portfolio
Institutional Emerging Markets Portfolio
Emerging Markets Portfolio
Frontier Emerging Markets Portfolio
Global Equity Research Portfolio
International Equity Research Portfolio
Emerging Markets Research Portfolio
Chinese Equity Portfolio | ||
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Harding Loevner Funds
Global equity investing is Harding Loevner’s exclusive focus. Through Harding Loevner Funds it offers distinct global strategies based on its quality-and-growth investment philosophy. It seeks to purchase shares of growing, financially strong, well-managed companies at favorable prices. Harding Loevner manages each of the Funds’ Portfolios according to a disciplined, research-based investment process. It identifies companies with sustainable competitive advantages and assesses the durability of their earnings growth by conducting in-depth fundamental research into global industries. In constructing portfolios, Harding Loevner diversifies carefully to limit risk.
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Must be preceded or accompanied by a current Prospectus.
Quasar Distributors, LLC, Distributor
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Letter To Our Shareholders | ||||
April 30, 2022
| ||||
David Loevner, CFA |
Chairman of the Funds and Chief Executive Officer of the Adviser |
Ferrill Roll, CFA |
Chief Investment Officer of the Adviser |
Simon Hallett, CFA |
Vice Chairman of the Adviser |
Growth investors have had a difficult time, and as of this writing it isn’t over yet. Falling prices spreading to almost every asset class were preceded by poor returns in the most richly priced and fastest-growing stocks with the pain felt most acutely in stocks of profitless fast-growth companies. The savagery of the decline is bringing out the predictable catcalls announcing the death of growth investing. Yet, a mere 18 months ago, we wrote in our annual letter that the rumors of the death of value investing were greatly exaggerated, borrowing Mark Twain’s phrase. Since then, the MSCI ACWI Value Index has risen 36%, leading its growth counterpart by nearly 27 percentage points. The ACWI ex-US Value Index’s lead is 30 percentage points. Memories are notoriously short in financial markets, but even we are surprised at the alacrity with which the same commentators who cast value into an early grave less than two years ago are now tipping growth investing into the hole just vacated by value investing’s entirely predictable resurrection.
So let us go back to first principles: returns from any investment are related to the price you pay for the security. The security entitles its holder to a string of future cash flows, and its price reflects the collective evaluation of the present value of those future flows appropriately discounted. Discount rates, however, are fickle, rising and falling to reflect shifting risk appetites and opportunity costs in the form of interest rates. Expected cash flows from equities extend far into the future and fluctuate widely, subject to shifting competitive dynamics, government actions, and macroeconomic conditions, not to mention pandemics and wars. Global equity investors recently have faced more than the usual shifts in all of the above categories.
New business models, new technologies, and new entrants are disrupting previously stable competitive contests. Government
policies in both developed and developing economies have become less predictable, lurching between light-touch oversight and heavy-handed action, with wholesale regulatory interventions harming investors. A full-scale invasion of one country by its neighbor has triggered dramatic dislocations across commodity markets while simultaneously undermining confidence in global trade resilience as well as in the diversification benefits of cross-border investing.
And now, for the first time in a generation, rising inflation has returned to roil investor assumptions about discount rates, monetary policy, and business resilience. Few investors operating in the early 1970s are still working today to parse the variables from first-hand experience; institutional memories of how to trim the sails for the new weather are hazy. We at Harding Loevner are no different from the rest on that score. Our instinctive response is to focus exclusively on the shifting demands and pressures on each company we invest in, aiming to avoid the most vulnerable business models and identify the most resilient. But, in the short run, it is the changing discount rates that affect our companies’ share prices the most, impacted by anticipated policy responses to either inflation or economic weakness. Our performance, across all our strategies in these last six months, is partly a reflection of our studied avoidance of making wholesale portfolio changes based on any forecasts of such macroeconomic variables. Markets, however, have moved, with or without our forecasts, causing us some pain in the short run.
The headwinds against our high-quality growth style of investing have been blowing a stiff breeze since November of 2020, when the first COVID-19 vaccines won approval and investors began to imagine a return to some sort of normal social and economic activity. But those headwinds turned into a gale in the most recent six months as the anticipated reopening met up with labor shortages and supply-chain interruptions, igniting a global inflationary impulse that is inconsistent with financial assets priced for low inflation and low interest rates as far as the eye could see. Central banks, after striving for a decade to break deflationary forces, now face the ugly task of subduing this new inflation using their main tool: interest rates. Higher rates target debt-financed demand and speculative activity, to deflate the equity and real estate markets intentionally even while hoping to minimize harm to employment.
The ensuing storm has assailed the most richly priced stocks relative to those of the least richly priced. Because both high quality and rapid growth had been increasingly prized, and bid up, by investors in the decade since the Great Financial Crisis, our portfolios have suffered, too. Rising interest rates, combined with the rising input costs faced by all companies as commodity and energy inflation seep into wages and rents, make for volatile stock markets and a sobering outlook.
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Without doubt, we have made some missteps that have exacerbated the effect of these headwinds on our performance. We have written elsewhere about the Russian stock market losses inflicted by a united Western revulsion against the Russian invasion of Ukraine. Some of our strategies, leaning into the inflation-resistant, diversifying characteristics of Russian stocks, got caught by the sweeping, shattering sanctions. Also, in each of our strategies we discovered a few holdings whose businesses are proving less resilient than we foresaw to previously unseen competition, or to surging input costs, or more volatile revenue as geopolitical uncertainty persists.
We remain convinced, however, that the preponderance of companies that our analysts have vetted through fundamental understanding of their businesses will shine in the more subdued economic environment that the central bankers so devoutly wish to reach on the other side of their concerted monetary tightening.
Through other periods of poor performance we have stuck to our principles and seen our discipline rewarded. In our view, investment returns are about the actions of companies as well as the prices investors pay for the securities. In the long run, the former dominates, even if in the short run prices do. The competitive forces faced by companies, such as the bargaining power they have over suppliers as input cost pressure rises, or that which they have over customers when unavoidable cost increases need to be passed on, will be fruitful avenues for our research. Our attention to the robustness of expected growth should also pay dividends if and when economic growth falters under tight monetary conditions. As we evaluate what is a fair price to pay for those companies, our process should serve us well, as it has over the long course of our history.
We are grateful, as always, for the trust you place in us.
Sincerely, | ||||||||
David R. Loevner, CFA | Ferrill D. Roll, CFA | Simon Hallett, CFA |
Opinions expressed are those of Harding Loevner and are not intended to be forecasts of future events, a guarantee of future results, nor investment advice. Please read the separate disclosure page for important information, including the risks of investing in the Portfolios. Past performance is not a guarantee of future results.
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| ||||
Institutional Investors: HLMVX & HLGZX | Individual Investors: HLMGX | ||||
Portfolio Management Team
| ||
Peter Baughan, CFA Co-Lead Portfolio Manager
Jingyi Li Co-Lead Portfolio Manager
Scott Crawshaw Portfolio Manager
Christopher Mack, CFA Portfolio Manager
Richard Schmidt, CFA Portfolio Manager
Moon Surana, CFA Portfolio Manager | ||
Performance Summary
For the Global Equity Portfolio, the Institutional Class declined 23.95%, the Institutional Class Z declined 23.94%, and the Advisor Class declined 24.03% (net of fees and expenses) in the six-month period ended April 30, 2022. The Portfolio’s benchmark, the MSCI All Country World Index, declined 11.63% (net of source taxes).
Market Review
Stock markets fell sharply during the period as the confluence of several macroeconomic events battered share prices.
In November, consumer price inflation in the US reached its highest rate since 1982, leading the US Federal Reserve to signal several interest rate hikes and an imminent end to its bond buying program. Other central banks moved even more quickly: the Bank of England raised its main interest rate and the European Central Bank announced it would end its bond buying program. At the same time, just as supply chain bottlenecks showed signs of easing, the emergence of Omicron threatened to upend the progress and reintroduce global lockdowns. Chinese officials, aiming for zero transmission, pursued the most stringent lockdown policies—further hampering economic growth that had already been stalled amid a slowdown in construction spending after several heavily indebted property developers, including the gargantuan Evergrande, defaulted on bond payments.
Fund Facts at April 30, 2022 | ||||||
Total Net Assets | $1,278.3M | |||||
Sales Charge | None | |||||
Number of Holdings | 70 | |||||
Turnover (5 Yr. Avg.) | 46% | |||||
Dividend Policy | Annual | |||||
Institutional Investors | Individual Investors | |||||
Inst. Class | Inst. Class Z | Advisor Class | ||||
Ticker | HLMVX | HLGZX | HLMGX | |||
CUSIP | 412295602 | 412295727 | 412295206 | |||
Inception Date | 11/3/2009 | 8/1/2017 | 12/1/1996 | |||
Minimum Investment1 | $100,000 | $10,000,000 | $5,000 | |||
Expense Ratio2 | 0.87%3 | 0.80%4 | 1.08%5 |
1Lower minimums available through certain brokerage firms; 2The Expense Ratios are as of the most recent Prospectus and have been restated to reflect current fees; 3Harding Loevner’s contractual agreement caps the net expense ratio at 0.90% through February 28, 2023. The expense ratio (without cap) is applicable to investors; 4Harding Loevner’s contractual agreement caps the net expense ratio at 0.80% through February 28, 2023. The expense ratio (without cap) is applicable to investors; 5Harding Loevner’s contractual agreement caps the net expense ratio at 1.20% through February 28, 2023. The expense ratio (without cap) is applicable to investors.
Investors barely had time to digest these events when, in February, Russia commenced its invasion of Ukraine. The reaction by Western governments was swift and emphatic as they sought to tread a delicate balance between punishing Russian aggression and avoiding an escalating military conflict. The US and its allies enacted crippling economic sanctions against Russia, including freezing a significant share of the Russian central bank reserve assets, cutting off many of the country’s banks from the SWIFT global financial messaging system, and outlawing the export of a variety of industrial and luxury goods. The sanctions initially led to a collapse in the ruble, while the Moscow stock exchange closed for almost a month before re-opening for domestic investors only. With foreign investors effectively unable to trade, major market index providers expunged all Russian securities from their indexes.
Prices for a wide range of commodities for which Russia is a major producer—including oil, gas, grains, and metals—surged on fears of disruption, prompting billions of US dollars in margin calls to cover futures positions. Headline inflation, which had already been rising rapidly around the world prior to the invasion, received a fillip from the shock to energy and food supplies stemming from the war, increasing the pressure on central banks to tighten monetary policy. In March, the US Fed did just that, raising interest rates for the first time in three years and signaling as many as seven additional hikes in 2022, causing stocks to retreat further as investors feared efforts to tame inflation may cause a recession.
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Performance (% Total Return)
For periods ended March 31, 2022 |
For periods ended April 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
1 | 3 | 5 | 10 | Since Inception* | 1 | 3 | 5 | 10 | Since Inception* | |||||||||||||||||||||||||||||||||||||||||||||||
Year | Years | Years | Years | Nov-09 | Aug-17 | Dec-96 | Year | Years | Years | Years | Nov-09 | Aug-17 | Dec-96 | |||||||||||||||||||||||||||||||||||||||||||
Global Equity Portfolio – Inst. Class | -1.52 | 13.61 | 12.57 | 10.62 | 10.72 | -17.49 | 7.91 | 9.19 | 9.35 | 9.56 | ||||||||||||||||||||||||||||||||||||||||||||||
Global Equity Portfolio – Inst. Class Z | -1.46 | 13.69 | – | – | 10.90 | -17.45 | 7.99 | – | – | 7.87 | ||||||||||||||||||||||||||||||||||||||||||||||
Global Equity Portfolio – Advisor Class | -1.73 | 13.40 | 12.35 | 10.36 | 7.83 | -17.67 | 7.71 | 8.97 | 9.09 | 7.28 | ||||||||||||||||||||||||||||||||||||||||||||||
MSCI All Country World Index | 7.28 | 13.75 | 11.64 | 10.00 | 9.91 | 10.76 | – | -5.44 | 9.41 | 9.46 | 9.21 | 9.11 | 8.64 | – |
Returns are annualized for periods greater than 1 year. *Inception of the Institutional Class, November 3, 2009. Inception of the Institutional Class Z, August 1, 2017. Inception of the Advisor Class, December 1, 1996. Index performance prior to January 1, 2001 cannot be shown since it relies on back-filled data.
Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Portfolio may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling (877) 435-8105 or visiting hardingloevnerfunds.com.
On a sector basis, Energy performed strongly, reflecting the meteoric rise in commodity prices caused by supply shocks from war and sanctions. Utilities and Consumer Staples were the only other sectors to eke out gains. Consumer Discretionary and Communication Services performed the worst; the former was impacted by slumping consumer confidence in the wake of the rapid rise in inflation, while the latter—largely comprised of highly priced growth stocks—was impacted by central bank efforts to tame inflation.
Geographically, all major regions declined. The eurozone was most impacted as sanctions against Russia served to compound the difficulties of countries already grappling with mounting inflation. Japanese stocks also lagged, with supply chain issues emanating out of China and other economic concerns weighing on the market. Emerging Markets also performed poorly, largely due to Russia and China—the latter of which faced an economic slowdown aggravated by difficulties in maintaining its zero-COVID policy, sweeping regulatory actions, and the government’s attempts to slowly deflate its colossal real estate bubble.
Style factors played a significant role: the most highly priced shares suffered throughout, first from the regulatory mauling of many Chinese growth leaders, and then from a reassessment of discount rates in the face of rising inflation. Similarly, the fastest-growing stocks significantly underperformed their slowest-growing peers. There was no clear effect by quality as both the highest- and lowest-quality stocks underperformed.
Performance Attribution
The Portfolio’s concentration in expensive stocks, a hazard of our commitment to investing in the stocks of high-quality rapidly growing businesses, hurt relative performance in the period during which investors fled from richly priced companies. So stiff was this style headwind that, when viewed through the standard lenses of sector and geographic attribution, our Portfolio underperformed within each sector and each region. Walking through sector by sector or region by region would add little to that overarching explanation.
A more informative parsing of sources of underperformance comes from viewing our returns in terms of the Portfolio’s exposure to growth and valuation factors. According to our growth and valuation rankings, the Portfolio’s emphasis on companies in the fastest-growing cohorts—or, inseparably, its tolerance of their rankings among the most richly priced cohorts—accounted for about 40% of our underperformance in the period. Our parallel emphasis on quality provided no defense in the period. However much we’ve steadily reduced holdings of highly priced stocks, the Portfolio remains skewed toward the expensive end of the market, and that skew has cost over 400 basis points of relative performance in the half year.
Perspective and Outlook
The performance of our strategy has been poor throughout the period, a six-month span in which value stocks have trounced growth stocks.
In retrospect, we were too sanguine about the near-term course of inflation, and the extent to which the risk that inflation expectations would become entrenched would rise. We expected surging demand for consumer durables to revert to trend and supply chains to normalize as economies reopened from COVID-19 constraints. But ongoing bottlenecks, such as congestion at US ports, now exacerbated by lockdowns in China’s industrial hubs and commodity supply shocks emanating from the Ukrainian conflict, have led to prolonged shortages of key components and finished goods across many industries. The effects of sustained price pressures on monetary policy and concerns for its prospective impact on economic growth have raised equity discount rates and lowered general growth expectations, leading to severe underperformance of the fastest-growing quintile of the market—the cohort from which we’ve drawn a large portion of our Portfolio, which also meant a large helping of the most expensive quintile (as measured by our composite valuation rankings).
If we’d had better macroeconomic foresight or were less convinced of the through-the-cycle earnings power of our fastest-growing companies, we might have reduced our
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exposure to the most expensive of them. Too late for that, at this point we are contending with the market’s massive style shift in the midst of rising inflation and discount rates, regulatory uncertainty, and disrupted supply chains, all against a backdrop of nascent fears of an economic slowdown.
However, for many of our holdings, most of the specific blemishes that marred their shares are likely to be transient; the companies’ long-term prospects remain bright while the sell-off has left their shares more attractively priced. PayPal is admittedly at a crossroads with its still-untested strategy of focusing on deepening existing user relationships instead of growing e-commerce commissions off new users; but, at its current price, we are prepared to wait a while longer to gauge if it can succeed. With Meta Platforms (Facebook), we think it is only a matter of time before the company’s heavy investments in proprietary ad targeting tools and the next generation of web experiences launch the next growth phase. Other examples include Align Technology, which remains among the fastest growing and most innovative companies in consumer health, and Japanese healthcare company Sysmex, which—in addition to a promising Alzheimer’s test in clinical trials—is already using its early-disease-detection systems to help doctors diagnose and better treat many types of cancers far earlier in the diseases’ progression.
Over the last 20 years we’ve experienced four other episodes when our quality-growth style has significantly underperformed. The most recent was in December 2018 when the Trump trade war and rising interest rates delivered a shock remarkably similar to the one experienced today and which also contributed to a broad retreat from highly priced growth shares. It’s too soon to tell if the current hiking cycle will prove equally short-lived, but what does seem clear is that the ability of economic activity to withstand higher interest rates has been progressively lowered over time. That said, given today’s potent mix of macroeconomic and geopolitical uncertainties, investors are facing an unusually wide range of potential outcomes. In a scenario of continued high inflation and sharply rising interest rates, shares of quality-growth companies will probably continue to lag the market; but, should inflation moderate and economic growth revert to a more tepid pace, we would expect to see a reversal of their recent underperformance as the market embraces companies growing their earnings faster than average. In the face of this uncertainty, we do what we have done for the last two decades: construct a diversified Portfolio of high-quality growth companies by taking advantage of the most attractive valuations as they emerge.
Portfolio Highlights
The war in Ukraine has given new urgency to the question of whether globalization has reached a tipping point and if the familiar web of decentralized, just-in-time, global supply chains will be a casualty of the inward turn dividing countries into competing trading blocs. It is probably too soon
to know. It is probable, however, that companies everywhere will be reassessing presuppositions about access to low-cost transportation, cheap foreign labor, and business-friendly social and tax policies, and taking steps to minimize future supply disruptions or unanticipated regulatory shifts. At a minimum, we’d expect to see manufacturers begin to reshore or at least duplicate production processes for critical operations, whether it’s setting up plants closer to their end customers or encouraging their suppliers to do the same. We’d also expect future capital expenditures and supply chain reorganizations to take full advantage of the many advances occurring across the industrial automation landscape, which are propelling leading providers of so-called “Industry 4.0” solutions onto favorable growth paths.
Rockwell Automation is one such provider, which we purchased during the market correction in the first three months of 2022. Rockwell’s sales growth had stalled during the US capex recession following the recovery from the Global Financial Crisis. The company sold sensors, actuators, valves, and control software, but lacked the ability to weave all these offerings together to provide a single control point for clients wanting to
Portfolio Positioning (% Weight) at April 30, 2022 | ||||||
Sector | Portfolio | Benchmark1 | ||||
Comm Services | 9.0 | 7.7 | ||||
Cons Discretionary | 7.4 | 11.3 | ||||
Cons Staples | 1.7 | 7.5 | ||||
Energy | 1.2 | 4.7 | ||||
Financials | 14.0 | 14.5 | ||||
Health Care | 23.8 | 12.3 | ||||
Industrials | 14.6 | 9.4 | ||||
Info Technology | 23.6 | 21.6 | ||||
Materials | 0.0 | 5.1 | ||||
Real Estate | 1.3 | 2.9 | ||||
Utilities | 0.0 | 3.0 | ||||
Cash | 3.4 | – | ||||
Geography | Portfolio | Benchmark1 | ||||
Canada | 0.0 | 3.2 | ||||
Emerging Markets | 12.0 | 11.3 | ||||
Europe EMU | 6.5 | 7.8 | ||||
Europe ex-EMU | 10.0 | 8.2 | ||||
Frontier Markets2 | 0.0 | – | ||||
Japan | 2.8 | 5.4 | ||||
Middle East | 0.0 | 0.2 | ||||
Pacific ex-Japan | 1.9 | 3.2 | ||||
United States | 63.4 | 60.7 | ||||
Cash | 3.4 | – |
1MSCI All Country World Index; 2Includes countries with less-developed markets outside the Index.
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automate an existing plant or build a fully automated new one. Its 2018 minority investment in PTC Inc, a Boston-based industrial software firm with a strong capability in augmented reality and visualization tools, marked a turning point in Rockwell’s fortunes. Through this partnership, Rockwell was able to develop software that integrated data from individual business segments, stitching it together on its “FactoryTalk” platform, to give managers a real-time digital picture of their operations. The company is now a chief enabler and beneficiary of reshoring initiatives as a wave of manufacturers scarred by pandemic supply chain disruptions look to automation to help them recreate some of the cost savings that had driven their offshoring in the first place.
Another example is Hexagon, a Swedish industrial sensor and digital reality company, which we added to the Portfolio on share weakness. Hexagon has long made high-value tools that enable more efficient construction and manufacturing, but where these were mostly once expensive standalone pieces of hardware—like high-resolution survey equipment or cameras—they now tend to be expensive hardware connected to cloud-based software sold on a recurring, subscription basis. This can take the form of an advanced sensor drone that buzzes above the factory floor monitoring operations and collecting data to spot inefficiencies or potential breakdowns, or computer modeling software for constructing a virtual twin of an entire plant for processing said data and helping to optimize back the other way. The result is that top-line growth, driven by increasing adoption of such Industry
4.0 efficiency-enhancing tools, has also been accompanied by an improving revenue mix for Hexagon, with 60% of its revenues now coming from higher-margin software and recurring sources.
We sold Baidu; however, it wasn’t due to company-specific factors as Baidu continues to generate strong cash flows and appears reasonably valued with a strong balance sheet. We have simply grown more concerned about the country risk associated with our Chinese shares, especially shares heavily owned by US investors, given the simmering tensions between the two nations. Our bottom-up fundamental research process continues to identify many high quality-growth businesses in China that compare favorably with global peers, but we have decided to trim our overweight as we reassess the implications of our holdings there for overall, Portfolio-level risk.
Additional sales included Neste, the Finnish renewable diesel company, whose CEO resigned unexpectedly at a difficult moment for the company, as it is struggling with inflation and scarcity in its commercial cooking-oil-waste raw material chain and working to complete construction of a large new aviation fuel plant in Singapore. We also sold Disney, due to some concerns about the increasing capital intensity of its business amid signs of rising competition and slowing growth in streaming media consumption.
Ten Largest Holdings by Weight at April 30, 2022 | ||||||
Company | Sector | Market | % | |||
Alphabet | Comm Services | US | 3.6 | |||
Vertex Pharmaceuticals | Health Care | US | 3.2 | |||
First Republic Bank | Financials | US | 3.0 | |||
SVB Financial Group | Financials | US | 3.0 | |||
John Deere | Industrials | US | 2.8 | |||
Microsoft | Info Technology | US | 2.7 | |||
UnitedHealth Group | Health Care | US | 2.7 | |||
Schneider Electric | Industrials | France | 2.6 | |||
Amazon.com | Cons Discretionary | US | 2.3 | |||
Meta Platforms | Comm Services | US | 2.3 |
Please read the separate disclosures page for important information, including the risks of investing in the Portfolio.
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International Equity Portfolio
| ||||
Institutional Investors: HLMIX & HLIZX | Individual Investors: HLMNX | ||||
Portfolio Management Team
Ferrill Roll, CFA Co-Lead Portfolio Manager
Andrew West, CFA Co-Lead Portfolio Manager
Bryan Lloyd, CFA Portfolio Manager
Babatunde Ojo, CFA Portfolio Manager
Patrick Todd, CFA Portfolio Manager |
Performance Summary
For the International Equity Portfolio, the Institutional Class declined 17.46%, the Institutional Class Z declined 17.42%, and the Investor Class declined 17.58% (net of fees and expenses) in the six-month period ended April 30, 2022. The Portfolio’s benchmark, the MSCI All Country World ex-US Index, declined 11.87% (net of source taxes).
Market Review
Stock markets fell sharply during the period as the confluence of several macroeconomic events battered share prices.
In November, consumer price inflation in the US reached its highest rate since 1982, leading the US Federal Reserve to signal several interest rate hikes and an imminent end to its bond buying program. Other central banks moved even more quickly: the Bank of England raised its main interest rate and the European Central Bank announced it would end its bond buying program. At the same time, just as supply chain bottlenecks showed signs of easing, the emergence of Omicron threatened to upend the progress and reintroduce global lockdowns. Chinese officials, aiming for zero transmission, pursued the most stringent lockdown policies—further hampering economic growth that had already been stalled amid a slowdown in construction spending after several heavily indebted property developers, including the gargantuan Evergrande, defaulted on bond payments.
Investors barely had time to digest these events when, in February, Russia commenced its invasion of Ukraine. The
Fund Facts at April 30, 2022 | ||||||
Total Net Assets | $17,805.7M | |||||
Sales Charge | None | |||||
Number of Holdings | 58 | |||||
Turnover (5 Yr. Avg.) | 18% | |||||
Dividend Policy | Annual | |||||
Institutional Investors | Individual Investors | |||||
Inst. Class | Inst. Class Z | Investor Class | ||||
Ticker | HLMIX | HLIZX | HLMNX | |||
CUSIP | 412295107 | 412295719 | 412295503 | |||
Inception Date | 5/11/1994 | 7/17/2017 | 9/30/2005 | |||
Minimum Investment1 | $100,000 | $10,000,000 | $5,000 | |||
Expense Ratio2 | 0.79%3 | 0.71%4 | 1.11%5 |
1Lower minimums available through certain brokerage firms; 2The Expense Ratios are as of the most recent Prospectus and have been restated to reflect current fees; 3Harding Loevner’s contractual agreement caps the net expense ratio at 1.00% through February 28, 2023. The expense ratio (without cap) is applicable to investors; 4Harding Loevner’s contractual agreement caps the net expense ratio at 0.80% through February 28, 2023. The expense ratio (without cap) is applicable to investors; 5Harding Loevner’s contractual agreement caps the net expense ratio at 1.25% through February 28, 2023. The expense ratio (without cap) is applicable to investors.
reaction by Western governments was swift and emphatic as they sought to tread a delicate balance between punishing Russian aggression and avoiding an escalating military conflict. The US and its allies enacted crippling economic sanctions against Russia, including freezing a significant share of the Russian central bank reserve assets, cutting off many of the country’s banks from the SWIFT global financial messaging system, and outlawing the export of a variety of industrial and luxury goods. The sanctions initially led to a collapse in the ruble, while the Moscow stock exchange closed for almost a month before re-opening for domestic investors only. With foreign investors effectively unable to trade, major market index providers expunged all Russian securities from their indexes.
Prices for a wide range of commodities for which Russia is a major producer—including oil, gas, grains, and metals—surged on fears of disruption, prompting billions of US dollars in margin calls to cover futures positions. Headline inflation, which had already been rising rapidly around the world prior to the invasion, received a fillip from the shock to energy and food supplies stemming from the war, increasing the pressure on central banks to tighten monetary policy. In March, the US Fed did just that, raising interest rates for the first time in three years and signaling as many as seven additional hikes in 2022, causing stocks to retreat further as investors feared efforts to tame inflation may cause a recession.
On a sector basis, only Energy was able to eke out modest gains during the period, reflecting the meteoric rise in commodity prices caused by supply shocks from war and sanctions.
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Performance (% Total Return) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For periods ended March 31, 2022 | For periods ended April 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
1 | 3 | 5 | 10 | Since Inception* | 1 | 3 | 5 | 10 | Since Inception* | |||||||||||||||||||||||||||||||||||||||||||||
Year | Years | Years | Years | May-94 | Jul-17 | Sep-05 | Year | Years | Years | Years | May-94 | Jul-17 | Sep-05 | |||||||||||||||||||||||||||||||||||||||||
Intl. Equity Portfolio – Inst. Class | -4.20 | 9.26 | 8.14 | 7.36 | 6.43 | -13.54 | 5.08 | 5.78 | 6.63 | 6.11 | ||||||||||||||||||||||||||||||||||||||||||||
Intl. Equity Portfolio – Inst. Class Z | -4.13 | 9.34 | – | – | 6.80 | -13.47 | 5.16 | – | – | 4.90 | ||||||||||||||||||||||||||||||||||||||||||||
Intl. Equity Portfolio – Investor Class | -4.48 | 8.93 | 7.80 | 7.02 | 6.52 | -13.83 | 4.76 | 5.43 | 6.29 | 5.97 | ||||||||||||||||||||||||||||||||||||||||||||
MSCI All Country World ex-US Index | -1.48 | 7.51 | 6.76 | 5.55 | – | 5.35 | 4.84 | -10.31 | 4.30 | 4.94 | 5.04 | – | 3.84 | 4.41 |
Returns are annualized for periods greater than 1 year. *Inception of the Institutional Class, May 11, 1994. Inception of the Institutional Class Z, July 17, 2017. Inception of the Investor Class, September 30, 2005. Index performance prior to January 1, 2001 cannot be shown since it relies on back-filled data.
Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Portfolio may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling (877) 435-8105 or visiting hardingloevnerfunds.com.
Consumer Discretionary and Information Technology (IT) performed the worst; the former was impacted by slumping consumer confidence in the wake of the rapid rise in inflation, while the latter—largely comprised of highly priced growth stocks—was impacted by central bank efforts to tame inflation.
Geographically, all major regions declined. The eurozone was most impacted as sanctions against Russia served to compound the difficulties of countries already grappling with mounting inflation. Emerging Markets also performed poorly, largely due to Russia and China—the latter of which faced an economic slowdown aggravated by difficulties in maintaining its zero-COVID policy, sweeping regulatory actions, and the government’s attempts to slowly deflate its colossal real estate bubble.
Style factors played a significant role: the most highly priced shares suffered throughout, first from the regulatory mauling of many Chinese growth leaders, and then from a reassessment of discount rates in the face of rising inflation. Similarly, the fastest-growing stocks significantly underperformed their slowest-growing peers. There was no clear effect by quality as both the highest- and lowest-quality stocks performed similar to the average.
Performance Attribution
In a period in which investors fled from richly priced, high-quality growth companies, it should come as no surprise that, whether viewed through the lens of sector or geographic attribution, our portfolio underperformed within most sectors and regions. A laundry list of the contributors to underperformance would not improve much on the explanation. An exception, of course, is the value destruction from our two Russian holdings, Lukoil and Yandex—nearly 300 basis points of value wiped off the Portfolio, and almost half the total underperformance in the period—which dominates whichever category they fall under in any breakdown of returns.
A more informative parsing of returns comes from viewing them according to how they relate to rankings of growth, quality, and valuation. Viewed through the lens of growth, our efforts to resist
a skew towards the most expensive members of the faster-growing quintiles of the market meant that only a modest amount of our underperformance, about 60 basis points, is attributable to our preference for growth businesses. The rest, like sector or regional attribution, comes across as poor stocks within the different quintiles of growth. Our heavy skew towards higher quality companies had similarly modest allocation effects. However much we’ve steadily reduced holdings of highly priced stocks, the Portfolio remains skewed toward the expensive end of the market, and that skew has cost about 200 basis points of relative performance in the half year, much of the remainder that is not explained by Russian losses.
Perspective and Outlook
We’ve owned shares in Lukoil and Yandex for several years with the view that while a grasping and ruthless government posed political risks, companies able to navigate those risks and build sound growing businesses that deliver highly valued products and services to their customers could nevertheless generate strong business results. Due to fears of the Russian state’s confiscatory tendencies and corporate governance risks more generally, shares in these companies traded at a discount relative to their global peers, which could lead to strong returns for intrepid investors. Additionally, these political risks bore almost no correlation to other risks embedded in our portfolio. In an investment climate where most fast-growing, resilient businesses commanded historically high valuations, Russian shares offered a tempting mix of diversification and inexpensive growth.
In the end, it wasn’t the corporate governance or expropriation risks that proved our undoing, nor even the brutal and unexpected invasion itself. Instead, it was the resulting broad social revulsion in most developed democracies, which united previously divided or reluctant actors, calling down a ferocious firestorm of nearly inconceivable official and private actions targeting the Russian economy, and in the process also rendering Russian investments held by private Western bystanders effectively worthless. If anything, the episode will have alerted skeptics to the potency of seemingly remote investment risks, including social ones.
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But we must stress that the Russian invasion and the West’s financially fierce response, as dramatic as they are, have merely accelerated the style headwinds we’ve been facing in recent months, as investors retreat from high-priced stocks. Well before the Ukraine crisis, headline inflation had been rising almost everywhere and intruding on the discount rates used to value shares. The energy and food shocks emanating from the conflict and consequent sanctions have supercharged the existing trends for expected inflation, bond yields, and equity discount rates, and the prospects for tighter monetary policies to combat the rise in prices. These trends have the largest effects on the present value (and therefore the current price) of distant future earnings—and thus pointedly on the price of growth stocks whose expected cash flows lie far in the future.
The monetary policy tightening now underway by central banks is intended to dampen speculative or less productive demand for goods, services, and assets by raising borrowing costs. But those policies, when combined with the demand destruction likely to emanate from soaring food and energy prices, may contain the seeds of their own reversal. If consumer and producer confidence take more than a temporary hit from the war in Ukraine and its ramifications, a recession—either in Europe or more globally—could conspire to reduce the inflationary impulse from COVID-19 re-openings and offset some of the need for monetary tightening. We’re not in the business of making such forecasts but, were that scenario to unfold, it’s possible that the headwinds for our quality/growth investment style would abate.
Much has been written recently about “the end of globalization” being another result of the war in Ukraine, and about the reluctance of some large countries—notably China and India—to sign onto the sanctions imposed by Western and Asian-Pacific governments. We, like many observers, worry that China, ostensibly aiming to be neutral, might risk some consequences by facilitating sanctions workarounds for Russia, and misjudge the West’s resolve. The economic disincentives would appear to work against the possibility. China’s total trade with Russia in 2020 was around a tenth of its US$1.4 trillion trade with the US and Europe. Given China’s flagging growth as it manages its deflating property market—a multi-year prospect, if previous property bubbles are anything to go by—and its stated priority to improve “common prosperity” for its people, the last thing it’s likely to want is to impair its access to the global trading system and court rejection by its largest customers.
While risks of unforeseen consequences arising from the Ukraine conflict are high, on this front we are cautiously optimistic that China will work hard to maintain its neutrality in a credible way, as it is a huge beneficiary of trade with the rest of the world, especially the rich developed nations. We think it likely that China, along with India, will continue to buy oil and gas from Russia, and do not expect that fact to alter China’s trade relations with the West much. Nevertheless, we must contemplate that our optimism is misplaced on the importance of membership in the global network of exchange. If our central
and optimistic case is wrong, then we’d need to greatly modify our views of which companies in our opportunity set will face new barriers to profitable growth, and which might stand to benefit from a further receding of globalization. We’d expect such a world to be less efficient—as the cold logic of comparative advantage is demoted as a determinant of which goods or services are produced and where—and less prosperous, since exploiting comparative advantage is a cornerstone of wealth creation.
Portfolio Highlights
Our fundamental investment process guides our search for durably growing companies with strong finances. Ideally, we’d like to pay no more than our estimate of fair value for such a company’s shares, but as a practical matter we’ve been willing to pay some premium to own superior companies. We rarely own deep value stocks since shares of companies that meet our quality and growth criteria generally don’t plumb the depths of value except fleetingly. Why, then, not own more of those at the other end of the spectrum, the fastest-growing companies,
Portfolio Positioning (% Weight) at April 30, 2022 |
| |||||
Sector | Portfolio | Benchmark1 | ||||
Comm Services | 4.6 | 6.3 | ||||
Cons Discretionary | 2.5 | 11.0 | ||||
Cons Staples | 14.0 | 8.8 | ||||
Energy | 2.0 | 5.7 | ||||
Financials | 16.9 | 20.4 | ||||
Health Care | 13.7 | 9.6 | ||||
Industrials | 15.7 | 12.0 | ||||
Info Technology | 14.6 | 11.6 | ||||
Materials | 10.5 | 8.8 | ||||
Real Estate | 0.0 | 2.5 | ||||
Utilities | 1.3 | 3.3 | ||||
Cash | 4.2 | – | ||||
Geography | Portfolio | Benchmark1 | ||||
Canada | 2.6 | 8.2 | ||||
Emerging Markets | 24.1 | 28.8 | ||||
Europe EMU | 19.8 | 19.7 | ||||
Europe ex-EMU | 26.4 | 21.0 | ||||
Frontier Markets2 | 0.0 | – | ||||
Japan | 12.5 | 13.7 | ||||
Middle East | 0.0 | 0.5 | ||||
Pacific ex-Japan | 9.0 | 8.1 | ||||
Other3 | 1.4 | – | ||||
Cash | 4.2 | – |
1MSCI All Country World ex-US Index; 2Includes countries with less-developed markets outside the Index. 3Includes companies classified in countries outside the Index.
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whose shares are typically very highly priced relative to their current fundamentals? The short answer is that rapid growth is not reason enough when share prices are too high to support acceptable future returns, or when confidence in the business model or financial strength is lacking. For several years such “disruptive innovators” have been at the forefront of growth stock investing. Most of them we regard as speculative businesses. We will entertain them as candidates for investment only when there’s an already-profitable business behind the hype and a market valuation suggesting its growth potential has yet to be fully priced in. We think investors should proceed with humility when forecasting leaps in corporate sales and profits decades into the future.
While the price drop in speculative stocks doesn’t tempt us to purchase them, the underperformance of quality growth stocks has created some interesting opportunities. A number of Japanese quality growth stocks which have declined sharply in recent months have our eye. For example, In April we purchased Shiseido, Japan’s largest cosmetics company by revenue. The company possesses strong brands oriented towards skincare that are particularly well-regarded in Asia and backed by both research and development (R&D) and effective marketing. We expect to see good growth of revenue and profitability in the coming years as Japan and China recover from COVID-19 restrictions and as management moves to emphasize margin improvement by focusing on a smaller number of premium-oriented products, disposing of smaller lower-margin and slower growing brands. The stock has been weak, which allowed us to buy at a price that appears undervalued relative to our expectations of future profitability.
Of course, to buy we must also sell; our recent sales have been of companies that for the most part are achieving our mileposts for business growth but whose share prices still offer no margin for error. We sold our position in UK-based foods and consumer products producer Unilever as we believe inflationary pressures will negatively impact the company’s growth and margins for the foreseeable future. We also sold our position in Israeli security firm Check Point as the stock traded above our fair value estimate. Recent outperformance has been supported by greater awareness of cybersecurity threats; however, we have doubts about the company maintaining longer-term growth given faltering market share and the need to increase personnel spending.
In a world where black swans seem to be multiplying, we believe our focus on companies with sound business models, strong balance sheets, and positive cash flow should at least provide some additional defense against the unexpected.
Ten Largest Holdings by Weight at April 30, 2022
Company | Sector | Market | % | |||
Samsung Electronics | Info Technology | South Korea | 3.8 | |||
L’Oréal | Cons Staples | France | 3.3 | |||
Roche | Health Care | Switzerland | 3.3 | |||
BHP | Materials | Australia | 3.2 | |||
Atlas Copco | Industrials | Sweden | 3.1 | |||
DBS Group | Financials | Singapore | 3.0 | |||
Tencent | Comm Services | China | 2.9 | |||
AIA Group | Financials | Hong Kong | 2.8 | |||
Schneider Electric | Industrials | France | 2.7 | |||
Allianz | Financials | Germany | 2.6 |
Please read the separate disclosures page for important information, including the risks of investing in the Portfolio.
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International Small Companies Portfolio | ||||
Institutional Investors: HLMRX | Individual Investors: HLMSX | ||||
Portfolio Management Team
Jafar Rizvi, CFA
Co-Lead Portfolio Manager
Anix Vyas, CFA
Co-Lead Portfolio Manager
Performance Summary
For the International Small Companies Portfolio, the Institutional Class declined 21.55% and the Investor Class declined 21.69% (net of fees and expenses) in the trailing six months up to April 30, 2022. The Portfolio’s benchmark, the MSCI All Country World ex-US Small Cap Index, declined 13.36% in the same period (net of source taxes).
Market Review
International small capitalization stocks fell strongly in the fiscal year-to-date, as ongoing concerns over stagflation were joined and intensified by Russia’s invasion of Ukraine. International small cap companies trailed their larger-cap counterparts in the period.
Headline inflation, which had already been rising rapidly around the world prior to the invasion, received a fillip from the shock to energy and food supplies stemming from the war. Prices for a wide range of commodities for which Russia is a major producer—including oil, gas, grains, and metals—surged on fears of disruption, prompting billions of US dollars in margin calls to cover futures positions. Central banks were pressed to tighten their monetary policy. The Bank of England—along with the South Korean, South African, and Brazilian central banks—continued raising short-term policy rates to beat back rising prices. In the US, the Federal Reserve lifted rates for the first time since December 2018 and signaled a willingness to do whatever it takes to bring inflation under control, announcing an aggressive rate hike path for the months ahead.
Fund Facts at April 30, 2022 | ||||
Total Net Assets | $502.4M | |||
Sales Charge | None | |||
Number of Holdings | 82 | |||
Turnover (5 Yr. Avg.) | 30% | |||
Dividend Policy | Annual | |||
Institutional Investors | Individual Investors | |||
Institutional Class | Investor Class | |||
Ticker | HLMRX | HLMSX | ||
CUSIP | 412295875 | 412295883 | ||
Inception Date | 6/30/2011 | 3/26/2007 | ||
Minimum Investment1 | $100,000 | $5,000 | ||
Net Expense Ratio2 | 1.12%3 | 1.40%4 | ||
Gross Expense Ratio2 | 1.12% | 1.46% |
1Lower minimums available through certain brokerage firms; 2The Gross and Net Expense Ratios are as of the most recent Prospectus and have been restated to reflect current fees; 3Harding Loevner’s contractual agreement caps the net expense ratio at 1.15% through February 28, 2023. The expense ratio (without cap) is applicable to investors; 4The Net Expense Ratio is shown net of Harding Loevner’s contractual agreement through February 28, 2023. Harding Loevner’s contractual agreement caps the net expense ratio at 1.40%. The Net Expense Ratio is applicable to investors.
Western governments sought to tread a delicate balance between punishing Russian aggression and avoiding an escalating military conflict. The US and its allies enacted crippling economic sanctions against Russia. The sanctions led to a collapse in the ruble, forcing the central bank to raise overnight interest rates to 20% per annum to bolster the currency, while the Moscow stock exchange closed for almost a month before re-opening for domestic investors only. With foreign investors effectively unable to trade, major market index providers expunged all Russian securities from their indexes.
The shock imposed by the start of the Russia-Ukraine war and the West’s reaction to it was so severe that almost all sectors registered negative growth. Health Care, the worst-performing sector, was hurt by the post-COVID-19 slowdown in health care funding and higher interest rates. Ailing consumer and business confidence resulted in Consumer Discretionary and Information Technology also being among the worst-performing sectors. On the other hand, Energy companies enjoyed higher oil prices.
The two best performing regions, the Middle East and Canada, were helped by their heavy weight in Energy and Materials stocks. In Japan, Prime Minister Fumio Kishida had been expected to deliver long-needed economic reforms, but those hopes were dashed when he proposed raising Japan’s capital gains tax and limiting share buybacks. Emerging Markets were hurt by China as the country grappled with ongoing regulatory
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Performance (% Total Return) | ||||||||||||||||||||||||||||||||||||||||||||||
For periods ended March 31, 2022 | For periods ended April 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||
1 | 3 | 5 | 10 | Since Inception* | 1 | 3 | 5 | 10 | Since Inception* | |||||||||||||||||||||||||||||||||||||
Year | Years | Years | Years | Jun-11 | Mar-07 | Year | Years | Years | Years | Jun-11 | Mar-07 | |||||||||||||||||||||||||||||||||||
Intl. Small Companies Portfolio – Inst. Class | -2.07 | 9.69 | 8.83 | 8.34 | 7.02 | -14.59 | 5.00 | 5.99 | 7.26 | 6.10 | ||||||||||||||||||||||||||||||||||||
Intl. Small Companies Portfolio – Investor Class | -2.31 | 9.41 | 8.55 | 8.07 | 6.45 | -14.84 | 4.73 | 5.72 | 6.98 | 5.79 | ||||||||||||||||||||||||||||||||||||
MSCI All Country World ex-US Small Cap Index | 0.03 | 10.22 | 7.89 | 7.28 | 5.90 | – | -10.53 | 7.01 | 5.83 | 6.66 | 5.21 | – |
Returns are annualized for periods greater than 1 year. *Inception of the Institutional Class, June 30, 2011. Inception of the Investor Class, March 26, 2007. Index performance prior to June 1, 2007 cannot be shown since it relies on back-filled data.
Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Portfolio may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling (877) 435-8105 or visiting hardingloevnerfunds.com.
crackdowns and cracks forming in its zero-COVID policy. The US Securities and Exchange Commission also began the procedural implementation of the Holding Foreign Companies Accountable Act, identifying several US-listed Chinese companies whose latest financial reports fail to adhere to US audit standards and could be subject to delisting. However, investor sentiment towards the country may be worse than reality; after the SEC’s actions, Chinese officials signaled room for compromise on a mutually agreeable auditing framework.
Style effects for the period favored the cheapest companies, which outperformed the most richly valued by over 1500 basis points.
Performance Attribution
The Portfolio’s concentration in expensive, faster growing, and higher quality stocks, a hazard of our investment philosophy, hurt relative performance in a period during which investors fled from richly priced and higher quality companies. So stiff were these style headwinds that walking through sector or regional attribution would add little to that overarching explanation.
Viewing our returns in terms of the Portfolio’s exposure to growth and valuation factors gives us a better picture. The Portfolio’s emphasis on companies in the fastest-growing cohorts accounted for over half of our underperformance in the quarter. Our parallel emphasis on quality provided no defense in the period. But within these faster-growing and richly priced cohorts, some of our holdings performed worse than their peers. The shares of Bossard, a Swiss fastener distribution and logistics company, saw worsening global supply chain problems finally catch up with its ability to procure industrial fasteners from its suppliers, many of which are located in China and Southeast Asia. Management issued lower-than-expected 2022 revenue and profit guidance due to rising personnel and logistics costs and the impact on demand for screws from shortages of other parts. Meanwhile, Japanese seasoning products manufacturer Ariake, another member of the highest-quality quintile, suffered from deteriorating restaurant sales caused by extended lockdowns in its home country, with sales of its home meal kits in supermarkets and convenience stores failing to offset this decline.
The direct impact of Russia’s invasion of Ukraine on our Portfolio was small. We exited Kernel, a vertically integrated sunflower oil producer and our sole holding in Ukraine, about a month before the invasion, and have held no Russian securities since our sale of Moscow Exchange in early 2019. Two banks neighboring Russia that we have owned for several years accounted for about 40 bps of our underperformance: The eponymous Bank of Georgia, and Lithuanian bank Siauliu Bankas. They hold dominant franchises in their respective markets and are well managed. Doing business in emerging democracies along Russia’s border means they trade at a discount, but their geopolitical risks are uncorrelated with most other risks embedded in our Portfolio. While most fast-growing, resilient businesses command historically high valuations today, Bank of Georgia and Siauliu Bankas represent inexpensive growth and diversification.
Perspective and Outlook
Well before the Ukraine crisis, headline inflation had been rising almost everywhere and intruding on the discount rates used to value shares. The energy and food shocks emanating from the conflict and consequent sanctions have supercharged the existing trends for expected inflation, bond yields, and equity discount rates, and the prospects for tighter monetary policies to combat the rise in prices. These trends are most detrimental to growth stocks whose expected cash flows lie far in the future.
The monetary policy tightening now underway by central banks is intended to dampen speculative or less productive demand for goods, services, and assets by raising borrowing costs. If consumer and producer confidence take more than a temporary hit from the war in Ukraine and its ramifications, a recession—either in Europe or more globally—could conspire to reduce the inflationary impulse from COVID-19 re-openings and offset some of the need for monetary tightening. We’re not in the business of making such forecasts but, were that scenario to unfold, it’s possible that the headwinds for our quality/growth investment style would abate.
Much has been written recently about “the end of globalization” being another result of the war in Ukraine, and about the
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reluctance of some large countries—notably China and India—to sign onto the sanctions imposed by Western and Asian-Pacific governments. We, like many observers, worry that China, ostensibly aiming to be neutral, might risk some consequences by facilitating sanctions workarounds for Russia, and misjudge the West’s resolve. However, China’s total trade with Russia in 2020 was around a tenth of its US$1.4 trillion total trade with the US and Europe, and the last thing it’s likely to want is to court rejection from its largest customers and impair its access to the global trading system. Indeed, On March 16th economic policy czar and Vice Premier Liu He affirmed the importance of economic growth and markets, offering insight into the government’s leanings and reversing a dramatic swoon in Chinese stocks that had coincided with reports that China might be contemplating military aid to Russia.
While risks of unforeseen consequences arising from the Ukraine conflict are high, on this front we are cautiously optimistic that China will maintain its neutrality in a credible way, as it is a huge beneficiary of trade with the rest of the world, especially the rich developed nations. Nevertheless, we must contemplate that our optimism is misplaced on the importance of membership in the global network of exchange. If our central case—admittedly an educated guess—is wrong, then we’d need to modify our views of which companies will be hurt by, and which might stand to benefit, relatively, from a further receding of globalization. We’d expect such a world to be less efficient, as the logic of comparative advantage is demoted as a determinant of which goods or services are produced, and where. If regional blocs began to raise limits on the movement of capital as well as goods, we’d need to parse which of our companies are at risk of declining sales from increasingly insular countries.
Bossard, for example, has built its business upon today’s web of global supply chains. Its specialty is fasteners, whether bespoke or ready-made1; It sources them from its network of 4,500 manufacturing partners. It would throw a considerable monkey wrench in Bossard’s business if some of its best suppliers in China were to find themselves trapped behind new Western tariffs or trade sanctions. At the same time, we need to be careful not to underrate the ability of Bossard or its customers to prepare for and adapt to such scenarios; in the case that Bossard runs into difficulty servicing key client Tesla’s factories in California and Texas, it has plenty of suppliers in Mexico it can turn to. In a world of new barriers and shifting trade patterns, it would become more difficult for companies to manage their fastener sourcing internally. Bossard had a record year in 2021, growing revenues by 22%, as more manufacturers sought out its specialized expertise to help them contend with seized-up supply chains.
1The typical car manufactured today contains about 3,500 screws; a smart phone contains about 75, and a jetliner, 1.5 million.
Kinaxis, an Ottawa-based supply chain management software company, could directly benefit from near-shoring initiatives and other efforts to build more resilience into supply chains. The company saw strong demand in response to the pandemic’s logistics challenges, and in its March update management said demand continues to pick up. Their guidance is now for 2022 revenue growth of between 34%-38% with improving profitability.
While some small companies are heavily geared toward globalization or helping with the transition away from it, others have more of a domestic focus. Around 56% of revenues for small caps come from their home markets, compared to 40% for large caps, which means small companies are somewhat less exposed to the risk of losing foreign customers. Even for those with higher foreign sales revenues, sources may align neatly with the trading bloc in which they are likely to find themselves. Diploma, a UK-based controls, seals, and life science equipment supplier, only generates 15% of its sales from the UK, but it generates a further 62% of its sales in Continental Europe and the US, markets to which the UK will remain tightly bound.
Portfolio Positioning (% Weight) at April 30, 2022 | ||||||
Sector | Portfolio | Benchmark1 | ||||
Comm Services | 11.1 | 4.0 | ||||
Cons Discretionary | 3.8 | 11.0 | ||||
Cons Staples | 8.2 | 5.8 | ||||
Energy | 1.7 | 3.7 | ||||
Financials | 7.5 | 11.1 | ||||
Health Care | 13.2 | 6.1 | ||||
Industrials | 16.7 | 20.3 | ||||
Info Technology | 25.6 | 11.3 | ||||
Materials | 6.8 | 11.9 | ||||
Real Estate | 0.5 | 11.0 | ||||
Utilities | 2.2 | 3.8 | ||||
Cash | 2.7 | – | ||||
Geography | Portfolio | Benchmark1 | ||||
Canada | 1.9 | 7.5 | ||||
Emerging Markets | 22.2 | 25.8 | ||||
Europe EMU | 21.7 | 14.2 | ||||
Europe ex-EMU | 28.2 | 21.8 | ||||
Frontier Markets2 | 6.6 | – | ||||
Japan | 11.4 | 18.0 | ||||
Middle East | 1.9 | 2.2 | ||||
Pacific ex-Japan | 0.5 | 10.5 | ||||
Other3 | 2.9 | – | ||||
Cash | 2.7 | – |
1MSCI All Country World ex-US Small Cap Index; 2Includes countries with less-developed markets outside the Index; 3Includes companies classified in countries outside the Index.
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Portfolio Highlights
With the volatility of stock prices this quarter, portfolio activity picked up as a handful of high-quality growth companies we regarded as too expensive saw their valuations fall into range.
We purchased Germany-based Scout24, the dominant internet platform for real estate agents, landlords, and sellers in Germany and Austria, with agents in particular using the product for a wide range of functions within their organizations. Its market share of over 70% gives it a scale advantage over rivals. We think that its services are under-monetized compared to those of counterparts in other developed markets, so the company should be able to raise prices over time.
We added to Financials with the purchase of Spanish insurer Linea Directa. The company was among the first in Spain to sell insurance directly by telephone. It is now the country’s fifth-largest car insurer, twelfth-largest home insurer, and a small but rapidly growing health insurer. Linea Directa’s direct sales approach should lead to improved returns from cost savings as user-acquisition and claims-processing migrate online. The company also has an opportunity to cross-sell its home and health insurance products to its established auto insurance customers. Of the customers for its nascent health insurance business, 71% are existing car or home insurance customers; given the car policyholder base is 25 times the size of the health business and cross-sale penetration is still low, its runway for growth is long.
In Health Care, the sector hardest hit by valuation headwinds this quarter, we made a new purchase in Switzerland-based Tecan, a leading lab automation provider. The company’s recent acquisition of Paramit, a leading manufacturer of medical devices, diagnostics, and life science instruments, provides new verticals with important synergies with Tecan’s core lab systems. Sales are currently focused on the US (46%) and Europe (37%) but are growing in Asia (16%), including China.
Falling prices created opportunities to add two companies in China to the Portfolio. Meyer Optoelectronic makes sophisticated optical sensors. The company is currently focused on applications in food-sorting machines, dental imaging machines, and a range of other industrial and commercial applications. The machine vision market in China alone is growing over 20% per annum, driven by the low penetration of dental equipment in China and a general push toward industrial automation. There is also a large as-yet untapped opportunity for recycling sorting machines, which could be a natural focus of China’s ambitious climate initiatives.
We also added Yantai China Pet Foods, a supplier of white-label pet foods to international customers, and seller of its own branded products in China. China’s pet industry, which grew 20% last year, is still immature. In addition to its brand equity in China, Yantai’s huge manufacturing scale helps keep existing rivals and new entrants at bay.
Ten Largest Holdings by Weight at April 30, 2022
Company | Sector | Market | % | |||
Reply | Info Technology | Italy | 3.7 | |||
Hoa Phat Group | Materials | Vietnam | 3.6 | |||
Alten | Info Technology | France | 2.5 | |||
Rubis | Utilities | France | 2.2 | |||
Vaisala | Info Technology | Finland | 2.2 | |||
LEM Holdings | Info Technology | Switzerland | 2.1 | |||
Dechra | Health Care | United Kingdom | 2.1 | |||
Diploma | Industrials | United Kingdom | 2.0 | |||
STRATEC | Health Care | Germany | 2.0 | |||
Senior | Industrials | United Kingdom | 2.0 |
Our new positions were funded from a combination of cash and sales of holdings that either had excessive valuations, like Japan-based management consulting firm Nihon M&A, elevated risks (Kernel), or were simply squeezed out (UK-based home repair portal HomeServe) to make room for more attractively priced quality growth opportunities.
Please read the separate disclosures page for important information, including the risks of investing in the Portfolio.
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Emerging Markets Portfolio | ||||
Institutional Investors: HLMEX & HLEZX | Individual Investors: HLEMX | ||||
Portfolio Management Team | ||
Scott Crawshaw Co-Lead Portfolio Manager
Craig Shaw, CFA Co-Lead Portfolio Manager
Pradipta Chakrabortty Portfolio Manager
Richard Schmidt, CFA Portfolio Manager |
Performance Summary
The Institutional Emerging Markets Portfolio (Institutional Class and Institutional Class Z) and the Emerging Markets Portfolio (Advisor Class)—collectively, the “Portfolios”—are both managed in strict accordance with Harding Loevner’s Emerging Markets Equity strategy model portfolio. Therefore, the Portfolios have highly similar holdings and characteristics. We have provided a single commentary to cover both Portfolios. The specific performance and characteristics of each are presented separately in the tables that follow.
For the Institutional Emerging Markets Portfolio, the Institutional Class fell 26.94% and Class Z fell 26.89% (net of fees and expenses). For the Emerging Markets Portfolio, the Advisor Class declined 26.96% (net of fees and expenses) in the six-month period ended April 30, 2022. The Portfolios’ benchmark, the MSCI Emerging Markets Index, fell 14.15% (net of source taxes).
Market Review
Emerging Markets (EMs) began the fiscal year by drifting lower as uncertainty over the trajectory of global inflation and a deceleration in Chinese economic growth quelled investors’ appetite for EM assets. EMs also faced headwinds from expectations the US Federal Reserve would start raising rates to combat rising inflation. The Fed indeed hiked rates 0.25% in March—the first increase since the start of the pandemic in 2020—and primed the market for a subsequent 0.50% increase (which occurred in May). Meanwhile, monetary policy across EMs has been bifurcated. Most EM central banks in the Americas,
Fund Facts at April 30, 2022 | ||||||
Sales Charge | None | |||||
Number of Holdings | 80 | |||||
Dividend Policy | Annual | |||||
Institutional Investors | Individual Investors | |||||
Total Net Assets | $4,081.4M | $2,646.5M | ||||
Turnover (5 Yr. Avg.) | 19% | 21% | ||||
Inst. Class | Inst. Class Z | Advisor Class | ||||
Ticker | HLMEX | HLEZX | HLEMX | |||
CUSIP | 412295701 | 412295693 | 412295305 | |||
Inception Date | 10/17/2005 | 3/5/2014 | 11/9/1998 | |||
Minimum Investment1 | $500,000 | $10,000,000 | $5,000 | |||
Net Expense Ratio2 | 1.10%3 | 1.00%4 | 1.19%5 | |||
Gross Expense Ratio2 | 1.10% | 1.01% | 1.19% |
1Lower minimums available through certain brokerage firms; 2The Gross and Net Expense Ratios are as of the most recent Prospectus and have been restated to reflect current fees; 3Harding Loevner’s contractual agreement caps the net expense ratio at 1.10% through February 28, 2023. The expense ratio (without cap) is applicable to investors; 4The Net Expense Ratio is shown net of Harding Loevner’s contractual agreement through February 28, 2023. Harding Loevner’s contractual agreement caps the net expense ratio at 1.00%. The Net Expense Ratio is applicable to investors; 5Harding Loevner’s contractual agreement caps the net expense ratio at 1.30% through February 28, 2023. The expense ratio (without cap) is applicable to investors.
Europe, and Africa were ahead of the Fed in raising rates, and they continued to tighten further. Asian central banks, however, took a less hawkish stance. China, notably, continued to ease monetary policy to stimulate economic growth.
EMs fell sharply starting in late February when Russia launched its deadly and destructive invasion of Ukraine. The reaction by Western governments was swift and emphatic, with the implementation of crippling economic sanctions against Russia. The sanctions initially led to a collapse in the ruble, while the Moscow stock exchange closed for almost a month before re-opening for domestic investors only. With foreign investors effectively unable to trade, major market index providers expunged all Russian securities from their indexes.
As a result of the uncertainty around the war, European stocks with material businesses in, or trade linkages to, Russia or Ukraine sold off, as well as stocks in markets closest to the conflict. However, markets across Latin America and the Middle East, as well as South Africa, benefited from the sharp rise in energy and commodity prices caused by the conflict. Crude prices nearly reached US$135 before settling above US$100 as OPEC eschewed requests to increase production; grain prices spiked, as did Russian-sourced metals like palladium and nickel.
As war broke out in Europe, China’s economy continued to falter due to a confluence of several factors, including the country’s
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Performance (% Total Return) |
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For periods ended March 31, 2022 | For periods ended April 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
1 | 3 | 5 | 10 | Since Inception* | 1 | 3 | 5 | 10 | Since Inception* | |||||||||||||||||||||||||||||||||||||||||||||||
Year | Years | Years | Years | Oct-05 | Mar-14 | Nov-98 | Year | Years | Years | Years | Oct-05 | Mar-14 | Nov-98 | |||||||||||||||||||||||||||||||||||||||||||
Inst. Emerging Markets Portfolio – Inst. Class | -21.82 | -0.19 | 2.34 | 2.90 | 5.55 | -29.30 | -4.16 | 0.02 | 2.17 | 4.97 | ||||||||||||||||||||||||||||||||||||||||||||||
Inst. Emerging Markets Portfolio – Inst. Class Z | -21.75 | -0.06 | 2.50 | – | 2.85 | -29.24 | -4.03 | 0.17 | – | 1.75 | ||||||||||||||||||||||||||||||||||||||||||||||
Emerging Markets Portfolio – Advisor Class | -21.77 | -0.28 | 2.24 | 2.86 | 9.49 | -29.26 | -4.26 | -0.07 | 2.12 | 9.05 | ||||||||||||||||||||||||||||||||||||||||||||||
MSCI Emerging Markets Index | -11.37 | 4.94 | 5.98 | 3.36 | 6.20 | 4.60 | – | -18.33 | 2.24 | 4.32 | 2.89 | 5.80 | 3.82 | – |
Returns are annualized for periods greater than 1 year. *Inception of Institutional Class, October 17, 2005. Inception of Class Z, March 5, 2014. Inception of the Advisor Class, November 9, 1998. Index performance prior to January 1, 2001 cannot be shown since it relies on back-filled data.
Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Portfolio may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling (877) 435-8105 or visiting hardingloevnerfunds.com.
worst COVID-19 outbreak and continued weakening of the property sector. The government’s zero-COVID policy meant the rising case count in Shanghai and other major cities led to large scale lockdowns and strict containment measures in key commercial areas. As a result, the nascent recovery in China’s services sector has been stymied, and factories have been temporarily shuttered, exacerbating global supply chain issues. Vice Premier Liu He sent out some positive signals, however, reaffirming the government’s focus on solving the crisis in the beleaguered real estate sector and supporting economic growth and capital markets ahead of the National Party Congress in October.
The high-growth sectors Consumer Discretionary and Health Care, were the worst performers in the trailing six months. Despite elevated oil and gas prices, Energy was also weak, dragged down by the vaporization of all value in Russian energy stocks, even as other energy stocks were among the top-performing. Financials outperformed as banks and stock exchanges in commodity-exporting countries rallied due to the boon to fiscal accounts and the outlook for economic growth. The rising interest rate environment is also beneficial for most EM banks, helping boost net interest margins and earnings growth.
The style preference in EMs trended toward value stocks and away from growth stocks trading at higher multiples, a consequence of the shift to higher interest rates in the US and many EMs.
Performance Attribution
The Portfolio’s heavy absolute loss and underperformance were primarily due to our direct holdings in Russia: Lukoil and Novatek in Energy, Sberbank in Financials, and Yandex in Communication Services. We began the fiscal year overweight Russia by 600 basis points (bps). As the invasion of Ukraine unfolded, we marked the value of our Russian positions, which had stood at 8.0% of the Portfolio at the end of January, down to zero on March 7, the point at which these US- and UK-listed shares became untradeable because of Western sanctions and actions taken by stock exchanges and brokers to avoid any possibility of entanglement.
The losses in Russia accounted for over 500 bps—roughly half—of our total underperformance. Information Technology (IT) services business EPAM and beverage company Coca-Cola HBC (CCH)— developed-market-listed companies that have significant operations in Russia, Ukraine, and Belarus—together cost a further 200 bps in underperformance.
Beyond Russia, the notable detractors from relative returns were weak stock selection in Taiwan and China, where growth stocks generally lagged. Shares of power-management chip designer Silergy declined due to concerns that chip-manufacturing capacity constraints could increase the company’s costs as well as worries that semiconductor demand had peaked. Shares of optical-component manufacturer Sunny Optical fell as chip shortages, the spread of the Omicron variant, and the Ukraine conflict all impacted the sales outlook for premium smartphones and autos, the company’s core markets. More helpful was our overweight to the surging Brazilian and Mexican markets, which rose alongside commodity prices.
By sector, the wipe out of our Russian and Russia-related holdings appeared as severe negative stock selection across Energy (Novatek and Lukoil), IT (EPAM), Communication Services (Yandex), and Financials (Sberbank). Poor returns in Energy were partly mitigated by our holding in Tenaris, a leading maker of seamless pipes for the oil and gas industry. Higher energy prices are boosting investment and rig activation in the sector, particularly in the Americas, which is leading to higher demand and better pricing for Tenaris’s products.
In Financials, the heavy drag from Sberbank was partly counterbalanced by strong contributions from companies in countries that have benefited from rising commodity prices, including Brazil’s Itaú Unibanco, South Africa’s Standard Bank, and Mexico’s GF Banorte.
We outperformed the Index in Consumer Discretionary, where Indonesian automobile company Astra International reported stronger earnings, helped by a recovery in Indonesia’s economy due to rising commodity prices. The Portfolio’s avoidance of some expensively valued Chinese e-commerce and electric-vehicle (EV) companies was also helpful.
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Perspective and Outlook
We made our Russian investments based on a favorable fundamental view of the four companies: Lukoil and Novatek, both prominent players in the global oil and gas sector; Yandex, Russia’s dominant search engine with expansive growth businesses in ride-hailing, e-commerce, and autonomous mobility; and Sberbank, Russia’s leading banking franchise. Each was a high-quality business with good long-term growth prospects, and each had navigated hazardous economic conditions while cementing their dominant competitive position.
We deeply regret the capital losses suffered by our clients with respect to our Russian investments, which resulted, not from the invasion per se, but as collateral damage from the sanctions heaped upon Russia by the US and its allies. We have a structured, deliberative process designed to defend against behavioral flaws we exhibit as human beings, such as over-confidence and action bias. We refrain from making decisions based upon forecasts of macroeconomic or geopolitical events, where we have little faith in the reliability of such forecasts, ours or those of others. Could one have foreseen this particular set of outcomes, including Russia’s military advance, the unparalleled scope, speed, and unanimity of Western sanctions, and the market disorder that immediately followed? Yes, in theory, but only in hindsight is the chain of causality and the outcome clearly visible. In forecasting, one must consider various possible outcomes and their associated probabilities—wherein, by definition, black swans must be discounted as highly unlikely and accorded little weight. We continue to reflect on whether we could have made better decisions with respect to these investments in the run-up to the invasion, on its eve, and in the very brief period after the attack until trading venues closed. Taking into consideration the information available at each point in time, including the predictions of geopolitical experts and the available market prices (which fell sharply at the outbreak of war), we have yet to identify clear oversights or lapses in judgement.
We continue to believe staying true to the decision-making discipline we have formalized in our investment process will produce over time the best overall result for our clients, even though it will not lead to the best outcome in every instance—as recent events have demonstrated.
The EM landscape is currently fogged by an exceptional confluence of risks: armed conflict, inflation, rising interest rates, volatile commodity prices, and concerns about food and energy security. These risks could lead to changes in the pattern of global trade that would present challenges and opportunities to the businesses we examine. Increased confrontation among the world’s economic powers and a deepening focus on local priorities would erode many of the efficiencies conferred by established global networks, whether they be cost-efficient supply chains, open financial platforms, or telecommunications. Uncoupling would materially reduce growth in the world’s economic output by increasing input costs and introducing
operational frictions. But however ruinous overall, such an environment wouldn’t be bad for all companies. Those companies that can develop innovative products or services and then find smart ways to mitigate the potential risks of a less- globalized economy would have a comparative advantage.
One example among our portfolio companies is Discovery Holdings, one of South Africa’s leading providers of life and health insurance, which has found a creative way to grow globally without having to actually set up shop in other markets. The company was founded thirty years ago as a specialist life insurer; its major innovation was the development of what is referred to as the “shared values” model of insurance. The idea is to apply behavioral economic principles to benefit both the customer and Discovery, encouraging actions that lead to better health for the former and lower claims costs for the latter. For instance, Discovery offers members a subsidized gym membership that costs less the more
Portfolio Positioning (% Weight) at April 30, 2022
Sector | Institutional HLMEX / HLEZX | Advisor HLEMX | Benchmark1 | |||||||
Comm Services | 8.1 | 8.1 | 10.3 | |||||||
Cons Discretionary | 14.2 | 14.2 | 12.7 | |||||||
Cons Staples | 8.9 | 8.9 | 6.0 | |||||||
Energy | 1.7 | 1.7 | 5.0 | |||||||
Financials | 25.0 | 25.0 | 22.2 | |||||||
Health Care | 3.6 | 3.6 | 3.7 | |||||||
Industrials | 12.5 | 12.6 | 5.5 | |||||||
Info Technology | 22.8 | 22.8 | 20.5 | |||||||
Materials | 0.0 | 0.0 | 9.2 | |||||||
Real Estate | 0.5 | 0.5 | 2.2 | |||||||
Utilities | 1.7 | 1.7 | 2.7 | |||||||
Cash | 1.0 | 0.9 | – | |||||||
Geography | Institutional HLMEX / HLEZX | Advisor HLEMX | Benchmark1 | |||||||
Brazil | 7.5 | 7.5 | 5.3 | |||||||
China + Hong Kong2 | 33.2 | 33.2 | 30.6 | |||||||
India | 10.4 | 10.4 | 13.6 | |||||||
Mexico | 7.4 | 7.4 | 2.2 | |||||||
Russia | 0.0 | 0.0 | – | |||||||
South Africa | 2.5 | 2.5 | 3.7 | |||||||
South Korea | 9.7 | 9.8 | 12.5 | |||||||
Taiwan | 12.1 | 12.2 | 15.4 | |||||||
Small Emerging Markets3 | 8.3 | 8.2 | 16.7 | |||||||
Frontier Markets4 | 1.9 | 1.9 | – | |||||||
Developed Markets Listed5 | 6.0 | 6.0 | – | |||||||
Cash | 1.0 | 0.9 | – |
1MSCI Emerging Markets Index; 2The Emerging Markets Portfolio’s end weight in China at April 30, 2022 is 27.2% and Hong Kong is 6.0%. The Benchmark does not include Hong Kong; 3Includes the remaining emerging markets which, individually, comprise less than 5% of the Index; 4Includes countries with less-developed markets outside the Index; 5Includes emerging markets or frontier markets companies listed in developed markets.
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they visit. The benefits to Discovery are clear: if you can find ways to get your customers to be physically active and eat well, they live longer and healthier lives, and claims costs decrease. Discovery has expanded this behavioral model beyond life and health insurance to its auto insurance and investment management businesses, and it is now three years into developing a digital bank in its domestic market.
The potential market for Discovery’s shared-value products stretches far beyond South Africa, as health care and pension costs are rising around the world due to aging populations and growth in the upper-middle class in Emerging Markets countries. But other than its life and health business in the UK, Discovery has not directly expanded into other markets. Instead, it has relied on a series of joint ventures and partnerships where it is not responsible for the sale or administration of policies, but rather supplies technology to enable the same behavioral model to be employed under other insurers’ brands.
This partnership approach not only has the benefit of lower capital requirements for Discovery but also achieves geographic diversification and access to fast-growing markets such as China where the penetration of life and health insurance remains low.
Portfolio Highlights
Although we made only a modest number of transactions in the first half of the fiscal year, the Portfolio’s profile changed significantly because of the write-down of our Russian holdings and the outsized returns of stocks benefiting from commodity price inflation. The latter caused our absolute weight in Latin America to increase over 300 bps; we now have nearly twice as much in this region as the Index. The Portfolio’s combined weight in China and Hong Kong also rose—from 500 bps below to over 200 bps above the benchmark—due to the elimination of our Russian holdings as well as some new purchases and additions we made to take advantage of share-price declines. By sector, the principal change has been the sharp drop in our Energy weight due to Lukoil and Novatek. The Portfolio is now over 300 bps underweight to Energy.
We continue to hold both EPAM in IT and CCH in Consumer Staples. EPAM’s core advantage is its engineering capability that allows it to provide highly complex and valuable services to its customers. While recognizing that its business prospects are uncertain due to the displacement of many of its engineers by the conflict and potential client and staff defections, we believe it will be difficult for its clients to switch providers in the near term notwithstanding their preferences. EPAM should thus have time to adjust its geographic footprint. CCH operates the Coca-Cola bottling franchise in Russia and the Ukraine, which represented about 20% of the company’s operating profit in 2021. That business is obviously under severe threat. However, we consider the shares to be attractive at their current, diminished price given CCH’s long-term growth opportunities outside Russia, including Nigeria and Egypt.
Ten Largest Holdings by Weight at April 30, 2022
Company | Sector | Market | Institutional HLEZX | Advisor HLEMX | ||||||
Samsung Electronics | Info Technology | South Korea | 5.5 | 5.5 | ||||||
TSMC | Info Technology | Taiwan | 5.2 | 5.3 | ||||||
Tencent | Comm Services | China | 4.4 | 4.4 | ||||||
Tata Consultancy Services | Info Technology | India | 3.1 | 3.1 | ||||||
AIA Group | Financials | Hong Kong | 2.8 | 2.8 | ||||||
Alibaba | Cons Discretionary | China | 2.7 | 2.7 | ||||||
HDFC Corp. | Financials | India | 2.7 | 2.7 | ||||||
Techtronic Industries | Industrials | Hong Kong | 2.3 | 2.3 | ||||||
Walmart de México | Cons Staples | Mexico | 2.3 | 2.3 | ||||||
LG Household & Health Care | Cons Staples | South Korea | 2.1 | 2.1 |
Our large implicit bet against resources, which includes a long-standing absence of Materials, reflects our focus on high-quality, growing businesses. Companies in these sectors are inordinately reliant upon, and vulnerable to, cyclical moves in commodity prices, which makes it rare for them to meet our investment criteria, especially competitive advantage and financial strength. Western sanctions on Russia have created a supply squeeze in the short term, elevating commodity prices. We are disinclined to make a dash for more commodity exposure, given uncertainty about the duration and effectiveness of sanctions, alternative supply and substitution response, and the cyclical demand outlook, preferring instead to let our deliberative research process bring attractive long-term investments to our attention.
While now having minimal direct exposure to the fossil fuel industry, the Portfolio holds several businesses that are firmly part of the global energy transition—a transition that should accelerate if energy prices remain elevated. Examples include the Brazilian industrial equipment manufacturer WEG, which has a growing solar-energy equipment business, and various Chinese companies including CATL, the world’s biggest, most technologically diverse, and most profitable electric vehicle battery manufacturer, and Sanhua Intelligent Controls, whose thermal management components are needed in EVs.
Please read the separate disclosures page for important information, including the risks of investing in the Portfolio.
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Frontier Emerging Markets Portfolio
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Institutional Investors: HLFMX & HLFFX | Individual Investors: HLMOX
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Portfolio Management Team
Pradipta Chakrabortty
Co-Lead Portfolio Manager
Babatunde Ojo, CFA
Co-Lead Portfolio Manager
Sergey Dubin, CFA
Portfolio Manager
Performance Summary
For the Frontier Emerging Markets Portfolio, the Institutional Class I declined 12.54%, the Institutional Class II declined 12.49%, and the Investor Class declined 12.69% (net of fees and expenses) in the trailing six months up to April 30, 2022. The Portfolio’s benchmark, the MSCI Frontier Emerging Markets (FEM) Index, declined 8.94% in the same period (net of source taxes).
Market Review
Frontier Emerging Markets (FEMs) began the fiscal year facing the ongoing pandemic and rising prices. Russia’s appalling invasion of Ukraine in late February provided a new shock; global prices of oil and industrial metals like aluminum, nickel, and steel rose sharply on expectations that sanctions against Russia, a major producer, would disrupt global supply.
Latin America and the Gulf States, big commodity-exporting regions, recorded the best performances for the period. Peru rose nearly 9% as rising copper and other metal prices buoyed the country’s mining stocks. The expectation of higher royalties and tax revenue from mining gave a badly needed lift to Peru’s financial condition following months of political strife and flagging business confidence. Colombia, the other Latin American market in the FEM Index, rose nearly 14%; its oil-producing economy benefitted from rising prices. The Gulf States on aggregate rose over 20%, also on the back of oil prices.
Fund Facts at April 30, 2022 | ||||||
Total Net Assets | $191.9M | |||||
Sales Charge | None | |||||
Number of Holdings | 56 | |||||
Turnover (5 Yr. Avg.) | 24% | |||||
Dividend Policy | Annual | |||||
Institutional Investors | Individual Investors | |||||
Inst. Class I | Inst. Class II | Investor Class | ||||
Ticker | HLFMX | HLFFX | HLMOX | |||
CUSIP | 412295867 | 412295735 | 412295859 | |||
Inception Date | 5/27/2008 | 3/1/2017 | 12/31/2010 | |||
Minimum Investment1 | $100,000 | $10,000,000 | $5,000 | |||
Net Expense Ratio2 | 1.62%3 | 1.35%4 | 2.00%5 | |||
Gross Expense Ratio2 | 1.62% | 1.53% | 2.12% |
1Lower minimums available through certain brokerage firms; 2The Gross and Net Expense Ratios are as of the most recent Prospectus and have been restated to reflect current fees; 3Harding Loevner’s contractual agreement caps the Net Expense Ratio at 1.75% through February 28, 2023. The expense ratio (without cap) is applicable to investors; 4The Net Expense Ratio is shown net of Harding Loevner’s contractual agreement through February 28, 2023. Harding Loevner’s contractual agreement caps the net expense ratio at 1.35%. The Net Expense Ratio is applicable to investors; 5The Net Expense Ratio is shown net of Harding Loevner’s contractual agreement through February 28, 2023. Harding Loevner’s contractual agreement caps the net expense ratio at 2.00%. The Net Expense Ratio is applicable to investors.
In contrast, European stocks suffered the most from the war, due not only to concerns that hostilities could spread beyond Ukraine but also to its adverse economic impact on countries with strong trade and financial linkages with Russia. Kazakhstan was the worst-performing market in the region, down 42%. The market started plunging in January; when protests over the removal of a fuel price cap turned violent, President Kassym-Jomart Tokayev sought help from Russia, which sent in troops to restore order. In a concession to the protesters, Tokayev reinstated fuel price controls. Attempting to quiet broader grievances about the country’s yawning wealth disparities, he also issued a call for higher taxes on mining companies. But whatever social harmony he might have achieved was soon overwhelmed by the devastating impact of the war on Kazakhstan’s economy. Kazakhstan’s trade with Russia is around 11% of its GDP, and it also relies on Russia as a transit country for most foreign trade. As many of Kazakhstan’s trade partners sought to comply with Western sanctions and ceased shipping goods to Russian ports, Kazakh supply chains were thrown into disarray, its companies left scrambling for alternative trade routes through China or Latvia.
Sector performance in the six-month period was a tale of the competing effects of the meteoric rise in commodity prices and the inflationary pressures created, in part, by that rise. Energy and Materials each outperformed. But Health Care and especially Information Technology (IT), the two worst-performing sectors,
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Performance (% Total Return)
For periods ended March 31, 2022 | For periods ended April 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
1 | 3 | 5 | 10 | Since Inception* | 1 | 3 | 5 | 10 | Since Inception* | |||||||||||||||||||||||||||||||||||||||||||||
Year | Years | Years | Years | May-08 | Mar-17 | Dec-10 | Year | Years | Years | Years | May-08 | Mar-17 | Dec-10 | |||||||||||||||||||||||||||||||||||||||||
Frontier EM Portfolio – Inst. Class I | 4.89 | 1.45 | 2.68 | 3.00 | -0.47 | -1.32 | -0.31 | 1.90 | 2.63 | -0.69 | ||||||||||||||||||||||||||||||||||||||||||||
Frontier EM Portfolio – Inst. Class II | 5.22 | 1.71 | 2.97 | – | 3.34 | -1.10 | -0.05 | 2.18 | – | 2.66 | ||||||||||||||||||||||||||||||||||||||||||||
Frontier EM Portfolio – Investor Class | 4.41 | 1.03 | 2.31 | 2.62 | 1.04 | -1.67 | -0.65 | 1.56 | 2.24 | 0.76 | ||||||||||||||||||||||||||||||||||||||||||||
MSCI Frontier Emerging Markets Index | 11.58 | 2.07 | 3.25 | 2.70 | – | 3.57 | 1.67 | 2.21 | -0.31 | 1.54 | 1.87 | – | 2.18 | 1.06 |
Returns are annualized for periods greater than 1 year. *Inception of the Institutional Class I, May 27, 2008. Inception of the Institutional Class II, March 1, 2017. Inception of the Investor Class, December 31, 2010. Index performance prior to December 2, 2008 cannot be shown since it relies on back-filled data.
Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Portfolio may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling (877) 435-8105 or visiting hardingloevnerfunds.com.
suffered as equity investors increased the discount rates they use to value future cash flows, to the greater detriment of faster-growing companies whose cash flows lie farther in the future.
Style effects for the period favored cheaper, slower-growing, and lower-quality companies.
Performance Attribution
By sector, weak stocks in Financials detracted the most from relative returns. The poor performance of these holdings was often related in one form or another to the war. Halyk Savings Bank in Kazakhstan and Bank of Georgia plummeted even as each reported strong earnings. Commercial International Bank (CIB) also fell despite strong earnings, as the country’s central bank devalued the Egyptian pound in response to soaring food prices. (Egypt is the world’s largest importer of Ukrainian and Russian wheat.) Our overweight to the poorly performing IT sector was also a major detractor from performance. Stock selection in Real Estate sector helped performance. UAE-based Emaar Properties reported the highest property sales in the company’s history as its rebound from the troughs of the pandemic quickened. Demand has been so strong that Emaar was able to discontinue its flexible payment policy that allowed buyers to pay for properties even after ownership was transferred to them. The change will strengthen the company’s cash flow and financial position.
By region, our underweight to the strong Latin American market of Peru hurt returns. US-listed and Belarus-founded technology services company EPAM was another detractor. Nearly 60% of the company’s workforce is based in either Ukraine, Belarus, or Russia. While many employees are relocating, the disruption to its operations is considerable. Stock selection in Asia helped performance the most, particularly in Vietnam. Vietcombank (VCB) performed well on a combination of strong mortgage loan growth and widening net interest margins.
Perspective and Outlook
Russia’s invasion of Ukraine, and the West’s severe sanctions that followed, are the epitome of a black swan event—very difficult to predict but holding huge consequences. Russia and Ukraine are not part of the MSCI FEM Index or our Portfolio, and only two of our Portfolio holdings (EPAM and Krka) have significant direct business exposure to Russia and Ukraine. Nonetheless, we see two main impacts on broader FEMs. First, the geopolitical risk to countries like Kazakhstan, Poland, and Georgia, which have strong financial and trade ties with Russia, has risen. These countries are now grappling with disrupted trade logistics, lower remittance inflows, and a large influx of refugees. Their currencies also fell, although they have rebounded from the March lows. In the month following the invasion, the Kazakhstan tenge was down 13.4% against the US dollar, the Polish zloty 4.8%, and the Georgian lari 7.3%. Depending on the duration of the war, economic growth throughout the region could suffer.
The war has also affected commodity prices. Wheat and corn exports from Russia and Ukraine have been curtailed now that Black Sea ports are closed. Russia also accounts for 43% of the world’s production of palladium, 6% of aluminum, 17% of natural gas, and 12% of oil. Spot prices for all these commodities jumped, reflecting disruptions to supply and the building of inventories by users (and speculators) in anticipation of disruptions to come.
We are concerned that these food and energy shocks will place an especially large burden on FEMs given the composition of consumer spending in those markets. For example, the IMF estimates that food costs account for 40% of consumer spending in Sub-Saharan Africa, over twice the level in developed economies. This disproportionate impact on FEM households adds to the inflationary pressures from global supply chain disruptions that were present prior to the war. These will likely spur aggressive rate hikes by FEM central banks to support their currencies and keep consumer prices from spiraling out of control, which will retard the post-pandemic growth recovery
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in FEMs that finally got underway in recent months as their vaccination rates improved. Food and oil importing countries will face ballooning import bills that could badly erode their current account positions. This could affect the currencies of major FEMs such as Bangladesh, Pakistan, Egypt, Kenya, Vietnam, and the Philippines, making them even more susceptible to domestic inflation.
Some FEMs stand to benefit from the rising commodity prices. Latin America and the Gulf have seen a major lift due to their limited trade ties to Russia, geographical remove from the crisis, and high concentration of net commodity-exporting countries. But such regions are in the minority.
While the current crisis will likely slow many FEMs’ growth in the near term, it does not change FEMs’ long-term growth drivers in any fundamental way. They still benefit from distinctive qualities, especially their youthful populations and growing middle classes, which underpin their labor forces and domestic consumption. The emergence of an aspiring middle class is redirecting consumer behavior—so that households in places such as Philippines, Vietnam, and Saudi Arabia have the wherewithal to spend on discretionary categories and on services such as health care, laying new avenues for growth. We see a tremendous growth opportunity in banking; despite a relative lack of participation in the formal financial system, access to the internet has exploded in FEMs through the widespread adoption of smart phones. This has led to the emergence of some of the world’s pioneering payment platforms and super apps in FEMs, such as Kenya’s Safaricom and Kazakhstan’s Kaspi Bank, among other new digitally enabled businesses. Despite the tragedy visited upon Ukraine and its perturbation of the global economy, none of these long-term opportunities in FEMs are going away.
Portfolio Highlights
On the eve of the invasion, EPAM and Krka represented about 4% of the Portfolio.
EPAM is an IT services company, headquartered in Pennsylvania and US-listed but founded in Belarus. It delivers high-end software and digital solutions for its corporate clients, utilizing talent mostly based in FEMs, especially Eastern Europe. Before the war, 58% of its 53,000 employees were based in Russia, Ukraine, or Belarus. The conflict has obviously impacted the ability of EPAM’s employees to work effectively and disrupted the servicing of its clients. The company has already relocated some of its Ukrainian and Russian employees overseas and has seen good recovery in the productivity of relocated employees. With the US$1.2 billion in net cash it had available prior to the conflict, the company is also accelerating hiring across its other locations in Central Europe, Latin America, and India. The extent to which its near-term earnings will be affected is not yet clear. Nevertheless, given EPAM’s long-standing relationships with clients, the continued strong demand for IT services, and shortage of
software engineers in developed countries, we expect it to survive this massive disruption. At EPAM’s current valuation, we believe we are being fairly compensated for the challenges and risks.
Krka is a Slovenian generic drug manufacturer with 6% of its sales in Ukraine and 21% in Russia. The sales and marketing-focused operation in Ukraine has been severely disrupted. The company has insurance to cover its trade receivables, so the money it is owed in Ukraine is protected. Another saving grace is that its Ukrainian sales are conducted in euros, minimizing currency risk. The situation for Krka’s Russian operations is the opposite. Its manufacturing and distribution within Russia has been unaffected; drugs are exempt from the Western sanctions and demand for its products remain high. But all transactions are conducted in rubles, a problem now that sanctions prevent counterparties from helping Krka hedge its currency risk. However, management estimates that its first-quarter sales in Russia will remain flat when compared to the same period last year. It is hard to predict what the long-term impact of the war on Krka’s Russian and Ukrainian businesses will be, but we believe the company is in a solid financial position to weather the crisis. It generates strong operating cash flows, has a cash balance of EUR€160 million (US$169 million), and no financial debt.
Portfolio Positioning (% Weight) at April 30, 2022
Sector | Portfolio | Benchmark1 | ||||
Comm Services | 5.7 | 8.0 | ||||
Cons Discretionary | 7.5 | 1.2 | ||||
Cons Staples | 12.2 | 6.6 | ||||
Energy | 5.1 | 4.9 | ||||
Financials | 35.3 | 37.3 | ||||
Health Care | 6.3 | 2.9 | ||||
Industrials | 6.2 | 13.7 | ||||
Info Technology | 7.5 | 0.1 | ||||
Materials | 4.3 | 9.1 | ||||
Real Estate | 8.1 | 12.7 | ||||
Utilities | 0.0 | 3.5 | ||||
Cash | 1.8 | – | ||||
Geography | Portfolio | Benchmark1 | ||||
Africa | 19.4 | 15.5 | ||||
Asia | 39.9 | 46.9 | ||||
Europe | 11.6 | 13.4 | ||||
Gulf States | 9.5 | 6.3 | ||||
Latin America | 8.6 | 17.2 | ||||
Middle East | 0.0 | 0.7 | ||||
Developed Markets Listed2 | 9.2 | – | ||||
Cash | 1.8 | – |
1MSCI Frontier Emerging Markets Index; 2Includes frontier or small emerging markets companies listed in developed markets.
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Besides the direct impact on EPAM and Krka, we are closely monitoring the secondary impact of the war and sanctions via financial and trade linkages as well as the impact of escalating commodity prices. Egypt has found itself in an especially vulnerable position as a major importer of wheat and oil from Russia and Ukraine. The country also receives a significant share of its tourists from Russia and Ukraine. With these issues threatening its current account, the Egyptian central bank hiked interest rates by 100bps and devalued the Egyptian pound by 14% against the US dollar to stem capital outflows from the country. However, we did not sell any of our holdings in Egypt, as the stock market anticipated the currency impact of the war. Two weeks before the March 21 currency devaluation, the global depositary receipt of our Egyptian banking holding CIB, which is traded on the London Stock Exchange in US dollars, was already trading at a 14% discount to its ordinary shares priced in Egyptian pounds. But the bank’s attractive valuation, and its track record navigating Egypt’s periodic upheavals, provides a margin of comfort. During the last major Egyptian currency devaluation in 2016, the bank managed the crisis better than peers and emerged in a stronger competitive position; we expect a similar outcome this time.
Periods of uncertainty and fear create opportunities to buy superior companies at valuations more attractive than usual. An example is our purchase of Lithuania-based Baltic Classifieds (BCG). BCG operates 12 online classified advertising portals across Lithuania, Estonia, and Latvia. BCG’s platforms are bolstered by powerful network effects that create barriers to entry for possible competitors. As portals in the Baltics are relatively cheap, management sees room to increase fees gradually for many years before they reach prevailing European levels, while also growing volumes through the addition of ancillary products that connect users with finance companies that pay Baltic for the leads. The company’s share price fell in half due to concerns over Russian aggression, which allowed us to buy it at a price below that which justified our expectations of future growth.
MSCI Index Changes
MSCI implemented changes to our benchmark, the Frontier Emerging Markets Index, on November 30. Argentina was downgraded from small EM to standalone status due to capital controls in place in the country. Pakistan was also downgraded from small EM to frontier status due to low trading volume. These changes will not impact how we manage our Portfolio but has increased its tracking error against the benchmark. The main sectoral change to the Index is a large reduction in the weight of IT, from about 6% to less than 1%, after Globant was removed along with other Argentinian shares. As a result, IT is now our Portfolio’s largest overweight by sector.
Ten Largest Holdings by Weight at April 30, 2022
Company | Sector | Market | % | |||
Emaar Properties | Real Estate | United Arab Emirates | 4.5 | |||
Vietcombank | Financials | Vietnam | 4.2 | |||
Ecopetrol | Energy | Colombia | 3.9 | |||
Hoa Phat Group | Materials | Vietnam | 3.6 | |||
SM Prime Holdings | Real Estate | Philippines | 3.6 | |||
Bancolombia | Financials | Colombia | 3.6 | |||
Banca Transilvania | Financials | Romania | 3.5 | |||
Globant | Info Technology | US | 3.5 | |||
Bank Central Asia | Financials | Indonesia | 3.4 | |||
Safaricom | Comm Services | Kenya | 3.4 |
Please read the separate disclosures page for important information, including the risks of investing in the Portfolio.
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Global Equity Research Portfolio
| ||||
Institutional Investors: HLRGX
| ||||
Portfolio Management Team
Edmund Bellord
Portfolio Manager
Moon Surana, CFA
Portfolio Manager
Fund Facts at April 30, 2022 | ||
Total Net Assets | $8.1M | |
Sales Charge | None | |
Number of Holdings | 314 | |
Turnover (5 Yr. Avg.) | 43% | |
Dividend Policy | Annual | |
Institutional Investors | ||
Ticker | HLRGX | |
CUSIP | 412295792 | |
Inception Date | 12/19/2016 | |
Minimum Investment1 | $100,000 | |
Net Expense Ratio2 | 0.80%3 | |
Gross Expense Ratio2 | 1.73% |
1Lower minimums available through certain brokerage firms; 2The Gross and Net Expense Ratios are as of the most recent Prospectus and have been restated to reflect current fees; 3The Net Expense Ratio is shown net of Harding Loevner’s contractual agreement through February 28, 2023. Harding Loevner’s contractual agreement caps the net expense ratio at 0.80%. The Net Expense Ratio is applicable to investors.
Performance Summary
The Global Equity Research Portfolio Institutional Class declined 17.29%, net of fees and expenses, in the six-month period ended April 30, 2022. The Portfolio’s benchmark, the MSCI All Country World Index, declined 11.63% (net of source taxes).
Market Review
Stock markets fell sharply during the period as the confluence of several macroeconomic events battered share prices.
In November, consumer price inflation in the US reached its highest rate since 1982, leading the US Federal Reserve to signal several interest rate hikes and an imminent end to its bond buying program. Other central banks moved even more quickly: the Bank of England raised its main interest rate and the European Central Bank announced it would end its bond buying program. At the same time, just as supply chain bottlenecks showed signs of easing, the emergence of Omicron threatened to upend the progress and reintroduce global lockdowns. Chinese officials, aiming for zero transmission, pursued the most stringent lockdown policies—further hampering economic growth that had already been stalled amid a slowdown in construction spending after several heavily indebted property developers, including the gargantuan Evergrande, defaulted on bond payments.
Investors barely had time to digest these events when, in February, Russia commenced its invasion of Ukraine. The
reaction by Western governments was swift and emphatic as they sought to tread a delicate balance between punishing Russian aggression and avoiding an escalating military conflict. The US and its allies enacted crippling economic sanctions against Russia, including freezing a significant share of the Russian central bank reserve assets, cutting off many of the country’s banks from the SWIFT global financial messaging system, and outlawing the export of a variety of industrial and luxury goods. The sanctions initially led to a collapse in the ruble, while the Moscow stock exchange closed for almost a month before re-opening for domestic investors only. With foreign investors effectively unable to trade, major market index providers expunged all Russian securities from their indexes.
Prices for a wide range of commodities for which Russia is a major producer—including oil, gas, grains, and metals—surged on fears of disruption, prompting billions of US dollars in margin calls to cover futures positions. Headline inflation, which had already been rising rapidly around the world prior to the invasion, received a fillip from the shock to energy and food supplies stemming from the war, increasing the pressure on central banks to tighten monetary policy. In March, the US Fed did just that, raising interest rates for the first time in three years and signaling as many as seven additional hikes in 2022, causing stocks to retreat further as investors feared efforts to tame inflation may cause a recession.
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Performance (% Total Return)
For periods ended March 31, 2022 | For periods ended April 30, 2022 | |||||||||||||||||||||||||||||||
1 Year | 3 Years | 5 Years | Since Inception* | 1 Year | 3 Years | 5 Years | Since Inception* | |||||||||||||||||||||||||
Global Equity Research Portfolio – Inst. Class | -1.33 | 10.88 | 11.48 | 12.39 | -12.43 | 6.41 | 9.19 | 10.40 | ||||||||||||||||||||||||
MSCI All Country World Index | 7.28 | 13.75 | 11.64 | 12.37 | -5.44 | 9.41 | 9.46 | 10.44 |
Returns are annualized for periods greater than 1 year. *Inception date: December 19, 2016.
Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Portfolio may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling (877) 435-8105 or visiting hardingloevnerfunds.com.
On a sector basis, Energy performed strongly, reflecting the meteoric rise in commodity prices caused by supply shocks from war and sanctions. Utilities and Consumer Staples were the only other sectors to eke out gains. Consumer Discretionary and Communication Services performed the worst; the former was impacted by slumping consumer confidence in the wake of the rapid rise in inflation, while the latter—largely comprised of highly priced growth stocks—was impacted by central bank efforts to tame inflation.
Geographically, all major regions declined. The eurozone was most impacted as sanctions against Russia served to compound the difficulties of countries already grappling with mounting inflation. Japanese stocks also lagged, with supply chain issues emanating out of China and other economic concerns weighing on the market. Emerging Markets also performed poorly, largely due to Russia and China—the latter of which faced an economic slowdown aggravated by difficulties in maintaining its zero-COVID policy, sweeping regulatory actions, and the government’s attempts to slowly deflate its colossal real estate bubble.
Style factors played a significant role: the most highly priced shares suffered throughout, first from the regulatory mauling of many Chinese growth leaders, and then from a reassessment of discount rates in the face of rising inflation. Similarly, the fastest-growing stocks significantly underperformed their slowest-growing peers. There was no clear effect by quality as both the highest- and lowest-quality stocks underperformed.
Performance Attribution
The Portfolio’s concentration in expensive stocks, a hazard of our commitment to investing in the stocks of high-quality rapidly growing businesses, hurt relative performance in a period during which investors fled from richly priced and fast-growing companies. The Portfolio’ skew toward expensive companies cost about 70 basis points of relative performance. Our parallel emphasis on quality provided no defense and cost the Portfolio an additional 10 basis points. A modest amount of our underperformance—50 basis points—is directly attributable to our preference for growth businesses.
The rest of the Portfolio underperformance (about 400 basis points) was due to negative stock selection across sectors and geographies. On a sector basis, weak stocks in Health Care and Industrials detracted during the period. In Health Care, Chinese biological pharmaceuticals manufacturer WuXi Biologics declined as Chinese health regulators tightened the standards for approving new oncology drugs. Additionally, the company was placed on a US “unverified list” of foreign importers in February, due to COVID-19 restrictions preventing US Commerce Department inspectors from undertaking routine examinations of the country’s manufacturing facilities to confirm civilian use of US-made equipment. In Industrials, Japanese electric power tools manufacturer Makita detracted as the company suffered from higher shipping costs and exposure to Eastern Europe.
On a geographic basis, the value destruction stemming from our four Russian holdings—Sberbank, Lukoil, Novatek, and Yandex—turned out to have a relatively modest impact on performance, costing us around 50 basis points. Weak stocks in Japan, Europe outside of the eurozone (Switzerland and the UK), and the US accounted for a majority of underperformance. In Japan, furniture company NITORI faced rising materials and logistics costs, alongside a weaker yen. Swiss laboratory instruments producer Tecan Group reported disappointing 2021 revenue and projected revenue growth below expectations. US bank SVB Financial declined as investors feared the impact a potential economic downturn would have on loan growth for startup activity.
Perspective and Outlook
The performance of our strategy has been poor throughout the period, a six-month span in which value stocks have trounced growth stocks.
In retrospect, we were too sanguine about the near-term course of inflation, and the extent to which the risk that inflation expectations would become entrenched would rise. We expected surging demand for consumer durables to revert to trend and supply chains to normalize as economies reopened from COVID-19 constraints. But ongoing bottlenecks,
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such as congestion at US ports, now exacerbated by lockdowns in China’s industrial hubs and commodity supply shocks emanating from the Ukrainian conflict, have led to prolonged shortages of key components and finished goods across many industries. The effects of sustained price pressures on monetary policy and concerns for its prospective impact on economic growth have raised equity discount rates and lowered general growth expectations, leading to severe underperformance of the fastest-growing quintile of the market—the cohort from which we’ve drawn a large portion of our Portfolio, which also meant a large helping of the most expensive quintile (as measured by our composite valuation rankings).
If we’d had better macroeconomic foresight or were less convinced of the through-the-cycle earnings power of our fastest-growing companies, we might have reduced our exposure even more to the most expensive of them. Too late for that, at this point we are contending with the market’s massive style shift in the midst of rising inflation and discount rates, regulatory uncertainty, and disrupted supply chains, all against a backdrop of nascent fears of an economic slowdown.
However, for many of our holdings, most of the specific blemishes that marred their shares are likely to be transient; the companies’ long-term prospects remain bright while the sell-off has left their shares more attractively priced. PayPal is admittedly at a crossroads with its still-untested strategy of focusing on deepening existing user relationships instead of growing e-commerce commissions off new users; but, at its current price, we are prepared to wait a while longer to gauge if it can succeed. With Meta Platforms (Facebook), we think it is only a matter of time before the company’s heavy investments in proprietary ad targeting tools and the next generation of web experiences launch the next growth phase. Other examples include Align, which remains among the fastest growing and most innovative companies in consumer health, and Japanese healthcare company Sysmex, which—in addition to its promising Alzheimer’s test—is already using its early-disease-detection systems to help doctors diagnose and better treat many types of cancers far earlier in the diseases’ progression.
Over the last 20 years we’ve experienced four other episodes when our quality-growth style has significantly underperformed. The most recent was in December 2018 when the Trump trade war and rising interest rates delivered a shock remarkably similar to the one experienced today and which also contributed to a broad retreat from highly priced growth shares. It’s too soon to tell if the current hiking cycle will prove equally short-lived, but what does seem clear is that the ability of economic activity to withstand higher interest rates has been progressively lowered over time. That said, given today’s potent mix of macroeconomic and geopolitical uncertainties, investors are facing an unusually wide range of potential outcomes. In a scenario of continued high inflation and sharply rising interest rates, shares of
quality-growth companies will probably continue to lag the market; but, should inflation moderate and economic growth revert to a more tepid pace, we would expect to see a reversal of their recent underperformance as the market embraces companies growing their earnings faster than average. In the face of this uncertainty, we do what we have done for the last two decades: construct a diversified Portfolio of high-quality growth companies by taking advantage of the most attractive valuations as they emerge.
Portfolio Highlights
The holdings in the Portfolio are directly determined from the universe of companies that are our analysts have rated buy. We ended the period with 314 holdings. The Portfolio’s profile changed significantly in large part due to the value destruction of our Russian holdings. By sector, the largest change was the drop in our Energy weight, due to the write-down of Russian holdings Lukoil and Novatek. The Portfolio is currently more than 200bps underweight to Energy. By region, Japan saw the largest drop in its relative weight, with other regions staying roughly the same.
Portfolio Positioning (% Weight) at April 30, 2022
Sector | Portfolio | Benchmark1 | ||||
Comm Services | 4.9 | 7.7 | ||||
Cons Discretionary | 11.8 | 11.3 | ||||
Cons Staples | 5.5 | 7.5 | ||||
Energy | 2.6 | 4.7 | ||||
Financials | 14.4 | 14.5 | ||||
Health Care | 18.8 | 12.3 | ||||
Industrials | 14.4 | 9.4 | ||||
Info Technology | 19.2 | 21.6 | ||||
Materials | 5.2 | 5.1 | ||||
Real Estate | 0.8 | 2.9 | ||||
Utilities | 1.0 | 3.0 | ||||
Cash | 1.4 | – | ||||
Geography | Portfolio | Benchmark1 | ||||
Canada | 1.7 | 3.2 | ||||
Emerging Markets | 21.6 | 11.3 | ||||
Europe EMU | 12.3 | 7.8 | ||||
Europe ex-EMU | 11.6 | 8.2 | ||||
Frontier Markets2 | 1.0 | – | ||||
Japan | 7.2 | 5.4 | ||||
Middle East | 0.3 | 0.2 | ||||
Pacific ex-Japan | 3.1 | 3.2 | ||||
United States | 39.8 | 60.7 | ||||
Cash | 1.4 | – |
1MSCI All Country World Index; 2Includes countries with less-developed markets outside the Index.
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Given our long investment horizon, we tend to be patient when companies we own encounter operational issues that appear to be transient, but our scrutiny of the investment thesis will be heightened. This was the case for many of our Consumer Staples holdings during the period. We’ve been watching for signs of a turnaround at Henkel, German chemical company under its new management team. Their repeated failures to deliver on either organic revenue growth or margin expansion finally led us to conclude that the company is unlikely to resume growing, so we sold our shares. We also sold Japanese disposable hygiene and household products maker Unicharm, Indian conglomerate Godrej, and Indian consumer good multinational Marico after the analysts downgraded the companies due to their high valuations. Grupo Nutresa, a Columbian food processor, was similarly downgraded after multiple takeover bids led to a surge in its share price.
In Consumer Discretionary, notable purchases included Pool Corp and MercadoLibre (MELI). Pool Corp is the largest US wholesale distributor of swimming pool supplies, equipment, and related products, with a residential pool market share of close to one half. As a dominant distributor, the company has benefitted from work-from-home-induced trends in consumer spending on residential pools, and it is likely to benefit from more secular trends as the US population increasingly shifts south. MELI is a leading ecommerce platform operating in 18 countries in Latin America. It offers multiple integrated e-commerce and digital payment services in a region where online penetration remains low, and a large portion of the population does not have bank accounts. MELI bridges the gap between merchants and their diverse consumers with a unified platform that enables both offline and online commerce, credit, and logistics services.
The Portfolio also made new purchases in Industrials, among which was North American salvage vehicle auctions market Copart. The company is one of the two dominant salvage vehicle auction markets in North America. It has decades-long relationships with major insurance companies and access to salvage yards in proximity to all US metropolitan areas, both of which give it major advantages in scale. Another purchase in industrials, Rockwell Automation, is a US provider of industrial automation services. Through its investment several years ago in PTC Inc, a firm with strong capabilities in augmented reality and visualization tools, Rockwell has been able to develop a software platform that can integrate data from separate business segments and generate a real-time digital picture of operations for managers. The company is a chief enabler and beneficiary of the trend in manufacturers looking toward automation.
China was the region with the largest increase in weight due to position changes. Among our new holdings in the region was CATL, a battery manufacturer and technology company. It is the country’s largest producer of electric vehicle (EV) batteries. Its proximity to China’s deep EV supply chain gives a significant cost advantage to global rivals; CATL is well-positioned to benefit from the ongoing acceleration in EV adoption both inside and outside China with its planned capacity expansion.
Ten Largest Holdings by Weight at April 30, 2022
Company | Sector | Market | % | |||
AbbVie | Health Care | US | 1.2 | |||
Gartner | Info Technology | US | 1.1 | |||
Thermo Fisher Scientific | Health Care | US | 1.1 | |||
UnitedHealth Group | Health Care | US | 1.1 | |||
Vertex Pharmaceuticals | Health Care | US | 1.0 | |||
OCBC Bank | Financials | Singapore | 1.0 | |||
Bristol-Myers Squibb | Health Care | US | 1.0 | |||
Microsoft | Info Technology | US | 1.0 | |||
Manulife Financial | Financials | Canada | 1.0 | |||
Alphabet | Comm Services | US | 1.0 |
Please read the separate disclosures page for important information, including the risks of investing in the Portfolio.
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International Equity Research Portfolio
| ||||
Institutional Investors: HLIRX
| ||||
Portfolio Management Team
Edmund Bellord
Portfolio Manager
Moon Surana, CFA
Portfolio Manager
Fund Facts at April 30, 2022 | ||
Total Net Assets | $12.1M | |
Sales Charge | None | |
Number of Holdings | 221 | |
Turnover (5 Yr. Avg.) | 44% | |
Dividend Policy | Annual | |
Institutional Investors | ||
Ticker | HLIRX | |
CUSIP | 412295826 | |
Inception Date | 12/17/2015 | |
Minimum Investment1 | $100,000 | |
Net Expense Ratio2 | 0.75%3 | |
Gross Expense Ratio2 | 1.43% |
1Lower minimums available through certain brokerage firms; 2The Gross and Net Expense Ratios are as of the most recent Prospectus and have been restated to reflect current fees; 3The Net Expense Ratio is shown net of Harding Loevner’s contractual agreement through February 28, 2023. Harding Loevner’s contractual agreement caps the net expense ratio at 0.75%. The Net Expense Ratio is applicable to investors.
Performance Summary
For the International Equity Research Portfolio, the Institutional Class declined 18.66% (net of fees and expenses) in the six-month period ended April 30, 2022. The Portfolio’s benchmark, the MSCI All Country World ex-US Index, declined 11.87% (net of source taxes).
Market Review
Stock markets fell sharply during the period as the confluence of several macroeconomic events battered share prices.
In November, consumer price inflation in the US reached its highest rate since 1982, leading the US Federal Reserve to signal several interest rate hikes and an imminent end to its bond buying program. Other central banks moved even more quickly: the Bank of England raised its main interest rate and the European Central Bank announced it would end its bond buying program. At the same time, just as supply chain bottlenecks showed signs of easing, the emergence of Omicron threatened to upend the progress and reintroduce global lockdowns. Chinese officials, aiming for zero transmission, pursued the most stringent lockdown policies—further hampering economic growth that had already been stalled amid a slowdown in construction spending after several heavily indebted property developers, including the gargantuan Evergrande, defaulted on bond payments.
Investors barely had time to digest these events when, in February, Russia commenced its invasion of Ukraine. The reaction by Western governments was swift and emphatic
as they sought to tread a delicate balance between punishing Russian aggression and avoiding an escalating military conflict. The US and its allies enacted crippling economic sanctions against Russia, including freezing a significant share of the Russian central bank reserve assets, cutting off many of the country’s banks from the SWIFT global financial messaging system, and outlawing the export of a variety of industrial and luxury goods. The sanctions initially led to a collapse in the ruble, while the Moscow stock exchange closed for almost a month before re-opening for domestic investors only. With foreign investors effectively unable to trade, major market index providers expunged all Russian securities from their indexes.
Prices for a wide range of commodities for which Russia is a major producer—including oil, gas, grains, and metals—surged on fears of disruption, prompting billions of US dollars in margin calls to cover futures positions. Headline inflation, which had already been rising rapidly around the world prior to the invasion, received a fillip from the shock to energy and food supplies stemming from the war, increasing the pressure on central banks to tighten monetary policy. In March, the US Fed did just that, raising interest rates for the first time in three years and signaling as many as seven additional hikes in 2022, causing stocks to retreat further as investors feared efforts to tame inflation may cause a recession.
On a sector basis, only Energy was able to eke out modest gains during the period, reflecting the meteoric rise in commodity prices caused by supply shocks from war and sanctions. Consumer Discretionary and Information Technology (IT) performed the worst; the former was impacted by slumping
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Performance (% Total Return)
For periods ended March 31, 2022 | For periods ended April 30, 2022 | |||||||||||||||||||||||||||||
1 Year | 3 Years | 5 Years | Since Inception* | 1 Year | 3 Years | 5 Years | Since Inception* | |||||||||||||||||||||||
Intl. Equity Research Portfolio – Inst. Class | -7.42 | 6.27 | 6.63 | 8.13 | -17.26 | 2.08 | 4.28 | 6.62 | ||||||||||||||||||||||
MSCI All Country World ex-US Index | -1.48 | 7.51 | 6.76 | 7.48 | -10.31 | 4.30 | 4.94 | 6.29 |
Returns are annualized for periods greater than 1 year. *Inception date: December 17, 2015.
Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Portfolio may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling (877) 435-8105 or visiting hardingloevnerfunds.com.
consumer confidence in the wake of the rapid rise in inflation, while the latter—largely comprised of highly priced growth stocks—was impacted by central bank efforts to tame inflation.
Geographically, all major regions declined. The eurozone was most impacted as sanctions against Russia served to compound the difficulties of countries already grappling with mounting inflation. Emerging Markets also performed poorly, largely due to Russia and China—the latter of which faced an economic slowdown aggravated by difficulties in maintaining its zero-COVID policy, sweeping regulatory actions, and the government’s attempts to slowly deflate its colossal real estate bubble.
Style factors played a significant role: the most highly priced shares suffered throughout, first from the regulatory mauling of many Chinese growth leaders, and then from a reassessment of discount rates in the face of rising inflation. Similarly, the fastest-growing stocks significantly underperformed their slowest-growing peers. There was no clear effect by quality as both the highest- and lowest-quality stocks performed similar to the average.
Performance Attribution
In a period during which investors fled from richly priced, high-quality growth companies, it should come as no surprise that, whether viewed through the lens of sector or geographic attribution, our portfolio underperformed within most sectors and most regions. More surprisingly, perhaps, is that the value destruction stemming from our four Russian holdings—Sberbank, Lukoil, Novatek, and Yandex—turned out to be a relatively small impact with a portfolio of over 200 holdings, costing us 29 basis points.
A more informative parsing of returns comes from viewing them according to how they relate to rankings of growth, quality, and valuation. Viewed through the lens of growth, our efforts to resist a skew towards the most expensive members of the faster-growing quintiles of the market meant that only a modest amount of our underperformance, just over 85 basis points, is attributable to our preference for growth businesses. The rest, like sector or regional attribution, comes across as poor stocks within the different quintiles of growth. Similarly, our emphasis
on the highest-quality companies (half the portfolio is sourced from the top two quintiles of our quality rankings) detracted only 10 basis points from relative performance. Nevertheless, however much we’ve steadily reduced holdings of highly priced stocks, the portfolio remains skewed toward the expensive end of the market, and that skew cost about 120 basis points of relative performance.
On a sector basis, weak stocks in Health Care and Industrials detracted the most during the period. In Health Care, Japanese healthcare company Sysmex tumbled after it reported issues with its largest distributor in China as well as disappointing sales in China stemming from the country’s “Buy China” policy initiative. In Industrials, Japanese electric power tools manufacturer Makita detracted as higher shipping costs, currency headwinds (a large percentage of revenue is in euros, which weakened against the dollar), and exposure to Eastern Europe (which has been negatively impacted by the war in Ukraine) all weighed on shares.
On a geographic basis, weak stocks in Japan detracted the most. In addition to Sysmex and Makita, furniture company NITORI declined as it faced rising materials and logistics costs, alongside a weaker yen. Stocks in Europe outside the eurozone also detracted; Swedish manufacturer of specialty heat-transfer, centrifugal-separation, and fluid-handling products Alfa Laval experienced shrinking margins due to weakness in its marine division, where the company cancelled Russian orders for ship equipment following the invasion of Ukraine.
Perspective and Outlook
We’ve owned shares in Sberbank, Lukoil, Novatek, and Yandex for several years with the view that while a grasping and ruthless government posed political risks, companies able to navigate those risks and build sound growing businesses that deliver highly valued products and services to their customers could nevertheless generate strong business results. Due to fears of the Russian state’s confiscatory tendencies and corporate governance risks more generally, shares in these companies traded at a discount relative to their global peers, which could lead to strong returns for intrepid investors. Additionally, these political risks bore almost no correlation to other risks embedded in our portfolio. In an investment climate
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where most fast-growing, resilient businesses commanded historically high valuations, Russian shares offered a tempting mix of diversification and inexpensive growth.
In the end, it wasn’t the corporate governance or expropriation risks that proved our undoing, nor even the brutal and unexpected invasion itself. Instead, it was the resulting broad social revulsion in most developed democracies, which united previously divided or reluctant actors, calling down a ferocious firestorm of nearly inconceivable official and private actions targeting the Russian economy, and in the process also rendering Russian investments held by private Western bystanders effectively worthless. If anything, the episode will have alerted skeptics to the potency of seemingly remote investment risks, including social ones.
But we must stress that the Russian invasion and the West’s financially fierce response, as dramatic as they are, have merely accelerated the style headwinds we’ve been facing in recent months, as investors retreat from high-priced stocks. Well before the Ukraine crisis, headline inflation had been rising almost everywhere and intruding on the discount rates used to value shares. The energy and food shocks emanating from the conflict and consequent sanctions have supercharged the existing trends for expected inflation, bond yields, and equity discount rates, and the prospects for tighter monetary policies to combat the rise in prices. These trends have the largest effects on the present value (and therefore the current price) of distant future earnings—and thus pointedly on the price of growth stocks whose expected cash flows lie far in the future.
The monetary policy tightening now underway by central banks is intended to dampen speculative or less productive demand for goods, services, and assets by raising borrowing costs. But those policies, when combined with the demand destruction likely to emanate from soaring food and energy prices, may contain the seeds of their own reversal. If consumer and producer confidence take more than a temporary hit from the war in Ukraine and its ramifications, a recession—either in Europe or more globally—could conspire to reduce the inflationary impulse from COVID-19 re-openings and offset some of the need for monetary tightening. We’re not in the business of making such forecasts but, were that scenario to unfold, it’s possible that the headwinds for our quality/growth investment style would abate.
Much has been written recently about “the end of globalization” being another result of the war in Ukraine, and about the reluctance of some large countries—notably China and India—to sign onto the sanctions imposed by Western and Asian-Pacific governments. We, like many observers, worry that China, ostensibly aiming to be neutral, might risk some consequences by facilitating sanctions workarounds for Russia, and misjudge the West’s resolve. The economic disincentives would appear to work against the possibility. China’s total trade with Russia in 2020 was around a tenth of its US$1.4 trillion trade with the US and Europe. Given China’s flagging growth as it manages
its deflating property market—a multi-year prospect, if previous property bubbles are anything to go by—and its stated priority to improve “common prosperity” for its people, the last thing it’s likely to want is to impair its access to the global trading system and court rejection by its largest customers.
While risks of unforeseen consequences arising from the Ukraine conflict are high, on this front we are cautiously optimistic that China will work hard to maintain its neutrality in a credible way, as it is a huge beneficiary of trade with the rest of the world, especially the rich developed nations. We think it likely that China, along with India, will continue to buy oil and gas from Russia, and do not expect that fact to alter China’s trade relations with the West much. Nevertheless, we must contemplate that our optimism is misplaced on the importance of membership in the global network of exchange. If our central and optimistic case is wrong, then we’d need to greatly modify our views of which companies in our opportunity set will face new barriers to profitable growth, and which might stand to benefit from a further receding of globalization. We’d expect such a world to be less efficient—as the cold logic of comparative advantage is demoted as a determinant of which goods or services are produced and where—and less prosperous, since exploiting comparative advantage is a cornerstone of wealth creation.
Portfolio Positioning (%) at April 30, 2022
Sector | Portfolio | Benchmark1 | ||||
Comm Services | 5.1 | 6.3 | ||||
Cons Discretionary | 11.8 | 11.0 | ||||
Cons Staples | 7.3 | 8.8 | ||||
Energy | 2.1 | 5.7 | ||||
Financials | 17.1 | 20.4 | ||||
Health Care | 11.4 | 9.6 | ||||
Industrials | 20.2 | 12.0 | ||||
Info Technology | 14.2 | 11.6 | ||||
Materials | 5.8 | 8.8 | ||||
Real Estate | 1.7 | 2.5 | ||||
Utilities | 0.9 | 3.3 | ||||
Cash | 2.4 | – | ||||
Geography | Portfolio | Benchmark1 | ||||
Canada | 2.0 | 8.2 | ||||
Emerging Markets | 31.6 | 28.8 | ||||
Europe EMU | 21.7 | 19.7 | ||||
Europe ex-EMU | 19.4 | 21.0 | ||||
Frontier Markets2 | 1.3 | – | ||||
Japan | 14.9 | 13.7 | ||||
Middle East | 0.3 | 0.5 | ||||
Pacific ex-Japan | 6.4 | 8.1 | ||||
Cash | 2.4 | – |
1MSCI All Country World ex-US Index; 2Includes countries with less-developed markets outside the Index.
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Portfolio Highlights
The International Equity Research Portfolio’s holdings follow analysts’ recommendations from Harding Loevner’s collection of researched companies. We ended the period with 221 holdings. By sector, the portfolio’s exposure in Consumer Staples declined the most and its exposure to IT increased the most, both due largely to analyst recommendations. By region, our exposure in Europe outside the eurozone declined the most, due to both analyst recommendations and market movements. Our exposure in Japan increased the most, due to analyst recommendations.
Given our long investment horizon we tend to be patient when companies we own encounter operational issues that appear to be transient, but our scrutiny of the investment thesis will be heightened. This was the case for many of our Consumer Staples holdings during the period. We’ve been watching for signs of a turnaround at Henkel, German chemical company under its new management team. Their repeated failures to deliver on either organic revenue growth or margin expansion finally led us to conclude that the company is unlikely to resume growing, so we sold our shares. Unilever Indonesia is another previously growing business that grew complacent. Its failure to reinvest in its business has resulted in a loss of market share that threatens its longer-term growth and led to our exit. We also sold Japanese disposable hygiene and household products maker Unicharm, Indian conglomerate Godrej, and Indian consumer good multinational Marico after the analysts downgraded the companies due to their high valuations. Grupo Nutresa, a Columbian food processor, was similarly downgraded after multiple takeover bids led to a surge in its share price.
In IT, we purchased LONGi, newly added to our research universe. LONGi is the world’s largest and most vertically integrated supplier of solar power equipment, with market-leading technology and one of the lowest costs of production. The company is well positioned to benefit from the accelerated adoption of solar power necessary to meet emission reduction targets over the coming decades. We also purchased StarPower, the largest Chinese maker of power modules for managing energy distribution in industrial robots, home appliances, and, increasingly, electric vehicles. It is a frontrunner in silicon carbide technology, a more energy-efficient future replacement of the insulated-gate bipolar transistors (IGBTs) which have long been the core output-switch technology used in high-voltage high-current applications. Our analyst expects the company to gain share from its developed market competitors by offering lower prices in combination with customized service provided by its China-based engineering staff.
In Europe outside the eurozone, several sales reduced our exposure. We sold Swiss drug manufacturer Vifor Pharma and UK-based provider of subscription-based home repair memberships HomeServe after analyst downgrades. Additionally, we sold UK-based assurance, inspection, product testing, and certification company Intertek Group after it was unrated following analyst Shali Zhu’s departure.
Ten Largest Holdings by Weight at April 30, 2022
Company | Sector | Market | % | |||
DBS Group | Financials | Singapore | 1.2 | |||
Royal Dutch Shell | Energy | United Kingdom | 1.1 | |||
BHP | Materials | Australia | 1.1 | |||
ASM Pacific Technology | Info Technology | Hong Kong | 1.0 | |||
Rio Tinto | Materials | United Kingdom | 1.0 | |||
Alcon | Health Care | Switzerland | 1.0 | |||
Chugai Pharmaceutical | Health Care | Japan | 1.0 | |||
Air Liquide | Materials | France | 1.0 | |||
Couche-Tard | Cons Staples | Canada | 1.0 | |||
OCBC Bank | Financials | Singapore | 1.0 |
Our exposure to Japan increased as one of our associate analysts, Japan specialist Takayuki Hayano, CFA, was promoted to an analyst role, making his recommendations eligible for the strategy. We purchased employee outsourcing company UT Group, job recruiter and human resources company Recruit, and Daifuku, a leading provider of automated material handling solutions. We also added to some of our existing Japanese holdings, MISUMI Group, Makita, and Fast Retailing, the owner of Uniqlo, among other brands.
Please read the separate disclosures page for important information, including the risks of investing in the Portfolio.
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Emerging Markets Research Portfolio
| ||||
Institutional Investors: HLREX
| ||||
Portfolio Management Team
Edmund Bellord
Portfolio Manager
Moon Surana, CFA
Portfolio Manager
Fund Facts at April 30, 2022 | ||
Total Net Assets | $7.2M | |
Sales Charge | None | |
Number of Holdings | 126 | |
Turnover (5 Yr. Avg.) | 56% | |
Dividend Policy | Annual | |
Institutional Investors | ||
Ticker | HLREX | |
CUSIP | 412295776 | |
Inception Date | 12/19/2016 | |
Minimum Investment1 | $100,000 | |
Net Expense Ratio2 | 1.15%3 | |
Gross Expense Ratio2 | 2.28% |
1Lower minimums available through certain brokerage firms; 2The Gross and Net Expense Ratios are as of the most recent Prospectus and have been restated to reflect current fees; 3The Net Expense Ratio is shown net of Harding Loevner’s contractual agreement through February 28, 2023. Harding Loevner’s contractual agreement caps the net expense ratio at 1.15%. The Net Expense Ratio is applicable to investors.
Performance Summary
For the Emerging Markets Research Portfolio, the Institutional Class fell 19.10% (net of fees and expenses) in the six-month period ended April 30, 2022. The Portfolios’ benchmark, the MSCI Emerging + Frontier Markets Index, fell 14.14% (net of source taxes).
Market Review
Emerging Markets (EMs) began the fiscal year by drifting lower as uncertainty over the trajectory of global inflation and a deceleration in Chinese economic growth quelled investors’ appetite for EM assets. EMs also faced headwinds from expectations the US Federal Reserve would start raising rates to combat rising inflation. The Fed indeed hiked rates 0.25% in March—the first increase since the start of the pandemic in 2020—and primed the market for a subsequent 0.50% increase (which occurred in May). Meanwhile, monetary policy across EMs has been bifurcated. Most EM central banks in the Americas, Europe, and Africa have been ahead of the Fed in raising rates, and they continued to tighten further. Asian central banks, however, have been taking a less hawkish stance. China, notably, continued to ease monetary policy to stimulate economic growth.
EMs fell sharply starting in late February when Russia launched its deadly and destructive invasion of Ukraine. The reaction by Western governments was swift and emphatic, with the implementation of crippling economic sanctions against Russia. The sanctions initially led to a collapse in the ruble, while the Moscow stock exchange closed for almost a month before
re-opening for domestic investors only. With foreign investors effectively unable to trade, major market index providers expunged all Russian securities from their indexes.
As a result of the uncertainty around the war, European stocks with material businesses in, or trade linkages to, Russia or Ukraine sold off, as well as stocks in markets closest to the conflict. However, markets across Latin America and the Middle East, as well as South Africa, benefited from the sharp rise in energy and commodity prices caused by the conflict. Crude prices nearly reached US$135 before settling above US$100 as OPEC eschewed requests to increase production; grain prices spiked, as did Russian-sourced metals like palladium and nickel.
As war broke out in Europe, China’s economy continued to falter due to a confluence of several factors, including the country’s worst COVID-19 outbreak and continued weakening of the property sector. The government’s zero-COVID policy meant the rising case count in Shanghai and other major cities led to large-scale lockdowns and strict containment measures in key commercial areas. As a result, the nascent recovery in China’s services sector has been stymied, and factories have been temporarily shuttered, exacerbating global supply chain issues. Vice Premier Liu He sent out some positive signals, however, reaffirming the government’s focus on solving the crisis in the beleaguered real estate sector and supporting economic growth and capital markets ahead of the National Party Congress in October.
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Performance (% Total Return)
For periods ended March 31, 2022 | For periods ended April 30, 2022 | |||||||||||||||||||||||||||||
1 Year | 3 Years | 5 Years | Since Inception* | 1 Year | 3 Years | 5 Years | Since Inception* | |||||||||||||||||||||||
Emerging Markets Research Portfolio – Inst. Class | -13.38 | 3.02 | 5.17 | 7.20 | -21.08 | -0.84 | 2.91 | 5.37 | ||||||||||||||||||||||
MSCI Emerging + Frontier Markets Index | -11.17 | 4.95 | 5.95 | 8.12 | -18.15 | 2.29 | 4.31 | 6.86 |
Returns are annualized for periods greater than 1 year. *Inception date: December 19, 2016.
Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Portfolio may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling (877) 435-8105 or visiting hardingloevnerfunds.com.
The high-growth sectors Consumer Discretionary and Health Care, were the worst performers in the trailing six months. Despite elevated oil and gas prices, Energy was also weak, dragged down by the vaporization of all value in Russian energy stocks, even as other energy stocks were among the top-performing. Financials outperformed as banks and stock exchanges in commodity-exporting countries rallied due to the boon to fiscal accounts and the outlook for economic growth. The rising interest rate environment is also beneficial for most EM banks, helping boost net interest margins and earnings growth.
The style preference in EMs trended toward value stocks and away from growth stocks trading at higher multiples, a consequence of the shift to higher interest rates in the US and many EMs.
Performance Attribution
The Portfolio’s heavy absolute loss and underperformance were primarily due to our direct holdings in Russia: Lukoil and Novatek in Energy, Sberbank in Financials, and Yandex in Communication Services. We began the fiscal year overweight Russia by 200 basis points (bps). As the invasion of Ukraine unfolded, we marked the value of our Russian positions, which had stood at nearly 5.0% of the Portfolio at the end of January, down to zero on March 7, the point at which these US- and UK-listed shares became untradeable because of Western sanctions and actions taken by stock exchanges and brokers to avoid any possibility of entanglement. The losses in Russia accounted for about 200 bps—over half—of our total underperformance.
Beyond Russia, the notable detractors from relative returns were weak stock selection in South Korea, Taiwan, and Brazil, where growth stocks generally lagged. In South Korea, shares of game producer NCSOFT fell as an industry-wide increase in labor costs and higher marketing spend to support new game launches hurt operating margins. Near term revenue growth expectations were also pushed out as the company announced delays in the release of new games. Taiwan-listed power-management chip designer Silergy underperformed on concerns that chip-manufacturing capacity constraints could increase the company’s costs as well as worries that semiconductor demand had peaked. In Brazil, higher interest rates dampened consumer purchasing, hurting the omnichannel (online and offline) retailer
Magazine Luiza whose prolific sales growth during the e-commerce boom of 2020 set a challenging reference for near-term comparisons. The Portfolio’s large overweight in commodity-exporting countries in Latin America, especially Brazil and Mexico, was helpful this period.
By sector, the wipe out of our Russian and Russia-related holdings appeared as severe negative stock selection across Energy (Novatek and Lukoil), Communication Services (Yandex), and Financials (Sberbank). In Financials, the heavy drag from Sberbank was partly counterbalanced by strong contributions from companies in countries that have benefited from rising commodity prices, including Brazil’s Itaú Unibanco, Peru’s Credicorp, and Mexico’s GF Banorte.
We outperformed the Index in Consumer Discretionary, where Indonesian automobile company Astra International reported stronger earnings, helped by a recovery in Indonesia’s economy due to rising commodity prices. The Portfolio’s avoidance of some expensively valued Chinese e-commerce and electric-vehicle companies was also helpful.
Perspective and Outlook
We made our Russian investments based on a favorable fundamental view of the four companies: Lukoil and Novatek, both prominent players in the global oil and gas sector; Yandex, Russia’s dominant search engine with expansive growth businesses in ride-hailing, e-commerce, and autonomous mobility; and Sberbank, Russia’s leading banking franchise. Each was a high-quality business with good long-term growth prospects, and each had navigated hazardous economic conditions while cementing their dominant competitive position.
We deeply regret the capital losses suffered by our clients with respect to our Russian investments, which resulted, not from the invasion per se, but as collateral damage from the sanctions heaped upon Russia by the US and its allies. We have a structured, deliberative process designed to defend against behavioral flaws we exhibit as human beings, such as over-confidence and action bias. We refrain from making decisions based upon forecasts of macroeconomic or geopolitical events, where we have little faith in the reliability of such forecasts, ours or those of others. Could one have foreseen this particular set of
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outcomes, including Russia’s military advance, the unparalleled scope, speed, and unanimity of Western sanctions, and the market disorder that immediately followed? Yes, in theory, but only in hindsight is the chain of causality and the outcome clearly visible. In forecasting, one must consider various possible outcomes and their associated probabilities—wherein, by definition, black swans must be discounted as highly unlikely and accorded little weight. We continue to reflect on whether we could have made better decisions with respect to these investments in the run-up to the invasion, on its eve, and in the very brief period after the attack until trading venues closed. Taking into consideration the information available at each point in time, including the predictions of geopolitical experts and the available market prices (which fell sharply at the outbreak of war), we have yet to identify clear oversights or lapses in judgement.
We continue to believe staying true to the decision-making discipline we have formalized in our investment process will produce over time the best overall result for our clients, even though it will not lead to the best outcome in every instance—as recent events have demonstrated.
The EM landscape is currently fogged by an exceptional confluence of risks: armed conflict, inflation, rising interest rates, volatile commodity prices, and concerns about food and energy security. These risks could lead to changes in the pattern of global trade that would present challenges and opportunities to the businesses we examine. Increased confrontation among the world’s economic powers and a deepening focus on local priorities would erode many of the efficiencies conferred by established global networks, whether they be cost-efficient supply chains, open financial platforms, or telecommunications. Uncoupling would materially reduce growth in the world’s economic output by increasing input costs and introducing operational frictions. But however ruinous overall, such an environment wouldn’t be bad for all companies. Those companies that can develop innovative products or services and then find smart ways to mitigate the potential risks of a less-globalized economy would have a comparative advantage.
One example among our Portfolio companies is Discovery Holdings (Discovery), one of South Africa’s leading providers of life and health insurance, which has found a creative way to grow globally without having to actually set up shop in other markets. The company was founded thirty years ago as a specialist life insurer; its major innovation was the development of what is referred to as the “shared values” model of insurance. The idea is to apply behavioral economic principles to benefit both the customer and Discovery, encouraging actions that lead to better health for the former and lower claims costs for the latter. For instance, Discovery offers members a subsidized gym membership that costs less the more they visit. The benefits to Discovery are clear: if you can find ways to get your customers to be physically active and eat well, they live longer and healthier lives, and claims costs decrease. Discovery has expanded this behavioral model
beyond life and health insurance to its auto insurance and investment management businesses, and it is now three years into developing a digital bank in its domestic market.
The potential market for Discovery’s shared-value products stretches far beyond South Africa, as health care and pension costs are rising around the world due to aging populations and growth in the upper-middle class in emerging market countries. But other than its life and health business in the UK, Discovery has not directly expanded into other markets. Instead, it has relied on a series of joint ventures and partnerships where it is not responsible for the sale or administration of policies, but rather supplies technology to enable the same behavioral model to be employed under other insurers’ brands.
This partnership approach not only has the benefit of lower capital requirements for Discovery but also achieves geographic diversification and access to fast-growing markets such as China where the penetration of life and health insurance remains low.
Portfolio Positioning (% Weight) at April 30, 2022
Sector | Portfolio | Benchmark1 | ||||
Comm Services | 6.7 | 10.3 | ||||
Cons Discretionary | 15.9 | 12.6 | ||||
Cons Staples | 11.2 | 6.0 | ||||
Energy | 2.9 | 5.0 | ||||
Financials | 21.1 | 22.4 | ||||
Health Care | 7.4 | 3.8 | ||||
Industrials | 10.6 | 5.5 | ||||
Info Technology | 14.5 | 20.2 | ||||
Materials | 4.7 | 9.2 | ||||
Real Estate | 2.6 | 2.3 | ||||
Utilities | 0.8 | 2.7 | ||||
Cash | 1.6 | – | ||||
Geography | Portfolio | Benchmark1 | ||||
Brazil | 9.6 | 5.2 | ||||
China + Hong Kong2 | 30.7 | 30.2 | ||||
India | 8.5 | 13.5 | ||||
Mexico | 2.6 | 2.2 | ||||
Russia | 0.0 | – | ||||
South Africa | 1.0 | 3.7 | ||||
South Korea | 8.5 | 12.3 | ||||
Taiwan | 11.4 | 15.2 | ||||
Small Emerging Markets3 | 18.8 | 16.4 | ||||
Frontier Markets4 | 7.3 | 1.3 | ||||
Cash | 1.6 | – |
1MSCI Emerging + Frontier Markets Index; 2The Emerging Markets Research Portfolio’s end weight in China at April 30, 2022 is 30.7% and Hong Kong is 0.0%. The Benchmark does not include Hong Kong; 3Includes the remaining emerging markets which, individually, comprise less than 5% of the Index. 4Includes countries with less-developed markets outside the Index.
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Portfolio Highlights
The holdings in the Portfolio are directly determined from the universe of companies that are our analysts have rated buy. We ended the period with 126 holdings. The Portfolio’s profile changed significantly over the six-month period largely due to the write-down of our Russian holdings and the outsized returns of stocks benefiting from commodity price inflation. The latter caused our absolute weight in Latin America to increase 200 bps; we now have nearly twice as much in this region as the Index.
By sector, the principal change was the sharp drop in our Energy weight due to Lukoil and Novatek. The Portfolio is now over 300 bps underweight to Energy. The Portfolio’s Financials weight also fell due to Russia’s Sberbank as well as the sale of numerous bank holdings in response to analysts’ downgrades following a surge in the share prices for various banks in commodity-producing countries, including Mexico’s GF Banorte, Brazil’s Itaú Unibanco, and Banco Santander Chile. Meanwhile, we increased the Portfolio’s exposure to Health Care and Industrials wherever share prices led to more attractive entry points; the Portfolio’s weight in each sector rose about 200 basis points.
In Health Care, our new purchases included Thailand’s Bumrungrad Hospital (BH), which operates a high-end private hospital in Bangkok. The company’s competitive advantages include a strong reputation for meeting the highest global standards for care. BH’s growth should be supported by Thailand’s aging population, Thailand’s doctor shortage (which limits the number of new hospitals) and comparatively low-quality of the public hospital system, as well the increase in health care spending as incomes in the country rise. In Industrials, many of our new holdings are in China. The analyst of express delivery company ZTO Express upgraded the shares based on the company’s increasing focus on expanding margins (rather than increasing volumes) by keeping pricing stable and identifying cost savings. The analyst believed the shares were reasonably priced given the potential for ZTO Express to achieve stronger earnings growth over the next several years.
Our analysts’ recommendations also led us to increase the Portfolio’s exposure to companies engaged in various alternative energy businesses. New holding CATL, for example, is China’s dominant producer of batteries for electric vehicles (EVs). CATL’s ability to scale its production has been increasing, and the company’s proximity to China’s deep, local supply chain provides a significant cost advantage to global rivals. The analysts expects that the acceleration in EV adoption will continue to propel the company’s capacity expansion—and, in turn, overall growth—over the next several years. Also in China, we purchased StarPower, the largest Chinese maker of power modules for managing energy distribution in industrial robots, home appliances, and, increasingly, electric vehicles and solar power inverters. It is a frontrunner among its Chinese peers in silicon carbide technology, a more energy-efficient future replacement for the IGBTs (insulated-gate bipolar transistors) that have long been the core output-switch technology used in high-voltage, high-current
Top Ten Holdings by Weight at April 30, 2022
Company | Sector | Market | % | |||
Hero Motocorp | Cons Discretionary | India | 2.1 | |||
CSPC Pharmaceutical Group | Health Care | China | 2.0 | |||
Hon Hai Precision | Info Technology | Taiwan | 2.0 | |||
FEMSA | Cons Staples | Mexico | 1.9 | |||
TSMC | Info Technology | Taiwan | 1.9 | |||
NCSoft | Comm Services | South Korea | 1.9 | |||
AirTAC | Industrials | Taiwan | 1.8 | |||
Ping An Insurance | Financials | China | 1.8 | |||
Naver | Comm Services | South Korea | 1.8 | |||
Localiza | Industrials | Brazil | 1.8 |
applications. Our analyst expects the company to gain share from its developed-market competitors by offering lower prices in combination with customized service provided by its China-based engineering staff.
Please read the separate disclosures page for important information, including the risks of investing in the Portfolio.
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| ||||
Institutional Investors: HLMCX
| ||||
Portfolio Management Team
Pradipta Chakrabortty
Co-Lead Portfolio Manager
Wenting Shen, CFA
Co-Lead Portfolio Manager
Jingyi Li
Portfolio Manager
Fund Facts at April 30, 2022 | ||
Total Net Assets | $3.7M | |
Sales Charge | None | |
Number of Holdings | 45 | |
Turnover (5 Yr. Avg.) | – | |
Dividend Policy | Annual | |
Institutional Investors | ||
Ticker | HLMCX | |
CUSIP | 412295685 | |
Inception Date | 12/16/2020 | |
Minimum Investment1 | $100,000 | |
Net Expense Ratio2 | 1.15%3 | |
Gross Expense Ratio2 | 6.98% |
1Lower minimums available through certain brokerage firms; 2The Gross and Net Expense Ratios are as of the most recent Prospectus and have been restated to reflect current fees; 3The Net Expense Ratio is shown net of Harding Loevner’s contractual agreement through February 28, 2023. Harding Loevner’s contractual agreement caps the net expense ratio at 1.15%. The Net Expense Ratio is applicable to investors.
Performance Summary
The Chinese Equity Portfolio Institutional Class fell 29.91% (net of fees and expenses). The Portfolio’s benchmark, the MSCI China All Shares Index, fell 23.79% (net of source taxes).
Market Review
Chinese equities fell sharply in the first half of the fiscal year as new COVID-19 outbreaks and a long-simmering spat with US securities regulators were accompanied by the spike in geopolitical tensions resulting from Russia’s invasion of Ukraine. The invasion triggered strong, rapid, and coordinated sanctions against Russia by Western governments and US allies in Asia and the Pacific Region, one of the largest refugee crises in recent memory, and the threat of an expanded war in Europe. Global oil and commodity prices skyrocketed, leading to outperformance of energy and material companies in China, as in other stock markets.
The most pressing domestic issue in China during the quarter was COVID-19 outbreaks, the worst since the start of the pandemic. The rising case count prompted lockdowns in several major Chinese cities, including Shenzhen, creating chokepoints in supply chains. In late March, an expansion of testing revealed many thousands of (mostly asymptomatic) cases of the Omicron variant in Shanghai, China’s business and finance hub, which until then had been spared the containment measures periodically imposed on other cities under China’s zero-COVID policy. Within hours, the city’s factories were shuttered and its entire population of 26 million was locked down, causing a scramble for groceries and testing kits.
Concerns mounted over the effect that new lockdowns will have on economic growth. Companies in the consumer industry saw significant drops in nationwide sales volumes in March, between 20–50% year-over-year. The government continues to assert that its zero-COVID policy is the only way to flatten the curve until more of the still-reluctant elderly population can be persuaded to get jabbed. But there is vigorous debate within Chinese society over the logic of the approach.
The future of overseas listings of Chinese securities also remained a focal point as US regulators continued their march toward delisting Chinese companies refusing to provide audit transparency. A number of Chinese companies whose audit reports do not comply with existing US audit standards were officially designated for delisting as early as 2023, sending the share prices of major US-listed Chinese companies (both their US-listed securities and Hong Kong-traded counterparts) into free fall, with some stocks down as much as 25% overnight on the news. Within our Chinese Equity Portfolio, we do not hold any US-listed shares, though we hold Hong Kong-listed shares of several Chinese companies that are also listed in the US as ADRs and, as a result, could be more volatile as the issue evolves.
Since Russia’s attack on Ukraine in late February, Chinese market sentiment has also deteriorated over concerns that China might extend Russia military aid or sanction workarounds that could invite US retaliation. Despite China’s assertion of a
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Performance (% Total Return)
For periods ended March 31, 2022 | For periods ended April 30, 2022 | |||||||||||||||||||||
Calendar YTD | 1 Year | Since Inception* | Calendar YTD | 1 Year | Since Inception* | |||||||||||||||||
Chinese Equity Portfolio – Inst. Class | -20.34 | -32.26 | -23.59 | -26.10 | -38.80 | -26.49 | ||||||||||||||||
MSCI China All Shares Index | -14.26 | -24.20 | -18.31 | -19.64 | -30.55 | -21.13 |
Returns are annualized for periods greater than 1 year. *Inception date: December 16, 2020.
Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Portfolio may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling (877) 435-8105 or visiting hardingloevnerfunds.com.
“no limits” partnership with Russia prior to the invasion, given the magnitude of China’s annual trade with the West (at US$1.4 trillion annually, dwarfing its trade with Russia) and the other many challenges it currently faces at home, we think it unlikely that China will pursue actions that would provoke a serious Western response.
On another positive note, we expect China to continue to carry through with pro-growth policies first sketched out at the end of last year, perhaps even faster now. In a rare gesture of comfort to the markets, Vice Premier Liu He reaffirmed the government’s focus on solving the crisis in the beleaguered property sector, implementing (as opposed to expanding on) existing regulation of big technology platforms, and supporting economic growth and capital markets ahead of the 20th Party Congress scheduled for the fall. He also cited a willingness to work with US regulators on a framework that would be acceptable to both sides to head off delisting of US-listed Chinese stocks, which prompted them to rally.
Performance Attribution
One significant cause of the Portfolio’s underperformance was what we did not hold. We had no direct exposure to banks, which performed well as the scale of the government’s credit easing and other pro-growth policies became clear. Most Chinese banks, largely state-owned, do not meet our threshold for quality and growth, especially during the current real estate deleveraging cycle. The Portfolio also did not hold Energy companies in a period of sharply rising commodity prices.
In addition, stock selection was negative in Information Technology (IT), Real Estate, and Industrials. In IT, shares of power-management chip designer Silergy fell on concerns that chip-manufacturing capacity constraints could increase the company’s costs as well as worries that semiconductor demand had peaked. Software company Sangfor saw lower or delayed demand amid a domestic business downcycle. In Real Estate, we are overweight versus the Index in Country Garden Services, a property management company that suffered amid the general slowdown in the property sector.
We outperformed in Consumer Discretionary, where in this case what we did not hold was actually helpful. We avoided lossmaking, earlier-stage companies such as electric vehicle (EV) makers NIO and XPeng that corrected sharply in the risk-off environment. Similarly, relative returns in Communication Services were helped by our lower exposure to internet and e-commerce companies.
Style headwinds were acute in the six-month period. The MSCI China Growth Index underperformed the MSCI China Value Index by around 1,300 basis points (-31% vs. -18% respectively). While stocks of companies of average quality outperformed those of the highest- and lowest-quality companies, the spread in performance between expensive and inexpensive stocks—3,300 basis points in favor of cheap stocks—was extreme.
Perspective and Outlook
After several decades in which greater openness and interconnectedness led to China’s emergence on the global stage, the last few years have seen the pendulum swing in the opposite direction. Since 2016, coinciding with the beginning of the Trump administration, China has experienced rising tension with the US and other nations over trade, access to advanced technology, and its geo-political ambitions. In 2019, President Xi Jinping began to emphasize the concept of “dual circulation,” whereby China aims to expand domestic consumption as an outlet for expanded local production and as a way to backfill areas of domestic production formerly reliant on overseas suppliers, all while remaining open to international trade and investment.
Chinese policymakers see the upgrading of local brands and industries as critical to achieving their broad social and political goals. However, they also need to ensure the private sector remains vital and continues to innovate and flourish so long-term economic growth is sustained—a challenge that tripped up other large emerging economies, like Brazil and India, when they pursued a path of “import substitution” in the post-war period.
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To that end, in June 2021, six Chinese ministries jointly issued guidelines aiming to develop 10,000 “little giants”—small- and mid-sized enterprises with differentiated core technologies, strong innovative capacity, and the potential for high global market share in their niches. An apt historical analogy to this aspect of the localization trend might be Germany’s “hidden champions,” a term that first appeared in a German scientific management journal in 1990 describing the small- and mid-sized leaders in specialized global markets that are the country’s economic backbone even today.2 Based on Chinese government reports and our own research, close to 5,000 enterprises are in line for government subsidies and favorable financing under the little giants program. Notably, 340 of these firms are listed on the A-share market and thus accessible to foreign investors, representing a combined market cap of RMB 3.35 trillion (US$520 billion), about 4% of the A-share market’s total.
The government’s support for the little giants dovetails with President Xi’s self-sufficiency agenda. Although China is a large manufacturing country, core parts of its production chains—including semiconductors, software, and key equipment—still rely on imports. For fundamental investors like us, understanding the details of the localization campaign is key to identifying companies that are best positioned to capture a greater share of the potential future demand growth for locally developed and manufactured Chinese goods and services.
To be able to rely on domestic sources of supply, a manufacturer must have access to breadth and depth. Breadth provides a complete domestic supply chain while depth ensures healthy competition among suppliers that stimulates innovation, cost efficiency, and price competitiveness. One area where China has already made tremendous strides on both vectors—and, not coincidentally, has grabbed increasing global market share—is EV manufacturing. Sanhua Intelligent Controls, the global leader in thermal controls, is a participant in the EV industry’s success. Sanhua started in the 1980s as a low-cost maker of specialty pumps and valves for home appliances. Over time, management realized these components had profitable applications in cars, especially EVs, which require precise and efficient temperature management. The company was also influenced by the government’s early emphasis on the domestic promotion of EVs, including sales credits issued through automakers to the consumer, and “dual” manufacturing credits in which automakers not only received incentive payments if they achieved their EV quotas but were fined if they didn’t. Starting about ten years ago, Sanhua repurposed a significant portion of its manufacturing capacity toward producing components for domestic-branded EV manufacturers such as BYD, NIO, and XPeng. In 2017, Sanhua became the first Chinese company to win an industry
2Of the Fortune 500 companies, 27 are German. However, German firms comprise 48% of global small market cap leaders.
innovation benchmark, the Automotive News PACE Award, for one of its core products: an expansion valve that depressurizes and cools refrigerant.
Like almost all companies in China, Sanhua halted production in January 2020 during the country’s first wave of COVID-19 but reopened within weeks. As one of only a few producers of thermal management parts globally, it was able to win more orders from another growing company: Tesla. Less than two years later, Tesla is Sanhua’s largest customer and Sanhua is Tesla’s exclusive supplier of core thermal management parts. Sanhua also has a position in the supply chain of almost every major EV producer, including Volkswagen, Daimler, Volvo, and General Motors. From its past as the type of company now identified as a “little giant,” Sanhua has become the dominant global supplier in its niche.
Portfolio Highlights
Our experience of investing in China for the last 25 years has taught us that periods of severe market volatility also unveil good long-term investment opportunities. We have stayed disciplined in our investment process and, as the Chinese market declined over the last six months, we have taken the opportunity to make some Portfolio adjustments, including adding to companies that will likely benefit from trends such as increased localization and other longer-term government priorities. We have funded these purchases by trimming or selling some positions where a combination of increasing competition and adverse regulatory
Portfolio Positioning (% Weight) at April 30, 2022
Sector | Portfolio | Benchmark1 | ||||
Comm Services | 9.0 | 11.5 | ||||
Cons Discretionary | 23.8 | 19.7 | ||||
Cons Staples | 8.1 | 10.0 | ||||
Energy | 0.0 | 2.5 | ||||
Financials | 6.1 | 17.3 | ||||
Health Care | 12.9 | 7.3 | ||||
Industrials | 21.6 | 9.4 | ||||
Info Technology | 13.1 | 8.7 | ||||
Materials | 0.0 | 7.1 | ||||
Real Estate | 1.6 | 3.6 | ||||
Utilities | 2.0 | 2.9 | ||||
Cash | 1.8 | – | ||||
Geography | Portfolio | Benchmark1 | ||||
Mainland China + Hong Kong | 92.3 | 100.0 | ||||
Other Emerging Markets | 5.9 | – | ||||
Cash | 1.8 | – |
1MSCI China All Shares Index.
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trends due to misalignment with current government priorities have led us to lower our earnings-growth expectations for the companies.
One area where we made new investments is China’s energy transition away from fossil fuels. We own a number of companies connected to EV manufacturing, for instance. Only 17% of China’s adult population owns a car, and rising incomes are pushing this rate higher—while government incentives and the availability of sleek new EV models are shortening the replacement cycle and pulling forward first-time buyers. But investing in the EV super cycle is difficult. The industry is highly fragmented and very competitive. Despite the industry’s strong revenue growth outlook, we haven’t yet found attractive investment candidates among EV makers, as none are profitable yet or otherwise meet our business quality criteria.
As in the case of Sanhua, however, we are drawn to component suppliers upstream, where the markets are more concentrated and participants benefit from significant economies of scale and strong competitive positions in their niches. Beyond Sanhua, our holdings include Inovance, which makes inverters both for EVs and for the robots that make the EVs; Fuyao Glass, which supplies windows and panoramic sunroofs; CATL, a leading global manufacturer of EV batteries; and Haitian International, which supplies the high-precision injection molding machines used in different parts of the EV manufacturing process.
Another recent purchase connected to China’s energy transition is LONGi, the world’s largest manufacturer of polysilicon wafers, an essential component in solar panels. LONGi first established its leadership a decade ago by making a key early bet on monocrystalline (“mono”) wafers. At the time, the technology was more expensive to produce than the multicrystalline (“multi”) wafer technology that dominated the market, even though multi was less efficient at converting sunlight to electricity. LONGi believed (correctly, as it turned out) that with enough investment in research and development it could learn to make mono wafers that would be cheaper than multi. Since then, LONGi has set multiple world records in the conversion efficiency of solar cells and continues to invest aggressively in new technologies, especially the heterojunction techniques (essentially applying multiple types of conductive layers to both sides of a solar cell) that are expected to dominate the market over the next decade.
Our sales in this period included Ping An Insurance, whose restructuring of its agent workforce has proven to be a significant headwind for growth, adding to our concerns about balance sheet weakness from its exposure (through Ping An Bank and investments by its life insurance funds) to China’s beleaguered property sector. We also exited our position in Shanghai International Airport as the virus resurgences and ongoing zero-COVID policy have pushed chances of a recovery in international travel even further into the future.
Ten Largest Holdings by Weight at April 30, 2022
Company | Sector | Market | % | |||
Tencent | Comm Services | Mainland China | 5.3 | |||
Alibaba | Cons Discretionary | Mainland China | 3.7 | |||
AIA Group | Financials | Hong Kong | 3.7 | |||
WuXi AppTec | Health Care | Mainland China | 3.6 | |||
AirTAC | Industrials | Taiwan | 3.5 | |||
JD.com | Cons Discretionary | Mainland China | 3.4 | |||
China Tourism Group Duty Free | Cons Discretionary | Mainland China | 3.2 | |||
WuXi Biologics | Health Care | Mainland China | 3.1 | |||
Haitian International | Industrials | Mainland China | 3.0 | |||
Shenzhou International | Cons Discretionary | Mainland China | 3.0 |
We conclude with a note about our portfolio management team. At the start of 2022, our Chinese Equity Portfolio migrated to a co-lead portfolio manager structure (in line with other Harding Loevner strategies), with the promotion of Wenting Shen, CFA, to co-lead. Shen has served as a “paper” (supporting) portfolio manager on the strategy since its launch. The change has not resulted in any material alteration of the Portfolio’s quality and growth characteristics or its risk profile.
Please read the separate disclosures page for important information, including the risks of investing in the Portfolio.
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Disclosures
The Portfolios invest in foreign securities, which will involve greater volatility and political, economic, and currency risks and differences in accounting methods. They also invest in emerging markets, which involve unique risks, such as exposure to economies less diverse and mature than the US or other more established foreign markets. Economic and political instability may cause larger price changes in emerging markets securities than other foreign securities.
Investments in small- and mid-cap companies involve additional risks such as limited liquidity and greater volatility.
Diversification does not guarantee a profit or prevent a loss in a declining market.
Long-term earnings growth and earnings per share growth are not a forecast of the Portfolios’ future performance.
The value of securities may fluctuate in response to various factors including, but not limited to, public health risks; these may be magnified if conditions and events adversely impact the global economy.
Companies held in the Portfolios at the end of the fiscal year appear in bold type; only the first reference to a particular holding appears in bold. The Portfolios are actively managed; therefore holdings shown may not be current. Portfolio holdings and top ten holdings should not be considered recommendations to buy or sell any security. Please refer to the Portfolios of Investments in this report for complete Portfolio holdings. Current and future Portfolio holdings are subject to risk.
While the Portfolios have no sales charge, management fees and other expenses still apply. Please see the Prospectus for further details.
Sector & Geographic Positioning data is sourced from: Northern Trust, Harding Loevner Funds Portfolios, and MSCI Barra.
Expense Ratios: Differences may exist between the commentary data and similar information reported in the financial statements due to timing differences. Unless otherwise stated, the expense ratios presented are shown as of the most recent Prospectus date, February 28, 2022.
Five year average turnover data is calculated using a simple average of annual turnover figures for the past five fiscal years. These annual turnover figures utilize purchase, sales, and market value data which is not reflective of adjustments required pursuant to Generally Accepted Accounting Principles (GAAP). Accordingly, differences may exist between this data and similar information reported in the financial statements.
Quasar Distributors, LLC, Distributor.
Index Definitions
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 47 developed and emerging market countries. Net dividends reinvested.
The MSCI All Country World ex-US Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global developed and emerging markets, excluding the US. The Index consists of 46 developed and emerging market countries. Net dividends reinvested.
The MSCI All Country World ex-US Small Cap Index is a free-float market capitalization index that is designed to measure small cap developed and emerging market equity performance. The Index consists of 46 developed and emerging market countries, and is comprised of companies that fall within a market capitalization range of USD 56-10,590 million (as of March 31, 2022).
The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. The Index consists of 24 emerging market countries. Net dividends reinvested.
The MSCI China All Shares Index is a free float-adjusted market capitalization index that is designed to reflect an opportunity set capturing large and mid-cap China share classes listed in Hong Kong, Shanghai, Shenzhen, and outside of China.
The MSCI Emerging + Frontier Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets and frontier markets. The Index consists of 25 emerging markets countries and 28 frontier markets countries. Net dividends reinvested.
The MSCI Frontier Emerging Markets index is a free float-adjusted market capitalization index designed to measure equity market performance in all countries from the MSCI Frontier Markets Index and the lower size spectrum of the MSCI Emerging Markets Index. The Index consists of 28 frontier markets and 4 emerging markets. Net dividends reinvested.
The S&P 500 Index is an unmanaged index commonly used to measure performance of US stocks.
You cannot invest directly in these Indexes.
Term Definitions
Basis Points are a common measurement used chiefly for interest rates and other percentages in finance. A basis point is one hundredth of one percent.
Dividend Yield is the annual dividends per share divided by current price per share, expressed as a percent.
Economies of Scale is the cost advantage that arises with increased output of a product.
Gross Domestic Product (GDP) is the monetary value of all finished goods and services produced within a country’s borders in a specific time period (usually calculated on an annual basis).
Market Capitalization is the total dollar market value of all of a company’s outstanding shares.
Return on Capital (ROC) is a calculation used to assess a company’s efficiency at allocating the capital under its control to profitable investments.
Tracking Error is a measure of how closely a portfolio follows the index to which it is benchmarked.
Turnover is calculated by dividing the lesser of Purchases or Sales by Average Capital.
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Global Equity Portfolio
International Equity Portfolio
International Small Companies Portfolio
Institutional Emerging Markets Portfolio
Emerging Markets Portfolio
Frontier Emerging Markets Portfolio
Global Equity Research Portfolio
International Equity Research Portfolio
Emerging Markets Research Portfolio
Chinese Equity Portfolio | ||
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For use only when preceded or accompanied by a prospectus. Read the prospectus carefully before you invest or send money.
Table of Contents
Harding, Loevner Funds, Inc.
April 30, 2022 (unaudited)
As a shareholder of a Harding Loevner Portfolio, you incur ongoing costs, including management fees; to the extent applicable, distribution (12b-1) fees and/or shareholder services fees; and other fund expenses. The following examples are intended to help you understand your ongoing costs (in dollars and cents) of investing in a Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of a six month period and held through the period ended April 30, 2022.
Actual Expenses
The first line under each Portfolio in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for your Portfolio under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line under each Portfolio in the table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Portfolio and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second line under each Portfolio in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Portfolio | Beginning Account Value November 1, 2021 | Ending Account Value April 30, 2022 | Annualized Expense Ratio | Expenses Paid During Period* (November 1, 2021 to April 30, 2022) | ||||||||||||
Global Equity Portfolio — Institutional Class |
| |||||||||||||||
Actual | $ | 1,000.00 | $ | 760.50 | 0.84 | % | $ | 3.67 | ||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,020.63 | 0.84 | 4.21 | ||||||||||||
Global Equity Portfolio — Institutional Class Z |
| |||||||||||||||
Actual | 1,000.00 | 760.60 | 0.79 | 3.45 | ||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,020.88 | 0.79 | 3.96 | ||||||||||||
Global Equity Portfolio — Advisor Class |
| |||||||||||||||
Actual | 1,000.00 | 759.70 | 1.04 | 4.54 | ||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,019.64 | 1.04 | 5.21 | ||||||||||||
International Equity Portfolio — Institutional Class |
| |||||||||||||||
Actual | 1,000.00 | 825.40 | 0.79 | 3.58 | ||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,020.88 | 0.79 | 3.96 | ||||||||||||
International Equity Portfolio — Institutional Class Z |
| |||||||||||||||
Actual | 1,000.00 | 825.80 | 0.70 | 3.17 | ||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,021.32 | 0.70 | 3.51 | ||||||||||||
International Equity Portfolio — Investor Class |
| |||||||||||||||
Actual | 1,000.00 | 824.20 | 1.09 | 4.93 | ||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,019.39 | 1.09 | 5.46 | ||||||||||||
International Small Companies Portfolio — Institutional Class |
| |||||||||||||||
Actual | 1,000.00 | 784.50 | 1.10 | 4.87 | ||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,019.34 | 1.10 | 5.51 |
* Expenses are calculated using each Portfolio’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (181 days), and divided by the number of days in the year (365 days).
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Harding, Loevner Funds, Inc. |
Expense Example (continued) |
April 30, 2022 (unaudited)
Portfolio | Beginning Account Value November 1, 2021 | Ending Account Value April 30, 2022 | Annualized Expense Ratio | Expenses Paid During Period* (November 1, 2021 to April 30, 2022) | ||||||||||||
International Small Companies Portfolio — Investor Class |
| |||||||||||||||
Actual | $ | 1,000.00 | $ | 783.10 | 1.40 | % | $ | 6.19 | ||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,017.85 | 1.40 | 7.00 | ||||||||||||
Institutional Emerging Markets Portfolio — Institutional Class |
| |||||||||||||||
Actual | 1,000.00 | 730.60 | 1.10 | 4.72 | ||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,019.34 | 1.10 | 5.51 | ||||||||||||
Institutional Emerging Markets Portfolio — Institutional Class Z |
| |||||||||||||||
Actual | 1,000.00 | 731.10 | 1.00 | 4.29 | ||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,019.84 | 1.00 | 5.01 | ||||||||||||
Emerging Markets Portfolio — Advisor Class |
| |||||||||||||||
Actual | 1,000.00 | 730.40 | 1.18 | 5.06 | ||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,018.94 | 1.18 | 5.91 | ||||||||||||
Frontier Emerging Markets Portfolio — Institutional Class I |
| |||||||||||||||
Actual | 1,000.00 | 874.60 | 1.61 | 7.48 | ||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,016.81 | 1.61 | 8.05 | ||||||||||||
Frontier Emerging Markets Portfolio — Institutional Class II |
| |||||||||||||||
Actual | 1,000.00 | 875.10 | 1.35 | 6.28 | ||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,018.10 | 1.35 | 6.76 | ||||||||||||
Frontier Emerging Markets Portfolio — Investor Class |
| |||||||||||||||
Actual | 1,000.00 | 873.10 | 2.00 | 9.29 | ||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,014.88 | 2.00 | 9.99 | ||||||||||||
Global Equity Research Portfolio — Institutional Class |
| |||||||||||||||
Actual | 1,000.00 | 827.10 | 0.80 | 3.62 | ||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,020.83 | 0.80 | 4.01 | ||||||||||||
International Equity Research Portfolio — Institutional Class |
| |||||||||||||||
Actual | 1,000.00 | 813.40 | 0.75 | 3.37 | ||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,021.08 | 0.75 | 3.76 | ||||||||||||
Emerging Markets Research Portfolio — Institutional Class |
| |||||||||||||||
Actual | 1,000.00 | 809.00 | 1.15 | 5.16 | ||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,019.09 | 1.15 | 5.76 | ||||||||||||
Chinese Equity Portfolio — Institutional Class |
| |||||||||||||||
Actual | 1,000.00 | 700.90 | 1.15 | 4.85 | ||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,019.09 | 1.15 | 5.76 |
* Expenses are calculated using each Portfolio’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (181 days), and divided by the number of days in the year (365 days).
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Harding, Loevner Funds, Inc. |
April 30, 2022 (unaudited) |
Shares | Value | |||||||
COMMON STOCKS - 96.6% | ||||||||
Australia - 0.8% | ||||||||
Xero Ltd. (Software & Services)*† | 156,441 | $10,259,691 | ||||||
Brazil - 1.0% | ||||||||
B3 SA - Brasil Bolsa Balcao (Diversified Financials) | 4,773,900 | 12,842,539 | ||||||
China - 5.4% | ||||||||
Country Garden Services Holdings Co., Ltd. (Real Estate)† | 3,846,000 | 16,196,855 | ||||||
Sangfor Technologies Inc., Class A (Software & Services)† | 451,750 | 6,013,390 | ||||||
Tencent Holdings Ltd. (Media & Entertainment)† | 284,600 | 13,349,271 | ||||||
WuXi AppTec Co., Ltd., Class A (Pharmaceuticals, Biotechnology & Life Sciences)† | 1,057,301 | 16,125,360 | ||||||
Wuxi Biologics Cayman Inc. (Pharmaceuticals, Biotechnology & Life Sciences)*^† | 2,358,000 | 17,111,742 | ||||||
68,796,618 | ||||||||
Denmark - 0.9% | ||||||||
Genmab A/S (Pharmaceuticals, Biotechnology & Life Sciences)*† | 33,202 | 11,712,106 | ||||||
France - 3.7% | ||||||||
L’Oreal SA (Household & Personal Products)† | 37,773 | 13,741,840 | ||||||
Schneider Electric SE (Capital Goods)† | 232,606 | 33,128,686 | ||||||
46,870,526 | ||||||||
Germany - 0.6% | ||||||||
HelloFresh SE (Food & Staples Retailing)*† | 175,084 | 7,487,663 | ||||||
Hong Kong - 1.1% | ||||||||
AIA Group Ltd. (Insurance)† | 1,449,605 | 14,162,519 | ||||||
India - 1.2% | ||||||||
HDFC Bank Ltd. - ADR (Banks) | 274,710 | 15,166,739 | ||||||
Indonesia - 1.6% | ||||||||
Bank Central Asia Tbk PT (Banks)† | 37,006,270 | 20,697,589 | ||||||
Japan - 2.8% | ||||||||
Chugai Pharmaceutical Co., Ltd. (Pharmaceuticals, Biotechnology & Life Sciences)† | 307,500 | 9,228,339 | ||||||
Keyence Corp. (Technology Hardware & Equipment)† | 29,900 | 12,063,345 | ||||||
MISUMI Group Inc. (Capital Goods)† | 291,400 | 7,329,487 |
Shares | Value | |||||||
COMMON STOCKS - 96.6% (continued) |
| |||||||
Japan - 2.8% (continued) | ||||||||
Sysmex Corp. (Health Care Equipment & Services)† | 117,165 | $7,588,391 | ||||||
36,209,562 | ||||||||
Netherlands - 2.3% | ||||||||
Adyen NV (Software & Services)*^† | 6,722 | 11,242,262 | ||||||
ASML Holding NV, Reg S (Semiconductors & Semiconductor Equipment) | 31,451 | 17,731,130 | ||||||
28,973,392 | ||||||||
Poland - 0.7% | ||||||||
CD Projekt SA (Media & Entertainment)† | 329,264 | 8,899,627 | ||||||
South Korea - 1.0% | ||||||||
Samsung Electronics Co., Ltd. - GDR, Reg S (Technology Hardware & Equipment)† | 9,598 | 12,552,766 | ||||||
Sweden - 4.2% | ||||||||
Atlas Copco AB, Class A (Capital Goods)† | 262,392 | 11,882,636 | ||||||
Epiroc AB, Class A (Capital Goods)† | 727,808 | 14,801,442 | ||||||
Hexagon AB, Class B (Technology Hardware & Equipment)† | 2,115,723 | 27,355,737 | ||||||
54,039,815 | ||||||||
Switzerland - 3.1% | ||||||||
Alcon Inc. (Health Care Equipment & Services) | 236,037 | 16,808,195 | ||||||
Roche Holding AG, Genusschein (Pharmaceuticals, Biotechnology & Life Sciences)† | 34,718 | 12,858,389 | ||||||
VAT Group AG (Capital Goods)^† | 33,389 | 10,361,679 | ||||||
40,028,263 | ||||||||
Taiwan - 1.1% | ||||||||
Taiwan Semiconductor Manufacturing Co., | 151,251 | 14,055,755 | ||||||
United Kingdom - 1.7% | ||||||||
Abcam plc (Pharmaceuticals, Biotechnology & Life Sciences)*† | 1,014,397 | 15,831,310 | ||||||
Spirax-Sarco Engineering plc (Capital Goods)† | 43,081 | 6,515,729 | ||||||
22,347,039 | ||||||||
United States - 63.4% | ||||||||
Accenture plc, Class A (Software & Services) | 78,689 | 23,635,028 |
See Notes to Financial Statements
4
Table of Contents
Harding, Loevner Funds, Inc. |
Global Equity Portfolio Portfolio of Investments (continued) April 30, 2022 (unaudited) |
Shares | Value | |||||||
COMMON STOCKS - 96.6% (continued) |
| |||||||
United States - 63.4% (continued) | ||||||||
Adobe Inc. (Software & Services)* | 41,236 | $16,327,394 | ||||||
Align Technology Inc. (Health Care Equipment & Services)* | 45,676 | 13,241,929 | ||||||
Alphabet Inc., Class A (Media & Entertainment)* | 20,227 | 46,161,857 | ||||||
Amazon.com Inc. (Retailing)* | 12,036 | 29,917,043 | ||||||
AMETEK Inc. (Capital Goods) | 169,049 | 21,344,127 | ||||||
Apple Inc. (Technology Hardware & Equipment) | 120,801 | 19,044,278 | ||||||
Applied Materials Inc. (Semiconductors & Semiconductor Equipment) | 149,094 | 16,452,523 | ||||||
Broadcom Inc. (Semiconductors & Semiconductor Equipment) | 27,262 | 15,113,780 | ||||||
CME Group Inc. (Diversified Financials) | 106,920 | 23,451,833 | ||||||
CoStar Group Inc. (Commercial & Professional Services)* | 192,144 | 12,224,201 | ||||||
Danaher Corp. (Pharmaceuticals, Biotechnology & Life Sciences) | 61,952 | 15,558,006 | ||||||
Deere & Co. (Capital Goods) | 95,884 | 36,201,004 | ||||||
Edwards Lifesciences Corp. (Health Care Equipment & Services)* | 163,694 | 17,315,551 | ||||||
Etsy Inc. (Retailing)* | 83,473 | 7,778,849 | ||||||
First Republic Bank (Banks) | 260,673 | 38,897,625 | ||||||
Illumina Inc. (Pharmaceuticals, Biotechnology & Life Sciences)* | 87,787 | 26,042,014 | ||||||
Intuitive Surgical Inc. (Health Care Equipment & Services)* | 53,366 | 12,770,484 | ||||||
IQVIA Holdings Inc. (Pharmaceuticals, Biotechnology & Life Sciences)* | 61,213 | 13,343,822 | ||||||
Lululemon Athletica Inc. (Consumer Durables & Apparel)* | 44,394 | 15,743,444 | ||||||
MercadoLibre Inc. (Retailing)* | 14,819 | 14,428,223 | ||||||
Meta Platforms Inc., Class A (Media & Entertainment)* | 145,624 | 29,193,243 | ||||||
Microsoft Corp. (Software & Services) | 126,366 | 35,069,092 | ||||||
Netflix Inc. (Media & Entertainment)* | 30,826 | 5,868,037 | ||||||
NIKE Inc., Class B (Consumer Durables & Apparel) | 216,842 | 27,040,197 | ||||||
NVIDIA Corp. (Semiconductors & Semiconductor Equipment) | 56,211 | 10,425,454 | ||||||
PayPal Holdings Inc. (Software & Services)* | 102,700 | 9,030,411 |
Shares | Value | |||||||
COMMON STOCKS - 96.6% (continued) |
| |||||||
United States - 63.4% (continued) | ||||||||
Pinterest Inc., Class A (Media & Entertainment)* | 567,584 | $11,646,824 | ||||||
Rockwell Automation Inc. (Capital Goods) | 74,198 | 18,747,609 | ||||||
Salesforce Inc. (Software & Services)* | 66,059 | 11,622,420 | ||||||
Schlumberger NV (Energy) | 407,578 | 15,899,618 | ||||||
SVB Financial Group (Banks)* | 79,033 | 38,539,652 | ||||||
Synopsys Inc. (Software & Services)* | 74,907 | 21,482,579 | ||||||
Thermo Fisher Scientific Inc. (Pharmaceuticals, Biotechnology & Life Sciences) | 42,565 | 23,535,040 | ||||||
Trade Desk Inc., Class A (Software & Services)* | 215,404 | 12,691,604 | ||||||
Tradeweb Markets Inc., Class A (Diversified Financials) | 219,030 | 15,592,746 | ||||||
UnitedHealth Group Inc. (Health Care Equipment & Services) | 67,779 | 34,469,010 | ||||||
Verisk Analytics Inc. (Commercial & Professional Services) | 67,185 | 13,709,099 | ||||||
Vertex Pharmaceuticals Inc. (Pharmaceuticals, Biotechnology & Life Sciences)* | 147,156 | 40,205,962 | ||||||
809,761,612 | ||||||||
Total Common Stocks (Cost $1,039,775,074) |
| $1,234,863,821 | ||||||
SHORT TERM INVESTMENTS - 3.3% |
| |||||||
Northern Institutional Funds - Treasury Portfolio (Premier Shares), 0.18% (Money Market Funds) | 42,416,858 | 42,416,858 | ||||||
Total Short Term Investments (Cost $42,416,858) |
| $42,416,858 | ||||||
Total Investments — 99.9% | ||||||||
(Cost $1,082,191,932) | $1,277,280,679 | |||||||
Other Assets Less Liabilities - 0.1% | 984,641 | |||||||
Net Assets — 100.0% | $1,278,265,320 |
See Notes to Financial Statements
5
Table of Contents
Harding, Loevner Funds, Inc. |
Global Equity Portfolio Portfolio of Investments (continued) April 30, 2022 (unaudited) |
Summary of Abbreviations
ADR | American Depositary Receipt | |
GDR | Global Depositary Receipt | |
Reg S | Security sold outside United States without registration under the Securities Act of 1933. | |
* | Non-income producing security. | |
† | Investment categorized as level 2 security as disclosed in Note 2 of the Notes to Financial Statements. | |
^ | Security exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities, which represent 3.0% of net assets as of April 30, 2022, are considered liquid and may be resold in transactions exempt from registration, normally to qualified buyers. |
Industry | Percentage of Net Assets | |||
Banks | 8.8 | % | ||
Capital Goods | 12.6 | |||
Commercial & Professional Services | 2.1 | |||
Consumer Durables & Apparel | 3.3 | |||
Diversified Financials | 4.0 | |||
Energy | 1.3 | |||
Food & Staples Retailing | 0.6 | |||
Health Care Equipment & Services | 8.0 | |||
Household & Personal Products | 1.1 | |||
Insurance | 1.1 | |||
Media & Entertainment | 9.0 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 15.7 | |||
Real Estate | 1.3 | |||
Retailing | 4.0 | |||
Semiconductors & Semiconductor Equipment | 5.8 | |||
Software & Services | 12.4 | |||
Technology Hardware & Equipment | 5.5 | |||
Money Market Fund | 3.3 | |||
Total Investments | 99.9 | |||
Other Assets Less Liabilities | 0.1 | |||
Net Assets | 100.0 | % |
See Notes to Financial Statements
6
Table of Contents
Harding, Loevner Funds, Inc. |
International Equity Portfolio Portfolio of Investments April 30, 2022 (unaudited) |
Shares | Value | |||||||
COMMON STOCKS - 95.8% | ||||||||
Australia - 3.2% | ||||||||
BHP Group Ltd. - Sponsored ADR (Materials) | 8,395,120 | $562,305,138 | ||||||
Brazil - 2.3% | ||||||||
Ambev SA - ADR (Food Beverage & Tobacco) | 76,232,243 | 221,835,827 | ||||||
XP Inc., Class A (Diversified Financials)* | 7,315,157 | 180,026,014 | ||||||
401,861,841 | ||||||||
Canada - 2.6% | ||||||||
Alimentation Couche-Tard Inc. (Food & Staples Retailing) | 5,695,200 | 253,538,698 | ||||||
Canadian National Railway Co. (Transportation) | 1,829,975 | 215,241,659 | ||||||
468,780,357 | ||||||||
China - 9.0% | ||||||||
CSPC Pharmaceutical Group Ltd. (Pharmaceuticals, Biotechnology & Life Sciences)† | 239,908,000 | 244,301,080 | ||||||
ENN Energy Holdings Ltd. (Utilities)† | 17,920,300 | 238,241,042 | ||||||
Haier Smart Home Co., Ltd., Class A (Consumer Durables & Apparel)† | 73,781,688 | 283,407,304 | ||||||
Ping An Insurance Group Co. of China Ltd., Class H (Insurance)† | 25,630,000 | 164,824,181 | ||||||
Tencent Holdings Ltd. (Media & Entertainment)† | 11,061,800 | 518,857,938 | ||||||
Zhejiang Sanhua Intelligent Controls Co., Ltd., Class A (Capital Goods)† | 62,128,337 | 154,709,087 | ||||||
1,604,340,632 | ||||||||
Denmark - 1.1% | ||||||||
Novozymes A/S, Class B (Materials)† | 2,840,831 | 197,379,499 | ||||||
France - 8.6% | ||||||||
Air Liquide SA (Materials)† | 1,156,522 | 199,665,409 | ||||||
Dassault Systemes SE (Software & Services)† | 5,850,364 | 260,252,168 | ||||||
L’Oreal SA (Household & Personal Products)† | 1,634,850 | 594,759,391 | ||||||
Schneider Electric SE (Capital Goods)† | 3,350,324 | 477,166,684 | ||||||
1,531,843,652 | ||||||||
Germany - 7.9% | ||||||||
Allianz SE, Reg S (Insurance)† | 2,014,260 | 458,778,366 | ||||||
Infineon Technologies AG (Semiconductors & Semiconductor Equipment)† | 15,819,357 | 457,659,480 | ||||||
SAP SE - Sponsored ADR (Software & Services) | 2,194,479 | 221,203,483 |
Shares | Value | |||||||
COMMON STOCKS - 95.8% (continued) |
| |||||||
Germany - 7.9% (continued) | ||||||||
Symrise AG (Materials)† | 2,267,651 | $271,137,922 | ||||||
1,408,779,251 | ||||||||
Hong Kong - 2.8% | ||||||||
AIA Group Ltd. (Insurance)† | 51,826,774 | 506,343,238 | ||||||
India - 3.1% | ||||||||
HDFC Bank Ltd. - ADR (Banks) | 3,630,139 | 200,419,974 | ||||||
ICICI Bank Ltd. - Sponsored ADR (Banks) | 18,320,752 | 348,827,118 | ||||||
549,247,092 | ||||||||
Indonesia - 1.7% | ||||||||
Telkom Indonesia Persero Tbk PT (Telecommunication Services)† | 946,288,800 | 301,541,236 | ||||||
Japan - 12.5% | ||||||||
Chugai Pharmaceutical Co., Ltd. (Pharmaceuticals, Biotechnology & Life Sciences)† | 8,146,500 | 244,483,467 | ||||||
Daifuku Co., Ltd. (Capital Goods)† | 1,415,833 | 87,394,662 | ||||||
FANUC Corp. (Capital Goods)† | 821,800 | 127,104,117 | ||||||
Keyence Corp. (Technology Hardware & Equipment)† | 535,934 | 216,225,975 | ||||||
Komatsu Ltd. (Capital Goods)† | 9,999,500 | 224,328,786 | ||||||
Kubota Corp. (Capital Goods)† | 15,761,800 | 268,454,078 | ||||||
Nitori Holdings Co., Ltd. (Retailing)† | 1,588,800 | 161,635,707 | ||||||
Shionogi & Co., Ltd. (Pharmaceuticals, Biotechnology & Life Sciences)† | 4,735,800 | 264,718,205 | ||||||
Shiseido Co., Ltd. (Household & Personal Products)† | 4,200,600 | 197,956,255 | ||||||
Sysmex Corp. (Health Care Equipment & Services)† | 2,899,207 | 187,772,086 | ||||||
Unicharm Corp. (Household & Personal Products)† | 6,944,600 | 241,552,483 | ||||||
2,221,625,821 | ||||||||
Mexico - 1.8% | ||||||||
Fomento Economico Mexicano SAB de CV - Sponsored ADR (Food Beverage & Tobacco) | 4,217,547 | 315,219,463 | ||||||
Netherlands - 1.9% | ||||||||
Adyen NV (Software & Services)*^† | 203,933 | 341,069,337 | ||||||
Russia - 0.0% | ||||||||
LUKOIL PJSC - Sponsored ADR (Energy)‡ | 4,279,605 | — | ||||||
Yandex NV, Class A (Media & Entertainment)*‡ | 2,609,766 | — | ||||||
— |
See Notes to Financial Statements
7
Table of Contents
Harding, Loevner Funds, Inc. |
International Equity Portfolio Portfolio of Investments (continued) April 30, 2022 (unaudited) |
Shares | Value | |||||||
COMMON STOCKS - 95.8% (continued) |
| |||||||
Singapore - 3.0% | ||||||||
DBS Group Holdings Ltd. (Banks)† | 22,045,080 | $533,957,811 | ||||||
South Korea - 3.8% | ||||||||
Samsung Electronics Co., Ltd. - GDR, Reg S (Technology Hardware & Equipment)† | 514,236 | 672,544,714 | ||||||
Spain - 1.4% | ||||||||
Banco Bilbao Vizcaya Argentaria SA (Banks)† | 47,736,532 | 251,186,929 | ||||||
Sweden - 7.3% | ||||||||
Alfa Laval AB (Capital Goods)† | 9,132,937 | 253,489,551 | ||||||
Atlas Copco AB, Class A (Capital Goods)† | 12,086,236 | 547,335,054 | ||||||
Epiroc AB, Class A (Capital Goods)† | 14,030,711 | 285,342,787 | ||||||
Skandinaviska Enskilda Banken AB, Class A (Banks)† | 18,568,724 | 207,637,847 | ||||||
1,293,805,239 | ||||||||
Switzerland - 11.6% | ||||||||
Alcon Inc. (Health Care Equipment & Services) | 3,987,868 | 283,976,080 | ||||||
Lonza Group AG, Reg S (Pharmaceuticals, Biotechnology & Life Sciences)† | 639,577 | 375,493,142 | ||||||
Nestle SA - Sponsored ADR (Food Beverage & Tobacco) | 3,297,478 | 424,187,570 | ||||||
Roche Holding AG, Genusschein (Pharmaceuticals, Biotechnology & Life Sciences)† | 1,575,228 | 583,411,922 | ||||||
SGS SA, Reg S (Commercial & Professional Services)† | 60,299 | 154,848,697 | ||||||
Sonova Holding AG, Reg S (Health Care Equipment & Services)† | 692,423 | 249,312,160 | ||||||
2,071,229,571 | ||||||||
Taiwan - 2.5% | ||||||||
Taiwan Semiconductor | 4,733,138 | 439,850,514 | ||||||
United Kingdom - 6.4% | ||||||||
Diageo plc (Food Beverage & Tobacco)† | 4,975,689 | 246,570,701 | ||||||
Rio Tinto plc (Materials)† | 5,582,067 | 395,946,413 | ||||||
Shell plc (Energy)† | 12,882,319 | 348,674,393 | ||||||
Standard Chartered plc (Banks)† | 21,688,014 | 148,576,816 | ||||||
1,139,768,323 |
Shares | Value | |||||||
COMMON STOCKS - 95.8% (continued) |
| |||||||
United States - 1.3% | ||||||||
Linde plc (Materials)† | 750,012 | $239,513,015 | ||||||
Total Common Stocks (Cost $13,277,815,343) |
| $17,052,192,673 | ||||||
SHORT TERM INVESTMENTS - 4.0% |
| |||||||
Northern Institutional Funds - Treasury Portfolio (Premier Shares), 0.18% (Money Market Funds) | 717,810,678 | 717,810,678 | ||||||
Total Short Term Investments (Cost $717,810,678) |
| $717,810,678 | ||||||
Total Investments — 99.8% | ||||||||
(Cost $13,995,626,021) | $17,770,003,351 | |||||||
Other Assets Less Liabilities - 0.2% | 35,728,270 | |||||||
Net Assets — 100.0% | $17,805,731,621 |
Summary of Abbreviations
ADR | American Depositary Receipt | |
GDR | Global Depositary Receipt | |
Reg S | Security sold outside United States without registration under the Securities Act of 1933. | |
* | Non-income producing security. | |
† | Investment categorized as level 2 security as disclosed in Note 2 of the Notes to Financial Statements. | |
^ | Security exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities, which represent 1.9% of net assets as of April 30, 2022, are considered liquid and may be resold in transactions exempt from registration, normally to qualified buyers. | |
‡ | Investment categorized as level 3 security that is effectively valued at zero. See Note 2 of the Notes to Financial Statements. |
See Notes to Financial Statements
8
Table of Contents
Harding, Loevner Funds, Inc. |
International Equity Portfolio Portfolio of Investments (continued) April 30, 2022 (unaudited) |
Industry | Percentage of Net Assets | |||
Banks | 9.5 | % | ||
Capital Goods | 13.7 | |||
Commercial & Professional Services | 0.8 | |||
Consumer Durables & Apparel | 1.6 | |||
Diversified Financials | 1.0 | |||
Energy | 2.0 | |||
Food & Staples Retailing | 1.4 | |||
Food Beverage & Tobacco | 6.9 | |||
Health Care Equipment & Services | 4.0 | |||
Household & Personal Products | 5.8 | |||
Insurance | 6.3 | |||
Materials | 10.4 | |||
Media & Entertainment | 2.9 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 9.7 | |||
Retailing | 0.9 | |||
Semiconductors & Semiconductor Equipment | 5.1 | |||
Software & Services | 4.6 | |||
Technology Hardware & Equipment | 5.0 | |||
Telecommunication Services | 1.7 | |||
Transportation | 1.2 | |||
Utilities | 1.3 | |||
Money Market Fund | 4.0 | |||
Total Investments | 99.8 | |||
Other Assets Less Liabilities | 0.2 | |||
Net Assets | 100.0 | % |
See Notes to Financial Statements
9
Table of Contents
Harding, Loevner Funds, Inc. |
International Small Companies Portfolio Portfolio of Investments April 30, 2022 (unaudited) |
Shares | Value | |||||||
COMMON STOCKS - 97.3% | ||||||||
Bangladesh - 0.9% | ||||||||
Square Pharmaceuticals Ltd. | 1,765,295 | $4,600,251 | ||||||
Brazil - 2.0% | ||||||||
Localiza Rent a Car SA (Transportation) | 928,800 | 9,945,625 | ||||||
Canada - 1.9% | ||||||||
Kinaxis Inc. (Software & Services)* | 84,400 | 9,339,745 | ||||||
China - 3.6% | ||||||||
Haitian International Holdings Ltd. (Capital Goods)† | 3,310,000 | 8,177,273 | ||||||
Hefei Meiya Optoelectronic Technology Inc., Class A (Capital Goods)† | 1,033,301 | 3,496,989 | ||||||
TravelSky Technology Ltd., | 2,238,000 | 3,350,291 | ||||||
Yantai China Pet Foods Co., Ltd., | 1,067,349 | 3,219,378 | ||||||
18,243,931 | ||||||||
Denmark - 0.4% | ||||||||
SimCorp A/S (Software & Services)† | 30,110 | 2,112,269 | ||||||
Egypt - 1.7% | ||||||||
Edita Food Industries SAE (Food Beverage & Tobacco)† | 10,531,985 | 4,556,042 | ||||||
Integrated Diagnostics Holdings plc (Health Care Equipment & Services)^† | 3,438,865 | 3,765,230 | ||||||
8,321,272 | ||||||||
Finland - 2.2% | ||||||||
Vaisala OYJ, Class A (Technology Hardware & Equipment)† | 233,526 | 10,818,123 | ||||||
France - 4.8% | ||||||||
Alten SA (Software & Services)† | 94,937 | 12,715,233 | ||||||
Rubis SCA (Utilities)† | 419,186 | 11,145,717 | ||||||
23,860,950 | ||||||||
Germany - 9.0% | ||||||||
Bechtle AG (Software & Services)† | 186,794 | 8,721,328 | ||||||
FUCHS PETROLUB SE (Materials)† | 278,160 | 7,414,527 | ||||||
KWS Saat SE & Co. KGaA (Food Beverage & Tobacco)† | 95,420 | 7,066,396 | ||||||
Pfeiffer Vacuum Technology AG (Capital Goods)† | 24,230 | 4,326,682 | ||||||
Scout24 SE (Media & Entertainment)^† | 47,409 | 3,024,910 |
Shares | Value | |||||||
COMMON STOCKS - 97.3% (continued) |
| |||||||
Germany - 9.0% (continued) | ||||||||
STRATEC SE (Health Care Equipment & Services)† | 88,437 | $10,060,604 | ||||||
TeamViewer AG (Software & Services)*^† | 396,057 | 4,804,079 | ||||||
45,418,526 | ||||||||
Hong Kong - 0.5% | ||||||||
ASM Pacific Technology Ltd. (Semiconductors & Semiconductor Equipment)† | 268,700 | 2,715,134 | ||||||
India - 2.2% | ||||||||
Max Financial Services Ltd. (Insurance)*† | 701,825 | 6,905,099 | ||||||
SH Kelkar & Co., Ltd. (Materials)^† | 2,049,441 | 4,113,248 | ||||||
11,018,347 | ||||||||
Indonesia - 2.5% | ||||||||
Prodia Widyahusada Tbk PT (Health Care Equipment & Services)† | 2,000,000 | 951,735 | ||||||
Sarana Menara Nusantara Tbk PT (Telecommunication Services)† | 116,509,700 | 8,108,708 | ||||||
Tower Bersama Infrastructure Tbk PT (Telecommunication Services)† | 16,537,000 | 3,427,850 | ||||||
12,488,293 | ||||||||
Israel - 2.0% | ||||||||
CyberArk Software Ltd. (Software & Services)* | 62,132 | 9,763,422 | ||||||
Italy - 3.7% | ||||||||
Reply SpA (Software & Services)† | 126,706 | 18,590,733 | ||||||
Japan - 11.4% | ||||||||
Ariake Japan Co., Ltd. (Food Beverage & Tobacco)† | 158,600 | 6,352,894 | ||||||
BML Inc. (Health Care Equipment & Services)† | 127,900 | 3,289,313 | ||||||
Cosmos Pharmaceutical Corp. (Food & Staples Retailing)† | 49,600 | 4,607,859 | ||||||
Infomart Corp. (Software & Services)† | 837,100 | 4,201,839 | ||||||
JCU Corp. (Materials)† | 184,100 | 4,693,086 | ||||||
MISUMI Group Inc. (Capital Goods)† | 77,700 | 1,954,362 | ||||||
Pigeon Corp. (Household & Personal Products)† | 232,700 | 3,943,186 | ||||||
Rinnai Corp. (Consumer Durables & Apparel)† | 39,100 | 2,477,202 | ||||||
Rohto Pharmaceutical Co., Ltd. (Household & Personal Products)† | 111,100 | 2,964,270 |
See Notes to Financial Statements
10
Table of Contents
Harding, Loevner Funds, Inc. |
International Small Companies Portfolio Portfolio of Investments (continued) April 30, 2022 (unaudited) |
Shares | Value | |||||||
COMMON STOCKS - 97.3% (continued) |
| |||||||
Japan - 11.4% (continued) | ||||||||
Santen Pharmaceutical Co., Ltd. (Pharmaceuticals, Biotechnology & Life Sciences)† | 559,300 | $4,569,453 | ||||||
SMS Co., Ltd. (Commercial & Professional Services)† | 324,300 | 7,487,723 | ||||||
Solasto Corp. (Health Care Equipment & Services)† | 759,100 | 5,251,226 | ||||||
Stanley Electric Co., Ltd. (Automobiles & Components)† | 324,900 | 5,593,419 | ||||||
57,385,832 | ||||||||
Kuwait - 0.5% | ||||||||
Mabanee Co. KPSC (Real Estate)† | 955,053 | 2,600,036 | ||||||
Lithuania - 1.6% | ||||||||
Siauliu Bankas AB (Banks)† | 12,796,457 | 8,026,539 | ||||||
Malaysia - 1.4% | ||||||||
Dialog Group Bhd. (Energy)† | 5,887,940 | 3,371,787 | ||||||
TIME dotCom Bhd. (Telecommunication Services)† | 3,520,800 | 3,590,270 | ||||||
6,962,057 | ||||||||
Mexico - 2.4% | ||||||||
Grupo Herdez SAB de CV (Food Beverage & Tobacco) | 1,984,638 | 2,977,954 | ||||||
Megacable Holdings SAB de CV (Media & Entertainment) | 3,110,400 | 8,860,292 | ||||||
11,838,246 | ||||||||
Norway - 1.1% | ||||||||
Tomra Systems ASA (Commercial & Professional Services)† | 138,078 | 5,464,490 | ||||||
Poland - 0.3% | ||||||||
CD Projekt SA (Media & Entertainment)† | 62,672 | 1,693,952 | ||||||
Romania - 0.5% | ||||||||
Societatea Nationala de Gaze Naturale ROMGAZ SA (Energy)† | 259,247 | 2,471,914 | ||||||
Saudi Arabia - 1.1% | ||||||||
Jarir Marketing Co. (Retailing)† | 112,133 | 5,735,382 | ||||||
South Africa - 0.8% | ||||||||
Clicks Group Ltd. (Food & Staples Retailing)† | 97,345 | 1,916,623 | ||||||
Discovery Ltd. (Insurance)*† | 225,592 | 2,166,921 | ||||||
4,083,544 | ||||||||
South Korea - 1.7% | ||||||||
Cheil Worldwide Inc. (Media & Entertainment)† | 431,885 | 8,631,833 |
Shares | Value | |||||||
COMMON STOCKS - 97.3% (continued) | ||||||||
Spain - 2.0% | ||||||||
Bankinter SA (Banks)† | 707,168 | $4,175,742 | ||||||
Linea Directa Aseguradora SA Cia de Seguros y Reaseguros (Insurance)† | 4,161,023 | 5,955,555 | ||||||
10,131,297 | ||||||||
Sweden - 3.0% | ||||||||
Intrum AB (Commercial & Professional Services)† | 232,335 | 5,560,927 | ||||||
Paradox Interactive AB (Media & Entertainment)† | 419,753 | 6,979,563 | ||||||
Thule Group AB (Consumer Durables & Apparel)^† | 73,733 | 2,547,996 | ||||||
15,088,486 | ||||||||
Switzerland - 4.8% | ||||||||
Bossard Holding AG, Class A, | 32,068 | 6,966,232 | ||||||
LEM Holding SA, Reg S (Technology Hardware & Equipment)† | 4,686 | 10,766,304 | ||||||
Tecan Group AG, Reg S | 20,371 | 6,121,852 | ||||||
23,854,388 | ||||||||
Taiwan - 1.9% | ||||||||
Advantech Co., Ltd. (Technology Hardware & Equipment)† | 254,645 | 3,154,309 | ||||||
Chipbond Technology Corp. | 1,701,700 | 3,819,769 | ||||||
Eclat Textile Co., Ltd. | 166,909 | 2,720,107 | ||||||
9,694,185 | ||||||||
United Kingdom - 18.9% | ||||||||
Abcam plc (Pharmaceuticals, | 612,821 | 9,564,065 | ||||||
Bank of Georgia Group plc (Banks)† | 502,468 | 7,738,238 | ||||||
Clarkson plc (Transportation)† | 162,436 | 7,451,930 | ||||||
Cranswick plc (Food Beverage & Tobacco)† | 88,788 | 3,518,189 | ||||||
Dechra Pharmaceuticals plc (Pharmaceuticals, Biotechnology & Life Sciences)† | 231,523 | 10,474,077 | ||||||
Diploma plc (Capital Goods)† | 296,301 | 10,136,004 | ||||||
EMIS Group plc (Health Care Equipment & Services)† | 465,465 | 7,781,212 | ||||||
Keywords Studios plc (Software & Services)† | 318,505 | 9,466,396 | ||||||
Network International Holdings plc (Software & Services)*^† | 1,530,938 | 4,973,756 |
See Notes to Financial Statements
11
Table of Contents
Harding, Loevner Funds, Inc. |
International Small Companies Portfolio Portfolio of Investments (continued) April 30, 2022 (unaudited) |
Shares | Value | |||||||
COMMON STOCKS - 97.3% (continued) |
| |||||||
United Kingdom - 18.9% (continued) | ||||||||
Rathbones Group plc | 108,251 | $2,844,244 | ||||||
Rightmove plc (Media & Entertainment)† | 566,654 | 4,356,061 | ||||||
Senior plc (Capital Goods)*† | 6,310,737 | 9,982,013 | ||||||
YouGov plc (Media & Entertainment)† | 435,966 | 6,776,784 | ||||||
95,062,969 | ||||||||
United States - 2.9% | ||||||||
Core Laboratories NV (Energy) | 108,667 | 2,825,342 | ||||||
Globant SA (Software & Services)* | 41,642 | 8,994,255 | ||||||
Sensata Technologies Holding plc (Capital Goods)* | 64,387 | 2,923,814 | ||||||
14,743,411 | ||||||||
Vietnam - 3.6% | ||||||||
Hoa Phat Group JSC (Materials)† | 9,641,996 | 18,082,781 | ||||||
Total Common Stocks (Cost $438,695,126) |
| $488,787,963 | ||||||
SHORT TERM INVESTMENTS - 3.0% |
| |||||||
Northern Institutional Funds - | 15,337,729 | 15,337,729 | ||||||
Total Short Term Investments (Cost $15,337,729) |
| $15,337,729 | ||||||
Total Investments — 100.3% | ||||||||
(Cost $454,032,855) | $504,125,692 | |||||||
Liabilities Less Other Assets - (0.3)% | (1,739,872 | ) | ||||||
Net Assets — 100.0% | $502,385,820 |
Summary of Abbreviations
Reg S | Security sold outside United States without registration under the Securities Act of 1933. |
† | Investment categorized as level 2 security as disclosed in Note 2 of the Notes to Financial Statements. |
* | Non-income producing security. |
^ | Security exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities, which represent 4.6% of net assets as of April 30, 2022, are considered liquid and may be resold in transactions exempt from registration, normally to qualified buyers. |
Industry | Percentage of Net Assets | |||
Automobiles & Components | 1.1 | % | ||
Banks | 3.9 | |||
Capital Goods | 9.6 | |||
Commercial & Professional Services | 3.7 | |||
Consumer Durables & Apparel | 1.5 | |||
Diversified Financials | 0.6 | |||
Energy | 1.7 | |||
Food & Staples Retailing | 1.3 | |||
Food Beverage & Tobacco | 5.5 | |||
Health Care Equipment & Services | 6.2 | |||
Household & Personal Products | 1.4 | |||
Insurance | 3.0 | |||
Materials | 6.8 | |||
Media & Entertainment | 8.0 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 7.0 | |||
Real Estate | 0.5 | |||
Retailing | 1.1 | |||
Semiconductors & Semiconductor Equipment | 1.3 | |||
Software & Services | 19.4 | |||
Technology Hardware & Equipment | 5.0 | |||
Telecommunication Services | 3.0 | |||
Transportation | 3.5 | |||
Utilities | 2.2 | |||
Money Market Fund | 3.0 | |||
Total Investments | 100.3 | |||
Liabilities Less Other Assets | (0.3 | ) | ||
Net Assets | 100.0 | % |
See Notes to Financial Statements
12
Table of Contents
Harding, Loevner Funds, Inc. |
Institutional Emerging Markets Portfolio Portfolio of Investments April 30, 2022 (unaudited) |
Shares | Value | |||||||
COMMON STOCKS - 96.0% | ||||||||
Brazil - 5.9% | ||||||||
Ambev SA - ADR (Food Beverage & Tobacco) | �� | 15,000,174 | $43,650,507 | |||||
B3 SA - Brasil Bolsa Balcao | 13,623,400 | 36,649,080 | ||||||
Cia Brasileira de Distribuicao - | 1,126,612 | 4,709,238 | ||||||
Localiza Rent a Car SA (Transportation) | 4,828,770 | 51,706,648 | ||||||
Lojas Renner SA (Retailing)* | 3,581,270 | 17,203,888 | ||||||
Magazine Luiza SA (Retailing)* | 10,552,400 | 10,415,905 | ||||||
Ultrapar Participacoes SA (Energy) | 2,940,435 | 7,773,437 | ||||||
WEG SA (Capital Goods) | 5,554,492 | 33,817,132 | ||||||
XP Inc., Class A (Diversified Financials)* | 1,365,228 | 33,598,261 | ||||||
239,524,096 | ||||||||
China - 27.2% | ||||||||
Alibaba Group Holding Ltd. (Retailing)*† | 6,044,816 | 73,878,536 | ||||||
Alibaba Group Holding Ltd. - Sponsored ADR (Retailing)* | 393,181 | 38,173,943 | ||||||
Baidu Inc., Class A (Media & Entertainment)*† | 2,064,558 | 32,409,597 | ||||||
China Tourism Group Duty Free Corp., Ltd., Class A (Retailing)† | 1,278,600 | 34,273,096 | ||||||
Contemporary Amperex Technology Co., Ltd., Class A (Capital Goods)† | 564,300 | 34,147,415 | ||||||
Country Garden Services Holdings Co., Ltd. (Real Estate)† | 4,632,504 | 19,509,099 | ||||||
CSPC Pharmaceutical Group Ltd. (Pharmaceuticals, Biotechnology & Life Sciences)† | 50,664,080 | 51,591,816 | ||||||
ENN Energy Holdings Ltd. (Utilities)† | 5,201,800 | 69,155,218 | ||||||
Fuyao Glass Industry Group Co., | 9,984,200 | 40,721,950 | ||||||
Hefei Meiya Optoelectronic | 7,032,316 | 23,799,388 | ||||||
JD.com Inc., Class A (Retailing)*† | 163,488 | 5,095,999 | ||||||
Jiangsu Hengrui Medicine Co., Ltd., Class A (Pharmaceuticals, Biotechnology & Life Sciences)† | 2,163,920 | 9,537,530 | ||||||
Li Ning Co., Ltd. (Consumer Durables & Apparel)† | 4,015,500 | 31,400,192 | ||||||
Midea Group Co., Ltd., Class A (Consumer Durables & Apparel)† | 8,118,464 | 69,063,144 |
Shares | Value | |||||||
COMMON STOCKS - 96.0% (continued) |
| |||||||
China - 27.2% (continued) | ||||||||
Ping An Insurance Group Co. of China Ltd., Class H (Insurance)† | 10,933,500 | $70,312,336 | ||||||
Sangfor Technologies Inc., Class A (Software & Services)† | 1,237,200 | 16,468,767 | ||||||
SF Holding Co., Ltd., Class A (Transportation)† | 2,662,200 | 20,393,553 | ||||||
Shenzhou International Group Holdings Ltd. (Consumer Durables & Apparel)† | 3,323,000 | 45,683,695 | ||||||
Sino Biopharmaceutical Ltd. | 20,569,135 | 10,710,162 | ||||||
Sunny Optical Technology Group Co., Ltd. (Technology Hardware & Equipment)† | 3,497,100 | 51,165,141 | ||||||
Tencent Holdings Ltd. (Media & Entertainment)† | 3,837,700 | 180,008,779 | ||||||
WuXi AppTec Co., Ltd., Class H (Pharmaceuticals, Biotechnology & Life Sciences)^† | 2,040,200 | 27,325,330 | ||||||
Wuxi Biologics Cayman Inc. (Pharmaceuticals, Biotechnology & Life Sciences)*^† | 6,728,500 | 48,827,971 | ||||||
Zhejiang Sanhua Intelligent Controls Co., Ltd., Class A (Capital Goods)† | 21,563,636 | 53,696,760 | ||||||
ZTO Express Cayman Inc. - ADR (Transportation) | 1,854,019 | 51,004,063 | ||||||
1,108,353,480 | ||||||||
Czech Republic - 0.9% | ||||||||
Komercni banka AS (Banks)† | 1,107,268 | 36,109,718 | ||||||
Egypt - 0.6% | ||||||||
Commercial International Bank Egypt SAE - GDR, Reg S (Banks)† | 10,547,014 | 23,637,154 | ||||||
Hong Kong - 6.0% | ||||||||
AIA Group Ltd. (Insurance)† | 11,489,815 | 112,254,530 | ||||||
ASM Pacific Technology Ltd. (Semiconductors & Semiconductor Equipment)† | 3,950,469 | 39,918,317 | ||||||
Techtronic Industries Co., Ltd. (Capital Goods)† | 6,945,301 | 92,724,053 | ||||||
�� | 244,896,900 | |||||||
India - 10.4% | ||||||||
HDFC Bank Ltd. - ADR (Banks) | 896,297 | 49,484,557 | ||||||
Housing Development Finance Corp., Ltd. (Banks)† | 3,821,120 | 110,016,570 | ||||||
Kotak Mahindra Bank Ltd. (Banks)† | 3,122,662 | 72,539,745 |
See Notes to Financial Statements
13
Table of Contents
Harding, Loevner Funds, Inc. |
Institutional Emerging Markets Portfolio Portfolio of Investments (continued) April 30, 2022 (unaudited) |
Shares | Value | |||||||
COMMON STOCKS - 96.0% (continued) |
| |||||||
India - 10.4% (continued) | ||||||||
Maruti Suzuki India Ltd. (Automobiles & Components)† | 655,483 | $65,706,661 | ||||||
Tata Consultancy Services Ltd. (Software & Services)† | 2,766,921 | 127,318,271 | ||||||
425,065,804 | ||||||||
Indonesia - 4.0% | ||||||||
Astra International Tbk PT (Automobiles & Components)† | 86,304,900 | 45,032,705 | ||||||
Bank Central Asia Tbk PT (Banks)† | 79,033,165 | 44,203,211 | ||||||
Bank Rakyat Indonesia Persero Tbk PT (Banks)† | 226,677,200 | 75,344,514 | ||||||
164,580,430 | ||||||||
Italy - 1.5% | ||||||||
Tenaris SA - ADR (Energy) | 2,051,858 | 61,925,074 | ||||||
Kenya - 1.3% | ||||||||
East African Breweries Ltd. (Food Beverage & Tobacco)† | 2,772,533 | 3,451,199 | ||||||
Safaricom plc (Telecommunication Services)† | 170,793,627 | 49,492,301 | ||||||
52,943,500 | ||||||||
Mexico - 7.4% | ||||||||
Fomento Economico Mexicano SAB de CV - Sponsored ADR (Food Beverage & Tobacco) | 886,096 | 66,226,815 | ||||||
Grupo Aeroportuario del Sureste SAB de CV - ADR (Transportation) | 295,944 | 64,580,900 | ||||||
Grupo Financiero Banorte SAB de CV, Series O (Banks) | 12,177,800 | 80,389,652 | ||||||
Wal-Mart de Mexico SAB de CV (Food & Staples Retailing) | 26,104,200 | 92,307,798 | ||||||
303,505,165 | ||||||||
Panama - 0.6% | ||||||||
Copa Holdings SA, Class A (Transportation)* | 320,036 | 24,121,113 | ||||||
Poland - 0.3% | ||||||||
CD Projekt SA (Media & Entertainment)† | 502,139 | 13,572,239 | ||||||
Russia - 0.0% | ||||||||
LUKOIL PJSC - Sponsored ADR (Energy)‡ | 1,601,095 | — | ||||||
Novatek PJSC - Sponsored GDR, Reg S (Energy)‡ | 602,214 | — | ||||||
Sberbank of Russia PJSC - Sponsored ADR (Banks)‡ | 9,147,062 | — | ||||||
Yandex NV, Class A (Media & Entertainment)*‡ | 1,693,430 | — | ||||||
— |
Shares | Value | |||||||
COMMON STOCKS - 96.0% (continued) |
| |||||||
South Africa - 2.5% | ||||||||
Discovery Ltd. (Insurance)*† | 5,378,653 | $51,664,583 | ||||||
Standard Bank Group Ltd. (Banks)† | 4,644,598 | 49,258,009 | ||||||
100,922,592 | ||||||||
South Korea - 9.4% | ||||||||
Coway Co., Ltd. (Consumer Durables & Apparel)† | 586,896 | 32,856,531 | ||||||
LG Household & Health Care Ltd. (Household & Personal Products)† | 119,810 | 85,168,015 | ||||||
NAVER Corp. (Media & Entertainment)† | 153,344 | 34,686,792 | ||||||
NCSoft Corp. (Media & Entertainment)† | 62,835 | 20,953,962 | ||||||
Samsung Electronics Co., | 160,072 | 209,350,527 | ||||||
383,015,827 | ||||||||
Taiwan - 12.1% | ||||||||
Airtac International Group (Capital Goods)† | 2,271,633 | 61,712,781 | ||||||
Eclat Textile Co., Ltd. | 4,246,031 | 69,197,328 | ||||||
Hon Hai Precision Industry Co., Ltd. (Technology Hardware & Equipment)† | 21,117,545 | 72,249,541 | ||||||
Largan Precision Co., Ltd. (Technology Hardware & Equipment)† | 252,000 | 14,296,451 | ||||||
Silergy Corp. (Semiconductors & Semiconductor Equipment)† | 719,122 | 63,514,484 | ||||||
Taiwan Semiconductor Manufacturing Co., Ltd. (Semiconductors & Semiconductor Equipment)† | 11,747,277 | 214,270,318 | ||||||
495,240,903 | ||||||||
Thailand - 1.4% | ||||||||
SCB X pcl, Reg S (Banks)† | 16,853,870 | 56,589,637 | ||||||
United Kingdom - 2.5% | ||||||||
Bank of Georgia Group plc (Banks)† | 617,791 | 9,514,265 | ||||||
Coca-Cola HBC AG - CDI (Food Beverage & Tobacco)*† | 3,314,423 | 67,011,793 | ||||||
Network International Holdings plc (Software & Services)*^† | 7,327,153 | 23,804,670 | ||||||
100,330,728 | ||||||||
United States - 2.0% | ||||||||
EPAM Systems Inc. (Software & Services)* | 313,416 | 83,052,106 | ||||||
Total Common Stocks (Cost $3,527,931,835) |
| $3,917,386,466 |
See Notes to Financial Statements
14
Table of Contents
Harding, Loevner Funds, Inc. |
Institutional Emerging Markets Portfolio Portfolio of Investments (continued) April 30, 2022 (unaudited) |
Shares | Value | |||||||
PREFERRED STOCKS - 3.0% |
| |||||||
Brazil - 1.6% | ||||||||
Banco Bradesco SA - ADR, 0.95% (Banks)+ | 5,686,897 | $20,472,832 | ||||||
Itau Unibanco Holding | 9,548,134 | 45,735,562 | ||||||
66,208,394 | ||||||||
Colombia - 1.0% | ||||||||
Bancolombia SA - Sponsored ADR, 7.55% (Banks)+ | 1,098,911 | 42,604,779 | ||||||
South Korea - 0.4% | ||||||||
Samsung Electronics Co., Ltd. - GDR, Reg S, 2.46% (Technology Hardware & Equipment)+† | 12,697 | 14,737,554 | ||||||
Total Preferred Stocks (Cost $92,650,062) |
| $123,550,727 | ||||||
SHORT TERM INVESTMENTS - 0.8% |
| |||||||
Northern Institutional Funds - Treasury Portfolio (Premier Shares), 0.18% (Money Market Funds) | 32,648,234 | 32,648,234 | ||||||
Total Short Term Investments (Cost $32,648,234) |
| $32,648,234 | ||||||
Total Investments — 99.8% | ||||||||
(Cost $3,653,230,131) | $4,073,585,427 | |||||||
Other Assets Less Liabilities - 0.2% | 7,832,107 | |||||||
Net Assets — 100.0% | $4,081,417,534 |
Summary of Abbreviations
ADR | American Depositary Receipt |
CDI | Chess Depositary Interest |
GDR | Global Depositary Receipt |
Reg S | Security sold outside United States without registration under the Securities Act of 1933. |
* | Non-income producing security. |
† | Investment categorized as level 2 security as disclosed in Note 2 of the Notes to Financial Statements. |
^ | Security exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities, which represent 3.4% of net assets as of April 30, 2022, are considered liquid and may be resold in transactions exempt from registration, normally to qualified buyers. |
‡ | Investment categorized as level 3 security that is effectively valued at zero. See Note 2 of the Notes to Financial Statements. |
+ | Current yield is disclosed. Dividends are calculated based on a percentage of the issuer’s net income. |
Industry | Percentage of Net Assets | |||
Automobiles & Components | 3.7 | % | ||
Banks | 17.5 | |||
Capital Goods | 7.3 | |||
Consumer Durables & Apparel | 6.1 | |||
Diversified Financials | 1.7 | |||
Energy | 1.7 | |||
Food & Staples Retailing | 2.3 | |||
Food Beverage & Tobacco | 4.5 | |||
Household & Personal Products | 2.1 | |||
Insurance | 5.7 | |||
Media & Entertainment | 6.9 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 3.7 | |||
Real Estate | 0.5 | |||
Retailing | 4.3 | |||
Semiconductors & Semiconductor Equipment | 7.8 | |||
Software & Services | 6.1 | |||
Technology Hardware & Equipment | 8.9 | |||
Telecommunication Services | 1.2 | |||
Transportation | 5.3 | |||
Utilities | 1.7 | |||
Money Market Fund | 0.8 | |||
Total Investments | 99.8 | |||
Other Assets Less Liabilities | 0.2 | |||
Net Assets | 100.0 | % |
See Notes to Financial Statements
15
Table of Contents
Harding, Loevner Funds, Inc. |
Portfolio of Investments April 30, 2022 (unaudited) |
Shares | Value | |||||||
COMMON STOCKS - 96.1% | ||||||||
Brazil - 5.9% | ||||||||
Ambev SA - ADR (Food Beverage & Tobacco) | 9,755,085 | $28,387,297 | ||||||
B3 SA - Brasil Bolsa Balcao (Diversified Financials) | 8,851,509 | 23,811,946 | ||||||
Cia Brasileira de Distribuicao - ADR (Food & Staples Retailing) | 733,321 | 3,065,282 | ||||||
Localiza Rent a Car SA (Transportation) | 3,137,390 | 33,595,288 | ||||||
Lojas Renner SA (Retailing)* | 2,326,888 | 11,178,024 | ||||||
Magazine Luiza SA (Retailing)* | 6,881,868 | 6,792,851 | ||||||
Ultrapar Participacoes SA (Energy) | 1,880,254 | 4,970,706 | ||||||
WEG SA (Capital Goods) | 3,608,848 | 21,971,566 | ||||||
XP Inc., Class A (Diversified Financials)* | 887,025 | 21,829,685 | ||||||
155,602,645 | ||||||||
China - 27.2% | ||||||||
Alibaba Group Holding Ltd. (Retailing)*† | 3,927,437 | 48,000,352 | ||||||
Alibaba Group Holding Ltd. - Sponsored ADR (Retailing)* | 255,460 | 24,802,611 | ||||||
Baidu Inc., Class A (Media & Entertainment)*† | 1,341,414 | 21,057,624 | ||||||
China Tourism Group Duty Free Corp., Ltd., Class A (Retailing)† | 830,807 | 22,269,926 | ||||||
Contemporary Amperex Technology Co., Ltd., Class A (Capital Goods)† | 366,600 | 22,184,020 | ||||||
Country Garden Services Holdings Co., Ltd. (Real Estate)† | 3,009,930 | 12,675,871 | ||||||
CSPC Pharmaceutical Group Ltd. (Pharmaceuticals, Biotechnology & Life Sciences)† | 32,918,680 | 33,521,471 | ||||||
ENN Energy Holdings Ltd. (Utilities)† | 3,379,713 | 44,931,522 | ||||||
Fuyao Glass Industry Group Co., Ltd., Class H (Automobiles & Components)^† | 6,487,096 | 26,458,525 | ||||||
Hefei Meiya Optoelectronic Technology Inc., Class A (Capital Goods)† | 4,569,134 | 15,463,269 | ||||||
JD.com Inc., Class A (Retailing)*† | 105,264 | 3,281,130 | ||||||
Jiangsu Hengrui Medicine Co., Ltd., Class A (Pharmaceuticals, Biotechnology & Life Sciences)† | 1,393,260 | 6,140,827 | ||||||
Li Ning Co., Ltd. (Consumer Durables & Apparel)† | 2,609,000 | 20,401,718 | ||||||
Midea Group Co., Ltd., Class A (Consumer Durables & Apparel)† | 5,274,768 | 44,872,043 |
Shares | Value | |||||||
COMMON STOCKS - 96.1% (continued) |
| |||||||
China - 27.2% (continued) | ||||||||
Ping An Insurance Group Co. of China Ltd., Class H (Insurance)† | 7,103,880 | $45,684,401 | ||||||
Sangfor Technologies Inc., Class A (Software & Services)† | 803,800 | 10,699,640 | ||||||
SF Holding Co., Ltd., Class A (Transportation)† | 1,729,700 | 13,250,217 | ||||||
Shenzhou International Group Holdings Ltd. (Consumer Durables & Apparel)† | 2,158,710 | 29,677,355 | ||||||
Sino Biopharmaceutical Ltd. (Pharmaceuticals, Biotechnology & Life Sciences)† | 13,467,792 | 7,012,557 | ||||||
Sunny Optical Technology Group Co., Ltd. (Technology Hardware & Equipment)† | 2,272,144 | 33,243,135 | ||||||
Tencent Holdings Ltd. (Media & Entertainment)† | 2,493,500 | 116,958,566 | ||||||
WuXi AppTec Co., Ltd., Class H (Pharmaceuticals, Biotechnology & Life Sciences)^† | 1,325,600 | 17,754,366 | ||||||
Wuxi Biologics Cayman Inc. (Pharmaceuticals, Biotechnology & Life Sciences)*^† | 4,371,750 | 31,725,300 | ||||||
Zhejiang Sanhua Intelligent Controls Co., Ltd., Class A (Capital Goods)† | 14,010,499 | 34,888,291 | ||||||
ZTO Express Cayman Inc. - ADR (Transportation) | 1,204,605 | 33,138,684 | ||||||
720,093,421 | ||||||||
Czech Republic - 0.9% | ||||||||
Komercni banka AS (Banks)† | 719,421 | 23,461,429 | ||||||
Egypt - 0.6% | ||||||||
Commercial International Bank Egypt | 6,837,211 | 15,323,030 | ||||||
Hong Kong - 6.0% | ||||||||
AIA Group Ltd. (Insurance)† | 7,465,271 | 72,935,072 | ||||||
ASM Pacific Technology Ltd. (Semiconductors & Semiconductor Equipment)† | 2,566,745 | 25,936,197 | ||||||
Techtronic Industries Co., Ltd. (Capital Goods)† | 4,512,860 | 60,249,465 | ||||||
159,120,734 | ||||||||
India - 10.4% | ||||||||
HDFC Bank Ltd. - ADR (Banks) | 582,348 | 32,151,433 | ||||||
Housing Development Finance Corp., Ltd. (Banks)† | 2,482,682 | 71,480,655 | ||||||
Kotak Mahindra Bank Ltd. (Banks)† | 2,028,875 | 47,130,966 |
See Notes to Financial Statements
16
Table of Contents
Harding, Loevner Funds, Inc. |
Emerging Markets Portfolio Portfolio of Investments (continued) April 30, 2022 (unaudited) |
Shares | Value | |||||||
COMMON STOCKS - 96.1% (continued) |
| |||||||
India - 10.4% (continued) | ||||||||
Maruti Suzuki India Ltd. (Automobiles & Components)† | 425,885 | $42,691,391 | ||||||
Tata Consultancy Services Ltd. (Software & Services)† | 1,797,741 | 82,722,013 | ||||||
276,176,458 | ||||||||
Indonesia - 4.0% | ||||||||
Astra International Tbk PT (Automobiles & Components)† | 55,565,507 | 28,993,314 | ||||||
Bank Central Asia Tbk PT (Banks)† | 50,883,664 | 28,459,209 | ||||||
Bank Rakyat Indonesia Persero Tbk PT (Banks)† | 145,941,036 | 48,508,877 | ||||||
105,961,400 | ||||||||
Italy - 1.5% | ||||||||
Tenaris SA - ADR (Energy) | 1,333,146 | 40,234,346 | ||||||
Kenya - 1.3% | ||||||||
East African Breweries Ltd. | 1,478,450 | 1,840,347 | ||||||
Safaricom plc (Telecommunication Services)† | 109,961,673 | 31,864,516 | ||||||
33,704,863 | ||||||||
Mexico - 7.5% | ||||||||
Fomento Economico Mexicano SAB de CV - Sponsored ADR (Food Beverage & Tobacco) | 575,720 | 43,029,313 | ||||||
Grupo Aeroportuario del Sureste SAB de CV - ADR (Transportation) | 192,283 | 41,959,996 | ||||||
Grupo Financiero Banorte SAB de CV, Series O (Banks) | 7,912,174 | 52,230,856 | ||||||
Wal-Mart de Mexico SAB de CV (Food & Staples Retailing) | 16,960,615 | 59,974,909 | ||||||
197,195,074 | ||||||||
Panama - 0.6% | ||||||||
Copa Holdings SA, Class A (Transportation)* | 207,936 | 15,672,136 | ||||||
Poland - 0.3% | ||||||||
CD Projekt SA (Media & Entertainment)† | 326,253 | 8,818,243 | ||||||
Russia - 0.0% | ||||||||
LUKOIL PJSC - Sponsored ADR (Energy)‡ | 910,483 | — | ||||||
Novatek PJSC - Sponsored GDR, Reg S (Energy)‡ | 342,744 | — | ||||||
Sberbank of Russia PJSC - Sponsored ADR (Banks)‡ | 5,203,159 | — | ||||||
Yandex NV, Class A (Media & Entertainment)*‡ | 968,763 | — | ||||||
— |
Shares | Value | |||||||
COMMON STOCKS - 96.1% (continued) |
| |||||||
South Africa - 2.5% | ||||||||
Discovery Ltd. (Insurance)*† | 3,494,651 | $33,567,826 | ||||||
Standard Bank Group Ltd. (Banks)† | 3,017,717 | 32,004,219 | ||||||
65,572,045 | ||||||||
South Korea - 9.4% | ||||||||
Coway Co., Ltd. (Consumer Durables & Apparel)† | 381,322 | 21,347,765 | ||||||
LG Household & Health Care Ltd. (Household & Personal Products)† | 77,844 | 55,336,107 | ||||||
NAVER Corp. (Media & Entertainment)† | 99,625 | 22,535,421 | ||||||
NCSoft Corp. (Media & Entertainment)† | 40,826 | 13,614,490 | ||||||
Samsung Electronics Co., Ltd. - GDR, Reg S (Technology Hardware & Equipment)† | 104,003 | 136,020,559 | ||||||
248,854,342 | ||||||||
Taiwan - 12.2% | ||||||||
Airtac International Group (Capital Goods)† | 1,475,823 | 40,093,246 | ||||||
Eclat Textile Co., Ltd. (Consumer Durables & Apparel)† | 2,758,846 | 44,960,758 | ||||||
Hon Hai Precision Industry Co., Ltd. (Technology Hardware & Equipment)† | 13,720,146 | 46,940,790 | ||||||
Largan Precision Co., Ltd. (Technology Hardware & Equipment)† | 163,631 | 9,283,106 | ||||||
Silergy Corp. (Semiconductors & Semiconductor Equipment)† | 467,300 | 41,272,994 | ||||||
Taiwan Semiconductor Manufacturing Co., Ltd. (Semiconductors & Semiconductor Equipment)† | 7,632,147 | 139,210,352 | ||||||
321,761,246 | ||||||||
Thailand - 1.3% | ||||||||
SCB X pcl, Reg S (Banks)† | 10,592,691 | 35,566,700 | ||||||
United Kingdom - 2.5% | ||||||||
Bank of Georgia Group plc (Banks)† | 397,751 | 6,125,548 | ||||||
Coca-Cola HBC AG - CDI (Food Beverage & Tobacco)*† | 2,153,467 | 43,539,308 | ||||||
Network International Holdings plc (Software & Services)*^† | 4,691,994 | 15,243,488 | ||||||
64,908,344 | ||||||||
United States - 2.0% | ||||||||
EPAM Systems Inc. (Software & Services)* | 203,635 | 53,961,239 | ||||||
Total Common Stocks (Cost $2,114,155,984) |
| $2,541,987,695 |
See Notes to Financial Statements
17
Table of Contents
Harding, Loevner Funds, Inc. |
Emerging Markets Portfolio Portfolio of Investments (continued) April 30, 2022 (unaudited) |
Shares | Value | |||||||
PREFERRED STOCKS - 3.0% |
| |||||||
Brazil - 1.6% | ||||||||
Banco Bradesco SA - ADR, 0.95% (Banks)+ | 3,661,381 | $13,180,971 | ||||||
Itau Unibanco Holding SA - Sponsored ADR, 0.66% (Banks)+ | 6,203,673 | 29,715,593 | ||||||
42,896,564 | ||||||||
Colombia - 1.0% | ||||||||
Bancolombia SA - Sponsored ADR, 7.55% (Banks)+ | 713,991 | 27,681,431 | ||||||
South Korea - 0.4% | ||||||||
Samsung Electronics Co., Ltd. - GDR, Reg S, 2.46% (Technology Hardware & Equipment)+† | 8,250 | 9,575,870 | ||||||
Total Preferred Stocks (Cost $61,796,504) |
| $80,153,865 | ||||||
SHORT TERM INVESTMENTS - 1.2% |
| |||||||
Northern Institutional Funds - Treasury Portfolio (Premier Shares), 0.18% (Money Market Funds) | 31,846,445 | 31,846,445 | ||||||
Total Short Term Investments (Cost $31,846,445) |
| $31,846,445 | ||||||
Total Investments — 100.3% | ||||||||
(Cost $2,207,798,933) | $2,653,988,005 | |||||||
Liabilities Less Other Assets - (0.3)% | (7,462,631 | ) | ||||||
Net Assets — 100.0% | $2,646,525,374 |
Summary of Abbreviations
ADR | American Depositary Receipt |
CDI | Chess Depositary Interest |
GDR | Global Depositary Receipt |
Reg S | Security sold outside United States without registration under the Securities Act of 1933. |
* | Non-income producing security. |
† | Investment categorized as level 2 security as disclosed in Note 2 of the Notes to Financial Statements. |
^ | Security exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities, which represent 3.5% of net assets as of April 30, 2022, are considered liquid and may be resold in transactions exempt from registration, normally to qualified buyers. |
‡ | Investment categorized as level 3 security that is effectively valued at zero. See Note 2 of the Notes to Financial Statements. |
+ | Current yield is disclosed. Dividends are calculated based on a percentage of the issuer’s net income. |
Industry | Percentage of Net Assets | |||
Automobiles & Components | 3.7 | % | ||
Banks | 17.4 | |||
Capital Goods | 7.3 | |||
Consumer Durables & Apparel | 6.1 | |||
Diversified Financials | 1.7 | |||
Energy | 1.7 | |||
Food & Staples Retailing | 2.4 | |||
Food Beverage & Tobacco | 4.5 | |||
Household & Personal Products | 2.1 | |||
Insurance | 5.7 | |||
Media & Entertainment | 6.9 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 3.7 | |||
Real Estate | 0.5 | |||
Retailing | 4.3 | |||
Semiconductors & Semiconductor Equipment | 7.9 | |||
Software & Services | 6.1 | |||
Technology Hardware & Equipment | 8.9 | |||
Telecommunication Services | 1.2 | |||
Transportation | 5.3 | |||
Utilities | 1.7 | |||
Money Market Fund | 1.2 | |||
Total Investments | 100.3 | |||
Liabilities Less Other Assets | (0.3 | ) | ||
Net Assets | 100.0 | % |
See Notes to Financial Statements
18
Table of Contents
Harding, Loevner Funds, Inc. |
Frontier Emerging Markets Portfolio Portfolio of Investments April 30, 2022 (unaudited) |
Shares | Value | |||||||
COMMON STOCKS - 94.6% |
| |||||||
Bangladesh - 2.7% | ||||||||
GrameenPhone Ltd. (Telecommunication Services)† | 147,326 | $542,754 | ||||||
Square Pharmaceuticals Ltd. (Pharmaceuticals, Biotechnology & Life Sciences)† | 1,785,504 | 4,652,914 | ||||||
5,195,668 | ||||||||
Colombia - 4.4% | ||||||||
Cementos Argos SA - Sponsored ADR (Materials)#† | 137,381 | 1,042,159 | ||||||
Ecopetrol SA - Sponsored ADR (Energy) | 455,980 | 7,400,555 | ||||||
8,442,714 | ||||||||
Croatia - 0.2% | ||||||||
Ericsson Nikola Tesla (Technology Hardware & Equipment)† | 1,700 | 446,820 | ||||||
Egypt - 5.1% | ||||||||
Commercial International Bank Egypt SAE - GDR, Reg S (Banks)† | 2,866,753 | 6,424,746 | ||||||
Edita Food Industries SAE (Food Beverage & Tobacco) | 2,214,224 | 957,853 | ||||||
Integrated Diagnostics Holdings plc (Health Care Equipment & Services)^† | 2,153,737 | 2,358,137 | ||||||
9,740,736 | ||||||||
Iceland - 1.0% | ||||||||
Marel HF (Capital Goods)^† | 363,387 | 1,885,635 | ||||||
Indonesia - 3.4% | ||||||||
Bank Central Asia Tbk PT (Banks)† | 11,642,200 | 6,511,477 | ||||||
Kazakhstan - 4.7% | ||||||||
Halyk Savings Bank of Kazakhstan | 454,535 | 4,442,104 | ||||||
Kaspi.KZ JSC - GDR, Reg S (Diversified Financials)† | 72,323 | 4,597,658 | ||||||
9,039,762 | ||||||||
Kenya - 5.4% | ||||||||
East African Breweries Ltd. (Food Beverage & Tobacco)† | 620,700 | 772,636 | ||||||
Equity Group Holdings plc (Banks)*† | 7,704,500 | 3,187,279 | ||||||
Safaricom plc (Telecommunication Services)† | 22,347,550 | 6,475,837 | ||||||
10,435,752 | ||||||||
Morocco - 2.7% | ||||||||
Itissalat Al-Maghrib (Telecommunication Services)† | 156,447 | 2,103,777 |
Shares | Value | |||||||
COMMON STOCKS - 94.6% (continued) |
| |||||||
Morocco - 2.7% (continued) | ||||||||
Societe d’Exploitation des Ports (Transportation)† | 108,889 | $3,009,900 | ||||||
5,113,677 | ||||||||
Nigeria - 6.2% | ||||||||
Guaranty Trust Holding Co., plc (Banks) | 48,903,727 | 2,828,216 | ||||||
Nestle Nigeria plc (Food Beverage & Tobacco) | 1,394,492 | 4,838,719 | ||||||
Zenith Bank plc (Banks)† | 71,417,980 | 4,216,478 | ||||||
11,883,413 | ||||||||
Pakistan - 0.6% | ||||||||
MCB Bank Ltd. (Banks)† | 1,169,700 | 949,530 | ||||||
Oil & Gas Development Co., Ltd. (Energy)† | 515,000 | 234,322 | ||||||
1,183,852 | ||||||||
Peru - 0.7% | ||||||||
Alicorp SAA (Food Beverage & Tobacco) | 750,417 | 1,001,208 | ||||||
Cementos Pacasmayo SAA (Materials) | 222,899 | 267,188 | ||||||
1,268,396 | ||||||||
Philippines - 18.4% | ||||||||
Bank of the Philippine Islands (Banks)† | 2,525,334 | 4,579,110 | ||||||
BDO Unibank Inc. (Banks)† | 1,203,888 | 2,971,678 | ||||||
International Container Terminal Services Inc. (Transportation)† | 780,030 | 3,195,782 | ||||||
Jollibee Foods Corp. (Consumer Services)† | 1,235,780 | 5,068,529 | ||||||
Robinsons Retail Holdings Inc. (Food & Staples Retailing)† | 1,366,430 | 1,399,798 | ||||||
Security Bank Corp. (Banks)† | 896,340 | 1,765,378 | ||||||
SM Prime Holdings Inc. (Real Estate)† | 10,343,500 | 6,913,745 | ||||||
Universal Robina Corp. (Food Beverage & Tobacco)† | 1,763,240 | 3,455,433 | ||||||
Wilcon Depot Inc. (Retailing)† | 11,098,400 | 5,954,196 | ||||||
35,303,649 | ||||||||
Poland - 0.2% | ||||||||
Allegro.eu SA (Retailing)*^† | 61,608 | 315,247 | ||||||
Romania - 4.6% | ||||||||
Banca Transilvania SA (Banks)† | 13,285,442 | 6,695,241 | ||||||
Societatea Nationala de Gaze Naturale ROMGAZ SA (Energy)† | 228,909 | 2,182,642 | ||||||
8,877,883 | ||||||||
Saudi Arabia - 3.7% | ||||||||
Bupa Arabia for Cooperative Insurance Co. (Insurance)† | 41,163 | 1,821,850 | ||||||
Jarir Marketing Co. (Retailing)† | 37,555 | 1,920,864 |
See Notes to Financial Statements
19
Table of Contents
Harding, Loevner Funds, Inc. |
Frontier Emerging Markets Portfolio Portfolio of Investments (continued) April 30, 2022 (unaudited) |
Shares | Value | |||||||
COMMON STOCKS - 94.6% (continued) |
| |||||||
Saudi Arabia - 3.7% (continued) | ||||||||
Mouwasat Medical Services Co. (Health Care Equipment & Services)† | 51,284 | $3,272,159 | ||||||
7,014,873 | ||||||||
Slovenia - 0.9% | ||||||||
Krka dd Novo mesto (Pharmaceuticals, Biotechnology & Life Sciences)† | 18,539 | 1,757,786 | ||||||
Sri Lanka - 0.0% | ||||||||
Commercial Bank of Ceylon plc (Banks)† | 325,315 | 47,471 | ||||||
Thailand - 0.6% | ||||||||
Home Product Center pcl, Reg S (Retailing) | 2,620,494 | 1,147,662 | ||||||
United Arab Emirates - 5.8% | ||||||||
Agthia Group PJSC (Food Beverage & Tobacco)† | 2,119,592 | 2,465,062 | ||||||
Emaar Properties PJSC (Real Estate)† | 5,013,686 | 8,668,663 | ||||||
11,133,725 | ||||||||
United Kingdom - 3.8% | ||||||||
Baltic Classifieds Group plc (Media & Entertainment)* | 1,093,941 | 1,788,938 | ||||||
Bank of Georgia Group plc (Banks)† | 70,511 | 1,085,902 | ||||||
Network International Holdings plc (Software & Services)*^† | 1,121,556 | 3,643,744 | ||||||
TBC Bank Group plc (Banks)† | 54,947 | 868,933 | ||||||
7,387,517 | ||||||||
United States - 5.4% | ||||||||
EPAM Systems Inc. (Software & Services)* | 14,130 | 3,744,309 | ||||||
Globant SA (Software & Services)* | 30,652 | 6,620,525 | ||||||
10,364,834 | ||||||||
Vietnam - 14.1% | ||||||||
Bank for Foreign Trade of Vietnam JSC (Banks)† | 2,265,295 | 7,964,672 | ||||||
Hoa Phat Group JSC (Materials)† | 3,710,762 | 6,959,233 | ||||||
Sai Gon Cargo Service Corp. (Transportation)† | 476,970 | 3,724,164 | ||||||
Saigon Beer Alcohol Beverage Corp. (Food Beverage & Tobacco)† | 460,910 | 3,244,272 | ||||||
Vietnam Dairy Products JSC (Food Beverage & Tobacco)† | 1,614,194 | 5,210,425 | ||||||
27,102,766 | ||||||||
Total Common Stocks (Cost $151,085,443) |
| $181,601,315 |
Shares | Value | |||||||
PREFERRED STOCKS - 3.6% |
| |||||||
Colombia - 3.6% | ||||||||
Bancolombia SA - Sponsored ADR, 7.55% (Banks)+ | 177,202 | $6,870,122 | ||||||
Total Preferred Stocks (Cost $5,119,667) |
| $6,870,122 | ||||||
SHORT TERM INVESTMENTS - 1.0% |
| |||||||
Northern Institutional Funds - Treasury Portfolio (Premier Shares), 0.18% (Money Market Funds) | 1,886,886 | 1,886,886 | ||||||
Total Short Term Investments (Cost $1,886,886) |
| $1,886,886 | ||||||
Total Investments — 99.2% | ||||||||
(Cost $158,091,996) | $190,358,323 | |||||||
Other Assets Less Liabilities - 0.8% | 1,587,781 | |||||||
Net Assets — 100.0% | $191,946,104 |
Summary of Abbreviations
ADR | American Depositary Receipt |
GDR | Global Depositary Receipt |
Reg S | Security sold outside United States without registration under the Securities Act of 1933. |
† | Investment categorized as level 2 security as disclosed in Note 2 of the Notes to Financial Statements. |
# | Security valued at fair value as determined in good faith under policies and procedures established by and under the supervision of the Portfolio’s Board of Directors as disclosed in Note 2 of the Notes to Financial Statements. |
^ | Security exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities, which represent 4.3% of net assets as of April 30, 2022, are considered liquid and may be resold in transactions exempt from registration, normally to qualified buyers. |
* | Non-income producing security. |
+ | Current yield is disclosed. Dividends are calculated based on a percentage of the issuer’s net income. |
See Notes to Financial Statements
20
Table of Contents
Harding, Loevner Funds, Inc. |
Frontier Emerging Markets Portfolio Portfolio of Investments (continued) April 30, 2022 (unaudited) |
Industry | Percentage of Net Assets | |||
Banks | 32.1 | % | ||
Capital Goods | 1.0 | |||
Consumer Services | 2.6 | |||
Diversified Financials | 2.4 | |||
Energy | 5.1 | |||
Food & Staples Retailing | 0.7 | |||
Food Beverage & Tobacco | 11.4 | |||
Health Care Equipment & Services | 2.9 | |||
Insurance | 1.0 | |||
Materials | 4.3 | |||
Media & Entertainment | 0.9 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 3.3 | |||
Real Estate | 8.1 | |||
Retailing | 4.9 | |||
Software & Services | 7.3 | |||
Technology Hardware & Equipment | 0.2 | |||
Telecommunication Services | 4.8 | |||
Transportation | 5.2 | |||
Money Market Fund | 1.0 | |||
Total Investments | 99.2 | |||
Other Assets Less Liabilities | 0.8 | |||
Net Assets | 100.0 | % |
See Notes to Financial Statements
21
Table of Contents
Harding, Loevner Funds, Inc. |
Global Equity Research Portfolio Portfolio of Investments April 30, 2022 (unaudited) |
Shares | Value | |||||||
COMMON STOCKS - 97.5% |
| |||||||
Australia - 0.6% | ||||||||
BHP Group Ltd. (Materials)† | 676 | $22,721 | ||||||
Cochlear Ltd. (Health Care Equipment & Services)† | 145 | 23,297 | ||||||
46,018 | ||||||||
Brazil - 1.8% | ||||||||
Ambev SA - ADR (Food Beverage & Tobacco) | 7,484 | 21,778 | ||||||
B3 SA - Brasil Bolsa Balcao (Diversified Financials) | 7,000 | 18,831 | ||||||
Cia Brasileira de Distribuicao - ADR (Food & Staples Retailing) | 2,433 | 10,170 | ||||||
Localiza Rent a Car SA (Transportation) | 2,300 | 24,628 | ||||||
Magazine Luiza SA (Retailing)* | 12,800 | 12,634 | ||||||
Raia Drogasil SA (Food & Staples Retailing) | 2,500 | 10,584 | ||||||
Ultrapar Participacoes SA - Sponsored ADR (Energy) | 6,271 | 16,744 | ||||||
WEG SA (Capital Goods) | 3,500 | 21,309 | ||||||
XP Inc., Class A (Diversified Financials)* | 393 | 9,672 | ||||||
146,350 | ||||||||
Canada - 1.7% | ||||||||
Alimentation Couche-Tard Inc. (Food & Staples Retailing) | 1,400 | 62,325 | ||||||
Manulife Financial Corp. (Insurance) | 4,000 | 78,216 | ||||||
140,541 | ||||||||
China - 8.2% | ||||||||
Baidu Inc., Class A (Media & Entertainment)*† | 1,200 | 18,838 | ||||||
China Tourism Group Duty Free Corp., Ltd., Class A (Retailing)† | 500 | 13,403 | ||||||
Contemporary Amperex Technology Co., Ltd., Class A (Capital Goods)† | 100 | 6,051 | ||||||
Country Garden Services Holdings Co., Ltd. (Real Estate)† | 3,000 | 12,634 | ||||||
CSPC Pharmaceutical Group Ltd. (Pharmaceuticals, Biotechnology & Life Sciences)† | 15,360 | 15,641 | ||||||
ENN Energy Holdings Ltd. (Utilities)† | 3,700 | 49,190 | ||||||
Foshan Haitian Flavouring & Food Co., Ltd., Class A (Food Beverage & Tobacco)† | 821 | 10,013 | ||||||
Fuyao Glass Industry Group Co., Ltd., Class H (Automobiles & Components)^† | 3,600 | 14,683 | ||||||
Glodon Co., Ltd., Class A (Software & Services)† | 2,000 | 13,720 |
Shares | Value | |||||||
COMMON STOCKS - 97.5% (continued) |
| |||||||
China - 8.2% (continued) | ||||||||
Guangzhou Tinci Materials Technology Co., Ltd., Class A (Materials)† | 6,200 | $68,303 | ||||||
Haier Smart Home Co., Ltd., Class H (Consumer Durables & Apparel)† | 4,000 | 14,296 | ||||||
Haitian International Holdings Ltd. (Capital Goods)† | 5,000 | 12,352 | ||||||
Hangzhou Tigermed Consulting Co., Ltd., Class H (Pharmaceuticals, Biotechnology & Life Sciences)^† | 1,500 | 14,541 | ||||||
Hongfa Technology Co., Ltd., Class A (Capital Goods)*† | 2,700 | 19,395 | ||||||
Inner Mongolia Yili Industrial Group Co., Ltd., Class A (Food Beverage & Tobacco)† | 2,600 | 14,942 | ||||||
JD.com Inc., Class A (Retailing)*† | 414 | 12,905 | ||||||
Jiangsu Hengrui Medicine Co., Ltd., Class A (Pharmaceuticals, Biotechnology & Life Sciences)† | 2,408 | 10,613 | ||||||
Jiangsu Yanghe Brewery Joint-Stock Co., Ltd., Class A (Food Beverage & Tobacco)† | 600 | 14,233 | ||||||
Kweichow Moutai Co., Ltd., Class A (Food Beverage & Tobacco)† | 100 | 27,291 | ||||||
Li Ning Co., Ltd. (Consumer Durables & Apparel)† | 1,500 | 11,730 | ||||||
LONGi Green Energy Technology Co., Ltd., Class A (Semiconductors & Semiconductor Equipment)† | 1,100 | 11,036 | ||||||
Meituan, Class B (Retailing)*^† | 1,200 | 25,757 | ||||||
Midea Group Co., Ltd., Class A (Consumer Durables & Apparel)† | 1,200 | 10,208 | ||||||
NetEase Inc. - ADR (Media & Entertainment) | 205 | 19,543 | ||||||
Ping An Insurance Group Co. of China Ltd., Class H (Insurance)† | 2,000 | 12,862 | ||||||
SF Holding Co., Ltd., Class A (Transportation)† | 1,900 | 14,555 | ||||||
Shandong Sinocera Functional Material Co., Ltd., Class A (Materials)† | 2,000 | 9,693 | ||||||
Shenzhen Inovance Technology Co., Ltd., Class A (Capital Goods)† | 1,350 | 11,588 | ||||||
Shenzhou International Group Holdings Ltd. (Consumer Durables & Apparel)† | 1,000 | 13,748 |
See Notes to Financial Statements
22
Table of Contents
Harding, Loevner Funds, Inc. |
Global Equity Research Portfolio Portfolio of Investments (continued) April 30, 2022 (unaudited) |
Shares | Value | |||||||
COMMON STOCKS - 97.5% (continued) |
| |||||||
China - 8.2% (continued) | ||||||||
Sino Biopharmaceutical Ltd. (Pharmaceuticals, Biotechnology & Life Sciences)† | 20,000 | $10,414 | ||||||
Songcheng Performance Development Co., Ltd., Class A (Consumer Services)† | 4,200 | 7,857 | ||||||
StarPower Semiconductor Ltd., Class A (Semiconductors & Semiconductor Equipment)† | 300 | 15,296 | ||||||
Sunny Optical Technology Group Co., Ltd. (Technology Hardware & Equipment)† | 600 | 8,778 | ||||||
TravelSky Technology Ltd., Class H (Software & Services)† | 11,000 | 16,467 | ||||||
Trip.com Group Ltd. (Consumer Services)*† | 514 | 12,235 | ||||||
Wuliangye Yibin Co., Ltd., Class A (Food Beverage & Tobacco)† | 500 | 12,056 | ||||||
WuXi AppTec Co., Ltd., Class A (Pharmaceuticals, Biotechnology & Life Sciences)† | 1,286 | 19,613 | ||||||
Wuxi Biologics Cayman Inc. (Pharmaceuticals, Biotechnology & Life Sciences)*^† | 2,500 | 18,142 | ||||||
Yonyou Network Technology Co., Ltd., Class A (Software & Services)† | 3,500 | 9,954 | ||||||
Zhejiang Sanhua Intelligent Controls Co., Ltd., Class A (Capital Goods)† | 4,400 | 10,957 | ||||||
ZTO Express Cayman Inc. - ADR (Transportation) | 463 | 12,737 | ||||||
658,270 | ||||||||
Colombia - 0.9% | ||||||||
Cementos Argos SA (Materials) | 9,486 | 14,392 | ||||||
Ecopetrol SA - Sponsored ADR (Energy) | 3,708 | 60,181 | ||||||
74,573 | ||||||||
Czech Republic - 0.2% | ||||||||
Komercni banka AS (Banks)† | 493 | 16,077 | ||||||
Denmark - 1.1% | ||||||||
Ambu A/S, Class B (Health Care Equipment & Services)† | 852 | 11,198 | ||||||
Chr Hansen Holding A/S (Materials)† | 249 | 19,404 | ||||||
Coloplast A/S, Class B (Health Care Equipment & Services)† | 193 | 26,058 |
Shares | Value | |||||||
COMMON STOCKS - 97.5% (continued) |
| |||||||
Denmark - 1.1% (continued) | ||||||||
Genmab A/S (Pharmaceuticals, Biotechnology & Life Sciences)*† | 39 | $13,757 | ||||||
Novozymes A/S, Class B (Materials)† | 254 | 17,648 | ||||||
88,065 | ||||||||
Egypt - 0.2% | ||||||||
Commercial International Bank Egypt SAE - GDR, Reg S (Banks)† | 6,085 | 13,637 | ||||||
Finland - 0.3% | ||||||||
Kone OYJ, Class B (Capital Goods)† | 211 | 10,125 | ||||||
Neste OYJ (Energy)† | 314 | 13,498 | ||||||
23,623 | ||||||||
France - 4.5% | ||||||||
Air Liquide SA (Materials)† | 330 | 56,972 | ||||||
Alten SA (Software & Services)† | 286 | 38,305 | ||||||
Dassault Systemes SE (Software & Services)† | 650 | 28,915 | ||||||
IPSOS (Media & Entertainment)† | 1,082 | 51,876 | ||||||
Kering SA (Consumer Durables & Apparel)† | 60 | 31,869 | ||||||
LISI (Capital Goods)† | 1,514 | 33,990 | ||||||
L’Oreal SA (Household & Personal Products)† | 49 | 17,826 | ||||||
Rubis SCA (Utilities)† | 1,135 | 30,179 | ||||||
Safran SA (Capital Goods)† | 327 | 34,802 | ||||||
Sartorius Stedim Biotech (Pharmaceuticals, Biotechnology & Life Sciences)† | 41 | 13,345 | ||||||
Schneider Electric SE (Capital Goods)† | 159 | 22,646 | ||||||
360,725 | ||||||||
Germany - 3.7% | ||||||||
adidas AG (Consumer Durables & Apparel)† | 60 | 12,221 | ||||||
Allianz SE, Reg S (Insurance)† | 230 | 52,386 | ||||||
Bayerische Motoren Werke AG (Automobiles & Components)† | 715 | 59,201 | ||||||
Bechtle AG (Software & Services)† | 246 | 11,486 | ||||||
Brenntag SE (Capital Goods)† | 257 | 20,055 | ||||||
Carl Zeiss Meditec AG (Bearer) (Health Care Equipment & Services)† | 134 | 16,925 | ||||||
FUCHS PETROLUB SE (Materials)† | 685 | 18,259 | ||||||
HelloFresh SE (Food & Staples Retailing)*† | 415 | 17,748 |
See Notes to Financial Statements
23
Table of Contents
Harding, Loevner Funds, Inc. |
Global Equity Research Portfolio Portfolio of Investments (continued) April 30, 2022 (unaudited) |
Shares | Value | |||||||
COMMON STOCKS - 97.5% (continued) |
| |||||||
Germany - 3.7% (continued) | ||||||||
Infineon Technologies AG (Semiconductors & Semiconductor Equipment)† | 438 | $12,671 | ||||||
Nemetschek SE (Software & Services)† | 198 | 15,898 | ||||||
SAP SE - Sponsored ADR (Software & Services) | 110 | 11,088 | ||||||
Scout24 SE (Media & Entertainment)^† | 235 | 14,994 | ||||||
Symrise AG (Materials)† | 160 | 19,131 | ||||||
TeamViewer AG (Software & Services)*^† | 1,400 | 16,982 | ||||||
299,045 | ||||||||
Hong Kong - 0.7% | ||||||||
AIA Group Ltd. (Insurance)† | 1,600 | 15,632 | ||||||
ASM Pacific Technology Ltd. (Semiconductors & Semiconductor Equipment)† | 1,800 | 18,189 | ||||||
Techtronic Industries Co., Ltd. (Capital Goods)† | 2,000 | 26,701 | ||||||
60,522 | ||||||||
Iceland - 0.2% | ||||||||
Marel HF (Capital Goods)^† | 2,669 | 13,850 | ||||||
India - 1.3% | ||||||||
Asian Paints Ltd. (Materials)† | 460 | 19,321 | ||||||
HDFC Bank Ltd. - ADR (Banks) | 204 | 11,263 | ||||||
Hero MotoCorp Ltd. (Automobiles & Components)† | 419 | 13,552 | ||||||
Housing Development Finance Corp., Ltd. (Banks)† | 426 | 12,265 | ||||||
ICICI Bank Ltd. - Sponsored ADR (Banks) | 1,034 | 19,687 | ||||||
Kotak Mahindra Bank Ltd. (Banks)† | 608 | 14,124 | ||||||
Tata Consultancy Services Ltd. (Software & Services)† | 327 | 15,047 | ||||||
105,259 | ||||||||
Indonesia - 0.4% | ||||||||
Astra International Tbk PT (Automobiles & Components)† | 33,400 | 17,428 | ||||||
Bank Rakyat Indonesia Persero Tbk PT (Banks)† | 53,600 | 17,816 | ||||||
35,244 | ||||||||
Ireland - 0.2% | ||||||||
Ryanair Holdings plc - Sponsored ADR (Transportation)* | 196 | 17,115 | ||||||
Israel - 0.3% | ||||||||
CyberArk Software Ltd. (Software & Services)* | 140 | 22,000 |
Shares | Value | |||||||
COMMON STOCKS - 97.5% (continued) |
| |||||||
Italy - 0.9% | ||||||||
Amplifon SpA (Health Care Equipment & Services)† | 387 | $15,399 | ||||||
DiaSorin SpA (Health Care Equipment & Services)† | 148 | 19,346 | ||||||
FinecoBank Banca Fineco SpA (Banks)† | 1,194 | 16,449 | ||||||
Reply SpA (Software & Services)† | 131 | 19,221 | ||||||
70,415 | ||||||||
Japan - 7.2% | ||||||||
BML Inc. (Health Care Equipment & Services)† | 1,100 | 28,290 | ||||||
Chugai Pharmaceutical Co., Ltd. (Pharmaceuticals, Biotechnology & Life Sciences)† | 600 | 18,006 | ||||||
Daifuku Co., Ltd. (Capital Goods)† | 200 | 12,345 | ||||||
FANUC Corp. (Capital Goods)† | 100 | 15,467 | ||||||
Fast Retailing Co., Ltd. (Retailing)† | 40 | 18,330 | ||||||
GMO Payment Gateway Inc. (Software & Services)† | 200 | 16,887 | ||||||
Hakuhodo DY Holdings Inc. (Media & Entertainment)† | 3,100 | 36,651 | ||||||
Kakaku.com Inc. (Media & Entertainment)† | 500 | 10,515 | ||||||
Keyence Corp. (Technology Hardware & Equipment)† | 40 | 16,138 | ||||||
Komatsu Ltd. (Capital Goods)† | 900 | 20,191 | ||||||
Kubota Corp. (Capital Goods)† | 2,300 | 39,173 | ||||||
M3 Inc. (Health Care Equipment & Services)† | 400 | 12,879 | ||||||
Makita Corp. (Capital Goods)† | 1,200 | 35,653 | ||||||
MISUMI Group Inc. (Capital Goods)† | 700 | 17,607 | ||||||
Nitori Holdings Co., Ltd. (Retailing)† | 400 | 40,694 | ||||||
Recruit Holdings Co., Ltd. (Commercial & Professional Services)† | 300 | 11,066 | ||||||
Rinnai Corp. (Consumer Durables & Apparel)† | 540 | 34,212 | ||||||
Shimano Inc. (Consumer Durables & Apparel)† | 100 | 17,477 | ||||||
Shionogi & Co., Ltd. (Pharmaceuticals, Biotechnology & Life Sciences)† | 900 | 50,307 | ||||||
Shiseido Co., Ltd. (Household & Personal Products)† | 300 | 14,138 | ||||||
SMC Corp. (Capital Goods)† | 40 | 19,334 | ||||||
Stanley Electric Co., Ltd. (Automobiles & Components)† | 2,600 | 44,761 |
See Notes to Financial Statements
24
Table of Contents
Harding, Loevner Funds, Inc. |
Global Equity Research Portfolio Portfolio of Investments (continued) April 30, 2022 (unaudited) |
�� | Shares | Value | ||||||
COMMON STOCKS - 97.5% (continued) |
| |||||||
Japan - 7.2% (continued) | ||||||||
Sugi Holdings Co., Ltd. (Food & Staples Retailing)† | 400 | $17,204 | ||||||
Sysmex Corp. (Health Care Equipment & Services)† | 200 | 12,953 | ||||||
UT Group Co., Ltd. (Commercial & Professional Services)† | 1,100 | 24,863 | ||||||
585,141 | ||||||||
Kazakhstan - 0.4% | ||||||||
Halyk Savings Bank of Kazakhstan JSC - GDR, Reg S (Banks)† | 1,120 | 10,945 | ||||||
Kaspi.KZ JSC - GDR, Reg S (Diversified Financials)† | 343 | 21,805 | ||||||
32,750 | ||||||||
Mexico - 0.5% | ||||||||
Fomento Economico Mexicano SAB de CV - Sponsored ADR (Food Beverage & Tobacco) | 192 | 14,350 | ||||||
Wal-Mart de Mexico SAB de CV (Food & Staples Retailing) | 6,800 | 24,046 | ||||||
38,396 | ||||||||
Netherlands - 0.9% | ||||||||
Adyen NV (Software & Services)*^† | 8 | 13,380 | ||||||
ASM International NV (Semiconductors & Semiconductor Equipment)† | 37 | 11,049 | ||||||
ASML Holding NV, Reg S (Semiconductors & Semiconductor Equipment) | 90 | 50,739 | ||||||
75,168 | ||||||||
Norway - 0.2% | ||||||||
Adevinta ASA (Media & Entertainment)*† | 1,658 | 12,948 | ||||||
Panama - 0.2% | ||||||||
Copa Holdings SA, Class A (Transportation)* | 216 | 16,280 | ||||||
Peru - 0.2% | ||||||||
Credicorp Ltd. (Banks) | 126 | 17,500 | ||||||
Philippines - 1.8% | ||||||||
Bank of the Philippine Islands (Banks)† | 12,490 | 22,648 | ||||||
BDO Unibank Inc. (Banks)† | 10,070 | 24,857 | ||||||
International Container Terminal Services Inc. (Transportation)† | 4,970 | 20,362 | ||||||
Jollibee Foods Corp. (Consumer Services)† | 4,720 | 19,359 | ||||||
Robinsons Retail Holdings Inc. (Food & Staples Retailing)† | 10,510 | 10,767 | ||||||
Security Bank Corp. (Banks)† | 8,660 | 17,056 |
Shares | Value | |||||||
COMMON STOCKS - 97.5% (continued) |
| |||||||
Philippines - 1.8% (continued) | ||||||||
SM Prime Holdings Inc. (Real Estate)† | 27,500 | $18,381 | ||||||
Universal Robina Corp. (Food Beverage & Tobacco)† | 6,400 | 12,542 | ||||||
145,972 | ||||||||
Poland - 0.4% | ||||||||
Allegro.eu SA (Retailing)*^† | 3,048 | 15,596 | ||||||
ING Bank Slaski SA (Banks)† | 426 | 18,898 | ||||||
34,494 | ||||||||
Russia - 0.0% | ||||||||
LUKOIL PJSC - Sponsored ADR (Energy)‡ | 278 | — | ||||||
Novatek PJSC - Sponsored GDR, Reg S (Energy)‡ | 89 | — | ||||||
Sberbank of Russia PJSC - Sponsored ADR (Banks)‡ | 1,278 | — | ||||||
Yandex NV, Class A (Media & Entertainment)*‡ | 383 | — | ||||||
— | ||||||||
Saudi Arabia - 0.9% | ||||||||
Bupa Arabia for Cooperative Insurance Co. (Insurance)† | 401 | 17,748 | ||||||
Jarir Marketing Co. (Retailing)† | 252 | 12,889 | ||||||
Mouwasat Medical Services Co. (Health Care Equipment & Services)† | 252 | 16,079 | ||||||
Saudi National Bank (Banks)† | 1,118 | 23,382 | ||||||
70,098 | ||||||||
Singapore - 1.7% | ||||||||
DBS Group Holdings Ltd. (Banks)† | 2,418 | 58,567 | ||||||
Oversea-Chinese Banking Corp., Ltd. (Banks)† | 9,224 | 81,788 | ||||||
140,355 | ||||||||
Slovenia - 0.2% | ||||||||
Krka dd Novo mesto (Pharmaceuticals, Biotechnology & Life Sciences)† | 152 | 14,247 | ||||||
South Africa - 0.2% | ||||||||
Discovery Ltd. (Insurance)*† | 1,831 | 17,588 | ||||||
South Korea - 0.9% | ||||||||
Cheil Worldwide Inc. (Media & Entertainment)† | 1,001 | 20,007 | ||||||
Coway Co., Ltd. (Consumer Durables & Apparel)† | 184 | 10,301 | ||||||
LG Household & Health Care Ltd. (Household & Personal Products)† | 19 | 13,506 | ||||||
NAVER Corp. (Media & Entertainment)† | 55 | 12,441 |
See Notes to Financial Statements
25
Table of Contents
Harding, Loevner Funds, Inc. |
Global Equity Research Portfolio Portfolio of Investments (continued) April 30, 2022 (unaudited) |
Shares | Value | |||||||
COMMON STOCKS - 97.5% (continued) |
| |||||||
South Korea - 0.9% (continued) | ||||||||
NCSoft Corp. (Media & Entertainment)† | 38 | $12,672 | ||||||
68,927 | ||||||||
Spain - 1.7% | ||||||||
Amadeus IT Group SA (Software & Services)*† | 248 | 15,464 | ||||||
Banco Bilbao Vizcaya Argentaria SA (Banks)† | 6,148 | 32,350 | ||||||
Banco Santander SA - Sponsored ADR (Banks) | 14,529 | 41,844 | ||||||
Bankinter SA (Banks)† | 8,132 | 48,018 | ||||||
137,676 | ||||||||
Sweden - 2.4% | ||||||||
Alfa Laval AB (Capital Goods)† | 887 | 24,619 | ||||||
Assa Abloy AB, Class B (Capital Goods)† | 664 | 16,751 | ||||||
Atlas Copco AB, Class A (Capital Goods)† | 544 | 24,636 | ||||||
Epiroc AB, Class A (Capital Goods)† | 1,467 | 29,834 | ||||||
Evolution AB (Consumer Services)^† | 112 | 11,517 | ||||||
Hexagon AB, Class B (Technology Hardware & Equipment)† | 1,890 | 24,437 | ||||||
Intrum AB (Commercial & Professional Services)† | 1,097 | 26,257 | ||||||
Skandinaviska Enskilda Banken AB, Class A (Banks)† | 1,670 | 18,674 | ||||||
Thule Group AB (Consumer Durables & Apparel)^† | 390 | 13,477 | ||||||
190,202 | ||||||||
Switzerland - 2.8% | ||||||||
Alcon Inc. (Health Care Equipment & Services) | 661 | 47,070 | ||||||
Cie Financiere Richemont SA, Class A, Reg S (Consumer Durables & Apparel)† | 244 | 28,363 | ||||||
Lonza Group AG, Reg S (Pharmaceuticals, Biotechnology & Life Sciences)† | 60 | 35,226 | ||||||
SGS SA, Reg S (Commercial & Professional Services)† | 8 | 20,544 | ||||||
Sonova Holding AG, Reg S (Health Care Equipment & Services)† | 68 | 24,484 | ||||||
Straumann Holding AG, Reg S (Health Care Equipment & Services)† | 150 | 17,687 | ||||||
Tecan Group AG, Reg S (Pharmaceuticals, Biotechnology & Life Sciences)† | 32 | 9,617 | ||||||
Temenos AG, Reg S (Software & Services)† | 174 | 17,525 |
Shares | Value | |||||||
COMMON STOCKS - 97.5% (continued) |
| |||||||
Switzerland - 2.8% (continued) | ||||||||
VAT Group AG (Capital Goods)^† | 96 | $29,792 | ||||||
230,308 | ||||||||
Taiwan - 1.8% | ||||||||
Advantech Co., Ltd. (Technology Hardware & Equipment)† | 999 | 12,375 | ||||||
Airtac International Group (Capital Goods)† | 418 | 11,356 | ||||||
Chipbond Technology Corp. (Semiconductors & Semiconductor Equipment)† | 14,000 | 31,425 | ||||||
Eclat Textile Co., Ltd. (Consumer Durables & Apparel)† | 600 | 9,778 | ||||||
Hon Hai Precision Industry Co., Ltd. (Technology Hardware & Equipment)† | 4,000 | 13,685 | ||||||
Largan Precision Co., Ltd. (Technology Hardware & Equipment)† | 210 | 11,914 | ||||||
Silergy Corp. (Semiconductors & Semiconductor Equipment)† | 200 | 17,664 | ||||||
Taiwan Semiconductor Manufacturing Co., Ltd. (Semiconductors & Semiconductor Equipment)† | 2,000 | 36,480 | ||||||
144,677 | ||||||||
Thailand - 0.3% | ||||||||
SCB X pcl, Reg S (Banks)† | 6,200 | 20,818 | ||||||
Turkey - 0.2% | ||||||||
BIM Birlesik Magazalar AS (Food & Staples Retailing)† | 2,570 | 14,369 | ||||||
United Arab Emirates - 0.5% | ||||||||
Agthia Group PJSC (Food Beverage & Tobacco)† | 8,681 | 10,096 | ||||||
Emaar Properties PJSC (Real Estate)† | 18,834 | 32,564 | ||||||
42,660 | ||||||||
United Kingdom - 5.1% | ||||||||
Abcam plc (Pharmaceuticals, Biotechnology & Life Sciences)*† | 872 | 13,609 | ||||||
Coca-Cola HBC AG - CDI (Food Beverage & Tobacco)*† | 576 | 11,646 | ||||||
Compass Group plc (Consumer Services)† | 967 | 20,368 | ||||||
Dechra Pharmaceuticals plc (Pharmaceuticals, Biotechnology & Life Sciences)† | 435 | 19,679 | ||||||
Diploma plc (Capital Goods)† | 1,655 | 56,615 | ||||||
Grafton Group plc (Capital Goods)† | 2,919 | 35,514 | ||||||
Rathbones Group plc (Diversified Financials)† | 1,554 | 40,831 |
See Notes to Financial Statements
26
Table of Contents
Harding, Loevner Funds, Inc. |
Global Equity Research Portfolio Portfolio of Investments (continued) April 30, 2022 (unaudited) |
Shares | Value | |||||||
COMMON STOCKS - 97.5% (continued) | ||||||||
United Kingdom - 5.1% (continued) | ||||||||
Reckitt Benckiser Group plc (Household & Personal Products)† | 152 | $11,858 | ||||||
Rightmove plc (Media & Entertainment)† | 2,075 | 15,951 | ||||||
Rio Tinto plc (Materials)† | 994 | 70,506 | ||||||
Shell plc - ADR (Energy) | 1,324 | 70,741 | ||||||
Spirax-Sarco Engineering plc (Capital Goods)† | 154 | 23,292 | ||||||
Standard Chartered plc (Banks)† | 3,634 | 24,895 | ||||||
415,505 | ||||||||
United States - 39.8% | ||||||||
Abbott Laboratories (Health Care Equipment & Services) | 390 | 44,265 | ||||||
AbbVie Inc. (Pharmaceuticals, Biotechnology & Life Sciences) | 637 | 93,563 | ||||||
ABIOMED Inc. (Health Care Equipment & Services)* | 55 | 15,762 | ||||||
Accenture plc, Class A (Software & Services) | 70 | 21,025 | ||||||
Adobe Inc. (Software & Services)* | 90 | 35,635 | ||||||
Air Products and Chemicals Inc. (Materials) | 66 | 15,449 | ||||||
Align Technology Inc. (Health Care Equipment & Services)* | 32 | 9,277 | ||||||
Allegion plc (Capital Goods) | 136 | 15,537 | ||||||
Alphabet Inc., Class A (Media & Entertainment)* | 34 | 77,594 | ||||||
Altair Engineering Inc., Class A (Software & Services)* | 277 | 15,047 | ||||||
Amazon.com Inc. (Retailing)* | 14 | 34,799 | ||||||
AMETEK Inc. (Capital Goods) | 147 | 18,560 | ||||||
Amphenol Corp., Class A (Technology Hardware & Equipment) | 288 | 20,592 | ||||||
ANSYS Inc. (Software & Services)* | 78 | 21,504 | ||||||
Apple Inc. (Technology Hardware & Equipment) | 260 | 40,989 | ||||||
Applied Materials Inc. (Semiconductors & Semiconductor Equipment) | 615 | 67,865 | ||||||
Atlassian Corp. plc, Class A (Software & Services)* | 46 | 10,342 | ||||||
Automatic Data Processing Inc. (Software & Services) | 92 | 20,073 | ||||||
BorgWarner Inc. (Automobiles & Components) | 1,850 | 68,135 | ||||||
Bristol-Myers Squibb Co. (Pharmaceuticals, Biotechnology & Life Sciences) | 1,086 | 81,743 |
Shares | Value | |||||||
COMMON STOCKS - 97.5% (continued) | ||||||||
United States - 39.8% (continued) | ||||||||
Broadcom Inc. (Semiconductors & Semiconductor Equipment) | 62 | $34,372 | ||||||
Cisco Systems Inc. (Technology Hardware & Equipment) | 907 | 44,425 | ||||||
Cognex Corp. (Technology Hardware & Equipment) | 230 | 15,555 | ||||||
Copart Inc. (Commercial & Professional Services)* | 542 | 61,598 | ||||||
Costco Wholesale Corp. (Food & Staples Retailing) | 35 | 18,610 | ||||||
Danaher Corp. (Pharmaceuticals, Biotechnology & Life Sciences) | 298 | 74,837 | ||||||
Deere & Co. (Capital Goods) | 180 | 67,959 | ||||||
Domino’s Pizza Inc. (Consumer Services) | 42 | 14,196 | ||||||
eBay Inc. (Retailing) | 259 | 13,447 | ||||||
Ecolab Inc. (Materials) | 84 | 14,225 | ||||||
Edwards Lifesciences Corp. (Health Care Equipment & Services)* | 212 | 22,425 | ||||||
Elanco Animal Health Inc. (Pharmaceuticals, Biotechnology & Life Sciences)* | 3,065 | 77,575 | ||||||
Electronic Arts Inc. (Media & Entertainment) | 143 | 16,881 | ||||||
Emerson Electric Co. (Capital Goods) | 188 | 16,954 | ||||||
EnerSys (Capital Goods) | 200 | 13,092 | ||||||
EPAM Systems Inc. (Software & Services)* | 31 | 8,215 | ||||||
Equifax Inc. (Commercial & Professional Services) | 78 | 15,875 | ||||||
Estee Lauder Cos., Inc., Class A (Household & Personal Products) | 58 | 15,315 | ||||||
Etsy Inc. (Retailing)* | 183 | 17,054 | ||||||
First Republic Bank (Banks) | 384 | 57,300 | ||||||
Gartner Inc. (Software & Services)* | 311 | 90,361 | ||||||
Globant SA (Software & Services)* | 74 | 15,983 | ||||||
Guidewire Software Inc. (Software & Services)* | 152 | 13,215 | ||||||
HEICO Corp. (Capital Goods) | 290 | 40,957 | ||||||
Helmerich & Payne Inc. (Energy) | 501 | 23,061 | ||||||
IDEXX Laboratories Inc. (Health Care Equipment & Services)* | 70 | 30,134 | ||||||
Illumina Inc. (Pharmaceuticals, Biotechnology & Life Sciences)* | 60 | 17,799 |
See Notes to Financial Statements
27
Table of Contents
Harding, Loevner Funds, Inc. |
Global Equity Research Portfolio Portfolio of Investments (continued) April 30, 2022 (unaudited) |
Shares | Value | |||||||
COMMON STOCKS - 97.5% (continued) |
| |||||||
United States - 39.8% (continued) | ||||||||
Intuitive Surgical Inc. (Health Care Equipment & Services)* | 63 | $15,076 | ||||||
IPG Photonics Corp. (Technology Hardware & Equipment)* | 179 | 16,912 | ||||||
IQVIA Holdings Inc. (Pharmaceuticals, Biotechnology & Life Sciences)* | 100 | 21,799 | ||||||
JPMorgan Chase & Co. (Banks) | 589 | 70,303 | ||||||
Linde plc (Materials)† | 169 | 53,969 | ||||||
Malibu Boats Inc., Class A (Consumer Durables & Apparel)* | 517 | 26,000 | ||||||
Mastercard Inc., Class A (Software & Services) | 52 | 18,896 | ||||||
McDonald’s Corp. (Consumer Services) | 85 | 21,179 | ||||||
MercadoLibre Inc. (Retailing)* | 12 | 11,684 | ||||||
Merck & Co., Inc. (Pharmaceuticals, Biotechnology & Life Sciences) | 734 | 65,098 | ||||||
Meta Platforms Inc., Class A (Media & Entertainment)* | 270 | 54,127 | ||||||
Microsoft Corp. (Software & Services) | 290 | 80,481 | ||||||
Monster Beverage Corp. (Food Beverage & Tobacco)* | 204 | 17,479 | ||||||
Neurocrine Biosciences Inc. | ||||||||
(Pharmaceuticals, Biotechnology & Life Sciences)* | 445 | 40,063 | ||||||
NIKE Inc., Class B (Consumer Durables & Apparel) | 156 | 19,453 | ||||||
Ollie’s Bargain Outlet Holdings Inc. (Retailing)* | 815 | 39,161 | ||||||
Palo Alto Networks Inc. (Software & Services)* | 52 | 29,187 | ||||||
PayPal Holdings Inc. (Software & Services)* | 161 | 14,157 | ||||||
Penumbra Inc. (Health Care Equipment & Services)* | 62 | 10,699 | ||||||
Pinterest Inc., Class A (Media & Entertainment)* | 566 | 11,614 | ||||||
Pool Corp. (Retailing) | 103 | 41,738 | ||||||
Procter & Gamble Co. (Household & Personal Products) | 137 | 21,995 | ||||||
Reinsurance Group of America Inc. (Insurance) | 430 | 46,148 | ||||||
Repligen Corp. (Pharmaceuticals, Biotechnology & Life Sciences)* | 97 | 15,252 | ||||||
ResMed Inc. (Health Care Equipment & Services) | 81 | 16,198 | ||||||
Shares | Value | |||||||
COMMON STOCKS - 97.5% (continued) |
| |||||||
United States - 39.8% (continued) | ||||||||
Rockwell Automation Inc. (Capital Goods) | 55 | $13,897 | ||||||
Rollins Inc. (Commercial & Professional Services) | 1,132 | 37,967 | ||||||
Roper Technologies Inc. (Software & Services) | 47 | 22,086 | ||||||
Salesforce Inc. (Software & Services)* | 130 | 22,872 | ||||||
Schlumberger NV (Energy) | 698 | 27,229 | ||||||
Sensata Technologies Holding plc (Capital Goods)* | 328 | 14,894 | ||||||
ServiceNow Inc. (Software & Services)* | 54 | 25,817 | ||||||
Signature Bank (Banks) | 150 | 36,337 | ||||||
Starbucks Corp. (Consumer Services) | 578 | 43,142 | ||||||
SVB Financial Group (Banks)* | 144 | 70,220 | ||||||
Synopsys Inc. (Software & Services)* | 269 | 77,146 | ||||||
Teradyne Inc. (Semiconductors & Semiconductor Equipment) | 618 | 65,174 | ||||||
Texas Instruments Inc. (Semiconductors & Semiconductor Equipment) | 115 | 19,579 | ||||||
Thermo Fisher Scientific Inc. (Pharmaceuticals, Biotechnology & Life Sciences) | 156 | 86,255 | ||||||
TJX Cos., Inc. (Retailing) | 274 | 16,791 | ||||||
UnitedHealth Group Inc. (Health Care Equipment & Services) | 169 | 85,945 | ||||||
Vertex Pharmaceuticals Inc. (Pharmaceuticals, Biotechnology & Life Sciences)* | 307 | 83,879 | ||||||
Visa Inc., Class A (Software & Services) | 76 | 16,198 | ||||||
Walt Disney Co. (Media & Entertainment)* | 98 | 10,940 | ||||||
Workday Inc., Class A (Software & Services)* | 140 | 28,938 | ||||||
Zoetis Inc. (Pharmaceuticals, Biotechnology & Life Sciences) | 261 | 46,262 | ||||||
3,209,412 | ||||||||
Total Common Stocks (Cost $7,160,146) | $7,866,820 | |||||||
| ||||||||
PREFERRED STOCKS - 1.1% | ||||||||
Colombia - 0.2% | ||||||||
Bancolombia SA - Sponsored ADR, 7.55% (Banks)+ | 360 | 13,957 |
See Notes to Financial Statements
28
Table of Contents
Harding, Loevner Funds, Inc. |
Global Equity Research Portfolio Portfolio of Investments (continued) April 30, 2022 (unaudited) |
Shares | Value | |||||||
PREFERRED STOCKS - 1.1% (continued) |
| |||||||
Germany - 0.1% | ||||||||
Sartorius AG, 0.36% (Health Care Equipment & Services)+† | 33 | $12,500 | ||||||
South Korea - 0.8% | ||||||||
Samsung Electronics Co., Ltd. - GDR, Reg S, 2.46% (Technology Hardware & Equipment)+† | 56 | 65,000 | ||||||
Total Preferred Stocks (Cost $93,945) | $91,457 | |||||||
| ||||||||
SHORT TERM INVESTMENTS - 1.5% |
| |||||||
Northern Institutional Funds - Treasury Portfolio (Premier Shares), 0.18% (Money Market Funds) | 118,596 | 118,596 | ||||||
Total Short Term Investments (Cost $118,596) |
| $118,596 | ||||||
| ||||||||
Total Investments — 100.1% | ||||||||
(Cost $7,372,687) | $8,076,873 | |||||||
Liabilities Less Other Assets - (0.1)% | (7,559 | ) | ||||||
Net Assets — 100.0% | $8,069,314 |
Summary of Abbreviations | ||
ADR | American Depositary Receipt | |
CDI | Chess Depositary Interest | |
GDR | Global Depositary Receipt | |
Reg S | Security sold outside United States without registration under the Securities Act of 1933. | |
† | Investment categorized as level 2 security as disclosed in Note 2 of the Notes to Financial Statements. | |
* | Non-income producing security. | |
^ | Security exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities, which represent 2.5% of net assets as of April 30, 2022, are considered liquid and may be resold in transactions exempt from registration, normally to qualified buyers. | |
‡ | Investment categorized as level 3 security that is effectively valued at zero. See Note 2 of the Notes to Financial Statements. | |
+ | Current yield is disclosed. Dividends are calculated based on a percentage of the issuer’s net income. |
Industry | Percentage of Net Assets | |||
Automobiles & Components | 2.7 | % | ||
Banks | 10.2 | |||
Capital Goods | 10.5 | |||
Commercial & Professional Services | 2.5 | |||
Consumer Durables & Apparel | 3.0 | |||
Consumer Services | 2.0 | |||
Diversified Financials | 1.1 | |||
Energy | 2.6 | |||
Food & Staples Retailing | 2.2 | |||
Food Beverage & Tobacco | 2.1 | |||
Health Care Equipment & Services | 6.7 | |||
Household & Personal Products | 1.2 | |||
Insurance | 3.0 | |||
Materials | 5.3 | |||
Media & Entertainment | 4.9 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 12.1 | |||
Real Estate | 0.8 | |||
Retailing | 4.1 | |||
Semiconductors & Semiconductor Equipment | 4.7 | |||
Software & Services | 10.9 | |||
Technology Hardware & Equipment | 3.6 | |||
Transportation | 1.4 | |||
Utilities | 1.0 | |||
Money Market Fund | 1.5 | |||
Total Investments | 100.1 | |||
Liabilities Less Other Assets | (0.1 | ) | ||
Net Assets | 100.0 | % |
See Notes to Financial Statements
29
Table of Contents
Harding, Loevner Funds, Inc.
International Equity Research Portfolio
Portfolio of Investments
April 30, 2022 (unaudited)
Shares |
Value | |||||||
COMMON STOCKS - 96.0% | ||||||||
Australia - 1.6% | ||||||||
BHP Group Ltd. (Materials)† | 3,859 | $129,704 | ||||||
Cochlear Ltd. (Health Care Equipment & Services)† | 427 | 68,605 | ||||||
198,309 | ||||||||
Brazil - 2.8% | ||||||||
Ambev SA - ADR (Food Beverage & Tobacco) | 13,956 | 40,612 | ||||||
B3 SA - Brasil Bolsa Balcao (Diversified Financials) | 14,500 | 39,007 | ||||||
Cia Brasileira de Distribuicao - ADR (Food & Staples Retailing) | 6,733 | 28,144 | ||||||
Localiza Rent a Car SA (Transportation) | 4,800 | 51,399 | ||||||
Magazine Luiza SA (Retailing)* | 32,200 | 31,783 | ||||||
Raia Drogasil SA (Food & Staples Retailing) | 10,300 | 43,605 | ||||||
Ultrapar Participacoes SA - Sponsored ADR (Energy) | 16,618 | 44,370 | ||||||
WEG SA (Capital Goods) | 6,200 | 37,747 | ||||||
XP Inc., Class A (Diversified Financials)* | 1,028 | 25,299 | ||||||
341,966 | ||||||||
Canada - 2.0% | ||||||||
Alimentation Couche-Tard Inc. (Food & Staples Retailing) | 2,800 | 124,650 | ||||||
Manulife Financial Corp. (Insurance) | 6,100 | 119,279 | ||||||
243,929 | ||||||||
China - 10.8% | ||||||||
Baidu Inc., Class A (Media & Entertainment)*† | 2,250 | 35,321 | ||||||
China Tourism Group Duty Free Corp., Ltd., Class A (Retailing)† | 1,200 | 32,166 | ||||||
Contemporary Amperex Technology Co., Ltd., Class A (Capital Goods)† | 300 | 18,154 | ||||||
Country Garden Services Holdings Co., Ltd. (Real Estate)† | 7,000 | 29,479 | ||||||
CSPC Pharmaceutical Group Ltd. (Pharmaceuticals, Biotechnology & Life Sciences)† | 37,600 | 38,289 | ||||||
ENN Energy Holdings Ltd. (Utilities)† | 2,200 | 29,248 | ||||||
Foshan Haitian Flavouring & Food Co., Ltd., Class A (Food Beverage & Tobacco)† | 2,289 | 27,932 | ||||||
Fuyao Glass Industry Group Co., Ltd., Class H (Automobiles & Components)^† | 6,800 | 27,735 | ||||||
Glodon Co., Ltd., Class A (Software & Services)† | 3,480 | 23,873 |
Shares |
Value | |||||||
COMMON STOCKS - 96.0% (continued) | ||||||||
China - 10.8% (continued) | ||||||||
Guangzhou Tinci Materials Technology Co., Ltd., Class A (Materials)† | 2,000 | $22,033 | ||||||
Haier Smart Home Co., Ltd., Class H (Consumer Durables & Apparel)† | 10,800 | 38,599 | ||||||
Haitian International Holdings Ltd. (Capital Goods)† | 15,000 | 37,057 | ||||||
Hangzhou Tigermed Consulting Co., Ltd., Class H (Pharmaceuticals, Biotechnology & Life Sciences)^† | 3,300 | 31,991 | ||||||
Hongfa Technology Co., Ltd., Class A (Capital Goods)*† | 4,400 | 31,606 | ||||||
Inner Mongolia Yili Industrial Group Co., Ltd., Class A (Food Beverage & Tobacco)† | 5,200 | 29,884 | ||||||
JD.com Inc., Class A (Retailing)*† | 1,176 | 36,656 | ||||||
Jiangsu Hengrui Medicine Co., Ltd., Class A (Pharmaceuticals, Biotechnology & Life Sciences)† | 5,564 | 24,523 | ||||||
Jiangsu Yanghe Brewery Joint-Stock Co., Ltd., Class A (Food Beverage & Tobacco)† | 1,100 | 26,093 | ||||||
Kweichow Moutai Co., Ltd., Class A (Food Beverage & Tobacco)† | 100 | 27,292 | ||||||
Li Ning Co., Ltd. (Consumer Durables & Apparel)† | 3,500 | 27,369 | ||||||
LONGi Green Energy Technology Co., Ltd., Class A (Semiconductors & Semiconductor Equipment)† | 4,000 | 40,133 | ||||||
Meituan, Class B (Retailing)*^† | 1,800 | 38,635 | ||||||
Midea Group Co., Ltd., Class A (Consumer Durables & Apparel)† | 3,400 | 28,924 | ||||||
NetEase Inc. - ADR (Media & Entertainment) | 571 | 54,433 | ||||||
Ping An Insurance Group Co. of China Ltd., Class H (Insurance)† | 6,000 | 38,585 | ||||||
SF Holding Co., Ltd., Class A (Transportation)† | 3,800 | 29,110 | ||||||
Shandong Sinocera Functional Material Co., Ltd., Class A (Materials)† | 5,300 | 25,686 | ||||||
Shenzhen Inovance Technology Co., Ltd., Class A (Capital Goods)† | 4,050 | 34,766 | ||||||
Shenzhou International Group Holdings Ltd. (Consumer Durables & Apparel)† | 2,000 | 27,495 |
See Notes to Financial Statements
30
Table of Contents
Harding, Loevner Funds, Inc.
International Equity Research Portfolio
Portfolio of Investments (continued)
April 30, 2022 (unaudited)
Shares |
Value | |||||||
COMMON STOCKS - 96.0% (continued) |
| |||||||
China - 10.8% (continued) | ||||||||
Sino Biopharmaceutical Ltd. (Pharmaceuticals, Biotechnology & Life Sciences)† | 51,000 | $26,555 | ||||||
Songcheng Performance Development Co., Ltd., Class A (Consumer Services)† | 11,800 | 22,076 | ||||||
StarPower Semiconductor Ltd., Class A (Semiconductors & Semiconductor Equipment)† | 700 | 35,691 | ||||||
Sunny Optical Technology Group Co., Ltd. (Technology Hardware & Equipment)† | 4,700 | 68,764 | ||||||
TravelSky Technology Ltd., Class H (Software & Services)† | 23,000 | 34,431 | ||||||
Trip.com Group Ltd. (Consumer Services)*† | 1,251 | 29,779 | ||||||
Wuliangye Yibin Co., Ltd., Class A (Food Beverage & Tobacco)† | 1,300 | 31,345 | ||||||
WuXi AppTec Co., Ltd., Class A (Pharmaceuticals, Biotechnology & Life Sciences)† | 1,790 | 27,300 | ||||||
Wuxi Biologics Cayman Inc. (Pharmaceuticals, Biotechnology & Life Sciences)*^† | 4,500 | 32,656 | ||||||
Yonyou Network Technology Co., Ltd., Class A (Software & Services)† | 7,700 | 21,898 | ||||||
Zhejiang Sanhua Intelligent Controls Co., Ltd., Class A (Capital Goods)† | 11,900 | 29,633 | ||||||
ZTO Express Cayman Inc. - ADR (Transportation) | 1,185 | 32,599 | ||||||
1,305,794 | ||||||||
Colombia - 0.8% | ||||||||
Cementos Argos SA (Materials) | 26,196 | 39,744 | ||||||
Ecopetrol SA - Sponsored ADR (Energy) | 3,334 | 54,111 | ||||||
93,855 | ||||||||
Czech Republic - 0.4% | ||||||||
Komercni banka AS (Banks)† | 1,394 | 45,460 | ||||||
Denmark - 2.3% | ||||||||
Ambu A/S, Class B (Health Care Equipment & Services)† | 1,550 | 20,373 | ||||||
Chr Hansen Holding A/S (Materials)† | 702 | 54,705 | ||||||
Coloplast A/S, Class B (Health Care Equipment & Services)† | 377 | 50,900 |
Shares |
Value | |||||||
COMMON STOCKS - 96.0% (continued) |
| |||||||
Denmark - 2.3% (continued) | ||||||||
Genmab A/S (Pharmaceuticals, Biotechnology & Life Sciences)*† | 328 | $115,703 | ||||||
Novozymes A/S, Class B (Materials)† | 598 | 41,549 | ||||||
283,230 | ||||||||
Egypt - 0.6% | ||||||||
Commercial International Bank Egypt SAE - GDR, Reg S (Banks)† | 30,792 | 69,009 | ||||||
Finland - 0.5% | ||||||||
Kone OYJ, Class B (Capital Goods)† | 601 | 28,839 | ||||||
Neste OYJ (Energy)† | 665 | 28,588 | ||||||
57,427 | ||||||||
France - 6.8% | ||||||||
Air Liquide SA (Materials)† | 723 | 124,821 | ||||||
Alten SA (Software & Services)† | 710 | 95,093 | ||||||
Dassault Systemes SE (Software & Services)† | 887 | 39,458 | ||||||
IPSOS (Media & Entertainment)† | 2,051 | 98,334 | ||||||
Kering SA (Consumer Durables & Apparel)† | 162 | 86,047 | ||||||
LISI (Capital Goods)† | 3,059 | 68,676 | ||||||
L’Oreal SA (Household & Personal Products)† | 100 | 36,380 | ||||||
Rubis SCA (Utilities)† | 3,120 | 82,957 | ||||||
Safran SA (Capital Goods)† | 558 | 59,387 | ||||||
Sartorius Stedim Biotech (Pharmaceuticals, Biotechnology & Life Sciences)† | 103 | 33,526 | ||||||
Schneider Electric SE (Capital Goods)† | 691 | 98,415 | ||||||
823,094 | ||||||||
Germany - 8.1% | ||||||||
adidas AG (Consumer Durables & Apparel)† | 146 | 29,737 | ||||||
Allianz SE, Reg S (Insurance)† | 507 | 115,477 | ||||||
Bayerische Motoren Werke AG (Automobiles & Components)† | 1,419 | 117,491 | ||||||
Bechtle AG (Software & Services)† | 2,341 | 109,300 | ||||||
Brenntag SE (Capital Goods)† | 1,433 | 111,827 | ||||||
Carl Zeiss Meditec AG (Bearer) (Health Care Equipment & Services)† | 256 | 32,334 | ||||||
FUCHS PETROLUB SE (Materials)† | 2,480 | 66,106 | ||||||
HelloFresh SE (Food & Staples Retailing)*† | 754 | 32,246 |
See Notes to Financial Statements
31
Table of Contents
Harding, Loevner Funds, Inc.
International Equity Research Portfolio
Portfolio of Investments (continued)
April 30, 2022 (unaudited)
Shares |
Value | |||||||
COMMON STOCKS - 96.0% (continued) | ||||||||
Germany - 8.1% (continued) | ||||||||
Infineon Technologies AG (Semiconductors & Semiconductor Equipment)† | 3,128 | $90,494 | ||||||
Nemetschek SE (Software & Services)† | 911 | 73,145 | ||||||
SAP SE - Sponsored ADR (Software & Services) | 717 | 72,274 | ||||||
Scout24 SE (Media & Entertainment)^† | 1,132 | 72,227 | ||||||
Symrise AG (Materials)† | 253 | 30,251 | ||||||
TeamViewer AG (Software & Services)*^† | 2,653 | 32,180 | ||||||
985,089 | ||||||||
Hong Kong - 2.6% | ||||||||
AIA Group Ltd. (Insurance)† | 8,600 | 84,021 | ||||||
ASM Pacific Technology Ltd. (Semiconductors & Semiconductor Equipment)† | 12,600 | 127,319 | ||||||
Techtronic Industries Co., Ltd. (Capital Goods)† | 7,500 | 100,130 | ||||||
311,470 | ||||||||
Iceland - 0.2% | ||||||||
Marel HF (Capital Goods)^† | 5,278 | 27,388 | ||||||
India - 2.1% | ||||||||
Asian Paints Ltd. (Materials)† | 998 | 41,918 | ||||||
HDFC Bank Ltd. - ADR (Banks) | 541 | 29,869 | ||||||
Hero MotoCorp Ltd. (Automobiles & Components)† | 1,194 | 38,618 | ||||||
Housing Development Finance Corp., Ltd. (Banks)† | 1,063 | 30,606 | ||||||
ICICI Bank Ltd. - Sponsored ADR (Banks) | 1,648 | 31,378 | ||||||
Kotak Mahindra Bank Ltd. (Banks)† | 1,697 | 39,421 | ||||||
Tata Consultancy Services Ltd. (Software & Services)† | 892 | 41,045 | ||||||
252,855 | ||||||||
Indonesia - 0.9% | ||||||||
Astra International Tbk PT (Automobiles & Components)† | 122,700 | 64,023 | ||||||
Bank Rakyat Indonesia Persero Tbk PT (Banks)† | 141,200 | 46,933 | ||||||
110,956 | ||||||||
Ireland - 0.3% | ||||||||
Ryanair Holdings plc - Sponsored ADR (Transportation)* | 375 | 32,745 | ||||||
Israel - 0.3% | ||||||||
CyberArk Software Ltd. (Software & Services)* | 241 | 37,871 |
Shares |
Value | |||||||
COMMON STOCKS - 96.0% (continued) | ||||||||
Italy - 1.7% | ||||||||
Amplifon SpA (Health Care Equipment & Services)† | 767 | $30,520 | ||||||
DiaSorin SpA (Health Care Equipment & Services)† | 281 | 36,732 | ||||||
FinecoBank Banca Fineco SpA (Banks)† | 2,153 | 29,661 | ||||||
Reply SpA (Software & Services)† | 729 | 106,961 | ||||||
203,874 | ||||||||
Japan - 14.9% | ||||||||
BML Inc. (Health Care Equipment & Services)† | 2,100 | 54,008 | ||||||
Chugai Pharmaceutical Co., Ltd. (Pharmaceuticals, Biotechnology & Life Sciences)† | 4,200 | 126,046 | ||||||
Daifuku Co., Ltd. (Capital Goods)† | 1,800 | 111,108 | ||||||
FANUC Corp. (Capital Goods)† | 350 | 54,133 | ||||||
Fast Retailing Co., Ltd. (Retailing)† | 70 | 32,077 | ||||||
GMO Payment Gateway Inc. (Software & Services)† | 300 | 25,331 | ||||||
Hakuhodo DY Holdings Inc. (Media & Entertainment)† | 9,090 | 107,469 | ||||||
Kakaku.com Inc. (Media & Entertainment)† | 2,700 | 56,780 | ||||||
Keyence Corp. (Technology Hardware & Equipment)† | 60 | 24,207 | ||||||
Komatsu Ltd. (Capital Goods)† | 4,740 | 106,337 | ||||||
Kubota Corp. (Capital Goods)† | 6,100 | 103,895 | ||||||
M3 Inc. (Health Care Equipment & Services)† | 800 | 25,758 | ||||||
Makita Corp. (Capital Goods)† | 3,900 | 115,872 | ||||||
MISUMI Group Inc. (Capital Goods)† | 4,500 | 113,187 | ||||||
Nitori Holdings Co., Ltd. (Retailing)† | 800 | 81,388 | ||||||
Recruit Holdings Co., Ltd. (Commercial & Professional Services)† | 2,800 | 103,285 | ||||||
Rinnai Corp. (Consumer Durables & Apparel)† | 1,100 | 69,691 | ||||||
Shimano Inc. (Consumer Durables & Apparel)† | 600 | 104,859 | ||||||
Shionogi & Co., Ltd. (Pharmaceuticals, Biotechnology & Life Sciences)† | 1,600 | 89,436 | ||||||
Shiseido Co., Ltd. (Household & Personal Products)† | 600 | 28,275 | ||||||
SMC Corp. (Capital Goods)† | 160 | 77,336 | ||||||
Stanley Electric Co., Ltd. (Automobiles & Components)† | 4,415 | 76,008 |
See Notes to Financial Statements
32
Table of Contents
Harding, Loevner Funds, Inc.
International Equity Research Portfolio
Portfolio of Investments (continued)
April 30, 2022 (unaudited)
Shares |
Value | |||||||
COMMON STOCKS - 96.0% (continued) | ||||||||
Japan - 14.9% (continued) | ||||||||
Sugi Holdings Co., Ltd. (Food & Staples Retailing)† | 1,555 | $66,880 | ||||||
Sysmex Corp. (Health Care Equipment & Services)† | 500 | 32,383 | ||||||
UT Group Co., Ltd. (Commercial & Professional Services)† | 1,000 | 22,603 | ||||||
1,808,352 | ||||||||
Kazakhstan - 0.6% | ||||||||
Halyk Savings Bank of Kazakhstan JSC - GDR, Reg S (Banks)† | 3,384 | 33,072 | ||||||
Kaspi.KZ JSC - GDR, Reg S (Diversified Financials)† | 657 | 41,766 | ||||||
74,838 | ||||||||
Mexico - 0.7% | ||||||||
Fomento Economico Mexicano SAB de CV - Sponsored ADR (Food Beverage & Tobacco) | 655 | 48,955 | ||||||
Wal-Mart de Mexico SAB de CV (Food & Staples Retailing) | 11,100 | 39,251 | ||||||
88,206 | ||||||||
Netherlands - 1.5% | ||||||||
Adyen NV (Software & Services)*^† | 16 | 26,759 | ||||||
ASM International NV (Semiconductors & Semiconductor Equipment)† | 172 | 51,362 | ||||||
ASML Holding NV, Reg S (Semiconductors & Semiconductor Equipment) | 192 | 108,244 | ||||||
186,365 | ||||||||
Norway - 0.2% | ||||||||
Adevinta ASA (Media & Entertainment)*† | 3,174 | 24,787 | ||||||
Panama - 0.2% | ||||||||
Copa Holdings SA, Class A (Transportation)* | 404 | 30,449 | ||||||
Peru - 0.4% | ||||||||
Credicorp Ltd. (Banks) | 323 | 44,861 | ||||||
Philippines - 2.9% | ||||||||
Bank of the Philippine Islands (Banks)† | 27,440 | 49,756 | ||||||
BDO Unibank Inc. (Banks)† | 18,870 | 46,579 | ||||||
International Container Terminal Services Inc. (Transportation)† | 14,190 | 58,136 | ||||||
Jollibee Foods Corp. (Consumer Services)† | 8,190 | 33,591 | ||||||
Robinsons Retail Holdings Inc. (Food & Staples Retailing)† | 39,680 | 40,649 | ||||||
Security Bank Corp. (Banks)† | 19,210 | 37,835 |
Shares |
Value | |||||||
COMMON STOCKS - 96.0% (continued) | ||||||||
Philippines - 2.9% (continued) | ||||||||
SM Prime Holdings Inc. (Real Estate)† | 83,300 | $55,679 | ||||||
Universal Robina Corp. (Food Beverage & Tobacco)† | 14,560 | 28,533 | ||||||
350,758 | ||||||||
Poland - 0.5% | ||||||||
Allegro.eu SA (Retailing)*^† | 4,376 | 22,392 | ||||||
ING Bank Slaski SA (Banks)† | 878 | 38,949 | ||||||
61,341 | ||||||||
Russia - 0.0% | ||||||||
LUKOIL PJSC - Sponsored ADR (Energy)‡ | 603 | — | ||||||
Novatek PJSC - Sponsored GDR, Reg S (Energy)‡ | 190 | — | ||||||
Sberbank of Russia PJSC - Sponsored ADR (Banks)‡ | 3,389 | — | ||||||
Yandex NV, Class A (Media & Entertainment)*‡ | 541 | — | ||||||
— | ||||||||
Saudi Arabia - 1.4% | ||||||||
Bupa Arabia for Cooperative Insurance Co. (Insurance)† | 1,021 | 45,189 | ||||||
Jarir Marketing Co. (Retailing)† | 724 | 37,031 | ||||||
Mouwasat Medical Services Co. (Health Care Equipment & Services)† | 648 | 41,346 | ||||||
Saudi National Bank (Banks)† | 2,214 | 46,303 | ||||||
169,869 | ||||||||
Singapore - 2.2% | ||||||||
DBS Group Holdings Ltd. (Banks)† | 6,014 | 145,666 | ||||||
Oversea-Chinese Banking Corp., Ltd. (Banks)† | 14,038 | 124,474 | ||||||
270,140 | ||||||||
Slovenia - 0.2% | ||||||||
Krka dd Novo mesto (Pharmaceuticals, Biotechnology & Life Sciences)† | 303 | 28,399 | ||||||
South Africa - 0.3% | ||||||||
Discovery Ltd. (Insurance)*† | 4,148 | 39,844 | ||||||
South Korea - 1.3% | ||||||||
Cheil Worldwide Inc. (Media & Entertainment)† | 2,148 | 42,931 | ||||||
Coway Co., Ltd. (Consumer Durables & Apparel)† | 524 | 29,335 | ||||||
LG Household & Health Care Ltd. (Household & Personal Products)† | 43 | 30,567 | ||||||
NAVER Corp. (Media & Entertainment)† | 111 | 25,109 |
See Notes to Financial Statements
33
Table of Contents
Harding, Loevner Funds, Inc.
International Equity Research Portfolio
Portfolio of Investments (continued)
April 30, 2022 (unaudited)
Shares | Value | |||||||
COMMON STOCKS - 96.0% (continued) |
| |||||||
South Korea - 1.3% (continued) | ||||||||
NCSoft Corp. (Media & Entertainment)† | 105 | $35,015 | ||||||
162,957 | ||||||||
Spain - 2.6% | ||||||||
Amadeus IT Group SA (Software & Services)*† | 528 | 32,923 | ||||||
Banco Bilbao Vizcaya Argentaria SA (Banks)† | 16,305 | 85,796 | ||||||
Banco Santander SA - Sponsored ADR (Banks) | 34,683 | 99,887 | ||||||
Bankinter SA (Banks)† | 15,831 | 93,480 | ||||||
312,086 | ||||||||
Sweden - 5.5% | ||||||||
Alfa Laval AB (Capital Goods)† | 2,478 | 68,778 | ||||||
Assa Abloy AB, Class B (Capital Goods)† | 4,623 | 116,629 | ||||||
Atlas Copco AB, Class A (Capital Goods)† | 998 | 45,195 | ||||||
Epiroc AB, Class A (Capital Goods)† | 5,084 | 103,394 | ||||||
Evolution AB (Consumer Services)^† | 1,144 | 117,636 | ||||||
Hexagon AB, Class B (Technology Hardware & Equipment)† | 2,300 | 29,738 | ||||||
Intrum AB (Commercial & Professional Services)† | 2,169 | 51,915 | ||||||
Skandinaviska Enskilda Banken AB, Class A (Banks)† | 9,177 | 102,619 | ||||||
Thule Group AB (Consumer Durables & Apparel)^† | 769 | 26,574 | ||||||
662,478 | ||||||||
Switzerland - 3.9% | ||||||||
Alcon Inc. (Health Care Equipment & Services) | 1,774 | 126,327 | ||||||
Cie Financiere Richemont SA, Class A, Reg S (Consumer Durables & Apparel)† | 470 | 54,634 | ||||||
Lonza Group AG, Reg S (Pharmaceuticals, Biotechnology & Life Sciences)† | 117 | 68,690 | ||||||
SGS SA, Reg S (Commercial & Professional Services)† | 11 | 28,248 | ||||||
Sonova Holding AG, Reg S (Health Care Equipment & Services)† | 124 | 44,647 | ||||||
Straumann Holding AG, Reg S (Health Care Equipment & Services)† | 290 | 34,196 | ||||||
Tecan Group AG, Reg S (Pharmaceuticals, Biotechnology & Life Sciences)† | 77 | 23,140 | ||||||
Temenos AG, Reg S (Software & Services)† | 306 | 30,820 |
Shares | Value | |||||||
COMMON STOCKS - 96.0% (continued) |
| |||||||
Switzerland - 3.9% (continued) | ||||||||
VAT Group AG (Capital Goods)^† | 187 | $58,032 | ||||||
468,734 | ||||||||
Taiwan - 2.4% | ||||||||
Advantech Co., Ltd. (Technology Hardware & Equipment)† | 2,998 | 37,137 | ||||||
Airtac International Group (Capital Goods)† | 1,046 | 28,416 | ||||||
Chipbond Technology Corp. (Semiconductors & Semiconductor Equipment)† | 21,000 | 47,138 | ||||||
Eclat Textile Co., Ltd. (Consumer Durables & Apparel)† | 2,000 | 32,594 | ||||||
Hon Hai Precision Industry Co., Ltd. (Technology Hardware & Equipment)† | 9,000 | 30,792 | ||||||
Largan Precision Co., Ltd. (Technology Hardware & Equipment)† | 450 | 25,529 | ||||||
Silergy Corp. (Semiconductors & Semiconductor Equipment)† | 250 | 22,081 | ||||||
Taiwan Semiconductor Manufacturing Co., Ltd. (Semiconductors & Semiconductor Equipment)† | 4,000 | 72,960 | ||||||
296,647 | ||||||||
Thailand - 0.4% | ||||||||
SCB X pcl, Reg S (Banks)† | 14,400 | 48,350 | ||||||
Turkey - 0.4% | ||||||||
BIM Birlesik Magazalar AS (Food & Staples Retailing)† | 8,225 | 45,985 | ||||||
United Arab Emirates - 1.2% | ||||||||
Agthia Group PJSC (Food Beverage & Tobacco)† | 23,110 | 26,877 | ||||||
Emaar Properties PJSC (Real Estate)† | 70,076 | 121,161 | ||||||
148,038 | ||||||||
United Kingdom - 7.5% | ||||||||
Abcam plc (Pharmaceuticals, Biotechnology & Life Sciences)*† | 4,498 | 70,199 | ||||||
Coca-Cola HBC AG - CDI (Food Beverage & Tobacco)*† | 1,463 | 29,579 | ||||||
Compass Group plc (Consumer Services)† | 1,711 | 36,040 | ||||||
Dechra Pharmaceuticals plc (Pharmaceuticals, Biotechnology & Life Sciences)† | 555 | 25,108 | ||||||
Diploma plc (Capital Goods)† | 3,481 | 119,080 | ||||||
Grafton Group plc (Capital Goods)† | 5,899 | 71,770 | ||||||
Rathbones Group plc (Diversified Financials)† | 2,788 | 73,253 |
See Notes to Financial Statements
34
Table of Contents
Harding, Loevner Funds, Inc.
International Equity Research Portfolio
Portfolio of Investments (continued)
April 30, 2022 (unaudited)
Shares | Value | |||||||
COMMON STOCKS - 96.0% (continued) |
| |||||||
United Kingdom - 7.5% (continued) | ||||||||
Reckitt Benckiser Group plc (Household & Personal Products)† | 736 | $57,417 | ||||||
Rightmove plc (Media & Entertainment)† | 8,008 | 61,560 | ||||||
Rio Tinto plc (Materials)† | 1,782 | 126,401 | ||||||
Shell plc - ADR (Energy) | 2,443 | 130,529 | ||||||
Spirax-Sarco Engineering plc (Capital Goods)† | 248 | 37,508 | ||||||
Standard Chartered plc (Banks)† | 11,266 | 77,179 | ||||||
915,623 | ||||||||
Total Common Stocks (Cost $11,445,100) | $11,663,428 | |||||||
| ||||||||
PREFERRED STOCKS - 1.6% |
| |||||||
Colombia - 0.5% | ||||||||
Bancolombia SA - Sponsored ADR, 7.55% (Banks)+ | 1,364 | 52,882 | ||||||
Germany - 0.2% | ||||||||
Sartorius AG, 0.36% (Health Care Equipment & Services)+† | 70 | 26,515 | ||||||
South Korea - 0.9% | ||||||||
Samsung Electronics Co., Ltd. - GDR, Reg S, 2.46% (Technology Hardware & Equipment)+† | 94 | 109,107 | ||||||
Total Preferred Stocks (Cost $180,493) | $188,504 | |||||||
| ||||||||
SHORT TERM INVESTMENTS - 2.4% |
| |||||||
Northern Institutional Funds - Treasury Portfolio (Premier Shares), 0.18% (Money Market Funds) | 287,115 | 287,115 | ||||||
Total Short Term Investments (Cost $287,115) |
| $287,115 | ||||||
| ||||||||
Total Investments — 100.0% | ||||||||
(Cost $11,912,708) | $12,139,047 | |||||||
Other Assets Less Liabilities - 0.0% | 5,180 | |||||||
Net Assets — 100.0% | $12,144,227 |
Summary of Abbreviations
ADR | American Depositary Receipt |
CDI | Chess Depositary Interest |
GDR | Global Depositary Receipt |
Reg S | Security sold outside United States without registration under the Securities Act of 1933. |
† | Investment categorized as level 2 security as disclosed in Note 2 of the Notes to Financial Statements. |
* | Non-income producing security. |
^ | Security exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities, which represent 4.2% of net assets as of April 30, 2022, are considered liquid and may be resold in transactions exempt from registration, normally to qualified buyers. |
‡ | Investment categorized as level 3 security that is effectively valued at zero. See Note 2 of the Notes to Financial Statements. |
+ | Current yield is disclosed. Dividends are calculated based on a percentage of the issuer’s net income. |
Industry | Percentage of Net Assets | |||
Automobiles & Components | 2.6 | % | ||
Banks | 12.1 | |||
Capital Goods | 16.8 | |||
Commercial & Professional Services | 1.6 | |||
Consumer Durables & Apparel | 4.4 | |||
Consumer Services | 2.1 | |||
Diversified Financials | 1.4 | |||
Energy | 2.2 | |||
Food & Staples Retailing | 3.5 | |||
Food Beverage & Tobacco | 2.5 | |||
Health Care Equipment & Services | 5.1 | |||
Household & Personal Products | 1.2 | |||
Insurance | 3.7 | |||
Materials | 5.5 | |||
Media & Entertainment | 5.2 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 6.3 | |||
Real Estate | 1.7 | |||
Retailing | 2.7 | |||
Semiconductors & Semiconductor Equipment | 4.9 | |||
Software & Services | 6.7 | |||
Technology Hardware & Equipment | 2.6 | |||
Transportation | 1.9 | |||
Utilities | 0.9 | |||
Money Market Fund | 2.4 | |||
Total Investments | 100.0 | |||
Other Assets Less Liabilities | 0.0 | |||
Net Assets | 100.0 | % |
See Notes to Financial Statements
35
Table of Contents
Harding, Loevner Funds, Inc. |
Emerging Markets Research Portfolio Portfolio of Investments April 30, 2022 (unaudited) |
Shares | Value | |||||||
COMMON STOCKS - 96.1% | ||||||||
Bangladesh - 0.4% | ||||||||
Square Pharmaceuticals Ltd. (Pharmaceuticals, Biotechnology & Life Sciences)† | 10,847 | $28,267 | ||||||
Brazil - 9.6% | ||||||||
Ambev SA - ADR (Food Beverage & Tobacco) | 20,505 | 59,669 | ||||||
B3 SA - Brasil Bolsa Balcao (Diversified Financials) | 45,400 | 122,133 | ||||||
Cia Brasileira de Distribuicao - ADR (Food & Staples Retailing) | 8,181 | 34,197 | ||||||
Localiza Rent a Car SA (Transportation) | 11,900 | 127,426 | ||||||
Magazine Luiza SA (Retailing)* | 68,100 | 67,219 | ||||||
Raia Drogasil SA (Food & Staples Retailing) | 14,100 | 59,692 | ||||||
Ultrapar Participacoes SA - Sponsored ADR (Energy) | 15,872 | 42,378 | ||||||
WEG SA (Capital Goods) | 12,500 | 76,103 | ||||||
XP Inc., Class A (Diversified Financials)* | 3,890 | 95,733 | ||||||
684,550 | ||||||||
China - 30.8% | ||||||||
Baidu Inc., Class A (Media & Entertainment)*† | 2,650 | 41,600 | ||||||
China Tourism Group Duty Free Corp., Ltd., Class A (Retailing)† | 1,700 | 45,569 | ||||||
Contemporary Amperex Technology Co., Ltd., Class A (Capital Goods)† | 600 | 36,308 | ||||||
Country Garden Services Holdings Co., Ltd. (Real Estate)† | 8,000 | 33,691 | ||||||
CSPC Pharmaceutical Group Ltd. (Pharmaceuticals, Biotechnology & Life Sciences)† | 140,080 | 142,645 | ||||||
ENN Energy Holdings Ltd. (Utilities)† | 4,400 | 58,496 | ||||||
Foshan Haitian Flavouring & Food Co., Ltd., Class A (Food Beverage & Tobacco)† | 2,739 | 33,421 | ||||||
Fuyao Glass Industry Group Co., Ltd., Class H (Automobiles & Components)^† | 8,400 | 34,261 | ||||||
Glodon Co., Ltd., Class A (Software & Services)† | 3,400 | 23,324 | ||||||
Guangzhou Tinci Materials Technology Co., Ltd., Class A (Materials) | 10,600 | 116,776 | ||||||
Haier Smart Home Co., Ltd., Class H (Consumer Durables & Apparel)† | 30,400 | 108,648 | ||||||
Haitian International Holdings Ltd. (Capital Goods)† | 15,000 | 37,057 |
Shares | Value | |||||||
COMMON STOCKS - 96.1% (continued) |
| |||||||
China - 30.8% (continued) | ||||||||
Hangzhou Tigermed Consulting Co., Ltd., Class H (Pharmaceuticals, Biotechnology & Life Sciences)^† | 3,900 | $37,807 | ||||||
Hefei Meiya Optoelectronic Technology Inc., Class A (Capital Goods)† | 3,700 | 12,522 | ||||||
Hongfa Technology Co., Ltd., Class A (Capital Goods)*† | 5,300 | 38,071 | ||||||
Inner Mongolia Yili Industrial Group Co., Ltd., Class A (Food Beverage & Tobacco)† | 11,300 | 64,939 | ||||||
JD.com Inc., Class A (Retailing)*† | 3,252 | 101,366 | ||||||
Jiangsu Hengrui Medicine Co., Ltd., Class A (Pharmaceuticals, Biotechnology & Life Sciences)† | 6,480 | 28,561 | ||||||
Jiangsu Yanghe Brewery Joint-Stock Co., Ltd., Class A (Food Beverage & Tobacco)† | 2,200 | 52,187 | ||||||
Kweichow Moutai Co., Ltd., Class A (Food Beverage & Tobacco)† | 100 | 27,292 | ||||||
Li Ning Co., Ltd. (Consumer Durables & Apparel) | 4,000 | 31,279 | ||||||
LONGi Green Energy Technology Co., Ltd., Class A (Semiconductors & Semiconductor Equipment)† | 3,400 | 34,113 | ||||||
Meituan, Class B (Retailing)*^† | 1,600 | 34,342 | ||||||
Midea Group Co., Ltd., Class A (Consumer Durables & Apparel)† | 14,300 | 121,649 | ||||||
NetEase Inc. - ADR (Media & Entertainment) | 648 | 61,774 | ||||||
Ping An Insurance Group Co. of China Ltd., Class H (Insurance)† | 20,000 | 128,618 | ||||||
Qingdao Haier Biomedical Co., Ltd., Class A (Health Care Equipment & Services)† | 2,900 | 28,172 | ||||||
SF Holding Co., Ltd., Class A (Transportation)† | 5,900 | 45,196 | ||||||
Shandong Sinocera Functional Material Co., Ltd., Class A (Materials)† | 6,300 | 30,532 | ||||||
Shenzhen Inovance Technology Co., Ltd., Class A (Capital Goods)† | 4,800 | 41,204 | ||||||
Shenzhou International Group Holdings Ltd. (Consumer Durables & Apparel)† | 3,000 | 41,243 | ||||||
Sino Biopharmaceutical Ltd. (Pharmaceuticals, Biotechnology & Life Sciences)† | 123,000 | 64,045 |
See Notes to Financial Statements
36
Table of Contents
Harding, Loevner Funds, Inc. |
Emerging Markets Research Portfolio Portfolio of Investments (continued) April 30, 2022 (unaudited) |
Shares |
Value | |||||||
COMMON STOCKS - 96.1% (continued) |
| |||||||
China - 30.8% (continued) | ||||||||
Songcheng Performance Development Co., Ltd., Class A (Consumer Services)† | 19,100 | $35,733 | ||||||
StarPower Semiconductor Ltd., Class A (Semiconductors & Semiconductor Equipment) | 1,300 | 66,284 | ||||||
Sunny Optical Technology Group Co., Ltd. (Technology Hardware & Equipment)† | 2,700 | 39,503 | ||||||
TravelSky Technology Ltd., Class H (Software & Services)† | 23,000 | 34,431 | ||||||
Trip.com Group Ltd. (Consumer Services)*† | 2,161 | 51,441 | ||||||
Wuliangye Yibin Co., Ltd., Class A (Food Beverage & Tobacco)† | 1,400 | 33,756 | ||||||
WuXi AppTec Co., Ltd., Class A (Pharmaceuticals, Biotechnology & Life Sciences)† | 3,727 | 56,842 | ||||||
Wuxi Biologics Cayman Inc. (Pharmaceuticals, Biotechnology & Life Sciences)*^† | 6,000 | 43,541 | ||||||
Yonyou Network Technology Co., Ltd., Class A (Software & Services)† | 9,600 | 27,301 | ||||||
Zhejiang Sanhua Intelligent Controls Co., Ltd., Class A (Capital Goods)† | 14,200 | 35,360 | ||||||
ZTO Express Cayman Inc. - ADR (Transportation) | 1,449 | 39,862 | ||||||
2,200,762 | ||||||||
Colombia - 1.4% | ||||||||
Cementos Argos SA (Materials) | 15,277 | 23,178 | ||||||
Ecopetrol SA - Sponsored ADR (Energy) | 4,717 | 76,557 | ||||||
99,735 | ||||||||
Czech Republic - 0.3% | ||||||||
Komercni banka AS (Banks)† | 706 | 23,024 | ||||||
Egypt - 0.5% | ||||||||
Commercial International Bank Egypt SAE - GDR, Reg S (Banks)† | 15,603 | 34,968 | ||||||
Iceland - 0.2% | ||||||||
Marel HF (Capital Goods)^† | 3,210 | 16,657 | ||||||
India - 8.5% | ||||||||
Asian Paints Ltd. (Materials)† | 1,186 | 49,815 | ||||||
HDFC Bank Ltd. - ADR (Banks) | 2,301 | 127,038 | ||||||
Hero MotoCorp Ltd. (Automobiles & Components)† | 4,698 | 151,948 |
Shares |
Value | |||||||
COMMON STOCKS - 96.1% (continued) |
| |||||||
India - 8.5% (continued) | ||||||||
Housing Development Finance Corp., Ltd. (Banks)† | 2,467 | $71,029 | ||||||
ICICI Bank Ltd. - Sponsored ADR (Banks) | 4,058 | 77,264 | ||||||
Kotak Mahindra Bank Ltd. (Banks)† | 1,950 | 45,299 | ||||||
Max Financial Services Ltd. (Insurance)*† | 1,683 | 16,559 | ||||||
Tata Consultancy Services Ltd. (Software & Services)† | 1,502 | 69,114 | ||||||
608,066 | ||||||||
Indonesia - 1.6% | ||||||||
Astra International Tbk PT (Automobiles & Components)† | 116,400 | 60,736 | ||||||
Bank Rakyat Indonesia Persero Tbk PT (Banks)† | 164,300 | 54,611 | ||||||
115,347 | ||||||||
Kazakhstan - 0.6% | ||||||||
Halyk Savings Bank of Kazakhstan JSC - GDR, Reg S (Banks)† | 1,819 | 17,777 | ||||||
Kaspi.KZ JSC - GDR, Reg S (Diversified Financials)† | 386 | 24,538 | ||||||
42,315 | ||||||||
Kenya - 0.2% | ||||||||
Safaricom plc (Telecommunication Services)† | 62,300 | 18,053 | ||||||
Malaysia - 0.5% | ||||||||
Dialog Group Bhd. (Energy)† | 63,800 | 36,536 | ||||||
Mexico - 2.6% | ||||||||
Fomento Economico Mexicano SAB de CV - Sponsored ADR (Food Beverage & Tobacco) | 1,864 | 139,315 | ||||||
Wal-Mart de Mexico SAB de CV (Food & Staples Retailing) | 13,300 | 47,031 | ||||||
186,346 | ||||||||
Morocco - 0.6% | ||||||||
Attijariwafa Bank (Banks)† | 430 | 20,045 | ||||||
Itissalat Al-Maghrib (Telecommunication Services)† | 1,491 | 20,050 | ||||||
40,095 | ||||||||
Pakistan - 0.3% | ||||||||
Oil & Gas Development Co., Ltd. (Energy)† | 41,800 | 19,019 | ||||||
Panama - 0.6% | ||||||||
Copa Holdings SA, Class A (Transportation)* | 607 | 45,750 |
See Notes to Financial Statements
37
Table of Contents
Harding, Loevner Funds, Inc. |
Emerging Markets Research Portfolio Portfolio of Investments (continued) April 30, 2022 (unaudited) |
Shares |
Value | |||||||
COMMON STOCKS - 96.1% (continued) |
| |||||||
Peru - 1.8% | ||||||||
Credicorp Ltd. (Banks) | 907 | $125,973 | ||||||
Philippines - 4.3% | ||||||||
Bank of the Philippine Islands (Banks)† | 13,720 | 24,878 | ||||||
BDO Unibank Inc. (Banks)† | 26,400 | 65,166 | ||||||
International Container Terminal Services Inc. (Transportation)† | 18,410 | 75,426 | ||||||
Jollibee Foods Corp. (Consumer Services)† | 6,330 | 25,962 | ||||||
Robinsons Retail Holdings Inc. (Food & Staples Retailing)† | 16,410 | 16,811 | ||||||
Security Bank Corp. (Banks)† | 10,700 | 21,074 | ||||||
SM Prime Holdings Inc. (Real Estate)† | 88,800 | 59,355 | ||||||
Universal Robina Corp. (Food Beverage & Tobacco)† | 8,270 | 16,207 | ||||||
304,879 | ||||||||
Poland - 0.7% | ||||||||
Allegro.eu SA (Retailing)*^† | 5,182 | 26,516 | ||||||
ING Bank Slaski SA (Banks)† | 505 | 22,403 | ||||||
48,919 | ||||||||
Romania - 0.7% | ||||||||
Banca Transilvania SA (Banks)† | 38,734 | 19,520 | ||||||
Societatea Nationala de Gaze Naturale ROMGAZ SA (Energy)† | 3,372 | 32,152 | ||||||
51,672 | ||||||||
Russia - 0.0% | ||||||||
LUKOIL PJSC - Sponsored ADR (Energy)‡ | 1,738 | — | ||||||
Novatek PJSC - Sponsored GDR, Reg S (Energy)‡ | 531 | — | ||||||
Sberbank of Russia PJSC - Sponsored ADR (Banks)‡ | 8,719 | — | ||||||
Yandex NV, Class A (Media & Entertainment)*‡ | 941 | — | ||||||
— | ||||||||
Saudi Arabia - 2.5% | ||||||||
Bupa Arabia for Cooperative Insurance Co. (Insurance)† | 621 | 27,485 | ||||||
Jarir Marketing Co. (Retailing)† | 1,292 | 66,083 | ||||||
Mouwasat Medical Services Co. (Health Care Equipment & Services)† | 471 | 30,052 | ||||||
Saudi National Bank (Banks)† | 2,666 | 55,756 | ||||||
179,376 | ||||||||
Slovenia - 0.2% | ||||||||
Krka dd Novo mesto (Pharmaceuticals, Biotechnology & Life Sciences)† | 179 | 16,777 |
Shares |
Value | |||||||
COMMON STOCKS - 96.1% (continued) |
| |||||||
South Africa - 1.0% | ||||||||
Discovery Ltd. (Insurance)*† | 7,600 | $73,002 | ||||||
South Korea - 6.8% | ||||||||
Cheil Worldwide Inc. (Media & Entertainment)† | 3,865 | 77,247 | ||||||
Coway Co., Ltd. (Consumer Durables & Apparel)† | 1,180 | 66,060 | ||||||
LG Household & Health Care Ltd. (Household & Personal Products)† | 116 | 82,460 | ||||||
NAVER Corp. (Media & Entertainment)† | 567 | 128,257 | ||||||
NCSoft Corp. (Media & Entertainment)† | 405 | 135,058 | ||||||
489,082 | ||||||||
Taiwan - 11.4% | ||||||||
Advantech Co., Ltd. (Technology Hardware & Equipment)† | 5,499 | 68,117 | ||||||
Airtac International Group (Capital Goods)† | 4,800 | 130,400 | ||||||
ASPEED Technology Inc. (Semiconductors & Semiconductor Equipment)† | 550 | 48,542 | ||||||
Chipbond Technology Corp. (Semiconductors & Semiconductor Equipment)† | 31,000 | 69,585 | ||||||
Eclat Textile Co., Ltd. (Consumer Durables & Apparel)† | 4,000 | 65,188 | ||||||
Hon Hai Precision Industry Co., Ltd. (Technology Hardware & Equipment)† | 41,000 | 140,273 | ||||||
Largan Precision Co., Ltd. (Technology Hardware & Equipment)† | 700 | 39,712 | ||||||
Silergy Corp. (Semiconductors & Semiconductor Equipment)† | 1,350 | 119,235 | ||||||
Taiwan Semiconductor Manufacturing Co., Ltd. (Semiconductors & Semiconductor Equipment)† | 7,500 | 136,800 | ||||||
817,852 | ||||||||
Thailand - 2.2% | ||||||||
Bumrungrad Hospital pcl, Reg S (Health Care Equipment & Services)† | 11,200 | 52,485 | ||||||
SCB X pcl, Reg S (Banks) | 32,000 | 107,445 | ||||||
159,930 | ||||||||
Turkey - 0.9% | ||||||||
BIM Birlesik Magazalar AS (Food & Staples Retailing)† | 11,148 | 62,328 | ||||||
United Arab Emirates - 1.5% | ||||||||
Agthia Group PJSC (Food Beverage & Tobacco)† | 13,882 | 16,145 |
See Notes to Financial Statements
38
Table of Contents
Harding, Loevner Funds, Inc. |
Emerging Markets Research Portfolio Portfolio of Investments (continued) April 30, 2022 (unaudited) |
Shares |
Value | |||||||
COMMON STOCKS - 96.1% (continued) |
| |||||||
United Arab Emirates - 1.5% (continued) | ||||||||
Emaar Properties PJSC (Real Estate)† | 53,031 | $91,690 | ||||||
107,835 | ||||||||
Vietnam - 3.4% | ||||||||
Bank for Foreign Trade of Vietnam JSC (Banks)† | 19,446 | 68,371 | ||||||
Hoa Phat Group JSC (Materials)† | 62,966 | 118,088 | ||||||
Saigon Beer Alcohol Beverage Corp. (Food Beverage & Tobacco)† | 2,320 | 16,330 | ||||||
Vietnam Dairy Products JSC (Food Beverage & Tobacco)† | 11,810 | 38,121 | ||||||
240,910 | ||||||||
Total Common Stocks (Cost $7,445,437) | $6,878,025 | |||||||
| ||||||||
PREFERRED STOCKS - 2.3% |
| |||||||
Colombia - 0.6% | ||||||||
Bancolombia SA - Sponsored ADR, 7.55% (Banks)+ | 1,139 | 44,159 | ||||||
South Korea - 1.7% | ||||||||
Samsung Electronics Co., Ltd. - GDR, Reg S, 2.46% (Technology Hardware & Equipment)+† | 106 | 123,035 | ||||||
| ||||||||
Total Preferred Stocks (Cost $135,581) | $167,194 | |||||||
| ||||||||
SHORT TERM INVESTMENTS - 1.1% |
| |||||||
Northern Institutional Funds - Treasury Portfolio (Premier Shares), 0.18% (Money Market Funds) | 78,718 | 78,718 | ||||||
| ||||||||
Total Short Term Investments (Cost $78,718) |
| $78,718 | ||||||
|
| |||||||
Total Investments — 99.5% | ||||||||
(Cost $7,659,736) | $7,123,937 | |||||||
Other Assets Less Liabilities - 0.5% | 32,237 | |||||||
Net Assets — 100.0% | $7,156,174 |
Summary of Abbreviations
ADR | American Depositary Receipt |
GDR | Global Depositary Receipt |
Reg S | Security sold outside United States without registration under the Securities Act of 1933. |
† | Investment categorized as level 2 security as disclosed in Note 2 of the Notes to Financial Statements. |
* | Non-income producing security. |
^ | Security exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities, which represent 2.7% of net assets as of April 30, 2022, are considered liquid and may be resold in transactions exempt from registration, normally to qualified buyers. |
‡ | Investment categorized as level 3 security that is effectively valued at zero. See Note 2 of the Notes to Financial Statements. |
+ | Current yield is disclosed. Dividends are calculated based on a percentage of the issuer’s net income. |
See Notes to Financial Statements
39
Table of Contents
Harding, Loevner Funds, Inc. |
Emerging Markets Research Portfolio Portfolio of Investments (continued) April 30, 2022 (unaudited) |
Industry |
Percentage of Net Assets | |||
Automobiles & Components | 3.4 | % | ||
Banks | 14.6 | |||
Capital Goods | 5.9 | |||
Consumer Durables & Apparel | 6.0 | |||
Consumer Services | 1.6 | |||
Diversified Financials | 3.3 | |||
Energy | 2.9 | |||
Food & Staples Retailing | 3.1 | |||
Food Beverage & Tobacco | 6.8 | |||
Health Care Equipment & Services | 1.5 | |||
Household & Personal Products | 1.1 | |||
Insurance | 3.4 | |||
Materials | 4.7 | |||
Media & Entertainment | 6.3 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 5.8 | |||
Real Estate | 2.6 | |||
Retailing | 4.8 | |||
Semiconductors & Semiconductor Equipment | 6.7 | |||
Software & Services | 2.2 | |||
Technology Hardware & Equipment | 5.7 | |||
Telecommunication Services | 0.5 | |||
Transportation | 4.7 | |||
Utilities | 0.8 | |||
Money Market Fund | 1.1 | |||
Total Investments | 99.5 | |||
Other Assets Less Liabilities | 0.5 | |||
Net Assets | 100.0 | % |
See Notes to Financial Statements
40
Table of Contents
Harding, Loevner Funds, Inc. |
Portfolio of Investments April 30, 2022 (unaudited) |
Shares |
Value | |||||||
COMMON STOCKS - 98.2% |
| |||||||
China - 81.2% | ||||||||
Alibaba Group Holding Ltd. (Retailing)*† | 11,200 | $ | 136,884 | |||||
ANTA Sports Products Ltd. (Consumer Durables & Apparel)† | 5,500 | 63,254 | ||||||
Baidu Inc., Class A (Media & Entertainment)*† | 3,558 | 55,854 | ||||||
China Tourism Group Duty Free Corp., Ltd., Class A (Retailing)† | 4,300 | 115,262 | ||||||
Contemporary Amperex Technology Co., Ltd., Class A (Capital Goods)† | 1,300 | 78,667 | ||||||
Country Garden Services Holdings Co., Ltd. (Real Estate)† | 14,000 | 58,959 | ||||||
CSPC Pharmaceutical Group Ltd. (Pharmaceuticals, Biotechnology & Life Sciences)† | 78,000 | 79,428 | ||||||
ENN Energy Holdings Ltd. (Utilities)† | 5,500 | 73,120 | ||||||
Foshan Haitian Flavouring & Food Co., Ltd., Class A (Food Beverage & Tobacco)† | 3,399 | 41,475 | ||||||
Fuyao Glass Industry Group Co., Ltd., Class H (Automobiles & Components)^† | 10,000 | 40,786 | ||||||
Haier Smart Home Co., Ltd., Class H (Consumer Durables & Apparel)† | 18,000 | 64,331 | ||||||
Haitian International Holdings Ltd. (Capital Goods)† | 45,020 | 111,221 | ||||||
Hangzhou Tigermed Consulting Co., Ltd., Class H (Pharmaceuticals, Biotechnology & Life Sciences)^† | 7,400 | 71,737 | ||||||
Hefei Meiya Optoelectronic Technology Inc., Class A (Capital Goods)† | 16,600 | 56,179 | ||||||
Hongfa Technology Co., Ltd., Class A (Capital Goods)*† | 4,700 | 33,761 | ||||||
Inner Mongolia Yili Industrial Group Co., Ltd., Class A (Food Beverage & Tobacco)† | 16,900 | 97,122 | ||||||
JD.com Inc., Class A (Retailing)*† | 3,971 | 123,778 | ||||||
Jiangsu Hengrui Medicine Co., Ltd., Class A (Pharmaceuticals, Biotechnology & Life Sciences)† | 8,540 | 37,640 | ||||||
Kweichow Moutai Co., Ltd., Class A (Food Beverage & Tobacco) | 300 | 81,875 | ||||||
Li Ning Co., Ltd. (Consumer Durables & Apparel) | 4,500 | 35,189 |
Shares |
Value | |||||||
COMMON STOCKS - 98.2% (continued) |
| |||||||
China - 81.2% (continued) | ||||||||
LONGi Green Energy Technology Co., Ltd., Class A (Semiconductors & Semiconductor Equipment)† | 8,400 | $84,279 | ||||||
Midea Group Co., Ltd., Class A (Consumer Durables & Apparel)† | 11,800 | 100,382 | ||||||
NetEase Inc. (Media & Entertainment)† | 4,300 | 82,168 | ||||||
Qingdao Haier Biomedical Co., Ltd., Class A (Health Care Equipment & Services)† | 4,000 | 38,857 | ||||||
Sangfor Technologies Inc., Class A (Software & Services)† | 2,929 | 38,989 | ||||||
SF Holding Co., Ltd., Class A (Transportation)† | 9,700 | 74,306 | ||||||
Shenzhen Inovance Technology Co., Ltd., Class A (Capital Goods)† | 11,900 | 102,151 | ||||||
Shenzhou International Group Holdings Ltd. (Consumer Durables & Apparel)† | 8,000 | 109,982 | ||||||
Sunny Optical Technology Group Co., Ltd. (Technology Hardware & Equipment)† | 5,400 | 79,006 | ||||||
Tencent Holdings Ltd. (Media & Entertainment)† | 4,100 | 192,312 | ||||||
TravelSky Technology Ltd., Class H (Software & Services)† | 62,000 | 92,814 | ||||||
Trip.com Group Ltd. (Consumer Services)*† | 2,146 | 51,084 | ||||||
Wuliangye Yibin Co., Ltd., Class A (Food Beverage & Tobacco)† | 1,700 | 40,989 | ||||||
WuXi AppTec Co., Ltd., Class A (Pharmaceuticals, Biotechnology & Life Sciences)† | 8,560 | 130,552 | ||||||
Wuxi Biologics Cayman Inc. (Pharmaceuticals, Biotechnology & Life Sciences)*^† | 15,500 | 112,482 | ||||||
Yonyou Network Technology Co., Ltd., Class A (Software & Services)† | 19,800 | 56,309 | ||||||
Zhejiang Sanhua Intelligent Controls Co., Ltd., Class A (Capital Goods)† | 40,400 | 100,602 | ||||||
Zhejiang Shuanghuan Driveline Co., Ltd., Class A (Automobiles & Components) | 11,300 | 32,438 | ||||||
2,976,224 | ||||||||
Hong Kong - 11.1% | ||||||||
AIA Group Ltd. (Insurance)† | 14,000 | 136,779 |
See Notes to Financial Statements
41
Table of Contents
Harding, Loevner Funds, Inc. |
Chinese Equity Portfolio Portfolio of Investments April 30, 2022 (unaudited) |
Shares | Value | |||||||
COMMON STOCKS - 98.2% (continued) |
| |||||||
Hong Kong - 11.1% (continued) | ||||||||
ASM Pacific Technology Ltd. (Semiconductors & Semiconductor Equipment)† | 4,100 | $41,429 | ||||||
Budweiser Brewing Co. APAC Ltd. (Food Beverage & Tobacco)^† | 14,200 | 35,521 | ||||||
Hong Kong Exchanges & Clearing Ltd. (Diversified Financials)† | 2,000 | 84,821 | ||||||
Techtronic Industries Co., Ltd. (Capital Goods)† | 8,000 | 106,805 | ||||||
405,355 | ||||||||
Taiwan - 5.9% | ||||||||
Airtac International Group (Capital Goods)† | 4,685 | 127,276 | ||||||
Silergy Corp. (Semiconductors & Semiconductor Equipment)† | 1,000 | 88,322 | ||||||
215,598 | ||||||||
Total Common Stocks (Cost $4,937,375) | $3,597,177 | |||||||
| ||||||||
SHORT TERM INVESTMENTS - 1.8% | ||||||||
Northern Institutional Funds - Treasury Portfolio (Premier Shares), 0.18% (Money Market Funds) | 68,046 | 68,046 | ||||||
Total Short Term Investments (Cost $68,046) | $68,046 | |||||||
| ||||||||
Total Investments — 100.0% | ||||||||
(Cost $5,005,421) | $3,665,223 | |||||||
Liabilities Less Other Assets - (0.0)% | (1,501 | ) | ||||||
Net Assets — 100.0% | $3,663,722 |
* | Non-income producing security. |
† | Investment categorized as level 2 security as disclosed in Note 2 of the Notes to Financial Statements. |
^ | Security exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities, which represent 7.1% of net assets as of April 30, 2022, are considered liquid and may be resold in transactions exempt from registration, normally to qualified buyers. |
Industry | Percentage of Net Assets | |||
Automobiles & Components | 2.0 | % | ||
Capital Goods | 19.5 | |||
Consumer Durables & Apparel | 10.2 | |||
Consumer Services | 1.4 | |||
Diversified Financials | 2.3 | |||
Food Beverage & Tobacco | 8.1 | |||
Health Care Equipment & Services | 1.1 | |||
Insurance | 3.8 | |||
Media & Entertainment | 9.0 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 11.9 | |||
Real Estate | 1.6 | |||
Retailing | 10.2 | |||
Semiconductors & Semiconductor Equipment | 5.8 | |||
Software & Services | 5.1 | |||
Technology Hardware & Equipment | 2.2 | |||
Transportation | 2.0 | |||
Utilities | 2.0 | |||
Money Market Fund | 1.8 | |||
Total Investments | 100.0 | |||
Liabilities Less Other Assets | (0.0 | ) | ||
Net Assets | 100.0 | % |
See Notes to Financial Statements
42
Table of Contents
Harding, Loevner Funds, Inc.
Statements of Assets and Liabilities
April 30, 2022 (Unaudited)
Global Equity Portfolio | International Equity Portfolio | International Small Companies Portfolio | ||||||||||
ASSETS: | ||||||||||||
Investments (cost $1,082,191,932, $13,995,626,021 and $454,032,855, respectively) | $1,277,280,679 | $17,770,003,351 | $504,125,692 | |||||||||
Dividends and interest receivable | 634,461 | 30,870,014 | 773,312 | |||||||||
Foreign currency (cost $143,460, $6,981,030 and $143,043, respectively) | 143,460 | 6,987,634 | 143,122 | |||||||||
Receivable for investments sold | 1,094,073 | 137,143 | 805,540 | |||||||||
Receivable for Fund shares sold | 505,379 | 15,524,305 | 1,196,078 | |||||||||
Tax reclaims receivable | 531,285 | 29,638,332 | 373,835 | |||||||||
Capital gain tax refund receivable | — | — | 5,332 | |||||||||
Prepaid expenses | 46,675 | 133,044 | 27,849 | |||||||||
Total Assets: | 1,280,236,012 | 17,853,293,823 | 507,450,760 | |||||||||
LIABILITIES: | ||||||||||||
Payable to Investment Adviser | (853,456 | ) | (10,262,706 | ) | (411,378 | ) | ||||||
Payable for investments purchased | (410,973 | ) | (12,074,849 | ) | (4,135,901 | ) | ||||||
Payable for Fund shares redeemed | (259,958 | ) | (21,034,276 | ) | (96,665 | ) | ||||||
Payable for directors’ fees and expenses | (12,641 | ) | (160,811 | ) | (4,490 | ) | ||||||
Payable for distribution fees | — | (202,795 | ) | (28,315 | ) | |||||||
Deferred capital gains tax | — | — | (212,535 | ) | ||||||||
Other liabilities | (433,664 | ) | (3,826,765 | ) | (175,656 | ) | ||||||
Total Liabilities | (1,970,692 | ) | (47,562,202 | ) | (5,064,940 | ) | ||||||
Net Assets | $1,278,265,320 | $17,805,731,621 | $502,385,820 | |||||||||
ANALYSIS OF NET ASSETS: | ||||||||||||
Paid in capital | $1,068,465,477 | $13,817,129,092 | $456,823,404 | |||||||||
Distributable earnings | 209,799,843 | 3,988,602,529 | 45,562,416 | |||||||||
Net Assets | $1,278,265,320 | $17,805,731,621 | $502,385,820 | |||||||||
Net Assets: | ||||||||||||
Institutional Class | $963,145,158 | $14,530,945,268 | $464,641,692 | |||||||||
Institutional Class Z | 277,597,418 | 2,961,154,692 | — | |||||||||
Investor Class | — | 313,631,661 | 37,744,128 | |||||||||
Advisor Class | 37,522,744 | — | — | |||||||||
Total Shares Outstanding: | ||||||||||||
Institutional Class (500,000,000, 700,000,000 and 500,000,000, respectively, $.001 par value shares authorized) | 27,364,728 | 588,312,773 | 26,811,594 | |||||||||
Institutional Class Z (200,000,000, 300,000,000 and —, respectively, $.001 par value shares authorized) | 7,881,614 | 119,922,252 | — | |||||||||
Investor Class (—, 100,000,000 and 400,000,000, respectively, $.001 par value shares authorized) | — | 12,706,838 | 2,204,559 | |||||||||
Advisor Class (400,000,000, — and —, respectively, $.001 par value shares authorized) | 1,069,958 | — | — | |||||||||
Net Asset Value, Offering Price and Redemption Price Per Share: | ||||||||||||
Institutional Class | $35.20 | $24.70 | $17.33 | |||||||||
Institutional Class Z | 35.22 | 24.69 | — | |||||||||
Investor Class | — | 24.68 | 17.12 | |||||||||
Advisor Class | 35.07 | — | — |
See Notes to Financial Statements
43
Table of Contents
Harding, Loevner Funds, Inc.
Statements of Assets and Liabilities (continued)
April 30, 2022 (Unaudited)
Institutional Emerging Markets Portfolio | Emerging Markets Portfolio | Frontier Emerging Markets Portfolio | ||||||||||
ASSETS: | ||||||||||||
Investments (cost $3,653,230,131, $2,207,798,933 and $158,091,996, respectively) | $4,073,585,427 | $2,653,988,005 | $190,358,323 | |||||||||
Dividends and interest receivable | 3,525,039 | 2,225,404 | 127,029 | |||||||||
Foreign currency (cost $6,382,265, $845,491 and $2,769,604, respectively) | 6,373,894 | 844,806 | 2,729,624 | |||||||||
Receivable for investments sold | 33,668,655 | 1,095,046 | 83 | |||||||||
Receivable for Fund shares sold | 2,389,672 | 1,503,082 | 154,527 | |||||||||
Tax reclaims receivable | 210,220 | 128,398 | 1,294 | |||||||||
Capital gain tax refund receivable | 1,013 | — | — | |||||||||
Prepaid expenses | 223,050 | 295,268 | 48,294 | |||||||||
Total Assets: | 4,119,976,970 | 2,660,080,009 | 193,419,174 | |||||||||
LIABILITIES: | ||||||||||||
Payable to Investment Adviser | (3,473,831 | ) | (2,259,430 | ) | (218,448 | ) | ||||||
Payable for investments purchased | (207,958 | ) | (154,381 | ) | (391,155 | ) | ||||||
Payable for Fund shares redeemed | (23,002,212 | ) | (3,626,801 | ) | (14,235 | ) | ||||||
Payable for directors’ fees and expenses | (43,142 | ) | (24,926 | ) | (1,664 | ) | ||||||
Payable for distribution fees | — | — | (15,677 | ) | ||||||||
Deferred capital gains tax | (10,360,103 | ) | (5,815,805 | ) | (700,246 | ) | ||||||
Other liabilities | (1,472,190 | ) | (1,673,292 | ) | (131,645 | ) | ||||||
Total Liabilities | (38,559,436 | ) | (13,554,635 | ) | (1,473,070 | ) | ||||||
Net Assets | $4,081,417,534 | $2,646,525,374 | $191,946,104 | |||||||||
ANALYSIS OF NET ASSETS: | ||||||||||||
Paid in capital | $3,759,187,144 | $2,146,959,193 | $268,879,652 | |||||||||
Distributable earnings | 322,230,390 | 499,566,181 | (76,933,548 | ) | ||||||||
Net Assets | $4,081,417,534 | $2,646,525,374 | $191,946,104 | |||||||||
Net Assets: | ||||||||||||
Institutional Class | $3,585,165,124 | $— | $— | |||||||||
Institutional Class I | — | — | 80,876,933 | |||||||||
Institutional Class II | — | — | 103,074,503 | |||||||||
Institutional Class Z | 496,252,410 | — | — | |||||||||
Investor Class | — | — | 7,994,668 | |||||||||
Advisor Class | — | 2,646,525,374 | — | |||||||||
Total Shares Outstanding: | ||||||||||||
Institutional Class (500,000,000, — and —, respectively, $.001 par value shares authorized) | 193,170,601 | — | — | |||||||||
Institutional Class I (—, — and 400,000,000, respectively, $.001 par value shares authorized) | — | — | 10,398,724 | |||||||||
Institutional Class II (—, — and 200,000,000, respectively, $.001 par value shares authorized) | — | — | 13,159,273 | |||||||||
Institutional Class Z (500,000,000, — and —, respectively, $.001 par value shares authorized) | 26,669,849 | — | — | |||||||||
Investor Class (—, — and 400,000,000, respectively, $.001 par value shares authorized) | — | — | 1,032,161 | |||||||||
Advisor Class (—, 500,000,000 and —, respectively, $.001 par value shares authorized) | — | 58,839,542 | — | |||||||||
Net Asset Value, Offering Price and Redemption Price Per Share: | ||||||||||||
Institutional Class | $18.56 | $— | $— | |||||||||
Institutional Class I | — | — | 7.78 | |||||||||
Institutional Class II | — | — | 7.83 | |||||||||
Institutional Class Z | 18.61 | — | — | |||||||||
Investor Class | — | — | 7.75 | |||||||||
Advisor Class | — | 44.98 | — |
See Notes to Financial Statements
44
Table of Contents
Harding, Loevner Funds, Inc.
Statements of Assets and Liabilities (continued)
April 30, 2022 (Unaudited)
Global Equity Research Portfolio | International Equity Research Portfolio | Emerging Markets Research Portfolio | Chinese Equity Portfolio | |||||||||||||
ASSETS: | ||||||||||||||||
Investments (cost $7,372,687, $11,912,708, $7,659,736 and $5,005,421, respectively) | $8,076,873 | $12,139,047 | $7,123,937 | $3,665,223 | ||||||||||||
Dividends and interest receivable | 14,263 | 30,166 | 5,343 | 8 | ||||||||||||
Foreign currency (cost $950, $2,087, $67,154 and $318, respectively) | 950 | 2,090 | 66,111 | 318 | ||||||||||||
Receivable for Fund shares sold | — | 3,294 | — | — | ||||||||||||
Tax reclaims receivable | 2,543 | 10,264 | 97 | — | ||||||||||||
Prepaid offering fees | — | — | — | 5,806 | ||||||||||||
Prepaid expenses | 18,171 | 19,328 | 18,925 | 19,240 | ||||||||||||
Total Assets: | 8,112,800 | 12,204,189 | 7,214,413 | 3,690,595 | ||||||||||||
LIABILITIES: | ||||||||||||||||
Payable to Investment Adviser | (4,903 | ) | (7,345 | ) | (6,168 | ) | (2,947 | ) | ||||||||
Payable for investments purchased | (2 | ) | (3 | ) | — | — | ||||||||||
Payable for directors’ fees and expenses | (69 | ) | (121 | ) | (54 | ) | (30 | ) | ||||||||
Deferred capital gains tax | (2,966 | ) | (6,762 | ) | (8,687 | ) | — | |||||||||
Other liabilities | (35,546 | ) | (45,731 | ) | (43,330 | ) | (23,896 | ) | ||||||||
Total Liabilities | (43,486 | ) | (59,962 | ) | (58,239 | ) | (26,873 | ) | ||||||||
Net Assets | $8,069,314 | $12,144,227 | $7,156,174 | $3,663,722 | ||||||||||||
ANALYSIS OF NET ASSETS: | ||||||||||||||||
Paid in capital | $7,068,048 | $11,711,812 | $7,793,229 | $5,470,854 | ||||||||||||
Distributable earnings | 1,001,266 | 432,415 | (637,055 | ) | (1,807,132 | ) | ||||||||||
Net Assets | $8,069,314 | $12,144,227 | $7,156,174 | $3,663,722 | ||||||||||||
Net Assets: | ||||||||||||||||
Institutional Class | $8,069,314 | $12,144,227 | $7,156,174 | $3,663,722 | ||||||||||||
Total Shares Outstanding: | ||||||||||||||||
Institutional Class (400,000,000, 400,000,000, 400,000,000 and 500,000,000, respectively, $.001 par value shares authorized) | 660,793 | 1,149,791 | 742,173 | 560,169 | ||||||||||||
Net Asset Value, Offering Price and Redemption Price Per Share: | ||||||||||||||||
Institutional Class | $12.21 | $10.56 | $9.64 | $6.54 |
See Notes to Financial Statements
45
Table of Contents
Harding, Loevner Funds, Inc.
Six Months Ended April 30, 2022 (unaudited)
Global Equity | International Equity Portfolio | International Small Companies Portfolio | Institutional Emerging Markets Portfolio | Emerging Markets Portfolio | ||||||||||||||||
INVESTMENT INCOME | ||||||||||||||||||||
Dividends (net of foreign withholding taxes of $350,553, $10,739,842, $370,254, $5,718,546 and $3,465,315, respectively) | $4,457,616 | $228,245,186 | $3,486,698 | $37,635,042 | $22,034,293 | |||||||||||||||
Non-cash dividends | 508,239 | 19,316,844 | — | 6,946,677 | 3,958,305 | |||||||||||||||
Total investment income | 4,965,855 | 247,562,030 | 3,486,698 | 44,581,719 | 25,992,598 | |||||||||||||||
EXPENSES | ||||||||||||||||||||
Investment advisory fees (Note 3) | 5,784,289 | 67,498,937 | 2,651,470 | 27,021,436 | 16,074,739 | |||||||||||||||
Administration fees (Note 3) | 106,211 | 1,325,318 | 41,246 | 370,467 | 219,147 | |||||||||||||||
Distribution fees, Investor Class | — | 453,288 | 54,913 | — | — | |||||||||||||||
Custody and accounting fees (Note 3) | 93,651 | 1,238,808 | 92,904 | 880,733 | 507,051 | |||||||||||||||
Directors’ fees and expenses | 25,132 | 321,443 | 8,691 | 90,807 | 52,276 | |||||||||||||||
Transfer agent fees and expenses (Note 3) | 4,699 | 154,256 | 1,184 | 10,515 | — | |||||||||||||||
Printing and postage fees | 15,528 | 398,588 | 10,488 | 129,297 | 146,528 | |||||||||||||||
State registration filing fees | 34,173 | 80,811 | 22,052 | 30,123 | 31,631 | |||||||||||||||
Professional fees | 33,705 | 222,398 | 30,294 | 84,971 | 65,774 | |||||||||||||||
Shareholder servicing fees (Note 3) | 353,691 | 7,088,578 | 210,691 | 2,085,264 | 2,242,601 | |||||||||||||||
Compliance officers’ fees and expenses (Note 3) | 1,889 | 24,123 | 649 | 6,908 | 3,948 | |||||||||||||||
Other fees and expenses | 22,846 | 228,606 | 9,180 | 68,222 | 27,333 | |||||||||||||||
Total Expenses | 6,475,814 | 79,035,154 | 3,133,762 | 30,778,743 | 19,371,028 | |||||||||||||||
Less Waiver of investment advisory fee and/or reimbursement of other operating expenses (Note 3) | — | — | (4,335 | ) | (174,999 | ) | — | |||||||||||||
Net expenses | 6,475,814 | 79,035,154 | 3,129,427 | 30,603,744 | 19,371,028 | |||||||||||||||
Net investment income (loss) | (1,509,959 | ) | 168,526,876 | 357,271 | 13,977,975 | 6,621,570 | ||||||||||||||
REALIZED AND UNREALIZED GAIN (LOSS) | ||||||||||||||||||||
Net realized gain (loss) | ||||||||||||||||||||
Investment transactions | 20,553,025 | 191,676,907 | 1,471,732 | 82,056,719 | 107,251,506 | |||||||||||||||
Foreign currency transactions | (64,958 | ) | (1,772,804 | ) | (94,878 | ) | (620,861 | ) | 25,702 | |||||||||||
Net realized gain | 20,488,067 | 189,904,103 | 1,376,854 | 81,435,858 | 107,277,208 | |||||||||||||||
Change in unrealized appreciation (depreciation) | ||||||||||||||||||||
Investments (net of increase (decrease) in deferred foreign taxes of $—, $—, $234,352, $4,584,898 and $3,483,901, respectively) | (429,997,359 | ) | (4,162,650,532 | ) | (135,986,348 | ) | (1,777,997,378 | ) | (1,107,142,428 | ) | ||||||||||
Translation of assets and liabilities denominated in foreign currencies | (39,935 | ) | (1,782,470 | ) | (41,631 | ) | 362,372 | �� | 207,116 | |||||||||||
Net change in unrealized depreciation | (430,037,294 | ) | (4,164,433,002 | ) | (136,027,979 | ) | (1,777,635,006 | ) | (1,106,935,312 | ) | ||||||||||
Net realized and unrealized loss | (409,549,227 | ) | (3,974,528,899 | ) | (134,651,125 | ) | (1,696,199,148 | ) | (999,658,104 | ) | ||||||||||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $(411,059,186 | ) | $(3,806,002,023 | ) | $(134,293,854 | ) | $(1,682,221,173 | ) | $(993,036,534 | ) |
See Notes to Financial Statements
46
Table of Contents
Harding, Loevner Funds, Inc.
Statements of Operations (continued)
Six Months Ended April 30, 2022 (unaudited)
Frontier Emerging Markets Portfolio | Global Equity Research Portfolio | International Equity Research Portfolio | Emerging Markets Research Portfolio | Chinese Equity Portfolio | ||||||||||||||||
INVESTMENT INCOME | ||||||||||||||||||||
Dividends (net of foreign withholding taxes of $507,010, $6,781, $15,832, $8,168 and $35, respectively) | $2,984,788 | $67,766 | $125,784 | $67,421 | $8,610 | |||||||||||||||
Non-cash dividends | — | — | — | — | 6,238 | |||||||||||||||
Total investment income | 2,984,788 | 67,766 | 125,784 | 67,421 | 14,848 | |||||||||||||||
EXPENSES | ||||||||||||||||||||
Investment advisory fees (Note 3) | 1,382,014 | 31,859 | 48,555 | 41,322 | 18,681 | |||||||||||||||
Administration fees (Note 3) | 18,269 | 5,551 | 5,861 | 5,497 | 5,344 | |||||||||||||||
Distribution fees, Investor Class | 10,832 | — | — | — | — | |||||||||||||||
Custody and accounting fees (Note 3) | 124,970 | 5,292 | 6,075 | 8,696 | 4,947 | |||||||||||||||
Directors’ fees and expenses | 3,265 | 149 | 212 | 140 | 52 | |||||||||||||||
Transfer agent fees and expenses (Note 3) | 1,142 | 236 | 271 | 255 | 385 | |||||||||||||||
Printing and postage fees | 3,737 | 132 | 201 | 122 | 230 | |||||||||||||||
State registration filing fees | 22,551 | 10,653 | 11,021 | 10,697 | 8,311 | |||||||||||||||
Professional fees | 25,360 | 19,947 | 19,986 | 24,045 | 14,004 | |||||||||||||||
Shareholder servicing fees (Note 3) | 33,596 | — | 461 | 54 | 111 | |||||||||||||||
Compliance officers’ fees and expenses (Note 3) | 247 | 11 | 16 | 11 | 4 | |||||||||||||||
Offering fees | — | — | — | — | 26,123 | |||||||||||||||
Other fees and expenses | 7,643 | 1,973 | 2,013 | 1,968 | 2,106 | |||||||||||||||
Total Expenses | 1,633,626 | 75,803 | 94,672 | 92,807 | 80,298 | |||||||||||||||
Less Waiver of investment advisory fee and/or reimbursement of other operating expenses (Note 3) | (109,503 | ) | (39,393 | ) | (42,649 | ) | (45,287 | ) | (57,684 | ) | ||||||||||
Net expenses | 1,524,123 | 36,410 | 52,023 | 47,520 | 22,614 | |||||||||||||||
Net investment income (loss) | 1,460,665 | 31,356 | 73,761 | 19,901 | (7,766 | ) | ||||||||||||||
REALIZED AND UNREALIZED GAIN (LOSS) | ||||||||||||||||||||
Net realized gain (loss) Investment transactions | 608,807 | 282,799 | 279,144 | (82,383 | ) | (269,831 | ) | |||||||||||||
Foreign currency transactions | (38,289 | ) | (1,389 | ) | (2,691 | ) | (2,761 | ) | (490 | ) | ||||||||||
Net realized gain (loss) | 570,518 | 281,410 | 276,453 | (85,144 | ) | (270,321 | ) | |||||||||||||
Change in unrealized appreciation (depreciation) | ||||||||||||||||||||
Investments (net of increase (decrease) in deferred foreign taxes of $(186,485), $1,990, $4,627, $6,311 and $—, respectively) | (29,556,558 | ) | (1,996,501 | ) | (3,150,558 | ) | (1,628,182 | ) | (1,181,079 | ) | ||||||||||
Translation of assets and liabilities denominated in foreign currencies | 6,830 | (535 | ) | (1,579 | ) | 116 | — | |||||||||||||
Net change in unrealized depreciation | (29,549,728 | ) | (1,997,036 | ) | (3,152,137 | ) | (1,628,066 | ) | (1,181,079 | ) | ||||||||||
Net realized and unrealized loss | (28,979,210 | ) | (1,715,626 | ) | (2,875,684 | ) | (1,713,210 | ) | (1,451,400 | ) | ||||||||||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $(27,518,545 | ) | $(1,684,270 | ) | $(2,801,923 | ) | $(1,693,309 | ) | $(1,459,166 | ) |
See Notes to Financial Statements
47
Table of Contents
Harding, Loevner Funds, Inc.
Statements of Changes in Net Assets
For the Six Months Ended April 30, 2022 (unaudited) and the Fiscal Year Ended October 31, 2021
Global Equity Portfolio | International Equity Portfolio | International Small Companies Portfolio | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | ||||||||||||||||||||||||
Net investment income (loss) | $(1,509,959 | ) | $(4,545,036 | ) | $168,526,876 | $241,579,583 | $357,271 | $1,338,454 | ||||||||||||||||
Net realized gain on investments and foreign currency transactions | 20,488,067 | 250,426,555 | 189,904,103 | 792,159,294 | 1,376,854 | 20,518,770 | ||||||||||||||||||
Net change in unrealized appreciation (depreciation) on investments and translation of assets and liabilities denominated in foreign currencies | (430,037,294 | ) | 230,188,057 | (4,164,433,002 | ) | 3,879,532,363 | (136,027,979 | ) | 111,531,955 | |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (411,059,186 | ) | 476,069,576 | (3,806,002,023 | ) | 4,913,271,240 | (134,293,854 | ) | 133,389,179 | |||||||||||||||
DISTRIBUTIONS TO SHAREHOLDERS: | ||||||||||||||||||||||||
Institutional Class | (185,635,345 | ) | (65,209,713 | ) | (444,803,839 | ) | (123,781,067 | ) | (16,184,086 | ) | (609,752 | ) | ||||||||||||
Institutional Class Z | (50,280,731 | ) | (17,916,242 | ) | (81,696,227 | ) | (21,728,233 | ) | — | — | ||||||||||||||
Investor Class | — | — | (8,326,347 | ) | (1,685,707 | ) | (1,329,708 | ) | (12,869 | ) | ||||||||||||||
Advisor Class | (7,355,600 | ) | (3,368,857 | ) | — | — | — | — | ||||||||||||||||
Total distributions to shareholders | (243,271,676 | ) | (86,494,812 | ) | (534,826,413 | ) | (147,195,007 | ) | (17,513,794 | ) | (622,621 | ) | ||||||||||||
TRANSACTIONS IN SHARES OF COMMON STOCK | ||||||||||||||||||||||||
Institutional Class | 105,402,848 | 18,309,218 | (150,824,810 | ) | 646,601,165 | 54,740,734 | 92,733,830 | |||||||||||||||||
Institutional Class Z | 35,268,903 | 7,371,412 | 403,753,690 | 422,221,016 | — | — | ||||||||||||||||||
Investor Class | — | — | (19,158,512 | ) | (21,699,734 | ) | (199,478 | ) | (2,710,589 | ) | ||||||||||||||
Advisor Class | 3,742,179 | (13,246,523 | ) | — | — | — | — | |||||||||||||||||
Net Increase in net assets from portfolio share transactions | 144,413,930 | 12,434,107 | 233,770,368 | 1,047,122,447 | 54,541,256 | 90,023,241 | ||||||||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | (509,916,932 | ) | 402,008,871 | (4,107,058,068 | ) | 5,813,198,680 | (97,266,392 | ) | 222,789,799 | |||||||||||||||
NET ASSETS | ||||||||||||||||||||||||
At beginning of period | 1,788,182,252 | 1,386,173,381 | 21,912,789,689 | 16,099,591,009 | 599,652,212 | 376,862,413 | ||||||||||||||||||
At end of period | $1,278,265,320 | $1,788,182,252 | $17,805,731,621 | $21,912,789,689 | $502,385,820 | $599,652,212 | ||||||||||||||||||
See Notes to Financial Statements
48
Table of Contents
Harding, Loevner Funds, Inc.
Statements of Changes in Net Assets (continued)
For the Six Months Ended April 30, 2022 (unaudited) and the Fiscal Year Ended October 31, 2021
Institutional Emerging Markets Portfolio | Emerging Markets Portfolio | Frontier Emerging Markets Portfolio | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | ||||||||||||||||||||||||
Net investment income | $13,977,975 | $23,198,946 | $6,621,570 | $7,726,216 | $1,460,665 | $2,035,958 | ||||||||||||||||||
Net realized gain on investments and foreign currency transactions | 81,435,858 | 130,998,582 | 107,277,208 | 320,983,925 | 570,518 | 18,982,850 | ||||||||||||||||||
Net change in unrealized appreciation (depreciation) on investments and translation of assets and liabilities denominated in foreign currencies | (1,777,635,006 | ) | 1,003,016,842 | (1,106,935,312 | ) | 482,938,965 | (29,549,728 | ) | 39,990,501 | |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (1,682,221,173 | ) | 1,157,214,370 | (993,036,534 | ) | 811,649,106 | (27,518,545 | ) | 61,009,309 | |||||||||||||||
DISTRIBUTIONS TO | ||||||||||||||||||||||||
SHAREHOLDERS: | ||||||||||||||||||||||||
Institutional Class | (39,642,558 | ) | (23,061,824 | ) | — | — | — | — | ||||||||||||||||
Institutional Class I | — | — | — | — | (756,883 | ) | (1,305,371 | ) | ||||||||||||||||
Institutional Class II | — | — | — | — | (1,026,818 | ) | (2,278,483 | ) | ||||||||||||||||
Institutional Class Z | (5,159,015 | ) | (3,583,856 | ) | — | — | — | — | ||||||||||||||||
Investor Class | — | — | — | — | (44,023 | ) | (146,250 | ) | ||||||||||||||||
Advisor Class | — | — | (289,296,570 | ) | (14,604,731 | ) | — | — | ||||||||||||||||
Total distributions to shareholders | (44,801,573 | ) | (26,645,680 | ) | (289,296,570 | ) | (14,604,731 | ) | (1,827,724 | ) | (3,730,104 | ) | ||||||||||||
TRANSACTIONS IN SHARES OF COMMON STOCK | ||||||||||||||||||||||||
Institutional Class | (663,986,081 | ) | (72,145,922 | ) | — | — | — | — | ||||||||||||||||
Institutional Class I | — | — | — | — | (3,553,081 | ) | 1,089,776 | |||||||||||||||||
Institutional Class II | — | — | — | — | 1,026,818 | (31,446,987 | ) | |||||||||||||||||
Institutional Class Z | (21,459,680 | ) | (38,875,745 | ) | — | — | — | — | ||||||||||||||||
Investor Class | — | — | — | — | (317,165 | ) | (3,400,547 | ) | ||||||||||||||||
Advisor Class | — | — | 115,527,631 | (722,922,763 | ) | — | — | |||||||||||||||||
Net Increase (Decrease) in net assets from portfolio share transactions | (685,445,761 | ) | (111,021,667 | ) | 115,527,631 | (722,922,763 | ) | (2,843,428 | ) | (33,757,758 | ) | |||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | (2,412,468,507 | ) | 1,019,547,023 | (1,166,805,473 | ) | 74,121,612 | (32,189,697 | ) | 23,521,447 | |||||||||||||||
NET ASSETS | ||||||||||||||||||||||||
At beginning of period | 6,493,886,041 | 5,474,339,018 | 3,813,330,847 | 3,739,209,235 | 224,135,801 | 200,614,354 | ||||||||||||||||||
At end of period | $4,081,417,534 | $6,493,886,041 | $2,646,525,374 | $3,813,330,847 | $191,946,104 | $224,135,801 | ||||||||||||||||||
See Notes to Financial Statements
49
Table of Contents
Harding, Loevner Funds, Inc.
Statements of Changes in Net Assets (continued)
For the Six Months Ended April 30, 2022 (unaudited) and the Fiscal Year Ended October 31, 2021
Global Equity Research Portfolio | International Equity Research Portfolio | Emerging Markets Research Portfolio | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | ||||||||||||||||||||||||
Net investment income | $31,356 | $61,559 | $73,761 | $149,982 | $19,901 | $68,200 | ||||||||||||||||||
Net realized gain (loss) on investments and foreign currency transactions | 281,410 | 993,321 | 276,453 | 1,549,600 | (85,144 | ) | 771,316 | |||||||||||||||||
Net change in unrealized appreciation (depreciation) on investments and translation of assets and liabilities denominated in foreign currencies | (1,997,036 | ) | 1,413,992 | (3,152,137 | ) | 1,625,603 | (1,628,066 | ) | 564,118 | |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (1,684,270 | ) | 2,468,872 | (2,801,923 | ) | 3,325,185 | (1,693,309 | ) | 1,403,634 | |||||||||||||||
DISTRIBUTIONS TO SHAREHOLDERS: | ||||||||||||||||||||||||
Institutional Class | (1,055,667 | ) | (217,846 | ) | (1,698,835 | ) | (489,632 | ) | (819,048 | ) | (134,267 | ) | ||||||||||||
Total distributions to shareholders | (1,055,667 | ) | (217,846 | ) | (1,698,835 | ) | (489,632 | ) | (819,048 | ) | (134,267 | ) | ||||||||||||
TRANSACTIONS IN SHARES OF COMMON STOCK | ||||||||||||||||||||||||
Institutional Class | 952,862 | 218,347 | 1,350,214 | (34,784 | ) | 603,964 | 428,228 | |||||||||||||||||
Net Increase (Decrease) in net assets from portfolio share transactions | 952,862 | 218,347 | 1,350,214 | (34,784 | ) | 603,964 | 428,228 | |||||||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | (1,787,075 | ) | 2,469,373 | (3,150,544 | ) | 2,800,769 | (1,908,393 | ) | 1,697,595 | |||||||||||||||
NET ASSETS | ||||||||||||||||||||||||
At beginning of period | 9,856,389 | 7,387,016 | 15,294,771 | 12,494,002 | 9,064,567 | 7,366,972 | ||||||||||||||||||
At end of period | $8,069,314 | $9,856,389 | $12,144,227 | $15,294,771 | $7,156,174 | $9,064,567 | ||||||||||||||||||
See Notes to Financial Statements
50
Table of Contents
Harding, Loevner Funds, Inc.
Statements of Changes in Net Assets (continued)
For the Six Months Ended April 30, 2022 (unaudited) and the Fiscal Year Ended October 31, 2021
Chinese Equity Portfolio | ||||||||||||||||
2022 | 2021(1) | |||||||||||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | ||||||||||||||||
Net investment loss | $(7,766 | ) | $(7,935 | ) | ||||||||||||
Net realized loss on investments and foreign currency transactions | (270,321 | ) | (171,141 | ) | ||||||||||||
Net change in unrealized depreciation on investments and translation of assets and liabilities denominated in foreign currencies | (1,181,079 | ) | (159,119 | ) | ||||||||||||
Net decrease in net assets resulting from operations | (1,459,166 | ) | (338,195 | ) | ||||||||||||
DISTRIBUTIONS TO SHAREHOLDERS: | ||||||||||||||||
Institutional Class | (11,045 | ) | — | |||||||||||||
Total distributions to shareholders | (11,045 | ) | — | |||||||||||||
TRANSACTIONS IN SHARES OF COMMON STOCK | ||||||||||||||||
Institutional Class | 1,191,628 | 4,280,500 | ||||||||||||||
Net Increase in net assets from portfolio share transactions | 1,191,628 | 4,280,500 | ||||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | (278,583 | ) | 3,942,305 | |||||||||||||
NET ASSETS | ||||||||||||||||
At beginning of period | 3,942,305 | — | ||||||||||||||
At end of period | $3,663,722 | $3,942,305 | ||||||||||||||
(1) | For the period from December 16, 2020 (commencement of operations) through October 31, 2021. |
See Notes to Financial Statements
51
Table of Contents
Financial Highlights
For the Six Months Ended April 30, 2022 (unaudited) and the Fiscal Year Ended October 31
Global Equity Portfolio Institutional Class | ||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||
Net asset value, beginning of period | $ | 53.93 | $ | 42.41 | $ | 35.38 | $ | 35.68 | $ | 40.84 | $ | 32.53 | ||||||||||||||||||
Increase (Decrease) in Net Assets from Operations | ||||||||||||||||||||||||||||||
Net investment income (loss)(1) | (0.04 | ) | (0.14 | ) | (0.06 | ) | 0.09 | 0.13 | 0.09 | |||||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency-related transactions | (11.28 | ) | 14.30 | 7.33 | 3.45 | (0.13 | ) | 8.74 | ||||||||||||||||||||||
Net increase (decrease) from investment operations | (11.32 | ) | 14.16 | 7.27 | 3.54 | — | 8.83 | |||||||||||||||||||||||
Distributions to Shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | — | — | (0.24 | ) | (0.12 | ) | (0.14 | ) | (0.13 | ) | ||||||||||||||||||||
Net realized gain from investments | (7.41 | ) | (2.64 | ) | — | (3.72 | ) | (5.02 | ) | (0.39 | ) | |||||||||||||||||||
Total distributions | (7.41 | ) | (2.64 | ) | (0.24 | ) | (3.84 | ) | (5.16 | ) | (0.52 | ) | ||||||||||||||||||
Net asset value, end of period | $ | 35.20 | $ | 53.93 | $ | 42.41 | $ | 35.38 | $ | 35.68 | $ | 40.84 | ||||||||||||||||||
Total Return | (23.95 | )%(A) | 34.57 | % | 20.63 | % | 11.86 | % | (0.35 | )% | 27.58 | % | ||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||
Net assets, end of year (000’s) | $ | 963,145 | $ | 1,354,918 | $ | 1,043,741 | $ | 684,764 | $ | 619,347 | $ | 790,097 | ||||||||||||||||||
Expenses to average net assets | 0.84 | %(B) | 0.88 | % | 0.92 | % | 0.93 | % | 0.94 | % | 0.93 | % | ||||||||||||||||||
Expenses to average net assets (net of fees waived/reimbursed) | 0.84 | %(B) | 0.88 | % | 0.92 | % | 0.93 | % | 0.94 | % | 0.93 | % | ||||||||||||||||||
Net investment income (loss) to average net assets | (0.20 | )%(B) | (0.28 | )% | (0.15 | )% | 0.28 | % | 0.34 | % | 0.25 | % | ||||||||||||||||||
Portfolio turnover rate | 25 | %(A) | 59 | % | 63 | % | 39 | % | 42 | % | 33 | % |
(A) | Not Annualized. |
(B) | Annualized. |
(1) | Net investment income per share was calculated using the average shares outstanding method. |
See Notes to Financial Statements
52
Table of Contents
Harding, Loevner Funds, Inc.
Financial Highlights (continued)
For the Six Months Ended April 30, 2022 (unaudited) and the Fiscal Year Ended October 31
Global Equity Portfolio Institutional Class Z | ||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | 2017(1)(2) | |||||||||||||||||||||||||
Net asset value, beginning of period | $ | 53.95 | $ | 42.39 | $ | 35.36 | $ | 35.67 | $ | 40.84 | $ | 39.33 | ||||||||||||||||||
Increase (Decrease) in Net Assets from Operations | ||||||||||||||||||||||||||||||
Net investment income (loss)(3) | (0.03 | ) | (0.10 | ) | (0.02 | ) | 0.11 | 0.17 | (0.01 | ) | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency-related transactions | (11.29 | ) | 14.30 | 7.31 | 3.44 | (0.15 | ) | 1.52 | ||||||||||||||||||||||
Net increase (decrease) from investment operations | (11.32 | ) | 14.20 | 7.29 | 3.55 | 0.02 | 1.51 | |||||||||||||||||||||||
Distributions to Shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | — | — | (0.26 | ) | (0.14 | ) | (0.17 | ) | — | |||||||||||||||||||||
Net realized gain from investments | (7.41 | ) | (2.64 | ) | — | (3.72 | ) | (5.02 | ) | — | ||||||||||||||||||||
Total distributions | (7.41 | ) | (2.64 | ) | (0.26 | ) | (3.86 | ) | (5.19 | ) | — | |||||||||||||||||||
Net asset value, end of period | $ | 35.22 | $ | 53.95 | $ | 42.39 | $ | 35.36 | $ | 35.67 | $ | 40.84 | ||||||||||||||||||
Total Return | (23.94 | )%(A) | 34.66 | % | 20.76 | % | 11.89 | % | (0.26 | )% | 3.80 | %(A) | ||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||
Net assets, end of year (000’s) | $ | 277,597 | $ | 379,781 | $ | 289,320 | $ | 229,355 | $ | 140,359 | $ | 46,493 | ||||||||||||||||||
Expenses to average net assets | 0.79 | %(B) | 0.81 | % | 0.85 | % | 0.88 | % | 0.91 | % | 1.21 | %(B) | ||||||||||||||||||
Expenses to average net assets (net of fees waived/reimbursed) | 0.79 | %(B) | 0.80 | % | 0.84 | % | 0.88 | % | 0.90 | % | 0.90 | %(B) | ||||||||||||||||||
Net investment income (loss) to average net assets | (0.15 | )%(B) | (0.20 | )% | (0.05 | )% | 0.32 | % | 0.43 | % | (0.05 | )%(B) | ||||||||||||||||||
Portfolio turnover rate | 25 | %(A) | 59 | % | 63 | % | 39 | % | 42 | % | 33 | %(A) |
(A) | Not Annualized. |
(B) | Annualized. |
(1) | For the period from August 1, 2017 (commencement of class operations) through October 31, 2017. |
(2) | All per share amounts and net asset values have been adjusted as a result of the reverse share split effected after the close of business on December 1, 2017. |
(3) | Net investment income per share was calculated using the average shares outstanding method. |
See Notes to Financial Statements
53
Table of Contents
Harding, Loevner Funds, Inc.
Financial Highlights (continued)
For the Six Months Ended April 30, 2022 (unaudited) and the Fiscal Year Ended October 31
Global Equity Portfolio Advisor Class | ||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||
Net asset value, beginning of period | $ | 53.82 | $ | 42.41 | $ | 35.30 | $ | 35.60 | $ | 40.78 | $ | 32.47 | ||||||||||||||||||
Increase (Decrease) in Net Assets from Operations | ||||||||||||||||||||||||||||||
Net investment income (loss)(1) | (0.09 | ) | (0.24 | ) | (0.12 | ) | 0.03 | 0.07 | 0.01 | |||||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency-related transactions | (11.25 | ) | 14.29 | 7.33 | 3.43 | (0.15 | ) | 8.73 | ||||||||||||||||||||||
Net increase (decrease) from investment operations | (11.34 | ) | 14.05 | 7.21 | 3.46 | (0.08 | ) | 8.74 | ||||||||||||||||||||||
Distributions to Shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | — | — | (0.10 | ) | (0.04 | ) | (0.08 | ) | (0.04 | ) | ||||||||||||||||||||
Net realized gain from investments | (7.41 | ) | (2.64 | ) | — | (3.72 | ) | (5.02 | ) | (0.39 | ) | |||||||||||||||||||
Total distributions | (7.41 | ) | (2.64 | ) | (0.10 | ) | (3.76 | ) | (5.10 | ) | (0.43 | ) | ||||||||||||||||||
Net asset value, end of period | $ | 35.07 | $ | 53.82 | $ | 42.41 | $ | 35.30 | $ | 35.60 | $ | 40.78 | ||||||||||||||||||
Total Return | (24.03 | )%(A) | 34.28 | % | 20.47 | % | 11.60 | % | (0.57 | )% | 27.28 | % | ||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||
Net assets, end of year (000’s) | $ | 37,523 | $ | 53,483 | $ | 53,112 | $ | 48,181 | $ | 90,567 | $ | 75,244 | ||||||||||||||||||
Expenses to average net assets | 1.04 | %(B) | 1.09 | % | 1.11 | % | 1.12 | % | 1.14 | % | 1.14 | % | ||||||||||||||||||
Expenses to average net assets (net of fees waived/reimbursed) | 1.04 | %(B) | 1.09 | % | 1.11 | % | 1.12 | % | 1.14 | % | 1.14 | % | ||||||||||||||||||
Net investment income (loss) to average net assets | (0.40 | )%(B) | (0.48 | )% | (0.32 | )% | 0.09 | % | 0.18 | % | 0.02 | % | ||||||||||||||||||
Portfolio turnover rate | 25 | %(A) | 59 | % | 63 | % | 39 | % | 42 | % | 33 | % |
(A) | Not Annualized. |
(B) | Annualized. |
(1) | Net investment income per share was calculated using the average shares outstanding method. |
See Notes to Financial Statements
54
Table of Contents
Harding, Loevner Funds, Inc.
Financial Highlights (continued)
For the Six Months Ended April 30, 2022 (unaudited) and the Fiscal Year Ended October 31
International Equity Portfolio Institutional Class | ||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||
Net asset value, beginning of period | $ | 30.69 | $ | 23.76 | $ | 22.72 | $ | 20.74 | $ | 22.64 | $ | 18.37 | ||||||||||||||||||
Increase (Decrease) in Net Assets from Operations | ||||||||||||||||||||||||||||||
Net investment income(1) | 0.23 | 0.34 | 0.23 | 0.29 | 0.31 | 0.23 | ||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency-related transactions | (5.47 | ) | 6.80 | 1.19 | 1.98 | (1.83 | ) | 4.22 | ||||||||||||||||||||||
Net increase (decrease) from investment operations | (5.24 | ) | 7.14 | 1.42 | 2.27 | (1.52 | ) | 4.45 | ||||||||||||||||||||||
Distributions to Shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | (0.43 | ) | (0.21 | ) | (0.38 | ) | (0.29 | ) | (0.20 | ) | (0.18 | ) | ||||||||||||||||||
Net realized gain from investments | (0.32 | ) | — | — | — | (0.18 | ) | — | ||||||||||||||||||||||
Total distributions | (0.75 | ) | (0.21 | ) | (0.38 | ) | (0.29 | ) | (0.38 | ) | (0.18 | ) | ||||||||||||||||||
Net asset value, end of period | $ | 24.70 | $ | 30.69 | $ | 23.76 | $ | 22.72 | $ | 20.74 | $ | 22.64 | ||||||||||||||||||
Total Return | (17.46 | )%(A) | 30.16 | % | 6.25 | % | 11.19 | % | (6.86 | )% | 24.47 | % | ||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||
Net assets, end of year (000’s) | $ | 14,530,945 | $ | 18,268,498 | $ | 13,596,900 | $ | 13,766,876 | $ | 11,995,592 | $ | 11,107,736 | ||||||||||||||||||
Expenses to average net assets | 0.79 | %(B) | 0.80 | % | 0.81 | % | 0.81 | % | 0.81 | % | 0.82 | % | ||||||||||||||||||
Expenses to average net assets (net of fees waived/reimbursed) | 0.79 | %(B) | 0.80 | % | 0.81 | % | 0.81 | % | 0.81 | % | 0.82 | % | ||||||||||||||||||
Net investment income to average net assets | 1.64 | %(B) | 1.17 | % | 1.01 | % | 1.35 | % | 1.34 | % | 1.22 | % | ||||||||||||||||||
Portfolio turnover rate | 8 | %(A) | 14 | % | 17 | % | 30 | % | 10 | % | 12 | % |
(A) | Not Annualized. |
(B) | Annualized. |
(1) | Net investment income per share was calculated using the average shares outstanding method. |
See Notes to Financial Statements
55
Table of Contents
Harding, Loevner Funds, Inc.
Financial Highlights (continued)
For the Six Months Ended April 30, 2022 (unaudited) and the Fiscal Year Ended October 31
International Equity Portfolio Institutional Class Z | ||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | 2017(1)(2) | |||||||||||||||||||||||||
Net asset value, beginning of period | $ | 30.69 | $ | 23.76 | $ | 22.72 | $ | 20.75 | $ | 22.64 | $ | 21.35 | ||||||||||||||||||
Increase (Decrease) in Net Assets from Operations | ||||||||||||||||||||||||||||||
Net investment income(3) | 0.25 | 0.37 | 0.25 | 0.30 | 0.40 | 0.02 | ||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency-related transactions | (5.48 | ) | 6.79 | 1.18 | 1.98 | (1.90 | ) | 1.27 | ||||||||||||||||||||||
Net increase (decrease) from investment operations | (5.23 | ) | 7.16 | 1.43 | 2.28 | (1.50 | ) | 1.29 | ||||||||||||||||||||||
Distributions to Shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | (0.45 | ) | (0.23 | ) | (0.39 | ) | (0.31 | ) | (0.21 | ) | — | |||||||||||||||||||
Net realized gain from investments | (0.32 | ) | — | — | — | (0.18 | ) | — | ||||||||||||||||||||||
Total distributions | (0.77 | ) | (0.23 | ) | (0.39 | ) | (0.31 | ) | (0.39 | ) | — | |||||||||||||||||||
Net asset value, end of period | $ | 24.69 | $ | 30.69 | $ | 23.76 | $ | 22.72 | $ | 20.75 | $ | 22.64 | ||||||||||||||||||
Total Return | (17.42 | )%(A) | 30.25 | % | 6.32 | % | 11.29 | % | (6.79 | )% | 6.00 | %(A) | ||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||
Net assets, end of year (000’s) | $ | 2,961,155 | $ | 3,235,428 | $ | 2,165,343 | $ | 1,938,763 | $ | 1,342,804 | $ | 166,923 | ||||||||||||||||||
Expenses to average net assets | 0.70 | %(B) | 0.72 | % | 0.73 | % | 0.75 | % | 0.74 | % | 0.99 | %(B) | ||||||||||||||||||
Expenses to average net assets (net of fees waived/reimbursed) | 0.70 | %(B) | 0.72 | % | 0.73 | % | 0.75 | % | 0.74 | % | 0.80 | %(B) | ||||||||||||||||||
Net investment income to average net assets | 1.79 | %(B) | 1.25 | % | 1.08 | % | 1.42 | % | 1.77 | % | 0.33 | %(B) | ||||||||||||||||||
Portfolio turnover rate | 8 | %(A) | 14 | % | 17 | % | 30 | % | 10 | % | 12 | %(A) |
(A) | Not Annualized. |
(B) | Annualized. |
(1) | All per share amounts and net asset values have been adjusted as a result of the reverse share split effected after the close of business on December 1, 2017. |
(2) | For the period from July 17, 2017 (commencement of operations) through October 31, 2017. |
(3) | Net investment income per share was calculated using the average shares outstanding method. |
See Notes to Financial Statements
56
Table of Contents
Harding, Loevner Funds, Inc.
Financial Highlights (continued)
For the Six Months Ended April 30, 2022 (unaudited) and the Fiscal Year Ended October 31
International Equity Portfolio Investor Class | ||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||
Net asset value, beginning of period | $ | 30.61 | $ | 23.70 | $ | 22.66 | $ | 20.65 | $ | 22.55 | $ | 18.30 | ||||||||||||||||||
Increase (Decrease) in Net Assets from Operations | ||||||||||||||||||||||||||||||
Net investment income(1) | 0.19 | 0.24 | 0.16 | 0.22 | 0.21 | 0.19 | ||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency-related transactions | (5.47 | ) | 6.80 | 1.18 | 1.98 | (1.80 | ) | 4.18 | ||||||||||||||||||||||
Net increase (decrease) from investment operations | (5.28 | ) | 7.04 | 1.34 | 2.20 | (1.59 | ) | 4.37 | ||||||||||||||||||||||
Distributions to Shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | (0.33 | ) | (0.13 | ) | (0.30 | ) | (0.19 | ) | (0.13 | ) | (0.12 | ) | ||||||||||||||||||
Net realized gain from investments | (0.32 | ) | — | — | — | (0.18 | ) | — | ||||||||||||||||||||||
Total distributions | (0.65 | ) | (0.13 | ) | (0.30 | ) | (0.19 | ) | (0.31 | ) | (0.12 | ) | ||||||||||||||||||
Net asset value, end of period | $ | 24.68 | $ | 30.61 | $ | 23.70 | $ | 22.66 | $ | 20.65 | $ | 22.55 | ||||||||||||||||||
Total Return | (17.58 | )%(A) | 29.74 | % | 5.91 | % | 10.79 | % | (7.16 | )% | 24.04 | % | ||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||
Net assets, end of year (000’s) | $ | 313,632 | $ | 408,864 | $ | 337,348 | $ | 395,339 | $ | 411,712 | $ | 644,243 | ||||||||||||||||||
Expenses to average net assets | 1.09 | %(B) | 1.12 | % | 1.13 | % | 1.13 | % | 1.14 | % | 1.14 | % | ||||||||||||||||||
Expenses to average net assets (net of fees waived/reimbursed) | 1.09 | %(B) | 1.12 | % | 1.13 | % | 1.13 | % | 1.14 | % | 1.14 | % | ||||||||||||||||||
Net investment income to average net assets | 1.34 | %(B) | 0.83 | % | 0.69 | % | 1.03 | % | 0.92 | % | 0.95 | % | ||||||||||||||||||
Portfolio turnover rate | 8 | %(A) | 14 | % | 17 | % | 30 | % | 10 | % | 12 | % |
(A) | Not Annualized. |
(B) | Annualized. |
(1) | Net investment income per share was calculated using the average shares outstanding method. |
See Notes to Financial Statements
57
Table of Contents
Harding, Loevner Funds, Inc.
Financial Highlights (continued)
For the Six Months Ended April 30, 2022 (unaudited) and the Fiscal Year Ended October 31
International Small Companies Portfolio Institutional Class | ||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||
Net asset value, beginning of period | $ | 22.80 | $ | 17.14 | $ | 15.64 | $ | 15.29 | $ | 16.67 | $ | 13.72 | ||||||||||||||||||
Increase (Decrease) in Net Assets from Operations | ||||||||||||||||||||||||||||||
Net investment income(1) | 0.02 | 0.06 | 0.08 | 0.12 | 0.13 | 0.11 | ||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency-related transactions | (4.82 | ) | 5.63 | 1.53 | 1.24 | (1.30 | ) | 3.41 | ||||||||||||||||||||||
Net increase (decrease) from investment operations | (4.80 | ) | 5.69 | 1.61 | 1.36 | (1.17 | ) | 3.52 | ||||||||||||||||||||||
Distributions to Shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | (0.06 | ) | (0.03 | ) | (0.11 | ) | (0.13 | ) | (0.06 | ) | (0.16 | ) | ||||||||||||||||||
Net realized gain from investments | (0.61 | ) | — | — | (0.88 | ) | (0.15 | ) | (0.41 | ) | ||||||||||||||||||||
Total distributions | (0.67 | ) | (0.03 | ) | (0.11 | ) | (1.01 | ) | (0.21 | ) | (0.57 | ) | ||||||||||||||||||
Net asset value, end of period | $ | 17.33 | $ | 22.80 | $ | 17.14 | $ | 15.64 | $ | 15.29 | $ | 16.67 | ||||||||||||||||||
Total Return | (21.55 | )%(A) | 33.16 | % | 10.34 | % | 10.14 | % | (7.15 | )% | 26.98 | % | ||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||
Net assets, end of year (000’s) | $ | 464,642 | $ | 549,895 | $ | 337,166 | $ | 272,252 | $ | 151,283 | $ | 144,170 | ||||||||||||||||||
Expenses to average net assets | 1.10 | %(B) | 1.16 | % | 1.34 | % | 1.38 | % | 1.39 | % | 1.41 | % | ||||||||||||||||||
Expenses to average net assets (net of fees waived/reimbursed) | 1.10 | %(B) | 1.14 | % | 1.15 | % | 1.15 | % | 1.15 | % | 1.15 | % | ||||||||||||||||||
Net investment income to average net assets | 0.15 | %(B) | 0.29 | % | 0.50 | % | 0.78 | % | 0.75 | % | 0.72 | % | ||||||||||||||||||
Portfolio turnover rate | 14 | %(A) | 13 | % | 30 | % | 37 | % | 52 | % | 19 | % |
(A) | Not Annualized. |
(B) | Annualized. |
(1) | Net investment income per share was calculated using the average shares outstanding method. |
See Notes to Financial Statements
58
Table of Contents
Harding, Loevner Funds, Inc.
Financial Highlights (continued)
For the Six Months Ended April 30, 2022 (unaudited) and the Fiscal Year Ended October 31
International Small Companies Portfolio Investor Class | ||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||
Net asset value, beginning of period | $ | 22.51 | $ | 16.94 | $ | 15.48 | $ | 15.16 | $ | 16.55 | $ | 13.64 | ||||||||||||||||||
Increase (Decrease) in Net Assets from Operations | ||||||||||||||||||||||||||||||
Net investment income (loss)(1) | (0.02 | ) | — | (2) | 0.04 | 0.09 | 0.10 | 0.05 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency-related transactions | (4.76 | ) | 5.58 | 1.51 | 1.21 | (1.29 | ) | 3.42 | ||||||||||||||||||||||
Net increase (decrease) from investment operations | (4.78 | ) | 5.58 | 1.55 | 1.30 | (1.19 | ) | 3.47 | ||||||||||||||||||||||
Distributions to Shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | (0.01 | ) | (0.01 | ) | (0.09 | ) | (0.10 | ) | (0.05 | ) | (0.15 | ) | ||||||||||||||||||
Net realized gain from investments | (0.60 | ) | — | — | (0.88 | ) | (0.15 | ) | (0.41 | ) | ||||||||||||||||||||
Total distributions | (0.61 | ) | (0.01 | ) | (0.09 | ) | (0.98 | ) | (0.20 | ) | (0.56 | ) | ||||||||||||||||||
Net asset value, end of period | $ | 17.12 | $ | 22.51 | $ | 16.94 | $ | 15.48 | $ | 15.16 | $ | 16.55 | ||||||||||||||||||
Total Return | (21.69 | )%(A) | 32.84 | % | 10.07 | % | 9.82 | % | (7.35 | )% | 26.71 | % | ||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||
Net assets, end of year (000’s) | $ | 37,744 | $ | 49,757 | $ | 39,696 | $ | 57,095 | $ | 57,912 | $ | 50,292 | ||||||||||||||||||
Expenses to average net assets | 1.42 | %(B) | 1.50 | % | 1.67 | % | 1.70 | % | 1.75 | % | 1.80 | % | ||||||||||||||||||
Expenses to average net assets (net of fees waived/reimbursed) | 1.40 | %(B) | 1.40 | % | 1.40 | % | 1.40 | % | 1.40 | % | 1.40 | % | ||||||||||||||||||
Net investment income to average net assets | (0.17 | )%(B) | 0.01 | % | 0.28 | % | 0.63 | % | 0.58 | % | 0.37 | % | ||||||||||||||||||
Portfolio turnover rate | 14 | %(A) | 13 | % | 30 | % | 37 | % | 52 | % | 19 | % |
(A) | Not Annualized. |
(B) | Annualized. |
(1) | Net investment income per share was calculated using the average shares outstanding method. |
(2) | Amount was less than $0.005 per share. |
See Notes to Financial Statements
59
Table of Contents
Harding, Loevner Funds, Inc.
Financial Highlights (continued)
For the Six Months Ended April 30, 2022 (unaudited) and the Fiscal Year Ended October 31
Institutional Emerging Markets Portfolio Institutional Class | ||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||
Net asset value, beginning of period | $ | 25.59 | $ | 21.23 | $ | 21.25 | $ | 18.43 | $ | 21.94 | $ | 17.65 | ||||||||||||||||||
Increase (Decrease) in Net Assets from Operations | ||||||||||||||||||||||||||||||
Net investment income(1) | 0.06 | 0.09 | 0.12 | 0.24 | 0.19 | 0.19 | ||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency-related transactions | (6.91 | ) | 4.37 | 0.19 | 2.76 | (3.53 | ) | 4.20 | ||||||||||||||||||||||
Net increase (decrease) from investment operations | (6.85 | ) | 4.46 | 0.31 | 3.00 | (3.34 | ) | 4.39 | ||||||||||||||||||||||
Distributions to Shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | (0.18 | ) | (0.10 | ) | (0.33 | ) | (0.18 | ) | (0.17 | ) | (0.10 | ) | ||||||||||||||||||
Net asset value, end of period | $ | 18.56 | $ | 25.59 | $ | 21.23 | $ | 21.25 | $ | 18.43 | $ | 21.94 | ||||||||||||||||||
Total Return | (26.94 | )%(A) | 21.03 | % | 1.38 | % | 16.43 | % | (15.33 | )% | 25.08 | % | ||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||
Net assets, end of year (000’s) | $ | 3,585,165 | $ | 5,774,486 | $ | 4,847,707 | $ | 4,864,702 | $ | 3,978,321 | $ | 4,386,511 | ||||||||||||||||||
Expenses to average net assets | 1.10 | %(B) | 1.22 | % | 1.28 | % | 1.27 | % | 1.27 | % | 1.28 | % | ||||||||||||||||||
Expenses to average net assets (net of fees waived/reimbursed) | 1.10 | %(B) | 1.15 | % | 1.28 | % | 1.27 | % | 1.27 | % | 1.28 | % | ||||||||||||||||||
Net investment income to average net assets | 0.49 | %(B) | 0.33 | % | 0.59 | % | 1.18 | % | 0.84 | % | 0.97 | % | ||||||||||||||||||
Portfolio turnover rate | 8 | %(A) | 13 | % | 23 | % | 17 | % | 24 | % | 17 | % |
(A) | Not Annualized. |
(B) | Annualized. |
(1) | Net investment income per share was calculated using the average shares outstanding method. |
See Notes to Financial Statements
60
Table of Contents
Harding, Loevner Funds, Inc.
Financial Highlights (continued)
For the Six Months Ended April 30, 2022 (unaudited) and the Fiscal Year Ended October 31
Institutional Emerging Markets Portfolio Institutional Class Z | ||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | 2017(1) | |||||||||||||||||||||||||
Net asset value, beginning of period | $ | 25.65 | $ | 21.28 | $ | 21.28 | $ | 18.45 | $ | 21.94 | $ | 17.71 | ||||||||||||||||||
Increase (Decrease) in Net Assets from Operations | ||||||||||||||||||||||||||||||
Net investment income(2) | 0.07 | 0.11 | 0.15 | 0.27 | 0.22 | 0.22 | ||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency-related transactions | (6.93 | ) | 4.38 | 0.20 | 2.76 | (3.52 | ) | 4.21 | ||||||||||||||||||||||
Net increase (decrease) from investment operations | (6.86 | ) | 4.49 | 0.35 | 3.03 | (3.30 | ) | 4.43 | ||||||||||||||||||||||
Distributions to Shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | (0.18 | ) | (0.12 | ) | (0.35 | ) | (0.20 | ) | (0.19 | ) | (0.20 | ) | ||||||||||||||||||
Net asset value, end of period | $ | 18.61 | $ | 25.65 | $ | 21.28 | $ | 21.28 | $ | 18.45 | $ | 21.94 | ||||||||||||||||||
Total Return | (26.89 | )%(A) | 21.11 | % | 1.55 | % | 16.61 | % | (15.21 | )% | 25.43 | % | ||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||
Net assets, end of year (000’s) | $ | 496,253 | $ | 719,400 | $ | 626,632 | $ | 557,924 | $ | 391,583 | $ | 458,288 | ||||||||||||||||||
Expenses to average net assets | 1.02 | %(B) | 1.13 | % | 1.19 | % | 1.19 | % | 1.20 | % | 1.23 | % | ||||||||||||||||||
Expenses to average net assets (net of fees waived/reimbursed) | 1.00 | %(B) | 1.07 | % | 1.11 | % | 1.11 | % | 1.11 | % | 1.12 | % | ||||||||||||||||||
Net investment income to average net assets | 0.58 | %(B) | 0.41 | % | 0.76 | % | 1.34 | % | 1.00 | % | 1.12 | % | ||||||||||||||||||
Portfolio turnover rate | 8 | %(A) | 13 | % | 23 | % | 17 | % | 24 | % | 17 | % |
(A) | Not Annualized. |
(B) | Annualized. |
(1) | All per share amounts and net asset values have been adjusted as a result of the reverse share split effected after the close of business on December 1, 2017. |
(2) | Net investment income per share was calculated using the average shares outstanding method. |
See Notes to Financial Statements
61
Table of Contents
Harding, Loevner Funds, Inc.
Financial Highlights (continued)
For the Six Months Ended April 30, 2022 (unaudited) and the Fiscal Year Ended October 31
Emerging Markets Portfolio Advisor Class | ||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||
Net asset value, beginning of period | $ | 66.93 | $ | 55.48 | $ | 55.65 | $ | 48.21 | $ | 57.46 | $ | 46.27 | ||||||||||||||||||
Increase (Decrease) in Net Assets from Operations | ||||||||||||||||||||||||||||||
Net investment income(1) | 0.11 | 0.12 | 0.26 | 0.58 | 0.42 | 0.43 | ||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency-related transactions | (16.98 | ) | 11.55 | 0.40 | 7.28 | (9.24 | ) | 11.02 | ||||||||||||||||||||||
Net increase (decrease) from investment operations | (16.87 | ) | 11.67 | 0.66 | 7.86 | (8.82 | ) | 11.45 | ||||||||||||||||||||||
Distributions to Shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | (0.36 | ) | (0.22 | ) | (0.83 | ) | (0.42 | ) | (0.40 | ) | (0.26 | ) | ||||||||||||||||||
Net realized gain from investments | (4.72 | ) | — | — | — | (0.03 | ) | — | ||||||||||||||||||||||
Total distributions | (5.08 | ) | (0.22 | ) | (0.83 | ) | (0.42 | ) | (0.43 | ) | (0.26 | ) | ||||||||||||||||||
Net asset value, end of period | $ | 44.98 | $ | 66.93 | $ | 55.48 | $ | 55.65 | $ | 48.21 | $ | 57.46 | ||||||||||||||||||
Total Return | (26.96 | )%(A) | 21.04 | % | 1.11 | % | 16.46 | % | (15.47 | )% | 24.93 | % | ||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||
Net assets, end of year (000’s) | $ | 2,646,525 | $ | 3,813,331 | $ | 3,739,209 | $ | 4,274,314 | $ | 3,459,157 | $ | 4,014,977 | ||||||||||||||||||
Expenses to average net assets | 1.18 | %(B) | 1.31 | % | 1.36 | % | 1.37 | % | 1.40 | % | 1.42 | % | ||||||||||||||||||
Expenses to average net assets (net of fees waived/reimbursed) | 1.18 | %(B) | 1.28 | % | 1.36 | % | 1.37 | % | 1.40 | % | 1.42 | % | ||||||||||||||||||
Net investment income to average net assets | 0.40 | %(B) | 0.18 | % | 0.49 | % | 1.10 | % | 0.73 | % | 0.84 | % | ||||||||||||||||||
Portfolio turnover rate | 13 | %(A) | 15 | % | 18 | % | 19 | % | 24 | % | 17 | % |
(A) | Not Annualized. |
(B) | Annualized. |
(1) | Net investment income per share was calculated using the average shares outstanding method. |
See Notes to Financial Statements
62
Table of Contents
Harding, Loevner Funds, Inc.
Financial Highlights (continued)
For the Six Months Ended April 30, 2022 (unaudited) and the Fiscal Year Ended October 31
Frontier Emerging Markets Portfolio Institutional Class I | ||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.97 | $ | 6.92 | $ | 7.80 | $ | 7.62 | $ | 8.50 | $ | 7.35 | ||||||||||||||||||
Increase (Decrease) in Net Assets from Operations | ||||||||||||||||||||||||||||||
Net investment income(1) | 0.05 | 0.06 | 0.10 | 0.14 | 0.11 | 0.05 | ||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency-related transactions | (1.17 | ) | 2.12 | (0.82 | ) | 0.14 | (0.82 | ) | 1.17 | |||||||||||||||||||||
Net increase (decrease) from investment operations | (1.12 | ) | 2.18 | (0.72 | ) | 0.28 | (0.71 | ) | 1.22 | |||||||||||||||||||||
Distributions to Shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | (0.07 | ) | (0.13 | ) | (0.16 | ) | (0.10 | ) | (0.17 | ) | (0.07 | ) | ||||||||||||||||||
Net asset value, end of period | $ | 7.78 | $ | 8.97 | $ | 6.92 | $ | 7.80 | $ | 7.62 | $ | 8.50 | ||||||||||||||||||
Total Return | (12.54 | )%(A) | 31.74 | % | (9.50 | )% | 3.59 | % | (8.47 | )% | 16.82 | % | ||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||
Net assets, end of year (000’s) | $ | 80,877 | $ | 96,905 | $ | 73,376 | $ | 144,742 | $ | 220,367 | $ | 266,844 | ||||||||||||||||||
Expenses to average net assets | 1.61 | %(B) | 1.64 | % | 1.68 | % | 1.63 | % | 1.62 | % | 1.71 | % | ||||||||||||||||||
Expenses to average net assets (net of fees waived/reimbursed) | 1.61 | %(B) | 1.64 | % | 1.68 | % | 1.63 | % | 1.62 | % | 1.71 | % | ||||||||||||||||||
Net investment income to average net assets | 1.29 | %(B) | 0.75 | % | 1.44 | % | 1.72 | % | 1.24 | % | 0.69 | % | ||||||||||||||||||
Portfolio turnover rate | 5 | %(A) | 30 | % | 21 | % | 31 | % | 20 | % | 28 | % |
(A) | Not Annualized. |
(B) | Annualized. |
(1) | Net investment income per share was calculated using the average shares outstanding method. |
See Notes to Financial Statements
63
Table of Contents
Harding, Loevner Funds, Inc.
Financial Highlights (continued)
For the Six Months Ended April 30, 2022 (unaudited) and the Fiscal Year Ended October 31
Frontier Emerging Markets Portfolio Institutional Class II | ||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | 2017(1)(2) | |||||||||||||||||||||||||
Net asset value, beginning of period | $ | 9.03 | $ | 6.95 | $ | 7.82 | $ | 7.63 | $ | 8.50 | $ | 7.43 | ||||||||||||||||||
Increase (Decrease) in Net Assets from Operations | ||||||||||||||||||||||||||||||
Net investment income(3) | 0.07 | 0.09 | 0.14 | 0.17 | 0.14 | 0.08 | ||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency-related transactions | (1.19 | ) | 2.13 | (0.84 | ) | 0.13 | (0.83 | ) | 0.99 | |||||||||||||||||||||
Net increase (decrease) from investment operations | (1.12 | ) | 2.22 | (0.70 | ) | 0.30 | (0.69 | ) | 1.07 | |||||||||||||||||||||
Distributions to Shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | (0.08 | ) | (0.14 | ) | (0.17 | ) | (0.11 | ) | (0.18 | ) | — | |||||||||||||||||||
Net asset value, end of period | $ | 7.83 | $ | 9.03 | $ | 6.95 | $ | 7.82 | $ | 7.63 | $ | 8.50 | ||||||||||||||||||
Total Return | (12.49 | )%(A) | 32.18 | % | (9.26 | )% | 4.01 | % | (8.31 | )% | 14.40 | %(A) | ||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||
Net assets, end of year (000’s) | $ | 103,074 | $ | 117,689 | $ | 116,911 | $ | 128,742 | $ | 163,794 | $ | 166,698 | ||||||||||||||||||
Expenses to average net assets | 1.54 | %(B) | 1.55 | % | 1.60 | % | 1.55 | % | 1.56 | % | 1.58 | %(B) | ||||||||||||||||||
Expenses to average net assets (net of fees waived/reimbursed) | 1.35 | %(B) | 1.35 | % | 1.35 | % | 1.35 | % | 1.35 | % | 1.35 | %(B) | ||||||||||||||||||
Net investment income to average net assets | 1.58 | %(B) | 1.05 | % | 1.95 | % | 2.19 | % | 1.51 | % | 1.47 | %(B) | ||||||||||||||||||
Portfolio turnover rate | 5 | %(A) | 30 | % | 21 | % | 31 | % | 20 | % | 28 | %(A) |
(A) | Not Annualized. |
(B) | Annualized. |
(1) | For the period from March 1, 2017 (commencement of class operations) through October 31, 2017. |
(2) | All per share amounts and net asset values have been adjusted as a result of the share dividend effected after the close of business on December 1, 2017. |
(3) | Net investment income per share was calculated using the average shares outstanding method. |
See Notes to Financial Statements
64
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Harding, Loevner Funds, Inc.
Financial Highlights (continued)
For the Six Months Ended April 30, 2022 (unaudited) and the Fiscal Year Ended October 31
Frontier Emerging Markets Portfolio Investor Class | ||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.92 | $ | 6.88 | $ | 7.75 | $ | 7.57 | $ | 8.43 | $ | 7.28 | ||||||||||||||||||
Increase (Decrease) in Net Assets from Operations | ||||||||||||||||||||||||||||||
Net investment income(1) | 0.04 | 0.03 | 0.08 | 0.11 | 0.07 | 0.04 | ||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency-related transactions | (1.17 | ) | 2.11 | (0.83 | ) | 0.13 | (0.79 | ) | 1.15 | |||||||||||||||||||||
Net increase (decrease) from investment operations | (1.13 | ) | 2.14 | (0.75 | ) | 0.24 | (0.72 | ) | 1.19 | |||||||||||||||||||||
Distributions to Shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | (0.04 | ) | (0.10 | ) | (0.12 | ) | (0.06 | ) | (0.14 | ) | (0.04 | ) | ||||||||||||||||||
Net asset value, end of period | $ | 7.75 | $ | 8.92 | $ | 6.88 | $ | 7.75 | $ | 7.57 | $ | 8.43 | ||||||||||||||||||
Total Return | (12.69 | )%(A) | 31.14 | % | (9.70 | )% | 3.24 | % | (8.75 | )% | 16.40 | % | ||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||
Net assets, end of year (000’s) | $ | 7,995 | $ | 9,542 | $ | 10,327 | $ | 20,560 | $ | 25,388 | $ | 30,981 | ||||||||||||||||||
Expenses to average net assets | 2.12 | %(B) | 2.14 | % | 2.12 | % | 2.00 | % | 2.06 | % | 2.13 | % | ||||||||||||||||||
Expenses to average net assets (net of fees waived/reimbursed) | 2.00 | %(B) | 2.00 | % | 2.00 | % | 2.00 | % | 2.00 | % | 2.00 | % | ||||||||||||||||||
Net investment income to average net assets | 0.89 | %(B) | 0.35 | % | 1.17 | % | 1.38 | % | 0.87 | % | 0.48 | % | ||||||||||||||||||
Portfolio turnover rate | 5 | %(A) | 30 | % | 21 | % | 31 | % | 20 | % | 28 | % |
(A) | Not Annualized. |
(B) | Annualized. |
(1) | Net investment income per share was calculated using the average shares outstanding method. |
See Notes to Financial Statements
65
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Harding, Loevner Funds, Inc.
Financial Highlights (continued)
For the Six Months Ended April 30, 2022 (unaudited) and the Fiscal Year Ended October 31
Global Equity Research Portfolio Institutional Class | ||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | 2017(1) | |||||||||||||||||||||||||
Net asset value, beginning of period | $ | 16.59 | $ | 12.76 | $ | 12.57 | $ | 12.06 | $ | 12.23 | $ | 10.00 | ||||||||||||||||||
Increase (Decrease) in Net Assets from Operations | ||||||||||||||||||||||||||||||
Net investment income(2) | 0.05 | 0.10 | 0.10 | 0.14 | 0.10 | 0.08 | ||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency-related transactions | (2.65 | ) | 4.11 | 0.78 | 1.40 | 0.23 | 2.15 | |||||||||||||||||||||||
Net increase (decrease) from investment operations | (2.60 | ) | 4.21 | 0.88 | 1.54 | 0.33 | 2.23 | |||||||||||||||||||||||
Distributions to Shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | (0.11 | ) | (0.09 | ) | (0.15 | ) | (0.09 | ) | (0.18 | ) | — | |||||||||||||||||||
Net realized gain from investments | (1.67 | ) | (0.29 | ) | (0.54 | ) | (0.94 | ) | (0.32 | ) | — | |||||||||||||||||||
Total distributions | (1.78 | ) | (0.38 | ) | (0.69 | ) | (1.03 | ) | (0.50 | ) | — | |||||||||||||||||||
Net asset value, end of period | $ | 12.21 | $ | 16.59 | $ | 12.76 | $ | 12.57 | $ | 12.06 | $ | 12.23 | ||||||||||||||||||
Total Return | (17.29 | )%(A) | 33.45 | % | 7.15 | % | 14.36 | % | 2.74 | % | 22.30 | %(A) | ||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||
Net assets, end of year (000’s) | $ | 8,069 | $ | 9,856 | $ | 7,387 | $ | 6,895 | $ | 5,452 | $ | 5,308 | ||||||||||||||||||
Expenses to average net assets | 1.67 | %(B) | 1.75 | % | 2.04 | % | 1.96 | % | 2.64 | % | 3.49 | %(B) | ||||||||||||||||||
Expenses to average net assets (net of fees waived/reimbursed) | 0.80 | %(B) | 0.80 | % | 0.80 | % | 0.83 | % | 0.90 | % | 0.90 | %(B) | ||||||||||||||||||
Net investment income to average net assets | 0.69 | %(B) | 0.67 | % | 0.80 | % | 1.18 | % | 0.76 | % | 0.80 | %(B) | ||||||||||||||||||
Portfolio turnover rate | 21 | %(A) | 39 | % | 44 | % | 44 | % | 45 | % | 36 | %(A) |
(A) | Not Annualized. |
(B) | Annualized. |
(1) | For the period from December 19, 2016 (commencement of class operations) through October 31, 2017. |
(2) | Net investment income per share was calculated using the average shares outstanding method. |
See Notes to Financial Statements
66
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Harding, Loevner Funds, Inc.
Financial Highlights (continued)
For the Six Months Ended April 30, 2022 (unaudited) and the Fiscal Year Ended October 31
International Equity Research Portfolio Institutional Class | ||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||
Net asset value, beginning of period | $ | 14.71 | $ | 12.01 | $ | 12.03 | $ | 11.59 | $ | 13.11 | $ | 11.10 | ||||||||||||||||||
Increase (Decrease) in Net Assets from Operations | ||||||||||||||||||||||||||||||
Net investment income(1) | 0.07 | 0.14 | 0.14 | 0.18 | 0.14 | 0.12 | ||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency-related transactions | (2.56 | ) | 3.03 | 0.07 | 1.17 | (0.93 | ) | 2.26 | ||||||||||||||||||||||
Net increase (decrease) from investment operations | (2.49 | ) | 3.17 | 0.21 | 1.35 | (0.79 | ) | 2.38 | ||||||||||||||||||||||
Distributions to Shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | (0.16 | ) | (0.15 | ) | (0.14 | ) | (0.13 | ) | (0.14 | ) | (0.17 | ) | ||||||||||||||||||
Net realized gain from investments | (1.50 | ) | (0.32 | ) | (0.09 | ) | (0.78 | ) | (0.59 | ) | (0.20 | ) | ||||||||||||||||||
Total distributions | (1.66 | ) | (0.47 | ) | (0.23 | ) | (0.91 | ) | (0.73 | ) | (0.37 | ) | ||||||||||||||||||
Net asset value, end of period | $ | 10.56 | $ | 14.71 | $ | 12.01 | $ | 12.03 | $ | 11.59 | $ | 13.11 | ||||||||||||||||||
Total Return | (18.66 | )%(A) | 26.76 | % | 1.73 | % | 12.93 | % | (6.43 | )% | 22.26 | % | ||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||
Net assets, end of year (000’s) | $ | 12,144 | $ | 15,295 | $ | 12,494 | $ | 19,458 | $ | 9,305 | $ | 9,479 | ||||||||||||||||||
Expenses to average net assets | 1.36 | %(B) | 1.45 | % | 1.40 | % | 1.42 | % | 1.78 | % | 2.26 | % | ||||||||||||||||||
Expenses to average net assets (net of fees waived/reimbursed) | 0.75 | %(B) | 0.75 | % | 0.75 | % | 0.79 | % | 0.90 | % | 0.90 | % | ||||||||||||||||||
Net investment income to average net assets | 1.06 | %(B) | 0.99 | % | 1.20 | % | 1.62 | % | 1.07 | % | 0.99 | % | ||||||||||||||||||
Portfolio turnover rate | 22 | %(A) | 38 | % | 51 | % | 44 | % | 43 | % | 55 | % |
(A) | Not Annualized. |
(B) | Annualized. |
(1) | Net investment income per share was calculated using the average shares outstanding method. |
See Notes to Financial Statements
67
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Financial Highlights (continued)
For the Six Months Ended April 30, 2022 (unaudited) and the Fiscal Year Ended October 31
Emerging Markets Research Portfolio Institutional Class | ||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | 2017(1) | |||||||||||||||||||||||||
Net asset value, beginning of period | $ | 13.15 | $ | 11.21 | $ | 11.42 | $ | 10.82 | $ | 13.01 | $ | 10.00 | ||||||||||||||||||
Increase (Decrease) in Net Assets from Operations | ||||||||||||||||||||||||||||||
Net investment income(2) | 0.03 | 0.10 | 0.09 | 0.15 | 0.12 | 0.10 | ||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency-related transactions | (2.35 | ) | 2.04 | 0.17 | 1.35 | (1.34 | ) | 2.91 | ||||||||||||||||||||||
Net increase (decrease) from investment operations | (2.32 | ) | 2.14 | 0.26 | 1.50 | (1.22 | ) | 3.01 | ||||||||||||||||||||||
Distributions to Shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | (0.11 | ) | (0.07 | ) | (0.14 | ) | (0.09 | ) | (0.23 | ) | — | |||||||||||||||||||
Net realized gain from investments | (1.08 | ) | (0.13 | ) | (0.33 | ) | (0.81 | ) | (0.74 | ) | — | |||||||||||||||||||
Total distributions | (1.19 | ) | (0.20 | ) | (0.47 | ) | (0.90 | ) | (0.97 | ) | — | |||||||||||||||||||
Net asset value, end of period | $ | 9.64 | $ | 13.15 | $ | 11.21 | $ | 11.42 | $ | 10.82 | $ | 13.01 | ||||||||||||||||||
Total Return | (19.10 | )%(A) | 19.18 | % | 2.19 | % | 15.05 | % | (10.24 | )% | 30.10 | %(A) | ||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||
Net assets, end of year (000’s) | $ | 7,156 | $ | 9,065 | $ | 7,367 | $ | 7,198 | $ | 5,702 | $ | 5,880 | ||||||||||||||||||
Expenses to average net assets | 2.25 | %(B) | 2.30 | % | 2.40 | % | 2.29 | % | 2.90 | % | 3.72 | %(B) | ||||||||||||||||||
Expenses to average net assets (net of fees waived/reimbursed) | 1.15 | %(B) | 1.15 | % | 1.15 | % | 1.19 | % | 1.30 | % | 1.30 | %(B) | ||||||||||||||||||
Net investment income to average net assets | 0.48 | %(B) | 0.76 | % | 0.83 | % | 1.35 | % | 0.93 | % | 1.04 | %(B) | ||||||||||||||||||
Portfolio turnover rate | 28 | %(A) | 45 | % | 67 | % | 58 | % | 55 | % | 46 | %(A) |
(A) | Not Annualized. |
(B) | Annualized. |
(1) | For the period from December 19, 2016 (commencement of class operations) through October 31, 2017. |
(2) | Net investment income per share was calculated using the average shares outstanding method. |
See Notes to Financial Statements
68
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Harding, Loevner Funds, Inc.
Financial Highlights (continued)
For the Six Months Ended April 30, 2022 (unaudited) and the Fiscal Year Ended October 31
Chinese Equity Portfolio Institutional Class | |||||||||||||||||
2022 | 2021(1) | ||||||||||||||||
Net asset value, beginning of period | $ | 9.36 | $ | 10.00 | |||||||||||||
Increase (Decrease) in Net Assets from Operations | |||||||||||||||||
Net investment income (loss)(2) | 0.01 | (0.02 | ) | ||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency-related transactions | (2.80 | ) | (0.62 | ) | |||||||||||||
Net increase (decrease) from investment operations | (2.79 | ) | (0.64 | ) | |||||||||||||
Distributions to Shareholders from: | |||||||||||||||||
Net investment income | (0.03 | ) | — | ||||||||||||||
Net asset value, end of period | $ | 6.54 | $ | 9.36 | |||||||||||||
Total Return | (29.91 | )%(A) | (6.40 | )%(A) | |||||||||||||
Ratios/Supplemental Data: | |||||||||||||||||
Net assets, end of year (000’s) | $ | 3,664 | $ | 3,942 | |||||||||||||
Expenses to average net assets | 4.08 | %(B) | 7.00 | %(B) | |||||||||||||
Expenses to average net assets (net of fees waived/reimbursed) | 1.15 | %(B) | 1.15 | %(B) | |||||||||||||
Net investment income (loss) to average net assets | (0.39 | )%(B) | (0.23 | )%(B) | |||||||||||||
Portfolio turnover rate | 24 | %(A) | 17 | %(A) |
(A) | Not Annualized. |
(B) | Annualized. |
(1) | For the period from December 16, 2020 (commencement of operations) through October 31, 2021. |
(2) | Net investment income per share was calculated using the average shares outstanding method. |
See Notes to Financial Statements
69
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Notes to Financial Statements
April 30, 2022 (unaudited)
1. | Organization |
Harding, Loevner Funds, Inc. (the “Fund”) was organized as a Maryland corporation on July 31, 1996, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Fund currently has nine separate diversified Portfolios and one non-diversified Portfolio, all of which were active as of April 30, 2022 (individually, a “Portfolio”, collectively, the “Portfolios”). The Fund is managed by Harding Loevner LP (the “Investment Adviser”).
Portfolio | Inception Date | Investment Objective | ||
Global Equity Portfolio (“Global Equity”) | Institutional Class: November 3, 2009 Institutional Class Z: August 1, 2017 Advisor Class: December 1, 1996 | to seek long-term capital appreciation through investments in equity securities of companies based both inside and outside the United States | ||
International Equity Portfolio (“International Equity”) | Institutional Class: May 11, 1994* Institutional Class Z: July 17, 2017 Investor Class: September 30, 2005 | to seek long-term capital appreciation through investments in equity securities of companies based outside the United States | ||
International Small Companies Portfolio (“International Small Companies”) | Institutional Class: June 30, 2011 Investor Class: March 26, 2007 | to seek long-term capital appreciation through investments in equity securities of small companies based outside the United States | ||
Institutional Emerging Markets Portfolio** (“Institutional Emerging Markets”) | Institutional Class (Formerly Class I): October 17, 2005 Institutional Class Z (Formerly Class II): March 5, 2014 | to seek long-term capital appreciation through investments in equity securities of companies based in emerging markets | ||
Emerging Markets Portfolio** (“Emerging Markets”) | Advisor Class: November 9, 1998 | to seek long-term capital appreciation through investments in equity securities of companies based in emerging markets | ||
Frontier Emerging Markets Portfolio (“Frontier Emerging Markets”) | Institutional Class I: May 27, 2008 Institutional Class II: March 1, 2017 Investor Class: December 31, 2010 | to seek long-term capital appreciation through investments in equity securities of companies based in frontier and smaller emerging markets | ||
Global Equity Research Portfolio (“Global Equity Research”) | Institutional Class: December 19, 2016 | to seek long-term capital appreciation through investments in equity securities of companies based both inside and outside the United States | ||
International Equity Research Portfolio (“International Equity Research”) | Institutional Class: December 17, 2015 | to seek long-term capital appreciation through investments in equity securities of companies based outside the United States | ||
Emerging Markets Research Portfolio (“Emerging Markets Research”) | Institutional Class: December 19, 2016 | to seek long-term capital appreciation through investments in equity securities of companies based in emerging markets | ||
Chinese Equity Portfolio (“Chinese Equity”) | Institutional Class: December 16, 2020 | to seek long-term capital appreciation through investments in equity securities of Chinese companies |
* The International Equity Portfolio is the successor to the HLM International Equity Portfolio of AMT Capital Fund, Inc., pursuant to a reorganization that took place on October 31, 1996. Information for periods prior to October 31, 1996, is historical information for the predecessor portfolio.
** Effective March 1, 2019, the Institutional Emerging Markets and Emerging Markets Portfolios’ shares are generally available for purchase by new and existing shareholders, subject to certain limitations that may apply at the Fund’s discretion.
2. | Summary of Significant Accounting Policies |
The accounting policies of the Fund are in conformity with accounting principles generally accepted in the United States (“GAAP”) for investment companies. Accordingly, the Fund follows accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946, “Financial Services - Investment Companies”. The following is a summary of the Fund’s significant accounting policies:
See Notes to Financial Statements
70
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Notes to Financial Statements (continued)
April 30, 2022 (unaudited)
2. | Summary of Significant Accounting Policies (continued) |
Estimates
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
Valuation
The Board of Directors of the Fund (the “Board” or the “Directors”) has adopted procedures (“Procedures”) to govern the valuation of the securities held by each Portfolio of the Fund in accordance with the 1940 Act. The Procedures incorporate principles set forth in relevant pronouncements of the Securities and Exchange Commission (“SEC”) and its staff, including guidance on the obligations of the Portfolios and their Directors to determine, in good faith, the fair value of the Portfolios’ securities when market quotations are not readily available.
In determining a Portfolio’s net asset value per share (“NAV”), each equity security traded on a securities exchange, including the NASDAQ Stock Market, and over-the-counter securities, are first valued at the closing price on the exchange or market designated by the Fund’s accounting agent as the principal exchange (each, a “principal exchange”). The closing price provided by the Fund’s accounting agent for a principal exchange may differ from the price quoted elsewhere and may represent information such as last sales price, an official closing price, a closing auction price or other information, depending on exchange or market convention. Shares of open-end mutual funds including money market funds are valued at NAV. Such securities are typically categorized as “Level 1” pursuant to the hierarchy described below.
Since trading in many foreign securities is normally completed before the time at which a Portfolio calculates its NAV, the effect on the value of such securities held by a Portfolio of events that occur between the close of trading in the security and the time at which the Portfolio prices its securities would not be reflected in the Portfolio’s calculation of its NAV if foreign securities were generally valued at their closing prices. To address this issue, the Board has approved the daily use of independently provided quantitative models that may adjust the closing prices of certain foreign equity securities based on information that becomes available after the foreign market closes, through the application of an adjustment factor to such securities’ closing price. Adjustment factors may be greater than, less than, or equal to 1. Thus, use of these quantitative models could cause a Portfolio to value a security higher, lower or equal to its closing market price, which in turn could cause the Portfolio’s NAV per share to differ significantly from that which would have been calculated using closing market prices. The use of these quantitative models is also intended to decrease the opportunities for persons to engage in ‘‘time zone arbitrage,’’ i.e., trading intended to take advantage of stale closing prices in foreign markets that could affect the NAV of the Portfolios. Securities subjected to an adjustment factor due to the use of these quantitative models are not specifically designated on the Portfolios’ Portfolio of Investments as being “fair valued”. Securities with an adjustment factor greater than or less than 1, which are absent the use of significant unobservable inputs into their valuation, are categorized as “Level 2” and securities with an adjustment factor equal to 1, which are absent the use of significant unobservable inputs into their valuation, are categorized as “Level 1” pursuant to the hierarchy described below.
Any securities for which market quotations are not readily available or for which available prices are deemed unreliable are priced by the Investment Adviser at “fair value as determined in good faith”, in accordance with the Procedures. Such securities are identified on the Portfolios’ Portfolio of Investments as securities valued at “fair value as determined in good faith” and absent the use of significant unobservable inputs into their valuation, such securities would be categorized as “Level 2” pursuant to the hierarchy described below.
GAAP has established a hierarchy for NAV determination purposes in which various inputs are used in determining the value of each Portfolio’s assets or liabilities. GAAP defines fair value as the price that the Portfolio would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market of the investment. GAAP establishes a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability including assumptions about risk. Such risks include the inherent risk in a particular valuation technique which is used to measure fair value. This may include the quantitative models and/or the inputs to the quantitative models used in the valuation technique described above. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.
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Notes to Financial Statements (continued)
April 30, 2022 (unaudited)
2. | Summary of Significant Accounting Policies (continued) |
Level 1 | unadjusted quoted prices in active markets for identical assets |
Level 2 | other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
Level 3 | significant unobservable inputs (including the Portfolio’s own assumptions in determining the fair value of investments) |
GAAP provides additional guidance for estimating fair value when the volume and level of activity for the asset or liability have significantly decreased as well as guidance on identifying circumstances that indicate when a transaction is not orderly.
The following is a summary of the Portfolios’ investments classified by Level 1, Level 2 and Level 3 and security type as of April 30, 2022. Please refer to each Portfolio’s Portfolio of Investments to view individual securities classified by industry type and country.
Portfolio | Unadjusted Quoted Prices in Active Markets for Identical Assets (Level 1) | Other Significant Observable Inputs (Level 2) | Significant Unobservable Inputs | Total | ||||||||||||
Global Equity | ||||||||||||||||
Common Stocks | $ | 886,365,970 | $ | 348,497,851 | $ | — | $ | 1,234,863,821 | ||||||||
Short Term Investments | 42,416,858 | — | — | 42,416,858 | ||||||||||||
Total Investments | $ | 928,782,828 | $ | 348,497,851 | $ | — | $ | 1,277,280,679 | ||||||||
International Equity | ||||||||||||||||
Common Stocks | $ | 3,666,631,538 | $ | 13,385,561,135 | $ | — | ‡ | $ | 17,052,192,673 | |||||||
Short Term Investments | 717,810,678 | — | — | 717,810,678 | ||||||||||||
Total Investments | $ | 4,384,442,216 | $ | 13,385,561,135 | $ | — | $ | 17,770,003,351 | ||||||||
International Small Companies | ||||||||||||||||
Common Stocks | $ | 55,630,449 | $ | 433,157,514 | $ | — | $ | 488,787,963 | ||||||||
Short Term Investments | 15,337,729 | — | — | 15,337,729 | ||||||||||||
Total Investments | $ | 70,968,178 | $ | 433,157,514 | $ | — | $ | 504,125,692 | ||||||||
Institutional Emerging Markets | ||||||||||||||||
Common Stocks | $ | 850,790,117 | $ | 3,066,596,349 | $ | — | ‡ | $ | 3,917,386,466 | |||||||
Preferred Stocks | 108,813,173 | 14,737,554 | — | 123,550,727 | ||||||||||||
Short Term Investments | 32,648,234 | — | — | 32,648,234 | ||||||||||||
Total Investments | $ | 992,251,524 | $ | 3,081,333,903 | $ | — | $ | 4,073,585,427 | ||||||||
Emerging Markets | ||||||||||||||||
Common Stocks | $ | 552,758,168 | $ | 1,989,229,527 | $ | — | ‡ | $ | 2,541,987,695 | |||||||
Preferred Stocks | 70,577,995 | 9,575,870 | — | 80,153,865 | ||||||||||||
Short Term Investments | 31,846,445 | — | — | 31,846,445 | ||||||||||||
Total Investments | $ | 655,182,608 | $ | 1,998,805,397 | $ | — | $ | 2,653,988,005 | ||||||||
Frontier Emerging Markets | ||||||||||||||||
Common Stocks | $ | 25,020,166 | $ | 156,581,149 | $ | — | $ | 181,601,315 | ||||||||
Preferred Stocks | 6,870,122 | — | — | 6,870,122 | ||||||||||||
Short Term Investments | 1,886,886 | — | — | 1,886,886 | ||||||||||||
Total Investments | $ | 33,777,174 | $ | 156,581,149 | $ | — | $ | 190,358,323 | ||||||||
Global Equity Research | ||||||||||||||||
Common Stocks | $ | 3,912,910 | $ | 3,953,910 | $ | — | ‡ | $ | 7,866,820 | |||||||
Preferred Stocks | 13,957 | 77,500 | — | 91,457 | ||||||||||||
Short Term Investments | 118,596 | — | — | 118,596 | ||||||||||||
Total Investments | $ | 4,045,463 | $ | 4,031,410 | $ | — | $ | 8,076,873 |
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April 30, 2022 (unaudited)
2. | Summary of Significant Accounting Policies (continued) |
Portfolio | Unadjusted Quoted Prices in Active Markets for Identical Assets (Level 1) | Other Significant Observable Inputs | Significant Unobservable Inputs | Total | ||||||||||||
International Equity Research | ||||||||||||||||
Common Stocks | $ | 1,599,422 | $ | 10,064,006 | $ | — | ‡ | $ | 11,663,428 | |||||||
Preferred Stocks | 52,882 | 135,622 | — | 188,504 | ||||||||||||
Short Term Investments | 287,115 | — | — | 287,115 | ||||||||||||
Total Investments | $ | 1,939,419 | $ | 10,199,628 | $ | — | $ | 12,139,047 | ||||||||
Emerging Markets Research | ||||||||||||||||
Common Stocks | $ | 1,448,292 | $ | 5,429,733 | $ | — | ‡ | $ | 6,878,025 | |||||||
Preferred Stocks | 44,159 | 123,035 | — | 167,194 | ||||||||||||
Short Term Investments | 78,718 | — | — | 78,718 | ||||||||||||
Total Investments | $ | 1,571,169 | $ | 5,552,768 | $ | — | $ | 7,123,937 | ||||||||
Chinese Equity | ||||||||||||||||
Common Stocks | $ | — | $ | 3,597,177 | $ | — | $ | 3,597,177 | ||||||||
Short Term Investments | 68,046 | — | — | 68,046 | ||||||||||||
Total Investments | $ | 68,046 | $ | 3,597,177 | $ | — | $ | 3,665,223 |
‡ | Investments categorized as Level 3 securities that are effectively valued at zero. |
As of April 30, 2022, there were investments related to four companies held within the Portfolios all of which were effectively valued at zero due to the inability of the Portfolios to transact in these investments, the lack of visibility on when the Portfolios may do so, and the lack of readily available market prices for such investments. All of these factors are related to the Russian invasion of Ukraine and responses to that event. The value of these securities compared to the Portfolio’s net assets is not material and therefore, the reconciliation of Level 3 securities and related valuation techniques are not disclosed.
Securities
For financial reporting purposes, all securities transactions are recorded on a trade date basis, as of the last business day in the reporting period. Throughout the reporting period, securities transactions are typically accounted for on a trade date – plus one business day basis. Interest income and expenses are recorded on an accrual basis. Dividend income is recorded on the ex-dividend date (except for certain foreign dividends that may be recorded as soon as the Portfolio is informed of such dividends). The Portfolios use the specific identification method for determining realized gains or losses from sales of securities.
Dividends to Shareholders
It is the policy of the Portfolios to declare dividends from net investment income annually. Net short-term and long-term capital gains distributions for the Portfolios, if any, are also normally distributed on an annual basis.
Dividends from net investment income and distributions from net realized gains from investment transactions have been determined in accordance with income tax regulations and may differ from net investment income and realized gains recorded by the Portfolios for financial reporting purposes. Differences result primarily from foreign currency transactions and timing differences related to recognition of income, and gains and losses from investment transactions. In general, to the extent that any differences, which are permanent in nature, result in over distributions to shareholders, the amount of the over distribution is reclassified within the capital accounts based on its federal tax basis treatment and may be reported as return of capital. Temporary differences do not require reclassification.
Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under forward foreign currency exchange contracts are translated into U.S. dollars at the mean of the quoted bid and asked prices of such currencies against the U.S. dollar. Purchases and sales of the Portfolios’ securities are translated at the rates of exchange prevailing when such securities were acquired or sold. Income and expenses are translated at
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April 30, 2022 (unaudited)
2. | Summary of Significant Accounting Policies (continued) |
exchange rates prevailing when accrued. The Portfolios do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the “Net realized gain (loss) on investment transactions” and “Change in unrealized appreciation (depreciation) on investments” on the Statements of Operations.
Net realized gains and losses from foreign currency-related transactions arise from sales of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Portfolios’ books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized appreciation or depreciation on translation of assets and liabilities denominated in foreign currencies arise from changes in the value of assets and liabilities other than investments in securities at the period end, resulting from changes in the exchange rates.
Expenses
Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate measures. If an expense is incurred at the Portfolio level, it is generally apportioned among the classes of that Portfolio based upon relative net assets of each respective class. Certain expenses are incurred at the class level and charged only to that particular class. These expenses may be class specific (i.e., distribution fees charged only to a particular class) or they may be identifiable to a particular class (i.e., the costs related to mailing shareholder reports to shareholders of a particular class).
Organization and Offering Fees
Costs incurred by the Chinese Equity Portfolio in connection with its organization were expensed as they were incurred. Costs related to the offering of shares were deferred and amortized on a straight line basis over the twelve-month period from the date of commencement of operations of the Portfolios.
Indemnifications
Under the Fund’s organizational document, its officers and Board are indemnified against certain liability arising out of the performance of their duties to the Portfolios. In the normal course of business, the Fund may enter into contracts that contain a variety of representations or that provide indemnification for certain liabilities. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.
3. | Transactions with Affiliates and Significant Agreements |
The Board has approved investment advisory agreements with the Investment Adviser. Advisory fees are computed daily and paid monthly based on the average daily net assets of each Portfolio. The Investment Adviser has contractually agreed to reduce its fee and/or reimburse the Portfolios for other operating expenses to the extent that aggregate expenses, excluding certain non-operating expenses, exceed certain annual rates of the average daily net assets of each class.
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April 30, 2022 (unaudited)
3. | Transactions with Affiliates and Significant Agreements (continued) |
The following annualized advisory fees and contractual expense limits were in effect for the period ended April 30, 2022. The advisory fees are charged at the Portfolio level as a whole and expense limitations are at the class specific level.
Portfolio | First $1 billion of assets | Next $1 billion of assets | Next $1 billion of assets | Over $3 billion of assets | Over $4 billion of assets | Over $5 billion of assets | Contractual Expense Limit(a) | |||||||
Global Equity–Institutional Class | 0.75% | 0.73% | 0.71% | 0.69% | 0.69% | 0.69% | 0.90% | |||||||
Global Equity–Institutional Class Z | 0.75% | 0.73% | 0.71% | 0.69% | 0.69% | 0.69% | 0.80% | |||||||
Global Equity–Advisor Class | 0.75% | 0.73% | 0.71% | 0.69% | 0.69% | 0.69% | 1.20% | |||||||
International Equity–Institutional Class | 0.75% | 0.73% | 0.71% | 0.69% | 0.67% | 0.65% | 1.00% | |||||||
International Equity–Institutional Class Z | 0.75% | 0.73% | 0.71% | 0.69% | 0.67% | 0.65% | 0.80% | |||||||
International Equity–Investor Class | 0.75% | 0.73% | 0.71% | 0.69% | 0.67% | 0.65% | 1.25% | |||||||
International Small Companies–Institutional Class | 0.95% | 0.95% | 0.95% | 0.95% | 0.95% | 0.95% | 1.15% | |||||||
International Small Companies–Investor Class | 0.95% | 0.95% | 0.95% | 0.95% | 0.95% | 0.95% | 1.40%(b) | |||||||
Institutional Emerging Markets–Institutional Class | 1.00% | 0.98% | 0.96% | 0.94% | 0.94% | 0.94% | 1.10% | |||||||
Institutional Emerging Markets–Institutional Class Z | 1.00% | 0.98% | 0.96% | 0.94% | 0.94% | 0.94% | 1.00% | |||||||
Emerging Markets–Advisor Class | 1.00% | 0.98% | 0.96% | 0.94% | 0.94% | 0.94% | 1.30% | |||||||
Frontier Emerging Markets–Institutional Class I | 1.35% | 1.35% | 1.35% | 1.35% | 1.35% | 1.35% | 1.75% | |||||||
Frontier Emerging Markets–Institutional Class II | 1.35% | 1.35% | 1.35% | 1.35% | 1.35% | 1.35% | 1.35% | |||||||
Frontier Emerging Markets–Investor Class | 1.35% | 1.35% | 1.35% | 1.35% | 1.35% | 1.35% | 2.00% | |||||||
Global Equity Research–Institutional Class | 0.70% | 0.70% | 0.70% | 0.70% | 0.70% | 0.70% | 0.80% | |||||||
International Equity Research–Institutional Class | 0.70% | 0.70% | 0.70% | 0.70% | 0.70% | 0.70% | 0.75% | |||||||
Emerging Markets Research–Institutional Class | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | 1.15% | |||||||
Chinese Equity–Institutional Class | 0.95% | 0.95% | 0.95% | 0.95% | 0.95% | 0.95% | 1.15% |
(a) | Effective through February 28, 2023. |
(b) | Effective July 1, 2022, the Investment Adviser has contractually agreed to lower the expense cap for the International Small Companies Portfolio Investor Class to 1.30%. |
For the period ended April 30, 2022, the Investment Adviser waived and/or reimbursed the following amounts pursuant to the contractual expense limits described above:
Portfolio | Fees waived and/or reimbursed by the Investment Adviser | |
International Small Companies-Investor Class | $ 4,335 | |
Institutional Emerging Markets-Institutional Class | 103,356 | |
Institutional Emerging Markets-Institutional Class Z | 71,643 | |
Frontier Emerging Markets-Institutional Class II | 104,438 | |
Frontier Emerging Markets-Investor Class | 5,065 | |
Global Equity Research-Institutional Class | 39,393 | |
International Equity Research-Institutional Class | 42,649 | |
Emerging Markets Research-Institutional Class | 45,287 | |
Chinese Equity-Institutional Class | 57,684 |
The Fund has an administration agreement with The Northern Trust Company (“Northern Trust”), which provides certain accounting, clerical and bookkeeping services, Blue Sky, corporate secretarial services and assistance in the preparation and filing of tax returns and reports to shareholders and the SEC.
Northern Trust also serves as custodian of each Portfolio’s securities and cash, transfer agent, dividend disbursing agent and agent in connection with any accumulation, open-account or similar plans provided to the shareholders of the Portfolios.
Foreside Management Services, LLC provides compliance support to the Fund’s Chief Compliance Officer. Fees paid pursuant to these services are shown as “Compliance officers’ fees and expenses” on the Statements of Operations.
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April 30, 2022 (unaudited)
3. | Transactions with Affiliates and Significant Agreements (continued) |
The Fund has adopted an Amended Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act (“Distribution Plan”). Under the Distribution Plan, the Investor Class of each of the International Equity, International Small Companies and Frontier Emerging Markets Portfolios may pay underwriters, distributors, dealers or brokers a fee at an annual rate of up to 0.25% of the average daily net assets of the Portfolio’s Investor Class shares for services or expenses arising in connection with activities primarily intended to result in the sale of Investor Class shares of the Portfolios or for Shareholder Services (defined below) consistent with those described under the Shareholder Servicing Plan.
The Fund, on behalf of the Portfolios, has agreements with various financial intermediaries and “mutual fund supermarkets”, under which customers of these intermediaries may purchase and hold Portfolio shares. These intermediaries assess fees in consideration for providing certain account maintenance, recordkeeping and transactional and other shareholder services (collectively, “Shareholder Services”). With the exception of Institutional Class Z, each Portfolio or class is authorized, pursuant to a Shareholder Servicing Plan, to pay to each intermediary an annual rate of up to 0.25% of its average daily net assets attributable to that intermediary (subject to the contractual expense limits described above) for such Shareholder Services. Because of the contractual expense limits on certain Portfolios’ fees and expenses, the Investment Adviser paid a portion of the Portfolios’ share of these fees during the period ended April 30, 2022. Such payments, if any, are included in the table above under the caption “Fees waived and/or reimbursed by the Investment Adviser”.
A Portfolio may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is due solely to having a common investment adviser, common officers, or common Directors. For the period ended April 30, 2022, no Portfolios engaged in purchases and/or sales of securities from an affiliated portfolio in compliance with Rule 17a-7 of the 1940 Act.
4. | Class Specific Expenses |
The class level expenses for the period ended April 30, 2022, were as follows for each Portfolio:
Portfolio | Distribution Fees | State Registration Filing Fees | Printing and Postage Fees | Transfer Agent Fees and Expenses | Shareholder Servicing Fees | |||||||||||||
Global Equity–Institutional Class | $ | — | $ | 16,977 | $ | 12,108 | $ | 2,412 | $ 303,195 | |||||||||
Global Equity–Institutional Class Z | — | 9,031 | 2,630 | 668 | — | |||||||||||||
Global Equity–Advisor Class | — | 8,165 | 790 | 1,619 | 50,496 | |||||||||||||
International Equity–Institutional Class | — | 52,233 | 332,605 | 137,475 | 6,869,241 | |||||||||||||
International Equity–Institutional Class Z | — | 16,725 | 48,326 | 7,915 | — | |||||||||||||
International Equity–Investor Class | 453,288 | 11,853 | 17,657 | 8,866 | 219,337 | |||||||||||||
International Small Companies–Institutional Class | — | 13,172 | 9,194 | — | 188,113 | |||||||||||||
International Small Companies–Investor Class | 54,913 | 8,880 | 1,294 | 1,184 | 22,578 | |||||||||||||
Institutional Emerging Markets–Institutional Class | — | 19,104 | 121,101 | 7,053 | 2,085,264 | |||||||||||||
Institutional Emerging Markets–Institutional Class Z | — | 11,019 | 8,196 | 3,462 | — | |||||||||||||
Emerging Markets–Advisor Class | — | 31,631 | 146,528 | — | 2,242,601 | |||||||||||||
Frontier Emerging Markets–Institutional Class I | — | 7,751 | 2,341 | 545 | 27,367 | |||||||||||||
Frontier Emerging Markets–Institutional Class II | — | 7,325 | 781 | 123 | — | |||||||||||||
Frontier Emerging Markets–Investor Class | 10,832 | 7,475 | 615 | 474 | 6,229 | |||||||||||||
Global Equity Research–Institutional Class | — | 10,653 | 132 | 236 | — | |||||||||||||
International Equity Research–Institutional Class | — | 11,021 | 201 | 271 | 461 | |||||||||||||
Emerging Markets Research–Institutional Class | — | 10,697 | 122 | 255 | 54 | |||||||||||||
Chinese Equity–Institutional Class | — | 8,311 | 230 | 385 | 111 |
5. | Investment Transactions |
Cost of purchases and proceeds from sales of investment securities, other than short-term investments, for the period ended April 30, 2022, were as follows for each Portfolio:
Portfolio | Purchase Cost of Investment Securities | Proceeds from Sales of Investment Securities | ||||||||||
Global Equity | $ | 376,428,776 | $ | 486,742,080 | ||||||||
International Equity | 1,653,853,864 | 1,867,748,288 | ||||||||||
International Small Companies | 115,572,938 | 75,633,306 |
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April 30, 2022 (unaudited)
5. | Investment Transactions (continued) |
Portfolio | Purchase Cost of Investment Securities | Proceeds from Sales of Investment Securities | ||||||||||
Institutional Emerging Markets | $ | 487,443,670 | $ | 1,093,696,385 | ||||||||
Emerging Markets | 404,738,866 | 531,847,444 | ||||||||||
Frontier Emerging Markets | 10,756,341 | 15,132,366 | ||||||||||
Global Equity Research | 1,908,873 | 1,998,472 | ||||||||||
International Equity Research | 2,992,291 | 3,302,791 | ||||||||||
Emerging Markets Research | 2,271,216 | 2,429,366 | ||||||||||
Chinese Equity | 2,194,086 | 917,191 |
6. | In-Kind Redemptions |
During the period ended April 30, 2022, the International Equity Portfolio delivered portfolio securities rather than cash in exchange for the redemption of shares for certain investors (in-kind redemptions). These investors received readily marketable securities that were valued on the redemption date using the same method employed in calculating the Portfolio’s NAV per share. The International Equity Portfolio had in-kind redemptions of approximately $73,824,231. The redemption amounts are included in “Net increase (decrease) in net assets from portfolio share transactions” on the Statements of Changes in Net Assets. Net gain of approximately $41,683,876 on the securities resulting from such in-kind redemptions are included in “Net realized gain (loss) on investments and foreign currency transactions” in the Statements of Changes in Net Assets. For financial reporting purposes, these transactions are treated as sales of securities and the resulting gains and losses are recognized based on the market value of the securities on the date of the redemption. For tax purposes, no gains or losses are recognized.
7. | Capital Share Transactions |
Transactions in capital shares for the period ended April 30, 2022, were as follows for each Portfolio:
Shares Sold | Proceeds From Shares Sold | Shares From Reinvested Dividends | Reinvestment of Dividends | Shares Redeemed | Payments for Shares | Net Increase in Shares | Net Increase in Net Assets | |||||||||||||||||||||||||
Global Equity | ||||||||||||||||||||||||||||||||
Institutional Class | 2,057,045 | $ | 87,037,261 | 3,943,186 | $ | 176,536,474 | (3,756,897 | ) | $ | (158,170,887 | ) | 2,243,334 | $ | 105,402,848 | ||||||||||||||||||
Institutional Class Z | 108,217 | 4,467,080 | 1,048,461 | 46,971,052 | (314,046 | ) | (16,169,229 | ) | 842,632 | 35,268,903 | ||||||||||||||||||||||
Advisor Class | 50,217 | 2,190,058 | 159,875 | 7,138,414 | (133,956 | ) | (5,586,293 | ) | 76,136 | 3,742,179 | ||||||||||||||||||||||
International Equity | ||||||||||||||||||||||||||||||||
Institutional Class | 65,990,702 | 1,854,808,832 | 11,513,852 | 335,974,199 | (84,537,358 | ) | (2,341,607,841 | ) | (7,032,804 | ) | (150,824,810 | ) | ||||||||||||||||||||
Institutional Class Z | 20,968,844 | 583,967,396 | 2,485,478 | 72,476,537 | (8,953,622 | ) | (252,690,243 | ) | 14,500,700 | 403,753,690 | ||||||||||||||||||||||
Investor Class | 1,677,978 | 47,286,233 | 279,397 | 8,155,604 | (2,607,044 | ) | (74,600,349 | ) | (649,669 | ) | (19,158,512 | ) | ||||||||||||||||||||
International Small Companies |
| |||||||||||||||||||||||||||||||
Institutional Class | 5,962,172 | 116,701,374 | 710,008 | 14,860,474 | (3,981,529 | ) | (76,821,114 | ) | 2,690,651 | 54,740,734 | ||||||||||||||||||||||
Investor Class | 252,488 | 4,804,423 | 62,997 | 1,304,027 | (321,880 | ) | (6,307,928 | ) | (6,395 | ) | (199,478 | ) | ||||||||||||||||||||
Institutional Emerging Markets |
| |||||||||||||||||||||||||||||||
Institutional Class | 26,242,874 | 594,288,512 | 1,366,081 | 32,977,191 | (60,071,110 | ) | (1,291,251,784 | ) | (32,462,155 | ) | (663,986,081 | ) | ||||||||||||||||||||
Institutional Class Z | 3,637,653 | 86,227,336 | 178,360 | 4,316,319 | (5,189,281 | ) | (112,003,335 | ) | (1,373,268 | ) | (21,459,680 | ) | ||||||||||||||||||||
Emerging Markets | ||||||||||||||||||||||||||||||||
Advisor Class | 10,665,703 | 580,370,556 | 4,567,689 | 267,209,765 | (13,371,552 | ) | (732,052,690 | ) | 1,861,840 | 115,527,631 | ||||||||||||||||||||||
Frontier Emerging Markets |
| |||||||||||||||||||||||||||||||
Institutional Class I | 753,802 | 6,182,142 | 80,150 | 682,875 | (1,242,750 | ) | (10,418,098 | ) | (408,798 | ) | (3,553,081 | ) | ||||||||||||||||||||
Institutional Class II | — | — | 119,815 | 1,026,818 | — | — | 119,815 | 1,026,818 | ||||||||||||||||||||||||
Investor Class | 44,941 | 372,565 | 4,964 | 42,195 | (87,909 | ) | (731,925 | ) | (38,004 | ) | (317,165 | ) | ||||||||||||||||||||
Global Equity Research | ||||||||||||||||||||||||||||||||
Institutional Class | 1 | 10 | 73,565 | 1,055,667 | (6,956 | ) | (102,815 | ) | 66,610 | 952,862 | ||||||||||||||||||||||
International Equity Research |
| |||||||||||||||||||||||||||||||
Institutional Class | 14,469 | 171,234 | 136,234 | 1,698,835 | (40,662 | ) | (519,855 | ) | 110,041 | 1,350,214 |
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Notes to Financial Statements (continued)
April 30, 2022 (unaudited)
7. | Capital Share Transactions (continued) |
Shares Sold | Proceeds From Shares Sold | Shares From Reinvested Dividends | Reinvestment of Dividends | Shares Redeemed | Payments for Shares | Net Increase in Shares | Net Increase in Net Assets | |||||||||||||||||||||||||
Emerging Markets Research |
| |||||||||||||||||||||||||||||||
Institutional Class | 5,509 | $ | 63,131 | 71,408 | $ | 819,048 | (24,283 | ) | $ | (278,215 | ) | 52,634 | $ | 603,964 | ||||||||||||||||||
Chinese Equity | ||||||||||||||||||||||||||||||||
Institutional Class | 175,693 | 1,506,990 | 1,233 | 11,045 | (37,760 | ) | (326,407 | ) | 139,166 | 1,191,628 |
Transactions in capital shares for the year ended October 31, 2021, were as follows for each Portfolio:
Shares Sold | Proceeds From Shares Sold | Shares From Reinvested Dividends | Reinvestment of Dividends | Shares Redeemed | Payments for Shares Redeemed | Net Increase (Decrease) in Shares | Net Increase (Decrease) in Net Assets | |||||||||||||||||||||||||
Global Equity | ||||||||||||||||||||||||||||||||
Institutional Class | 2,755,173 | $ | 134,959,470 | 1,350,884 | $ | 61,262,574 | (3,594,707 | ) | $ | (177,912,826 | ) | 511,350 | $ | 18,309,218 | ||||||||||||||||||
Institutional Class Z | 1,253,152 | 60,994,104 | 296,046 | 13,419,766 | (1,334,691 | ) | (67,042,458 | ) | 214,507 | 7,371,412 | ||||||||||||||||||||||
Advisor Class | 260,555 | 12,723,575 | 72,150 | 3,270,573 | (591,279 | ) | (29,240,671 | ) | (258,574 | ) | (13,246,523 | ) | ||||||||||||||||||||
International Equity | ||||||||||||||||||||||||||||||||
Institutional Class | 135,837,628 | 3,960,640,326 | 3,415,990 | 94,725,399 | (116,226,503 | ) | (3,408,764,560 | ) | 23,027,115 | 646,601,165 | ||||||||||||||||||||||
Institutional Class Z | 40,762,511 | 1,210,064,860 | 756,652 | 20,966,814 | (27,234,972 | ) | (808,810,658 | ) | 14,284,191 | 422,221,016 | ||||||||||||||||||||||
Investor Class | 3,429,544 | 101,106,880 | 59,184 | 1,641,770 | (4,364,393 | ) | (124,448,384 | ) | (875,665 | ) | (21,699,734 | ) | ||||||||||||||||||||
International Small Companies |
| |||||||||||||||||||||||||||||||
Institutional Class | 7,747,074 | 162,134,735 | 29,893 | 569,448 | (3,321,648 | ) | (69,970,353 | ) | 4,455,319 | 92,733,830 | ||||||||||||||||||||||
Investor Class | 178,402 | 3,648,929 | 661 | 12,455 | (310,774 | ) | (6,371,973 | ) | (131,711 | ) | (2,710,589 | ) | ||||||||||||||||||||
Institutional Emerging Markets |
| |||||||||||||||||||||||||||||||
Institutional Class | 39,751,528 | 1,033,720,059 | 773,359 | 19,248,905 | (43,255,578 | ) | (1,125,114,886 | ) | (2,730,691 | ) | (72,145,922 | ) | ||||||||||||||||||||
Institutional Class Z | 6,828,128 | 178,141,359 | 126,142 | 3,145,987 | (8,363,042 | ) | (220,163,091 | ) | (1,408,772 | ) | (38,875,745 | ) | ||||||||||||||||||||
Emerging Markets | ||||||||||||||||||||||||||||||||
Advisor Class | 11,237,277 | 764,954,443 | 203,160 | 13,223,728 | (21,865,322 | ) | (1,501,100,934 | ) | (10,424,885 | ) | (722,922,763 | ) | ||||||||||||||||||||
Frontier Emerging Markets |
| |||||||||||||||||||||||||||||||
Institutional Class I | 3,693,948 | 29,496,185 | 132,190 | 1,028,440 | (3,620,253 | ) | (29,434,849 | ) | 205,885 | 1,089,776 | ||||||||||||||||||||||
Institutional Class II | — | — | 291,739 | 2,278,483 | (4,064,425 | ) | (33,725,470 | ) | (3,772,686 | ) | (31,446,987 | ) | ||||||||||||||||||||
Investor Class | 152,653 | 1,225,142 | 17,809 | 138,196 | (600,304 | ) | (4,763,885 | ) | (429,842 | ) | (3,400,547 | ) | ||||||||||||||||||||
Global Equity Research |
| |||||||||||||||||||||||||||||||
Institutional Class | 34 | 501 | 15,309 | 217,846 | — | — | 15,343 | 218,347 | ||||||||||||||||||||||||
International Equity Research |
| |||||||||||||||||||||||||||||||
Institutional Class | 14,627 | 208,669 | 36,323 | 489,632 | (51,422 | ) | (733,085 | ) | (472 | ) | (34,784 | ) | ||||||||||||||||||||
Emerging Markets Research |
| |||||||||||||||||||||||||||||||
Institutional Class | 22,627 | 302,608 | 10,514 | 134,267 | (653 | ) | (8,647 | ) | 32,488 | 428,228 | ||||||||||||||||||||||
Chinese Equity | ||||||||||||||||||||||||||||||||
Institutional Class* | 421,003 | 4,280,500 | — | — | — | — | 421,003 | 4,280,500 |
* | For the period from December 16, 2020 (commencement of operations) through October 31, 2021. |
8. | Income Tax |
The cost of investments for federal income tax purposes and the components of net unrealized appreciation (depreciation) on investments at April 30, 2022, for each of the Portfolios were as follows:
Portfolio | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation / (Depreciation) | Cost | ||||||||||||
Global Equity | $ | 287,347,653 | $ | (92,258,906 | ) | $ | 195,088,747 | $ | 1,082,191,932 | |||||||
International Equity | 4,985,645,889 | (1,218,444,099 | ) | 3,767,201,790 | 14,002,801,561 |
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Harding, Loevner Funds, Inc.
Notes to Financial Statements (continued)
April 30, 2022 (unaudited)
8. | Income Tax (continued) |
Portfolio | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation / (Depreciation) | Cost | ||||||||||||
International Small Companies | $ | 100,270,544 | $ | (50,547,083 | ) | $ | 49,723,461 | $ | 454,402,231 | |||||||
Institutional Emerging Markets | 1,152,849,949 | (739,752,317 | ) | 413,097,632 | 3,660,487,795 | |||||||||||
Emerging Markets | 841,916,196 | (401,396,733 | ) | 440,519,463 | 2,213,468,542 | |||||||||||
Frontier Emerging Markets | 49,190,008 | (16,923,681 | ) | 32,266,327 | 158,091,996 | |||||||||||
Global Equity Research | 1,627,868 | (924,041 | ) | 703,827 | 7,373,046 | |||||||||||
International Equity Research | 1,821,206 | (1,595,945 | ) | 225,261 | 11,913,786 | |||||||||||
Emerging Markets Research | 947,225 | (1,483,654 | ) | (536,429 | ) | 7,660,366 | ||||||||||
Chinese Equity | 5,972 | (1,346,170 | ) | (1,340,198 | ) | 5,005,421 |
It is the policy of each Portfolio of the Fund to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes; therefore, no federal income tax provision is required.
The Portfolios may be subject to taxes imposed by countries in which they invest. Such taxes are generally based on income and/or capital gains earned. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are recorded. Taxes accrued on unrealized gains are reflected as a liability on the Statements of Assets and Liabilities under the caption “Deferred capital gains tax” and as a reduction in “Distributable earnings”. When assets subject to capital gains tax are sold, accrued taxes are relieved, and the actual amount of the taxes paid is reflected on the Statements of Operations as a reduction in “Net realized gain (loss) on Investment Transactions”. The Portfolios seek to recover a portion of foreign withholding taxes applied to income earned in jurisdictions where favorable treaty rates for US investors are available. The portion of such taxes believed to be recoverable is reflected as an asset on the Statements of Assets and Liabilities under the caption “Tax reclaims receivable”.
Management has performed an analysis of each Portfolio’s tax positions for the open tax years as of April 30, 2022, and has concluded that no provisions for income tax are required. The Portfolios’ federal tax returns for the prior three fiscal years (open tax years: October 31, 2019; October 31, 2020; October 31, 2021) remain subject to examination by the Portfolios’ major tax jurisdictions, which include the United States, the State of New Jersey and the State of Maryland. Management is not aware of any events that are reasonably possible to occur in the next twelve months that would result in the amounts of any unrecognized tax benefits significantly increasing or decreasing for the Portfolios. However, management’s conclusions regarding tax positions taken may be subject to review and adjustment at a later date based on factors including, but not limited to, new tax laws and accounting regulations and interpretations thereof.
The tax character of distributions paid during the fiscal years ended October 31, 2021 and 2020 were as follows:
Distributions From | ||||||||||||||||
Portfolio | Ordinary Income 2021 | Long-Term Capital Gains 2021 | Ordinary Income 2020 | Long-Term Capital Gains 2020 | ||||||||||||
Global Equity | 10,667,822 | $ | 75,826,990 | $ | 6,200,271 | $ | — | |||||||||
International Equity | 147,195,007 | — | 269,536,396 | — | ||||||||||||
International Small Companies | 622,621 | — | 2,122,682 | — | ||||||||||||
Institutional Emerging Markets | 26,645,680 | — | 85,287,487 | — | ||||||||||||
Emerging Markets | 14,604,731 | — | 63,406,861 | — | ||||||||||||
Frontier Emerging Markets | 3,730,104 | — | 5,825,150 | — | ||||||||||||
Global Equity Research | 190,800 | 27,046 | 83,862 | 296,019 | ||||||||||||
International Equity Research | 489,632 | — | 232,264 | 142,336 | ||||||||||||
Emerging Markets Research | 66,856 | 67,411 | 145,125 | 154,592 |
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Harding, Loevner Funds, Inc.
Notes to Financial Statements (continued)
April 30, 2022 (unaudited)
8. | Income Tax (continued) |
Under the Regulated Investment Company Modernization Act of 2010 (the “Act”), each Portfolio is permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses.
At October 31, 2021, capital losses incurred that will be carried forward indefinitely under provisions of the Act were as follows:
Portfolio | Short-Term Capital Loss Carryforward |
| Long-Term Capital Loss Carryforward | |||||||||
Institutional Emerging Markets | $ | (82,711,940 | ) | $ | (9,373,518 | ) | ||||||
Frontier Emerging Markets | (19,505,546 | ) | (84,308,092 | ) | ||||||||
Chinese Equity * | (169,512 | ) | — |
* | For the period from December 16, 2020 (commencement of operations) through October 31, 2021. |
During the fiscal year ended October 31, 2021, the International Equity, International Small Companies, Institutional Emerging Markets, Emerging Markets and Frontier Emerging Markets Portfolios utilized $556,130,928, $4,712,316, $113,764,086, $36,752,112 and $19,167,471, respectively, in capital loss carryforwards.
9. | Foreign Exchange Contracts |
The Portfolios do not generally hedge foreign currency exposure, however, the Portfolios may enter into forward foreign exchange contracts in order to hedge their exposure to changes in foreign currency exchange rates on their foreign portfolio holdings. Each Portfolio will conduct its currency transactions either on a spot (cash) basis at the rate prevailing in the currency exchange market, or by entering into forward contracts to purchase or sell currency. Foreign currency transactions entered into on the spot markets serve to pay for foreign investment purchases or to convert to dollars, the proceeds from foreign investment sales or dividend and interest receipts. The Portfolios will disclose open forward currency contracts, if any, on the Portfolios of Investments. The Portfolios do not separately disclose open spot market transactions on the Portfolios of Investments. Such realized gain (loss) and unrealized appreciation (depreciation) on spot market transactions is included in “Net realized gain (loss) on foreign currency transactions” and “Change in unrealized appreciation (depreciation) on translation of assets and liabilities denominated in foreign currencies”, respectively, on the Portfolios’ Statements of Operations. The Portfolios held no open forward currency contracts as of or during the period ended April 30, 2022.
The Central Bank of Nigeria has implemented currency controls that significantly limit the ability to convert Nigerian Naira (NGN) to U.S. dollars. As of April 30, 2022, the Frontier Emerging Markets Portfolio had 7.5% of Nigeria exposure (comprised of 1.3% NGN and 6.2% Nigerian equities) and the Emerging Markets Research Portfolio had 0.9% of Nigeria exposure (comprised of 0.9% NGN). The NGN has been valued based on an established foreign currency benchmark rate and the Nigerian equity securities have been valued at their closing price on the Nigerian Stock Exchange. These valuation methodologies are in accordance with the Procedures and GAAP. However, the conversion rate from NGN to U.S. dollars does not reflect the impact of the aforementioned currency controls. As a result, the value of NGN currently held, any proceeds from the sale of Nigerian equities received by the Frontier Emerging Markets and Emerging Markets Research Portfolios, or dividends received by the Portfolios in connection with their investment in such Nigerian equities, may differ materially once converted from NGN to U.S. dollars.
10. | Concentration of Ownership |
At April 30, 2022, the percentage of total shares outstanding held by record shareholders each owning 10% or greater of the aggregate shares outstanding of each Portfolio were as follows:
No. of Shareholders | % Ownership | |||||||||||
Global Equity | 2 | 43.46 | %* | |||||||||
International Equity | 2 | 26.06 | %* | |||||||||
International Small Companies | 4 | 58.81 | %* | |||||||||
Institutional Emerging Markets | 2 | 54.86 | %* | |||||||||
Emerging Markets | 3 | 71.93 | %* | |||||||||
Frontier Emerging Markets | 3 | 44.87 | %* | |||||||||
Global Equity Research | 2 | 84.22 | % |
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Harding, Loevner Funds, Inc.
Notes to Financial Statements (continued)
April 30, 2022 (unaudited)
10. | Concentration of Ownership (continued) |
No. of Shareholders | % Ownership | |||||||||||
International Equity Research | 3 | 73.54 | %* | |||||||||
Emerging Markets Research | 2 | 73.97 | % | |||||||||
Chinese Equity | 1 | 47.62 | % |
* | Includes omnibus positions of broker-dealers representing numerous shareholder accounts. |
Investment activities of these shareholders may have a material effect on the Portfolios.
11. | Concentration of Risk |
Investing in securities of foreign issuers and currency transactions may involve certain considerations and risks not typically associated with investments in U.S. issuers. These risks include revaluation of currencies, adverse fluctuations in foreign currency values and possible adverse political, social and economic developments, including those particular to a specific industry, country or region, which could cause the securities and their markets to be less liquid and prices more volatile than those of comparable U.S. companies and U.S. government securities. These risks are greater with respect to securities of issuers located in emerging market countries in which the Portfolios are authorized to invest.
The Frontier Emerging Markets Portfolio is permitted to invest up to 35% of its total assets in companies in the same industry, if, at the time of investment, that industry represents 20% or more of the Frontier Emerging Markets Portfolio’s benchmark index. During periods when the Frontier Emerging Markets Portfolio has invested more than 25% of its total assets in companies in the same industry, it will operate as a concentrated portfolio and be subject to additional risks and greater volatility. Such additional risks include increased competition within the industry, or changes in legislation, or government regulations affecting the industry. The value of the Frontier Emerging Markets Portfolio’s shares may be particularly vulnerable to factors affecting the banking industry, such as the availability and cost of capital funds, changes in interest rates, the rate of corporate and consumer debt defaults, extensive government regulation, and price competition. Such risks may be magnified with respect to securities of issuers in Frontier Emerging Markets. At April 30, 2022, the Frontier Emerging Markets Portfolio’s investment in the Banking industry amounted to 31.75% of its total assets.
As a non-diversified fund, the Chinese Equity Portfolio has the ability to invest a larger percentage of its assets in the securities of a smaller number of issuers than a diversified fund. As a result, poor performance by a single issuer could adversely affect the Chinese Equity Portfolio’s performance more than if the Chinese Equity Portfolio were invested in a larger number of issuers.
Investing in securities issued by companies located in Russia involves significant risks, including legal, regulatory, currency and economic risks that are specific to Russia. In addition, investing in securities issued by companies located in Russia involves risks associated with the settlement of portfolio transactions and loss of a Portfolio’s ownership rights in its portfolio securities as a result of the system of share registration and custody in Russia. Governments in the U.S. and many other countries have imposed economic sanctions on certain Russian individuals and Russian corporate and banking entities. A number of jurisdictions may also institute broader sanctions on Russia, including banning Russia from global payments systems that facilitate cross-border payments. Additionally, Russia is alleged to have participated in state-sponsored cyberattacks against foreign companies and foreign governments. Russia launched a large-scale invasion of Ukraine on February 24, 2022. The extent and duration of the military action, resulting sanctions and resulting future market disruptions, including declines in its stock markets and the value of the ruble against the U.S. dollar, are impossible to predict, but could be significant. Any such disruptions caused by Russian military action or other actions (including cyberattacks and espionage) or resulting actual and threatened responses to such activity, including purchasing and financing restrictions, boycotts or changes in consumer or purchaser preferences, sanctions, tariffs or cyberattacks on the Russian government, Russian companies, or Russian individuals, including politicians, may impact Russia’s economy and Russian issuers of securities in which a Portfolio invests. Actual and threatened responses to such military action may also impact the markets for certain Russian commodities, such as oil and natural gas, as well as other sectors of the Russian economy, and may likely have collateral impacts on such sectors globally. Such responses could also result in the immediate freeze of Russian securities and/or funds invested in prohibited assets, impairing the ability of a Portfolio to buy, sell, receive or deliver those securities and/or assets.
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Harding, Loevner Funds, Inc.
Notes to Financial Statements (continued)
April 30, 2022 (unaudited)
12. | Pandemic Risk |
The outbreak of the novel coronavirus (“COVID-19”) and subsequent global pandemic has significantly impacted the global economy, individual companies, and financial markets in general and throughout the world has created significant uncertainty. The duration and extent of COVID-19 over the long-term cannot be reasonably estimated at this time. The ultimate impact of COVID-19 and the extent to which COVID-19 impacts the Fund’s normal course of business, results of operations, investments, and cash flows will depend on future developments, which are highly uncertain and difficult to predict.
13. | Line of Credit |
The Fund has a $150 million line of credit agreement with Northern Trust. Borrowings are made solely to facilitate the handling of redemptions or unusual or unanticipated short-term cash requirements. Because several Portfolios participate and collateral requirements apply, there is no assurance that an individual Portfolio will have access to the entire $150 million at any particular time. Interest is charged to each Portfolio based on its borrowings at an amount above the Federal Funds rate, subject to a minimum rate. In addition, a facility fee is computed at an annual rate of 0.15% on the line of credit and is allocated among the Portfolios.
For the period ended April 30, 2022, Emerging Markets had an outstanding balance for two days with a maximum balance of $50,000,000 at an average weighted interest rate of 1.75%. Chinese Equity had an outstanding balance for two days with a maximum balance of $200,000 at an average weighted interest rate of 1.33%.
14. | Subsequent Events |
Subsequent events occurring after the date of this report have been evaluated for potential impact, for purposes of recognition or disclosure in the financial statements, through the date the report was issued.
As of May 13, 2022, Northern Trust and the Fund have agreed to amend the line of credit agrement to increase its size to $300 million. The facility fee under the agreement increased from 0.15% to 0.25%.
As of July 1, 2022, the Investment Adviser has agreed to lower the expense cap for International Small Companies Portfolio Fund Investor Class. Please refer to the Investment Advisory Fee table in Note 3 for more detail.
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Liquidity Risk Management Program
(unaudited)
Liquidity Risk Management Program
Pursuant to Rule 22e-4 under the Investment Company Act of 1940 (the “Liquidity Rule”), Harding, Loevner Funds, Inc. (the “Fund”) has adopted a liquidity risk management program (the “Program”) whose principal objectives include assessing, managing and periodically reviewing the liquidity risk of each series of the Fund (each, a “Portfolio” and together, the “Portfolios”), based on factors specific to the circumstances of each Portfolio.
The Board of Directors (the “Board”) of the Fund approved the Program and designated Harding Loevner LP as the administrator of the Program, acting through its Brokerage and Trading Advisory Committee (the “Administrator”). The Liquidity Rule and the Program require the Administrator to assess and review, at least annually, the liquidity risk of each Portfolio, and to consider whether any new or additional steps need to be taken or recommended to manage liquidity risk.
Pursuant to the Liquidity Rule, at the December 17, 2021 Board meeting, the Administrator provided the Board with an annual report that addressed the operation of the Program and assessed the adequacy and effectiveness of its implementation and any material changes to the Program (the “Liquidity Report”).
The Liquidity Report described the operation of the Program, including the process for categorizing portfolio securities into one of four liquidity categories, as defined in the Liquidity Rule, noting that the process is supervised by the Administrator. In addition, the Liquidity Report discussed the role of the Fund’s third-party liquidity classification data provider (the “Liquidity Data Provider”) in the classification process, including the techniques used and assumptions applied by the Liquidity Data Provider to analyze portfolio holdings and the quality and timeliness of the liquidity classification data provided to the Administrator by the Liquidity Data Provider.
The Liquidity Report then discussed the annual assessment and review of the Program undertaken by the Administrator. In its assessment and review of each Portfolio’s liquidity risk, the Administrator considered such information as it deemed appropriate, which included, among other factors:
• The Portfolios’ investment strategies and liquidity of portfolio investments during both normal and reasonably foreseeable stressed conditions.
The Administrator reviewed the investment strategy and liquidity of each Portfolio during both normal and reasonably foreseeable stressed conditions, including whether each strategy involves a relatively more concentrated portfolio or large position sizes in particular issuers and whether, or to what extent, the investment strategy is appropriate for an open-end fund.
• Short-term and long-term cash flow projections during both normal and reasonably foreseeable stressed conditions.
The Administrator reviewed the short- and long-term cash flow projections of each Portfolio during normal and reasonably foreseeable stressed conditions.
• Holdings of cash and cash equivalents, as well as borrowing arrangements.
The Administrator reviewed holdings of cash and cash equivalents as well as borrowings, including the credit facility applicable to the Fund, the financial health of the institution providing the facility and the fact that the credit facility is shared among multiple Portfolios.
The Administrator’s consideration of the foregoing information among other factors, as part of its assessment and review of each Portfolio’s liquidity risk, suggested to the Administrator there would be sufficient cash to satisfy redemption requests under both normal conditions, and under reasonably foreseeable stressed conditions.
Finally, the Liquidity Report noted that the Fund had not adopted an highly liquid investment minimum (“HLIM”) because each Portfolio is invested primarily in highly liquid securities, and that the Administrator continues to believe, based on the composition of each Portfolio over the first year of the Program, that an HLIM is not needed.
The Liquidity Report concluded by stating that there were no material changes made to the Program since its inception, and that the Administrator had determined based on its assessment that the Program was effectively implemented and appropriately tailored to the nature and degree of the Fund’s liquidity risk, both under normal and reasonably foreseeable stressed conditions.
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Supplemental Information
(unaudited)
Quarterly Portfolio Schedules of Investments
Each Portfolio files its complete portfolio of investments with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Portfolios’ Forms N-PORT are available on the SEC’s website at www.sec.gov. Additionally, they are available upon request by calling (877) 435-8105.
Proxy Voting Record
The Fund’s proxy voting record relating to the Portfolios’ securities during the most recent 12-month period ended June 30 is available on the Fund’s website at www.hardingloevnerfunds.com and on the SEC’s website at www.sec.gov, on Form N-PX.
Proxy Voting Policies and Procedures
The Fund’s proxy voting policies and procedures are included in Appendix B to the Fund’s Statement of Additional Information and is available without charge, upon request, by calling (877) 435-8105 or on the SEC’s website at www.sec.gov.
Additional Information
The Adviser updates Fact Sheets for the Portfolios each calendar quarter that are posted to the Fund’s website at www.hardingloevnerfunds.com. This information, along with the Adviser’s commentaries on its various strategies, is available without charge, upon request, by calling (877) 435-8105.
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Directors and Principal Officers
(unaudited)
DIRECTORS AND PRINCIPAL OFFICERS OF THE FUNDS
David R. Loevner
Director and Chairman of the Board of Directors
Carolyn N. Ainslie
Director
Jill R. Cuniff
Director
R. Kelly Doherty
Director
Charles W. Freeman III
Director
Jason Lamin
Director
Alexandra K. Lynn
Director
Eric Rakowski
Director
Richard T. Reiter
President
Tracy L. Dotolo
Chief Financial Officer and Treasurer
Brian D. Simon
Chief Compliance Officer, Anti-Money Laundering Compliance Officer, and Assistant Secretary
Marcia Y. Lucas
Secretary
Aaron J. Bellish
Assistant Treasurer
Ryan Bowles
Assistant Treasurer
Derek A. Jewusiak
Assistant Treasurer
Lisa Togneri
Assistant Treasurer
Lisa R. Price
Assistant Secretary
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This report is intended for shareholders of Harding, Loevner Funds, Inc. It may not be used as sales literature unless preceded or accompanied by the current Prospectus,which gives details about charges, expenses, investment objectives, risks and policies of the Portfolios.
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Harding, Loevner Funds, Inc.
c/o Northern Trust
Attn: Funds Center, Floor 38
333 South Wabash Avenue
Chicago, IL 60604
(877) 435-8105
www.hardingloevnerfunds.com
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Item 1. Reports to Stockholders (cont.).
(b) | Not Applicable. |
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Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
(a) | Schedule I is included as part of the report to shareholders filed under Item 1 of this report on Form N-CSR. |
(b) | Not applicable. |
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures.
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(a) | The Registrant’s Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) were effective as of a date within 90 days prior to the filing date of this report, based on their evaluation of the effectiveness of the Registrant’s disclosure controls and procedures as of the evaluation date. |
(b) | There were no significant changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13. Exhibits.
(a)(1) | Not applicable. | |
(a)(2) | Exhibit 99.CERT: Certifications pursuant to Rule 30a-2(a) of the Investment Company Act of 1940, as amended, are attached. | |
(a)(3) | Not applicable. | |
(a)(4) | Not applicable. | |
(b) | Exhibit 99.906: Certifications pursuant to Rule 30a-2(b) of the Investment Company Act of 1940, as amended, are attached hereto. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Harding, Loevner Funds, Inc.
By | /s/ Richard T. Reiter | |
Richard T. Reiter | ||
(Principal Executive Officer) |
Date: June 30, 2022
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By | /s/ Richard T. Reiter | |
Richard T. Reiter | ||
(Principal Executive Officer) |
Date: June 30, 2022
By | /s/ Tracy L. Dotolo | |
Tracy L. Dotolo | ||
(Principal Financial Officer) |
Date: June 30, 2022